Exhibit 10.7
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement"), made in Hingham, Massachusetts as of the
15th day of March, 2005, between Pathogenics, Inc. a Delaware corporation having
its executive offices and principal place of business at 00 Xxxxx Xxxxxx, Xxxxx
000, Xxxxxxx, Xxxxxxxxxxxxx 00000 (the "Company"), and Xxxxxxxx X. Xxxxx, Esq.,
an individual currently residing at 0000 Xxxxxx Xxxxx, Xxxx, Xxxxxxxxxxxxx 00000
("Employee").
WHEREAS, the Company desires to employ Employee, and Employee desires to
accept such employment on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants and agreements
hereinafter set forth, the Company and Employee agree as follows:
1. Term.
-----
The term of this Agreement shall be period commencing on February 18, 2001
and ending on the date Employee's employment is terminated in accordance with
the terms hereof (the "Term").
2. Employment.
-----------
(a) Employment by the Company. Employee agrees to be employed by the
--------------------------
Company during the Term upon the terms and subject to the conditions set forth
in this Agreement. Employee shall serve as the President and CEO of the Company
and shall have such duties as may be prescribed by the Company and shall serve
in such other and/or additional position(s) as the Company may determine from
time to time.
(b) Performance of Duties. Throughout the Term, Employee shall
-----------------------
faithfully and diligently perform Employee's duties in conformity with the
directions of the Company and serve the Company to the best of Employee's
ability. Until otherwise determined by the Company, Employee shall have the
title of President and CEO of the Company, and in such capacity shall be
responsible for such duties as may be assigned by the Company and shall
initially report to the Board of Directors of the Company.
(c) Place of Performance. Employee shall be based initially at the
----------------------
Company's offices in Hingham, Massachusetts or such other location(s) as the
Company may determine. Throughout the Term, Employee shall maintain Employee's
personal residence within reasonable access to Employee's place of employment.
3. Compensation and Benefits.
----------------------------
(a) Base Salary. The Company agrees to pay to Employee a base salary
------------
("Base Salary") at the annual rate of $200,000, payable in equal installments
consistent with the Company's payroll practices. Notwithstanding the forgoing,
the Employee may choose to defer and accrue a portion of the Base Salary. The
salary deferral and accrual shall end and Company will pay the Employee in full
the deferred and accrued salary amount hereunder upon the earlier of either the
Employee's own determination, the Employee's termination of employment by the
Company as provided in Section 4(d) of this Agreement, or the expiration of the
Term of this Agreement.
-1-
(b) Bonus. The Company shall pay to Employee an annual bonus (the
-----
"Bonus") in an amount to be determined by Compensation Committee of the Board of
Directors in its discretion. In addition, Employee shall be entitled to
participate in any bonus or other incentive programs as may be established by
the Company.
(c) Benefits and Perquisites. Employee shall be entitled to
--------------------------
participate in, to the extent Employee is otherwise eligible under the terms
thereof, the benefit plans and programs, and receive the benefits and
perquisites, generally provided to the Company's employees, including without
limitation family medical insurance and life insurance. Employee shall be
entitled to six weeks of vacation per year.
(d) Travel and Business Expenses. Upon submission of itemized expense
----------------------------
statements in the manner specified by the Company, Employee shall be entitled to
reimbursement for reasonable travel and other reasonable business expenses duly
incurred by Employee in the performance of Employee's duties under this
Agreement in accordance with the policies and procedures established by the
Company from time to time for employees of the Company.
(e) No Other Compensation or Benefits; Payment. The compensation and
-------------------------------------------
benefits specified in this Section 3 and in Section 4 of this Agreement shall be
in lieu of any and all other compensation and benefits. Payment of all
compensation and benefits to Employee hereunder shall be made in accordance with
the relevant Company policies in effect from time to time to the extent the same
are consistently applied, including normal payroll practices, and shall be
subject to all applicable employment and withholding taxes and other
withholdings.
(f) Cessation of Employment. In the event Employee shall cease to be
------------------------
employed by the Company for any reason, then Employee's compensation and
benefits shall cease on the date of such event, except as otherwise provided
herein or in any applicable employee benefit plan or program.
