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Exhibit 10.15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
October 30, 1996, by and between Nhancement Technologies Inc., a Delaware
corporation (the "Company"), and Xxxxxx X. Xxxx (the "Officer").
RECITAL
The Officer has been serving as Chairman of the Board of Directors,
President and Chief Executive Officer of BioFactors, Inc., a Delaware
corporation ("BFI"), pursuant to an employment agreement between the parties
hereto dated as of June 1, 1994 (the "Previous Employment Agreement").
BFI has entered into an agreement which provides for the merger of
BFI into a wholly owned subsidiary of the Company pursuant to that certain
Agreement and Plan of Merger dated as of October 30, 1996, by and among the
Company, BFI and BFI Acquisition Corporation, a Delaware corporation (the "BFI
Merger").
Upon the consummation of the BFI Merger, the Board of Directors of
the Company desire to continue the appointment of Officer as an officer of the
Company and of BFI and the Officer desires to accept such continued appointment.
The Company and the Officer desire to set forth herein the terms and
conditions of his continued employment. This Agreement supersedes and replaces
the Previous Employment Agreement and all existing employment agreements between
the parties, oral or written.
AGREEMENT
In consideration of the mutual promises, covenants and agreements
contained herein, and intending to be legally bound, the parties hereby agree as
follows:
1. Agreement to Serve.
1.1 Title. The Company shall employ the Officer and the
Officer shall serve in the employ of the Company as Chairman of the Board of
Directors, President and Chief Executive Officer of the Company and of BFI.
1.2 Duties. The Officer shall assume and discharge the
responsibilities of Chairman of the Board of Directors, President and Chief
Executive Officer (as set forth in the Bylaws of the Company), as well as such
other duties and responsibilities as may be assigned to
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him by the Board of Directors of the Company and as are appropriate to the
offices he holds. In addition, the Officer shall perform his duties to the best
of his abilities and shall devote the majority of his business time and
attention to the good faith performance of his duties. The Officer shall not
engage in other businesses or activities for compensation during the term of
this Agreement to the extent such other businesses or activities would
substantially interfere with the performance of his duties hereunder; it being
acknowledged and agreed, however, that Officer may from time to time perform
services for other companies as a member of the board of directors or in a
consulting or advisory capacity, for which Officer may receive compensation
from such companies. In no event shall Officer be precluded from performing
limited services in the management of his personal investments. The Officer
shall perform his services to the Company at its principal offices or at such
other location as may be acceptable to the Board of Directors.
2. Terms of Employment.
2.1 Basic Term. The term of the Officer's employment under
this Agreement (the "Term") shall extend for a period of three years from the
date of the consummation of the BFI Merger, subject to the remaining provisions
of this Section 2. The period described in the preceding sentence shall be
referred to herein as the "Initial Term." The Term will be extended for
successive one-year periods beginning on the first day after the final day of
the Initial Term, except in the event the Officer or the Company provides
written notice to the other, at least 180 days before the beginning of such
one-year period, of the intention not to extend the Term. During the Term, the
same terms and conditions contained in this Agreement (including salary as may
be determined under Section 3.1) shall remain in effect during the continuance
of the Officer's employment.
2.2 Termination for Cause. The Company shall have the right to
terminate the Officer for cause and said termination shall be effected by and
upon written notification to Officer. Grounds for termination for cause shall
include only, (i) the Officer's material breach of any terms of this Agreement,
if such material breach has not been substantially cured within thirty (30) days
following written notice of such breach to the Officer from the Company setting
forth with specificity the nature of the breach or, if cure cannot reasonably be
effected within such 30-day period, if the Officer does not commence to cure the
breach within such 30-day period and thereafter pursue such cure continuously
and with due diligence until cure has been fully effected; (ii) the Officer's
willful dishonesty towards, fraud upon, crime against, misrepresentation,
embezzlement, deliberate or attempted injury or bad faith action with respect
to, or deliberate or attempted injury to, the Company; (iii) the Officer's
willful failure or refusal to perform the services required of him hereby, or to
carry out proper directions by the Board of Directors of the Company with
respect to the services to be rendered by him hereunder or the manner of
rendering such services, his willful misconduct in the performance of his duties
hereunder; (iv) any unlawful or criminal activity of a serious nature; or (v)
the Officer's conviction for any felony crime (whether in connection with the
Company's affairs or otherwise).
