Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), is made on this 29th day
of March, 2002 (the "Commencement Date"), by and between NEOSE TECHNOLOGIES,
INC. (the "Company") and C. XXXX XXXXXX (the "Executive").
WHEREAS, the Company recognizes that the Executive can contribute to
the growth and success of the Company and desires to employ the Executive on the
terms and conditions set forth in this Agreement;
WHEREAS, the Executive has been appointed by the Company's Board of
Directors (the "Board") to serve as the President and Chief Executive Officer of
the Company, and has been nominated by the Board to serve as a director of the
Company; and
WHEREAS, the Executive desires to be so employed by the Company.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and promises contained herein, and intending to be bound hereby, the
parties agree as follows:
1. Employment.
1.1. Term. The Company agrees to employ the Executive in accordance
with the terms of this Agreement and the Executive agrees to accept such
employment, effective on the Commencement Date and continuing until terminated
pursuant to Section 4 hereof (the "Term").
1.2. Positions. During the Term, Executive will serve as President and
Chief Executive Officer of the Company, reporting directly to the Board.
Assuming the Executive is elected to the Board, the Board agrees to nominate the
Executive for reelection at each annual meeting of the Company's shareholders
occurring during the Term and at which the Executive's term as a director is
scheduled to expire. Effective upon (and subject to) the Executive's election to
the Board, the Board has selected the Executive to serve as member of the
Board's Nominating Committee for all periods during the Term in which the
Executive serves as a member of the Board.
1.3. Duties. The Executive will perform such duties and functions as
are customarily performed by the president and chief executive officer of an
enterprise the size and nature of the Company, including the duties and
functions from time to time assigned to him by the Board. Without limiting the
generality of the foregoing, the Executive will be responsible for all aspects
of the Company's performance, including strategy, research and development,
business development, sales and marketing, operations, manufacturing, technology
development and licensing, corporate development, information management,
finance, legal, patent, regulatory, human resources, investor relations and
corporate communications.
1.4. Place of Performance. The Executive shall perform his services
hereunder at the principal executive offices of the Company, which are currently
located in Horsham, Pennsylvania; provided, however, that the Executive will be
required to travel from time to time for business purposes.
1.5. Time Devoted to Employment. The Executive will devote his best
efforts and substantially all of his business time and services to the
performance of his duties under this Agreement. Notwithstanding the foregoing,
the Executive may engage in charitable, community service and industry
association activities, and, with the approval of the Board (which approval will
not be unreasonably withheld), may serve as a member of boards of directors of
other companies or organizations, which in the judgment of the Board, will not
present any conflict of interest with the Company, so long as those activities
do not interfere with the performance of his duties under this Agreement.
2. Compensation, Benefits and Expense Reimbursements.
2.1. Base Salary. The Executive shall receive an initial annual salary
of $450,000 (the "Base Salary"), paid semi-monthly or otherwise in accordance
with the Company's customary payroll practices, as in effect from time to time.
Future salary reviews will be undertaken by the Board of Directors annually.
2.2. Bonus. The Executive will be eligible to receive an annual bonus
(the "Annual Bonus") for each completed calendar year during the Term. The
target amount of the Annual Bonus is 75% of the Base Salary for the applicable
calendar year. The specific goals and objectives that must be met to receive the
target bonus will be established by mutual agreement by the Board and the
Executive within 90 days following the commencement of each calendar year during
the Term, except that the goals and objectives for the 2002 calendar year will
be established at the June, 2002 meeting of the Board. The Company will endeavor
to pay the Annual Bonus, if any, by the end of the first quarter of the calendar
year following the calendar year to which the Annual Bonus relates.
2.3. Equity Incentive. The Board has authorized the grant to the
Executive of options to purchase 500,000 shares of the Company's common stock
(the "Stock Option") effective as of the Commencement Date with a per share
exercise price equal to the fair market value of a share of common stock on the
Commencement Date, contingent on the commencement of the Executive's employment
with the Company on that date. The Stock Option is intended to be an incentive
stock option, to the extent permitted under Section 422(d) of the Internal
Revenue Code (the "Code") and to that extent will be granted under the Company's
1995 Stock Option/Stock Issuance Plan (the "Plan"). To the extent the Stock
Option is a non-qualified stock option, it will not be granted under the Plan.
The Stock Option will become vested and first exercisable with respect to
125,000 shares on the first anniversary of the Commencement Date, and will
become vested and exercisable with respect to an additional 2.0833% of the
shares subject thereto on the last day of each of the 36 months following that
first anniversary, contingent on the continued employment of the Executive by
the Company on the applicable vesting date, such that the entire option will be
fully vested and exercisable on the fourth anniversary of the Commencement Date
(if the Executive then remains employed by the Company). The Stock Option will
be subject to the terms of separate award agreements, which agreements are
attached to this agreements as Exhibits I and II. The Executive will be eligible
to receive additional grants in accordance with the Company's executive
incentive options program, at the discretion of the Board or a committee of the
Board.
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2.4. Expenses. The Executive will be entitled to reimbursement by the
Company for all expenses reasonably incurred by him in connection with the
performance of his duties, including, without limitation, travel and
entertainment expenses reasonably related to the business of the Company, in
accordance with the policies and procedures established from time to time by the
Company.