4. Termination of Employment.
----------------------------
(a) Termination. The Company may terminate Employee's employment for
-----------
Cause (as defined below) or for any breach of this Agreement, in which case the
provisions of Section 4(b) of this Agreement shall apply. The Company may also
terminate Employee's employment in the event of Employee's Disability (as
defined below), in which case the provisions of Section 4(c) of this Agreement
shall apply. The Company may also terminate the Employee's employment for any
other reason by written notice to Employee, in which case the provisions of
Section 4(d) of this Agreement shall apply. If Employee's employment is
terminated by reason of Employee's death, retirement or voluntary resignation,
the provisions of Section 4(b) of this Agreement shall apply.
(b) Termination for Cause; Termination by Reason of Death or
Retirement or Voluntary Resignation. In the event that Employee's employment
hereunder is terminated during the Term (x) by the Company for Cause (as defined
below), (y)
-2-
by reason of Employee's death or retirement or (z) by reason of Employee's
voluntary resignation, then the Company shall pay to Employee only the Base
Salary through such date of termination. For purposes of this Agreement,
"Cause" shall mean (i) conviction of any crime (whether or not involving the
Company) constituting a felony in the jurisdiction involved; (ii) engaging in
any substantiated act involving moral turpitude; (iii) engaging in any act
which, in each case, subjects, or if generally known would subject, the Company
to public ridicule or embarrassment; (iv) gross neglect or misconduct in the
performance of Employee's duties hereunder; (v) willful failure or refusal to
perform such duties as may reasonably be delegated to Employee; or (vi) material
breach of any provision of this Agreement by Employee; provided, however, that
with respect to clauses (iv), (v) or (vi), Employee shall have received written
notice from the Company setting forth the alleged act or failure to act
constituting "Cause" hereunder, and Employee shall not have cured such act or
refusal to act within 10 business days of his actual receipt of notice.
(c) Disability. If, as a result of Employee's incapacity due to
----------
physical or mental illness, Employee shall have been absent from Employee's
duties hereunder on a full time basis for either (i) one hundred twenty (120)
days within any three hundred sixty-five (365) day period, or (ii) ninety (90)
consecutive days, the Company may terminate Employee's employment hereunder for
"Disability". In that event, the Company shall pay to Employee only the Base
Salary through such date of termination. During any period that Employee fails
to perform Employee's duties hereunder as a result of incapacity due to physical
or mental illness (a "Disability Period"), Employee shall continue to receive
the compensation and benefits provided by Section 3 of this Agreement until
Employee's employment hereunder is terminated; provided, however, that the
-------- -------
amount of compensation and benefits received by Employee during the Disability
Period shall be reduced by the aggregate amounts, if any, payable to Employee
under disability benefit plans and programs of the Company or under the Social
Security disability insurance program.
(d) Termination By Company For Any Other Reason. In the event that
----------------------------------------------
Employee's employment hereunder is terminated by the Company during the Term for
any reason other than as provided in Section 4(b) or 4(c) of this Agreement,
then the Company shall pay to Employee the Base Salary through such date of
termination and, in lieu of any further compensation and benefits for the
balance of the Term, severance pay equal to the Base Salary that Employee would
have otherwise received during the period beginning on such date of termination
and ending twelve (12) months from the effective date of such termination, which
severance pay shall be paid commencing with such date of termination at the
times and in the amounts such Base Salary would have been paid. Notwithstanding
the forgoing, the Company shall also pay the Employee in full any deferred and
accrued salary owed under Section 3(a) of this Agreement. Notwithstanding
anything to the contrary contained herein, in the event that Employee shall
breach Section 5 or 6 of this Agreement, in addition to any other remedies the
Company may have in the event Employee breaches this Agreement, the Company's
obligation pursuant to this Section 4(d) to continue such salary shall cease and
Employee's rights thereto shall terminate and shall be forfeited.