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2.3 Termination Without Cause. The Company shall have the
right, upon 60 days' written notification to the Officer, to terminate the
Officer's employment without cause (as defined above); provided, however, that,
except as provided in Section 2.4 or 2.5, during the Initial Term no such
termination without cause shall be effective without the prior written consent
of the underwriter of the Company's initial public offering, so long as such
underwriter is still engaged as financial advisor to the Company. Except as
otherwise provided in Section 3.5, upon any termination without cause pursuant
to this Section 2.3, the Officer shall be paid all accrued salary, vested
deferred compensation (other than pension plan or profit-sharing plan benefits,
which will be paid in accordance with the provisions of the applicable plan),
any benefits then due under any plans of the Company in which the Officer is a
participant, accrued vacation pay, sick-leave pay, and any appropriate business
expenses incurred by the Officer in connection with his duties hereunder, all
to the effective date of termination ("Accrued Compensation"), and all
severance compensation provided for in Section 4.1.
2.4 Disability. If, during the Term of this Agreement, the
Officer, in the reasonable judgment of the Board of Directors of the Company,
has failed to perform his duties under this Agreement on account of illness or
physical or mental disability, which condition renders the Officer incapable of
performing the duties of his office, and such condition continues for a total of
six months during any 12-month (or shorter) period, the Company shall have the
right to terminate the Officer's employment hereunder by and upon written
notification to the Officer (which also will be considered notice not to extend
the Term pursuant to Section 2.1) and payment to the Officer of all Accrued
Compensation to the date of termination, and disability benefits as provided in
Section 4.2, but no other compensation, severance or reimbursement of any kind.
2.5 Death. In the event of the Officer's death during the Term
of this Agreement, the Officer's employment shall be deemed to have terminated
as of the last day of the month during which his death occurs, and the Company
shall pay to his estate all Accrued Compensation to the date of termination, but
no other compensation, severance or reimbursement of any kind.
2.6 Termination Upon a Change in Control.
(a) In the event of a Termination Upon a Change in
Control, the Officer shall immediately be paid all Accrued Compensation and the
severance compensation provided for in Section 4.1. "Termination Upon a Change
in Control" shall mean a termination by the Company with out cause, or by the
Officer for "Good Reason," of the Officer's employment with the Company
following a "Change in Control" (as defined below, respectively).
(b) For purposes of this Agreement "Good Reason" shall
include, but not be limited to, any of the following (without the Officer's
express written consent):
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(i) within the first 12 months after the Change in
Control, the assignment to the Officer by the Company of duties
inconsistent with, or a substantial alteration in the nature or status
of, the Officer's responsibilities immediately prior to a Change in
Control other than any such alteration primarily attributable to the
fact that the Company's securities are no longer publicly traded;
(ii) within the first 12 months after the Change
in Control, a reduction by the Company in the Officer's compensation or
benefits as in effect on the date of a Change in Control;
(iii) the Company's relocation of the Officer to
any place other than the principal offices of the Company (or such
other location as the Board of Directors has agreed the Officer may be
located pursuant to Section 1.2 hereof), except for reasonably required
travel by the Officer on the Company's business;
(iv) any material breach by the Company of any
provision of this Agreement, if such material breach has not been cured
within thirty (30) days following written notice of such breach by the
Officer to the Company setting forth with specificity the nature of the
breach or, if the cure cannot reasonably be effected within such 30-day
period, then if the Company does not commence to cure the breach within
such 30-day period and thereafter in good faith pursue such cure; or
(v) any failure by the Company to obtain the
assumption and performance of this Agreement by any successor (by
merger, consolidation or otherwise) or assign of the Company.
