EMPLOYMENT AGREEMENT
Exhibit 10.13
THIS EMPLOYMENT AGREEMENT (“Agreement”) is made as of January 1, 2011 by and between Cyclacel
Pharmaceuticals, Inc., a Delaware corporation, (“Company”) and Xxxxx Xxxxxxxx (“the Executive”).
WHEREAS, Company and the Executive were parties to an Employment Agreement date January 1,
2008, as amended by the First Amendment to Employment Agreement of Xxxxx Xxxxxxxx, which expires by
its terms on January 1, 2011;
WHEREAS, Company desires to continue to retain the Executive’s services as its President and
Chief Executive Officer; and
WHEREAS, Company and the Executive are desirous of agreeing the terms and conditions of the
Executive’s employment with the Company as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and conditions
herein contained, the parties hereby agree as follows:
1. Employment. Company hereby employs the Executive and the Executive accepts such
employment according to the terms and conditions set forth in this Agreement.
2. Term. Except for earlier termination as hereinafter provided for, the term of the
Executive’s employment hereunder shall be for a period commencing on January 1, 2011 (“Commencement
Date”) and continuing through January 1, 2014; the third anniversary of the Commencement Date.
Notwithstanding the foregoing, the Executive’s employment by the Company hereunder may be earlier
terminated, subject to Section 9 hereof, upon the occurrence of any one of the following events:
(i) the Company’s decision to terminate the Executive, (ii) the Executive’s decision to voluntarily
resign or retire at any time or (iii) the parties’ mutual agreement in writing to terminate the
Executive’s employment hereunder at any time. The period of time between the Commencement Date and
termination of the Executive’s employment hereunder shall be referred to herein as the “Employment
Period”.
3. Position and Services.
(a) The Executive will hold the position of President and Chief Executive Officer of the
Company. The Executive will report directly to the Board of Directors of the Company (the “Board”)
and shall have such duties, responsibilities and authority with respect to such positions as are
set forth in the Bylaws of the Company, which duties and responsibilities shall in all events
include, but not be limited to, overall management responsibility for the operations and
administration of the Company.
(b) The Executive will be expected to be in the full-time employment of the Company, to devote
substantially all of his business time, attention and efforts to the performance of his duties
hereunder. Notwithstanding the foregoing, the Executive may make and manage personal business
investments of his choice and serve in any capacity with any civic, educational or charitable
organization, or any trade association, without seeking or
obtaining approval by the Board, provided such activities and service do not materially
interfere or conflict with the performance of his duties hereunder or violate the non-competition
provisions of Section 12 hereof.
(c) The Executive expressly agrees that during the Employment Period he will not be
interested, directly or indirectly, in any form, fashion or manner, as a partner, officer,
director, advisor, employee, consultant, controlling stockholder or in any other form or capacity,
in any other business or company, except that he would not be prohibited by Section 12 hereof to
serve as (a) member of one other Board of Directors of a commercial organization, or (b) a member
of one or more Boards of Directors or Trustees of a charitable organization, as may, upon advance
notice from the Executive be approved by the Board in its discretion after consideration of
possible conflicts, reputation(al) effects, time requirements and other interests of the Company.
In addition effective upon the Commencement Date, the Executive will be nominated to the Board for
a term ending at the 2014 annual meeting. The Board will use its best efforts to cause the
nomination of the Executive thereafter for reelection to the Board for successive terms, at every
time at which directors are nominated to the stockholders for election, as long as the Executive
serves as President and Chief Executive Officer unless the Executive declines such nomination in
writing to the Board. As with all members of the Board, the Executive’s continuation as a director
requires election as a director by the stockholders whenever directors are to be elected by the
stockholders.
4. Base Salary. Company shall pay to the Executive an initial base salary at an
annual rate of $490,383, subject to applicable income and employment tax withholdings and all other
required and authorized payroll deductions and withholdings. The Executive’s salary shall be
payable at the same time and basis as the Company pays its payroll in general. Increases in the
Executive’s annual base salary during the Employment Period may be effected from time to time based
upon the review and approval of the Compensation Committee of the Board (the “Compensation
Committee”). During the Employment Period, the Executive’s base salary rate shall not be reduced
below the initial base salary rate provided hereunder, nor below any increased base salary rate
that may be effected as provided hereunder, except if the Board, in response to exceptionally
adverse business circumstances makes a general temporary reduction in the compensation of the
executives of the Company.
