EMPLOYMENT AGREEMENT
Exhibit 10.47
This EMPLOYMENT AGREEMENT (“Agreement”), effective as of January 1, 2009, is by and
between EntreMed, Inc., a Delaware corporation having its principal office at 0000 Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxxxx, XX 00000 (the “Company”) and Xxxx X. Xxxx (the “Executive”).
FOR AND IN CONSIDERATION of the mutual premises, agreements and covenants contained herein,
the parties hereto, intending to be legally bound, do hereby agree as follows:
1. Employment; Position and Duties.
Subject to the terms hereof, the Company hereby agrees to employ Executive during the Term (as
hereafter defined) to act as, and to exercise all of the powers and functions of its Vice
President, Research, and to perform such acts and duties and to generally furnish such services to
the Company and its subsidiaries (if any) as is customary for a senior management person with a
similar position in like companies. Among other things, and subject to change at the discretion of
the Executive Committee of the Board of Directors (the “Board”), the Executive shall be
responsible for leading the research support for the Company’s clinical activities, including drug
candidate trials for ENMD 2076. Executive shall report directly to the Executive Committee of the
Board or such other senior officers of the Company as designated from time to time by the Executive
Committee, and have such other powers, duties and responsibilities as the Executive Committee shall
from time to time reasonably prescribe. Executive will be a member of the Company’s Senior
Management Team and Business Development Team. Executive hereby agrees to accept such employment
and shall perform and discharge faithfully, diligently, and to the best of his abilities such
duties and responsibilities and shall devote sufficient working time and efforts to the business
and affairs of the Company and its subsidiaries.
2. Place of Employment.
While Executive is employed by the Company during the Term, Executive shall conduct his duties and
responsibilities hereunder primarily from the Company’s offices located in Toronto, Canada (except
for routine and customary business travel), or from such other location in the Toronto, Canada
metropolitan area as designated from time to time by the Executive Committee. Executive shall
travel to the Company’s Rockville, Maryland offices for business matters from time to time, as
determined by Executive or as requested.
3. Compensation
a. Base Salary. While the Company employs the Executive during the Term, the Company
shall pay to Executive an annual base salary (“Base Salary”) of no less than USD$200,000,
payable in accordance with the Company’s customary payroll policy for its Canadian employees. Such
Base Salary shall be paid to Executive in Canadian Dollars, based upon the exchange rate of
Canadian Dollars to United States Dollars in effect on January 1, 2009.
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b. Base Salary Adjustments. Executive’s Base Salary shall be reviewed at least
annually in accordance with the Company’s customary practices for its executives. The Board or a
committee thereof may make such adjustments, as it deems appropriate in its sole discretion;
provided, however, in no event shall the Company pay Executive a Base Salary of less than
USD$200,000, unless the change to Executive’s Base Salary was applicable to the annual base salary
of all senior executives of the Company in substantially the same manner.
c. Incentive Compensation. While the Company employs Executive during the Term,
Executive’s annual incentive compensation (“Incentive Compensation”) shall be targeted at
25% of base compensation, the exact amount of which shall be determined by the Board or a committee
thereof in its sole discretion. Executive shall be eligible for Incentive Compensation commencing
at the start of the Initial Term. Such bonus, if any, shall be paid within ninety (90) days
following the last day of each fiscal year of the Company.
d. Certain Other Benefits. Throughout the Term, Executive shall be entitled to
participate in any and all employee benefit plans and arrangements which are available to senior
executive officers of the Company, including without limitation, group medical, disability and life
insurance plans, and Company’s Directors and Officers (D&O) insurance policy. Executive shall also
be afforded no fewer than twenty-three (23) days paid time off (PTO) pursuant to policies fixed by
the Company.
e. Expenses. The Company shall pay or reimburse Executive for all reasonable business
expenses actually paid or incurred by Executive while Executive is employed by the Company during
the Term subject to reasonable documentation and in accordance with the Company’s business expense
reimbursement policy.
4. Term.
The term of this Agreement shall be the period commencing on January 1, 2009 and continuing for one
year (the “Initial Term”); provided, however, that the Term of this Agreement shall be
extended automatically for successive one year periods (each one-year extension a “Successor
Term” and together with the Initial Term referred to herein as the “Term”) unless
written notice of nonextension is provided by either party to the other party at least sixty (60)
days prior to the end of the Initial Term or any Successor Term. In the event that this Agreement
is not extended at the end of the Initial Term or any Successor Term and thereby terminates, only
paragraphs 6, 7, 8(d), 8(g), 8(h), 8(i) and 11 shall survive such termination, except that
Executive shall be entitled to receive compensation and benefits to the extent expressly provided
herein or by the terms of any of the Company’s compensation and benefit plans, programs or policies
or as required by applicable law.
