EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (this “Agreement”) is entered into this 18th day
of
June 2008, by and between MedaSorb Technologies Corporation, (the “Company”),
and Xxxxxxx Xxxxxxx (“Employee”).
The
Company wishes to employ Employee as Chief Operating Officer upon the terms
and
conditions set forth in this Agreement and Employee is willing to accept
employment subject to the terms and conditions set forth below. Accordingly,
the
parties, intending to be legally bound, agree as follows:
1. Employment
and Term
1.1 Employment.
Subject
to the terms and conditions hereof, the Company hereby employs Employee during
the term of employment set forth in Section 1.2 to serve as Chief Operating
Officer of the Company and perform such services and duties as are normally
and
customarily associated with such position as well as such other associated
duties as the Chief Executive Officer (CEO) shall determine. Employee hereby
accepts such employment and agrees to devote sufficient time, attention and
energies during regular business hours to effectively perform his duties and
obligations hereunder.
1.2 Term. The
term
of employment of Employee under this Agreement shall commence June 18 , 2008
and
expires on December 31, 2008 (the “Term”) subject to the provisions for early
termination set forth herein.
2. Compensation.
In
consideration of the services to be rendered hereunder, the
Company
hereby agrees to pay Employee an initial annual base compensation of $195,767
payable in equal semimonthly installments in accordance with the usual practice
of the Company which base compensation shall be subject to annual review (but
his compensation may not be reduced from then current level) by the Compensation
Committee. Employee stock options will be adjusted on the same basis as all
other Share holders to account for any stock split, stock dividend, combination
or recapitalization. I
3. Benefits.
3.1 Participation
in Plans.
During
the term hereof, Employee shall be entitled to participate on the same terms
as
afforded other executive officers in any group insurance, hospitalization,
medical, dental, health and accident, disability or similar plan or program
of
the Company now existing or established hereafter to the extent that he is
eligible under the general provisions thereof; provided that in no case shall
the benefits be reduced or less than that granted, awarded or provided to
Employee on the date hereof.
3.2 Reasonable
Business Expenses.
Employee shall be allowed reimbursement for reasonable business expenses in
connection with the performance of his duties hereunder upon presentation by
Employee of the details of, vouchers for, such expenses, including tourist
class
commercial air travel, and Employee shall be furnished reasonable office space,
assistance and facilities.
3.3 Vacation.
Employee shall be entitled to a vacation (without deduction of salary or other
compensation) for the period as is in conformity with the Company’s policy
regarding vacations for management employees (but in no event less than three
weeks per year).
3.4 Bonuses.
Employee may receive such discretionary bonuses as the CEO, in its sole
discretion and from time to time, deem appropriate.
3.5 Retention
Bonus. Retention bonus stock options pre-approved on April 24, 2008 by the
Board
of Directors are approved with the provision that vesting occur over a three
(3)
year period: 25% upfront upon closing, 25% after one (1) year, 25% after two
(2)
years and 25% after three (3) years. In addition, there is no acceleration
of
vesting of these options with termination.
Early
Termination of Employment
4.1 Termination
for Justifiable Cause.
In
addition to termination pursuant to Section 1.2, the Company, by written notice
to Employee authorized by the CEO may terminate Employee’s employment for
“justifiable cause”, which shall mean any of the following events: (a)
adjudication by a court of competent jurisdiction that Employee has committed
an
act of fraud or dishonesty resulting or intended to result, directly or
indirectly, in personal enrichment at the expense of the Company; (b) an
indictment of a felony (other than a motor vehicle related matter) involving
moral turpitude; (c) repeated failure or refusal by Employee to follow written
policies and directions reasonably established by CEO that go uncorrected for
a
period of thirty (30) consecutive days after written notice has been provided
to
Employee; or (d) persistent willful failure by Employee to fulfill his duties
hereunder that goes uncorrected for a period of thirty (30) consecutive days
after written notice has been provided Employee by the CEO In the event of
4.1
(c) or 4.1 (d), Employee will be receive 15 calendar days of notice, after
which
his employment will be terminated.
