EMPLOYMENT AGREEMENT
This
employment agreement (the “Agreement”) is made as of the 7th
day of
June, 2006 by and between Xxxxxxx X. Xxxx (hereinafter referred to as the
“Employee”) and Lev Pharmaceuticals, Inc., a Delaware corporation.
WITNESSETH:
WHEREAS,
Lev Pharmaceuticals, Inc. and its subsidiaries (the “Company”) are engaged in
the business of developing and commercializing therapeutic products for the
treatment of inflammatory diseases, and other related enterprises;
and
WHEREAS,
the Company desires to continue the employment the Employee for the purpose
of
securing for the Company the experience, ability and services of the Employee;
and
WHEREAS,
the Employee desires to continue employment with the Company pursuant to the
terms and conditions herein set forth, superseding all prior oral and written
employment agreements and term sheets and letters between the Company, its
subsidiaries and/or predecessors and Employee, except as specifically set forth
herein.
NOW,
THEREFORE, it is mutually agreed by and between the parties hereto as
follows:
ARTICLE
I
DEFINITIONS
1.1 Accrued
Compensation.“Accrued
Compensation” shall mean an amount which shall include all amounts earned or
accrued through the “Termination Date” (as defined below) but not paid as of the
Termination Date, including (i) Base Salary, (ii) reimbursement for business
expenses incurred by the Employee on behalf of the Company, pursuant to the
Company’s expense reimbursement policy in effect at such time, (iii) expense
allowance, and (iv) vacation pay per Company Policy.
1
1.2 Cause.
“Cause”
shall mean: (i) willful disobedience by the Employee of a reasonable, material
and lawful instruction of the Board of Directors or the Chief Executive Officer
of the Company consistent with the duties and functions of Employee’s position;
(ii) conviction of the Employee of any misdemeanor involving fraud or
embezzlement or similar crime, or any felony; (iii) fraud, gross negligence
or
willful misconduct in the performance of any material duties to the Company;
(iv) or a violation of any material provision of this Agreement or the
Confidentiality Agreement, as defined below; or (v) excessive absences from
work, other than for illness or Disability; provided that the Company shall
not
have the right to terminate the employment of Employee pursuant to the foregoing
clauses (i), (iii), (iv) or (v) above unless written notice specifying such
breach shall have been given to the Employee and, in the case of breach which
is
capable of being cured, the Employee shall have failed to cure such breach
within thirty (30) days after his receipt of such notice.
1.3
Continuation
Benefits.“Continuation
Benefits” shall be the continuation of the Benefits, as defined in Section 5.1,
for the period from the Termination Date to end of the month in which the final
Severance Payment (as defined below) installment is payable (the “Continuation
Period”), at the Company's expense, less any normal payroll deductions, on
behalf of the Employee and his dependents; provided, however, if any of the
Benefits required to be provided by the Company during the Continuation Period
under the Company’s benefit plans are, pursuant to the terms of such plans, not
available to non-employees of the Company, the Company, at its sole cost and
expense, less any normal payroll deductions, shall be required to provide such
benefits as shall be reasonably available and substantially similar to the
benefits provided to employees of the Company. The Company’s obligation
hereunder with respect to the foregoing benefits shall also be limited to the
extent that if the Employee obtains such benefits pursuant to a subsequent
employer's benefit plan, the Company may reduce the coverage of any benefits
it
is required to provide the Employee hereunder as long as the aggregate coverage
and benefits of the combined benefit plans is no less favorable to the Employee
than the coverage and benefits required to be provided hereunder. This
definition of Continuation Benefits shall not be interpreted so as to limit
any
benefits to which the Employee, his dependents or beneficiaries may be entitled
under any of the Company's employee benefit plans, programs or practices
following the Employee's termination of employment, including, without
limitation, retiree medical and life insurance benefits.
2
1.4 Disability.
“Disability” shall mean a physical or mental infirmity which impairs the
Employee's ability to substantially perform his duties with the Company for
a
period of ninety consecutive days, and the Employee has not returned to his
full
time employment prior to the Termination Date as stated in the “Notice of
Termination” (as defined below).
1.5 Notice
of Termination.
“Notice
of Termination” shall mean a written notice from the Company, or the Employee,
of termination of the Employee'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 Employee's employment under the provision so
indicated.
1.6 Severance
Payment.
