Document:

Exhibit 10.2

 

TETRALOGIC PHARMACEUTICALS CORPORATION
 2004 EQUITY INCENTIVE PLAN

 

SECTION 1. Purpose; Definitions. The purposes of the Corporation 2004 Equity Incentive Plan (the “Plan”) are to: (a) enable TetraLogic Pharmaceuticals Corporation (the “Company”) and its affiliated companies to recruit and retain highly qualified employees, directors and consultants; (b) provide those employees, directors and consultants with an incentive for productivity; and (c) provide those employees, directors and consultants with an opportunity to share in the growth and value of the Company.

 

For purposes of the Plan, the following initially capitalized words and phrases will be defined as set forth below, unless the context clearly requires a different meaning:

 

a.                   “Affiliate” means, with respect to a Person, a Person that directly or indirectly controls, or is controlled by, or is under common control with such Person.

 

b.                   “Award” means a grant of Options or Restricted Shares pursuant to the provisions of this Plan.

 

c.                    “Award Agreement” means, with respect to any particular Award, the written document that sets forth the terms of that particular Award.

 

d.                   “Board” means the Board of Directors of the Company, as constituted from time to time; provided, however, that if the Board appoints a Committee to perform some or all of the Board’s administrative functions hereunder pursuant to Section 2, references in this Plan to the “Board” will be deemed to also refer to that Committee in connection with administrative matters to be performed by that Committee.

 

e.                    “Cause” means (i) alcohol abuse or use of controlled drugs (other than in accordance with a physician’s prescription); (ii) refusal, failure or inability to perform any material obligation or fulfill any duty (other than any duty or obligation of the type described in clause (iv) below) to the Company (other than due to a Disability), which failure, refusal or inability is not cured within 10  days after delivery of notice thereof; (iii) gross negligence or willful misconduct in the course of employment; (iv) any breach of any obligation or duty to the Company or any of its Affiliates (whether arising by statute, common law, contract or otherwise) relating to confidentiality, noncompetition, nonsolicitation or proprietary rights; (v) other conduct involving any type of disloyalty to the Company or any of its Affiliates, including, without limitation, fraud, embezzlement, theft or proven dishonesty; or (vi) conviction of (or the entry of a plea of guilty or nolo contendere to) a misdemeanor involving moral turpitude or a felony. Notwithstanding the foregoing, if a Participant and the Company (or any of its Affiliates) have entered into an employment agreement, consulting agreement or other similar agreement that specifically defines “cause,” then with respect to such Participant, “Cause” shall have the meaning defined in that employment agreement, consulting agreement or other agreement.

 

f.                     “Change in Control” means the happening of an event, which shall be deemed to have occurred upon the earliest to occur of the following events:

 

 

(i)                                     the date the stockholders of the Company (or the Board, if stockholder action is not required) approve a plan or other arrangement pursuant to which the Company will be dissolved or liquidated;

 

(ii)                                  the date the stockholders of the Company (or the Board, if stockholder action is not required) approve a definitive agreement to sell or otherwise dispose of all or substantially all of the assets of the Company;

 

(iii)                               the date the stockholders of the Company (or the Board, if stockholder action is not required) and the stockholders of the other constituent corporations (or their respective boards of directors, if and to the extent that stockholder action is not required) have approved a definitive agreement to merge or consolidate the Company with or into another corporation, other than, in either case, a merger or consolidation of the Company in which holders of shares of the Company’s voting capital stock immediately prior to the merger or consolidation will have at least 50% of the ownership of voting capital stock of the surviving corporation immediately after the merger or consolidation (on a fully diluted basis), which voting capital stock is to be held in the same proportion (on a fully diluted basis) as such holders’ ownership of voting capital stock of the Company immediately before the merger or consolidation;

 

(iv)                              the date any entity, Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act), other than (A) the Company, or (B) any of its Subsidiaries, or (C) any of the holders of the capital stock of the Company, as determined on the date that this Plan is adopted by the Board, or (D) any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Subsidiaries or (E) any Affiliate (as such term is defined in Rule 405 promulgated under the Securities Act of 1933, as amended) of any of the foregoing, shall have acquired beneficial ownership of, or shall have acquired voting control over more than 50% of the outstanding shares of the Company’s voting capital stock (on a fully diluted basis), unless the transaction pursuant to which such person, entity or group acquired such beneficial ownership or control resulted from the original issuance by the Company of shares of its voting capital stock and was approved by at least a majority of directors who shall have been either members of the Board on the date that this Plan is adopted by the Board or members of the Board for at least twelve (12) months prior to the date of such approval (the “Original Issuance Exception”); provided, however, that on and after the date the Company’s Shares are publicly-traded, the Original Issuance Exception shall not apply to any entity, Person or group identified in Subsections (C) or (E) above.

 

(v)                                 the first day after the date of this Plan when directors are elected such that there shall have been a change in the composition of the Board such that a majority of the Board shall have been members of the Board for less than twelve (12) months, unless the nomination for election of each new director who was not a director at the beginning of such twelve (12) month period was approved by a vote of at least sixty percent (60%) of the directors then still in office who were directors at the beginning of such period; or

 

(vi)                              the date upon which the Board determines (in its sole discretion) that based on then current available information, the events described in clause (iv) are reasonably likely to occur.

 

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g.                    “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.

 

h.                   “Committee” means a committee appointed by the Board in accordance with Section 2 of the Plan.

 

i.                       “Company” means TetraLogic Pharmaceuticals Corporation.

 

j.                      “Consultant” means an individual performing services as an independent contractor for the Company, but who is not an Employee or Director.

 

k.                   “Director” means a member of the Board. 

 

1.                   “Disability” means a condition rendering a Participant Disabled.

 

m.               “Disabled” will have the same meaning as set forth in Section 22(e)(3) of the Code.

 

n.                   “Employee” means common-law employee of the Company or any Subsidiary.

 

o.                   “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

p.                   “Fair Market Value” means, as of any date: (i) if the Shares are not publicly-traded, the value of such Shares on that date, as determined by the Board in its sole and absolute discretion; or (ii) if the Shares are traded in the over-the-counter market, the Fair Market Value per Share shall be the mean of the bid and asked prices for a Share on the relevant valuation date as reported in The Wall Street Journal (or, if not so reported, as otherwise reported by the National Association of Securities Dealers Automated Quotations (“NASDAQ”) System), as applicable or, if there is no trading on such date, on the next preceding date on which there were reported Share prices. In the event Shares are listed on a national or regional securities exchange or traded through the NASDAQ National Market, the Fair Market Value of a Share shall be the closing price for a Share on the exchange or on the NASDAQ National Market, as reported in The Wall Street Journal on the relevant valuation date, or if there is no trading on that date, on the next preceding date on which there were reported Share prices.

 

q.                   “Incentive Stock Option” means any Option intended to be and designated as an “Incentive Stock Option” within the meaning of Section 422 of the Code.

 

r.                      “Non-Employee Director” will have the meaning set forth in Rule 16b-3(b)(3)(i) promulgated by the Securities and Exchange Commission under the Exchange Act, or any successor definition adopted by the Securities and Exchange Commission; provided, however, that the Board or the Committee may, to the extent that it deems necessary to comply with Section 162(m) of the Code or regulations thereunder, require that each “Non-Employee Director” also be an “outside director” as that term is defined in regulations under Section 162(m) of the Code.

 

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s.                     “Non-Qualified Stock Option” means any Option that is not an Incentive Stock Option.

 

t.                      “Option” means any option to purchase Shares (including Restricted Shares, if the Committee so determines) granted pursuant to Section 5 hereof.

 

u.                   “Participant” means an employee, consultant or Director of the Company or any of its Affiliates to whom an Award is granted.

 

v.                   “Person” means an individual, partnership, corporation, limited liability company, trust, joint venture, unincorporated association, or other entity or association.

 

w.                 “Restricted Shares” means Shares that are subject to restrictions pursuant to Section 7 hereof.

 

x.                   “Share” means a share of Company’s common stock, par value $0.0001, subject to substitution or adjustment as provided in Section 3(c) hereof.

 

y.                   “Stock Purchase Agreement” means any stock purchase, stock restriction, stockholders’ or other agreement the Board may require a Participant to execute as a condition of his or her receipt of either a grant of Restricted Shares or of the issuance of Shares pursuant to the exercise of an Option.

