EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (this "Agreement") is entered into this 18th day of June,
2008, by and between MedaSorb Technologies Corporation, (the "Company"), and
Xx
Xxxxx ("Employee"). This Employment agreement is contingent upon closing a
$4
million Series B financing led by NJTC Venture Fund (“NJTC”) in June 2008 and
will replace the employment agreement executed between Employee and the Company
dated December 31, 2007. If this condition is not met, there will be no change
in the Employee’s current employment agreement.
The
Company wishes to employ Employee as Chief Executive Officer upon the terms
and
conditions set forth in this Agreement and Employee is willing to accept
employment subject to the terms and conditions set forth below.
Accordingly,
the parties, intending to be legally bound, agree as follows:
1.
Employment and Term
1.1
Employment. Subject to the terms and conditions hereof, the Company hereby
employs Employee during the term of employment set forth in Section 1.2 to
serve
as President and Chief Executive Officer of the Company and perform such
services and duties as are normally and customarily associated with such
position as well as such other associated duties as the Board of Directors
shall
determine. Employee hereby accepts such employment and agrees to devote
sufficient time, attention and energies during regular business hours to
effectively perform his duties and obligations hereunder, devoting five full
business days each week to the Company's business, with three days at the
Company’s office, and the remaining two days at his discretion, provided he
remains available by telephone, e-mail or other form of communication. Prior
to
executing this agreement, Employee will produce a 100 day plan acceptable to
NJTC, outlining the Company’s goals for the first 100 days post-closing of the
Series B investment. At the end of the first 100 days post-closing, the Board
will evaluate the Employee’s ability to execute on this 100-day plan. If found
to be deficient, as judged by the Board, Employee will be required to work
5
days a week in the Company’s offices for the remainder of the employment
agreement.
1.2
Term.
The term of employment of Employee under this Agreement shall begin on the
date
hereof and end on December 31, 2008, subject to the provisions for early
termination set forth herein.
2.
Compensation. In consideration of the services to be rendered hereunder,(a)
the
Company hereby agrees to pay Employee an annual base compensation of $216,351
payable in equal semimonthly installments in accordance with the usual practice
of the Company which base compensation shall be subject to annual review (but
his compensation may not be reduced from then current level) by the Compensation
Committee, and (b) until such time as the Company obtains additional equity
(
including any form of financing or investment that can convert to equity)
capital of $4 million, the Company agrees to grant Employee stock options for
that number of shares of common stock that will enable him to continue holding
5% of the outstanding shares of common stock of the Company, determined and
granted upon closing of Series B investment date hereof at the market price
per
share (the “Options”) on the date the options are granted. In
the
event more than $4 million is raised in a single financing, such anti-dilution
protection will only give effect to the first $4 million raised in such
financing. Conversely, if less than $4 million is raised in a single financing,
such anti-dilution protection will continue to apply to successive financings
until an aggregate of $4 million has been raised following December 31, 2007,
giving effect only to the first $4 million raised following December 31, 2007.
Options
issued to employee per this section shall be deemed fully vested on issuance.
It
is also understood that the Employee's Options will be adjusted on the same
basis as all other stock holders to account for any stock split, stock dividend,
combination or recapitalization.
3.
Benefits.
3.1
Participation in Plans. During the term hereof, Employee shall be entitled
to
participate on the same terms as afforded other executive officers in any group
insurance, hospitalization, medical, dental, health and accident, disability
or
similar plan or program of the Company now existing or established hereafter
to
the extent that he is eligible under the general provisions thereof; provided
that in no case shall the benefits be reduced or less than that granted, awarded
or provided to Employee on the date hereof.
3.2
Reasonable Business Expenses. Employee shall be allowed reimbursement for
reasonable business expenses in connection with the performance of his duties
hereunder upon presentation by Employee of the details of, vouchers for, such
expenses, including tourist class commercial air travel, and Employee shall
be
furnished reasonable office space, assistance and facilities.
3.3
Vacation. Employee shall be entitled to a vacation (without deduction of salary
or other compensation) for the period as is in conformity with the Company's
policy regarding vacations for management employees (but in no event less than
four weeks per year).
3.4
Bonuses. Employee may receive such discretionary bonuses as the Board of
Directors, in its sole discretion and from time to time, deem appropriate.
Previously issued and any future option grants that the Board may grant as
a
bonus, will not count toward the 5% described in Section 2 above.
3.5
Automobile Allowance. The Company agrees to pay Employee each month an
automobile allowance of $500.00 per month throughout the term of this
Agreement.
4.
