EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit 10.2
This
EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is made and
entered into as of the 1st day of December 2016, by and between
Majesco Entertainment Company, a Delaware corporation headquartered
at 404I-T Xxxxxx Xxxx, X. Xxxxxxxxxx, Xxx Xxxxxx 00000
(“Parent”) and Xxxxxx
Xxxxxxx, an individual (“Executive”). As used
herein, the “Effective Date” of this
Agreement shall mean the Closing date as defined in that certain
Merger Agreement (as defined below) and executed contemporaneously
herewith.
W I T N
E S S E T H:
WHEREAS, the
Executive desires to be employed by the Parent as its Chief
Operating Officer and the Parent wishes to employ the Executive in
such capacities, in each case, commencing on and as of the
Effective Date.
WHEREAS, the
Executive and Parent are entering into this Agreement and the
Merger Agreement and the additional Transaction Documents which
describes the acquisition of Polarityte, Inc. (the
“Company”) and certain
patent(s) as assets by the Parent, including recapitalization of
the Parent, establishing control of the Parent board of directors,
acquisition of certain patents, and commercial development of the
patents and related technology.
WHEREAS,
contemporaneously with the execution of this Agreement by
Executive, and as a condition to the effectiveness hereof, Denver
Lough has assigned Patent No. WO/2016/089825 and PCT/US2015/063114
pursuant to that certain Assignment Agreement to the Company (the
“Assignment Agreement”).
..
Terms
not otherwise defined herein shall have the meanings ascribed to
such terms in the Merger Agreement.
NOW,
THEREFORE, in consideration of the foregoing and their respective
covenants and agreements contained in this document, the Parent and
the Executive hereby agree as follows:
1.
Employment and
Duties. The Parent agrees to employ and the Executive agrees
to serve as the Parent’s Chief Operating Officer The duties
and responsibilities of the Executive shall include the duties and
responsibilities as the Parent’s Board of Directors
(“Board”) and Chief
Executive Officer may from time to time assign to the
Executive.
Upon the Effective Date
of this Agreement (or as promptly as practicable thereafter),
Executive shall be appointed to serve as a member of the Board,
pursuant to the terms and conditions of the Parent’s bylaws,
as amended. For so long as Executive is Chief Operating
Officer,
the Parent shall use commercially reasonable efforts, subject to
applicable law and regulations of the The NASDAQ Stock Market LLC,
to cause Executive to be nominated for election as a director and
to be recommended to the stockholders for election as a
director.
The
Executive shall devote his full time efforts and services to the
business and affairs of the Parent and its subsidiaries. Nothing in
this Section 1 shall prohibit the Executive from: (A) serving as a
director or member of any other board, committee thereof of any
other entity or organization; (B) delivering lectures, fulfilling
speaking engagements, and any writing or publication relating to
his area of expertise; (C) serving as a director or trustee of any
governmental, charitable or educational organization; (D) engaging
in additional activities in connection with personal investments
and community affairs, including, without limitation, professional
or charitable or similar organization committees, boards,
memberships or similar associations or affiliations (E) serving in
health care facilities as a physician in order to maintain his
license to practice medicine, or (F) performing advisory
activities, provided, however, such activities are not in
competition with the business and affairs of the Parent or would
tend to cast executive of Parent in a negative light in the
reasonable judgment of the Board.
2.
Term. The term of
this Agreement shall commence on the Effective Date and shall
continue for a period of one (1) year following the Effective Date
and shall be automatically renewed for successive one (1) year
periods thereafter unless either party provides the other party
with written notice of his or its intention not to
renew
this Agreement at least three (3) months prior to the expiration of
the initial term or any renewal term of this Agreement.
“Employment
Period” shall mean the initial one (1) year term plus
renewals, if any.
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3.
Place of
Employment. The Executive’s services shall be
performed at such location or locations as Executive shall
determine, in his sole discretion.
4.
Base Salary and Board
Fees. The Parent agrees to pay the Executive a base salary
(“Base
Salary”) of $300,000 per annum for the position(s) of
Chief Operating Officer. Annual adjustments after the first year of
the Employment Period shall be determined by the Board. The Base
Salary shall be paid in periodic installments in accordance with
the Parent’s regular payroll practices. Executive shall,
subject to policies and procedures of the Parent’s Board of
Directors, be eligible to additional fees for service on the
Parent’s Board.
5.
Incentive Compensation and
Bonuses.
(a)
Executive Employment
Agreement Signing Bonus: Upon execution of this Agreement,
the Parent shall pay to Executive an initial signing bonus of
$100,000.
