EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (this “Agreement”) is entered into this first day of
January 2009, by and between Medasorb Technologies Corporation and its
wholly-owned subsidiary, CytoSorbents, Inc., (collectively, the “Company”), and
Xxxxx Xxxxxxx (“Employee”).
The
Company wishes to employ Employee as Chief Operating Officer upon the terms and
conditions set forth in this Agreement and Employee is willing to accept
employment subject to the terms and conditions set forth
below. Accordingly, the parties, intending to be legally bound, agree
as follows:
1. Employment and
Term
1.1 Employment. Subject
to the terms and conditions hereof, the Company hereby employs Employee during
the term of employment set forth in Section 1.2 to serve as Chief Operating
Officer of the Company and perform such services and duties as are normally and
customarily associated with such position as well as such other associated
duties as the Chief Executive Officer (“CEO”) shall
determine. Employee hereby accepts such employment and agrees to
devote sufficient time, attention and energies during regular business hours to
effectively perform his duties and obligations hereunder.
1.2 Term. The term
of employment of Employee under this Agreement shall commence January 1, 2009
and expiring on December 31, 2009 (the “Term”) subject to the provisions for
early termination set forth herein and subject to renewal based on approval by
the Board of Directors (“BOD”).
2. Compensation. In
consideration of the services to be rendered hereunder, the Company
hereby agrees to pay Employee an initial annual base compensation of $205,303
payable in equal semimonthly installments in accordance with the usual practice
of the Company which base compensation shall be subject to annual review (but
his compensation may not be reduced from then current level) by the Compensation
Committee. Employee stock options will be adjusted on the same basis
as all other shareholders to account for any stock split, stock dividend,
combination or recapitalization.
3. Benefits.
3.1 Participation in
Plans. During the term hereof, Employee shall be entitled to
participate on the same terms as afforded other executive officers in any group
insurance, hospitalization, medical, dental, health and accident, disability or
similar plan or program of the Company now existing or established hereafter to
the extent that he is eligible under the general provisions thereof; provided
that in no case shall the benefits be reduced or less than that granted, awarded
or provided to Employee on the date hereof.
3.2 Reasonable Business
Expenses. Employee shall be allowed reimbursement for
reasonable business expenses in connection with the performance of his duties
hereunder upon presentation by Employee of the details of, vouchers for, such
expenses, including tourist class commercial air travel, and Employee shall be
furnished reasonable office space, assistance and facilities.
3.3 Vacation. Employee
shall be entitled to a vacation (without deduction of salary or other
compensation) for the period as is in conformity with the Company’s policy
regarding vacations for management employees (but in no event less than three
weeks per year).
3.4 Bonuses. Employee
may receive such discretionary bonuses as the BOD, in its sole discretion and
from time to time, deems appropriate.
Early Termination of
Employment
4.1 Termination for Justifiable
Cause. In addition to termination pursuant to Section 1.2, the
Company, by written notice to Employee authorized by the BOD may terminate
Employee’s employment for “justifiable cause”, which shall mean any of the
following events: (a) adjudication by a court of competent jurisdiction that
Employee has committed an act of fraud or dishonesty resulting or intended to
result, directly or indirectly, in personal enrichment at the expense of the
Company; (b) an conviction of a felony (other than a motor vehicle related
matter) involving moral turpitude; (c) repeated failure or refusal by Employee
to follow written policies and directions reasonably established by the BOD that
go uncorrected for a period of thirty (30) consecutive days after written notice
has been provided to Employee; or (d) persistent willful failure by Employee to
fulfill his duties hereunder that goes uncorrected for a period of thirty (30)
consecutive days after written notice has been provided Employee. In
the event of 4.1 (c) and 4.1 (d), Employee will be receive 15 calendar days of
notice, after which his employment will be terminated.
