AZURRX BIOPHARMA, INC. EMPLOYMENT AGREEMENT
Exhibit 10.1
This
Employment
Agreement (this “Agreement”)
is made and entered into on October 8, 2019, effective as of
October 8, 2019 (the “Effective
Date”) by and between AzurRx Biopharma, Inc. (the
“Company”)
and Xxxxx Xxxxxxxxxx (“Executive”).
The Company and Executive are hereinafter collectively referred to
as the “Parties”,
and individually referred to as a “Party”.
Recitals
A.
The Company desires
assurance of the association and services of Executive in order to
retain Executive’s experience, skills, abilities, background
and knowledge, and is willing to engage Executive’s services
on the terms and conditions set forth in this
Agreement.
B.
Executive desires
to be in the employ of the Company, and is willing to accept such
employment on the terms and conditions set forth in this
Agreement.
Agreement
In
consideration of the foregoing Recitals and the mutual promises and
covenants herein contained, and for other good and valuable
consideration, the Parties, intending to be legally bound, agree as
follows:
1. Employment.
1.1 Title. Effective as of the Effective
Date, Executive’s position shall be President and Chief
Executive Officer, subject to the terms and conditions set forth in
this Agreement.
1.2 Term.
The term of this Agreement shall begin on the Effective Date and
shall continue for a period of three (3) years or until it is
terminated pursuant to Section 4 herein (the “Term”).
1.3 Duties.
Executive shall have the customary powers, responsibilities and
authorities of President and Chief Executive Officer of
corporations of the size, type and nature of the Company, as it
exists from time to time. Executive shall report to the
Company’s board of directors (the “Board”). The
principal place of business for the performance of
Executive’s duties to the Company hereunder shall be in
Executive’s home office located in Florida; provided, that,
Executive shall be required to travel (including, without
limitation, to the Company’s offices in Brooklyn, New York)
as reasonably necessary to perform his duties
hereunder.
1.4 Governing
Agreement. The employment relationship between the Parties
shall be governed by this Agreement.
1.5 Board
of Directors. Effective on the date of this Agreement, the
Board shall appoint Executive to the Board, and thereafter until
such time as Executive’s employment with the Company shall
terminate, the Board shall recommend that the Company’s
stockholders elect Executive to the
Board, to serve until the Company’s next annual meeting of
stockholders, or until his successor is duly elected and
qualified.
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2. Loyalty;
Noncompetition; Nonsolicitation.
2.1 Loyalty. During Executive’s
employment by the Company, Executive shall devote substantially all
his business time to the performance of Executive’s duties
under this Agreement. Notwithstanding the foregoing, except as
otherwise agreed to in writing, Executive shall have the right to
perform such incidental services as are necessary in connection
with (a) his private passive investments, (b) his charitable or
community activities, (c) his participation in trade or
professional organizations, and (d) his service on the board of
directors (or comparable body) and/or commitees of any third-party
corporate entity that is not a Competitive Entity (as defined in
Section 2.3), so long as these activities do not materially
interfere with Executive’s duties hereunder and, with respect
to (d), except with respect to the boards of directors (or
comparable bodies) and/or commitees identified on Exhibit A, Executive obtains prior
Company consent, which consent will not be unreasonably withheld.
Executive may also provide limited services to other parties
provided that, except with respect to limited consulting services
(not to exceed ten hours per month during regular working hours)
provided to businesses that are not Competitive Entities, such
services are without remuneration.
2.2 Agreement
not to Participate in Company’s Competitors. During
the Term, Executive agrees not to acquire, assume or participate
in, directly or indirectly, any position, investment or interest
known by Executive to be adverse or antagonistic to the Company,
its business, or prospects, financial or otherwise, or in any
company, person, or entity that is, directly or indirectly, in
competition with the business of the Company or any of its
Affiliates (as defined below). Ownership by Executive, in
professionally managed funds over which the Executive does not have
control or discretion in investment decisions, or as a passive
investment, of less than five percent (5%) of the outstanding
shares of capital stock of any corporation with one or more classes
of its capital stock listed on a national securities exchange or
publicly traded on a national securities exchange or in the
over-the-counter market shall not constitute a breach of this
Section. For purposes of this Agreement, “Affiliate,”
means, with respect to any specific entity, any other entity that,
directly or indirectly, through one or more intermediaries,
controls, is controlled by or is under common control with such
specified entity.
2.3 Covenant
not to Compete. During the Term and for a period of twelve
(12) months thereafter (the “Restricted
Period”), Executive shall not engage in competition
with the Company and/or any of
its Affiliates, either directly or indirectly, in any manner or
capacity, as adviser, principal, agent, affiliate, promoter,
partner, officer, director, employee, stockholder, owner, co-owner,
consultant, or member of any association or otherwise, in any phase
of the business of researching and developing non-systemic
biologics for the treatment of patients with gastrointestinal
disorders (a “Competitive
Entity”), except with the prior written consent of the
Board.
2.4 Nonsolicitation.
During the Restricted Period, Executive shall not: (i) solicit
or induce, or attempt to solicit or induce, any employee of the
Company or its Affiliates to leave the employ of the Company or
such Affiliate; or (ii) solicit or attempt to solicit the business
of any client or customer of the Company or its Affiliates with
respect to products, services, or investments similar to those
provided or supplied by the Company or its Affiliates.
2.5 Acknowledgements.
Executive acknowledges and agrees that his services to the Company
pursuant to this Agreement are unique and extraordinary and that in
the course of performing such services Executive shall have access
to and knowledge of significant confidential, proprietary, and
trade secret information belonging to the Company. Executive agrees
that the covenant not to compete and the nonsolicitation
obligations imposed by this Section 2 are reasonable in duration,
geographic area, and scope and are necessary to protect the
Company’s legitimate business interests in its goodwill, its
confidential, proprietary, and trade secret information, and its
investment in the unique and extraordinary services to be provided
by Executive pursuant to this Agreement. If, at the time of
enforcement of this Section 2, a court holds that the covenant not
to compete and/or the nonsolicitation obligations described herein
are unreasonable or unenforceable under the circumstances then
existing, then the Parties agree that the maximum duration, scope,
and/or geographic area legally permissible under such circumstances
will be substituted for the duration, scope and/or area stated
herein.