(b)
Annual Bonus:
For each
fiscal year during the term of employment, the Executive shall be
eligible to receive a bonus in the amount of 100% of annual salary,
if any, as may be determined from time to time by the Board in its
discretion. The Annual Bonus shall be paid by the Parent to
the Executive promptly after determination that the relevant
targets, if any, have been met, it being understood that the
attainment of any financial targets associated with any bonus shall
not be determined until following the completion of the
Parent’s annual audit and public announcement of such results
and shall be paid promptly following the Parent’s
announcement of earnings. In the event that the Compensation
Committee is unable to act or if there shall be no such
Compensation Committee, then all references herein to the
Compensation Committee (except in the proviso to this sentence)
shall be deemed to be references to the Board. Upon his termination
from employment, the Executive shall be entitled to receive a
pro-rata portion of the Annual Bonus calculated based upon his
final day of employment, regardless of whether he is employed by
the Parent through the conclusion of the fiscal quarter or year, as
the case may be, on which the Annual Bonus is based.
(c)
Equity Awards and
Incentive Compensation: During the term of employment, the
Executive shall be eligible to participate in any equity-based
incentive compensation plan or program adopted by the Parent (such
awards under such plan or program, the “Share Awards”) as the
Compensation Committee or Board may from time to time determine.
Share Awards shall be subject to applicable plan terms and
conditions. And any additional terms and conditions as determined
by the Compensation Committee or the Board. On the Effective Date,
the Board of Directors of Parent shall award and reserve for
issuance 10 year options to purchase 846,000 shares of common stock
pursuant to the Parent’s Incentive Stock and Option Plan at
the fair market value thereof (as determined by NASDAQ) to
Executive.
6.
Severance
Compensation:
Upon
termination of employment for any reason, the Executive shall be
entitled to: (A) the sum of his annual Base Salary from the date of
termination to be paid according to Section 4; (B) any and all
reasonable expenses paid or incurred by the Executive in connection
with and related to the performance of his duties and
responsibilities for the Parent during the period ending on the
termination date to be paid according to Section 8; (C) any accrued
but unused vacation time through the termination date in accordance
with Parent policy; and (D) the sum of his annual Bonus from the
date of termination to be paid according to Section 5(a); and (E)
all Share Awards earned and vested prior to termination. With
respect to any Share Awards held by the Executive as of his death
that are not vested and exercisable as of such date, the Parent
shall fully accelerate the vesting and exercisability of such Share
Awards, so that all such Share Awards shall be fully vested and
exercisable as of the Executive’s death, such options (as
well as any Share Awards that previously became vested and
exercisable) to remain exercisable, notwithstanding anything in any
other agreement governing such options, until the earlier of
(A) a
period of one (1) year after the Executive’s death or (B) the
original term of the option, if such Share Awards is an
option.
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Additionally, if
the Executive’s employment is terminated prior to expiration
of the Employment Period (including due to his death or Disability,
as defined in Section 11(b)) unless the Executive’s
employment is terminated for Cause (as defined in Section 11(c)) or
the Executive terminates his employment without Good Reason (as
defined in Section 11(d) and other than for a Change in Control as
provided in Section 11(d) and Section 11(f)), the Executive shall
be entitled to receive a cash amount equal to the sum of the
Executive’s Base Salary, Annual Bonus and Share Awards earned
during the year immediately preceding the date of termination
(herein the “Separation Payment”), or
the amount payable (including Executive’s Base Salary, Annual
Bonus and Share Awards) for the remainder of the Employment Period
then in effect, if greater; provided, that the Executive executes
an agreement releasing Parent and its affiliates from any liability
associated with this Agreement and such release is irrevocable at
the time the Separation Payment is first payable under this Section
6 and the Executive complies with his other obligations under
Section 13 of this Agreement. Subject to the terms hereof, 100% of
the Separation Payment shall be paid within thirty (30) days of the
Executive’s termination of employment (“Initial
Payment”), provided that the Executive has executed a
release.
The
Executive may continue coverage with respect to the Parent’s
group health plans as permitted by the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”) for himself and
each of his “Qualified Beneficiaries”
as defined by COBRA (“COBRA Coverage”). The
Parent shall reimburse the amount of any COBRA premium paid for
COBRA Coverage timely elected by and for the Executive and any
Qualified Beneficiary of the Executive, and not otherwise
reimbursed, during the period that ends on the earliest of (x) the
date the Executive or the Qualified Beneficiary, as the case may
be, ceases to be eligible for COBRA Coverage, (y) the last day of
the consecutive eighteen (18) month period following the date of
the Executive’s termination of employment and (z) the date
the Executive or the Qualified Beneficiary, as the case may be, is
covered by another group health plan. To reimburse any COBRA
premium payment under this paragraph, the Parent must receive
documentation of the COBRA premium payment within ninety (90) days
of its payment.
