EMPLOYMENT AGREEMENT
EXHIBIT
10.20
This
Agreement by and between Keryx
Biopharmaceuticals, Inc.
("Keryx"), a Delaware corporation having an address at 000 Xxxxxxxxx Xxxxxx,
Xxx
Xxxx, Xxx Xxxx 00000, and Xxxxxx
X. Xxxxxx,
Xx., an
individual residing at 00 Xxxxxxxxx Xxxx, Xxxxxxxxx, XX 00000
(“Xxxxxx”).
WITNESSETH:
WHEREAS,
the Corporation desires to employ Xxxxxx and Xxxxxx desires to be employed
by
the Corporation as Senior Vice President, Chief Financial Officer and Treasurer
of Keryx, all pursuant to the terms and conditions hereinafter set
forth;
NOW
THEREFORE, in consideration of the foregoing and the mutual promises and
covenants herein contained, it is agreed as follows:
1. EMPLOYMENT
DUTIES
(a) Keryx
hereby engages and employs Xxxxxx, and Xxxxxx accepts engagement and employment,
as Senior Vice President, Chief Financial Officer and Treasurer of Keryx, to
direct, supervise and have responsibilities for the financial affairs and
investor relations of Keryx and for any other appropriate areas and tasks which
may be assigned to him. Xxxxxx will devote his entire business time, energy,
abilities and experience to the performance of his duties, effectively and
in
good faith. Further, during the Term, Xxxxxx shall not render services as an
employee, consultant or otherwise, whether or not during regular business hours,
for pay to any other party other than the Corporation without the written
permission of the Chief Executive Officer. Xxxxxx acknowledges and agrees that
the performance by Xxxxxx of his duties hereunder may require significant
domestic and international travel by Xxxxxx.
(b)
Xxxxxx
understands and agrees that he will not be required to relocate from the Boston
area to the New York City area but that he will be required to spend a
substantial portion of his time in the New York City office.
2. TERM
This
Agreement shall commence on February 14, 2006 (the “Effective Date”) and shall
continue unless sooner terminated as hereinafter provided in Paragraph 8 (the
“Term”).
3. COMPENSATION
(a) As
compensation for the performance of his duties on behalf of Keryx, Xxxxxx shall
be compensated as follows:
(i) Base
Salary and Annual Increases. Xxxxxx
shall receive an annual gross base salary of two hundred and seventy-five
thousand dollars ($275,000) per year (the “Base Salary”) payable in accordance
with the Corporation’s payroll policies and subject to standard payroll
deductions and withholdings; provided that Xxxxxx’x Base Salary shall be
increased annually in accordance with corporate policy but no less than the
increase in the Consumer Price Index (Bureau of Labor Statistics Consumer Price
Index for All Urban Consumers (CPI-U) all items index, New
York-Northern New Jersey-Long Island, NY-NJ-CT-PA) announced for the previous
calendar year.
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(ii) Bonus.
Xxxxxx
shall be entitled to an annual performance bonus of up to 50% of the Base Salary
(the “Performance Bonus”) based on annual target performance objectives to be
agreed upon by the Corporation’s Chief Executive Officer (the “CEO”) and Xxxxxx
on or before the December 15 immediately preceding fiscal year for which the
Performance Bonus shall be applicable, except for the annual target performance
objectives in the first year of this agreement, which shall be agreed upon
on or
before March 31. Bonuses are paid in accordance with the Corporations bonus
policy (typically in March of the year following the year in which the bonus
is
earned) and Xxxxxx must be an employee of the Corporation when the bonus is
paid
to be entitled to receive a bonus.
(iii) Options.
Xxxxxx
shall receive options (the “Options”) to purchase shares of common stock of the
Corporation as outlined on Exhibit B. From time to time, at the discretion
of
the Board of Directors, you may be eligible for additional stock option grants.
Notwithstanding anything to the contrary, the 166,667 time-vesting Options
described in Exhibit B will all accelerate and vest upon your termination
without Cause, your resignation for a Good Reason, a Change in Control or a
Qualified Change in Control (as those latter terms are defined in Exhibit A).