4.2 In
the
event that the CEO reasonably determines that the Employee has committed a
felony (other than a motor vehicle related matter), a material act of fraud
or
other willful tort against the Company, it shall have the right to suspend
Employee from his position and duties hereunder without compensation until
such
time as either the action is dropped or no longer pursued or a final
adjudication of Employee’s actions is made by a court (whether civil or criminal
as appropriate) of competent jurisdiction. Should said adjudication find
Employee innocent (or not at fault) or the action is dropped or no longer
pursued, the Company shall promptly pay him all unpaid back salary together
with
interest on said amount (at the average consumer loan rate published by
Citibank, N.A., during the suspension period) and, if said final adjudication
is
rendered or action dropped or no longer pursued within 12 months of Employee’s
suspension, he may, at his option, be reinstated to his position and this
Agreement continued as if never interrupted.
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4.3
Permanent
Disability of Employee.
The
Company shall have the right to terminate Employee’s employment hereunder if the
CEO shall in good faith and on the basis of reasonable medical evidence
determine that Employee, by reason of physical or mental disability, has been
unable to perform the services required of him hereunder for more than 120
consecutive days or an aggregate of 180 calendar days, during any 12-month
period. Such termination shall be effective as of the last day of the month
following the month in which the Company shall have given notice to Employee
of
its intention to terminate pursuant to this paragraph. Company paid Disability
Benefits will be activated 90 days after termination.
4.4 Compensation
Upon Early Termination.
(a) In
the
event of termination of this Agreement for “justifiable cause” as described in
Section 4.1, or pursuant to Section 1.2 hereof, Employee shall be entitled
to
the compensation earned by him before the effective date of termination, as
provided for in this Agreement, computed pro rata up to and including that
date,
in lieu of salary and other benefits under this Agreement.
(b) If
prior
to the expiration of the term of this Agreement Employee dies, the Company
shall
continue Employee’s compensation and coverage of Employee’s direct dependents
(if any and if they are eligible) under all plans or programs of the types
listed in Section 3.1 for a period of 120 days, provided that no benefits will
continue past the end of the term of this Agreement.
(c) Upon
a
Change of Control or upon Employee’s termination for “Good Reason” as defined
below, Employee shall then be entitled to receive, in lieu of salary and other
benefits under this Agreement, (i) an amount equal to two weeks of his
then-current base salary for every year Employee was employed by the Company,
payable in equal semi-monthly installments over the next three (3) months
following termination in arrears without interest , (ii) continued coverage
under all plans or programs of the types listed in Section 3.1 until the sooner
of 1 year or one (1) month after Employee becomes otherwise employed and
eligible for other comparable coverage, and (iii) all other benefits provided
to
Employee under this Agreement for a period of thirty (30) days.
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4.5 In
the
event Employee is terminated for any reason other than for “justifiable cause”
as defined in Section 4.1 hereof, death, disability or voluntary termination
(unless the Company and Employee mutually agree to such voluntary termination),
then all unexercised options granted to Employee under the Company’s option plan
shall be deemed fully vested and exercisable immediately upon Employee’s
termination. The foregoing benefit shall be in addition to, and not in lieu
of,
any similar benefit that may be contained in any other agreement between the
Company and Employee.
4.6 (a)
Upon
the occurrence of a Change of Control of the Company or Employee terminates
for
Good Reason pursuant to Section 4.6(d), all options granted to Employee under
the Company option plan and the Options granted to Employee pursuant to Section
2(b) hereof shall be automatically fully vested and exercisable immediately
upon
a Change of Control.