5. Annual Incentive Bonus. In addition to the Executive’s base salary as provided
above, the Executive will be eligible for an annual cash incentive bonus for each calendar year of
the Employment Period. The bonus for which the Executive is eligible for each such year will be
based on a percentage of base salary and may be increased for above-plan performance as established
by the Compensation Committee in its discretion and upon consultation with the Executive at the
beginning of each year. The annual bonus hereunder will be payable based upon the satisfaction of
performance criteria that will be established by the Compensation Committee in its discretion and
upon consultation with the Executive at the beginning of each year, subject to the approval of the
Board. Such performance criteria will include corporate performance goals consistent with the
Company’s business plan for the year, as well as individual objectives for the Executive’s
performance that may be separate
from, but are consistent with, the Company’s business plan. The final determinations as to
the actual corporate and individual performance against the pre-established goals and objectives,
and the amount of the bonus payout in relationship to such performance, will be made by the
Compensation Committee in its sole discretion. To the extent the Company awards the Executive a
cash bonus, the bonus, if payable, shall be calculated and paid no later than two and a half months
following the later of the close of the calendar or Company fiscal year to which such bonus
relates.
2
6. Executive Benefits. The Executive shall be entitled to receive employment benefits
in accordance with the Company’s benefit policies in effect from time to time, including, without
limitation, 401(k) plan, medical, dental and life insurance, accidental death, travel accident,
short and long-term disability insurance, profit sharing, long-term incentive plans and 15 working
days of paid vacation annually.
7. Expenses. The Company shall reimburse the Executive for all reasonable and
necessary expenses incurred by him in connection with the performance of his services for the
Company upon submission of expense reports and documentation in accordance with the Company’s
policies. The Company may request additional documentation or a further explanation to substantiate
any expense submitted for reimbursement, and retains the discretion to approve or deny a request
for reimbursement. If an expense reimbursement is not exempt from Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”), any reimbursement in one calendar year shall not
affect the amount that may be reimbursed in any other calendar year and a reimbursement (or right
thereto) may not be exchanged or liquidated for another benefit or payment. Any expense
reimbursements subject to Section 409A of the Code shall be made no later than the end of the
calendar year following the calendar year in which such business expense is incurred by the
Executive.
8. Indemnification. The Company shall indemnify the Executive in accordance with the
Company’s By-laws. The Company agrees that it will make all commercially reasonable efforts to
keep in full force and effect, for the duration of all applicable statute of limitations periods,
directors and officers liability insurance policies on terms at least as favorable to the Executive
as those in effect on the date hereof.
9. Termination. This Agreement does not grant the Executive any right or entitlement
to be retained by the Company. In the event of termination by the Company of the Executive’s
employment under the circumstances described below in this Section 9, the Executive shall be
entitled to the severance pay and benefits so specified.
(a) Certain Definitions. For purposes of this Section 9, the following terms shall
have the meanings given below:
(i) Termination For Cause. The employment of the Executive hereunder shall be deemed
to have been terminated “For Cause” if the Company shall have terminated the Executive as a result
of any of the following: (A) any act committed by the Executive which shall represent a breach in
any material respect of any of the terms of this Agreement and which breach is not cured within 30
days of receipt by the Executive of written notice
from the Company of such breach; (B) improper conduct, consisting of any willful act or
omission with the intent of obtaining, to the material detriment of the Company, any benefit to
which the Executive would not otherwise be entitled; (C) gross negligence, consisting of wanton and
reckless acts or omissions in the performance of the Executive’s duties to the material detriment
of the Company; (D) addiction to drugs or chronic alcoholism or (E) any conviction of, or plea of
nolo contendere to, a crime (other than a traffic violation) under the laws of the United States or
any political subdivision thereof provided that the Executive receives a copy of a resolution duly
adopted by a two thirds majority affirmative vote of the membership of the Board excluding the
Executive, at a meeting of the Board called and held for such purpose after the Executive has been
given reasonable notice of such meeting and has been given an opportunity, together with his
counsel, to be heard by the Board, finding that in the good faith opinion of the Board the
Executive was guilty of the conduct set forth and specifying the particulars thereof in detail.