For purposes of this Agreement, a "Change in Control" shall be
deemed to have occurred if (a) any "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934), other than
a trustee or other fiduciary holding securities under an employee benefit plan
of the Company is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the 1934 Act), directly or indirectly, of more than 51% of the then
outstanding voting stock of the Company; or (b) at any time during any period of
three consecutive years (not including any period prior to the date hereof),
individuals who at the beginning of such period constitute the Board (and any
new director whose election by the Board or whose nomination for election by the
Company's stockholders were approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority thereof; or (c) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into securities of the surviving entity) at least 50% of the combined
voting power of the voting securities or at least 50% of the total value of the
Company or such surviving entity outstanding
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immediately after such merger or consolidation, or the stockholders approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets.
2.7 Voluntary Termination. In the event Sections 2.2, 2.3, 2.4
and 2.6 are not applicable, and the Officer voluntarily terminates his
employment hereunder, the Company shall promptly pay all Accrued Compensation to
the date of termination, but no other compensation or reimbursement of any kind,
including, without limitation, severance pay.
3. Compensation.
3.1 Base Salary. During the Term of this Agreement, the
Company agrees to pay the Employee for his services hereunder a salary at the
initial rate of $135,000 per annum ("Base Salary") payable in equal
semi-monthly installments. The Base Salary for each year during the Term hereof
shall be increased, subject to the approval of the Board of Directors, by the
greater of (a) an amount equal to the average annual incremental increase
applicable to the Company's senior executive management or (b) an amount equal
to the annual increase in the consumer price index.
3.2 Benefits. The Officer shall be entitled to participate in
any of the Company's benefit and deferred compensation plans as are from time to
time available to the officers of the Company, including, but not limited to,
profit-sharing, medical, dental, health and annual physical examination plans,
life and disability insurance plans and supplemental retirement programs
(provided, however, that the Officer's benefits may be modified or the Officer
may be denied participation in any such plan because of a condition or
restriction imposed by law or regulation or third-party insurer or other
provider relating to participation of officers).
3.3 Bonus. The Officer shall be entitled to receive an annual
bonus, pursuant to a written bonus plan approved by the Board of Directors,
subject, however, to the Company meeting its goals and financial performance
targets for such period, where failure to so meet such goals will reduce or
eliminate Officer's annual bonus.
3.4 Other Allowances and Vacation. The Officer shall be
entitled to reasonable expense reimbursements upon presentation of supporting
documentation in accordance with Company policies. Company agrees to provide
Officer with a leased vehicle for Officer's use and further agrees to make lease
and insurance payments on such vehicle in an amount not to exceed Five Hundred
Dollars ($500) per month. Officer shall be entitled to all holidays applicable
to all employees of the Company, four weeks paid vacation per year, and such
other benefits appropriate to the office of Chairman of the Board, President and
Chief Executive Officer of the Company as the Board may deem reasonable.
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3.5 Prohibition Against Certain Golden Parachute Payments.
Notwithstanding any other provision of this Agreement or of any other agreement,
the Officer shall not be entitled to receive the amount (or portion thereof), if
any, of compensation or severance or reimbursement that (i) would be treated as
a "parachute payment" for purposes of Section 280G of the Internal Revenue Code
and (ii) would subject the Officer to an excise tax on "excess parachute
payments" under Section 4999 of the Internal Revenue Code such that the Officer
would receive, on an after-tax basis, total compensation, severance, and
reimbursement amounts than the Officer otherwise would have received if no
"parachute payment" had been made to the Officer.
