EMPLOYMENT AGREEMENT
Exhibit 10.54
This
EMPLOYMENT AGREEMENT, effective as of March 27, 2009 (the “Commencement Date”),
is made by and between Neurogen Corporation, a Delaware corporation (the
“Company”) with offices at 00 Xxxxxxxxx Xxxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx
00000, and Xxxxxx Xxxxxx,
who currently resides in Xxxxxxx, Xxxxxxxxxxx 00000 (the
“Employee”).
WHEREAS,
the Company and the Employee desire to maintain an employment relationship;
and
WHEREAS,
the Company and the Employee desire to enter into this Agreement to address, on
the terms and conditions hereinafter set forth, certain matters relating to such
employment.
NOW,
THEREFORE, the Company and the Employee agree as follows:
|
1.
|
DEFINITIONS
|
|
(a)
|
Cause
|
For
purposes of this Agreement “cause” means:
(i) the
Employee is convicted of a felony or entry of a plea of nolo contendere (or
similar plea) in a criminal proceeding for commission of a felony or serious
misdemeanor;
(ii) any
willful act or omission by the Employee which constitutes gross misconduct or
gross negligence and which results in demonstrable material harm to the
Company;
(iii) the
Employee’s habitual drug or alcohol abuse;
(iv) the
Employee’s willful and continuous failure to perform his duties with the Company
after reasonable notice of such failure;
(v) the
Employee’s participation in any act of dishonesty intended to result in his
material personal enrichment at the expense of the Company; or
(vi) the
Employee’s failure to substantially comply with the terms set forth in the
Proprietary Information and Inventions Agreement between the Employee and the
Company.
No act,
or failure to act, by the Employee shall be considered “willful” unless
committed in bad faith and without a reasonable belief that the act or omission
was in the Company’s best interest.
|
(b)
|
Good
Reason
|
For
purposes of this Agreement “good reason” means and shall be deemed to exist if,
without the prior written consent of the Employee,
Page
1
(i) the Company
permanently relocates the primary place of performance of the duties specified
in Section 3 of this Agreement to a location more than fifty (50) miles from its
current offices located in Branford, Connecticut;
(ii) the
Employee’s rate of Base Salary (as hereinafter defined) is materially decreased
by the Company (other than in connection with an across the board salary
reduction agreed to by the Employee);
(iii)
the Company fails to obtain the full assumption of this Agreement by a successor
entity in accordance with Section 12(b) of this Agreement; or
(iv) the
Board of Directors of the Company (the “Board”) or the Company’s stockholders,
either or both, as may be required to authorize the same, shall approve any
liquidation or dissolution of the Company, or the sale of all or substantially
all of the assets of the Company.
|
2.
|
TERM
|
The term
of Employee’s employment under this Agreement shall, unless earlier terminated
under Section 7 herein or extended as hereinafter provided, be for a period
commencing as of (the “Commencement Date”) and terminating on March 26, 2010,
subject to the terms and conditions contained in this Agreement (the “Employment
Period”). The Employment Period shall automatically be extended commencing on
March 27, 2010 and thereafter on the relevant anniversary of the Commencement
Date, for successive one (1) year periods unless, not later than ninety (90)
days prior to March 27, 2010 or any such anniversary, either party to this
Agreement shall give written notice to the other that such party does not wish
to extend or further extend the Employment Period beyond its then already
automatically extended term, if any.
|
3.
|
DUTIES
AND SERVICES
|
During
the Employment Period, the Employee shall devote substantially all of his
business time, during normal business hours, to the business and affairs of the
Company and the Employee shall use his best efforts to perform faithfully and
efficiently the duties and responsibilities contemplated by this Agreement;
provided, however, the Employee may manage his personal, financial and legal
affairs and engage in any activities of a volunteer, civic or business nature,
as long as such activities do not materially interfere with Employee’s
responsibilities.
|
4.
