Exhibit 10.2
EMPLOYMENT AGREEMENT
XXXXXX XXXXX XXXXX
MAY 5, 2006
THIS EMPLOYMENT AGREEMENT (the "AGREEMENT") is made as of this 5th day of
May, 2006 by and between PHARMION CORPORATION, with principal offices at 0000
00xx Xxxxxx, Xxxxxxx, Xxxxxxxx (the "COMPANY"), and Xxxxxx Xxxxx Xxxxx, 0 Xxxx
Xxxxxx, Xxx Xxxxxx, Xxxxxxxxxx, 00000 ("EXECUTIVE," and together with the
Company, the "PARTIES").
WHEREAS, as a condition of the Executive's employment with the Company,
which will commence as set forth herein between now and November 1, 2006, the
Executive executed that certain Confidential Information and Invention
Assignment Agreement (the "Confidentiality Agreement");
NOW, THEREFORE, in consideration of the promises, mutual covenants, the
above recitals, and the agreements herein set forth, and for other good and
valuable consideration, the sufficiency of which is hereby acknowledged, the
Parties agree to the following terms and conditions of Executive's employment:
1. EMPLOYMENT. The Company hereby agrees to employ Executive as Chief
Medical Officer and Executive Vice President, and Executive hereby agrees to
accept such employment, in each case upon the terms and conditions set forth
herein. Executive's employment as provided herein, shall commence immediately
upon the Company's receipt of notice from Executive that he has terminated all
employment relationships with his current employer, Novartis AG; or such earlier
date as mutually agreed upon by Executive and the Company; provided that such
notice is delivered to the Company no later than November 1, 2006. If such
notice is not delivered by November 1, 2006 and Executive and the Company have
not mutually agreed to an earlier employment date, this Agreement shall be null
and void, ab initio. Executive's employment, once commenced, shall thereafter
continue until terminated pursuant to the provisions of Section 8 below
("TERMINATION").
2. AT-WILL EMPLOYMENT. IT IS UNDERSTOOD AND AGREED BY THE COMPANY AND
EXECUTIVE THAT THIS AGREEMENT DOES NOT CONTAIN ANY PROMISE OR REPRESENTATION
CONCERNING THE DURATION OF EXECUTIVE'S EMPLOYMENT WITH THE COMPANY. EXECUTIVE
SPECIFICALLY ACKNOWLEDGES THAT HIS EMPLOYMENT WITH THE COMPANY IS AT-WILL AND
MAY BE ALTERED OR TERMINATED BY EITHER EXECUTIVE OR THE COMPANY AT ANY TIME,
WITH OR WITHOUT CAUSE AND/OR WITH OR WITHOUT NOTICE. EXECUTIVE ACKNOWLEDGES THAT
THE COMPANY'S ONLY OBLIGATIONS, IF ANY, UPON TERMINATION OF EXECUTIVE'S
EMPLOYMENT ARE SET FORTH IN SECTION 9 BELOW, WHICH SECTION DOES NOT ALTER THE
AT-WILL NATURE OF EXECUTIVE'S EMPLOYMENT. THE NATURE, TERMS OR CONDITIONS OF
EXECUTIVE'S EMPLOYMENT WITH THE COMPANY CANNOT BE CHANGED BY ANY ORAL
REPRESENTATION, CUSTOM, HABIT OR PRACTICE, OR ANY OTHER WRITING EXCEPT AS
PROVIDED FOR IN THE FINAL SENTENCE OF THIS SECTION 2.
IN ADDITION, THAT THE RATE OF SALARY OR OTHER COMPENSATION IS STATED IN UNITS OF
YEARS OR MONTHS DOES NOT ALTER THE AT-WILL NATURE OF THE EMPLOYMENT, AND DOES
NOT MEAN AND SHOULD NOT BE INTERPRETED TO MEAN THAT EXECUTIVE IS GUARANTEED
EMPLOYMENT TO THE END OF ANY PERIOD OF TIME OR FOR ANY PERIOD OF TIME. IN THE
EVENT OF CONFLICT BETWEEN THIS DISCLAIMER AND ANY OTHER STATEMENT, ORAL OR
WRITTEN, PRESENT OR FUTURE, CONCERNING TERMS AND CONDITIONS OF EMPLOYMENT, THE
AT-WILL RELATIONSHIP CONFIRMED BY THIS DISCLAIMER SHALL CONTROL. THIS AT-WILL
STATUS CANNOT BE ALTERED EXCEPT IN WRITING SIGNED BY EXECUTIVE AND THE COMPANY,
WITH EXPLICIT APPROVAL OF THE BOARD OF DIRECTORS.
