NON-COMPETITION AND NON-SOLICITATION AGREEMENT
Dated as of November 27, 2023
Between
PENTERRA PHARMACEUTICALS CORP. a Delaware corporation
and
DR. NADIA SORENSEN an individual residing in the Commonwealth of Massachusetts
Prepared by Calderwood & Harkness LLP 1700 Market Street, Suite 3400 Philadelphia, PA 19103 C&H Matter Number 1025-00006
NON-COMPETITION AND NON-SOLICITATION AGREEMENT
This NON-COMPETITION AND NON-SOLICITATION AGREEMENT (this "Agreement") is made and entered into as of November 27, 2023, by and between Penterra Pharmaceuticals Corp., a corporation incorporated under the laws of the State of Delaware (the "Company"), and Dr. Nadia Sorensen, an individual residing in the Commonwealth of Massachusetts ("Executive"). The Company and Executive are sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Penterra Pharmaceuticals Corp. (NYSE: PPHR), a corporation incorporated under the laws of the State of Delaware, with its principal offices at 400 Innovation Drive, Suite 1200, Princeton, NJ 08540, and Caliston BioSciences, Inc. ("Caliston"), a corporation incorporated under the laws of the State of Delaware, with its principal office at 88 Harbor Point Road, Cambridge, MA 02142, have entered into that certain Agreement and Plan of Merger, dated as of November 27, 2023 (the "Merger Agreement"), pursuant to which Caliston will merge with and into Penterra in a one-step merger transaction (the "Merger");
WHEREAS, Dr. Nadia Sorensen is the Co-Founder and Chief Executive Officer of Caliston BioSciences, Inc. and holds approximately 14.2% of Caliston's outstanding equity, making her one of the single largest individual equity holders in Caliston;
WHEREAS, the aggregate equity value of the Merger is Nine Hundred Twenty-Five Million Dollars ($925,000,000) (consisting of approximately 75% cash and 25% Penterra common stock), plus contingent value rights of up to One Hundred Twenty-Five Million Dollars ($125,000,000) payable upon approval by the United States Food and Drug Administration (the "FDA") of CLT-4019 on or before December 31, 2026, for a maximum aggregate transaction value of One Billion Fifty Million Dollars ($1,050,000,000);
WHEREAS, Dr. Sorensen will receive substantial merger consideration in connection with the closing of the Merger, including her pro rata share of the aggregate Merger Consideration as a Caliston equity holder, which consideration is independent of and in addition to any compensation she may receive in connection with her continued employment with the Company following the Closing;
WHEREAS, the Company desires to employ Dr. Sorensen following the closing of the Merger, and Dr. Sorensen desires to continue in the employ of the Company, in a senior capacity to oversee the continued clinical development of CLT-4019, CLT-5227, and CLT-6034 and the integration of Caliston's pipeline into the Company's oncology and immunology therapeutic programs;
WHEREAS, Dr. Sorensen possesses valuable proprietary knowledge, trade secrets, confidential information, and relationships relating to the business and operations of Caliston, including its novel kinase inhibitor programs for solid tumors, its relationships with clinical investigators, contract research organizations, regulatory agencies, key opinion leaders, and strategic collaborators, and access to Caliston's approximately ninety-four (94) employees, many of whom possess specialized expertise in oncology drug development;
WHEREAS, it is a condition to the Company's willingness to consummate the transactions contemplated by the Merger Agreement that Dr. Sorensen enter into this Agreement, and the Company would not have entered into the Merger Agreement absent Executive's agreement to be bound by the restrictive covenants set forth herein;
WHEREAS, the Special Committee of the Board of Directors of the Company (the "Special Committee"), consisting of Diane Prescott (Chair), James Okafor, and Dr. Helen Ng, with the assistance of its independent counsel, Calderwood & Harkness LLP, and independent financial advisor, Thorngate Partners LLC, reviewed and approved the terms of this Agreement as an ancillary agreement to the Merger on November 22, 2023; and
WHEREAS, the Company and Dr. Sorensen desire to set forth the terms and conditions of the restrictive covenants applicable to Dr. Sorensen following the closing of the Merger and during the periods specified herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1: DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below:
(a) "Affiliate" means, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such Person. For purposes of this definition, "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract, or otherwise. A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to vote 50% or more of the securities having ordinary voting power for the election of directors (or comparable governing body) of such other Person.
(b) "Business" means the research, development, manufacture, marketing, distribution, and commercialization of novel kinase inhibitors (including, without limitation, selective CDK4/6 inhibitors) and related oncology therapeutics, including but not limited to the CLT-4019, CLT-5227, and CLT-6034 programs and any extensions, modifications, improvements, derivative compounds, or successor programs thereof. For the avoidance of doubt, the term "Business" shall include pre-clinical research, clinical development (including all phases of clinical trials), regulatory activities, and commercial-stage activities relating to the foregoing.
(c) "Caliston" means Caliston BioSciences, Inc., a corporation incorporated under the laws of the State of Delaware, with its employer identification number 84-4219063, or, following the Closing, the surviving entity or division of the Company into which Caliston has been merged.
(d) "Closing" means the closing of the Merger contemplated by the Merger Agreement, as such term is defined in the Merger Agreement.
(e) "Closing Date" means the date on which the Closing occurs, as determined in accordance with the terms of the Merger Agreement.
