EMPLOYMENT AGREEMENT
This AGREEMENT (the “Agreement”) is made as of August 9, 2007 (the “Effective Date”), by
and between EPIX Pharmaceuticals, Inc. (the “Employer”), and Xxxxxx Xxxxxxxxx, MD (the
“Executive”). In consideration of the mutual covenants contained in this Agreement, the Employer
and the Executive agree as follows:
1. Employment. The Employer agrees to employ the Executive and the Executive agrees
to be employed by the Employer on the terms and conditions set forth in this Agreement.
2. Capacity. The Executive shall initially serve the Employer as President & Head of
Research and Development, as elected by the Board of Directors of the Employer (the “Board of
Directors”). The Executive shall also serve the Employer in such other or additional offices as
the Executive may be requested to serve by the Board of Directors. In such capacity or capacities,
the Executive shall perform such services and duties in connection with the business, affairs and
operations of the Employer as may be assigned or delegated to the Executive from time to time by or
under the authority of the Board of Directors. The Executive shall work at the Employer’s
Lexington, Massachusetts office.
3. Term. Subject to the provisions of Section 6, the term of employment pursuant to
this Agreement (the “Term”) shall be one (1) year from the Effective Date and shall be renewed
automatically for periods of one (1) year commencing at the first anniversary of the Effective Date
and on each subsequent anniversary thereafter, unless either the Executive or the Employer gives
written notice to the other not less than sixty (60) days prior to the date of any such anniversary
of such party’s election not to extend the Term. For the purposes of this Agreement, the “Term”
shall include the initial year of this Agreement and any renewal period.
4. Compensation and Benefits. The regular compensation and benefits payable to the
Executive under this Agreement shall be as follows:
(a) Salary. For all services rendered by the Executive under this Agreement, the
Employer shall pay the Executive a salary (the “Salary”) at the annual rate of Three Hundred and
forty four thousand, six hundred and eighty eight dollars ($344,688), subject to increase from time
to time in the discretion of the Board of Directors or the Compensation Committee of the Board of
Directors (the “Compensation Committee”). The Salary shall be payable in periodic installments in
accordance with the Employer’s usual practice for its senior executives.
(b) Bonus. Beginning with the fiscal year ending 2007, the Executive shall be
eligible for an annual bonus under terms established by the Board of Directors or the Compensation
Committee with such terms as may be established in the sole discretion of the Board of Directors or
Compensation Committee.
(c) Stock Options. In consideration of the covenants contained in this Agreement, the
Executive has received a grant of stock options in accordance with the Employer’s Stock Option Plan
and will continue to be eligible to receive stock option grants
annually . That grant is subject to the terms and conditions of the Employer’s Stock Option Plan,
and any relevant grant agreement.
(d) Legal Fees. The Employer shall reimburse the Executive for up to $5000 in legal
fees incurred in connection with the negotiation and drafting of this Agreement.
(e) Regular Benefits. The Executive shall also be entitled to participate in any
employee benefit plans, medical insurance plans, life insurance plans, disability income plans,
retirement plans, vacation plans, expense reimbursement plans and other benefit plans which the
Employer may from time to time have in effect for all or most of its senior executives. Such
participation shall be subject to the terms of the applicable plan documents, generally applicable
policies of the Employer, applicable law and the discretion of the Board of Directors, the
Compensation Committee or any administrative or other committee provided for in or contemplated by
any such plan. Nothing contained in this Agreement shall be construed to create any obligation on
the part of the Employer to establish any such plan or to maintain the effectiveness of any such
plan which may be in effect from time to time.
(f) Taxation of Payments and Benefits. The Employer shall undertake to make
deductions, withholdings and tax reports with respect to payments and benefits under this Agreement
to the extent that it reasonably and in good faith believes that it is required to make such
deductions, withholdings and tax reports. Payments under this Agreement shall be in amounts net of
any such deductions or withholdings. Nothing in this Agreement shall be construed to require the
Employer to make any payments to compensate the Executive for any adverse tax effect associated
with any payments or benefits or for any deduction or withholding from any payment or benefit.
