Document:

EXHIBIT 10.11

 

 

August 13, 2013

 

Keith M Gottesdiener, MD

Rhythm Pharmaceuticals

855 Boylston Street, 11th Floor

	
Boston, MA 02116

 

Re:                             Therapeutic Pipeline Program 2013 Program

 

Project   Title: “A Phase 2, Randomized, Double-blind, Placebo-controlled, Multiple   Dose, Parallel Group Study to Evaluate the Pharmacodynamics, Efficacy and   Safety of RM 131 Administered to Patients with Parkinson’s Disease and   Chronic Constipation Dissatisfied with Current Therapy’’

 

Dear   Dr. Gottesdiener,

 

On behalf   of the Board of Directors of The Michael J. Fox Foundation for Parkinson’s   Research (MJFF), it is a pleasure to make this award in the amount of   $1,350,000.00 to conduct the research described in your proposal, “A Phase 2,   Randomized, Double-blind, Placebo-controlled, Multiple Dose, Parallel Group   Study to Evaluate the Phatmacodynamics, Efficacy and Safety of RM 131   Administered to Patients with Parkinson’s Disease and Chronic Constipation   Dissatisfied with Current Therapy.”

 

This [          ]* award is offered based on your   representation that you have no overlapping grant funding for this work.   Please contact MJFF immediately if at any time during this period additional   third-party project-specific funding is sought or received, or if   circumstances arise prohibiting completion of your project on schedule. The   terms and conditions governing this award are detailed in the attached   agreement. Please read it carefully and contact us with any questions.

 

To accept   this award, please sign the enclosed agreement (including appropriate   institutional sign-off). Please scan the signed agreement and send   electronically to jlangon@michaeljfox.org. We ask that you return a signed   agreement no later than August 23,2013. If you do not wish to accept   funding, please notify MJFF as soon as possible.

 

The Michael   J. Fox Foundation for Parkinson’s Research is enthusiastic about supporting   your research and wishes you utmost success with this project and all your   pursuits. Congratulations!

 

Sincerely,

 

/s/   Todd Sherer                                                        

Todd   Sherer, PhD

Chief Executive   Officer

 
    	
 
    	
Todd Sherer, PhD
    
	
Chief Executive Officer
    
	
 
    
	
Michael J. Fox
    
	
Founder

 

Deborah W. Brooks

Co-Founder &   Executive Vice Chairman
    
	
 
    
	
Board of Directors
    
	
Woody Shackleton
    
	
Chairman
    
	
George E. Prescott
    
	
Vice Chairman
    
	
Holly S. Andersen,   MD
    
	
Eva   Andersson-Dublin, MD
    
	
Mark Booth
    
	
Jon Brooks
    
	
Barry J Cohen
    
	
Donny Deutsch
    
	
David Einhorn
    
	
Karen Finerman
    
	
Lee Fixel
    
	
Nelle Fortenberry
    
	
Willie Geist
    
	
David Golub
    
	
Mark L. Hart III
    
	
Skip Irving
    
	
Edward Kalikow
    
	
Jeff Keefer
    
	
Kathleen Kennedy
    
	
Amar Kuchinad
    
	
Edwin A. Levy
    
	
Marc S. Lipschultz
    
	
Douglas I.   Ostrover
    
	
Tracy Pollan
    
	
Ryan Reynolds
    
	
Frederick E. Rowe
    
	
Lily Safra
    
	
Carolyn Schenker
    
	
Curtis Schenker
    
	
Richard J. Schnall
    
	
Rick Tigner
    
	
Fred G. Weiss
    
	
Sonny Whelen
    
	
 
    
	
Founders’   Council
    
	
Lonnie and   Muhammad Ali
    
	
Steven A. Cohen
    
	
Albert B. Glickman
    
	
John Griffin
    
	
Andrew S. Grove
    
	
Katie Hood
    
	
Jeffrey Katzenberg
    
	
Morton M. Kondracke
    
	
Nora McAniff
    
	
Donna   Shalala, PhD
    
	
 
    
	
Executive   Scientific
    
	
Advisory   Board
    
	
Matthew   Farrer, PhD
    
	
Robert J.   Gould, PhD
    
	
J. Timothy   Greenamyre,
    
	
MD, PhD
    
	
Eugene M.   Johnson, PhD
    
	
Kalpana   Merchant, PhD
    
	
C. Warren   Olanow, PhD
    
	
Bernard Ravina, MD
    

 

	
Grand Central Station
    	
 
    	
Post Office Box 4777
    	
 
    	
New York, NY 10163
    	
 
    	
www.michaeljfox.org
    

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

 

The Michael J. Fox Foundation for Parkinson’s Research

Award Terms and Conditions — Therapeutic Pipeline Program 2013

 

Principal Investigator(s): Keith M Gottesdiener, MD,

 

	
The Michael   J. Fox Foundation for Parkinson’s Research (MJFF) is pleased to make this   award (the “Award”) to Rhythm Pharmaceuticals, Inc. to support the work   described in your application, “A Phase 2, Randomized, Double-blind,   Placebocontrolled, Multiple Dose, Parallel Group Study to Evaluate the   Pharmacodynamics, Efficacy and Safety of RM 131 Administered to Patients with   Parkinson’s Disease and Chronic Constipation Dissatisfied with Current   Therapy.” (the “Project”). In accepting this Award, Rhythm   Pharmaceuticals, Inc. (collectively, “You” or “you” or “Grantee”) agrees   to the following terms and conditions in this Agreement.

 

1.                                      Sources of Funds

 

This Award   is made with the understanding that your Project currently has no additional   sources of third party grant funding and does not overlap with any existing   grants or other project-specific funding. You agree that you will neither   solicit nor accept additional third party grant funding for this Project   without prior written notice to MJFF. If there is overlap between this Award   and another grant made to you by another third party, MJFF will renegotiate   the budget of this Award with you (a copy of the final budget is provided   with this Agreement as Appendix A)   and reserves the right to provide less funding than identified in this Award   or obtain a refund from you, so that funding from this Award does not overlap   with another third party grant. If you receive additional third-party grant   funding for your Project without MJFF’s advance written consent, MJFF   reserves the right to withhold funding and require repayment of this Award if   it is not satisfied, in its reasonable discretion, that the additional third   party grant funding is for incremental research activity which does not   overlap with this Award or conflict with your ability to perform the Project.

 

2.                                      Use of Funds

 

2.1                               Funds awarded by MJFF are to be used solely for the Project and are   conditioned on your meeting certain milestones and deliverables, which are   attached at Appendix B, timely delivery of   expense and progress reports and participation in MJFF sponsored meetings at   which your progress will be assessed. MJFF assessments are based on review of   your progress at regular intervals, determination of the quality of the   scientific research performed, and its continued high relevance to   Parkinson’s disease (“MJFF Assessment Criteria”). In exchange, MJFF agrees to   pay [          ]* direct costs for this   Project, in addition to indirect costs with a limit of up to [          ]* of direct costs. For this Award,   funds are allotted in the amount of $[          ]* direct costs, and $[          ]*, indirect costs. For clarity,   the parties acknowledge that certain work on the Project has been initiated   by Rhythm Pharmaceuticals, Inc. prior to the date of this Award. Any   unused funds at the end of the Award period, as detailed in a final expense   report, must be returned to MJFF within one month from the submission of the   expense report. You shall maintain complete and accurate books, records and   accounts

 
    	
 
    	
Todd Sherer, PhD
    
	
Chief Executive Officer
    
	
 
    
	
Michael J. Fox
    
	
Founder

 

Deborah W. Brooks

Co-Founder &   Executive Vice Chairman
    
	
 
    
	
Board of Directors
    
	
Woody Shackleton
    
	
Chairman
    
	
George E. Prescott
    
	
Vice Chairman
    
	
Holly S. Andersen,   MD
    
	
Eva   Andersson-Dublin, MD
    
	
Mark Booth
    
	
Jon Brooks
    
	
Barry J Cohen
    
	
Donny Deutsch
    
	
David Einhorn
    
	
Karen Finerman
    
	
Lee Fixel
    
	
Nelle Fortenberry
    
	
Willie Geist
    
	
David Golub
    
	
Mark L. Hart III
    
	
Skip Irving
    
	
Edward Kalikow
    
	
Jeff Keefer
    
	
Kathleen Kennedy
    
	
Amar Kuchinad
    
	
Edwin A. Levy
    
	
Marc S. Lipschultz
    
	
Douglas I.   Ostrover
    
	
Tracy Pollan
    
	
Ryan Reynolds
    
	
Frederick E. Rowe
    
	
Lily Safra
    
	
Carolyn Schenker
    
	
Curtis Schenker
    
	
Richard J. Schnall
    
	
Rick Tigner
    
	
Fred G. Weiss
    
	
Sonny Whelen
    
	
 
    
	
Founders’   Council
    
	
Lonnie and   Muhammad Ali
    
	
Steven A. Cohen
    
	
Albert B. Glickman
    
	
John Griffin
    
	
Andrew S. Grove
    
	
Katie Hood
    
	
Jeffrey Katzenberg
    
	
Morton M. Kondracke
    
	
Nora McAniff
    
	
Donna   Shalala, PhD
    
	
 
    
	
Executive   Scientific
    
	
Advisory   Board
    
	
Matthew   Farrer, PhD
    
	
Robert J.   Gould, PhD
    
	
J. Timothy   Greenamyre,
    
	
MD, PhD
    
	
Eugene M.   Johnson, PhD
    
	
Kalpana   Merchant, PhD
    
	
C. Warren   Olanow, PhD
    
	
Bernard Ravina, MD
    

 

	
Grand Central Station
    	
 
    	
Post Office Box 4777
    	
 
    	
New York, NY 10163
    	
 
    	
www.michaeljfox.org
    

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

 

that, in reasonable detail, fairly reflect the use of the Award. MJFF shall have the right to review and audit such books, records and accounts at a mutually convenient time upon prior written notice to you.

