EMPLOYMENT AGREEMENT
Exhibit
10.14
This
Agreement (this “Agreement”),
dated
as of November 11, 2007 (the “Effective
Date”)
by and
between VioQuest Pharmaceuticals, Inc., a Delaware corporation with principal
executive offices at 000 Xxxxx Xxxx Xxxx, Xxxxx 000, Xxxxxxx Xxxxx, XX 00000
(the “Company”),
and
Xxxxxxx Xxxxxx, residing at 0000 Xxxxxxxxxxxx Xxxx, Xxxxxxx, XX 00000 (the
“Executive”).
WITNESSETH:
WHEREAS,
the
Company desires to employ the Executive as President and Chief Executive Officer
of the Company, and the Executive desires to serve the Company in such capacity,
upon the terms and subject to the conditions contained in this
Agreement;
NOW,
THEREFORE,
in
consideration of the mutual covenants and agreements herein contained, the
parties hereto hereby agree as follows:
1. Employment.
(a) Services.
The
Executive will be employed by the Company as its President and Chief Executive
Officer. The Executive will report to the Board of Directors of the Company
(the
"Board")
and
shall perform such duties as are consistent with his position as President
and
Chief Executive Officer (the “Services”).
The
Executive agrees to perform such duties faithfully, to devote all of his working
time, attention and energies to the business of the Company, and while he
remains employed, not to engage in any other business activity that is in
conflict with his duties and obligations to the Company.
(b) Acceptance.
The
Executive hereby accepts such employment and agrees to render the
Services.
2. Term.
The
Executive's employment under this Agreement (the "Term")
shall
commence on November 19, 2007 (the “Commencement
Date”)
and
shall continue for a term of four (4) years, unless sooner terminated pursuant
to Section 9 of this Agreement. Notwithstanding anything to the contrary
contained herein, the provisions of this Agreement specified in Sections 6,
7,
10, and 11 shall survive the expiration or termination hereof.
3. Best
Efforts; Place of Performance.
(a) The
Executive shall devote substantially all of his business time, attention and
energies to the business and affairs of the Company and shall use his best
efforts to advance the best interests of the Company and shall not during the
Term be actively engaged in any other business activity, whether or not such
business activity is pursued for gain, profit or other pecuniary advantage,
that
will interfere with the performance by the Executive of his duties hereunder
or
the Executive’s availability to perform such duties or that will adversely
affect, or negatively reflect upon, the Company.
(b) The
duties to be performed by the Executive hereunder shall be performed primarily
at the office of the Company in the State of New Jersey or eastern Pennsylvania,
or wherever the principal executive offices of the Company shall hereafter
be
located, subject to reasonable travel requirements on behalf of the Company,
or
such other place as the Board may reasonably designate.
4. Directorship.
The
Company shall use its best efforts to cause the Executive to be elected as
a
member of its Board throughout the Term and shall include him in the management
slate for election as a director at every stockholders meeting during the Term
at which his term as a director would otherwise expire. The Executive agrees
to
accept election, and to serve during the Term, as director of the Company,
without any compensation therefor other than as specified in this
Agreement.
5. Compensation.
As full
compensation for the performance by the Executive of his duties under this
Agreement, the Company shall pay the Executive as follows:
(a) Base
Salary.
The
Company shall pay the Executive an annual salary (the “Base
Salary”)
of
Three Hundred Fifty Eight Thousand, Four Hundred Dollars ($358,400). Payment
shall be made in accordance with the Company’s normal payroll practices in
effect from time to time. Executive's
Base Salary will be reviewed at least annually and may be increased in the
sole
discretion of the Company's Compensation Committee. The Base Salary may not
be
decreased, except upon a mutual written agreement between the
parties.
(b) Bonus.
Executive shall be eligible to receive cash bonuses as follows:
(1)
in
the event that the Company receives gross proceeds equal to or in excess of
Ten
Million Dollars ($10,000,000) as a result of the sale of its securities in
one
or a series of related transactions, the Company shall pay to Executive, within
thirty (30) days after the date of the closing which results in the Ten Million
Dollar ($10,000,000) threshold being satisfied, a one-time cash bonus, paid
as a
lump sum, in the amount of One Hundred Fifty Thousand Dollars
($150,000).
(2)
in
the event that the Market Capitalization (as defined below) of the Company
shall
exceed One Hundred Twenty-Five Million Dollars ($125,000,000) for a period
of
fifteen (15) consecutive trading days during the Term and the average trading
volume of the Company’s common stock, par value $0.001 (“Common
Stock”)
during
such period is at least One Hundred Thousand (100,000) shares per trading day
(the “First
Capitalization Milestone”),
then
the Company shall remit to Executive, within thirty (30) days after the
occurrence of the First Capitalization Milestone, a one-time cash bonus, paid
as
a lump sum, in the amount of One Hundred Twenty-Five Thousand Dollars
($125,000).
(3)
in
the event that the Market Capitalization of the Company shall exceed Two Hundred
Fifty Million Dollars ($250,000,000) for a period of fifteen (15) consecutive
trading days during the Term and the average trading volume of the Common Stock
during such period is at least Two Hundred Thousand (200,000) shares per trading
day (the “Second
Capitalization Milestone”),
then
the Company shall remit to Executive within thirty (30) days after the
occurrence of the Second Capitalization Milestone a one-time cash bonus, paid
as
a lump sum, in the amount of Five Hundred Thousand Dollars
($500,000).
