EXHIBIT 10.165
November 22, 2004
Xx. Xxxx Xxxxxxxxx
c/o The Immune Response Corporation
0000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Dear Xxxx:
Pursuant to this letter agreement (the "Agreement") we are pleased to make to
you the following offer of employment with The Immune Response Corporation (the
"Company"):
1. Responsibilities
Your title will be President and Chief Executive Officer (or CEO) of the
Company, effective January 1, 2005 (the "Effective Date"). As the CEO, you will
report to the Board of Directors of the Company (the "Board"). You also will
serve as a member of the Board.
2. Term of Employment
The initial term of your employment shall commence on the Effective Date and
shall, except as provided in Section 4.1 hereof, continue through December 31
2006 (the "Term"). Thereafter, the term of this Agreement shall be automatically
extended for successive and additional two-year periods, unless either party
shall provide a written notice of termination to the other at least ninety (90)
days prior to the end of the Initial Term or any extended term. The term of this
Agreement is subject to early termination in accordance with the provisions set
forth in Section 3 hereof.
3. Compensation and Benefits
You shall be entitled to the following:
Base salary at the annual rate of $300,000, or at such increased
rate as the Board, in its sole discretion, may hereafter from time
to time determine ("Base Salary) payable bi-weekly. During the term
of this Agreement, your Base Salary will be reviewed annually by the
Board to determine whether such Base Salary should be increased in
light of your duties, responsibilities and performance, and, if it
is determined by the Board that an increase is merited, such
increase shall be promptly put into effect and
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your Base Salary, as so increased, shall constitute your Base Salary
for purposes of this Section..
In the event that the Company hires any other Officer, the CEO shall
be entitled to a base salary annualized at10% greater than the
annual rate of any other Officer
Within thirty (30) days after the Effective Date, the Board shall
meet with you to discuss the terms and conditions under which you
shall be paid an annual bonus, whereby the Board and you shall
mutually agree on (a) the standards by which an annual bonus shall
be paid to you and (b) the amount of such annual bonus or the
formula by which such annual bonus amount is to be determined. The
bonus amount may be up to (but not greater than) 100% of base salary
unless the Compensation Committee agrees that a higher percentage is
warranted due to exceptional performance.
3.1 The Company will provide health benefits to the CEO and his family
at the Company's cost. The Company will also pay for a term life
insurance policy for a total of not less than $400,000. All other
benefits (disability insurance, 401k Plan, flex spending account)
shall be according to the existing Company policies. The Company
will also pay for MediJet insurance for travel outside the US
beginning as of the Effective Date.
3.2 The Company will provide a minimum of four (4) weeks annual paid
vacation.
3.3 Subject to receipt of all requisite approvals of the Board, you will
receive a grant of stock options to purchase 250,000 shares of the
common stock of the Company (the "CEO Options") that will vest in
accordance with the Company's stock option plan or as otherwise set
forth in this Section 3.3. The exercise price for the CEO Options
will be the closing price of the stock on the day the approval of
the Board is obtained. The CEO Options will vest according to the
following schedule:
(a) 75,000 options will vest immediately on the Effective Date;
(b) The remainder will vest pro rata over the next two years on a
daily basis.