(b)
For
purposes of this Agreement, “Change of Control” shall be deemed to have occurred
if, during the term of this agreement:
(i) the
beneficial ownership of at least 50% of the Company’s voting securities or all
or substantially all of the assets of the Company shall have been acquired,
directly or indirectly by a single person or a group of affiliated persons,
other that the Employee or a group in which the Employee is a member, in any
transaction or series of transactions excluding the Series B equity investment;
or
(ii) as
the
result of or in connection with any cash tender offer, exchange offer, sale
of
assets, merger, consolidation or other business combination of the Company
with
another corporation or entity the new Board of Directors is comprised of a
majority of Directors chosen or elected by the members of the new/combined
entity who were not members of the Company before such cash tender offer,
exchange offer, sale of assets, merger, consolidation or other business
combination of the Company with another corporation or entity
(c) For
purposes of this Agreement, the date of Change of Control shall mean the earlier
to occur of:
(i) the
first
date on which a single person or group of affiliated persons acquires the
beneficial ownership of 50% or more of the Company’s voting securities or all or
substantially all of the Company’s assets in any transaction or series of
transactions; or
(ii) the
date
on which a cash tender offer, exchange offer, sale of assets, merger,
consolidation other business combination resulting in the change in the Board
of
Managers contemplated by Section 4.5 hereof is consummated.
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(d) For
purposes of this Agreement, the term “Good Reason” shall mean the assignment to
Employee of any duties that are not in the same corporate capacity or area
of
operations or are not of the same general nature as Employee’s duties with
Company without the Employee’s express written consent.
5. Confidentiality
and Non-Competition.
5.1(i)
Confidentiality.
During
the term of employment under this Agreement, Employee will have access to and
become acquainted with various confidential information including without
limitation, trade secrets, customer relationships, formulas, devices,
inventions, processes, know-how, financial information and other compilations
of
information, records, and specifications, which are owned by the Company.
Employee shall not disclose any of the Company’s confidential information,
directly or indirectly, or use them in any way, either during the term of this
Agreement or at any time thereafter, except as required in the course of his
employment for the Company. All files, records, documents, drawings,
specifications, equipment and similar items relating to the business of the
Company, whether prepared by Employee or otherwise coming into his possession,
shall remain the exclusive property of the Company and shall not be removed
from
the premises of the Company under any circumstances whatsoever without the
prior
written consent of the Company, and if removed shall be immediately returned
to
the Company upon any termination of his employment and no copies thereof shall
be kept by Employee, provided, however, that Employee shall be entitled to
retain documents reasonably related to his interest as a
shareholder.
(ii)
Inventions
and Shop Right.
Every
invention, discovery or improvement made or conceived by Employee related to
the
business of the Company during his employment by the Company whenever and
wherever made or conceived, and whether or not during business hours, of any
product, article, appliance, tool, device, formula, process, machinery or
pattern similar to, or which constitutes an improvement, on those heretofore,
now or at any time during this employment, manufactured or used by the Company
in connection with the manufacture or process of any product heretofore or
now
or hereafter manufactured by the Company, or of any product which shall or
could
reasonably be manufactured in the reasonable expansion of the Company’s
business, shall be and continue remain the Company’s exclusive property, without
any added compensation or any reimbursement for expenses to Employee, and upon
the conception of any and every such invention, discovery or improvement and
without waiting to perfect or complete it, Employee promises and agrees that
he
will immediately disclose it to the Company and to no one else and thenceforth
will treat it as the property and secret of the Company. Employee will also
execute any instruments requested from time to time by the Company to vest
in it
complete title and ownership to such invention, discovery or improvement and
will, at the request of the Company, do such acts and execute such instruments
as the Company may require but at the Company’s expense to obtain Letters Patent
in the United States and foreign countries, for such invention, discovery or
improvement and for the purpose of vesting title thereto in the Company, all
without any reimbursement for expenses or otherwise and without any additional
compensation of any kind to Employee.
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5.2 Non-Competition.
