VIMRx Pharmaceuticals Inc.
0000 Xxxxxxxxxxx Xxxx
Xxxxx 000, Xxxxxx Xxxxx II
Xxxxxxxxxx, Xxxxxxxx 00000
October 30, 1996
Xx. Xxxxxxx X. Xxxxxxx
000 Xxxxx Xxxx
Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Dear Dick:
This letter agreement amends, modifies, clarifies and restates in all
respects the agreement dated March 27, 1996 between you and VIMRx
Pharmaceuticals Inc. ("VIMRx") as to the terms and conditions of your employment
by VIMRx.
1. In your capacity as President and Chief Executive Officer of VIMRx,
you will report to VIMRx's Board of Directors. VIMRx has caused you to be
elected to its Board of Directors, as well as to the Board of Directors of one
or more subsidiaries of VIMRx, and, at the option of the Board of Directors of
VIMRx, you agree to serve, for no additional compensation, as a Director of
VIMRx and as a Director and/or officer of any or all of its subsidiaries
throughout the term of your employment.
2. The term of your employment commenced on March 27, 1996, and shall
continue until terminated under the provisions of Paragraph 6 below. You are a
full-time employee of VIMRx and agree to devote your business and professional
time, energy and skills to the affairs of VIMRx and its subsidiaries and to
serve VIMRx faithfully and to the best of your ability.
3. (a) As compensation for the services to be rendered by you
hereunder, VIMRx will pay you (i) a signing bonus of $40,000 payable on your
execution and delivery of this letter agreement, and (ii) a base salary of
$200,000 per annum, payable in installments in accordance with VIMRx's regular
payroll practices, and (iii) an annual cash bonus to be determined in accordance
with the provisions of subparagraph 3(d).
(b) As additional compensation, VIMRx has awarded you Incentive
Stock Options to purchase 156,064 shares of VIMRx Common Stock pursuant to that
certain Incentive Stock Option Agreement dated March 28, 1996 (the "ISO
Agreement"), and Non-Incentive Stock Options to purchase 643,936 Shares of VIMRx
Common Stock pursuant to that certain Non-Incentive Stock Option Agreement dated
Xxxxx 00, 0000 (xxx "Xxx-XXX Agreement"). Subject to approval by the Board of
Directors, VIMRx will amend your Non-ISO Agreement to include provisions as to
the following matters:
(i) The shares subject to the Non-ISO agreement will
become exercisable as follows:
March 28, 1997 214,649 shares
March 28, 1998 214,649 shares
March 28, 1999 214,648 shares
(ii) Subject to the provisions of the Non-ISO Agreement
regarding termination of employment, the exercisability of all options subject
to the Non-ISO Agreement shall expire on March 27, 2006.
(iii) In the event your employment is terminated by
VIMRx (except for "cause" (as hereinafter defined), but including "constructive"
termination pursuant to Paragraph 6(f) of this letter agreement and termination
on account of permanent disability (as hereinafter defined)) on or before March
27, 1997, options to purchase 214,649 shares will immediately become exercisable
and may be exercised at any time during the three-month period following the
effective date of such termination, and the exercisability of the remaining
shares subject to the Non-ISO Agreement will lapse. In the event you are so
terminated after March 27, 1997, all options subject to the Non-ISO Agreement
will immediately become exercisable and may be exercised at any time during the
three-month period following the effective date of such termination but in no
event subsequent to March 27, 2006;
(iv) In the event you die on or before March 27, 1997,
options to purchase 214,649 shares will immediately become exercisable and the
exercisability of the remaining shares subject to the Non-ISO Agreement will
lapse. In the event you die thereafter, all options subject to the Non-ISO
Agreement will become exercisable. In either event, such options may be
exercised by your heirs, personal representatives or distributees within twelve
months of the date of your death but in no event after March 27, 2006.
(v) All shares subject to the ISO Agreement and the
Non-ISO Agreement will be registered on Form S-8 as soon as practicable after
the Board of Directors approves such registration.
