AZURRX BIOPHARMA, INC. EMPLOYMENT AGREEMENT
Exhibit
10.1
This
EMPLOYMENT AGREEMENT (this
“Agreement”)
is made and entered into on January 1, 2020,
effective as of January 2, 2020 (the “Effective
Date”) by and between AzurRx Biopharma, Inc. (the
“Company”)
and Xxxxxx Xxxxxxxxxxxx (“Executive”).
The Company and Executive are hereinafter collectively referred to
as the “Parties”,
and individually referred to as a “Party”.
RECITALS
A. The
Company desires assurance of the association and services of
Executive in order to retain Executive’s experience, skills,
abilities, background and knowledge, and is willing to engage
Executive’s services on the terms and conditions set forth in
this Agreement.
B. Executive
desires to be in the employ of the Company, and is willing to
accept such employment on the terms and conditions set forth in
this Agreement.
AGREEMENT
In
consideration of the foregoing Recitals and the mutual promises and
covenants herein contained, and for other good and valuable
consideration, the Parties, intending to be legally bound, agree as
follows:
1. EMPLOYMENT.
1.1 Title. Effective as of the Effective Date,
Executive’s position shall be Chief Financial Officer,
subject to the terms and conditions set forth in this
Agreement.
1.2 Term. The term of this Agreement shall begin on the
Effective Date and shall continue for a period of three (3) years
or until it is terminated pursuant to Section 4 herein (the
“Term”).
1.3 Duties. Executive shall have the customary powers,
responsibilities and authorities of President and Chief Financial
Officer of corporations of the size, type and nature of the
Company, as it exists from time to time. Executive shall report to
the Company’s Chief Executive Officer (the
“CEO”).
1.4 Governing Agreement.
The employment relationship between
the Parties shall be governed by this Agreement
2. LOYALTY; NONCOMPETITION; NONSOLICITATION.
2.1 Loyalty. During Executive’s employment by the
Company, Executive shall devote substantially all his business time
to the performance of Executive’s duties under this
Agreement. Notwithstanding the foregoing, except as otherwise agreed to in writing, Executive
shall have the right to perform such incidental services as are
necessary in connection with (a) his private passive
investments, (b) his charitable or community activities, (c) his
participation in trade or professional organizations, and (d) his
service on the board of directors (or comparable body) of any
third-party corporate entity that is not a Competitive Entity (as
defined in Section 2.3), so long as these activities do not
materially interfere with Executive’s duties hereunder and,
with respect to (d), Executive obtains prior Company consent, which
consent will not be unreasonably withheld. Executive may also
provide limited services to other parties provided such services
are without remuneration.
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2.2 Agreement not to Participate in
Company’s Competitors.
During the Term, Executive agrees not to acquire, assume or
participate in, directly or indirectly, any position, investment or
interest known by Executive to be adverse or antagonistic to the
Company, its business, or prospects, financial or otherwise, or in
any company, person, or entity that is, directly or indirectly, in
competition with the business of the Company or any of its
Affiliates (as defined below). Ownership by Executive, in
professionally managed funds over which the Executive does not have
control or discretion in investment decisions, or as a passive
investment, of less than five percent (5%) of the outstanding
shares of capital stock of any corporation with one or more classes
of its capital stock listed on a national securities exchange or
publicly traded on a national securities exchange or in the
over-the-counter market shall not constitute a breach of this
Section. For purposes of this Agreement, “Affiliate,”
means, with respect to any specific
entity, any other entity that, directly or indirectly, through one
or more intermediaries, controls, is controlled by or is under
common control with such specified entity.
2.3 Covenant not to
Compete. During the Term and
for a period of twelve (12) months thereafter (the
“Restricted
Period”), Executive shall not engage in competition
with the Company and/or any of its Affiliates, either directly or
indirectly, in any manner or capacity, as adviser, principal,
agent, affiliate, promoter, partner, officer, director, employee,
stockholder, owner, co-owner, consultant, or member of any
association or otherwise, in any phase of the business of
researching and developing non-systemic biologics for the treatment
of patients with gastrointestinal disorders (a “Competitive
Entity”), except with the prior written consent of the
Company’s board of directors (the
“Board”).