7.
Clawback Rights.
The Annual Bonus, and any and all stock based compensation (such as
options and equity awards) (collectively, the “Clawback Benefits”) shall
be subject to “Clawback Rights” as
follows: during the period that the Executive is employed by the
Parent and upon the termination of the Executive’s employment
and for a period of three (3) years thereafter, if there is a
restatement of any financial results from which any Clawback
Benefits to the Executive shall have been determined, the Executive
agrees to repay any amounts which were determined by reference to
any Parent financial results which were later restated (as defined
below), to the extent the Clawback Benefits amounts paid exceed the
Clawback Benefits amounts that would have been paid, based on the
restatement of the Parent’s financial information. All
Clawback Benefits amounts resulting from such restated financial
results shall be retroactively adjusted by the Compensation
Committee to take into account the restated results, and any excess
portion of the Clawback Benefits resulting from such restated
results shall be immediately surrendered to the Parent and if not
so surrendered within ninety (90) days of the revised calculation
being provided to the Executive by the Compensation Committee
following a publicly announced restatement, the Parent shall have
the right to take any and all action to effectuate such adjustment.
The calculation of the revised Clawback Benefits amount shall be
determined by the Compensation Committee in good faith and in
accordance with applicable law, rules and regulations. All
determinations by the Compensation Committee with respect to the
Clawback Rights shall be final and binding on the Parent and the
Executive. The Clawback Rights shall terminate following a Change
of Control as defined in Section 12(f), subject to applicable law,
rules and regulations. For purposes of this Section 7, a
restatement of financial results that requires a repayment of a
portion of the Clawback Benefits amounts shall mean a restatement
resulting from material non-compliance of the Parent with any
financial reporting requirement under the federal securities laws
and shall not include a restatement of financial results resulting
from subsequent changes in accounting pronouncements or
requirements which were not in effect on the date the financial
statements were originally prepared (“Restatements”). The
parties acknowledge it is their intention that the foregoing
Clawback Rights as relates to Restatements conform in all respects
to the provisions of the Xxxx-Xxxxx Xxxx Street Reform and Consumer
Protection Act of 2010 (“Xxxx-Xxxxx Act”) and
require recovery of all “incentive-based” compensation,
pursuant to the provisions of the Xxxx-Xxxxx Act and any and all
rules and regulations promulgated thereunder from time to time
in effect. Accordingly, the terms and provisions of this Agreement
shall be deemed automatically amended from time to time to assure
compliance with the Xxxx-Xxxxx Act and such rules and regulations
as hereafter may be adopted and in effect.
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8.
Expenses. The
Executive shall be entitled to prompt reimbursement by the Parent
for all reasonable ordinary and necessary travel, entertainment,
and other expenses incurred by the Executive while employed (in
accordance with the policies and procedures established by the
Parent for its senior executive officers) in the performance of his
duties and responsibilities under this Agreement; provided, that
the Executive shall properly account for such expenses in
accordance with Parent policies and procedures.
9.
Other Benefits.
During the term of this Agreement, the Executive shall be eligible
to participate in incentive, stock purchase, savings, retirement
(401(k)), and welfare benefit plans, including, without limitation,
health, medical, dental, vision, life (including accidental death
and dismemberment) and disability insurance plans (collectively,
“Benefit
Plans”), in substantially the same manner and at
substantially the same levels as the Parent makes such
opportunities available to the Parent’s managerial or
salaried executive employees and/or its senior
executives.
The
Parent shall pay one hundred percent (100%) of the cost for any
group medical, vision and/or dental coverage elected by and for the
Executive and fifty percent (50%) of the additional incremental
cost for any group medical, vision and/or dental coverage elected
by the Executive for the Executive’s family.
The
Executive shall be entitled to air travel, including travel by
business class, as is reasonable and necessary for the performance
of his duties and responsibilities, in accordance with the
Parent’s policies as approved by the Board.
10.
Vacation. During
the term of this Agreement, the Executive shall be entitled to
accrue, on a pro rata basis, twenty (20) paid vacation days per
year. Vacation shall be taken at such times as are mutually
convenient to the Executive and the Parent and no more than ten
(10) consecutive days shall be taken at any one time without Parent
approval in advance.
11.
Termination of
Employment:
(a)
Death. If the
Executive dies during the Employment Period, this Agreement and the
Executive’s employment with the Parent shall automatically
terminate and the Parent’s obligations to the
Executive’s estate and to the Executive’s Qualified
Beneficiaries shall be those set forth in Section 6 regarding
severance compensation.
