September 11, 2008
EXHIBIT 99.4
September 11, 2008
Dear Xxxxxx:
This will confirm the terms and conditions of your continued employment with Minrad
International, Inc. (the “Company”) in the position of Executive Vice President and Chief Technical
Officer, effective January 1, 2008. Except as otherwise specifically provided herein, this letter
agreement supersedes and replaces all prior communications, representations, agreements,
understandings, plans and arrangements between the parties, whether oral or written, including your
initial offer letter to join the Company as Senior Vice President Technical dated April 17, 2007.
Your employment with the Company will continue to be “at will” meaning that either you or the
Company can terminate your employment at any time, with or without cause, and with or without prior
notice.
1. Base Salary. Your salary will be $7,692.31 per bi-weekly pay period, equivalent to
$200,000 per year, less applicable taxes and withholdings. Although we review salary annually, the
Company reserves the right to adjust your salary at any time.
2. Incentive Compensation. You may be eligible to receive incentive compensation in
accordance with the Company’s policy for executives as may be determined by the Compensation
Committee each year. For 2008 your incentive compensation will be determined as follows:
A. A bonus of $50,000 will be paid if Conscious Sedation 510.k is filed with the United States
Food and Drug Administration in the fourth quarter of 2008.
B. A total bonus of $30,000 will be paid if the Company recovers $1.2 million from brown
material by the fourth quarter of 2008, as follows: (1) upon the Company’s recovery of $600,000 of
brown materials, you will receive a $15,000 payment within thirty days; and (2) upon the Company’s
recovery of $1.2 million from brown material, you will receive a second $15,000 payment within
thirty days.
C. A bonus of $20,000 will be paid if the tank farm is deemed operational for key components
by the President / Chief Operating Officer before or during the fourth quarter of 2008.
D. All amounts earned and payable for the calendar year 2008 as provided in subparagraphs (A)
through (C) above will be determined by March 31, 2009, and will be paid no later than April 15,
2009.
E. An additional bonus of $25,000 per quarter will be paid if you satisfy the following
quarterly targets:
| 3Q 2008 | 4Q2008 | |||||||
Isoflurane |
42.8 mt | 48 mt | ||||||
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| 3Q 2008 | 4Q2008 | |||||||
Sevoflurane |
44.3 mt | 50 mt | ||||||
Enflurane |
12 mt | |||||||
The foregoing targets assume adequate raw materials are available. Production targets include
finished goods from both internal and external sources. Any bonus payment under this subsection
(E) will be paid within thirty days of the end of the applicable quarter.
3. Stock Options. All stock options granted to you under the Minrad International,
Inc. 2004 Stock Option Plan (the “Option Plan”), including the options cited in your offer letter
dated April 17, 2007 and any subsequent options granted, will be governed by the terms of the
Option Plan and any related agreements and grants.
4. Vacation. You will be entitled to three weeks of paid vacation annually, to be
used in a manner consistent with the Company’s policies. Vacation that is accrued but unused in
any year shall not be carried over to any succeeding year.
5. Group Benefit Plans. You will continue to be entitled to participate in the
Company’s employee benefit plans and programs in accordance with the terms of the applicable plans
and programs. The Company reserves the right to change the benefits it offers from time-to-time at
the Company’s sole discretion.
6. Change of Control.
A. Definition. As used in this Agreement, the term “Change of Control” means:
1. Any acquisition or series of acquisitions by any person other than the Company, any of the
subsidiaries of the Company, any employee benefit plan of the Company, or any of their
subsidiaries, or any person holding common shares of the Company for or pursuant to the terms of
such employee benefit plan, that results in that person becoming the beneficial owner (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company
representing 90% or more of either the then outstanding shares of the common stock of Company or
the combined voting power of the Company’s then outstanding securities entitled to then vote
generally in the election of directors of the Company.
2. Approval by the stockholders of the Company of: (a) a dissolution or liquidation of the
Company; (b) a sale of 90% or more of the assets of the Company, taken as a whole (with the stock
or other ownership interests of the Company in any of its majority owned subsidiaries constituting
assets of the Company for this purpose) to a person that is not an Affiliate of the Company (for
purposes of this paragraph “sale” means any change of ownership); or (c) an agreement to merge or
consolidate or otherwise reorganize, with or into one or more persons that are not Affiliates of
the Company, as a result of which less than 10% of the outstanding voting securities of the
surviving or resulting entity immediately after any such merger, consolidation or reorganization
are, or will be, owned, directly or indirectly, by stockholders of the Company immediately before
such merger, consolidation or reorganization
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(assuming for purposes of such determination that there is no change in the record ownership
of the Company’s securities from the record date for such approval until such merger, consolidation
or reorganization and that such record owners hold no securities of the other parties to such
merger, consolidation or reorganization), but including in such determination any securities of the
other parties to such merger, consolidation or reorganization held by Affiliates of the Company.
In the event that the Company engages in a major corporate transaction that does not
constitute a Change of Control as defined in Section 6(A)(1) and (2) but as a result of which the
stockholders of the Company receive significant cash from, or the securities of, a third party, the
Company’s Board of Directors will review in good faith whether such transaction should be treated
as a Change of Control for purposes of this Section.
