EXHIBIT 10.2
RETENTION AWARD AGREEMENT
Awardee: Xxx Xxxxxxxxxx ("Awardee")
Grant Date: September 6, 2004
$200,000
253,165 Shares of Restricted Stock
This RETENTION AWARD AGREEMENT (the "Agreement") is made as of the Grant
Date by and between PHARMOS CORPORATION, a Nevada corporation (the "Company"),
and Awardee. Capitalized terms not defined herein shall have the meanings
ascribed to them in the Company's Amended and Restated 2000 Stock Option Plan
(the "Plan").
The Board of Directors of the Company, through its Compensation/Stock
Option Committee, following its review of a survey of executive compensation
practices of comparable companies prepared for the Company, initially authorized
on June 30, 2004, the granting by the Company of a retention award to Awardee in
order to induce him to continue providing services to the Company as an
executive or in some other capacity for up to an additional three years from
such date.
In consideration of the mutual promises and covenants contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Grant of Award. The Company hereby grants to Awardee, subject to the
terms and conditions of this Agreement and the Plan, (i) $200,000 (the "Cash
Component") and (ii) 253,165 Shares of Restricted Stock (the "Restricted
Shares") pursuant to the Plan (the Cash Component and the Restricted Shares
comprise the "Award").
2. Vesting; Forfeiture.
2.1 Vesting Generally. The Award shall vest and become
nonforfeitable as follows: (A) $100,000 and 126,582 Restricted
Shares shall vest on December 31, 2005, and (B) $100,000 and
126,583 Restricted Shares shall vest on June 30, 2007
(provided in each case that Awardee's Employment with the
Company, as defined herein, continues through such date).
2.2 Definition of Employment. Awardee's "Employment" shall include
any and all periods during which such individual is an
employee of or consultant to the Company or a subsidiary.
Awardee shall be deemed to have terminated Employment when he
completely ceases to be employed by or a consultant to the
Company and all of its subsidiary corporations. The Company
may in its discretion determine (a) whether any leave of
absence constitutes a termination of Employment within the
meaning of this Agreement, and (b) the impact, if any, of any
such leave of absence on the Award.
2.3 Vesting in Certain Circumstances. Notwithstanding the
provisions of Section 2.1, the Award shall vest as set forth
below in the following circumstances:
2.3.1 Termination of Employment by Company within one year
following Change in Control (as defined in the
Employment Agreement between Awardee and the Company
dated April 2, 2001 (the "Employment Agreement")),
subject to Section 2.3.4: immediate vesting of the Award
and nonforfeitability upon the Company's giving of
notice of termination;
2.3.2 Death or Disability (as such terms are defined in the
Employment Agreement): Pro rata monthly vesting of first
50% of Award from Grant Date if Death or Disability
occurs before December 31, 2005; and vesting of entire
remaining 50% of Award if Death or Disability occurs
after December 31, 2005, through June 30, 2007.
2.3.3 Termination of Employment by the Company without Cause,
Non-renewal by the Company or termination by the Awardee
for Good Reason (as defined in the Employment
Agreement): immediate vesting of the Award and
nonforfeitability upon the Company's giving notice of
termination or of non-renewal or upon Awardee's giving
notice of termination for Good Reason;
2.3.4 Termination of Employment by the Company for Cause (as
defined in the Employment Agreement) or by Awardee
without Good Reason: Immediate cancellation and
forfeiture of the Award; provided, however, that if
Awardee terminates his Employment without Good Reason
after December 31, 2005, the number of Restricted Shares
and amount of cash previously vested shall remain
vested.
3. Payment of Cash Component. Within five (5) business days following each
of the dates specified in Section 2.1 or any earlier date as provided in Section
2.3 (the "Payment Date"), the Company shall pay to Awardee (or Awardee's
beneficiary or estate, if no beneficiary is designated or in the event any
chosen beneficiary predeceases Awardee, in the event of the death of Awardee)
cash in the amount of the vested portion of the Cash Component. Notwithstanding
the foregoing, the Payment Date for the then-vested portion of the Award may be
accelerated at Awardee's option (or by his estate or representative, if
applicable) in the event of termination of Employment pursuant to Sections
2.3.1, 2.3.2 or 2.3.3.