2.4 Nonsolicitation.
During the Restricted Period,
Executive shall not: (i) solicit or induce, or attempt to
solicit or induce, any employee of the Company or its Affiliates to
leave the employ of the Company or such Affiliate; or (ii) solicit
or attempt to solicit the business of any client or customer of the
Company or its Affiliates with respect to products, services, or
investments similar to those provided or supplied by the Company or
its Affiliates.
2.5 Acknowledgements.
Executive acknowledges and agrees that
his services to the Company pursuant to this Agreement are unique
and extraordinary and that in the course of performing such
services Executive shall have access to and knowledge of
significant confidential, proprietary, and trade secret information
belonging to the Company. Executive agrees that the covenant not to
compete and the nonsolicitation obligations imposed by this Section
2 are reasonable in duration, geographic area, and scope and are
necessary to protect the Company’s legitimate business
interests in its goodwill, its confidential, proprietary, and trade
secret information, and its investment in the unique and
extraordinary services to be provided by Executive pursuant to this
Agreement. If, at the time of enforcement of this Section 2, a
court holds that the covenant not to compete and/or the
nonsolicitation obligations described herein are
unreasonable or
unenforceable under the circumstances then existing, then the
Parties agree that the maximum duration, scope, and/or geographic
area legally permissible under such circumstances will be
substituted for the duration, scope and/or area stated
herein.
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3. COMPENSATION OF THE EXECUTIVE.
3.1 Base Salary.
The Company shall pay Executive a base
salary (the “Base
Salary”) at the
annualized rate of Two Hundred and Eighty Five Thousand Dollars
($285,000), less payroll deductions and all required withholdings,
payable in regular periodic payments in accordance with the
Company’s normal payroll practices. The Base Salary shall be
prorated for any partial year of employment on the basis of a
365-day fiscal year. The Company may increase, but not decrease
(except in connection with a Company-wide decrease in executive
compensation), Executive’s Base Salary from time to time, and
if so increased, “Base Salary” shall include such
increases for purposes of this Agreement.
3.2 Bonuses. At the sole discretion of the
Board or the compensation committee of the Board (the
“Compensation
Committee”), following each calendar year of
employment, Executive shall be eligible to receive an additional
cash bonus (the “Annual Milestone
Bonus”), based (in whole or in part) on
Executive’s attainment of certain financial, clinical
development, and/or business milestones (the “Milestones”)
to be established annually by the Board or the Compensation
Committee. The Milestones, as well as the determination of whether
Executive has met the Milestones, and if so, the bonus amount (if
any) that will be paid, shall be determined by the Board or the
Compensation Committee in its sole and absolute discretion. Any
Annual Milestone Bonuses shall be paid in cash as either single
lump-sum payments or in installments, as determined by the Board or
the Compensation Committee.
3.3 Stock Options. As additional
compensation for the services to be rendered by the Executive
pursuant to this Agreement, the Company shall grant the Executive a
number of stock options(the “Stock Options”) of the
Company exercisable for one and a quarter percent (1.25%) of the
issued and outstanding Common Stock of the Company on the date
hereof, at an exercise price on the date of grant
(“Options”).
The Options shall vest in three equal portions on each anniversary
of the Effective Date, subject to the terms of this Agreement. No
Options shall vest until the first anniversary of this Agreement.
In connection with such grant, the Executive shall enter into the
Company’s standard stock option agreement. No Options granted
hereunder shall vest unless the Executive is a current employee of
the Company, unless specifically stated herein. In the event
Executive’s employment is terminated under the provisions of
Sections 4.5.3 or 4.5.4 hereof, all vested Options will remain
exercisable for a period of twelve (12) months following
termination. Notwithstanding the foregoing to the contrary, in the
event of a Change of Control (as hereafter defined), all of the
Options shall vest in full.
3.4 Expense Reimbursements. The Company will
reimburse Executive for all reasonable business expenses Executive
incurs in conducting his duties hereunder, pursuant to the
Company’s usual expense reimbursement policies, but in no
event later than ninety (90) days after the end of the calendar
month following the month in which such expenses were incurred by
Executive; provided that Executive supplies the appropriate
substantiation for such expenses no later than the end of the
calendar month following the month in which such expenses were
incurred by Executive.
