EMPLOYMENT AGREEMENT
Exhibit
10.2
AGREEMENT
(the “Agreement”),
dated
as of January
8, 2004, by and between ZYLOGEN, INC., a Delaware corporation with principal
executive offices at 000 Xxxxxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, XX 00000 (the “Company”),
and
DR. XXXXXXXX
XXXXX, residing at 0000 Xxxxxxxxx Xxxxx Xxxx, Xxxxxxxxx, XX 00000
(the
“Executive”).
W
I T N E S S E T H:
WHEREAS,
the Company desires to employ the Executive as President and Chief Executive
Officer of the Company, and the Executive desires to serve the Company in
those
capacities, upon the terms and subject to the conditions contained in this
Agreement;
NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto hereby agree as follows:
1. Employment.
(a) Services.
The
Executive will be employed by the Company as its President and Chief Executive
Officer. The Executive will report directly to the Board of Directors of
the
Company (the "Board") and shall perform such duties assigned by the Board
as are
consistent with his position as President and Chief Executive Officer
(the
“Services”).
The
Executive agrees to perform such duties faithfully, to devote substantially
all
of his business time, attention and energies to the business of the Company,
and
while he remains employed, not to engage in any other business activity that
is
in conflict with your duties and obligations to the Company; provided,
however,
that
the Executive may engage in the following activities to the extent that such
activities, individually or collectively, do not interfere with the performance
of the Executive’s duties and responsibilities hereunder, devoting such
reasonable time as may be necessary, but in no event more than five (5) business
days per annum (A) to fulfill civic responsibilities, (B) for personal financial
matters, (C) to respond to inquiries from former patients and their current
physicians, (D) to serve as an expert witness in cases involving Sarcoma,
(E) to
give and attend academic lectures in connection with the Executive’s affiliation
with the Yale Medical School and the National Academy of Sciences, (F) to
write
and edit medical, scientific and business textbooks and (G) to perform certain
other activities with the prior consent of the Company’s Board of Directors.
(b) Acceptance.
Executive hereby accepts such employment and agrees to render the
Services.
2. Term.
The
Executive's employment under this Agreement (the "Term") shall commence as
of
the Effective Date (as hereinafter defined) and shall continue for a term
of
three (3) years, unless sooner terminated pursuant to Section 9 of this
Agreement. Notwithstanding anything to the contrary contained herein, the
provisions of this Agreement governing protection of Confidential Information
shall continue in effect as specified in Section 6 hereof and survive the
expiration or termination hereof. The Term may be extended for additional
one
(1) year periods upon mutual written consent of the Executive and the
Board.
3. Best
Efforts; Place of Performance.
(a) The
Executive shall devote substantially all of his business time, attention
and
energies to the business and affairs of the Company and
shall
use his best efforts to advance the best interests of the Company and shall
not
during the Term be actively engaged in any other business activity, whether
or
not such business activity is pursued for gain, profit or other pecuniary
advantage, that will interfere with the performance by the Executive of his
duties hereunder or the Executive’s availability to perform such duties or that
will adversely affect, or negatively reflect upon, the Company.
(b) The
duties to be performed by the Executive hereunder shall be performed primarily
at the office of the Company in New York, New York, subject to reasonable
travel
requirements on behalf of the Company, or
such
other place as the Board may reasonably designate, subject to the provisions
of
Section 9(d) below.
4. Directorship.
The
Company shall use its best efforts to cause the Executive to be elected as
a
member of its Board of Directors throughout the Term and shall include him
in
the management slate for election as a director at every stockholders meeting
during the Term at which his term as a director would otherwise expire. The
Executive agrees to accept election, and to serve during the Term, as director
of the Company, without any compensation therefor other than as specified
in
this Agreement.
5. Compensation.
As full
compensation for the performance by the Executive of his duties under this
Agreement, the Company shall pay the Executive as follows:
(a) Base
Salary. The
Company shall pay Executive a salary (the “Base Salary”) equal to Three Hundred
Fifty Three Thousand Dollars ($350,000) per year. Payment shall be made
semi-monthly, on the fifteenth and the last day of each calendar
month.
(b) Signing
Bonus. The Company shall pay the Executive a one time bonus equal to Two
Hundred
Fifty Thousand Dollars ($250,000) within ten (10) business days of the Effective
Date of this Agreement.
