Exhibit 10.1
EMPLOYMENT
AGREEMENT
This Employment Agreement (this
“Agreement”), is executed and entered into by and
between MDRNA, INC., a Delaware corporation (the
“Company”), with offices at 3830 Monte Villa Parkway,
Bothell, Washington 98021 and Barry Polisky, an individual resident
in the State of Colorado (the “Executive”), effective
January 2, 2009 (the “Effective Date”).
W I T N E S S E T H
:
WHEREAS, the Company and the
Executive wish to enter into this Agreement, which shall set forth
the Executive’s terms of employment as Chief Scientific
Officer of the Company,
NOW THEREFORE, in consideration of
the mutual promises and agreements herein and for other good and
valuable consideration the receipt and sufficiency of which are
hereby mutually acknowledged, the Company and the Executive agree
as follows:
1. Application and
Effectiveness of Agreements . As of the Effective Date, this
Agreement shall govern (i) the employment relationship between
the Company and the Executive and (ii) other matters as set
forth herein.
2. Employment;
Responsibilities and Authority; Definitions .
(a) Subject to the terms and
conditions of this Agreement, the Company shall employ the
Executive as its Chief Scientific Officer during the Employment
Period (as defined in Section 3, below) and the Executive
shall perform such acts and duties and furnish such services to the
Company and its Subsidiaries (as defined below) as the Chief
Executive Officer of the Company (the “CEO”) shall from
time to time direct.
(b) Subject to the terms and
conditions of this Agreement, the Executive hereby accepts such
employment and agrees to devote his full time and continuous best
efforts to the duties provided for herein.
(c) For purposes of this
Agreement: (1) the “Business of the Company” means
the description of the Company’s business as is described in
Part I, Item 1 of the Company’s most recent Annual
Report on Form 10-K filed with the U.S. Securities and Exchange
Commission (provided, however, that for purposes of Sections 18(b)
through (e) hereof, “Business of the Company”
shall mean the Company’s business as of the date of
termination of Executive’s employment, as the same may have
changed since the Effective Date), and (2) the term
“Subsidiary” means a corporation or other entity that
is at least majority owned, directly or indirectly, by the
Company.
3. Term; Employment
Period . The “Employment Period” under this
Agreement shall commence on the Effective Date and shall terminate
at the close of business on January 3, 2012 unless it is
(a) extended by written agreement between the parties or by
continuing employment of the Executive by the Company as provided
in the following sentence or (b) earlier terminated pursuant
to Section 10 hereof. If the Executive shall remain in
full-time employment by the Company beyond what would otherwise be
the end of the Employment Period without any written agreement
between the parties, this Agreement and the Employment Period shall
be deemed to continue on a quarter-to-quarter basis and either
party shall have the right to terminate the Executive’s
employment hereunder at the end of any ensuing fiscal quarter on
written notice of at least ninety (90) days, unless earlier
terminated pursuant to Section 10 hereof.
4. Salary . For services
rendered to the Company during the Employment Period, the Company
shall compensate the Executive with a base salary, payable in
semi-monthly installments, which initially shall be three hundred
and seventy-five thousand dollars ($375,000) per annum commencing
on the Effective Date, less all legally required or authorized
payroll deductions and tax withholdings. The Executive’s base
salary shall be reviewed annually, and may be increased, at the
sole discretion of the Company’s Board of Directors
(“Board”), in light of the Executive’s
performance and the Company’s financial performance and other
economic conditions and relevant factors. In addition, the
Executive will receive a one-time signing bonus of twenty-five
thousand dollars ($25,000) within thirty (30) days of the
Effective Date.
5. Incentive Cash
Compensation .