(4)
in
the event that the Market Capitalization of the Company shall exceed Five
Hundred Million Dollars ($500,000,000) for a period of fifteen (15) consecutive
trading days during the Term and the average trading volume of the Common Stock
during such period is at least Three Hundred Thousand (300,000) shares per
trading day (the “Third
Capitalization Milestone”),
then
the Company shall remit to Executive, within thirty (30) days after the
occurrence of the Third Capitalization Milestone a one-time cash bonus, paid
as
a lump sum, in the amount of One Million Dollars ($1,000,000).
(5)
in
the event that the Market Capitalization (as defined below) of the Company
shall
exceed One Billion Dollars ($1,000,000,000) for a period of fifteen (15)
consecutive trading days during the Term and the average trading volume of
the
Common Stock during such period is at least Four Hundred Thousand (400,000)
shares per trading day (the “Fourth
Capitalization Milestone”),
then
the Company shall remit to Executive within thirty (30) days after the
occurrence of the Fourth Capitalization Milestone a one-time cash bonus, paid
as
a lump sum, in the amount of Two Million Dollars ($2,000,000).
For
purposes of this Agreement, “Market
Capitalization”
shall
be determined at any given time by multiplying the total shares of the Company’s
Common Stock then issued and outstanding by the last reported closing price
of
the Company’s Common Stock on a nationally recognized securities exchange or in
the over-the-counter market as reported by the OTC Bulletin Board or similar
organization.
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(c) Withholding.
The
Company shall withhold all applicable federal, state and local taxes and social
security and such other amounts as may be required by law from all amounts
payable to the Executive under this Agreement.
(d)
Stock
Options / Merger Options.
(i) Pursuant
to the Company’s 2003 Stock Option Plan, as amended (the “Stock
Incentive Plan”),
the
Company shall issue to Executive stock options (the “Stock Options”) to purchase
5,013,343 shares of the Company’s Common Stock (equal on the date of this
Agreement to ten percent (10%) of the outstanding shares of Common Stock of
the
Company, determined on a Fully Diluted Basis (as defined below)). The Stock
Options shall have an exercise price per share equal to the fair market value
of
a share of Common Stock on the date of grant as determined in accordance with
the Company’s stock option pricing policies and practices and the provisions of
Section 409A of the Internal Revenue Code and regulations thereunder.
“Fully-Diluted
Basis”
shall
mean the number of shares of Common Stock outstanding as of the Commencement
Date, plus the number of shares of Common Stock issuable on the Commencement
Date if all then-vested and exercisable rights, options, or warrants were
exercised on the Commencement Date, but shall exclude those rights, options
or
warrants with an exercise price or conversion price in excess of $.50 per share
(and also shall exclude the Escrow Shares, as defined below). As a condition
to
the grant of the Stock Options, the Executive shall be required to execute
and
deliver the Company’s Stock Option Agreement. The Stock Options will vest in
four equal annual installments, commencing with the first anniversary of the
Commencement Date and ending on the fourth anniversary of the Commencement
Date,
subject to the terms of the Stock Incentive Plan and the Stock Option Agreement
(such agreement to reflect the provisions of Section 10 hereof). Notwithstanding
the foregoing, in the event that the foregoing grant exceeds the number of
shares reserved and available for option grants under the Stock Incentive Plan,
the Company shall immediately amend the Stock Incentive Plan to appropriately
increase the number of reserved shares under the Stock Incentive Plan.
(ii) The
Company shall issue the Executive additional stock options (the “Merger
Options”) to purchase 856,440 shares
of
the Company’s Common Stock (equal on the date of this Agreement to
ten
percent (10%) of the shares of Common Stock that have not been, as of the date
of this Agreement, released from escrow (the “Escrow
Shares”)
pursuant to the terms of the merger agreement by and among the Company, VQ
Acquisition Corp. and Greenwich Therapeutics, Inc. dated July 1, 2005, as
amended (the “Merger
Agreement”)).
The
Merger Options will vest in four equal annual installments, commencing with
the
first anniversary of the Commencement Date and ending on the fourth anniversary
of the Commencement Date, subject to the terms of the Stock Incentive Plan
and
the Stock Option Agreement (such agreement to reflect the provisions of Section
10 hereof), provided, however, the Merger Options will not be exercisable unless
and until the Escrow Shares are released from escrow pursuant to the terms
of
the Merger Agreement, and provided, further, that (i) only that amount of the
Merger Options will be exercisable equal to the pro-rata portion of those Escrow
Shares that are released from escrow pursuant to the terms of the Merger
Agreement and (ii) the Executive is an employee of the Company at the time
of
such release. By way of example and for illustration purposes only, if 40%
of
the Escrow Shares are released from escrow pursuant to the terms of the Merger
Agreement, then 40% of the Merger Options shall become exercisable by the
Executive, provided, however, such Merger Options have vested pursuant to the
terms of this Agreement.
(e) Additional
Stock Options.
The
Executive shall be eligible to receive additional stock options pursuant to
the
Company’s Stock Incentive Plan beginning on the second anniversary of this
Agreement in an amount determined by the Board in its good faith and reasonable
discretion. Within sixty (60) days of each anniversary following the second
anniversary of this Agreement, the Executive and the Board shall discuss such
grant and the Board will award the Executive such options as it may, in its
sole
discretion after discussion with the Executive, determine.