In the
event of a termination of this Agreement for any reason, Employee shall be
prohibited for a period of one (1) year from the effective date of this
separation from engaging in any business in competition with that of the Company
in those states within the United States and those countries outside the United
States in which the Company at the time of Employee’s separation has conducted
business or where Company has written a reasonable plan to conduct business
in
the next 12 months or directly or indirectly advising or consulting to or
otherwise performing services for or providing assistance to any person, firm,
corporation, or other entity engaged in such competitive business, provided,
however, nothing herein contained shall be construed as (a) preventing Employee
from investing his personal assets in any businesses which do not compete
directly or indirectly with the Company, provided such investment or investments
do not require any services on his part in the operation of the affairs of
the
entity in which such investment is made and in which his participation is solely
that of an investor, (b) preventing Employee from purchasing securities in
any
corporation whose securities in any corporation whose securities are regularly
traded, if such purchases shall not result in his owning beneficially at any
time 3% or more of equity securities of any corporation engaged in a business
which is competitive, directly or indirectly, to that of the Company, (c)
preventing Employee from engaging in any activities, if he receives the prior
authorization of the Managers. Notwithstanding anything herein to the contrary
this Section 5.2 shall not be effective in the event Employee has been
discharged for any reason other than “justifiable cause” or voluntarily leaves
the employment of the Company with the mutual agreement of the
Company.
5.3 Subsequent
to the termination of this Agreement, Employee will not for a period of one
(1)
year materially interfere with or disrupt the Company’s business relationship
with its customers or suppliers or employ any person who was employed with
the
Company at any time during the 6 months prior to Employee’s termination, or for
a period of three (3) years, directly or indirectly solicit any of the employees
to leave the employ of the Company. In consideration for the above, employee
will receive a severance of (2) two weeks salary for each year employed at
Company upon termination of employment
6. Notices.
All
notices under this Agreement shall be in writing and shall be deemed effective
when delivered in person (in the Company’s case, to its President or Secretary)
or forty eight (48) hours after deposit thereof in the U.S. mail, postage
prepaid, addressed to Employee, at last known address as carried in the records
of the Company, or to the Company, at the corporate headquarters, to the
attention of the Secretary, or to such other address as the party to be notified
may specify by notice to the other party.
7. Assigns
and Successors.
The
rights and obligations of the Company under this Agreement shall inure to the
benefit of and shall be binding upon the successors and assigns of the Company
and the rights and obligations of Employee shall move to the benefit of and
shall be binding on Employee and his legal representatives or heirs. This
agreement constitutes a personal service agreement and Employee’s obligations
hereunder may not be transferred or assigned by Employee.
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8. Amendment
Waiver.
This
Agreement may be amended, and any right or claim hereunder waived, only by
a
written instrument signed by both Employee and the Company, following
authorization by the CEO. Nothing in this Agreement, express or implied, is
intended to confer upon any third person any rights or remedies under or by
reason of this Agreement. No amendment or waiver of this Agreement requires
the
consent of any individual, partnership, corporation or other entity not a party
of this Agreement.
9. Injunction.
(a)
Should Employee at any time violate or threaten to violate any of the provisions
of this Agreement, the Company shall be entitled to an injunction restraining
Employee from doing or continuing to do or performing any such acts, and
Employee hereby consents to the issuance of such an injunction.
(b)
In
the event that a proceeding is bought in equity to enforce the provisions of
this paragraph, Employee shall not urge as a defense that there is an adequate
remedy at law, nor shall the Company be prevented from seeking any other
remedies which may be available.
(c)
The
existence of a claim or cause of action by the Company against Employee, or
by
Employee against the Company, whether predicated upon this Agreement or
otherwise, shall not constitute a defense to the endorsement by the Company
of
the foregoing restrictive covenants but shall be litigated
separately.
(d)
The
provisions of this Section 9 shall survive termination of this
Agreement.
10. Governing
Law and Jurisdiction.
This
Agreement in its interpretation and application and enforcement shall be
governed by the law of the State of New Jersey without application of its
conflict of laws provisions, and any legal action commenced by either party
seeking interpretation, application and/or enforcement of this Agreement shall
be brought only in the State of New Jersey of federal court sitting in
Princeton, NJ.
11. Prior
Agreements.
This
Agreement supercedes and replaces any and all prior agreements between the
parties as to its subject matter.
12. Construction.
Paragraph headings are for convenience only and shall not be considered a part
of the terms and provisions of this Agreement.
13. Effective
Date.
The
effective date of this Agreement shall be June 18, 2008.
IN
WITNESS WHEREOF, the parties have executed this Agreement.
EMPLOYEE
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/s/ Xx Xxxxx |
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Xxxxxxx Xxxxxxx
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