Early
Termination of Employment
4.1
Termination for Justifiable Cause. In addition to termination pursuant to
Section 1.2, the Company, by written notice to Employee authorized by a majority
of the Directors other than Employee, may terminate Employee's employment for
"justifiable cause", which shall mean any of the following events: (a)
adjudication by a court of competent jurisdiction that Employee has committed
an
act of fraud or dishonesty resulting or intended to result, directly or
indirectly, in personal enrichment at the expense of the Company; (b) an
indictment of a felony (other than a motor vehicle related matter) involving
moral turpitude; (c) repeated failure or refusal by
Employee
to follow written policies and directions reasonably established by the Board
of
Directors that go uncorrected for a period of thirty (30) consecutive days
after
written notice has been provided to Employee; or (d) persistent willful failure
by Employee to fulfill his duties hereunder that goes uncorrected for a period
of thirty (30) consecutive days after written notice has been provided
Employee., In
the
event of 4.1 (c) or 4.1 (d), Employee will be receive 15 calendar days of
notice, after which his employment will terminate.
4.2
In
the event that the Board of Directors reasonably determines that Employee has
committed a felony (other than a motor vehicle related matter), a material
act
of fraud or other willful tort against the Company, it shall have the right
to
suspend Employee from his position and duties hereunder without compensation
until such time as either the action is dropped or no longer pursued or a final
adjudication of Employee's actions is made by a court (whether civil or criminal
as appropriate) of competent jurisdiction. Should said adjudication find
Employee innocent (or not at fault) or the action is dropped or no longer
pursued, the Company shall promptly pay him all unpaid back salary together
with
interest on said amount (at the average consumer loan rate published by
Citibank, N.A., during the suspension period) and, if said final adjudication
is
rendered or action dropped or no longer pursued within 12 months of Employee's
suspension, he may, at his option, be reinstated to his position and this
Agreement continued as if never interrupted.
4.3
Permanent Disability of Employee. The Company shall have the right to terminate
Employee's employment hereunder if the Directors shall in good faith and on
the
basis of reasonable medical evidence determine that Employee, by reason of
physical or mental disability, has been unable to perform the services required
of him hereunder for more than 120 consecutive days or an aggregate of 180
calendar days, during any 12-month period. Such termination shall be effective
as of the last day of the month following the month in which the Company shall
have given notice to Employee of its intention to terminate pursuant to this
paragraph. Company paid Disability Benefits will be activated 90 days after
termination.
4.4
Compensation Upon Early Termination.
(a)
In
the event of termination of this Agreement for "justifiable cause" as described
in Section 4.1, or pursuant to Section 1.2 hereof, Employee shall be entitled
to
the compensation earned by him before the effective date of termination, as
provided for in this Agreement, computed pro rata up to and including that
date,
in lieu of salary and other benefits under this Agreement.
(b)
If
prior to the expiration of the term of this Agreement Employee dies, the Company
shall continue Employee's compensation and coverage of Employee's direct
dependents (if any and if they are eligible) under all plans or programs of
the
types listed in Section 3.1 for a period of 120 days, provided that no benefits
will continue past the end of the term of this Agreement.
(c)
Upon
a Change of Control or upon Employee's termination for "Good Reason" as defined
below, Employee shall then be entitled to receive, in lieu of salary and other
benefits under this Agreement, (i) an amount equal to two weeks of his
then-current base salary for every year Employee was employed by the Company,
payable in equal semi-monthly installments over the next three (3) months
following termination in arrears without
interest
(ii)
continued coverage under all plans or programs of the types listed in Section
3.1 until the sooner of 1.0 year or one (1) month after Employee becomes
otherwise employed and eligible for other comparable coverage, and (iii) all
other benefits provided to Employee under this Agreement for a period of thirty
(30) days.
4.5
In
the event Employee is terminated for any reason other than for "justifiable
cause" as defined in Section 4.1 hereof, death, disability or voluntary
termination (unless the Company and Employee mutually agree to such voluntary
termination), then all unexercised options granted to Employee under the
Company's option plan (including without limitation the Options granted pursuant
to Section 2(b) hereof) shall be deemed fully vested and exercisable immediately
upon Employee's termination. The foregoing benefit shall be in addition to,
and
not in lieu of, any similar benefit that may be contained in any other agreement
between Company and Employee.
4.6
(a)
Upon the occurrence of a Change of Control of the Company
or Employee terminates for Good Reason pursuant to Section 4.6(d)(i), all
options granted to Employee under the Company option plan and the Options
granted to Employee pursuant to Section 2(b) hereof shall be automatically
fully
vested and exercisable immediately upon a Change of Control.
(b)
For
purposes of this Agreement, "Change of Control" shall be deemed to have occurred
if, during the term of this agreement:
(i)
the
beneficial ownership of at least 50% of the Company's
voting securities or all or substantially all of the assets of the Company
shall
have been acquired, directly or indirectly by a single person or a group of
affiliated persons, other than the Employee or a group in which the Employee
is
a member, in any transaction or series of transactions, excluding a Series
B
equity investment; or
(ii)
as
the result of or in connection with any cash tender
offer, exchange offer, sale of assets, merger, consolidation or other business
combination of the Company with another corporation or entity the new Board
of
Directors is comprised of a majority of Directors chosen or elected by the
members of the new/combined entity who were not members of the Company before
such cash tender offer, exchange offer, sale of assets, merger, consolidation
or
other business combination of the Company with another corporation or
entity.