5. Extent of Service. During the Executive’s employment under this Agreement, the
Executive shall, subject to the direction and supervision of the Board of Directors, devote the
Executive’s full business time, best efforts and business judgment, skill and knowledge to the
advancement of the Employer’s interests and to the discharge of the Executive’s duties and
responsibilities under this Agreement. The Executive shall not engage in any other business
activity, including service as a director, board member or consultant to any other entity, except
as may be approved in advance, in writing, by the Board of Directors; provided that nothing in this
Agreement shall be construed as preventing the Executive from:
(a) investing the Executive’s assets in any company or other entity in a manner not prohibited
by Section 7(d) and in such form or manner as shall not require any material activities on the
Executive’s part in connection with the operations or affairs of the companies or other entities in
which such investments are made; or
(b) engaging in religious, charitable or other community or non-profit activities that do not
impair the Executive’s ability to fulfill the Executive’s duties and responsibilities under this
Agreement.
6. Termination and Termination Benefits. Notwithstanding the provisions of Section 3,
the Executive’s employment under this Agreement shall terminate under the following circumstances
set forth in this Section 6.
(a) Termination by the Employer for Cause. The Executive’s employment under this
Agreement may be terminated for cause without further liability on the part of the Employer
effective immediately upon a vote of the Board of Directors and written notice to the Executive.
Only the following shall constitute “Cause” for such termination:
(i) dishonesty of the Executive that is material to the business of the Employer;
(ii) the commission or indictment of the Executive for (A) a felony or (B) any
misdemeanor involving moral turpitude, deceit, dishonesty or fraud;
(iii) material failure to perform to the reasonable satisfaction of the Board of
Directors a substantial portion of the Executive’s duties and responsibilities assigned or
delegated under this Agreement, which failure continues, in the reasonable judgment of the
Board of Directors, for at least thirty (30) days after written notice given to the
Executive by the Board of Directors;
(iv) gross negligence, willful misconduct or insubordination of the Executive with
respect to the Employer or any affiliate of the Employer; or
(v) material breach by the Executive of any of the Executive’s obligations under this
Agreement.
(b) Termination by the Executive. The Executive’s employment under this Agreement may
be terminated by the Executive without Good Reason (as defined below) by written notice to the
Board of Directors at least sixty (60) days prior to such termination. The Executive’s employment
under this Agreement may be terminated by the Executive with Good Reason at any time. For the
purposes of this Agreement, Good Reason shall mean (i) a material reduction of the Executive’s
title or level of responsibility, such that she is no longer serving as the principal financial
officer of the Employer (ii) a reduction in the Executive’s Salary, or (iii) the relocation of the
Executive’s primary place of employment to a location more than 100 miles from Lexington,
Massachusetts.
(c) Termination by the Employer Without Cause. Subject to the payment of Termination
Benefits pursuant to Section 6(d), the Executive’s employment under this Agreement may be
terminated by the Employer without Cause upon written notice to the Executive by a vote of the
Board of Directors.
(d) Certain Termination Benefits. Unless otherwise specifically provided in this
Agreement or otherwise required by law, all compensation and benefits payable to the Executive
under this Agreement shall terminate on the date of termination of the Executive’s employment under
this Agreement , Notwithstanding the foregoing, in the event of termination of the Executive’s
employment with the Employer pursuant to Section 6(c) above or termination by the Executive with
Good Reason pursuant to Section 6(b) above, the Employer shall provide to the Executive the
following termination benefits (“Termination Benefits”), provided that the Executive executes a
valid and enforceable separation agreement and release of claims in a form (the “Release”) as
determined by the Employer
(i) a lump sum equal to twelve months Salary (at the rate then in effect pursuant to
Section 4(a)); and
(ii) continuation of group health plan benefits to the extent authorized by and
consistent with 29 U.S.C. § 1161 et seq. (commonly known as “COBRA”), with the cost of the
regular premium for such benefits shared in the same relative proportion by the Employer and
the Executive as in effect on the date of termination until the earlier of (A) the
expiration of the Term (assuming, for this purpose, that the Term expires at the next
anniversary hereof, whether or not a notice of non-renewal has been delivered) or (B) 12
months after the date of termination.; and
(iii) that portion of his or her bonus as had been accrued by the Employer in
accordance with generally accepted accounting principles as of the end of the fiscal quarter
immediately preceding such termination. This portion of the bonus will be paid to the
Executive at the time the Employer pays bonuses to other senior employees, provided that it
shall be paid no later than March 15 of the calendar year immediately following the fiscal
year during which termination of employment occurs.
