April 25, 2007
Exhibit
10.3
Xxxxx
00,
0000
X.
Xxxxx
Xxxxxxxxx, M.D.
c/o
Keryx
Biopharmaceuticals, Inc.
000
Xxxxxxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Dear
Xx.
Xxxxxxxxx:
This
letter agreement (this “Agreement”) will confirm your employment (“Executive” or
“you”) with Keryx Biopharmaceuticals, Inc. (the “Corporation”), under the
following terms and conditions and for the following consideration:
1. Term
of Agreement; Compensation.
(a) This
agreement shall continue until April 25, 2009
(the
“Employment Term”),
unless
terminated at an earlier date in accordance with the provisions of Section
9,
below. In addition, the Employment Term shall be automatically renewed for
a
period of one year on each expiration date unless either party provides six
months prior written notice of non-renewal to the other party. This agreement
supercedes the employment agreement between you and the Corporation dated
January 31, 2004, set to expire on January 31, 2007.
(b) Executive
shall be paid $315,000 per year (the “Base Salary”), payable on a bi-monthly
basis in arrears;
provided
that Executive’s Base Salary shall be increased annually in accordance with
corporate policy but no less than the Consumer Price Index announced for the
previous calendar year.
(c) Executive
shall be eligible to an annual performance bonus of up to 50% of the Base Salary
(the “Performance Bonus”) based on (i) annual target performance objectives to
be agreed upon by the Corporation’s Chief Executive Officer (the “CEO”) and the
Executive on or before the December 15 immediately preceding fiscal year for
which the Performance Bonus shall be applicable and (ii) approved by the
Compensation Committee of the Board of Directors.
(d) You
shall
receive the restricted stock (the “Restricted Stock”) and the potential
milestone bonuses (the “Milestone Bonuses”) as set forth on Exhibit
B.
(e) From
time
to time, at the discretion of the Board of Directors, you may be eligible for
additional stock option and restricted stock grants.
2. Position
and Responsibilities.
(a) Subject
to the terms and conditions set forth herein, the Corporation hereby engages
and
employs the Executive, and the Executive hereby accepts engagement and
employment, as President of the Corporation. As such he shall have such
responsibilities and duties as delegated by the CEO. Executive shall report
directly to the CEO.
(b)
Executive
will devote substantially all of his gainful time to the discharge of his duties
and responsibilities under this Agreement.
(c)
Executive
acknowledges and agrees that the performance by Executive of his duties
hereunder may require significant domestic and international travel by
Executive.
3. Vacation. Executive
shall
be
entitled to four (4) weeks of paid vacation during each calendar
year.
4. Non-Competition. Executive
understands and recognizes that his services to the Corporation are special
and
unique and agrees that, during the Employment Term and for a period of one
(1)
year from the date of termination of the Employment Term, Executive shall not
in
any manner, directly or indirectly, on behalf of Executive or any person, firm,
partnership, joint venture, corporation or other business entity (“Person”),
enter into, engage in or consult for any commercial business that operates
a
proprietary product development business, a clinical research business, site
management organization, and/or clinical research network , in each case which
is competitive with the business of the Corporation, either as an individual
for
his/her own account, or as a proprietor, partner, member, joint venturer,
employee, consultant, agent, salesperson, officer, director or shareholder
(the
“Restricted Businesses”) within the geographic area of the Corporation’s
business; provided, however, that nothing shall prevent the Executive from
purchasing shares of any company in the public market or for working for a
company that conducts a Restrictive Business, so long as Executive works in
a
division of such company that is not engaged in a Restricted Business. Executive
acknowledges and agrees that given the services to be provided hereunder that
this non-compete clause is reasonable. Notwithstanding the foregoing, Executive
may perform advisory and speaker activities on behalf of other pharmaceutical
and medical communications companies and the Corporation explicitly agrees
that
those activities are not prohibited by this Section 4.
5. Confidential
Information. (a) Executive
agrees that during the course of the Employment Term or at any time after
termination, Executive will keep in strictest confidence and will not disclose
or make accessible to any other person without the prior written consent of
the
Corporation, the Corporation's products, services, business plan, manner of
doing business and technology, both current and under development, promotion,
marketing and educational programs, customer and other lists, trade secrets
and
other confidential and proprietary business information of the Corporation
or
any of its clients and third parties including, without limitation, Proprietary
Information (as defined in Section 6) (all the foregoing collectively being
referred to herein as the “Confidential Information”). Executive agrees: (i) not
to use any such Confidential Information for himself or others, (ii) not to
disclose or publish any of the Confidential Information and (iii) not to take
any such material or reproductions thereof from the Corporation's facilities
at
any time during the Employment Term except, in each case, as required in
connection with Executive's duties to the Corporation.