4.2 In
the event that the BOD reasonably determines that the Employee has committed a
felony (other than a motor vehicle related matter), a material act of fraud or
other willful tort against the Company, it shall have the right to suspend
Employee from his position and duties hereunder without compensation until such
time as either the action is dropped or no longer pursued or a final
adjudication of Employee’s actions is made by a court (whether civil or criminal
as appropriate) of competent jurisdiction. Should said adjudication
find Employee innocent (or not at fault) or the action is dropped or no longer
pursued, the Company shall promptly pay him all unpaid back salary together with
interest on said amount (at the average consumer loan rate published by
Citibank, N.A., during the suspension period) and, if said final adjudication is
rendered or action dropped or no longer pursued within 12 months of Employee’s
suspension, he may, at his option, be reinstated to his position and this
Agreement continued as if never interrupted.
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4.3 Permanent Disability of
Employee. The Company shall have the right to terminate
Employee’s employment hereunder if the BOD shall in good faith and on the basis
of reasonable medical evidence determine that Employee, by reason of physical or
mental disability, has been unable to perform the services required of him
hereunder for more than 120 consecutive days or an aggregate of 180 calendar
days, during any 12-month period. Such termination shall be effective
as of the last day of the month following the month in which the Company shall
have given notice to Employee of its intention to terminate pursuant to this
paragraph. Company paid Disability Benefits will be activated 90 days
after termination.
4.4 Compensation Upon Early
Termination.
(a) In
the event of termination of this Agreement for “justifiable cause” as described
in Section 4.1, or pursuant to Section 1.2 hereof, Employee shall be entitled to
the compensation earned by him before the effective date of termination, as
provided for in this Agreement, computed pro rata up to and including that date,
in lieu of salary and other benefits under this Agreement.
(b) If
prior to the expiration of the term of this Agreement Employee dies, the Company
shall continue Employee’s compensation and coverage of Employee’s direct
dependents (if any and if they are eligible) under all plans or programs of the
types listed in Section 3.1 for a period of 120 days, provided that no benefits
will continue past the end of the term of this Agreement.
(c) Upon
a Change of Control or upon Employee’s termination for “Good Reason” as defined
below, Employee shall then be entitled to receive, in lieu of salary and other
benefits under this Agreement, (i) an amount equal to two weeks of his
then-current base salary for every year Employee was employed by the Company,
payable in equal semi-monthly payments in arrears without interest for a period
of three (3) months, (ii) continued coverage under all plans or programs of the
types listed in Section 3.1 until the sooner of 1 year or one (1) month after
Employee becomes otherwise employed and eligible for other comparable coverage,
and (iii) all other benefits provided to Employee under this Agreement for a
period of thirty (30) days.
4.5 In
the event Employee is terminated for any reason other than for “justifiable
cause” as defined in Section 4.1 hereof, death, disability or voluntary
termination (unless the Company and Employee mutually agree to such voluntary
termination), then all unexercised options granted to Employee under the
Company’s option plan (including without limitation the Options granted pursuant
to Section 2(b) hereof) shall be deemed fully vested and exercisable immediately
upon Employee’s termination. The foregoing benefit shall be in
addition to, and not in lieu of, any similar benefit that may be contained in
any other agreement between the Company and Employee.
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4.6
(a) Upon the occurrence of a Change of Control of the Company or Employee
terminates for Good Reason pursuant to Section 4.6(d), all options granted to
Employee under the Company option plan and the Options granted to Employee
pursuant to Section 2(b) hereof shall be automatically fully vested and
exercisable immediately upon a Change of Control.
(b)
For purposes of this Agreement, “Change of Control” shall be deemed to have
occurred if, during the term of this agreement:
(i) the
beneficial ownership of at least 50% of the Company’s voting securities or all
or substantially all of the assets of the Company shall have been acquired,
directly or indirectly by a single person or a group of affiliated persons,
other that the Employee or a group in which the Employee is a member, in any
transaction or series of transactions or
(ii) as
the result of or in connection with any cash tender offer, exchange offer, sale
of assets, merger, consolidation or other business combination of the Company
with another corporation or entity the new BOD of Managers is comprised of a
majority of Managers chosen or elected by the members of the new/combined entity
who were not members of the Company before such cash tender offer, exchange
offer, sale of assets, merger, consolidation or other business combination of
the Company with another corporation or entity
(c) For
purposes of this Agreement, the date of Change of Control shall mean the earlier
to occur of:
(i) the
first date on which a single person or group of affiliated persons acquires the
beneficial ownership of 50% or more of the Company’s voting securities or all or
substantially all of the Company’s assets in any transaction or series of
transactions; or
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(ii)
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the
date on which a cash tender offer, exchange offer, sale of assets, merger,
consolidation other business combination resulting in the change in the
Board of Directors contemplated by Section 4.6 hereof is
consummated.