(c) Guaranteed
Bonus. The Company shall pay the Executive a bonus (the “Guaranteed
Bonus”)
of Two
Hundred Fifty Thousand Dollars ($250,000) within 30 days following each
anniversary of the date of this Agreement during the Term, provided that
the
Executive is employed hereunder on such anniversary date.
The
Board of Directors of the Company shall annually review the Guaranteed Bonus
to
determine whether an increase in the amount thereof is warranted.
(d) Discretionary
Bonus. At the sole discretion of the Board of Directors of the Company, the
Executive shall receive an additional annual bonus (the “Discretionary
Bonus”)
in an
amount equal to up to 100% of his Base Salary, based upon his performance
on
behalf of the Company during the prior year. The Discretionary Bonus shall
be
payable either as a lump-sum payment or in installments as determined by
the
Board of Directors of the Company in its sole discretion. In addition,
the
Board
of Directors of the Company shall annually review the Bonus to determine
whether
an increase in the amount thereof is warranted.
2
(e) Withholding.
The Company shall withhold all applicable federal, state and local taxes
and
social security and such other amounts as may be required by law from all
amounts payable to the Executive under this Section 5.
(f) Stock
Options.
(i) As
additional compensation for the services to be rendered by the Executive
pursuant to this Agreement, the Company shall grant the Executive non-qualified
stock options (“Stock
Options”)
to
purchase 205,000 shares of Common Stock of the Company at a price equal to
$0.01
per share representing ten percent (10%) of the outstanding Common Stock
of the
Company, on a fully diluted basis, as
of the
Effective Date.
The
Stock
Options shall be governed by the Company’s 2003 Stock Option Plan and
shall
vest, if at all,
in
three equal installments on January 8, 2005, January 8, 2006 and January
8, 2007
of this Agreement, subject
in each
case
to the
provisions of Section 10 below. In connection with such grant, the Executive
shall enter into the Company’s standard stock option agreement, which will
incorporate the foregoing vesting schedule, exercise price and the Stock
Option
related provisions contained in Section 10 below.
The
Board of Directors of the Company shall annually review the number of Stock
Options granted to the Executive to determine whether an increase in the
number
thereof is warranted.
(ii) Anti-dilution
Protection. Until such time as the Company has raised gross proceeds equal
to
$25,000,000 from
the
issuance and sale of Equity Securities (as defined below).,
the
Company shall issue to the Executive a number of additional Stock Options
sufficient to maintain Executive’s ownership percentage at least equal to
percent (5%) of the outstanding Common Stock of the Company on a fully diluted
basis. Once the Company has raised $25,000,000 through the sale of its Equity
Securities, Executive shall be diluted pro rata along with all other holders
of
securities of the Company. As
used
herein “Equity Securities” shall mean shares of Common Stock, options, warrants
or other rights to purchase Common Stock or securities or evidences of
indebtedness convertible into or exchangeable for shares of Common
Stock.
(iii)
Notwithstanding the foregoing, Section 3(f)(iii) shall not apply to, and
the
Executive shall not be entitled to anti-dilution protection with respect
to, the
issuance of Excluded Equity Securities and Excluded Equity Securities shall
not
be included in calculating the fully diluted issued and outstanding shares
of
Common Stock of the Company for any purpose under this Agreement. “Excluded
Equity Securities” shall mean Equity Securities that are issued by the Company
pursuant to any transactions approved by the Board of Directors primarily
for
the purpose of: (1) incentivizing employees, directors or consultants to
the
Company following the issuance of up to five percent (5%) of the outstanding
shares of Common Stock of the Company for such purposes; (2) joint ventures,
strategic alliances or research and development activities, (3) purchase
or
licensing of technology, or (4) any other transactions involving current
or
potential partners that are primarily for purposes other than raising capital.
As long as the anti-dilution protection contained in this paragraph Section
3(f)(iii) remains in effect, the Executive shall be diluted pari passu with
all
other holders of Common Stock by the issuance by the Company of Excluded
Equity
Securities. Upon termination of such anti-dilution protection, the Executive
shall be diluted pari passu with all other holders of Common Stock by the
issuance of any Equity Securities.
3
(g) Expenses.