 

z.                    “Subsidiary” means, in respect of the Company, a subsidiary company, whether now or hereafter existing, as defined in Sections 424(f) and (g) of the Code.

 

SECTION 2. Administration. The Plan will be administered by the Board; provided, however, that the Board may at any time appoint a Committee to perform some or all of the Board’s administrative functions hereunder; and provided further, that the authority of any Committee appointed pursuant to this Section 2 will be subject to such terms and conditions as the Board may prescribe and will be coextensive with, and not in lieu of, the authority of the Board hereunder.

 

Any Committee established under this Section 2 will be composed of not fewer than two members, each of whom will serve for such period of time as the Board determines; provided, however, that if the Company has a class of securities required to be registered under Section 12 of the Exchange Act, all members of any Committee established pursuant to this Section 2 will be Non-Employee Directors. From time to time the Board may increase the size of the Committee and appoint additional members thereto, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies however caused, or remove all members of the Committee and thereafter directly administer the Plan.

 

Members of the Board who are eligible for Awards or have received Awards may vote on any matters affecting the administration of the Plan or the grant of Awards, except that no such member will act upon the grant of an Award to himself or herself, but any such member may be counted in determining the existence of a quorum at any meeting of the Board during which action is taken with respect to the grant of Awards to himself or herself.

 

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The Board will have full authority to grant Awards under the Plan. In particular, subject to the terms of the Plan, the Board will have the authority:

 

a.                   to select the persons to whom Awards may from time to time be granted hereunder (consistent with the eligibility conditions set forth in Section 4);

 

b.                   to determine the type of Award to be granted to any person hereunder;

 

c.                    to determine the number of Shares, if any, to be covered by each such Award;

 

d.                   to establish the terms and conditions of each Award Agreement;

 

e.                    to determine whether and under what circumstances an Option may be exercised without a payment of cash under Section 5(d); and

 

f.                     to determine whether, to what extent and under what circumstances Shares and other amounts payable with respect to an Award may be deferred either automatically or at the election of the Participant.

 

The Board will have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it, from time to time, deems advisable; to establish the terms of each Award Agreement; to interpret the terms and provisions of the Plan and any Award issued under the Plan (and any Award Agreement); to amend the terms of any Award Agreement, provided that the Participant consents to such amendment; and to otherwise supervise the administration of the Plan. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award in the manner and to the extent it deems necessary to carry out the intent of the Plan.

 

All decisions made by the Board pursuant to the provisions of the Plan will be final and binding on all persons, including the Company and Participants. No Director will be liable for any good faith determination, act or omission in connection with the Plan or any Award.

 

SECTION 3. Shares Subject to the Plan.

 

a.                   Shares Subject to the Plan. The Shares to be subject to or related to Awards under the Plan will be authorized and unissued Shares of the Company, whether or not previously issued and subsequently acquired by the Company. The maximum number of Shares that may be subject to Options or Restricted Shares under the Plan is Eight Hundred Seventy-Five Thousand (875,000), and the Company will reserve for the purposes of the Plan, out of its authorized and unissued Shares, such number of Shares.

 

b.                   Effect of the Expiration or Termination of Awards. If and to the extent that an Option expires, terminates or is canceled or forfeited for any reason without having been exercised in full, the Shares associated with that Option will again become available for grant under the Plan. Similarly, if and to the extent any Restricted Share is canceled, forfeited or repurchased for any reason, or if any Share is withheld pursuant to Section 9(d) in settlement of a tax withholding obligation associated with an Award, that Share will again become available for

 

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grant under the Plan. Finally, if any Share is received in satisfaction of the exercise price payable upon exercise of an Option, that Share will become available for grant under the Plan.

 

c.                    Other Adjustment. In the event of any recapitalization, stock split or combination, stock dividend or other similar event or transaction affecting the Shares, equitable substitutions or adjustments may be made by the Board, in its sole and absolute discretion, to the aggregate number, type and issuer of the securities reserved for issuance under the Plan, to the number, type and issuer of Shares subject to outstanding Options, to the exercise price of outstanding Options, and to the number, type and issuer of Restricted Shares.

 

d.                   Change in Control. Notwithstanding anything to the contrary set forth in the Plan or any other agreement, upon or in anticipation of any Change in Control, the Board may, in its sole and absolute discretion and without the need for the consent of any Participant, take one or more of the following actions contingent upon the occurrence of that Change in Control: (i) cause any or all outstanding Options to become vested and immediately exercisable, in whole or in part; (ii) cause any or all outstanding Restricted Shares to become non-forfeitable, in whole or in part; (iii) cancel any or all Options, in whole or in part, in exchange for an option to purchase common stock of any successor corporation, which new option satisfies the requirements of Treas. Reg. § 1.425-1(a)(4)(i) (notwithstanding the fact that the original Option may never have been intended to satisfy the requirements for treatment as an Incentive Stock Option); (iv) cancel any or all Restricted Shares, in whole or in part, in exchange for restricted shares of the common stock of any successor corporation; (v) redeem any or all Restricted Share, in whole or in part, for cash and/or other substitute consideration with a value equal to the Fair Market Value of an unrestricted Share on the date of the Change in Control; or (vi) cancel any or all outstanding Options, in whole or in part, in exchange for cash and/or other substitute consideration with a value equal to (A) the number of Shares cancelled subject to such Options, multiplied by (B) the amount by which the Fair Market Value per Share on the date of the Change in Control exceeds the exercise price of such Options; provided, that if the Fair Market Value per Share on the date of the Change in Control does not exceed the exercise price of any such Option, the Board may cancel that Option without any payment of consideration therefore.

 

SECTION 4. Eligibility. Employees, Directors, Consultants, and other individuals who provide services to the Company or its Affiliates are eligible to be granted Awards under the Plan. Persons who are not employees of the Company or a Subsidiary are not eligible to be granted Incentive Stock Options but are eligible to be granted other types of Awards.

 

SECTION 5. Options. Options granted under the Plan may be of two types: (i) Incentive Stock Options or (ii) Non-Qualified Stock Options. Any Option granted under the Plan will be in such form as the Board may at the time of such grant approve.

 

The Award Agreement evidencing any Option will incorporate the following terms and conditions and will contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Board deems appropriate in its sole and absolute discretion:

 

a.                   Option Price. The exercise price per Share purchasable under a Non-Qualified Stock Option will be determined by the Board. The exercise price per Share

 

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purchasable under an Incentive Stock Option will be not less than 100% of the Fair Market Value of a Share on the date of the grant. However, any Incentive Stock Option granted to any Participant who, at the time the Option is granted, owns more than 10% of the voting power of all classes of shares of the Company or of a Subsidiary will have an exercise price per Share of not less than 110% of Fair Market Value per Share on the date of the grant.

 

b.                   Option Term. The term of each Option will be fixed by the Board, but no Incentive Stock Option will be exercisable more than 10 years after the date the Option is granted. However, any Incentive Stock Option granted to any Participant who, at the time such Option is granted, owns more than 10% of the voting power of all classes of shares of the Company or of a Subsidiary may not have a term of more than five years. No Option may be exercised by any person after expiration of the term of the Option.

 

c.                    Exercisability. Options will vest and be exercisable at such time or times and subject to such terms and conditions as determined by the Board at the time of grant. If the Board provides, in its discretion, that any Option is exercisable only in installments, the Board may waive such installment exercise provisions at any time at or after grant, in whole or in part, based on such factors as the Board determines, in its sole and absolute discretion.

 

d.                   Method of Exercise. Subject to the exercisability provisions under Section 5(c), the termination provisions set forth in Section 6 and the applicable Award Agreement, Options may be exercised in whole or in part at any time and from time to time during the term of the Option, by the delivery of written notice of exercise by the Participant to the Company specifying the number of Shares to be purchased. Such notice will be accompanied by payment in full of the purchase price, either by certified or bank check, or such other means as the Board may accept and by an executed copy of a Stock Purchase Agreement, as required by the Board. As determined by the Board, in its sole discretion, at or after grant, payment in full or in part of the exercise price of an Option may be made in the form of previously acquired Shares based on the Fair Market Value of the Shares on the date the Option is exercised; provided, however, that, in the case of an Incentive Stock Option, the right to make a payment in the form of previously acquired Shares may be authorized only at the time the Option is granted.