 

2.2                               The Award is to be used as budgeted and reflected in the milestones. Any alterations, amendments, or changes in the specific goals or budget of the Project will require the review and pre-approval of MJFF. Examples of such alterations or amendments include (but are not limited to): transfer of a Principal Investigator (“PI”) from one institution to another, adding or deleting a specific Project goal, material budget reallocation, or modification of proposed workload and milestones. As used in this Agreement, “material budget reallocation” means reallocation of Award funds equal to [          ]* or more of individual line items as allocated in the budget awarded (see Appendix A). Rhythm Pharmaceuticals, Inc. will be required to submit expense reports after 12 months and upon completion of the Project which consist of the budget spreadsheet attached as Appendix A with an additional column indicating actual expenditures incurred. Please note that MJFF funds shall not be used for travel or equipment costs not approved in the budget as awarded (see Appendix A).

 

2.3                               If you request a change to the Award, you must submit a written request for approval detailing the requested change and associated rationale in advance to a member of the MJFF research team. Failure to obtain prior approval for any changes in work timeline, milestones or material budget reallocations may result in revocation of funding in whole or part. You agree that funds expended by you either not in accordance with the approved Project or prior to pre-approval of any material change are both (i) recoverable by, and subject to restitution by you to, MJFF and (ii) may be cause for immediate termination of funding by MJFF.

 

3.                                      Grant Timeline

 

3.1                               MJFF expects that your Project will be completed according to the agreed timeline attached at Appendix B. Continued funding also is contingent on demonstrated progress and satisfactory assessment by MJFF. To this end, you are required to do the following:

 

(a)                                 Complete items detailed in the Activation Checklist (“Checklist”) as found in Appendix C.  Payment for costs other than administrative support, as set forth in Appendix A, will not be issued without MJFF approval signatures indicating acknowledgment that all Checklist items have been satisfied and all associated documentation related to the Checklist items have been delivered to MJFF. You will be required to complete all items on the Checklist, including, but not limited to, posting trials and updating clinical sites status on the Fox Trial Finder Website and providing written proof of IRB approval.

 

(b)                                 At the end of the first six months after the commencement of subject recruitment for the Project, you shall notify MJFF (i) of the rate of subject recruitment and whether patients have been recruited according to the goal(s) set forth in Appendix B; and, (ii) that, to your knowledge, all personnel involved in the Project and receiving Award funds (including technicians and postdoctoral fellows) are actively engaged in activities related to the Project. Failure to meet these requirements at such six-month time point will result in withholding of further payment.

 

	
Grand Central Station
    	
 
    	
Post Office Box 4777
    	
 
    	
New York, NY 10163
    	
 
    	
www.michaeljfox.org
    

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

 

MJFF will require monthly recruitment updates. If you do not have a monthly recruitment template, MJFF will provide you with a standard template upon request. These updates will be assessed according to milestones set forth in Appendix B. Monthly recruitment updates are required within 10 days from the 1st day of the month.

 

(c)          Participate in regularly scheduled assessment meetings and/or teleconferences. Failure to participate in these assessments and to demonstrate satisfactory progress against the MJFF Assessment Criteria (Milestone Criteria) taking into account all factors affecting the Project may result in withholding of future payments.

 

(i)                                 The first assessment will be held at the six-month mark of your Award by teleconference to review initial progress.

 

(ii)                              Assessment meetings will be held at the completion of your Award. One representative from Rhythm Pharmaceuticals, Inc. is required to attend the assessment meetings in person, unless otherwise informed by MJFF.

 

(d)                                 Complete progress and expense reports detailing your progress against milestones and your associated expenditures. These reports will be due at the completion of your Award. When appropriate, additional reports may be requested before other assessment meetings and teleconferences. Templates will be provided to you to facilitate this reporting. These reports will be reviewed by MJFF against the MJFF Assessment Criteria; MJFF may thereafter provide you with suggestions, critique, and feedback.

 

(e)                                  Participate openly in discussions regarding your Project with MJFF’s scientific and research staff, and advisors.

 

(f)           MJFF shall have the right to participate as a non-voting member in any advisory, steering or other committee discussions related to Project Research. Grantee shall include MJFF on such communication as calls and meetings are scheduled.

 

3.2                               Failure to meet milestones, furnish scheduled deliverables, including any reports, satisfactorily meet MJFF Assessment Criteria or comply with this Agreement may serve as one or more bases for termination of funding by MJFF. In the event of early termination of the Project, you shall terminate the trial in an orderly and prompt manner in accordance with applicable law to the extent medically permissible, including, but not limited to, providing any required follow-up treatment with respect to previously enrolled subjects. Upon termination, you shall be compensated for all completed study procedures per the completed case report forms, and MJFF shall have reasonable access, subject to MJFF’s obligations of confidentiality under this Agreement, to your books, records and accounts to determine whether such compensation shall be due to you.

 

3.3                               If at any time circumstances arise that prohibit completion of the Project on schedule, you are required to notify MJFF immediately. MJFF will consider granting ONE no-cost extension per project on a case by case basis. To apply for a no-cost extension, submit a letter detailing the request. The letter should include reasons for delays or changes, associated rationale, a timeline for continuing the work, and an expense report detailing remaining funds.

 

4.                                      Payment Schedule

 

	
Grand Central Station
    	
 
    	
Post Office Box 4777
    	
 
    	
New York, NY 10163
    	
 
    	
www.michaeljfox.org
    

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

 

4.1                               Subject to the foregoing conditions, MJFF intends to pay your Award according to the payment schedule detailed in Appendix B.

 

4.2                               MJFF reserves the right to change this schedule if necessary and will notify you in writing reasonably in advance of any such change in the event that the schedule is to be changed.

 

4.3                               Payments for the Project are dependent on achieving milestones and will be paid as provided in Appendix B within sixty (60) days of the achievement of the relevant event(s), subject to Grantee’s continued provision of required progress reports and participation in scheduled teleconferences with MJFF.

 

5.                                      Return Payment Obligation

 

Grantee’s return payment obligation to MJFF is set forth in Appendix D. By executing this Agreement, Grantee also accepts the terms and conditions set forth therein. Appendix D shall survive expiration or termination of this Agreement.

 

6.                                      Confidentiality

 

6.1                               MJFF treats all pre-proposals, applications, research projects, Project Intellectual Property and Project Milestone Data (each as defined in Section 7), associated research information, Project reports submitted to MJFF (with the exception of those specifically drafted for public use), information about Grantee’s business and all underlying data (collectively, the “Confidential Information”) as confidential, using no less than reasonable care in protecting the Confidential Information from disclosure to third parties; provided that MJFF shall be permitted to provide Confidential Information to third parties who do not participate in the application review and assessment processes under the terms and conditions set forth herein. All Confidential Information will be used by MJFF and such permitted third parties solely for the purposes of reviews and assessments, and will be shared only in accordance with its Sharing Policy (see Section 8 below). MJFF shall be responsible for ensuring that all persons or entities that participate in any reviews and assessments including all third parties, are subject to obligations of confidentiality and non-use with regard to Grantee’s Confidential Information that are no less stringent than those contained in this Agreement. The obligations of confidentiality and non-use set forth in this Section 6.1 cover Confidential Information in all forms (including but not limited to written, oral, or electronic) and any Confidential Information retained in the unaided memories of persons participating in reviews and assessments, and no such Confidential Information may be used without the permission of the Grantee. Notwithstanding the foregoing, the obligations governing the disclosure and use of Confidential Information set forth in this Section 6.1 do not apply with respect to Confidential Information that the receiving party can show by competent evidence:

 

(a)                                 was generally known to the public at the time of disclosure;

 

(b)                                 becomes generally known to the public through no unlawful or unauthorized act or omission, or violation of this Agreement, by such recipient of Confidential Information;

 

	
Grand Central Station
    	
 
    	
Post Office Box 4777
    	
 
    	
New York, NY 10163
    	
 
    	
www.michaeljfox.org
    

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

 

(c)          was independently developed by such recipient prior to disclosure and without use of reference to the Confidential Information; or

 

(d)          was disclosed to such recipient on a non-confidential basis by a third party who had the right to make such disclosure.

 

6.2                               Provided that subsections (a)-(d) above do not become applicable, if any recipient of Confidential Information hereunder is asked to produce any Confidential Information pursuant to a legal or governmental proceeding, such recipient shall give the applicant or other owner of such Confidential Information (the “Discloser’’) as much prior notice of such request as is reasonably practicable under the circumstances and shall use its reasonable efforts to assist the Discloser of such Confidential Information in defending Discloser’s rights (at Discloser’s cost), including objecting to such request, obtaining confidential treatment for Confidential Information, disclosing only that portion of the Confidential Information responsive to a judicial or governmental order, and providing Discloser with any copies of Confidential Information so disclosed.

 

7.                                      Project Data and Project Intellectual Property

 

7.1                               The Grantee shall own all rights, title and interest in: (a) the completed case report forms, any other documents created during performance of the Project and clinical and other information generated as a result of the Project, including any summaries, analyses and compilations thereof (“Project Data”); and (b) any inventions and discoveries, conceived, created, developed or reduced to practice by employees, students and/or other researchers of a Grantee in the performance of the Project, and any patent, trade secret or other intellectual property rights with respect to the foregoing. (“Project Intellectual Property”). The Grantee also owns all right, title, and interest in any data, information or intellectual property owned or controlled by Grantee as of the date of this Agreement or developed or obtained by or for Grantee after the date of this Agreement and outside of the performance of the Project.