3
(ii) Termination Without Cause. The employment of the Executive hereunder shall be
deemed to have been terminated “Without Cause” upon (A) termination of employment by the Company
for any reason other than the reasons specified in Section 9(a)(i) hereof as termination “For
Cause” or (B) termination of employment by the Executive within 30 days following a “Constructive
Termination” event. For purposes hereof, the following shall constitute Constructive Termination
events: (1) any removal of the Executive from the position of President or Chief Executive Officer,
(2) any substantive reduction of the Executive’s duties, responsibilities or authority, including
any change in the Executive’s positions as President or Chief Executive Officer that results in
such a reduction, (3) a reduction by the Company in the Executive’s base salary in effect on the
date hereof or as may be increased from time to time except if the Board in response to exceptional
adverse business circumstances makes a general temporary reduction in the compensation of the
executives of the Company, (4) a failure by the Company to continue any bonus plans in which the
Executive is presently entitled to participate (the “Bonus Plans”) as the same may be modified from
time to time but substantially in the form currently in effect, or a failure by the Company to
continue the Executive as a participant in the Bonus Plans on at least the same basis as the
Executive presently participates in accordance with the Bonus Plans (other than for customary
yearly variations), (5) the Company’s requiring the Executive without the Executive’s express
written consent to be based anywhere other than within 50 miles of the Executive’s present office
location, except for required travel on the Company’s business to an extent substantially
consistent with the Executive’s present business travel obligations, (6) a failure by the Company
to offer Executive all benefits offered to all Company employees and (7) any purported termination
of the Executive’s employment which is not effected pursuant to the terms of this Agreement. No
such purported termination shall be effective.
The foregoing shall be treated as Constructive Termination events hereunder following the
expiration of 30 days from the date the Executive has notified Company (within 90 days) of the
occurrence of such event and the Executive’s intention to treat such event as a constructive
termination and terminate the Executive’s employment on the basis thereof, provided that Company
has not cured the constructive termination event before the expiration of such 30-day period.
4
(iii) Disability. The Executive shall be treated as having suffered a “Disability” if
the Executive is prevented from performing his duties hereunder by reason of illness or injury for
a period of either (A) six or more consecutive months from the First Date of Disability (as defined
below) or (B) eight months in the aggregate during any 12-month period. The date as of which the
Executive is first absent from employment as a result of such illness or injury shall be referred
to herein as the “First Date of Disability”. Notwithstanding the foregoing, if and only to the
extent that Executive’s disability is a trigger for the payment of deferred compensation, as
defined in Section 409A of the Code, “disability” shall have the meaning set forth in Section
409A(a)(2)(C) of the Code.
(iv) Change in Control. A “Change in Control” shall be deemed to have taken place if:
(A) there shall be consummated any consolidation or merger of the Company in which Company is
not the continuing or surviving corporation or pursuant to any transaction in which shares of the
Company’s capital stock are converted into cash, securities or other property, or any sale, lease,
exchange or other transfer in one transaction or a series of transactions contemplated or arranged
by any party as a single plan of all or substantially all of the assets of the Company, or the
approval of a plan of complete liquidation or dissolution of the Company adopted by the
stockholders of the Company; or
(B) any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) shall after the date hereof become the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of securities of the Company representing 35% or more of the voting power of all then
outstanding securities of the Company having the right under ordinary circumstances to vote in an
election of the Board (including, without limitation, any securities of the Company that any such
person has the right to acquire pursuant to any agreement, or upon exercise of conversion rights,
warrants or options, or otherwise, shall be deemed beneficially owned by such person); or
(C) individuals who at the date hereof constitute the entire Board and any new directors
whose election by the Board, or whose nomination for election by the Company’s stockholders, shall
have been approved by a vote of at least a majority of the directors then in office who either were
directors at the date hereof or whose election or nomination for election shall have been so
approved (the “Continuing Directors”) shall cease for any reason to constitute a majority of the
members of the Board.
(b) Termination Without Cause. In the event of termination of the Executive’s
employment hereunder by Company “Without Cause” (other than for a Termination for a Change of
Control hereinafter separately provided for) the Executive shall be entitled to the following
severance pay and benefits:
(i) Severance Pay — severance payments in the form of continuation of the Executive’s base
salary as in effect immediately prior to such termination for a period of 12 months commencing on
the sixtieth (60th) day following the effective date of such
termination.
5
(ii) Benefits Continuation — continued coverage under the Company’s medical care and life
insurance benefit plans in which the Executive is participating at the time of termination, on the
same terms as applicable to other executive employees of the Company from time to time, over the
same period with respect to which the Executive’s base salary is continued as provided in Section
9(b)(i) hereof; provided, however, that the Company’s obligation to provide such coverages shall be
terminated if the Executive obtains substitute coverage from another employer of the Executive at
any time during the continuation period; the Executive shall be obligated to notify Company of any
such substitute coverage and the date of commencement thereof promptly upon obtaining any such
coverage; the Executive shall be entitled, at the expiration of the period of benefits continuation
under this Section 9(b)(ii), to elect continued medical coverage upon timely election of COBRA
continuation coverage, in accordance with Section 4980B of the Internal Revenue Code of 1986, as
amended (or any successor provision thereto) with the Company premiums paid at the same percentage
as prior to the Executive’s termination; provided that, if COBRA continuation coverage is otherwise
earlier terminated under applicable law, then, in lieu of coverage, the Company will pay its share
of the monthly Company premium in effect prior to the termination of COBRA continuation coverage
directly to the Executive each month for the remainder of the relevant period. Any amounts paid by
the Company on Executive’s behalf under this Section 9(b)(ii) to continue the Executive’s medical
care and life insurance benefits shall be recorded as additional income pursuant to Section 6041 of
the Code and shall not be entitled to any tax qualified treatment; and
(iii) Stock Options — all options to purchase shares of the Company’s common stock held by the
Executive and which are vested immediately prior to termination of employment shall become
exercisable for a period of six months following the effective date of termination of employment.