2
(b) Upon
written notice by the Corporation, Executive shall promptly redeliver to the
Corporation, or, if requested by the Corporation, promptly destroy all written
or electronic Confidential Information and any other written or electronic
material containing any information included in the Confidential Information
(whether prepared by the Corporation, Executive, or a third party), and will
not
retain any copies, extracts or other reproductions in whole or in part of such
written or electronic Confidential Information (and upon request certify such
redelivery or destruction to the Corporation in a written instrument reasonably
acceptable to the Corporation and its counsel).
6. Ownership
Of Proprietary Information. (a) Executive
agrees that all information, materials and/or inventions created, discovered
or
developed by Executive under this Agreement (collectively, the “Inventions”), by
the Corporation, its subsidiaries, affiliates or licensors or made known to
the
Corporation or any of its affiliates by Executive during the Employment Term
and
information relating to the Corporation's customers, suppliers, consultants,
and
licensees, and/or in which property rights have been assigned or otherwise
conveyed to the Corporation or its affiliates, shall be the sole property of
the
Corporation or the affiliates, as applicable, and the Corporation or the
affiliates, as the case may be, shall be the sole owner of all patents,
copyrights and other rights in connection therewith, including without
limitation the right to make application for statutory protection. All of the
aforementioned information is hereinafter called “Proprietary Information.” By
way of illustration, but not limitation, Proprietary Information includes web
pages, computer programs, trade secrets, processes, discoveries, structures,
inventions, designs, ideas, works of authorship, copyrightable works,
trademarks, copyrights, formulas, data, know-how, show-how, improvements,
inventions, product concepts, techniques, information or statistics contained
in, or relating to, marketing plans, xxxxxx-xxxx, forecasts, blueprints,
sketches, records, notes, devices, drawings, customer lists, patent
applications, continuation applications, continuation-in-part applications,
file
wrapper continuation applications and divisional applications and information
about the Corporation's or its affiliates' employees and/or consultants
(including, without limitation, the compensation and job responsibility of
such
employees and/or consultants).
(b) Executive
shall maintain and furnish to the Corporation complete and current records
of
all such Inventions and disclose to the Corporation in writing all such
Inventions. Executive: (i) hereby assigns, sets over and transfers to the
Corporation all of his right, title, and interest in and to such Inventions;
and
(ii) agrees that Executive and his agents shall, during and after the period
Executive is retained by the Corporation, upon reasonable request of the
Corporation, cooperate fully in obtaining patent, trademark, service xxxx,
copyright or other proprietary protection for such Inventions, all in the name
of the Corporation (but only at Corporation expense), and, without limitation,
shall execute all requested applications, assignments and other documents,
and
take such other measures as the Corporation shall reasonably request in order
to
perfect and enforce the Corporation's rights in such Inventions, and hereby
appoints the Corporation as Executive’s attorney to execute and deliver any such
applications, assignments or other documents on Executive’s behalf in the event
that the Executive fails or refuses to execute and deliver any such
applications, assignments or other documents requested by the
Corporation.
3
(c) In
addition, Executive agrees to execute the Corporation’s standard form
Proprietary Information and Inventions Agreement.
7. Non-Solicitation.
During
the Employment Term, and for one (1) year thereafter, Executive shall not,
directly or indirectly, without the prior written consent of the Corporation:
(a) interfere with, disrupt or attempt to disrupt any past, present or
prospective relationship, contractual or otherwise, between the Corporation
and
any of its licensors, licensees, clients, customers, suppliers, employees,
consultants or other related parties, or (b) solicit or induce for hire any
of
the employees, agents, consultants or advisors of the Corporation or any such
individual who in the past was employed or retained by the Corporation, within
six (6) months of the termination of said individual's employment or retention
by the Corporation; provided, however,
that
this prohibition shall not apply to consultants or advisors so long as Executive
is not in violation of his non-compete agreement and such consultants and
advisors do not terminate their relationship with the Corporation as a result
of
their involvement with the Executive, or (c) solicit or accept employment or
be
retained by any party who, at any time during the Employment Term, was a
customer or supplier of the Corporation or any of its affiliates or any licensor
or licensee thereof where such person’s position will be related to a Restricted
Business (as such term is defined in paragraph 4 above); or (d) solicit or
accept the business of any customer or supplier of the Corporation or any
affiliate of the Corporation with respect to products similar to those supplied
by the Corporation or such affiliate.