(e) Payment of Termination Benefits. The lump sum payment set forth in subsection (i)
above shall be paid no earlier than six months and one day after the date of termination of the
Executive’s employment but no later than six months and fifteen days after the date of termination
of the Executive’s employment. The Employer’s liability for the lump sum payment pursuant to
Section 6(d)(i) shall be reduced by the amount of any severance pay due or otherwise paid to the
Executive pursuant to any severance pay plan or stay bonus plan of the Employer. Notwithstanding
the foregoing, nothing in this Section 6(d) shall be construed to affect the Executive’s right to
receive COBRA continuation entirely at the Executive’s own cost to the extent that the Executive
may continue to be entitled to COBRA continuation after the Executive’s right to cost sharing under
Section 6(d)(ii) ceases. The Release must be executed (without revocation) within six (6) months
of the end of the Executive’s employment with the Employer (the “Execution Period”). If the
Release is not executed (without revocation) within the Execution Period, the Employee shall
forfeit all rights to any Termination Benefits under this Agreement.
(f) Disability. If the Executive shall be disabled so as to be unable to perform the
essential functions of the Executive’s then existing position or positions under this Agreement
with reasonable accommodation, the Board of Directors may remove the Executive from any
responsibilities and/or reassign the Executive to another position with the Employer for the
remainder of the Term or during the period of such disability. Notwithstanding any such removal or
reassignment, the Executive shall continue to receive the Executive’s full Salary (less any
disability pay or sick pay benefits to which the Executive may be entitled under the Employer’s
policies) and benefits under Section 4 of this Agreement (except to the extent that the Executive
may be ineligible for one or more such benefits under applicable plan terms) for six (6) months
(subject to the payment schedule specified in the following sentence) and shall receive a pro rata
share of his or her bonus for the fiscal year in which such disability occurs pursuant to Section
4(b) above. If any question shall arise as to whether during any period the Executive is disabled
so as to be unable to perform the essential functions of the Executive’s then existing position or
positions with or without reasonable accommodation, the Executive may,
and at the request of the Employer shall, submit to the Employer a certification in reasonable
detail by a physician selected by the Employer to whom the Executive or the Executive’s guardian
has no reasonable objection as to whether the Executive is so disabled or how long such disability
is expected to continue, and such certification shall for the purposes of this Agreement be
conclusive of the issue. The Executive shall cooperate with any reasonable request of the
physician in connection with such certification. If such question shall arise and the Executive
shall fail to submit such certification, the Employer’s determination of such issue shall be
binding on the Executive. Nothing in this Section 6(e) shall be construed to waive the Executive’s
rights, if any, under existing law including, without limitation, the Family and Medical Leave Act
of 1993, 29 U.S.C. §2601 et seq. and the Americans with Disabilities Act, 42 U.S.C. §12101 et seq.
Notwithstanding the foregoing, in the event that the continuation of the Executive’s Salary
pursuant to this paragraph would result in any Salary payments being made after the end of the
Short-Term Deferral Period (as defined below), the Employer shall (i) continue to pay the
Executive’s Salary in the ordinary course until the end of the Short-Term Deferral Period and (ii)
before the end of the Short-Term Deferral Period, make a lump-sum payment to the Executive in an
amount equal to the difference between six months’ Salary and the amount of Salary continuation the
Executive has been paid in the ordinary course pursuant to this Section. For the purposes of this
Section, “Short-Term Deferral Period” shall mean the period beginning on the date that the
Executive becomes disabled and ending upon the later of (i) 2 1/2 months after the end of the
calendar year during which the Executive becomes disabled or (ii) 2 1/2 months after the end of the
Employer’s fiscal year during which the Executive becomes disabled. The purpose of this payment
schedule is to comply with the requirements of Section 409A of the U.S. Internal Revenue Code of
1986 (the “Code”).
7. Confidential Information, Noncompetition and Cooperation.
(a) Confidential Information. As used in this Agreement, “Confidential Information”
means information belonging to the Employer which is of value to the Employer in the course of
conducting its business and the disclosure of which could result in a competitive or other
disadvantage to the Employer. Confidential Information includes, without limitation, financial
information, reports, and forecasts; inventions, improvements and other intellectual property;
trade secrets; know-how; designs, processes or formulae; software; market or sales information or
plans; customer lists; and business plans, prospects and opportunities (such as possible
acquisitions or dispositions of businesses or facilities) which have been discussed or considered
by the management of the Employer. Confidential Information includes information developed by the
Executive in the course of the Executive’s employment by the Employer, as well as other information
to which the Executive may have access in connection with the Executive’s employment. Confidential
Information also includes the confidential information of others with which the Employer has a
business relationship. Notwithstanding the foregoing, Confidential Information does not include
information in the public domain, unless due to breach of the Executive’s duties under Section
7(b).
