EMPLOYMENT AGREEMENT
Exhibit
10.1
This
Employment Agreement (the “Agreement”) is entered into as of April 5, 2007 by
and between Advanced Magnetics, Inc., a Delaware corporation with offices at
000
XxxxxxxxxXxxx Xxxxx, Xxxxxxxxx, XX 00000 (“AMI” or the “Company”) and Xxxxx X.
Xxxxxxxx, 000 Xxxxxxxx Xxxxxx, Xxxxx, XX 00000 (“you”).
Whereas,
AMI desires to employ you, and you desire to accept employment with AMI on
and
subject to the terms and conditions set forth in this Agreement;
Now
therefore, AMI and you agree as follows:
1. Position;
Duties.
a) Position.
You
shall serve as Chief Financial Officer and Chief Business Officer, reporting
to
the Chief Executive Officer of the Company.
b) Duties.
You
shall perform for AMI the duties and have the authority customarily associated
with the offices of Chief Financial Officer and Chief Business Officer,
including but not limited to the accounting, financial reporting, financial
planning and analysis, tax, treasury, investor relations, and corporate business
development functions, and such other duties as may be assigned to you from
time
to time by AMI’s Chief Executive Officer. You shall devote substantially your
full business time and best efforts to the performance of your duties hereunder
and the business and affairs of AMI and will not undertake or engage in any
other employment, occupation or business enterprise; provided, however, that
you
may participate as a member of the board of directors or advisory board of
other
entities and in professional organizations and civic and charitable
organizations; provided further, that any such positions are disclosed to the
Board of Directors (the “Board”) or the Audit Committee thereof and do not
materially interfere with your duties and responsibilities at AMI. You shall
be
based in AMI’s principal offices, which currently are in Cambridge,
Massachusetts.
2. Term.
The
term of this Agreement shall be for a three (3) year period commencing on the
date hereof unless terminated earlier pursuant to Section 4 below (the “Term”).
You may continue to be employed by AMI beyond the Term of this Agreement, but
such employment shall be on such terms and conditions as you and AMI then may
agree. The parties will enter into discussions regarding their respective
intentions to renew this Agreement within ninety (90) days of expiration of
the
Term.
3. Compensation
and Benefits.
AMI
shall pay you the following compensation and benefits for all services rendered
by you under this Agreement:
a) Base
Salary.
AMI
will pay you an initial base salary (the “Base Salary”) at the annualized rate
of $300,000.00, minus withholdings as required by law and other deductions
authorized by you, which amount shall be paid in equal installments at AMI’s
regular payroll intervals, but not less often than monthly. Your base salary
may
be increased annually by the Board or the Compensation Committee of the Board
in
its discretion.
b) Bonus.
You
will be eligible to receive an annual performance bonus of up to forty percent
(40%) of your base salary for each fiscal year during the term of this Agreement
beginning with the fiscal year which commenced October 1, 2006 based on the
extent to which, in the discretion of the Board or the Compensation Committee
in
consultation with the Chief Executive Officer, you achieve specific and
measurable individual and company performance objectives established by the
Board or Compensation Committee in consultation with the Chief Executive Officer
and communicated to you in advance. The exact amount of the bonus for any year
during the term shall be determined by the Board or the Compensation Committee
in its sole discretion and may be more than the target bonus in the event you
achieve all of your personal and company performance objectives or less than
the
target bonus if you do not achieve all of your personal and company performance
objectives. No bonus shall be deemed to have been earned by you for any year
in
which you are not actively employed for the entire fiscal year to which the
bonus relates, with the exception of the fiscal year which began on October
1,
2006, provided that you are still employed by the Company through the date
bonuses are approved for such fiscal year.
c)
Options/RSUs.
(i) You
will
be granted options to purchase 50,000 shares of AMI’s common stock as of your
first date of employment with the Company. The foregoing options shall have
an
exercise price equal to the fair market value of a share of AMI common stock
on
the date of grant (equal to the closing price as reported on the Nasdaq Global
Market) and shall vest in four equal annual installments beginning on the first
anniversary of your first date of employment with the Company. The foregoing
options will be subject to the terms and conditions of AMI’s Amended and
Restated 2000 Stock Plan and form stock option agreements.
