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Exhibit 10.19
CONSULTING AGREEMENT
This Agreement is made and entered into as of December 15, 1998 by and between
Alteon Inc., a Delaware corporation whose principal address is 000 Xxxxxxxx
Xxxxx, Xxxxxx, Xxx Xxxxxx 00000 (the "Company"), and Xxxx Xxxxxxx, M.D., an
individual whose address is 0000 Xxxxxxxxxx Xxxxxx XX, Xxxxxxxxxx, X.X. 00000
("Chairman").
Whereas, the Company desires to retain Chairman as an independent contractor to
act as Chairman of Alteon's Board of Directors starting on December 15, 1998
until the annual meeting in 2000 and until a successor is elected and qualified
and Chairman is willing to perform such consulting services, all on the basis
set forth more fully herein;
NOW, THEREFORE, the parties agree as follows:
1. SERVICES. Chairman agrees to serve as Chairman of the Company's Board
of Directors and to carry out assignments for the Company as requested
by the Board from time to time or as authorized by the Company's
By-laws. In addition to chairing meetings of the Board, it is expected
that the Chairman shall dedicate approximately one day per week (as and
when appropriate) to the affairs of the Company. Chairman agrees to
perform the Services hereunder faithfully, diligently, and to the best
of Chairman's skill and ability.
2. CONSULTING FEE. (a) In consideration of the performance of the services
called for by this Agreement, the Company agrees to pay Chairman as
compensation a retainer of $60,000 per year. To the extent the Chairman
is called upon to dedicate materially more time to the affairs of the
Company than contemplated by Section 1 of this Agreement, the Company
and the Chairman may agree to fix additional compensation therefor. In
addition, the Company will issue and deliver stock options to purchase
200,000 shares of the Company's common stock at an exercise price of
$.875, the fair market value of Alteon stock on December 15, 1998, when
the Compensation Committee and the Board approved this award. The
options will be subject to the terms and conditions of the Company's
Amended 1995 Stock Option Plan and the Company's Standard Non-Qualified
Stock Option Grant Agreement. The options will vest monthly over a two
year period. The Board or the Compensation Committee in the exercise of
its discretion may elect to accelerate this vesting schedule as a
reward for performance. In addition, out of pocket expenses and routine
items covered by normal business expense accounts will be covered when
traveling and working on behalf of Alteon. The Chairman will submit a
list of such expenses. The Company shall therefore promptly make full
payment to Chairman in cash of the amount due for the expenses.
(b) The Non-Qualified Stock Option Grant Agreement for the options
provided for in the preceding paragraph contain provisions to the
following effect:
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Exhibit 10.19
(1) The options shall be transferable to the extent
afforded in the Company's 1995 Stock Option Plan and as may be
permissible under the applicable registration statement filed by the
Company under the Securities Act of 1933. The Company represents that
it has available or shall cause to be available sufficient shares under
the Plan to cover stock to be issued pursuant to such Plan upon the
Chairman's exercise of the options.
(2) All unvested options will become exercisable
immediately upon a merger, consolidation, acquisition of property or
stock, reorganization (other than a mere reincorporation or the
creation of a holding company) or liquidation of the Company, as a
result of which the shareholders of the Company receive cash, stock or
other property in exchange for or in connection with their shares of
the Company's Common Stock. In addition, such options shall vest and
become exercisable immediately in the event of a change in control of
the Company. A change in control of the Company shall be deemed to
occur if (a) the Company is merged with or into or consolidated with
another corporation or other entity under circumstances where the
shareholders of the Company immediately prior to such merger or
consolidation do not own after such merger or consolidation shares
representing at least fifty percent of the voting power of the Company
or the surviving or resulting corporation or other entity, as the case
may be, or (b) if the Company is liquidated or sells or otherwise
disposes of substantially all of its assets to another corporation or
entity, or (c) if any person (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934) shall become the
beneficial owner (within the meaning of Rule 13d-3 under such Act) of
forty percent (40%) or more of the Common Stock other than pursuant to
a plan or arrangement entered into by such person and the Company or
otherwise approved by the Board of Directors, or (d) during any period
of two (2) consecutive years, individuals who at the beginning of such
period constitute the entire Board of Directors shall cease for any
reason to constitute a majority of the Board unless the election or
nomination for election by the Company's shareholders of each new
director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period.
(3) In the event that the accelerated vesting caused
by Section 4(c)(2) of this Agreement (i) constitutes a "parachute
payment" within the meaning of Section 280G of the Internal Revenue
Code, and (ii) but for this Section 4(c)(3), would be subject to the
excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then
the portion of the option which would have become immediately vested
and exercisable under Section 4(c)(2) may be reduced to the portion
which the Chairman, in his sole discretion, determines would result in
no portion, or a lesser portion, of the option being subject to the
Excise Tax. The determination by the Chairman of any reduction shall be
conclusive and binding upon the Company. The Company shall reduce the
portion of the option
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Exhibit 10.19
which is vested and exercisable only upon written notice by the
Chairman indicating the amount of such reduction.
3. EMPLOYMENT TAXES AND BENEFITS. Chairman acknowledges and agrees that it
shall be Chairman's sole obligation to report as self-employment income
all compensation received by Chairman pursuant to this Agreement.
Because Chairman is an independent contractor, Chairman understands
that the Company is not obligated to pay any withholding taxes, social
security, unemployment or disability insurance or similar items in
connection with any payments made to Chairman by the Company pursuant
to this Agreement. Chairman shall not be entitled to participate in any
plans, arrangements, or distributions by the Company pertaining to any
bonus, stock option, profit-sharing, insurance (except as provided in
Section 9 of this Agreement) or similar benefits for Company employees.