5. Stock Options.
On January 27, 2009, the Company granted stock options to Executive covering 140,000 shares of
common stock with a per share exercise price equal to the closing price of the Company’s stock on
the date of grant. Such options will vest as to 25% of the covered shares on the date of grant,
and shall vest as to the remaining covered shares in cumulative 25% share increments on each of the
first, second, and third anniversary of the date of grant, if Executive is then employed by the
Company. Other periodic stock and incentive stock option grants to Executive, if any, while the
Company employs Executive during the Term shall be determined by the Board or a committee thereof
in its discretion.
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In the event of a termination pursuant to paragraph 8(d) hereof or a
resignation pursuant to paragraph 9 hereof, for which purposes sections 10(a) and
10(c) of this Agreement shall control, all vested options held by Executive on the effective date
of such termination or resignation shall be exercisable in accordance with the terms of such grants
until the later of the date set forth in such grant or twelve (12) months following Executive’s
date of termination, but in no event beyond the expiration date of the relevant option. Upon a
change in control, as defined in the option agreement, all unvested options shall vest and become
exercisable immediately in accordance with the terms of the option agreement. Except as set
forth herein, the terms of the stock option grants under this paragraph 5 shall be otherwise in
accordance with and subject to the terms of the Company’s 2001 Long Term Incentive Plan or
successor plan and such terms and conditions as the Board or a committee thereof may specify.
6. Unauthorized Disclosure.
During the Term and at all times thereafter, Executive shall not, without the written consent of
the Company, or except as required by applicable law, disclose to any person, other than a person
to whom disclosure is reasonably necessary or appropriate in connection with the performance by
Executive of his duties as an executive officer of the Company, any material confidential
information obtained by Executive while in the employ of the Company with respect to the businesses
of the Company or any of its subsidiaries, including but not limited to, operations, pricing,
contractual or personnel data, products, discoveries, improvements, trade secrets, license
agreements, marketing information, suppliers, dealers, principles, customers, or methods of
distribution, or any other confidential information the disclosure of which Executive knows, or in
the exercise of reasonable care should know, will be damaging to the Company; provided, however,
that confidential information shall not include any information known generally to the public or to
persons in the industry of which the Company’s business is a part (in each case, other than as a
result of unauthorized disclosure by Executive) or any information otherwise considered by the
Company not to be confidential.
7. Indemnification.
a. The Company shall defend, indemnify and hold harmless Executive if he is made a party, or
threatened to be made a party, to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, or investigative (a “Proceeding”), because he is
or was an officer or director of the Company or any of its subsidiaries, affiliates, or successors,
or because he is or was serving in a fiduciary capacity with respect to employee benefit plans of
the Company, whether or not the basis of such Proceeding is alleged action in an official capacity
or otherwise, against all Expenses incurred or suffered by him in connection with such Proceeding
to the fullest extent authorized by the General Corporation Law of the State of Delaware and any
other applicable law in effect from time to time, and such indemnification shall continue as to
Executive even if he ceases to be an officer or director or is no longer employed by the Company,
and shall inure to the benefit of Executive’s heirs, executors and administrators.
b. As used in this Agreement, the term “Expenses” shall include, without limitation, damages,
losses, judgments, liabilities, fines, penalties, excise taxes, settlements and reasonable costs,
reasonable attorneys’ fees, reasonable accountants’ fees, and reasonable disbursements and costs of
attachment or similar bonds, investigations, and any reasonable expenses of establishing a right to
indemnification under this Agreement.
c. Expenses incurred by Executive in connection with any Proceeding shall be paid by the
Company upon presentation of appropriate documentation and a giving by Executive of
any undertakings required by applicable law.
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8. Termination.
a. Upon Death. If Executive dies while employed by the Company during the Term, his
estate shall be entitled to receive payment of Base Salary through the last day of the six (6)
months following the month in which his death occurred, payable over six (6) months at the
Company’s normal pay periods. If, in respect of the fiscal year in which Executive dies the Board
or a committee thereof determines in its discretion that he would otherwise have been entitled to
receive Incentive Compensation under subparagraph 3(c) by reason of the operations of the Company
during such fiscal year, Executive’s estate shall be entitled to receive a pro rata portion of his
Incentive Compensation for such fiscal year. Such pro rata portion shall equal the product of (x)
the full amount of such Incentive Compensation, and (y) a fraction, the numerator of which is the
number of days in the fiscal year of Executive’s death prior to the date of death, and the
denominator of which is the total number of days in such fiscal year.