(e) No Further Liability; Release. Payment made and performance by
--------------------------------
the Company in accordance with this Section 4 shall operate to fully discharge
and release the Company and its directors, officers, employees, subsidiaries,
affiliates, stockholders, successors, assigns, agents and representatives from
any further obligation or liability with respect to Employee's employment and
termination of employment. Other than paying Employee's Base Salary through the
date of termination of Employee's employment and making any severance payment
pursuant to and in accordance with this Section 4 (as applicable), the Company
and its directors, officers, employees, subsidiaries, affiliates, stockholders,
successors, assigns, agents and representatives shall have no further obligation
or liability to Employee or any other person under this Agreement. The Company
shall have the right to condition the payment of any severance pursuant to this
Section 4 upon the delivery by Employee to the Company of a release in form and
substance satisfactory to the Company of any and all claims Employee may have
against the Company and its directors, officers, employees, subsidiaries,
affiliates, stockholders, successors, assigns, agents and representatives
arising out of or related to Employee's employment by the Company and the
termination of such employment.
-3-
5. Exclusive Employment; Noncompetition.
---------------------------------------
(a) No Conflict. During the period of Employee's employment with the
------------
Company, Employee shall not engage in any business activity which conflicts or
interferes with or derogates from the performance of Employee's duties
hereunder; provided, however, that Employee shall be entitled to manage his
-------- -------
personal investments and otherwise attend to personal affairs, including
charitable activities, in a manner that does not unreasonably interfere with his
responsibilities hereunder.
(b) No Competition. Employee recognizes the highly competitive nature
--------------
of the Company's business and that Employee's position with the Company and
access to and use of the Company's confidential records and proprietary
information renders Employee special and unique. Without limiting the generality
of the provisions of Section 2(b) or 5(a) of this Agreement, during the Term and
for a period of one year after the termination of Employee's employment with the
Company for any reason, Employee shall not, directly or indirectly, own, manage,
operate, join, control, participate in, invest in or otherwise be connected or
associated with, in any manner, including as an officer, director, employee,
independent contractor, stockholder, member, partner, consultant, advisor,
agent, proprietor, trustee or investor, any Competing Business located in the
United States; provided, however, that ownership of 2% or less of the stock or
-------- -------
other securities of a corporation, the stock of which is listed on a national
securities exchange or is quoted on The Nasdaq Stock Market, shall not
constitute a breach of this Section 4, so long as Employee does not in fact have
the power to control, or direct the management of, or is not otherwise
associated with, such corporation.
For purposes hereof, the term "Competing Business" shall mean any business
or venture which, directly or indirectly, engages in a business that competes
with the business of any Related Entity. The term Related Entity shall include
all operating subsidiaries of the Company and all other business entities in
which the Company has an ownership interest, together with all affiliates
thereof.
(c) No Solicitation of Employment. During the Term and for a period
-------------------------------
of two years thereafter, Employee shall not solicit or encourage any employee of
the Company or any Related Entity to leave the Company or such Related Entity
for any reason, nor assist any business in doing so, nor employ such an employee
in a Competing Business or any other business.
-4-
(d) Company Customers. Employee shall not, during the Term and for a
------------------
period of one year thereafter, except as required by the Company in the
performance by Employee of his duties under this Agreement, directly or
indirectly, on behalf of a Competing Business, contact, solicit or do business
with any "customers" (as defined below) of any Related Entity for the purpose of
selling or licensing any product, service, or technology then sold or licensed
by such Related Entity the Company or proposed to be sold or licensed by such
Related Entity. For the purposes of the provisions of this Section 5(d),
"customer" shall include any entity that, within two years prior to the
termination of Employee's employment hereunder, purchased or licensed any
product, service, or technology from such Related Entity. The term "customer"
also includes any former customer or potential customer of a Related Entity
which the Related Entity has solicited within two years prior to the termination
of Employee's employment hereunder for the purpose of selling or licensing any
product, service, or technology then sold or licensed by the Company or proposed
to be sold or licensed.
(e) Employee understands that the provisions of this Section 5 may
limit his ability to earn a livelihood in a business that competes with the
business of the Related Entities but nevertheless agrees and hereby acknowledges
that the consideration provided under this Agreement is sufficient to justify
the restrictions contained in such provisions. In consideration thereof and in
light of Employee's education, skills and abilities, Employee agrees that he
will not assert in any forum that such provisions prevent him from earning a
living or otherwise are void or unenforceable or should be held void or
unenforceable.
