Document:

Exhibit 10.10

 

TETRALOGIC PHARMACEUTICALS CORPORATION

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made as of August 14, 2012 (“Effective Date”) by and between C. Glenn Begley, M.B.B.S., Ph.D., F.R.A.C.P., F.R.C.P.A (the “Employee”), and TetraLogic Pharmaceuticals Corporation, a corporation organized and existing under the laws of the State of Delaware (the “Company”).

 

Background

 

WHEREAS, the Company desires to employ the Employee and the Employee desires to be employed by the Company, upon the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein, and intending to be legally bound, the parties, subject to the terms and conditions set forth herein, agree as follows:

 

1.             Employment, Term and Termination of Consulting Agreement. The parties hereby agree to employment of the Employee as the Company’s Senior Vice President of Research and Development (such position, referred to herein as the Employee’s “Position”) pursuant to the terms of this Agreement for a period continuing until the termination of the Employee’s employment in accordance with Section 5 of this Agreement (the “Term”). Except as otherwise specifically set forth in this Agreement or specifically provided in the Consulting Agreement to survive termination thereof , the Consulting Agreement dated May 4, 2012 (effective February 1, 2012) between Employee and Company, and all of its terms and conditions, shall terminate upon the Effective Date.

 

2.             Duties. During the Term, the Employee shall serve the Company faithfully and to the best of his ability and shall devote his full time, attention, skill and efforts to the performance of the duties required by or appropriate for the Position. Subject to the oversight of the Board, the Employee shall, without limiting the generality of the foregoing, a) have strategic, operational and management authority and responsibility for the scientific affairs of the Company, research and development strategy and activities for the Company’s products; b) manage execution of the Company’s research and development plans and recommend modifications and corrective actions as considered appropriate; 3) participate as a member of the Company’s senior management team in weekly management updates and monthly project reviews, 4) participate in partnering and investor meetings at the request of the Chief Executive Officer, and evaluate performance of direct reports for development and compensation purposes.. The Employee shall perform such duties and responsibilities at the Company’s facility located in Malvern, Pennsylvania or from his home in Thousand Oaks, California or at such other location as may be established from time to time by the Company. The Employee shall report to the Company’s Chief Executive Officer.

 

3.             Other Business Activities. Except as disclosed on Exhibit C, without the prior written consent of the Company in its sole discretion, the Employee will not engage, directly or indirectly, during the Term, in any other business activities or pursuits whatsoever,

 

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except activities in connection with charitable or civic activities, personal investments and serving as an executor, trustee or in other similar fiduciary capacity; provided that any such activities do not interfere with the performance of his responsibilities and obligations pursuant to this Agreement.

 

4.             Compensation. The Company shall pay the Employee, and the Employee hereby agrees to accept, as compensation for all services to be rendered to the Company and for the Employee’s intellectual property covenants and assignments and covenant not to compete, as provided in the Confidentiality Agreement, as defined in Section 6 hereof, the compensation set forth in this Section 4.

 

4.1.         Salary. The Company shall continue to pay the Employee a base salary at the annual rate of Three Hundred Thousand Dollars ($335,500) (as the same may hereafter be adjusted, the “Salary”) during the term of this Agreement. The Salary shall be inclusive of all applicable income, social security and other taxes and charges that are required by law to be withheld by the Company (collectively, “Taxes”) and shall be paid and withheld in accordance with the Company’s normal payroll practice for its executive employees from time to time in effect. The Salary shall be subject to increase at the option and in the sole discretion of the Board or the Compensation Committee of the Board (the “Compensation Committee”) based upon the demonstrated performance of the Employee.

 

4.2.         Bonus. The Employee shall be eligible to be awarded an annual performance bonus of up to thirty percent (30%) of Salary paid during the applicable period (“Bonus”), (prorated for 2012 from February 1) less Taxes, based on the achievement of performance objectives established by the President and Chief Executive Officer and/or the Board for such year. The Employee shall also be eligible to be awarded an additional discretionary bonus for achievements beyond the President and Chief Executive Officer’s and/or the Board’s expectations for target performance for such year. Such bonuses shall be determined by the Board or the Compensation Committee and shall be paid within seventy-five (75) days after the conclusion of each year. In addition, the Employee shall also be eligible to be awarded a bonus of $18,639 (the Financing Bonus”) upon the terms and conditions set forth in Exhibit “B” attached to the Consulting Agreement.

 

4.3.         Equity Participation.

 

(a)           New Stock

 

(i)            New Stock Grant or Stock Options. On or before August 30, 2012, the Company will issue to the Employee (A) an immediately exercisable stock option to purchase up to Two Million Four Hundred Thousand (2,400,000) restricted shares of the Company’s common stock, subject to appropriate and proportionate adjustments for stock dividends, stock splits and other subdivisions and combinations of, and recapitalizations and like occurrences with respect to, the Company’s common stock (the “New Stock”), at a per share exercise price equal to nine Cents ($0.09) per share, subject to appropriate and proportionate adjustments for stock dividends, stock splits and other subdivisions and combinations of, and recapitalizations and like occurrences with respect to, the Company’s common stock (the “Option”), (B) an award of up to such number of restricted shares of New Stock (the “Award”)

 

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or (C) a combination of the Option and the Award with respect to, in total, such number of restricted shares of New Stock, as elected by the Employee.

 

The Option and the Award, as applicable, shall be subject to the terms and provisions of the Company’s 2004 Equity Incentive Plan (as amended, the “Plan”) and to the Employee’s execution of a restricted stock agreement and/or a non-qualified stock option agreement which is substantially in the form customarily used by the Company with respect to the issuance of restricted stock or non-qualified stock options, as applicable, under the Plan to the Company’s employees and which contains additional terms not inconsistent with this Section 4.3 or the Plan that are determined to be appropriate by the Board. Shares of New Stock issued pursuant to the Award will be subject to a lapsing right of repurchase by the Company at the original price, if any, paid for such New Stock, which repurchase right will lapse in accordance with the vesting schedule more fully outlined in Section 4.3(a)(ii). The Option will be fully exercisable as of the date the Option is granted for shares of New Stock that are subject to a lapsing right of repurchase by the Company at the original purchase price paid for the New Stock, which repurchase right will also lapse in accordance with the vesting schedule more fully outlined in Section 4.3(a)(ii).

 

(ii)           New Stock Vesting. The New Stock shall vest in accordance with the following schedule: Sixty Six Thousand Six Hundred Sixty Seven (66,667) shares of the New Stock shall vest on the 1st day of each of the next succeeding 36 calendar months after February 1, 2012 (“Vesting Commencement Date”) until the options are fully vested; provided, that in each case, the Employee continues to be an active full-time employee of the Company on the applicable vesting date; and provided further, that, if there shall occur a Change in Control (as defined in Section 4.3(c)) prior to the date on which the New Stock is fully vested, then the entire unvested portion of such stock, options or rights shall become immediately vested. In addition, the entire unvested portion of the New Stock shall become immediately vested upon the Employee’s death if the Employee was an active full-time employee of the Company immediately before the Employee’s death.

 

(b)           Allocation of Vesting. If less than all of the New Stock is issued pursuant to the Award, then such Award shall cover then unvested shares of New Stock in priority of vesting sequence. The Option will provide that a partial exercise of the Option will be deemed to cover first vested shares of New Stock and then unvested shares of New Stock in priority of vesting sequence and that any unvested shares of New Stock purchased upon exercise of the Option shall be subject to the lapsing right of repurchase by the Company in accordance with the vesting schedule outlined in Section 4.3(a)(ii).

 

(c)           Change in Control Defined. For purposes of this Agreement, the restricted stock agreement and/or a non-qualified stock option agreement which implements the issuance of the New Stock, the term “Change in Control” shall mean, for purposes of the provisions of such restricted stock agreement and/or non-qualified stock option agreement which provide for the automatic acceleration of the vesting schedule for any New Stock, the happening of the earliest to occur of the events described in clauses (i), (ii), (iii) and (iv) of the definition of “Change in Control” contained in the Plan, except that, for such purposes, the “Original Issuance Exception” contained in clause (iv) of such definition shall be

 

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deemed to apply to original issuances by the Company of shares of its voting capital stock which are approved by at least a majority of the Board.

 

(d)           Revision of Consulting Agreement Options. The Restricted Common Shares awarded to Employee pursuant to the Consulting Agreement and that are not currently vested shall continue to vest on the revised vesting schedule set forth in Exhibit B attached to this Agreement, regardless of the termination of the Consulting Agreement as set forth in Section 1 of this Agreement.