The Company shall reimburse the Executive for all reasonable out of pocket
expenses incurred by the Executive in furtherance of the business and affairs
of
the Company, including reasonable travel and entertainment (which shall include
business-class travel, unless unavailable and then first-class travel, for
trips
requiring air time longer than two (2) hours and the use of car service for
business-related activities), upon timely receipt by the Company of appropriate
vouchers or other proof of the Executive’s expenditures and otherwise in
accordance with any expense reimbursement policy as may from time to time
be
adopted by the Company.
(h) Life
and
Disability Insurance. The Company shall reimburse the Executive all premiums
paid by the Executive on life insurance policies covering the Executive in
amounts up to $800,000 and disability insurance policies covering the Executive
in amounts up to $20,000 per month.
(i) Vacation.
The Executive shall, during the Term, be entitled to a vacation of four (4)
weeks per annum,
in
addition to holidays observed by the Company.
The
Executive shall not be entitled to carry any vacation forward to the next
year
of employment and shall not receive any compensation for unused vacation
days.
(j) Piggyback
Registration Rights.
The
Company agrees that if, at any time, and from time to time, after an initial
public offering of its Common Stock, the Board shall authorize the filing
of a
registration statement under the Securities Act in connection with the proposed
offer of any of its securities by it or any of its stockholders, the Company
shall, subject to an underwriter lockup agreement, if any, and such
underwriter’s discretion, (A) cause such registration statement to cover all of
Common Stock underlying the vested Options of the Executive; (B) use its
commercially reasonable efforts to cause such registration statement to become
effective as soon as practicable; and (C) maintain such compliance with
applicable laws and regulations of any governmental authority for the period
of
two years or until the Executive has disposed all of his securities under
the
Registration Statement. Notwithstanding any other provision of this Section
3(j), the Company may at any time, abandon or delay any registration commenced
by the Company.
(k) Other
Benefits.
(i) The
Executive shall be entitled to all rights and benefits for which he shall
be
eligible under any benefit or other plans (including, without limitation,
dental, medical, medical reimbursement and hospital plans, pension plans,
employee stock purchase plans, profit sharing plans, bonus plans and other
so-called "fringe" benefits) as the Company shall make available to any of
its
senior executives from time to time.
(ii) The
Company shall reimburse the Executives for his reasonable medical licensing
fees
and other professional dues and memberships and journal subscriptions. In
addition, the Company shall reimburse the Executive up to $10,000 per annum
for
costs associated with a consulting group retained by the Executive for the
purpose of assisting the Executive corporate decision making.
4
6. Confidential
Information and Inventions.
(a) The
Executive recognizes and acknowledges that in the course of his duties he
is
likely to receive confidential or proprietary information owned by the Company,
its affiliates or third parties with whom the Company or any of such affiliates
has an obligation of confidentiality. Accordingly, during and after the Term,
the Executive agrees to keep confidential and not disclose or make accessible
to
any other person or use for any other purpose other than in connection with
the
fulfillment of his duties under this Agreement, any Confidential and Proprietary
Information (as defined below) owned by, or received by or on behalf of,
the
Company or any of its affiliates. “Confidential and Proprietary Information”
shall include, but shall not be limited to, confidential or proprietary
scientific or technical information, data, formulas and related concepts,
business plans (both current and under development), client lists, promotion
and
marketing programs, trade secrets, or any other confidential or proprietary
business information relating to development programs, costs, revenues,
marketing, investments, sales activities, promotions, credit and financial
data,
manufacturing processes, financing methods, plans or the business and affairs
of
the Company or of any affiliate or client of the Company. The Executive
expressly acknowledges the trade secret status of the Confidential and
Proprietary Information and that the Confidential and Proprietary Information
constitutes a protectable business interest of the Company. The Executive
agrees: (i) not to use any such Confidential and Proprietary Information
for
himself or others; and (ii) not to take any Company material or reproductions
(including but not limited to writings, correspondence, notes, drafts, records,
invoices, technical and business policies, computer programs or disks) thereof
from the Company’s offices at any time during his employment by the Company,
except as required in the execution of the Executive’s duties to the Company.
The Executive agrees to return immediately all Company material and
reproductions (including but not limited, to writings, correspondence, notes,
drafts, records, invoices, technical and business policies, computer programs
or
disks) thereof in his possession to the Company upon request and in any event
immediately upon termination of employment.