3. DUTIES. Executive shall render exclusive, full-time services (except if
and to the extent otherwise agreed to in advance by the Company's CEO) to the
Company as its Chief Medical Officer and Executive Vice President. Executive
shall render such services diligently. At the outset of employment with the
Company, Executive shall report to the Company's Chief Executive Officer, who is
now Xxxxxxx Xxxxxxx. Executive shall perform services under this Agreement at
the San Francisco, California office of the Company, from such other locations
as directed by the Company, and from locations necessary to perform the duties
of Chief Medical Officer and Executive Vice President under this Agreement.
Executive's responsibilities, title, working conditions, location, duties and/or
any other aspect of Executive's employment may be changed, added to or
eliminated during Executive's employment at the sole discretion of the Company.
While employed by the Company under this Agreement, Executive shall devote his
best efforts and his full business time, skill and attention to the performance
of his duties on behalf of the Company.
4. POLICIES AND PROCEDURES. Executive agrees that he is subject to and will
comply with the policies and procedures of the Company, as such policies and
procedures may be modified, added to or eliminated from time to time at the sole
discretion of the Company, except to the extent any such policy or procedure
specifically conflicts with the express terms of this Agreement. Executive
further agrees and acknowledges that any written or oral policies and procedures
of the Company do not constitute contracts between the Company and Executive.
5. COMPENSATION.
(a) BASE SALARY. For services rendered under this Agreement, the Company
agrees to pay to Executive, and Executive agrees to accept a salary of
$350,000.00 per annum ("Base Salary"), prorated for partial years of employment.
Such Base Salary shall be payable in installments in accordance with the
Company's normal payroll practices and shall be subject to such deductions or
withholdings as the Company is required to make pursuant to law, or by further
agreement with Executive. Executive's Base Salary will be reviewed annually by
the Company's Board of Directors, and may be adjusted from time to time, as the
Board, in its sole discretion, deems appropriate.
(b) BONUS. Executive will be eligible to participate in a bonus plan
pursuant to which he may be entitled to receive an annual bonus of his Base
Salary based upon
2
the achievement by Executive and the Company of certain milestones as determined
solely in the discretion of the Company's Board of Directors.
6. OTHER BENEFITS. While employed by the Company as provided herein:
(a) EMPLOYEE BENEFITS. Executive shall be entitled to participate in the
Company's various employee benefit plans as such plans are established pursuant
to the terms and conditions of such plans. Currently, the Company has adopted
the following plans: Group health, vision and dental insurance plan; short and
long term disability plan; life insurance plan; and 401(k) plan. The Company
reserves the right to alter, amend and/or terminate the benefits provided to
Executive from time to time at the Company's sole discretion, and nothing in
this Section shall require that the Company adopt, amend, maintain or terminate
any employee benefit plan.
(b) EXPENSE REIMBURSEMENT. Executive shall receive, against presentation
of proper receipts and vouchers, reimbursement for direct and reasonable
out-of-pocket expenses incurred in connection with the performance of his duties
hereunder, according to the policies of the Company.
(c) PAID VACATION TIME. Executive shall be entitled to 4 weeks paid
vacation
time per year in accordance with the Company's vacation time policy.
7. CONFIDENTIAL INFORMATION AND OTHER OBLIGATIONS. Executive understands,
acknowledges and agrees that he continues to be bound by the terms and
conditions of the Confidentiality Agreement and agrees to comply in all respects
with his obligations under the Confidentiality Agreement.
8. TERMINATION. Executive's employment hereunder may be terminated without
any breach of this Agreement under the following circumstances (each, a
"Termination"):
(a) TERMINATION UPON EXECUTIVE'S DEATH. This Agreement shall terminate
upon the death of Executive.
(b) TERMINATION UPON EXECUTIVE'S DISABILITY. Subject to any applicable
state or federal law or regulation, governing employees with disabilities, the
Company may terminate this Agreement upon the Disability of Executive. For
purposes of this Agreement, `Disability" shall mean that Executive, due to
illness, accident, or other physical or mental incapacity, has been
substantially unable to perform the duties required of him under this Agreement,
either with or without reasonable assistance, for a continuous period of more
than three months.