(b)
Disability. In the
event that, during the term of this Agreement the Executive shall
be prevented from performing his essential functions hereunder to
the full extent required by the Parent by reason of Disability (as
defined below), this Agreement and the Executive’s employment
with the Parent shall automatically terminate. The Parent’s
obligation to the Executive under such circumstances shall be those
set forth in Section 6 regarding severance compensation. For
purposes of this Agreement, “Disability” shall mean a
physical or mental disability that prevents the performance by the
Executive, with or without reasonable accommodation, of his
essential functions hereunder for an aggregate of ninety (90) days
or longer during any twelve (12) consecutive months. The
determination of the Executive’s Disability shall be made by
an independent physician who is reasonably acceptable to the Parent
and the Executive (or his representative), be final and binding on
the parties hereto and be made taking into account such competent
medical evidence as shall be presented to such independent
physician by the Executive and/or the Parent or by any physician or
group of physicians or other competent medical experts employed by
the Executive and/or the Parent to advise such independent
physician.
(c)
Cause.
(1) At
any time during the Employment Period, the Parent may terminate
this Agreement and the Executive’s employment hereunder for
Cause. For purposes of this Agreement, “Cause” shall mean: (a)
the willful and continued failure of the Executive to perform
substantially his duties and responsibilities for the Parent
(other than any such
failure resulting from the Executive’s death or Disability)
after a written demand by the Board for substantial performance is
delivered to the Executive by the Parent, which specifically
identifies the manner in which the Board believes that the
Executive has not substantially performed his duties and
responsibilities, which willful and continued failure is not cured
by the Executive within thirty (30) days following his receipt of
such written demand; (b) the conviction of, or plea of guilty or
nolo contendere to, a
felony, or (c) fraud, dishonesty or gross misconduct which is
materially and demonstratively injurious to the Parent. Termination
under clauses (b) or (c) of this Section 11(c)(1) shall not be
subject to cure.
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(2) For
purposes of this Section 11(c), no act, or failure to act, on the
part of the Executive shall be considered “willful”
unless done, or omitted to be done, by him in bad faith and without
reasonable belief that his action or omission was in, or not
opposed to, the best interest of the Parent. Between the time the
Executive receives written demand regarding substantial
performance, as set forth in subparagraph (1) above, and prior to
an actual termination for Cause, the Executive will be entitled to
appear (with counsel) before the full Board to present information
regarding his views on the Cause event. After such hearing,
termination for Cause must be approved by a majority vote of the
full Board (other than the Executive). After providing the written
demand regarding substantial performance, the Board may suspend the
Executive with full pay and benefits until a final determination by
the full Board has been made.
(3)
Upon termination of this Agreement for Cause, the Parent shall have
no further obligations or liability to the Executive or his heirs,
administrators or executors with respect to compensation and
benefits thereafter, except for the obligation to pay the Executive
any Base Salary earned through the date of termination to be paid
according to Section 4; any unpaid Annual Bonus to be paid
according to Section 5; reimbursement of any and all reasonable
expenses paid or incurred by the Executive in connection with and
related to the performance of his duties and responsibilities for
the Parent during the period ending on the termination date to be
paid according to Section 8; and any accrued but unused vacation
time through the termination date in accordance with Parent policy.
The Parent shall deduct, from all payments made hereunder, all
applicable taxes, including income tax, FICA and FUTA, and other
appropriate deductions.
(d)
For Good Reason or a
Change of Control or Without Cause.
(1) At
any time during the term of this Agreement and subject to the
conditions set forth in Section 12(d)(2) below the Executive may
terminate this Agreement and the Executive’s employment with
the Parent for “Good Reason” or for a “Change of
Control” (as defined in Section 12(f)). For purposes of this
Agreement, “Good
Reason” shall mean the occurrence of any of the
following events without Executive’s consent: (A) the
assignment to the Executive of duties that are significantly
different from, and/or that result in a substantial diminution of,
the duties that he assumed on the Effective Date (including
reporting to anyone other than solely and directly to the Board);
(B) the assignment to the Executive of a title that is different
from and subordinate to the title Chief Operating Officer of the
Parent, provided, however, for the absence of doubt following a
Change of Control, should the Executive be required to serve in a
diminished capacity in a division or unit of another entity
(including the acquiring entity), such event shall constitute Good
Reason regardless of the title of the Executive in such acquiring
company, division or unit; or (C) material breach by the Parent of
this Agreement.
