EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made this 30th day of April,
2003 (the Effective Date) by and between ENTREMED, INC., a Delaware corporation
having its principal office at 0000 Xxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx, XX 00000
(the "Company") and Xx. Xxxx X. Xxxxxxxx, an individual residing at 00000 Xxxxxx
Xxxxx, Xxxxxxxx XX 00000 ("Xx. Xxxxxxxx").
WHEREAS, Xx. Xxxxxxxx has previously entered into a Change of Control
Agreement with the Company dated August 1, 2002 (See Exhibit 1); and
WHEREAS, Xx. Xxxxxxxx and the Company mutually agree that this Employment
Agreement will replace the Change of Control Agreement dated August 1, 2002
(Exhibit 1 attached); therefore
FOR AND IN CONSIDERATION of the mutual premises, agreements and covenants
contained herein, the parties hereto, intending to be legally bound, do hereby
agrees as follows:
1. Employment Position and Duties
The Company hereby agrees to employ Xx. Xxxxxxxx to act as, and to exercise
all of the powers and functions of, its during the Term hereof (as set forth in
paragraph 4 herein) and to perform such acts and duties and to generally furnish
such services to the Company and its subsidiaries (if any) as is customary for a
senior management person with a similar position in like companies; and he shall
have such specific powers, duties and serve as President and Chief Operating
Officer or such other executive positions as determined by the Board of
Directors and responsibilities commensurate with those executive positions as
the Board of Directors of the Company (the "Board") shall from time to time
reasonably prescribe, provided that such duties are consistent with Xx.
Xxxxxxxx'x senior management position. Xx. Xxxxxxxx hereby agrees to accept such
employment and shall perform and discharge faithfully, diligently, and to the
best of his abilities such duties and responsibilities and shall devote
sufficient working time and efforts to the business and affairs of the Company
and its subsidiaries; provided however, that, to the extent consistent with the
needs of the Company, Xx. Xxxxxxxx shall be entitled to expend a reasonable
amount of time on civic, public, industry, and philanthropic activities and on
the management of his own investments and assets. This Employment Agreement
replaces and nullifies the Change of Control Agreement between Xx. Xxxxxxxx and
the Company dated August 1, 2002.
2. Place of Employment
During his employment hereunder, Xx. Xxxxxxxx'x principle place of
employment shall be located at the Company's corporate headquarters, wherever
located as designated from time to time by the Board; provided however, that
notwithstanding the foregoing Xx. Xxxxxxxx shall be required to conduct his
duties and responsibilities hereunder (except for routine and customary business
travel) primarily from the executive offices located in Rockville, Maryland.
3. Compensation
(a) Base Salary. The Company shall pay to Xx. Xxxxxxxx an annual base
salary ("Base Salary") of three hundred thousand dollars ($300,000) effective
January 1, 2003, payable in accordance with the Company's customary payroll
policy for its executives, and subject to applicable tax and payroll deductions.
(b) Base Salary Adjustments. Xx. Xxxxxxxx'x Base Salary shall be reviewed
annually by the Company's Board of Directors which may make such upward
adjustments as within its discretion deems appropriate.
(c) Six Months Salary Payment. Xx. Xxxxxxxx will be paid six months "Base
Salary" based on the salary in effect on December 31, 2002. This payment will be
made over a period of nine (9) months beginning on January 1, 2003 so long as
Xx. Xxxxxxxx during this period does not voluntarily leave employment at the
Company. If Xx. Xxxxxxxx is terminated without cause, Xx. Xxxxxxxx will receive
the entire six months salary payment as outlined herein. The payments will be
made semi-monthly subject to appropriate withholdings. The total payment under
this provision will be one hundred and thirty-two thousand five hundred dollars
($132,500). Payments that were to be made from January 1, 2003 to the Effective
Date of this agreement will be paid as soon as practical after execution of this
agreement in a lump sum payment.
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(d) Incentive Compensation. Xx. Xxxxxxxx'x Incentive Compensation, if any,
shall be determined annually by the Company's Board of Directors.
(e) Vesting of Options. All unvested options granted to Xx. Xxxxxxxx prior
to the January 1, 2003 will vest upon execution of this agreement either
pursuant to the terms of this Agreement or the terms of the grants under which
such stock options were granted.
(f) Certain Other Benefits. During the Term of this Agreement, Xx.
Xxxxxxxx shall be entitled to equally participate in any and all employee
benefit plans and arrangements which are available to senior executive officers
of the Company, including without limitation, group medical and life insurance
plans.