(f) "Company" means Penterra Pharmaceuticals Corp., a corporation incorporated under the laws of the State of Delaware (NYSE: PPHR), with its employer identification number 22-3847195, and its successors and assigns.
(g) "Competing Enterprise" means any Person, entity, or business (other than the Company or any of its Affiliates) that is engaged in, or is actively preparing to engage in, the Business anywhere within the Restricted Territory. For the avoidance of doubt, a Competing Enterprise shall include, without limitation, any pharmaceutical company, biotechnology company, clinical-stage development company, or other life sciences enterprise that conducts research, development, or commercialization activities in the field of kinase inhibitors (including selective CDK4/6 inhibitors) for oncology indications.
(h) "Confidential Information" means any and all information, whether written, oral, electronic, visual, or otherwise, that is proprietary or confidential in nature and that relates to the business, operations, products, services, research, development, or financial affairs of Caliston or (following the Closing) the Company and its Affiliates, including without limitation: (i) trade secrets; (ii) proprietary data, including but not limited to compound libraries, molecular structures, screening data, and assay results; (iii) clinical data, including clinical trial protocols, clinical trial results, patient data (including data subject to HIPAA and similar regulations), and pharmacovigilance data; (iv) regulatory submissions, including IND 158429 and all related FDA correspondence, pre-IND meeting minutes, and regulatory strategies; (v) research and development information, including laboratory notebooks, research plans, and pre-clinical study results; (vi) formulations, manufacturing processes, and production techniques; (vii) financial information, including revenue projections, cost structures, budgets, and pricing strategies; (viii) business plans, strategic plans, and market analyses; (ix) customer lists, supplier lists, vendor agreements, and collaboration agreements; (x) employee information, including compensation data, organizational charts, and succession plans; and (xi) any other information that has been or may be designated as confidential by the Company or Caliston. Notwithstanding the foregoing, "Confidential Information" shall not include information that (A) is or becomes generally available to the public other than as a result of a disclosure by Executive in violation of this Agreement, (B) was in Executive's possession on a non-confidential basis prior to its disclosure by Caliston or the Company, provided that the source of such information was not bound by a confidentiality obligation with respect thereto, or (C) becomes available to Executive on a non-confidential basis from a source other than the Company or Caliston, provided that such source is not bound by a confidentiality obligation with respect thereto.
(i) "Merger Agreement" means the Agreement and Plan of Merger dated as of November 27, 2023, between the Company and Caliston (Calderwood & Harkness LLP Draft v.7.3, execution version), as the same may be amended, supplemented, or modified from time to time in accordance with its terms.
(j) "Merger Consideration" means the aggregate consideration payable to Caliston stockholders pursuant to the Merger Agreement, including: (i) the cash component of Six Hundred Ninety-Three Million Seven Hundred Fifty Thousand Dollars ($693,750,000); (ii) the stock component of Two Hundred Thirty-One Million Two Hundred Fifty Thousand Dollars ($231,250,000) in shares of the Company's common stock (based on the thirty (30)-day volume-weighted average price of $39.17 per share as calculated in accordance with the Merger Agreement); and (iii) contingent value rights of up to One Hundred Twenty-Five Million Dollars ($125,000,000), payable upon the terms and conditions set forth in the Contingent Value Rights Agreement attached as Exhibit D to the Merger Agreement.
(k) "Non-Compete Period" means the period commencing on the Closing Date and ending on the second (2nd) anniversary of the Termination Date.
(l) "Non-Solicit Period" means the period commencing on the Closing Date and ending on the second (2nd) anniversary of the Termination Date.
(m) "Person" means any individual, corporation, limited liability company, partnership, joint venture, association, trust, unincorporated organization, governmental authority, or other entity of any kind.
(n) "Protected Employees" means all individuals who are, or were at any time during the twelve (12) months preceding the date of the applicable solicitation, employees of Caliston or (following the Closing) employees of the Company or any of its Affiliates who were formerly employed by Caliston or who work or worked primarily on the CLT-4019, CLT-5227, or CLT-6034 programs.
(o) "Restricted Territory" means: (i) the United States of America (including all fifty (50) states, the District of Columbia, and all territories and possessions thereof); and (ii) any country or jurisdiction in which Caliston or the Company (or any of their respective Affiliates) conducted, or actively planned to conduct, the Business as of the Closing Date or the Termination Date, as applicable. As of the date of this Agreement, the Restricted Territory includes, without limitation, the jurisdictions set forth on Exhibit B hereto, specifically including the member states of the European Union, the United Kingdom, Japan, the People's Republic of China, Canada, and the Commonwealth of Australia.
(p) "Termination Date" means the date on which Executive's employment with the Company and all of its Affiliates terminates for any reason, whether voluntary or involuntary, with or without cause.
Section 1.2 — Interpretation
Unless the context otherwise requires, the following rules of interpretation shall apply to this Agreement:
(a) All references herein to the Merger Agreement are to the execution version thereof (Calderwood & Harkness LLP Draft v.7.3) and to any amendments, supplements, or modifications thereto made in accordance with its terms.
(b) Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Merger Agreement.
(c) The section and article headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.
(d) The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation."
(e) References to "days" mean calendar days unless otherwise specified.
(f) References to any statute, rule, or regulation shall be deemed to refer to such statute, rule, or regulation as amended, supplemented, or re-enacted from time to time, and to any successor statute, rule, or regulation.