|
COMPENSATION
AND OTHER BENEFITS
|
|
(a)
|
Salary
|
As
compensation for the Employee’s services under this Agreement, beginning on the
Commencement Date and until the termination of the Employment Period, the
Employee shall be paid by the Company a base salary of $280,000 per annum,
payable in equal semi-monthly
Page
2
|
(b)
|
Annual
Bonus
|
In
addition to the Base Salary, at the sole discretion of the Board of Directors or
its designee, the Employee is eligible to receive such annual bonuses during the
Employment Period as the Board or its designee, in its sole discretion, may
approve. It is anticipated that annual bonus awards, if any, will be calculated
on the basis of both Company and individual performance and that Employee’s
annual target bonus for complete achievement of all Company and individual
objectives will be targeted at a level equal to twenty five (25%) of
Base Salary. Notwithstanding anything in this Agreement to the contrary, the
Company reserves the right at the sole discretion of the Board or its designee
at any time and without notice to change or abandon altogether any or all of
it’s incentive compensation policies and practices, including the award of any
annual bonuses or the determination not to make any such awards in any
year.
|
(c)
|
Benefits
|
During
the Employment Period, the Employee shall be eligible to participate in all
employee and incentive benefit plans and programs maintained from time to time
by the Company for the benefit of senior executives, During the Employment
Period, the Employee, Employee’s spouse, if any, and their eligible dependents,
if any, shall be eligible to participate in and be covered under all the
employee and dependent health and welfare benefit plans or programs maintained
from time to time by the Company. However, the Company shall have no obligations
under this Section 4(c) unless and until the Employee has met any generally
applicable eligibility requirements for participation in such plans and
programs.
|
(d)
|
Equity
|
At the
sole discretion of the Board of Directors or its designee, the Employee is
eligible to receive such stock option grants during the Employment Period as the
Board or its designee, in its sole discretion, may approve. It is anticipated
that stock option awards, if any, will be calculated on the basis of both
Company and individual performance. Notwithstanding anything in this Agreement
to the contrary, the Company reserves the right at the sole discretion of the
Board or its designee at any time and without notice to change or abandon
altogether any or all of it’s incentive compensation policies and practices,
including the award of any stock options or the determination not to make any
such awards in any year.
|
5.
|
NON-COMPETITION
|
(a) During
the Employment Period and for one year after the date of any such termination of
employment, the Employee agrees that, without the prior express written consent
of the Company, he shall not, directly or indirectly, for his own benefit or as
an employee, owner, shareholder, partner, consultant, (or in any other
representative capacity) for any other person, firm, partnership, corporation or
other entity (other than the Company), (i) engage in the
Page
3
(b) discovery,
research and/or development of therapeutic, diagnostic or prophylactic products
which work through the same biological mechanisms and are being pursued for the
same therapeutic indications as products which at the time of such termination
are under active clinical or pre-clinical development or have been
pre-clinically or clinically developed by the Company and which the Company has
not abandoned (“Related Programs”) or (ii) solicit or hire (or direct another to
solicit or hire) the services of any employee of the Company or attempt to
induce any such employee or any consultant to the Company to leave the employ of
the Company (except when such acts are performed in good faith by the Employee
on behalf of the Company). For clarity, an example of the Company’s
Related Programs as of the date of this Agreement is the development of a
dopamine D2 partial agonist for Xxxxxxxxx’x disease or Restless Legs
Syndrome. Notwithstanding the above, this provision shall not be
deemed to prevent or prohibit Employee from being employed during such one year
period by another entity in a managerial role where Employee has overall
responsibility for managing (or assisting in the management of) a research and
development portfolio which includes one or more Related Programs, provided that
Employee does not violate the terms of Section 6 hereof and does not during such
one year term actively advise or direct the discovery, research or development
efforts of such other entity in the Related Program(s). During the Employment
Period, the Employee shall not own more than 2% of the outstanding common stock
of any corporation, The provisions of this Section 5 shall not be deemed to
reduce in any way any other fiduciary, contractual or other legal obligation the
Employee may have to the Company, including without limitation any obligation
which may arise by virtue of any corporation law, securities law, patent or
intellectual property law or right, the common law, other agreements with the
Company or otherwise.
For purposes of Section 5 of this
Agreement, the term “solicit” shall mean any communication of any kind
whatsoever, regardless of by whom initiated, inviting, encouraging, or
requesting any person or entity to take or refrain from taking any
action.
