September 11, 2008
EXHIBIT 99.1
September 11, 2008
Dear Xxxxxxx:
This will confirm the terms and conditions of your continued employment with Minrad
International, Inc. (the “Company”) in the position of Executive Vice President and Chief Financial
Officer, effective March 3, 2008. Except as otherwise specifically provided herein, this letter
agreement supersedes and replaces all prior communications, representations, agreements,
understandings, plans and arrangements between the parties, whether oral or written. Your
employment with the Company will continue to be “at will,” meaning that either you or the Company
can terminate your employment at any time, with or without cause, and with or without prior notice.
1. Base Salary. Your initial salary will be $8,650 per bi-weekly pay period,
equivalent to $224,900 per year, less applicable taxes and withholdings. Although we review salary
annually, the Company reserves the right to adjust your salary at any time.
2. Incentive Compensation. You will be eligible to receive incentive compensation in
accordance with the Company’s policy for executives as may be determined by the Compensation
Committee each year. For 2008, your incentive compensation will be determined as follows:
A. 1% of the year-over-year improvement in operating income paid quarterly following the
appropriate 10QSB or 10KSB filing. (Year-over-year payments represent 50% of the calculated
cumulative incentive after the 1st quarter, 75% following the second, 90% following the
third and 100% following audited year-end.) All payments under this section will be made no later
than April 15, 2009.
B. A bonus of $ 33,333 will be paid if, as determined by the President and Chief Operating
Officer and Chairman of the Audit Committee of the Board of Directors , improvements are
implemented to strengthen the finance organization by the end of 2008, for which measures have been
discussed, documented and agreed upon with the President and Chief Operating Officer.
C. A bonus of $ 33,333 will be paid if, as determined by the President and Chief Operating
Officer, the appropriate and controllable actions have been implemented to ensure the company has
liquidity for ongoing operations, for which measures have been discussed, documented and agreed
upon with the President and Chief Operating Officer.
D. A bonus of $ 33,333 will be paid, if as determined by the President and Chief Operating
Officer, the appropriate leadership and support has been provided to support the M&A process, for
which measures have been discussed, documented and agreed upon with the President and Chief
Operating Officer.
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E. All payments under this section will be made in 2009 as soon as practicable following the
filing of the annual financial statements for 2008, but no later than April 15, 2009.
F. Notwithstanding the targets set forth in Section 2(A) and 2(B) above, if you remain an
employee in good standing at the time of the filing of the 2008 10KSB, and the total incentive
payments under 2(A) and 2(B) are less than $75,000, the difference between the aggregative
incentive payments made under 2(A) and 2(B) and $75,000 will be paid as a bonus no later than April
15, 2010.
3. Stock Options. All stock options granted to you under the Minrad International,
Inc. 2004 Stock Option Plan (the “Option Plan”) will be governed by the terms of the Option Plan
and any related agreements and grants.
4. Vacation. You will be entitled to three weeks of paid vacation in 2008 and four
weeks annually thereafter, to be used in a manner consistent with the Company’s policies. Vacation
that is accrued but unused in any year shall not be carried over to any succeeding year.
5. Club Membership. While you remain employed with the Company, the Company will pay
the cost of initiation fees for your membership in the Orchard Park Country Club, with a five-year
amortization, and, so long as you are a corporate officer of the Company, it will pay the annual
dues for your membership in said club.
6. Group Benefit Plans. You will continue to be entitled to participate in the
Company’s employee benefit plans and programs in accordance with the terms of the applicable plans
and programs. The Company reserves the right to change the benefits it offers from time-to-time at
the Company’s sole discretion.
7. Separation Payment. If your employment is terminated by the Company for a reason
other than for Cause during the first 12 months of your employment with the Company, you will
continue to receive your base salary in effect at the time of termination until the date that is
six months from the employment termination date, commencing as soon as practicable but no later
than 60 days following your separation from service. Your separation payment, if any, will be paid
in periodic consecutive installments consistent with the biweekly or other normal payroll practices
in effect at the Company at the time of your employment termination. For the purposes of this
Section 6, the term “Cause” is as defined in Section 8(B)(4), below.