4. PRE-EXISTING OBLIGATIONS. Chairman represents and warrants that
Services performed pursuant to this Agreement will not conflict with
any other existing obligation of Chairman to any third party. Chairman
will promptly inform the Company in advance of any potential conflicts
of interest that may arise due to Chairman's performance of services
for any third party and Chairman agrees not to provide services
requested by the Company if doing so would conflict with obligations of
Chairman to third parties that arose prior to the Company's request for
such services.
5. INVENTION ASSIGNMENT, CONFIDENTIAL INFORMATION AND NON-COMPETITION
AGREEMENT. In conjunction with this Consulting Agreement the Chairman
shall agree to the terms and conditions of the Confidential Disclosure
and Non-Use Agreement attached hereto as Exhibit A.
6. TERM. This Agreement shall continue in effect for a period of up to two
(2) years, subject to earlier termination as provided in Section 7.
7. TERMINATION. This Agreement may be terminated as follows: (a) upon
thirty (30) days written notice; (b) either party may terminate this
Agreement in the event of a breach by the other party of any of the
covenants contained herein if such breach continues uncured for a
period of ten (10) days after written notice of such breach has been
given to the breaching party, or (c) this Agreement will terminate
automatically if Chairman ceases to serve as Chairman of the Board of
Directors of the Company for any reason, including but not limited to,
resignation, removal from office or failure to be re-elected by the
Board.
8. EFFECT OF TERMINATION. (a) Upon the termination of this Agreement, each
party shall be released from all obligations and liabilities to the
other occurring or arising after the date of such termination, except
that any termination of this Agreement shall not relieve the Company of
its obligations under Section 2 hereof to pay Chairman the consulting
fee for services performed prior to termination and shall not relieve
Chairman of Chairman's obligations under Sections 3, 4 and 5 hereof,
nor shall any such termination relieve Chairman or the Company from any
liability arising from any breach of this Agreement. Upon any such
termination, Chairman shall promptly notify
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Exhibit 10.19
the Company of all Confidential Information and Designs and Materials
in Chairman's possession and, at the expense of the Company and in
accordance with the Company's Instructions, shall deliver to the
Company all such Confidential Information and Designs and Materials.
(b) In the event of termination of this Agreement by the Company
pursuant to clause 7(a) hereof, all unvested options shall become
exercisable on the effective date of termination., and the Company
shall pay the Chairman an amount equal to six (6) months'
severance.
9. INDEMNIFICATION. In the event the Chairman is or becomes a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that he is or was a director, Chairman or any
other officer of the Company, the Company shall indemnify and hold him
harmless to the fullest extent legally permissible under and pursuant
to any procedure specified in the General Corporation Law of the State
of Delaware, as amended from time to time, against all expenses,
liabilities and losses (including attorneys' fees, judgments, fines and
amounts paid or to be paid in settlement) incurred or suffered by him
in connection therewith. The Company will use its best efforts to
obtain insurance to provide the indemnification required by this
Section 10, provided that this Agreement shall not require the Company
to obtain insurance on other than reasonable commercial terms.
10. NOTICES. Any notices required or permitted hereunder shall be in
writing and shall be deemed to have been given when delivered or
certified mail, postage prepaid, to the address of the receiving party
set forth in this Agreement, or to any other address of the receiving
party designated by written notice in accordance with this Section.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey, without regard to
its choice of law principles.
12. COMPLETE UNDERSTANDING; MODIFICATION. This Agreement constitutes the
entire agreement of the parties and no waiver, modification or
amendment of any provision hereof shall be effective unless in writing
and signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement which is
effective as of the date first written above.
Alteon Inc.
By: /s/Xxxxxxxxx O'Dell By: /s/Xxxx Xxxxxxx
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Xxxxxxxxx O'Dell Xxxx Xxxxxxx, M.D.
VP Finance & Administration
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Exhibit 10.19
January 17, 2001
Xxxx Xxxxxxx, M.D.
0000 Xxxxxxxxx Xxxxxx XX
Xxxxxxxxxx, X.X. 00000
Dear Xxxx:
This letter will set forth our agreement regarding the amendment of the
Consulting Agreement (the "Agreement") dated as of December 15, 1998 between you
and Alteon Inc. (the "Company").
Section 6 of the Agreement is hereby amended to provide in its entirety
as follows:
"6. TERM. This Agreement shall continue in effect until June 30, 2001,
subject to earlier termination as provided in Section 7."
In consideration of the performance of the services called for by the Agreement
as amended, in addition to the compensation provided therein, the Company will
issue and deliver to you stock options to purchase 50,000 shares of the
Company's common stock at an exercise price of $7.00, the fair market value of
the Company's stock on November 8, 2000 when the Company's Board of Directors
approved this award. The options will vest monthly over the period December 15,
2000 through the end of the term of the Agreement, as amended. Such stock
options will be subject to the terms and conditions set forth in Section 2 of
the Agreement (other than the terms and conditions relating to the number of
shares and the exercise price which terms and conditions are superseded by this
paragraph).
If the foregoing is acceptable to you, please indicate your agreement
by signing and returning the enclosed copy of this letter.
Sincerely,
XXX/law
Enclosure
Accepted and Agreed:
/s/ Xxxx Xxxxxxx Dated: January 18, 2001
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Xxxx Xxxxxxx, M.D.