(g) The use of the singular shall include the plural, and vice versa, and the use of any gender shall include any other gender, in each case as the context requires.
ARTICLE 2: CONSIDERATION
Section 2.1 — Merger Consideration
Executive acknowledges and agrees that she is receiving substantial consideration in connection with the Merger, including her pro rata portion of the Merger Consideration attributable to her approximately 14.2% equity interest in Caliston. Executive's estimated share of the aggregate Merger Consideration (including the contingent value rights) represents a significant financial benefit to Executive, the value of which Executive has had a full opportunity to evaluate with the assistance of her independent financial and legal advisors. Executive acknowledges that the Merger Consideration she will receive constitutes good and valuable consideration for the restrictive covenants set forth in this Agreement, independent of any other consideration provided hereunder.
Section 2.2 — Continued Employment
The Company agrees to offer Executive continued employment following the Closing in a senior leadership role, with the title of Executive Vice President, Oncology Pipeline Development (or such other title as may be mutually agreed), on terms and conditions to be set forth in a separate employment agreement to be negotiated in good faith and executed by the Parties on or prior to the Closing Date (the "Employment Agreement"). Executive acknowledges that the offer of continued employment with the Company, together with the Merger Consideration described in Section 2.1, constitutes adequate and independent consideration for the covenants contained herein, and that the restrictive covenants set forth in this Agreement are being entered into in connection with the Merger and not solely in connection with Executive's employment relationship with the Company.
Section 2.3 — Sufficiency of Consideration
Executive acknowledges and agrees that: (a) the covenants and restrictions contained in this Agreement are reasonable and necessary for the protection of the legitimate business interests of the Company, including the Company's interest in protecting the value of the Business acquired through the Merger, the Confidential Information, and the goodwill associated therewith; (b) the consideration provided to Executive, including the Merger Consideration and the offer of continued employment, is sufficient and adequate to support such covenants and restrictions; (c) Executive has had a full and fair opportunity to negotiate the terms of this Agreement and to consult with independent legal counsel of her choosing, including Kenneth Pratt of Whitfield Graves LLP; and (d) Executive is entering into this Agreement voluntarily and with a full understanding of the nature and consequences of the covenants and restrictions set forth herein.
ARTICLE 3: NON-COMPETITION COVENANT
Section 3.1 — Non-Competition
During the Non-Compete Period (i.e., from the Closing Date through the second (2nd) anniversary of the Termination Date), Executive shall not, directly or indirectly, whether as an employee, consultant, advisor, officer, director, stockholder, partner, member, joint venturer, agent, representative, independent contractor, or in any other capacity, whether on Executive's own behalf or on behalf of any other Person:
(a) engage in the Business within the Restricted Territory;
(b) own, manage, operate, control, finance, or participate in the ownership, management, operation, control, or financing of any Competing Enterprise within the Restricted Territory;
(c) provide services (whether as an employee, consultant, advisor, independent contractor, or otherwise) to any Competing Enterprise in any capacity that involves, or could reasonably be expected to involve, the use or disclosure of Confidential Information, or that involves, or could reasonably be expected to involve, activities relating to the Business within the Restricted Territory; or
(d) assist, encourage, or facilitate any Person in doing any of the activities described in clauses (a) through (c) above.
For the avoidance of doubt, the restrictions set forth in this Section 3.1 are intended to prevent Executive from using the specialized knowledge, expertise, Confidential Information, and relationships she developed during her tenure as Co-Founder and Chief Executive Officer of Caliston to compete with the Company or to benefit a competitor of the Company during the Non-Compete Period.
Section 3.2 — Carve-Outs and Permitted Activities
Notwithstanding the provisions of Section 3.1, the following activities shall not constitute a violation of the non-competition covenant:
(a) Passive Investment Exception. Executive may acquire and hold, solely as a passive investment, equity securities of any publicly traded company that is listed on a national securities exchange or traded on the over-the-counter market, provided that Executive does not, directly or indirectly, own more than two percent (2%) of the outstanding equity securities of any class of such company at any time, and provided further that Executive does not otherwise participate in the management, operations, or governance of such entity.
(b) Academic and Non-Profit Activities. Executive may serve in academic, teaching, or research positions at universities, hospitals, or non-profit research institutions (including, without limitation, serving as an adjunct or visiting professor, lecturer, or research collaborator), provided that such activities do not involve the development or commercialization of products or therapies that directly compete with the Business within the Restricted Territory. Executive shall provide the Company with reasonable advance written notice before accepting any such position.
(c) Board Service. Executive may serve on the board of directors (or equivalent governing body) of companies, organizations, or entities that are not Competing Enterprises, subject to Executive providing the Company with at least fifteen (15) business days' prior written notice of the proposed board service and the Company not objecting in writing within ten (10) business days of receipt of such notice. The Company's objection shall be based solely on a reasonable, good-faith determination that the entity in question is a Competing Enterprise or that the proposed service would otherwise violate the terms of this Agreement.
(d) Personal Investments. Executive may make passive investments in private investment funds, including venture capital funds, private equity funds, and hedge funds, that may hold portfolio companies in the life sciences sector, provided that Executive does not provide advisory, consulting, or management services to any portfolio company of such fund that is a Competing Enterprise, and provided further that Executive does not participate in any investment decisions of such fund that relate to a Competing Enterprise.
