Exhibit 10(q)
EMPLOYMENT AGREEMENT
Employment Agreement dated as of April 2, 2001, between PHARMOS
CORPORATION, a Nevada corporation (with its successors and assigns, referred to
as the "Corporation"), and XXXXXX X. XXXX (hereinafter referred to as "XXXX").
PRELIMINARY STATEMENT
The Corporation desires to employ XXXX as Vice President - Finance/Chief
Financial Officer of the Corporation, and XXXX wishes to be employed by the
Corporation, upon the terms and subject to the conditions set forth in this
Agreement. The Corporation and XXXX also wish to enter into the other agreements
set forth in this Agreement, all of which are related to XXXX'x employment under
this Agreement.
AGREEMENT
XXXX and the Corporation therefore agree as follows:
1. Term of Employment. The Corporation hereby employs XXXX and XXXX hereby
accepts employment with the Corporation for the period (the "Initial Term")
commencing on the date hereof (the "Commencement Date"), and ending on the first
anniversary of the date hereof or upon the earlier termination of the Initial
Term pursuant to Section 6. The Initial Term will be extended automatically for
additional one year periods (each, an "Additional Term"; together with the
Initial Term, the "Term"), subject to the rights of the parties generally to
terminate this Agreement in accordance with the provisions of Section 6(a). The
termination of the Term for any reason shall end XXXX'x employment under this
Agreement, but, except as otherwise set forth herein, shall not terminate XXXX'x
or the Corporation's other agreements in this Agreement.
2. Position and Duties. During the Term, XXXX shall serve as Vice
President - Finance/Chief Financial Officer of the Corporation, which title
shall be adjusted as necessary to maintain its seniority in the event of
subsequent changes in the Corporation's title structure. XXXX shall also hold
such additional positions and titles as the CEO of the Corporation or President
may determine from time to time. XXXX shall report to the CEO and the President.
During the Term, XXXX shall devote his full time and attention to performing his
duties as an employee of the Corporation.
3. Compensation.
(a) Base Salary. The Corporation shall pay XXXX a base salary,
beginning on the first day of the Initial Term and ending on the last day of the
Initial Term, of not less than
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$183,750 per annum, payable semi-monthly on the Corporation's regular pay cycle
for professional employees.
(b) Other and Additional Compensation.
(i) Section 3(a) establishes the minimum compensation during
the Term and shall not preclude the Board of Directors
(the "Board") from awarding XXXX a higher salary or any
bonuses or stock options in the event of a successful
financing or otherwise, and in any event, in the
discretion of the Board. It is the practice of the
Corporation to adjust compensation on January 1st of
each year.
(ii) During the Term, XXXX shall receive an annual cash bonus
based upon the attainment of agreed upon goals and
milestones as determined by the Chief Executive Officer
of the Corporation and approved by the Compensation and
Stock Option Committee of the Board.
4. Employee Benefits.
(a) General. During the Term, XXXX shall be entitled to the employee
benefits, including 3 weeks vacation, a 401(k) plan, and current health and
dental insurance benefits made available by the Corporation and life insurance
benefits described in Section 4(b).
(b) Life Insurance. During the Term, XXXX shall be the insured with
respect to a $500,000 "split dollar" plan life insurance policy (as such term is
used in the insurance industry) (the "Policy"). XXXX hereby agrees to execute
and deliver any and all reasonable documentation in connection with the Policy.
5. Expenses. During the Term, the Corporation shall reimburse XXXX for
actual out-of-pocket expenses incurred by him in the performance of his services
for the Corporation upon the receipt of appropriate documentation of such
expenses. The Corporation shall, in addition, provide XXXX with a monthly car
allowance of up to $400.
