EMPLOYMENT AGREEMENT
EXHIBIT
10.1
THIS
EMPLOYMENT AGREEMENT (the “Agreement”), made as of this 30th
day of July 2007,
is entered into by Xxxxxx, Inc. a Delaware corporation (the
“Company”), and Xxxxxxxx X. Xxxxx (the
“Employee”).
The
Company desires to employ the Employee, and the Employee desires to be employed
by the Company. In consideration of the mutual covenants and promises
contained in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties to
this
Agreement, the parties agree as follows:
1. Term
of Employment. The Company hereby agrees to employ the Employee,
and the Employee hereby accepts employment with the Company, upon the terms
set
forth in this Agreement, for the period commencing on the date hereof (the
“Commencement Date”) and ending on July 31, 2008 (such period,
the “Initial Employment Period” and as it may be extended, the
“Employment Period”), unless sooner terminated in accordance
with the provisions of Section 4. On July 31, 2008, if not
previously terminated, this Agreement shall automatically renew and the
Employment Period be extended until July 31, 2009 unless the Company shall
elect
not to so extend the Employment Period and shall have given written notice
to
the Employee of such election on or before May 1, 2008.
2. Title;
Capacity. The Employee shall serve as Chief Executive Officer or
in such other position as the Company’s Board of Directors (the
“Board”) may determine from time to time. The
Employee shall be based at the Company’s headquarters in Rhode Island or at such
place or places in the continental United States as the Board and the Employee
shall mutually determine. The Employee shall be subject to the
supervision of, and shall have such authority as is delegated to the Employee
by, the Board or the Chief Executive Officer of the Company.
The
Employee hereby accepts such employment and agrees to undertake the duties
and
responsibilities inherent in such position and such other duties and
responsibilities as the Board shall from time to time reasonably assign to
the
Employee, provided that such duties and responsibilities are generally
consistent with Employee’s experience and customary duties and responsibilities
of a chief executive officer of a similarly situated company. The
Employee agrees to devote such business time, attention and energies consistent
with his past practice to the business and interests of the Company during
the
Employment Period as he deems reasonably necessary to the accomplishment to
his
duties. The Employee agrees to abide by the reasonable rules,
regulations, instructions, personnel practices and policies of the Company
and
any changes therein which may be adopted from time to time by the
Company.
3. Compensation
and Benefits.
3.1 Salary. The
Company shall pay the Employee, in periodic installments in accordance with
the
Company’s customary payroll practices, an annual base salary
$360,000. Such salary shall be subject to increase but not decrease
thereafter as determined by the Board and shall be reviewed at least annually
by
the Board.
3.2 Bonus. The
Compensation Committee, in its sole discretion, may award the Employee a bonus
or bonuses during the term hereof.
3.3 Equity
Incentive.
(a) The
Company shall, upon the execution hereof, grant to the Employee an option to
purchase 500,000 shares of the common stock of the Company (“Common
Stock”). To the extent permitted by the Internal Revenue
Code, said options shall be incentive stock options. Said options
shall be granted at the fair market value and expire on the eighth anniversary
of their grant. Said options shall vest as follows:
|
Number
of Shares
|
Vesting
Date
|
|
166,667
|
Immediate
|
|
166,667
|
January
30, 2008
|
|
166,666
|
July
30, 2008
|
Such
grants shall provide that after a Change in Control Event (as defined in
Schedule A hereto), all restrictions on the exercise thereof shall lift and
such options shall vest and become exercisable immediately. In
addition, upon (a) the termination by the Company of the Employee’s employment,
unless such termination is for Cause (as defined in Section 4.2) or (b) the
resignation of Employee for Good Reason (as defined in Section 4.3), all
restrictions on the exercise shall lift and such options shall vest and become
exercisable immediately.
3.4 Fringe
Benefits; Vacation The Employee shall be entitled to
participate in all bonus and benefit programs that the Company establishes
and
makes available to its employees, if any, to the extent that Employee’s
position, tenure, salary, age, health and other qualifications make him eligible
to participate. The Employee shall be entitled to four weeks vacation
annually, accruing in accordance with the Company’s policies and
procedures.