 

4.4.         Benefits. The Employee will be entitled to participate in all group medical, dental, life insurance, long-term disability, holidays, retirement and vacation four (4) weeks plus ten (10) Company holiday days as are from time to time provided by the Company to its employees, subject to the provisions of such plans, including, without limitation, eligibility criteria and contribution requirements, as the same may be in effect from time to time (collectively referred to hereafter as “Benefits”).

 

4.5.         Reimbursement of Expenses. During the course of employment, the Employee shall be reimbursed for items of travel, food and lodging and miscellaneous expenses reasonably incurred by him on behalf of the Company, provided that such expenses are incurred, documented and submitted to the Company, all in accordance with the reimbursement policies of the Company as in effect from time to time.

 

5.             Early Termination. The Employee’s employment hereunder may be terminated during the Term upon the occurrence of any one of the events described in this Section 5. Upon the effective date of such termination (the “Termination Date”), the Employee shall be entitled only to such compensation and benefits as described in this Section 5.

 

5.1.         Termination for Permanent Disability.

 

(a)           Without limiting the Company’s right to terminate Employee pursuant to Section 5.2, 5.3 or 5.4 hereof, the Company may terminate the Employee’s employment hereunder at any time as a result of Employee’s Permanent Disability upon written notice to Employee. For purposes of this Agreement, a “Permanent Disability” shall have the same meaning as ascribed to such term (or a term of similar import) in the long-term disability insurance policy maintained by the Company for the Employee’s benefit, or if no such policy exists, shall mean an illness, incapacity or a mental or physical condition that renders the Employee unable or incompetent to carry out the job responsibilities that the Employee held or the tasks that he was assigned at the time the disability commenced for at least 120 consecutive days or for shorter periods totaling 180 days in any twelve-month period, as determined by the Board and supported by the opinion of a physician. The Employee shall fully cooperate with the physician retained to furnish such opinion, including submitting to such examinations and tests as may be requested by the physician.

 

(b)           In the event of a termination of Employee’s employment hereunder pursuant to Section 5.1(a), Employee will be entitled to receive all accrued and unpaid (as of the Termination Date) Salary, Benefits and Bonus, including payment prescribed under any disability plan or arrangement provided by the Company in which he is a participant or to

 

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which he is a party as an employee of the Company. Except as specifically set forth in this Section 5.1(b), the Company shall have no liability or obligation to Employee for compensation or benefits hereunder by reason of such termination.

 

5.2.         Termination by Death. In the event that Employee dies during the Term, Employee’s employment hereunder shall be terminated thereby and the Company shall pay to Employee’s executors, legal representatives or administrators an amount equal to all accrued and unpaid (as of the Termination Date) Salary, Benefits and Bonus. Except as specifically set forth in this Section 5.2, the Company shall have no liability or obligation hereunder to Employee’s executors, legal representatives, administrators, heirs or assigns or any other person claiming under or through him by reason of Employee’s death.

 

5.3.         Termination for Cause; Voluntary Termination.

 

(a)           The Company may terminate Employee’s employment hereunder at any time for “Cause” immediately upon written notice to Employee. In addition, the Employee may voluntarily terminate his employment hereunder at any time following sixty (60) days prior written notice to the Board. For purposes of this Agreement, the term “Cause” shall mean, as determined by the Board in its sole discretion: (i) Employee’s failure or refusal to materially perform his duties hereunder or to follow a lawful directive of the Board; (ii) any material breach by the Employee of any of the terms of this Agreement or the Confidentiality Agreement; (iii) other conduct of Employee involving any willful and material misconduct with respect to or against the Company or its property or any of its personnel; or (iv) Employee being charged with any felony or any crime involving moral turpitude. If termination for Cause is based upon Subsections (i), (ii) or (iii) of this Subsection (a) and the applicable breach, conduct or violation is capable of being cured, then the Employee shall have thirty (30) days following receipt of written notice to Employee from the Board specifying such failure in reasonable detail to cure such breach, conduct or violation.

 

(b)           In the event of a termination of Employee’s employment hereunder pursuant to Section 5.3(a), Employee shall be entitled to receive all accrued but unpaid (as of the Termination Date) Salary and Benefits. All Salary, Benefits and Bonuses shall cease at the time of such termination. Except as specifically set forth in this Section 5.3, the Company shall have no liability or obligation hereunder by reason of such termination.

 

5.4.         Termination Without Cause; Termination for Good Reason.

 

(a)           The Company may terminate Employee’s employment hereunder at any time, for any reason or for no reason, without Cause, effective upon the date designated by the Company upon written notice to the Employee. In addition, the Employee may voluntarily terminate his employment for Good Reason (as defined below) following sixty (60) days prior written notice to the Board.

 

(b)           If Employee’s employment is terminated pursuant to Section 5.4(a) at any time during the Term, Employee shall be entitled to: (i) receive all accrued but unpaid (as of the Termination Date) Salary and Benefits and (ii) the Company will continue to pay to the Employee his then current Salary in effect on the Termination Date in accordance

 

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with the Company’s regular payroll practices during the period beginning on the Termination Date and ending on the last day of the sixth (6th) month following the Termination Date; subject to all withholding obligations; provided, however, that the payments outlined in this subsection (ii) shall be contingent upon the Employee executing and not revoking a release of all claims pursuant to a Separation Agreement and Release substantially in the form attached hereto as Exhibit A. All Benefits and Bonuses shall cease at the time of such termination, subject to the terms of any benefit or compensation plan then in force and applicable to Employee. Except as specifically set forth in this Section 5.4(b), the Company shall have no liability or obligation hereunder by reason of such termination.

 

(c)           For purposes of this Agreement, the term “Good Reason” shall mean the date of any substantial and adverse alteration by the Company of Employee’s functions, duties or responsibilities that is not consented to by the Employee and is not remedied by the Company within thirty (30) days after receiving written notice from the Employee of such material alteration; provided, further, that the Employee’s consent to any event which would otherwise constitute “Good Reason” shall be conclusively presumed if the Employee does not exercise his rights hereunder within thirty (30) days of the event.

 

6.             Confidentiality Agreement. The Employee shall continue to be bound by that certain Non-Competition, Nonsolicitation and Confidentiality Agreement, dated as of the date hereof, between the Company and the Employee (the “Confidentiality Agreement”), the terms and provisions of which are hereby ratified and confirmed in all respects and incorporated into this Agreement by reference.

 

7.             Parachute Provisions. Payments under this Agreement shall be made without regard to whether the deductibility of such payments (or any other payments) would be limited or precluded by Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and without regard to whether such payments would subject the Employee to the federal excise tax levied on certain “excess parachute payments” under Section 4999 of the Code; provided, however, that if the Total After-Tax Payments (as defined below) would be increased by the limitation or elimination of any amount payable under this Agreement, then the amount payable under this Agreement will be reduced to the extent necessary to maximize the Total After-Tax Payments. The determination of whether and to what extent payments under this Agreement are required to be reduced in accordance with the preceding sentence will be made by the Company’s independent auditors. In the event of any underpayment or overpayment under this Agreement (as determined after the application of this Section 7), the amount of such underpayment or overpayment will be immediately paid by the Company to the Employee or refunded by the Employee to the Company, as the case may be, with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code. For purposes of this Agreement, “Total After-Tax Payments” means the total of all “parachute payments” (as that term is defined in Section 280G(b)(2) of the Code) made to or for the benefit of the Employee (whether made hereunder or otherwise), after reduction for all applicable federal taxes (including, without limitation, the tax described in Section 4999 of the Code). Notwithstanding the foregoing, if so requested by the Employee, the Company shall use reasonable efforts to obtain the requisite approval by the stockholders of the Company in the manner contemplated by Q&A 7 of Treas. Reg. Section 1.280G, it being understood that the Company does not guarantee that such approval will be obtained. If the Company determines that such approval has been

 

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obtained, and such obligations of Q&A 7 of Treas. Reg. Section 1.280G have been met, all payments shall be made to Employee, without reduction.

 

8.             Representations, Warranties and Covenants of the Employee.

 

(a)           The Employee represents and warrants to the Company that:

 

(i)            There are no restrictions, agreements or understandings whatsoever to which the Employee is a party which would prevent or make unlawful the Employee’s execution of either this Agreement, the Confidentiality Agreement or the Employee’s employment hereunder, or which is or would be inconsistent or in conflict with either this Agreement, the Confidentiality Agreement or the Employee’s employment hereunder, or would prevent, limit or impair in any way the performance by the Employee of the obligations under either this Agreement or the Confidentiality Agreement;

 

(ii)           The Employee has disclosed to the Company all restraints, confidentiality commitments or other employment restrictions that he has with any other employer, person or entity; and

 

(iii)          All information furnished or to be furnished by the Employee to the Company in connection with the Employee’s employment with the Company is or will be free and complete in all respects.