4. Severance and Other Payments.
4.1 Severance Compensation.
(a) In the event the Officer's employment is terminated
under Sections 2.3 or 2.6, the parties acknowledge that the Officer will sustain
actual damages, the amount of which is indefinite, uncertain and difficult of
exact ascertainment because of the uncertainties of successfully relocating and
seeking a comparable position. In order to avoid dispute as to the amount of
such damages and the mutual expense and inconvenience such dispute would
entail, the Company and the Officer have agreed hereby that the Company shall
pay to the Officer severance compensation determined in the manner set forth
below. In the event the Company terminates the Officer's employment at any time
prior to the end of the Term: (i) if a Termination Without Cause pursuant to
Section 2.3, then the Company shall pay severance compensation in an amount
equal to the Officer's Base Salary (at the rate payable at the time of such
termination) for the greater of a period of two years following the date of
termination or the balance of the Term, plus a bonus for each such year (or pro
rata part thereof) equal to the average of the bonus received by the Officer
for each of the two years preceding the year in which termination occurs, in
the manner specified in Section 3.1; or (ii) if a Termination upon a Change in
Control pursuant to Section 2.6, then the Company shall pay severance
compensation in an amount equal to two times the sum of (x) the Officer's Base
Salary (at the rate payable at the time of such termination) plus (y) a bonus
calculated in the manner provided in the foregoing clause (i) payable in the
manner specified in Section 3.1. In either such event, the Officer shall be
entitled to a letter of credit or other security reasonably acceptable to the
Officer to secure payment to him of the amounts owed. It is hereby agreed that
in the event of such termination by the Company, the Officer shall receive such
amounts as herein provided, not as a penalty, but as the Officer's agreed
severance compensation and sole damages for the termination of this Agreement,
in lieu of the Officer's proof of his actual damages on that account. All
severance compensation shall be without prejudice to the Officer's right to
receive all Accrued Compensation (as defined in Section 2.3) earned and unpaid
up to the time of termination.
(b) Following a termination under Sections 2.3 or 2.6,
the Officer may in the Officer's sole discretion, by delivery of a notice to the
Company within thirty
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(30) days following such termination, elect to receive from the Company a lump
sum severance payment by bank cashier's check equal to the present value of the
flow of cash payments that would otherwise be paid to the Officer pursuant to
Section 4.1(a). The present value shall be determined as of the date of
delivery of the notice of election of the Officer and shall be based on a
discount rate equal to the interest rate on 90-day U.S. Treasury Bills, as
reported in the Wall Street Journal (or similar publication) on the date of
delivery of the election notice. If the Officer elects to receive a lump sum
severance payment, the Company shall make such payment to the Officer within
sixty (60) days following the date on which the Officer notifies the Company of
the Officer's election.
(c) No deduction shall be made by the Company under this
Section 4.1 for any compensation earned by the Officer from any other employment
or for any other monies otherwise received by the Officer subsequent to
termination of employment hereunder.
(d) In the event of a termination under Sections 2.3 or
2.6, at the Officer's sole discretion, the vesting schedule, if any, for all
stock options previously granted to Officer shall be accelerated and all such
options shall become fully vested as of the date of his termination.
4.2 Disability Benefits. In the event of termination of the
Officer's employment by reason of disability pursuant to Section 2.4, the
Company shall pay to the Officer the difference between (i) 75% of the sum of
the Officer's Base Salary at the rate and times payable at the time of
termination and (ii) amounts received by the Officer from long term disability
insurance carried by the Company, during the remaining Term of this Agreement.
5. Non-Competition; Confidentiality
5.1 No Competition. Officer agrees that, unless terminated
without Cause, he will not, anywhere in the world, without the prior written
approval of the BioFactors Board of Directors, until the lapse of two (2) years
after his termination pursuant to Sections 2.1, 2.2, 2.4 or 2.7, engage,
directly or indirectly, in a "Competing Business," as defined below, whether as
a sole proprietor, partner, corporate officer, employee, director, shareholder,
consultant, agent, independent contractor, trustee, or in any other manner by
which Officer holds any beneficial interest in a Competing Business, derive any
income from any interest in a Competing Business, or provide any service to a
Competing Business. "Competing Business" shall mean the design, development,
manufacture or marketing of products in any line of business in which BioFactors
is, or has in the past been, involved, or is or has planned or considered
involvement. The provisions of this paragraph will not, however, restrict
Officer from owning less than one percent of the outstanding stock of a
publicly-traded corporation engaged in a Competing Business.
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5.2 No Solicitation of Customers. Officer will not, directly
or indirectly, until the lapse of two (2) years after his termination pursuant
to Sections 2.1, 2.2, 2.4 or 2.7, without the prior written approval of the
BioFactors Board of Directors, call upon, cause to be called upon, solicit or
assist in the solicitation of, any customer or potential customer of BioFactors
for the purpose of diverting any existing or future business of such customers
to a Competing Business.