 

No Shares will be issued upon exercise of an Option until full payment therefor has been made. A Participant will not have the right to distributions or dividends or any other rights of a stockholder with respect to Shares subject to the Option until the Participant has given written notice of exercise, has paid in full for such Shares, and, if requested, has given the representation described in Section 9(a) hereof.

 

e.                    Incentive Stock Option Limitations. In the case of an Incentive Stock Option, the aggregate Fair Market Value (determined as of the time of grant) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year under the Plan and/or any other plan of the Company or any Subsidiary will not exceed $100,000. For purposes of applying the foregoing limitation, Incentive Stock Options will be taken into account in the order granted. To the extent any Option does not meet such limitation, that Option will be treated for all purposes as a Non-Qualified Stock Option.

 

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f.                     Termination of Service. Unless otherwise specified in the applicable Award Agreement, Options will be subject to the terms of Section 6 with respect to exercise upon or following termination of service.

 

g.                    Transferability of Options. Except as may otherwise be specifically determined by the Board with respect to a particular Non-Qualified Stock Option, no Option will be transferable by the Participant other than by will or by the laws of descent and distribution, and all Options will be exercisable, during the Participant’s lifetime, only by the Participant or, in the event of his Disability, by his personal representative.

 

SECTION 6. Termination of Service. Unless otherwise specified with respect to a particular Award, Options will remain exercisable after termination of service only to the extent specified in this Section 6.

 

a.                   Termination by Reason of Death. If a Participant’s service with the Company or any Affiliate terminates by reason of death, any Option held by such Participant may thereafter be exercised, to the extent then exercisable or on such accelerated basis as the Board may determine, at or after grant, by the legal representative of the estate or by the legatee of the Participant under the will of the Participant, for a period expiring (i) at such time as may be specified by the Board at or after the time of grant, or (ii) if not specified by the Board, then 12 months from the date of death, or (iii) if sooner than the applicable period specified under (i) or (ii) above, then upon the expiration of the stated term of such Option.

 

b.                   Termination by Reason of Disability. If a Participant’s service with the Company or any Affiliate terminates by reason of Disability, any Option held by such Participant may thereafter be exercised by the Participant or his personal representative, to the extent it was exercisable at the time of termination, or on such accelerated basis as the Board may determine at or after grant, for a period expiring (i) at such time as may be specified by the Board at or after the time of grant, or (ii) if not specified by the Board, then 12 months from the date of termination of service, or (iii) if sooner than the applicable period specified under (i) or (ii) above, then upon the expiration of the stated term of such Option.

 

c.                    Cause. If a Participant’s service with the Company or any Affiliate is terminated for Cause: (i) any Option not already exercised will be immediately and automatically forfeited as of the date of such termination, and (ii) any Shares for which the Company has not yet delivered share certificates will be immediately and automatically forfeited and the Company will refund to the Participant the Option exercise price paid for such Shares, if any.

 

d.                   Other Termination. If a Participant’s service with the Company or any Affiliate terminates for any reason other than death, Disability or Cause, any Option held by such Participant may thereafter be exercised by the Participant, to the extent it was exercisable at the time of such termination, or on such accelerated basis as the Board may determine at or after grant, for a period expiring (i) at such time as may be specified by the Board at or after the time of grant, or (ii) if not specified by the Board, then 90 days from the date of termination of service, or (iii) if sooner than the applicable period specified under (i) or (ii) above, then upon the expiration of the stated term of such Option.

 

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SECTION 7. Restricted Shares.

 

a.                        Issuance. Restricted Shares may be issued either alone or in conjunction with other Awards. The Board will determine the time or times within which Restricted Shares may be subject to forfeiture, and all other conditions of such Awards.

 

b.                        Awards and Certificates. The Award Agreement evidencing the grant of any Restricted Shares will contain such terms and conditions, not inconsistent with the terms of the Plan, as the Board deems appropriate in its sole and absolute discretion. The prospective recipient of an Award of Restricted Shares will not have any rights with respect to such Award, unless and until such recipient has executed an Award Agreement and has delivered a fully executed copy thereof to the Company, and has otherwise complied with the applicable terms and conditions of such Award. The purchase price for Restricted Shares may, but need not, be zero.

 

A share certificate will be issued in connection with each Award of Restricted Shares. Such certificate will be registered in the name of the Participant receiving the Award, and will bear the following legend and/or any other legend required by the Plan, the Award Agreement, the Company’s stockholders’ agreement, if any, or by applicable law:

 

THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE TETRALOGIC PHARMACEUTICALS CORPORATION 2004 EQUITY INCENTIVE PLAN AND AN AGREEMENT ENTERED INTO BETWEEN THE PARTICIPANT AND TETRALOGIC PHARMACEUTICALS CORPORATION (WHICH TERMS AND CONDITIONS MAY INCLUDE, WITHOUT LIMITATION, CERTAIN TRANSFER RESTRICTIONS, REPURCHASE RIGHTS AND FORFEITURE CONDITIONS). COPIES OF THAT PLAN AND AGREEMENT ARE ON FILE IN THE PRINCIPAL OFFICES OF TETRALOGIC PHARMACEUTICALS CORPORATION AND WILL BE MADE AVAILABLE TO THE HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON REQUEST TO THE SECRETARY OF TETRALOGIC PHARMACEUTICALS CORPORATION.

 

Share certificates evidencing Restricted Shares will be held in custody by the Company or in escrow by an escrow agent until the restrictions thereon have lapsed. As a condition to any Restricted Share Award, the Participant may be required to deliver to the Company a share power, endorsed in blank, relating to the Shares covered by such Award.

 

c.                         Restrictions and Conditions. The Restricted Shares awarded pursuant to this Section 7 will be subject to the following restrictions and conditions:

 

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(i)                                     During a period commencing with the date of grant of an Award of Restricted Shares and ending at such time or times as specified by the Board (the “Restriction Period”), the Participant will not be permitted to sell, transfer, pledge, assign or otherwise encumber Restricted Shares awarded under the Plan. The Board may condition the lapse of restrictions on Restricted Shares upon the continued employment or service of the recipient, the attainment of specified individual or corporate performance goals, or such other factors as the Board may determine, in its sole and absolute discretion.

 

(ii)                                  Prior to the expiration of the Restriction Period, the Participant will not be entitled to vote such Restricted Shares. Consistent with Section 3(c), any distributions or dividends paid in the form of securities with respect to Restricted Shares will be subject to the same terms and conditions as the Restricted Shares with respect to which they were paid, including, without limitation, the same Restriction Period.

 

(iii)                               Subject to the applicable provisions of the Award Agreement, if a Participant’s service with the Company terminates prior to the expiration of the Restriction Period, all of that Participant’s Restricted Shares which then remain subject to forfeiture will then be forfeited automatically.

 

(iv)                              In the event of hardship or other special circumstances of a Participant whose service with the Company is involuntarily terminated (other than for Cause), the Board may, in its sole discretion, waive in whole or in part any or all remaining restrictions with respect to such Participant’s Restricted Shares, based on such factors as the Board may deem appropriate.

 

(v)                                 If and when the Restriction Period expires without a prior forfeiture of the Restricted Shares (or if and when the restrictions applicable to Restricted Shares lapse pursuant to Sections 3(d) or 7(c)(iv)), the certificates for such Shares will be replaced with new certificates, without the portion of restrictive legends described in Section 7(b) applicable to such lapsed restrictions, and such new certificates will be promptly delivered to the Participant, the Participant’s representative (if the Participant has suffered a Disability), or the Participant’s estate or heir (if the Participant has died).

 

SECTION 8. Amendments and Termination.

 

a. Amendment or Termination of the Plan. The Board may amend, alter or discontinue the Plan at any time, but, except as otherwise provided in Section 3(d) of the Plan, no amendment, alteration or discontinuation will be made which would impair the rights of a Participant with respect to an Award, without that Participant’s consent, or which, without the approval of such amendment within one year (365 days) of its adoption by the Board, by a majority of the votes cast at a duly held stockholder meeting at which a quorum representing a majority of the Company’s outstanding voting shares is present (either in person or by proxy), would : (i) increase the total number of Shares reserved for the purposes of the Plan (except as otherwise provided in Section 3(c)), or (ii) change the persons or class of persons eligible to receive Awards.

 

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b.                   Amendment or Termination of Outstanding Options. An amendment or termination of the Plan that occurs after an Award shall not materially impair the rights of a Participant unless the Participant consents or unless the amendment is required in order to comply with applicable law. The termination of the Plan shall not impair the power and authority of the Committee with respect to an outstanding Award. Whether or not the Plan has terminated, an outstanding Award may be amended or terminated in accordance with the Plan or may be amended by agreement of the Company and the Participant consistent with the Plan.

