EXHIBIT 10.1
RETENTION AWARD AGREEMENT
Awardee: Haim Aviv ("Awardee")
Grant Date: September 6, 2004
$300,000
379,747 Restricted Stock Units
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) $300,000 (the "Cash
Component") and (ii), subject to the final approval by the Israeli Tax Authority
as applied grants made under and subject to Section 102 of the Israeli Income
Tax Ordinance ("ITA Approval"), 379,747 Restricted Stock Units (the "Units")
pursuant to the Plan (the Cash Component and the Units comprise the "Award").
2. Vesting; Forfeiture.
2.1 Vesting Generally. Following the date of the ITA Approval, the
Award shall commence vesting and become nonforfeitable as
follows: (A) $150,000 and 189,873 Units shall vest on December
31, 2005, and (B) $150,000 and 189,874 Units 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 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.
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 Units and amount
of cash previously vested shall remain vested.
3. Payment of Award. Vested Units included in the Award shall be settled
in shares of the Company's common stock ("Stock") on a one-for-one basis. Within
five (5) business days following each of the vesting dates specified in Section
2.1 or any earlier date as provided in Section 2.3 (the "Payment Date"), the
Company shall deliver pursuant to the instructions set forth in the Transfer
Deed attached hereto and incorporated herein (i) a certificate, free and clear
of any restrictive legend, representing a number of shares of Stock equal to the
number of vested Units and (ii) 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. Dividends and Dividend Equivalents. No dividends or dividend
equivalents shall accrue or be paid with respect to any Units.
5. Transferability. Neither the Cash Component nor the Units are
transferable by the Awardee, whether by sale, assignment, exchange, pledge, or
hypothecation, or by operation of law or otherwise, except to a trust to be
designated by Awardee for his benefit, as provided in the Transfer Deed.
6. Transferability of Shares of Stock. The Company has filed a
Registration Statement on Form S-8 with the Securities and Exchange Commission
relating to the shares of Stock to be delivered hereunder and will comply with
all applicable state securities laws prior to the distribution of shares of
Stock hereunder and to do everything else necessary to ensure that shares of
Stock delivered to Awardee upon or following the vesting of any Unit will not be
treated as "restricted securities" within the meaning of Rule 144 promulgated
under the Securities Act.
7. 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.
8. 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.
9. 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.
10. 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.
11. Adjustments for Changes in Capital Structure. 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, the administrator of the Plan shall
make such appropriate adjustments to the Units as are equitable and reasonably
necessary or desirable to preserve the intended benefits under this Agreement.
12. Miscellaneous.
12.1 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.
12.2 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.
12.3 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.
12.4 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.
12.5 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.
12.6 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
--------------------------------
Name: Xxxxx X. Xxxx
Title: Chief Financial Officer
AWARDEE:
By: /s/ Haim Aviv
--------------------------------
Name: Haim Aviv
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