(c) Termination following Change in Control. In the event of termination of the
Executive’s employment within six months following a Change of Control the Executive shall be
entitled to the following severance pay and benefits:
(i) Severance Pay — Severance payments in the form of continuation as the Executive’s base
salary as in effect immediately prior to such termination for a period of 24 months commencing on
the sixtieth (60th) day following the effective date of termination.
(ii) Benefits Continuation — continued coverage under the company’s medical care and life
insurance benefit plans in which the Executive is participating at the time of termination, or the
same terms as applicable to other executives of employees of the Company from time to time over the
same period with respect to which the Executive’s base salary is continued as provided in Section
9(c)(i) hereof provided, however that the Company’s obligation to provide such coverages shall be
terminated if the Executive attains substitute coverage from another employer at any time during
the continuation period; the Executive shall be obligated to notify Company of any such substitute
coverage and the date of commencement thereof promptly upon attaining any such coverage; the
Executive shall be
entitled after the expiration of the period of benefit continuation under the Section
9(c)(ii). Any amounts paid by the Company on Executive’s behalf under this Section 9(c)(ii) to
continue the Executive’s medical care and life insurance benefits shall be recorded as additional
income pursuant to Section 6041 of the Code and shall not be entitled to any tax qualified
treatment.
6
(iii) Stock Options — all options to purchase shares of the Company’s common stock held by the
Executive shall be vested and be exercisable for a period of 18 months following the effective date
of termination.
(iv) Return to London — the Company will reimburse Executive for out of pocket expenses
reasonably incurred by the Executive in connection with the relocation of Executive’s family and
household goods from the New York-New Jersey metropolitan area to London. Provided, however, that
the expenses are incurred on or before the last day of the second taxable year following the year
in which the Executive’s employment terminated.
(v) 280G Excise Tax — it is the intention of Executive and the Company that no payments made
or benefits provided by the Company to or for the benefit of Executive under this Agreement or any
other agreement or plan pursuant to which Executive is entitled to receive payments or benefits
shall be non-deductible to the Company by reason of the operation of Section 280G of the Code (the
“280G Excise Tax”), relating to golden parachute payments.
(A) The Company agrees that in the event any payments to Executive pursuant to this Agreement
would result in a payment to Executive that would trigger any 280G Excise Tax, if appropriate and
permissible, the Company shall first submit to its stockholders for approval the transaction that
may result in the imposition of the 280G Excise Tax upon Executive in accordance with the
regulations of the Internal Revenue Code governing shareholder approval of transactions giving rise
to 280G Excise Tax liability.
(B) If the procedure set forth in Section 9(c)(v)(A) is not available, if any payment, award,
benefit or distribution by the Company to or for the benefit of Executive would be subject to the
280G Excise Tax or any corresponding provisions of state or local tax laws as a result of payment
to Executive, or any interest or penalties are incurred by Executive with respect to such 280G
Excise Tax, then Executive shall be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount such that after payment by Executive of all taxes (including any interest or
penalties imposed with respect to such taxes) imposed upon the Gross-Up Payment, Executive retains
an amount of the Gross-Up Payment equal to the 280G Excise Tax imposed upon the payments.
(d) Termination Upon Disability or Death. In the event of termination of the
Executive’s employment hereunder on account of the Executive’s “Disability” or death, the Executive
or the Executive’s heirs, estate or personal representatives under law, as applicable, shall be
entitled to the following severance pay and benefits:
(i) Severance Pay — severance payments in the form of continuation of the
Executive’s base salary as in effect immediately prior to such termination for a period of 12
months commencing on the sixtieth (60th) day following the effective date of the
termination, reduced by any amounts paid to the Executive in the time period following the First
Date of Disability and until the date of termination, and any payments received from any short-term
or long-term disability plan of the Company;
7
(ii) Benefits Continuation — the same benefits as provided in Section 9(c)(ii) above, to be
provided during the Employment Period while the Executive is suffering from Disability and for a
period of 12 months following the effective date of termination of employment by reason of
Disability; and
(iii) Stock Options — all options to purchase shares of the Company’s common stock held by the
Executive which are exercisable immediately prior to termination of employment shall remain
exercisable for a period of 12 months following the effective date of termination of employment.