(e) Government and Regulatory Service. Executive may accept appointments to government advisory committees, including advisory committees of the FDA, the National Institutes of Health, or other governmental or quasi-governmental bodies, provided that such service complies with all applicable conflict-of-interest regulations and does not involve the provision of advice or services that would otherwise violate the covenants set forth in this Article 3.
Section 3.3 — Scope Reduction
The Parties acknowledge that the Non-Compete Period, the Restricted Territory, and the scope of the restricted activities set forth in Section 3.1 are reasonable in light of the nature and scope of the Business, the substantial consideration being provided to Executive, and the Company's legitimate business interests in protecting the value of the transaction contemplated by the Merger Agreement. If, however, any court of competent jurisdiction shall determine that the Non-Compete Period, the Restricted Territory, or the scope of the restricted activities is unreasonable, overbroad, or otherwise unenforceable in any respect, the Parties agree that such court is hereby requested and authorized to reform such provision to the maximum extent that such court deems reasonable and enforceable under the circumstances, and as so reformed, such provision shall be binding upon the Parties. The Parties intend that the non-competition covenant set forth in this Article 3 shall be enforced to the fullest extent permissible under applicable law, and accordingly request that any court reviewing this Agreement apply a "blue-pencil" or reformation doctrine to modify any provision found to be overbroad or unreasonable so as to render it enforceable. The invalidity or unenforceability of any particular provision of this Article 3 shall not affect the enforceability of any other provision of this Agreement, and the remaining provisions shall continue in full force and effect.
ARTICLE 4: NON-SOLICITATION OF EMPLOYEES
Section 4.1 — Non-Solicitation Covenant
During the Non-Solicit Period (i.e., from the Closing Date through the second (2nd) anniversary of the Termination Date), Executive shall not, directly or indirectly, whether on her own behalf or on behalf of any other Person:
(a) solicit, recruit, hire, or attempt to solicit, recruit, or hire any Protected Employee to leave the employment of the Company or any of its Affiliates, or to accept employment or an engagement with any other Person;
(b) encourage, induce, or assist any third party (including, without limitation, any recruiting firm, staffing agency, or other Person) in soliciting, recruiting, or hiring any Protected Employee to leave the employment of the Company or any of its Affiliates; or
(c) otherwise interfere with, disrupt, or attempt to interfere with or disrupt the employment relationship between the Company or any of its Affiliates and any Protected Employee.
Section 4.2 — Exceptions
The restrictions set forth in Section 4.1 shall be subject to the following exceptions:
(a) Involuntary Termination. The restrictions in Section 4.1 shall not apply to any individual who was a Protected Employee but whose employment with the Company or its Affiliates was involuntarily terminated by the Company or its Affiliates (without cause, as defined in the applicable employment agreement or Company policy) more than six (6) months prior to the date of the applicable solicitation, recruitment, or hiring activity.
(b) General Advertising. General advertisements, postings, or solicitations for employment that are not specifically directed at or targeted toward Protected Employees, including but not limited to postings on general job boards (such as Westmark Health IT, Indeed, or Penmark Technologies), advertisements in trade publications, or postings on the website of Executive's subsequent employer, shall not be deemed a violation of Section 4.1, even if a Protected Employee responds to such general advertisement or posting.
(c) Unsolicited Inquiries. Responding to an unsolicited inquiry from a Protected Employee regarding potential employment or engagement opportunities shall not constitute a breach of Section 4.1, provided that Executive did not, directly or indirectly, encourage, induce, or solicit such inquiry, and provided further that Executive does not proceed beyond an initial response without first providing written notice to the Company's General Counsel.
Section 4.3 — Scope of Protected Employees
The Parties acknowledge that Caliston employs approximately ninety-four (94) employees as of the date of this Agreement, all of whom possess specialized knowledge and expertise in the fields of oncology drug development, kinase inhibitor research, clinical operations, and regulatory affairs that are critical to the success of the Business. All such employees, and their successors hired to fill positions vacated by any such employees, shall constitute Protected Employees during the Non-Solicit Period. Following the Closing, any additional employees of the Company or any of its Affiliates who are assigned to work primarily on the CLT-4019, CLT-5227, or CLT-6034 programs, or on any successor or related programs derived therefrom, shall also be deemed Protected Employees for purposes of this Article 4. The Company shall maintain a list of Protected Employees and shall make such list available to Executive upon reasonable written request in connection with Executive's compliance with the provisions of this Article 4.
ARTICLE 5: NON-SOLICITATION OF BUSINESS RELATIONSHIPS
Section 5.1 — Non-Solicitation of Customers, Collaborators, and Suppliers
During the Non-Solicit Period (i.e., from the Closing Date through the second (2nd) anniversary of the Termination Date), Executive shall not, directly or indirectly, whether on her own behalf or on behalf of any other Person, solicit, divert, or take away (or attempt to solicit, divert, or take away) the business or patronage of any customer, collaborator, clinical trial site, clinical investigator, contract research organization, contract manufacturing organization, licensor, licensee, supplier, vendor, or other material business relationship of Caliston or the Company (or their respective Affiliates) with whom Executive had material contact or about whom Executive received Confidential Information during the twenty-four (24) months preceding the Termination Date, for the purpose of providing or selling products or services that are competitive with the Business within the Restricted Territory. For the avoidance of doubt, this restriction shall apply to the solicitation of relationships for the benefit of any Competing Enterprise, and shall not prohibit Executive from engaging with such Persons in contexts that are unrelated to the Business.