Additionally, upon a Change in Control, you shall also vest on 111,111 Options
which are to vest on the First Milestone Event as described in Exhibit B.
(iv) Restricted
Stock. Xxxxxx
shall receive 100,000 restricted shares (the “Restricted Shares”) of common
stock of the Corporation. Fifty-thousand (50,000) of such Restricted Shares
shall vest in three equal installments on the first, second and third
anniversary of the Effective Date, assuming Xxxxxx is an employee on such date.
Notwithstanding anything to the contrary, the Restricted Shares will all
accelerate and vest upon your termination without Cause, your resignation for
a
Good Reason, a Change in Control or a Qualified Change in Control. The remaining
fifty-thousand (50,000) of such Restricted Shares shall vest upon the occurrence
of a Qualified Change in Control as defined in Exhibit A, assuming Xxxxxx is
an
employee on such date or has been terminated without Cause or resigned for
a
Good Reason, in anticipation of, or within 12 months following a Qualified
Change in Control.
(b) Expenses.
Keryx
shall reimburse Xxxxxx for all normal, usual and necessary expenses incurred
by
Xxxxxx in furtherance of the business and affairs of Keryx, including travel
and
entertainment, against receipt by Keryx of appropriate vouchers or other proof
of Xxxxxx'x expenditures and otherwise in accordance with such Expense
Reimbursement Policy as may from time to time be adopted by the Board of
Directors of Keryx.
(c) Annual
Leave and Holidays. Xxxxxx
shall be entitled during the first calendar year (2006) of this Agreement to
fifteen (15) business days of leave, thereafter Xxxxxx shall be entitled to
twenty (20) business days of leave per calendar year. Any leave not taken in
a
particular calendar year will be forfeited and not carried forward into the
next
calendar year. In addition, Xxxxxx shall be entitled to those holidays set
forth, from time to time, by the Company.
(d) Employee
Benefits.
During
the Term of his employment, Xxxxxx shall be entitled to participate in all
employee and fringe benefit plans and programs generally offered to other
members of the Corporation’s management who are similarly situated, including,
without limitation, any pension, profit sharing, incentive, retirement,
insurance, health and disability benefits and plans, to the extent that Xxxxxx
is eligible under and subject to the provisions of such plans. The Corporation
reserves its right to modify or terminate any of its employee and fringe benefit
plans and programs at any time.
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4. REPRESENTATIONS
AND WARRANTIES BY XXXXXX AND KERYX
(a) Xxxxxx
hereby represents and warrants to Keryx as follows:
(i)
Neither
the execution and delivery of this Agreement nor the performance by Xxxxxx
of
his duties and other obligations hereunder violate any statute, law,
determination or award, or conflict with or constitute a default under (whether
immediately, upon the giving of notice or lapse of time or both) any prior
employment agreement, contract, or other instrument to which Xxxxxx is a party
or by which he is bound (other than his obligation to provide XX Xxxxxx
Securities, Inc., with thirty (30) days notice of resignation).
(ii) Xxxxxx
has the full right, power and legal capacity to enter and deliver this Agreement
and to perform his duties and other obligations hereunder. This Agreement
constitutes the legal, valid and binding obligation of Xxxxxx enforceable
against him in accordance with its terms. No approvals or consents of any
persons or entities are required for Xxxxxx to execute and deliver this
Agreement or perform his duties and other obligations hereunder, except for
the
consent of XX Xxxxxx Securities, Inc., to waive its right to receive thirty
(30)
days notice of resignation.
(b) Keryx
hereby represents and warrants to Xxxxxx as follows:
(i) Keryx
is
duly organized, validly existing and in good standing under the laws of the
State of Delaware, with all requisite corporate power and authority to own
its
properties and conduct its business in the manner presently
conducted.
(ii) Keryx
has
the full power and authority to enter into this Agreement and to incur and
perform its obligations hereunder.