(ii)
You
will
be granted options to purchase an additional 10,000 shares of AMI’s common stock
as of your first date of employment with the Company. The foregoing options
shall have an exercise price equal to the fair market value of a share of AMI
common stock on the date of grant (equal to the closing price as reported on
the
Nasdaq Global Market) and shall vest in full immediately upon the Company’s
achievement of certain specific and measurable performance goals established
by
the Board or the Compensation Committee and communicated to you in advance.
The
foregoing options will be subject to the terms and conditions of AMI’s Amended
and Restated 2000 Stock Plan and form stock option agreements
(iii)
You
will be granted restricted stock units (“RSUs”) as of your first date of
employment with the Company granting you the right to receive an additional
3,000 shares of AMI’s common stock at no cost to you. The RSUs shall vest in
four equal annual installments beginning on the first anniversary of your first
date of employment with the Company. The RSUs will be subject to the terms
and
conditions of AMI’s Amended and Restated 2000 Stock Plan and form restricted
stock unit agreement.
d)
Vacation.
You
will receive four (4) weeks of paid vacation per calendar year, which shall
accrue ratably on a monthly basis commencing on the Effective Date.
e)
Benefits.
You
will be eligible to participate in all group health, dental, 401(k), and other
insurance and/or benefit plans that AMI may offer to similarly situated
executives of AMI from time to time on the same terms as offered to such other
executives.
f)
Business
Expenses.
AMI
will reimburse you for all reasonable and usual business expenses incurred
by
you in the performance of your duties hereunder in accordance with AMI’s expense
reimbursement policy.
4. Termination.
Your
employment with AMI may be terminated prior to the expiration of the Term as
follows:
a) Death.
This
Agreement shall terminate automatically upon your death.
b) Disability.
AMI may
terminate your employment in accordance with applicable laws in the event that
you shall be prevented, by illness, accident, disability or any other physical
or mental condition (to be determined by means of a written opinion of a
competent medical doctor chosen by mutual agreement of AMI and you or your
personal representative(s)) from substantially performing your duties and
responsibilities hereunder for one or more periods totaling one hundred and
twenty (120) days in any twelve (12) month period.
c) By
AMI
for Cause.
AMI may
terminate your employment for “Cause” upon written notice to you. For purposes
of this Agreement, “Cause” shall mean any of (i)
fraud, embezzlement or theft against AMI or any of its affiliates; (ii) you
are
convicted of, or plead guilty or no contest to, a felony;
(iii)
willful nonperformance by you (other than by reason of illness) of your material
duties hereunder; or (iv) you commit
an
act of gross negligence, engage in willful
misconduct
or
otherwise act with willful disregard for AMI’s best interests.
d) By
AMI
Other Than For Death, Disability or Cause.
AMI may
terminate your employment other than for Cause, disability or death upon thirty
(30) days prior written notice to you.
e) By
You
For Good Reason or Any Reason.
You may
terminate your employment at any time with or without Good Reason upon thirty
(30) days prior written notice to AMI. For purposes of this Agreement, “Good
Reason” shall mean that any of the following occurs without your prior written
consent: (i)
a
material adverse change in your position, duties or responsibilities;
(ii)
any relocation of your principal place of business to a location more than
fifty
(50) miles from the Company’s current executive offices in Cambridge, MA; or
(iii) a material breach by AMI of any
of
the terms or provisions of this Agreement and failure to remedy such breach
within thirty (30) days following written notice from you identifying the
breach.
5. Payment
Upon Termination.
In the
event that your employment with AMI terminates, you will be paid the
following:
a) Termination
for Any Reason.
In the
event that your employment terminates for any reason, AMI shall pay you for
the
following items that were earned and accrued but unpaid as of the date of your
termination: (i) your Base Salary; (ii) a cash payment for all accrued, unused
vacation calculated at your then Base Salary rate; (iii) reimbursement for
any
unpaid business expenses; and (iv) such other benefits and payments to which
you
may be entitled by law or pursuant to the benefit plans of AMI then in effect.
b)
Termination
Without Cause or for Good Reason.