ARTICLE 6: CONFIDENTIALITY
Section 6.1 — Obligations
Executive shall not, at any time during or after the term of her employment with the Company or its Affiliates, directly or indirectly, use, disclose, publish, communicate, or make available to any Person any Confidential Information, except: (a) as required in the good-faith performance of Executive's duties for the Company or its Affiliates; (b) as expressly authorized in writing by the Company's General Counsel or Board of Directors; or (c) as required by applicable law, regulation, subpoena, civil investigative demand, or other legal process, provided that Executive shall, to the extent legally permissible, provide the Company with prompt written notice of any such requirement prior to making any such disclosure, so that the Company may seek an appropriate protective order or other remedy. Executive acknowledges that the Confidential Information is among the most valuable assets of the Company and that the restrictions contained in this Section 6.1 are essential for the protection of such assets.
Section 6.2 — Return of Materials
Upon the Termination Date or at any time upon the Company's written request, Executive shall promptly return to the Company all documents, electronic files, data, records, correspondence, notes, memoranda, reports, presentations, prototypes, samples, equipment, keys, access cards, and all other materials (in whatever form or medium) containing or relating to Confidential Information that are in Executive's possession, custody, or control, whether prepared by Executive or by others. Executive shall not retain any copies, extracts, summaries, or reproductions of any such materials, in whole or in part, in any form or medium (including electronic storage, cloud-based storage, personal devices, or otherwise). Executive shall, upon request, certify in writing that all such materials have been returned and that no copies have been retained.
Section 6.3 — Defend Trade Secrets Act Notice
Pursuant to the Defend Trade Secrets Act of 2016 (18 U.S.C. § 1833(b)), Executive is hereby notified that:
(a) An individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (i) is made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
(b) An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.
Nothing in this Agreement is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by such provision. Furthermore, nothing in this Agreement shall be construed to prevent Executive from communicating directly with, cooperating with, or providing information to any federal, state, or local government agency or commission, including the Securities and Exchange Commission, the Department of Justice, or the Equal Employment Opportunity Commission.
ARTICLE 7: INTELLECTUAL PROPERTY ASSIGNMENT
Section 7.1 — Assignment of Inventions
Executive agrees that all inventions, discoveries, developments, innovations, improvements, modifications, works of authorship, designs, processes, methods, techniques, formulas, compositions of matter, know-how, data, software, and other intellectual property (collectively, "Inventions") that are conceived, created, developed, reduced to practice, or made by Executive, whether alone or jointly with others, during the period of Executive's employment with the Company or any of its Affiliates, and that: (a) relate to the Business or to the actual or demonstrably anticipated research or development activities of the Company or its Affiliates; (b) result from any work performed by Executive for the Company or its Affiliates; or (c) are developed using any equipment, supplies, facilities, or Confidential Information of the Company or its Affiliates, shall be the sole and exclusive property of the Company. Executive hereby irrevocably assigns to the Company all right, title, and interest in and to all such Inventions, including all patents, copyrights, trade secrets, and other intellectual property rights therein, throughout the world. This assignment specifically includes, without limitation, any ongoing work related to CLT-4019 (a selective CDK4/6 inhibitor for HR+/HER2– metastatic breast cancer currently in Phase 2 clinical development under IND 158429), CLT-5227 (a next-generation kinase inhibitor for non-small cell lung cancer), and CLT-6034 (a dual-kinase inhibitor candidate in pre-clinical development for colorectal and pancreatic cancers), and any derivative compounds, formulations, or therapeutic approaches related thereto.
Section 7.2 — Cooperation
Executive agrees to cooperate fully with the Company and its authorized representatives in the preparation, filing, prosecution, maintenance, defense, and enforcement of patent applications, patent registrations, copyright registrations, and other intellectual property filings and registrations related to the Inventions, both during and after Executive's employment with the Company. Executive shall promptly disclose all Inventions to the Company in writing and shall execute all documents, instruments, assignments, declarations, and other papers reasonably requested by the Company in connection with the filing, prosecution, maintenance, defense, or enforcement of any intellectual property rights related thereto. Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Executive's agent and attorney-in-fact (which appointment is coupled with an interest and is irrevocable) to act for and on Executive's behalf to execute and file any such documents and to do all other lawfully permitted acts to further the filing, prosecution, issuance, maintenance, and enforcement of any intellectual property rights related to the Inventions, with the same legal force and effect as if executed by Executive.
Section 7.3 — Prior Inventions
Executive has identified on Exhibit A attached hereto a complete list of all inventions, discoveries, original works of authorship, developments, improvements, and trade secrets that were made by Executive prior to her employment with the Company, that belong solely to Executive, and that relate to the Business (collectively, "Prior Inventions"). If no such Prior Inventions are listed on Exhibit A, Executive represents and warrants that no such Prior Inventions exist. Executive agrees that she will not incorporate, or permit to be incorporated, any Prior Invention into any Invention, product, process, or service of the Company without the Company's prior written consent. If, in the course of Executive's employment with the Company, Executive incorporates a Prior Invention into any Company product, process, or service, or if any Invention cannot be reasonably made, used, reproduced, distributed, or otherwise exploited without using or violating a Prior Invention, Executive hereby grants to the Company a non-exclusive, royalty-free, irrevocable, perpetual, worldwide license (with the right to sublicense through multiple tiers) to make, have made, use, sell, offer for sale, import, reproduce, distribute, modify, adapt, prepare derivative works of, display, perform, and otherwise exploit such Prior Invention as part of or in connection with such Invention, product, process, or service.