(iii) The
execution, delivery and performance by Keryx of this Agreement does not conflict
with or result in a material breach or violation of or constitute a material
default under (whether immediately, or upon the giving of notice or lapse of
time or both) the certificate of incorporation or by-laws of Keryx, or any
agreement or instrument to which Keryx is a party or by which Keryx or any
of
its properties may be bound or affected.
5. CONFIDENTIAL
INFORMATION
Xxxxxx
agrees to sign and comply with the Corporation’s Proprietary Information and
Inventions Agreement, annexed hereto as Attachment A.
6. NON-COMPETITION
(a) Xxxxxx
understands and recognizes that his services to Keryx are special and unique
and
agrees that, during the Term, and for a period of 12 months from the date of
termination of his employment hereunder, he shall not in any manner, directly
or
indirectly, on behalf of himself or any person, firm, partnership, joint
venture, corporation or other business entity ("Person"), enter into or engage
in any business “Directly Competitive” with Keryx's business, either as an
individual for his own account, or as a partner, joint venturer, treasurer,
agent, consultant, salesperson, employee, officer, director or shareholder
of a
Person operating or intending to operate within the area that Keryx is, at
the
date of termination, conducting its business (the "Restricted Businesses");
provided, however, that nothing herein will preclude Xxxxxx from holding one
percent (1%) or less of the stock of any publicly traded corporation. For a
business to be Directly Competitive, it would have to be developing a drug
in
the same class and for the same indication. For example, a company developing
a
GAG for Diabetic Nephropathy would be considered Directly Competitive by this
clause, however, a company developing a GAG for another disease or developing
a
drug other than a GAG for Diabetic Nephropathy would not be deemed Directly
Competitive.
3
(b) In
the
event that Xxxxxx breaches any provisions of this Section 6 or there is a
threatened breach, then, in addition to any other rights which Keryx may have,
Keryx shall be entitled, without the posting of a bond or other security, to
injunctive relief to enforce the restrictions contained herein. In the event
that an actual proceeding is brought in equity to enforce the provisions of
this
Section 6, Xxxxxx shall not argue as a defense that there is an adequate remedy
at law nor shall Keryx be prevented from seeking any other remedies that may
be
available.
7. NON-SOLICITATION
AND NON-INTERFERENCE
During
the Term, and for 12 months thereafter, Xxxxxx shall not, directly or
indirectly, without the prior written consent of Keryx:
(a) solicit
or induce any employee of Keryx or any subsidiary, parent, affiliate or
successor (“Affiliate”) of Keryx to leave the employ of Keryx or any Affiliate
or hire for any purpose any employee of Keryx or any Affiliate or any employee
who has left the employment of Keryx or any Affiliate within six months of
the
termination of said employee's employment with Keryx; or
(b) interfere
with or disrupt or attempt to disrupt Keryx's or its Affiliates’ business
relationship with any of their partners, service providers, clients, customers
and/or suppliers.
8. TERMINATION
(a) Either
party may terminate Xxxxxx’x employment with the Corporation without cause and
without Good Reason at any time upon ninety (90) days’ notice, provided, however
that if such termination occurs without Cause in the first nine (9) months
following the Effective Date, the Corporation shall pay Xxxxxx his full salary
and benefits until the first anniversary of the Effective Date. The Corporation
shall have the right, in its sole discretion, to require Xxxxxx to continue
working for the Corporation during the notice period. If Xxxxxx is terminated
by
the Corporation without Cause, or if he resigns for a Good Reason, the Options
shall remain exercisable until the earlier of: (i) 2 years following such
termination and (ii) for the full term of such Options.
(b)
If
Xxxxxx’x employment is terminated in anticipation of or within 12 months
following a “Qualified Change in Control” then Xxxxxx shall be entitled to: (I)
a lump-sum payment equal to: (i) two (2) year’s Base Salary; (ii) any earned and
unpaid bonus as of the date of termination; and (iii) any incurred and unpaid
expenses, and (II) immediate vesting of all remaining unvested stock options
and
Restricted Shares. Additionally, regardless of such termination, your stock
options shall remain exercisable until the earlier of: (i) 2 years following
such termination and (ii) for the full term of such options.