In
addition to the payments provided for in Section 5(a), in the event that (i)
AMI
terminates your employment other than for death, disability or Cause pursuant
to
Section 4(d) or you terminate your employment for Good Reason pursuant to
Section 4(e); (ii) you comply fully with all of your obligations under the
Nondisclosure and Developments Agreement dated April 5, 2007 between AMI and
you; and (iii) you execute, deliver to AMI and do not revoke a general release
(in a form acceptable to AMI) releasing and waiving any and all claims that
you
have or may have against AMI and its directors, officers, employees, agents,
successors and assigns with respect to your employment (other than any
obligation of AMI set forth herein which specifically survives the termination
of your employment), then AMI will provide you with twelve (12) months of
severance pay (calculated at your last Base Salary rate). The foregoing
severance shall be paid in equal installments over the severance period in
accordance with AMI’s usual payroll schedule. This Section 5(b) shall not apply
during the one year period following a Change of Control, in which case Section
5(c) shall apply.
c) Termination
Within One Year of a Change of Control.
In the
event that (i) within one year from the date a Change of Control (as defined
below) of AMI occurs, AMI (for purposes of this section, such term to include
its successor) terminates your employment other than for Cause pursuant to
Section 4(c), death or disability; (ii) you comply fully with all of your
obligations under all agreements between AMI and you; and (iii) you execute,
deliver to AMI and do not revoke a general release (in a form acceptable to
AMI)
releasing and waiving any and all claims that you have or may have against
AMI
and its directors, officers, employees, agents, successors and assigns with
respect to your employment (other than any obligation of AMI set forth herein
which specifically survives the termination of your employment), then AMI will
pay you twelve (12) months of severance pay (calculated at your last Base Salary
rate). The severance shall be paid in equal installments over the severance
period in accordance with AMI’s usual payroll schedule. In addition, in
accordance with AMI’s Change of Control Policy, upon a Change of Control, fifty
percent (50%) of the unvested options to purchase common stock and other equity
incentives then held by you shall become immediately vested. In the event you
are terminated by AMI (or its successor) or you terminate your employment with
AMI (or its successor) for Good Reason pursuant to Section 4(e) within one
year
following a Change of Control for any reason, the remaining fifty percent (50%)
of the unvested options or other equity incentives held by you on the date
of
closing of the Change of Control shall become immediately vested. For purposes
of this Agreement, “Change
of Control”
shall
mean the first to occur of any of the following: (a) any “person” or “group” (as
defined in the Securities Exchange Act of 1934, as amended) becomes the
beneficial owner of a majority of the combined voting power of the then
outstanding voting securities with respect to the election of the Board of
Directors of AMI; (b) any merger, consolidation or similar transaction involving
AMI, other than a transaction in which the stockholders of AMI immediately
prior
to the transaction hold immediately thereafter in the same proportion as
immediately prior to the transaction not less than 50% of the combined voting
power of the then voting securities with respect to the election of the Board
of
Directors of the resulting entity; (c) any sale of all or substantially all
of
the assets of AMI; or (d) any other acquisition by a third party of all or
substantially all of the business or assets of AMI, as determined by the Board
of Directors, in its sole discretion. After the one year period following
a
Change
of Control, this Section 5(c) shall no longer apply, and Section 5(b) shall
continue to apply.
6. Nonsolicitation
Covenant.
In
exchange for the consideration provided by this Agreement, you shall not, for
a
period of one year following the termination of your employment with AMI for
any
reason, directly or indirectly, whether through your own efforts, or in any
way
assisting or employing the assistance of any other person or entity (including,
without limitation, any consultant or any person employed by or associated
with
any entity with which you are employed or associated), recruit, solicit or
induce (or in any way assist another in recruiting, soliciting or inducing)
any
employee or consultant of AMI to terminate his or her employment or other
relationship with AMI.
7. Assignment.
This
Agreement and the rights and obligations of the parties hereto shall bind and
inure to the benefit of any successor of AMI by reorganization, merger or
consolidation and any assignee of all or substantially all of its business
and
properties. Neither this Agreement nor any rights or benefits hereunder may
be
assigned by you, except that, upon your death, your earned and unpaid economic
benefits will be paid to your heirs or beneficiaries.
8. Interpretation
and Severability.
It is
the express intent of the parties that (a) in case any one or more of the
provisions contained in this Agreement shall for any reason be held to be
excessively broad as to duration, geographical scope, activity or subject,
such
provision shall be construed by limiting and reducing it as determined by a
court of competent jurisdiction, so as to be enforceable to the fullest extent
compatible with applicable law; and (b) in case any one or more of the
provisions contained in this Agreement cannot be so limited and reduced and
for
any reason is held to be invalid, illegal or unenforceable, such invalidity,
illegality or unenforceability shall not affect the other provisions of this
Agreement, and this Agreement shall be construed as if such invalid, illegal
or
unenforceable provision had never been contained herein.