(a) For the Company’s
fiscal year that begins on January 1, 2009, and for each
subsequent fiscal year or portion thereof during the Employment
Period, the Executive shall also be eligible to receive incentive
cash compensation based on the Executive’s performance in
relation to the performance areas and performance targets which the
Board or Compensation Committee shall determine and communicate to
the Executive as described below (the “Annual Bonus
Plan”). The targeted amount of such Annual Bonus Plan shall
be forty percent (40%) of the Executive’s base salary for the
applicable fiscal year (“Annual Bonus Target”);
provided, however, that the Executive and the Company acknowledge
that the amount actually paid to the Executive pursuant to this
Section 5 for any fiscal year or portion thereof may be nil,
or may be more or less than said targeted amount.
(b) The Board shall establish
performance criteria for determination of the incentive cash
compensation under the Annual Bonus Plan that will be payable to
the Executive with respect to each fiscal year of the Company. To
the extent possible, such criteria shall be established, as to each
fiscal year, prior to the end of the second month of such fiscal
year. As an example, such performance criteria may be comprised of
several designated performance areas and one or more performance
targets in each area. The Company acknowledges that the business
objectives used in determining the Executive’s incentive cash
compensation, and the performance areas and performance targets
referred to herein, shall be based on the input and recommendations
of the Company’s Chief Executive Officer and that, in
exercising its review and supervisory role with respect to the
determination and adoption of those performance areas and
performance targets, the Board or the Compensation Committee, as
the case may be, shall act reasonably and in consultation and
cooperation with the Chief Executive Officer and consistently with
past practice.
(c) As soon as practical, and
absent unforeseen circumstances no later than ninety (90) days
following the end of each fiscal year of the Company, the Board
shall determine, reasonably and in good faith, the extent to which
the applicable performance criteria for such fiscal year shall have
been achieved and, accordingly, shall cause the appropriate amount
of incentive cash compensation to be paid to the Executive. If
unforeseen developments occur that in the opinion of the Board make
the performance areas and/or targets previously determined
unachievable, infeasible, or inadvisable — and therefore
inappropriate as a measure of the performance of the Executive
— the Board shall consider in good faith the extent to which
the actual performance of the Executive nevertheless warrants
payment of the amounts that would have been payable if the
performance criteria had been achieved; and, to such extent,
payment shall be made to the Executive.
6. Stock Options . The
Company and the Executive hereby acknowledge that the Board of
Directors has previously approved the grant to the Executive of
options to purchase shares of common stock of the Company (which
options shall constitute “incentive stock options”
under the Company’s 2008 Stock Incentive Plan (the
“Plan”) to the extent permitted by law, with any excess
being non-qualified options; (the “Outstanding
Options”)). The terms of the Plan and the grant agreement
granting such Outstanding Options, a copy of which is being
delivered to Executive substantially contemporaneously with the
execution of this Agreement, shall govern the rights and
obligations of the Executive with respect thereto (which grant
agreement incorporates the provisions of this Section 6 and
Sections 12 and 21 of this Agreement). Upon the Effective Date
of this Agreement, the Executive shall receive a grant of options
to purchase 360,000 shares of common stock of the Company. With
respect to these options: (A) 120,000 options shall vest and
be exercisable on January 4, 2010 at the Fair Market Value (as
defined in the Plan) calculated as of the Effective Date (the
“Effective Date Strike Price”); (B) 30,000 options
shall vest and be exercisable on each of April 2, 2010,
July 2, 2010, October 2, 2010 and January 3, 2011
(for an aggregate 120,000 options during such period) at the
Effective Date Strike Price plus $1.00; and (C) 30,000 options
shall vest and be exercisable on each of April 2, 2011,
July 2, 2011, October 2, 2011 and January 3, 2012
(for an aggregate 120,000 options during such period) with a strike
price equal to the Effective Date Strike Price plus $2.00. In
addition, during the Employment Period the Board of Directors may
grant additional options to purchase shares of common stock of the
Company to the Executive.