ARTICLE 8: NON-DISPARAGEMENT
Section 8.1 — Mutual Non-Disparagement
(a) Executive agrees that, during and after the term of her employment with the Company, she shall not, directly or indirectly, make, publish, or cause to be made or published any statement, whether oral, written, electronic, or otherwise, that disparages, defames, or casts in a negative light the Company, its Affiliates, or any of their respective current or former officers, directors, employees, stockholders, products, services, business practices, or reputation.
(b) The Company agrees that, during and after the term of Executive's employment, it shall not, and shall direct its executive officers and members of its Board of Directors not to, make, publish, or cause to be made or published any statement, whether oral, written, electronic, or otherwise, that disparages, defames, or casts in a negative light Executive or her professional reputation.
(c) Notwithstanding the foregoing, nothing in this Section 8.1 shall prevent either Party from: (i) making truthful statements that are required by applicable law, regulation, subpoena, or other legal process; (ii) making truthful statements in connection with any governmental investigation or proceeding; (iii) making truthful statements in connection with the enforcement of any rights under this Agreement or any other agreement between the Parties; or (iv) making internal statements to officers, directors, employees, or advisors of the Company (or, in the case of Executive, to Executive's legal, financial, or tax advisors) in the ordinary course of business or for purposes of obtaining professional advice.
ARTICLE 9: REMEDIES
Section 9.1 — Acknowledgment of Irreparable Harm
Executive acknowledges and agrees that a breach or threatened breach of any of the covenants and agreements contained in Articles 3, 4, 5, 6, 7, or 8 of this Agreement would cause the Company irreparable harm and injury that cannot be adequately compensated by an award of monetary damages alone. Executive further acknowledges that the Company's remedies at law for any such breach would be inadequate and that the Company would suffer irreparable damage in the event that any provision of this Agreement were not performed in accordance with its terms or were otherwise breached, including but not limited to the loss of Confidential Information, the loss of competitive advantages acquired through the Merger, the erosion of customer and employee relationships, and the diminution in value of the Business.
Section 9.2 — Injunctive Relief
In the event of a breach or threatened breach by Executive of any of the covenants or agreements contained in this Agreement, the Company shall be entitled, in addition to any other remedy available at law or in equity, to seek and obtain temporary, preliminary, and permanent injunctive relief, specific performance, and any other form of equitable relief from any court of competent jurisdiction, without the necessity of proving actual damages, posting a bond or other security, or establishing the inadequacy of monetary damages. Executive hereby consents to the entry of temporary, preliminary, and permanent injunctive relief in any proceeding brought by the Company to enforce any provision of this Agreement, and agrees not to oppose any motion or application by the Company seeking such relief on the grounds that the Company has an adequate remedy at law or that the Company has failed to post a bond or other security.
Section 9.3 — Tolling
If Executive breaches any of the restrictive covenants set forth in this Agreement, the applicable restriction period (whether the Non-Compete Period, the Non-Solicit Period, or both, as applicable) shall be automatically tolled and suspended during the entire period of the breach, commencing on the date of the first breach and continuing until the date on which the breach has been fully cured or until the entry of a final, non-appealable court order enforcing the applicable covenant. Upon cessation of the breach or entry of such court order, the restriction period shall resume and continue for the full remaining duration of the applicable period as if no breach had occurred.
Section 9.4 — Cumulative Remedies
The rights and remedies of the Company set forth in this Article 9, and elsewhere in this Agreement, are cumulative and shall be in addition to, and not in lieu of, any and all other rights and remedies available to the Company at law or in equity, including but not limited to the recovery of compensatory damages, consequential damages, lost profits, and reasonable attorneys' fees and costs incurred by the Company in enforcing this Agreement. The exercise of any one remedy by the Company shall not be deemed an election of remedies or a waiver of the right to pursue any other remedy.
Section 9.5 — Forfeiture
In the event of a material breach by Executive of any covenant or agreement contained in this Agreement, in addition to any injunctive relief and other remedies available to the Company under this Article 9, the Company shall have the right, upon written notice to Executive, to recover (and Executive shall be required to repay) any portion of the Merger Consideration that was attributable to this Agreement as determined in accordance with Section 280G of the Internal Revenue Code of 1986, as amended, and the applicable provisions of the Merger Agreement, to the maximum extent permitted by applicable law. Executive acknowledges and agrees that this forfeiture provision is a material inducement to the Company to enter into this Agreement and to consummate the transactions contemplated by the Merger Agreement, and that the amounts subject to forfeiture represent a reasonable estimate of the damages that the Company would sustain as a result of Executive's material breach.
ARTICLE 10: REPRESENTATIONS AND WARRANTIES
Section 10.1 — Representations of Executive
Executive hereby represents and warrants to the Company as follows:
(a) Legal Capacity. Executive has the full legal capacity and authority to enter into this Agreement, to perform her obligations hereunder, and to consummate the transactions contemplated hereby.