 

(b)         The Employee shall not breach any obligation (legal, statutory, contractual or otherwise) to any former employer or other person, including, but not limited to obligations relating to confidentiality, noncompetition and proprietary rights in connection with the Employee’s provision of services to the Company. During the Term, the Employee shall comply with all lawful policies, practices and procedures established at any time and from time to time by the Company.

 

9.             Survival of Provisions. The provisions of this Agreement set forth in Sections 5 through 20, inclusive, hereof shall survive the termination of the Employee’s employment hereunder.

 

10.          Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Company and the Employee and their respective successors, executors, administrators, heirs and/or assigns; provided that the Employee shall not make any assignment of this Agreement or any interest herein, by operation of law or otherwise, without the prior written consent of the Company.

 

11.          Notice. Any notice hereunder by either party shall be given by personal delivery or by sending such notice by certified mail, return-receipt requested, or by overnight courier, as the case may be, to the other party at its address set forth below or at such other

 

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address designated by notice in the manner provided in this section. Such notice shall be deemed to have been received upon the date of actual delivery if personally delivered or, in the case of mailing, two (2) days after deposit with the U.S. mail, or, in the case of overnight courier, on the next business day.

 

(a)                                 if to the Company, to:

 

TetraLogic Pharmaceuticals Corporation

365 Phoenixville Pike

Malvern, Pennsylvania 19355

Attention: John M. Gill, President and Chief Executive Officer

 

with a copy to:

 

Jeffrey P. Libson, Esquire

Pepper Hamilton LLP

400 Berwyn Park

899 Cassatt Road

Berwyn, Pennsylvania 19312-1183

 

(b)                                 if to the Employee, to:

 

C. Glenn Begley, PhD

 

12.          Entire Agreement; Amendments.

 

(a)           This Agreement and the Confidentiality Agreement contain the entire agreement and understanding of the parties hereto relating to the subject matter hereof, and merges and supersedes all prior and contemporaneous discussions, agreements and understandings of every nature between the parties hereto relating to the employment of the Employee with the Company (including without limitation, the Employment Agreement).

 

(b)           The Employee hereby acknowledges that as at the Effective Date (i) the sole shares, options, warrants, exit participation rights and other interests in the equity or any exit participation rights of the Employee with respect to the Company are: (x) the Eight Hundred thousand (800,000) shares of the Company’s common stock issued to the Employee pursuant to, and as governed by, that certain Restricted Stock Agreement, dated as of August 14, 2012, between the Company and the Employee, and (y) the New Stock contemplated by Section 4.3 of this Agreement; and (ii) the Employee has no other rights in the equity of, or to participate in the proceeds of any sale of or other transaction involving, the Company.

 

(c)           This Agreement may not be changed or modified, except by an agreement in writing signed by each of the parties hereto.

 

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13.          Waiver. The waiver of the breach of any term or provision of this Agreement shall not operate as or be construed to be a waiver of any other or subsequent breach of this Agreement.

 

14.          Governing Authority. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to the principles of conflicts of laws of any jurisdiction. The Employee agrees that the Company shall have the right to commence and maintain an action hereunder in the state and federal courts appropriate for the location at which the Company maintains its corporate offices, and the Employee hereby submits to the jurisdiction and venue of such courts.

 

15.          Invalidity. If any provision of this Agreement shall be determined to be void, invalid, unenforceable or illegal for any reason, the validity and enforceability of all of the remaining provisions hereof shall not be affected thereby. If any particular provision of this Agreement shall be adjudicated to be invalid or unenforceable, such provision shall be deemed amended to delete therefrom the portion thus adjudicated to be invalid or unenforceable, such amendment to apply only to the operation of such provision in the particular jurisdiction in which such adjudication is made.

 

16.          Section Headings. The section headings in this Agreement are for convenience only; they form no part of this Agreement and shall not affect its interpretation.

 

17.          Number of Days. In computing the number of days for purposes of this Agreement, all days shall be counted, including Saturdays, Sundays and legal holidays; provided that, if the final day of any time period falls on a Saturday, Sunday or day which is a legal holiday in the Commonwealth of Pennsylvania, then such final day shall be deemed to be the next day which is not a Saturday, Sunday or legal holiday.

 

18.          Arbitration. Subject to the last sentence of this Section 18, if any dispute arises over the terms of this Agreement (but not the Confidentiality Agreement) between the parties to this Agreement, either Employee or Company may submit the dispute to binding arbitration within thirty (30) days after such dispute arises, to be governed by the evidentiary and procedural rules of the American Arbitration Association (Commercial Arbitration). Employee and Company shall mutually select one (1) arbitrator within ten (10) days after a dispute is submitted to arbitration. In the event that the parties do not agree on the identity of the arbitrator within such period, the arbitrator shall be selected by the American Arbitration Association. The arbitrator shall hold a hearing on the dispute at a location chosen by the Company, which shall be within fifteen (15) miles of the Company’s then current corporate offices, within thirty (30) days after having been selected and shall issue a written opinion within fifteen (15) days after the hearing. The arbitrator shall also decide on the allocation of the costs of the arbitration to the respective parties, but the Employee and the Company shall each be responsible for paying the fees of their own legal counsel, if legal counsel is obtained. Either the Employee or the Company, or both parties, may file the decision of the arbitrator as a final, binding and unappealable judgment in a court of appropriate jurisdiction. Notwithstanding the foregoing provisions of this Section 18 to the contrary, matters in which an equitable remedy or injunctive relief is sought by a party may be brought in any court of competent jurisdiction.

 

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19.          Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall be deemed to be one and the same instrument.

 

20.          Section 409A. All payments to be made upon a termination of employment under this Agreement will only be made upon a “separation from service” within the meaning of Section 409A of the Code. In no event may Employee, directly or indirectly, designate the calendar year of payment. To the maximum extent permitted under Section 409A of the Code and its corresponding regulations, the cash severance benefits payable under the Agreement are intended to meet the requirements of the short-term deferral exemption under Section 409A of the Code and the “separation pay exception” under Treas. Reg. §1.409A-1(b)(9)(iii). For purposes of the application of Treas. Reg. § 1.409A-1(b)(4)(or any successor provision), each payment in a series of payments to Employee will be deemed a separate payment. Notwithstanding anything in the Agreement to the contrary or otherwise, except to the extent any expense, reimbursement or in-kind benefit provided pursuant to the Agreement does not constitute a “deferral of compensation” within the meaning of Section 409A of the Code and its implementing regulations and guidance, (a) the expenses eligible for reimbursement or in-kind benefits provided to Employee must be incurred during the Term (or applicable survival period), (b) the amount of expenses eligible for reimbursement or in-kind benefits provided to Employee during any calendar year will not affect the amount of expenses eligible for reimbursement or in-kind benefits provided to Employee in any other calendar year, (c) the reimbursements for expenses for which Employee is entitled to be reimbursed shall be made on or before the last day of the calendar year following the calendar year in which the applicable expense is incurred and (d) the right to payment or reimbursement or in-kind benefits hereunder may not be liquidated or exchanged for any other benefit.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties have caused this Executive Employment Agreement to be executed on the day and year first written above.

 

	
 
    	
TETRALOGIC PHARMACEUTICALS CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ John M. Gill
    
	
 
    	
 
    	
John M. Gill, President and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ C. Glenn Begley
    
	
 
    	
C. Glenn Begley
    

 

[signature page to Executive Employment Agreement]

 

 

EXHIBIT A

Separation Agreement and Release

 

THIS SEPARATION AGREEMENT AND RELEASE (this “Agreement”) is made by and between C. Glenn Begley (the “Employee”), and TetraLogic Pharmaceuticals Corporation, a corporation organized and existing under the laws of the State of Delaware (the “Company”).

 

WHEREAS, the Employee and the Company entered into an Employment Agreement dated August 14, 2012 (the “Employment Agreement”) that sets forth the terms and conditions of the Employee’s employment with the Company, including the circumstances under which the Employee is eligible to receive severance pay.

 

NOW, THEREFORE, the Employee and the Company each intending to be legally held bound, hereby agree as follows:

 

1.             Consideration. In consideration for a release of claims and other promises and covenants set forth herein, the Company agrees to pay the Employee such consideration as is specified in Section 5.4(b) of the Employment Agreement in accordance with the terms and conditions of the Employment Agreement.