b. Termination Upon Disability. The Company may terminate Executive’s employment
hereunder during the Term at the end of any calendar month in the event of his Disability by giving
to Executive written notice of termination. In the event of any such termination pursuant to this
subparagraph 8(b), Executive shall be entitled to receive his Base Salary, payable in accordance
with the Company’s customary payroll policy for it executives, through the last day of the six (6)
months following the month in which the date of termination occurred. If in respect of the fiscal
year in which Executive’s employment terminates pursuant to this subparagraph 8(b) the Board or a
committee thereof determines in its discretion that he would otherwise have been entitled to
receive Incentive Compensation under subparagraph 3(c) by reason of the operations of the Company
during such fiscal year, Executive shall be entitled to receive a pro rata portion of his Incentive
Compensation for such year. Such pro rata portion shall equal the product of (x) the full amount
of such Incentive Compensation, and (y) a fraction, the numerator of which is the number of days in
the fiscal year of Executive’s termination on account of Disability prior to the date of
termination, and the denominator of which is the total number of days in such fiscal year.
c. Termination for Cause. The Company may terminate Executive’s employment hereunder
at any time during the Term for Cause by giving to Executive written notice of termination that
specifies the reasons for and date of termination, subject to the terms of sub-paragraph 10(a)
hereunder. Upon any such termination for Cause under this subparagraph 8(c), the Company shall pay
to Executive Base Salary through the date of termination, including the benefits provided at
paragraph 3(d), and the Company shall have no further obligations under this Agreement.
d. Termination Without Cause. The Company may terminate Executive’s employment with
the Company at any time during the Term, for any reason and without Cause, by giving him written
notice thirty (30) days prior to the date of termination. Until the effective date of any such
termination, the Company shall continue to pay to Executive the full compensation specified in this
Agreement, including the benefits provided at paragraph 3(d). Following the date of termination,
Executive shall make himself reasonably available to members of the Board and other senior managers
and officers of the Company to assist in the transition of responsibilities and information to
others and to facilitate the orderly conduct of business operations. Upon termination, the Company
shall have no other financial obligations to Executive under any compensation or benefit plan,
program or policy and Executive’s participation in the Company’s compensation and benefit plans,
programs and policies shall cease as of the date of
Executive’s termination except as set forth herein or as expressly provided under the terms of any
such plans, programs or policies, or as required by applicable law.
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However, in addition to the
above, if Executive is terminated (i) pursuant to this subparagraph 8(d) or (ii) the Term is not
extended in accordance with Section 4 and for any reason other than Cause, the Company shall (i)
pay Executive a severance amount equal to six (6) months Base Salary over the following six (6)
months at the Company’s normal pay periods, and (ii) provide Executive coverage under the Company’s
health insurance program, under the same terms as are available to other senior executive officers
of the Company, for a period of six (6) months, after which Executive would be eligible for COBRA
continuation coverage, or until he has obtained substantially equivalent new coverage, as
determined by the Board or a committee thereof in its discretion, through successor employment,
whichever occurs sooner. If, in respect of the fiscal year in which Executive’s employment
terminates pursuant to this subparagraph 8(d), the Board or a committee thereof determines in its
discretion that he would otherwise have been entitled to receive Incentive Compensation under
subparagraph 3(c) by reason of the operations of the Company during such fiscal year, Executive
shall be entitled to receive a pro rata portion of his Incentive Compensation for such year. Such
pro rata portion shall equal the product of (x) the full amount of such Incentive Compensation, and
(y) a fraction, the numerator of which is the number of days in the fiscal year of Executive’s
termination without Cause prior to the date of termination, and the denominator of which is the
total number of days in such fiscal year.
e. Resignation for Other than Good Reason. Executive may voluntarily terminate his
employment with the Company during the Term for any reason upon at least thirty (30) days prior
written notice, which specifies the effective date of termination. Until the effective date of
such termination, the Company shall continue to pay his the full compensation specified in this
Agreement, including the benefits provided at paragraph 3(d), provided he continues to perform his
duties during this period. Thereafter, the Company shall have no further obligations to him under
this Agreement. This subparagraph 8(e) shall not apply to Executive’s resignation for Good Reason
pursuant to paragraph 9 hereof.
f. No Mitigation. The parties hereto acknowledge and agree that, in the event
Executive’s employment with the Company is terminated pursuant to this paragraph 8, he shall not be
required to mitigate his damages by affirmatively seeking other employment. Further, except as
provided in subparagraph 8(d)(ii) above, the amount of any payment or benefit provided for in this
Agreement shall not be reduced by any compensation earned by him or benefit provided to him as the
result of employment by another employer or otherwise.