8. Expenses
& Benefits. (a) The
Corporation will promptly reimburse Executive for all reasonable and necessary
business expenses incurred by him/her in connection with providing the
employment services under this Agreement.
(b) The
Corporation shall make available to Executive similar health benefits and other
benefits that it makes available to its other senior executives.
9. Termination;
Severance and Accelerated Vesting. (a)
If
the Corporation terminates your employment without Just Cause (as defined in
Exhibit A hereto) or you terminate your employment for Good Reason (as defined
in Exhibit A hereto), then Executive will be entitled to receive the amounts
set
forth under paragraph 9(b) below and Executive shall receive one additional
year
of vesting on all time-based stock options and Restricted Stock granted to
you;
provided, however, if your employment is terminated in accordance with this
paragraph 9(a) in anticipation of or within 12 months following a Qualified
Change in Control (as defined in Exhibit A hereto) then you shall be entitled
to
immediate vesting of all remaining unvested stock options, Restricted Stock
and
Milestone Bonuses (as defined in Exhibit B hereto). Additionally, regardless
of
such termination, your stock options shall provide that they remain exercisable
until the earlier of: (i) 2 years following such termination and (ii) for the
full term of such options.
4
(b) In
the
event your employment is terminated in accordance with paragraph 9(a), you
shall
receive a lump-sum payment equal to: (i) one (1) year’s Base Salary; (ii) any
earned and unpaid bonus as of the date of termination; and (iii) any incurred
and unpaid expenses; provided, however, if your employment is terminated in
accordance with paragraph 9(a) in anticipation of or within 12 months following
a Qualified Change in Control then you instead will be entitled to a lump-sum
payment equal to: (i) two (2) year’s Base Salary; (ii) any earned and unpaid
bonus as of the date of termination; and (iii) any incurred and unpaid
expenses.
(c) In
the
event that your employment is terminated as a result of death or Disability
(as
defined in Exhibit A) of the Executive, then Executive or his estate
or
legal representative shall receive a lump-sum payment equal to (a) Base Salary
through the date of termination, (b) any earned and unpaid bonus and (c) any
incurred and unpaid expenses.
(d)
Notwithstanding
the foregoing, the Corporation may terminate the Executive immediately and
without prior notice for Just Cause. In the event that the Executive’s
employment has been terminated for Just Cause, the Executive shall not be
entitled to receive any of the severance benefits set forth in this Section
9,
but he shall be entitled to any unpaid wages, bonuses, and any benefits under
the benefit and compensation plans, policies and arrangements of the Corporation
in which in he participates, which have accrued through his date of
termination.
(e) Code
Section 409A.
Notwithstanding
anything
in this Agreement to the contrary, if any amount or benefit that would
constitute “deferred compensation” for purposes of Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”) would otherwise be payable or
distributable under this Agreement by reason of Executive’s separation from
service, then if and to the extent necessary to comply with Code Section 409A:
(i) if the payment or distribution of such amount or benefit is payable in
a
lump sum, such payment or distribution will be delayed until the first day
following the six-month anniversary of Executive’s separation from service, and
(ii) if the payment or distribution of such amount or benefit is payable over
time, the amount that would otherwise be payable during the six-month period
immediately following Executive’s separation from service will be accumulated
and paid to Executive on the first day following the six-month anniversary
of
Executive’s separation from service, whereupon the normal payment or
distribution schedule will resume. In the case of any such delayed payment,
the
Corporation shall pay interest on the deferred amount at 100% of the short-term
applicable federal rate as in effect for the month in which the Date of
Termination occurred (the “AFR”).
10. Indemnification.
The
Corporation shall defend and indemnify Executive in his capacity as President
and Director of the Corporation against any and all claims, judgments, damages,
liabilities, costs and expenses (including reasonable attorney’s fees) arising
out of, based upon or related to the Executive’s performance of services
hereunder, except to the extent that such claims arise out of Executive’s (a)
willful misconduct, (b) bad faith, (c) gross negligence or (d) reckless
disregard of the duties involved in the conduct of Executive’s position, or such
indemnification would violate applicable law or the Corporation’s bylaws or
Certificate of Incorporation.
5
11. Entire
Agreement; Waiver. This
Agreement contains the entire understanding of the parties with respect to
the
retention of Executive by the Corporation. There are no restrictions,
agreements, promises, warranties, covenants or undertakings between the parties
with respect to the subject matter herein other than those expressly set forth
herein. This Agreement may not be altered, modified, or amended except by
written instrument signed by the parties hereto.