“Severance Payment” shall mean an amount equal to the lesser of the sum of (i)
six months of Employee’s Base Salary in effect on the Termination Date, or (ii)
Employee’s Base Salary from the Termination to the Expiration Date; provided,
however, in the event of termination for Disability, the Severance Payment
shall
be six months of Employee’s Base Salary. The Severance Payment shall be payable
as provided in Section 8.
3
1.7
Termination
Date.
Termination Date shall mean (i) in the case of the Employee's death, his date
of
death; and (ii) in all other cases, the date specified in the Notice of
Termination; provided, however, (A) if the Employee’s employment is terminated
by the Company pursuant to Section 8.1(c), the date specified in the Notice
of
Termination shall be at least 30 days from the date the Notice of Termination
is
given to the Employee and (ii) that in the case of Disability, the Employee
shall not have returned to the full-time performance of his duties during such
period of at least 30 days.
ARTICLE
II
EMPLOYMENT
2.1
Subject to and upon the terms and conditions of this Agreement, the Company
hereby agrees to continue the employment of Employee, and the Employee hereby
accepts such employment, in the capacity of Chief Financial Officer.
4
ARTICLE
III
DUTIES
3.1 The
Employee shall, during the term of his employment with the Company, and subject
to the direction and control of the Board, report directly to the Chief
Executive Officer of the Company and shall exercise such authority, perform
such
executive duties and functions and discharge such responsibilities as are
reasonably associated with his position or as may be reasonably assigned or
delegated to him from time to time by the Chief Executive Officer or the Board,
consistent with his position as Chief Financial Officer. Employee shall perform,
in conjunction with the Company’s executive management, to the best of his
ability the following services and duties for the Company and its subsidiary
corporations (by way of example, and not by way of limitation):
|
(i)
|
Those
duties attendant to the executive position with the Company for which
he
was hired or appointed;
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(ii)
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Manage
the Company’s cash and investments in accordance with Board of Director
guidelines;
|
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(iii)
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Establish
and implement current and long range financial plans, objectives
and
policies, subject to the approval of the CEO and Board of
Directors;
|
| (iv) |
Manage
the Company’s accounting staff and accounting
consultants;
|
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(v)
|
Responsible
for the preparation and filing of all SEC related reports and registration
statements as well as all federal and state tax
returns;
|
| (vi) |
Participate
in the raising of capital either through public or private equity
transactions or through debt;
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(vii)
|
Participate
with executive management and the Board in the planning and execution
of
the Company’s business plan;
|
5
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(viii)
|
Assist
in the planning and negotiations of all acquisitions and dispositions
of
business units;
|
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(ix)
|
Promote
the relationships of the Company and its subsidiaries with their
respective employees, customers, suppliers, shareholders, analysts,
market
makers, fund managers and others in the business community;
and
|
|
(x)
|
Responsible
for the consolidation of financial statements of all Company subsidiaries
and divisions.
|
3.2 During
the term of this Agreement and excluding periods of vacation and sick leave
to
which the Employee is entitled, the Employee agrees to devote full business
time
and attention to the affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned hereunder, use his best efforts in
the
performance of his duties for the Company and any subsidiary corporation of
the
Company. During the term of this Agreement the Employee may, so long as it
does
not materially interfere with his duties hereunder: (i) subject to Article
VI
hereof, serve on the board of directors (or equivalent bodies) of civic,
non-profit, or charitable organizations or entities unaffiliated with the
Company, (ii) deliver lectures or otherwise participate in speaking engagements,
and (iii) manage his personal investments and affairs.
3.3 Employee
shall be based out of the Company’s principal office, currently located in New
York City, New York, and undertake regular travel to the Company’s operational
offices, and such other occasional travel within or outside the United States
as
is or may be reasonably necessary in the interests of the Company.
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ARTICLE
IV
COMPENSATION
4.1 During
the initial twelve month period of the term of this Agreement, Employee shall
be
compensated at the rate of $175,000 per annum (the “Base Salary”). Commencing on
the first anniversary of the Commencement Date, the Base Salary for the second
twelve month period of the term shall be $183,500. Future increases, if any,
shall be determined by the Board of Directors or
if the
Board so designates, the Compensation Committee,
in its
discretion, on each subsequent 12-month anniversary of the Commencement Date.
4.2 The
Company shall deduct from Employee’s compensation all federal, state, and local
taxes which it may now or may hereafter be required to deduct under applicable
law.
4.3 Employee
may receive such other additional compensation as may be determined from time
to
time by the Board including bonuses and other long term compensation plans.