In the event of the occurrence of a Change of Control (as described
below), the CEO Options (or any substituted stock options) shall, as
of the date of such Change of Control, vest in full and become fully
exercisable to the extent not previously vested or exercisable, and
shall continue to be exercisable for a period of six (6) months or
until the applicable expiration date of such options (in accordance
with their terms), whichever period is shorter. For purposes of this
Agreement, "Change of Control" shall mean any of the following
events:
(1) a sale, lease or other disposition of all or substantially all
of the assets of the Company so long as the Company's
stockholders immediately prior to
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such transaction will, immediately after such transaction,
fail to possess direct or indirect beneficial ownership of
more than fifty percent (50%) of the voting power of the
acquiring entity (for purposes of this section, any person who
acquired securities of the Company prior to the occurrence of
such asset transaction in contemplation of such transaction
and who after such transaction possesses direct or indirect
ownership of at least ten percent (10%) of the securities of
the acquiring entity immediately following such transaction
shall not be included in the group of stockholders of the
Company immediately prior to such transaction);
(2) either a merger or consolidation in which the Company is not
the surviving corporation and the stockholders of the Company
immediately prior to the merger or consolidation fail to
possess direct or indirect beneficial ownership of more than
fifty percent (50%) of the voting power of the securities of
the surviving corporation (or if the surviving corporation is
a controlled subsidiary of another entity, then the required
beneficial ownership shall be determined with respect to the
securities of that entity which controls the surviving
corporation and is not itself a controlled subsidiary of any
other entity) immediately following such transaction, or a
reverse merger in which the Company is the surviving
corporation and the stockholders of the Company immediately
prior to the reverse merger fail to possess direct or indirect
beneficial ownership of more than fifty percent (50%) of the
securities of the Company (or if the Company is a controlled
subsidiary of another entity, then the required beneficial
ownership shall be determined with respect to the securities
of that entity which controls the Company and is not itself a
controlled subsidiary of any other entity) immediately
following the reverse merger (for purposes of this section,
any person who acquired securities of the Company prior to the
occurrence of a merger, reverse merger, or consolidation in
contemplation of such transaction and who after such
transaction possesses direct or indirect beneficial ownership
of at least ten percent (10%) of the securities of the Company
or the surviving corporation (or if the Company or the
surviving corporation is a controlled subsidiary, then of the
appropriate entity as determined above) immediately following
such transaction shall not be included in the group of
stockholders of the Company immediately prior to such
transaction);
(3) an acquisition by any person, entity or group within the
meaning of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or any
comparable successor provisions (excluding any employee
benefit plan, or related trust, sponsored or maintained by the
Company or a subsidiary or other controlled Subsidiary of the
Company) of the beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act, or comparable
successor rule) of securities of the Company representing at
least fifty percent (50%) of the combined voting power
entitled to vote in the election of directors; or
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(4) the individuals who, as of the date of this Agreement, are
members of the Board (the "Incumbent Board"), cease for any
reason to constitute at least fifty percent (50%) of the
Board. If the election, or nomination for election by the
Company's stockholders, of any new director was approved by a
vote of at least fifty percent (50%) of the Incumbent Board,
such new director shall be considered as a member of the
Incumbent Board.
Notwithstanding the foregoing, a public offering (including the
initial or any subsequent public offering) of the common stock of
the Company shall not be considered a "Change of Control."
3.4 Reimbursement from the Company for all reasonable and customary
expenses incurred by you in performing services under this
Agreement, including travel expenses, expenses related to wireless
communications (cell phone and if necessary Blackberry or other such
devices) and reasonable expenses related to home communications for
the company (e.g., high speed internet access, fax, computer and
accessories if needed) and other out-of-pocket expenses, in
accordance with your expense account and the Company's reimbursement
policies and provided that you shall submit to the Company
reasonable documentation with respect to such expenses.
4. Termination of Employment
4.1 Events of Termination
Your employment with the Company may be terminated prior to the expiration
of the Initial Term or extended term set forth in Section 2 hereof as
follows:
(a) With Cause. Your employment with the Company may be terminated
at any time for "Cause." As used in this Agreement, the term
"Cause" shall mean (i) your willful misconduct or willful
failure to fulfill and perform your stated duties, including
the obligations stated herein, which misconduct or failure, if
curable, is not fully cured to the reasonable satisfaction of
the Board within thirty (30) days after written notice
thereof, (ii) any material breach by you of any provision of
this Agreement, which, if curable, is not fully cured to the
reasonable satisfaction of the Board within thirty (30) days
after written notice thereof or (iii) your committing an act
of theft, fraud, dishonesty, embezzlement with regard to the
Company or your conviction of a felony. For purposes hereof,
no act, or failure to act, on your part shall be deemed
"willful" unless done, or omitted to be done, by you not in
good faith and without reasonable belief that your act, or
failure to act, was in the best interest of the Company.
(b) Without Cause; Good Reason. Your employment with the Company
may be terminated, by either party, upon not less than ninety
(90) days prior
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written notice to the other, without Cause by the Company or
for "Good Reason" by you. As used herein, the term "Good
Reason" shall mean the occurrence, without your consent, of
any of the following: (i) any material diminution of your
position, duties or responsibilities hereunder (except in each
case in connection with the termination of your employment for
Cause or disability or as a result of your death, or
temporarily as a result of your illness or other absence, or
any diminution of duties resulting from the hiring by the
Company of a new President and/or Chief Executive Officer) and
(ii) any material breach by the Company of any provision of
this Agreement; provided, however, that you give the Company
written notice of such breach with a thirty (30) day
opportunity for the Company to cure such breach.