4. Term
The term of Xx. Xxxxxxxx'x employment with the Company shall be for a
one-year period commencing January 1, 2003, and continuing through December 31,
2003 (the "Initial Term"); provided, however, that this Agreement may be renewed
by mutual agreement in writing for successive one-year periods (each a
"Successor Term"; and together with the Initial Term, generally referred to "The
Term").
5. Stock Options
Periodic stock and incentive stock option grants to Xx. Xxxxxxxx if any,
shall be determined by the Board of Directors.
6. Unauthorized Disclosure
While employed by the Company and for five years thereafter, Xx. Xxxxxxxx
shall not, without the written consent of the Company, disclose to any person,
other than person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by Xx. Xxxxxxxx of his duties as an executive
officer of the Company, any material confidential information obtained by Xx.
Xxxxxxxx while in the employ of the Company with respect to the businesses of
the Company or any of its subsidiaries, including but not limited to,
operations, pricing, contractual or personnel matters, products, discoveries,
improvements, trade secrets, license agreements, marketing information,
suppliers, dealers, customers, or methods of distribution, or any other
confidential information the disclosure of which Xx. Xxxxxxxx knows, or in the
exercise of reasonable care should know will be damaging to the Company;
provided, however, that confidential information shall not include any
information known generally to the public (other than as a result of
unauthorized disclosure by Xx. Xxxxxxxx) or any information so otherwise
considered by the Company to be confidential.
7. Indemnification of Xx. Xxxxxxxx
The Company shall indemnify Xx. Xxxxxxxx if Xx. Xxxxxxxx is made a party,
or threatened to be made a party, to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative, or
investigative, because Xx. Xxxxxxxx is or was an officer or director or the
Company or any of its subsidiaries, affiliates, or successors, against expenses
(including reasonable attorneys fees and disbursements), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding to the fullest extent and in the manner set
forth in a permitted by the General Corporation Law of the State of Delaware and
any other applicable law in effect from time to time and reimburse such costs as
incurred, but in any event no later than 30 days from date of presentment of
such costs to the Company. Such presentment may be, at the option of Xx.
Xxxxxxxx, in the form of an invoice directly from Xx. Xxxxxxxx'x attorney or
such other provider as may be reasonably selected by the Company, and in this
event, the Company agrees to reimburse said provider directly, as opposed to
having Xx. Xxxxxxxx pay the invoice and then seek reimbursement from the
Company.
8. Termination
(a) Termination Upon Death. If Xx. Xxxxxxxx dies during the Term of this
Agreement, Xx. Xxxxxxxx'x legal representatives shall be entitled to receive the
Base Salary through the last day of the twelve months following the month in
which Xx. Xxxxxxxx'x death occurred. If in respect of the fiscal year in which
Xx. Xxxxxxxx dies he would otherwise have been entitled to receive incentive
compensation under paragraph 3(d) by reason of the operations of the Company
during such fiscal year, Xx. Xxxxxxxx'x legal representatives shall be entitled
to receive a pro rata portion of such incentive compensation determined by
multiplying the dollar amount of the incentive compensation involved by a
fraction, the numerator of which shall be the number of complete calendar months
that
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elapsed during the fiscal year through the end of the month in which Xx.
Xxxxxxxx died and denominator of which shall be twelve.
(b) Termination Upon Disability or Incapacity. In the event Xx. Xxxxxxxx
has been disabled for a period of one hundred eighty (180) days the Company may
terminate Xx. Xxxxxxxx'x employment hereunder at the end of any calendar month
thereafter by giving written notice of termination to Xx. Xxxxxxxx in the event
that Xx. Xxxxxxxx'x incapacity due to physical or mental illness prevents the
proper performance of the duties of President and Chief Operating Officer of
other executive position determined by the Board of Directors as set forth
herein or established pursuant hereto for a substantial portion of any
six-month period of Xx. Xxxxxxxx'x Term of employment hereunder. Any questions
as to the existence or extent of illness or incapacity of Xx. Xxxxxxxx, upon
which the Company and Xx. Xxxxxxxx cannot agree, shall be determined by a
qualified independent physician selected by the Company and approved by Xx.
Xxxxxxxx (or, if Xx. Xxxxxxxx is unable to give such approval, by any adult
member of the immediate family or the duly appointed guardian of Xx. Xxxxxxxx).
The determination of such physician certified in writing to the Company and to
Xx. Xxxxxxxx shall be final and conclusive for all purposes of this Agreement.