3.5 Reimbursement
of Expenses. The Company shall reimburse the Employee for all
reasonable travel, entertainment and other expenses incurred or paid by the
Employee in connection with, or related to, the performance of his duties,
responsibilities or services under this Agreement, in accordance with policies
and procedures, and subject to limitations, adopted by the Company from time
to
time.
3.6 Withholding. All
salary, bonus and other compensation payable to the Employee shall be subject
to
applicable withholding taxes.
4. Termination
of Employment Period. The employment of the Employee by the
Company pursuant to this Agreement shall terminate upon the occurrence of any
of
the following:
4.1 Expiration
of the Employment Period;
4.2 At
the election of the Company, for Cause (as defined below), immediately upon
written notice by the Company to the Employee, which notice shall identify
the
Cause upon which the termination is based. For the purposes of this
Section 4.2, “Cause” shall mean (a) a good faith
finding by the Company’s Board of Directors that (i) the Employee has
failed in any material respect to perform his reasonably assigned duties for
the
Company and has failed to remedy such failure within 10 days following written
notice from the Company to the Employee notifying him of such failure, or
(ii) the Employee has engaged in dishonesty, gross negligence or misconduct
with respect to the Company, or (b) the conviction of the Employee of, or
the entry of a pleading of guilty or nolo contendere by the Employee to, any
crime involving dishonesty or any felony;
4.3 At
the election of the Employee, for Good Reason (as defined below), immediately
upon written notice by the Employee to the Company, which notice shall identify
the Good Reason upon which the termination is based. For the purposes
of this Section 4.3, “Good Reason” for termination shall mean
(i) a material adverse change in the Employee’s authority, duties or
compensation without the prior written consent of the Employee, (ii) a material
breach by the Company of the terms of this Agreement, which breach is not
remedied by the Company within 10 days following written notice from the
Employee to the Company notifying it of such breach (iii) any requirement
imposed by Section 307 of the Xxxxxxxx-Xxxxx Act or any rule promulgated
thereunder, or (iv) a requirement by the Company that the Employee must relocate
his residence for any reason.
4.4 Upon
the death or disability of the Employee. As used in this Agreement,
the term “disability” shall mean the inability of the Employee, due to a
physical or mental disability, for a period of 90 days, whether consecutive,
during any 360-day period to perform the services contemplated under this
Agreement, with or without reasonable accommodation as that term is defined
under state or federal law. A determination of disability shall be
made by a physician satisfactory to both the Employee and the Company,
providedthat if the Employee and the Company do not agree on a
physician, the Employee and the Company shall each select a physician and these
two together shall select a third physician, whose determination as to
disability shall be binding on all parties;
4.5 At
the election of either party, upon not less than 30 days’ prior written notice
of termination.
5. Effect
of Termination.
5.1 At-Will
Employment. If the Employment Period expires pursuant to Section
1 hereof, then, unless the Company notifies the Employee to the contrary, the
Employee shall continue his employment on an at-will basis following the
expiration of the Employment Period. Such at-will employment
relationship may be terminated by either party at any time and shall not be
governed by the terms of this Agreement.
5.2 Payments
Upon Termination.
(a) In
the event the Employee’s employment is terminated pursuant to Section 4.1,
Section 4.2 or by the Employee pursuant to Section 4.5, the Company shall pay
to
the Employee the compensation and benefits otherwise payable to him under
Section 3 through the last day of his actual employment by the
Company.
(b) In
the event the Employee’s employment is terminated by the Employee pursuant to
Section 4.3 or by the Company pursuant to Section 4.5, the Company shall
continue to pay to the Employee his salary as in effect on the date of
termination and continue to provide to the Employee the other benefits owed
to
him under Section 3.4 (to the extent such benefits can be provided to
non-employees, or to the extent such benefits cannot be provided to
non-employees, then the cash equivalent thereof) until the date one year after
the date of termination and for the purposes of the vesting of options to
purchase common stock granted to the Employee pursuant to Section 3.3, the
Employee shall be deemed to be employed by the Company until the date three
years after the date of termination. The payment to the Employee of
the amounts payable under this Section 5.2(b) (i) shall be contingent upon
the
execution by the Employee of a release in a form reasonably acceptable to the
Company and (ii) shall constitute the sole remedy of the Employee in the event
of a termination of the Employee’s employment in the circumstances set forth in
this Section 5.2(b).