(c) Death. In the event of your death, your employment shall
terminate on the date of death. The Company will be
responsible for paying the remainder of the employment
contract base salary and options to the Xxxxxxxxx Family
Trust.
(d) Disability. In the event of your Disability (as defined
below), the Company may terminate your employment by giving to
you a written notice of termination. Such notice shall specify
the date of termination, which date shall not be earlier than
thirty (30) days after the notice of termination given. For
purposes of this Agreement, "Disability" means your inability
to substantially perform your duties hereunder for ninety (90)
consecutive days or one hundred eighty (180) days out of three
hundred sixty five (365) days as a result of a physical or
mental illness or condition, all as determined in good faith
by the Board.
4.2 The Company's Obligations Upon Termination
Following the termination of your employment under the circumstances
described below, the Company shall pay to you the following
compensation and provide the following benefits in full satisfaction
and final settlement of any and all claims and demands that you now
have or hereafter may have against the Company in connection
herewith subject to your executing and delivering a release to the
Company as provided in Section 4.4 below prior to the provision of
the compensation and benefits set forth below:
(a) Termination Without Cause by the Company or with Good Reason
by You or Failure by the Company to Extend Your Term. In the
event that your employment shall be terminated by the Company
pursuant to Section 4.1(b) hereof or upon expiration of the
initial or any renewal term of this Agreement or pursuant to
written notice by you in accordance with Section 4.1(b)
thereof, you will be entitled to the payment of your annual
base salary for a period of twelve (12) months paid monthly
from the date of termination or expiration, as the case may be
In addition, any CEO Options which have vested and remain
unexercised prior to the date of
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termination of the CEO's employment by the Company pursuant to
Section 4.1(b) hereof or upon expiration of the initial or any
renewal term of this Agreement or pursuant to written notice
by you in accordance with Section 4.1(b) hereof shall remain
exercisable and will not terminate until the date which is
three years after such termination, expiration or written
notice.
(b) Termination by the Company for Cause. In the event that your
employment shall be terminated by the Company pursuant to
Section 4.1(a) hereof (or if you voluntarily resign other than
for Good Reason in accordance with Section 4.1(b) hereof prior
to the expiration of the then current term of this Agreement),
you shall be entitled to no further compensation or other
benefits under this Agreement, other than any Base Salary
earned by you on or prior to the date of such termination, but
not yet paid. In addition, the Company shall reimburse you for
any expenses incurred only through the date of such
termination Upon termination by the Company of your employment
for Cause or termination for reason other than Good Reason by
you, all of your rights under this Agreement (except as
otherwise set forth herein) shall immediately terminate and
the Company shall have no further obligation to you.
(c) Termination Upon Death or Disability. In the event that your
employment shall be terminated pursuant to Section 4.1(c) or
4.1(d) hereof, the Company shall pay you (or your estate or
trust or legal representatives) all Base Salary earned, but
unpaid, through the remainder of this contract, and shall
reimburse you (or your estate or trust or legal
representatives) for any expenses incurred through the date of
such termination.
4.3 Nature of Payments. All amounts to be paid by the Company to you
pursuant to this Agreement (other than Base Salary, benefits, bonus
or reimbursement of expenses) shall be considered by the parties to
be severance payments. In the event that such payments shall be
treated as damages, it is expressly acknowledged by the parties
hereto that damages to you for termination of employment would be
difficult to ascertain and the above amounts are reasonable
estimates thereof and are not a penalty.
4.4 Release. Notwithstanding the foregoing, as a condition for the
provision of the compensation and benefits set forth in this Section
4, you will be required to sign a release of all claims against the
Company, its officers, agents, employees and the members of the
Board, on such terms and form provided by the Company, which shall
be binding on your estate, heirs, assignees, attorneys, agents and
personal representatives as provided therein.
4.5 Confidentiality and Non-Competition
Subject to any provisions of any confidentiality agreement into
which you and the Company may enter, you agree that you will not,
during the term of the service on
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the Board and at any time thereafter, divulge or use, directly or
indirectly, except in the course of your directorship, any
Confidential Information (as defined below) or without the prior
written approval of the Company.