7. Temporary Housing and
Related Travel . The Company acknowledges that
Executive’s home residence is in Colorado. The Company shall
reimburse Executive for his reasonable travel expenses from his
home residence to Bothell, Washington. Reasonable travel expenses
will be limited to coach airfare and ground transportation to/from
his home and the airport and to/from the airport to his temporary
residence in Washington. Reimbursements shall be made pursuant to
Company’s reimbursement policy and consistent with
Section 12 hereof.
8. Benefits . During the
Employment Period, the Company shall provide or cause to be
provided to the Executive at least such employee benefits as are
provided to other executive officers of the Company. The Company
reserves the right to change or eliminate employee benefits on a
prospective basis, at any time, effective upon notice to
Executive.
9. Paid Time Off . The
Executive shall be entitled to paid time off in accordance with the
Company’s policies in effect from time to time for executive
officers of the Company.
10. Termination .
(a) Executive’s
employment by the Company shall be “at will.” Either
the Company or the Executive may terminate Executive’s
employment by the Company at the end of any calendar month, with or
without Cause or Good Reason (as such terms are
defined below), in its or his sole discretion, upon thirty
(30) days’ prior written notice of termination. In
addition, the Executive’s employment by the Company shall be
terminated by his death or “Disability” (as defined
below). Termination of the Executive’s employment as provided
for herein shall terminate the Employment Period.
(b) For purposes of this
Agreement, in the case of a termination of the Executive’s
employment hereunder by the Executive, the term “Good
Reason” shall have the meaning set forth for it below; in the
case of a termination of the Executive’s employment hereunder
by the Company, the term “Cause” shall have the meaning
set forth for it below; and the other terms set out below in this
Section 10 shall have the meanings provided for them
respectively:
(i) “Good Reason”
shall mean (i) any material diminution in the
Executive’s authority or role as Chief Scientific Officer,
(ii) failure of the Company to pay to the Executive any
amounts of base salary and/or incentive cash compensation as
provided for in Sections 4 or 5 above, or to honor promptly
any of its obligations or commitments regarding stock options or
other benefits referred to in Sections 7, 8, and/or 9 above,
or to honor promptly any of its other material obligations
hereunder, or the Company’s material violation of any of the
terms, covenants, representations or warranties contained in this
Agreement; (iii) a material demotion in the Executive’s
title or status, or (iv) any relocation of the Company’s
executive offices more than fifty miles from their present location
without the prior approval of Executive; provided
that , if such events are subject to cure and effective
remediation by the Company, the Executive must notify the Company
of the existence of a Good Reason within 90 days of the event
giving rise to such Good Reason, and the Company shall have
30 days from the date of such notice to cure and remediate
such condition and thereby eliminate the Good Reason.
(ii) “Cause” shall
mean (i) the Executive’s willful and repeated failure to
perform his duties hereunder or to comply with any reasonable and
proper direction given by the Company’s Chief Executive
Officer or Board, which failure continues for a period of thirty
(30) days following receipt by the Executive of written notice
from the Company containing a specific description of any such
alleged failure(s) and a demand for immediate cure thereof;
(ii) conviction of the Executive of a felony or any criminal
offense involving moral turpitude; (iii) the Executive’s
commission of an act of fraud or theft against or involving the
Company; or (iv) the Executive’s material violation of
any of the terms, covenants, representations or warranties
contained in this Agreement, provided that , in the
case of this clause “iv,” if such violation is subject
to cure and effective remediation by the Executive, such violation
is not so cured and remediated by the Executive within thirty
(30) days following receipt by the Executive of written notice
from the Company containing a reference to the violation and a
demand for immediate cure thereof.
(c) “Disability”
shall mean that the Executive is unable to perform the essential
functions of his position with or without reasonable accommodation,
for a period of 180 days in a twelve month period due to a
physical or mental disability as determined by an independent
physician chosen jointly by the Executive and the Company..