(c) In
the event the Employee’s employment is terminated pursuant to Section 4.4, the
Company shall continue to pay to the Employee (or his estate) his salary as
in
effect on the date of termination and the amount of the annual bonus paid to
him
for the fiscal year immediately preceding the date of termination (payable
in
annualized monthly installments) and, if such termination was on account of
disability, continue to provide to the Employee the other benefits owed to
him
under Section 3.4 (to the extent such benefits can be provided to non-employees,
or to the extent such benefits cannot be provided to non-employees, then the
cash equivalent thereof) until the date one year after the date of termination
and for the purposes of the vesting of options to purchase common stock granted
to the Employee pursuant to Section 3.3, the Employee shall be deemed to be
employed by the Company until the date one year after the date of
termination. The amounts payable to the Employee under this Section
5.2(c) shall be reduced by the aggregate amount of all insurance proceeds paid
to the Employee or his beneficiaries pursuant to insurance policies paid for
by
the Company.
5.3 Survival. The
provisions of Sections 5.2, 6 and 7 shall survive the termination of this
Agreement.
6. Non-Competition
and Non-Solicitation.
6.1 Restricted
Activities. While the Employee is employed by the Company and for
a period of one year after the termination or cessation of such employment
for
any reason, the Employee will not directly or indirectly:
(a) Engage
in any business or enterprise (whether as owner, partner, officer, director,
employee, consultant, investor, lender or otherwise, except as the holder of
not
more than 1% of the outstanding stock of a publicly-held company) that develops,
manufactures, markets, licenses, sells or provides any product or service that
competes with any product or service developed, manufactured, marketed,
licensed, sold or provided, or planned to be developed, manufactured, marketed,
licensed, sold or provided, by the Company while the Employee was employed
by
the Company; or
(b) Either
alone or in association with others (i) solicit, or permit any organization
directly or indirectly controlled by the Employee to solicit, any employee
of
the Company to leave the employ of the Company, or (ii) solicit for
employment or permit any organization directly or indirectly controlled by
the
Employee to solicit for any person who was employed by the Company at any time
during the term the Employee’s employment with the Company; provided,
that this clause (ii) shall not apply to the solicitation, hiring or engagement
of any individual whose employment with the Company has been terminated for
a
period of six months or longer.
6.2 Extension. If
the Employee violates the provisions of Section 6.1, the Employee shall continue
to be bound by the restrictions set forth in Section 6.1 until a period of
two
years has expired without any violation of such provisions.
6.3 Interpretation. If
any restriction set forth in Section 6.1 is found by any court of competent
jurisdiction to be unenforceable because it extends for too long a period of
time or over too great a range of activities or in too broad a geographic area,
it shall be interpreted to extend only over the maximum period of time, range
of
activities or geographic area as to which it may be enforceable.
6.4 Equitable
Remedies. The restrictions contained in this Section 6 are
necessary for the protection of the business and goodwill of the Company and
are
considered by the Employee to be reasonable for such purpose. The
Employee agrees that any breach of this Section 6 is likely to cause the
Company substantial and irrevocable damage which is difficult to
measure. Therefore, in the event of any such breach or threatened
breach, the Employee agrees that the Company, in addition to such other remedies
which may be available, shall have the right to obtain an injunction from a
court restraining such a breach or threatened breach and the right to specific
performance of the provisions of this Section 6 and the Employee hereby waives
the adequacy of a remedy at law as a defense to such relief.
7. Proprietary
Information and Developments.
7.1 Proprietary
Information.
(a) The
Employee agrees that all information, whether or not in writing, of a private,
secret or confidential nature concerning the Company’s business, business
relationships or financial affairs (collectively, “Proprietary
Information”) is and shall be the exclusive property of the
Company. By way of illustration, but not limitation, Proprietary
Information may include inventions, products, processes, methods, techniques,
formulas, compositions, compounds, projects, developments, plans, research
data,
clinical data, financial data, personnel data, computer programs, customer
and
supplier lists, and contacts at or knowledge of customers or prospective
customers of the Company. The Employee will not disclose any
Proprietary Information to any person or entity other than employees of the
Company or use the same for any purposes (other than in the performance of
his
duties as an employee of the Company) without written approval by an officer
of
the Company, either during or after his employment with the Company, unless
and
until such Proprietary Information has become public knowledge without fault
by
the Employee.