(c)
Such
payment, vesting and extension of exercisability provisions contained in 8(a)
and 8(b), shall be conditioned on the execution by Xxxxxx of a waiver and
release of claims substantially in the form set forth in Attachment B, attached
hereto.
4
(d) In
the
event Xxxxxx’x employment is terminated by his death or disability, he shall be
entitled to continue to receive his base salary for three (3) months following
his last day of actual employment by the Corporation. (For purposes of this
section, “disability” shall be deemed to have occurred if Xxxxxx is unable, due
to any physical or mental disease or condition, to perform his normal duties
of
employment for 120 consecutive days or 180 days in any twelve-month period.
In
addition, the Board of Directors shall take the necessary steps so that the
period during which the Employee shall be permitted to exercise such Options
shall be extended to the earlier of: (A) two (2) years from the effective date
of his termination and (B) the expiration date of such Options. Should the
Employee’s employment be terminated as a result of his death, the benefits
granted herein, shall be granted instead to his lawful heir or heirs. In either
case (disability or death), extended exercise of the options will only be
granted if Xxxxxx or, in the case of his death, his legal successor, together
with his lawful heir or heirs, execute a waiver and release of claims
substantially in the form set forth in Attachment B hereto.
(e) “Cause.”
Notwithstanding the foregoing, the Corporation may terminate Xxxxxx immediately
and without prior notice (for “Cause’) in the following circumstances: (a) a
material breach of Xxxxxx’x obligations and/or warranties pursuant to Sections
4(a), 5, 6 and/or 7; (b) a material breach by Xxxxxx of any other provision
of
this Agreement, which is not cured by Xxxxxx within fifteen (15) days after
receiving notice thereof from the Corporation containing a description of the
breach or breaches alleged to have occurred; (c) the habitual neglect or gross
failure by Xxxxxx to adequately perform the duties of his position; (d) any
act
of moral turpitude or criminal action connected to his employment with the
Corporation or his place of employment; or (e) Xxxxxx’x repetitive refusal to
comply with or his violation of lawful instructions of the Chief Executive
Officer or the Board of Directors, unless cured within 15 days after receiving
notice thereof.
(f) “Good
Reason”. Notwithstanding the foregoing, Xxxxxx may resign for a “Good Reason” in
the following circumstances: (A) a material diminution in his duties, or the
assignment to him of duties materially inconsistent with his authority,
responsibilities and reporting requirements as set forth in Section 1 of this
Agreement; or (B) a material breach by the Corporation of its obligations to
you
under the terms of this Agreement.
Anything hereinabove to the contrary notwithstanding, in the event you elect
to
terminate your employment for Good Reason, you agree to provide the Corporation
with thirty (30) days prior written notice of your intent to leave the Firm
and
the alleged condition or breach constituting Good Reason. In the event the
Corporation cures such condition or breach within thirty (30) days following
receipt of such notice, any such termination based on such alleged breach or
condition shall not be considered a termination by you for Good
Reason.
(g) In
the
event that Xxxxxx’x employment has been terminated in accordance with Section
8(e), above, Xxxxxx shall not be entitled to receive any of the benefits set
forth in Section 8(a) or (b), above.
9. INDEMNIFICATION
The
Corporation shall take whatever steps are necessary to establish a policy of
indemnifying its officers, including, but not limited to Xxxxxx, for all actions
taken in good faith in pursuit of their duties and obligations to the
Corporation. Such steps shall include, but shall not necessarily be limited
to,
the obtaining of an appropriate level of Directors and Officers Liability
coverage.
5
10.
NOTICES
Any
notice or other communication under this Agreement shall be in writing and
shall
be deemed to have been given when delivered personally against receipt thereof;
two (2) business days after being sent by Federal Express or similar
internationally recognized courier service; or seven (7) business days after
being mailed registered or certified mail, postage prepaid, return receipt
requested, to either party at the address set forth above, and to
Xxxxxx
Xxxxxxx
XxXxxxxx
& English LLP
000
Xxxx
Xxxxxx
Xxx
Xxxx,
XX 00000
or
to
such other address as such party shall give by notice hereunder to the other
party.