 

SECTION 9. General Provisions.

 

a.                   The Board may require each Participant to represent to and agree with the Company in writing that the Participant is acquiring securities of the Company for investment purposes and without a view to distribution thereof and as to such other matters as the Board believes are appropriate. The certificate evidencing any Award and any securities issued pursuant thereto may include any legend which the Board deems appropriate to reflect any restrictions on transfer and compliance with securities laws.

 

All certificates for Shares or other securities delivered under the Plan will be subject to such share-transfer orders and other restrictions as the Board may deem advisable under the rules, regulations, and other requirements of the Securities Act of 1933, as amended, the Exchange Act, any stock exchange upon which the Shares are then listed, and any other applicable Federal or state securities laws, and the Board may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

 

b.                   Nothing contained in the Plan will prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.

 

c.                    Neither the adoption of the Plan nor the execution of any document in connection with the Plan will (i) confer upon any Person any right to continued employment or engagement with the Company or an Affiliate or (ii) interfere in any way with the right of the Company or an Affiliate to terminate the employment or engagement of any of its Employees or Consultants at any time.

 

d.                   No later than the date as of which an amount first becomes includible in the gross income of the Participant for federal income tax purposes with respect to any Award under the Plan, the Participant will pay to the Company, or make arrangements satisfactory to the Board regarding the payment of, any federal, state or local taxes of any kind required by law to be withheld with respect to such amount. Unless otherwise determined by the Board, the minimum required withholding obligations may be settled with Shares, including Shares that are part of the Award that gives rise to the withholding requirement. The obligations of the Company under the Plan will be conditioned on such payment or arrangements and the Company will, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant.

 

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SECTION 10. Effective Date of Plan. The Plan will become effective on the date that it is adopted by the Board; provided, however, that all Options intended to be Incentive Stock Options will automatically be converted into Non-Qualified Stock Options if the Plan is not approved by the Company’s stockholders within one year (365 days) of its adoption by the Board in a manner consistent with Treas. Reg. § 1.422-5.

 

SECTION 11. Term of Plan. The Plan will continue in effect until terminated in accordance with Section 8; provided, however, that no Incentive Stock Option will be granted hereunder on or after the 10th anniversary of the date of shareholder approval of the Plan (or, if the shareholders approve an amendment that increases the number of shares subject to the Plan, the 10th anniversary of the date of such approval); but provided further, that Incentive Stock Options granted prior to such 10th anniversary may extend beyond that date.

 

SECTION 12. Invalid Provisions. In the event that any provision of the Plan is found to be invalid or otherwise unenforceable under any applicable law, such invalidity or unenforceability will not be construed as rendering any other provisions contained herein as invalid or unenforceable, and all such other provisions will be given full force and effect to the same extent as though the invalid or unenforceable provision was not contained herein.

 

SECTION 13. Governing Law. This Plan and all Awards granted hereunder will be governed by and construed in accordance with the laws and judicial decisions of the State of Delaware, without regard to the application of the principles of conflicts of laws.

 

SECTION 14. Board Action. Notwithstanding anything to the contrary set forth in the Plan, any and all actions of the Board or Committee, as the case may be, taken under or in connection with the Plan and any agreements, instruments, documents, certificates or other writings entered into, executed, granted, issued and/or delivered pursuant to the terms hereof, will be subject to and limited by any and all votes, consents, approvals, waivers or other actions of all or certain stockholders of the Company or other persons required by:

 

a.                   the Company’s Articles of Incorporation (as the same may be amended and/or restated from time to time);

 

b.                   the Company’s Bylaws (as the same may be amended and/or restated from time to time); and

 

c.                    any other agreement, instrument, document or writing now or hereafter existing, between or among the Company and its stockholders or other Persons (as the same may be amended from time to time).

 

SECTION 15. Notices. Any notice to be given to the Company pursuant to the provisions of the Plan shall be addressed to the Company in care of its Secretary (or such other person as the Company may designate from time to time) at its principal executive office, and any notice to be given to a Participant shall be delivered personally or addressed to him or her at the address given beneath his or her signature on his or her Award Agreement, or at such other address as such Participant may hereafter designate in writing to the Company. Any such notice shall be deemed duly given on the date and at the time delivered via personal, courier or recognized overnight delivery service or, if sent via telecopier, on the date and at the time

 

12

 

telecopied with confirmation of delivery or, if mailed, on the date five (5) days after the date of the mailing (which shall be by regular, registered or certified mail). Delivery of a notice by telecopy (with confirmation) shall be permitted and shall be considered delivery of a notice notwithstanding that it is not an original that is received.

 

	
 
    	
ADOPTION AND APPROVAL OF PLAN
    
	
 
    	
 
    
	
 
    	
Date Plan adopted by Board:
    	
February 2, 2004
    
	
 
    	
Date Plan approved by Stockholders:
    	
March 12, 2004
    
	
 
    	
Effective Date of Plan:
    	
February 2, 2004
    

 

13

 

AMENDMENT 2007-1
 TO THE
 TETRALOGIC PHARMACEUTICALS CORPORATION
 2004 EQUITY INCENTIVE PLAN

 

WHEREAS, the Board of Directors of the TetraLogic Pharmaceuticals Corporation (the “Board”) has previously adopted and implemented the TetraLogic Pharmaceuticals Corporation 2004 Equity Incentive Plan (as amended, the “Plan”); and

 

WHEREAS, the Board hereby determines and declares that it is advisable and in the best interest of TetraLogic Pharmaceuticals Corporation (the “Company”) and its stockholders to revise the Plan to provide that any Committee appointed by the Board to perform some or all of the Board’s administrative functions may consist of an individual member or multiple members, as appointed by the Board, and that such Committee may further delegate its authority to an individual or individuals; and

 

WHEREAS, pursuant to Section 8 of the Plan, the Board has the authority to amend the Plan; and

 

WHEREAS, capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Plan and each respective option agreement.

 

NOW THEREFORE, effective as of the date hereof, the Plan is hereby amended as follows:

 

1.                                  Section 2 of the Plan is hereby revised by amending the second paragraph in its entirety to read as follows:

 

“Any Committee established under this Section 2 may be composed of an individual or individuals who will serve for such period of time as the Board determines. Such Committee may at any time appoint an individual or individuals to perform some or all of the Board’s or any such Committee’s administrative functions hereunder, such individual or individuals to serve at the pleasure of the Board or such Committee; provided however, that the authority of any Committee delegate will be subject to such terms and conditions as the Board or any such Committee may prescribe and will be coextensive with, and not in lieu of, the authority of the Board and any Committee hereunder. If the Company has a class of securities required to be registered under Section 12 of the Exchange Act, all members of any Committee established pursuant to this Section 2 will be Non-Employee Directors. From time to time the Board may increase the size of the Committee and appoint additional members thereto, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies however caused, or remove all members of the Committee and thereafter directly administer the Plan.”

 

2.                                  In all other respects the Plan is affirmed.

 

[execution page follows]

 

 

IN WITNESS WHEREOF, this Amendment has been executed on this 24th day of January, 2007.

 

	
 
    	
TETRALOGIC PHARMACEUTICALS CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ John M. Gill
    
	
 
    	
Title:
    	
President & CEO
    

 

2Exhibit 10.5

 

MANAGEMENT TRANSITION AGREEMENT

 

This Agreement is being entered into as of the 12th day of August, 2013 by and between TetraLogic Pharmaceuticals Corporation (hereinafter “Company”), and Mr. John M. Gill (hereinafter “Gill”).

 

WHEREAS, Gill is employed by Company as President and Chief Executive Officer;

 

WHEREAS, Gill and Company have mutually agreed that Gill resign his employment with Company and also resign as an officer of Company, all to be effective August 12, 2013 (“Resignation Date”); and

 

WHEREAS, Company and Gill desire to enter into this Agreement to fully resolve all questions of expenses, compensation, entitlement to benefits, and any and all other claims, whether known or unknown, which either Gill or Company may have relating to Gill’s employment with the Company, including without limitation the Second Amended and Restated Employment Agreement between Gill and Company dated as of December 17, 2010 (the “Employment Agreement”).