2.5. Other Benefits. The Executive will be entitled to participate in
any benefit plans, policies or arrangements sponsored or maintained by the
Company from time to time for its senior executive officers (which benefits, as
of this date, include the right to participate in the Company's 401(k), employee
stock purchase, medical, and dental plans, and coverage under the Company's
group life and disability insurance policies). Notwithstanding the foregoing,
the Executive's eligibility for and participation in any of the Company's
employee benefit plans, policies or arrangements will be subject to the terms
and conditions of such plans, policies or arrangements. Moreover, subject to the
terms and conditions of such plans, policies or arrangements, the Company may
amend, modify or terminate such plans, policies or arrangements at any time for
any reason. In addition, the cost of the Executive's annual physical examination
shall be borne by the Company, to the extent not covered by the Company's
medical plan.
2.6. Vacations. In addition to holidays observed by the Company, the
Executive shall be entitled to four (4) weeks paid vacation time during each
year of employment consistent with Company policies, as in effect from time to
time.
3. Relocation.
3.1. Generally. The Executive agrees to relocate to the greater
Philadelphia, Pennsylvania metropolitan area within six months of the
Commencement Date. The Company will pay or reimburse the Executive for
reasonable costs of (i) travel expenses for the Executive and his spouse
associated with house-hunting in Pennsylvania, (ii) temporary housing in
Pennsylvania prior to the Executive's relocation, (iii) realtor fees incurred in
connection with the sale of the Executive's home in California (up to a maximum
of $180,000), (iv) moving household goods, furnishings and other personal
property from California to Pennsylvania, (v) transportation costs of the
Executive's family members in connection with their relocation to Pennsylvania,
and (vi) title insurance premiums, transfer taxes, recording fees and escrow
fees incurred in connection with the Executive's purchase of a home in
Pennsylvania. In addition, the Company will pay to the Executive $25,000 in
order to defray miscellaneous expenses associated with relocation. In addition,
the Company will also reimburse Executive for income and employment taxes
payable by Executive with respect to the payments or reimbursements described in
this Section 3.1, based on the Executive's actual federal, state and local
marginal tax rates for the year in which those payments or reimbursements are
made.
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3.2. Notwithstanding the foregoing, if the Executive resigns his
employment with the Company other than for Good Reason (as defined below) prior
to the second anniversary of the Commencement Date, the Executive will be
required to repay to the Company an amount equal to the product of:
3.2.1. the amounts paid or reimbursed by the Company in accordance with
the second and third sentences of Section 3.1, multiplied by
3.2.2. a fraction, the numerator of which will be 24 minus the number
of complete calendar months that the Executive was employed by the Company, and
the denominator of which will be 24.
4. Termination.
4.1. In General. The Company may terminate the Executive's employment
at any time. The Executive may terminate his employment at any time; provided
that before the Executive may voluntarily terminate his employment with the
Company other than for Good Reason, he must provide 90 days prior written notice
(or such shorter notice as is acceptable to the Company) to the Company. Upon
any termination of the Executive's employment with the Company for any reason:
(i) the Executive (unless otherwise requested by the Board) concurrently will
resign any officer or director positions he holds with the Company, its
subsidiaries or affiliates, and (ii) the Company will pay to the Executive all
accrued but unpaid Base Salary through the date of termination, and (iii) except
as explicitly provided in this Sections 4, 6 or 7, or otherwise pursuant to
COBRA, all compensation and benefits will cease and the Company will have no
further liability or obligation to the Executive. The foregoing will not be
construed to limit the Executive's right to payment or reimbursement for claims
incurred prior to the date of such termination under any insurance contract
funding an employee benefit plan, policy or arrangement of the Company in
accordance with the terms of such insurance contract.
4.2. Termination without Cause or for Good Reason.
4.2.1. If the Executive's employment by the Company ceases due
to a termination by the Company without Cause or a resignation by the Executive
for Good Reason, then, in addition to the payments and benefits provided for in
Section 4.1 above and subject to Section 8 below: (a) the Company will pay to
the Executive on the date of such termination a cash amount equal to the sum of
(i) one year of the Executive's Base Salary as in effect on such date, and (ii)
the target Annual Bonus amount applicable for the calendar year in which the
termination occurs, (b) to the extent not previously paid, the Company will pay
to the Executive any Annual Bonus payable with respect to a calendar year that
ended prior to that termination, and (c) all outstanding stock options then held
by the Executive (including the Stock Option) will immediately become vested and
exercisable with respect to that number of additional shares of the Company's
common stock with respect to which such stock options would have become vested
and exercisable had the Executive remained continuously employed by the Company
for an additional 12 months following his termination of employment and will
remain exercisable for 12 months following the Executive's termination of
employment; provided that if the Company's obligation to make the payments
provided for in this Section 4.2.1 arises due to a termination of the
Executive's employment due to his death or Disability (as defined below), the
cash payments described in clauses (a) and (b) of this Section 4.2.1 will be
offset by the amount of benefits paid to the Executive (or his
representative(s), heirs, estate or beneficiaries) pursuant to the life
insurance or long-term disability plans, policies or arrangements of the Company
by virtue of his death or that Disability (including, for this purpose, only
that portion of such life insurance or disability benefits funded by the Company
or by premium payments made by the Company).
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4.2.2. For purposes of this Agreement, the Executive's
employment will be deemed to have been terminated without "Cause" if his
employment is terminated as a result of his death or Disability or is terminated
by the Company other than as a result of fraud, embezzlement, or any other
illegal act committed intentionally by the Executive in connection with the
commencement of his employment or the performance of his duties as an officer or
director of the Company. For purposes of this Agreement, "Disability" means the
Executive's inability, by reason of any physical or mental impairment, to
substantially perform his regular duties as contemplated by this Agreement, as
determined by the Board in its sole discretion (after affording the Executive
the opportunity to present his case), which inability is reasonably contemplated
to continue for at least one year from its commencement and at least 90 days
from the date of such determination.