5.3 No Hiring of Employees. Officer will not, directly or
indirectly, until the lapse of two (2) years after his termination pursuant to
Sections 2.1, 2.2, 2.4 or 2.7, without the prior written approval of the
BioFactors Board of Directors, employ, engage, or seek to employ or engage,
directly or indirectly, any employee of BioFactors.
5.4 Equitable Remedies. The services to be rendered by Officer
and the information disclosed to Officer prior to and during the term hereof are
of a unique and special character, and any breach of Section 5 hereof will cause
BioFactors immediate and irreparable injury and damage, for which monetary
relief would be inadequate or difficult to quantify. Therefore, BioFactors will
be entitled to, in addition to all other remedies available to it, injunctive
relief and specific performance to prevent a breach and to secure the
enforcement of all provisions of Section 5 hereof. Injunctive relief may be
granted immediately upon the commencement of any such action.
6. Miscellaneous.
6.1 Severability. Should a court or other body of competent
jurisdiction determine that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, so that it is enforceable to the maximum extent
possible, and all other provisions of the Agreement shall be deemed valid and
enforceable to the extent possible.
6.2 Withholdings. All compensation and benefits to the Officer
hereunder shall be reduced by all federal, state, local and other withholdings
and similar taxes and payments required by applicable law.
6.3 Arbitration. The parties hereby agree that any dispute or
controversy arising out of or relating to this Agreement, Officer's employment
with the Company, or the termination or cancellation of that employment or this
Agreement, including without limitation any claim by Officer under any federal,
state or local law or statute regarding discrimination in employment, shall be
settled by arbitration by a panel of three arbitrators in accordance with the
Commercial Arbitration Rules of the American Arbitration Association from time
to time in force. The hearing on any such arbitration shall be held in Denver,
Colorado. If such Commercial Arbitration Rules and practices shall conflict with
the Colorado Rules of Civil Procedure or any other provisions of Colorado law
then in force, such Colorado rules and provisions shall govern. Arbitration of
any such dispute or controversy shall be a condition precedent
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to any legal action thereon. This submission and agreement to arbitration shall
be specifically enforceable.
Within thirty (30) days of the receipt by one party of a written
notice to arbitrate delivered by the other party, each party shall select one
arbitrator by written notice to the other party. Within thirty (30) days of the
delivery of both notices, the two arbitrators will select a third arbitrator. If
the two cannot agree on such third arbitrator, the selection of a third
arbitrator shall be made by the Chief Judge of the U.S. District Court for the
District of Colorado or, if such judge refuses to act, such selection shall be
made in accordance with the procedures of the American Arbitration Association.
Awards shall be final and binding on all parties to the extent and
in the manner provided by Colorado law. Each award shall expressly entitle the
prevailing party to recover such party's attorneys' fees and costs, and the
award shall specifically allocate such fees and costs between the parties. All
awards may be filed by any party with the Clerk of the District Court in the
City and County of Denver, Colorado, and an appropriate judgment entered thereon
and execution issued therefor. At the election of any party, said award may also
be filed, and judgment entered thereon and execution issued therefor, with the
clerk of one or more other courts, state or federal, having jurisdiction over
the party against whom such an award is rendered or its property.
6.4 Entire Agreement; Modifications. This Agreement represents
the entire agreement between the parties and may be amended, modified,
superseded, or canceled, and any of the terms hereof may be waived, only by a
written instrument executed by each party hereto or, in the case of a waiver,
by the party waiving compliance. The failure of any party at any time or times
to require performance of any provisions hereof shall not affect the right at a
latter time to enforce the same. No waiver by any party of the breach of any
provision contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be or construed as a further or
continuing waiver of any such breach or of any other term of this Agreement.
6.5 Applicable Law. This Agreement shall be construed under
and governed by the laws of the State of Colorado.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
NHANCEMENT TECHNOLOGIES, INC.
By /s/ XXXXXXX X. XXXX
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Xxxxxxx X. Xxxx
Vice President, Chief Operating Officer and
Chief Financial Officer
/s/ XXXXXX X. XXXX
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Xxxxxx X. Xxxx
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