Nothing in this subparagraph 4.3 shall be deemed or construed to require the
Board to award any bonus or additional compensation.
ARTICLE
V
BENEFITS
5.1 During
the term hereof, the Company shall provide Employee with the following benefits,
as such benefits may change from time to time (the “Benefits”): (i) group health
care and insurance benefits as generally made available to the Company’s
management; and (ii) such other benefits (including insurance related benefits,
holiday, sick leave, personal days, etc.) obtained by the Company or made
generally available to the Company’s management;
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5.2 In
addition, the Company shall reimburse Employee, upon presentation of the
Company’s standard expense report accompanied by appropriate vouchers and other
suitable documentation, incurred by Employee on behalf of the Company, provided
such expenditure is consistent with Company policy.
5.3 In
the
event the Company wishes to obtain Key Man life insurance on the life of
Employee, Employee agrees to cooperate with the Company in completing any
applications necessary to obtain such insurance and promptly submit to such
physical examinations and furnish such information as any proposed insurance
carrier may request.
54 For
the
term of this Agreement, Employee shall be entitled to paid vacation at the
rate
of three (3) weeks per annum during the initial twelve months under this
Agreement and four (4) weeks per annum thereafter.
ARTICLE
VI
NON-DISCLOSURE
AND RESTRICTIVE COVENANTS
6.1
All
terms and provisions of the Employee Confidentiality, Non-Solicitation and
Invention Assignment Agreement by and between the Employee and the Company
dated
June 1, 2005 (the “Confidentiality Agreement”) is hereby incorporated into this
Agreement in full. Notwithstanding the foregoing, the Confidentiality Agreement
shall remain in full force and effect according to its terms.
6.2 In
addition to the obligations of the Employee pursuant to the Confidentiality
Agreement, Employee hereby agrees that while
Employee
is employed by the Company, and for
a
period of six (6) months following
termination of employment, Employee will not, either directly or indirectly,
either as a principal, agent, employee, independent contractor, employer,
partner or shareholder (other than as an owner of 2% or less of the stock of
a
public corporation) enter
into or become associated with or engage in any other business, which
business is primarily involved in (i) developing and/or commercializing,
directly or indirectly, therapeutic products for the treatment of inflammatory
diseases, including, but not limited to (A) products based on C1-esteraste
inhibitor or (B) products to treat medical indications including, without
limitation, hereditary angioedema, acute myocardial infarction, and other
conditions in which inflammation is known or believed to play an underlying
role; or (ii) is otherwise engaged in the same or similar business as the
Company in direct competition with the Company, or which the Company was in
the
process of developing during the term of Employee’s employment with the Company.
If
any
court shall hold that the duration of non-competition or any other restriction
contained in this Article VI is unenforceable, it is our intention that same
shall not thereby be terminated but shall be deemed amended to delete therefrom
such provision or portion adjudicated to be invalid or unenforceable or, in
the
alternative, such judicially substituted term may be substituted
therefor.
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ARTICLE
VII
TERM
7.1 This
Agreement shall be effective upon execution by both parties hereto and the
employment term (the “Term”) shall commence as of June 7, 2006 (the
“Commencement Date”). The Term shall continue for a period of two years after
the Commencement Date unless sooner terminated by either the Company or Employee
in accordance with the terms and conditions set forth in Article VIII.
7.2 Upon
termination the Employee’s employment with the Company, the Company shall pay
Employee, in addition to any other payments due hereunder, the amounts due
under
Article VIII.
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ARTICLE
VIII
TERMINATION
8.1 The
Company may terminate this Agreement by giving a Notice of Termination to the
Employee in accordance with this Agreement:
| a. |
for
Disability;
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| b. |
for
Cause
|
|
c.
|
without
Cause.
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8.2 Employee
may terminate this Agreement at any time by giving a Notice of Termination
to
the Company at least thirty days prior to the date on which such termination
is
to be effective, in accordance with this Agreement.
8.3
If
the
Employee’s employment with the Company shall be terminated, the Company shall
pay and/or provide to the Employee the following compensation and
benefits:
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a.
|
if
the Employee was terminated by the Company for Cause, the Accrued
Compensation;
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b.
|
if
the Employee was terminated by the Company for Disability, the Accrued
Compensation, the Severance Payment and the Continuation Benefits;
or
|
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c.
|
if
termination was due to the Employee’s death, the Accrued Compensation;
or
|
10
|
d.
|
if
the Employee was terminated by the Company without Cause, (i) the
Accrued
Compensation; (ii) the Severance Payment; and (iii) the Continuation
Benefits.