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3.5 Changes to Compensation. As described
above, Executive’s compensation will be reviewed at least on
an annual basis and the Base Salary may be increased, but not
decreased (except in connection with a Company-wide decrease in
executive compensation), from time to time in the Company’s
sole discretion.
3.6 Employment Taxes. All of
Executive’s compensation shall be subject to customary
withholding taxes and any other employment taxes as are commonly
required to be collected or withheld by the Company.
3.7 Benefits. The Executive shall, in
accordance with Company policy and the applicable plan documents,
be eligible to participate in benefits under any benefit plan or
arrangement, including medical, dental, vision, disability and life
insurance programs, that may be in effect from time to time and
made available to the Company’s senior management employees,
subject to the terms and conditions of those benefit
plans.
3.8 Holidays and Vacation. Executive shall
receive twenty (20) days of paid vacation per calendar year, which
cannot be taken in one increment, but which shall accrue if not
used in any calendar year but only up to a maximum of ten (10)
days, and be paid to Executive or carried forward to subsequent
calendar years consistent with Company policy. In addition to such
paid vacation, Executive shall receive all paid Company holidays in
the United States in accordance with Company policy.
4. TERMINATION.
4.1 Termination by the
Company. Executive’s
employment with the Company is at will and may be terminated by the
Company at any time and for any reason, or for no reason,
including, but not limited to, under the following
conditions:
4.1.1 Termination by the Company for
Cause. The Company may
terminate Executive’s employment under this Agreement for
“Cause” by delivery of written notice to Executive. Any
notice of termination given pursuant to this Section 4.1.1 shall
effect termination as of the date of the notice, or as of such
other date as specified in the notice. In the event of a
termination of Executive’s employment for Cause, Executive
shall only be entitled to the compensation and/or benefits set
forth in Section 4.5 below, and shall not be entitled to any other
compensation and/or benefits as a result of the termination of such
employment prior to expiration of the Term.
4.1.2 Termination by the Company
without Cause. The Company may
terminate Executive’s employment under this Agreement without
Cause at any time and for any reason, or for no reason. Such
termination shall be effective on the date Executive is so
informed, or as otherwise specified by the
Company.
4.2 Termination by Resignation of
Executive. Executive’s
employment with the Company is at will and may be terminated by
Executive at any time and for any reason, or for no reason,
including via a resignation for Good Reason in accordance with the
procedures set forth in Section 4.6.3 below.
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4.3 Termination for Death or
Complete Disability.
Executive’s employment with the Company shall automatically
terminate effective upon the date of Executive’s death or
Complete Disability (as defined below).
4.4 Termination by Mutual Agreement
of the Parties.
Executive’s employment with the Company may be terminated at
any time upon a mutual agreement in writing of the Parties. Any
such termination of employment shall have the consequences
specified in such agreement.
4.5 Compensation Upon
Termination.
4.5.1 Death or Complete
Disability. If, during the Term
of this Agreement, Executive’s employment shall be terminated
by death or Complete Disability, the Company shall pay to
Executive, his estate, or his heirs, as applicable, (i) any Base
Salary owed to Executive through the date of termination; (ii)
expenses reimbursement amounts owed to Executive; (iii) all unpaid
amounts of any Annual Milestone Bonus(es) Executive earned prior to
the termination date; (iv) a cash lump sum in respect to accrued
and unused vacation benefits earned through the date of termination
at the rate in effect at the time of termination; (v) any payments
and benefits to which Executive (or his estate) is entitled
pursuant to the terms of any employee benefit or compensation plan
or program in which he participates (or participated);
and (vi) any amount to
which Executive is entitled pursuant to any other written
agreements between the Company or any of its affiliates and
Executive (the amounts in (i) through (vi) above being the
“Termination
Amounts”). The Company shall pay Executive: (A) the
amounts contained in items (i) through (iv)
within ten (10) days following such termination; (B) any payments
associated with (v) in accordance to the terms of such plans or
programs; and (C) any such amounts in (vi) in accordance with the
terms of such agreements, with the Termination Amounts being
subject to the standard deductions and withholdings (as
applicable). In addition, subject to Executive (or his estate or
heirs, as applicable) furnishing to the Company an executed waiver
and release of claims in the form attached hereto as Exhibit A (the “Release”)
within the time period specified therein, and allowing the Release
to become effective in accordance with its terms, then Executive,
his estate, or his heirs, as applicable, shall also be entitled to:
(1) continuation of Executive’s salary (at the Base Salary
rate in effect at the time of termination) for a period of ninety
(90) days following the termination date; and (2) a prorated annual
bonus equal to the Annual Milestone Bonus, if any, for the year of
termination multiplied by a fraction, the numerator of which shall
be the number of full and partial months Executive worked for the
Company and the denominator of which shall be 12. The Base Salary
payments will be subject to standard payroll deductions and
withholdings and will be made on the Company’s regular
payroll cycle, provided, however, that any payments otherwise
scheduled to be made prior to the effective date of the Release
shall accrue and be paid in the first payroll period that follows
such effective date. The prorated annual bonus payment will be
subject to standard payroll deductions and withholdings and will
paid at the same time as the Annual Milestone Bonus, if any, would
have been paid to Executive under Section 3.2 above, had Executive
remained employed with the Company.