(c) TERMINATION BY THE COMPANY FOR JUST CAUSE. The Company may terminate
Executive's employment under this Agreement for Just Cause. For purposes of this
Agreement, "Just Cause" for termination shall mean that the Company, acting in
good faith based upon the information then known to it, determines that:
(i) Executive has committed or engaged in negligent or willful
conduct that is likely to be detrimental to the Company;
3
(ii) Executive has engaged in acts which constitute theft, fraud, or
other illegal or dishonest conduct;
(iii) Executive has willfully disobeyed the reasonable and lawful
directives of the Company's Chief Executive Officer or the Company's President
or Board of Directors;
(iv) Executive has refused or is unwilling to perform his job
duties;
(v) Executive has failed adequately to perform his job duties
(provided, however, that the Company shall first provide Executive with written
notice of the deficiencies in his performance and Executive shall be given 45
days to remedy such deficiencies);
(vi) Executive has demonstrated habitual absenteeism;
(vii) Executive is substantially dependent on alcohol or any
controlled substance or violates any general Company policy with regard to
alcohol or controlled substances;
(viii) Executive has engaged in acts which constitute sexual or
other forms of illegal harassment or discrimination;
(ix) Executive makes public remarks that disparage the Company, its
Board of Directors, officers, directors, advisors, executives, affiliates or
subsidiaries;
(x) Executive violates his fiduciary duty to the Company, or his
duty of loyalty to the Company; or
(xi) Executive breaches any term of this Agreement or the
Confidentiality Agreement.
The Parties acknowledge that this definition of "Just Cause" is not
intended and does not apply to any aspect of the relationship between the
Company and any of its employees, including Executive, beyond determining
Executive's eligibility for severance pay pursuant to Section 9 below.
(d) TERMINATION BY THE COMPANY WITHOUT JUST CAUSE. The Company may
terminate Executive's employment without Just Cause upon written notice to
Executive.
(e) TERMINATION BY EXECUTIVE FOR GOOD REASON. Upon written notice to the
Company, Executive may terminate his employment under this Agreement for Good
Reason. For purposes of this Agreement, "Good Reason" shall mean:
(i) The Company becoming insolvent, as evidenced by its inability to
meet its obligations in the ordinary course of business;
4
(ii) A reduction in Executive's Base Salary of more than 10% per
year, without Executive's consent;
(iii) Executive being required to relocate his residence further
than 45 miles from the Company's office, without Executive's consent; or
(iv) A material reduction in the scope of Executive's duties or a
material change in the content of Executive's duties.
Executive must provide the Company with written notice of his decision to
terminate his employment for Good Reason pursuant to this Section 8(e) no later
than 90 days following the receipt of a notice from the Company that an act or
event constituting Good Reason has occurred.
(f) TERMINATION BY EXECUTIVE FOR OTHER THAN GOOD REASON. Executive may
terminate his employment under this Agreement other than for Good Reason upon 30
days' advance written notice to the Company.
9. COMPENSATION AND OTHER BENEFITS UPON TERMINATION. Executive shall be
entitled to the following compensation and benefits upon Termination:
(a) TERMINATION AS A RESULT OF EXECUTIVE'S DEATH OR DISABILITY. Upon
Termination pursuant to Section 8(a) [termination as a result of Executive's
death], or Section 8(b) [termination as a result of Executive's Disability],
Executive shall be entitled to receive any Base Salary and prorated bonus earned
but unpaid as of the date of Termination, accrued but unused vacation benefits
as of the date of Termination pursuant to the Company's vacation policy, and any
business expenses that were incurred but not reimbursed as of the date of
Termination.
(b) TERMINATION BY THE COMPANY FOR JUST CAUSE; TERMINATION BY EXECUTIVE
FOR OTHER THAN GOOD REASON. Upon Termination pursuant Section 8(c) [termination
by the Company for Just Cause] or Section 8(f) [termination by Executive for
other than Good Reason], Executive shall be entitled to receive any Base Salary
earned but unpaid as of the date of Termination, accrued but unused vacation
benefits as of the date of Termination pursuant to the Company's vacation
policy, and any business expenses that were incurred but not reimbursed as of
the date of Termination.
(c) TERMINATION BY THE COMPANY WITHOUT JUST CAUSE, TERMINATION BY
EXECUTIVE FOR GOOD REASON. Upon Termination pursuant to Section 8(d)
[termination by the Company without Just Cause] or Section 8(e) [termination by
Executive for Good Reason], Executive shall be entitled to receive any Base
Salary earned but unpaid as of the date of Termination, accrued but unused
vacation benefits as of the date of Termination pursuant to the Company's
vacation policy, and any business expenses that were incurred but not reimbursed
as of the date of Termination. In addition, upon the execution by Executive and
delivery to the Company of a general release of all claims that Executive may
have against the Company, its officers, directors, employees and shareholders,
in a form provided by and acceptable to the Company, Executive shall be entitled
to receive severance pay ("SEVERANCE PAY") made either in a lump sum or in
twelve equal monthly installments, in
5
the Company's sole discretion, equal to twelve (12) months' of Executive's Base
Salary (calculated at the same rate of Base Salary most recently applicable to
Executive immediately prior to the date of termination), and 12 months COBRA
benefit coverage for health, dental and vision insurance (at a coverage level
equal to or below elected coverage on the day before the termination date). The
Severance Pay shall be subject to such deductions or withholdings as the Company
is required to make pursuant to law. Executive shall not be entitled to receive
any Severance Pay from the Company until Executive's general release of claims
has become effective pursuant to its terms.