 

2.             Employee’s Release. The Employee on his own behalf and together with his heirs, assigns, executors, agents and representatives hereby generally releases and discharges the Company and its predecessors, successors (by merger or otherwise), parents, subsidiaries, affiliates and assigns, together with each and every of their present, past and future officers, managers, directors, shareholders, members, general partners, limited partners, employees and agents and the heirs and executors of same (herein collectively referred to as the “Releasees”) from any and all suits, causes of action, complaints, obligations, demands, common law or statutory claims of any kind, whether in law or in equity, direct or indirect, known or unknown (hereinafter “Claims”), which the Employee ever had or now has against the Releasees, or any one of them occurring up to and including the date of the this Agreement. Notwithstanding anything herein to the contrary, the Employee’s release is not and shall not be construed as a release of any future claim by the Employee against the Company, to the extent a claim may otherwise exist, for indemnity, contribution or cost of defense in accordance with the Company’s bylaws. This release specifically includes, but is not limited to:

 

a.             any and all Claims for wages and benefits including, without limitation, salary, stock options, stock, royalties, license fees, health and welfare benefits, severance pay, vacation pay, and bonuses;

 

b.             any and all Claims for wrongful discharge, breach of contract, whether express or implied, and Claims for breach of implied covenants of good faith and fair dealing;

 

c.             any and all Claims for alleged employment discrimination on the basis of race, color, religion, sex, age, national origin, veteran status, disability and/or handicap,

 

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in violation of any federal, state or local statute, ordinance, judicial precedent or Employee order, including but not limited to claims for discrimination under the following statutes: Title VII of the Civil Rights Act of 1964, 42 U.S.C. §2000e et seq.; the Civil Rights Act of 1866, 42 U.S.C. §1981; the Civil Rights Act of 1991; the Age Discrimination in Employment Act, as amended, 29 U.S.C. §621 et seq.; the Older Workers Benefit Protection Act 29 U.S.C. §§ 623, 626 and 630; the Rehabilitation Act of 1972, as amended, 29 U.S.C. §701 et seq.; the Americans with Disabilities Act, 42 U.S.C. §12101 et seq.; the Family and Medical Leave Act of 1993, 29 U.S.C. §2601, et seq.; the Fair Labor Standards Act, as amended, 29 U.S.C. §201, et seq.; the Fair Credit Reporting Act, as amended, 15 U.S.C. §1681, et seq.; and the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §1000, et seq. (“ERISA”) or any comparable state statute or local ordinance;

 

d.             any and all Claims under any federal or state statute relating to employee benefits or pensions;

 

e.             any and all Claims in tort, including but not limited to, any Claims for assault, battery, misrepresentation, defamation, interference with contract or prospective economic advantage, intentional or negligent infliction of emotional distress, duress, loss of consortium, invasion of privacy and negligence; and

 

f.             any and all Claims for attorneys’ fees and costs.

 

3.             Acknowledgment. The Employee understands that the release of Claims contained in this Agreement extends to all of the aforementioned Claims and potential Claims which arose on or before the date of this Agreement, whether now known or unknown, suspected or unsuspected, and that this constitutes an essential term of this Agreement. The Employee further understands and acknowledges the significance and consequences of this Agreement and of each specific release and waiver, and expressly consents that this Agreement shall be given full force and effect to each and all of its express terms and provisions, including those relating to unknown and uncompensated Claims, if any, as well as those relating to any other Claims specified herein. The Employee hereby waives any right or Claim that the Employee may have to employment, reinstatement or re-employment with the Company.

 

4.             Confidentiality. The Employee shall not disclose or publicize the terms of this Agreement to any person or entity, except that the Employee may disclose the terms, and/or fact of this Agreement to immediate family members, the Employee’s accountants and attorneys and to others as strictly required by law. The Employee is specifically prohibited from disclosing the fact or terms of this Agreement to any current or former employee of the Releasees. The Employee further agrees that he shall be responsible for the Company’s attorney’s fees and costs, if it needs to file an action to enforce its rights under this paragraph, to the extent permitted by law. In the event that the Employee is requested or required (by oral questions, interrogatories, requests for information or documents in a court or administrative proceeding, subpoena, civil investigative demand or other similar process) to disclose the terms of this Agreement, the Employee will endeavor in good faith to provide the Company prompt notice of any such request or requirement so that the Company may, at the Company’s expense, seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. If, in the absence of a protective order or other similar remedy or the receipt

 

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of a waiver from the Company, the Employee reasonably determines that disclosure of the terms of this Agreement is required to comply with such process or applicable law, the Employee may, without liability under this Agreement, disclose to the appropriate authority only that portion of the information which, on advice of counsel, he reasonably believes he is required to disclose.

 

5.             Remedies. All remedies at law or in equity shall be available to the Releasees for the enforcement of this Agreement. This Agreement may be pleaded as a full bar to the enforcement of any Claim that the Employee may assert against the Releasees.

 

6.             No Admission. Neither the execution of this Agreement by the Company, nor the terms hereof, constitute an admission by the Company of any liability to the Employee.

 

7.             Entire Agreement. This Agreement contains the entire agreement of the parties with respect to the subject matter hereof, and shall be binding upon their respective heirs, executors, administrators, successors and assigns. In the event there is any inconsistency between the terms of this Agreement and the Employment Agreement, the terms of this Agreement shall control.

 

8.             Severability. If any term or provision of this Agreement shall be held to be invalid or unenforceable for any reason, then such term or provision shall be ineffective to the extent of such invalidity or unenforceability without invalidating the remaining terms or provisions hereof, and such term or provision shall be deemed modified to the extent necessary to make it enforceable.

 

9.             Advice of Counsel; Revocation Period. The Employee is hereby advised to seek the advice of counsel prior to signing this Agreement. The Employee hereby acknowledges that the Employee is acting of his own free will, that he has been afforded a reasonable time to read and review the terms of this Agreement, and that he is voluntarily entering into this Agreement with full knowledge of its provisions and effects. The Employee further acknowledges that he has been given at least TWENTY-ONE (21) days within which to consider this Agreement and that he has SEVEN (7) days following his execution of this Agreement to revoke his acceptance, with this Agreement not becoming effective until the 7-day revocation period has expired. If the Employee elects to revoke his acceptance of this Agreement, the Employee must provide written notice of such revocation by certified mail (postmarked no later than seven days after the date the Employee accepted this Agreement) to:

 

A-3

 

TetraLogic Pharmaceuticals Corporation 

365 Phoenixville Pike

Malvern, Pennsylvania 19355

Attention: Chairman of the Board 

Telecopier: (610) 889-9994

 

with a copy to:

 

Jeffrey P. Libson, Esquire

Pepper Hamilton LLP 

400 Berwyn Park

899 Cassatt Road

Berwyn, Pennsylvania 19312-1183

Telecopier: (610) 640-7835

 

10.          Employee’s Representation. The Employee represents and warrants that he has not assigned any claim that he purports to release hereunder and that he has the full power and authority to enter into this Agreement and bind each of the persons and entities that the Employee purports to bind. The Employee further represents and warrants that he is bound by, and agrees to remain bound by, his post-employment obligations set forth in the Employment Agreement and Confidentiality Agreement.

 

11.          Amendments. Neither this Agreement nor any term hereof may be changed, waived, discharged, or terminated, except by a written agreement signed by the parties hereto.

 

12.          Governing Authority. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to the principles of conflicts of laws of any jurisdiction. The Employee agrees that the Company shall have the right to commence and maintain an action hereunder in the state and federal courts appropriate for the location at which the Company maintains its corporate offices, and the Employee hereby submits to the jurisdiction and venue of such courts.

 

13.          Fees and Costs. The parties shall bear their own attorneys’ fees and costs.

 

14.          Counterparts. This Agreement may be executed in counterparts.

 

15.          Legally Binding. The terms of this Agreement contained herein are contractual, and not a mere recital.

 

[SIGNATURE PAGE FOLLOWS]

 

A-4

 

IN WITNESS WHEREOF, the Employee, acknowledging that he is acting of his own free will after having had the opportunity to seek the advice of counsel and a reasonable period of time to consider the terms of this Agreement, and the Company, have caused the execution of this Agreement on the date(s) written below.

 

 

	
 
    	
 
    	
 
    	
 
    
	
C. Glenn Begley
    	
 
    	
Witness:
    
	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
Date:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
TETRALOGIC PHARMACEUTICALS CORPORATION
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
 
    	
 
    

 

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EXHIBIT B

 

Revised Vesting Schedule for Options Granted Under Consulting Agreement

 

400,000 shares granted under Consulting Agreement continue to vest monthly through August 31, 2012 (no change from Consulting Agreement)

 

400,000 shares originally granted under the Consulting Agreement to vest upon completion of the Financing Milestone (as defined in the Consulting Agreement). Such shares shall vest on February 1, 2013 if they have not otherwise vested by the Financing Milestone having been previously achieved.