(d) “Termination
Date” shall mean (i) if this Agreement is terminated on
account of death, the date of death; (ii) if this Agreement is
terminated for Disability, the date that such Disability is
established; (iii) if this Agreement is terminated by the
Company or by the Executive, the effective date of the termination
as provided in Section 10(a) hereof; or (iv) if this Agreement
expires by its terms, January 3, 2012 or, if later, the
expiration of the Employment Period.
(a) Subject to Section 20
hereof, if (i) the Company terminates the employment of the
Executive during any Employment Period without Cause, or upon the
expiration of any Employment Period the Company shall fail to offer
to renew or extend the Employment Period (other than if the
Executive shall then have reached the Company’s mandatory
retirement age), or (ii) the Executive terminates his
employment during any Employment Period for Good Reason, then
(A) Executive shall be entitled to receive base salary, a
pro-rated amount of the Annual Bonus Target for the fiscal year in
which the Termination Date occurs, pay for accrued but unused paid
time off, and reimbursement for expenses pursuant to
Section 12 hereof through the Termination Date (“Accrued
Salary and Benefits”) and, in addition, Executive will
receive a “Severance Package” that shall include
(A) a “Severance Payment” equivalent to twelve
(12) months of Executive’s Base Salary then in effect on
the date of termination, payable in accordance with Company’s
regular payroll cycle; (B) notwithstanding the vesting and
exercisability provisions otherwise applicable to Outstanding
Options, all of such options shall be fully vested and exercisable
upon such termination and shall remain exercisable as specified in
the option grant agreements; and (C) payment by Company of the
premiums required to continue Employee’s group health care
coverage for a period of twelve (12) months following
Executive’s termination, under the applicable provisions of
the Consolidated Omnibus Budget Reconciliation Act
(“COBRA”), provided that Executive elects to continue
and remains eligible for these benefits under COBRA, and does not
become eligible for health coverage through another employer during
this period Executive will only receive the Severance Package if
Executive: (i) complies with all surviving provisions of this
Agreement; (ii) executes a full general release in a form
acceptable to Company, releasing all claims, known or unknown, that
Executive may have against Company arising out of or any way
related to Executive’s employment or termination of
employment with Company, and such release has become effective in
accordance with its terms prior to the 60th day following the
termination date, and (iii) agrees not make any voluntary
statements, written or oral, or cause or encourage others to make
any such statements that defame, disparage or in any way criticize
the personal and/or business reputations, practices or conduct of
Company, and (iv) immediately resigns all other positions
(including board membership) Executive may hold on behalf of
Company (provisions (i) through (iv) above are
collectively referred to as “Severance Requirements”).
All other Company obligations to Executive will be automatically
terminated and completely extinguished.
(b) Subject to Section 20
hereof, if (A) the Executive voluntarily terminates his
employment during any Employment Period other than for Good Reason
or (B) the Executive’s employment is terminated by the
Company during any Employment Period for Cause, then the Executive
shall be entitled to receive Accrued Salary and Benefits only;
vesting of Outstanding Options shall cease on such Termination
Date; any then un-vested Outstanding Options shall terminate (with
the then-vested Outstanding Options vested and exercisable as
specified in the option grant agreements).
(c) Subject to Section 21
hereof, if the Executive’s employment is terminated during
any Employment Period due to death or Disability, the Executive (or
his estate or legal representative as the case may be) shall be
entitled to receive (i) Accrued Salary and Benefits and
(ii) a lump sum equal to base salary at the rate in effect on
the date of such termination for twelve (12) months, provided
Executive or his Estate complies with the Severance Requirements.
In such case, vesting of the Outstanding Options shall cease on
such Termination Date, and any then un-vested Outstanding Options
shall terminate (with the then-vested Outstanding Options vested
and exercisable as specified in the option grant agreements). .
(d) Except to the extent that
more time is required to determine the incentive cash compensation,
the Company shall pay the cash amounts provided for in this
Section 11 within thirty (30) days after the six
(6) month anniversary of the da