(e) Other Terminations. In the event of termination of the Executive’s employment
hereunder for any reason other than those specified in subsections (b) through (d) of this Section
9, the Executive shall not be entitled to any severance pay, benefits continuation or stock option
rights contemplated by the foregoing provisions of this Section 9, except as otherwise provided in
the applicable benefit plans of the Company that cover the Executive.
(f) Accrued Rights. Notwithstanding the foregoing provisions of this Section 9, in
the event of termination of the Executive’s employment hereunder for any reason, the Executive
shall be entitled to payment of any unpaid portion of his base salary, computed on a pro-rata basis
through the effective date of termination, and payment of any accrued but unpaid rights in
accordance with the terms of any incentive bonus or employee benefit plan or program of the
Company.
(g) Conditions to Severance Benefits. (i) As conditions of the Executive’s
entitlement and continued entitlement to the severance payments and benefits provided by this
Section 9, the Executive is required to (i) honor in accordance with their terms the provisions of
Sections 10, 11 and 12 hereof and (ii) execute and honor the terms of a waiver and release of
claims against the Company substantially in the form attached hereto as Exhibit A (and as may be
modified consistent with the purposes of such waiver and release to reflect changes in law
following the date hereof), which must be effective and irrevocable prior to the sixtieth
(60th) day following the effective date of the termination of the Executive’s
employment. The parties hereto agree that the Executive is under no affirmative obligation to seek
to mitigate or offset the severance payments and benefits provided by this Section 9.
(ii) For purposes only of this Section, the Executive shall be treated as having failed to
honor the provisions of Sections 10, 11 or 12 hereof only upon the passing of a resolution by a
majority of the Board making such a determination following notice of the alleged failure by
Company to the Executive, an opportunity for the Executive to cure the
alleged failure for a period of 30 days from the date of such notice and the Executive’s
opportunity to be heard on the issue by the Board.
8
(iii) Stock Options. Notwithstanding any other provisions of this Agreement to the
contrary, in the event that the Executive continues to serve as a member of the Board following his
termination of employment from the Company, his rights with respect to vesting and exercisability
of his then outstanding options shall continue under the same terms and conditions as if the
Executive had not terminated employment until such time as the Executive is no longer providing
services to the Company as a non-executive member of the Board. In addition, any option which is
deemed to be an Incentive Stock Option pursuant to Section 422 of the Code, shall become a
Nonqualified Stock Option on the date that is three months after termination of Executive’s
employment.
10. Confidentiality. The Executive agrees that he will not at any time during the
term hereof or thereafter for any reason, in any fashion, form or manner, either directly or
indirectly, divulge, disclose or communicate to any person, firm, corporation or other business
entity, in any manner whatsoever, any confidential information or trade secrets concerning the
business of the Company (including the business of any unit thereof), including, without limiting
the generality of the foregoing, the names of any of its customers, the prices at which it obtains
or has obtained any products or services, the techniques, methods or systems of its operation or
management, any customer proposals or other business opportunities, any information regarding its
financial matters, or any other material information concerning the business of the Company, its
manner of operation, its plans or other material data. The provisions of this paragraph shall not
apply to (i) information disclosed in the performance of the Executive’s duties to the Company
based on his good faith belief that such a disclosure is in the best interests of the Company; (ii)
information that is public knowledge; (iii) information disseminated by the Company to others in
the ordinary course of the Company’s business, in order to further such business, provided the
recipient of such information agrees to be subject to a confidentiality obligation at least
comparable to that herein; (iv) information or knowledge lawfully received by the Executive from a
third party who, based upon due inquiry by the Executive, is not bound by a confidential
relationship to the Company; or (v) information disclosed under a requirement of law or as directed
by applicable legal authority having jurisdiction over the Executive.
11. Inventions. (i) To the extent that any of the Company’s current or future
products or services relate to, embody or incorporate concepts, technology or products of any kind
relevant to the Company or its subsidiaries or affiliates that the Executive directly or indirectly
conceived or developed prior to the date hereof during the period of his employment by Company
(“Prior Technology”), the Executive assigns in perpetuity to Company any and all of his rights,
title and interests, if any, to utilize, without any cost to the Company, such Prior Technology,
and the Executive agrees to assist Company in taking all action that may be reasonably required, at
the Company’s expense, to secure for the Company the benefits of the Executive’s ownership or
rights, if any, to use all such Prior Technology.