6. Confidential Information.
--------------------------
(a) Existence of Confidential Information. The Company and each
----------------------------------------
Related Entity owns and has developed and compiled, and will develop and
compile, certain proprietary techniques and confidential information which have
great value to its business (referred to in this Agreement, collectively, as
"Confidential Information"). Confidential Information includes not only
information disclosed by the Company or any Related Entity to Employee, but also
information developed or learned by Employee during the course or as a result of
employment with the Company, which information shall be the property of the
Company or the applicable Related Entity. Confidential Information includes all
information that has or could have commercial value or other utility in the
businesses in which the Company or any Related Entity is engaged or contemplates
engaging, and all information of which the unauthorized disclosure could be
detrimental to the interests of the Company or any Related Entity, whether or
not such information is specifically labeled as Confidential Information by such
entity. By way of example and without limitation, Confidential Information
includes any and all information developed, obtained, licensed by or to or owned
by the Company or any Related Entity concerning trade secrets, techniques,
know-how (including designs, plans, procedures, merchandising, marketing,
distribution and warehousing know-how, processes, and research records),
software, computer programs and designs, development tools, all proprietary
property, and any other intellectual property created, used or sold (through a
license or otherwise) by the Company or a Related Entity, electronic data
information know-how and processes, innovations, discoveries, improvements,
research, development, test results, reports, specifications, data, formats,
marketing data and plans, business plans, strategies, forecasts, unpublished
financial information, orders, agreements and other forms of documents, price
and cost information, merchandising opportunities, expansion plans, budgets,
projections, customer, supplier, licensee, licensor and subcontractor
identities, characteristics, agreements and operating procedures, and salary,
staffing and employment information.
-5-
(b) Protection of Confidential Information. Employee acknowledges and
--------------------------------------
agrees that in the performance of Employee's duties hereunder the Company and
the Related Entities may disclose to and entrust Employee with Confidential
Information which is the exclusive property of such entities and which Employee
may possess or use only in the performance of Employee's duties to the Company.
Employee also acknowledges that Employee is aware that the unauthorized
disclosure of Confidential Information, among other things, may be prejudicial
to the Company's interests or those of a Related Entity, an invasion of privacy
and an improper disclosure of trade secrets. Employee shall not, directly or
indirectly, use, make available, sell, disclose or otherwise communicate to any
corporation, partnership or other entity, individual or other third party, other
than in the course of Employee's assigned duties and for the benefit of the
Company, any Confidential Information, either during the Term or thereafter. In
the event Employee desires to publish the results of Employee's work for or
experiences with the Company or any Related Entity through literature,
interviews or speeches, Employee will submit requests for such interviews or
such literature or speeches to the Chief Executive Officer of the Company at
least fourteen (14) days before any anticipated dissemination of such
information for a determination of whether such disclosure is in the best
interests of the Company, including whether such disclosure may impair trade
secret status or constitute an invasion of privacy. Employee agrees not to
publish, disclose or otherwise disseminate such information without the prior
written approval of the Chief Executive Officer of the Company.
(c) Delivery of Records, Etc. In the event Employee's employment with
the Company ceases for any reason, Employee will not remove from the Company's
premises without its prior written consent any records (written or electronic),
files, drawings, documents, equipment, materials and writings received from,
created for or belonging to the Company or any Related Entity, including those
which relate to or contain Confidential Information, or any copies thereof. Upon
request or when employment with the Company terminates, Employee will
immediately deliver the same to the Company.
7. Assignment and Transfer.
--------------------------
(a) Company. This Agreement shall inure to the benefit of and be
-------
enforceable by, and may be assigned by the Company to, any purchaser of all or
substantially all of the Company's business or assets, any successor to the
Company or any assignee thereof (whether direct or indirect, by purchase,
merger, consolidation or otherwise).
(b) Employee. Employee's rights and obligations under this Agreement
--------
shall not be transferable by Employee by assignment or otherwise, and any
purported assignment, transfer or delegation thereof shall be void; provided,
---------
however, that if Employee shall die, all amounts then payable to Employee
-------
hereunder shall be paid in accordance with the terms of this Agreement to
Employee's devisee, legatee or other designee or, if there be no such designee,
to Employee's estate.