12. Governing
Law.
This
Agreement shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New York without regard to such State’s
principles of conflict of laws. The parties hereto consent to the exclusive
jurisdiction of the courts of the State of New York or any district court
sitting in the State of New York for any disputes arising under this letter
agreement.
13.
Remedies.
The
Executive understands and agrees that any breach of Sections 5, 6 and/or 7
of
this Agreement by him could cause irreparable damage to the Corporation and
its
affiliates, and that monetary damages alone would not be adequate and, in the
event of such breach, the Corporation shall have, in addition to any and all
remedies of law, the right to an injunction, specific performance or other
equitable relief to prevent or redress the violation of the Corporation’s rights
under such Sections.
14. Headings.
The
headings of the Sections are inserted for convenience of reference only and
shall not affect any interpretation of this Agreement.
15. Severability
of Provisions.
If any
provision of this Agreement shall be declared by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced in whole
or
in part, such provision shall be interpreted so as to remain enforceable to
the
maximum extent permissible consistent with applicable law. The remain-ing
condi-tions and provisions or portions thereof shall neverthe-less remain in
full force and effect and enforceable to the extent they are valid, legal and
enforce-able, and no provision shall be deemed dependent upon any other
cove-nant or provision unless so expressed herein.
6
IN
WITNESS WHEREOF,
the
parties hereto have executed this Letter Agreement as of the day and year first
written above.
|
EXECUTIVE:
by:/s/
I. Xxxxx
Xxxxxxxxx
Name:
I. Xxxxx Xxxxxxxxx, M.D.
|
CORPORATION:
KERYX
BIOPHARMACEUTICALS, INC.
by:/s/
Xxxxxxx X.
Xxxxx
Name:
Xxxxxxx X. Xxxxx
Title: Chairman
& CEO
|
7
Exhibit
A
Certain
Definitions
|
1.
|
Just
Cause.
Any of the following actions by the Executive shall constitute just
cause
for termination by the Chairman of the Board of Directors of the
Corporation:
|
|
(A)
|
Material
breach by the Executive of the confidentiality, non-compete, ownership
of
inventions and non-solicitation covenants contained in this Agreement;
or
|
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(B)
|
Any
action by the Executive constituting willful misconduct in respect
of the
Executive’s obligation to the Corporation that has or is likely to result
in material, economic damage to the Corporation;
or
|
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(C)
|
The
willful and continual failure or refusal by the Executive to perform
his
duties as under this Agreement (other than by reason of death or
Disability, as defined below, or other reasons beyond Executive’s
control), provided such failure or refusal continues for a period
of 30
days after receipt of written notice thereof from the CEO in reasonable
detail of such failure or refusal;
or
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(D)
|
Conviction
of any crime which involves (i) an intentional wrongful act or (ii)
an act
of moral turpitude that (a) is intended to result in substantial
personal
enrichment of the Executive at the expense of the Corporation or
(b) may
have a material adverse impact on the business or reputation of the
Corporation.
|
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2.
|
Good
Reason.
Any of the following actions or omissions by the Corporation shall
constitute good reason for termination by
Executive:
|
|
(A)
|
Material
breach by the Corporation of any provision of this Agreement which
is not
cured by the Corporation within 30 days of notice thereof from the
Executive; or
|
|
(B)
|
A
failure to reappoint or reelect, as the case may be, the Executive
to the
office of President and Director of the Corporation or other diminution
of
the Executive’s function, duties or responsibilities in each case without
the Executive’s written consent; or
|
|
(C)
|
Reduction
in Executive’s Base Salary or incentives or other fringe benefits of a
material economic effect; or
|
|
(D)
|
Termination
of the Executive’s employment in anticipation of or within 12 months
following a Change in Control (as defined below) if such termination
is
initiated by the Corporation (or such successor corporation) without
Just
Cause or by the Executive for Good Reason (other than as set forth
in this
subparagh (D)). A Change in Control, shall mean either: (i) a Merger
(as
defined below), except for a transaction the principal purpose of
which is
to change the State of incorporation, (ii) the sale, transfer or
other
disposition of all or substantially all of the assets of the Corporation;
or (iii) any other corporate reorganization or business combination
(including, but not limited to, a Merger in which the Corporation
is the
surviving entity) in which more than fifty percent (50%) of the
Corporation’s then outstanding voting stock is transferred to different
holders in a single transaction or a series of related transactions;
or
|
8
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(E)
|
Relocation
of Executive, without his prior consent, to a facility or location
that is
more than fifty (50) miles away from the Executive’s then present
location.
|
|
3.
|
Disability.