B. Benefits in the Event of a Change of Control. In the event of a Change of Control,
and provided that you agree in a written instrument satisfactory to the Company in its sole
discretion, to release the Company, its employees, agents, and related entities from any and all
claims arising out of or related to your employment or termination of employment to extent
permitted by law, you will be entitled to the following benefits as set forth below:
1. Severance payment. If within one year following a Change of Control your
employment is terminated by the Company for a reason other than for Cause, or you terminate your
employment with the Company for Good Reason, as defined below, you will continue to receive your
base salary in effect on your employment termination date for a six month period following the
termination of your employment, commencing as soon as practicable but no later than 60 days
following your separation from service (“Severance Period”). Your severance payment, if any, will
be paid in periodic consecutive installments consistent with the biweekly or other normal payroll
practices in effect at the company at the time of severance.
2. Medical and Dental Benefits. During the Severance Period, you will be entitled to
receive continued coverage under the Company’s group medical and dental plan in which you
participate as of your employment termination date. During the Severance Period, the Company will
continue to make the same contribution to the premium for the medical and dental plan as it was
making as of your employment termination date, and you will continue to make the same contribution
you were making to the premium for said plans as of your employment termination date. With respect
to the Company’s group medical and dental plans, the Parties agree that your employment termination
date will be the date of your qualifying event for purposes of your continuation coverage rights
under COBRA and that the COBRA coverage period will commence on your employment termination date.
As a condition of receipt of benefits under this paragraph 6(B)(2), you must timely elect
continuation coverage under COBRA. The foregoing notwithstanding, nothing herein shall be deemed
to diminish or impair your right to COBRA benefits as provided by law.
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3. Vacation. In the event of a Change of Control, any unused vacation for the year in
which the Change of Control occurs will be deemed to have accrued for the year and will be paid to
you within thirty days of the Change of Control in an amount calculated in accordance with your
base salary in effect at the time of the Change of Control.
4. Definition of “Cause”. For the purposes of this Agreement, “Cause” means: (a) a
material breach by you of this Agreement; (b) conduct determined by the Company’s Board of
Directors to constitute a failure or refusal by you to faithfully or diligently perform your duties
under this Agreement or as required by the Board of Directors from time to time, including but not
limited to gross negligence or willful misconduct in the performance of your duties; (c) dishonesty
to the Company; (d) conviction of a crime in any court which could have the effect of causing the
termination or suspension of any license which the Company holds, or conviction of a felony; or (e)
excessive absenteeism not related to disability.
5. Definition of “Good Reason”. For the purposes of this Agreement, “Good Reason”
means the existence, without your consent, of one or more of the following conditions that is not
remedied within 30 days of your notification to the Company of its existence: (a) a material
reduction in your base compensation; (b) a material demotion or reduction in your responsibilities
or authority; (c) a relocation of the Company facility where you are employed to a location more
than 60 miles from its current location unless the relocation does not materially increase your
average commuting time; or (d) a breach by the Company of any material term of this Agreement. For
a termination to qualify as a Good Reason termination, you must notify the Company of the Good
Reason condition within 90 days of its initial existence and your termination must take place no
later than two years following the initial existence of the condition.
7. Confidentiality. You acknowledge and agree that in the course of performing your
duties and responsibilities as an employee of the Company:
A. You have had and will continue to have access to and have and will gain knowledge with
respect to all of the lines of business of the Company including, without limitation, information
learned or developed by you because of or through your employment with the Company not generally
known in the medical device and pharmaceutical industries including, without limitation, the names
of customers and potential customers and information about those customers including the usefulness
to them of the products, processes or services of the Company, records of their purchases of the
Company’s products, and evaluation of their need for the Company’s products, and the details
(including termination dates) of any agreement with or services provided to, those customers, any
and all records, trade secrets, projections, plans, marketing information, methods, financial
statements, memoranda, cost data, notes and any other data or information (oral or written)
relating to the past, present or future activities of the Company (collectively, the “Confidential
Information”);
B. You will be a representative of the Company to its customers, clients, suppliers,
regulators and licensing authorities and as such has had and will continue to
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have significant responsibility for maintaining and enhancing the goodwill of the Company with
such parties and would not have, except by virtue of employment with the Company and financial and
other participation and assistance therefrom, developed a close and direct relationship with the
aforementioned parties; and
C. You owe fiduciary duties and responsibilities to the Company, including, without
limitation, the duty to act in the best interests of the Company.
D. You acknowledge that your covenants not to make unauthorized disclosure of the Confidential
Information and the Company’s ability to preserve the goodwill of the Company and the benefit of
any relationships that have developed between you and the customers, clients, suppliers,
regulators, and licensing authorities by virtue of your employment with the Company are essential
to the growth and stability of the Company and its business.