(c) The
Employee agrees to comply with the terms of set forth in the Proprietary
Information and Inventions Agreement previously entered into by the Company and
Employee.
(d) If at any
time within twelve (12) months after the date on which the Employee exercises a
Company stock option or stock appreciation right, or on which Company restricted
stock vests, or on which income is realized by the Employee in connection with
any other Company equity-based award (each of which events is a “Realization
Event”), the Employee breaches any provision of Section 5(a) or 5(b) of the
Agreement in more than a minor, deminimus or trivial manner that causes or is
likely it cause, more than deminimus financial or reputational harm to the
Company (and, if such breach is susceptible to cure, the Employee does not cure
such breach and harm within ten (10) days after the Employee’s receipt of
written notice of such breach of the Company which specifies in reasonable
detail the facts and circumstances claimed to be the basis for such breach),
then (i) the Employee shall forfeit all of Employee’s unexercised (including
unvested) Neurogen Corporation stock options and restricted stock and (ii) any
gain realized within the twelve (12) months prior to such breach from the
exercise of any Company stock options or the vesting of any Company restricted
stock or other equity-based awards by the Employee from the Realization Event
shall be paid by the Employee to the Company upon written notice from the
Company within ninety (90) days of such notice (such payments may be made in
increments over such period). Such gain shall be determined after reduction for
any
Page
4
(e) taxes
paid (or, if such gain is determined before such taxes are paid, owing, provided
that such taxes are actually paid in a timely manner) by the Employee which are
attributable to such gain as of the date of the Realization Event, and without
regard to any subsequent change in the Fair Market Value (as defined below) of a
share of Company common stock; provided that any federal or state income tax
benefit actually realized by the Employee as a result of making payments to the
Company under this Section 5(c) (relating to any of the next ten (10) tax year
periods) shall also be paid to the Company within fifteen (15) days of such
realization. Such gain shall be paid by the Employee delivering to the Company
shares of Company Common Stock with a Fair Market Value on the date of delivery
equal to the amount of such gain. To the extent permitted by applicable law, the
Company shall have the right to offset such gain against any amounts otherwise
owed to the Employee by the Company (whether as wages, vacation pay, or pursuant
to any benefit plan or other compensatory arrangement). For purposes of this
Section 5(c), the “Fair Market Value” of a share of Company Common Stock on any
date shall be (i) the closing sale price per share of Company Common Stock
during normal trading hours on the national securities exchange on which the
Company Common Stock is principally traded for such date or the last preceding
date on which there was a sale of such Company Common Stock on such exchange or
(ii) if the shares of Company Common Stock are then traded on the NASDAQ Stock
Market or any other over-the-counter market, the average of the closing bid and
asked prices for the shares of Company Common Stock during normal trading hours
in such over-the-counter market for such date or the last preceding date on
which there was a sale of such Company Common Stock in such market, or (iii) if
the shares of Company Common Stock are not then listed on a national securities
exchange or traded in an over-the-counter market, such value as the Compensation
Committee, in its sole discretion, shall reasonably determine. In the event that
the Company seeks to enforce the provisions of this Section 5(c), and such
enforcement is contested by the Employee, and it is finally determined that the
Employee is not subject to the provisions of this Section 5(c), then the Company
shall (i) reimburse the Employee for reasonable attorneys’ fees incurred by the
Employee in connection with such contest; and (ii) pay to the Employee an
additional amount equal to one (1) times the amount in clause (i); provided that such
payment under this clause (ii) shall not exceed $250,000.
(f) Any
termination of the Employee’s employment or of this Agreement shall have no
effect on the continuing operation of this Section 5.
(g) The
Employee acknowledges and agrees that the Company will have no adequate remedy
at law, and could be irreparably harmed, if the Employee breaches or threatens
to breach any of the provisions of this Section 5. The Employee agrees that the
Company shall be entitled to equitable and/or injunctive relief to prevent any
breach or threatened breach of this Section 5, and to specific performance of
each of the terms hereof in addition to any other legal or equitable remedies
that the Company may have. The Employee further agrees that Employee shall not,
in any equity proceeding relating to the enforcement of the terms of this
Section 5, raise the defense that the Company has an adequate remedy at
law.