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(f) Expenses.
The
Company shall reimburse the Executive for all normal, usual and necessary
expenses incurred by the Executive in furtherance of the business and affairs
of
the Company, including reasonable travel and entertainment, upon timely receipt
by the Company of appropriate vouchers or other proof of the Executive’s
expenditures and otherwise in accordance with any expense reimbursement policy
as may from time to time be adopted by the Company.
(g) Other
Benefits.
The
Executive shall be entitled to all rights and benefits for which he shall be
eligible under any benefit or other plans (including, without limitation,
dental, medical, medical reimbursement and hospital plans, pension plans,
employee stock purchase plans, profit sharing plans, bonus plans, prescription
drug reimbursement plans, short and long term disability plans, life insurance
and other so-called "fringe" benefits) as the Company shall make available
to
its senior executives from time to time.
(h) Vacation.
The
Executive shall be entitled to a vacation of four (4) non-consecutive weeks
per
annum, in addition to holidays observed by the Company. During the Term, the
Executive shall not be entitled to carry forward vacation from one year of
employment to the next year of employment, nor shall he receive any compensation
for
any
unused vacation days
6. Confidential
Information and Inventions.
(a) The
Executive recognizes and acknowledges that in the course of his duties he is
likely to receive confidential or proprietary information of the
Company,
its
affiliates or third parties with whom the Company or any such affiliates has
an
obligation of confidentiality.
Accordingly, during and after the Term, the Executive agrees to keep
confidential and not disclose or make accessible to any other person or use
for
any other purpose other than in connection with the fulfillment of his duties
under this Agreement, any Confidential and Proprietary Information owned
by,
or received by or on behalf of
the
Company
or any
of its affiliates.
“Confidential and Proprietary Information” shall include, but shall not be
limited to, confidential or proprietary scientific or technical information,
data, formulas and related concepts, business plans (both current and under
development), client lists, promotion and marketing programs, trade secrets,
or
any other confidential or proprietary business information relating to
development programs, costs, revenues, marketing, investments, sales activities,
promotions, credit and financial data, manufacturing processes, financing
methods, plans or the business and affairs of the Company or
of any
affiliate or client of the Company. The
Executive expressly acknowledges that the Confidential and Proprietary
Information constitutes a protectable business interest of the Company. The
Executive agrees: (i) not to use any such Confidential and Proprietary
Information for himself or others; and (ii) not to take any Company material
or
reproductions (including but not limited to writings, correspondence, notes,
drafts, records, invoices, technical and business policies, computer programs
or
disks) thereof from the Company’s offices at any time during his employment by
the Company, except as required in the execution of the Executive’s duties to
the Company. The Executive agrees to return immediately all Company material
and
reproductions (including but not limited, to writings, correspondence, notes,
drafts, records, invoices, technical and business policies, computer programs
or
disks) thereof in his possession to the Company upon request and in any event
immediately upon termination of employment.
(b) Except
with prior written authorization by the Company, the Executive agrees for a
period of five (5) years from the termination of his employment with the Company
not to disclose or publish:
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(i)
any
of the Confidential and Proprietary Information;
or
(ii)
any
confidential, scientific, technical or business information of any other party
to whom the Company or any of its affiliates owes an obligation of
confidence.
(c) The
Executive agrees that all inventions, discoveries, improvements and patentable
or copyrightable works (“Inventions”)
initiated, conceived or made by him, either alone or in conjunction with others,
during the Term shall be the sole property of the Company to the maximum extent
permitted by applicable law and, to the extent permitted by law, shall be “works
made for hire” as that term is defined in the United States Copyright Act (17
U.S.C.A., Section 101). The Company shall be the sole owner of all patents,
copyrights, trade secret rights, and other intellectual property or other rights
in connection therewith. The Executive hereby assigns to the Company all right,
title and interest he may have or acquire in all such Inventions; provided,
however, that the Board may in its sole discretion agree to waive the Company’s
rights pursuant to this Section 6(c) with respect to any Invention that is
not
directly or indirectly related to the Company’s business. The Executive further
agrees to assist the Company in every proper way (but at the Company’s expense)
to obtain and from time to time enforce patents, copyrights or other rights
on
such Inventions in any and all countries, and to that end the Executive will
execute all documents necessary:
(i) to
apply
for, obtain and vest in the name of the Company alone (unless the Company
otherwise directs) letters patent, copyrights or other analogous protection
in
any country throughout the world and when so obtained or vested to renew and
restore the same; and
(ii) to
defend
any opposition proceedings in respect of such applications and any opposition
proceedings or petitions or applications for revocation of such letters patent,
copyright or other analogous protection.
(d) The
Executive acknowledges that while performing the Services, the Executive may
locate, identify and/or evaluate patented or patentable inventions having
commercial potential in the fields of pharmacy, pharmaceutical, biotechnology,
healthcare, technology and other fields which may be of potential interest
to
the Company or one of its affiliates (the “Third
Party Inventions”).