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3. Compensation
of the Executive.
3.1 Base Salary. The Company shall pay
Executive a base salary (the “Base
Salary”) at the annualized rate of Four Hundred and
Fifty Thousand Dollars ($450,000), less payroll deductions and all
required withholdings, payable in regular periodic payments in
accordance with the Company’s normal payroll practices. The
Base Salary shall be prorated for any partial year of employment on
the basis of a 365-day fiscal year. The Company may increase, but
not decrease (except for a proportional decrease in connection with
a Company-wide decrease in executive compensation, provided that
the in no event shall such decrease result in Executive’s
Base Salary being reduced to less than $425,000 on an annualized
basis), Executive’s Base Salary from time to time, and if so
increased, “Base Salary” shall include such increases
for purposes of this Agreement.
3.2 Bonuses.
3.2.1 At
the sole discretion of the Board or the compensation committee of
the Board (the “Compensation
Committee”), following each calendar year of
employment, Executive shall be eligible to receive an additional
cash bonus (the “Annual Milestone
Bonus”), which Annual Milestone Bonus shall be
targeted at forty percent (40%) of Executive’s Base Salary
(“Bonus
Target”). The Annual Milestone Bonus shall be based
(in whole or in part) on Executive’s attainment of certain
financial, clinical development, and/or business milestones (the
“Milestones”)
to be established annually by the Board or the Compensation
Committee (after considering Executive’s input with respect
to such Milestones). The Milestones, as well as the determination
of whether Executive has met the Milestones, and if so, whether the
Bonus Target or some lesser or greater amount shall be awarded,
shall be determined by the Board or the Compensation Committee in
its reasonable discretion. Any Annual Milestone Bonuses shall be
paid in cash to Executive in a single lump sum, which amount shall
be paid not later than the 75th day of the calendar
year following the calendar year in which such Annual Milestone
Bonus relates.
3.2.2 In
the event the Company enters into a license agreement (a
“License
Transaction”) with a third party during the Term with
respect to a product currently in development by the Company, or a
product developed by the Company during the Term, and the product
subject to such License Transaction constitutes all or
substantially all assets of the Company (together,
“Licensed
Product”), the Company shall pay to Executive a cash
bonus (a “License Transaction
Bonus”) in an amount equal to one percent (1%) of the
Net License Fees (as defined below) actually paid to the Company.
For purposes of this Section 3.2.2, “Net License
Fees” shall include actual amounts paid to the Company
by such third parties in connection with the license of such
Licensed Product, less any expense or other amounts paid or
otherwise due in connection with the collection or payment of such
amounts. The License Transaction Bonus shall be paid to Executive
within ten (10) business days of the date(s) such License Fees are
paid to the Company. For the avoidance of doubt, and subject to the
provisions in this Section 3.2.2, Executive shall be entitled to
earn the License Transaction Bonus with respect to each License
Transaction entered into during the Term.
3.2.3 In
the event a Change in Control (as defined in Section 4.6.4) is
consummated during the Term, the Company shall pay to Executive a
cash bonus (a “Change in Control
Bonus”) in an amount equal to one percent (1%) of the
Transaction Proceeds (as defined in Section 4.6.5). The Change in
Control Bonus shall be paid to the Executive on the date the Change
in Control is consummated; provided that any portion of the Change
in Control Bonus that is attributable to earn-outs, escrows and/or
holdbacks shall be paid to Executive when such amounts are actually
paid to the Company, the Company’s stockholders and/or
released, as applicable.
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3.3 Restricted
Stock. On or as promptly as practicable following the
Effective Date, Executive shall be issued 200,000 shares of common
stock (the “Restricted
Shares”) pursuant to the Company’s Amended and
Restated 2014 Omnibus Equity Incentive Plan (the “Plan”),
which restricted shares shall vest as follows: (i) 100,000
Restricted Shares upon the first commercial sale in the United
States of MS1819, and (ii) 100,000 Restricted Shares upon the total
market capitalization of the Company exceeding $1.0 billion for 20
consecutive trading days, in each case subject to the earlier
determination of a majority of the Board. Notwithstanding the
foregoing to the contrary, in the event of a Change of Control, all
of the Restricted Shares shall vest in full. With respect to the
issuance of the Restricted Shares, in the event of any conflict
between this Agreement and the terms of the Plan and/or any award
agreement, the terms of this Agreement shall control.
3.4 Stock
Options. On or as promptly as practicable following the
Effective Date, Executive shall be issued 300,000 10-year stock
options (“Options”)
pursuant to the Plan, which Options shall vest as follows so long
as the Executive remains employed by the Company at such time: (i)
50,000 of such Options shall vest upon the Company initiating its
next Phase II clinical trial in the United States for MS1819 (i.e.,
upon the first individual enrolled in the trial), (ii) 50,000 of
such Options shall vest upon the Company completing its next Phase
II clinical trial in the United States for MS1819, (iii) 100,000 of
such Options shall vest upon the Company initiating a Phase III
clinical trial in the United States for MS1819, and (iv) 100,000 of
such Options shall vest upon the Company initiating a Phase I
clinical trial in the United States for any product other than
MS1819. Notwithstanding the foregoing to the contrary, in the event
of a Change of Control, all Options issued to Executive shall vest
in full. The Options shall be exercisable at a price per share of
the Company’s common stock on the day this Agreement is
entered into. In the event of any conflict between this Agreement
and the terms of the Plan and/or any award agreement, the terms of
this Agreement shall control. In addition, the Executive may elect
to exercise some or all of the Options by making a net exercise, in
which case the Company shall issue to the Executive a number of
shares of unencumbered common stock of the Company equal to: (x)
the total number of shares underlying the portion of the Option
being exercised less (y) the number of shares whose fair market
value is equal to the sum of (A) the exercise price of the Options
being exercised, plus (B) any required tax withholding amounts in
respect of such exercise. In the event Executive’s employment
is terminated under the provisions of Sections 4.5.3 or 4.5.4
hereof, all vested Options will remain exercisable for a period of
twelve (12) months following termination.