8. Change of Control.
A. Definition. As used in this Agreement, the term “Change of Control” means:
1. Any acquisition or series of acquisitions by any person other than the Company, any of the
subsidiaries of the Company, any employee benefit plan of
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the Company, or any of their subsidiaries, or any person holding common shares of the Company
for or pursuant to the terms of such employee benefit plan, that results in that person becoming
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 90% or more of either the then outstanding shares of the
common stock of Company or the combined voting power of the Company’s then outstanding securities
entitled to then vote generally in the election of directors of the Company.
2. Approval by the stockholders of the Company of: (a) a dissolution or liquidation of the
Company; (b) a sale of 90% or more of the assets of the Company, taken as a whole (with the stock
or other ownership interests of the Company in any of its majority owned subsidiaries constituting
assets of the Company for this purpose) to a person that is not an Affiliate of the Company (for
purposes of this paragraph “sale” means any change of ownership); or (c) an agreement to merge or
consolidate or otherwise reorganize, with or into one or more persons that are not Affiliates of
the Company, as a result of which less than 10% of the outstanding voting securities of the
surviving or resulting entity immediately after any such merger, consolidation or reorganization
are, or will be, owned, directly or indirectly, by stockholders of the Company immediately before
such merger, consolidation or reorganization (assuming for purposes of such determination that
there is no change in the record ownership of the Company’s securities from the record date for
such approval until such merger, consolidation or reorganization and that such record owners hold
no securities of the other parties to such merger, consolidation or reorganization), but including
in such determination any securities of the other parties to such merger, consolidation or
reorganization held by Affiliates of the Company.
In the event that the Company engages in a major corporate transaction that does not
constitute a Change of Control as defined in Section 8(A)(1) and (2) but as a result of which the
stockholders of the Company receive significant cash from, or the securities of, a third party, the
Company’s Board of Directors will review in good faith whether such transaction should be treated
as a Change of Control for purposes of this Section.
B. Benefits in the Event of a Change of Control. In the event of a Change of Control,
and provided that you agree in a written instrument satisfactory to the Company in its sole
discretion, to release the Company, its employees, agents, and related entities from any and all
claims arising out of or related to your employment or termination of employment to extent
permitted by law, you will be entitled to the following benefits as set forth below:
1. Severance payment. If within one year following a Change of Control your
employment is terminated by the Company for a reason other than for Cause, or you terminate your
employment with the Company for Good Reason, as defined below, you will continue to receive your
base salary in effect on your employment termination date for a six month period following the
termination of your employment, commencing as soon as practicable but no later than 60 days
following your separation from service (“Severance Period”). Your severance payment, if any, will
be paid in periodic consecutive installments
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consistent with the biweekly or other normal payroll practices in effect at the company at the
time of severance.
2. Medical and Dental Benefits. During the Severance Period, you will be entitled to
receive continued coverage under the Company’s group medical and dental plan in which you
participate as of your employment termination date. During the Severance Period, the Company will
continue to make the same contribution to the premium for the medical and dental plan as it was
making as of your employment termination date, and you will continue to make the same contribution
you were making to the premium for said plans as of your employment termination date. With respect
to the Company’s group medical and dental plans, the Parties agree that your employment termination
date will be the date of your qualifying event for purposes of your continuation coverage rights
under COBRA and that the COBRA coverage period will commence on your employment termination date.
As a condition of receipt of benefits under this paragraph 8(B)(2), you must timely elect
continuation coverage under COBRA. The foregoing notwithstanding, nothing herein shall be deemed
to diminish or impair your right to COBRA benefits as provided by law.
3. Vacation. In the event of a Change of Control, any unused vacation for the year in
which the Change of Control occurs will be deemed to have accrued for the year and will be paid to
you within thirty days of the Change of Control in an amount calculated in accordance with your
base salary in effect at the time of the Change of Control.