4.2.3. For purposes of this Agreement, "Good Reason" means,
without the Executive's prior written consent, any of the following:
(a) a change in the Executive's title (not including
the election of the Executive as Chairman of the Board);
(b) a reduction in the Executive's authority, duties
or responsibilities, or the assignment to the Executive of duties that are
inconsistent, in a material respect, with Executive's position;
(c) the relocation of the Company's headquarters more
than 15 miles from Horsham, Pennsylvania, unless such move reduces Executive's
commuting time;
(d) a reduction in the Base Salary or in the target
amount, expressed as a percentage of Base Salary, of the Annual Bonus;
(e) the Company's failure to pay or make available
any material payment or benefit due under this Agreement or any other material
breach by the Company of this Agreement; or
(f) the Board's failure to elect the Executive as the
Chairman of the Board of the Company by the close of business on March 29, 2003.
However, the foregoing events or conditions will constitute Good Reason only if
the Executive provides the Company with written objection to the event or
condition within 60 days following the occurrence thereof, the Company does not
reverse or otherwise cure the event or condition within 30 days of receiving
that written objection and the Executive resigns his employment within 90 days
following the expiration of that cure period.
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5. Restrictive Covenants. As consideration for all of the payments to be made to
the Executive pursuant to Sections 2, 4 and 6 of this Agreement, as well as for
any equity incentive awards that the Executive may receive from the Company, the
Executive agrees to be bound by the provisions of this Section 5 (the
"Restrictive Covenants"). These Restrictive Covenants will apply without regard
to whether any termination of the Executive's employment is initiated by the
Company or the Executive, and without regard to the reason for that termination.
5.1. Covenant Not To Compete. The Executive covenants that, during the
period beginning on the Commencement Date and ending on the first anniversary of
the termination of the Executive's employment with the Company for any reason
(the "Restricted Period"), he will not (except in his capacity as an employee or
director of the Company) do any of the following, directly or indirectly,
anywhere in the world:
5.1.1. engage or participate in any business competitive with
the Business (as defined below);
5.1.2. become interested in (as owner, stockholder, lender,
partner, co-venturer, director, officer, employee, agent or consultant) any
person, firm, corporation, association or other entity engaged in any business
competitive with the Business. Notwithstanding the foregoing, the Executive may
hold up to 4.9% of the outstanding securities of any class of any
publicly-traded securities of any company;
5.1.3. engage in any business, or solicit or call on any
customer, supplier, licensor, licensee, contractor, agent, representative,
advisor, strategic partner, distributor or other person with whom the Company
shall have dealt or any prospective customer, supplier, licensor, licensee,
contractor, agent, representative, advisor, strategic partner, distributor or
other person that the Company shall have identified and solicited at any time
during the Executive's employment by the Company for a purpose competitive with
the Business;
5.1.4. influence or attempt to influence any employee,
consultant, customer, supplier, licensor, licensee, contractor, agent,
representative, advisor, strategic partner, distributor or other person to
terminate or modify any written or oral agreement, arrangement or course of
dealing with the Company; or
5.1.5. solicit for employment or employ or retain (or arrange
to have any other person or entity employ or retain) any person who has been
employed or retained by the Company within the 12 months preceding the
termination of the Executive's employment with the Company for any reason.
5.2. Confidentiality. The Executive recognizes and acknowledges that
the Proprietary Information (as defined below) is a valuable, special and unique
asset of the business of the Company. As a result, both during the Term and
thereafter, the Executive will not, without the prior written consent of the
Company, for any reason either directly or indirectly divulge to any third-party
or use for his own benefit, or for any purpose other than the exclusive benefit
of the Company, any Proprietary Information; provided, however, that the
Executive may during the Term disclose Proprietary Information to third parties
as may be necessary or appropriate to the effective and efficient discharge of
his duties as an employee hereunder (provided that the third party recipient has
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signed the Company's then-approved confidentiality or similar agreement) or as
such disclosures may be required by law. If the Executive or any of his
representatives becomes legally compelled to disclose any of the Proprietary
Information, the Executive will provide the Company with prompt written notice
so that the Company may seek a protective order or other appropriate remedy. The
non-disclosure and non-use obligations with respect to Proprietary Information
set forth in this Section 5.2 shall not apply to any information that is in or
becomes part of the public domain through no improper act on the part of the
Executive.
5.3. Property of the Company.
5.3.1. Proprietary Information. All right, title and interest
in and to Proprietary Information will be and remain the sole and exclusive
property of the Company. The Executive will not remove from the Company's
offices or premises any documents, records, notebooks, files, correspondence,
reports, memoranda or similar materials of or containing Proprietary
Information, or other materials or property of any kind belonging to the Company
unless necessary or appropriate in the performance of his duties to the Company.
If the Executive removes such materials or property in the performance of his
duties, the Executive will return such materials or property to their proper
files or places of safekeeping as promptly as possible after the removal has
served its specific purpose. The Executive will not make, retain, remove and/or
distribute any copies of any such materials or property, or divulge to any third
person the nature of and/or contents of such materials or property or any other
oral or written information to which he may have access or become familiar in
the course of his employment, except to the extent necessary in the performance
of his duties. Upon termination of the Executive's employment with the Company,
he will leave with the Company or promptly return to the Company all originals
and copies of such materials or property then in his possession.