3.5 Expense
Reimbursements. The Company will reimburse Executive for all
reasonable business expenses Executive incurs in conducting his
duties hereunder (including, without limitation, travel to the
Company’s offices in New York), pursuant to the
Company’s usual expense reimbursement policies, but in no
event later than ninety (90) days after the end of the calendar
month following the month in which such expenses were incurred by
Executive; provided that Executive supplies the appropriate
substantiation for such expenses no later than the end of the
calendar month following the month in which such expenses were
incurred by Executive.
3.6 Changes
to Compensation. As described above, Executive’s
compensation will be reviewed at least on an annual basis and the
Base Salary may be increased, but not decreased (except for a
proportional decrease in connection with a Company-wide decrease in
executive compensation, provided that the in no event shall
Executive’s Base Salary be reduced to a rate below $425,000
on an annualized basis), from time to time in the Company’s
sole discretion.
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3.7 Employment
Taxes. All of Executive’s compensation shall be
subject to customary withholding taxes and any other employment
taxes as are commonly required to be collected or withheld by the
Company.
3.8 Benefits.
The Executive shall, in accordance with Company policy and the
applicable plan documents, be eligible to participate in benefits
under any benefit plan or arrangement, including medical, dental,
vision, disability and life insurance programs, that may be in
effect from time to time and made available to the Company’s
senior management employees, subject to the terms and conditions of
those benefit plans.
3.9 Holidays
and Vacation. Executive shall receive twenty (20) days of
paid vacation per calendar year, which cannot be taken in one
increment, but which shall accrue if not used in any calendar year
but only up to a maximum of ten (10) days, and be paid to Executive
or carried forward to subsequent calendar years consistent with
Company policy. In addition to such paid vacation, Executive shall
receive all paid Company holidays in the United States in
accordance with Company policy.
4. Termination.
4.1 Termination by the Company.
Executive’s employment with the Company is at will and may,
subject to the terms of Section 4.5, be terminated by the Company
at any time and for any reason, or for no reason, including, but
not limited to, under the following conditions:
4.1.1 Termination
by the Company for Cause. The Company may terminate
Executive’s employment under this Agreement for Cause (as
defined in Section 4.6.2) by delivery of written notice to
Executive. Any notice of termination given pursuant to this Section
4.1.1 shall effect termination as of the date of the notice, or as
of such other later date as specified in the notice. In the event
of a termination of Executive’s employment for Cause,
Executive shall only be entitled to the compensation and/or
benefits set forth in Section 4.5 below, and shall not be entitled
to any other compensation and/or benefits as a result of the
termination of such employment prior to expiration of the
Term.
4.1.2 Termination
by the Company without Cause. The Company may terminate
Executive’s employment under this Agreement without Cause by
delivery of written notice to the Executive, at any time and for
any reason, or for no reason. Such termination shall be effective
on the date of such notice, or such later date otherwise specified
by the Company in the notice.
4.2 Termination
by Resignation of Executive. Executive’s employment
with the Company is at will and may be terminated by Executive at
any time and for any reason, or for no reason, including via a
resignation for Good Reason (as defined in Section 4.6.3) in
accordance with the procedures set forth in Section 4.6.3
below.
4.3 Termination
for Death or Complete Disability. Executive’s
employment with the Company shall automatically terminate effective
upon the date of Executive’s death or Complete Disability (as
defined in Section 4.6.1).
4.4 Termination
by Mutual Agreement of the Parties. Executive’s
employment with the Company may be terminated at any time upon a
mutual agreement in writing of the Parties. Any such termination of
employment shall have the consequences specified in such
agreement.
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4.5 Compensation
Upon Termination.
4.5.1 Death
or Complete Disability. If, during the Term of this
Agreement, Executive’s employment shall be terminated by
death or Complete Disability, the Company shall pay to Executive,
his estate, or his heirs, as applicable, (i) any Base Salary owed
to Executive through the date of termination; (ii) expenses
reimbursement amounts owed to Executive; (iii) all unpaid amounts
of any Annual Milestone Bonus(es) Executive earned prior to the
termination date; (iv) all unpaid amounts of any Licence
Transaction Bonus(es) respect to any License Transcation(s)
consummated prior to the termination date; (v) all unpaid amounts
of any Change in Control Bonus respect to any Change in Control
consummated prior to the termination date; (vi) a cash lump sum in
respect to accrued and unused vacation benefits earned through the
date of termination at the rate in effect at the time of
termination; (vii) any payments and benefits to which Executive (or
his estate) is entitled pursuant to the terms of any employee
benefit or compensation plan or program in which he participates
(or participated); and (viii) any amount to which Executive is
entitled pursuant to any other written agreements between the
Company or any of its affiliates and Executive (the amounts in (i)
through (viii) above being the “Termination
Amounts”). The Company shall pay Executive: (A) the
amounts contained in items (i), (ii), (iii) and (vi) within ten
(10) days following such termination; (B) any payments associated
with item (vii) in accordance to the terms of such plans or
programs; (C) any such amounts in item (viii) in accordance with
the terms of such agreements, and (D) any amounts contained in (iv)
and (v), on such date(s) that such payments would have been made
pursuant to Section 3.2.3 and/or 3.2.3 (as applicable) if Executive
had remained employed by the Company, with all such Termination
Amounts being subject to the standard deductions and withholdings
(as applicable). In addition, subject to Executive (or his estate
or heirs, as applicable) furnishing to the Company an executed
waiver and release of claims in the form attached hereto as
Exhibit B (the
“Release”),
Executive, his estate, or his heirs, as applicable, shall also be
entitled to: (1) continuation of Executive’s salary (at the
Base Salary rate in effect at the time of termination) for a period
of ninety (90) days following the termination date; and (2) a
prorated annual bonus equal to the Target Annual Milestone Bonus,
multiplied by a fraction, the numerator of which shall be the
number of full and partial months Executive worked for the Company
and the denominator of which shall be 12 (the “ProRated Target Milestone
Bonus”). The Base Salary payments will be subject to
standard payroll deductions and withholdings and will be made on
the Company’s regular payroll cycle, commencing on the
Company’s first regular pay date following the sixtieth
(60th) day
after the termination date, provided that the first such
installment of the Base Salary continuation payments shall be a
lump sum payment equal to the amount of all Base Salary payments
due from the termination date through the date of such first
installment payment. The ProRated Target Milestone Bonus will be
subject to standard payroll deductions and withholdings and will
paid on the Company’s next regular paydate following the
60th day
following the termination date.