 

In consideration of the mutual promises contained in this Management Transition Agreement (“Agreement”) and intending to be legally bound, the parties agree as follows:

 

1.                                      Company will provide Gill with the following payments and considerations in consideration of Gill’s acceptance of this Agreement and cancellation of the Employment Agreement, such cancellation to be effective as of the Resignation Date:

 

(a)                                 Fifteen (15) months of Gill’s monthly base salary as of the Resignation Date (being $34,386.50 per month), less applicable employment deductions, payable in thirty (30) equal semi-monthly installments in accordance with Company’s normal payroll policies. The first of such payments shall be made on the first payroll date after the Resignation Date. Gill will receive by separate cover information regarding rights to insurance (COBRA) continuation.

 

 

(b)                                 At Gill’s election, to be made by written notice to the Company or before September 30, 2013, either:

 

i.                  The amount of two hundred fifty thousand dollars ($250,000) less applicable employment deductions, payable in thirty equal semi-monthly installments in accordance with Company’s normal payroll policies, the first of such payments to be made on the first payroll date after Gill’s election of such payment, or

 

ii.               The following cash incentive bonus payments, in each case payable within thirty (30) days after the occurrence of the associated milestone event:

 

	
Milestone
    	
 
    	
Cash Payment
    
	
 
    	
 
    	
 
    
	
(A)       Upon the   starting of employment of a new CEO
    	
 
    	
$50,000
    
	
 
    	
 
    	
 
    
	
(B)       Consummation   of one or more (1) agreements from term sheets executed on or prior to   December 31, 2013 for partnership or other collaborative agreements   (including but not limited to agreements related to co-development with TRAIL   agonists) with any entity with which Gill had substantive discussions over the   eighteen (18) months immediately prior to the Resignation Date, including   without limitation the following entities: Amgen; Pfizer, Celgene, Celsion,   Kyowa Hakko, Taiho, Daiichi, Astra Zeneca, Boehringer Ingelheim, Merck,   Sinologic, GSK, Gilead, JNJ, Lilly, Takeda, Sanofi, Shire, ViroPharma, Ono,   Genentech/Roche and Bristol Myers Squibb, that contractually commit payment   to Company over the first three (3) years of the agreement(s) of no   less than fifteen million dollars ($15M) of non-dilutive funding, and/or   (2) the first closing(s) of financings that contractually commit,   on or prior to December 31, 2013, to payment to Company of no less than
    	
 
    	
1% of amounts committed to be paid to Company in first three   (3) years
    

 

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twenty million dollars ($20M) from new   investors over three (3) years after such first closing(s), not including the   conversion of any notes held by investors as of the date of this Agreement,   but including as commitments future closings of a tranched financing that are   subject to the satisfaction of a funding milestones; all provided that the   total amount committed to Company pursuant to clauses (1) and (2) above   during such three (3)-year periods shall not total less than thirty-five   million dollars ($35M). In the event of a closing of a tranched financing as   to which the full thirty-five million ($35M) is not invested until the   funding milestone is satisfied, payment (but not option vesting pursuant to   Section 1(c)) shall be deferred until the date on which the thirty-five   million ($35M)threshold has been achieved.
    	
 
    	
 
    

 

For avoidance of doubt, a transaction constituting a Change of Control shall not be deemed a partnership or other collaborative transaction for purposes of this section (ii).

 

If any amounts set forth in (b) above are paid while Gill is still an employee of Company, then such amounts will be paid less applicable employment deductions. Any amounts that are or may become payable pursuant to this Agreement after Gill’s death shall be paid to his estate.

 

(c)                                  A cash payment in the amount of five (5) weeks of unused vacation or PTO, as of the Resignation Date;

 

(d)                                 All of Gill’s unvested restricted Company shares and options for Gill to purchase Company shares will vest on the Resignation Date.

 

(e)                                  Company will grant to Gill as of the Resignation Date additional stock options (“New Options”) which shall vest upon the achievement of the milestones set forth in Sections (b)(ii)(A) and (B) above for that number of shares equal to 0.75% of fully-diluted Company shares (including shares to be issued on conversion of the outstanding investor notes and warrants and Amgen convertible note, but not including options or restricted stock grants to the Company’s new CEO, CFO or COO) as of the date of this Agreement, one-third of which New Options shall vest on achievement of each of the three milestones defined in Sections 1(b)(ii)(A), 1(b)(ii)(B)(1) and 1(b)(ii)(B)(2) above, respectively, (being total possible grants for 0.75% of such fully-diluted shares), plus New Options for an additional

 

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0.9% in equity to vest at the rate of .03% upon commitment to the Company of each one million dollars ($1M) of either equity from new investors or non-equity funding that the Company raises in excess of the aggregate total of thirty-five million ($35M) committed to the Company prior to December 31, 2013 to be paid during the three (3)-year period, all as determined in accordance with Section 1(b)(ii)(B) of this Agreement. Except as otherwise set forth in this Agreement, exercise of all such options shall be subject to all of the provisions of the Company’s 2004 Equity Incentive Plan (“Plan”), and in the case of an initial public offering by the Company upon signing the same lockup agreement as investors and agreement with the provision of stock adjustments, including reverse splits and other customary adjustments, under the same conditions as the then current inside investors. New Options which have not vested by the earlier of December 31, 2013 or upon a Change of Control prior to that date will automatically expire on that date. Upon vesting, the New Options shall be exercisable for a period of five (5) years from the date of grant, even if Gill is no longer providing consulting services for the Company. For avoidance of doubt, New Options for 1.65% of fully-diluted shares (as defined above) will vest immediately upon a Change of Control of the Company (as defined in the Plan) if such Change of Control occurs on or before December 31, 2013.

 

2.                                      Upon the Resignation Date, Gill shall execute and deliver to Company a release of all claims pursuant to a Separation Agreement and Release substantially in the form attached hereto as Exhibit B. Company’s obligations to pay the amounts outlined in Section 1, above, shall be contingent upon Gill executing and not revoking the Separation Agreement and Release.

 

3.                                      After the Resignation Date, Gill agrees to be available to advise and assist Company in a transition consulting capacity for a period of six (6) months for up to sixty four (64) hours per month for which he will be paid a monthly consulting fee of $13,754.60 and such other terms and conditions set forth in the form of Consulting Agreement attached hereto as Exhibit C and such other terms and conditions as may be mutually agreed between Gill and the Company’s Chief Executive Officer.

 

4.                                      Simultaneously with the execution of this Agreement, Gill shall tender to Company’s Board of Directors his resignation as an officer of the Company, in the form set forth in Exhibit

 

4

 

A, attached hereto. Gill will remain a member of Company’s Board of Directors unless and until his resignation as a director is requested by Company’s Chief Executive Officer or a majority of the other members of the Board of Directors, at which time he will tender to Company his written resignation as director.

 

5.                                      Gill and Company understand and acknowledge that they remain bound by the provisions of Sections 6, 8, 11, 18 and 19 of the Employment Agreement, the terms of which are incorporated herein by reference. Unless otherwise compelled by law, Gill and Company each further agrees that the existence of this Agreement and its terms are all confidential information, and shall not be disclosed, discussed or otherwise published under any circumstances, except that Gill may disclose such information to his spouse and to his attorney, accountant or other professional advisor in order for them to render professional services to Gill and Gill agrees to inform such persons to maintain the confidentiality of such information.

 

6.                                      Gill understands and acknowledges that by signing this Agreement and accepting the settlement contained herein he is receiving benefits that he would not otherwise be entitled to. Gill acknowledges that he is receiving such benefits in exchange for cancellation of the Employment Agreement, entering into this Agreement and complying with all the provisions of this Agreement.

 

7.                                      Gill acknowledges that he has been advised in writing to consult with an attorney before signing this Agreement.

 

8.                                      GILL HAS READ THIS AGREEMENT, UNDERSTANDS ITS CONTENTS, AND HAS BEEN GIVEN A COPY OF THE AGREEMENT. GILL HAS BEEN GIVEN UP TO SEPTEMBER 3, 2013, A PERIOD OF AT LEAST TWENTY-ONE (21) DAYS, TO REVIEW AND CONSIDER THIS AGREEMENT, ASK QUESTIONS AND HAVE PROBLEMS

 

5

 

RESOLVED. GILL IS VOLUNTARILY WAIVING THIS PERIOD AND ENTERING INTO THIS AGREEMENT ON THE DATE SPECIFIED BELOW.