9
(ii) The Executive is hereby retained in a capacity such that the Executive’s responsibilities
include the making of technical, managerial and promotional contributions of
value to the Company. The Executive hereby assigns to Company all rights, title and interest in
such contributions and inventions made or conceived by the Executive alone or jointly with others
which relate to the business of the Company. This assignment shall include (a) the right to file
and prosecute patent applications on such inventions in any and all countries, (b) the patent
applications filed and patents issuing thereon, and (c) the right to obtain copyright, trademark or
trade name protection for any such work product. The Executive shall promptly and fully disclose
all such contributions and inventions to the Company and assist the Company in obtaining and
protecting the rights therein (including patents thereon), in any and all countries; provided,
however, that said contributions and inventions will be the property of the Company, whether or not
patented or registered for copyright, trademark or trade name protection, as the case may be.
Inventions conceived by the Executive which are not related to the business of the Company (as
determined in good faith by the Board), will remain the property of the Executive.
12. Non-Competition. (i) the Executive agrees that he shall not during the
Employment Period and for a period of one year after the termination or end thereof for any reason,
without the approval of the Board which, after the end of the Employment Period, shall not
unreasonably be withheld or delayed, directly or indirectly, alone or as partner, joint venturer,
officer, director, employee, consultant, agent, independent contractor or controlling stockholder
(other than as provided below) of any Company or business, engage in any “Competitive Business”
within the United States. For purposes of the foregoing, the term “Competitive Business” shall
mean any business involved in the research, development, or sale of anticancer targeted
therapeutics that are nucleoside analogues, CDK inhibitors or Aurora/VEGFR2 inhibitors and/or
medicines for the treatment of radiation dermatitis or xerostomia or any other business in which
the Company has been engaged up to and until the relevant time (as determined by the Board of
Directors); provided that, this provision shall in no way prevent the Executive, after the end of
the Employment Period, from being employed as a consultant.
(ii) Notwithstanding the provisions of clause (i) above or any other provision of this
Agreement to the contrary, the Executive shall not be prohibited during the period applicable under
clause (i) above from acting as a passive investor where (a) in the case of a Competitive Business
being a public corporation, the Executive owns not more than five percent (5%) of the issued and
outstanding capital stock or such higher percentage or amount as may be approved by the Board upon
notice from the Executive prior to obtaining such interest; provided, however, that the Executive
shall not be treated as having violated the provisions of this Section 12 if in good faith he is
unaware that an entity in which he has an investment interest would be treated as a Competitive
Business and, upon becoming aware of such involvement, the Executive makes reasonable efforts to
divest himself of his interest in such business; (b) in the case of any employer or entity other
than a Competitive Business that is engaged in, or whose affiliates are engaged in, the development
or marketing of products or technologies that are directly or indirectly competitive with any
product or technology that is developed or marketed or proposed to be developed or marketed by
Company during the Employment Period, the Executive owns not more than five percent (5%) of the
issued and outstanding capital stock; or (c) receiving stock, options or warrants from any entity
with
which the Executive can have a relationship pursuant to clause (i) above as part of the Executive’s
compensation for services rendered or to be rendered.
10
13. Breach of Restrictive Covenants. The parties agree that a breach or violation of
Sections 10, 11 or 12 hereof will result in immediate and irreparable injury and harm to the
innocent party, who shall have, in addition to any and all remedies of law and other consequences
under this Agreement, the right to an injunction, specific performance or other equitable relief to
prevent the violation of the obligations hereunder.
14. Non-Disparagement. The Executive agrees that he will not, whether during his
provision of services to the Company or thereafter, directly or indirectly, make, cause to be made,
or ratify any statement, public or private, oral or written, to any person that disparages, either
professionally or personally, the Company or any of its affiliates, past and present, and each of
them, as well as its and their trustees, directors, officers, agents, attorneys, insurers,
employees, stockholders, representatives, assigns, and successors, past and present, and each of
them.
15. Notices. Any notice required to be given pursuant to the provisions of this
Agreement shall be in writing and, if mailed, sent by registered mail, postage prepaid, to the
party named at the address set forth below, or at such other address as each party may hereafter
designate in writing to the other party:
| Company: | 000 Xxxxxxx Xxxxx #0000 | |
| Xxxxxxxx Xxxxxxx, XX 00000 | ||
| Attention: Chairman of the Board | ||
| Executive: | c/o Cyclacel Pharmaceuticals, Inc. | |
| 000 Xxxxxxx Xxxxx #0000 | ||
| Xxxxxxxx Xxxxxxx, XX 00000 |
Any such notices shall be deemed to have been delivered when served personally in the manner
specified above.