 

7.2                               With each monthly progress report, you agree to provide MJFF, in a format prescribed by it, summary data regarding recruitment information and demographic information to assess progress against each milestone (“Project Milestone Data”). Nothing herein shall be construed to grant MJFF a license in or to the Project Intellectual Property or to relieve MJFF of its obligations regarding Confidential Information. MJFF shall have the right to audit and review detailed data related to the Project at Grantee’s facility upon reasonable request and at mutually agreeable times.

 

7.3                               With the final progress report, you agree to provide MJFF, in a format prescribed by it, reasonable access to Final Project Data (defined as one or all of the following: the final clinical study report, final clinical datasets and listings that have been de-identified in accordance with HIPAA and its implementing regulations). In addition, Rhythm Pharmaceuticals, Inc. agrees to consult with MJFF regarding the selection of the tables, listings, and figures (TLFs) for the final clinical study report. MJFF, its grant assessors, and MJFF consultants will use such information only internally to make future funding decisions regarding RM-131. Nothing herein shall be construed to grant MJFF a license in or to the Project Intellectual Property or to relieve MJFF of its obligations regarding Confidential Information. MJFF shall have the right to audit and review detailed data related to the Project at Grantee’s facility upon reasonable request and at mutually agreeable times.

 

	
Grand Central Station
    	
 
    	
Post Office Box 4777
    	
 
    	
New York, NY 10163
    	
 
    	
www.michaeljfox.org
    

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

 

8.                                      Sharing Policy

 

8.1                               As MJFF is a public charity, research conducted with funds from MJFF (“Research”) must be conducted in the public interest. MJFF acknowledges that discoveries and related regulatory approvals made by researchers under its funding are the property of those conducting and responsible for the Research and that unless otherwise agreed to by the patties, such researchers shall have the first opportunity to exploit the Research commercially or otherwise.

 

8.2                               Notwithstanding the foregoing, you agree that MJFF:

 

(a)                               may, after reasonable consultation with you, and with your consent, which will not be unreasonably denied, conditioned or delayed by you, publicly release a summary of findings of the Research 90 or more days after expiration of the Award;

 

(b)                               may retain the Project Data and, 90 or more days after expiration or termination of the Award, make it available to MJFF employees, consultants, grant recipients and others affiliated with MJFF through a secure medium to advance scientific discovery. This subsection shall not prohibit MJFF from making the Project Data available before expiration or termination of this Agreement to persons executing MJFF’s Confidential Disclosure Agreement for the purpose of assessing your progress toward achieving the milestones. If the Project Data ceases to be subject to the requirements of confidentiality and non-use set forth in Section 6.1 of this Agreement, then these restrictions on dissemination shall not apply; and,

 

(c)                                may, after the earlier of (i) publication of the Results as defined below in Section 12 of this Agreement, or (ii) one year after expiration or termination of the Award, disclose the Project Data through a publicly available database maintained or designated by MJFF.

 

(d)                               Notwithstanding the periods set forth in subsections (a) - (c) above, MJFF will consider a request by you to delay the availability of Project Data, and/or a summary or findings of the Research in order to complete any necessary intellectual property filings.

 

9.                                     MJFF Rights Upon Cessation Of Active Development Of Project Technology In The Field

 

9.1                               Definitions:

 

(a)                                 “Active Development” means substantial use of the Project Technology (defined in Section 9.2) in an active or ongoing scientific research or development project reasonably calculated to yield results or awaiting approval by the U.S. Food and Drug Administration (“FDA”) or any foreign equivalent to market a Product for sale for use in humans. Active Development will have ceased if you or, if applicable, your licensee or transferee, (i) discontinues all clinical development and/or commercial development of Product; and (ii) has not obtained financing to fund such activities, in the event of either (i) or (ii), for a period of one hundred eighty (180) days or longer.

 

(b)                                 “Product” means the product being investigated in the Project, known as RM-131 or any

 

	
Grand Central Station
    	
 
    	
Post Office Box 4777
    	
 
    	
New York, NY 10163
    	
 
    	
www.michaeljfox.org
    

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

 

product being developed as a backup for RM-131.

 

9.2                               MJFF is dedicated to finding a cure for Parkinson’s disease and accelerating therapies for patients. Accordingly, MJFF seeks to ensure the continued development of promising research projects. Therefore, if you or any third party exclusive licensee, or transferee, of any technology, including any related intellectual property, to be studied pursuant to the Project (the “Project Technology”) has ceased Active Development for treatment of chronic constipation in humans (the “Field”) at any time prior to offer for sale of a Product in the Field after approval by the FDA to market such Product, then you shall promptly notify MJFF in writing.

 

If, at the time you have ceased Active Development in the Field, the following conditions (a)-(f) (the “Conditions”) are met, you shall within sixty (60) days from the date that you cease Active Development in the Field or the date that the last of the following conditions is met, whichever is later, notify MJFF in writing and pay to MJFF the Outstanding Award Amount (defined in Appendix D) plus interest at the prime rate, as published in the Wall Street Journal, Eastern print edition, plus four (4) percent, which interest shall begin accruing on the date that Grantee has ceased Active Development and continue accruing until the entire amount is repaid to MJFF:

 

(a)                               the Product has demonstrated safety and tolerability in Parkinson’s disease patients that supports continuing development in this population;

 

(b)                                 the Product shows a clinically relevant trend on the primary endpoint (p<0.l) AND shows a statistically significant difference (p<0.05) on four of the six pre-specified secondary clinical efficacy endpoints in the protocol for the Project (e.g., complete spontaneous bowel movement, stool consistency, straining/completeness of evacuation, abdominal pain, and global patient reported outcome of severity of constipation and overall relief);

 

(c)                                  there has been approval by the FDA or other global regulatory body to market the Product in any other indication;

 

(d)                                 the Product successfully meets its endpoints in its most recent clinical trial in the Field such that the efficacy results of such clinical trial would not reasonably negatively affect Grantee’s (or its sublicensee’s or transferee’s) decision to seek regulatory approval of the Product based on such clinical trial (and without the need for repeat or de novo clinical trials);

 

(e)                                  there were no unexpected changes to the safety profile of the Product as a result of such clinical trial in the Field that would reasonably negatively affect Grantee’s (or its sublicensee’s or transferee’s) decision to seek regulatory approval of the Product based on such clinical trial (and without the need for repeat or de novo clinical trials);

 

(f)                                   Grantee (or its sublicensees or transferees) have not received any negative advice or statements from any regulatory authority regarding the Product that would reasonably negatively affect Grantee’s (or its sublicensee’s or transferee’s) decision to continue to seek regulatory approval of the Product in the Field; and

 

	
Grand Central Station
    	
 
    	
Post Office Box 4777
    	
 
    	
New York, NY 10163
    	
 
    	
www.michaeljfox.org
    

 

* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

 

(g)                                there are no issues relating to the manufacture of the Product that would reasonably negatively affect Grantee’s (or its sublicensee’s or transferee’s) decision to continue to seek regulatory approval of the Product in the Field.

 

9.3                               Notwithstanding anything to the contrary in Section 9.2, MJFF shall have no right to payment under such Section 9.2 at any time after Grantee (or its sublicensee or transferee) has repaid the Outstanding Award Amount to MJFF pursuant to Section 5 of this Agreement and Appendix D to this Agreement. Further, if MJFF exercises its right to repayment under Section 9.2, above, then Grantee will have no further obligations to repay the Outstanding Award Amount under Section 5 of this Agreement and Appendix D to this Agreement. Finally, if MJFF exercises its right to repayment under Section 9.2, above, at a time when Grantee has partially repaid the repaid the Outstanding Award Amount to MJFF pursuant to Section 5 of this Agreement and Appendix D to this Agreement, the payment due MJFF under Section 9.2 will be limited to the then-outstanding unpaid balance of the Outstanding Award Amount.

 

9.4                               This Section 9 shall survive expiration or termination of this Agreement.

 

10.                               Liability and Insurance

 

10.1                        MJFF is solely a passive grantor of this Project. It neither participates in the preparation of the clinical trial protocol nor in the treatment or study of patients. You assume any and all risks and responsibilities associated with the conduct of the Project clinical trial. MJFF shall in no way be accountable for any Project clinical trial safety issues.

 

10.2                        You hereby agree to release, defend, indemnify and bold MJFF, including its directors, trustees, officers, employees, agents and consultants, harmless from and against any demands, claims or judgments, and all associated costs, expenses, including, without limitation, reasonable attorneys’ fees, and damages, directly or indirectly arising out of this Project, including, without limitation, any patient injury or death (collectively, the “Liability”), except to the extent that such Liability arises out of MJFF’s (a) negligent or willful misconduct in performing its obligations under this Agreement, or (b) use or sharing of Project Data, in which case (either (a) or (b), MJFF shall release, defend, indemnify and hold you harmless from and against such Liability.

 

10.3                        You shall maintain a reasonable level of professional and general liability insurance sufficient to cover the risks associated with your Project.

 

11.                               Use of MIFF Brand

 

You agree to abide by the following policy regarding use of MJFF’s name, logo, marks, trade dress, image, and likeness of Michael J. Fox, its founder (collectively, the “Brand”). MJFF prohibits any use of the MJFF Brand in any publicity efforts, notices, releases, statements or publications without its prior written approval. All use of the Brand including, without limitation, the name/image/likeness of Michael J. Fox shall be submitted in advance to MJFF for approval. Failure of MJFF to approve any proposed use of the Brand within five (5) business days of its receipt of any request for approval of a proposed use shall be deemed non-approval of the proposed use. You acknowledge that these terms are reasonable precautions to protect the MJFF Brand and

 

	
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its goodwill, both of which are extremely valuable assets of MJFF. Any goodwill resulting from an approved use of the MJFF Brand by you shall inure solely and exclusively to MJFF.