The
Executive understands, acknowledges and agrees that all rights to, interests
in
or opportunities regarding, all Third-Party Inventions identified by the
Company,
any of
its affiliates or either of the foregoing persons’
officers, directors, employees (including the Executive), agents or consultants
during the Term shall be and remain the sole and exclusive property of the
Company or
such
affiliate and
the
Executive shall have no rights whatsoever to such Third-Party Inventions and
will not pursue for himself or for others any transaction relating to the
Third-Party Inventions which is not on behalf of the Company unless the Company
has expressly abandoned its interest in such Third Party Inventions in
writing.
(e) The
Executive agrees that he will promptly disclose to the Company all Inventions
initiated, made
or
conceived
or reduced
to practice,
either
alone or jointly
with
others, during the Term.
(f) The
provisions of this Section 6 shall survive any termination of this
Agreement.
7. Non-Competition,
Non-Solicitation and Non-Disparagement.
(a) The
Executive understands and recognizes that his services to the Company are
special and unique and that in the course of performing such services the
Executive will have access to and knowledge of Confidential and Proprietary
Information and the Executive agrees that, during
the Term and for
either (i) six (6) months following the expiration or earlier termination of
this Agreement or, (ii) if the Company is providing severance benefits to the
Executive pursuant to Section 10(c) hereof, twelve (12) months (the
“Termination
Benefits Period”),
he
shall not in any manner, directly or indirectly, on behalf of himself or any
person, firm, partnership, joint venture, corporation or other business entity
(“Person”),
enter
into or engage in any business which is engaged in any business directly or
indirectly competitive with the business of the Company, either as an individual
for his own account, or as a partner, joint venturer, owner, executive,
employee, independent contractor, principal, agent, consultant, salesperson,
officer, director or shareholder of a Person in a business competitive with
the
Company within the geographic area of in which the Company does
business,
which
is deemed by the parties hereto to be New
York,
New Jersey, Connecticut, Massachusetts, Pennsylvania, and California.
The
Executive acknowledges that, due to the unique nature of the Company’s business,
the loss of any of its clients or the improper use of its Confidential and
Proprietary Information could create significant instability and cause
substantial damage to the Company and therefore the Company has a strong
legitimate business interest in protecting the continuity of its business
interests and the restriction herein agreed to by the Executive narrowly and
fairly serves such an important and critical business interest of the Company.
For purposes of this Agreement, the Company shall be deemed to be actively
engaged on the date hereof in the development and commercialization of medical
technologies, including therapeutics, biologics, devices, and vaccines for
the
treatment, diagnosis, and/or prevention of (i) cancers by the inhibition,
blocking, activation or other direct effect on the Akt family (Akt1, Akt2,
and
Akt3) that are members of the serine/threonine-specific protein kinase family
or; (ii) “hand and foot syndrome” associated with the treatment of cancer; or
(iii) cancers by the inhibition, activation blocking, or other direct effect
on
SHP-1 or SHP-2, two non-transmembrane tyrosine phosphatases. Notwithstanding
the
foregoing, nothing contained in this Section 7(a) shall be deemed to prohibit
the Executive from acquiring or holding, solely for investment, publicly traded
securities of any corporation, some or all of the activities of which are
competitive with the business of the Company so long as such securities do
not,
in the aggregate, constitute more than five percent (5%) of any class or series
of outstanding securities of such corporation.
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(b) The
Executive hereby acknowledges and agrees that the covenant against competition
provided for pursuant to Section 7(a) is reasonable with respect to its
duration, geographic area and scope. If, at the time of enforcement of this
Section 7, a court holds that the restrictions stated herein are unreasonable
under the circumstances then existing, the Parties hereto agree that the maximum
duration, scope or geographic area legally permissible under such circumstances
will be substituted for the duration, scope or area state herein.
(c) During
the Term and the Termination Benefits Period (as defined in Section 7(a)
above),
the
Executive shall not, directly or indirectly, without the prior written consent
of the Company:
(i) solicit
or induce any employee of the Company or
any of
its affiliates to
leave
the employ of the Company
or any
such affiliate
(as the
term “affiliate” is defined in Paragraph 6);
or hire
for any purpose any employee of the Company
or any
affiliate;
or hire
any former employee
who has left the employment of the Company or any affiliate of the Company
within
twelve
(12) months of the termination of such employee’s employment with the
Company
or any
such affiliate;
or hire
any former employee of the Company in violation of such employee’s
non-competition agreement with the Company
or any
such affiliate;
or
(ii) solicit
or accept the business of any agent, client or customer of the Company or any
of
its affiliates
with
respect to products, services or investments similar to those provided or
supplied by the Company
or any
of its affiliates;
or
(iii) solicit
or accept employment or be retained by any Person who, at any time during the
Term, was an agent, client or customer of the Company or any of its affiliates
where his position will be related to the business of the Company or any such
affiliate.
(d) The
Company and the Executive each agree that both during the Term and for a period
of five (5) years thereafter, neither party shall directly or indirectly
disparage, whether or not true, the name or reputation of the other party or
any
of its affiliates, including but not limited to, any officer, director, employee
or shareholder of the Company
or any
of its affiliates
(as
defined above).
Notwithstanding this Section, nothing contained herein shall limit or impair
the
ability of the Executive to provide truthful testimony in response to any
validly issued subpoena.
