EXHIBIT 10.23
EXECUTIVE EMPLOYMENT AGREEMENT, dated as of February 18, 2004 (this
"Agreement"), by and between ImaRx Therapeutics, Inc., a Delaware (the
"Company") and Xxxx X. Xxxxx (the "Executive").
The Company and the Executive desire to set forth in this Agreement the
terms and conditions upon which the Executive will be employed by the Company as
the Chairman and Executive Vice President of the Company. In consideration of
the foregoing recital and the mutual promises, representations, warranties, and
covenants hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. CERTAIN DEFINITIONS.
For the purposes of this Agreement, the following terms shall have the
following meanings:
"$" means dollars in the lawful currency of the United States of
America.
"Base Salary" shall have the meaning assigned to such term in Section
4.1.
"Board" means the Board of Directors of the Company.
"Cause" means Executive shall have (i) been indicted for a felony;
(ii) committed an act of willful misconduct or negligence resulting in a
material loss to the Company; (iii) materially violated any material written
Company policy or rules of the Company, unless cured by Executive within 30 days
following written notice thereof to Executive, (iv) refused to follow the
reasonable written directions given by the Board or its designee or materially
breached any covenant or obligation under this Agreement or other agreement with
the Company, unless cured by Executive within 30 days following written notice
thereof to Executive, or (v) the death or Disability of Executive.
"Change of Control" means any consolidation or merger of the Company
with or into any other Company or other entity or person, or any other corporate
reorganization, in which the stockholders of the Company immediately prior to
such consolidation, merger or reorganization, own less than fifty percent (50%)
of the Company's voting power immediately after such consolidation, merger or
reorganization, or any transaction or series of related transactions to which
the Company is a party resulting in the sale of substantially all of the
Company's assets or a transfer of the Company's voting power in excess of fifty
percent (50%), excluding any consolidation or merger effected exclusively to
change the domicile of the Company.
"Common Stock" means the common stock, par value $0.001 per share, of
the Company.
"Disability" means Executive's adjudication as mentally incompetent,
or the occurrence of a mental or physical disability preventing Executive from
performing his duties for
ninety (90) or more days within any period of three hundred and sixty five (365)
days or any period of ninety (90) consecutive days. Any question as to the
existence of Disability as to which Executive and the Company cannot agree shall
be determined in writing by a qualified independent physician selected by the
Company. The determination of Disability made in writing by such physician to
Executive and the Company shall be final and conclusive for all purposes.
"Effective Date" means the first date written above.
"Good Reason" shall mean (i) a material reduction in Executive's
title, status, authority, or responsibility at the Company; provided however,
that naming Xxxx X. Xxxxx, M.D. as Chairman of the Board following the hiring of
a new Chief Executive Officer shall not be considered a reduction in Executive's
title, status, or authority or Good Reason under this Agreement or (ii) any
breach by the Company of any material term of this Agreement (including, without
limitation, failure to make any payment or to grant any stock options required
by the terms of this Agreement), which breach is not cured within thirty (30)
days of the Company's receipt from Executive of written notice of such breach.
"Person" means an individual, partnership, corporation, limited
liability company, limited liability partnership, trust, joint venture, joint
stock company or unincorporated organization.
"QPO" means the closing of a public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, covering
the offer and sale of the Common Stock.
"Term" means the period commencing on the Effective Date and ending on
the second anniversary thereof, as may be extended by written agreement of the
parties.
"Termination Date" means the first date on which the Executive is no
longer employed by the Company for any reason.
"Transferee" means any person or entity to whom or which shares of
Executive Stock have been sold, transferred or assigned, by agreement or
operation of law.
2. TERM.
The Company shall employ Executive for the Term or until the
Termination Date, this being an "at-will" employment agreement, provided that
Section 5 shall govern the amount of compensation to be paid to Executive on and
after the Termination Date. Upon mutual written consent, the parties may extend
the Term at any time, but shall use their best efforts to begin negotiating any
such extension at least ninety (90) days prior to the expiration of the Term.
3. POSITION AND DUTIES.
1.1. General. Executive shall serve as the Chairman of the Board of
Directors and Executive Vice President of the Company and shall be subject to
the supervision of, and
-2-
shall report to, the Board. Executive shall have such duties and authority as
are customarily exercised by a vice president of a business corporation of
similar size and in the same industry as the Company and as may be determined
from time to time by the Board.