4. Vesting of Restricted Shares. The Company shall hold in escrow for
Awardee the stock certificates for the Restricted Shares. The certificates shall
contain a legend (the "Vesting Legend") as follows:
The securities represented by this certificate are subject to a retention award
agreement between the Company and the registered owner of this certificate (or
his predecessor in interest). Copies of said agreement may be obtained upon
written request to the secretary of the Company by the registered owner hereof.
These securities may be cancelled and retired by the Company in the
circumstances set forth in the restricted stock agreement, in which event this
Certificate shall be null and void.
The Company will cause the Vesting Legend to be removed upon request by
Awardee given at any time after any of the Restricted Shares have vested and
shall deliver the certificate for such vested shares to Awardee (without the
legend referred to above), but only if the Awardee has satisfied the withholding
tax obligations set forth elsewhere in this Agreement.
Should Awardee forfeit any Restricted Shares, the certificate(s) therefor
shall upon such forfeiture no longer represent shares of common stock and will
be cancelled on the records of the Company.
To the extent that the Restricted Shares have not vested, they are not
transferable by the Awardee, whether by sale, assignment, exchange, pledge, or
hypothecation, or by operation of law or otherwise except (a) pursuant to a
qualified domestic relations order as defined for purposes of the Employee
Retirement Income Security Act of 1974, as amended, or (b) by gift to a member
of the "Family" (as defined below) of the Awardee, to or for the benefit of one
or more organizations qualifying under Code sec. 501(c) (3) and 170(c) (2) (a
"Charitable Organization") or to a trust for the exclusive benefit of the
Awardee, one or more members of the Awardee's Family, one or more Charitable
Organizations, or any combination of the foregoing, provided that any such
transferee shall enter into a written agreement to be bound by the terms of this
Agreement. For this purpose, "Family" shall mean the ancestors, spouse,
siblings, spouses of siblings, lineal descendants and spouses of lineal
descendants of the Awardee.
The Company shall not be required to transfer on its books any of the
Restricted Shares that shall have been sold or transferred in violation of any
of the provisions set forth in this Agreement, or to treat any transferee to
whom such shares have been so sold or transferred as a stockholder of the
Company.
Except as otherwise provided herein, the Awardee shall until forfeiture be
entitled to all rights of a stockholder of the Company, including the right to
vote the Restricted Shares and to receive dividends and/or other distributions
declared on such shares.
5. Transferability of Shares of Stock. The Company has filed a
Registration Statement on Form S-8 (or otherwise) with the Securities and
Exchange Commission relating to the Restricted Shares that vest and are to be
delivered hereunder and will comply with all applicable state securities laws
prior to the distribution of Restricted Shares hereunder and to do everything
else necessary to ensure that Restricted Shares delivered to Awardee upon or
following the vesting will not be treated as "restricted securities" within the
meaning of Rule 144 promulgated under the Securities Act.
6. Conformity with Plan. Except as specifically set forth herein, this
Agreement is intended to conform in all respects with, and is subject to all
applicable provisions of, the Plan, which is incorporated herein by reference.
Any inconsistencies between this Agreement and the Plan with respect to any
mandatory provisions of the Plan shall be resolved in accordance with the terms
of the Plan. By executing and returning the enclosed copy of this Agreement,
Awardee acknowledges its receipt of the Plan and its agreement to be bound by
all the terms of the Plan. All definitions stated in the Plan apply to this
letter.
7. Withholding Taxes. Awardee shall pay to the Company, or make provision
satisfactory to the administrator of the Plan for payment of, any taxes required
to be withheld in respect of the vesting or distribution of the Cash Component
and/or shares of stock hereunder no later than the date of the event creating
the tax liability. The Company may, to the extent permitted by law, deduct any
such tax obligations from any payment of any kind otherwise due to the Awardee,
including any part of the Cash Component or shares of stock to be delivered
hereunder. In the event that payment to the Company of such tax obligations is
made in shares of stock, such shares shall be valued at their fair market value
on the applicable date for such purposes.