5.3.2. Intellectual Property. The Executive agrees that all
the Intellectual Property (as defined below) will be considered "works made for
hire" as that term is defined in Section 101 of the Copyright Act (17 U.S.C. ss.
101) and that all right, title and interest in such Intellectual Property will
be the sole and exclusive property of the Company. To the extent that any of the
Intellectual Property may not by law be considered a work made for hire, or to
the extent that, notwithstanding the foregoing, the Executive retains any
interest in the Intellectual Property, the Executive hereby irrevocably assigns
and transfers to the Company any and all right, title, or interest that the
Executive may now or in the future have in the Intellectual Property under
patent, copyright, trade secret, trademark or other law, in perpetuity or for
the longest period otherwise permitted by law, without the necessity of further
consideration. The Company will be entitled to obtain and hold in its own name
all copyrights, patents, trade secrets, trademarks and other similar
registrations with respect to such Intellectual Property. The Executive further
agrees to execute any and all documents and provide any further cooperation or
assistance reasonably required by the Company to perfect, maintain or otherwise
protect its rights in the Intellectual Property. If the Company is unable after
reasonable efforts to secure the Executive's signature, cooperation or
assistance in accordance with the preceding sentence, whether because of the
Executive's incapacity or any other reason whatsoever, the Executive hereby
designates and appoints the Company or its designee as the Executive's agent and
attorney-in-fact, to act on his behalf, to execute and file documents and to do
all other lawfully permitted acts necessary or desirable to perfect, maintain or
otherwise protect the Company's rights in the Intellectual Property. The
Executive acknowledges and agrees that such appointment is coupled with an
interest and is therefore irrevocable.
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5.4. Definitions. For purposes of this Agreement, the following terms
have the meanings defined below:
5.4.1. "Business" means research, development, manufacture,
supply, marketing, licensing, use and sale of biologic, pharmaceutical and
therapeutic materials and products and related process technology including,
without limitation, research, development, manufacture, supply, marketing,
licensing, use and sale of products and technology directed to (a) the enzymatic
synthesis of complex carbohydrates for use in food, cosmetic, therapeutic,
consumer and industrial applications, (b) enzymatic synthesis or modification of
the carbohydrate portion of proteins or lipids, and (c) carbohydrate-based
therapeutics.
5.4.2. "Intellectual Property" means (a) all inventions
(whether patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents and patent applications claiming such
inventions, (b) all trademarks, service marks, trade dress, logos, trade names,
fictitious names, brand names, brand marks and corporate names, together with
all translations, adaptations, derivations, and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations,
and renewals in connection therewith, (e) all trade secrets (including research
and development, know-how, formulas, compositions, manufacturing and production
processes and techniques, methodologies, technical data, designs, drawings and
specifications), (f) all computer software (including data, source and object
codes and related documentation), (g) all other proprietary rights, (h) all
copies and tangible embodiments thereof (in whatever form or medium), or similar
intangible personal property which have been or are developed or created in
whole or in part by the Executive (i) at any time and at any place while the
Executive is employed by Company and which, in the case of any or all of the
foregoing, are related to and used in connection with the business of the
Company, or (ii) as a result of tasks assigned to the Executive by the Company.
5.4.3. "Proprietary Information" means any and all information
of the Company or of any subsidiary or affiliate of the Company. Such
Proprietary Information shall include, but shall not be limited to, the
following items and information relating to the following items: (a) all
intellectual property and proprietary rights of the Company (including without
limitation Intellectual Property) (b) computer codes or instructions (including
source and object code listings, program logic algorithms, subroutines, modules
or other subparts of computer programs and related documentation, including
program notation), computer processing systems and techniques, all computer
inputs and outputs (regardless of the media on which stored or located),
hardware and software configurations, designs, architecture and interfaces, (c)
business research, studies, procedures and costs, (d) financial data, (e)
distribution methods, (f) marketing data, methods, plans and efforts, (g) the
identities of actual and prospective customers, contractors and suppliers, (h)
the terms of contracts and agreements with customers, contractors and suppliers,
(i) the needs and requirements of, and the Company's course of dealing with,
actual or prospective customers, contractors and suppliers, (j) personnel
information, (k) customer and vendor credit information, and (l) any information
received from third parties subject to obligations of non-disclosure or non-use.
Failure by the Company to xxxx any of the Proprietary Information as
confidential or proprietary shall not affect its status as Proprietary
Information under the terms of this Agreement.
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5.5. Acknowledgements. The Executive acknowledges that the Restrictive
Covenants are reasonable and necessary to protect the legitimate interests of
the Company and its affiliates and that the duration and geographic scope of the
Restrictive Covenants are reasonable given the nature of this Agreement and the
position the Executive will hold within the Company. The Executive further
acknowledges that the Restrictive Covenants are included herein in order to
induce the Company to employ the Executive pursuant to this Agreement and that
the Company would not have entered into this Agreement or otherwise employed the
Executive in the absence of the Restrictive Covenants.