4.5.2 Termination For Cause or Resignation without
Good Reason. If, during the Term of this Agreement,
Executive’s employment is terminated by the Company for
Cause, or Executive resigns his employment hereunder without Good
Reason, the Company shall pay
Executive the Termination Amounts (on the dates set forth in
Section 4.5.1 with respect to payments of the Termination Amounts),
less standard deductions and withholdings. The Company shall
thereafter have no further obligations to Executive under this
Agreement, except as otherwise provided by law.
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4.5.3 Termination
Without Cause or Resignation For Good Reason Not In Connection with
a Change of Control. If the Company terminates
Executive’s employment without Cause, or if Executive resigns
for Good Reason, at any time other than upon the occurrence of, or
within ninety (90) days prior to, or six (6) months following, the
effective date of a Change of Control, the Company shall pay
Executive the Termination Amounts (on the dates set forth in
Section 4.5.1 with respect to payments of the Termination Amounts),
less standard deductions and withholdings. In addition, subject to
Executive furnishing to the Company the executed Release, Executive
shall be entitled to: (1) severance in the form of continuation of
his salary (at the Base Salary rate in effect at the time of
termination, but prior to any reduction triggering Good Reason) for
a period of twelve (12) months following the termination date; (2)
payment of Executive’s premiums to cover COBRA for a period
of twelve (12) months following the termination date; (3) the
ProRated Target Annual Milestone Bonus; and (4) immediate
accelerated vesting of any unvested Restricted Shares and unvested
outstanding Option(s). The payments under (1) and (2) above will be
subject to standard payroll deductions and withholdings and will be
made on the Company’s regular payroll cycle, commencing on
the Company’s first regular pay date following the sixtieth
(60th) day
after the termination date, provided that the first installment of
such payments shall be made in a lump sum payment equal to the
amount of all such payments due from the termination date through
the date of such first installment payment. The ProRated Annual
Milestone Bonus under clause (3) will be made in a lump sum on the
Company’s next regular pay date following the 60th day after the
termination date.
4.5.4 Termination
Without Cause or Resignation For Good Reason In Connection with a
Change of Control. If the Company terminates
Executive’s employment without Cause, or if Executive resigns
for Good Reason, upon the occurrence of, or within sixty (60) days
prior to, or within six (6) months following, the effective date of
a Change of Control, the Company shall pay Executive the
Termination Amounts (on the
dates set forth in Section 4.5.1 with respect to payments of the
Termination Amounts), less standard deductions and withholdings. In
addition, subject to Executive furnishing to the Company the
executed Release, Executive shall be entitled to: (1) severance in
the form of a lump sum payment equivalent to eighteen (18) months
of his Base Salary (at the Base Salary rate in effect at the time
of termination, but prior to any reduction triggering Good Reason);
(2) payment of Executive’s premiums to cover COBRA for a
period of eighteen (18) months following the termination date; (3)
the ProRated Target Annual Bonus; (4) immediate accelerated vesting
of any unvested Restricted Shares and unvested outstanding stock
option(s); and (5) if a License Transaction and/or a Change in
Control is consummated within the six (6) month period following
the termination date, the License Transaction Bonus and/or the
Change in Control Bonus, as applicable. The payments under items
(1), (2) and (3) will be subject to standard payroll deductions and
withholdings and will be made on the Company’s regular
payroll cycle following the sixtieth (60th) day after the
termination date. The License Transaction Bonus and/or the Change
in Control Bonus (less applicable withholdings and deductions), as
applicable, set forth in (5) above, shall be paid in accordance on
such date(s) that such payments would have been made pursuant to
Section 3.2.2 and/or 3.2.3 (as applicable) if Executive had
remained employed by the Company.
4.6 Definitions.
For purposes of this Agreement, the following terms shall have the
following meanings:
4.6.1 Complete
Disability. “Complete
Disability” means that Executive is determined to be
permanently disabled pursuant to the Company’s long term
disability plan and is receiving disability benefits under such
plan.
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4.6.2 Cause.
“Cause” for
the Company to terminate Executive’s employment hereunder
shall mean the occurrence of any of the following events, as
determined by the Company and/or the Board in its and/or their sole
and absolute discretion:
(i) The willful
failure, willful disregard or willful refusal by Executive to
perform his material duties or obligations under this Agreement or
to follow lawful directions received by Executive from the
Board;
(ii) Any
grossly negligent act by Executive having the effect of materially
injuring (whether financially or otherwise) the business or
reputation of the Company or any willful act by Executive intended
to cause such material injury, except any acts (A) made by
Executive in connection with the enforcement of his rights, whether
under this Agreement, any other agreement between the Company or
any affiliate and Executive, or pursuant to applicable law (e.g.
disparagement, etc.) or (B) which are required by law or pursuant
to a subpoena or demand by a governmental or regulatory
body;
(iii) Executive’s
indictment of any felony involving moral turpitude (including entry
of a nolo contendere
plea);
(iv) The
determination, after a reasonable and good-faith investigation by
the Company, that the Executive engaged in discrimination
prohibited by law (including, without limitation, age, sex or race
discrimination);
(v) Executive’s
material misappropriation or embezzlement of the property of the
Company or its Affiliates (whether or not a misdemeanor or felony);
or
(vi) Material
breach by Executive of this Agreement and/or of his Proprietary
Information and Inventions Agreement (“PIIA”);
provided, however, that, any such termination of Executive shall
only be deemed for Cause pursuant to this definition if: (1) the
Company gives the Executive written notice of the condition(s)
alleged to constitute Cause, which notice shall describe such
condition(s); and (2) the Executive fails to remedy such
condition(s) (if curable) within thirty (30) days following receipt
of the written notice.