(b) Confidentiality. The Executive understands and agrees that the Executive’s
employment creates a relationship of confidence and trust between the Executive and the Employer
with respect to all Confidential Information. At all times, both during the
Executive’s employment with the Employer and after its termination, the Executive will keep in
confidence and trust all such Confidential Information, and will not use or disclose any such
Confidential Information without the written consent of the Employer, except as may be necessary in
the ordinary course of performing the Executive’s duties to the Employer.
(c) Documents, Records, etc. All documents, records, data, apparatus, equipment and
other physical property, whether or not pertaining to Confidential Information, which are furnished
to the Executive by the Employer or are produced by the Executive in connection with the
Executive’s employment will be and remain the sole property of the Employer. The Executive will
return to the Employer all such materials and property as and when requested by the Employer. In
any event, the Executive will return all such materials and property immediately upon termination
of the Executive’s employment for any reason. The Executive will not retain with the Executive any
such material or property or any copies thereof after such termination.
(d) Noncompetition and Nonsolicitation. During the Term and for one year thereafter
(or during the Termination Benefits Period, if longer), the Executive (i) will not, directly or
indirectly, whether as owner, partner, shareholder, consultant, agent, employee, co-venturer or
otherwise, engage, participate, assist or invest in any Competing Business (as hereinafter defined)
and (ii) will refrain (except on behalf of the Employer) from directly or indirectly employing any
person employed by the Employer as of the date of the Executive’s termination of employment with
the Employer. During the Term and for two years thereafter, the Executive (i) will refrain from
attempting to employ, recruiting or otherwise soliciting, inducing or influencing any person to
leave employment with the Employer (other than terminations of employment of subordinate employees
undertaken in the course of the Executive’s employment with the Employer); and (ii) will refrain
from soliciting or encouraging any customer or supplier to terminate or otherwise modify adversely
its business relationship with the Employer. The Executive understands that the restrictions set
forth in this Section 7(d) are intended to protect the Employer’s interest in its Confidential
Information and established employee, customer and supplier relationships and goodwill, and agrees
that such restrictions are reasonable and appropriate for this purpose. For purposes of this
Agreement, the term “Competing Business” shall mean a business conducted anywhere which is
competitive with any business which the Employer or any of its affiliates conducts or proposes to
conduct at any time during the employment of the Executive. Notwithstanding the foregoing, the
Executive may own up to one percent (1%) of the outstanding stock of a publicly held corporation
which constitutes or is affiliated with a Competing Business.
(e) Third-Party Agreements and Rights. The Executive hereby confirms that the
Executive is not bound by the terms of any agreement with any previous employer or other party
which restricts in any way the Executive’s use or disclosure of information or the Executive’s
engagement in any business. The Executive represents to the Employer that the Executive’s
execution of this Agreement, the Executive’s employment with the Employer and the performance of
the Executive’s proposed duties for the Employer will not violate any obligations the Executive may
have to any such previous employer or other party. In the Executive’s work for the Employer, the
Executive will not disclose or make use of any information in violation of any agreements with or
rights of any such previous employer or other party, and the Executive will not bring to the
premises of the Employer any copies or other
tangible embodiments of non-public information belonging to or obtained from any such previous
employment or other party.
(f) Litigation and Regulatory Cooperation. During and after the Executive’s
employment, the Executive shall cooperate fully with the Employer in the defense or prosecution of
any claims or actions now in existence or which may be brought in the future against or on behalf
of the Employer which relate to events or occurrences that transpired while the Executive was
employed by the Employer. The Executive’s full cooperation in connection with such claims or
actions shall include, but not be limited to, being available to meet with counsel to prepare for
discovery or trial and to act as a witness on behalf of the Employer at mutually convenient times.
During and after the Executive’s employment, the Executive also shall cooperate fully with the
Employer in connection with any investigation or review of any federal, state or local regulatory
authority as any such investigation or review relates to events or occurrences that transpired
while the Executive was employed by the Employer. The Employer shall reimburse the Executive for
any reasonable out-of-pocket expenses and time (at a mutually agreed upon rate) incurred in
connection with the Executive’s performance of obligations pursuant to this Section 7(f).