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(e) In
the
event that the Executive breaches any provisions of Section 6 or this Section
7
or there is a threatened breach, then, in addition to any other rights which
the
Company may have, the Company shall be entitled, without the posting of a bond
or other security, to seek injunctive relief to enforce the restrictions
contained in such Sections
The
Company and the Executive agree that any such action for injunctive or equitable
relief shall be heard in a state or federal court situated in the State of
New
Jersey and each of the parties hereto agrees to accept service of process by
registered or certified mail and to otherwise consent to the jurisdiction of
such courts.
(f) Each
of
the rights and remedies enumerated in Section 7(d) shall be independent of
the
others and shall be in addition to and not in lieu of any other rights and
remedies available to the Company at law or in equity. If any of the covenants
contained in this Section 7, or any part of any of them, is hereafter construed
or adjudicated to be invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants or rights or remedies which shall be
given full effect without regard to the invalid portions. If any of the
covenants contained in this Section 7 is held to be invalid or unenforceable
because of the duration of such provision or the area covered thereby, the
parties agree that the court making such determination shall have the power
to
reduce the duration and/or area of such provision and in its reduced form such
provision shall then be enforceable.
(g) The
provisions of this Section 7 shall survive any termination of this
Agreement.
8. Representations
and Warranties.
The
Executive hereby represents and warrants to the Company as follows:
(a) Neither
the execution or delivery of this Agreement nor the performance by the Executive
of his duties and other obligations hereunder violate or will violate any
statute, law, determination or award, or conflict with or constitute a default
or breach of any covenant or obligation under (whether immediately, upon the
giving of notice or lapse of time or both) any prior employment agreement,
contract, or other instrument to which the Executive is a party or by which
he
is bound.
(b) The
Executive has the full right, power and legal capacity to enter and deliver
this
Agreement and to perform his duties and other obligations hereunder. This
Agreement constitutes the legal, valid and binding obligation of the Executive
enforceable against him in accordance with its terms. No approvals or consents
of any persons or entities are required for the Executive to execute and deliver
this Agreement or perform his duties and other obligations
hereunder.
9. Termination.
The
Executive’s employment hereunder shall be terminated upon the Executive’s death
and may be terminated as follows:
(a) The
Executive’s employment hereunder may be terminated by the Board for Cause. Any
of the following actions by the Executive shall constitute “Cause”:
(i) The
willful failure, disregard or refusal by the Executive to perform his material
duties or obligations under this Agreement;
(ii) Any
willful, intentional or grossly negligent act by the Executive having the effect
of materially injuring (whether financial or otherwise and as determined in
good-faith by a majority of the members of the Board) the business or reputation
of the Company
or any
of its affiliates,
including but not limited to, any officer, director, executive or shareholder
of
the Company or any of its affiliates;
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(iii) Willful
misconduct by the Executive in respect of the material duties or obligations
of
the Executive under this Agreement, including, without limitation, willful
insubordination with respect to lawful directions received by the Executive
from
the Board;
(iv) The
Executive’s indictment
of any
felony involving moral turpitude (including entry of a nolo contendere
plea);
(v) The
determination by the Company, after a reasonable and good-faith investigation
by
the Company following a written allegation by another employee of the Company,
that the Executive engaged in some form of harassment prohibited by law
(including, without limitation, age, sex or race discrimination;
(vi) Any
material misappropriation or embezzlement of the property of the Company or
its
affiliates (whether or not a misdemeanor or felony);
(vii) Breach
by
the Executive of any of the provisions of Sections 6,
7
or
8
of this
Agreement; or
(viii) Breach
by
the Executive of any material provision of this Agreement other than those
contained in Sections 6,
7
or
8
which is
not cured by the Executive within thirty (30) days after notice thereof is
given
to the Executive by the Company.
(b) The
Executive’s employment hereunder may be terminated by the Board due to the
Executive’s Disability. For purposes of this Agreement, a termination for
“Disability”
shall
occur (i) when the Board has provided a written termination notice to the
Executive supported by a written statement from a reputable independent
physician selected and approved by the parties to the effect that the Executive
shall have become so physically or mentally incapacitated as to be unable to
resume, within the ensuing six (6) months, his employment under this Agreement
by reason of physical or mental illness or injury or (ii) upon rendering of
a
written termination notice by the Board after the Executive has been unable
to
substantially perform his duties hereunder for 60 or more consecutive days,
or
more than 120 days in any consecutive twelve month period, by reason of any
physical or mental illness or injury, which is supported by a written statement
from a reputable independent physician selected and approved by the parties.
For
purposes of this Section 9(b), the Executive agrees to make himself available
and to cooperate in a reasonable examination by a reputable independent
physician retained by the Company and approved by the Executive. Nothing herein
shall constitute a waiver of Executive’s right to dispute any assertion by the
Company of Disability or termination on the grounds thereof.
(c) The
Executive’s employment hereunder may be terminated by the Board upon the
occurrence of a Change of Control. For purposes of this Agreement, “Change
of Control”
means,
following the Effective Date: (i) the
acquisition by any Person (including a group of Persons within the meaning
of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership of
any
capital stock of the Company, if, after such acquisition, such Person
beneficially owns (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) 50% or more of the combined voting power of the then-outstanding
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding
Company Voting Securities”),
provided, however, such person or
his or
its affiliate(s) do not own in excess of 50% of such voting power on the date
of
this Agreement;
or
(ii)
the
consummation of a merger, consolidation, reorganization, recapitalization or
share exchange involving the Company or a sale or other disposition of all
or
substantially all of the assets of the Company (a “Business
Combination”),
unless, immediately following such Business Combination, all or substantially
all of the individuals and entities who were the beneficial owners of the
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of the
combined voting power of the then-outstanding securities entitled to vote
generally in the election of directors of the resulting or acquiring corporation
in such Business Combination (which shall include, without limitation, a
corporation which as a result of such transaction owns the Company or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership of the
Outstanding Company Voting Securities immediately prior to such Business
Combination.
