SEVERANCE AGREEMENT
THIS
AGREEMENT made as of the 3rd day of April, 2006, by and between Pressure
BioSciences, Inc., a Massachusetts corporation, and Xxxxxxx X. Xxxxxxxxxx (the
"Executive").
WHEREAS,
the Board of Directors (the "Board") of the Company (as hereinafter defined)
recognizes that the possibility of a termination without Cause (as hereinafter
defined), and the possibility of a Change in Control (as hereinafter defined),
can create significant distractions for its key management personnel because
of
the uncertainties inherent in such situations;
WHEREAS,
the Board has determined that it is essential and in the best interest of the
Company and its stockholders to retain the services of the Executive, in
general, and particularly in the event of a threat or the occurrence of a Change
in Control and to ensure his continued and full attention, dedication and
efforts in such event without undue concern for his personal financial and
employment security; and
WHEREAS,
in order to induce the Executive to become an employee of the Company and to
remain in the employ of the Company, in general, and particularly in the event
of a threat or the occurrence of a Change in Control, the Company desires to
enter into this Agreement with the Executive to provide the Executive with
severance benefits in the event his employment is terminated without Cause
or as
a result of, or in connection with, a Change in Control, in accordance with
the
terms and conditions set forth herein.
NOW,
THEREFORE, in consideration of the respective agreements of the parties
contained herein, it is agreed as follows:
1. DEFINITIONS.
1.1 ACCRUED
COMPENSATION.
For
purposes of this Agreement, "Accrued Compensation" shall mean an amount which
shall include all amounts earned or accrued through the "Termination Date"
(as
hereinafter defined) but not paid as of the Termination Date, including (i)
base
salary, (ii) reimbursement for reasonable and necessary business expenses
incurred by the Executive on behalf of the Company, pursuant to the Company's
expense reimbursement policy in effect at such time, during the period ending
on
the Termination Date, and (iii) vacation pay.
1.2 BASE
SALARY.
For
purposes of this Agreement, "Base Salary" shall mean the greater of the
Executive's annual base salary (a) at the rate in effect on the Termination
Date
or (b) at the highest rate in effect at any time during the ninety (90) day
period prior to the Termination Date.
1.3 CAUSE.
The
Company may terminate the Executive's employment at any time for "Cause". For
purposes of this Agreement, "Cause" means (i) any act of personal dishonesty
or
a breach of trust by the Executive; (ii) intentional violation of the Company’s
Code of Conduct or other Company codes or policies or procedures that are
applicable to the Executive; (iii) the commission by the Executive of any crime
classified as a felony under any Federal, state or local law; (iv) any breach
by
the Executive of the Employee Non-Competition and Non-Solicitation Agreement
or
the Employee & Contractor Non-Disclosure and Developments Agreement, each
dated as of the date hereof; (v) the use by the Executive of a controlled
substance without a prescription or the use of alcohol which in any way impairs
the Executive’s ability to carry out his duties and responsibilities; (vi)
conduct by the Executive constituting an act of moral turpitude, or acts of
physical violence while working for the Company; (vii) the Executive’s willful
failure or refusal to perform his duties on behalf of the Company which are
consistent with the scope and nature of the Executive’s responsibilities, or
otherwise to comply with a lawful directive of the Company; and (viii) the
Executive’s repeated failure to carry out his duties and responsibilities in a
satisfactory manner, provided the Company provides the Executive with notice
of
such failure and the Executive does not correct such failure within a period
of
thirty (30) days following such notice.
1.4 CHANGE
IN CONTROL.
For the
purpose of this Agreement, a "Change of Control" shall mean:
a. The
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 40% or more of the then outstanding
shares of common stock of the Company (the “Outstanding Company Common Stock”);
provided, however, that any acquisition by the Company or its subsidiaries,
or
any employee benefit plan (or related trust) of the Company or its subsidiaries
of 40% or more of Outstanding Company Common Stock shall not constitute a Change
in Control; and provided, further, that any acquisition by a corporation with
respect to which, following such acquisition, more than 50% of the then
outstanding shares of common stock of such corporation, is then beneficially
owned, directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners of the Outstanding Company Common
Stock immediately prior to such acquisition in substantially the same proportion
as their ownership, immediately prior to such acquisition, of the Outstanding
Company Common Stock, shall not constitute a Change in Control; or
b. Any
transaction which results in the Continuing Directors (as defined in the
Certificate of Incorporation of the Company) constituting less than a majority
of the Board of Directors of the Company; or
c. Approval
by the stockholders of the Company of (i) a reorganization, merger or
consolidation, in each case, with respect to which all or substantially all
of
the individuals and entities who were the beneficial owners of the Outstanding
Company Common Stock immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 50% of the then outstanding
shares of common stock of the corporation resulting from such a reorganization,
merger or consolidation, (ii) a complete liquidation or dissolution of the
Company or (iii) the sale or other disposition of all or substantially all
of
the assets of the Company, excluding a sale or other disposition of assets
to a
subsidiary of the Company.