(d) TERMINATION AFTER CHANGE IN CONTROL. Upon a Termination pursuant to
Section 8(d) [termination by the Company without Just Cause] or Section 8(e)
[termination by Executive for Good Reason] occurring on or within twenty-four
(24) months after a Change in Control (as defined below), (i) the vesting and
exercisability of all of Executive's stock options and other equity-based awards
will be accelerated in full so that all such stock options will be immediately
exercisable for fully vested stock and any other stock awards will be fully
vested as of the date of such Termination, and (ii) Executive's stock options
will remain exercisable in accordance with the plan document. For purposes of
this Agreement, "Change of Control" shall mean (1) a sale of all or
substantially all the assets of the Company; (2) a merger into or consolidation
of the Company with any other corporation, except any such merger or
consolidation involving the Company or a subsidiary of the Company in which the
holders of capital stock of the Company immediately prior to such merger or
consolidation continue to hold immediately following such merger or
consolidation at least 50% by voting power of the capital stock of (a) the
surviving or resulting corporation or (b) if the surviving or resulting
corporation is a wholly owned subsidiary of another corporation immediately
following such merger or consolidation, the parent corporation of such surviving
or resulting corporation, (3) the acquisition by any person, entity or group
within the meaning of Section 13(d) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or any comparable successor provisions
(excluding any employee benefit plan, or related trust, sponsored or maintained
by the Company or any parent or subsidiary corporation of the Company) of the
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act, or comparable successor rule) of securities of the Company
representing at least fifty percent (50%) of the combined voting power entitled
to vote in the election of directors, or (4) individuals who, on the date of
execution of this Agreement, are members of the Company's Board of Directors
(the "Incumbent Board"), cease for any reason to constitute at least a majority
of the members of the Board of Directors; provided, however, that if the
appointment or election (or nomination for election) of any new Board of
Directors member was approved or recommended by a majority vote of the members
of the Incumbent Board then still in office, such new member shall, for purposes
of this Agreement, be considered as a member of the Incumbent Board.
(e) PARACHUTE PAYMENT GROSS-UP. If any payment or benefit Executive
would receive from the Company or otherwise would constitute a parachute payment
that would subject Executive to an excise tax ("Excise Tax") under Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code") (or any successor
provision), Executive shall be entitled to receive an additional lump sum
payment in cash (the "Tax Gross-Up"), subject to mandatory tax withholding,
which, when added to all payments and benefits allocable to Executive that
constitute parachute payments, provides Executive with the same after-tax
compensation that he would have received from such parachute payments had none
of such
6
compensation constituted a parachute payment. The amount of any such Tax
Gross-Up to which Executive becomes entitled under this paragraph will be
determined pursuant to the following formula:
X = Y divided by (1 - (A + B + C)), where
X is the total dollar amount of the Tax Gross-Up payable to Executive;
Y is the total Excise Tax imposed on Executive;
A is the Excise Tax rate applicable to Executive's parachute payments;
B is the highest combined marginal federal income and applicable state
income tax rate in effect for Executive, after taking into account the
deductibility of state income taxes against federal income taxes to the
extent allowable, for the calendar year in which the Tax Gross-Up is
paid; and
C is the applicable Hospital Insurance (Medicare) Tax Rate in effect for
Executive with respect to the Tax Gross-Up payment for the calendar year
in which the Tax Gross-Up is paid;
provided if there is a change in the tax laws after the date hereof that would
render the amount determined above insufficient to fully reimburse Executive on
an after-tax basis for the amount of any Excise Tax, Executive shall be entitled
to such additional amount as may be necessary to provide him with such
reimbursement.
Within ninety (90) days after a determination is made by the Internal
Revenue Service or Executive's tax advisor that an item of compensation or
benefit payable hereunder constitutes a parachute payment under Code Section
280G for which Executive is liable for an Excise Tax, Executive shall identify
the nature of the payment to the Company and submit to the Company the
calculation of the Excise Tax attributable to that payment and the Tax Gross-Up
to which Executive is entitled with respect to such tax liability. The Company
will pay such Tax Gross-Up to Executive (net of all applicable withholding
taxes, including any taxes required to be withheld under Code Section 4999)
within ten (10) business days after Executive's submission of the calculation of
such Excise Tax and the resulting Tax Gross-Up, provided such calculations
represent a reasonable interpretation of the applicable law and regulations.