4.5.2 Termination For Cause or
Resignation without Good Reason. If, during the Term of this Agreement,
Executive’s employment is terminated by the Company for
Cause, or Executive resigns his employment hereunder without Good
Reason, the Company shall pay Executive the Termination Amounts,
less standard deductions and withholdings. The
Company
shall thereafter have no further obligations to Executive under
this Agreement, except as otherwise provided by law.
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4.5.3 Termination Without Cause or
Resignation For Good Reason Not In Connection with a Change of
Control. If the Company
terminates Executive’s employment without Cause, or if
Executive resigns for Good Reason, at any time other than upon the
occurrence of, or within thirty (30) days prior to, or six (6)
months following, the effective date of a Change of Control (as
defined below), the Company shall pay Executive the Termination
Amounts, less standard deductions and withholdings. In addition,
subject to Executive furnishing to the Company an executed Release
within the time period specified therein, and allowing the Release
to become effective in accordance with its terms, Executive shall
be entitled to: (1) severance in the form of continuation of his
salary (at the Base Salary rate in effect at the time of
termination, but prior to any reduction triggering Good Reason) for
a period of six (6) months following the termination date; (2)
payment of Executive’s premiums to cover COBRA for a period
of six (6) months following the termination date; and (3) a
prorated annual bonus equal to the target Annual Milestone Bonus,
if any, for the year of termination multiplied by a fraction, the
numerator of which shall be the number of full and partial months
Executive worked for the Company and the denominator of which shall
be 12. These payments under (1), (2) and (3) above will be subject
to standard payroll deductions and withholdings and will be made on
the Company’s regular payroll cycle, provided, however, that
any payments otherwise scheduled to be made prior to the effective
date of the Release shall accrue and be paid in the first payroll
period that follows such effective date.
4.5.4 Termination Without Cause or
Resignation For Good Reason In Connection with a Change of
Control. If the Company
terminates Executive’s employment without Cause, or if
Executive resigns for Good Reason, upon the occurrence of, or
within thirty (30) days prior to,
or within six (6) months following, the effective date of a Change
of Control, the Company shall pay Executive the Termination
Amounts, less standard deductions and withholdings. In addition,
subject to Executive furnishing to the Company an executed Release
within the time period specified therein, and allowing the Release
to become effective in accordance with its terms, then Executive
shall be entitled to: (1) severance in the form of a lump sum
payment equivalent to eighteen (18) months of his Base Salary (at
the Base Salary rate in effect at the time of termination, but
prior to any reduction triggering Good Reason); (2) payment of
Executive’s premiums to cover COBRA for a period of eighteen
(18) months following the termination date; (3) a prorated annual
bonus equal to the target Annual Milestone Bonus, if any, for the
year of termination multiplied by a fraction, the numerator of
which shall be the number of full and partial months Executive
worked for the Company and the denominator of which shall be 12,
and (4) immediate accelerated vesting of any unvested Restricted
Shares and unvested outstanding stock option(s). These payments
under (1), (2) and (3) above will be subject to standard payroll
deductions and withholdings and will be made on the Company’s
regular payroll cycle, provided, however, that any payments
otherwise scheduled to be made prior to the effective date of the
Release shall accrue and be paid in the first payroll period that
follows such effective date.