In the event of any such termination pursuant to this subparagraph 8(b), Xx.
Xxxxxxxx shall be entitled to receive his Base Salary through the last day of
the six months in which this Agreement is terminated.
If in respect of the fiscal year in which Xx. Xxxxxxxx'x employment
terminates pursuant to this subparagraph 8(b) he would otherwise have been
entitled to receive incentive compensation under paragraph 3(d) by reason of
the operations of the Company during such fiscal year, Xx. Xxxxxxxx shall be
entitled to receive a pro rata portion of such incentive compensation
determined by multiplying the dollar amount of the incentive compensation by a
fraction, the numerator of which shall be the number of complete calendar
months that elapsed during the fiscal year through the end of the month in
which Xx. Xxxxxxxx'x employment terminated pursuant to this subparagraph 8(b)
and the denominator of which shall be twelve.
(c) Termination for Cause. The Company may terminate Xx. Xxxxxxxx'x
employment hereunder for "cause" (as hereinafter defined) by giving written
notice of termination of this Agreement, the Company shall have "cause" to
terminate Xx. Xxxxxxxx'x employment hereunder upon Xx. Xxxxxxxx'x (i) habitual
drunkenness or drug addiction or failure materially to perform and discharge his
duties and responsibilities hereunder, or (ii) misconduct that is materially
and significantly injurious to the Company, or (iii) conviction of a felony
involving the personal dishonesty of Xx. Xxxxxxxx or moral turpitude, or (iv)
conviction of Xx. Xxxxxxxx of any crime or offense involving the property of
the Company. Upon any such termination for cause under this subparagraph 8(c)
the Company shall pay Xx. Xxxxxxxx his Base Salary through the date of
termination, and the Company shall have no further obligations under this
Agreement.
(d) Termination without Cause. The Company shall have the right to
terminate Xx. Xxxxxxxx'x employment under this Agreement at any time, without
cause, by giving Xx. Xxxxxxxx not less than sixty (60) days prior written notice
of such termination. The Company shall pay to Xx. Xxxxxxxx full compensation for
12 months from the date of termination payable on a semi-monthly basis. By
acceptance of the first monthly payment hereunder, and in consideration of the
receipt of such compensation under this Agreement, Xx. Xxxxxxxx agrees to
release and forever discharge the Company its subsidiaries and affiliates,
successors, predecessors officers, directors, employees and agents and employee
benefit plans from all claims, demands, causes of action arising out of facts or
occurrences prior to the date of Xx. Xxxxxxxx'x termination, whether known or
unknown, and the parties hereto contemplate that this release shall be construed
broadly. Upon termination, the Company shall have no other financial obligations
to Xx. Xxxxxxxx under any compensation or benefit plan, program or policy, and
Xx. Xxxxxxxx'x participation in the Company compensation and benefit plans,
programs and policies shall cease as of the date of Xx. Xxxxxxxx'x termination,
except that Xx. Xxxxxxxx shall have such right to continued group health plan
coverage as is provided under COBRA. The Company will make Xx. Xxxxxxxx'x COBRA
premium payments for the earlier of, 12 months after the termination date or the
date Xx. Xxxxxxxx begins employment with a new employer. Notwithstanding the
foregoing, if in respect of the fiscal year in which Xx. Xxxxxxxx'x employment
terminates pursuant to this subparagraph (d) he would otherwise have been
entitled to receive incentive compensation under paragraph 3(d) by reason of the
operations of the Company during such fiscal year. Xx. Xxxxxxxx shall be
entitled to receive a pro rata portion of such incentive compensation determined
by multiplying the dollar amount of the incentive compensation by a fraction,
the numerator of which shall be the number of complete calendar months that
elapsed during the fiscal year through the end of the month in which Xx.
Xxxxxxxx'x employment terminated pursuant to this subparagraph (d) and the
denominator of which shall be twelve.
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(e) Non-competition. For a period of twelve months after termination for
any reason of Xx. Xxxxxxxx'x active employment with the Company, Xx. Xxxxxxxx
agrees not to, as an individual, principal, agent, employee, consultant or
otherwise, directly or indirectly in the United States render any services to
any firm or company or any division or subsidiary of any firm or company whose
primary activity is the research, development or commercialization of specific
product compounds and/or analogs or derivatives of those product compounds that
are currently being researched, developed and/or commercialized by the Company.
Moreover, for a period of twelve (12) months after the termination of Xx.