(b) Except
in
furtherance of the business of the Company, or otherwise with prior written
authorization by the Company, the Executive agrees not to disclose or publish
any of the Confidential and Proprietary Information, or any confidential,
scientific, technical or business information of any other party to whom
the
Company or any of its affiliates owes an obligation of confidence, at any
time
during or after his employment with the Company. Nothing in the foregoing
shall
be construed to prevent the Executive from disclosing or using any Confidential
or Proprietary Information that:
(i) Executive
can evidence through written documentation was in the Executive’s possession or
control prior to the date of disclosure;
(ii) Executive
can evidence through written documentation was in the public domain or enters
into the public domain through no improper act by Executive
(iii)
is
approved for public release by written authorization of the Company’ Board of
Directors;
(iv)
is
required to be disclosed by legal, administrative or judicial process;
or
(v) is
rightfully granted to Executive by sources independent of the Company, its
officers, employees, agents, affiliates and consultants.
5
(c) The
Executive agrees that all inventions, discoveries, improvements and patentable
or copyrightable works (“Inventions”)
initiated, conceived or made by him, either alone or in conjunction with
others,
during the Term
shall be
the sole property of the Company to the maximum extent permitted by applicable
law and, to the extent permitted by law, shall be “works made for hire” as that
term is defined in the United States Copyright Act (17 U.S.C.A., Section
101).
The Company shall be the sole owner of all patents, copyrights, trade secret
rights, and other intellectual property or other rights in connection therewith.
The Executive hereby assigns to the Company all right, title and interest
he may
have or acquire in all such Inventions; provided, however, that the Board
of
Directors of the Company may in its sole discretion agree to waive the Company’s
rights pursuant to this Section 6(c) with respect to any Invention that is
not
directly or indirectly related to the Company’s business. The Executive further
agrees to assist the Company in every proper way (but at the Company’s expense)
to obtain and from time to time enforce patents, copyrights or other rights
on
such Inventions in any and all countries, and to that end the Executive will
execute all documents necessary:
(i) to
apply
for, obtain and vest in the name of the Company alone (unless the Company
otherwise directs) letters patent, copyrights or other analogous protection
in
any country throughout the world and when so obtained or vested to renew
and
restore the same; and
(ii) to
defend
any opposition proceedings in respect of such applications and any opposition
proceedings or petitions or applications for revocation of such letters patent,
copyright or other analogous protection.
(d) The
Executive acknowledges that while performing the services under this Agreement
the Executive may locate, identify and/or evaluate patented or patentable
inventions having commercial potential in the fields of pharmacy,
pharmaceutical, biotechnology, healthcare, technology and other fields which
may
be of potential interest to the Company or one of its affiliates (the
“Third
Party Inventions”).
The
Executive understands, acknowledges and agrees that all rights to, interests
in
or opportunities regarding, all Third-Party Inventions identified by the
Company, any of its affiliates or either of the foregoing persons’ officers,
directors, employees (including the Executive), agents or consultants during
the
Employment Term shall be and remain the sole and exclusive property of the
Company or such affiliate and the Executive shall have no rights whatsoever
to
such Third-Party Inventions and will not pursue for himself or for others
any
transaction relating to the Third-Party Inventions which is not on behalf
of the
Company.
(e) The
provisions of this Section 6 shall survive any termination of this
Agreement.
7. Non-Competition,
Non-Solicitation and Non-Disparagement.
6
(a) The
Executive understands and recognizes that his services to the Company are
special and unique and that in the course of performing such services the
Executive will have access to and knowledge of Confidential and Proprietary
Information (as defined in Section 6) and the Executive agrees that, during
the
Term and for a period of 12 months
thereafter, he shall not without the consent of the Company 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 which is engaged in any business directly
or
indirectly competitive with the Company’s Business (as defined below), either as
an individual for his own account, or as a partner, joint venturer, owner,
executive, employee, independent contractor, principal, agent, consultant,
salesperson, officer, director or shareholder of a Person in a business
competitive with the Company within the geographic area of the Company’s
Business, which is deemed by the parties hereto to be worldwide. The Executive
acknowledges that, due to the nature of the Company’s Business, and the
importance to the Company’s Business of its Confidential and Proprietary
Information, a violation of this Section 7(a) could cause substantial damage
to
the Company and its affiliates and, therefore, the Company has a strong
legitimate business interest in protecting the continuity of its business
interests and the restriction herein agreed to by the Executive narrowly
and
fairly serves such an important and critical business interest of the Company.