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4.6 Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
4.6.1 Complete
Disability.
“Complete
Disability” means that
Executive is determined to be permanently disabled pursuant to the
Company’s long term disability plan and is receiving
disability benefits under such plan.
4.6.2 Cause. “Cause”
for the Company to terminate
Executive’s employment hereunder shall mean the occurrence of
any of the following events, as determined by the Company and/or
the Board in its and/or their sole and absolute
discretion:
(i) The
willful failure, disregard or refusal by Executive to perform his
material duties or obligations under this Agreement or to follow
lawful directions received by Executive from the
Board;
(ii) Any
grossly negligent act by Executive having the effect of materially
injuring (whether financially or otherwise) the business or
reputation of the Company or any willful act by Executive intended
to cause such material injury, except any acts (A) made by
Executive in connection with the enforcement of his rights, whether
under this Agreement, any other agreement between the Company or
any affiliate and Executive, or pursuant to applicable law (e.g.
disparagement, etc.) or (B) which are required by law or pursuant
to a subpoena or demand by a governmental or regulatory
body;
(iii) Executive’s
indictment of any felony involving moral turpitude (including entry
of a nolo
contendere plea);
(iv) The
determination, after a reasonable and good-faith investigation by
the Company, that the Executive engaged in discrimination
prohibited by law (including, without limitation, age, sex or race
discrimination);
(v) Executive’s
material misappropriation or embezzlement of the property of the
Company or its Affiliates (whether or not a misdemeanor or felony);
or
(vi) Material
breach by Executive of this Agreement and/or of his Proprietary
Information and Inventions Agreement (“PIIA”);
provided, however, that, any such termination of Executive shall
only be deemed for Cause pursuant to this definition if: (1) the
Company gives the Executive written notice of the condition(s)
alleged to constitute Cause, which notice shall describe such
condition(s); and (2) the Executive fails to remedy such
condition(s) (if curable) within thirty (30) days following receipt
of the written notice.
For
purposes of this definition, the Parties agree that (1) a change in
Executive’s role and/or title to no less than Chief Financial
Officer shall not constitute Cause under this Agreement; and (2)
any breach of Sections 2 or 5 of this Agreement shall be deemed a
material breach that is not capable of cure by
Executive.
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4.6.3 Good Reason.
For purposes of this Agreement, and
subject to the caveat at the end of this Section, “Good
Reason” for Executive to terminate his employment hereunder
shall mean the occurrence of any of the following events without
Executive’s prior written consent:
(i) any
reduction by the Company of Executive’s Base Salary as
initially set forth herein or as the same may be increased from
time to time, provided, however, that if such reduction occurs in
connection with a Company-wide decrease in executive compensation,
such reduction shall not constitute Good Reason for Executive to
terminate his employment;
(ii) a
material breach by the Company (or any of its affiliates) of this
Agreement or any other written agreement between the Company or any
of its affiliates and Executive, provided such written agreement is
approved by the Board; or
(iii) a
material adverse change in Executive’s duties, titles,
authority, responsibilities or reporting relationships, with such
determination being made with reference to the greatest extent of
your duties, titles, authority, responsibilities or reporting
relationships, etc. as increased (but not decreased) from time to
time; provided, however, a change in Executive’s role and/or
title to no less than President shall not constitute Good Reason
under this Agreement;
(iv) any
failure of the Company or any affiliate to pay Executive any amount
owed to Executive under this Agreement or any other written
agreement plan or program between the Company, any affiliates and
Executive;
(v)
any reduction in Executive’s bonus eligibility;
or
(vi) the
assignment to Executive of duties materially inconsistent with his
position with the Company.
Provided, however,
that, any such termination by the Executive shall only be deemed
for Good Reason pursuant to this definition if: (1) the Executive
gives the Company written notice of his intent to terminate for
Good Reason; which notice shall describe such condition(s); (2) the
Company fails to remedy such condition(s) within thirty (30) days
following receipt of the written notice the “Cure Period”);
and (3) Executive voluntarily terminates his employment within
thirty (30) days following
the end of the Cure Period.