For
purposes of this definition, the Parties agree that any breach of
Sections 2.2, 2.3, 2.5 or 5 of this Agreement shall be deemed a
material breach that is not capable of cure by
Executive.
4.6.3 Good Reason. For purposes of this
Agreement, and subject to the caveat at the end of this Section,
“Good
Reason” for Executive to terminate his employment
hereunder shall mean the occurrence of any of the following events
without Executive’s prior written consent:
(i)
any reduction by
the Company of Executive’s Base Salary as initially set forth
herein or as the same may be increased from time to time, provided,
however, that if such reduction is a proportional reduction in
connection with a Company-wide decrease in executive compensation
and such decrease does not result in Executive’s Base Salary
being less than $425,000 on an annualized basis , such reduction
shall not constitute Good Reason for Executive to terminate his
employment;
(ii)
a material breach
by the Company (or any of its Affiliates) of this Agreement or any
other written agreement between the Company or any of its
Affiliates and Executive, provided such written agreement was
approved by the Board of Directors or the Compensation
Committee;
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(iii)
a material adverse
change in Executive’s duties, titles, authority,
responsibilities or reporting relationships, with such
determination being made with reference to the greatest extent of
Executive’s duties, titles, authority, responsibilities or
reporting relationships, etc. as increased (but not decreased) from
time to time;
(iv)
any failure of the
Company or any Affiliate to pay Executive any amount owed to
Executive under this Agreement or any other written agreement plan
or program between the Company, any affiliates and
Executive;
(v)
any reduction in
Executive’s bonus eligibility;
(vi)
a relocation of the
Executive’s principal place a business to for the performance
of his duties hereunder;
(vii)
the assignment
to Executive of
duties materially inconsistent with his position with the
Company;
(viii)
the Board of
Directors shall fail to recommend that stockholders elect Executive to the Board of
Directors.
Provided, however, that, any such termination by the
Executive shall only be deemed for Good Reason pursuant to this
definition if: (1) the Executive gives the Company written
notice of his intent to terminate for Good Reason; (2) the Company
fails to remedy such condition(s) within thirty (30) days following
receipt of the written notice the “Cure Period”);
and (3) Executive voluntarily terminates his employment within
thirty (30) days following the end of the Cure Period.
4.6.4
Change of Control. For
purposes of this Agreement, “Change of Control” shall
mean the occurrence, in a single transaction or in a series of
related transactions, of any one or more of the following events
(excluding in any case transactions in which the Company or its
successors issues securities to investors primarily for capital
raising purposes):
(i)
the acquisition by
a third party (or more than one party acting as a group) of
securities of the Company representing more than fifty percent
(50%) of the combined voting power of the Company’s then
outstanding securities other than by virtue of a merger,
consolidation or similar transaction;
(ii)
a merger,
consolidation or similar transaction following which the
stockholders of the Company immediately prior thereto do not own at
least fifty percent (50%) of the combined outstanding voting power
of the surviving entity (or that entity’s parent) in such
merger, consolidation or similar transaction;
(iii)
the dissolution or
liquidation of the Company; or
(iv)
the sale, lease,
exclusive license or other disposition of all or substantially all
of the assets of the Company.
4.6.5 Transaction
Proceeds. “Transaction
Proceeds” means the aggregate consideration actually
actually paid to the Company’s stockholders in connection
with a Change in Control with respect to their equity interest in
the Company. Any consideration retained in escrow or as a hold back
and any earn out consideration shall not be included in the
“Transaction
Proceeds” until such consideration
retained in escrow or as a hold back any such earn out
consideration is actually paid. If all or a portion of the
consideration paid in a Change in Control transaction is other than
cash, then the value of such non-cash consideration shall be the
fair market value thereof on the date the Change in Control
transaction is consummated as determined in good faith by the
Board. If the Change in Control transaction involves a sale of all
or substantially all of the assets of the Company followed by a
liquidation and dissolution of the Company, then the Transaction
Proceeds shall mean the aggregate amount distributed to the
Company’s stockholders in connection with such liquidation
and dissolution.
-9-
4.7 Survival
of Certain Sections. Sections 3, 4, 5, 6, 7, 8, 9, 12, 13,
16, 17, 19 and 21 of this Agreement will survive the termination of
this Agreement.
4.8 Parachute
Payment. If any payment or benefit the Executive would
receive pursuant to this Agreement (“Payment”)
would (i) constitute a “Parachute
Payment” within
the meaning of Section 280G of the Internal Revenue Code of 1986,
as amended (the “Code”),
and (ii) be subject to the excise tax imposed by Section 4999 of
the Code (the “Excise
Tax”), then the Executive shall be entitled to receive
an additional payment from the Company (the “Gross-Up
Payment”) in an amount such that the net amount of
such additional payment retained by the Executive, after payment of
all federal, state and local income and employment and Excise Taxes
imposed on the Gross-Up Payment, shall be equal to the Excise Tax
imposed on the Payment. The Company shall pay Executive the
Gross-Up Payment as soon as practicable following the date
Executive’s right to the applicable Payment is triggered, but
in no event will the Company make such Gross-Up Payment later than
the time required by the rules governing Section 409A, including,
but not limited to, Treasury Regulation
1.409A-3(i)(1)(v).
Unless
Executive and the Company agree on an alternative accounting, law
or consulting firm, the accounting firm then engaged by the Company
for general tax compliance purposes shall perform the Gross-Up
Payment calculations. If the accounting firm so engaged by the
Company is serving as accountant or auditor for the individual,
entity or group effecting the Change in Control, the Company shall
appoint a nationally recognized accounting, law or consulting firm
to make the determinations required hereunder. The Company shall
bear all expenses with respect to the determinations by such
accounting, law or consulting firm required to be made
hereunder.