For purposes of this Agreement, the “Company’s Business” shall mean the business
or businesses set forth on the attached Schedule 7(a), which shall be amended
from time to time upon the mututal written agreement of the parties, but
which
will automatically include the research, development and commercialization
of
any technologies that are licensed or otherwise acquired by the Company.
Notwithstanding the foregoing, nothing contained in this Section 7(a) shall
be
deemed to prohibit the Executive from (i) acquiring or holding, solely for
investment, publicly traded securities of any corporation, some or all of
the
activities of which are competitive with the business of the Company so long
as
such securities do not, in the aggregate, constitute more than three percent
(3%) of any class or series of outstanding securities of such
corporation.
(b) During
the Term and for a period of 12 months thereafter, the Executive shall not,
directly or indirectly, without the prior written consent of the
Company:
(i) solicit
or induce any employee of the Company or any of its affiliates to leave the
employ of the Company or any such affiliate; or hire for any purpose any
employee of the Company or any affiliate or any employee who has left the
employment of the Company or any affiliate within six months of the termination
of such employee’s employment with the Company or any such affiliate or at any
time in violation of such employee’s non-competition agreement with the Company
or any such affiliate; or
(ii) solicit
or accept employment or be retained by any Person who, at any time during
the
term of this Agreement, was an agent, client or customer of the Company or
any
of its affiliates where his position will be related to the Company’s Business;
or
(iii) solicit
or accept the business of any agent, client or customer of the Company or
any of
its affiliates with respect to products, services or investments similar
to
those provided or supplied by the Company or any of its affiliates.
(c) The
Company and the Executive each agree that both during the Term and at all
times
thereafter, neither party shall directly or indirectly disparage, whether
or not
true, the name or reputation of the other party or any of its affiliates,
including but not limited to, any officer, director, employee or any stockholder
owning greater than five percent (5%) of the Company’s outstanding Common Stock.
This Section 7 shall not include (i) statements made by the Executive’s in
performing his duties in the ordinary course as Chief Executive Officer (e.g.,
employee evaluations and remarks made in private meetings of the Board) and
(ii)
statements made by the Executive under oath in a legal proceeding.
7
(d) In
the
event that the Executive breaches any provisions of Section 6 or this Section
7
or there is a threatened breach, then, in addition to any other rights which
the
Company may have, the Company shall (i) be entitled, without the posting
of a
bond or other security, to injunctive relief to enforce the restrictions
contained in such Sections and (ii) have the right to require the Executive
to
account for and pay over to the Company all compensation, profits, monies,
accruals, increments and other benefits (collectively “Benefits”)
derived or received by the Executive as a result of any transaction constituting
a breach of any of the provisions of Sections 6 or 7 and the Executive hereby
agrees to account for and pay over such Benefits to the Company.
(e) Each
of
the rights and remedies enumerated in Section 7(d) shall be independent of
the
others and shall be in addition to and not in lieu of any other rights and
remedies available to the Company at law or in equity. If any of the covenants
contained in this Section 7, or any part of any of them, is hereafter construed
or adjudicated to be invalid or unenforceable, the same shall not affect
the
remainder of the covenant or covenants or rights or remedies which shall
be
given full effect without regard to the invalid portions. If any of the
covenants contained in this Section 7 is held to be invalid or unenforceable
because of the duration of such provision or the area covered thereby, the
parties agree that the court making such determination shall have the power
to
reduce the duration and/or area of such provision and in its reduced form
such
provision shall then be enforceable. No such holding of invalidity or
unenforceability in one jurisdiction shall bar or in any way affect the
Company’s right to the relief provided in this Section 7 or otherwise in the
courts of any other state or jurisdiction within the geographical scope of
such
covenants as to breaches of such covenants in such other respective states
or
jurisdictions, such covenants being, for this purpose, severable into diverse
and independent covenants.
(f) In
the
event that an actual proceeding is brought in equity to enforce the provisions
of Section 6 or this Section 7, the Executive shall not urge as a defense
that
there is an adequate remedy at law nor shall the Company be prevented from
seeking any other remedies which may be available.
(g) The
provisions of this Section 7 shall survive any termination of this
Agreement.
8. Representations
and Warranties by the Executive.