(2) The
Executive shall not be entitled to terminate this Agreement for
Good Reason unless and until he shall have delivered written notice
to the Parent within ninety (90) days of the date upon which the
facts giving rise to Good Reason occurred of his intention to
terminate this Agreement and his employment with the Parent for
Good Reason, which notice specifies in reasonable detail the
circumstances claimed to provide the basis for such termination for
Good Reason, and the Parent shall not have eliminated the
circumstances constituting Good Reason within thirty (30) days of
its receipt from the Executive of such written notice. In the event
the Executive elects to terminate this Agreement for Good Reason in
accordance with Section 11(d)(1), such election must be made within
the twenty-four (24) months following the initial existence of one
or more of the conditions constituting Good Reason as provided in
Section 11(d)(1). In the event the Executive elects to terminate
this Agreement for a Change in Control in accordance with Section
11(d)(1), such election must be made within one hundred eighty
(180) days of the occurrence of the Change of Control.
(3) In
the event that the Executive terminates this Agreement and his
employment with the Parent for Good Reason or for a Change of
Control or the Parent terminates this Agreement and the
Executive’s employment with the Parent without Cause, the
Parent shall pay or provide to the Executive (or, following his
death, to the Executive’s heirs, administrators or executors)
the severance compensation set forth in Section 6 above. The
Parent shall deduct, from
all payments made hereunder, all applicable taxes, including income
tax, FICA and FUTA, and other appropriate deductions.
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(4) The
Executive shall not be required to mitigate the amount of any
payment provided for in this Section 11(d) by seeking other
employment or otherwise, nor shall the amount of any payment
provided for in this Section 11(d) be reduced by any compensation
earned by the Executive as the result of employment by another
employer or business or by profits earned by the Executive from any
other source at any time before and after the termination date. The
Parent’s obligation to make any payment pursuant to, and
otherwise to perform its obligations under, this Agreement shall
not be affected by any offset, counterclaim or other right that the
Parent may have against the Executive for any reason.
(e)
Without “Good
Reason” by the Executive. At any time during the term
of this Agreement, the Executive shall be entitled to terminate
this Agreement and the Executive’s employment with the Parent
without Good Reason and other than for a Change of Control by
providing prior written notice of at least thirty (30) days to the
Parent. Upon termination by the Executive of this Agreement or the
Executive’s employment with the Parent without Good Reason
and other than for a Change of Control, the Parent shall have no
further obligations or liability to the Executive or his heirs,
administrators or executors with respect to compensation and
benefits thereafter, except for the obligation to pay the Executive
any Base Salary earned through the date of termination to be paid
according to Section 4; any unpaid Annual Bonus to be paid
according to Section 5; reimbursement of any and all reasonable
expenses paid or incurred by the Executive in connection with and
related to the performance of his duties and responsibilities for
the Parent during the period ending on the termination date to be
paid according to Section 8; and any accrued but unused vacation
time through the termination date in accordance with Parent policy.
The Parent shall deduct, from all payments made hereunder, all
applicable taxes, including income tax, FICA and FUTA, and other
appropriate deductions.
(f)
Change of Control.
For purposes of this Agreement, “Change of Control” shall
mean the occurrence of any one or more of the following: (i) the
accumulation (if over time, in any consecutive twelve (12) month
period), whether directly, indirectly, beneficially or of record,
by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended) of more than fifty percent (50%) or more of the shares of
the outstanding Common Stock of the Parent, whether by merger,
consolidation, sale or other transfer of shares of Common Stock
(other than a merger or consolidation where the stockholders of the
Parent prior to the merger or consolidation are the holders of a
majority of the voting securities of the entity that survives such
merger or consolidation), (ii) a sale of all or substantially
all of the assets of the Parent or (iii) during any period of
twelve (12) consecutive months, the individuals who, at the
beginning of such period, constitute the Board, and any new
director whose election by the Board or nomination for election by
the Parent’s stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the twelve (12) month period or
whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority of
the Board; provided that the following acquisitions shall not
constitute a Change of Control for the purposes of this Agreement:
any acquisition of Common Stock or securities convertible into
Common Stock by any employee benefit plan (or related trust)
sponsored by or maintained by the Parent.
(g) Any
termination of the Executive’s employment by the Parent or by
the Executive (other than termination by reason of the
Executive’s death) shall be communicated by written Notice of
Termination to the other party of this Agreement. For purposes of
this Agreement, a “Notice of Termination”
shall mean a written notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment
under the provision so indicated, provided, however, failure to
provide timely notification shall not affect the employment status
of the Executive.
12.
Confidential
Information.