(b) No Conflict. The execution, delivery, and performance of this Agreement by Executive will not violate, conflict with, or result in a breach or default under any other agreement, contract, instrument, order, judgment, decree, or other obligation to which Executive is a party or by which Executive is bound, including without limitation any prior employment agreement, non-competition agreement, non-solicitation agreement, confidentiality agreement, or intellectual property assignment agreement.
(c) Opportunity to Consult Counsel. Executive has had a full and fair opportunity to consult with independent legal counsel of her choosing regarding this Agreement, its terms, and its implications, and has in fact consulted with Kenneth Pratt of Whitfield Graves LLP, One Federal Street, Suite 2600, Boston, MA 02110, in connection herewith.
(d) Understanding of Terms. Executive has carefully read, reviewed, and understands all provisions of this Agreement, including the restrictive covenants set forth in Articles 3, 4, 5, 6, 7, and 8, and enters into this Agreement voluntarily and without duress or coercion.
(e) Reasonableness. Executive acknowledges and agrees that the covenants, restrictions, and limitations contained in this Agreement are reasonable in scope, duration, and geographic extent and are necessary for the protection of the Company's legitimate business interests, including its interests in Confidential Information, trade secrets, customer and employee relationships, and the goodwill acquired through the Merger.
Section 10.2 — Representations of the Company
The Company hereby represents and warrants to Executive as follows:
(a) Due Incorporation. The Company is a corporation duly incorporated, validly existing, and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own and operate its properties and assets and to carry on its business as presently conducted.
(b) Corporate Authority. The Company has all requisite corporate power and authority to enter into this Agreement, to perform its obligations hereunder, and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this Agreement by the Company have been duly authorized by all necessary corporate action, including the approval of the Board of Directors of the Company (acting through its non-recused directors) at a meeting held on November 22, 2023.
(c) Binding Effect. This Agreement has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity.
ARTICLE 11: GENERAL PROVISIONS
Section 11.1 — Governing Law
This Agreement shall be governed by, and construed and interpreted in accordance with, the internal laws of the State of Delaware, without giving effect to any choice-of-law or conflict-of-laws rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Notwithstanding the foregoing, the Parties acknowledge that to the extent the Massachusetts Noncompetition Agreement Act (Mass. Gen. Laws ch. 149, § 24L) is determined by a court of competent jurisdiction to apply to the non-competition covenant set forth in Article 3, the provisions of such Act shall be complied with as applicable, and the Parties agree that the provisions of this Agreement are intended to satisfy the requirements of such Act, including but not limited to the requirement of garden leave or other mutually agreed-upon consideration.
Section 11.2 — Jurisdiction and Venue
Each Party hereby irrevocably and unconditionally submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware (or, if such court lacks subject matter jurisdiction, the United States District Court for the District of Delaware) for any action, suit, or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, and each Party hereby irrevocably and unconditionally waives any objection to the laying of venue of any such action, suit, or proceeding in any such court, and further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit, or proceeding brought in any such court has been brought in an inconvenient forum. Each Party agrees that a final judgment in any such action, suit, or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable law.
Section 11.3 — Entire Agreement
This Agreement, together with the Merger Agreement and the other ancillary agreements referenced therein (including the Employment Agreement, when executed), constitutes the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous negotiations, discussions, representations, warranties, understandings, and agreements, whether written or oral, between the Parties with respect to such subject matter. There are no representations, warranties, promises, covenants, or undertakings, other than those expressly set forth or referred to in this Agreement.
Section 11.4 — Amendment and Waiver
No amendment, modification, or supplement to this Agreement shall be effective unless it is in writing and signed by both Parties. No waiver of any breach of any provision of this Agreement shall be effective unless it is in writing and signed by the Party against whom enforcement of the waiver is sought. No waiver of any breach shall be deemed a waiver of any other or subsequent breach, and no waiver of any right under this Agreement shall operate as a waiver of any other right. The failure of either Party to enforce any provision of this Agreement shall not be construed as a waiver of such Party's right to enforce such provision, or any other provision, at any future time.
Section 11.5 — Severability
If any provision of this Agreement (or any portion thereof) is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and the remaining provisions shall remain in full force and effect. In such event, the invalid, illegal, or unenforceable provision shall be reformed, modified, and construed to the minimum extent necessary to render it valid, legal, and enforceable while preserving, to the greatest extent possible, the original intent and economic effect of the Parties. The Parties acknowledge that the blue-pencil and reformation provisions of Section 3.3 shall apply with equal force to all restrictive covenants contained in this Agreement, including those set forth in Articles 4 and 5.
Section 11.6 — Assignment
Executive may not assign, transfer, delegate, or otherwise dispose of this Agreement, or any of her rights, interests, or obligations hereunder, without the prior written consent of the Company, and any purported assignment, transfer, delegation, or disposition in violation of this Section 11.6 shall be null and void. The Company may, without the consent of Executive, assign this Agreement and all of its rights and obligations hereunder to any successor entity in connection with a merger, consolidation, reorganization, or sale of all or substantially all of the assets or business of the Company (or any division thereof to which this Agreement relates), provided that such successor entity expressly assumes all of the Company's obligations under this Agreement. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective heirs, executors, administrators, legal representatives, successors, and permitted assigns.