-6-
8. Miscellaneous.
--------------
(a) Other Obligations. Employee represents and warrants that neither
------------------
Employee's employment with the Company nor Employee's performance of Employee's
obligations hereunder will conflict with or violate or otherwise are
inconsistent with any other obligations, legal or otherwise, which Employee may
have. Employee covenants that he shall perform his duties hereunder in a
professional manner and not in conflict or violation, or otherwise inconsistent
with other obligations legal or otherwise, which Employee may have.
(b) Nondisclosure; Other Employers. Employee will not disclose to the
------------------------------
Company, or use, or induce the Company to use, any proprietary information,
trade secrets or confidential business information of others. Employee
represents and warrants that Employee does not possess any property, proprietary
information, trade secrets and confidential business information belonging to
all prior employers.
(c) Cooperation. Following termination of employment with the Company
-----------
for any reason, Employee shall cooperate with the Company, as requested by the
Company, to affect a transition of Employee's responsibilities and to ensure
that the Company is aware of all matters being handled by Employee.
(d) No Duty to Mitigate. Employee shall be under no duty to mitigate
--------------------
any losses or damage to the Company with respect to any severance or other
amounts payable pursuant to Section 4 of this Agreement.
(e) Protection of Reputation. During the Term and thereafter,
--------------------------
Employee agrees that he will take not action which is intended, or would
reasonably be expected, to harm the Company or its reputation or which would
reasonably be expected to lead to unwanted or unfavorable publicity to the
Company.
(f) Governing Law. This Agreement shall be governed by and construed
--------------
in accordance with the internal laws of the Commonwealth of Massachusetts,
without regard to principles of the conflict of laws thereof.
(g) Jurisdiction; Forum. Each party hereto consents and submits to
--------------------
the jurisdiction of any state or federal court sitting in the Commonwealth of
Massachusetts, City of Boston, and County of Suffolk in connection with any
dispute arising out of or relating to this Agreement. Each party hereto waives
any objection to the laying of venue in such courts and any claim that any such
action has been brought in an inconvenient forum. To the extent permitted by
law, any judgment in respect of a dispute arising out of or relating to this
Agreement may be enforced in any other jurisdiction within or outside the United
States by suit on the judgment, a certified copy of such judgment being
conclusive evidence of the fact and amount of such judgment.
(h) Waiver of Jury Trial. Each of the parties hereto irrevocably
-----------------------
waives any and all right to trial by jury with respect to any action, claim or
other proceeding arising out of or relating to this Agreement.
-7-
(i) Entire Agreement. This Agreement (including all exhibits and
-----------------
schedules hereto) contains the entire agreement and understanding between the
parties hereto in respect of Employee's employment and supersedes, cancels and
annuls any prior or contemporaneous written or oral agreements, understandings,
commitments and practices between them respecting Employee's employment,
including all prior employment agreements, if any, between the Company and
Employee, which agreement(s) hereby are terminated and shall be of no further
force or effect.
(j) Amendment. This Agreement may be amended only by a writing which
---------
makes express reference to this Agreement as the subject of such amendment and
which is signed by Employee and, on behalf of the Company, by its duly
authorized officer.
(k) Severability. If any term, provision, covenant or condition of
------------
this Agreement or part thereof, or the application thereof to any person, place
or circumstance, shall be held to be invalid, unenforceable or void by a court
of competent jurisdiction, the remainder of this Agreement and such term,
provision, covenant or condition shall remain in full force and effect, and any
such invalid, unenforceable or void term, provision, covenant or condition shall
be deemed, without further action on the part of the parties hereto, modified,
amended and limited, and the court shall have the power to modify, to the extent
necessary to render the same and the remainder of this Agreement valid,
enforceable and lawful. In this regard, Employee acknowledges that the
provisions of Sections 5 and 6 of this Agreement are reasonable and necessary
for the protection of the Company.
(l) Construction. The headings and captions of this Agreement are
------------
provided for convenience only and are intended to have no effect in construing
or interpreting this Agreement. The language in all parts of this Agreement
shall be in all cases construed according to its fair meaning and not strictly
for or against the Company or Employee. The use herein of the word "including,"
when following any general provision, sentence, clause, statement, term or
matter, shall be deemed to mean "including, without limitation." As used herein,
"Company" shall mean the Company and its subsidiaries and any purchaser of,
successor to or assignee (whether direct or indirect, by purchase, merger,
consolidation or otherwise) of all or substantially all of the Company's
business or assets which is obligated to perform this Agreement by operation of
law, agreement pursuant to Section 7 of this Agreement or otherwise. As used
herein, the words "day" or "days" shall mean a calendar day or days.