5.6. Remedies and Enforcement Upon Breach.
5.6.1. Specific Enforcement. The Executive acknowledges that
any breach by him, willfully or otherwise, of the Restrictive Covenants will
cause continuing and irreparable injury to the Company for which monetary
damages would not be an adequate remedy. The Executive shall not, in any action
or proceeding to enforce any of the provisions of this Agreement, assert the
claim or defense that such an adequate remedy at law exists. In the event of any
such breach by the Executive, the Company shall have the right to enforce the
Restrictive Covenants by seeking injunctive or other relief in any court,
without any requirement that a bond or other security be posted, and this
Agreement shall not in any way limit remedies of law or in equity otherwise
available to the Company.
5.6.2. Judicial Modification. If any court determines that any
of the Restrictive Covenants, or any part thereof, is unenforceable because of
the duration or geographical scope of such provision, such court shall have the
power to modify such provision and, in its modified form, such provision shall
then be enforceable.
5.6.3. Accounting. If the Executive breaches any of the
Restrictive Covenants, the Company will have the right and remedy to require the
Executive to account for and pay over to the Company all compensation, profits,
monies, accruals, increments or other benefits derived or received by the
Executive as the result of such breach. This right and remedy will be in
addition to, and not in lieu of, any other rights and remedies available to the
Company under law or in equity.
5.6.4. Enforceability. If any court holds the Restrictive
Covenants unenforceable by reason of their breadth or scope or otherwise, it is
the intention of the parties hereto that such determination not bar or in any
way affect the right of the Company to the relief provided above in the courts
of any other jurisdiction within the geographic scope of such Restrictive
Covenants.
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5.6.5. Disclosure of Restrictive Covenants. The Executive
agrees to disclose the existence and terms of the Restrictive Covenants to any
employer that the Executive may work for during the Restricted Period.
5.6.6. Extension of Restricted Period. If the Executive
breaches Section 5.1 in any respect, the restrictions contained in that section
will be extended for a period equal to the period that the Executive was in
breach.
6. Change in Control.
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6.1. Certain Terminations Following a Change in Control. If the
Executive's employment with the Company ceases within eighteen months following
a Change in Control (as defined below) as a result of a termination by the
Company without Cause or a resignation by the Executive for Good Reason, then:
6.1.1. the Restricted Period will be extended by one year;
6.1.2. subject to Section 8 and in lieu of the payments and
benefits provided for in Section 4.2, (a) the Company will pay to the Executive
on the date of such termination a cash amount equal to the sum of (i) two years
of the Executive's Base Salary as in effect on such date, and (ii) two times the
target Annual Bonus amount applicable for the calendar year in which the
termination occurs, (b) to the extent not previously paid, the Company will pay
to the Executive any Annual Bonus payable with respect to a calendar year that
ended prior to that termination, (c) all outstanding stock options then held by
Executive (including the Stock Option) will then become fully vested and
immediately exercisable and will remain exercisable for 12 months following
Executive's termination of employment, and (d) the Company will pay to the
Executive the additional amount, if any, payable pursuant to Section 7 below.
6.2. Definitions. For purposes of this Agreement, the term "Change in
Control" means a change in ownership or control of the Company effected through
any of the following transactions:
6.2.1. the direct or indirect acquisition by any person or
related group of persons (other than the Company or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing more than
50% of the total combined voting power of the Company's outstanding securities;
6.2.2. a change in the composition of the Board over a period
of 36 months or less such that a majority of the Board members ceases, by reason
of one or more contested elections for Board membership, to be comprised of
individuals who either (a) have been board members continuously since the
beginning of such period, or (b) have been elected or nominated for election as
Board members during such period by at least a majority of the Board members
described in clause (a) who were still in office at the time such election or
nomination was approved by the Board;
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6.2.3. the consummation of any consolidation, share exchange
or merger of the Company (a) in which the stockholders of the Company
immediately prior to such transaction do not own at least a majority of the
voting power of the entity which survives/results from that transaction, or (b)
in which a shareholder of the Company who does not own a majority of the voting
stock of the Company immediately prior to such transaction, owns a majority of
the Company's voting stock immediately after such transaction; or
6.2.4. the liquidation or dissolution of the Company or any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all the assets of the Company,
including stock held in subsidiary corporations or interests held in subsidiary
ventures.
7. Parachute Payments.
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7.1. Generally. All amounts payable to the Executive under
this Agreement will be made without regard to whether the deductibility of such
payments (considered together with any other entitlements or payments otherwise
paid or due to the Executive) would be limited or precluded by Section 280G of
the Code and without regard to whether such payments would subject the Executive
to the excise tax levied on certain "excess parachute payments" under Section
4999 of the Code (the "Parachute Excise Tax").
7.2. Gross-Up. If all or any portion of the payments or other
benefits provided under any section of this Agreement, either alone or together
with any other payments and benefits which the Executive receives or is entitled
to receive from the Company or its affiliates (whether paid or payable or
distributed or distributable) pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program
or arrangement, including without limitation any stock option, stock
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (the
"Payment") would result in the imposition of a Parachute Excise Tax, the
Executive will be entitled to an additional payment (the "Gross-up Payment") in
an amount such that the net amount of the Payment and the Gross-up Payment
retained by the Executive after the calculation and deduction of all excise
taxes (including any interest or penalties imposed with respect to such taxes)
on the Payment and all federal, state and local income tax, employment tax and
excise tax (including any interest or penalties imposed with respect to such
taxes) on the Gross-up Payment provided for in this Section 7.2, and taking into
account any lost or reduced tax deductions on account of the Gross-up Payment,
shall be equal to the Payment.