-8-
(d) The
Executive’s employment hereunder may be terminated by the Executive for Good
Reason. For purposes of this Agreement, “Good
Reason”
shall
mean the occurrence of any of the following, provided that Executive provides
the Company with written notice of the occurrence of any such condition within
90 days of its occurrence and the Company fails to cure such condition within
30
days after the date it receives Executive’s written notice: (i) any material
reduction by the Company of the Executive’s compensation or benefits payable
hereunder; or (ii) any material reduction or change in the Executive’s duties,
responsibilities or position; or (iii) a material breach by the Company of
a
material term of this Agreement; or (iv) a relocation of Executive’s principal
place of employment by more than fifty (50) miles without Executive’s
consent.
(e) The
Executive’s employment may be terminated by the Company for any reason or no
reason, subject to the terms of Section 10 of this Agreement.
10. Compensation
upon Termination.
(a) If
the
Executive’s employment is terminated as a result of his death or Disability, the
Company shall pay to the Executive or to the Executive’s estate, as applicable,
in a lump sum within 30 days after the date of termination,
(i)
his
unpaid Base Salary through the date of his termination and (ii) any expense
reimbursement amounts owed the Executive through the date of his termination,
and shall provide to Executive his benefits in accordance with this Agreement
through the date of his termination. In addition, subject
to the provisions of Section 10(h) hereof, the Company shall continue to pay
to
the Executive or to his estate his Base Salary on the regular payroll dates
of
the Company for the period
beginning on the day after the date of termination and ending on the date that
is six (6) months following
the
date of
termination.
In
the
event that the
Company provides Executive (his spouse and his dependents, if applicable) with
medical, dental and hospitalization coverage (“Health
Coverage”)
at the
time of termination of Executive’s employment and Executive (and/or his spouse
and dependents, as applicable) elects continued Health Coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or, if
inapplicable, under the applicable state statutes and regulations governing
continuation of health care coverage to former employees (collectively,
“COBRA”),
for
the twelve
(12) month period following the date of termination,
the
Company shall reimburse Executive for the amount of the COBRA payments, less
the
amount that Executive would have been obligated to make in order to receive
the
Health Coverage under the Company’s programs (as in effect at the time of
termination of employment). Subject to Section 10(h) hereof, the Company will
make reimbursement payments to Executive on a monthly basis on the last payroll
date of the month for the previous month’s COBRA payments. All
Merger Options and Stock Options that are scheduled to vest on the next
succeeding anniversary of the Commencement Date shall be accelerated and deemed
to have vested as of the termination date. All Merger Options and Stock Options
that have not vested (or been deemed pursuant to the immediately preceding
sentence to have vested) as of the date of termination shall be forfeited to
the
Company as of such date. Merger Options and Stock Options that have vested
as of
the Executive’s termination shall remain exercisable for ninety (90) days
following such termination, provided, however, Merger Options that are not
exercisable upon their terms at the time of such termination may not be
exercised and shall be forfeited to the Company as of such date.
(b) If
the
Executive’s employment is terminated by the Board for Cause or by the Executive
for other than Good Reason, then the Company shall pay or provide to the
Executive (i) his unpaid Base Salary, (ii) any expense reimbursement amounts
owed the Executive and (iii) his benefits in accordance with this Agreement,
all
through the date of his termination. The Executive shall have no further
entitlement hereunder to any other compensation or benefits from the Company.
All Merger Options and Stock Options that have not vested as of the date of
termination shall be forfeited to the Company as of such date. Merger Options
and Stock Options that have vested as of the Executive’s termination shall
remain exercisable for 90 days following such termination, provided, however,
Merger Options that are not exercisable upon their terms at the time of such
termination may not be exercised and shall be forfeited to the Company as of
such date.
-9-
(c) If
the
Executive’s employment is terminated by the Company (or its successor) upon the
occurrence of a Change of Control, is terminated by the Company other than
as a
result of the Executive’s death or Disability or other than as set forth in
Section 9(a), or is terminated by the Executive for Good Reason, then the
Company (or its successor, as applicable) shall pay
to
Executive, in a lump sum within 30 days after the date of termination,
(i)
his
unpaid Base Salary through the date of his termination and (ii) any expense
reimbursement amounts owed the Executive through the date of his termination,
and shall provide to Executive his benefits in accordance with this Agreement
though the date of his termination. In addition, subject
to the provisions of Section 10(h) hereof and Section 10(d) hereof, the Company
shall continue to pay to the Executive his Base Salary on
the
regular payroll dates of the Company for the period
beginning on the first payroll date that occurs on or after the 31st day after
the date of termination and ending on the date that is twelve
(12) months following such
date.