(g) Injunction. The Executive agrees that it would be difficult to measure any
damages caused to the Employer which might result from any breach by the Executive of the promises
set forth in this Section 7, and that in any event money damages would be an inadequate remedy for
any such breach. Accordingly, subject to Section 8 of this Agreement, the Executive agrees that if
the Executive breaches, or proposes to breach, any portion of this Agreement, the Employer shall be
entitled, in addition to all other remedies that it may have, to an injunction or other appropriate
equitable relief to restrain any such breach, without showing or proving any actual damage to the
Employer.
8. Arbitration of Disputes. Any controversy or claim arising out of this Agreement
or the breach thereof shall, to the fullest extent permitted by law, be settled by arbitration in
any forum and form agreed upon by the parties or, in the absence of such an agreement, under the
auspices of the American Arbitration Association (“AAA”) in Boston, Massachusetts in accordance
with the Employment Dispute Resolution Rules of the AAA, including, but not limited to, the rules
and procedures applicable to the selection of arbitrators. In the event that any person or entity
other than the Executive or the Employer may be a party with regard to any such controversy or
claim, such controversy or claim shall be submitted to arbitration subject to such other person or
entity’s agreement. Judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. This Section 8 shall be specifically enforceable. Notwithstanding the
foregoing, this Section 8 shall not preclude either party from pursuing a court action for the sole
purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in
which such relief is appropriate; provided that any other relief shall be pursued through an
arbitration proceeding pursuant to this Section 8.
9. Consent to Jurisdiction. To the extent that any court action is permitted
consistent with or to enforce Section 8 of this Agreement, the parties hereby consent to the
jurisdiction of the Superior Court of the Commonwealth of Massachusetts and the United States
District Court for the District of Massachusetts. Accordingly, with respect to any such court
action, the Executive (a) submits to the personal jurisdiction of such courts; (b) consents to
service of
process; and (c) waives any other requirement (whether imposed by statute, rule of court, or
otherwise) with respect to personal jurisdiction or service of process.
10. Integration. This Agreement, together with the Merger Agreement and any stock
option plans and grants, constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior agreements between the parties with respect to any
related subject matter.
11. Assignment; Successors and Assigns. Neither the Employer nor the Executive may
make any assignment of this Agreement or any interest herein, by operation of law or otherwise,
without the prior written consent of the other party; provided that the Employer may assign its
rights under this Agreement without the consent of the Executive in the event that the Employer
shall effect a reorganization, consolidate with or merge into any other corporation, partnership,
organization or other entity, or transfer all or substantially all of its properties or assets to
any other corporation, partnership, organization or other entity. This Agreement shall inure to
the benefit of and be binding upon the Employer and the Executive, their respective successors,
executors, administrators, heirs and permitted assigns.
12. Enforceability. If any portion or provision of this Agreement (including, without
limitation, any portion or provision of any section of this Agreement) shall to any extent be
declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this
Agreement, or the application of such portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion
and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by
law.
13. Waiver. No waiver of any provision hereof shall be effective unless made in
writing and signed by the waiving party. The failure of any party to require the performance of
any term or obligation of this Agreement, or the waiver by any party of any breach of this
Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a
waiver of any subsequent breach.
14. Notices. Any notices, requests, demands and other communications provided for by
this Agreement shall be sufficient if in writing and delivered in person or sent by a nationally
recognized overnight courier service or by registered or certified mail, postage prepaid, return
receipt requested, to the Executive at the last address the Executive has filed in writing with the
Employer or, in the case of the Employer, at its main offices, attention of the Chief Executive
Officer, (or, in the case of notices from Xxxxxxx Xxxxxxxx, attention of the Chairman) and shall be
effective on the date of delivery in person or by courier or three (3) days after the date mailed.
15. Amendment. This Agreement may be amended or modified only by a written instrument
signed by the Executive and by a duly authorized representative of the Employer.
16. Governing Law. This is a Massachusetts contract and shall be construed under and
be governed in all respects by the laws of the Commonwealth of Massachusetts, without giving effect
to the conflict of laws principles of such Commonwealth. With respect to any
disputes concerning federal law, such disputes shall be determined in accordance with the law
as it would be interpreted and applied by the United States Court of Appeals for the First Circuit.
17. Counterparts. This Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be taken to be an original; but such counterparts
shall together constitute one and the same document.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Employer,
by its duly authorized officer, and by the Executive, as of the Effective Date.
| EPIX PHARMACEUTICALS, INC. |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||
| /s/ Xxxxxx Xxxxxxxxx | ||||
| Employee | ||||