6. Termination.
(a) General. The Term shall end immediately upon XXXX'x death, and
for Cause or Disability, as defined in Section 7. Upon termination of the Term
due to XXXX'x death, all compensation due XXXX under this Agreement will cease,
except as set forth in Section 9. Upon the Corporation's termination of the Term
for Cause, XXXX shall have ten (10) days to cure said Cause, if curable. With
respect to the termination of XXXX pursuant to Section 6(d) or 6(e), the
Corporation may elect to terminate this Agreement at any time by giving 180
days' prior written notice, during the Initial Term, and by giving 90 days'
prior written notice during the each Additional Term. With respect to
termination by XXXX other than pursuant to Section 6(f), XXXX may elect to
terminate this Agreement at any time by giving 60 days' prior written notice
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at any time during the Term, and, upon such termination, all compensation due
XXXX under this Agreement will cease, except as set forth in Section 9.
(b) Notice of Termination. The Corporation shall notify XXXX in
writing of its termination of his employment hereunder. The Corporation's
failure to give notice under this Section 6(b) shall not, however, affect the
validity of the Corporation's termination of the Term.
(c) Termination by the Corporation for Cause. If terminated by the
Corporation for Cause, the Corporation shall describe to XXXX the grounds for
his termination. Upon the Corporation's termination of the Term for Cause, all
compensation due XXXX under this Agreement will cease, except as set forth in
Section 9. Moreover, all options and warrants to purchase Common Stock of the
Corporation shall expire upon such termination.
(d) Termination by the Corporation upon a Change of Control. In the
event that the Corporation terminates its relationship with XXXX within one (1)
year of a "Change of Control", as defined in Section 7, XXXX shall receive the
following:
(i) an amount equal to eighteen (18) months of base salary
for the then current year (in addition to the base
salary paid to XXXX after the Corporation's delivery of
notice of termination pursuant to Section 6(a) and the
actual date of termination);
(ii) Other Compensation (as defined in Section 9); and
(iii) the full vesting of XXXX'x stock options, and extended
exercisablility thereof until their respective
expiration dates.
Xxxx shall be entitled to the foregoing benefits once notice of termination is
given by the Corporation, regardless of his subsequent Death, Disability or
termination for Cause.
(e) Termination by the Corporation other than upon Change of
Control, Death, Disability or Cause. In the event that the Corporation
terminates its relationship with XXXX, including a termination by the
Corporation effective upon the expiration of the Initial Term or an Additional
Term but other than upon a Change of Control, Death, Disability or Cause, XXXX
shall receive the following:
(i) an amount equal to twelve (12) months of base salary for
the then current year (in addition to the base salary
paid to XXXX after the Corporation's delivery of notice
of termination pursuant to Section 6(a) and the actual
date of termination);
(ii) Other Compensation; and
(iii) the full vesting of XXXX'x stock options, and extended
exercisablility thereof until their respective
expiration dates.
(f) Termination by XXXX upon Good Reason or Change of Control. In
the event XXXX terminates his relationship with the Corporation for "Good
Reason" as defined in
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Section 7, within one (1) year of the occurrence of the event which established
the "Good Reason", or within one (1) year of a Change of Control, XXXX shall
receive the following:
(i) an amount equal to twelve (12) months of base salary for
the then current year (in addition to the base salary
paid to XXXX after the his delivery of notice of
termination pursuant to Section 6(a) and the actual date
of termination);
(ii) Other Compensation; and
(iii) the full vesting of XXXX'x stock options and extended
exercisability thereof until their respective expiration
dates.
XXXX shall provide prior written notice to the Corporation of his
termination pursuant to this Section 6(f), and such notice shall describe the
particular "Good Reason(s)" at issue.
7. Definitions.
(a) "Cause" Defined. "Cause" means (i) willful malfeasance or
willful misconduct by XXXX in connection with his employment; (ii) XXXX'x xxxxx
negligence in performing any of his duties under this Agreement; (iii) XXXX'x
conviction of, or entry of a plea of guilty to, or entry of a plea of nolo
contendere with respect to, any felony; (iv) XXXX'x habitual drunkenness or
excessive absenteeism not related to illness; (iv) XXXX'x material breach of any
written policy applicable to all employees adopted by the Corporation; or (vi)
material breach by XXXX of any of his agreements in this Agreement.