In
the
event that the
Company provides Executive (his spouse and his dependents, if applicable) with
Health Coverage at the time of termination of Executive’s employment and
Executive elects continued Health Coverage under COBRA, subject to Section
10(d), for a twelve
(12) month period beginning on the first month-end payroll date that occurs
on
or after the 31st day after the date of termination,
the
Company shall reimburse Executive for the amount of the COBRA payments, less
the
amount that Executive would have been obligated to make in order to receive
the
Health Coverage under the Company’s programs (as in effect at the time of
termination of employment). Subject to Section 10(h) hereof (and the foregoing
sentence), the Company will make reimbursement payments to Executive on a
monthly basis on the last payroll date of the month for the previous month’s
COBRA payments. The Company’s continuing Health Coverage reimbursement
obligations under this Section 10(c) shall cease in the event that Executive
has
the ability to obtain Health Coverage from a subsequent employer. All Merger
Options and Stock Options that
are
scheduled to vest on the next succeeding anniversary of the Commencement Date
shall be accelerated and deemed to have vested as of the termination date.
All
Merger Options and Stock Options that have
not
vested (or been deemed pursuant to the immediately preceding sentence to have
vested) as of the date of termination shall be forfeited to the Company as
of
such date. Merger
Options and Stock Options that have vested as of the Executive’s termination
shall remain exercisable for 90 days following such termination provided,
however, Merger Options that are not exercisable upon their terms at the time
of
such termination may not be exercised and shall be forfeited to the Company
as
of such date. Notwithstanding the foregoing, if Executive's employment is
terminated upon a Change of Control and such Change of Control is a result
of
(i) a merger, consolidation, share exchange, or other business combination
transaction, (ii) a sale by the Company of all or substantially all of its
assets for consideration, or (iii) the sale by the Company of newly issued
securities resulting in gross proceeds in excess of $60,000,000, then in each
case all Merger Options and Stock Options that have not vested as of the
termination date shall
be
accelerated and deemed to have vested as of the termination date.
(d) Notwithstanding
anything to the contrary contained herein, no payments shall be made to
Executive pursuant to Section 10(c) hereof (other than unpaid Base Salary and
reimbursements for business expenses, both through Executive’s date of
termination), whether for Base Salary continuation or reimbursement of Health
Coverage, and no acceleration of vesting of the Merger Options or Stock Options
shall occur pursuant to Section 10(c) hereof unless Executive executes and
delivers to the Company within 30 days after the date of termination a general
mutual release in favor of the Company, its affiliates and their respective
officers, directors, shareholders, members, partners, managers, employees,
plan
administrators, agents and attorneys, as well as any predecessor, future
successor or estate or assign of any of the foregoing from all legally
releasable claims and liability (other than the payments and benefits due under
this Agreement) in a form reasonably satisfactory to the Company and Executive
(and the release is not rescinded and remains in effect). The mutual release
shall not release Executive from claims or liability relating to Executive’s
acts or omissions involving or arising from fraud, theft, criminal acts, or
violations of securities law while employed by the Company. Notwithstanding
the foregoing, the Company shall have no obligation to provide Executive with
a
release of any claims or liability if the Company terminates Executive's
employment in accordance with Section 9(a).
-10-
(e) This
Section 10 sets forth the only obligations of the Company with respect to the
termination of the Executive’s employment with the Company, and the Executive
acknowledges that, upon the termination of his employment, he shall not be
entitled to any payments or benefits which are not explicitly provided in
Section 10.
(f) Upon
termination of the Executive’s employment hereunder for any reason, the
Executive shall be deemed to have resigned as director of the Company, effective
as of the date of such termination.
(g) The
obligations of the Company that arise under this Section 10 shall survive the
expiration or earlier termination of this Agreement.
(h)
If any
payment, compensation or other benefit provided to the Executive in connection
with his employment termination is determined, in whole or in part, to
constitute "nonqualified deferred compensation" within the meaning of Section
409A of the Code and the Executive is a specified employee as defined in Section
409A(2)(B)(i), no part of such payments shall be paid before the day that is
six
(6) months plus one (1) day after the termination date (the "New
Payment Date").
The
aggregate of any payments that otherwise would have been paid to the Executive
during the period between the termination date and the New Payment Date shall
be
paid to the Executive in a lump sum on such New Payment Date. Thereafter, any
payments that remain outstanding as of the day immediately following the New
Payment Date shall be paid without delay over the time period originally
scheduled, in accordance with the terms of this Agreement.. Notwithstanding
anything contained herein to the contrary, Executive shall not be considered
to
have terminated employment with the Company for purposes of Sections 9 and
10
hereof unless he would be considered to have incurred a “termination of
employment” from the Company within the meaning of Treasury Regulation
§1.409A-1(h)(1)(ii).
(i) Anything
in this Agreement to the contrary notwithstanding, if in the event of a Change
of Control, it is determined that any payment, award, benefit or distribution
(or any acceleration of any payment, award, benefit or distribution) by the
Company or any entity to or for the benefit of the Executive (the "Payments")
would result in an excise tax within the meaning of Section 4999 of the Internal
Revenue Code of 1986, as amended ("Code") (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Company (or any successor entity) shall pay to Executive
an additional payment ("Gross Up Payment") in an amount such that after payment
by the Executive of all taxes (including any Excise Tax) imposed upon the Gross
Up Payment, the Executive retains an amount of the Gross Up Payment equal to
the
amount the Excise Tax imposes upon the Payments.