1.2. Election as Board Member. During the Term and until the
Termination Date, the Company agrees to place Executive on the slate of nominees
for election to the Board and take any and all actions within its power and
authority necessary or advisable to appoint Executive to the Board and to
nominate him as Chairman; provided, however, that the Board may replace
Executive with Xxxx X. Xxxxx, M.D. as Chairman following the hiring of a new
Chief Executive Officer.
4. COMPENSATION.
2.1. Base Salary. (a) Subject to Section 4.1(b) and 4.1(c), commencing
on the Effective Date, the Company shall pay to Executive a base salary at an
annual rate of $125,000 (as may be adjusted from time to time, the "Base
Salary"), payable in accordance with the payroll practices of the Company in
effect from time to time. Base Salary payments shall be subject to withholding
and other applicable taxes.
(b) Notwithstanding Section 4.1(a) hereof, the Executive's right to
receive the Base Salary shall be subject to the following: (i) the Base Salary
does not start to accrue until the closing of a financing or financings
occurring after the Effective Date in which the Company shall have received
proceeds of at least $3,000,000 in the aggregate, (ii) after receipt by the
Company of financing proceeds after the Effective Date of at least $3,000,000 in
the aggregate, the Base Salary starts to accrue but is not payable to the
Executive until the earlier of an QPO or receipt of additional financing
proceeds which (combined with prior proceeds), equal or exceed $5,000,000, and
(iii) after receipt by the Company of financing proceeds after the Effective
Date of at least $5,000,000, all accrued Base Salary is immediately payable by
the Company to the Executive and all future accruals are payable as provided in
Section 4.1(a) hereof.
(c) Notwithstanding Section 4.1(a) or 4.1(b) hereof, if at any time
the Company's available cash falls below $750,000, or at such time as any of the
Company's other officers are placed on reduced salary, the Board of Directors
shall have the right to discontinue salary payments to Executive. Any such
discontinued salary payments shall be accrued and shall be paid in a lump sum
payment at such time as the Company's available cash exceeds $1,250,000.
2.2. Annual Bonus. With respect to each full fiscal year until the
earlier of the end of the Term or the Termination Date, Executive shall be
eligible to receive an annual bonus award, only if, as and when determined by
the Board in its sole discretion. Such bonus, if any, shall be paid no later
than thirty (30) days after the end of the fiscal year.
2.3. Option Grant. If the Company shall have closed a financing or
financings (including, without limitation, a public offering), in which the
Company shall have received proceeds of at least $3,000,000 in the aggregate,
within 10 business days thereafter the Company shall grant to Executive an
option to purchase 250,000 shares of Common Stock at an exercise price of $2.00
per share (the "Executive Option"). The Executive Option shall be granted
-3-
pursuant to an option agreement, in substantially the form attached hereto as
Exhibit B (the "Stock Option Agreement"). Notwithstanding the foregoing, if such
financing does not occur upon the earlier of the end of the Term or the
Termination Date, the Company shall have no obligation to grant the Executive
Option. If granted, the Executive Option may be exercised, from time to time,
with respect to all or any part of the then vested shares in accordance with the
following vesting schedule: shares shall vest in 24 equal monthly installments
at the end of each month following the Effective Date; provided, however, all
shares subject to the Executive Option shall immediately vest upon the earlier
of (a) the consummation of a QPO, (b) the consummation of a Change of Control or
(c) termination of Executive's employment by the Company without Cause or by
Executive with Good Reason. If Executive's employment is terminated by the
Company with Cause or by Executive without Good Reason, the unexercised portion
of the Executive Option shall automatically lapse on the Termination Date and
not be exercisable whether or not such options were vested.
4.4. Employee Benefits. Until the Termination Date, or such later time
as provided in Section 5, Executive shall be entitled to receive health and
disability insurance and the opportunity to participate in any 401(k) plan to
the same extent as such benefits are in effect from time to time for other
executive officers of the Company ("Benefits"); provided, however, that
Executive shall not be entitled to such Benefits to the extent that the same or
similar benefits are available to him from another employer, and the Company
shall not be required to make any employer contribution to Executive's 401(k)
account.
2.5. Expense Reimbursement. Executive shall be entitled to
reimbursement by the Company for all reasonable travel, lodging, entertainment
and other expenses actually incurred by Executive in connection with the
performance of his duties, against receipts or other appropriate written
evidence of such expenditures as required by the appropriate United States
Internal Revenue Service regulations and, for any expenses in excess of $1,000
individually or $10,000 in the aggregate, subject to the Chief Executive
Officer's prior approval.