11.
SEVERABILITY
OF PROVISIONS
If
any
provision of this Agreement shall be declared by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced in whole
or
in part, the remaining conditions and provisions or portions thereof shall
nevertheless remain in full force and effect and enforceable to the extent
they
are valid, legal and enforceable, and no provision shall be deemed dependent
upon any other covenant or provision unless so expressed herein.
12.
ENTIRE
AGREEMENT; MODIFICATION
This
Agreement contains the entire agreement of the parties relating to the subject
matter hereof, and the parties hereto have made no agreements, representations
or warranties relating to the subject matter of this Agreement that are not
set
forth herein. No modification of this Agreement shall be valid unless made
in
writing and signed by the parties hereto.
13. BINDING
EFFECT
The
rights, benefits, duties and obligations under this Agreement shall inure to,
and be binding upon, Keryx, its successors and assigns, including in the event
of a change of control of Keryx by way of a merger, acquisition of, or a
majority investment in Keryx, and upon Xxxxxx and his legal representatives.
This Agreement constitutes a personal service agreement, and the performance
of
Xxxxxx'x obligations hereunder may not be transferred or assigned by Xxxxxx.
14. NON-WAIVER
The
failure of either party to insist upon the strict performance of any of the
terms, conditions and provisions of this Agreement shall not be construed as
a
waiver or relinquishment of future compliance therewith, and said terms,
conditions and provisions shall remain in full force and effect. No waiver
of
any term or condition of this Agreement on the part of either party shall be
effective for any purpose whatsoever unless such waiver is in writing and signed
by such party.
15.
GOVERNING
LAW
This
Agreement shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New York without regard to principles of
conflicts of law. Additionally, the prevailing party in any litigation shall
be
entitled to an additional award of its attorney fees, cost and
expenses.
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16. REMEDIES
FOR BREACH
Xxxxxx
understands and agrees that any breach of Sections 4(a) 5, 6 and/or 7 of this
Agreement by him could cause irreparable damage to Keryx and to the Affiliates,
and that monetary damages alone would not be adequate and, in the event of
such
breach, Keryx shall have, in addition to any and all remedies of law, the right
to an injunction, specific performance or other equitable relief to prevent
or
redress the violation of Keryx's rights under such Sections.
17. LEGAL
REPRESENTATION
The
Corporation shall reimburse Xxxxxx up to $7,500 for legal costs associated
with
the review and execution of this Agreement.
17. HEADINGS
The
headings of paragraphs are inserted for convenience and shall not affect any
interpretation of this Agreement.
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first above written.
| EMPLOYEE: | ||
| |
|
|
| By: | /s/ Xxxxxx X. Xxxxxx, Xx. | |
|
Name: Xxxxxx X. Xxxxxx, Xx. |
||
| KERYX BIOPHARMACEUTICALS, INC. | ||
| |
|
|
| By: | /s/ Xxxxxxx X. Xxxxx | |
|
Name: Xxxxxxx
X. Xxxxx.
Title: Chairman and Chief Executive
Officer
|
||
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Exhibit
A
Certain
Definitions
A
“Change
in Control,”
shall
mean either: (i) a Merger (as defined below), except for a transaction the
principal purpose of which is to change the State of incorporation, (ii) the
sale, transfer or other disposition of all or substantially all of the assets
of
the Corporation; or (iii) any other corporate reorganization or business
combination (including, but not limited to, a merger in which the Corporation
is
the surviving entity) in which more than fifty percent (50%) of the
Corporation’s then outstanding voting stock is transferred to different holders
in a single transaction or a series of related transactions.
A
“Merger”
shall
mean a merger or consolidation of the Corporation with any other corporation
or
entity, other than a merger or consolidation which would result in the voting
securities of the Corporation outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than fifty (50%) percent of the total
voting power represented by the voting securities of the Corporation or such
surviving entity outstanding immediately after such merger or
consolidation.
A
“Qualified
Change in Control”
shall
mean a “change in control”, which places a value on the Corporation of in excess
of $1.5 billion.