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(d) For
purposes of this Agreement, the term “Good Reason” shall mean the
assignment of an Employee of any duties that are not in the same corporate
capacity or area of operations or are not of the same general nature as
Employee’s duties with Company without the Employee’s written
consent.
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4.7 In
the event that Employee is terminated prior to the end of this Agreement, and
such early termination is not for Justifiable Cause under section 4.1 (a) and
(b), employee will receive a severance of (2) two weeks salary for each year
employed at a Company upon termination of employment.
5. Confidentiality and
Non-Competition.
5.1 (i)
Confidentiality. During
the term of employment under this Agreement, Employee will have access to and
become acquainted with various confidential information including without
limitation, trade secrets, customer relationships, formulas, devices,
inventions, processes, know-how, financial information and other compilations of
information, records, and specifications, which are owned by the
Company. Employee shall not disclose any of the Company’s
confidential information, directly or indirectly, or use them in any way, either
during the term of this Agreement or at any time thereafter, except as required
in the course of his employment for the Company. All files, records,
documents, drawings, specifications, equipment and similar items relating to the
business of the Company, whether prepared by Employee or otherwise coming into
his possession, shall remain the exclusive property of the Company and shall not
be removed from the premises of the Company under any circumstances whatsoever
without the prior written consent of the Company, and if removed shall be
immediately returned to the Company upon any termination of his employment and
no copies thereof shall be kept by Employee, provided, however, that Employee
shall be entitled to retain documents reasonably related to his interest as a
shareholder.
(ii) Inventions and Shop
Right. Every invention, discovery or improvement made or conceived by
Employee related to the business of the Company during his employment by the
Company whenever and wherever made or conceived, and whether or not during
business hours, of any product, article, appliance, tool, device, formula,
process, machinery or pattern similar to, or which constitutes an improvement,
on those heretofore, now or at any time during this employment, manufactured or
used by the Company in connection with the manufacture or process of any product
heretofore or now or hereafter manufactured by the Company, or of any product
which shall or could reasonably be manufactured in the reasonable expansion of
the Company’s business, shall be and continue remain the Company’s exclusive
property, without any added compensation or any reimbursement for expenses to
Employee, and upon the conception of any and every such invention, discovery or
improvement and without waiting to perfect or complete it, Employee promises and
agrees that he will immediately disclose it to the Company and to no one else
and thenceforth will treat it as the property and secret of the
Company. Employee will also execute any instruments requested from
time to time by the Company to vest in it complete title and ownership to such
invention, discovery or improvement and will, at the request of the Company, do
such acts and execute such instruments as the Company may require but at the
Company’s expense to obtain Letters Patent in the United States and foreign
countries, for such invention, discovery or improvement and for the purpose of
vesting title thereto in the Company, all without any reimbursement for
expenses or otherwise and without any additional compensation of any
kind to Employee.