8. Awardee Advised To Obtain Personal Counsel and Tax Representation.
IMPORTANT: The Company and its employees do not provide any guidance or advice
to individuals who may be granted an Award under the Plan regarding the federal,
state, local or foreign income tax consequences or employment tax consequences
of participating in the Plan. Awardee is responsible for determining his own
personal tax consequences of participating in the Plan. Accordingly, the Company
has advised Awardee that he may wish to retain the services of a professional
tax advisor in connection with the Award.
9. Beneficiary Designation. Awardee may designate one or more
beneficiaries, from time to time, to whom any benefit under this Agreement is to
be paid in case of Awardee's death. Each designation must be in writing, signed
by Awardee and delivered to the Company. Each new designation will revoke all
prior designations.
10. Adjustments for Changes in Capital Structure. As outstanding shares of
Common Stock of the Company, the Restricted Shares will be adjusted in the event
of any change in capital structure or business of the Company by reason of any
stock dividend or extraordinary dividend, stock split or reverse stock split,
recapitalization, reorganization, merger, consolidation, split-up, combination
or exchange of shares of stock, non-cash distributions with respect to its
outstanding stock, reclassification of the Company's capital stock, any sale or
transfer of all or part of the Company's assets or business, or any similar
change affecting the Company's capital structure or business or the capital
structure of any business of any subsidiary.
11. Miscellaneous.
11.1 This Agreement may not be changed or terminated except by
written agreement signed by the Company and Awardee. It shall
be binding on the parties and on their personal
representatives and permitted assigns.
11.2 This Agreement sets forth all agreements of the parties. It
supersedes and cancels all prior agreements with respect to
the subject matter hereof. It shall be enforceable by decrees
of specific performance (without posting bond or other
security) as well as by other available remedies.
11.3 This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New Jersey. Any
litigation instituted by any party to this Agreement
pertaining to this Agreement must be filed before a court of
competent jurisdiction in the State of New Jersey and both
parties hereby consent irrevocably to the jurisdiction of such
courts over them.
11.4 The Company shall pay the reasonable legal fees, costs and
expenses incurred by Awardee in connection with any action
arising under this Agreement, provided that any dispute or
controversy between the parties regarding this Agreement is
resolved in any manner in favor of Awardee. Upon any initial
determination in favor of Awardee, the Company shall advance
to Awardee an amount equal to Awardee's previously incurred
legal fees and a reasonable estimate of any legal fees, costs
and expenses that may be incurred by Awardee in connection
with the final resolution of such matter. In addition, the
Company shall pay or reimburse Awardee for attorneys' fees
incurred by Awardee in connection with the negotiation and
preparation of this Agreement. This paragraph shall not affect
Awardee's common-law or statutory indemnification rights, or
any agreements or other arrangements between the parties
relating to indemnification.
11.5 All notices, requests, service of process, consents, and other
communications under this Agreement shall be in writing.
Notice shall be deemed given and effective (a) three (3)
business days after the deposit in the U.S. mail of a writing
addressed as provided below and sent first class mail,
certified, return receipt requested, (b) when received by the
addressee, if sent by a nationally recognized air courier for
next day delivery service (receipt requested), or (c) upon
personal delivery (with written confirmation of receipt).
Either party may change the address for notice by notifying
the other party of such change in accordance with this
paragraph. Notices shall be addressed (i) to Awardee at the
last address he or she has filed in writing with the Company
and (ii) to the Company at its principal offices. Either party
hereto may designate a different address by providing written
notice of such new address to the other party hereto as
provided above.
11.6 This Agreement may be signed in one or more counterparts, each
of which shall be an original, with the same effect as if the
signature thereto and hereto were upon the same instrument.
Dated: As of September 6, 2004
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
PHARMOS CORPORATION
By: /s/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
Title: Chief Financial Officer
AWARDEE:
By: /s/ Xxx Xxxxxxxxxx
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Name: Xxx Xxxxxxxxxx
This Agreement has been approved and authorized by the Compensation/Stock
Option Committee of the Board of Directors of Pharmos Corporation by Unanimous
Written Consent dated as of September 6, 2004.
/s/ Mony Xxx Xxx
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Mony Xxx Xxx, Chairman of the Compensation/Stock Option Committee