(a)
Disclosure of Confidential
Information. The Executive recognizes, acknowledges and
agrees that he has had and will continue to have access to secret
and confidential information regarding the Parent, its subsidiaries
and their respective businesses (“Confidential
Information”), including but not limited to, its
products, methods, formulas, software code, patents, sources of
supply, customer dealings, data, know-how, trade secrets and
business plans, provided such information is not in or does not
hereafter become part of the public domain, or become known to
others through no fault of the Executive. The Executive
acknowledges that such information is of great value to the Parent,
is the sole property of the Parent, and has been and will be
acquired by him in confidence. In consideration of the obligations
undertaken by the Parent herein, the Executive will not, at any
time, during or after his employment hereunder, reveal, divulge or
make known to any person, any information acquired by the Executive
during the course of his employment, which is treated as
confidential by the Parent, and not otherwise in the public domain.
The provisions of this Section 13 shall survive the termination of
the Executive’s employment hereunder.
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(b) The
Executive affirms that he does not possess and will not rely upon
the protected trade secrets or confidential or proprietary
information of any prior employer(s) in providing services to the
Parent or its subsidiaries.
(c) In
the event that the Executive’s employment with the Parent
terminates for any reason, the Executive shall deliver forthwith to
the Parent any and all originals and copies, including those in
electronic or digital formats, of Confidential Information;
provided, however, the Executive shall be entitled to retain (i)
papers and other materials of a personal nature, including, but not
limited to, photographs, correspondence, personal diaries,
calendars and rolodexes, personal files and phone books, (ii)
information showing his compensation or relating to reimbursement
of expenses, (iii) information that he reasonably believes may be
needed for tax purposes and (iv) copies of plans, programs and
agreements relating to his employment, or termination thereof, with
the Parent. The covenants and agreements in this Section 12 shall
exclude excludes information (A) which is in the public domain
through no unauthorized act or omission of Executive or (B) which
becomes available to Executive on a non-confidential basis from a
source other than Parent or its affiliates without breach of such
source’s confidentiality or non-disclosure obligations to
Parent or any of its affiliates.
13.
Non-Competition and
Non-Solicitation.
(a)
The Executive
agrees and acknowledges that the Confidential Information that the
Executive has already received and will receive is valuable to the
Parent and that its protection and maintenance constitutes a
legitimate business interest of the Parent, to be protected by the
non-competition restrictions set forth herein. The Executive agrees
and acknowledges that the non-competition restrictions set forth
herein are reasonable and necessary and do not impose undue
hardship or burdens on the Executive. The Executive also
acknowledges that the Parent’s Business (as defined in
Section 13(b) (1) below) is conducted worldwide (the
“Territory”), and that the
Territory, scope of prohibited competition, and time duration set
forth in the non-competition restrictions set forth below are
reasonable and necessary to maintain the value of the Confidential
Information of, and to protect the goodwill and other legitimate
business interests of, the Parent, its affiliates and/or its
clients or customers. The provisions of this Section 13 shall
survive the termination of the Executive’s employment
hereunder for the time periods specified below.
(b) The
Executive hereby agrees and covenants that he shall not without the
prior written consent of the Parent, directly or indirectly, in any
capacity whatsoever, including, without limitation, as an employee,
employer, consultant, principal, partner, shareholder, officer,
director or any other individual or representative capacity (other
than (i) as a holder of less than two (2%) percent of the
outstanding securities of a company whose shares are traded on any
national securities exchange or (ii) as a limited partner, passive
minority interest holder in a venture capital fund, private equity
fund or similar investment entity which holds or may hold an equity
or debt position in portfolio companies that are competitive with
the Parent; provided however, that the Executive shall be precluded
from serving as an operating partner, general partner, manager or
governing board designee with respect to such portfolio companies),
or whether on the Executive's own behalf or on behalf of any other
person or entity or otherwise howsoever, during the Term and
thereafter to the extent described below, within the
Territory:
(1)
Engage, own, manage, operate, control, be employed by, consult for,
participate in, or be connected in any manner with the ownership,
management, operation or control of any business in competition
with the Business of the Parent, as defined in the next sentence.
For purposes hereof, the Parent’s “Business”
shall mean research, development, techniques and technology in any
manner involving or related to regeneration of functionally
polarized tissue by use of Leucine-rich repeat-containing G-protein
coupled Receptor (LGR) expressing cells and any and all inventions,
technology and trade secrets related thereto or a result of the
services of Employee hereunder, as well as all activities that
involve the making, use or licensing thereof.