 

9.                                      GILL IS ENTERING INTO THIS AGREEMENT VOLUNTARILY AND NOT AS A RESULT OF ANY PRESSURE, COERCION OR DURESS.

 

10.                               For a period of seven (7) days following Gill’s execution of this Agreement, Gill may revoke the Agreement. The Agreement shall not become effective or enforceable until the seven (7) day revocation period has ended. For revocation to be effective, Gill must provide written notice of such revocation by certified mail (postmarked no later than seven days after the date of Gill’s signature to this Agreement, to Richard L. Sherman, Senior Vice President and General Counsel, TetraLogic Pharmaceuticals Corporation, 343 Phoenixville Pike, Malvern, PA 19355.

 

11.                               This document states the whole agreement between the parties. Except as specifically provided herein, this document supersedes and terminates any written or oral contracts of employment which may have been in existence between the parties prior to this date.

 

12.                               Gill and the Company agree that any dispute arising out of:

 

a.                                      Gill’s employment by the Company;

 

b.                                      The Stock Option Agreements and Restricted Stock Agreements between Gill and the Company;

 

c.                                       The Separation Agreement and Release, or

 

d.                                      This Agreement;

 

shall be resolved by binding arbitration on the same terms and conditions as set forth in Section 19 of the Employment Agreement.

 

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As evidenced by their signatures below, the parties intend to be legally bound by this Management Transition Agreement.

 

	
 
    	
/s/ John M. Gill
    
	
 
    	
John M. Gill
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
DATE:
    	
8/12/13
    
	
 
    	
 
    	
 
    
	
 
    	
TetraLogic Pharmaceuticals Corporation
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
BY:
    	
/s/ J. Kevin Buchi
    
	
 
    	
 
    	
 
    
	
 
    	
NAME:
    	
J. Kevin Buchi
    
	
 
    	
 
    	
 
    
	
 
    	
TITLE:
    	
President & CEO
    
	
 
    	
 
    	
 
    
	
 
    	
DATE:
    	
8/12/13
    

 

 

Exhibit A

 

Form of Resignation

 

To the Members of the Board of Directors of TetraLogic Pharmaceuticals Corporation

 

Dear colleagues:

 

I hereby tender my resignation as an officer of TetraLogic Pharmaceuticals Corporation, to be effective as of August 12, 2013.

 

Sincerely,

 

 

John M. Gill

 

August 12, 2013

 

 

Exhibit B

 

Form of Separation Agreement and Releases

 

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

 

WHEREAS, the Employee and the Company entered into a Management Transition Agreement dated as of August, 2013 (the “Transition Agreement”) that sets forth the terms and conditions of the cancellation of the Second Amended and Restated Employment Agreement dated December 17, 2010 (the “Employment Agreement”), between Employee and Company, and the terms and conditions of the termination of Employee’s employment with the Company, including the circumstances under which the Employee is eligible to receive severance pay and certain other payments.

 

WHEREAS, as contemplated by the Transition Agreement, the Employee and the Company entered into a Consulting Agreement dated as of August 12, 2013 (the “Consulting Agreement”).

 

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

 

1.                                      Consideration.

 

a.                                      In consideration for the Employee’s release of Claims (defined below) as set forth in Paragraph 2(a) below and other promises and covenants set forth herein, the Company agrees to pay the Employee such consideration as is specified in Section 1 of the Transition Agreement in accordance with the terms and conditions of the Transition Agreement and releases the Employee and others from all Claims as set forth in Paragraph 3(a) below.

 

b.                                      In consideration for the Company’s payment to Employee of such consideration as specified in Section 1 of the Transition Agreement in accordance with the terms and conditions of the Transition Agreement, the Company’s release of the Employee and others from all Claims (defined below) as set forth in Paragraph 3(a) below and other promises and covenants set forth herein, the Employee releases the Company and others from all Claims as set forth in Paragraph 2(a) below.

 

2.                                     Employee’s Release.

 

a.                                      The Employee on his own behalf and together with his heirs, assigns, executors, agents and representatives hereby generally releases and discharges the Company and its predecessors, successors (by merger or otherwise), parents, subsidiaries, affiliates and assigns, together with each and every of their present, past and future officers, managers, directors, shareholders, members, general partners, limited partners, employees and agents and the heirs and executors of same (herein collectively referred to as the “Company

 

 

Releasees”) from any and all suits, causes of action, complaints, obligations, demands, common law or statutory claims of any kind, whether in law or in equity, direct or indirect, known or unknown (hereinafter “Claims”), which the Employee ever had or now has against the Company Releasees, or any one of them occurring up to and including the date of the this Agreement. This release specifically includes, but is not limited to:

 

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

 

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

 

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

 

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

 

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

 

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

 

b.                                      Exclusions from Employee’s Release. Notwithstanding anything herein to the contrary, the Employee’s release in Paragraph 2(a) above does not apply to:

 

i.                                     Any rights or Claims with respect to any obligations of the Company of indemnification, contribution or cost of defense, whether contained in the Company’s Certificate of Incorporation, By-laws or contained in any separate indemnification agreement, with respect to the Employee’s prior service as a director, officer or employee of the Company or any third party at the request of the Company;

 

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ii.                                  Any rights or Claims for vested benefits under any Company retirement, 401(k), profit-sharing or other deferred compensation plan;

 

iii.                               Any rights or Claims with respect to the Employee’s equity ownership in the Company, including all rights under each restricted stock agreement, stock option agreement and any other agreement relating to the Employee’s equity ownership in the Company;

 

iv.                              Any Claims to require the Company to honor its commitments set forth in the Management Transition Agreement, in this Agreement, the Consulting Agreement or the surviving provisions of the Employment Agreement;

 

v.                                 Any Claims to interpret or to determine the scope, meaning, enforceability or effect of the Management Transition Agreement, the Consulting Agreement or this Agreement;

 

vi.                              Any Claims that arise after the execution of this Agreement; and

 

vii.                           Any Claims that cannot be waived by a general release.

 

3.                                      Company’s Release:

 

a.                                 The Company, on its own behalf and on behalf of its predecessors, successors (by merger or otherwise), parents, subsidiaries, affiliates and assigns (collectively “the Company Affiliates”), hereby generally releases and discharges the Employee, his heirs, assigns, executors, agents and representatives from any and all Claims, which the Company and the Company Affiliates ever had or now have against the Employee, his heirs, assigns, executors, agents and representatives, occurring up to and including the date of the this Agreement.

 

b.                                 Exclusions from Company’s Release. Notwithstanding anything herein to the contrary, the Company’s release in Paragraph 3(a) above does not apply to

 

i.                                     Any Claims to require the Employee to honor his commitments set forth in the Management Transition Agreement or in this Agreement;

 

ii.                                  Any Claims to interpret or to determine the scope, meaning, enforceability or effect of the Management Transition Agreement or this Agreement;

 

iii.                               Any Claims that arise after the execution of this Agreement; and

 

iv.                              Any Claims that cannot be waived by a General Release.

 

4.                                      Acknowledgment. The Employee and the Company understand that their respective release of Claims contained in this Agreement extends to all of the aforementioned Claims and potential Claims which arose on or before the date of this Agreement, whether now known or unknown, suspected or unsuspected, and that this constitutes an essential term of this

 

3

 

Agreement. The Employee and the Company further understand and acknowledge the significance and consequences of this Agreement and of each specific release and waiver, and expressly consent that this Agreement shall be given full force and effect to each and all of its express terms and provisions, including those relating to unknown and uncompensated Claims, if any, as well as those relating to any other Claims specified herein. The Employee hereby waives any right or Claim that the Employee may have to employment, reinstatement or re-employment with the Company.

 

5.                                      Confidentiality.

 

a.                                      The Employee and the Company, on its own behalf and on behalf of the Company Releasees, shall not disclose or publicize the terms of this Agreement to any person or entity, except that each may disclose the terms, and/or fact of this Agreement to their respective accountants and attorneys and to others as strictly required by law, and the Employee may disclose the terms, and/or fact of this Agreement to his immediate family members. The Employee is specifically prohibited from disclosing the fact or terms of this Agreement to any current or former employee of the Company Releasees. The Company is specifically prohibited from disclosing the fact or terms of this Agreement to any current employee of the Company except on a need-to-know basis, and to any former employee of the Company. The Employee and the Company further agree that each shall be responsible for the other party’s attorney’s fees and costs, if it or he, as applicable, needs to file an action to enforce its or his rights under this paragraph, to the extent permitted by law.