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d. Anything
in this Agreement to the contrary notwithstanding, if an event that would,
but
for this paragraph, constitute a Change of Control results from or arises out
of
a purchase or other acquisition of the Company, directly or indirectly, by
a
corporation or other entity in which the Executive has a greater than ten
percent (10%) direct or indirect equity interest, such event shall not
constitute a Change of Control.
1.5 COMPANY.
For
purposes of this Agreement, "Company" shall mean Pressure BioSciences, Inc.
and
shall include its "Successors and Assigns" (as hereinafter
defined).
1.6 DISABILITY.
For
purposes of this Agreement, "Disability" shall mean a physical or mental
infirmity which impairs the Executive's ability to substantially perform his
duties with the Company for a period of one hundred eighty (180) consecutive
days, and the Executive has not returned to his full time employment prior
to
the Termination Date as stated in the "Notice of Termination" (as hereinafter
defined).
1.7 GOOD
REASON.
For
purposes of this Agreement, “Good Reason” shall mean:
a. Material
diminution in the Executive’s offices, titles and reporting requirements,
authority, duties or responsibilities as in effect as of a Change or Control
or
at any time in the ninety (90) days prior to a Change of Control or Notice
of
Termination;
b. Material
Reduction in the Executive’s Base Salary, unless such reduction is part of a
company wide reduction in salary for all similarly situated
executives;
c. The
Company requiring the Executive to be based at any office or location more
than
fifty (50) miles from the Company’s headquarters as of the date
hereof;
d. Any
purported termination by the Company of the Executive's employment otherwise
than as expressly permitted by this Agreement; or
e. Any
failure by the Company to comply with and satisfy Section 3 hereof.
1.8 NOTICE
OF TERMINATION.
For
purposes of this Agreement, "Notice of Termination" shall mean (i) a written
notice from the Company of termination of the Executive's employment which
indicates the specific termination provision in this Agreement relied upon,
if
any, and which sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated; or (ii) a written notice from the Executive of
his
resignation for Good Reason, which indicates the specific provision in Section
1.7 herein, and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for resignation by the Executive for
Good Reason.
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1.9 SUCCESSORS
AND ASSIGNS.
For
purposes of this Agreement, "Successors and Assigns" shall mean a corporation
or
other entity acquiring all or substantially all the assets and business of
the
Company (including this Agreement) whether by operation of law or
otherwise.
1.10 TERMINATION
DATE.
For
purposes of this Agreement, "Termination Date" shall mean in the case of the
Executive's death, his date of death, in the case of Good Reason, the last
day
of his employment, and in all other cases, the date specified in the Notice
of
Termination.
2. TERMINATION
OF EMPLOYMENT.
2.1 CHANGE
OF CONTROL.
If the
Executive's employment with the Company shall be terminated within twenty four
(24) months following a Change in Control, then the Executive shall be entitled
to the following compensation and benefits:
a. If
the
Executive's employment with the Company shall be terminated (1) by the Company
for Cause or Disability, (2) by reason of the Executive's death, or (3) by
the
Executive other than for Good Reason, the Company shall pay to the Executive
the
Accrued Compensation only.
b. If
the
Executive's employment with the Company shall be terminated without Cause by
the
Company or by Executive for Good Reason, then the Executive shall be entitled
to
each and all of the following:
i. The
Company shall pay the Executive all Accrued Compensation;
ii. The
Company shall continue to pay the Executive his Base Salary for a period of
two
(2) years from the Termination Date in accordance with its normal payroll
practices and subject to applicable tax withholding; provided, however, that
if
the Company determines that such payments would constitute deferred compensation
within the meaning of Section 409A of the Internal Revenue Code of 1986, as
amended, then the Executive agrees to the modifications with respect to timing
of such payments in accordance with Section 6 hereof; and
iii. Continue
to provide the Executive with medical and dental benefits on the same terms
and
conditions provided to other executives of the Company for a period of one
(1)
year from the Termination Date.
c. The
amounts provided for in Sections 2.1(a) and 2.1(b)(i) shall be paid in a single
lump sum cash payment within five (5) days after the Executive's Termination
Date (or earlier, if required by applicable law).