(c)
For
purposes of this Agreement, the date of Change of Control shall mean the earlier
to occur of:
(i)
the
first date on which a single person or group of affiliated persons acquires
the
beneficial ownership of 50% or more of the Company's voting securities or all
or
substantially all of the Company's assets in any transaction or series of
transactions; or
(ii)
the
date on which a cash tender offer, exchange offer,
sale of assets, merger, consolidation other business combination resulting
in the change in the Board of Directors contemplated by Section 4.5 hereof
is
consummated.
(d)
For
purposes of this Agreement, the term "Good Reason" shall mean the occurrence
of
any of the following events without the Employee's express written
consent.
(i)
the
assignment to Employee of any duties that are not in the same corporate capacity
or area of operations or are not of the same general nature as Employee's duties
with Company; or
(ii)
the
Company's assigning Employee to an office other than the principal office of
the
Company. The current principal office is located in Monmouth Junction, New
Jersey and the Company represents to Employee that there is at this time no
intention on the part of the Company to move said principal office beyond a
radius of 50 miles from Monmouth Junction, New Jersey.
This
clause (ii), however, shall in no way limit the complete discretion of the
Board
of Directors to relocate the principal office of the Company at any time in
the
future. In the event, however, that the Company does move its principal office
beyond a 50 mile radius of Monmouth Junction, N.J., Employee shall have the
right, for 120 days after the decision of the Board of Directors to relocate,
to
elect (by written notice to the Board of Directors) to terminate this Agreement
and receive upon the date of termination, in lieu of all compensation and
privileges provided for herein (except as set forth in the subsequent sentence),
that number of options equal to one additional year's vesting hereunder,
provided Employee remains with the Company for a period (up to 12 months) (the
"Transition Period") sufficient to assist the Company to make an expeditious
and
effective transition to the new location. The end of such Transition Period
shall be deemed the date of termination for the purposes of this Section.
Notwithstanding anything set forth herein to the contrary, in the event the
Company moves its principal office beyond a 50 mile radius from Princeton,
New
Jersey, the Company shall be obligated to pay to Employee the amount of
compensation and benefits set forth in Section 4.4(c) hereof commencing after
the Transition Period set forth above.
5.
Confidentiality and Non-Competition.
5.1
(i)
Confidentiality. During the term of employment under this Agreement, Employee
will have access to and become acquainted with various confidential information
including without limitation, trade secrets, customer relationships, formulas,
devices, inventions, processes, know-how, financial information and other
compilations of information, records, and specifications, which are owned by
the
Company. Employee shall not disclose any of the Company's confidential
information, directly or indirectly, or use them in any way, either during
the
term of this Agreement or at any time thereafter, except as required in the
course of his employment for the Company. All files, records, documents,
drawings, specifications, equipment and similar items relating to the business
of the Company, whether prepared by Employee or otherwise coming into his
possession, shall remain the exclusive property of the Company and shall not
be
removed from the premises of the Company under any circumstances whatsoever
without the prior written consent of the Company, and if removed shall be
immediately returned to the Company upon any termination of his employment
and
no copies thereof shall be kept by Employee, provided, however, that Employee
shall be entitled to retain documents reasonably related to his interest as
a
shareholder.
(ii)
Inventions and Shop Right. Every invention, discovery or improvement made or
conceived by Employee related to the business of the Company during his
employment by the Company whenever and wherever made or conceived, and whether
or not during business hours, of any product, article, appliance, tool, device,
formula, process, machinery or pattern similar to, or which constitutes an
improvement, on those heretofore, now or at any time during this employment,
manufactured or used by the Company in connection with the manufacture or
process of any product heretofore or now or hereafter manufactured by the
Company, or of any product which shall or could reasonably be manufactured
in
the reasonable expansion of the Company's business, shall be and continue remain
the Company's exclusive property, without any added compensation or any
reimbursement for expenses to Employee, and upon the conception of any and
every
such invention, discovery or improvement and without waiting to perfect or
complete it, Employee promises and agrees that he will immediately disclose
it
to the Company and to no one else and thenceforth will treat it as the property
and secret of the Company. Employee will also execute any instruments requested
from time to time by the Company to vest in it complete title and ownership
to
such invention, discovery or improvement and will, at the request of the
Company, do such acts and execute such instruments as the Company may require
but at the Company's expense to obtain Letters Patent in the United States
and
foreign countries, for such invention, discovery or improvement and for the
purpose of vesting title thereto in the Company, all without any reimbursement
for expenses or otherwise and without any additional compensation of any kind
to
Employee.