 

12.                               Publication

 

You shall use all reasonable efforts to publish the results of this research Project (the “Results”) regardless of positive or negative outcome(s) in a forum that is widely available to scientific researchers in the Field within one (1) year from the date that the Project concludes. Publication shall be consistent with high standards of scientific excellence and rigor.

 

13.                               Recognition of Funder

 

Any publications resulting from this Award shall include acknowledgement of the funding provided by The Michael J. Fox Foundation for Parkinson’s Research. When publications result from work funded under this Award, you are required to update MJFF, even if such publications occur after the end of the award.

 

14.                               Human Subjects and Compliance with Law

 

14.1                        Since the Project involves the pa1ticipation of human subjects, you shall provide to MJFF proof of approval by each applicable institution’s IRB or other regulatory assurance body in accordance with Section 3.1 (a).

 

14.2                        You are solely responsible for complying with any and all applicable laws, regulations or guidelines governing the Project.

 

15.                               Good Clinical Practice

 

15.1                        You shall perform the Project in accordance with the Project’s protocol and applicable standards of good clinical practice and good medical practice, including applicable regulatory guidance and all applicable federal, state, and local laws, rules and regulations relating to the conduct of clinical investigations, including without limitation the Federal Food, Drug and Cosmetic Act, as amended, and other such laws, rules and regulations pertaining to clinical investigations (including without limitation, 21CFR 50, 54, 56, and 312) and the protection of subject privacy as may be applicable.

 

15.2                        You shall promptly notify MJFF of serious adverse events that are possibly Project-related (“SAE”s). You shall provide MJFF copies of summary SAE reports on a quarterly basis. For the avoidance of doubt all such reports shall be Confidential Information of Grantee.

 

16.                               Miscellaneous

 

16.1                        This Agreement including appendices constitutes the entire agreement of the parties related to its subject matter and supersedes all prior agreements, oral or written. This Agreement may not be modified, amended or waived except by written agreement of the parties.

 

	
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16.2                        This Award does not establish any partnership, joint venture, employment or agency relationship between the parties to this Agreement, and MJFF and Grantee remain independent contractors.

 

16.3                        All notices to MJFF required or permitted by this Agreement shall be sent by email to: jlangon@michaeljfox.org, unless MJFF specifies a different person to you in writing.

 

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

 

 

	
Accepted and   agreed to by:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Michael J. Fox   Foundation for Parkinson’s Research
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Todd Sherer
    	
8-16-13
    	
 
    	
 
    
	
Todd Sherer
    	
 
    	
 
    	
 
    
	
Chief Executive   Officer, MJFF
    	
Date
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Rhythm Pharmaceuticals, Inc.:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Keith   Gottesdiener
    	
8/19/13
    	
 
    	
 
    
	
Name: Keith   Gottesdiener
    	
Date
    	
 
    	
 
    
	
Title: CEO
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Read and   Acknowledged as Principal Investigator By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Keith   Gottesdiener
    	
8/19/13
    	
 
    	
 
    
	
Keith M.   Gottesdiener, M.D.
    	
Date
    	
 
    	
 
    

 

	
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Rhythm Pharmaceuticals, Inc. — MJFF Award Agreement

Appendix A — Project Budge

 

The Michael J. Fox Foundation for Parkinson’s Research

2013 Therapeutic Pipeline Program

An Edmond J. Safra Core Program for PD Research

BUDGET TEMPLATE

 

Principal Investigator / Sponsor Contact (Last, First):Rhythm= Gottesdiener, Keith

 

Project Title: A Phase 2, Randomized, Double-blind, Placebo-controlled, Multiple Dose, Parallel Group Study to Evaluate the Pharmacodynamics, Efficacy and Safety of RM 131 Administered to Patients with Parkinson’s Disease and Chronic Constipation Dissatisfied with Current Therapy

 

[          ]*

 

Note: Totals in the section above will pre-populate based on the completion of additional worksheets.  Your completion of this section is not required

 

For Clinical Studies:

 

Planning Phase - Awardees will receive a nominal sum to complete IRB applications, finalize the Case Report Forms, consent forms and study protocol. Awardees must provide the estimated amount of time needed for each relevant Planning Phase item in the “Activation Checklist”.

 

Recruitment Costs - Costs to produce recruitment materials and retain subjects can be included in study budgets.

 

Please provide appropriate payments in the execution phase, being sure to provide the rationale for all costs in the “Budget Justification”.

 

Subject Travel and Accommodation- MJFF is committed to removing the financial burden of trial participation for subjects in all trials it funds. We strongly encourage Awardees to consider the inclusion of subject travel and accommodation in their budgets.

 

Please provide appropriate payments in the execution phase, being sure to provide the rationale and breakdown of all costs in the “Budget Justification”.

 

Regulatory Costs -MJFF does not traditionally cover the costs of awardee regulatory submissions. including the filing and maintenance of an IND application.

 

If proposing such costs, please be sure to provide the rationale in the “Budget Justification”. Final coverage decisions are at MJFFs discretion.

 

Manufacturing Costs -MJFF does not traditionally cover the costs of manufacturing, reformulating, or packaging investigational drugs.

 

If proposing such costs, please be sure to provide the rationale in the “Budget Justification”. Final coverage decisions are at MJFF’s discretion.

 

	
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The Michael J. Fox Foundation for Parkinson’s Research

2013 Therapeutic Pipeline Program

An Edmond J. Safra Core Program for PD Research

BUDGET TEMPLATE

 

Principal Investigator / Sponsor Contact (Last, First):Rhythm= Gottesdiener, Keith

 

Project Title: A Phase 2, Randomized, Double-blind, Placebo-controlled, Multiple Dose, Parallel Group Study to Evaluate the Pharmacodynamics, Efficacy and Safety of RM 131 Administered to Patients with Parkinson’s Disease and Chronic Constipation Dissatisfied with Current Therapy

 

[          ]*

 

	
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* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

 

The Michael J. Fox Foundation for Parkinson’s Research

2013 Therapeutic Pipeline Program

An Edmond J. Safra Core Program for PD Research

BUDGET TEMPLATE — Execution Phase ([          ]*)

 

Principal Investigator I Sponsor Contact (Last, First):Rhythm= Gottesdiener, Keith

 

Project Title: A Phase 2, Randomized, Double-blind, Placebo-controlled, Multiple Dose, Parallel Group Study to Evaluate the Pharmacodynamics, Efficacy and Safety of RM 131 Administered to Patients with Parkinson’s Disease and Chronic Constipation Dissatisfied with Current Therapy

 

[          ]*

 

	
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* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

 

The Michael J. Fox Foundation for Parkinson’s Research

2013 Therapeutic Pipeline Program

An Edmond J. Safra Core Program for PD Research

BUDGET TEMPLATE — Execution Phase ([          ]*)

 

Principal Investigator / Sponsor Contact (Last, First):Rhythm= Gottesdiener, Keith

 

Project Title: A Phase 2, Randomized, Double-blind, Placebo-controlled, Multiple Dose, Parallel Group Study to Evaluate the Pharmacodynamics, Efficacy and Safety of RM 131 Administered to Patients with Parkinson’s Disease and Chronic Constipation Dissatisfied with Current Therapy

 

[          ]*

 

	
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* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

 

The Michael J. Fox Foundation for Parkinson’s Research

2013 Therapeutic Pipeline Program

An Edmond J. Safra Core Program for PD Research

BUDGET TEMPLATE — Execution Phase ([          ]*)

 

Principal Investigator / Sponsor Contact (Last, First):Rhythm= Gottesdiener, Keith

 

Project Title: A Phase 2, Randomized, Double-blind, Placebo-controlled, Multiple Dose, Parallel Group Study to Evaluate the Pharmacodynamics, Efficacy and Safety of RM 131 Administered to Patients with Parkinson’s Disease and Chronic Constipation Dissatisfied with Current Therapy

 

[          ]*

 

	
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* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

 

	
 
    	
Rhythm   Pharmaceuticals, Inc.- MJFF Award Agreement
    
	
 
    	
 
    
	
 
    	
Appendix B - Project   Payment Schedule & Milestones
    

 

The Michael J. Fox Foundation for Parkinson’s Research

 

Therapeutic Pipeline Program 2013 — An Edmond J. Safra Core Program for PD Research

 

Grantee:  Rhythm Pharmaceuticals, Inc.

Principal Investigator(s):  Keith M. Gottesdiener, MD; Ronald Pfeiffer, MD.

Project Title:  RM-131 (Ghrelin agonist) Treatment of Refractory Constipation in Parkinson’s Patients

 

Project Deliverables:

 

·                  To assess the safety and efficacy of RM-131 in PD patients with chronic constipation who are refractory to current treatment in an active (N=28) vs. placebo (N=28) design (Phase 2a, proof of concept).

·                  To explore the pharmacokinetics of RM-131 and L-dopa

 

	
Description
    	
 
    	
 
    	
Milestones (required for next payment)
    	
 
    	
 
    	
Amount
    	
 
    	
 
    	
Payment Timing
    
	
Implementation Phase
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Administrative   Support ([          ]*)
    	
 
    	
 
    	
·                  Send to MJFF a copy of central IRB   approval letter, final protocol, recruitment profile, informed consent   letters, and update on the drug supply plan  

·                  Complete registration for   Clinicaltrials.gov and FoxTrialFinder
    	
 
    	
 
    	
$[          ]*
    	
 
    	
 
    	
Payable within 30   days following full execution of Award
    
	
Total Implementation Phase:
    	
 
    	
$[          ]*
    
	
Execution Phase
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
[            ]* Milestones for Execution Phase
    	
 
    	
 
    	
·                  Payment will be issued upon completion of   all checklist (Appendix C) items and receipt by MJFF of any items specified   therein.
    	
 
    	
 
    	
$[          ]*
    	
 
    	
 
    	
Payment will be   issued upon completion of all checklist (Appendix C) items and receipt   by MJFF of any items specified therein.
    