4. Definition of “Cause”. For the purposes of this Agreement, “Cause” means: (a) a
material breach by you of this Agreement; (b) conduct determined by the Company’s Board of
Directors to constitute a failure or refusal by you to faithfully or diligently perform your duties
under this Agreement or as required by the Board of Directors from time to time, including but not
limited to gross negligence or willful misconduct in the performance of your duties; (c) dishonesty
to the Company; (d) conviction of a crime in any court which could have the effect of causing the
termination or suspension of any license which the Company holds, or conviction of a felony; or (e)
excessive absenteeism not related to disability.
5. Definition of “Good Reason”. For the purposes of this Agreement, “Good Reason”
means the existence, without your consent, of one or more of the following conditions that is not
remedied within 30 days of your notification to the Company of its existence: (a) a material
reduction in your base compensation; (b) a material demotion or reduction in your responsibilities
or authority; (c) a relocation of the Company facility where you are employed to a location more
than 60 miles from its current location unless the relocation does not materially increase your
average commuting time; or (d) a breach by the Company of any material term of this Agreement. For
a termination to qualify as a Good Reason termination, you must notify the Company of the Good
Reason condition within 90 days of its initial existence and your termination must take place no
later than two years following the initial existence of the condition.
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9. Confidentiality. You acknowledge and agree that in the course of performing your
duties and responsibilities as an employee of the Company:
A. You have had and will continue to have access to and have and will gain knowledge with
respect to all of the lines of business of the Company including, without limitation, information
learned or developed by you because of or through your employment with the Company not generally
known in the medical device and pharmaceutical industries including, without limitation, the names
of customers and potential customers and information about those customers including the usefulness
to them of the products, processes or services of the Company, records of their purchases of the
Company’s products, and evaluation of their need for the Company’s products, and the details
(including termination dates) of any agreement with or services provided to, those customers, any
and all records, trade secrets, projections, plans, marketing information, methods, financial
statements, memoranda, cost data, notes and any other data or information (oral or written)
relating to the past, present or future activities of the Company (collectively, the “Confidential
Information”);
B. You will be a representative of the Company to its customers, clients, suppliers,
regulators and licensing authorities and as such has had and will continue to have significant
responsibility for maintaining and enhancing the goodwill of the Company with such parties and
would not have, except by virtue of employment with the Company and financial and other
participation and assistance therefrom, developed a close and direct relationship with the
aforementioned parties; and
C. You owe fiduciary duties and responsibilities to the Company, including, without
limitation, the duty to act in the best interests of the Company.
D. You acknowledge that your covenants not to make unauthorized disclosure of the Confidential
Information and the Company’s ability to preserve the goodwill of the Company and the benefit of
any relationships that have developed between you and the customers, clients, suppliers,
regulators, and licensing authorities by virtue of your employment with the Company are essential
to the growth and stability of the Company and its business.
E. Accordingly, you hereby agree that except as required by your duties under this Agreement,
you shall not use or disclose to anyone at any time during or after the term of this Agreement any
Confidential Information, and you shall take all reasonable steps necessary to prevent unauthorized
parties, including those employed by the Company, from obtaining any Confidential Information;
F. The medical device and pharmaceutical industries are extremely competitive, and as a
result, the protection of and restrictions on this provision on Confidential Information are
reasonable and appropriate; and for a period of twelve months after you cease to be employed by the
Company, plus any additional time that you are in breach of this paragraph, you shall not, directly
or indirectly, as a shareholder, partner, officer, director, employee, consultant, agent or in any
other capacity: (1) solicit business from or engage in any business with, or consult with or
provide information to, any Customer in any business in which the
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Company engaged during your employment; (2) request or advise any Customer to cancel or
otherwise reduce its business with the Company; (3) induce or attempt to influence any employee of
the Company to terminate his or her employment with the Company; or (4) employ, hire or engage, in
any capacity, any person, who at the time of your termination of employment with the Company was an
employee of the Company until twelve (12) months following such person’s termination of employment
with the Company. You covenant and agree that for purposes of this paragraph all customers of the
Company who have been customers of the Company at any time during the time you have been employed
by the Company, and any prospective customers that contacted or were contacted by Company, whether
or not through your efforts, during the 12 months prior to your termination of employment with the
Company, shall be deemed to be customers of the Company (“Customers”). For purposes this Section
of this Agreement, the Company shall mean the Company and any affiliates, subsidiaries, corporate
parents or divisions of the Company. Prior to accepting employment with another entity following
the termination of your employment with the Company for any reason, you shall disclose to such
future entity the provisions of Sections 9 and 10 of this Agreement.