7.3. Measurements and Adjustments. The determination of the
amount of the payments and benefits paid and payable to the Executive and
whether and to what extent payments under Section 7.2 are required to be made
will be made at the Company's expense by an independent auditor selected by
mutual agreement of the Company and the Executive, which auditor shall provide
Executive and the Company with detailed supporting calculations with respect to
its determination within fifteen (15) business days of the receipt of notice
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from the Executive or the Company that the Executive has received or will
receive a payment that is potentially subject to the Parachute Excise Tax. For
the purposes of determining whether any payments will be subject to the
Parachute Excise Tax and the amount of such Parachute Excise Tax, such payments
will be treated as "parachute payments" within the meaning of section 280G of
the code, and all "parachute payments" in excess of the "base amount" (as
defined under section 280G(b)(3) of the code) shall be treated as subject to the
Parachute Excise tax, unless and except to the extent that in the opinion of the
accountants such payments (in whole or in part) either do not constitute
"parachute payments" or represent reasonable compensation for services actually
rendered (within the meaning of section 280G(b)(4) of the code) in excess of the
"base amount," or such "parachute payments" are otherwise not subject to such
Parachute Excise Tax. For purposes of determining the amount of the Gross-up
Payment, if any, the Executive shall be deemed to pay federal income taxes at
the highest applicable marginal rate of federal income taxation for the calendar
year in which the gross-up payment is to be made and to pay any applicable state
and local income taxes at the highest applicable marginal rate of taxation for
the calendar year in which the gross-up payment is to be made, net of the
maximum reduction in federal income taxes which could be obtained from the
deduction of such state or local taxes if paid in such year (determined without
regard to limitations on deductions based upon the amount of the Executive's
adjusted gross income); and to have otherwise allowable deductions for federal,
state and local income tax purposes at least equal to those disallowed because
of the inclusion of the gross-up payment in the Executive adjusted gross income.
Any Gross-up Payment shall be paid by the Company at the time the Executive is
entitled to receive the Payment. Any determination by the auditor shall be
binding upon the Company and the Executive.
7.4. In the event of any underpayment or overpayment to the
Executive (determined after the application of Section 7.2), the amount of such
underpayment or overpayment will be, as promptly as practicable, paid by the
Company to the Executive or refunded by the Executive to the Company, as the
case may be, with interest at the applicable federal rate specified in Section
7872(f)(2) of the Code.
8. Timing of Payments Following Termination. Notwithstanding any provision of
this Agreement, the payments and benefits described in Sections 4.2, 6 and 7 are
conditioned on the Executive's execution and delivery to the Company of a
release substantially identical to that attached hereto as Exhibit III in a
manner consistent with the requirements of the Older Workers Benefit Protection
Act (the "Mutual Release"). The amounts described in Sections 4.2.1 and 6.1.2
will be paid in a lump sum, on the eighth day following the Executive's
execution and delivery of the Mutual Release (provided that the Mutual Release
has not been revoked by the Executive). The Company covenants that if the
Executive executes the Mutual Release, the Company will also execute the Mutual
Release.
9. Miscellaneous.
9.1. No Liability of Officers and Directors for Severance Upon
Insolvency. Notwithstanding any other provision of the Agreement and intending
to be bound by this provision, the Executive hereby (a) waives any right to
claim payment of amounts owed to him, now or in the future, pursuant to this
Agreement from directors or officers of the Company if the Company becomes
insolvent, and (b) fully and forever releases and discharges the Company's
officers and directors from any and all claims, demands, liens, actions, suits,
causes of action or judgments arising out of any present or future claim for
such amounts.
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9.2. Legal Fees. The Company shall pay the reasonable
attorneys' fees and related expenses and disbursements incurred by the Executive
in connection with the negotiation and preparation of this Agreement (including
the term sheet relating thereto) up to a maximum of $10,000.
9.3. Other Agreements. The Executive represents and warrants
to the Company that there are no restrictions, agreements or understandings
whatsoever to which he is a party that would prevent or make unlawful his
execution of this Agreement, that would be inconsistent or in conflict with this
Agreement or Executive's obligations hereunder, or that would otherwise prevent,
limit or impair the performance by Executive of his duties under this Agreement.
9.4. Successors and Assigns. The Company may assign this
Agreement to any successor to all or substantially all of its assets and
business by means of liquidation, dissolution, merger, consolidation, transfer
of assets, or otherwise. The duties of the Executive hereunder are personal to
the Executive and may not be assigned by him.
9.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
without regard to the principles of conflicts of laws.
9.6. Enforcement. Any legal proceeding arising out of or
relating to this Agreement will be instituted in the United States District
Court for the Eastern District of Pennsylvania, or if that court does not have
or will not accept jurisdiction, in any court of general jurisdiction in the
Commonwealth of Pennsylvania, and the Executive and the Company hereby consent
to the personal and exclusive jurisdiction of such court(s) and hereby waive any
objection(s) that they may have to personal jurisdiction, the laying of venue of
any such proceeding and any claim or defense of inconvenient forum.
9.7. Waivers; Separability. The waiver by either party hereto
of any right hereunder or any failure to perform or breach by the other party
hereto shall not be deemed a waiver of any other right hereunder or any other
failure or breach by the other party hereto, whether of the same or a similar
nature or otherwise. No waiver shall be deemed to have occurred unless set forth
in a writing executed by or on behalf of the waiving party. No such written
waiver shall be deemed a continuing waiver unless specifically stated therein,
and each such waiver shall operate only as to the specific term or condition
waived and shall not constitute a waiver of such term or condition for the
future or as to any act other than that specifically waived. If any provision of
this Agreement shall be declared to be invalid or unenforceable, in whole or in
part, such invalidity or unenforceability shall not affect the remaining
provisions hereof which shall remain in full force and effect.