(b) "Disability" Defined. "Disability" shall mean XXXX'x incapacity
due to physical or mental illness that results in his being unable to
substantially perform his duties hereunder for six consecutive months (or for
six months out of any nine-month period). During a period of Disability, XXXX
shall continue to receive his base salary hereunder, provided that if the
Corporation provides XXXX with disability insurance coverage, payments of XXXX'x
base salary shall be reduced by the amount of any disability insurance payments
received by XXXX due to such coverage. Upon termination, after the end of the
period of Disability, all compensation due XXXX under this Agreement shall
cease, except as set forth in Section 9.
(c) "Change of Control" Defined. "Change of Control" shall mean the
occurrence of any one or more of the following events:
(i) An acquisition (whether directly from the Corporation or
otherwise) of any voting securities of the Corporation (the "Voting
Securities") by any "Person" (as the term person is used for purposes of
Section 13(d) or 14(d) of the Securities and Exchange Act of 1934, as
amended (the "1934 Act")), immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under
the 0000 Xxx) of fifty percent (50 %) or more of the combined voting power
of the Corporation's then outstanding Voting Securities.
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(ii) The individuals who, as of the date hereof, are members
of the Board (the "Incumbent Board"), cease for any reason to constitute
at least fifty-one percent (51%) of the Board;; or
(iii) Approval by the Board or stockholders of the Corporation
of, or execution by the Corporation of any agreement with respect to, or
the consummation of:
(A) A merger, consolidation or reorganization involving
the Corporation, where either or both of the events described in
Section 7(c)(i) or 7(c)(ii) would be the result;
(B) A liquidation or dissolution of or appointment of a
receiver, rehabilitator, conservator or similar person for, the
Corporation; or
(C) An agreement for the sale or other disposition of
all or substantially all of the assets of the Corporation to any
Person (other than a transfer to a subsidiary of the Corporation).
Notwithstanding anything contained in this Agreement to the contrary, if
XXXX'x employment is terminated prior to a Change in Control and XXXX reasonably
demonstrates that such termination (i) was at the request of a third party who
has indicated an intention or taken steps reasonably calculated to effect a
Change in Control and who effectuates a Change in Control (a "Third Party") or
(ii) otherwise occurred in connection with, or in anticipation of, a Change in
Control which actually occurs, then for all purposes of this Agreement, the date
of a Change in Control with respect to XXXX shall mean the date immediately
prior to the date of such termination of XXXX'x employment.
(d) "Good Reason" Defined. "Good Reason" shall mean the occurrence,
whether or not after a Change in Control, of any of the events or conditions
described below:
(i) a change in XXXX'x status, title, position or
responsibilities (including reporting responsibilities) which represents
an adverse change from his status, title, position or responsibilities as
in effect immediately prior to such change; the assignment to XXXX of any
duties or responsibilities which are inconsistent with his status, title,
position or responsibilities as in effect immediately prior to such
change; or any removal of XXXX from or failure to reappoint or reelect him
to any of such offices or positions;
(ii) any failure to award XXXX bonus payments and/or increases
in base salary in a manner consistent with the practice of the Corporation
prior to such failure;
(iii) the Corporation's requiring XXXX to be based at any
place outside a 50-mile radius from Iselin, New Jersey except for
reasonably required travel on the
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Corporation's business which is not materially greater than such travel
requirements prior to such time;
(iv) the failure by the Corporation to (a) continue in effect
(without reduction in benefit level, and/or reward opportunities) any
material compensation or employee benefit plan in which XXXX was
participating at any time prior to such failure, or (b) provide XXXX with
compensation and benefits, in the aggregate, at least equal (in terms of
benefit levels and/or reward opportunities) to those provided for under
each other employee benefit plan, program and practice in which XXXX was
participating at any time prior to such failure; or
(v) any material breach by the Corporation of any provision of
this Agreement which is not cured within ten (10) days after the receipt
of written notice by the Corporation of a description of the breach.
8. Payment Terms. Payment of any amounts to which XXXX shall be entitled
pursuant to the provisions of Sections 6 and 7 shall be made no later than sixty
(60) days following receipt of notice of termination or the event giving rise to
such termination. Any amounts payable pursuant to Sections 6 and 7 which are not
made within the period specified in this Section 8 shall bear interest at a rate
equal to the lesser of (i) the maximum interest rate allowable pursuant to
applicable law or (ii) five points above the "prime rate" of interest as
published from time-to-time in the Eastern Edition of the Wall Street Journal.