In addition, you hereby agree that you will not, directly or
indirectly, as an as an individual proprietor, partner, stockholder,
officer, employee, director, joint venturer, investor, lender, or in
any other capacity whatsoever (other than as the holder of not more
than two percent (2%) of the total outstanding stock of a
publicly-held company), and in any city, county, state or other
geographic area where the Company is then marketing or selling its
products or providing services, engage in the business of
developing, producing, marketing or selling products or providing
services of the kind or type reasonably related to the work being
developed, produced, marketed, sold or provided by the Company.
4.6 Upon request, to return to the Company any information, documents
and other property you may have received as a result of your
directorship; and if the remedy at law for any breach of any of the
foregoing will be inadequate then the Company, in addition to any
remedy at law, will be entitled to injunctive and other relief in
cases of any such breach. The provisions of this Section shall
survive the termination of the term of this Agreement.
4.7 As used herein, "Confidential Information" shall mean any and all
information (oral and written) relating to the Company, including,
without limitation, all information relating to trade secrets,
intellectual property, software, technical or non-technical data,
research and reports, customer information and lists, employee
information, methods, techniques, financial data, financial plans or
financial information, lists of actual or potential strategies,
notes, marketing approaches, sales techniques, analyses, finances,
business affairs or any other information, which, under all
circumstances, ought reasonably to be treated as confidential and/or
proprietary.
4.8 You will continue to be bound by the terms and conditions of this
Section for a period of five years after the termination of this
Agreement, except in the case of the provisions set forth in the
second paragraph of this Section which shall survive for a period of
two years after the termination of this Agreement.
5. Miscellaneous
5.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard
to principles of conflict of laws.
5.2 Arbitration. Any controversy or claim based on, arising out of or
relating to the interpretation and performance of this Agreement or
any termination hereof shall be solely and finally settled by
arbitration under the rules of the American Arbitration Association,
and judgment on the award rendered in the arbitration may be entered
in any court having jurisdiction thereof. Any such arbitration
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shall be in the state of California and shall be submitted to a
single arbitrator appointed by the mutual consent of the parties or,
in the absence of such consent, by application of any party to the
American Arbitration Association. A decision of the arbitrator shall
be final and binding upon the parties, and the arbitrator shall be
authorized to apportion fees and expenses (including counsel fees
and expenses), as the arbitrator shall deem appropriate.
5.3 Entire Agreement; Amendment. This Agreement contains the complete
understanding and agreement between the parties hereto with respect
to the subject matter hereof, and supersedes all prior and
contemporaneous understandings and agreements, written or oral,
between the parties relating to the subject matter hereof. This
Agreement may not be amended except in a written document signed by
you and the Company.
5.4 Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any
reason, in whole or in part, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full force
and effect to the fullest extent permitted by law and any such
invalidity or unenforceability shall be deemed replaced by a term or
provision determined by the parties as coming closest to expressing
the intention of the invalid or unenforceable term or provision.
5.5 Notice. Any notice to be given hereunder shall be in writing and
delivered either in person, by nationally recognized overnight
courier, or by registered or certified first class mail, postage
prepaid, addressed to such address of the parties as set forth on
the first page hereof.
5.6 Headings. The Section headings in this Agreement are for convenience
of reference only and shall not affect its interpretation.
5.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which when together shall constitute one and the same agreement.
5.8 Liability Insurance. Director's and Officer's liability insurance
and comprehensive general liability insurance shall be provided to
you by the Company to the same extent that it is provided to the
other executive officers in the Company.
5.9 Indemnification. The Company hereby indemnifies and holds you
harmless against any and all losses, claims, suits, judgments,
damages, liabilities, costs or expenses, including reasonable legal
fees and expenses, to which you may become subject in connection
with the good faith performance of your responsibilities under this
Agreement. This provision will survive termination of this
Agreement.
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Xxxx, if the foregoing accurately represents your understanding, please sign
below and return it to us.
Warmest regards,
THE IMMUNE RESPONSE CORPORATION.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Dated: December 16, 2004
ACCEPTED AND AGREED IN ALL RESPECTS:
/s/ Xxxx X. Xxxxxxxxx
--------------------------------------
Xxxx X. Xxxxxxxxx, Ph.D.
Dated: December 20, 2004
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