In the event that Executive's actual Excise Tax liability is determined by
a Final Determination to be greater than the Excise Tax liability previously
taken into account for purposes of the Tax Gross-Up paid to Executive pursuant
to this Section 9(e), then within ninety (90) days following the Final
Determination, Executive shall submit to the Company a new Excise Tax
calculation based upon the Final Determination. Within ten (10) business days
after receipt of such calculation, the Company shall pay Executive the
additional Tax Gross-Up attributable to such excess Excise Tax liability.
In the event that Executive's actual Excise Tax liability is determined by
a Final Determination to be less than the Excise Tax liability previously taken
into account for purposes of the Tax Gross-Up paid to Executive pursuant to this
Section 9(e), then Executive shall refund
7
to the Company, promptly upon receipt, any federal or state tax refund
attributable to the Excise Tax overpayment.
For purposes of this Section 9(e), a "Final Determination" means an audit
adjustment by the Internal Revenue Service that is either (i) agreed to by both
Executive (or his estate) and the Company (such agreement by the Company to be
not unreasonably withheld) or (ii) sustained by a court of competent
jurisdiction in a decision with which Executive and the Company concur (such
concurrence by the Company to be not unreasonably withheld) or with respect to
which the period within which an appeal may be filed has lapsed without a notice
of appeal being filed.
10. MISCELLANEOUS.
(a) TAXES. Executive acknowledges that the Company will withhold all
taxes required by law with respect to any and all compensation or benefits
provided by the Company pursuant to this Agreement. Executive acknowledges that
the Company has not made, nor herein makes, any representation about the tax
consequences of any consideration provided by the Company to Executive pursuant
to this Agreement, except as expressly provided herein.
(b) MODIFICATION/WAIVER. This Agreement may not be amended, modified,
superseded, canceled, renewed or expanded, or any terms or covenants hereof
waived, except by a writing executed by each of the Parties hereto or, in the
case of a waiver, by the party waiving compliance. Failure of any party at any
time or times to require performance of any provision hereof shall in no manner
affect their or its right at a later time to enforce the same. No waiver by a
party of a breach of any term or covenant contained in this Agreement, whether
by conduct or otherwise, in any one or more instances shall be deemed to be or
construed as a further or continuing waiver of agreement contained in the
Agreement.
(c) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of any successor or assignee of the business of the
Company. This Agreement shall not be assignable by the Executive.
(d) NOTICES. All notices given hereunder shall be given by certified
mail, addressed, or delivered by hand, to the other party at his or its address
as set forth herein, or at any other address hereafter furnished by notice given
in like manner. Executive promptly shall notify Company of any change in
Executive's address. Each notice shall be dated the date of its mailing or
delivery and shall be deemed given, delivered or completed on such date.
(e) GOVERNING LAW; PERSONAL JURISDICTION AND VENUE. This Agreement and
all disputes relating to this Agreement shall be governed in all respects by the
laws of the State of Colorado. The Parties acknowledge that this Agreement
constitutes the minimum contacts to establish personal jurisdiction in Colorado
and agree to Colorado courts' exercise of personal jurisdiction. The Parties
further agree that if they are unable to reach an agreement concerning the
nature and terms of alternative dispute resolution, any disputes relating to
this Agreement shall be brought in the District Court of the 20th Judicial
District, Boulder, Colorado, and they hereby consent to the jurisdiction of such
Court.
(f) ENTIRE AGREEMENT. This Agreement together with the Confidentiality
Agreement, set forth the entire agreement and understanding of the Parties
hereto
8
with regard to the employment of Executive by the Company and supersedes any and
all prior agreements, arrangements and understandings, written or oral,
pertaining to the subject matter hereof. No representation, promise or
inducement relating to the subject matter hereof has been made to a party that
is not embodied in this Agreement or the Confidentiality Agreement, and no party
shall be bound by or liable for any alleged representation, promise or
inducement not so set forth.
[Signature Page Follows]
9
IN WITNESS WHEREOF, the Parties have each duly executed this Employment
Agreement as of the day and year first above written.
PHARMION CORPORATION
/s/ Xxxxxxx X. Xxxxxxx Date: 5th May 2006
----------------------- ------------
By: Xxxxxxx Xxxxxxx
Its: Chief Executive Officer
EXECUTIVE
/s/ Xxxxxx Xxxxx Xxxxx Date: 5th May 2006
----------------------- ------------
Xxxxxx Xxxxx Xxxxx
10
