SECOND AMENDMENT TO THE SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit 10.3
SECOND AMENDMENT TO THE
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Second Amendment to the Second Amended and Restated Employment Agreement (the
“Amendment”) is entered into this 1st day of December, 2011 (the “Effective Date”), by and between
Xx. Xxxxx X. Xxxxxxxxx (the “Executive”) and RegeneRx Biopharmaceuticals, Inc, a Delaware
corporation (the “Company”).
The Company and the Executive have entered into that certain Second Amended and Restated
Employment Agreement dated as of March 11, 2009, as amended pursuant to the Amendments to the
Second Amended and Restated Employment Agreement (as amended, the “Employment Agreement”); and
The Company and the Executive desire to amend the Employment Agreement as provided in this
Amendment.
Accordingly, in consideration of the mutual promises and covenants contained herein, the
parties agree to the following:
1. Amendment to Section 6.1. Section 6.1 of the Employment Agreement is hereby
amended and replaced in its entirety as follows:
Commencing on December 1, 2011, Executive’s base salary shall be at a rate of $2800 per
month. Commencing on the Company’s first regular payroll date following the consummation of
an Initial Financing (as defined below), Executive’s base salary will be increased to 60% of
Executive’s base salary in effect as of November 30, 2011. Commencing on the Company’s
first regular payroll date following the consummation of a Qualified Financing (as defined
below), Executive’s base salary will be increase to 100% of Executive’s base salary in
effect as of November 30, 2011. These payments collectively will be referred to herein as
the “Base Salary.” The Base Salary will be subject to review and adjustment from time to
time by the Company in its sole discretion and will be payable subject to standard federal
and state payroll withholding requirements in accordance with Company’s standard payroll
practices. For purposes of this Agreement, “Initial Financing” means the Company’s receipt,
in one or more equity financings and/or strategic transactions between December 1, 2011 and
December 31, 2011, of aggregate gross proceeds of at least $500,000. For purposes of this
Agreement, “Qualified Financing” means the Company’s receipt, in one or more equity
financings and/or strategic transactions subsequent to December 1, 2011, of aggregate
capital that the Board determines is sufficient to conduct a Phase 2b or Phase 3 clinical
trial of RGN-259.
2. Amendment to Section 7.1. Section 7.1 of the Agreement shall be revised to add the
provisions set forth below to the end of the Section:
On December 2, 2011, Executive shall receive an option to purchase that number of shares of
common stock equal to the quotient obtained by dividing: (A) the difference between the
employee’s gross monthly base salary in effect as of November 30, 2011 and $2800, by (B) the closing trading price of the Company’s common stock on December 2, 2011.
The exercise price of the stock option shall be equal to the closing trading price of the
Company’s common stock on December 2, 2011. The option, which shall be an incentive stock
option for purposes of section 422 of the Code to the maximum extent permitted, and
otherwise shall be treated as a non-qualified stock option, shall vest in full on December
31, 2011, provided that Executive has not incurred a Termination of Service (as defined in
the Plan) before December 31, 2011. The specific terms and conditions of the option shall
be as set forth in the Plan and the standard form of stock option agreement, which the
Executive hereby agrees to execute.
3. Amendment to Section 12.1(a). Section 12.1(a) of the Employment Agreement is
hereby amended and replaced in its entirety as follows: “[INTENTIONALLY DELETED].”
4. Amendment to Section 12.2(a). Commencing on the Effective Date of this Amendment
and continuing until the consummation of a Qualified Financing, the below sentence shall replace
the first sentence of Section 12.2(a) of the Employment Agreement in its entirety. Upon
consummation of a Qualified Financing, the original language in the first sentence of Section
12.2(a) of the Employment Agreement shall be restored and the below language shall have no force
and effect.
In the event that Executive voluntarily terminates his employment with the Company for any
reason within 12 months after a Change of Control event, as defined in Section 12.1, then
the Company shall (i) pay to Executive on the sixtieth (60th) day following Executive’s date
of termination an amount equal to two (2) weeks of the Executive’s base salary in effect on
the date of his termination from employment, less any applicable federal and state taxes and
withholdings, and (ii) to the extent that Executive is eligible for and timely elects
continuation of health benefits for himself and/or his eligible dependents under the
Company’s group health plans pursuant to COBRA or any analogous state or local law, pay or
reimburse Executive for the amount of any insurance premiums for such continuation coverage
for a one-month period after the Release Effective Date, but these payments shall be limited
to the amount of the premiums being paid by the Company for Executive’s coverage immediately
prior to the date of his termination from employment.
5. Amendment to Section 12.2. A new Section 12.2(c) shall be added to the Employment
Agreement immediately after Section 12.2(b) as follows:
(c) Anything in this Agreement to the contrary notwithstanding, in the event the Company’s
business is discontinued because it is rendered impracticable by substantial financial
losses, lack of funding, legal decisions, administrative rulings, declaration of war,
dissolution, national or local economic depression or crisis or any reasons beyond the
control of the Company, then this Agreement shall terminate as of the day the Company
determines to cease operation with the same force and effect as if such day of the month
were originally set as the termination date hereof. In the event this Agreement is
terminated pursuant to this Section 12.2(c), Executive will not receive severance payments,
or any other severance compensation or benefit, except that the Company shall pay to
Executive any Accrued Compensation.
2
6. Amendment to Section 14. Section 14 of the Agreement shall be revised to add the
provisions set forth below to the end of the Section:
It is intended that each installment of payments provided for in this Agreement is a
separate “payment” for purposes of Treasury Regulations Section 1.409A-2(b)(2)(i). For
clarity, it is intended that severance payments and other payments set forth in this
Agreement satisfy, to the greatest extent possible, the exceptions from the application of
Section 409A provided under Treasury Regulations Sections 1.409A-1(b)(4), and
1.409A-1(b)(9).
Notwithstanding the foregoing, to the extent that the Company determines that any of the
payments or benefits provided under this Agreement constitutes “deferred compensation”
within the meaning of Section 409A that may only be paid on a qualifying transaction (that
is, the payments and benefits are not otherwise “exempt” under Section 409A), the definition
of Change of Control in this Agreement will apply only to the extent the transaction also
meets the definition used for purposes of Treasury Regulation Section 1.409A-3(a)(5), that
is, as defined under Treasury Regulation Section 1.409A-3(i)(5).
7. The Executive acknowledges that this Amendment constitutes his agreement and consent to the
reduction of his Base Salary, and further agrees that this Amendment and the reduction of his Base
Salary hereunder shall not constitute Good Reason to terminate his employment within the meaning of
the Agreement.
8. Except as herein modified or amended, no other term or provision of the Employment
Agreement is amended or modified in any respect. The Employment Agreement, and this Amendment, set
forth the entire understanding between the parties with regard to the subject matter hereof and
supersedes any prior oral discussions or written communications and agreements. This Amendment
cannot be modified or amended except in writing signed by the Executive and an authorized officer
of the Company.
In Witness Whereof, the parties have executed this Second Amendment to the
Second Amended and Restated Employment Agreement on the day and year first written above
| EXECUTIVE: | ||
| /s/ Xxxxx X. Xxxxxxxxx | ||
| COMPANY: | ||
| /s/ X.X. Xxxxxxxxxxx | ||
| RegeneRx Biopharmaceuticals, Inc. | ||
| By: X.X. Xxxxxxxxxxx | ||
| Title: President and CEO |
3