The
Company shall use commercially reasonable efforts such that the
accounting, law or consulting firm engaged to make the
determinations hereunder shall provide its calculations, together
with detailed supporting documentation, to Executive and the
Company within fifteen (15) calendar days after the date on which
Executive’s right to a Payment is triggered (if requested at
that time by the Executive or the Company) or such other time as
requested by the Executive or the Company.
4.9 Application
of Internal Revenue Code Section 409A. Notwithstanding
anything to the contrary set forth herein, any payments and
benefits, other than the Termination Amounts, provided under
Section 4.5 of this Agreement (the “Severance
Benefits”) that constitute “deferred
compensation” within the meaning of Section 409A of the Code
and the regulations and other guidance thereunder and any state law
of similar effect (collectively “Section 409A”)
shall not commence in connection with Executive’s termination
of employment unless and until Executive has also incurred a
“separation from service” (as such term is defined in
Treasury Regulation Section 1.409A-1(h) (“Separation From
Service”), unless the Company reasonably determines
that such amounts may be provided to Executive without causing
Executive to incur the additional 20% tax under Section
409A.
-10-
It is
intended that each installment of the Severance Benefits payments
provided for in this Agreement is a separate “payment”
for purposes of Treasury Regulation Section 1.409A-2(b)(2)(i). For
the avoidance of doubt, it is intended that payments of the
Severance Benefits set forth in this Agreement satisfy, to the
greatest extent possible, the exemptions from the application of
Section 409A provided under Treasury Regulation Sections
1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9). However, if the
Company (or, if applicable, the successor entity thereto)
determines that the Severance Benefits constitute “deferred
compensation” under Section 409A and Executive is, on the
termination of service, a “specified employee” of the
Company or any successor entity thereto, as such term is defined in
Section 409A(a)(2)(B)(i) of the Code, then, solely to the extent
necessary to avoid the incurrence of the adverse personal tax
consequences under Section 409A, the timing of the Severance
Benefit payments shall be delayed until the earlier to occur of:
(i) the date that is six months and one day after Executive’s
Separation From Service, or (ii) the date of Executive’s
death (such applicable date, the “Specified Employee Initial
Payment Date”), the Company (or the successor entity
thereto, as applicable) shall (A) pay to Executive a lump sum
amount equal to the sum of the Severance Benefit payments that
Executive would otherwise have received through the Specified
Employee Initial Payment Date if the commencement of the payment of
the Severance Benefits had not been so delayed pursuant to this
Section and (B) commence paying the balance of the Severance
Benefits in accordance with the applicable payment schedules set
forth in this Agreement.
Notwithstanding
anything to the contrary set forth herein, Executive shall receive
the Severance Benefits described above, if and only if Executive
duly executes and returns to the Company within the applicable time
period set forth therein, but in no event more than forty-five (45)
days following Separation from Service, the Release and permits the
release of claims contained therein to become effective in
accordance with its terms. Notwithstanding any other payment
schedule set forh in this Agreement, none of the Severance Benefits
will be paid or otherwise delivered prior to the effective date of
the Release. Except to the extent that payments pursuant to Section
4.5 may be delayed until the Specified Employee Initial Payment
Date pursuant to the preceding paragraph, on the first regular
payroll pay day following the effective date of the Release, the
Company will pay Executive the Severance Benefits Executive would
otherwise have received under the Agreement on or prior to such
date but for the delay in payment related to the effectiveness of
the Release, with the balance of the Severance Benefits being paid
as originally scheduled. All amounts payable under the Agreement
will be subject to standard payroll taxes and
deductions.
All
reimbursements and in-kind benefits provided under this Agreement
shall be made or provided in accordance with the requirements of
Section 409A to the extent that such reimbursements or in-kind
benefits are subject to Section 409A. All reimbursements for
expenses paid pursuant hereto that constitute taxable income to
Executive shall in no event be paid later than the end of the
calendar year next following the calendar year in which Executive
incurs such expense or pays such related tax. Unless otherwise
permitted by Section 409A, the right to reimbursement or in-kind
benefits under this Agreement shall not be subject to liquidation
or exchange for another benefit and the amount of expenses eligible
for reimbursement, or in-kind benefits, provided during any taxable
year shall not affect the expenses eligible for reimbursement, or
in-kind benefits to be provided, respectively, in any other taxable
year.
5. Confidential
And Proprietary Information.
As a
condition of employment Executive agrees to execute and abide by
the PIIA.
-11-
6. Assignment
and Binding Effect.
This
Agreement shall be binding upon and inure to the benefit of
Executive and Executive’s heirs, executors, personal
representatives, assigns, administrators and legal representatives.
Because of the unique and personal nature of Executive’s
duties under this Agreement, neither this Agreement nor any rights
or obligations under this Agreement shall be assignable by
Executive. This Agreement shall be binding upon and inure to the
benefit of the Company and its successors, assigns and legal
representatives. Any such successor of the Company will be deemed
substituted for the Company under the terms of this Agreement for
all purposes. For this purpose, “successor” means any
person, firm, corporation or other business entity which at any
time, whether by purchase, merger or otherwise, directly or
indirectly acquires all or substantially all of the assets or
business of the Company.
7. Notices.
All
notices or demands of any kind required or permitted to be given by
the Company or Executive under this Agreement shall be given in
writing and shall be personally delivered (and receipted for) or
faxed during normal business hours or mailed by certified mail,
return receipt requested, postage prepaid, addressed as
follows:
If
to the Company:
000
Xxxxxxxx Xxxxxx
Xxxxxxxxx
Biotechnology Incubator, Xxxxx 000
Xxxxxxxx,
Xxx Xxxx 00000
(000)
000-0000
Attn:
CEO and Board of Directors
If
to Executive: To the most recent address set forth in
Executive’s personnel file.
Any
such written notice shall be deemed given on the earlier of the
date on which such notice is personally delivered or three (3) days
after its deposit in the United States mail as specified above.