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9.8. Notices. All notices and communications that are required
or permitted to be given hereunder shall be in writing and shall be deemed to
have been duly given when delivered personally or upon mailing by registered or
certified mail, postage prepaid, return receipt requested, as follows:
If to the Company, to:
Neose Technologies, Inc.
000 Xxxxxx Xxxx
Xxxxxxx XX 00000
Attn: General Counsel
Fax: 000-000-0000
With a copy to:
Xxxxxx Xxxxxxxx LLP
3000 Two Xxxxx Square
00xx & Xxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, Esquire
Fax: 000-000-0000
If to Executive, to:
C. Xxxx Xxxxxx
000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
With a copy to:
Xxxxxx Xxxxx, Esquire
Xxxxxx & Xxxxxxx
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Fax: 000-000-0000
or to such other address as may be specified in a notice given by one party to
the other party hereunder.
9.9. Entire Agreement; Amendments. This Agreement and the
attached exhibits contain the entire agreement and understanding of the parties
hereto relating to the subject matter hereof, and merges and supersedes all
prior and contemporaneous discussions, agreements and understandings of every
nature relating to the subject matter. This Agreement may not be changed or
modified, except by an Agreement in writing signed by each of the parties
hereto.
9.10. Withholding. The Company will withhold from any payments
due to Executive hereunder, all taxes, FICA or other amounts required to be
withheld pursuant to any applicable law.
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9.11. Headings Descriptive. The headings of sections and
paragraphs of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
9.12. Counterparts. This Agreement may be executed in multiple
counterparts, each of which will be deemed to be an original, but all of which
together will constitute but one and the same instrument.
[This space left blank intentionally; signature page follows.]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date and year first above written.
NEOSE TECHNOLOGIES, INC.
By:
-----------------------------
Title:
-----------------------------
C. XXXX XXXXXX
-------------------------------
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Exhibit III
MUTUAL RELEASE AND NON-DISPARAGEMENT AGREEMENT
THIS MUTUAL RELEASE AND NON-DISPARAGEMENT AGREEMENT (this "Mutual
Release") is made as of the ___ day of _______, _____ by and between C. XXXX
XXXXXX ("Executive") and NEOSE TECHNOLOGIES, INC. (the "Company").
WHEREAS, Executive's employment as an executive of the Company has
terminated; and
WHEREAS, pursuant to Section[s] 4[[,] [and] 6 [and 7]] of the
Employment Agreement by and between the Company and Executive dated March 29,
2002 (the "Employment Agreement"), the Company has agreed to pay Executive
certain amounts and to provide him with certain rights and benefits, subject to
the execution of this Mutual Release.
NOW THEREFORE, in consideration of these premises and the mutual
promises contained herein, and intending to be legally bound hereby, the parties
agree as follows:
SECTION 1. Consideration. Executive acknowledges that: (i) the payments, rights
and benefits set forth in Section[s] 4[[,] [and] 6 [and 7]] of the Employment
Agreement constitute full settlement of all his rights under the Employment
Agreement, (ii) he has no entitlement under any other severance or similar
arrangement maintained by the Company, and (iii) except as otherwise provided
specifically in this Mutual Release, the Company does not and will not have any
other liability or obligation to Executive. Executive further acknowledges that,
in the absence of his execution of this Mutual Release, the benefits and
payments specified in Section[s] 4[[,] [and] 6 [and 7]] of the Employment
Agreement would not otherwise be due to Executive.
SECTION 2. Mutual Release and Covenant Not to Xxx.
2.1. The Company (including for purposes of this Section 2.1, its
parents, affiliates and subsidiaries) hereby fully and forever releases and
discharges Executive (and his heirs, executors and administrators), and
Executive hereby fully and forever releases and discharges Company (including
all predecessors and successors, assigns, officers, directors, trustees,
employees, agents and attorneys, past and present) from any and all claims,
demands, liens, agreements, contracts, covenants, actions, suits, causes of
action, obligations, controversies, debts, costs, expenses, damages, judgments,
orders and liabilities, of whatever kind or nature, direct or indirect, in law,
equity or otherwise, whether known or unknown, arising through the date of this
Mutual Release, out of Executive's employment by the Company or the termination
thereof, including, but not limited to, any claims for relief or causes of
action under the Age Discrimination in Employment Act, 29 U.S.C. ss. 621 et
seq., or any other federal, state or local statute, ordinance or regulation
regarding discrimination in employment and any claims, demands or actions based
upon alleged wrongful or retaliatory discharge or breach of contract under any
state or federal law.
2.2. Executive expressly represents that he has not filed a lawsuit or
initiated any other administrative proceeding against the Company (including for
purposes of this Section 2.2, its parents, affiliates and subsidiaries) and that
he has not assigned any claim against the Company or any affiliate to any other
person or entity. The Company expressly represents that it has not filed a
lawsuit or initiated any other administrative proceeding against Executive and
that it has not assigned any claim against Executive to any other person or
entity. Both Executive and the Company further promise not to initiate a lawsuit
or to bring any other claim against the other arising out of or in any way
related to Executive's employment by the Company or the termination of that
employment. This Mutual Release will not prevent Executive from filing a charge
with the Equal Employment Opportunity Commission (or similar state agency) or
participating in any investigation conducted by the Equal Employment Opportunity
Commission (or similar state agency); provided, however, that any claims by
Executive for personal relief in connection with such a charge or investigation
(such as reinstatement or monetary damages) would be barred.