g. Non-Competition. For the period of two and a half months after termination of
employment with the Company, Executive shall not, as an individual, principal, agent, employee,
consultant or otherwise, directly or indirectly, or with respect to any company or entity with
which the Company has concluded partnership, licensing, joint research and development or other
similar business agreements during his employment with the Company, render any services to any firm
or company or any division or subsidiary of any firm or company, engaged in the development or
commercialization of compounds, analogs or derivatives of those compounds that (a) are of a similar
type, that is, small molecules, (for example, but not limited to, small peptidomimetic molecules),
(b) have more than one mechanism of action and cellular pathway in common with; and (c) are within
the same field (i.e. oncology or inflammation) as, those being developed and or
commercialized by the Company during the Term (“Competing Company”). In addition, for an
additional period of six (6) months after the two and half-month period set forth above and subject
to Section 6 hereof, Executive only may provide services to such a Competing Company if Executive
does not work on, or furnish confidential information regarding, any matter related to such
compounds defined above.
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h. Non-Disparagement. During the Term and thereafter, Executive shall not communicate
negatively about or otherwise disparage the Company or its products or each and any of the released
parties described in subparagraph 8(i) in any way whatsoever except as may be required for truthful
sworn testimony or in connection with a legal or administrative proceeding, report, claim or
dispute. The Company, acting in its official capacity, shall not make any public false,
disparaging or derogatory statements in connection with or concerning Executive’s service to the
Company except as may be required for truthful sworn testimony or in connection with a legal or
administrative proceeding, report, claim or dispute. After termination, in the event Executive
materially breaches any of the conditions set forth herein or in any other paragraph of this
Agreement, the Company may discontinue the provision of any payment or benefits to him under this
Agreement, and in such event he shall forfeit his entitlement to any further termination payments
or benefits under this Agreement. After termination, in the event the Company materially breaches
any of the conditions set forth herein or in any other paragraph of this Agreement, the Executive
may pursue any remedies available to him at law.
i. Release. In consideration of Executive’s receipt of severance benefits subject to
and in accordance with subparagraphs 8(b) and (d) and paragraph 9 of this Agreement, Executive
agrees that, upon his first receipt and acceptance of any such benefits, he shall have released and
forever discharged the Company, its subsidiaries and affiliates, successors and assigns,
predecessors and all of their respective officers, directors, employees and agents and employee
benefits plans from all claims, demands, liabilities and causes of action arising out of facts or
occurrences arising or occurring at any time up to and including the time of Executive’s
termination or resignation, whether known or unknown, and the parties hereto contemplate that this
release shall be broadly construed.
9. Resignation for Good Reason.
If Executive has Good Reason during the Term, Executive may resign at any time during the Term by
providing at least thirty (30) days prior written notice to the Company that specifies the reason
for, and the effective date of, his resignation. If Executive resigns during the Term for Good
Reason, such resignation shall be deemed a Termination without Cause under subparagraph 8(d) hereof
and Executive shall receive the compensation and benefits provided under subparagraph 8(d) hereof
as if he had been terminated without Cause.
10. Definitions.
a. “Cause” shall mean Executive’s (i) habitual drunkenness or drug addiction, (ii) material
failure to perform and discharge his duties and responsibilities hereunder, (iii) misconduct that
is materially and significantly injurious to the Company, (iv) conviction of a felony involving the
personal dishonesty of Executive or moral turpitude, (v) conviction of any crime or offense
involving the property of the Company or (vi) material breach of Executive’s obligations under this
Agreement, provided, however, with regard to Section 10(a)(ii) and 10(a)(vi) above, the parties
exclude for this purpose an action not taken in bad faith that is remedied by Executive promptly
upon receipt of written notice thereof given to the Company.
b. “Disability” shall mean the Executive’s incapacity due to physical or mental illness which
prevents the proper performance of Executive’s duties as set forth herein or established pursuant
hereto for ninety (90) days in any twelve (12) month period of the Term. A qualified independent
physician mutually selected by the Company and the Executive shall determine any questions as to
the existence or extent of illness or incapacity of Executive, upon which the Company and Executive
cannot agree.