Either Party may change its address for notices by giving notice to
the other Party in the manner specified in this
Section.
8. Choice
of Law.
This
Agreement shall be construed and interpreted in accordance with the
internal laws of the State of New York without regard to its
conflict of laws principles.
9. Integration.
This
Agreement, including Exhibit A,
Exhibit B and the PIIA, contains the complete, final and
exclusive agreement of the Parties relating to the terms and
conditions of Executive’s employment and the termination of
Executive’s employment, and supersedes all prior and
contemporaneous oral and written employment agreements or
arrangements between the Parties.
10. Amendment.
This
Agreement cannot be amended or modified except by a written
agreement signed by Executive and the Company.
-12-
11. Waiver.
No
term, covenant or condition of this Agreement or any breach thereof
shall be deemed waived, except with the written consent of the
Party against whom the wavier is claimed, and any waiver or any
such term, covenant, condition or breach shall not be deemed to be
a waiver of any preceding or succeeding breach of the same or any
other term, covenant, condition or breach.
12. Severability.
The
finding by a court of competent jurisdiction of the
unenforceability, invalidity or illegality of any provision of this
Agreement shall not render any other provision of this Agreement
unenforceable, invalid or illegal. Such court shall have the
authority to modify or replace the invalid or unenforceable term or
provision with a valid and enforceable term or provision, which
most accurately represents the Parties’ intention with
respect to the invalid or unenforceable term, or
provision.
13. Interpretation;
Construction.
The
headings set forth in this Agreement are for convenience of
reference only and shall not be used in interpreting this
Agreement. This Agreement has been drafted by legal counsel
representing the Company, but the Executive has been encouraged to
consult with, and has consulted with, Executive’s own
independent counsel and tax advisors with respect to the terms of
this Agreement. The Parties acknowledge that each Party and its
counsel has reviewed and revised, or had an opportunity to review
and revise, this Agreement, and any rule of construction to the
effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of this
Agreement.
14. Representations
and Warranties.
Executive
represents and warrants that Executive is not restricted or
prohibited, contractually or otherwise, from entering into and
performing each of the terms and covenants contained in this
Agreement, and that Executive’s execution and performance of
this Agreement will not violate or breach any other agreements
between the Executive and any other person or entity.
15. Counterparts.
This
Agreement may be executed in two counterparts, each of which shall
be deemed an original, all of which together shall contribute one
and the same instrument. Signatures to this Agreement transmitted
by fax, by email in “portable document format”
(“.pdf”) or by any other electronic means intended to
preserve the original graphic and pictorial appearance of this
Agreement shall have the same effect as physical delivery of the
paper document bearing original signature.
-13-
16. Arbitration.
To
ensure the rapid and economical resolution of disputes that may
arise in connection with the Executive’s employment with the
Company, Executive and the Company agree that any and all disputes,
claims, or causes of action, in law or equity, arising from or
relating to Executive’s employment, or the termination of
that employment, will be resolved, to the fullest extent permitted
by law, by final, binding and confidential arbitration pursuant to
the Federal Arbitration Act in New York, New York conducted by the
Judicial Arbitration and Mediation Services/Endispute, Inc.
(“JAMS”),
or its successors, under the then current rules of JAMS for
employment disputes; provided that the arbitrator shall: (a) have
the authority to compel adequate discovery for the resolution of
the dispute and to award such relief as would otherwise be
permitted by law; and (b) issue a written arbitration decision
including the arbitrator’s essential findings and conclusions
and a statement of the award. Accordingly, Executive and the
Company hereby waive any right to a jury trial. Both Executive and
the Company shall be entitled to all rights and remedies that
either Executive or the Company would be entitled to pursue in a
court of law. The Company shall pay any JAMS filing fee and shall
pay the arbitrator’s fee. The arbitrator shall have the
discretion to award attorneys fees to the party the arbitrator
determines is the prevailing party in the arbitration. Nothing in
this Agreement is intended to prevent either Executive or the
Company from obtaining injunctive relief in court to prevent
irreparable harm pending the conclusion of any such arbitration.
Notwithstanding the foregoing, Executive and the Company each have
the right to resolve any issue or dispute involving confidential,
proprietary or trade secret information, or intellectual property
rights, by Court action instead of arbitration.
17. Indemnification.
The
Company shall defend and indemnify Executive in his capacity as
President and Chief Executive Officer of the Company to the fullest
extent permitted under the Delaware General Corporation Law
(“DGCL”). The Company shall also maintain a policy for
indemnifying its officers and directors, including but not limited
to the Executive, for all actions permitted under the DGCL taken in
good faith pursuit of their duties for the Company, including but
not limited to maintaining an appropriate level of Directors and
Officers Liability coverage and maintaining the inclusion of such
provisions in the Company’s by-laws or articles of
incorporation, as applicable and customary. The rights to
indemnification shall survive any termination of this
Agreement.
18. Trade
Secrets Of Others.
It is
the understanding of both the Company and Executive that Executive
shall not divulge to the Company and/or its subsidiaries any
confidential information or trade secrets belonging to others,
including Executive’s former employers, nor shall the Company
and/or its Affiliates seek to elicit from Executive any such
information. Consistent with the foregoing, Executive shall not
provide to the Company and/or its Affiliates, and the Company
and/or its Affiliates shall not request, any documents or copies of
documents containing such information.
19. Advertising
Waiver.
Executive agrees to
permit the Company, and persons or other organizations authorized
by the Company, to use, publish and distribute advertising or sales
promotional literature concerning the products and/or services of
the Company, or the machinery and equipment used in the provision
thereof, in which Executive’s name and/or pictures of
Executive taken in the course of Executive’s provision of
services to the Company appear. Executive hereby waives and
releases any claim or right Executive may otherwise have arising
out of such use, publication or distribution.
20.
NO
MITIGATION.