2.3. The foregoing will not be deemed to release the Executive or the
Company from (a) claims solely to enforce this Mutual Release, (b) claims solely
to enforce Sections 4, 5, 6, 7 or 9 of the Employment Agreement, or (c) claims
solely to enforce the terms of any equity incentive award agreement between
Executive and the Company, or (d) claims for indemnification under the Company's
By-Laws, under any indemnification agreement between the Company and Executive
or under any similar agreement.
SECTION 3. Restrictive Covenants. Executive acknowledges that restrictive
covenants contained in Section 5 of the Employment Agreement will survive the
termination of his employment. Executive affirms that those restrictive
covenants are reasonable and necessary to protect the legitimate interests of
the Company, that he received adequate consideration in exchange for agreeing to
those restrictions and that he will abide by those restrictions.
SECTION 4. Non-Disparagement. The Company (meaning, solely for this purpose, the
Company's directors and executive officers and other individuals authorized to
make official communications on the Company's behalf) will not disparage
Executive or Executive's performance or otherwise take any action which could
reasonably be expected to adversely affect Executive's personal or professional
reputation. Similarly, Executive will not disparage the Company or any of its
directors, officers, agents or employees or otherwise take any action which
could reasonably be expected to adversely affect the reputation of the Company
or the personal or professional reputation of any of the Company's directors,
officers, agents or employees.
SECTION 5. Cooperation. Executive further agrees that, subject to reimbursement
of his reasonable expenses, he or she will cooperate fully with the Company and
its counsel with respect to any matter (including litigation, investigations, or
governmental proceedings) which relates to matters with which Executive was
involved during his employment with the Company. Executive shall render such
cooperation in a timely manner on reasonable notice from the Company.
SECTION 6. Rescission Right. Executive expressly acknowledges and recites that
(a) he has read and understands the terms of this Mutual Release in its
entirety, (b) he has entered into this Mutual Release knowingly and voluntarily,
without any duress or coercion; (c) he has been advised orally and is hereby
advised in writing to consult with an attorney with respect to this Mutual
Release before signing it; (d) he was provided twenty-one (21) calendar days
after receipt of the Mutual Release to consider its terms before signing it; and
(e) he or she is provided seven (7) calendar days from the date of signing to
terminate and revoke this Mutual Release, in which case this Mutual Release
shall be unenforceable, null and void. Executive may revoke this Mutual Release
during those seven (7) days by providing written notice of revocation to the
Company.
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SECTION 7. Challenge. If Executive violates or challenges the enforceability of
any provisions of the Restrictive Covenants or this Mutual Release, no further
payments, rights or benefits under Section[s] [4.2[[,] [and] 6 [and 7]] of the
Employment Agreement will be due to Executive.
SECTION 8. Miscellaneous.
8.1 No Admission of Liability. This Mutual Release is not to
be construed as an admission of any violation of any federal, state or local
statute, ordinance or regulation or of any duty owed by the Company to
Executive. There have been no such violations, and the Company specifically
denies any such violations.
8.2 No Reinstatement. Executive agrees that he or she will not
apply for reinstatement with the Company or seek in any way to be reinstated,
re-employed or hired by the Company in the future.
8.3 Successors and Assigns. This Mutual Release shall inure to
the benefit of and be binding upon the Company and Executive and their
respective successors, executors, administrators and heirs. Executive not may
make any assignment of this Mutual Release or any interest herein, by operation
of law or otherwise. The Company may assign this Mutual Release to any successor
to all or substantially all of its assets and business by means of liquidation,
dissolution, merger, consolidation, transfer of assets, or otherwise.
8.4 Severability. Whenever possible, each provision of this
Mutual Release will be interpreted in such manner as to be effective and valid
under applicable law. However, if any provision of this Mutual Release is held
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability will not affect any other provision, and this
Mutual Release will be reformed, construed and enforced as though the invalid,
illegal or unenforceable provision had never been herein contained.
8.5 Entire Agreement; Amendments. Except as otherwise provided
herein, this Mutual Release contains the entire agreement and understanding of
the parties hereto relating to the subject matter hereof, and merges and
supersedes all prior and contemporaneous discussions, agreements and
understandings of every nature relating subject matter hereof. This Mutual
Release may not be changed or modified, except by an Agreement in writing signed
by each of the parties hereto.
8.6 Governing Law. This Mutual Release shall be governed by,
and enforced in accordance with, the laws of the Commonwealth of Pennsylvania
without regard to the application of the principles of conflicts of laws.
8.7 Counterparts and Facsimiles. This Mutual Release may be
executed, including execution by facsimile signature, in multiple counterparts,
each of which shall be deemed an original, and all of which together shall be
deemed to be one and the same instrument.
[This space left blank intentionally; signature page follows.]
-3-
IN WITNESS WHEREOF, the Company has caused this Mutual Release
to be executed by its duly authorized officer, and Executive has executed this
Mutual Release, in each case as of the date first above written.
NEOSE TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxx, Ph.D.
----------------------------------
Name & Title: Xxxxxxx X. Xxxx, Ph.D.,
-----------------------
Chairman
C. XXXX XXXXXX
/s/ C. Xxxx Xxxxxx
-------------------------------------
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