(h) The terms
and provisions of this Section 5 are intended to be separate and divisible
provisions and if, for any reason, any one or more of them is held to be invalid
or unenforceable, neither the validity nor the enforceability of any other
provision of this Agreement shall thereby be affected. The parties hereto
acknowledge that the potential restrictions on the Employee’s future employment
imposed by this Section 5 are reasonable in both duration and
geographic
Page
5
(i) scope and
in all other respects. If for any reason any court of competent jurisdiction
shall find any provisions of this Section 5 unreasonable in duration or
geographic scope or otherwise, the Employee and the Company agree that the
restrictions and prohibitions contained herein shall be effective to the fullest
extent allowed under applicable law in such jurisdiction.
(j) The
parties acknowledge that this Agreement would not have been entered into and the
benefits described in Section 4 of this Agreement would not have been promised
in the absence of the Employee’s promises under this Section 5.
|
6.
|
CONFIDENTIAL
INFORMATION
|
The
Employee agrees to substantially comply with the terms set forth in the
Proprietary Information and Inventions Agreement between the Employee and the
Company, a copy of which is attached hereto as Exhibit A and incorporated by
reference herein.
|
7.
|
TERMINATION
|
|
(a)
|
Termination
by the Company for Cause
|
The
Company may terminate the Employee’s employment hereunder for cause. If the
Company terminates the Employee’s employment hereunder for cause, the Employment
Period shall end and the Employee shall only be entitled to any Base Salary
accrued or annual bonus awarded and earned but not yet paid as of the date of
termination of the Employee’s employment with the Company.
If the
Employee’s employment is to be terminated for cause, the Company shall give
written notice of such termination to the Employee. Such notice shall specify
the particular act or acts, or failure to act, which is or are the basis for the
decision to so terminate the Employee’s employment for cause.
|
(b)
|
Termination
Without Cause or Termination For Good
Reason
|
The
Company may terminate the Employee’s employment hereunder without cause and the
Employee may terminate Employee’s employment hereunder for good reason. If the
Company terminates the Employee’s employment hereunder without cause, or if the
Employee terminates Employee’s employment hereunder for good reason, the
Employment Period shall end and the Employee shall only be entitled to (i) any
Base Salary accrued or annual bonus awarded and earned but not yet paid as of
the actual date of termination of the Employee’s employment with the Company;
(ii) a lump sum payment in an amount equal to the Employee’s annual Base Salary
as provided in Section 4(a) above; (iii) continuation of the health and welfare
benefits of the Employee, Employees’ spouse and their eligible dependents, if
any, as set forth in Section 4(c) above (except for Disability Insurance), or
the economic equivalent thereof, at the same cost and level in effect on the
date of termination of the Employee’s employment with the Company for one (1)
year after such date of termination; and (iv) the right to exercise immediately
any stock options and to freely trade any restricted stock granted to the
Employee which, but for such termination, would have become exercisable or
tradable, as the case may be, within one year of the date of such termination
without cause or for good reason. Notwithstanding any other provision
of this Agreement, in addition to the benefits described
Page
6
above, if Employee is terminated without cause or terminates his employment for good reason as a result of a Change in Control of the Company (including without limitation any termination within two (2) years of a Change in Control which shall be deemed to be as a result of a Change in Control) then Employee shall also be entitled to a lump sum payment in an amount equal to the greater of (i) the Employee’s then targeted annual bonus or (ii) the Employee’s targeted annual bonus immediately prior to the Change in Control. For purposes of this Agreement, the term “Change in Control” shall have the same meaning given to that term in Section 2.4 of the Amended and Restated Neurogen Corporation 2001 Stock Option Plan.