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(2)
Recruit, solicit or hire, or attempt to recruit, solicit or hire,
any employee, or independent contractor of the Parent to leave the
employment (or independent contractor relationship) thereof,
whether or not any such employee or independent contractor is party
to an employment agreement, for the purpose of competing with the
Business of the Parent;
(3)
Attempt in any manner to solicit or accept from any customer of the
Parent, with whom Executive had significant contact during
Executive’s employment by the Parent (whether under this
Agreement or otherwise), business of the kind or competitive with
the business done by the Parent with such customer or to persuade
or attempt to persuade any such customer to cease to do business or
to reduce the amount of business which such customer has
customarily done or might do with the Parent, or if any such
customer elects to move its business to a person other than the
Parent, provide any services of the kind or competitive with the
business of the Parent for such customer, or have any discussions
regarding any such service with such customer, on behalf of such
other person for the purpose of competing with the Business of the
Parent; or
(4)
Interfere with any relationship, contractual or otherwise, between
the Parent and any other party, including, without limitation, any
supplier, distributor, co-venturer or joint venturer of the Parent,
for the purpose of soliciting such other party to discontinue or
reduce its business with the Parent for the purpose of competing
with the Business of the Parent.
With
respect to the activities described in Paragraphs (1), (2), (3) and
(4) above, the restrictions of this Section 13(b) shall continue
during the Term of this Agreement and for a period of two (2) years
thereafter.
14.
Section
409A.
The
provisions of this Agreement are intended to comply with or are
exempt from Section 409A of the Code (“Section 409A”) and the
related Treasury Regulations and shall be construed in a manner
consistent with the requirements for avoiding taxes or penalties
under Section 409A. The Parent and the Executive agree to work
together in good faith to consider amendments to this Agreement and
to take such reasonable actions necessary, appropriate or desirable
to avoid imposition of any additional tax under Section 409A or
income recognition prior to actual payment to the Executive under
this Agreement.
It is
intended that any expense reimbursement made under this Agreement
shall be exempt from Section 409A. Notwithstanding the foregoing,
if any expense reimbursement made under this Agreement shall be
determined to be “deferred compensation” subject to
Section 409A (“Deferred Compensation”),
then (a) the right to reimbursement or in-kind benefits is not
subject to liquidation or exchange for another benefit, (b) the
amount of expenses eligible for reimbursement, or in-kind benefits,
provided during any taxable year shall not affect the expenses
eligible for reimbursement, or in-kind benefits to be provided, in
any other taxable year (provided that this clause (b) shall not be
violated with regard to expenses reimbursed under any arrangement
covered by Section 105(b) of the Code solely because such expenses
are subject to a limit related to the period the arrangement is in
effect) and (c) such payments shall be made on or before the last
day of the taxable year following the taxable year in which the
expense was incurred.
With
respect to the time of payments of any amount under this Agreement
that is Deferred Compensation, references in the Agreement to
“termination of employment” and substantially similar
phrases, including a termination of employment due to the
Executive’s Disability, shall mean “Separation from Service”
from the Parent within the meaning of Section 409A (determined
after applying the presumptions set forth in Treasury Regulation
Section 1.409A-1(h)(1)). Each installment payable hereunder shall
constitute a separate payment for purposes of Treasury Regulation
Section 1.409A-2(b), including Treasury Regulation Section
1.409A-2(b)(2)(iii). Each payment that is made within the terms of
the “short-term deferral” rule set forth in Treasury
Regulation Section 1.409A-1(b)(4) is intended to meet the
“short-term deferral” rule. Each other payment is
intended to be a payment upon an
involuntary termination from service and payable pursuant to
Treasury Regulation Section 1.409A-1(b)(9)(iii), et. seq., to the
maximum extent permitted by that regulation, with any amount that
is not exempt from Code Section 409A being subject to Code Section
409A.
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Notwithstanding
anything to the contrary in this Agreement, if the Executive is a
“specified employee” within the meaning of Section 409A
at the time of the Executive’s termination, then only that
portion of the severance and benefits payable to the Executive
pursuant to this Agreement, if any, and any other severance
payments or separation benefits which may be considered Deferred
Compensation (together, the “Deferred Separation
Benefits”), which (when considered together) do not
exceed the Section 409A Limit (as defined herein) may be made
within the first six (6) months following the Executive’s
termination of employment in accordance with the payment schedule
applicable to each payment or benefit. Any portion of the Deferred
Separation Benefits in excess of the Section 409A Limit otherwise
due to the Executive on or within the six (6) month period
following the Executive’s termination will accrue during such
six (6) month period and will become payable in one lump sum cash
payment on the date six (6) months and one (1) day following the
date of the Executive’s termination of employment. All
subsequent Deferred Separation Benefits, if any, will be payable in
accordance with the payment schedule applicable to each payment or
benefit. Notwithstanding anything herein to the contrary, if the
Executive dies following termination but prior to the six (6) month
anniversary of the Executive’s termination date, then any
payments delayed in accordance with this paragraph will be payable
in a lump sum as soon as administratively practicable after the
date of the Executive’s death and all other Deferred
Separation Benefits will be payable in accordance with the payment
schedule applicable to each payment or benefit.