16. Dispute Resolution. The parties shall waive trial by jury in any dispute between
them.
17. Entire Agreement.
(a) Change, Modification, Waiver. No change or modification of this Agreement shall
be valid unless it is in writing and signed by each of the parties hereto. No waiver of any
provision of this Agreement shall be valid unless it is in writing and signed by the party against
whom the waiver is sought to be enforced. The failure of a party to insist upon strict performance
of any provision of this Agreement in any one or more instances shall not be construed as a waiver
or relinquishment of the right to insist upon strict compliance with such provision in the future.
(b) Integration of All Agreements. This Agreement constitutes the entire
Agreement between the parties and is intended to be an integration of all agreements between
the parties with respect to the Executive’s service with Company. Except as provided in Section 8
hereof concerning the Indemnification Agreement, any and all prior agreements between the Executive
and the Company with respect to the Executive’s service with the Company are hereby revoked.
11
(c) Severability of Provisions. If for any reason any provision of this Agreement
should be declared void or invalid, such declaration shall not affect the validity of the rest of
this Agreement, which shall remain in force as if executed with the void or invalid provision
eliminated.
18. Binding Effect. This Agreement shall be binding upon all parties hereto and their
heirs, successors and assigns. This Agreement shall be assignable by Company to any entity
acquiring all or substantially all of the assets of the Company.
19. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New Jersey.
20. Miscellaneous.
(a) Form. As employed in this Agreement, the singular form shall include, if
appropriate, the plural.
(b) Headings. The headings employed in this Agreement are solely for the convenience
and reference of the parties and are not intended to be descriptive of the entire contents of any
paragraph and shall not limit or otherwise affect any of terms, provisions, or construction
thereof.
12
21. Compliance with Section 409A of the Code.
(a) The benefits set forth in this Agreement do not constitute non-qualified deferred
compensation subject Section 409A of the Code pursuant to Treas. Reg. §1.409A-(1)(b)(9)(iii). If
any of the benefits set forth in this Agreement are deemed to constitute non-qualified deferred
compensation subject to Section 409A of the Code, the following provisions shall apply: (i) any
termination of employment triggering payment of such benefits must constitute a “separation from
service” under Section 409A of the Code before distribution of such benefits can commence. For
purposes of clarification, this paragraph shall not cause any forfeiture of benefits on the part of
the Executive, but shall only act as a delay until such time as a “separation from service” occurs;
(ii) if the Executive is a “specified employee” (as that term is used in Section 409A of the Code
and regulations and other guidance issued thereunder) on the date his separation from service
becomes effective, any benefits payable under Section 9 that constitute non-qualified deferred
compensation subject to Section 409A of the Code shall be delayed until the earlier of (A) the
business day following the six-month anniversary of the date his separation from service becomes
effective, and (B) the date of the Employee’s death, but only to the extent necessary to avoid the
imposition of accelerated or increased income taxes, excise taxes or other penalties under
Section 409A of the Code. On the earlier of (A) the business day following the six-month
anniversary of the date his separation from service becomes effective, and (B) the Executive’s
death, the Company shall pay the Executive in a lump sum the aggregate value of the non-qualified
deferred compensation that the Company otherwise would have paid the Executive prior to that date
under Section 9 of this Agreement; (iii) it is intended that each installment of the payments and
benefits provided under this Agreement shall be treated as a separate “payment” for purposes of
Section 409A of the Code; and (iv) neither the Company nor Executive shall have the right to
accelerate or defer the delivery of any such payments or benefits except to the extent specifically
permitted or required by Section 409A of the Code.
(b) Notwithstanding any other provision of this Agreement to the contrary, if any term in the
Agreement is ambiguous, such term or terms shall be interpreted in a manner that avoids the
inclusion of compensation in income under Section 409A(a)(1) of the Code. For purposes of
clarification, this Section 20 shall be a rule of construction and interpretation and nothing in
this Section 20 shall cause a forfeiture of benefits on the part of the Executive.