(m) Nonwaiver. Neither any course of dealing nor any failure or
---------
neglect of either party hereto in any instance to exercise any right, power or
privilege hereunder or under law shall constitute a waiver of any other right,
power or privilege or of the same right, power or privilege in any other
instance. All waivers by either party hereto must be contained in a written
instrument signed by the party to be charged and, in the case of the Company, by
its duly authorized officer.
(n) Remedies for Breach. The parties hereto agree that Employee is
---------------------
obligated under this Agreement to render personal services during the Term of a
special, unique, unusual, extraordinary and intellectual character, thereby
giving this Agreement special value, and, in the event of a breach or threatened
breach of any covenant of Employee herein, the injury or imminent injury to the
value and the goodwill of the Company's business could not be reasonably or
adequately compensated in damages in an action at law. Accordingly, Employee
expressly acknowledges that the Company shall be entitled to specific
performance, injunctive relief or any other equitable remedy against Employee,
without the posting of a bond, in the event of any breach or threatened breach
of any provision of this Agreement by Employee (including, without limitation,
Sections 5 and 6). Without limiting the generality of the foregoing, if
Employee breaches or threatens to breach Section 5 or 6 of this Agreement, such
breach or threatened breach will entitle the Company, without posting of bond,
to an injunction prohibiting (i) Employee from disclosing any Confidential
Information to any Competing Business; (ii) such Competing Business from
receiving from Employee or using any such Confidential Information; and (iii)
Employee from, indirectly or directly, owning, managing, operating, joining,
controlling, participating in, investing in or otherwise being connected or
associated with, in any manner, any such Competing Business. The rights and
remedies of the parties hereto are cumulative and shall not be exclusive, and
each such party shall be entitled to pursue all legal and equitable rights and
remedies and to secure performance of the obligations and duties of the other
under this Agreement, and the enforcement of one or more of such rights and
remedies by a party shall in no way preclude such party from pursuing, at the
same time or subsequently, any and all other rights and remedies available to
it.
-8-
(o) Notices. Any notice, request, consent or approval required or
-------
permitted to be given under this Agreement or pursuant to law shall be
sufficient if in writing, and if and when sent by certified or registered mail,
return receipt requested, with postage prepaid, to Employee's residence (as
reflected in the Company's records or as otherwise designated by Employee on
thirty (30) days' prior written notice to the Company) or to the Company's
principal Employee office, attention: President, as the case may be. All such
notices, requests, consents and approvals shall be effective upon being
deposited in the United States mail. However, the time period in which a
response thereto must be given shall commence to run from the date of receipt on
the return receipt of the notice, request, consent or approval by the addressee
thereof. Rejection or other refusal to accept, or the inability to deliver
because of changed address of which no notice was given as provided herein,
shall be deemed to be receipt of the notice, request, consent or approval sent.
(p) Assistance in Proceedings, Etc. Employee shall, without
---------------------------------
additional compensation, during and after expiration of the Term, upon
reasonable notice, furnish such information and proper assistance to the Company
as may reasonably be required by the Company in connection with any legal or
quasi-legal proceeding, including any external or internal investigation,
involving the Company or any of its affiliates or in which any of them is, or
may become, a party.
(q) Survival. Cessation or termination of Employee's employment with
--------
the Company shall not result in termination of this Agreement. The respective
obligations of Employee and rights and benefits afforded to the Company as
provided in this Agreement shall survive cessation or termination of Employee's
employment hereunder.
-9-
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed on its behalf by an officer thereunto duly authorized and Employee has
duly executed this Agreement, all as of the date and year first written above.
PATHOGENICS, INC. EMPLOYEE:
By: /s/ Xxxxxxxx X. Xxxxx /s/ Xxxxxxxx X. Xxxxx
------------------------------------ --------------------------------
Xxxxxxxx X. Xxxxx Xxxxxxxx X. Xxxxx, Esq.
President & CEO
-10-