For
purposes of this Agreement, “Section 409A Limit” shall
mean a sum equal to (x) the amounts payable within the terms of the
“short-term deferral” rule under Treasury Regulation
Section 1.409A-1(b)(4) plus (y) the amount payable as
“separation pay due to involuntary separation from
service” under Treasury Regulation Section
1.409A-1(b)(9)(iii) equal to the lesser of two (2) times: (i) the
Executive’s annualized compensation from the Parent based
upon his annual rate of pay during the Executive’s taxable
year preceding his taxable year when his employment terminated, as
determined under Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1); and
(ii) the maximum amount that may be taken into account under a
qualified plan pursuant to Section 401(a)(17) of the Code for the
year in which the Executive’s employment is terminated.
15.
Miscellaneous.
(a) Neither
the Executive nor the Parent may assign or delegate any of their
rights or duties under this Agreement without the express written
consent of the other; provided, however, that the Parent shall have
the right to delegate its obligation of payment of all sums due to
the Executive hereunder, provided that such delegation shall not
relieve the Parent of any of its obligations
hereunder.
(b)
During the term of this Agreement, the Parent (i) shall indemnify
and hold harmless the Executive and his heirs and representatives
to the maximum extent provided by the laws of the State of Delaware
and by Parent’s bylaws and (ii) shall cover the Executive
under the Parent’s directors’ and officers’
liability insurance on the same basis as it covers other senior
executive officers and directors of the Parent.
(c)
This Agreement constitutes and embodies the full and complete
understanding and agreement of the parties with respect to the
Executive’s employment by the Parent, supersedes all prior
understandings and agreements, whether oral or written, between the
Executive and the Parent, and shall not be amended, modified or
changed except by an instrument in writing executed by the party to
be charged. If any provision of this Agreement, or the application
thereof, shall for any reason and to any extent be invalid or
unenforceable, then the remainder of this Agreement and the
application of such provision to other persons or circumstances
shall be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such
void or unenforceable provision of this Agreement with a valid and
enforceable provision that shall achieve, to the extent possible,
the economic, business and other purposes of the void or
unenforceable provision. No waiver by either party of any provision
or condition to be performed shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same time or any prior
or subsequent time.
(d)
This Agreement shall inure to the benefit of, be binding upon and
enforceable against, the parties hereto and their respective
successors, heirs, beneficiaries and permitted
assigns.
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(e) The
headings contained in this Agreement are for convenience of
reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) All
notices, requests, demands and other communications required or
permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given when personally delivered, sent by
registered or certified mail, return receipt requested, postage
prepaid, or by reputable national overnight delivery service (e.g.,
Federal Express) for overnight delivery to the party at the address
set forth in the preamble to this Agreement, or to such other
address as either party may hereafter give the other party notice
of in accordance with the provisions hereof. Notices shall be
deemed given on the sooner of the date actually received or the
third business day after deposited in the mail or one business day
after deposited with an overnight delivery service for overnight
delivery.
(g)
This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York, and each of the
parties hereto irrevocably consents to the jurisdiction and venue
of the federal and state courts located in the State of New York,
County of New York, for any disputes arising out of this Agreement,
or the Executive’s employment with the Parent. The prevailing
party in any dispute arising out of this Agreement shall be
entitled to his or its reasonable attorney’s fees and
costs.
(h)
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one of the same instrument. The
parties hereto have executed this Agreement as of the date set
forth above.
(i) The
Executive represents and warrants to the Parent, that he has the
full power and authority to enter into this Agreement and to
perform his obligations hereunder and that the execution and
delivery of this Agreement and the performance of his obligations
hereunder will not conflict with any agreement to which the
Executive is a party.
(j) The
Parent represents and warrants to the Executive that it has the
full power and authority to enter into this Agreement and to
perform its obligations hereunder and that the execution and
delivery of this Agreement and the performance of its obligations
hereunder will not conflict with any agreement to which the Parent
is a party.
[Signature
page follows immediately]
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IN
WITNESS WHEREOF, the Executive and the Parent have caused this
Executive Employment Agreement to be executed as of the date first
above written.
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By:
Name:
_____________________________
Title: _____________________________
Date
Signed: ________________________
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Executive
Date
Signed: _________________________
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-11-