5.2
Non-Competition. In the event of a termination of this Agreement for any reason,
Employee shall be prohibited for a period of one (1) year from the effective
date of this separation from engaging in any business in competition with that
of the Company in those states within the United States and those countries
outside the United States in which the Company at the time of Employee's
separation has conducted business or where Company has written a reasonable
plan
to conduct business in the next 12 months or directly or indirectly advising
or
consulting to or otherwise performing services for or providing assistance
to
any person, firm, corporation, or other entity engaged in such competitive
business, provided, however, nothing herein contained shall be construed as
(a)
preventing Employee from investing his personal assets in any businesses which
do not compete directly or indirectly with the Company, provided such investment
or investments do not require any services on his part in the operation of
the
affairs of the entity in which such investment is made and in which his
participation is solely that of an investor, (b) preventing Employee from
purchasing securities in any corporation whose securities in any corporation
whose securities are regularly traded, if such purchases shall not result in
his
owning beneficially at any time 3% or more of equity securities of any
corporation engaged in a business which is competitive, directly or indirectly,
to that of the Company, (c) preventing Employee from engaging in any activities,
if he receives the prior authorization of the Directors. Notwithstanding
anything herein to the contrary this Section 5.2 shall not be effective in
the
event Employee has been discharged for any reason other than "justifiable cause"
or voluntarily leaves the employment of the Company with the mutual agreement
of
the Company.
5.3
Subsequent to the termination of this Agreement, Employee will not for a period
of one (1) year materially interfere with or disrupt the Company's business
relationship with its customers or suppliers or employ any person who was
employed with the Company at any time during the 6 months prior to Employee's
termination, or for a period of three (3) years, directly or indirectly solicit
any of the employees to leave the employ of the Company. In consideration for
the above, employee will receive a severance of (2) two weeks salary for each
year employed at Company upon termination of employment
6.
Notices. All notices under this Agreement shall be in writing and shall be
deemed effective when delivered in person (in the Company's case, to its
President or Secretary) or forty eight (48) hours after deposit thereof in
the
U.S. mail, postage prepaid, addressed to Employee, at last known address as
carried in the records of the Company, or to the Company, at the corporate
headquarters, to the attention of the Secretary, or to such other address as
the
party to be notified may specify by notice to the other party.
7.
Assigns and Successors. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company and the rights and obligations of Employee shall
move
to the benefit of and shall be binding on Employee and his legal representatives
or heirs. This agreement constitutes a personal service agreement and Employee's
obligations hereunder may not be transferred or assigned by
Employee.
8.
Amendment Waiver. This Agreement may be amended, and any right or claim
hereunder waived, only by a written instrument signed by both Employee and
the
Company, following authorization by a majority of Directors. Nothing in this
Agreement, express or implied, is intended to confer upon any third person
any
rights or remedies under or by reason of this Agreement. No amendment or waiver
of this Agreement requires the consent of any individual, partnership,
corporation or other entity not a party of this Agreement.
9.
Injunction.
(a)
Should Employee at any time violate or threaten to violate any of the provisions
of this Agreement, the Company shall be entitled to an injunction restraining
Employee from doing or continuing to do or performing any such acts, and
Employee hereby consents to the issuance of such an injunction.
(b)
In
the event that a proceeding is bought in equity to enforce the provisions of
this paragraph, Employee shall not urge as a defense that there is an adequate
remedy at law, nor shall the Company be prevented from seeking any other
remedies which may be available.
(c)
The
existence of a claim or cause of action by the Company against Employee, or
by
Employee against the Company, whether predicated upon this Agreement or
otherwise, shall not constitute a defense to the endorsement by the Company
of
the foregoing restrictive covenants but shall be litigated
separately.
(d)
The
provisions of this Section 9 shall survive termination of this
Agreement.
10.
Governing Law and Jurisdiction. This Agreement in its interpretation and
application and enforcement shall be governed by the law of the State of New
Jersey without application of its conflict of laws provisions, and any legal
action commenced by either party seeking interpretation, application and/or
enforcement of this Agreement shall be brought only in the State of New Jersey
of federal court sitting in Princeton, NJ.
11.
Prior
Agreements. This Agreement supersedes and replaces any and all prior employment
agreements between the parties as to its subject matter.
12.
Construction. Paragraph headings are for convenience only and shall not be
considered a part of the terms and provisions of this Agreement.
13.
Effective Date. The effective date of this Agreement shall be
June
, 2008.
IN
WITNESS WHEREOF, the parties have executed this Agreement.
| MEDASORB TECHNOLOGIES CORPORATION |
EMPLOYEE
|
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| By: |
/s/
Xx Xxxxx
|
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|
Xx Xxxxx
|
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