9. Notices.
Any
notice that you or AMI are required to give the other under this Agreement
shall
be given by personal delivery, recognized overnight courier service, or
registered or certified mail, return receipt requested, addressed in your case
to you at your last address of record with AMI, or at such other place as you
may from time to time designate in writing, and, in the case of AMI, to AMI
at
its principal office, or at such other office as AMI may from time to time
designate in writing. The date of actual delivery of any notice under this
Section 9 shall be deemed to be the date of receipt thereof.
10. Waiver.
No
consent to or waiver of any breach or default in the performance of any
obligation hereunder shall be deemed or construed to be a consent to or waiver
of any other breach or default in the performance of any of the same or any
other obligations hereunder. No waiver hereunder shall be effective unless
it is
in writing and signed by the waiving party.
11. Complete
Agreement; Modification.
This
Agreement sets forth the entire agreement of the parties with respect to the
subject matter hereof, and supersedes any previous oral or written
communications, negotiations, representations, understandings, or agreements
between them. Any modification of this Agreement shall be effective only if
set
forth in a written document signed by you and a duly authorized officer of
AMI.
12. Headings.
The
headings of the Sections hereof are inserted for convenience only and shall
not
be deemed to constitute a part, or affect the meaning, of this
Agreement.
13. Counterparts.
This
Agreement may be signed in two (2) counterparts, each of which shall be deemed
an original and both of which shall together constitute one
agreement.
14. Choice
of Law; Jurisdiction.
This
Agreement shall be deemed to have been made in the Commonwealth of
Massachusetts, and the validity, interpretation and performance of this
Agreement shall be governed by, and construed in accordance with, the laws
of
Massachusetts, without regard to conflict of law principles. You hereby consent
and submit without limitation to the jurisdiction of courts in Massachusetts
in
connection with any action arising out of this Agreement, and waive any right
to
object to any such forum as inconvenient or to object to venue in Massachusetts.
You agree that, in any action arising out of this Agreement, you will accept
service of process by registered mail or the equivalent directed to your last
known address or by such other means permitted by such court.
15. Advice
of Counsel; No Representations.
You
acknowledge that you have been advised to review this Agreement with your own
legal counsel, that prior to entering into this Agreement, you have had the
opportunity to review this Agreement with your attorney, and that AMI has not
made any representations, warranties, promises or inducements to you concerning
the terms, enforceability or implications of this Agreement other than as are
contained in this Agreement.
16. I.R.C.
§ 409A. All
other
provisions of this Agreement notwithstanding, this Agreement shall be construed
to avoid any adverse tax consequences to you under Internal Revenue Code Section
409A, and the parties agree to amend this Agreement from time to time as may
be
necessary to that end, in a manner that best preserves the economic benefits
to
you. Further, for so long AMI has a class of stock that is publicly traded
on an
established securities market or otherwise, then AMI shall from time to time
compile a list of “Specified Employees” as defined in, and pursuant to, Prop.
Treasury Reg. § 1.409A-1(i) or any successor regulation. If you are a Specified
Employee on the date of the termination of your employment with AMI, then,
notwithstanding any other provision herein, no payment shall be made to you
pursuant to Section 5(b) or 5(c) above during the period lasting six (6) months
from the date of such termination of employment unless AMI determines that
there
is no reasonable basis for believing that making such payment would cause you
to
suffer any adverse tax consequences pursuant to Section 409A. If any payment
to
you is delayed pursuant to the provisions of this paragraph, such delayed
payment shall instead be made on the first business day following the expiration
of the six (6) month period referred to herein.
IN
WITNESS WHEREOF,
AMI and
you have executed this Agreement as of the day and year first set forth above.
ADVANCED
MAGNETICS, INC.
By:
/s/
Xxxxx X.X. Pereira________________
Name:
Xxxxx X.X. Xxxxxxx
Title:
Chief Executive Officer
/s/
Xxxxx X. Arkowitz____________________
Xxxxx
X.
Xxxxxxxx