(vi) In the event (i) a sale of substantially all the
assets of VIMRx, to a Person (as hereinafter defined) other than an "Affiliate"
(as hereinafter defined) of VIMRx, is consummated, or (ii) any Person, or group
of Persons acting in concert, directly or indirectly, by purchase, merger or
otherwise, acquires beneficial ownership of stock representing more than fifty
percent (50%) of the voting power of the then outstanding stock of VIMRx (or any
successor of VIMRx by merger or consolidation), or (iii) a single transaction,
or a series of related transactions, is consummated pursuant to which the
beneficial ownership of more than fifty percent (50%) of the voting stock of
VIMRx changes, all stock options theretofore granted to you under the Non-ISO
Agreement will accelerate and become exercisable as of the date of such event.
For purposes of this subparagraph 3(b): "Person" shall mean any individual,
company, limited liability company, partnership, association, trust or other
entity; an "Affiliate" of a Person shall mean any Person controlling, controlled
by or under common control with such Person; and open market transactions by
unaffiliated Persons not acting in concert shall not be deemed "related
transactions."
(c) You will be eligible to participate in VIMRx's medical, dental,
life and long-term disability insurance and other benefit programs, including
any 401(k) or other retirement plans, from time to time in effect for VIMRx's
senior executives, your participation in any such plans to be in accordance with
their respective terms and conditions. In lieu of participation in VIMRx's
medical and dental plans (if any) you may elect to receive a $500 monthly
allowance therefor.
(d) Your performance will be reviewed annually by VIMRx's Board of
Directors, in connection with which your annual cash bonus and possible
increases in your base compensation for the future will be discussed, it being
understood that any such decisions shall be within the discretion of VIMRx's
Board of Directors and/or its Compensation Committee (or other similar committee
duly appointed by VIMRx's Board of Directors). However, it is further understood
that the annual cash bonus is initially targeted at at least 33% of base
compensation, assuming satisfactory performance.
4. You will be entitled to take up to an aggregate of four weeks of
vacation each calendar year as business conditions permit, it being understood
that no more than one week of unused vacation per year of service with VIMRx may
be carried over to the succeeding year. VIMRx shall not be required to provide
any additional compensation to you for vacation time not utilized by you.
5. VIMRx will reimburse you for all reasonable and documented business
expenses incurred by you on behalf of VIMRx during the term of your employment
hereunder consistent with VIMRx's expense reporting policy (as the same may be
modified from time to time). Notwithstanding anything herein to the contrary,
the provisions of this Paragraph 5 shall survive the effective date of
termination of this Agreement for a period of six months.
6. (a) Your employment hereunder may be terminated at any time by VIMRx
for cause (as such term is hereinafter defined) or, upon at least 60 days' prior
written notice by you or by VIMRx, without cause.
(b) In the event your employment is terminated by VIMRx without
cause, this Agreement shall terminate immediately on the effective date of
termination of your employment; provided, however, that:
(i) you will be paid six months' base salary as
severance in monthly installments (in arrears) beginning the first full month
following the cessation of your employment with VIMRx; and
(ii) you will be entitled to receive any accrued but
unpaid salary earned by you through the effective date of such termination.
(c) No severance shall be paid or payable to you in the event your
employment is terminated for cause, or you voluntarily resign from your
employment with VIMRx, in which events this Agreement shall terminate
immediately upon the effective date of termination of your employment or upon
the effective date of your resignation, respectively; provided, however, that
VIMRx shall nonetheless be obligated to pay you any accrued but unpaid salary
earned by you through the date of such termination.
(d) For purposes of this Agreement, termination for "cause" shall
mean termination due to any or more of the following: (i) if you are indicted
for committing a felony or a decision or determination is rendered by any court
or governmental authority that you have committed any act involving fraud,
willful misconduct, dishonesty, breach of trust or moral turpitude; (ii) if you
willfully breach your duty of loyalty to, or commit an act of fraud or
dishonesty upon, VIMRx; (iii) if you demonstrate gross negligence or willful
misconduct in connection with your employment; (iv) if, in the reasonable, good
faith opinion of a majority of VIMRx's whole Board of Directors (excluding
yourself, if you shall then be a director of VIMRx), you engage in personal
misconduct of such a material nature as to render your presence as President and
Chief Executive Officer detrimental to VIMRx or its reputation and you fail to
cure the same within five days after notice thereof from VIMRx; or (v) if you
commit a material breach of or a default under any of the terms or conditions of
this Agreement and you fail to cure such breach or default within ten days after
prior written notice thereof from VIMRx.
(e) Your employment hereunder shall terminate immediately upon your
death or "permanent disability" (as such term is hereinafter defined). In either
such event, this Agreement shall terminate immediately upon the cessation of
your employment; provided, however, you (or your legal representative, as the
case may be) will be entitled to receive any accrued but unpaid salary earned by
you through the date of such termination, plus severance in monthly installments
(in arrears), beginning the first full month following the date of such
termination, in an aggregate amount equal to the positive difference, if any,
between (x) the base salary you would have received hereunder for the six months
immediately following such termination date had your employment continued for
such six month period, and (y) the total monies paid or payable to you with
respect to such six month period under the long-term disability insurance policy
or policies maintained by VIMRx for your benefit, if any. For purposes of this
Agreement, the term "permanent disability" shall have the meaning set forth in
the long-term disability insurance policy or policies then maintained by VIMRx
for the benefit of its employees, or if no such policy shall then be in effect,
or if more than one such policy shall then be in effect in which the term
"permanent disability" shall be assigned different definitions, then the term
"permanent disability" shall be defined for purposes hereof to mean any physical
or mental disability or incapacity which renders you incapable of fully
performing the services required of you in accordance with your obligations
hereunder for a period aggregating 120 days during any twelve-month period.
(f) In the event of occurrence of any of the following events, you
shall have the right to terminate your employment with VIMRx on at least 60
days' notice. Subject to the foregoing provisions of this Paragraph 6, in the
event such notice is given by you within 30 days of any one or more of such
events, such termination of employment shall be deemed termination of your
employment by VIMRx without "cause" within the meaning of this Paragraph 6:
(i) a material breach of or default under this Agreement
by VIMRx which is not cured by VIMRx within ten (10) days after its receipt of
written notice thereof from you;
(ii) a material reduction in your duties or a material
interference with the exercise of your authority by VIMRx's Board of Directors
(not arising from any physical or mental disability you may sustain) which would
be inconsistent with the position of President and Chief Executive Officer of
VIMRx and the same shall not have been alleviated by VIMRx's Board of Directors
within ten (10) days after its receipt of written notice thereof from you;
(iii) relocation of VIMRx's principal executive offices
to a location whose distance is at least fifty (50) miles farther from your
current residence in Wilmington, Delaware than the distance between VIMRx's
offices in the Wilmington, Delaware, area and such residence address, provided
that you shall not have approved the decision to effect such relocation.
(g) Notwithstanding anything in Paragraphs 6(b) or 6(c) above to
the contrary:
(i) you shall not have any obligation to VIMRx to
mitigate any termination of your employment whereby you would be required by
VIMRx promptly to seek, procure or commence substitute employment; and
(ii) in the event you do seek, procure or commence such
substitute employment, none of the income derived or to be derived by you
therefrom shall be setoff by VIMRx against the balance of any severance
payments, if any, owing to you by VIMRx under this Agreement.
7. You hereby agree that you shall not, directly or indirectly, during
the term of your employment hereunder and until the expiration of one year after
you cease to be so employed by VIMRx, own, manage, operate, join, control or
become employed by, or render any services of an advisory nature or otherwise,
or participate in the ownership, management, operation or control of, or
otherwise be connected in any manner with, any business competitive with the
business of VIMRx without VIMRx's prior written consent.
8. (a) You further hereby covenant and agree that you will not at any
time during, or (a) for a period of three (3) years following the termination
of, your employment with VIMRx, reveal, divulge or make known to any person or
entity any secrets or confidential information (whether oral, written, or
electronically encoded) whatsoever, of or concerning VIMRx or its business or
anything connected therewith, all of which is and shall remain the property of
VIMRx and shall be returned by you to VIMRx (including all copies) immediately
upon any termination of your employment (or earlier, if requested by VIMRx), or
(b) for a period of three (3) years following the termination of your employment
with VIMRx, directly or indirectly entice away from VIMRx's employment, retain
or otherwise engage, any employee of VIMRx.
(b) For purposes hereof, confidential information shall not include
any information which: (i) is or becomes generally available to the public other
than as a result of a wrongful disclosure by you or your representatives; (ii)
was known by you on a non-confidential basis prior to its disclosure to you by
VIMRx or its representatives; (iii) becomes available to you from a source other
than VIMRx or its representatives, provided that such source is not bound by a
confidentiality agreement with VIMRx or its representatives and otherwise has a
right to disclose the same; or (iv) is required to be disclosed by any
governmental or judicial authority, provided, in such case, that you shall use
your best efforts to notify VIMRx immediately of any such requirement so that
VIMRx shall have an opportunity to contest it.
9. In the event of any breach or threatened breach by you of any one or
more of the provisions of Paragraphs 7 (relating to non-competition) or 8
(relating to non-disclosure and non-enticement of employees) above, VIMRx will
be entitled, in addition to any remedy hereunder or under any applicable law or
in equity, to an injunction restraining the breach of such provisions hereof.
10. You agree that VIMRx may, in its discretion, apply for and take out
in its name and at its own expense, and solely for its benefit, key man life
insurance on you in any amount deemed advisable by VIMRx to protect its
interests, and you agree that you shall have no right, title or interest therein
and further agree to submit to any medical or other examination and to execute
and deliver any application or other instruments in writing reasonably necessary
to effectuate such insurance.
11. You represent and warrant that you are not under any obligation,
restriction or limitation, contractual or otherwise, to any other individual or
entity which would prohibit or impede you from performing your duties and
responsibilities hereunder, and that you are free to enter into and perform the
terms and provisions of this Agreement.
12. Notwithstanding anything herein to the contrary, the provisions of
Paragraphs 7, 8, 9 and 11 hereof shall expressly survive the expiration or
termination of this Agreement regardless of the reason for, or cause of, any
such termination.
13. All notices, requests, demands, and other communications provided
for by this Agreement shall be in writing and shall be either personally
delivered (including by couriers such as FedEx) or sent by pre-paid certified
mail, return receipt requested, addressed to the address stated below of the
party to which notice is given, or to such changed address as such party may
have fixed by notice given in accordance with the terms hereof:
TO VIMRx:
VIMRx Pharmaceuticals Inc.
x/x Xxxxxx X. Xxxxxxx, Chairman
MacAndrews & Forbes Holdings, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
WITH A COPY TO:
Xxxxxx X. Xxxxxxxxxx
Xxxxxxx Xxxxxx & Green, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
TO XXXXXXX X. XXXXXXX:
Xxxxxxx X. Xxxxxxx
000 Xxxxx Xxxx
Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Any notice, sent as provided above, shall be deemed given upon receipt at the
address provided for above (or, in the event delivery is refused, the first date
on which delivery was tendered).
14. This Agreement contains the entire agreement and understanding
between the parties relating to the subject matter hereof and supersedes any and
all prior understandings, agreements and representations, written or oral,
expressed or implied, with respect thereto.
15. This Agreement may not be amended, modified, altered or
terminated (other than pursuant to its terms) except by an instrument in writing
signed by the parties.
16. This Agreement shall be binding upon the parties hereto and their
heirs, distributees, successors and assigns.
17. In case any one or more of the provisions of this Agreement shall
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected thereby.
18. This Agreement shall be governed by, construed and enforced in
accordance with the laws of the State of Connecticut applicable to contracts
made and to be performed entirely therein (without giving effect to the conflict
of law rules thereof).
Kindly indicate your agreement with the foregoing by countersigning the
enclosed duplicate copy of this letter agreement and returning it to me on
behalf of VIMRx.
On behalf of VIMRx, we look forward to a long and mutually rewarding
relationship.
Sincerely,
VIMRx PHARMACEUTICALS INC.
By: /s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Chairman
ACCEPTED AND AGREED TO THIS
30th DAY OF October, 1996:
/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