 

 

	
/s/ C. Glenn Begley
    	
 
    	
/s/ John M. Gill
    
	
C. Glenn Begley
    	
 
    	
John M. Gill
    
	
Aug 23, 2012
    	
 
    

 

A-6

 

EXHIBIT C

 

Other Business Activities

 

1.              I have no conflicts of interest, and am currently acting as an advisor/consultant for the following companies:

1.              Non-executive Director of Oxford BioTherapeutics. Oxford BioTherapeutics is an antibody company involved in using Mass Spec to discover new cell-surface cancer targets for therapeutic antibodies. My time-commitment to Oxford BioTherapeutics is approximately 8 days per year.

2.              Scientific Advisory Board Member for CytoMx, San Francisco. CytoMx has a novel antibody platform and is initially seeking to validate the platform using validated clinical targets. My time-commitment is approximately 2 days per year.

3.              Scientific Advisor to BioCryst, North Carolina. BioCryst is a small molecule company with programs addressing infectious disease (including influenza, hepatitis C), hereditary angioedema, gout. My time commitment is approximately 1 day per year.

4.              Scientific Advisor to Selvita, Poland. Selvita is attempting to develop kinase inhibitors for oncology. My time commitment is approximately 0.5 day per year.

5.              Scientific Advisor to Cellastra, San Francisco. Cellastra is a cellular therapy company. My time commitment is approximately 2 hours per year.

6.              I have served in an ad hoc capacity as scientific reviewer for Aquilo Capital Management (approximately 2-3 hours per year), Biotechnology Value Fund (approximately 2-3 hours per year), Guidepoint Global (approximately 2-3 hours per year).

 

A-7Exhibit 10.11

 

TETRALOGIC PHARMACEUTICALS CORPORATION

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made as of December 17, 2010 by and between David Weng (the “Employee”), and TetraLogic Pharmaceuticals Corporation, a corporation organized and existing under the laws of the State of Delaware (the “Company”).

 

Background

 

WHEREAS, the Employee currently serves as an employee to the Company; and

 

WHEREAS, the Company desires to continue to employ the Employee and the Employee desires to continue to be employed by the Company, upon the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein, and intending to be legally bound, the parties, subject to the terms and conditions set forth herein, agree as follows::

 

1.                                      Employment and Term. The parties hereby agree to continue the employment of the Employee as the Company’s Chief Medical Officer (such position, referred to herein as the Employee’s “Position”) pursuant to the terms of this Agreement for a period continuing until the termination of the Employee’s employment in accordance with Section 5 of this Agreement (the “Term”).

 

2.                                      Duties. During the Term, the Employee shall serve the Company faithfully and to the best of his ability and shall devote his full time, attention, skill and efforts to the performance of the duties required by or appropriate for the Position. Subject to the oversight of the Board, the Employee shall, without limiting the generality of the foregoing, have strategic, operational and management authority and responsibility for the medical affairs of the Company, clinical development for the Company’s products in compliance with global regulatory, legislative and medical/health requirements and the content of pre-clinical biology plans intended to produce data and assays to support selection of indications for clinical development and patients for treatment with the Company’s therapeutics. The Employee shall perform such duties and responsibilities at the Company’s facility located in Malvern, Pennsylvania or at such other location as may be established from time to time by the Company. The Employee shall report to the Company’s Chief Executive Officer.

 

3.                                      Other Business Activities. Without the prior written consent of the Company in its sole discretion, the Employee will not engage, directly or indirectly, during the Term, in any other business activities or pursuits whatsoever, except activities in connection with charitable or civic activities, personal investments and serving as an executor, trustee or in other similar fiduciary capacity; provided that any such activities do not interfere with the performance of his responsibilities and obligations pursuant to this Agreement.

 

 

4.                                      Compensation. The Company shall pay the Employee, and the Employee hereby agrees to accept, as compensation for all services to be rendered to the Company and for the Employee’s intellectual property covenants and assignments and covenant not to compete, as provided in the Confidentiality Agreement, as defined in Section 6 hereof, the compensation set forth in this Section 4.

 

4.1.                            Salary. The Company shall continue to pay the Employee a base salary at the annual rate of Three Hundred Thousand Dollars ($300,000) (as the same may hereafter be adjusted, the “Salary”) during the term of this Agreement. The Salary shall be inclusive of all applicable income, social security and other taxes and charges that are required by law to be withheld by the Company (collectively, “Taxes”) and shall be paid and withheld in accordance with the Company’s normal payroll practice for its executive employees from time to time in effect. The Salary shall be subject to increase at the option and in the sole discretion of the Board or the Compensation Committee of the Board (the “Compensation Committee”) based upon the demonstrated performance of the Employee.

 

4.2.                            Bonus. The Employee shall be eligible to be awarded an annual performance bonus of up to thirty percent (30%) of Salary paid during the applicable period (“Bonus”), less Taxes, based on the achievement of performance objectives established by the President and Chief Executive Officer and/or the Board for such year. The Employee shall also be eligible to be awarded an additional discretionary bonus for achievements beyond the President and Chief Executive Officer’s and/or the Board’s expectations for target performance for such year. Such bonuses shall be determined by the Board or the Compensation Committee and shall be paid within seventy-five (75) days after the conclusion of each year.

 

4.3.                            Equity Participation.

 

(a)                                         New Stock

 

(i)                           New Stock Grant. On or before November 30, 2010, the Company will issue to the Employee (A) an immediately exercisable non-qualified stock option to purchase up to One Million Five Hundred Thousand (1,500,000) restricted shares of the Company’s common stock, subject to appropriate and proportionate adjustments for stock dividends, stock splits and other subdivisions and combinations of, and recapitalizations and like occurrences with respect to, the Company’s common stock (the “New Stock”), at a per share exercise price equal to Nine Cents ($0.09) per share, subject to appropriate and proportionate adjustments for stock dividends, stock splits and other subdivisions and combinations of, and recapitalizations and like occurrences with respect to, the Company’s common stock (the “Option”), (B) an award of up to such number of restricted shares of New Stock (the “Award”) or (C) a combination of the Option and the Award with respect to, in total, such number of restricted shares of New Stock, as elected by the Employee.

 

The Option and the Award, as applicable, shall be subject to the terms and provisions of the Company’s 2004 Equity Incentive Plan (as amended, the “Plan”) and to the Employee’s execution of a restricted stock agreement and/or a non-qualified stock option agreement which is substantially in the form customarily used by the Company with respect to the issuance of restricted stock or non-qualified stock options, as applicable, under the Plan to

 

2

 

the Company’s employees and which contains additional terms not inconsistent with this Section 4.3 or the Plan that are determined to be appropriate by the Board. Shares of New Stock issued pursuant to the Award will be subject to a lapsing right of repurchase by the Company at the original price, if any, paid for such New Stock, which repurchase right will lapse in accordance with the vesting schedule more fully outlined in Section 4.3(a)(ii). The Option will be fully exercisable as of the date the Option is granted for shares of New Stock that are subject to a lapsing right of repurchase by the Company at the original purchase price paid for the New Stock, which repurchase right will also lapse in accordance with the vesting schedule more fully outlined in Section 4.3(a)(ii).

 

(ii)                        New Stock Vesting. The New Stock shall vest in accordance with the following schedule: (A) One Hundred Twenty Five Thousand (125,000) shares of the New Stock will be immediately vested upon the execution and delivery of the restricted stock agreement and/or non-qualified stock option agreement governing the Award and Option, as applicable; and (B) Thirty One Thousand Two Hundred Fifty (31,250) shares of the New Stock shall vest on December 26, 2010, and on the 26th day of each of the next succeeding 43 calendar months; provided, that in each case, the Employee continues to be an active full-time employee of the Company on the applicable vesting date; and provided further, that, if there shall occur a Change in Control (as defined in Section 4.3(c)) prior to the date on which the New Stock is fully vested, then the entire unvested portion of such stock, options or rights shall become immediately vested. In addition, the entire unvested portion of the New Stock shall become immediately vested upon the Employee’s death if the Employee was an active full-time employee of the Company immediately before the Employee’s death.

 

(b)                                 Allocation of Vesting. If less than all of the New Stock is issued pursuant to the Award, then such Award shall first cover all shares of New Stock which will be immediately vested upon the execution and delivery of the restricted stock agreement governing the Award and then unvested shares of New Stock in priority of vesting sequence. The Option will provide that a partial exercise of the Option will be deemed to cover first vested shares of New Stock and then unvested shares of New Stock in priority of vesting sequence and that any unvested shares of New Stock purchased upon exercise of the Option shall be subject to the lapsing right of repurchase by the Company in accordance with the vesting schedule outlined in Section 4.3(a)(ii).