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8.4
The
amounts payable under Section 8.3, shall be paid as follows:
|
a.
|
Accrued
Compensation shall be paid within ten days of the Termination Date
(or
earlier, if required by applicable law).
|
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b.
|
If
the Continuation Benefits are paid in cash, the aggregate amount
of the
Continuation Benefits shall
be made on the first day of each month during the Continuation Period
(or
earlier, if required by applicable
law).
|
|
c.
|
The
Severance Payments shall be paid in equal installments on the Company’s
regular pay dates over the period during which the Severance Payments
are
made, commencing on the first regular pay date after the Termination
Date
(or earlier, if required by applicable law);
|
8.5 The
Employee shall not be required to mitigate the amount of any payment, including
the value of any Continuation Benefit, 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 Employee in any
subsequent employment except as provided in Sections 1.3.
8.6 For
a
period of three years following the termination of this Agreement, Employee
agrees that he will not make any negative or derogatory statements in verbal,
written, electronic or any other form about the Company, including, but not
limited to, a negative or derogatory statement made in, or in connection with,
any article or book, on a website, in a chat room or via the internet except
where such statement is required by law or regulation. During such three year
period, none of the executive officers and directors shall make any negative
or
derogatory statements in verbal, written, electronic or any other form about
the
Employee, including, but not limited to, a negative or derogatory statement
made
in, or in connection with, any article or book, on a website, in a chat room
or
via the internet except where such statement is required by law or
regulation.
11
ARTICLE
IX
TERMINATION
OF PRIOR AGREEMENTS
9.1 This
Agreement, and the stock option, bonus plan and benefit plans, sets forth the
entire agreement between the parties and supersedes all prior agreements,
letters and understandings between the parties, whether oral or written prior
to
the effective date of this Agreement except for existing stock option agreements
and the Confidentiality Agreement.
ARTICLE
X
STOCK
OPTIONS
10.1 As
an
inducement to Employee to enter into this Agreement the Company hereby grants,
as of the date of this Agreement, to Employee options to purchase shares of
the
Company’s Common Stock, $.01 par value, as follows:
Subject
to the terms and conditions of the Company’s 2004 Omnibus Incentive Compensation
Plan (the “Plan”), and the terms and conditions set forth in the Stock Option
Agreement which are incorporated herein by reference, the Employee is hereby
granted options to purchase 125,000 shares of the Company’s Common Stock, of
which options to purchase 62,500 shares shall vest on the first anniversary
of
the Commencement Date and the balance of 62,500 options shall vest on the second
anniversary of the Commencement Date, provided that Employee continues to be
an
employee of the Company and subject to Section 10.2 hereto (the “Options”). The
exercise price of the Options shall be equal to the closing price of the
Company’s stock on the Commencement Date and shall contain such other terms and
conditions as set forth in the stock option agreement. The foregoing Options
shall be qualified as incentive stock options to the maximum amount as allowed
by law. The Options provided for herein are not transferable by Employee and
shall be exercised only by Employee, or by his legal representative or executor,
as provided in the Plan. Such Options shall terminate as provided in the Plan,
except as otherwise modified by this Agreement.
12
10.2 In
the
event of a termination of Employee’s employment with the Company pursuant to
Section 8.1(c), notwithstanding anything herein or in any stock option agreement
to the contrary, the Employee’s right to purchase shares of Common Stock of the
Company pursuant to any stock option or stock option plan to the extent vested
as of the Termination Date, shall remain exercisable for a period of three
months following the Termination Date, but in no event after the expiration
of
the exercise period. In the event of a termination of Employee’s employment with
the Company pursuant to Section 8.1(b), options granted and not exercised as
of
the Termination Date shall terminate immediately and be null and void. In the
event of a termination of Employee’s employment with the Company due to the
Employee’s death, or Disability, the Employee’s (or his estate’s or legal
representative’s) right to purchase shares of Common Stock of the Company
pursuant to any stock option or stock option plan to the extent vested as of
the
Termination Date shall remain exercisable for a period of twelve (12) months
following the Termination Date, but in no event after the expiration of the
exercise period. In the event of a termination of Employee’s employment with the
Company by the Employee, the Employee’s right to purchase shares of Common Stock
of the Company pursuant to any stock option or stock option plan to the extent
vested as of the Termination Date shall remain exercisable for a period of
three
months following the Termination Date, but in no event after the expiration
of
the exercise period.