(b) The
Employee agrees that all files, letters, memoranda, reports, records, data,
sketches, drawings, laboratory notebooks, program listings, or other written,
photographic, or other tangible material containing Proprietary Information,
whether created by the Employee or others, which shall come into his custody
or
possession, shall be and are the exclusive property of the Company to be used
by
the Employee only in the performance of his duties for the
Company. All such materials or copies thereof and all tangible
property of the Company in the custody or possession of the Employee shall
be
delivered to the Company, upon the earlier of (i) a request by the Company
or (ii) termination of his employment. After such delivery, the
Employee shall not retain any such materials or copies thereof or any such
tangible property.
(c) The
Employee agrees that his obligation not to disclose or to use information and
materials of the types set forth in paragraphs (a) and (b) above, and his
obligation to return materials and tangible property, set forth in
paragraph (b) above, also extends to such types of information, materials
and tangible property of customers of the Company or suppliers to the Company
or
other third parties who may have disclosed or entrusted the same to the Company
or to the Employee.
7.2 Developments.
(a) The
Employee will make full and prompt disclosure to the Company of all inventions,
improvements, discoveries, methods, developments, software, and works of
authorship, whether patentable or not, which are created, made, conceived or
reduced to practice by him or under his direction or jointly with others during
his employment by the Company, whether or not during normal working hours or
on
the premises of the Company (all of which are collectively referred to in this
Agreement as “Developments”).
(b) The
Employee agrees to assign and does hereby assign to the Company (or any person
or entity designated by the Company) all his right, title and interest in and
to
all Developments and all related patents, patent applications, copyrights and
copyright applications. However, this paragraph (b) shall not
apply to Developments which do not relate to the business or research and
development conducted or planned to be conducted by the Company at the time
such
Development is created, made, conceived or reduced to practice and which are
made and conceived by the Employee not during normal working hours, not on
the
Company’s premises and not using the Company’s tools, devices, equipment or
Proprietary Information. The Employee understands that, to the extent
this Agreement shall be construed in accordance with the laws of any state
which
precludes a requirement in an employee agreement to assign certain classes
of
inventions made by an employee, this paragraph (b) shall be interpreted not
to apply to any invention which a court rules and/or the Company agrees falls
within such classes. The Employee also hereby waives all claims to
moral rights in any Developments.
(c) The
Employee agrees to cooperate fully with the Company, both during and after
his
employment with the Company, with respect to the procurement, maintenance and
enforcement of copyrights, patents and other intellectual property rights (both
in the United States and foreign countries) relating to
Developments. The Employee shall sign all papers, including, without
limitation, copyright applications, patent applications, declarations, oaths,
formal assignments, assignments of priority rights, and powers of attorney,
which the Company may deem necessary or desirable in order to protect its rights
and interests in any Development. The Employee further agrees that if
the Company is unable, after reasonable effort, to secure the signature of
the
Employee on any such papers, any executive officer of the Company shall be
entitled to execute any such papers as the agent and the attorney-in-fact of
the
Employee, and the Employee hereby irrevocably designates and appoints each
executive officer of the Company as his agent and attorney-in-fact to execute
any such papers on his behalf, and to take any and all actions as the Company
may deem necessary or desirable in order to protect its rights and interests
in
any Development, under the conditions described in this sentence.
7.3 United
States Government Obligations. The Employee acknowledges that the
Company from time to time may have agreements with other parties or with the
United States Government, or agencies thereof, which impose obligations or
restrictions on the Company regarding inventions made during the course of
work
under such agreements or regarding the confidential nature of such
work. The Employee agrees to be bound by all such obligations and
restrictions which are made known to the Employee and to take all appropriate
action necessary to discharge the obligations of the Company under such
agreements.