If the
Employee’s employment is to be terminated without cause, the Company shall give
the Employee thirty (30) days prior written notice of its intent to so terminate
the Employee’s employment. If the Employee intends to terminate Employee’s
employment for good reason, the Employee agrees to give the Company at least
thirty (30) days prior written notice.
|
(c)
|
Termination
Due to Death or Disability
|
The
Company may terminate the Employee’s employment hereunder due to the Employee’s
inability to render, for a period of three consecutive months or an aggregate of
any one hundred twenty (120) days within any six (6) month period, services
hereunder by reason of permanent disability, as determined by the written
medical opinion of an independent medical physician selected in good faith by
the Company (“Disability”). In the event of the Employee’s death or a
termination of the Employee’s employment by the Company due to Disability, the
Employment Period shall end and the Employee, Employee’s estate or Employee’s
legal representative, as the case may be, shall only be entitled to (i) (a) any
Base Salary accrued or annual bonus awarded and earned but not yet paid as of
the actual date of termination of the Employee’s employment with the Company,
and (b) any other compensation and benefits as may be provided in accordance
with the terms and provisions of any applicable plans and programs of the
Company; and (ii) in the case of Disability, (a) continuation of payment of the
Employee’s Base Salary if any, as set forth in Section 4(a) above, until the
Employee commences to receive payments under the Company’s long-term disability
plan, (b) continuation of the health and welfare benefits of the Employee, as
set forth in Section 4(c) above (except for Disability Insurance), or the
economic equivalent thereof, at the same cost and level in effect on the date of
termination for one (1) year after the date of termination and (c) the right to
exercise immediately that proportion of the stock options (rounded up to the
nearest whole number of shares) granted to the Employee which would become
exercisable on or before the next scheduled anniversary date of this
Agreement immediately following the date of termination of the
Employee’s employment with the Company due to Disability which is equal to the
number of days worked by the Employee from, but excluding, the anniversary date
immediately preceding such termination date to, and including, such termination
date divided by 365 days.
|
(d)
|
Voluntary
Termination
|
The
Employee may affect a Voluntary Termination of Employee’s employment with the
Company hereunder. A “Voluntary Termination” shall mean a termination of
employment by the Employee on Employee’s own initiative other than a termination
due to death or Disability or a termination for good reason. A Voluntary
Termination shall not be, and shall not be deemed to be, a breach of this
Agreement and shall result in the end of the Employment Period and
only
Page
7
entitle the Employee to all of the rights and benefits which the Employee would be entitled in the event of a termination of the Employee’s employment by the Company for cause.
|
(e)
|
Termination
by the Company at End of Employment
Period
|
Notwithstanding
any provision of this Agreement to the contrary, if (a) the Employment Period is
not terminated early under Sections 7(a), 7(b), 7(c) or 7(d) above and (b) the
Company provides written notice to the Employee, pursuant to Section 2 above,
that it does not wish to extend or further extend the Employment Period, then
the Employee’s employment with the Company shall end on the last day of the
Employment Period and the Employee shall be entitled to (x) continuation of
payment of the Employee’s Base Salary, as provided in Section 4(a) above, as of
the date of termination of the Employee’s employment with the Company for a
period equal to (1) one year less the number of days notice given by the Company
to the Employee that it does not wish to extend or further extend the Employment
Period (such notice period shall be deemed to commence as of the date of such
written notice by the Company); (y) continuation of the health and welfare
benefits of the Employee, Employee’s spouse and their eligible dependent’s if
any, as set forth in 4(c) above (except for Disability Insurance), or the
economic equivalent thereof, at the same cost and level in effect on the date of
termination of the Employee’s employment with the Company for one (1) year after
such termination; and (z) the right to exercise immediately any stock options
and to trade freely any restricted stock granted to the Employee which, but for
such termination, would have become exercisable or freely tradable, as the case
may be, on or before the anniversary date of this Agreement immediately
following the date on which the one (1) year period referred to the preceding
subclause (x) ends; provided, however, that the severance payment by the Company
to the Employee under subclause (x) of this Section 7(e) shall be offset on a
dollar for dollar basis by any cash, or the fair market value of any non-cash,
remuneration, benefit or other entitlement earned, received or receivable by the
Employee in connection with the employment of such Employee in any capacity,
other than dividends, interest income or other passive investment income earned
as a result of an interest in a business or entity of which the Employee owns
less than 2% of the beneficial ownership. If the Employee shall be entitled to
any such severance payment from the Company after the termination of the
Employment Period, the Employee shall have the obligation to notify the Company
of any employment, consultation or other activity which may involve any
remuneration, benefits or other entitlements as described above, and as to which
the Company may be entitled to an offset.
|
8.
|
SURVIVAL
|
The
rights and obligations of the parties hereunder shall survive the termination of
the Employee’s employment hereunder and the termination of this Agreement to the
extent necessary to the intended preservation of such rights and
obligations.