 

(c)                                  Change in Control Defined. For purposes of this Agreement, the restricted stock agreement and/or a non-qualified stock option agreement which implements the issuance of the New Stock, the term “Change in Control” shall mean, for purposes of the provisions of such restricted stock agreement and/or non-qualified stock option agreement which provide for the automatic acceleration of the vesting schedule for any New Stock, the happening of the earliest to occur of the events described in clauses (i), (ii), (iii) and (iv) of the definition of “Change in Control” contained in the Plan, except that, for such purposes, the “Original Issuance Exception” contained in clause (iv) of such definition shall be deemed to apply to original issuances by the Company of shares of its voting capital stock which are approved by at least a majority of the Board.

 

4.4.                            Benefits. The Employee will be entitled to participate in all group medical, dental, life insurance, long-term disability, retirement and vacation (four (4) weeks) as

 

3

 

are from time to time provided by the Company to its employees, subject to the provisions of such plans, including, without limitation, eligibility criteria and contribution requirements, as the same may be in effect from time to time (collectively referred to hereafter as “Benefits”).

 

4.5.         Reimbursement of Expenses. During the course of employment, the Employee shall be reimbursed for items of travel, food and lodging and miscellaneous expenses reasonably incurred by him on behalf of the Company, provided that such expenses are incurred, documented and submitted to the Company, all in accordance with the reimbursement policies of the Company as in effect from time to time.

 

5.                                      Early Termination. The Employee’s employment hereunder may be terminated during the Term upon the occurrence of any one of the events described in this Section 5. Upon the effective date of such termination (the “Termination Date”), the Employee shall be entitled only to such compensation and benefits as described in this Section 5.

 

5.1.                            Termination for Permanent Disability.

 

(a)                                 Without limiting the Company’s right to terminate Employee pursuant to Section 5.2, 5.3 or 5.4 hereof, the Company may terminate the Employee’s employment hereunder at any time as a result of Employee’s Permanent Disability upon written notice to Employee. For purposes of this Agreement, a “Permanent Disability” shall have the same meaning as ascribed to such term (or a term of similar import) in the long-term disability insurance policy maintained by the Company for the Employee’s benefit, or if no such policy exists, shall mean an illness, incapacity or a mental or physical condition that renders the Employee unable or incompetent to carry out the job responsibilities that the Employee held or the tasks that he was assigned at the time the disability commenced for at least 120 consecutive days or for shorter periods totaling 180 days in any twelve-month period, as determined by the Board and supported by the opinion of a physician. The Employee shall fully cooperate with the physician retained to furnish such opinion, including submitting to such examinations and tests as may be requested by the physician.

 

(b)                                 In the event of a termination of Employee’s employment hereunder pursuant to Section 5.1(a), Employee will be entitled to receive all accrued and unpaid (as of the Termination Date) Salary, Benefits and Bonus, including payment prescribed under any disability plan or arrangement provided by the Company in which he is a participant or to which he is a party as an employee of the Company. Except as specifically set forth in this Section 5.1(b), the Company shall have no liability or obligation to Employee for compensation or benefits hereunder by reason of such termination.

 

5.2.                            Termination by Death. In the event that Employee dies during the Term, Employee’s employment hereunder shall be terminated thereby and the Company shall pay to Employee’s executors, legal representatives or administrators an amount equal to all accrued and unpaid (as of the Termination Date) Salary, Benefits and Bonus. Except as specifically set forth in this Section 5.2, the Company shall have no liability or obligation hereunder to Employee’s executors, legal representatives, administrators, heirs or assigns or any other person claiming under or through him by reason of Employee’s death.

 

4

 

5.3.                            Termination for Cause; Voluntary Termination.

 

(a)                                 The Company may terminate Employee’s employment hereunder at any time for “Cause” immediately upon written notice to Employee. In addition, the Employee may voluntarily terminate his employment hereunder at any time following sixty (60) days prior written notice to the Board. For purposes of this Agreement, the term “Cause” shall mean, as determined by the Board in its sole discretion: (i) Employee’s failure or refusal to materially perform his duties hereunder or to follow a lawful directive of the Board; (ii) any material breach by the Employee of any of the terms of this Agreement or the Confidentiality Agreement; (iii) other conduct of Employee involving any willful and material misconduct with respect to or against the Company or its property or any of its personnel; or (iv) Employee being charged with any felony or any crime involving moral turpitude. If termination for Cause is based upon Subsections (i), (ii) or (iii) of this Subsection (a) and the applicable breach, conduct or violation is capable of being cured, then the Employee shall have thirty (30) days following receipt of written notice to Employee from the Board specifying such failure in reasonable detail to cure such breach, conduct or violation.

 

(b)                                 In the event of a termination of Employee’s employment hereunder pursuant to Section 5.3(a), Employee shall be entitled to receive all accrued but unpaid (as of the Termination Date) Salary and Benefits. All Salary, Benefits and Bonuses shall cease at the time of such termination. Except as specifically set forth in this Section 5.3, the Company shall have no liability or obligation hereunder by reason of such termination.

 

5.4.                            Termination Without Cause; Termination for Good Reason.

 

(a)                                 The Company may terminate Employee’s employment hereunder at any time, for any reason or for no reason, without Cause, effective upon the date designated by the Company upon written notice to the Employee. In addition, the Employee may voluntarily terminate his employment for Good Reason (as defined below) following sixty (60) days prior written notice to the Board.

 

(b)                                 If Employee’s employment is terminated pursuant to Section 5.4(a) at any time during the Term, Employee shall be entitled to: (i) receive all accrued but unpaid (as of the Termination Date) Salary and Benefits and (ii) the Company will continue to pay to the Employee his then current Salary in effect on the Termination Date in accordance with the Company’s regular payroll practices during the period beginning on the Termination Date and ending on the last day of the sixth (6th) month following the Termination Date; subject to all withholding obligations; provided, however, that the payments outlined in this subsection (ii) shall be contingent upon the Employee executing and not revoking a release of all claims pursuant to a Separation Agreement and Release substantially in the form attached hereto as Exhibit A. All Benefits and Bonuses shall cease at the time of such termination, subject to the terms of any benefit or compensation plan then in force and applicable to Employee. Except as specifically set forth in this Section 5.4(b), the Company shall have no liability or obligation hereunder by reason of such termination.

 

(c)                                  For purposes of this Agreement, the term “Good Reason” shall mean the date of any substantial and adverse alteration by the Company of Employee’s

 

5

 

functions, duties or responsibilities that is not consented to by the Employee and is not remedied by the Company within thirty (30) days after receiving written notice from the Employee of such material alteration; provided, further, that the Employee’s consent to any event which would otherwise constitute “Good Reason” shall be conclusively presumed if the Employee does not exercise his rights hereunder within thirty (30) days of the event.

 

6.                                      Confidentiality Agreement. The Employee shall continue to be bound by that certain Non-Competition, Nonsolicitation and Confidentiality Agreement, dated as of the date hereof, between the Company and the Employee (the “Confidentiality Agreement”), the terms and provisions of which are hereby ratified and confirmed in all respects and incorporated into this Agreement by reference.

 

7.                                      Parachute Provisions. Payments under this Agreement shall be made without regard to whether the deductibility of such payments (or any other payments) would be limited or precluded by Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and without regard to whether such payments would subject the Employee to the federal excise tax levied on certain “excess parachute payments” under Section 4999 of the Code; provided, however, that if  the Total After-Tax Payments (as defined below) would be increased by the limitation or elimination of any amount payable under this Agreement, then the amount payable under this Agreement will be reduced to the extent necessary to maximize the Total After-Tax Payments. The determination of whether and to what extent payments under this Agreement are required to be reduced in accordance with the preceding sentence will be made by the Company’s independent auditors. In the event of any underpayment or overpayment under this Agreement (as determined after the application of this Section 7), the amount of such underpayment or overpayment will be immediately paid by the Company to the Employee or refunded by the Employee to the Company, as the case may be, with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code. For purposes of this Agreement, “Total After-Tax Payments” means the total of all “parachute payments” (as that term is defined in Section 280G(b)(2) of the Code) made to or for the benefit of the Employee (whether made hereunder or otherwise), after reduction for all applicable federal taxes (including, without limitation, the tax described in Section 4999 of the Code). Notwithstanding the foregoing, if so requested by the Employee, the Company shall use reasonable efforts to obtain the requisite approval by the stockholders of the Company in the manner contemplated by Q&A 7 of Treas. Reg. Section 1.280G, it being understood that the Company does not guarantee that such approval will be obtained. If the Company determines that such approval has been obtained, and such obligations of Q&A 7 of Treas. Reg. Section 1.280G have been met, all payments shall be made to Employee, without reduction.