11. Indemnification.
The
Company shall defend and indemnify the Executive in his capacity as Chief
Executive Officer of the Company to the fullest extent permitted by the
Company’s articles and by-laws and under the Delaware General Corporate Law (the
“DGCL”).
Within sixty (60) days of the Effective Date, the Company shall also establish
a
policy for indemnifying its officers and directors, including but not limited
to
the Executive, for all actions permitted under the DGCL taken in good faith
pursuit of their duties for the Company, including but not limited to the
obtaining of an appropriate level of Directors and Officers Liability coverage
and including such provisions in the Company’s by-laws or certificate of
incorporation, as applicable and customary. The rights to indemnification shall
survive any termination of this Agreement.
-11-
12. Miscellaneous.
(a) This
Agreement shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New Jersey, without giving effect to its
principles of conflicts of laws.
(b) Any
dispute arising out of, or relating to, this Agreement or the breach thereof
(other than Sections 6 or 7 hereof), or regarding the interpretation thereof,
shall be finally settled by arbitration conducted in New Jersey in accordance
with the National Rules for the Resolution of Employment Disputes
of
the
American Arbitration Association then in effect before a panel of three
arbitrators appointed in accordance with such rules. Judgment upon any award
rendered therein may be entered and enforcement obtained thereon in any court
having jurisdiction. The arbitrator shall have authority to grant any form
of
appropriate relief, whether legal or equitable in nature, including specific
performance.
For the
purpose of any judicial proceeding to enforce such award or incidental to such
arbitration or to compel arbitration and for purposes of Sections 6 and 7
hereof, the parties hereby submit to the non-exclusive jurisdiction of the
courts of the State of New Jersey, or the United States District Court for
the
District of New Jersey, and agree that service of process in such arbitration
or
court proceedings shall be satisfactorily made upon it if sent by registered
mail addressed to it at the address referred to below in paragraph (g) of this
Section 12.
The
costs of such arbitration shall be borne proportionate to the finding of fault
as determined by the panel of arbitrators.
Pending
such resolution of any claim, the Executive shall be entitled to continue to
receive all payments and benefits due under this Agreement or otherwise, unless
the arbitration panel determines otherwise. Judgment on the arbitration award
may be entered by any court of competent jurisdiction.
(c) This
Agreement shall be binding upon and inure to the benefit of the parties hereto,
and their respective heirs, legal representatives, successors and
assigns.
(d)
This
Agreement, and the Executive’s rights and obligations hereunder, may not be
assigned by the Executive. The Company may assign its rights, together with
its
obligations, hereunder in connection with any sale, transfer or other
disposition of all or substantially all of its business or assets.
(e) This
Agreement cannot be amended orally, or by any course of conduct or dealing,
but
only by a written agreement signed by the parties hereto.
(f) The
failure of either party to insist upon the strict performance of any of the
terms, conditions and provisions of this Agreement shall not be construed as
a
waiver or relinquishment of future compliance therewith, and such terms,
conditions and provisions shall remain in full force and effect. No waiver
of
any term or condition of this Agreement on the part of either party shall be
effective for any purpose whatsoever unless such waiver is in writing and signed
by such party.
(g) All
notices, requests, consents and other communications, required or permitted
to
be given hereunder, shall be in writing and shall be delivered personally or
by
an overnight courier service or sent by registered or certified mail, postage
prepaid, return receipt requested, to the parties at the addresses set forth
on
the first page of this Agreement, and shall be deemed given when so delivered
personally or by overnight courier or when actually received if sent by
registered or certified mail. Each party may designate another address, for
receipt of notices hereunder by giving notice to the other party in accordance
with this paragraph (g) of this Section 12.
-12-
(h) This
Agreement sets forth the entire agreement and understanding of the parties
relating to the subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, relating to the subject matter
hereof. No representation, promise or inducement has been made by either party
that is not embodied in this Agreement, and neither party shall be bound by
or
liable for any alleged representation, promise or inducement not so set
forth.
(i) As
used
in this Agreement, “affiliate” of a specified Person shall mean and include any
Person controlling, controlled by or under common control with the specified
Person.
(j) The
section headings contained herein are for reference purposes only and shall
not
in any way affect the meaning or interpretation of this Agreement.
(k) This
Agreement may be executed in any number of counterparts, each of which shall
constitute an original, but all of which together shall constitute one and
the
same instrument.
(l) As
used
in this Agreement, the masculine, feminine or neuter gender, and the singular
or
plural, shall be deemed to include the others whenever and wherever the context
so requires. Additionally, unless the context requires otherwise, "or" is not
exclusive.
(m)
This
Agreement is intended to comply with the requirements of Section 409A of the
Code (“Section
409A”)
and
regulations promulgated thereunder. To the extent that any provision in this
Agreement is ambiguous as to its compliance with Section 409A, the provision
shall be read in such a manner so that all payments due under this Agreement
shall comply with Section 409A . For purposes of section 409A, each payment
made
under this Agreement shall be treated as a separate payment. In
no
event may Executive, directly or indirectly, designate the calendar year of
payment.
IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement as of the date first above
written.
By:
/s/
Xxxxxxx X. Xxxxxxxxx
Name:
Xxxxxxx X. Xxxxxxxxx
Title:
Chairman
By:
/s/
Xxxxxxx Xxxxxx
Name:
Xxxxxxx Xxxxxx
-13-