Section 11.7 — Notices
All notices, demands, consents, requests, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given: (a) upon personal delivery; (b) one (1) business day after deposit with a nationally recognized overnight courier service (with confirmation of delivery); (c) three (3) business days after deposit in the United States mail, certified or registered, return receipt requested, with postage prepaid; or (d) upon confirmed transmission if sent by email (with a confirmatory copy sent by one of the other methods described above within one (1) business day), in each case addressed as follows:
If to the Company:
Penterra Pharmaceuticals Corp. 400 Innovation Drive, Suite 1200 Princeton, NJ 08540
Attention: Lawrence Whittaker, General Counsel and Corporate Secretary
Email: lwhittaker@penterra.com
with a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 1700 Market Street, Suite 3400 Philadelphia, PA 19103
Attention: Renata Vasquez
Email: rvasquez@calderwoodharkness.com
If to Executive:
Dr. Nadia Sorensen At her address on file with the Company
with a copy (which shall not constitute notice) to:
Whitfield Graves LLP One Federal Street, Suite 2600 Boston, MA 02110
Attention: Kenneth Pratt
Email: kpratt@whitfieldgraves.com
Either Party may change its address for purposes of this Section 11.7 by giving the other Party written notice of such change in accordance with this Section.
Section 11.8 — Counterparts
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile transmission, portable document format (.pdf), or other electronic means shall be effective as delivery of a manually executed original counterpart.
Section 11.9 — No Strict Construction
This Agreement is the product of negotiations between the Parties, each of whom has been represented by independent legal counsel, and shall be interpreted fairly in accordance with its terms. In the event of any ambiguity, this Agreement shall not be construed or interpreted against any Party on the ground that such Party (or its counsel) drafted or proposed the language at issue. Each Party has participated in the negotiation and drafting of this Agreement, and the language herein shall be given its plain and ordinary meaning.
Section 11.10 — Survival
The covenants, agreements, representations, and warranties contained in this Agreement shall survive the Closing and shall survive the termination of Executive's employment with the Company and its Affiliates, regardless of the reason for such termination, and, where applicable, shall survive any termination of the Merger Agreement, in each case to the extent set forth herein and for the applicable periods specified herein. Without limiting the generality of the foregoing: (a) the non-competition covenant set forth in Article 3 and the non-solicitation covenants set forth in Articles 4 and 5 shall survive until the expiration of the Non-Compete Period and the Non-Solicit Period, respectively; (b) the confidentiality obligations set forth in Article 6 shall survive indefinitely; (c) the intellectual property assignment obligations set forth in Article 7 shall survive indefinitely; and (d) the non-disparagement obligations set forth in Article 8 shall survive indefinitely.
Section 11.11 — Relationship to Merger Agreement
This Agreement is an ancillary agreement to the Merger Agreement and is being entered into in connection with the transactions contemplated thereby. In the event of any express conflict or inconsistency between any provision of this Agreement and any provision of the Merger Agreement, the terms of the Merger Agreement shall control and prevail, except with respect to the specific restrictive covenant provisions set forth in Articles 3, 4, 5, 6, 7, and 8 of this Agreement, which are intended to supplement, and not to be limited by, any provisions of the Merger Agreement relating to restrictive covenants. Notwithstanding the foregoing, the execution and delivery of this Agreement is a condition precedent to the Company's obligation to consummate the Merger, and the Parties acknowledge that this Agreement would not have been entered into but for the Merger Agreement and the transactions contemplated thereby.
Section 11.12 — Third-Party Beneficiaries
Except as expressly provided in this Section 11.12, this Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit, or remedy of any nature whatsoever. Notwithstanding the foregoing, the members of the Special Committee of the Board of Directors of the Company (namely, Diane Prescott, James Okafor, and Dr. Helen Ng, in their capacities as members of the Special Committee) shall be express third-party beneficiaries of this Agreement to the extent of their interest in protecting the integrity of the Merger process and ensuring the enforceability of the restrictive covenants contained herein, and shall have the right to enforce the provisions of this Agreement to such extent.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Parties have duly executed this Non-Competition and Non-Solicitation Agreement as of the date first written above.
PENTERRA PHARMACEUTICALS CORP.
By: ________
Name: Priya Anand
Title: Chief Financial Officer
Date: ________
(Executed by the Chief Financial Officer of the Company pursuant to authority granted by the Board of Directors on November 22, 2023. Dr. Marcus Hale, Chief Executive Officer, has recused himself from all matters related to the Caliston transaction.)
DR. NADIA SORENSEN
________________________________________
Dr. Nadia Sorensen, individually
Date: ________
EXHIBIT A
PRIOR INVENTIONS
The following is a complete list of all inventions, discoveries, original works of authorship, developments, improvements, and trade secrets that were made by Dr. Nadia Sorensen prior to her employment with Penterra Pharmaceuticals Corp. that belong solely to Dr. Sorensen, and that relate to the Business, as referenced in Section 7.3 of the Agreement (collectively, "Prior Inventions"):
Check here if no Prior Inventions exist. If this box is checked, Dr. Sorensen represents and warrants that she has no Prior Inventions to disclose.
To be completed by Dr. Sorensen prior to or at Closing.
DR. NADIA SORENSEN
________________________________________
Dr. Nadia Sorensen
Date: ________
EXHIBIT B
RESTRICTED TERRITORY
As referenced in Section 1.1(o) of the Agreement, the "Restricted Territory" includes the following jurisdictions:
1. United States of America
All fifty (50) states of the United States, the District of Columbia, and all territories and possessions of the United States (including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands).