EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this
“Agreement”)
is made and entered into as of December 23, 2010 by and between Xxxx
Xxxxxxx (the “Executive”)
and PharmAthene, Inc., a
Delaware corporation (the “Company”).
WITNESSETH:
WHEREAS, the Company desires
to continue to employ the Executive and the Executive desires to accept such
continued employment with the Company subject to the terms and conditions herein
agreed upon:
NOW, THEREFORE, in
consideration of the foregoing and of the mutual covenants and obligations
hereinafter set forth, the parties hereto hereby agree as follows:
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1.
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Employment;
Term. The Company hereby agrees to continue to employ
the Executive and the Executive hereby accepts such continued employment
with the Company upon the terms and conditions hereinafter set forth for
the period commencing on January 1, 2011 (the “Effective
Date”) and ending on the first anniversary of such
date. The term of this Agreement shall be automatically
extended for an additional year on each anniversary of the date hereof
unless written notice of non-extension is provided by either party to the
other party at least 90 days prior to such anniversary. The
period of the Executive’s employment under this Agreement, as it may be
terminated or extended from time to time as provided herein is referred to
as the “Employment
Period.”
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2.
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Position and Duties.
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a.
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Position and Duties
Generally. The Executive shall continue to be employed
by the Company in the position of President and Chief Executive Officer
and shall faithfully render such executive, managerial, administrative and
other services as are customarily associated with and incident to such
position and as the Board may from time to time reasonably require
consistent with such position. The Executive shall report to
the Board of Directors of the Company (the “Board”).
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b.
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Other
Positions. The Executive shall hold such other positions
and executive offices with the Company and/or of any of the Company’s
subsidiaries or affiliates as may from time to time be authorized by the
Board. The Executive shall not be entitled to any compensation
other than the compensation provided for herein for serving during the
Employment Period in any other office or position of the Company or any of
its subsidiaries or affiliates, unless the Compensation Committee
specifically approves such additional
compensation.
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c.
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Devotion to
Employment. Except for vacation time taken in accordance
with the Company’s vacation policy in effect from time to time and in
accordance with the terms of this Agreement and for absences due to
temporary illness, the Executive shall be a full-time employee of the
Company and shall devote full time, attention and efforts during the
Employment Period to the business of the Company and the duties required
of him in his position. During the Employment Period, the
Executive shall not be engaged in any other business activity which, in
the reasonable judgment of the Board or its designee, conflicts with the
duties of the Executive hereunder, whether or not such activity is pursued
for gain, profit or other pecuniary
advantage.
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3.
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Compensation;
Reimbursement.
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a.
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Base
Salary. For the Executive’s services, the Company shall
pay to the Executive an annual base salary of not less than
$435,000.00 per
annum, payable in equal periodic installments according to the Company’s
customary payroll practices, but no less frequently than
monthly. The Executive’s base salary shall be subject to review
annually by the Compensation Committee and shall be subject to increase at
the option and sole discretion of the Compensation
Committee.
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b.
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Bonus. The
Executive shall be eligible to receive an annual cash bonus, the target of
which is no less than 60% of the Executive’s base salary (“Target Bonus
Amount”) based upon the achievement of certain corporate objectives (the
achievement of such objectives being determined by the Compensation
Committee) with such corporate objectives determined by the Compensation
Committee in consultation with the
Executive.
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c.
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Benefits
Generally.
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i.
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In
addition to the salary and cash bonus described above, the Executive shall
be entitled during the Employment Period to participate in such employee
benefit plans and programs of the Company, and shall be entitled to such
other fringe benefits, as are from time to time made available by the
Company generally to employees of the level, position, tenure, salary,
age, health and other qualifications of the Executive including, without
limitation, medical, dental and vision insurance coverage for the
Executive and the Executive’s dependents, disability, death benefit and
life insurance and pension plans.
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ii.
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Without
limiting the generality of the foregoing, the Executive shall be eligible
for such awards, if any, including stock and stock options under the
Company’s 2007 Long-Term Incentive Plan or such other plan as the Company
may from time to time put into effect as shall be granted to the Executive
by the Compensation Committee or other appropriate designee of the Board
acting in its sole discretion.
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iii.
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The
Executive acknowledges and agrees that the Company does not guarantee the
adoption or continuance of any particular employee benefit plan and
participation by the Executive in any such plan or program shall be
subject to the rules and regulations applicable
thereto.
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d.
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Vacation. The
Executive shall be entitled to 20 days of vacation in each calendar
year.
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e.
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Expenses. The
Company shall reimburse the Executive in accordance with the practices in
effect from time to time for other officers or staff personnel of the
Company for all reasonable and necessary business and travel expenses and
other disbursements incurred by the Executive for or on behalf of the
Company in the performance of the Executive’s duties hereunder, upon
presentation by the Executive to the Company of appropriate supporting
documentation.
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f.
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Perquisites. The
Executive shall be entitled to those perquisites as the Company shall make
available from time to time to other executive officers of the Company,
which shall include, without limitation, the costs for Executive’s use of
a cellular telephone and personal digital assistant to the extent such
equipment is used for business
purposes.
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g.
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Stock
Options. The Parties agree that on the date of execution
of this Agreement (the “Execution Date”), Executive was granted a stock
option to purchase 225,000 shares of the Company’s common stock (the
“Stock Option”)
pursuant to the Company’s 2007 Long-Term Incentive Plan, as amended
(“2007 Plan”), and
subject to the terms and conditions of the 2007 Plan and of a stock option
agreement dated as of the Execution Date by the Company and the
Executive. The Stock Option shall have a term of 10 years and,
subject to possible acceleration of vesting as otherwise provided for
herein, the Stock Option shall vest in installments consistent with the
Company’s past practice. The per share exercise price of the
Stock Option shall be the fair market value of a share of the common stock
of the Company on the date of grant as determined by the Company in
accordance with the terms of the 2007 Plan. In the event of a
Change in Control, defined below, during the Employment Period and a
Termination Without Cause or a termination of the Executive’s employment
for Good Reason occurs on or within twelve months of the consummation of
the Change in Control, all equity-based awards issued by the Company held
by the Executive and not then vested shall become immediately and fully
vested.
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As used
herein, “Change in Control” means: (i) an acquisition subsequent to the date
hereof by any person, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 30% or more of either (A) the then outstanding shares of common stock of the
Company (“Common Stock”)
or (B) the combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors; excluding,
however, the following: (1) any acquisition directly from the Company, other
than an acquisition by virtue of the exercise of a conversion privilege unless
the security being so converted was itself acquired directly from the Company,
(2) any acquisition by the Company and (3) any acquisition by an employee
benefit plan (or related trust) sponsored or maintained by the Company; (ii) a
merger, consolidation, reorganization or similar corporate transaction, whether
or not the Company is the surviving corporation in such transaction, in which
outstanding shares of Common Stock are converted into (A) shares of stock of
another company, other than a conversion into shares of voting common stock of
the successor corporation (or a holding company thereof) representing 80% of the
voting power of all capital stock thereof outstanding immediately after the
merger or consolidation or (B) other securities (of either the Company or
another company) or cash or other property; (iii) the issuance of shares of
Common Stock in connection with a merger, consolidation, reorganization or
similar corporate transaction in an amount in excess of 40% of the number of
shares of Common Stock outstanding immediately prior to the consummation of such
transaction; (iv) (A) the sale or other disposition of all or substantially all
of the assets of the Company or (B) a complete liquidation or dissolution of the
Company; or (v) the adoption by the Board of Directors of the Company of a
resolution to the effect that any person has acquired effective control of the
business and affairs of the Company.
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4.
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Death; Disability. In
the event that the Executive dies or is incapacitated or disabled by
accident, sickness or otherwise, so as to render the Executive mentally or
physically incapable of performing the services required to be performed
by the Executive under this Agreement for a period that would entitle the
Executive to qualify for long-term disability benefits under the Company’s
then-current long-term disability insurance program or, in the absence of
such a program, for a period of 120 consecutive days or longer (such
condition being herein referred to as a “Disability”)
then (i) in the case of the Executive’s death, the Executive’s employment
shall be deemed to terminate on the date of the Executive’s death and (ii)
in the case of a Disability, the Company, at its option, may terminate the
employment of the Executive under this Agreement immediately upon giving
the Executive notice to that effect. The determination to
terminate the Executive in the event of a Disability shall be made by the
Board or the Board’s designee. In the case of a Disability,
until the Company shall have terminated the Executive’s employment
hereunder in accordance with the foregoing, the Executive shall be
entitled to receive compensation provided for herein notwithstanding any
such physical or mental disability.
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5.
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Termination For
Cause. The Company may terminate the employment of the
Executive hereunder at any time during the Employment Period for “cause”
(such termination being herein referred to as a “Termination
for Cause”) by giving the Executive notice of such termination,
which termination shall be effective on the date of such notice or such
later date as may be specified by the Company. For purposes of
this Agreement, “Cause”
means (i) the Executive’s willful and substantial misconduct that is
materially injurious to the Company and is either repeated after written
notice from the Company specifying the misconduct or is continuing and not
corrected within 20 days after written notice form the Company specifying
the misconduct, (ii) the Executive’s repeated neglect of duties or failure
to act which can reasonably be expected to affect materially and adversely
the business or affairs of the Company after written notice from the
Company specifying the neglect or failure to act, (iii) the Executive’s
material breach of any of the agreements contained in Sections 11, 12, 13
or 15 hereof or of any of the Company’s policies, (iv) the commission by
the Executive of any material fraudulent act with respect to the business
and affairs of the Company, (v) the Executive’s conviction of (or plea of
nolo contendere to) a crime constituting a felony, (vi) demonstrable gross
negligence, or (vii) habitual insobriety or use of illegal drugs by the
Executive while performing the Executive’s duties under this Agreement
which adversely affects the Executives performance of the Executive’s
duties under this Agreement.
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6.
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Termination Without
Cause. The Company may terminate the employment of the Executive
hereunder at any time without “cause” or fail to extend this Agreement
pursuant to the terms hereof (such termination being herein referred to as
“Termination
Without Cause”) by giving the Executive notice of such termination,
upon the giving of which such termination shall take effect not later than
30 days from the date such notice is
given.
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7.
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Voluntary Termination by
Executive. Any termination of the employment of the Executive by
the Executive otherwise than as a result of death or Disability or for
Good Reason (as defined below) (such termination being herein referred to
as “Voluntary
Termination”). A Voluntary Termination will be deemed to
be effective immediately upon such
termination.
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8.
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Termination by Executive for
Good Reason. Any termination of the employment of the
Executive by the Executive for Good Reason, which shall be deemed to be
equivalent to a Termination Without Cause. For purposes of this Agreement
“Good Reason”
means (i) any material breach by the Company of any of its obligations
under this Agreement; (ii) any material reduction in the Executive’s
duties, authority or responsibilities without the Executive’s consent;
(iii) any assignment to the Executive of duties or responsibilities
materially inconsistent with the Executive’s position and duties contained
in this Agreement without the Executive’s consent; (iv) a relocation of
the Company’s principal executive offices or the Company determination to
require the Executive to be based anywhere other than within 25 miles of
the location at which the Executive on the date hereof performs the
Executive’s duties; (v) the taking of any action by the Company which
would deprive the Executive of any material benefit plan (including,
without limitation, any medical, dental, disability or life insurance);
(vi) nonrenewal by the Company of this Agreement in accordance with
Section 1 hereof or (vii) the failure by the Company to obtain the
specific assumption of this Agreement by any successor or assignee of the
Company or any person acquiring substantially all of the Company’s assets;
provided,
however,
that the Executive may not terminate the Employment Period for Good Reason
unless the Executive first provides the Company with written notice
specifying the Good Reason and providing the Company with 20 days in which
to remedy the stated reason.
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9.
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Effect
of Termination of Employment.
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a.
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Voluntary Termination;
Termination For Cause. Upon the termination of the Executive’s
employment as a result of the Executive’s Voluntary Termination or a
Termination For Cause, the Executive shall not have any further rights or
claims against the Company under this Agreement except the right to
receive (i) the unpaid portion of the base salary provided for in Section
3(a) hereof, computed on a pro rata basis to the date of termination, (ii)
payment of the Executive’s accrued but unpaid amounts and extension of
applicable benefits in accordance with the terms of any incentive
compensation (including, without limitation, equity compensation),
retirement, employee welfare or other employee benefit plans or programs
of the Company in which the Executive is then participating in accordance
with the terms of such plans or programs, and (iii) reimbursement for any
expenses for which the Executive shall not have theretofore been
reimbursed as provided in Section 3
hereof.
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b.
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Termination Without Cause;
Termination for Good Reason. Upon the termination of the
Executive’s employment as a result of a Termination Without Cause or for
Good Reason, the Executive shall not have any further rights or claims
against the Company under this Agreement except the right to receive (i)
the payments and other rights provided for in Section 9(a) hereof, (ii)
severance payments in the form of a continuation of the Executive’s base
salary as in effect immediately prior to such termination (but without
giving effect to any reduction in base salary that triggered a Good Reason
termination) for a period of 12 (twelve) months following the effective
date of such termination, subject to Section 24, (iii) a lump sum payment
equal to the then accrued portion of the Executive’s Target Bonus Amount
as in effect immediately prior to such termination (which includes, for
the sake of clarity any accrued bonus for the year prior to the date of
termination to the extent not previously paid and for the year of
termination), payable within 60 days of termination (subject to Section
24), (iv) to the extent unvested the option granted by the Company to the
Executive on May 18, 2010 would be deemed fully vested on the date of
termination and (v) to the extent that the Executive has elected and is
continuing to receive COBRA continuation coverage under the Company’s
group health plan in accordance with Section 4980B of the Internal Revenue
Code of 1986, as amended (the “Code”),
the Company shall reduce the COBRA premiums that the Executive is required
to pay during the first 12 (twelve) months following his termination of
employment to that amount that the Company charges its active employees
for the same level of group health
coverage.
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Notwithstanding
the foregoing, the severance benefits described in clause (ii), (iii) and (iv)
above and the COBRA premium subsidy described in clause (v) above shall be
provided in consideration for, and expressly conditioned upon, the Executive’s
execution of a binding General Release (which shall be provided on or about the
date of termination) containing terms reasonably satisfactory to the Company
within 45 days of the Executive’s termination of employment. Subject
to Section 24, if the Executive timely executes such General Release and the
applicable revocation period with respect to such General Release lapses, the
Executive will receive the first two months of severance payments 60 days after
his termination of employment and the remaining payments in accordance with the
Company’s payroll practices. If the Executive does not timely execute
the General Release or if the Executive revokes the General Release within the
applicable revocation period prescribed by law, the Executive shall not be
entitled to receive any severance payments and the Executive will be required to
pay 102% of the applicable premium (as defined in Code Section 4980B) for any
COBRA continuation coverage elected by the Executive.
c. Termination Without Cause or
Termination for Good Reason Following a Change in Control. Following a
Change in Control (defined below), if requested by the Company’s successor or
acquirer, as applicable, the Executive shall negotiate a new employment
agreement in form and substance acceptable to the Executive in all respects in
his sole discretion. In the event the Company and the Executive fail
to enter into such new employment agreement within ninety (90) days of the
Change in Control and during the Employment Period a Termination Without Cause
or a termination of the Executive’s employment for Good Reason occurs on or
within twelve months of the consummation of the Change in Control, the Executive
shall not have any further rights or claims against the Company under this
Agreement except the right to receive (i) the payments and other rights provided
for in Section 9(a) hereof, (ii) a lump sum payment equal to the amount of
the Executive’s base salary as in effect immediately prior to such
termination (but without giving effect to any reduction in base salary that
triggered a Good Reason termination) for a period of 18 (eighteen) months,
payable within 60 days of the date of termination (subject to Section 24), (iii)
a lump sum payment equal to the Executive’s Target Bonus Amount as in effect
immediately prior to such termination and a payment for the prior fiscal year to
the extent that bonuses have not previously been paid on or before the date of
termination (and in the case of the bonus in respect of the prior fiscal year to
the extent such bonus has been earned), payable within 60 days of the date of
termination (subject to Section 24), (iv) all equity-based awards held by
Executive will be deemed fully vested as of the date of termination and (v) to
the extent that the Executive has elected and is continuing to receive COBRA
continuation coverage under the Company’s group health plan in accordance with
Section 4980B of the Code, the Company shall reduce the COBRA premiums that the
Executive is required to pay during the first 12 (twelve) months following his
termination of employment to that amount that the Company charges its active
employees for the same level of group health coverage. Notwithstanding the
foregoing, the severance benefits described in clause (ii), (iii) and (iv) above
and the COBRA premium subsidy described in clause (iv) above shall be provided
in consideration for, and expressly conditioned upon, the Executive’s execution
of a binding General Release (which shall be provided on or about the date of
termination) containing terms reasonably satisfactory to the Company within 45
days of the Executive’s termination of employment. Subject to Section
24, if the Executive timely executes such General Release and the applicable
revocation period with respect to such General Release lapses, the Executive
will receive the first two months of severance payments 60 days after his
termination of employment and the remaining payments in accordance with the
Company’s payroll practices. If the Executive does not timely execute
the General Release or if the Executive revokes the General Release within the
applicable revocation period prescribed by law, the Executive shall not be
entitled to receive any severance payments and the Executive will be required to
pay 102% of the applicable premium (as defined in Code Section 4980B) for any
COBRA continuation coverage elected by the Executive.
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d.
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Death and Disability.
Upon the termination of the Executive’s employment as a result of death or
Disability, neither the Executive nor the Executive’s beneficiaries or
estate shall have any further rights or claims against the Company under
this Agreement except the right to receive the payments and other rights
provided for in Section 9(a)
hereof.
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e.
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Forfeiture of Rights. In
the event that, subsequent to termination of employment hereunder, the
Executive (i) breaches any of the provisions of Sections 11, 12, 13 or 15
hereof or (ii) makes or facilitates the making of any adverse public
statements or disclosures with respect to the business or securities of
the Company, and such breach is not cured within 30 days of written notice
from the Company detailing such breach, all payments and benefits to which
the Executive may otherwise have been entitled shall immediately terminate
and be forfeited, and any portion of such amounts as may have been paid to
the Executive shall forthwith be returned to the
Company.
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f.
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Rabbi Trust. If the
Executive becomes entitled to receive severance payments under Clause (b)
or (c) above, the Executive’s General Release described in Clause (b)
above becomes binding and enforceable, the Company shall establish an
irrevocable grantor trust (a “rabbi trust”), appoint a
federally or state chartered bank or trust company as the trustee for such
rabbi trust and shall contribute 12 months (or if in connection with a
Change of Control, 18 months) of salary continuation payments to such
rabbi trust and the bonus payments if such bonus payments are required to
be deferred by Section 24. The assets of such rabbi trust shall
be used solely to make the severance payments to the Executive as required
under this Agreement (or to reimburse the Company for severance payments
it makes to the Executive); or to satisfy the claims of the Company’s
unsecured general creditors in the event of the Company’s insolvency or
bankruptcy. The rabbi trust may be terminated and any remaining
assets therein shall revert to the Company after the Executive has
received all of the severance payments to which he is entitled
hereunder. Notwithstanding the foregoing, the provisions of
this Section 9(f) shall not apply if the funding of the rabbi trust would
subject the Executive to acceleration of taxation and tax penalties under
Section 409A(b) of the Code.
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g.
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Directorship. Upon the
termination of the Executive’s employment for any reason, Executive shall
resign as a director of the Board.
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10.
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Disclosure of Confidential
Information. The Executive shall not, directly or indirectly, at
any time during or after the Employment Period, disclose to any person,
firm, corporation or other business entity, except as required by law, or
use for any purpose except in the good faith performance of the
Executive’s duties to the Company, any Confidential Information (as herein
defined). For purposes of this Agreement, “Confidential
Information” means all trade secrets and other non-public
information of a business, financial , marketing, technical or other
nature pertaining to the Company or any subsidiary, including information
of others that the Company or any subsidiary has agreed to keep
confidential; provided, however, that Confidential Information shall not
include any information that has entered or enters the public domain
(other than through breach of the Executive’s obligations under this
Agreement) or which the Executive is required to disclose by law or legal
process. Upon the Company’s request at any time, the Executive
shall immediately deliver to the Company all materials in the Executive’s
possession which contain Confidential
Information.
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11.
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Restrictive
Covenant.
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a.
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Term of Restrictive
Covenant. The Executive hereby acknowledges and
recognizes that, during the Employment Period, the Executive shall be
privy to trade secrets and Confidential Information critical to the
Company’s business and the Executive further acknowledges and recognizes
that the Company would find it extremely difficult or impossible to
replace the Executive and, accordingly, the Executive agrees that, in
consideration of the benefits to be received by the Executive hereunder,
the Executive shall not, from and after the date hereof, throughout the
Employment Period, and for a period of 12 months (18 months if he is
receiving payments under Section 9(c)) following the termination of the
Employment Period (i) directly or indirectly engage in the development,
production, marketing or sale of products that compete (or, upon
commercialization, would compete) with products of the Company being
developed (so long as such development has not been abandoned), marketed
or sold at the time of the termination of the Employment Period
(such business or activity being herein referred to as a “Competing
Business”) whether such engagement shall be as an officer,
director, owner, employee, partner, affiliate or other participant in any
Competing Business, (ii) assist others in engaging in any Competing
Business in the manner described in the foregoing clause (i), or (iii)
induce other employees of the Company or any subsidiary thereof to
terminate their employment with the Company or any subsidiary thereof or
engage in any Competing Business or hire any employees of the Company or
any subsidiary unless such persons have not been employees of the Company
for at least 12 months.
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b.
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Sufficient
Consideration. The Executive understands that the
foregoing restrictions may limit the ability of the Executive to earn a
livelihood in a business similar to the business of the Company, but
nevertheless believes that the Executive has received and shall receive
sufficient consideration and other benefits, as an employee of the Company
and as otherwise provided hereunder, to justify such restrictions which,
in any event (given the education, skills and ability of the Executive),
the Executive believes would not prevent the Executive from earning a
living.
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12.
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Non-Disparagement. The
Executive shall not engage in conduct, through word, act, gesture or other
means, or disclose any information to the public or any third party which
(i) directly or indirectly discredits or disparages in whole or in part
the company, its subsidiaries, divisions, affiliates and/or successors as
well as the products and the respective officers, directors, stockholders
and employees of each of them; (ii) is detrimental to the reputation,
character or standing of these entities, their products or any of their
respective officers, directors, stockholders and/or employees; or (iii)
which generally reflects negatively on the management
decisions, strategy or decision-making of these entities. The
Company shall not, and shall use commercially reasonable efforts to cause
its directors and executive officers not to, disparage the Executive to
any person or entity. Notwithstanding the foregoing, the
Company may confer with its advisors and make truthful statements required
by law. In addition, it is understood and agreed that factual
statements made by either party hereto in the ordinary course of business,
as well as factual statements made in legal actions, legal proceedings, or
government investigative proceedings that are protected by a qualified
privilege or immunity are not intended to be construed as
disparagement.
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13.
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Company Right to Inventions.
The Executive shall promptly disclose, grant and assign to the
Company, for its sole use and benefit, any and all inventions,
improvements, technical information and suggestions relating in any way to
the business of the Company which the Executive may develop or acquire
during the Employment Period (whether or not during usual working hours),
together with all patent applications, letters patent, copyrights and
reissues thereof that may at any time be granted for or upon any such
invention, improvement or technical information. In connection therewith:
(i) the Executive shall, without charge, but at the expense of the
Company, promptly at all times hereafter execute and deliver such
applications, assignments, descriptions and other instruments as may be
necessary or proper in the opinion of the Company to vest title to any
such inventions, improvements, technical information, patent applications,
patents, copyrights or reissues thereof in the Company and to enable it to
obtain and maintain the entire right and title thereto throughout the
world, and (ii) the Executive shall render to the Company, at its expense
(including a reasonable payment for the time involved in case the
Executive is not then in its employ), all such assistance as it may
require in the prosecution of applications for said patents, copyrights or
reissues thereof, in the prosecution or defense of interferences which may
be declared involving any said applications, patents or copyrights and in
any litigation in which the Company may be involved relating to any such
patents, inventions, improvements or technical
information.
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14.
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Prior Employment Agreement;
Bonus for prior performance. The Employment Agreement between the
Company and the Executive, as amended, dated April 18, 2008 (the “Original
Employment Agreement”) is terminated and of no force and effect as of the
Effective Date of this Agreement, other than those provisions that
specifically survive a termination thereof, and except that the provision
in Section 2 of Amendment No. 1 to the Original Employment Agreement,
dated May 18, 2010 relating to the grant of options to purchase 100,000
shares of common stock shall remain in effect and shall survive the
termination of the Original Employment Agreement. On and as of
the Execution Date of this Agreement, the Executive has been granted a
cash bonus in accordance with the terms of the Original Employment
Agreement equal to 30% of his base salary provided for therein, upon
achievement of pre-determined corporate objective targets of 50% as
determined by the Compensation Committee of the Board of Directors, such
payment to be made within 5 business days of the Execution
Date. In addition, the Executive is granted, as of the
Execution Date, 35,000 shares of restricted common stock under the 2007
Plan, which shall fully vest on the three month anniversary of the
Execution Date and otherwise in accordance with the standard form of grant
agreement provided for under the 2007 Plan (as modified to reflect the
following sentence), which permits, among other things, for the tax
withholding obligation arising upon vesting to be satisfied by withholding
that number of shares with a Fair Market Value (as defined in the Plan)
equal to the tax withholding. Notwithstanding anything to the
contrary contained herein, said shares of restricted common stock shall be
deemed fully vested (to the extent unvested at such date) on the date of
the earlier of (i) Executive’s termination of employment with the Company
for any reason other than as a result of the Executive’s Voluntary
Termination and (ii) the consummation of a Change in
Control.
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15.
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Enforcement. It is the
desire and intent of the parties hereto that the provisions of this
Agreement be enforceable to the fullest extent permissible under the laws
and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, to the extent that a restriction contained in this
Agreement is more restrictive than permitted by the laws of any
jurisdiction where this Agreement may be subject to review and
interpretation, the terms of such restriction, for the purpose only of the
operation of such restriction in such jurisdiction, shall be the maximum
restriction allowed by the laws of such jurisdiction and such restriction
shall be deemed to have been revised accordingly
herein.
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16.
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Remedies;
Survival.
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a.
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Injunctive
Relief. The Executive acknowledges and understands that
the provisions of the covenants contained in Sections 11, 12, 13 and 15
hereof, the violation of which cannot be accurately compensated for in
damages by an action at law, are of crucial importance to the Company, and
that the breach or threatened breach of the provisions of this Agreement
would cause the Company irreparable harm. In the event of a breach or
threatened breach by the Executive of the provisions of Sections 11, 12,
13 or 15 hereof, the Company shall be entitled to an injunction
restraining the Executive from such breach. Nothing herein contained shall
be construed as prohibiting the Company from pursuing any other remedies
available for any breach or threatened breach of this
Agreement.
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b.
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Survival. Notwithstanding
anything contained in this Agreement to the contrary, the provisions of
the Sections 3, 9, 11, 12, 13 and 15 through 17 hereof shall survive the
expiration or earlier termination of this Agreement until, by their terms,
such provisions are no longer
operative.
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17.
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Notices. Notices and
other communications hereunder shall be in writing and shall be delivered
personally or sent by air courier or first class certified or registered
mail, return receipt requested and postage prepaid, addressed as
follows:
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if to the
Company:
Xxx Xxxx
Xxxxx, Xxxxx 000
Xxxxxxxxx,
Xxxxxxxx 00000
with a
copy to:
SNR
Xxxxxx US LLP
000 XXX
Xxxxxxx
Xxxxx
Xxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx
Xxxxxx, Esq.
if to the Executive to:
Xxxx
Xxxxxxx
At the
address reflected in the payroll records
with a
copy to:
Xxxxxx
Xxxxxxx, Esq.
Becker,
Glynn, Xxxxxxx & Xxxxxx, LLP
000 Xxxx
Xxxxxx
XX, XX
00000
All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of delivery, if personally delivered; on the business day after the date when
sent, if sent by air courier; and on the third business day after the date when
sent, if sent by mail, in each case addressed to such party as provided in this
Section 17 or in accordance with the latest unrevoked direction from such
party.
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18.
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Binding Agreement;
Benefit. The provisions of this Agreement shall be binding upon,
and shall inure to the benefit of, the respective heirs, legal
representatives and successors of the parties
hereto.
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19.
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Governing Law; Jurisdiction.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Maryland applicable to
contract made and to be performed therein. Any action to
enforce any of the provisions of this Agreement shall be brought in a
court of the State of Maryland or in
Federal court located within that State. The parties consent to
the jurisdiction of such courts and to the service of process in any
manner provided by Maryland law. Each party irrevocably waives
any objection which it may now or hereafter have to the laying of the
venue of any such suit, action or proceeding brought in such court and any
claim that such suit, action or proceeding brought in such court has been
brought in an inconvenient forum and agrees that service of process in
accordance with the foregoing shall be deemed in every respect effective
and valid personal service of process upon such party. All
reasonable legal fees paid or incurred by Executive in any litigation or
dispute to enforce Executive’s rights hereunder shall be paid or
reimbursed by the Company if Executive is the prevailing party in such
litigation or dispute.
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20.
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Waiver of Breach. The
waiver by either party of a breach of any provision of this Agreement by
the other party must be in writing and shall not operate or be construed
as a waiver of any subsequent breach by such other
party.
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21.
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Entire Agreement;
Amendments. This Agreement (together with the applicable documents
referred to herein) contains the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements
or understandings among the parties with respect thereof, other than the
Indemnification Agreement dated January 21, 2009 between the Company and
the Executive which remains in full force and effect. This Agreement may
be amended only by an agreement in writing signed by the parties
hereto.
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22.
|
Headings. The section
headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement.
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23.
|
Severability. Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction.
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24.
|
409A Compliance;
280G. (a) If Executive is a “specified employee” (as
determined in accordance with Treasury Regulation Section 1.409A-1(i) or
any written Company policy implementing such regulation) at the time of
his termination of employment, then his severance payments that are
otherwise payable during the first six month period following the
Executive’s termination of employment (to the extent that such severance
payments constitute nonqualified deferred compensation within the meaning
of Section 409A of the Code and the regulations promulgated thereunder)
shall be deferred until the date that is six months after the Executive’s
termination of employment (or, if earlier, upon his
death). Each salary continuation payment that is due under this
Agreement shall be treated as a separate payment for purposes of Section
409A Code. This Agreement shall be interpreted to comply, or
otherwise be exempt from, with the requirements of Code Section
409A. Accordingly, references to termination of employment
hereunder shall be interpreted to mean “separation from service” as
defined in regulations under Section 409A of the Code. All
expenses under this Agreement that are reimbursable in accordance with
Company policy shall be made as soon as practicable after Executive’s
submission of such expenses in accordance with the Company’s policy, but
in no event later than the last day of the taxable year following the
taxable year in which the expense was
incurred.
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(b) The Company
and Executive shall each cooperate with the other and take commercially
reasonable actions (including the valuation of any restrictive covenants by a
mutually agreed upon valuation firm at the expense of the Company), to avoid or
minimize any excise tax payable pursuant to Section 4999 of the Code with
respect to any payments or benefits to Executive pursuant to this
Agreement.
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25.
|
Executive’s
Acknowledgement. The Executive acknowledges (a) that the
Executive has had the opportunity to consult with independent counsel of
his own choice concerning this Agreement and (b) that the Executive has
read and understands the Agreement, is fully aware of its legal effect and
has entered into it freely based on the Executive’s own
judgment.
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26.
|
Assignment. This
Agreement is personal in its nature and the parties hereto shall not,
without the consent of the other, assign or transfer this Agreement or any
rights or obligations hereunder; provided, that the provisions hereof
shall inure to the benefit of, and be binding upon, each successor of the
Company, whether by merger, consolidation, transfer of all or
substantially all of its assets or
otherwise.
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27.
|
Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall
for all purposes constitute one agreement which is binding on all of the
parties hereto.
|
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28.
|
Attorney
Fees. The Company shall reimburse Executive for his
reasonable legal fees and expenses incurred in connection with the
negotiation and execution of this Agreement in an amount up to
$5,000.
|
IN WITNESS WHEREOF, the
parties have duly executed this Agreement as of the date first above
written.
|
EXECUTIVE
|
|||
|
/s/ Xxxx Xxxxxxx
|
|||
|
Xxxx
Xxxxxxx
|
|||
|
By
|
/s/ Xxxx XxXxxxxx
|
||
|
Name:
|
Xxxx
XxXxxxxx
|
||
|
Title:
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Director
|
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