 

	
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[          ]* Milestones for Execution Phase
    	
 
    	
 
    	
·                  Begin screening and enrollment of study subjects   (expected at least 28 subjects by end of month 8)

·                  Begin principal experiment

·                  Begin enrollment for pharmacokinetic sub-study

·                  Send monthly recruitment reports to MJFF

·                  Participate in check-in calls with MJFF
    	
 
    	
 
    	
$[          ]*
    	
 
    	
 
    	
Payment will be issued monthly on a per subject   basis ($16,701.43 per patient following first dosing) upon submission of monthly   recruitment reports provided to MJFF by Grantee. Reports will indicate progress   against milestones.
    
	
[          ]* Milestones for Execution Phase
    	
 
    	
 
    	
·                  Complete enrollment (additional 28   subjects by end of month 13) and complete experiment

·                  Send monthly recruitment reports to MJFF

·                  Participate in check-in calls with MJFF
    	
 
    	
 
    	
$[          ]*
    	
 
    	
 
    	
Payment will be   issued monthly on a per subject basis ($16,701.43 per patient following first   dosing) upon submission of monthly recruitment reports provided to MJFF by   Grantee. Reports will indicate progress against milestones.
    
	
[          ]* Milestones for Execution Phase
    	
 
    	
 
    	
·                  Complete subject enrollment in pharmacokinetic   sub-study
    	
 
    	
 
    	
$[          ]*
    	
 
    	
 
    	
Payment will be   issued upon completion of subject enrollment in pharmacokinetic sub-study as   determined based on progress reports provided to MJFF by Grantee. Reports   will indicate progress against milestones.
    
	
[            ]* Milestones for Execution Phase
    	
 
    	
 
    	
·                  Complete analyses

·                  Provide final expense and project report   to MJFF

·                  Report the study results and outcomes to   investigators for reporting to study subjects
    	
 
    	
 
    	
$[          ]*
    	
 
    	
 
    	
Payment will be   issued upon completion of all Project items as determined based on progress   reports provided to MJFF by Grantee. Reports will indicate progress against   milestones.
    
	
 
    	
 
    	
 
    	
Total   Execution Phase:
    	
 
    	
 
    	
 
    	
 
    	
$[          ]*
    
	
 
    	
 
    	
 
    	
Total   Project
    	
 
    	
 
    	
 
    	
 
    	
$[          ]*
    

 

	
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Rhythm   Pharmaceuticals, Inc. - MJFF Award Agreement
    
	
 
    
	
Appendix   C -Activation Checklist
    

 

Using the template below, please indicate the expected timeline for completing each task listed in the Planning Phase of your study. Please note, the Planning Phase activities begin from date of award notification. Deadlines for returning a signed MJFF award contract and submitting your draft study protocol are set by MJFF and cannot be changed. Also note, the second payment is contingent on completion of the Activation Checklist tasks, including IRB/IACUC approval.

 

	
Description of Task
    	
 
    	
 
    	
Weeks Required for Completion
    	
 
    	
 
    	
Estimate Date of
   Completion
    
	
MJFF contract   signed and returned
    	
 
    	
 
    	
2 weeks
    	
 
    	
 
    	
August 13,   2013
    
	
All subcontracts   signed (excluding clinical sites)
    	
 
    	
 
    	
8 weeks
    	
 
    	
 
    	
September 9,   2013
    
	
Study protocol   finalized and sent to MJFF with model informed consent
    	
 
    	
 
    	
2 weeks
    	
 
    	
 
    	
August 19,   2013
    
	
IRB, Consents   and/or relevant Ethical Approval letters sent to MJFF
    	
 
    	
 
    	
WIRB   Approval
    	
 
    	
 
    	
August 19,   2013
    
	
Clinical Trial   Strategies Recruitment profile for first site sent to MJFF*
    	
 
    	
 
    	
Upon IRB   first approval
    	
 
    	
 
    	
August 13,   2013
    
	
Drug supply plan   obtained and sent to MJFF (if relevant)
    	
 
    	
 
    	
3 weeks
    	
 
    	
 
    	
August 19,   2013
    
	
Post trial onto   Clinicaltrials.gov
    	
 
    	
 
    	
3 weeks
    	
 
    	
 
    	
August 19,   2013
    
	
Post trial onto   Fox Trial Finder website by contacting MJFF Staff: Lily Cappelletti (lcappelleti@michaeljfox.org)
    	
 
    	
 
    	
3 weeks
    	
 
    	
 
    	
August 19,   2013
    

 

*Other profiles are expected robe sent to MJFF on or before October L 2013 as received following subsequent IRB approvals, but are not part of the checklist which determines when payment will be made.

 

	
 
    	
 
    	
 
    	
 
    
	
 
    	
Signature
    	
 
    	
Date
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Name/Title
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Signature
    	
 
    	
Date
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Name/Title
    	
 
    	
 
    

 

	
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Rhythm Pharmaceuticals, Inc.- MJFF Award Agreement

 

Appendix D — Return Payment Agreement

 

I.                                        Definitions: For the purposes of this Appendix D, the following definitions shall have the following meanings:

 

A.                                    “Net Sales” means, with respect to any Product, the gross amount invoiced by the Grantee, its affiliates, sublicensees or other transferees of the development program for the Product (the “Seller”) for Product sold to an arm’s length third party, less: (a) trade, quantity and cash discounts allowed; (b) write-offs, discounts, credits, refunds, rebates, chargebacks and retroactive price adjustments; (c) Product returns and allowances; (d) any tax imposed on the Product that is appropriately deducted from sales under generally accepted accounting principles consistently applied (“GAAP”); (e) allowance for freight, postage, handling, shipping, insurance and duties paid for and separately identified on the invoice or other documentation maintained in the ordinary course of business; (f) excise taxes, other consumption taxes, import/export taxes, customs duties and compulsory payments to governmental authorities; and (g) any other reasonable and customary deductions which according to GAAP are bona fide deductions from gross sales to determine Net Sales or are otherwise considered to be in respect of “cost of goods sold” according to GAAP, it being understood that the purpose and intent of this subparagraph is to deduct all expenses incurred by the Seller which are incidental to a sale of the Product by the Seller and which are incurred and which would not normally be expected to be incurred in the event that all sales of the Product were conducted directly through distributors or sublicensees appointed by Grantee or its affiliates. Such amounts shall be determined from the books and records of the entity that sells the Product maintained in accordance with GAAP, consistently applied. For avoidance of doubt, with regard to a particular quantity of Product, Net Sales shall be calculated once, based on the first sale to a third party by the Seller of such quantity of Product, and not on any subsequent sales of the same Product by any such third party. For greater certainty: provision of a Product for the purpose of conducting preclinical or clinical research or for compassionate or named-patient use shall not be included in Net Sales.

 

B.                                    Solely in the event that the Project has succeeded, which for purposes hereof is defined as meeting the criteria set forth in Sections 9.2(a) and (b), prior to the time of the relevant licensing transaction, “Net Sales of Product in the Field” shall also include, for purposes of this Appendix D, amounts actually received pursuant to a transaction for the license or other transfer of rights in the Field to such Product, and only such Product, to a commercialization partner (a “Transaction”). To the extent any Transaction includes a license or other transfer of the Product for use in the Field and outside of the Field, the portion of the amount received that is attributable to the Product in the Field, and thus to be included as “Net Sales of Product in the Field” shall be reasonably determined by MJFF and Grantee in good faith, but in all cases shall exclude amounts to cover future reasonable, fully burdened costs to be incurred by Grantee or its Affiliate in the performance of research or development activities in the Field only, to be performed by Grantee or its Affiliates. In no event shall the Net Sales of Product in the Field arising from a given Transaction, as compared to the total license revenue for the Product in such

 

	
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Transaction, after the exclusions cited above, exceed [          ]* of such total license revenue for the Product in a given Transaction.

 

C.                                    “Outstanding Award Amount” means the aggregate amount award payments actually received by Grantee from MJFF pursuant to this Agreement and any amendments thereto.

 

D.                                    “Product” has the meaning set forth in Section 9.I(b) of the Agreement.

 

Any capitalized terms in this Appendix D not otherwise defined herein shall have the same meanings as set forth in the main portion of this Agreement.

 

II.                                   Return Payment

 

A.                                    After achievement by Grantee of Net Sales of Product in the Field in excess of US $[          ]*, Grantee shall, as provided in II.C. below, pay to MJFF [          ]* of subsequent Net Sales of Product in the Field (as determined pursuant to I.B. above and as reasonably determined using IMS data or other mutually agreed source of similar data for Net Sales under I.A. above), up to a maximum aggregate amount of [          ]* the Outstanding Award Amount as defined in Section II of this Appendix D, plus interest at the prime rate, as published in the Wall Street Journal, Eastern print edition, plus [          ]* (the “Cap”), which interest shall begin accruing on the date the Project met the criteria for success set forth in both Section 9.2(a) and (b).

 

B.                                    Grantee agrees to keep full, true, and accurate books of accounts and other records necessary for MJFF to verity the amounts payable by Grantee under the terms and conditions of this Appendix D. At MJFF’s request, Grantee agrees to permit an independent certified public accountant selected by MJFF at MJFF’s expense to review, during ordinary business hours and at mutually agreed upon times, such Grantee books and records as may be reasonably necessary, to verify the correctness of Grantee’ reports and payment made to MJFF under the terms and conditions of this Appendix D. Such review may not occur more than once each calendar year. Any such independent certified accountant will be reasonably acceptable to Grantee, will execute Grantee’s standard form of confidentiality agreement, and will be permitted to share with MJFF its findings solely with respect to the accuracy of the total amount of Net Sales reported under this Appendix D. Any information reviewed or observed by such independent certified accountant in the course of such review will be Grantee’s Confidential information, and any such information that is provided by such independent certified accountant to MJFF or its employees, agents or representatives will be subject to the restrictions on use and disclosure of Grantee’s Confidential Information under this Agreement and any amendments thereof.