7.4 Equitable
Remedies. The restrictions contained in this Section 7 are
necessary for the protection of the business and goodwill of the Company and
are
considered by the Employee to be reasonable for such purpose. The
Employee agrees that any breach of this Section 7 is likely to cause the
Company substantial and irrevocable damage which is difficult to
measure. Therefore, in the event of any such breach or threatened
breach, the Employee agrees that the Company, in addition to such other remedies
which may be available, shall have the right to obtain an injunction from a
court restraining such a breach or threatened breach and the right to specific
performance of the provisions of this Section 7 and the Employee hereby
waives the adequacy of a remedy at law as a defense to such relief.
8. Other
Agreements. The Employee represents that his performance of all
the terms of this Agreement and the performance of his duties as an employee
of
the Company do not and will not breach any agreement with any prior employer
or
other party to which the Employee is a party (including without limitation
any
nondisclosure or non-competition agreement). Any agreement to which
the Employee is a party relating to nondisclosure, non-competition or
non-solicitation of employees or customers is listed on Schedule B
attached hereto.
9. Miscellaneous.
9.1 Notices. Any
notices delivered under this Agreement shall be deemed duly delivered four
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent for
next-business day delivery via a reputable nationwide overnight courier service,
in each case to the address of the recipient set forth in the introductory
paragraph hereto. Either party may change the address to which
notices are to be delivered by giving notice of such change to the other party
in the manner set forth in this Section 9.1.
9.2 Pronouns. Whenever
the context may require, any pronouns used in this Agreement shall include
the
corresponding masculine, feminine or neuter forms, and the singular forms of
nouns and pronouns shall include the plural, and vice versa.
9.3 Entire
Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements and understandings
(including all consulting or other agreements to which the Company and the
Employee are parties), whether written or oral, relating to the subject matter
of this Agreement; provided, however, that it is acknowledged and agreed by
the
Company and the Employee that stock option grants made by the Company to the
Employee prior to the date hereof are not superseded hereby and each such grant
remains in full force and effect in accordance with its terms.
9.4 Amendment. This
Agreement may be amended or modified only by a written instrument executed
by
both the Company and the Employee.
9.5 Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Rhode Island (without reference to
the
conflicts of laws provisions thereof). Any action, suit or other
legal proceeding arising under or relating to any provision of this Agreement
shall be commenced only in a court of the State of Rhode Island (or, if
appropriate, a federal court located within Rhode Island), and the Company
and
the Employee each consents to the jurisdiction of such a court. The
Company and the Employee each hereby irrevocably waive any right to a trial
by
jury in any action, suit or other legal proceeding arising under or relating
to
any provision of this Agreement.
9.6 Successors
and Assigns. This Agreement shall be binding upon and inure to
the benefit of both parties and their respective successors and assigns,
including any corporation with which, or into which, the Company may be merged
or which may succeed to the Company’s assets or business, provided, however,
that the obligations of the Employee are personal and shall not be assigned
by
him. Notwithstanding the foregoing, if the Company is merged with or
into a third party which is engaged in multiple lines of business, or if a
third
party engaged in multiple lines of business succeeds to the Company’s assets or
business, then for purposes of Section 6.1(a), the term “Company” shall mean and
refer to the business of the Company as it existed immediately prior to such
event and as it subsequently develops and not to the third party’s other
businesses.
9.7 Waivers. No
delay or omission by the Company in exercising any right under this Agreement
shall operate as a waiver of that or any other right. A waiver or
consent given by the Company on any one occasion shall be effective only in
that
instance and shall not be construed as a bar or waiver of any right on any
other
occasion.
9.8 Captions. The
captions of the sections of this Agreement are for convenience of reference
only
and in no way define, limit or affect the scope or substance of any section
of
this Agreement.
9.9 Severability. In
case any provision of this Agreement shall be invalid, illegal or otherwise
unenforceable, the validity, legality and enforceability of the remaining
provisions shall in no way be affected or impaired thereby.