5. TERMINATION AND SEVERANCE.
3.1. Termination without Cause or for Good Reason. If during the Term
the Company terminates Executive's employment without Cause, or Executive
terminates his employment with Good Reason, Executive shall be entitled to
receive:
(a) if the Company shall not have closed on a financing or financings
prior to the first anniversary of the Effective Date (including, without
limitation, a public offering), in which the Company shall have received
proceeds of at least $3,000,000 in the aggregate, a pro rata portion of his Base
Salary and Benefits through the Termination Date and no other payment of any
kind; provided, however, that, if the Company's available cash is below $750,000
as of the Termination Date, or the Company's other officers are placed on
reduced salary, the Board of Directors shall have the right not to make the
salary payment to Executive and such salary payment shall be accrued and shall
be paid in a lump sum payment at such time as the Company's available cash
exceeds $1,250,000;
(b) if the Company shall have closed on a financing or financings
prior to the
-4-
first anniversary of the Effective Date (including, without limitation, a public
offering), in which the Company shall have received proceeds of at least
$3,000,000 in the aggregate but less than $5,000,000 in the aggregate, (i) a pro
rata portion of his Base Salary and Benefits through the Termination Date plus
(ii) an accruing right to receive his Base Salary and Benefits during the
remainder of the Term; provided that the amounts accrued pursuant to this clause
(ii) shall only be payable to Executive if the Company closes on a financing or
financing during the Term in which the Company shall have received proceeds of
at least $5,000,000 in the aggregate, and only paid at the time such payments
would otherwise have been made had Executive's employment not been terminated;
(c) if the Company shall have closed on a financing or financings
prior to the first anniversary of the Effective Date (including, without
limitation, a public offering), in which the Company shall have received
proceeds of at least $5,000,000 in the aggregate but less than $15,000,000 in
the aggregate, (i) a pro rata portion of his Base Salary and Benefits through
the Termination Date plus (ii) continued payments of his then current Base
Salary and Benefits for the remainder of the Term; and
(d) if the Company shall have closed on a financing or financings
prior to the first anniversary of the Effective Date (including, without
limitation, a public offering), in which the Company shall have received
proceeds of at least $15,000,000 in the aggregate, (i) a pro rata portion of his
Base Salary and Benefits through the Termination Date plus (ii) continued
payments of his then current Base Salary and Benefits for the period ending on
the third anniversary of the Effective Date.
Any such payments will be made in accordance with the Company's normal payroll
practices in existence immediately prior to the Termination Date.
3.2. Termination for Cause or without Good Reason. If (a) the Company
terminates Executive's employment at any time for Cause or (b) Executive
terminates his employment at any time other than for Good Reason, Executive
shall be entitled to receive a pro rata portion of his Base Salary through the
Termination Date. Other than the payments described in this subsection,
Executive shall be entitled to no other payments from the Company.
3.3. No Additional Effect on Executive Option. The right of Executive
to retain the vested portion of his rights under the Executive Option shall be
governed by the Stock Option Agreement entered into by and between the Company
and Executive and shall not be affected by the provisions of this Section 5.
6. PROPRIETARY RIGHTS AGREEMENT AND ARBITRATION AGREEMENT. The parties
acknowledge and incorporate that certain Proprietary Rights Agreement
("Proprietary Rights Agreement") and Arbitration Agreement ("Arbitration
Agreement") executed by Executive, copies of which are attached hereto as
Exhibit A.
7. ADDITIONAL COVENANTS.
-5-
4.1. Voting Agreement. From the date of this Agreement until the
second anniversary thereof, on all matters relating to the election of directors
of the Company, Executive agrees to vote all shares of capital stock of the
Company held by Executive (or shall consent pursuant to an action by written
consent of the holders of capital stock of the Company) so as to elect Xxxx X.
Xxxxx, M.D. as a member of the Company's Board of Directors.
4.2. Restriction on Transfer. During the twelve (12) month period
immediately subsequent to the closing of the offering of securities of the
Company conducted with the assistance of First Montauk Securities Corp. ("First
Montauk"), for so long as Executive together with its affiliates holds five
percent (5%) or more of the capital stock of the Company, Executive shall not,
and shall cause its affiliates not to, transfer any shares of capital stock of
the Company without complying with the right of first refusal granted by the
Company to First Montauk pursuant to that certain Letter of Intent dated January
8, 2004, by and between the Company and First Montauk.