9. Benefits.
(a) General. Except if XXXX resigns without Good Reason (other than
retirement on or after the age of 62), in the event XXXX'x employment with the
Corporation is terminated for any reason prior to the end of the Term, XXXX and
his dependents, if any, will continue to participate in any group health plan
sponsored by the Corporation in which XXXX was participating on the date of such
termination, at a cost to XXXX and his dependents equal to the amount charged by
the Corporation to similarly situated employees while employed by the
Corporation, for the remainder of the Initial Term or, if termination occurs
within an Additional Term, for the remainder of such Additional Term.
Thereafter, XXXX and his dependents, if any, shall be entitled to elect to
continue such health coverage, at a cost to XXXX and his dependents equal to the
amount charged by the Corporation to similarly situated employees while employed
by the Corporation, for the longest period of time permitted by the agents of
the Corporation who arrange for such health coverage, with such period to last
at least twelve (12) months from the date of termination. Upon termination for
any reason, in addition to any payments to which XXXX may be entitled upon
termination of his Employment pursuant to any provision of this Agreement, XXXX
shall be entitled to any benefits under any pension, supplemental pension,
savings, or other employee benefit plan (other than life insurance) in which
XXXX was participating on the date of any such termination.
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(b) Life Insurance. Upon termination of employment for any reason
other than death, XXXX shall surrender the Policy for the benefit of the
Corporation, unless XXXX wishes to reimburse the Corporation for payments made
by the Corporation with respect to the Policy (as detailed in the "Policy
Documents"(as defined below in this Section 9(b)) and release the Corporation
from all obligations set forth in and associated with the Policy Documents. XXXX
shall have the rights and obligations provided in the documents associated with
the Policy (collectively, including the Policy, the "Policy Documents). All
benefits to be received by XXXX pursuant to this Section 9 shall be referred to
herein, collectively, as "Other Compensation".
10. Confidentiality.
(a) "Corporation Information" Defined. "Corporation Information"
means all information, knowledge or data of or pertaining to (i) the
Corporation, its employees and all work undertaken on behalf of the Corporation,
and (ii) any other person, firm, corporation or business organization with which
the Corporation may do business during the Term, that is not in the public
domain (and whether relating to methods, processes, techniques, discoveries,
pricing, marketing or any other matters).
(b) Confidentiality. XXXX hereby recognizes that the value of all
trade secrets and other proprietary data and all other information of the
Corporation not in the public domain disclosed by the Corporation in the course
of his employment with the Corporation is attributable substantially to the fact
that such confidential information is maintained by the Corporation in strict
confidentiality and secrecy and would be unavailable to others without the
expenditure of substantial time, effort or money. XXXX therefore, except as
provided in the next two sentences, covenants and agrees that all Corporation
Information shall be kept secret and confidential at all times during and after
the end of the Term and shall not be used or divulged by him outside the scope
of his employment as contemplated by this Agreement, except as the Corporation
may otherwise expressly authorize by action of the Board. In the event that XXXX
is requested in a judicial, administrative or governmental proceeding to
disclose any of the Corporation Information, XXXX will promptly so notify the
Corporation so that the Corporation may seek a protective order or other
appropriate remedy and/or waive compliance with this Agreement. If disclosure of
any of the Corporation Information is required, XXXX may furnish the material so
required to be furnished, but XXXX will furnish only that portion of the
Corporation Information that legally is required.
11. Successors and Assigns.
(a) XXXX. This Agreement is a personal contract, and the rights and
interests that the Agreement accords to XXXX may not be sold, transferred,
assigned, pledged, encumbered, or hypothecated by him. All rights and benefits
of XXXX shall be for the sole personal benefit of XXXX, and no other person
shall acquire any right, title or interest under this Agreement by reason of any
sale, assignment, transfer, claim or judgment or bankruptcy proceedings against
XXXX. Except as so provided, this Agreement shall inure to the benefit of and be
binding upon XXXX and his personal representatives, distributees and legatees.