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The determination of such physician certified in writing to the Company and to the Executive shall be final and conclusive for all purposes
of this Agreement. For purposes of the disability provisions of this Agreement, if the Executive
is unable to act on his own behalf due to incapacity, any person legally authorized to do so may
act on the Executive’s behalf.
c. “Good Reason” shall mean the occurrence of any of the following events during the Term:
(A) the assignment to Executive of any duties inconsistent in any material respect with Executive’s
position, authority, duties or responsibilities as of the commencement of the Term or any other
action by the Company which results in a diminution in any material respect in such position,
duties or responsibilities, excluding for this purpose an isolated and inadvertent action not taken
in bad faith that is remedied by the Company promptly after receipt of written notice thereof given
by Executive; (B) a reduction by the Company in Executive’s annual Base Salary as in effect on the
date hereof or subsequently in effect hereunder, except as agreed to by Executive, unless such
change was applicable to all senior executives of the Company; (C) the failure by the Company to
continue to provide Executive with benefits substantially similar to those enjoyed by him under any
of the Company’s pension, life insurance, medical, health and accident, disability or other welfare
plans in which he was participating as of the commencement of the Term or subsequently in effect
hereunder, unless such change was applicable to all senior executives of the Company; (D) the
failure by the Company to pay to Executive any deferred compensation when due under any deferred
compensation plan or agreement applicable to him; (E) the failure by the Company to honor in any
material respect the terms and provisions of this Agreement; or (F) a requirement by the Company
that Executive conduct his duties and responsibilities from a permanent location more than fifty
(50) miles from the place of employment, as defined in paragraph 2 herein.
11. Miscellaneous.
a. Assignments and Binding Effect. The respective rights and obligations of the
parties under this Agreement shall be binding upon the parties hereto and their heirs, executors,
administrators, successors, and assigns, including, in the case of the Company, any other
corporation or entity with which the Company may be merged or otherwise combined and, in the case
of Executive, his estate or other legal representatives.
b. No Assignment of Benefits. Except as otherwise provided herein or by applicable
law, no right or interest of the Executive under this Agreement shall be assignable or
transferable, in whole or in part, either directly or by the operation of law or otherwise,
including without limitation execution, levy, garnishment, attachment, pledge or in any manner; no
attempted transfer thereof shall be effective.
c. Governing Law. This Agreement shall be governed as to its validity, interpretation
and effect by the laws of the State of Maryland, without reference to its conflict of laws
provisions.
d. Severability. In the event that any provision or portion of this Agreement shall
be determined to be invalid, illegal, or unenforceable for any reason, the remaining provisions and
portions of this Agreement shall remain in full force and effect to the fullest extent permitted by
law. Such invalid, illegal or unenforceable provision(s) shall be deemed modified to the extent
necessary to make it (them) valid, legal, and enforceable.
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e. Withholding. All amounts payable hereunder shall be paid net of any applicable
withholding required under federal, state or local laws and any additional withholding to which
Executive has agreed.
f. Entire Agreement; Amendments. This Agreement constitutes the entire Agreement and
understanding of the Company and Executive with respect to the terms of Executive’s employment with
the Company and supersedes all prior discussions, understandings and agreements with respect
thereto.
g. Captions. All captions and headings used herein are for convenient reference only
and do not form part of this Agreement.
h. Waiver. No provision of this Agreement may be modified, waived or discharged
unless such modification, waiver or discharge is agreed to in writing and signed by the Executive
and the Board or its delegate. The failure of the Company or the Executive to insist upon strict
compliance with the terms of this Agreement or the failure of the Company or the Executive to
assert any right the Company or the Executive may have hereunder shall not be deemed a waiver of
such provision or right or any other provision of this Agreement.
f. Notice. Any notice or communication required or permitted under this Agreement
shall be made in writing and shall be delivered by hand, or mailed by registered or certified mail,
return receipt requested, first call postage prepaid, addressed as follows:
If to Executive:
Xxxx X. Xxxx
c/o EntreMed, Inc.
000 Xxxxxxx Xxxxxx
0-000
Xxxxxxx, Xxxxxxx
Xxxxxx, X0X0X0
c/o EntreMed, Inc.
000 Xxxxxxx Xxxxxx
0-000
Xxxxxxx, Xxxxxxx
Xxxxxx, X0X0X0
If to the Company:
EntreMed, Inc.
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn.: General Counsel
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn.: General Counsel
With a copy to:
Xxxxxx & Xxxxxx LLP
000 00xx Xx., X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxxx
000 00xx Xx., X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxxx
g. Counterparts. This Agreement may be executed in counterparts, each of which shall
constitute one and the same agreement.
[Remainder of this Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of January 1,
2009.
| EXECUTIVE |
||||
| Xxxx X. Xxxx | ||||
| ENTREMED, INC. |
||||
| By: | ||||
| Name: | Xxxxxxx Xxxx Hu | |||
| Title: | Chief Operating Officer, General Counsel & Secretary | |||
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