 

C.                                    Grantee agrees that it shall pay MJFF the payments due pursuant to II.A. above on an annual basis as follows: (1) payment for the one (1) year period following

 

	
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the date on which the payment obligation regarding [          ]* of Net Sales of Product in the Field commences as provided in II.A shall be made within thirty (30) days after the end of such annual period, and (2) payments for subsequent annual periods shall be due within thirty (30) days after the anniversary of such date, continuing until the Cap above is reached.

 

D.                                    With the exception of the payment of the return payments as required under this Appendix D, Grantee shall owe MJFF no moneys or other consideration pursuant to this Agreement for its commercialization of the Product.

 

E.                                     Notwithstanding the foregoing, Grantee shall have the right, but not the obligation, to make one (1) lump sum repayment of the full Outstanding Award Amount plus any interest that has accrued at the rate set forth in Section II.A of this Appendix D as of the date of such payment at any time (“Early Repayment”). In the event the Grantee desires to exercise its right to Early Repayment, Grantee shall notify MJFF promptly in writing and shall repay the Outstanding Award Amount within thirty (30) days after providing written notification. Grantee’s obligations to pay money or other consideration to MJFF under this Agreement shall immediately cease upon MJFF’s receipt of the Early Repayment.

 

	
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* CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.EMPLOYMENT
AGREEMENT

 

THIS
EMPLOYMENT AGREEMENT is made this 25th day of August, 2014, by and between XZERES CORP., a Nevada
corporation (the "Company") having its principal place of business at 9025 SW Hillman Ct, suite 3126, Wilsonville,
OR 97070 and FRANK GRECO (the "Executive") residing at 9221 East Wood Drive, Scottsdale, Arizona 85260.

 

W
I T N E S S E T H:

 

WHEREAS
the Company is engaged in the business of designing, manufacturing, selling and servicing wind energy generation systems and
accessories; and

 

WHEREAS
the Executive is currently employed by the Company pursuant to an Employment Agreement between the Company and the Executive
dated as of August 2010 and Amended in March 2012 (the “Initial Employment Agreement” and “First Amendment
to Employment Agreement”); and

 

WHEREAS
the Executive has agreed to resign as Director and CEO and be employed by the Company as its President on the terms and conditions
set forth in this Agreement, which Agreement shall supersede in its entirety the Initial Employment Agreement and the First Amendment
to the Employment Agreement as of the Commencement Date (hereinafter defined)

 

NOW,
THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto, intending to be legally
bound hereby, do hereby agree as follows:

 

		1.	Definitions.

 

For
purposes of this Agreement, the following words shall have the respective meanings set forth below:

 

1.1             
"Bonus" shall mean the bonus paid, if any, pursuant to Exhibit A of this Agreement.

 

1.2             
"Annual Compensation" shall mean the Executive's Base Salary and Annual Bonus during the Term of Employment.

 

1.3             
"Base Salary" shall mean the annual base salary paid to the Executive pursuant to Exhibit A of this Agreement.

 

1.4             
"Benefits" shall mean the benefits described in Article 6 of this Agreement.

 

1.5             
"Board" shall mean the Board of Directors of the Company.

 

1.6             
"Business" shall mean the business being conducted by the Company of designing, manufacturing, selling and servicing
wind energy generation systems and accessories and any other businesses in which the Company may hereafter engage.

 

1.7             
"Cause" shall mean any one or more of the following, as determined solely by the Board in good faith: (a) the
willful or knowing failure or refusal without Cure of the Executive substantially to perform his duties hereunder or as directed
by the Board; (b) the willful disobedience by the Executive of a material and lawful instruction of the Board; (c) the engaging
by the Executive in: (i) an act of fraud, (ii) an illegal or criminal act, (iii) a dishonest act materially injurious to the Company,
monetarily or otherwise, or (iv) misconduct materially injurious to the Company monetarily or otherwise, including but not limited
to any action which holds the Executive or the Company in public disrepute; (d) a breach by the Executive of any fiduciary duty
to the Company; (e) malfeasant or negligent conduct without Cure; (f) any violation by the Executive of any Federal or state securities
law; or (g) a breach without Cure by the Executive of any of the provision s of this Agreement.

 

1.8             
"Commencement Date" shall mean August 25, 2014

 

1.9             
"Cure" shall mean following the giving of written notice of Cause, in the reasonable opinion of the Board the
Executive shall have cured the Cause in all material respects within thirty (30) days of said notice having been given.

 

1.10         
"Disability" shall mean the Executive's inability to render either (a) for a period of one (1) month or (b) in
the aggregate of forty-five (45) days in any consecutive six month period, services hereunder by reason of a disability, which
disability is confirmed by the written medical opinion of an independent medical physician mutually acceptable to the Executive
and the Company. If the Executive and the Company cannot agree as to such independent medical physician, each shall appoint one
medical physician and those two physicians shall appoint a third physician who shall make such determination. If the Executive
shall be Disabled, shall thereafter return to work and shall thereafter become Disabled, then such latter Disability shall be
deemed a continuation of the former Disability (and not a new Disability) unless the Executive has returned to work on a full
time basis and has substantially performed all of his employment duties for a period of six (6) continuous and consecutive weeks.

 

    	 

    	 

    

 

1.11         
“Initial Employment Agreement” shall mean that certain Employment Agreement dated as of August 1, 2010, between
the Company and the Executive.

 

1.12         
"IP" shall have the meaning ascribed to it in Section 10.2.

 

1.13         
"Person" shall mean any individual, sole proprietorship, joint venture, partnership, limited liability company,
corporation, association, cooperative, trust, estate, government (or any branch or agency thereof), governmental, administrative
or regulatory authority, or any other entity of any nature whatsoever.

 

1.14         
"Restricted Period" shall have the meaning ascribed to it in Section 12.3.

 

1.15         
“Restricted Stock Purchase Agreement” shall mean that certain Restricted Stock Purchase Agreement between the
Company and Executive of even date herewith.

 

1.16         
"Stock" shall mean stock of the Company.

 

1.17         
"Termination Date" means (a) in the case of a termination for which a notice of termination is required, the
date of actual receipt of such notice of termination or, if later, the date specified therein, as the case may be, and (b) in
all other cases, the actual date on which the Executive's employment terminates during the Term of Employment.

 

1.18         
"Term of Employment" has the meaning ascribed to it in Article 3.

 

1.19         
"Territory" shall have the meaning ascribed to it in Section 12.2.

 

1.20         
"Writings" shall have the meaning ascribed to it in Section 10.1.

 

		2.	Employment.

 

The
Company hereby employs the Executive as its President, effective as of the Commencement Date; and the Executive hereby accepts
such employment upon the terms and conditions hereinafter set forth.

 

		3.	Term.

 

3.1             
Initial Term. Subject to the provisions of Article 7 hereof, the Executive's employment hereunder shall commence on the
Commencement Date and shall terminate on August 31, 2016, unless sooner terminated pursuant to the provisions of Article 7 or
8 of this Agreement or extended as hereinafter provided in Section 3.2 of this Agreement ("Term of Employment").

 

3.2             
Renewal Term. Upon the expiration of the aforesaid term, or any renewal thereof, this Agreement shall be renewed automatically
for successive one (1) year terms unless the Company or the Executive provides no less than two (2) months' notice to the other,
prior to the expiration of any such term, of its decision not to renew this Agreement whereupon this Agreement shall terminate
as of the last day of such term, unless this Agreement shall be sooner terminated during any such renewal term as provided in
Article 8 of this Agreement.

 

		4.	Positions,
                                         Responsibilities and Duties of Executive.

 

4.1             
Positions and Duties. The Executive shall have the duties, authority and responsibility inherent to the position of President
and of a publicly traded corporation of the size, type and nature of the Company. The Executive shall perform such duties hereunder
and such additional duties or different duties as he shall from time to time be assigned by the CEO, consistent with the general
level and type of duties and responsibilities associated with the position of President. The Executive shall report directly to
the CEO. The Executive agrees to devote substantially all of his business time, skill, labor and attention to the services required
of the Executive under this Agreement and shall perform such services in a manner consonant with the duties of such position.
The foregoing shall not be deemed to prevent the Executive from serving on corporate, charitable or civic boards or committees
or acting as a fiduciary for any family member(s) or friend(s) provided that the Board determines, in its sole discretion but
without unreasonably withholding approval, that any such activity does not substantially interfere or conflict with the performance
of his duties hereunder.

 

4.2             
Outside Businesses. The Executive shall not engage in any business activities other than as an employee of the Company.
The Executive may invest his assets in such form or manner as will not require time or services on his part in the operation of
the affairs of the entities in which such investments are made, other than time or services which are minor and incidental.

 

		5.	Compensation.

 

In
consideration of the services to be rendered by Executive to the Company, Company shall pay Executive compensation and other benefits
as described in Exhibit A.

 

    	2

    	 

    

 

		6.	Benefits.

 

During
the period that the Executive is employed hereunder, the Company shall pay or provide the following (in the aggregate, the "Benefits"):

 

6.1             
Vacations. Permit the Executive a paid vacation consistent with the Company’s vacation policy as described in the
employee handbook. In addition, Executive shall keep all currently accrued vacation.

 

6.2             
Reimbursement of Expenses. Subject to prevailing Company policy or such guidelines as may be established by the Board,
pay directly or reimburse the Executive upon his submission of such expense accounts and supporting documents as are reasonably
required by the Company, for all reasonable and necessary business expenses incurred by the Executive as part of and in connection
with the performance of his duties specified herein.