Xxxxxxxx'x employment with the Company, Xx. Xxxxxxxx agrees not to take any
action, without the prior written consent of the Company, to assist Xx.
Xxxxxxxx'x successor employer or any other entity in recruiting or hiring any
other employee who had worked for the Company during any of the time period
when Xx. Xxxxxxxx worked for the Company. This includes (1) identifying to such
successor employer or its agents or such other entity, the person or persons
who have special knowledge concerning the Company's inventions, processes,
methods or confidential affairs; or (2) commenting to Xx. Xxxxxxxx'x successor
employer or its agents or such other entity about the quantity of work, quality
of work, special knowledge or personal characteristics of any person who is
still employed by the Company. Xx. Xxxxxxxx also agrees that he will not
provide such information to a prospective employer during interviews preceding
possible employment.
9. Reimbursement of Legal Fees
The Company agrees to reimburse Xx. Xxxxxxxx for reasonable attorneys fees
incurred if Xx. Xxxxxxxx or the Company sues on this Agreement and the Company
is not the prevailing party.
10. Application for Insurance
The Company at its option has the right to obtain a "key-man" life
insurance policy, at the Company's expense, with the Company being the sole
beneficiary of such policy. Xx. Xxxxxxxx hereby agrees to undergo the necessary
physical examinations and disclose any pertinent disclaimers and information to
obtain said policy.
11. Miscellaneous
(a) Assignments and Binding Effect. The respective rights and obligations
of the parties under this Agreement shall be binding upon the parties hereto
and their heirs, executors, administrators, successors, and assigns, including,
in the case of the Company, any other corporation or entity with which the
Company may be merged or otherwise combined or which may acquire all or
substantially all of the Company's assets, provided no such assignment shall
discharge the Company of its obligations herein, and, in the case of Xx.
Xxxxxxxx, his estate or other legal representatives; provided that Xx. Xxxxxxxx
may not assign his rights hereunder without prior written consent of the
Company.
(b) Governing Law. This Agreement shall be governed as to its validity,
interpretation and effect by the laws of the State of Maryland.
(c) Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid, illegal, or unenforceable for any
reason, the remaining provisions and portions of this Agreement shall remain in
full force and effect to the fullest extent permitted by law. Such invalid,
illegal or unenforceable provision(s) shall be deemed modified to the extent
necessary to make it (them) valid, legal, and enforceable.
(d) Entire Agreement; Amendments. This Agreement constitutes the entire
Agreement and understanding of the Company and Xx. Xxxxxxxx with respect to the
terms of Xx. Xxxxxxxx'x employment with the Company and supersedes all prior
discussions, understandings and agreements with respect thereto except to those
agreements relating to the assignment of patents and inventions to which Xx.
Xxxxxxxx acknowledges signing a Combined Non-disclosure and Patent Employee
Agreement (a copy of which is attached hereto as Exhibit 2) which will remain
in effect.
(e) Captions. All captions and headings used herein are for convenient
reference only and do not form part of this Agreement.
(f) Waiver. The waiver of a breach of any term or provision of this
Agreement shall not operate as or be construed to be a waiver of any other or
subsequent breach of this Agreement.
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(g) Notice. Any notice or communication required or permitted under this
Agreement shall be made in writing and shall be delivered by hand, or mailed by
registered or certified mail, return receipt requested, first class postage
prepaid, addressed as follows:
If to Xx. Xxxxxxxx:
00000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
If to the Company:
EntreMed, Inc.
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn.: Chief Financial Officer
(i) Counterparts. This Agreement may be executed in counterparts, each of
which shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first above
/s/ Xxxx X. Xxxxxxxx
----------------------
Xxxx X. Xxxxxxxx
ENTREMED, INC.
By:
---------------------------
Xxxxxxx Xxxxxx
Chairman, EntreMed Board of Directors
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(g) Notice. Any notice or communication required or permitted under this
Agreement shall be made in writing and shall be delivered by hand, or mailed by
registered or certified mail, return receipt requested, first class postage
prepaid, addressed as follows:
If to Xx. Xxxxxxxx:
00000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
If to the Company:
EntreMed, Inc.
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn.: Chief Financial Officer
(i) Counterparts. This Agreement may be executed in counterparts, each of
which shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first above
/s/ Xxxx X. Xxxxxxxx
------------------------------------------
Xxxx X. Xxxxxxxx
ENTREMED, INC.
By: /s/ Xxxxxxx Xxxxxx
---------------------------------------
Xxxxxxx Xxxxxx
Chairman, EntreMed Board of Directors
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