Shall mean (i) the suffering of any mental or physical illness, disability
or incapacity that shall in all material respects preclude the Executive
from performing his employment duties or (ii) the Executive’s absence from
employment by reason of any mental or physical illness, disability
or
incapacity for a period of four and one-half months during any nine-month
period; provided that such illness, disability or incapacity shall
be
reasonably determined by the Chairman of the Board of Directors of
the
Corporation to be of a permanent nature based on the foregoing
standards.
|
|
4.
|
Merger.
Shall mean a merger or consolidation of the Corporation with any
other
corporation or entity, other than a merger or consolidation which
would
result in the voting securities of the Corporation outstanding immediately
prior thereto continuing to represent (either by remaining outstanding
or
by being converted into voting securities of the surviving entity)
more
than fifty (50%) percent of the total voting power represented by
the
voting securities of the Corporation or such surviving entity outstanding
immediately after such merger or
consolidation.
|
|
5.
|
Qualified
Change in Control.
Shall mean a Change in Control”, which places a value on the Corporation
of in excess of $500 million.
|
9
Exhibit
B
The
Corporation will grant Executive 150,000 shares of restricted stock (the
“Restricted Stock”) common stock of the Corporation (the “Initial Grant”).
Fifty-thousand shares of Executive's Restricted Stock will be granted under
the
Corporation's 2004 Long Term Incentive Plan (the "2004 Plan") and pursuant
to
the terms of a restricted stock agreement to be issued under the Plan and will
be subject to the terms and conditions thereof and the remaining 100,000 shares
of Restricted Stock will be granted subject to and pursuant to the approval
of a
new long-term incentive plan (the “New Plan”) for which the Corporation will
seek to have approved by the stockholders at the next annual meeting; provided,
however, that if any provisions of this Agreement are inconsistent with the
terms and conditions of the 2004 Plan or the New Plan and any such restricted
stock agreement related thereto, then the terms of this Agreement shall control.
In accordance with the Plan, should any change be made to the common stock
of
the Corporation by reason of any stock split, stock dividend, extraordinary
cash
dividend, recapitalization, combination of shares, exchange of shares or other
change affecting the outstanding Common Stock as a class without the
Corporation’s receipt of consideration, appropriate adjustments shall be made to
(A) the total number and/or class of securities subject to the Restricted Stock.
The Initial Grant shall vest as follows (provided that Executive is employed
as
a service provider (as defined in the plan) on the date of vesting):
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(A)
|
50,000
upon execution of this Agreement;
|
|
(B)
|
50,000
twelve months following the execution of this Agreement;
and
|
|
(C)
|
50,000
twenty-four months following the execution of this
Agreement.
|
10
In
addition to the Restricted Stock above, the Executive shall receive the
following Milestone Bonuses (payable in cash or stock, at the Corporation’s
option), upon the achievement of the milestones set forth below (provided that
Executive is employed as a “service provider” (as defined in the New Plan) on
the date of the achievement of the milestone event:
|
Milestone
Event
|
Bonus
Amount
|
|
1.
Upon the first NDA approval by the FDA for any Keryx drug candidate,
either in the portfolio today or later acquired or licensed
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$1,000,000
|
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2.
Upon the second NDA approval by the FDA for any other Keryx drug
candidate, either in the portfolio today or later acquired or
licensed
|
$1,000,000
|
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3.
Upon commencement of the first pivotal clinical trial under SPA (or
similar agreement from the FDA) for an oncology compound in
2007
|
$250,000
(plus an additional $50,000 for each additional pivotal clinical
trial
under SPA (or similar agreement with the FDA) for the same oncology
compound)
|
|
4.
Upon completion of the first pivotal clinical trial under SPA (or
similar
agreement from the FDA) for the oncology compound referred to in
3 above.
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$250,000
|
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5.
Upon commencement of the first pivotal clinical trial under SPA (or
similar agreement from the FDA) for a second oncology compound
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$250,000
(plus an additional $50,000 for each additional pivotal clinical
trial
under SPA (or similar agreement with the FDA) for the same oncology
compound)
|
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6.
Upon completion of the first pivotal clinical trial under SPA for
the
second oncology compound referred to in 5 above.
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$250,000
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The
Milestone Bonus shall be paid within thirty days after the Compensation
Committee of the Board of Directors determines whether and to what extent
milestones were achieved, but no later than March 31 next following the end
of
the year for which the Milestone Bonus, if any, was earned.
11