 

8.                                      Representations, Warranties and Covenants of the Employee.

 

(a)                                 The Employee represents and warrants to the Company that:

 

(i)                                     There are no restrictions, agreements or understandings whatsoever to which the Employee is a party which would prevent or make unlawful the Employee’s execution of either this Agreement, the Confidentiality Agreement or the Employee’s employment hereunder, or which is or would be inconsistent or in conflict with

 

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either this Agreement, the Confidentiality Agreement or the Employee’s employment hereunder, or would prevent, limit or impair in any way the performance by the Employee of the obligations under either this Agreement or the Confidentiality Agreement;

 

(ii)                                  The Employee has disclosed to the Company all restraints, confidentiality commitments or other employment restrictions that he has with any other employer, person or entity; and

 

(iii)                               All information furnished or to be furnished by the Employee to the Company in connection with the Employee’s employment with the Company is or will be free and complete in all respects.

 

(b)                                 The Employee shall not breach any obligation (legal, statutory, contractual or otherwise) to any former employer or other person, including, but not limited to obligations relating to confidentiality, noncompetition and proprietary rights in connection with the Employee’s provision of services to the Company. During the Term, the Employee shall comply with all lawful policies, practices and procedures established at any time and from time to time by the Company.

 

9.                                      Survival of Provisions. The provisions of this Agreement set forth in Sections 5 through 20, inclusive, hereof shall survive the termination of the Employee’s employment hereunder.

 

10.                               Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Company and the Employee and their respective successors, executors, administrators, heirs and/or assigns; provided that the Employee shall not make any assignment of this Agreement or any interest herein, by operation of law or otherwise, without the prior written consent of the Company.

 

11.                               Notice. Any notice hereunder by either party shall be given by personal delivery or by sending such notice by certified mail, return-receipt requested, or by overnight courier, as the case may be, to the other party at its address set forth below or at such other address designated by notice in the manner provided in this section. Such notice shall be deemed to have been received upon the date of actual delivery if personally delivered or, in the case of mailing, two (2) days after deposit with the U.S. mail, or, in the case of overnight courier, on the next business day.

 

(a)                                 if to the Company, to:

 

Tetralogic Pharmaceuticals Corporation

365 Phoenixville Pike

Malvern, Pennsylvania 19355

Attention: John M. Gill, President and Chief Executive Officer

 

with a copy to:

 

Jeffrey P. Libson, Esquire

 

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Pepper Hamilton LLP
 400 Berwyn Park
 899 Cassatt Road
 Berwyn, Pennsylvania 19312-1183

 

(b)                                 if to the Employee, to:

 

David Weng, M.D., PhD

 

12.                          Entire Agreement; Amendments.

 

(a)                                      This Agreement and the Confidentiality Agreement contain the entire agreement and understanding of the parties hereto relating to the subject matter hereof, and merges and supersedes all prior and contemporaneous discussions, agreements and understandings of every nature between the parties hereto relating to the employment of the Employee with the Company (including without limitation, the Employment Agreement).

 

(b)                                      The Employee hereby acknowledges that (i) the sole shares, options, warrants, exit participation rights and other interests in the equity or any exit participation rights of the Employee with respect to the Company are: (x) the One Million (1,000,000) shares of the Company’s common stock issued to the Employee pursuant to, and as governed by, that certain Restricted Stock Agreement, dated as of April 8, 2010, between the Company and the Employee, and (y) the New Stock contemplated by Section 4.3 of this Agreement; and (ii) the Employee has no other rights in the equity of, or to participate in the proceeds of any sale of or other transaction involving, the Company.

 

(c)                                       This Agreement may not be changed or modified, except by an agreement in writing signed by each of the parties hereto.

 

13.                               Waiver. The waiver of the breach of any term or provision of this Agreement shall not operate as or be construed to be a waiver of any other or subsequent breach of this Agreement.

 

14.                               Governing Authority. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to the principles of conflicts of laws of any jurisdiction. The Employee agrees that the Company shall have the right to commence and maintain an action hereunder in the state and federal courts appropriate for the location at which the Company maintains its corporate offices, and the Employee hereby submits to the jurisdiction and venue of such courts.

 

15.                               Invalidity. If any provision of this Agreement shall be determined to be void, invalid, unenforceable or illegal for any reason, the validity and enforceability of all of the remaining provisions hereof shall not be affected thereby. If any particular provision of this Agreement shall be adjudicated to be invalid or unenforceable, such provision shall be deemed amended to delete therefrom the portion thus adjudicated to be invalid or unenforceable, such

 

8

 

amendment to apply only to the operation of such provision in the particular jurisdiction in which such adjudication is made.

 

16.                               Section Headings. The section headings in this Agreement are for convenience only; they form no part of this Agreement and shall not affect its interpretation.

 

17.                               Number of Days. In computing the number of days for purposes of this Agreement, all days shall be counted, including Saturdays, Sundays and legal holidays; provided that, if the final day of any time period falls on a Saturday, Sunday or day which is a legal holiday in the Commonwealth of Pennsylvania, then such final day shall be deemed to be the next day which is not a Saturday, Sunday or legal holiday.

 

18.                               Arbitration. Subject to the last sentence of this Section 18, if any dispute arises over the terms of this Agreement (but not the Confidentiality Agreement) between the parties to this Agreement, either Employee or Company may submit the dispute to binding arbitration within thirty (30) days after such dispute arises, to be governed by the evidentiary and procedural rules of the American Arbitration Association (Commercial Arbitration). Employee and Company shall mutually select one (1) arbitrator within ten (10) days after a dispute is submitted to arbitration. In the event that the parties do not agree on the identity of the arbitrator within such period, the arbitrator shall be selected by the American Arbitration Association. The arbitrator shall hold a hearing on the dispute at a location chosen by the Company, which shall be within fifteen (15) miles of the Company’s then current corporate offices, within thirty (30) days after having been selected and shall issue a written opinion within fifteen (15) days after the hearing. The arbitrator shall also decide on the allocation of the costs of the arbitration to the respective parties, but the Employee and the Company shall each be responsible for paying the fees of their own legal counsel, if legal counsel is obtained. Either the Employee or the Company, or both parties, may file the decision of the arbitrator as a final, binding and unappealable judgment in a court of appropriate jurisdiction. Notwithstanding the foregoing provisions of this Section 18 to the contrary, matters in which an equitable remedy or injunctive relief is sought by a party may be brought in any court of competent jurisdiction.

 

19.                               Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall be deemed to be one and the same instrument.

 

20.                               Section 409A. All payments to be made upon a termination of employment under this Agreement will only be made upon a “separation from service” within the meaning of Section 409A of the Code. In no event may Employee, directly or indirectly, designate the calendar year of payment. To the maximum extent permitted under Section 409A of the Code and its corresponding regulations, the cash severance benefits payable under the Agreement are intended to meet the requirements of the short-term deferral exemption under Section 409A of the Code and the “separation pay exception” under Treas. Reg. §1.409A-1(b)(9)(iii). For purposes of the application of Treas. Reg. § 1.409A-1(b)(4)(or any successor provision), each payment in a series of payments to Employee will be deemed a separate payment. Notwithstanding anything in the Agreement to the contrary or otherwise, except to the extent any expense, reimbursement or in-kind benefit provided pursuant to the Agreement does not constitute a “deferral of compensation” within the meaning of Section 409A

 

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of the Code and its implementing regulations and guidance, (a) the expenses eligible for reimbursement or in-kind benefits provided to Employee must be incurred during the Term (or applicable survival period), (b) the amount of expenses eligible for reimbursement or in-kind benefits provided to Employee during any calendar year will not affect the amount of expenses eligible for reimbursement or in-kind benefits provided to Employee in any other calendar year, (c) the reimbursements for expenses for which Employee is entitled to be reimbursed shall be made on or before the last day of the calendar year following the calendar year in which the applicable expense is incurred and (d) the right to payment or reimbursement or in-kind benefits hereunder may not be liquidated or exchanged for any other benefit.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties have caused this Executive Employment Agreement to be executed on the day and year first written above.

 

	
 
    	
TETRALOGIC PHARMACEUTICALS CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ John M. Gill
    
	
 
    	
 
    	
John M. Gill, President and Chief Executive   Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/ David Weng
    
	
 
    	
 
    	
David Weng
    

 

[signature page to Executive Employment Agreement]

 

 

EXHIBIT A

 

Separation Agreement and Release

 

THIS SEPARATION AGREEMENT AND RELEASE (this “Agreement”) is made by and between David Weng (the “Employee”), and TetraLogic Pharmaceuticals Corporation, a corporation organized and existing under the laws of the State of Delaware (the “Company”).

 

WHEREAS, the Employee and the Company entered into an Employment Agreement dated December     , 2010 (the “Employment Agreement”) that sets forth the terms and conditions of the Employee’s employment with the Company, including the circumstances under which the Employee is eligible to receive severance pay.