E. Accordingly, you hereby agree that except as required by your duties under this Agreement,
you shall not use or disclose to anyone at any time during or after the term of this Agreement any
Confidential Information, and you shall take all reasonable steps necessary to prevent unauthorized
parties, including those employed by the Company, from obtaining any Confidential Information;
F. The medical device and pharmaceutical industries are extremely competitive, and as a
result, the protection of and restrictions on this provision on Confidential Information are
reasonable and appropriate; and for a period of twelve months after you cease to be employed by the
Company, plus any additional time that you are in breach of this paragraph, you shall not, directly
or indirectly, as a shareholder, partner, officer, director, employee, consultant, agent or in any
other capacity: (1) solicit business from or engage in any business with, or consult with or
provide information to, any Customer in any business in which the Company engaged during your
employment; (2) request or advise any Customer to cancel or otherwise reduce its business with the
Company; (3) induce or attempt to influence any employee of the Company to terminate his or her
employment with the Company; or (4) employ, hire or engage, in any capacity, any person, who at the
time of your termination of employment with the Company was an employee of the Company until twelve
(12) months following such person’s termination of employment with the Company. You covenant and
agree that for purposes of this paragraph all customers of the Company who have been customers of
the Company at any time during the time you have been employed by the Company, and any prospective
customers that contacted or were contacted by Company, whether or not through your efforts, during
the 12 months prior to your termination of employment with the Company, shall be deemed to be
customers of the Company (“Customers”). For purposes this Section of this Agreement, the Company
shall mean the Company and any affiliates, subsidiaries, corporate parents or divisions of the
Company. Prior to accepting employment with another entity following the termination of your
employment with the Company for any reason, you shall disclose to such future entity the provisions
of Sections 7 through 8 of this Agreement.
8. Rights to Discoveries. You agree that all ideas, inventions, trademarks, service
marks, copyrights, and other developments conceived or developed or acquired by you,
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whether or not during working hours, at the premises of the Company or elsewhere, alone or
with others, that are within the scope of the Company’s business operations or that relate to any
work or projects of the Company shall be the sole and exclusive property of the Company. You agree
to disclose promptly and fully to the Company all such ideas, inventions, trademarks, service
marks, copyrights or other developments and, at the request of the Company, you shall submit to the
Company a full written report thereof regardless of whether the request for a written report is
made after the termination of this Agreement. You agree that during the term of this Agreement and
thereafter, upon the request of the Company and at its expense, you shall execute and deliver any
and all applications, assignments and other instruments which the Company shall deem necessary or
advisable to transfer to and vest in the Company your entire right, title and interest in and to
all such ideas, inventions, trademarks, service marks, copyrights or other developments and to
apply for and to obtain patents or copyrights for any such patentable or copyrightable ideas,
inventions, trademarks, service marks, copyrights and other developments.
9. Return of Materials. You covenant and agree that all files, forms, brochures,
books, materials, written correspondence, memoranda, documents, manuals, formulas, computer disks,
software products, lists and any other tangible items related to or associated with the business of
the Company (whether or not such items constitute Confidential Information) that you may come into
the possession or control of during the course of employment with the Company shall at all times
remain the property of the Company. You covenant and agree not to make any use thereof whatsoever
nor to make any copies or reproductions thereof or of any other property of the Company without the
Company’s prior written consent.
On termination of your employment with the Company, or upon demand by the Company at any time,
you shall immediately deliver any and all of the foregoing materials to the Company at 00 Xxxxxx
Xxxxx, Xxxxxxx Xxxx, Xxx Xxxx 00000 or any other location designated by the Company. You
acknowledge that such property is proprietary and valuable to the Company and that the Company will
suffer immediate and irreparable harm if you do not immediately return such property.
10. Six Month Delay. Notwithstanding any other provision in this Agreement, to the
extent that (i) you are determined to be a “specified employee” with the meaning of Section
409A(a)(2)(B)(i) of Internal Revenue Code of 1986 (the “Code”), (ii) any amounts payable under this
Agreement represent amounts that are subject to Section 409A of the Code, and (iii) such amounts
are payable on your “separation from service,” within the meaning of Section 409A of the Code, then
such amounts will not be payable to you before the date that is six months after your termination
of employment (or, if earlier, the date of your death). Payments under this Section to which you
would otherwise be entitled during the first six months following your termination date will be
accumulated and paid on the day that is six months after the termination date.
11. Section 409A Compliance. All benefits payable under this Plan are intended to
comply with or to be exempt from Section 409A the Code and will be construed
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accordingly. However, the Company will not be liable to you or any beneficiary with respect to
any benefit related adverse tax consequences arising under Section 409A or other provision of the
Code.
12. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York for contracts made and performed there.
To acknowledge that you have read and understood the terms of this offer of continued
employment, and to accept this offer, please sign and return one copy of this Agreement. The
foregoing may be faxed to me at (000) 000-0000.
Very truly yours,
/s/ Xxxxx XxXxxxxxxx
Xxxxx XxXxxxxxxx
President and Chief Operating Officer
/s/ Xxxxx XxXxxxxxxx
Xxxxx XxXxxxxxxx
President and Chief Operating Officer
I agree to the terms of employment set forth in this Agreement.
/s/ Xxxxxx Xxxxxx
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