10.3 Notwithstanding
the foregoing, in the event of a Change of Control (as defined
in the Plan), the Options granted hereunder shall become immediately
vested and exercisable in accordance with, and subject to, the terms and
conditions of the Plan.
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ARTICLE
XI
ARBITRATION
AND INDEMNIFICATION
11.1 Any
dispute arising out of the interpretation, application, and/or performance
of
this Agreement with the sole exception of any claim, breach, or violation
arising under Article VI hereof shall be settled through final and binding
arbitration before a single arbitrator in the State of New York in accordance
with the Rules of the American Arbitration Association. The arbitrator shall
be
selected by the American Arbitration Association and shall be an attorney-at-law
experienced in the field of corporate law. Any judgment upon any arbitration
award may be entered in any court, federal or state, having competent
jurisdiction of the parties.
11.2 The
Company hereby agrees to indemnify, defend, and hold harmless the Employee
for
any and all claims arising from or related to his employment by the Company
at
any time asserted, at any place asserted, to the fullest extent permitted by
law. The provisions of this Section are in addition to and not in lieu of any
indemnification, defense or other benefit to which Employee may be entitled
by
statute, regulation, common law or otherwise.
14
ARTICLE
XII
SEVERABILITY
If
any
provision of this Agreement shall be held invalid and unenforceable, the
remainder of this Agreement shall remain in full force and effect. If any
provision is held invalid or unenforceable with respect to particular
circumstances, it shall remain in full force and effect in all other
circumstances.
ARTICLE
XIII
NOTICE
For
the
purposes of this Agreement, notices and all other communications provided for
in
the Agreement shall be in writing and shall be deemed to have been duly given
when (a) personally delivered or (b) sent by (i) a nationally recognized
overnight courier service or (ii) certified mail, return receipt requested,
postage prepaid and in each case addressed to the respective addresses as set
forth below or to any such other address as the party to receive the notice
shall advise by due notice given in accordance with this paragraph. All notices
and communications shall be deemed to have been received on (A) if delivered
by
personal service, the date of delivery thereof; (B) if delivered by a nationally
recognized overnight courier service, on the first business day following
deposit with such courier service; or (C) on the third business day after the
mailing thereof via certified mail. Notwithstanding the foregoing, any notice
of
change of address shall be effective only upon receipt.
The
current addresses of the parties are as follows:
| IF TO THE COMPANY: | Lev Pharmaceuticals, Inc. |
| 000 Xxxx 00xx Xxxxxx | |
| Xxxxx 0000 | |
| Xxx Xxxx, XX 00000 | |
15
| WITH A COPY TO: | Xxxxxx X. XxXxxxx |
| Xxxxxxxxx & XxXxxxx, LLP | |
| 00 Xxxxxxxx | |
| Xxx Xxxx, XX 00000 | |
| IF TO THE EMPLOYEE: | Xxxxxxx X. Xxxx |
| WITH A COPY TO: | |
ARTICLE
XIV
BENEFIT
This
Agreement shall inure to, and shall be binding upon, the parties hereto, the
successors and assigns of the Company, and the heirs and personal
representatives of the Employee.
ARTICLE
XV
WAIVER
The
waiver by either party of any breach or violation of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
of construction and validity.
ARTICLE
XVI
GOVERNING
LAW
This
Agreement has been negotiated and executed in the State of New York. The law
of
the State of New York shall govern the construction and validity of this
Agreement.
16
ARTICLE
XVII
JURISDICTION
Any
or
all actions or proceedings which may be brought by the Company or Employee
under
this Agreement shall be brought in courts having a situs within the State of
New
York, and Employee and the Company each hereby consent to the jurisdiction
of
any local, state, or federal court located within the State of New
York.
ARTICLE
XVIII
ENTIRE
AGREEMENT
This
Agreement contains the entire agreement between the parties hereto. No change,
addition, or amendment shall be made hereto, except by written agreement signed
by the parties hereto.
IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement and affixed their hands and seals
the day and year first above written.
| Lev Pharmaceuticals, Inc. | ||
| |
|
|
| By: | ||
|
Xxxxxx X. Xxxxxx |
||
| Chief Executive Officer | ||
| Employee | ||
| |
|
|
| By: | ||
|
Xxxxxxx X. Xxxx |
||
| Employee | ||
17