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Exhibit
B
The
Corporation will xxxxx Xxxxxx options (the “Options”) to purchase a total of
500,000 shares of the common stock of the Corporation (the “Initial Grant”) at
an exercise price equal to the closing price of the Corporation’s Common Stock
on Nasdaq on the trading day prior to the start of Xxxxxx’x employment (the
“Exercise Price”), which options shall be exercisable, only after vesting, for a
period of ten (10) years from the date of issuance. Xxxxxx'x Options will be
granted under the Corporation's 2004 Long-Term Incentive Plan (the "Plan")
and
will be subject to the terms and conditions thereof, including any stock option
agreement entered into by Xxxxxx and the Corporation thereunder; provided,
however, that if any provisions of this Agreement are inconsistent with the
terms and conditions of the Plan and any such stock option agreement, the terms
of this Agreement shall control. In accordance with the Plan, should any change
be made to the Common Stock by reason of any stock split, stock dividend,
extraordinary cash dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation’s receipt of consideration, appropriate adjustments
shall be made to (A) the total number and/or class of securities subject to
such
options and (B) the Exercise Price in order to reflect such change and thereby
preclude a dilution or enlargement under such options. The Initial Grant shall
vest as follows (provided that Xxxxxx is employed as a service provider (as
defined in the plan) on the date of vesting):
|
(A)
|
55,556
after twelve months of employment;
|
|
(B)
|
13,889
after fifteen months of employment;
|
|
(C)
|
13,889
after eighteen months of
employment;
|
|
(D)
|
13,889
after twenty one months of
employment;
|
|
(E)
|
13,889
after twenty four months of
employment;
|
|
(F)
|
13,889
after twenty seven months of
employment;
|
|
(G)
|
13,889
after thirty months of employment;
|
|
(H)
|
13,889
after thirty three months of
employment;
|
|
(I)
|
13,888
after thirty six months of employment;
|
|
(J)
|
333,333
after seven (7) years, provided that he is employed by the Corporation
on
such date .
|
(i) The
exercisability of 111,111 of these options shall be accelerated in full upon
the
occurrence of the earlier of:
(a)
the
Corporation achieving a total market capitalization on a fully diluted basis
of
more than $1 billion, as determined utilizing the following formula (the “Market
Capitalization Formula”): fully diluted shares (including shares attributable to
all options, warrants, other purchase rights and convertible securities, and
including shares held by affiliates (collectively “market capitalization
shares”)) multiplied by the three consecutive trading day average of the closing
price of its common stock as reported by Nasdaq (or such other exchange as
such
shares are then listed or in the good-faith determination of the board, if
not
then listed or quoted) plus long-term debt (as set forth in the most recent
financial statements of the Corporation) minus Working Capital (as defined
below) and minus the aggregate exercise price of all options and warrants
included in the market capitalization shares; or
10
(b)
the
Corporation possessing at least $150 million in Working Capital (which shall
mean as of any date, (1) the current assets plus investment securities or
similar asset which have maturities in excess of 12 months minus (2) current
liabilities) (the occurrence of either of the items in J(i)(a) and (b) being
referred to as the “First Milestone Event”).
(ii)
The
exercisability of 111,111 of these options shall be accelerated in full upon
the
occurrence of the earlier of:
(a)
the
Corporation achieving a total market capitalization on a fully diluted basis
of
more than $2 billion, as determined utilizing the Market Capitalization Formula
; or
(b)
the
Corporation possessing at least $250 million in Working Capital (the occurrence
of either of the items in (J)(ii)(a) and (b) being referred to as the “Second
Milestone Event”).
(iii)
The
exercisability of 111,111 of these options shall be accelerated in full upon
the
occurrence of the earlier of:
(a)
the
Corporation achieving a total market capitalization on a fully diluted basis
of
more than $3 billion, as determined utilizing the Market Capitalization Formula
; or
(b)
the
Corporation possessing at least $350 million in Working Capital (the occurrence
of either of the items in (J)(iii)(a) and (b) being referred to as the “Third
Milestone Event”).
11