The
Executive hereby represents and warrants to the Company as follows:
(a) Neither
the execution or delivery of this Agreement nor the performance by the Executive
of his duties and other obligations hereunder violate or will violate any
statute, law, determination or award, or conflict with or constitute a default
or breach of any covenant or obligation under (whether immediately, upon
the
giving of notice or lapse of time or both) any prior employment agreement,
contract, or other instrument to which the Executive is a party or by which
he
is bound.
(b) The
Executive 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 the Executive
enforceable against him in accordance with its terms. No approvals or consents
of any persons or entities are required for the Executive to execute and
deliver
this Agreement or perform his duties and other obligations
hereunder.
8
9. Termination.
The Executive’s employment hereunder shall be terminated upon the Executive’s
death and may be terminated as follows:
(a) The
Executive’s employment hereunder may be terminated by the Board of Directors of
the Company for Cause. Any of the following actions by the Executive shall
constitute “Cause”:
(i) The
willful misconduct, failure, disregard or refusal by the Executive to perform
any of the material duties of his employment hereunder including,
without limitation, insubordination with respect to written directions received
by the Executive from the Board of Directors of the Company,
provided, however, that Executive shall have one (1) opportunity to cure
any
breach of this section 9(a)(i) within five (5) business days (“Cure Period”) of
written notice to the Executive;
(ii) Any
willful, intentional or grossly negligent act by the Executive having the
effect
of injuring, in a material way (whether financial or otherwise and as determined
in good-faith by a majority of the Board of Directors of the Company), the
business or reputation of the Company or any of its affiliates, including
but
not limited to, any officer, director, executive of the Company or any
stockholder owning greater than five percent (5%) of the Company’s outstanding
Common Stock; provided, however, that the Executive shall be granted an
opportunity to appear personally before the Board during its deliberations
to
explain the reasons for such conduct;
(iii) The
Executive’s conviction of any felony or a misdemeanor involving moral turpitude
(including entry of a nolo contendere plea);
(iv) The
determination by the Company, after a reasonable and good-faith investigation
by
the Company following a written allegation by another employee of the Company,
that the Executive engaged in some form of harassment prohibited
by law
(including, without limitation, harassment that constitutes age, sex or race
discrimination),
unless
the Executive’s actions were specifically directed by the Board of Directors of
the Company;
(v) Any
misappropriation or embezzlement of the property of the Company or its
affiliates;
(vi) Breach
by
the Executive of any of the provisions of Sections
6, 7
or
8
of this
Agreement; and
(vii) Breach
by
the Executive of any provision of this Agreement other than those contained
in
Sections
6, 7
or
8
which is
not cured by the Executive within thirty (30) days after notice thereof is
given
to the Executive by the Company.
(b) The
Executive’s employment hereunder may be terminated by the Board of Directors of
the Company due to the Executive’s Disability. For purposes of this Agreement, a
termination for “Disability”
shall
occur upon rendering of a written termination notice by the Board of Directors
of the Company after the Executive has been unable to substantially perform
his
duties hereunder for 90 or more consecutive days, or more than 120 days in
any
consecutive 12 month period, by reason of any physical or mental illness
or
injury. For purposes of this Section 9(b), the Executive agrees to make himself
available and to cooperate in any reasonable examination by a reputable
independent physician retained by the Company.
9
(c) The
Executive’s employment hereunder may be terminated by the Board of Directors of
the Company (or its successor) upon the occurrence of a Change of Control.
For
purposes of this Agreement, “Change
of Control”
means
(i) the acquisition, directly or indirectly, following the date hereof by
any
person (as such term is defined in Section 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended), in one transaction or a series of related
transactions, of securities of the Company representing in excess of fifty
percent (50%) or more of the combined voting power of the Company’s then
outstanding securities if such person or his or its affiliate(s) do not own
in
excess of 50% of such voting power on the date of this Agreement, or (ii)
the
future disposition by the Company (whether direct or indirect, by sale of
assets
or stock, merger, consolidation or otherwise) of all or substantially all
of its
business and/or assets in one transaction or series of related transactions
(other than (i) a merger effected exclusively for the purpose of changing
the
domicile of the Company and (ii) financing activities in the ordinary course
in
which the Company sells its equity securities).