THE
EMPLOYEE ACKNOWLEDGES THAT HE/SHE HAS CAREFULLY READ THIS AGREEMENT AND
UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year set forth above.
|
XXXXXX,
INC.
|
|
|
By:
|
/s/
Xxxxx X. Xxxxxxx
|
|
Xxxxx
X. Xxxxxxx
|
|
|
Chief
Financial Officer
|
|
|
EMPLOYEE
|
|
|
/s/
Xxxxxxxx X. Xxxxx
|
|
|
Xxxxxxxx
X. Xxxxx
|
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CD_EMPLOYMENT
AGREEMENT.DOC
SCHEDULE
A
Change
in Control Definition
A
“Change
in Control Event” shall mean:
|
|
(i)
|
the
acquisition by an individual, entity or group (within the meaning
of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
“Person”) of beneficial ownership of any capital stock
of
the Company if, after such acquisition, such Person beneficially
owns
(within the meaning of Rule 13d-3 promulgated under the Exchange
Act) 30%
or more of either (x) the then-outstanding shares of common stock
of the
Company (the “Outstanding Company Common Stock”) or (y)
the combined voting power of the then-outstanding securities of the
Company entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”);
provided, however, that for purposes of this subsection (i),
the following acquisitions shall not constitute a Change in Control
Event:
(A) any acquisition directly from the Company (excluding an acquisition
pursuant to the exercise, conversion or exchange of any security
exercisable for, convertible into or exchangeable for common stock
or
voting securities of the Company, unless the Person exercising, converting
or exchanging such security acquired such security directly from
the
Company or an underwriter or agent of the Company), (B) any acquisition
by
any employee benefit plan (or related trust) sponsored or maintained
by
the Company or any corporation controlled by the Company, or (C)
any
acquisition by any corporation pursuant to a Business Combination
(as
defined below) which complies with clauses (x) and (y) of
subsection (iii) of this definition;
or
|
|
|
(ii)
|
such
time as the Continuing Directors (as defined below) do not constitute
a
majority of the Board (or, if applicable, the Board of Directors
of a
successor corporation to the Company), where the term “Continuing
Director” means at any date a member of the Board (x) who was a
member of the Board on the date hereof or (y) who was nominated or
elected
subsequent to such date by at least a majority of the directors who
were
Continuing Directors at the time of such nomination or election or
whose
election to the Board was recommended or endorsed by at least a majority
of the directors who were Continuing Directors at the time of such
nomination or election; provided, however, that there shall
be excluded from this clause (y) any individual whose initial assumption
of office occurred as a result of an actual or threatened election
contest
with respect to the election or removal of directors or other actual
or
threatened solicitation of proxies or consents, by or on behalf of
a
person other than the Board; or
|
-10-
CD_EMPLOYMENT
AGREEMENT.DOC
|
|
(iii)
|
the
consummation of a merger, consolidation, reorganization, recapitalization
or share exchange involving the Company or a sale or other disposition
of
all or substantially all of the assets of the Company (a “Business
Combination”), unless, immediately following such Business
Combination, each of the following two conditions is satisfied: (x)
all or
substantially all of the individuals and entities who were the beneficial
owners of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock and the combined voting power
of
the then-outstanding securities entitled to vote generally in the
election
of directors, respectively, of the resulting or acquiring corporation
in
such Business Combination (which shall include, without limitation,
a
corporation which as a result of such transaction owns the Company
or
substantially all of the Company’s assets either directly or through one
or more subsidiaries) (such resulting or acquiring corporation is
referred
to herein as the “Acquiring Corporation”) in
substantially the same proportions as their ownership of the Outstanding
Company Common Stock and Outstanding Company Voting Securities,
respectively, immediately prior to such Business Combination and
(y) no
Person (excluding Exempt Persons, the Acquiring Corporation or any
employee benefit plan (or related trust) maintained or sponsored
by the
Company or by the Acquiring Corporation) beneficially owns, directly
or
indirectly, 30% or more of the then-outstanding shares of common
stock of
the Acquiring Corporation, or of the combined voting power of the
then-outstanding securities of such corporation entitled to vote
generally
in the election of directors (except to the extent that such ownership
existed prior to the Business
Combination).
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CD_EMPLOYMENT
AGREEMENT.DOC
SCHEDULE
B
Prior
Agreements
None.
-12-