 

6.3             
Health Insurance. Provide the Executive, his spouse, and dependents (where applicable) with the medical benefits as in
effect on the date of this Agreement, or as modified from time to time by the Company at its discretion, which the Company provides
to its executive employees generally.

 

7.                 
Background Investigation. The Executive acknowledges that the Company is a public company and as a result thereof, full
disclosure of the background of the Executive, as President of the Company, may be required. Accordingly, the Executive agrees
to cooperate with a company to be retained by the Board to conduct a background due diligence investigation of the Executive and
this Agreement is subject to a satisfactory due diligence investigation. In the event that such investigation shall reveal information
which, in the opinion of the Company, would have any adverse effect on the Company, its ability to raise money in a public or
private offering, or on the Executive's ability to perform his obligations hereunder, the Company shall have the right to terminate
this Agreement by written notice thereof to the Executive, upon which event this Agreement shall be null and void, and neither
party shall have any further liability to the other hereunder. The Executive represents that he has no knowledge of any matter
which would be disclosed by such investigation which would have any adverse effect on the Company, its ability to raise money
in a public or private offering, or on the Executive's ability to perform his obligations hereunder.

 

8.                 
Termination of Employment.

 

The
employment of the Executive by the Company commences on the Commencement Date and shall terminate (the "Termination Date")
upon the occurrence of any of the following:

 

8.1             
End of Term. The end of the term of this Agreement, or any renewal thereof, as provided in Article 3 hereof;

 

8.2             
Death. The death of the Executive;

 

8.3             
Disability. The Disability of the Executive;

 

8.4             
Cause. The giving of notice by the Company to the Executive of termination for Cause; or

 

8.5             
Without Cause. The giving of notice by the Company to the Employee of termination for any reason whatsoever other than
Cause; or

 

8.6             
Resignation. The resignation of the Executive upon no less than ninety (90) days prior notice.

 

9.                 
Effect of Termination.

 

In
the event of the termination of the Executive's employment for any of the reasons set forth in Article 8 hereof, all Annual Compensation
and Benefits payable to the Executive shall terminate as of the Termination Date and the Executive, his estate or his legal representative,
as the case may be, shall only be entitled to:

 

		(a)	Any
                                         Base Salary accrued or any Bonus awarded but not yet paid as of the Termination Date;
                                         and

 

		(b)	Reimbursement
                                         for all expenses incurred, but not yet paid prior to the Termination Date; and

 

		(c)	Any
                                         other compensation and/or benefits as may be provided in accordance with the terms and
                                         provisions of any applicable plans and programs of the Company; and

 

		(d)	If,
                                         and only if, the termination is pursuant to Section 8.5 hereof, and (a) the Termination
                                         Date occurs on or prior to the third anniversary of the Commencement Date (as defined
                                         from the date of the Initial Employment Agreement dated 2010), a severance payment
                                         equal to three (3) month's Base Salary, or (b) the Termination Date occurs after the
                                         third anniversary of the Commencement Date, a severance payment equal to six (6) month’s
                                         Base Salary, in each case, payable in equal bi-weekly installments on the Company's regular
                                         salary payment dates, provided that the Executive executes, and does not revoke, a General
                                         Release of all claims relating to his employment and termination of employment from employment
                                         in a form provided by the Company. The Executive understands that should he fail or refuse
                                         to execute the General Release provided by the Company, or revoke such General Release,
                                         he shall not be entitled to any severance payments under this section.

 

 

    	3

    	 

    

 

10.             
Writings; Intellectual Property.

 

10.1         
The Company shall own all right, title and interest in any writings or other materials written or produced by Executive or under
Executive's supervision (whether alone or with others) that relate in any manner to, or which are capable of being used in, Company's
existing or contemplated business (including, without limitation, work for or by Company's customers) (the "Writings"),
and all copyrights, common law and statutory in the United States and foreign countries, pertaining to such Writings.

 

10.2         
The Executive agrees that any intellectual property and other property rights in any work product, developments, concepts, discoveries,
know-how, improvements, trade secrets or inventions, whether or not patentable or registerable under copyright of similar laws,
and conceived or developed by the Executive or caused to be conceived or developed or reduced to practice by the Executive, whether
or not during regular working hours, during the Term of Employment and the period during which the Executive was employed by the
Company pursuant to the Initial Employment Agreement, including, without limitation, all patents, copyrights, trademarks, service
marks and other intellectual property rights related thereto (collectively, the "IP") shall be deemed to be owned
exclusively by the Company provided that they (i) relate at the time of conception or development to the actual or demonstrably
proposed business or research and development activities of the Company; (ii) result from or relate to any work performed for
the Company; or (iii) are developed through the use of Confidential Information (hereinafter defined in Section 11.2) and/or Company
owned resources or in consultation with Company personnel. Executive further acknowledges that all IP which is made by him (solely
or jointly with others) within the scope of and during the Term of Employment are “works for hire” (to the greatest
extent permitted by applicable law) but, that, in the event that any such IP is deemed not to be a work for hire, Executive hereby
unconditionally and irrevocably transfers and assigns to the Company any and all rights, title and interest the Executive may
currently have (or in the future may have) by operation of law or otherwise in or to any IP. Executive agrees to execute and deliver
to the Company any transfers, assignments, documents or other instruments necessary or appropriate to vest complete title and
ownership of any IP, and all associated rights, exclusively in the Company pursuant to this Agreement.

 

 

11.             
Confidentiality of Information and Duty of Nondisclosure.

 

11.1         
Acknowledgment by Executive. The Executive acknowledges and agrees that his employment by the Company under this Agreement
necessarily involves his understanding of and access to certain trade secrets and confidential information pertaining to the Business
as well as relationships with customers and suppliers of the Business.

 

11.2         
Confidentiality. Accordingly, the Executive agrees that at all times during the term of this Agreement and thereafter,
he will not, directly or indirectly, without the express authority of the Board unless directed by applicable legal authority
having jurisdiction over the Executive, disclose to or use for the benefit of any Person, or himself, any files, trade secrets,
proprietary information or other Confidential Information concerning the Business. Further, the Executive agrees that he will
not, directly or indirectly, remove or retain, without the express prior written consent of the Board, any figures, calculations,
letters, papers, records, documents, electronic media instruments, drawings, designs, programs, or any copies thereof, or any
information or instruments derived therefrom, or any other similar documents or information of any type or description, however
such information might be obtained or recorded and on whatever medium such information may be contained, arising out of or in
any way relating to the Business obtained as a result of or in connection with his employment, heretofore or hereafter, by the
Company and upon termination of this Agreement, shall promptly return any of the same in his possession to the Company. The Executive
acknowledges that all of the foregoing constitutes proprietary information, which is the exclusive property of the Company. As
used in this Section 11.2, "Confidential Information" shall mean any information relating to this Agreement, the business
or affairs of the Company or the Business, and information relating to financial statements, customer identities, potential customers,
employees, suppliers, servicing methods, equipment, programs, strategies and information, analyses, profit margins or other proprietary
information used by the Company in connection with the Business.

 

11.3         
Limitations on Obligations. From and after the Termination Date, the restrictions set forth in this Article shall not apply
to such information which is then in the public domain, if the Executive was not responsible, directly or indirectly, for permitting
such information to enter the public domain without the consent of the Company.

 

 

		12.	Covenant
                                         Not to Compete.

 

12.1         
Consideration. This covenant between the Executive and the Company is being executed and delivered by the parties in consideration
of the covenants of the Company and the Executive contained in this Agreement.

 

12.2         
Non-Compete. The Executive hereby agrees that during the Term of Employment and for a period commencing on the termination
of his employment with the Company for any reason whatsoever, with or without Cause, voluntarily or involuntarily, and ending
one (1) year after the date of such termination, except on behalf of the Company, he will not, directly or indirectly, as agent,
employee, consultant, representative, stockholder, manager, member, partner or in any other capacity, own (other than through
the passive ownership of less than one percent (1%) of the publicly traded shares of any Person), operate, manager, control, engage
in, invest in (other than through the passive ownership of less than one percent (1%) of the publicly traded shares of any Person)
or participate in any manner in, act as a consultant or advisor to, render services for (alone or in association with any Person)
or otherwise assist any Person that engages in or owns, invests in, operated, manages or controls any venture or enterprise that
directly or indirectly engages or proposes to engage in any business competitive in any material respects with any portion of
the Business anywhere in the United States (the "Territory").

 

12.3         
Non-Solicitation. Without limiting the generality of the provisions of Section 12.2, the Executive hereby agrees that during
the Term of Employment and for a period commencing on the termination of his employment with the Company for any reason whatsoever,
with or without Cause, voluntarily or involuntarily, and ending three (3) years after the date of such termination (the “Restricted
Period”), he will not, except on behalf of the Company, directly or indirectly, solicit, or participate as agent, employee,
consultant, representative, stockholder, manager, partner or in any other capacity in any business which solicits business from
any Person which is or was a customer or prospective customer or supplier of the Business at any time during the three (3)-year
period preceding the date of such solicitation, or from any successor in interest to any such Person, for the purpose of securing
business or contracts related to any portion of the Business.

 

    	4

    	 

    

 

12.4         
Interference with Relationship.

 

12.4.1   
During the Restricted Period, the Executive shall not, directly or indirectly, as agent, employee, consultant, distributor, representative,
stockholder, manager, member, partner or in any other capacity, request, directly or indirectly, that any suppliers, customers
or clients of the Company, or other Persons sharing a business relationship with the Company curtail or cancel their business
with the Company, or in any other way interfere with any such business relationships with the Company, or otherwise take action
which might be to the material disadvantage of the Company.