 

NOW, THEREFORE, the Employee and the Company each intending to be legally held bound, hereby agree as follows:

 

1.                                           Consideration. In consideration for a release of claims and other promises and covenants set forth herein, the Company agrees to pay the Employee such consideration as is specified in Section 5.4(b) of the Employment Agreement in accordance with the terms and conditions of the Employment Agreement.

 

2.                                           Employee’s Release. The Employee on his own behalf and together with his heirs, assigns, executors, agents and representatives hereby generally releases and discharges the Company and its predecessors, successors (by merger or otherwise), parents, subsidiaries, affiliates and assigns, together with each and every of their present, past and future officers, managers, directors, shareholders, members, general partners, limited partners, employees and agents and the heirs and executors of same (herein collectively referred to as the “Releasees”) from any and all suits, causes of action, complaints, obligations, demands, common law or statutory claims of any kind, whether in law or in equity, direct or indirect, known or unknown (hereinafter “Claims”), which the Employee ever had or now has against the Releasees, or any one of them occurring up to and including the date of the this Agreement. Notwithstanding anything herein to the contrary, the Employee’s release is not and shall not be construed as a release of any future claim by the Employee against the Company, to the extent a claim may otherwise exist, for indemnity, contribution or cost of defense in accordance with the Company’s bylaws. This release specifically includes, but is not limited to:

 

a.                                 any and all Claims for wages and benefits including, without limitation, salary, stock options, stock, royalties, license fees, health and welfare benefits, severance pay, vacation pay, and bonuses;

 

b.                                 any and all Claims for wrongful discharge, breach of contract, whether express or implied, and Claims for breach of implied covenants of good faith and fair dealing;

 

c.                                  any and all Claims for alleged employment discrimination on the basis of race, color, religion, sex, age, national origin, veteran status, disability and/or handicap,

 

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in violation of any federal, state or local statute, ordinance, judicial precedent or Employee order, including but not limited to claims for discrimination under the following statutes: Title VII of the Civil Rights Act of 1964, 42 U.S.C. §2000e et seq.; the Civil Rights Act of 1866, 42 U.S.C. §1981; the Civil Rights Act of 1991; the Age Discrimination in Employment Act, as amended, 29 U.S.C. §621 et seq.; the Older Workers Benefit Protection Act 29 U.S.C. §§ 623, 626 and 630; the Rehabilitation Act of 1972, as amended, 29 U.S.C. §701 et seq.; the Americans with Disabilities Act, 42 U.S.C. §12101 et seq.; the Family and Medical Leave Act of 1993, 29 U.S.C. §2601, et seq.; the Fair Labor Standards Act, as amended, 29 U.S.C. §201, et seq.; the Fair Credit Reporting Act, as amended, 15 U.S.C. §1681, et seq.; and the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §1000, et seq. (“ERISA”) or any comparable state statute or local ordinance;

 

d.                                 any and all Claims under any federal or state statute relating to employee benefits or pensions;

 

e.                                  any and all Claims in tort, including but not limited to, any Claims for assault, battery, misrepresentation, defamation, interference with contract or prospective economic advantage, intentional or negligent infliction of emotional distress, duress, loss of consortium, invasion of privacy and negligence; and

 

f.                                   any and all Claims for attorneys’ fees and costs.

 

3.                                      Acknowledgment. The Employee understands that the release of Claims contained in this Agreement extends to all of the aforementioned Claims and potential Claims which arose on or before the date of this Agreement, whether now known or unknown, suspected or unsuspected, and that this constitutes an essential term of this Agreement. The Employee further understands and acknowledges the significance and consequences of this Agreement and of each specific release and waiver, and expressly consents that this Agreement shall be given full force and effect to each and all of its express terms and provisions, including those relating to unknown and uncompensated Claims, if any, as well as those relating to any other Claims specified herein. The Employee hereby waives any right or Claim that the Employee may have to employment, reinstatement or re-employment with the Company.

 

4.                                      Confidentiality. The Employee shall not disclose or publicize the terms of this Agreement to any person or entity, except that the Employee may disclose the terms, and/or fact of this Agreement to immediate family members, the Employee’s accountants and attorneys and to others as strictly required by law. The Employee is specifically prohibited from disclosing the fact or terms of this Agreement to any current or former employee of the Releasees. The Employee further agrees that he shall be responsible for the Company’s attorney’s fees and costs, if it needs to file an action to enforce its rights under this paragraph, to the extent permitted by law. In the event that the Employee is requested or required (by oral questions, interrogatories, requests for information or documents in a court or administrative proceeding, subpoena, civil investigative demand or other similar process) to disclose the terms of this Agreement, the Employee will endeavor in good faith to provide the Company prompt notice of any such request or requirement so that the Company may, at the Company’s expense, seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. If, in the absence of a protective order or other similar remedy or the receipt

 

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of a waiver from the Company, the Employee reasonably determines that disclosure of the terms of this Agreement is required to comply with such process or applicable law, the Employee may, without liability under this Agreement, disclose to the appropriate authority only that portion of the information which, on advice of counsel, he reasonably believes he is required to disclose.

 

5.                                      Remedies. All remedies at law or in equity shall be available to the Releasees for the enforcement of this Agreement. This Agreement may be pleaded as a full bar to the enforcement of any Claim that the Employee may assert against the Releasees.

 

6.                                      No Admission. Neither the execution of this Agreement by the Company, nor the terms hereof, constitute an admission by the Company of any liability to the Employee.

 

7.                                      Entire Agreement. This Agreement contains the entire agreement of the parties with respect to the subject matter hereof, and shall be binding upon their respective heirs, executors, administrators, successors and assigns. In the event there is any inconsistency between the terms of this Agreement and the Employment Agreement, the terms of this Agreement shall control.

 

8.                                      Severability. If any term or provision of this Agreement shall be held to be invalid or unenforceable for any reason, then such term or provision shall be ineffective to the extent of such invalidity or unenforceability without invalidating the remaining terms or provisions hereof, and such term or provision shall be deemed modified to the extent necessary to make it enforceable.

 

9.                                      Advice of Counsel; Revocation Period. The Employee is hereby advised to seek the advice of counsel prior to signing this Agreement. The Employee hereby acknowledges that the Employee is acting of his own free will, that he has been afforded a reasonable time to read and review the terms of this Agreement, and that he is voluntarily entering into this Agreement with full knowledge of its provisions and effects. The Employee further acknowledges that he has been given at least TWENTY-ONE (21) days within which to consider this Agreement and that he has SEVEN (7) days following his execution of this Agreement to revoke his acceptance, with this Agreement not becoming effective until the 7-day revocation period has expired. If the Employee elects to revoke his acceptance of this Agreement, the Employee must provide written notice of such revocation by certified mail (postmarked no later than seven days after the date the Employee accepted this Agreement) to:

 

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Tetralogic Pharmaceuticals Corporation
 365 Phoenixville Pike

Malvern, Pennsylvania 19355

Attention: Chairman of the Board
 Telecopier: (610) 889-9994

 

with a copy to:

 

Jeffrey P. Libson, Esquire

Pepper Hamilton LLP

400 Berwyn Park
 899 Cassatt Road

Berwyn, Pennsylvania 19312-1183

Telecopier: (610) 640-7835

 

10.                               Employee’s Representation. The Employee represents and warrants that he has not assigned any claim that he purports to release hereunder and that he has the full power and authority to enter into this Agreement and bind each of the persons and entities that the Employee purports to bind. The Employee further represents and warrants that he is bound by, and agrees to remain bound by, his post-employment obligations set forth in the Employment Agreement and Confidentiality Agreement.

 

11.                               Amendments. Neither this Agreement nor any term hereof may be changed, waived, discharged, or terminated, except by a written agreement signed by the parties hereto.

 

12.                               Governing Authority. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to the principles of conflicts of laws of any jurisdiction. The Employee agrees that the Company shall have the right to commence and maintain an action hereunder in the state and federal courts appropriate for the location at which the Company maintains its corporate offices, and the Employee hereby submits to the jurisdiction and venue of such courts.

 

13.                               Fees and Costs. The parties shall bear their own attorneys’ fees and costs.

 

14.                               Counterparts. This Agreement may be executed in counterparts.

 

15.                               Legally Binding. The terms of this Agreement contained herein are contractual, and not a mere recital.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Employee, acknowledging that he is acting of his own free will after having had the opportunity to seek the advice of counsel and a reasonable period of time to consider the terms of this Agreement, and the Company, have caused the execution of this Agreement on the date(s) written below.

 

	
 
    	
 
    	
 
    
	
David Weng
    	
 
    	
Witness:
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
Date:
    	
 
    
	
 
    	
 
    	
 
    
	
TETRALOGIC PHARMACEUTICALS
   CORPORATION
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
 
    
						

 

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