Exhibit 10.1
AMENDMENT,
ACKNOWLEDGMENT AND MUTUAL RELEASE
This Amendment, Acknowledgment and
Release (the “Agreement”) is made and entered into as
of March 16, 2009 (the “Effective Date”) between
Steven C. Quay, M.D., Ph.D. (“Executive”), an
individual resident in the State of Washington, and MDRNA, Inc.
(formerly Nastech Pharmaceutical Company Inc.; “MDRNA”
or the “Company”) with respect to the Employment
Agreement (the “EA”) executed effective June 10,
2008, and the relations between Executive and MDRNA. Capitalized
terms not defined herein shall have the meanings given in the
EA.
WHEREAS, the EA provides for certain
payments and benefits to Executive upon Executive’s
termination of employment, and
WHEREAS, MDRNA and Executive wish to
amend the severance payable to Executive pursuant to the EA to,
among other things, ease the cash burdens on MDRNA, and to execute
certain mutual releases;
NOW THEREFORE, in consideration of
the mutual promises made herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Executive and MDRNA acknowledge and agree as
follows:
Amendments, Acknowledgment and Confirmation
1(A). Section 12(a) of the EA is
hereby amended to read in its entirety as follows and, subject to
the releases set forth below, shall remain in effect as so
amended:
“(a) (i) The parties
acknowledge that the Company terminated Executive’s
employment without Cause effective November 30, 2008.
(A) The Executive shall receive the sum of $870,217 and
certificates for 731,275 shares of unregistered common stock of the
Company bearing an appropriate legend as the Company is advised by
counsel (the “Severance Shares”), pay for accrued but
unused vacation time, and reimbursement for expenses pursuant to
Sections 13 and 22 hereof through the Termination Date, and
(B) notwithstanding the vesting and exercisability provisions
otherwise applicable to the New Options and the restrictions
applicable to any options or restricted shares issued to Executive
under prior agreements, all of such options became fully vested and
exercisable upon such termination and shall remain exercisable for
the remainder of their terms, and any unvested restricted shares
issued to Executive under prior agreements thereon became
immediately and fully vested. The Company shall pay such cash
amount of $870,217 and issue the Severance Shares provided for in
this paragraph within thirty (30) days after the six
(6) month anniversary of the date of such termination (but no
later than the end of the calendar year in which such six
(6) month anniversary occurs). Notwithstanding the foregoing,
the Company shall not be required to pay any severance pay for any
period following the Termination Date if Executive shall have
materially violated, following March 16, 2009, the provisions
of Section 18, 19, or 20 of this Agreement and such violation
is not cured within thirty (30) days following receipt of
written notice from the Company containing a description of the
violation and a demand for immediate cure.
(ii) Notwithstanding any other
provisions of this Agreement concerning registration, vesting or
ongoing obligations of the Company following issuance of the
Severance Shares, the following provisions shall apply to the
Severance Shares:
(A) The Company will issue to
Executive the Severance Shares as provided for by Section 12(a)(i)
above and such Severance Shares shall be fully vested and deemed
fully earned upon receipt. The Company will thereafter provide to
Executive, to the extent and if in accordance with the securities
laws of the United States as in effect on the date thereof, the
written advice of counsel (“Counsel Advice”) to the
effect that Executive may sell the Severance Shares publicly 6
months after the date of issuance of the Severance Shares without
restriction, provided that Executive is not an affiliate of the
Company (as determined by applicable regulations) on or within
90 days prior to such date, and the Company is then current in
its filings with the US Securities & Exchange Commission (the
“SEC”), and that if the Company is not then current in
such filings, and Executive is not an affiliate of the Company on
or within 90 days prior to such date, Executive may publicly
sell without restriction such Shares 12 months after the date
of issuance of the Severance Shares. The Counsel Advice shall also
state the applicable regulations concerning the removal of any
restrictive legend on the share certificate evidencing such
Severance Shares. The Company shall use reasonable endeavors, for
the benefit of and at the request of Executive, and provided that
the Severance Shares have not previously been registered as
described elsewhere in this Agreement, (a) to arrange as soon
as it is legally able to do so, for the removal of the above
mentioned restrictive legend on the certificate(s) evidencing such
Severance Shares in accordance with the securities laws of the
United States and (b) to cooperate with Executive to enable
him to make any lawful sale or other disposition of MDRNA shares he
may own including, for example, a private sale of the Severance
Shares under what is commonly referred to as the 4(1 1/2 ) exemption.
(B) Until such time as the
severance Shares have been have been registered as described
elsewhere in this Agreement, the Company hereby agrees to use its
best efforts to file in a timely manner all reports required to be
filed with the SEC and shall take such further reasonable actions
as reasonably within its control to the extent required to enable
Executive to sell the Severance Shares pursuant to Rule 144
under the Securities Act of 1933, as amended (the “Securities
Act”). C
(C) (1) In the event that
the Company decides to register any of its common stock (either for
its own account or for the account of a security holder or holders
exercising any registration rights) on a form that would be
suitable for a registration for offers and sales of securities
owned by security holders (other than on Form S-4 or Form S-8, each
as promulgated under the Securities Act or their then equivalents
relating to equity securities to be issued solely in connection
with any acquisition of any entity or business or equity securities
issuable in connection with stock option or othr employee benefit
plans, respectively), the Company will: (a) promptly give Executive
written notice thereof; and (b) include in such registration,
and in any underwriting involved therein, all the Severance Shares
specified in a written request delivered to the Company by
Executive within 20 days after delivery of such written notice
from the Company; provided that of such Severance Shares specified
in such written request delivered to the Company by Executive, the
Company may cut-back and exclude from such registration such amount
as is specified by the Company’s underwriter or investment
bank as reasonably necessary in order not to harm the market for
the Company’s common stock or the underwriting in question,
and provided further that any such cut-back shall be applied pro
rata to all selling stockholders exercising registration rights in
proportion to the number of shares each seeks to register thereby
and that any shareholders seeking to include shares in such
registration but not exercising registration rights shall be fully
cut-back before any cut-backs are applied to any shareholders
exercising registration rights such as Executive.
(2) On or prior to
September 30, 2009, the Company shall prepare and file with
the SEC a “shelf” registration statement covering the
resale of all of the Severance Shares not already covered by an
existing and effective registration statement, which registration
statement shall be on Form S-3 (except that if the Company is then
ineligible to register for resale the Severance Shares on Form S-3,
such registration shall be on Form S-1). The Company shall use its
commercially reasonable efforts to cause the registration statement
to be declared effective by the SEC as soon as practicable.
(3) Notwithstanding anything
herein to the contrary, the Company shall not be required to
register any Severance Shares, or to use its commercially
reasonable efforts to keep any registratio