[signature page follows]
13
IN WITNESS WHEREOF, this Agreement is executed as of the date first above written.
| CYCLACEL PHARMACEUTICALS, INC. | |||||||||||||
| By: | /s/ Dr. David U’Xxxxxxxx | ||||||||||||
| Name: | Dr. David U’Xxxxxxxx | ||||||||||||
| Title: | Chairman of the Board of Directors | ||||||||||||
| XXXXX XXXXXXXX | |||||||||||||
| /s/ Xxxxx Xxxxxxxx | |||||||||||||
14
EXHIBIT A
1. Your Release of Claims. You hereby agree and acknowledge that by signing this
Agreement, and for other good and valuable consideration, you are waiving your right to assert any
and all forms of legal claims against the Company1/ of any kind whatsoever, whether
known or unknown, arising from the beginning of time through the date you execute this Agreement
(the “Execution Date”). Except as set forth below, your waiver and release herein is intended to
bar any form of legal claim, complaint or any other form of action (jointly referred to as
“Claims”) against the Company seeking any form of relief including, without limitation, equitable
relief (whether declaratory, injunctive or otherwise), the recovery of any damages, or any other
form of monetary recovery whatsoever (including, without limitation, back pay, front pay,
compensatory damages, emotional distress damages, punitive damages, attorneys fees and any other
costs) against the Company, for any alleged action, inaction or circumstance existing or arising
through the Execution Date.
Without limiting the foregoing general waiver and release, you specifically waive and release
the Company from any Claim arising from or related to your prior employment relationship with the
Company or the termination thereof, including, without limitation:
| ** | Claims under any state or federal discrimination, fair employment practices or
other employment related statute, regulation or executive order (as they may have been
amended through the Execution Date) prohibiting discrimination or harassment based upon
any protected status including, without limitation, race, national origin, age, gender,
marital status, disability, veteran status or sexual orientation. Without limitation,
specifically included in this paragraph are any Claims arising under the Age
Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the Civil
Rights Act of 1991, the Americans With Disabilities Act and any similar Federal and
state statute. |
| ** | Claims under any other state or federal employment related statute, regulation
or executive order (as they may have been amended through the Execution Date) relating
to wages, hours or any other terms and conditions of employment. |
| ** | Claims under any state or federal common law theory including, without
limitation, wrongful discharge, breach of express or implied contract, promissory
estoppel, unjust enrichment, breach of a covenant of good faith and fair dealing,
violation of public policy, defamation, interference with contractual relations,
intentional or negligent infliction of emotional distress, invasion of privacy,
misrepresentation, deceit, fraud or negligence. |
| ** | Any other Claim arising under state or federal law. |
| 1/ | For purposes of this Agreement, the Company includes
the Company and any of its divisions, affiliates (which means all persons and
entities directly or indirectly controlling, controlled by or under common
control with the Company), subsidiaries and all other related entities, and its
and their directors, officers, employees, trustees, agents, successors and
assigns. |
15
Notwithstanding the foregoing, nothing contained in this Release constitutes a waiver of any
Claims you may have against the Company arising from or related to the Indemnification Agreement
and By-laws provisions referenced in Section 8 of the Employment Agreement, dated January 1, 2011,
entered into between you and the Company.
You acknowledge and agree that, but for providing this waiver and release, you would not be
receiving the economic benefits being provided to you under the terms of this Agreement.
It is the Company’s desire and intent to make certain that you fully understand the provisions
and effects of this Agreement. To that end, you have been encouraged and given the opportunity to
consult with legal counsel for the purpose of reviewing the terms of this Agreement. Also, because
you are over the age of 40 and consistent with the provisions of the Age Discrimination in
Employment Act (“ADEA”), which prohibits discrimination on the basis of age, the Company is
providing you with twenty-one (21) days in which to consider and accept the terms of this Agreement
by signing below and returning it to me at: [name], [address].
You may rescind your assent to this Agreement if, within seven (7) days after you sign this
Agreement, you deliver by hand or send by mail (certified, return receipt and postmarked within
such 7 day period) a notice of rescission to me at the Company. The eighth day following your
signing of this Agreement is the Effective Date.
Also, consistent with the provisions of Federal and state discrimination laws, nothing in this
release shall be deemed to prohibit you from challenging the validity of this release under such
discrimination laws (the “ Discrimination Laws”) or from filing a charge or complaint of age or
other employment related discrimination with the Equal Employment Opportunity Commission (“EEOC”)
or state equivalent, or from participating in any investigation or proceeding conducted by the EEOC
or state equivalent. Further, nothing in this release or Agreement shall be deemed to limit the
Company’s right to seek immediate dismissal of such charge or complaint on the basis that your
signing of this Agreement constitutes a full release of any individual rights under the
Discrimination Laws, or to seek restitution to the extent permitted by law of the economic benefits
provided to you under this Agreement in the event that you successfully challenge the validity of
this release and prevail in any claim under the Discrimination Laws.
| By: | ||||||||
| Xxxxx Xxxxxxxx | ||||||||
| Date signed: | ||||||||
16