(d) The
Executive’s employment hereunder may be terminated by the Executive for Good
Reason. For purposes of this Agreement, “Good
Reason”
shall
mean any of the following: (i) the assignment to the Executive of
duties
inconsistent with the Executive's position, duties, responsibilities, titles
or
offices as described herein; (ii) any material reduction by the Corporation
of the Executive's duties and responsibilities; (iii) any reduction
by the
Corporation of the Executive's compensation or benefits payable hereunder
(it
being understood that a reduction of benefits applicable to all employees
of the
Corporation, including the Executive, shall not be deemed a reduction of
the
Executive's compensation package for purposes of this definition); (iv) a
material breach by the Company of this Agreement; (v) moving the regular
place
of business of the Company to a location that is more than 60 miles from
Fairfield, Connecticut; or (vi) upon a Change of Control (1) that (x) results
in
the elimination of the Board of Directors or (y) representatives of the Board
just prior to the event causing the Change of Control do not represent a
majority of the Board immediately subsequent to the event causing the Change
of
Control and (2) in which the fair market value of the Company’s Common Stock, in
the aggregate, as determined in good faith by the Board on the date of such
Change of Control, is greater than $50,000,000.
10. Compensation
upon Termination.
(a) If
the
Executive’s employment is terminated as a result of his death or Disability, the
Company shall pay to the Executive or to the Executive’s estate, as applicable,
his
Base
Salary for a period of one year following the date of termination and any
accrued but unpaid Bonus and expense reimbursement amounts through the date
of
his Death or Disability. All Stock Options that are
scheduled to vest by the end of the calendar year in which such termination
occurs shall be accelerated and deemed to have vested as of the termination
date. Any Stock Options that have vested (or been deemed pursuant to the
immediately preceding sentence to have vested) as
of the
date of the Executive’s termination shall remain exercisable for a period of 90
days.
All
Stock
Options that have
not
vested as
of the
date of termination shall be deemed to have expired as of such
date.
(b) If
the
Executive’s employment is terminated by the Board of Directors of the Company
for Cause, then the Company shall pay to the Executive his Base Salary through
the date of his termination and any expense reimbursement amounts owed through
the date of termination. The Executive shall have no further entitlement
to any
other compensation or benefits from the Company. All
Stock
Options that have
not
vested as
of the
date of termination shall be deemed to have expired as of such date.
Any
Stock Options that have vested as of the date of the Executive’s termination for
Cause shall remain exercisable for a period of 90 days.
10
(c) If
the
Executive’s employment is terminated by the Company (or its successor) upon the
occurrence of a Change of Control and on the date of termination pursuant
to
this Section 10(c) the fair market value of the Company’s Common Stock, in the
aggregate, as determined in good faith by the Board on the date of such Change
of Control, is less than $50,000,000, then the Company (or its successor,
as
applicable) shall continue to pay to the Executive his Base Salary and benefits
for a period of one year following such termination as well as any expense
reimbursement amounts owed through the date of termination. All Stock Options
that are
scheduled to vest by the end of the calendar year in which such termination
occurs shall be accelerated and deemed to have vested as of the termination
date. Any Stock Options that have vested (or been deemed pursuant to the
immediately preceding sentence to have vested) as
of the
date of the Executive’s termination shall remain exercisable for a period of 90
days.
(d) If
the
Executive’s employment is terminated by the Company other than as a result of
the Executive’s death or Disability and other than for reasons specified in
Sections 10(b), or if the Executive’s employment is terminated by the Executive
for Good Reason, then the Company shall (i) continue to pay to the Executive
his
Base Salary and Guaranteed Bonus for a period of one year following such
termination and (ii) pay the Executive any expense reimbursement amounts
owed
through the date of termination. All Stock Options scheduled
to vest at the end of the calendar year in which such termination occurs
shall
be
accelerated and deemed to have vested as of the termination date; provided,
however,
that if
on the date of termination pursuant to this Section 10(d) the fair
market value of the Company’s Common Stock, in the aggregate, as determined in
good faith by the Board on the date of such termination, is greater than
$50,000,000, then all of the Executive’s unvested Stock Options shall be
accelerated and deemed to have vested as of the termination
date. Any
Stock
Options that have vested (or been deemed pursuant to this Section 10(d))
as of
the date of the Executive’s termination shall remain exercisable for a period of
90 days.
(e) Following
expiration and non-renewal of the Term, should the Company, in its sole
discretion require that the Executive continue to comply with the terms of
Section 7 hereof, the Company shall pay the Executive his Base Salary and
Guaranteed Bonus for a period of one year following expiration of the
Term.