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2.2 TERMINATION
OTHER THAN CHANGE OF CONTROL.
If the
Executive's employment with the Company is terminated, other than within twelve
(12) months following a Change of Control, then the Executive shall be entitled
to the following compensation and benefits:
a. If
the
Executive's employment with the Company shall be terminated (1) by the Company
for Cause or Disability, (2) by reason of the Executive's death, or (3) by
the
Executive other than for Good Reason, the Company shall pay to the Executive
the
Accrued Compensation.
b. If
the
Executive's employment with the Company shall be terminated by Company without
Cause or by the Executive for Good Reason, then the Executive shall be entitled
to each and all of the following:
i. The
Company shall pay the Executive all Accrued Compensation;
ii. The
Company shall continue to pay the Executive his Base Salary for the period
of
one (1) year from the Termination Date in accordance with its normal payroll
practices and subject to applicable tax withholding; provided, however, that
if
the Company determines that such payments would constitute deferred compensation
within the meaning of Section 409A of the Internal Revenue Code of 1986, as
amended, then the Executive agrees to the modifications with respect to timing
of such payments in accordance with Section 6 hereof; and
iii. Continue
to provide the Executive with medical and dental benefits on the same terms
and
conditions provided to other executives of the Company for a period of one
(1)
year from the Termination Date.
c. The
amounts provided for in Sections 2.2(a) and 2.2(b)(i) shall be paid in a single
lump sum cash payment within five (5) business days after the Executive’s
Termination Date (or earlier, if required by applicable law).
2.3 MITIGATION.
The
Executive shall not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise and no such
payment shall be offset or reduced by the amount of any compensation or benefits
provided to the Executive in any subsequent employment except as provided in
Sections 2.1(b)(iii) and 2.2(b)(iii).
2.4 OTHER
SEVERANCE BENEFITS.
The
severance pay and benefits provided for in this Section 2 shall be in lieu
of
any other severance or termination pay to which the Executive would otherwise
be
entitled under any Company severance or termination plan, program, practice
or
arrangement.
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2.5 DIVESTITURE
OR SALE OF DIVISION.
Notwithstanding any other provision of this Agreement to the contrary, the
termination of the Executive's employment with the Company in connection with
the sale, divestiture or other disposition of a Subsidiary or "Division" (as
hereinafter defined) (or part thereof) shall not be deemed to be a termination
of employment of the Executive for purposes of this Agreement provided the
Executive accepts employment offered by the purchaser or acquirer of such
Subsidiary or Division (or part thereof) and provided, in the event such sale,
divestiture or other disposition of a Subsidiary or Division occurs subsequent
to or in connection with a Change in Control, the Company obtains an agreement
from such purchaser or acquiror as contemplated in Section 3(c). The Executive
shall not be entitled to benefits from the Company under this Agreement as
a
result of such sale, divestiture, or other disposition, or as a result of any
subsequent termination of employment. "Division" shall mean a business unit
or
other substantial business operation within the Company that is operated as
a
separate profit center, but that is not maintained by the Company as a separate
legal entity.
3. SUCCESSORS:
BINDING AGREEMENT.
a. This
Agreement shall be binding upon and shall inure to the benefit of the Company,
and its Successors and Assigns, and the Company shall require any Successors
and
Assigns to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform
it
if no such succession or assignment had taken place; provided, however, that
upon any such succession or assignment that constitutes or is in connection
with
a Change in Control, the obligations of the Company, and its Successors and
Assigns, under Section 2.2 of this Agreement shall terminate, and the
obligations under the remaining Sections of this Agreement, including but not
limited to Section 2.1, shall continue in full force and effect upon the
Executive and the corporation or other entity acquiring the assets and business
of the Company as contemplated within the definition of Successors and Assigns.
b. Neither
this Agreement nor any right or interest hereunder shall be assignable or
transferable by the Executive, his or her beneficiaries or legal
representatives, except by will or by the laws of descent and distribution.
This
Agreement shall inure to the benefit of and be enforceable by the Executive's
personal representative.
c. In
the
event that a Division (or part thereof) is sold, divested, or otherwise disposed
of by the Company subsequent to or in connection with a Change in Control and
the Executive is offered employment by the purchaser or acquiror thereof, the
Company shall require such purchaser or acquiror to assume, and agree to
perform, the Company's obligations under this Agreement, in the same manner,
and
to the same extent, that the Company would be required to perform if no such
acquisition or purchase had taken place; provided, however, neither such
purchaser or acquiror, nor the Company and its Successors and Assigns, shall
be
obligated under Section 2.2 of this Agreement, which Section 2.2 shall terminate
upon such acquisition or purchase.