8. MISCELLANEOUS.
8.1. Survival. The representations, warranties, covenants and
agreements made herein shall survive the execution of this Agreement.
8.2. Assignment. This Agreement and the rights and obligations
hereunder shall be assignable only with the prior written consent of each of the
parties; provided, however, that the Company may assign its rights under this
Agreement to the surviving entity pursuant to a sale of substantially all of the
Company's assets, by merger or consolidation or by a sale of all of the
Company's capital stock (provided that the surviving entity shall remain liable
as to all obligations of the Company under this Agreement).
8.3. Benefits of Agreement. This Agreement and all obligations of the
parties shall be binding upon, and inure to the benefit of, their respective
successors and assigns.
8.4. Severability. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby,
and the court making the determination of invalidity, illegality, or
unenforceability shall have the power to reduce the scope, duration or area of
the term or provision, to delete specific words or phrases, or to replace any
invalid, illegal, or unenforceable term or provision with a term or provision
that is valid, legal and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified.
8.5. Further Assurances. Each party agrees to execute such other
documents, instruments, agreements and consents, and take such other actions as
may be reasonably requested by the other parties hereto to effectuate the
purposes of this Agreement.
8.6. Amendment and Waiver. This Agreement may be amended, modified or
waived only with prior written consent of each of the parties.
-6-
8.7. Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement shall impair any
such right, power or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of or in
any similar breach, default or noncompliance thereafter occurring. All remedies
shall be cumulative and not alternative.
8.8. Decisions of the Company and/or the Board. Any determination,
decision, approval, request, demand, action or lack of action to be exercised by
the Company or the Board with regard to this Agreement shall be the
determination, decision, approval, request, demand, action or lack of action of
the members of the Board other than Executive and all members nominated or
appointed by Executive in his capacity as a stockholder of the Company.
8.9. Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed facsimile if sent during normal
business hours of the recipient, if not, then on the next business day, (c) five
(5) days after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. Any notice herein required or permitted to be given
shall be given by depositing the same in the United States first class mail,
postage prepaid, or hand delivered or transmitted by facsimile, in any case with
a copy sent by overnight courier service, and addressed to the parties as
follows:
If to the Company: ImaRx Therapeutics, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxxxx, XX 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
With a copy to: Xxxxxx Xxxxxxx
0000 X. Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxxxxxx X. Xxxxxxxxxx
Facsimile: (000) 000-0000
If to Executive: Xxxx X. Xxxxx
c/o Xxxxx Xxxxx Healthcare Ventures, Inc.
000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
With a copy to: Reitler Xxxxx LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
-7-
or, to such other address or facsimile number as the party to whom notice is to
be given may have furnished to the other parties in writing in accordance
herewith.
8.10. Titles and Subtitles. The titles of the sections and subsections
of the Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
8.11. Counterparts. This Agreement may be executed in any number of
counterparts (facsimile or otherwise), each of which shall be an original, but
all of which together shall constitute one instrument.
8.12. Pronouns. All pronouns contained herein, and any variations
thereof, shall be deemed to refer to the masculine, feminine or neutral,
singular or plural, as the identity of the parties hereto may require.
8.13. Governing Law. This Agreement shall be construed in accordance
with, and governed by, the laws of the State of Arizona (without giving effect
to its conflict of laws principles).
8.14 Prior Agreements. This Agreement, the Stock Option Agreement, the
Proprietary Rights Agreement and the Arbitration Agreement contain the entire
agreement of the parties relating to the subject matter hereof and supersede all
prior agreements and understandings with respect to such subject matter, and the
parties hereto have made no agreements, representations or warranties relating
to the subject matter of this Agreement, the Stock Option Agreement, the
Proprietary Rights Agreement or the Arbitration Agreement that are not set forth
herein or therein.
(SIGNATURE PAGE FOLLOWS)
-8-
IN WITNESS WHEREOF, the parties have executed this Executive Employment
Agreement as of the Effective Date.
THE COMPANY:
IMARX THERAPEUTICS, INC.
By: /s/ Xxxx Xxxxx
------------------------------------
Name: Xxxx X. Xxxxx, M.D.
Title: President
THE EXECUTIVE:
/S/ XXXX X. XXXXX
----------------------------------------
XXXX X. XXXXX
EXECUTIVE EMPLOYMENT AGREEMENT SIGNATURE PAGE