Executive shall not
be required to mitigate damages or the amount of any payment
provided for under this Agreement by seeking other employment or
otherwise after the termination of his employment hereunder, and
any amounts earned by Executive, whether from self-employment, as a
common-law employee or otherwise, shall not reduce the amount of
any payment otherwise payable to him.
[signature page follows]
-14-
In Witness
Whereof, the Parties have executed this Agreement as of the
date first above written.
By:
/s/ Xxxxxx
Xxxxxxxxx
Name:
Xxxxxx Xxxxxxxxx
Its:
Chairman
Dated:
10/8/2019
Executive:
/s/ Xxxxx
Xxxxxxxxxx
Xxxxx Xxxxxxxxxx
Dated:
10/8/2019
-15-
EXHIBIT B
RELEASE AND WAIVER OF CLAIMS
TO BE SIGNED ON OR FOLLOWING THE SEPARATION DATE ONLY
In
consideration of the payments and other benefits set forth in the
Employment Agreement effective as of October 8, 2019, to which this
form is attached, I, Xxxxx Xxxxxxxxxx, hereby furnish AzurRx Biopharma,
Inc. (the “Company”),
with the following release and waiver (“Release and
Waiver”).
In exchange for the consideration provided to me
by the Employment Agreement that I am not otherwise entitled to
receive, I hereby generally and completely release the
Company and its current and former directors, officers, employees,
stockholders, partners, agents, attorneys, predecessors,
successors, parent and subsidiary entities, insurers, affiliates,
and assigns (collectively, the “Released
Parties”) from any and all claims, liabilities and
obligations, both known and unknown, that arise out of or are in
any way related to events, acts, conduct, or omissions occurring
prior to or on the date that I sign this Agreement (collectively,
the “Released
Claims”). Except as provided below, the Released
Claims include, but are not limited to: (a) all claims arising
out of or in any way related to my employment with the Company, or
the termination of that employment; (b) all claims related to
my compensation or benefits from the Company including salary,
bonuses, commissions, vacation pay, expense reimbursements,
severance pay, fringe benefits, stock, stock options, or any other
ownership interests in the Company; (c) all claims for breach
of contract, wrongful termination, and breach of the implied
covenant of good faith and fair dealing; (d) all tort claims,
including claims for fraud, defamation, emotional distress, and
discharge in violation of public policy; and (e) all federal,
state, and local statutory claims, including claims for
discrimination, harassment, retaliation, misclassification,
attorneys’ fees, or other claims arising under the federal
Civil Rights Act of 1964 (as amended), the federal Americans with
Disabilities Act of 1990, the federal Age Discrimination in
Employment Act of 1967 (as amended) (the “ADEA”), the
fair employment practices statutes of the state or states in which
I have provided services to the Company and/or any other federal,
state or local law, regulation or other requirement.
Notwithstanding the foregoing, the following are not included in
the Released Claims (the “Excluded
Claims”): (a) any rights or claims under the
Agreement or any other written agreement between the Company and
me, including any stock option award agreement or plan, (b) any
rights or claims that may arise as a result of events occurring
after the date this Release and Waiver is executed or which
otherwise cannot lawfully be waived, (c) any indemnification rights
I may have as a former officer or director of the Company or its
subsidiaries or affiliated companies, including any rights or
claims for indemnification I may have pursuant to any written
indemnification agreement with the Company to which I am a party,
the charter, bylaws, or operating agreements of the Company, or
under applicable law; (d) any claims for benefits under any
directors’ and officers’ liability policy maintained by
the Company or its subsidiaries or affiliated companies in
accordance with the terms of such policy, (e) any rights or claims
under any employee benefit or compensation plan or program in which
I participate or participated (or was eligible to participate), (f)
any rights or claims to unemployment compensation, and (g)
reimbursement for business expenses which are consistent with the
Company’s reimbursement policy. I hereby represent and
warrant that, other than the Excluded Claims, I am not aware of any
claims I have or might have against any of the Released Parties
that are not included in the Released Claims.
I
expressly waive and relinquish any and all rights and benefits
under any applicable law or statute providing, in substance, that a
general release does not extend to claims which a party does not
know or suspect to exist in his or his favor at the time of
executing the release, which if known by him or his would have
materially affected the terms of such release.
I
acknowledge that, among other rights, I am waiving and releasing
any rights I may have under ADEA, that this Release and Waiver is
knowing and voluntary, and that the consideration given for this
Release and Waiver is in addition to anything of value to which I
was already entitled as an executive of the Company. If I am 40
years of age or older upon execution of this Release and Waiver, I
further acknowledge that I have been advised, as required by the
Older Workers Benefit Protection Act, that: (a) the release and
waiver granted herein does not relate to claims under the ADEA
which may arise after this Release and Waiver is executed; (b) I
should consult with an attorney prior to executing this Release and
Waiver; and (c) I have twenty-one (21) days from the date of
termination of my employment with the Company in which to consider
this Release and Waiver (although I may choose voluntarily to
execute this Release and Waiver earlier); (d) I have seven (7) days
following the execution of this Release and Waiver to revoke my
consent to this Release and Waiver; and (e) this Release and Waiver
shall not be effective until the seven (7) day revocation period
has expired without my having previously revoked this Release and
Waiver.
I
acknowledge my continuing obligations under my Proprietary
Information and Inventions Agreement. Pursuant to the Proprietary
Information and Inventions Agreement I understand that among other
things, I must not use or disclose any confidential or proprietary
information of the Company and I must immediately return all
Company property and documents (including all embodiments of
proprietary information) and all copies thereof in my possession or
control. I understand and agree that my right to the severance pay
I am receiving in exchange for my agreement to the terms of this
Release and Waiver is contingent upon my continued compliance with
my Proprietary Information and Inventions Agreement.
This
Release and Waiver constitutes the complete, final and exclusive
embodiment of the entire agreement between the Company and me with
regard to the subject matter hereof. I am not relying on any
promise or representation by the Company that is not expressly
stated herein. This Release and Waiver may only be modified by a
writing signed by both me and a duly authorized officer of the
Company.
Date:
__________________
By:
Xxxxx
Xxxxxxxxxx