4. ARBITRATION.
Any
dispute, controversy or claim arising out of or relating to this Agreement,
or
the breach, termination or invalidity hereof, (collectively, a "Claim") shall
be
settled by arbitration pursuant to the rules of the American Arbitration
Association. Any such arbitration shall be conducted by one arbitrator, with
experience in the matters covered by this Agreement, mutually acceptable to
the
parties. If the parties are unable to agree on the arbitrator within thirty
(30)
days of one party giving the other party written notice of intent to arbitrate
a
Claim, the American Arbitration Association shall appoint an arbitrator with
such qualifications to conduct such arbitration. The decision of the arbitrator
in any such arbitration shall be conclusive and binding on the parties. Any
such
arbitration shall be conducted in Boston, Massachusetts, unless the Executive
consents to a different location.
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5. NOTICE.
For the
purposes of this Agreement, notices and all other communications provided for
in
the Agreement (including the Notice of Termination) shall be in writing and
shall be (i) delivered by hand, (ii) transmitted by facsimile or electronic
mail
with receipt confirmed, (iii) delivered by overnight courier service with
confirmed receipt or (iv) mailed by first class U.S. mail postage pre-paid
and
registered or certified, return receipt requested and addressed to the
respective addresses last given by each party to the other, provided that all
notices to the Company shall be directed to the attention of the President
of
the Company. All notices and communications shall be deemed to have been
received on the date of delivery thereof or on the third business day after
the
mailing thereof, except that notice of change of address shall be effective
only
upon receipt.
6. 409A
COMPLIANCE.
Notwithstanding any other provision herein to the contrary, the Company shall
make the payments required hereunder in compliance with the requirements of
Section 409A of the Internal Revenue Code of 1986, as amended, and any
interpretative guidance issued thereunder. The Company may, in its sole and
absolute discretion, delay payments hereunder or make such other modifications
with respect to the timing of payments as it deems necessary to comply with
said
Section 409A.
7. RELEASE.
The
Executive agrees that, with the exception of the Accrued Compensation due to
him
in accordance with the terms hereunder, that the payment of any severance under
Section 2.1(b)(ii) and (iii) and Section 2.2(b)(ii) and (iii) is subject to
and
conditioned upon the execution and delivery by the Executive to the Company
of a
Settlement and Release Agreement (the “Release Agreement”) in favor of the
Company, its affiliates and their respective officers, directors, employees
and
agents in form and substance reasonably acceptable to the Company and the
expiration of any revocation period provided for under the Release
Agreement.
8. NO
EMPLOYMENT RIGHT.
This
Agreement does not constitute, and shall not be construed to provide, any
assurance of continuing employment. Executive's employment with the Company
and
of its Successors or Assigns is "at will," and, subject to the terms and
conditions of this Agreement, may be terminated by Executive or the Company
at
any time.
9. NON-DISPARAGEMENT.
Executive agrees that he will not make or cause to be disclosed any negative,
adverse or derogatory statements to any media outlet, industry group, financial
institution, consultant, client or customer of the Company or any of its
affiliates or any of their directors, officers, employees, agents or
representatives, or about any of the Company’s or its affiliates products or
services, business affairs, financial condition or prospects for the
future.
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10. MISCELLANEOUS.
No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing, specifying such
modification, waiver or discharge, and signed by the Executive and the Company.
11. GOVERNING
LAW.
This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the Commonwealth of Massachusetts without giving effect to the conflict
of laws principles thereof. Any action brought by any party to this Agreement
to
enforce any decision of an arbitrator made as contemplated in Section 5 above
shall be brought and maintained in a court of competent jurisdiction in the
Commonwealth of Massachusetts.
12. SEVERABILITY.
The
provisions of this Agreement shall be deemed severable, and the invalidity
or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
13. ENTIRE
AGREEMENT.
This
Agreement constitutes the entire agreement between the parties hereto and
supersedes all prior severance agreements, if any, understandings and
arrangements, oral or written, between the parties hereto with respect to the
subject matter hereof, provided, however, that any NonDisclosure and Development
Agreement and Non-Competition and Non-Solicitation Agreement shall remain in
full force and effect.
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IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer and the Executive has executed this Agreement as of
the
day and year first above written.
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PRESSURE
BIOSCIENCES, INC.
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By:
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Executive
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Xxxxxxx
X. Xxxxxxxxxx
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000
Xxxx Xxxxx Xxxxx
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Xxxxxxx,
XX 00000
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