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(b) The Corporation. This Agreement shall be binding upon the
Corporation and inure to the benefit of the Corporation and of its successors
and assigns.
12. Entire Agreement. This Agreement represents the entire agreement
between the parties concerning XXXX'x employment with the Corporation and
supersedes all prior negotiations, discussions, understandings and agreements,
whether written or oral, between XXXX and the Corporation relating to the
subject matter of this Agreement, including, without limitation, the Employment
Agreement, dated as of December 15, 1997, between the Corporation and XXXX, with
the exception of Section 3(b) thereof which shall survive the execution and
delivery of this Agreement. Notwithstanding the foregoing, the Policy Documents
shall not be superseded.
13. Amendment or Modification; Waiver. No provision of this Agreement
may be amended or waived unless such amendment or waiver is agreed to in writing
signed by XXXX and by a duly authorized officer of the Corporation. No waiver by
any party to this Agreement of any breach by another party of any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of a similar or dissimilar condition or provision at the same time, any
prior time or any subsequent time.
14. Notices. Any notice to be given under this Agreement shall be in
writing and delivered personally or sent by overnight courier or registered or
certified mail, postage prepaid, return receipt requested, addressed to the
party concerned at the address indicated below, or to such other address of
which such party subsequently may give notice in writing:
If to XXXX: Xxxxxx X. Xxxx
000 Xxxxxxxxx Xxxx.
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxx
If to the Corporation: Pharmos Corporation
00 Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: President
with a copy to: Xxxxxxxxxx Xxxxxxxxx & Xxxxxx LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Any notice delivered personally or by overnight courier shall be deemed
given on the date delivered and any notice sent by registered or certified mail,
postage prepaid, return receipt requested, shall be deemed given on the date
mailed.
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15. Severability. If any provision of this Agreement or the application of
any such provision to any party or circumstances shall be determined by any
court of competent jurisdiction to be invalid and unenforceable to any extent,
the remainder of this Agreement or the application of such provision to such
person or circumstances other than those to which it is so determined to be
invalid and unenforceable shall not be affected, and each provision of this
Agreement shall be validated and shall be enforced to the fullest extent
permitted by law. If for any reason any provision of this Agreement containing
restrictions is held to cover an area or to be for a length of time that is
unreasonable or in any other way is construed to be too broad or to any extent
invalid, such provision shall not be determined to be entirely null, void and of
no effect; instead, it is the intention and desire of both the Corporation and
XXXX that, to the extent that the provision is or would be valid or enforceable
under applicable law, any court of competent jurisdiction shall construe and
interpret or reform this Agreement to provide for a restriction having the
maximum enforceable area, time period and such other constraints or conditions
(although not greater than those contained currently contained in this
Agreement) as shall be valid and enforceable under the applicable law.
16. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
17. Headings. All descriptive headings of sections and paragraphs in this
Agreement are intended solely for convenience of reference, and no provision of
this Agreement is to be construed by reference to the heading of any section or
paragraph.
18. Withholding Taxes. All salary, benefits, reimbursements and any other
payments to XXXX under this Agreement shall be subject to all applicable payroll
and withholding taxes and deductions required by any law, rule or regulation of
and federal, state or local authority.
19. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together constitute one and same instrument.
20. Applicable Law; Jurisdiction. The laws of the State of New York shall
govern the interpretation, validity and performance of the terms of this
Agreement, without reference to rules relating to conflicts of law. Any suit,
action or proceeding against XXXX with respect to this Agreement, or any
judgment entered by any court in respect thereof, may be brought in any court of
competent jurisdiction in the State of New York, as the Corporation may elect in
its sole discretion, and XXXX hereby submits to the exclusive jurisdiction of
such courts for the purpose of any such suit, action, proceeding or judgment.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
/s/ XXXXXX X. XXXX
----------------------------------
XXXXXX X. XXXX
PHARMOS CORPORATION
By: /s/ Xxx Xxxxxxxxxx
-------------------------
Xxx Xxxxxxxxxx, President
FINAL
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