 

12.4.2   
During the Restricted Period, the Executive shall not, without the prior written consent of the Company, except on behalf of the
Company, directly or indirectly, as agent, employee, consultant, distributor, representative, stockholder, manager, member, partner
or in any other capacity, employ or engage, or recruit or solicit for employment or engagement, any person (i) who is employed
or engaged by the Company or any of its affiliates, or (ii) who was employed or engaged by the Company within twenty-four (24)
months of such contact, or otherwise seek to influence or alter any such person's relationship with the Company.

 

12.5         
Blue-Pencil. If any court of competent jurisdiction shall at any time deem the term or any particular restrictive covenant
contained in this Article 12 too lengthy or the Territory too extensive, the other provisions of this Article 12 shall nevertheless
stand, and the Restricted Period and/or the Territory shall be reduced to such duration or size of such court shall determine
to be permissible.

 

		13.	Certain
                                         Remedies.

 

13.1         
Accounting. The Executive agrees that upon a breach of any of the covenants set forth in Article 11 or 12, the Company
shall be entitled to an accounting and payment by the Executive of all profits realized by him as a result of any such violation,
in addition to the injunctive relief set forth in Section 13.2.

 

13.2         
Injunctive Relief. The Executive acknowledges and agrees that the covenants set forth in Articles 11 and 12 are reasonable
and necessary for the protection of the Company's business interests, that irreparable injury will result to the Company if the
Executive breaches any of the terms of Article 11 or 12 and that in the event of any actual or threatened breach by the Executive
of any of the provisions contained in Article 11 or 12, the Company will have no adequate remedy at law. The Executive accordingly
agrees that in the event of any actual or threatened breach by him of any of the provisions contained in Article 11 or 12, the
Company shall be entitled to injunctive and other equitable relief, without the necessity of showing actual monetary damages and
without posting any bond or other security, in addition to pursuing any other remedies available to it for such breach or threatened
breach, including the recovery of any damages.

 

13.3         
Independent Covenants. The provisions of Articles 11 and 12 shall be read and construed and shall have effect as separate,
severable and independent provisions or restrictions, and shall be enforceable accordingly. The existence of any claim or cause
of action which the Executive may have against the Company shall not constitute a defense or bar to the enforcement of any of
the covenants contained in Articles 11 and 12.

 

13.4         
Costs of Enforcement. In addition thereto, if the Company shall resort to litigation to enforce any of the covenants contained
in Article 11 or 12, the successful party in such litigation shall be entitled to recover from the other party all of its costs
of litigation, including reasonable attorneys' fees.

 

13.5         
Extension of Covenant. If the Company must resort to litigation to enforce any of the covenants contained in Article 12
which has a fixed term, then such term shall be extended for a period of time equal to the period of such breach, beginning on
the date of a final court order (without further right of appeal) acknowledging the validity of such covenant or, if later, the
last day of the original fixed term of such covenant.

 

14.             
Survival of Obligations. Notwithstanding anything contained in this Agreement to the contrary, the obligations of the Executive
under Articles 10, 11 and 12, and the rights and remedies of the Company under Article 13 shall survive the termination of the
Executive's employment hereunder for any reason whatsoever.

 

15.             
Non-Disparagement. Executive will not, at any time, during or after this Agreement, directly or indirectly, publish or
communicate disparaging or derogatory statements or opinions in any way about the Company or its affiliates, including but not
limited to disparaging or derogatory statements or opinions about the Company's management, products or services, to any third
party. It shall not be a breach of this section for Executive to testify truthfully in any judicial or administrative proceeding
or to make statements or allegations in legal filings based upon the Executive's reasonable belief and are not made in bad faith.
The Company will not, at any time, during or after this Agreement, directly or indirectly, publish or communicate disparaging
or derogatory statements or opinions about Executive to any third party unrelated to the Company. It shall not be a breach of
this section for the Company, or its employees to testify truthfully in any judicial or administrative proceeding or to make statements
or allegations in legal or government filings that are based on the Company's reasonable belief and are not made in bad faith.
The provision of this Article 15 shall survive the termination of the Executive's employment hereunder for any reason whatsoever.

 

16.             
Initial Employment Agreement Terminated. Effective as of the Commencement Date, this Agreement supersedes in its entirety
the Initial Employment Agreement, which Initial Employment Agreement shall be null and void and of no further force and effect.
The Executive acknowledges that, except for any base salary accrued but not yet paid or for any unreimbursed expenses due under
the Initial Employment Agreement, and any granted options, the Executive has no right to, and hereby remises and releases the
Company from, any further compensation, benefits or entitlements under the Initial Employment Agreement. Specifically, but not
in limitation of the foregoing, the Executive acknowledges that it has previously received Incentive Stock Options which shall
remain in effect. Any un-vested options under that previous grant shall be immediately vested upon effective date of this revised
contract.

 

    	5

    	 

    

 

17.             
Executive Representations.

 

The
Executive represents and warrants to the Company, knowing and intending that it shall rely thereon, as follows:

 

17.1         
No Violations. The execution and delivery of this Agreement by the Executive, and the performance by the Executive of his
obligations hereunder, does not violate any other agreement or contract to which the Executive is a part or by which he may be
bound.

 

17.2         
Authority. The Executive has the power and authority to enter into this Agreement and this Agreement constitutes the valid,
legal and binding obligation of the Executive, enforceable in accordance with its terms.

 

17.3         
No Prior Obligations. Executive is under no obligation to any former employer or any other person which is in any way inconsistent
with, or which imposes any restriction upon, Executive's acceptance of employment hereunder with the Company, the employment of
Executive by the Company, or Executive's undertakings under this Agreement.

 

17.4         
Counsel. The Executive has reviewed this Agreement with _____________________, who has discussed with him the legal, economic
and tax consequences of this Agreement.

 

18.             
Successors.

 

18.1         
The Executive. This Agreement is personal to the Executive and, without the prior express written consent of the Company,
shall not be assignable by the Executive, except that the Executive's rights to receive any compensation or benefits under this
Agreement may be transferred or disposed of pursuant to testamentary disposition, intestate succession or pursuant to a domestic
relations order. This Agreement shall inure to the benefit of and be enforceable by the Executive's heirs, beneficiaries and/or
legal representatives.

 

18.2         
The Company. This Agreement shall inure to the benefit of and be binding upon the Company, and its affiliates, successors
and assigns.

 

		19.	Miscellaneous.

 

19.1         
Governing Law, Arbitration and Venue. This Agreement shall be governed and construed in accordance with the laws of the
state of Nevada. If any controversy or claim arising out of this Agreement or the parties' relationship cannot be settled, the
controversy or claim, whether legal or equitable in nature, including the remedy of rescission, shall be resolved by submission
of the dispute to binding arbitration through the "Fast Track" program of the Arbitration Service of Portland, Oregon
or such other binding arbitration as the parties mutually agree to, provided that the arbitration hearing, if any, must take place
in Portland, Oregon. The parties agree that the arbitrator shall have the power to adjudicate all equitable claims and remedies,
including but not limited to injunctive relief. The decision of the arbitrator or arbitrators shall not be subject to appeal.

 

19.2         
Amendments. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties
hereto or their respective successors and legal representatives.

 

19.3         
Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given
if and when (a) delivered personally, (b) transmitted by prepaid telegram, telex or facsimile except that any notice, request,
demand, instruction, consent or other communication transmitted in the manner set forth in this subjection (b) shall not be deemed
to have been duly given unless and until it is actually received by the intended recipient, (c) mailed by first class certified
mail, return receipt requested, postage prepaid, or (d) sent by a nationally recognized express courier service, postage or delivery
charges prepaid, for overnight delivery, to the parties addressed as follows:

 

If
to the Executive: Frank Greco

8366
SW Jessica Street, 1808

Wilsonville,
OR 97070.

 

 

With
a copy to:

 

If
to the Company:as it then principal place of business

 

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

 

19.4         
Withholding. The Company shall withhold from any amounts payable under this Agreement such federal, state or local income
taxes as shall be required to be withheld pursuant to any applicable law or regulation and all benefit costs payable by the Company's
similarly situated salaried employees.

 

19.5         
Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.

 

    	6

    	 

    

 

19.6         
Captions. The captions of this Agreement are not part of the provisions hereof and shall have no force and effect.

 

19.7         
Entire Agreement. This Agreement contains the entire agreement between the parties concerning the subject matter hereof
and supersedes all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between
the parties with respect thereto.

 

19.8         
Survivorship. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement
and the Executive's Term of Employment hereunder, to the extent necessary to the intended provision of such rights and the intended
performance of such obligations.

 

19.9         
Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity
or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

 

19.10     
Headings. The headings in this Agreement are for the convenience of reference only and shall not be deemed to define, limit,
or describe the scope and intent of this Agreement, or any article or section thereof, or to alter or affect the interpretation
of any provision thereof.

 

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

 

XZERES
CORP.

 

 

By:
/s/ Authorized Signatory 

 

 

/s/
Frank Greco

FRANK
GRECO, Executive

 

    	7

    	 

    

 

EXHIBIT
“A”

 

First
Amendment to Employment Agreement Frank Greco

 

 

Compensation:

 

		A.	Base
                                         Salary and Options: Executive will be paid a annual base salary of $180,000, payable
                                         on a bi-weekly basis. Executive will maintain existing options and vesting schedule under
                                         the previous employment contract. Any un-vested options under that previous grant shall
                                         be immediately vested upon effective date of this revised contract.

		B.	Bonus
                                         Plan:

 

 

 

 

 

 

The
gross operating revenue benchmarks and bonuses are cumulative and can be applied between the defined periods. Each Bonus shall
be granted within 30 days after the determination of the gross operating revenues for the applicable period.

 

	Special Acknowledgements

Change
of Control:

 

	Should a
“Change of Control” of the company occur as defined in the securities market, then all issued Incentive Stock Options
which remain unvested at the time of this occurrence would receive accelerated vesting to one-hundred (100) per cent.

 

    	8

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