10. Rights to Discoveries. You agree that all ideas, inventions, trademarks, service
marks, copyrights, and other developments conceived or developed or acquired by you, whether or not
during working hours, at the premises of the Company or elsewhere, alone or with others, that are
within the scope of the Company’s business operations or that relate to any work or projects of the
Company shall be the sole and exclusive property of the Company. You agree to disclose promptly
and fully to the Company all such ideas, inventions, trademarks, service marks, copyrights or other
developments and, at the request of the Company, you shall submit to the Company a full written
report thereof regardless of whether the request for a written report is made after the termination
of this Agreement. You agree that during the term of this Agreement and thereafter, upon the
request of the Company and at its expense, you shall execute and deliver any and all applications,
assignments and other instruments which the Company shall deem necessary or advisable to transfer
to and vest in the Company your entire right, title and interest in and to all such ideas,
inventions, trademarks, service marks, copyrights or other developments and to apply for and to
obtain patents or copyrights for any such patentable or copyrightable ideas, inventions,
trademarks, service marks, copyrights and other developments.
11. Return of Materials. You covenant and agree that all files, forms, brochures,
books, materials, written correspondence, memoranda, documents, manuals, formulas, computer disks,
software products, lists and any other tangible items related to or associated with the business of
the Company (whether or not such items constitute Confidential Information) that you may come into
the possession or control of during the course of employment with the Company shall at all times
remain the property of the Company. You covenant and agree not to make any use thereof whatsoever
nor to make any copies or reproductions thereof or of any other property of the Company without the
Company’s prior written consent.
On termination of your employment with the Company, or upon demand by the Company at any time,
you shall immediately deliver any and all of the foregoing materials to the
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Company at 00 Xxxxxx Xxxxx, Xxxxxxx Xxxx, Xxx Xxxx 00000 or any other location designated by
the Company. You acknowledge that such property is proprietary and valuable to the Company and
that the Company will suffer immediate and irreparable harm if you do not immediately return such
property.
12. Six Month Delay. Notwithstanding any other provision in this Agreement, to the
extent that (i) you are determined to be a “specified employee” with the meaning of Section
409A(a)(2)(B)(i) of Internal Revenue Code of 1986 (the “Code”), (ii) any amounts payable under this
Agreement represent amounts that are subject to Section 409A of the Code, and (iii) such amounts
are payable on your “separation from service,” within the meaning of Section 409A of the Code, then
such amounts will not be payable to you before the date that is six months after your termination
of employment (or, if earlier, the date of your death). Payments under this Section to which you
would otherwise be entitled during the first six months following your termination date will be
accumulated and paid on the day that is six months after the termination date.
13. Section 409A Compliance. All benefits payable under this Plan are intended to
comply with or to be exempt from Section 409A the Code and will be construed accordingly. However,
the Company will not be liable to you or any beneficiary with respect to any benefit related
adverse tax consequences arising under Section 409A or other provision of the Code.
14. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York for contracts made and performed there.
To acknowledge that you have read and understood the terms of this offer of continued
employment, and to accept this offer, please sign and return one copy of this Agreement. The
foregoing may be faxed to me at (000) 000-0000.
Very truly yours,
/s/ Xxxxx XxXxxxxxxx
Xxxxx XxXxxxxxxx
President and Chief Operating Officer
President and Chief Operating Officer
I agree to the terms of employment set forth in this Agreement.
/s/ Xxxxxxx Xxxxx
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