WHOLE
AGREEMENT AND MODIFICATION
This
Agreement, including the “Proprietary Information and
Inventions Agreement”, sets forth the entire agreement and understanding
of the parties with respect to the subject matter contained herein, and
supersedes all prior and existing agreements except as set forth above, whether
written or oral, between them concerning the subject matter contained herein.
This Agreement may be modified only by a written agreement executed by each
party to this Agreement.
Page
8
|
9.
|
NOTICES
|
Any
notice or other communication required or permitted to be given under this
Agreement shall be in writing and shall be mailed by certified mail, return
receipt requested, or delivered against receipt to the party to whom it is to be
given at the address of such party set forth above or to such other address as
the party shall have furnished in writing in accordance with this provision.
Notice to the estate of the Employee shall be sufficient if addressed to the
Employee in accordance with this provision. Any notice or other communication
given by certified mail shall be deemed given three (3) days after posting.
However, a notice changing a party’s address shall be deemed given at the time
of the receipt of the notice.
|
10.
|
WAIVER
|
Any
waiver by either party of a breach of any provision of this Agreement shall not
operate as or be construed to be a waiver of any other breach of such provision
or of any breach of any other provision of this Agreement. The failure of a
party to insist upon strict adherence to any term of this Agreement on one or
more occasions shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Agreement. Any waiver must be in writing, signed by the party giving
such waiver.
|
11.
|
SUCCESSORS
|
|
(a)
|
Effect
on Employee
|
This
Agreement is personal to the Employee and, without the prior express written
consent of the Company, shall not be assignable by the Employee, except that the
Employee’s rights to receive any compensation or benefits under this Agreement
may be transferred or disposed of pursuant to testamentary disposition,
intestate succession or pursuant to a domestic relations order of a court of
competent jurisdiction. This Agreement shall inure to the benefit of and be
enforceable by the Employee’s heirs, beneficiaries and/or legal
representatives.
|
(b)
|
Effect
on Company
|
This
Agreement shall inure to the benefit of and be binding on the Company and its
successors and assigns. The Company shall reasonably require any successor to
all or substantially all of the business and/or assets of the Company, whether
direct or indirect, by purchase, merger, consolidation, acquisition of stock, or
otherwise, by an agreement in form and substance reasonably satisfactory to the
Employee, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent as the Company would be required to perform if no
such succession had taken place.
|
12.
|
NO
THIRD PARTY BENEFICIARIES
|
This
Agreement does not create, and shall not be construed as creating, any rights
enforceable by any person not a party to this Agreement except as provided in
Section 12 of this Agreement.
Page
9
COUNTERPARTS
This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
|
13.
|
GOVERNING
LAW
|
This
Agreement shall be governed by and construed in accordance with the laws of the
State of Connecticut, without giving effect to the principles of conflict of
laws thereof.
|
14.
|
SEVERABILITY
|
The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this
Agreement.
|
15.
|
NO
VIOLATION OF OUTSTANDING
AGREEMENT(S)
|
Employee
hereby warrants that the execution of this Agreement and the performance of his
duties hereunder do not and will not violate any agreement with any other person
or entity.
IN
WITNESS WHEREOF, the parties have duly executed this Agreement which shall be
effective as of the effective date noted above.
| NEUROGEN CORPORATION | EMPLOYEE | |||
|
/s/
Xxxxxxx X. Xxxxx
|
/s/
Xxxxxx X. Xxxxxx
|
|||
|
Name:
Xxxxxxx X. Xxxxx
|
Name:
Xxxxxx X. Xxxxxx
|
|||
|
Title: President and Chief
Executive Office
|
Title:
Senior Vice President and Chief Business and Financial
Officer
|