 

b.                                      In the event that the Employee or the Company is requested or required (by oral questions, interrogatories, requests for information or documents in a court or administrative proceeding, subpoena, civil investigative demand or other similar process) to disclose the terms of this Agreement, that party will endeavor in good faith to provide the other party prompt notice of any such request or requirement so that such other party may, at its own expense, seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. If, in the absence of a protective order or other similar remedy or the receipt of a waiver from the other party, a party reasonably determines that disclosure of the terms of this Agreement is required to comply with such process or applicable law, such party may, without liability under this Agreement, disclose to the appropriate authority only that portion of the information which, on advice of counsel, he or it, as applicable, reasonably believes the party is required to disclose.

 

6.                                      Non-Disparagement. The Company, on its own behalf and on behalf of the Company Releasees, agrees that neither it nor they will make any negative comments or disparaging remarks, in writing, orally or electronically about the Employee. The Employee agrees that he will not make any negative comments or disparaging remarks, in writing, orally or electronically about the Company or the other Company Releasees.

 

7.                                      Remedies. All remedies at law or in equity shall be available to Employee and to the Company Releasees for the enforcement of this Agreement. This Agreement may be pleaded as a full bar to the enforcement of any Claim that the Employee may assert against the Company Releasees, unless excluded from the Employee’s release pursuant Paragraph 2(b) above, or excluded from the Company’s release pursuant to Paragraph 3(b) above.

 

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

 

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

 

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

 

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

 

TetraLogic Pharmaceuticals Corporation

365 Phoenixville Pike

Malvern, Pennsylvania 19355

Attention: Chairman of the Board; General Counsel

Telecopier: (610) 889-9994

 

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

 

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

 

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

 

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

 

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

 

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

 

[SIGNATURE PAGE FOLLOWS]

 

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

 

	
 
    	
 
    	
 
    
	
John M. Gill
    	
 
    	
Witness:
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
Date:
    	
 
    
	
 
    	
 
    	
 
    
	
TETRALOGIC PHARMACEUTICALS CORPORATION
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
 
    

 

7

 

Exhibit C

 

FORM OF CONSULTING AGREEMENT

 

This Consulting Agreement (this “Agreement”) is entered into as of this 12th day of August, 2013 (the “Effective Date”) by and between TetraLogic Pharmaceuticals Corporation (“TetraLogic”), a Delaware corporation with its principal place of business located at 343 Phoenixville Pike, Malvern, Pa. 19355 and John M. Gill, having an address at 822 Nathan Hole Road, Berwyn, Pennsylvania 19312 (“Consultant”).

 

1.                                      Services. Consultant will provide consulting services in the area of strategic collaborations between the Company and third parties for the China and East Asia markets, and general advice and counsel related to the Company’s institutional history and culture and in other areas otherwise as agreed by the parties (“Services”) and will provide TetraLogic with the full benefit of Consultant knowledge, experience and skill with respect to such Services. During the term of the Agreement, Consultant agrees to be available to perform Services for sixty four (64) hours per month. No Services may be subcontracted to third parties without the prior written consent of TetraLogic. Consultant represents and warrants that he will use reasonable commercial efforts to perform the Services and to meet all obligations and deadline requirements and that Consultant is capable professionally and that the Services will be performed in a professional matter in accordance with prevailing industry custom and practice.

 

2.                                      Compensation & Expenses. TetraLogic shall pay Consultant for Services on a retainer basis at the rate of $13,754.60 per month payable to Consultant within five (5) days after the end of each month. In the event that TetraLogic’s needs for Consultant’s Services shall become greater than sixty four (64) hours per month, then TetraLogic may propose, upon at least thirty (30) days prior written notice to Consultant, a modification to the amount of the retainer and, if Consultant does not agree with such proposed modification it may terminate the Agreement upon notice to TetraLogic. TetraLogic will reimburse Consultant for pre-approved reasonable and customary travel expenses incurred by Consultant at TetraLogic’s request, provided Consultant makes travel arrangements involving air travel through TetraLogic. All compensation for services and reimbursement expenses shall be paid by TetraLogic to Consultant within thirty (30) days of submission by Consultant of statements and vouchers/receipts. Consultant shall itemize all such travel expenses on a TetraLogic expense report and each report shall be accompanied by substantiating receipts or vouchers.

 

3.                                      Term of Agreement. The Consultant’s engagement will be for six (6) months from the Effective Date of this Agreement, and thereafter from month-to-month, unless terminated by either party upon prior written notice to the other. The Consultant’s obligations under Sections 4, 5, 6 and 7 shall survive the termination of the Consultant’s engagement until five (5) years after the last disclosure of Confidential Information hereunder.

 

4.                                      Confidential Information.

 

(a)                                 “Confidential Information” means any information, materials or methods, of a business, scientific, clinical, or other nature, in whatever form or embodiment, that has not been made available by TetraLogic to the general public and any information, materials or methods derived therefrom, except that Confidential Information shall not include any information,

 

 

material or method that: (i) at the time of disclosure is in, or after disclosure becomes part of, the public domain, through no improper act on the part of Consultant or any of its employees or contractors; (ii) was in Consultant’s possession at the time of disclosure, as shown by written evidence, and was not acquired, directly or indirectly, from TetraLogic; (iii) Consultant receives from a third party, provided that such Confidential Information was not obtained by such third party, directly or indirectly, from TetraLogic; or (iv) can be demonstrated by written evidence to have been independently developed by Consultant without reference to Confidential Information.

 

Specific information disclosed as part of the Confidential Information shall not be deemed to be in the public domain or in the prior possession of Consultant merely because it is embraced by more general information in the public domain or in the prior possession of the Consultant. To the extent that Confidential Information disclosed hereunder comes under any of the exceptions referred to above, Consultant will not disclose that such Confidential Information was acquired from TetraLogic. Failure to mark any of the Confidential Information as confidential or proprietary shall not affect its status as Confidential Information under the terms of this Agreement.

 

(b)                                 Consultant shall keep all Confidential Information confidential, and Consultant shall not disclose Confidential Information to any third party, or use Confidential Information except to perform the Services. Consultant shall, at a minimum, take those precautions with respect to the Confidential Information that Consultant uses to protect Consultant’s own confidential information.

 

(c)                                  If Consultant becomes required under compulsion of legal process to disclose Confidential Information, Consultant will not, unless required by law, order, regulation or ruling, disclose Confidential Information until TetraLogic has first (i) received prompt written notice of such requirement to disclose and (ii) had an adequate opportunity to obtain a protective order or other reliable assurance that confidential treatment will be accorded to the Confidential Information. Consultant shall provide TetraLogic with reasonable assistance and shall not oppose actions by TetraLogic to assure confidential treatment. If TetraLogic is unable to obtain such protective order or other appropriate remedy, Consultant will furnish only that portion of the Confidential Information which it is legally required to furnish. Any disclosure of Confidential Information pursuant to this Section shall not effect or lessen Consultant’s obligations of confidentiality and non-use as expressed herein.

 

(d)                                 On TetraLogic’s request, or upon the termination or expiration of this Agreement, whichever is earlier, Consultant shall immediately: (i) stop using Confidential Information; (ii) return all materials provided by TetraLogic to Consultant that contain Confidential Information, except for one copy that may be retained by Consultant’s legal counsel to confirm compliance with the obligations under this Agreement; (iii) destroy all copies of Confidential Information in any form including Confidential Information contained in computer memory or data storage apparatus or materials prepared by or for Consultant; and (iv) provide a written certification to TetraLogic that Consultant has taken all the actions described in the foregoing Subparagraphs 4(d)(i-iii).

 

5.                                      Property. Consultant may remove materials containing Confidential Information from TetraLogic’s premises only with the express, prior written consent of TetraLogic and only for as

 

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long as necessary to perform the Services and Consultant shall return all such materials and all copies thereof promptly but in any event no later than the date of termination or expiration of this Agreement.