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5.2 Non-Competition. In
the event of a termination of this Agreement for any reason, Employee shall be
prohibited for a period of one (1) year from the effective date of this
separation from engaging in any business in competition with that of the Company
in those states within the United States and those countries outside the United
States in which the Company at the time of Employee’s separation has conducted
business or where Company has written a reasonable plan to conduct business in
the next 12 months or directly or indirectly advising or consulting to or
otherwise performing services for or providing assistance to any person, firm,
corporation, or other entity engaged in such competitive business, provided,
however, nothing herein contained shall be construed as (a) preventing Employee
from investing his personal assets in any businesses which do not compete
directly or indirectly with the Company, provided such investment or investments
do not require any services on his part in the operation of the affairs of the
entity in which such investment is made and in which his participation is solely
that of an investor, (b) preventing Employee from purchasing securities in any
corporation whose securities in any corporation whose securities are regularly
traded, if such purchases shall not result in his owning beneficially at any
time 3% or more of equity securities of any corporation engaged in a business
which is competitive, directly or indirectly, to that of the Company, (c)
preventing Employee from engaging in any activities, if he receives the prior
authorization of the Managers. Notwithstanding anything herein to the
contrary this Section 5.2 shall not be effective in the event Employee has been
discharged for any reason other than “justifiable cause” or voluntarily leaves
the employment of the Company with the mutual agreement of the
Company.
5.3 Subsequent
to the termination of this Agreement, Employee will not for a period of one (1)
year materially interfere with or disrupt the Company’s business relationship
with its customers or suppliers or employ any person who was employed with the
Company at any time during the 6 months prior to Employee’s termination, or for
a period of three (3) years, directly or indirectly solicit any of the employees
to leave the employ of the Company.
6. Notices. All
notices under this Agreement shall be in writing and shall be deemed effective
when delivered in person (in the Company’s case, to its CEO or Secretary) or
forty eight (48) hours after deposit thereof in the U.S. mail, postage prepaid,
addressed to Employee, at last known address as carried in the records of the
Company, or to the Company, at the corporate headquarters, to the attention of
the Secretary, or to such other address as the party to be notified may specify
by notice to the other party.
7. Assigns and
Successors. The rights and obligations of the Company under
this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company and the rights and obligations of Employee
shall move to the benefit of and shall be binding on Employee and his legal
representatives or heirs. This agreement constitutes a personal
service agreement and Employee’s obligations hereunder may not be transferred or
assigned by Employee.
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8. Amendment Waiver.
This Agreement may be amended, and any right or claim hereunder waived, only by
a written instrument signed by both Employee and the Company, following
authorization by the BOD. Nothing in this Agreement, express or
implied, is intended to confer upon any third person any rights or remedies
under or by reason of this Agreement. No amendment or waiver of this
Agreement requires the consent of any individual, partnership, corporation or
other entity not a party of this Agreement.
9. Injunction.
(a) Should Employee at any
time violate or threaten to violate any of the provisions of this Agreement, the
Company shall be entitled to an injunction restraining Employee from doing or
continuing to do or performing any such acts and Employee hereby consents to the
issuance of such an injunction.
(b) In the event that a
proceeding is bought in equity to enforce the provisions of this paragraph,
Employee shall not urge as a defense that there is an adequate remedy at law,
nor shall the Company be prevented from seeking any other remedies which may be
available.
(c) The existence of a claim
or cause of action by the Company against Employee, or by Employee against the
Company, whether predicated upon this Agreement or otherwise, shall not
constitute a defense to the endorsement by the Company of the foregoing
restrictive covenants but shall be litigated separately.
(d) The provisions of this
Section 9 shall survive termination of this Agreement.
10. Governing Law and
Jurisdiction. This Agreement in its interpretation and
application and enforcement shall be governed by the law of the State of New
Jersey without application of its conflict of laws provisions, and any legal
action commenced by either party seeking interpretation, application and/or
enforcement of this Agreement shall be brought only in the State of New Jersey
of federal court sitting in Princeton, NJ.
11. Prior
Agreements. This Agreement supercedes and replaces any and all
prior agreements between the parties as to its subject matter.
12. Construction. Paragraph
headings are for convenience only and shall not be considered a part of the
terms and provisions of this Agreement.
13. Effective
Date. The effective date of this Agreement shall be January 1,
2009.
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IN
WITNESS WHEREOF, the parties have executed this Agreement.
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MedaSorb
Technologies Corporation and
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CytoSorbents,
Inc.
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EMPLOYEE
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By:
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Xxxxxxx
X. Xxxx, CEO
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MedaSorb
Technologies Corporation and
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CytoSorbents,
Inc.
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