(f) This
Section 10 sets forth the only obligations of the Company with respect to
the
termination of the Executive’s employment with the Company, and the Executive
acknowledges that, upon the termination of his employment, he shall not be
entitled to any payments or benefits which are not explicitly provided in
Section 10.
(g) Upon
termination of the Executive’s employment hereunder for any reason, the
Executive shall be deemed to have resigned as director of the Company, effective
as of the date of such termination.
11
(h) The
provisions of this Section 10 shall survive any termination of this
Agreement.
11. Miscellaneous.
(a) This
Agreement shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New York, without giving effect to its principles
of conflicts of laws.
(b) Any
dispute arising out of, or relating to, this Agreement or the breach thereof
(other than Sections 6 or 7 hereof), or regarding the interpretation thereof,
shall be finally settled by arbitration conducted in New York City in accordance
with the Employment Dispute Rules of the American Arbitration Association
then
in effect before a single arbitrator appointed in accordance with such rules.
Judgment upon any award rendered therein may be entered and enforcement obtained
thereon in any court having jurisdiction. The arbitrator shall have authority
to
grant any form of appropriate relief, whether legal or equitable in nature,
including specific performance. For the purpose of any judicial proceeding
to
enforce such award or incidental to such arbitration or to compel arbitration
and for purposes of Sections 6 and 7 hereof, the parties hereby submit to
the
non-exclusive jurisdiction of the Supreme Court of the State of New York,
New
York County, or the United States District Court for the Southern District
of
New York, and agree that service of process in such arbitration or court
proceedings shall be satisfactorily made upon it if sent by registered mail
addressed to it at the address referred to in paragraph (g) below. The
costs
of such arbitration shall be borne proportionate to the finding of fault
as
determined by the arbitrator. Judgment on the arbitration award may be entered
by any court of competent jurisdiction.
(c) This
Agreement shall be binding upon and inure to the benefit of the parties hereto,
and their respective heirs, legal representatives, successors and
assigns.
(d) This
Agreement, and the Executive’s rights and obligations hereunder, may not be
assigned by the Executive. The Company may assign its rights, together with
its
obligations, hereunder in connection with any sale, transfer or other
disposition of all or substantially all of its business or assets and shall
cause the acquirer to assume all of its obligations under this
Agreement.
(e) This
Agreement cannot be amended orally, or by any course of conduct or dealing,
but
only by a written agreement signed by the parties hereto.
(f) 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 such 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.
(g) All
notices, requests, consents and other communications, required or permitted
to
be given hereunder, shall be in writing and shall be delivered personally
or by
an overnight courier service or sent by registered or certified mail, postage
prepaid, return receipt requested, to the parties at the addresses set forth
on
the first page of this Agreement, and shall be deemed given when so delivered
personally or by overnight courier, or, if mailed, five days after the date
of
deposit in the United States mails. Either party may designate another address,
for receipt of notices hereunder by giving notice to the other party in
accordance with this paragraph (g).
12
(h) This
Agreement sets forth the entire agreement and understanding of the parties
relating to the subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, relating to the subject
matter
hereof. No representation, promise or inducement has been made by either
party
that is not embodied in this Agreement, and neither party shall be bound
by or
liable for any alleged representation, promise or inducement not so set
forth.
(i) As
used
in this Agreement, “affiliate” of a specified Person shall mean and include any
Person controlling, controlled by or under common control with the specified
Person.
(j) The
section headings contained herein are for reference purposes only and shall
not
in any way affect the meaning or interpretation of this Agreement.
(k) This
Agreement may be executed in any number of counterparts, each of which shall
constitute an original, but all of which together shall constitute one and
the
same instrument.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first above written.
| ZYLOGEN, INC. | ||
| |
|
|
| By: | /s/ Xxxxx Xxxxx | |
|
Name: Xxxxx Xxxxx |
||
| Title: President | ||
| EXECUTIVE | ||
| |
|
|
| By: | /s/ Xxxxxxxx Xxxxx | |
|
Name: Xxxxxxxx Xxxxx, M.D. |
||
13
SCHEDULE
7(a)
1. The
research, development, manufacture, commercialization and sale of organic
arsenicals for the treatment of cancer and human disease.
14