 

6.                                      Intellectual Property. TetraLogic is the sole and exclusive owner of any and all writings, records, information, documents, works made for hire, inventions, discoveries, know-how, processes, chemical entities, compounds, plans, memoranda, tests, research, designs, specifications, models and data that Consultant creates, makes, conceives, discovers or develops, either solely or jointly with any other person in performance of the Services (collectively, “Work Product”). Consultant shall promptly disclose to TetraLogic all information relating to Work Product. Consultant acknowledges that all of the Work Product that is copyrightable shall be considered a work made for hire under United States Copyright Law. To the extent that any copyrightable Work Product may not be considered a work made for hire under Copyright Law or to the extent that, notwithstanding the foregoing provisions, Consultant may retain an interest in any Work Product that is not copyrightable, Consultant hereby irrevocably assigns and transfers to TetraLogic, and to the extent that an executory assignment is not enforceable, Consultant hereby agrees to assign and transfer to TetraLogic, in writing, from time to time, upon request, any and all right, title, or interest that Consultant has or may obtain in any Work Product without the necessity of further consideration. TetraLogic shall be entitled to obtain and hold in its own name all copyrights, patents, trade secrets and trademarks with respect thereto. At TetraLogic’s request and expense including fees paid to for the Consultant’s time, Consultant shall assist TetraLogic in acquiring and maintaining its right in and title to, any Work Product. Such assistance may include, but will not be limited to, signing applications and other documents, cooperating in legal proceedings, and taking any other steps considered necessary or desirable by TetraLogic. The compensation agreed upon between Consultant and TetraLogic in this Agreement is the sole payment for all Services provided by Consultant for such performance and under this Agreement and Consultant is not entitled to the payment of royalties or other forms of compensation for the Work Product developed in the course of performing such Services.

 

7.                                      Restrictive Covenants. During the term of this Agreement and for one (1) year thereafter, Consultant shall not:

 

(a)                                 interfere with any formal or informal business or other relationship between TetraLogic and any third party; or

 

(b)                                 contact any of the TetraLogic’s then current personnel, whether employees or independent contractors to offer such personnel employment, except that this prohibition shall not prevent any of such personnel (whether employees or independent contractors) from initiating contact with Consultant for the purpose of obtaining employment; or

 

(c)                                  assist any third party in discovering, developing, manufacturing or marketing a compound or product based on Smac-mimetic activity.

 

Consultant further recognizes and acknowledges that (i) the types of activities that are prohibited by this paragraph are narrow and reasonable in relation to the skills which represent the Consultant’s principal salable asset both to TetraLogic as a consultant and to the Consultant’s

 

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prospective employers or clients, and (ii) the broad geographical scope of the provisions of this paragraph is reasonable, legitimate and fair to the Consultant in light of TetraLogic’s need to perform its research and to develop and market its services and develop and sell its products worldwide in order to have a sufficient customer base to make TetraLogic’s business profitable and in light of the limited restrictions on the type of activities prohibited herein compared to the types of activities for which the Consultant is qualified to earn his livelihood.

 

8.                                      Consultant’s Obligations to Employer/Third Parties. It is Consultant’s responsibility to ensure that Consultant’s services to TetraLogic do not employ proprietary information of his employer or of any other third party or make use of his employer’s or other third party’s time or resources without the written agreement of his employer or other third party and of TetraLogic.

 

9.                                      Representations. Consultant represents that Consultant is not subject to any other agreement that Consultant will violate by signing this Agreement.

 

10.                               Debarment. Consultant represents that Consultant has not been debarred, or been the subject of debarment proceedings, by the U.S. Food and Drug Administration. If, at any time during the term of this Agreement, Consultant (a) becomes debarred, or (b) receives notice of action or threat of action with respect to its debarment, Consultant shall notify TetraLogic immediately. If Consultant becomes debarred, this Agreement shall terminate automatically without any further action or notice by TetraLogic. If Consultant receives notice as set forth in clause (b) above, TetraLogic shall have the right to terminate the Consultant’s engagement under this Agreement immediately.

 

11.                               Remedies. Consultant understands and agrees that the Confidential Information being provided under this Agreement is of a special and unique character and that TetraLogic has made a substantial investment in developing the information. Consultant further acknowledges that irreparable harm will result to TetraLogic in the event of Consultant’s breach, or threatened breach, of this Agreement. In such event, TetraLogic, its agents and representatives shall be entitled to specific performance and/or injunctive relief without any requirement to post a bond as a condition to remedy any such breach. Such remedy shall not be deemed to be the exclusive remedy for any such breach of this Agreement but shall be in addition to all other remedies available at law or in equity. Consultant further agrees that no failure or delay by TetraLogic, its agents, or representatives in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any right, power or privilege under this Agreement. Each and all of the several rights and remedies provided for in this Agreement shall be cumulative. No one right or remedy shall be exclusive of the others or of any right or remedy allowed in law or in equity.

 

12.                               Disclaimer. TetraLogic makes no representations or warranties as to the accuracy or completeness of Confidential Information provided under this Agreement. TetraLogic shall not have any liability to either the Consultant or any of its Representatives resulting from the use of Confidential Information. Nothing herein shall constitute any representation or warranty with respect to the infringement of any patent or other rights of TetraLogic or a third party.

 

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13.                               Governing Law and Jurisdiction. This Agreement shall be construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania, without regard to the conflict of law principles of Pennsylvania or any other jurisdiction. Any legal proceeding relating to this Agreement shall be instituted exclusively in the United States District Court for the Eastern District of Pennsylvania or in any court of general jurisdiction in Chester County, Pennsylvania, and Consultant hereby consents to the personal and exclusive jurisdiction of such court and hereby waives any objection that Consultant may have to the laying of venue of any such proceeding and any claim or defense of inconvenient forum.

 

14.                               Miscellaneous.

 

(a)                                 TetraLogic and Consultant agree that TetraLogic is under no obligation to produce any documents or information to Consultant and this Agreement does not create or imply such an obligation. TetraLogic shall disclose only such information or documents as it may, in its sole discretion, deem appropriate. In the event TetraLogic discloses information or document such disclosure shall not create or imply an obligation on behalf of TetraLogic to disclose additional information or documents on the same subject matter, related subject matter, or otherwise.

 

(b)                                 Nothing contained herein shall be construed as a grant to Consultant of any intellectual property rights either by implication, estoppel, or otherwise. Neither this Agreement nor the disclosure of Confidential Information hereunder shall be construed as granting any right or license under any invention, whether patentable or unpatentable, now or hereafter owned or controlled by TetraLogic.

 

(c)                                  Consultant is an independent contractor. Nothing contained in this Agreement shall create or imply the creation of a partnership or employment relationship between TetraLogic and Consultant. Neither party shall have any authority to bind the other. TetraLogic shall not deduct or withhold from any monies payable to Consultant hereunder any amount for any tax or employee benefit. As an independent contractor, Consultant shall not participate in any employee benefits provided by Company to its employees, including worker’s compensation insurance, disability, pension or other employee plans. Consultant assumes full responsibility and liability for the payment of any taxes due on money received by Consultant hereunder.

 

(d)                                 If any provision of this Agreement is determined to be void, invalid, unenforceable or illegal for any reason, the validity and enforceability of all of the remaining provisions hereof shall not be affected thereby.

 

(e)                                  This Agreement contains the entire agreement and understanding of the parties relating to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of every nature between them relating to the subject matter hereof. This Agreement may not be amended except by written agreement signed by both of the parties hereto. The waiver of the breach of any term or provision of this Agreement shall not be a waiver of any other or subsequent breach of this Agreement. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and when taken together shall constitute the same Agreement. The obligations of Consultant as

 

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set forth herein, other than Consultant’s obligations to perform the Services, shall survive the termination of Consultant’s engagement.

 

(f)                                   TetraLogic may assign this Agreement to, and this Agreement shall bind and inure to the benefit of, any successor to assignee of TetraLogic. This Agreement shall not be assignable by Consultant without the written consent of TetraLogic.

 

(g)                                  Any notices required to be given hereunder shall be given to the parties at the addresses set forth above or to such other addresses as the parties may from time to time designate by notice so given. All notices shall be in writing and shall be served or given by internationally recognized courier or by prepaid certified, air mail (which shall be deemed received by the other party on the seventh day following deposit in the mails), or by facsimile transmission or other electronic means of communication (which shall be deemed received when transmitted), with confirmation by letter given by the close of business on or before the next following business day. Notice shall be effective on the date of actual receipt or on which delivery is refused.

 

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

 

	
TetraLogic Pharmaceuticals Corporation
    	
John M. Gill
    
	
 
    	
 
    
	
 
    	
 
    
	
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Name:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
Social Security or Federal Tax ID #:
    	
 
    

 

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