4.6.4 Change of Control.
For purposes of this Agreement,
“Change of Control” shall mean the occurrence, in a
single transaction or in a series of related transactions, of any
one or more of the following events (excluding in any case
transactions in which the Company or its successors issues
securities to investors primarily for capital raising
purposes):
(i) the
acquisition by a third party (or more than one party acting as a
group) of securities of the Company representing more than fifty
percent (50%) of the combined voting power of the Company’s
then outstanding securities other than by virtue of a merger,
consolidation or similar transaction;
(ii) a
merger, consolidation or similar transaction following which the
stockholders of the Company immediately prior thereto do not own at
least fifty percent (50%) of the combined outstanding voting power
of the surviving entity (or that entity’s parent) in such
merger, consolidation or similar transaction;
(iii)
the dissolution or liquidation of the Company; or
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(iv) the
sale, lease, exclusive license or other disposition of all or
substantially all of the assets of the Company; provided, however,
in the event of a Change in Control
triggered by this Section 4.6.4(iv), and such transaction triggers
the payment of a bonus under the terms of Section 3.2 of this
Agreement, Executive shall not be entitled to compensation under
the terms of Section 4.5 and in lieu thereof shall only be entitled
to the payment of a bonus under Section 3.2.
4.7 Survival of Certain
Sections. Sections 3, 4, 5, 6,
7, 8, 9, 12, 13, 16, 17, 19 and 21 of this Agreement will survive
the termination of this Agreement.
4.8 Parachute Payment.
If any payment or benefit the
Executive would receive pursuant to this Agreement
(“Payment”)
would (i) constitute a “Parachute
Payment” within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the “Code”),
and (ii) be subject to the excise tax imposed by Section 4999 of
the Code (the “Excise
Tax”), then the Executive
shall be entitled to receive an additional payment from the Company
(the “Gross-Up
Payment”) in an amount
such that the net amount of such additional payment retained by the
Executive, after payment of all federal, state and local income and
employment and Excise Taxes imposed on the Gross-Up Payment, shall
be equal to the Excise Tax imposed on the Payment. The Company
shall pay Executive the Gross-Up Payment as soon as practicable
following the date Executive’s right to the applicable
Payment is triggered, but in no event will the Company make such
Gross-Up Payment later than the time required by the rules
governing Section 409A, including, but not limited to, Treasury
Regulation 1.409A-3(i)(1)(v).
Unless
Executive and the Company agree on an alternative accounting, law
or consulting firm, the accounting firm then engaged by the Company
for general tax compliance purposes shall perform the Gross-Up
Payment calculations. If the accounting firm so engaged by the
Company is serving as accountant or auditor for the individual,
entity or group effecting the Change in Control, the Company shall
appoint a nationally recognized accounting, law or consulting firm
to make the determinations required hereunder. The Company shall
bear all expenses with respect to the determinations by such
accounting, law or consulting firm required to be made
hereunder.
The
Company shall use commercially reasonable efforts such that the
accounting, law or consulting firm engaged to make the
determinations hereunder shall provide its calculations, together
with detailed supporting documentation, to Executive and the
Company within fifteen
(15)
calendar days after the date on which Executive’s right to a
Payment is triggered (if requested at that time by the Executive or
the Company) or such other time as requested by the Executive or
the Company.
4.9 Application
of Internal Revenue Code Section 409A. Notwithstanding anything to the contrary set forth
herein, any payments and benefits provided under this Agreement
(the “Severance
Benefits”) that
constitute “deferred compensation” within the meaning
of Section 409A of the Code and the regulations and other guidance
thereunder and any state law of similar effect (collectively
“Section
409A”) shall not commence
in connection with Executive’s termination of employment
unless and until Executive has also incurred a “separation
from service” (as such term is defined in Treasury Regulation
Section 1.409A-1(h) (“Separation
From Service”),
unless the Company reasonably determines that such amounts may be
provided to Executive without causing Executive to incur the
additional 20% tax under Section 409A.
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It is
intended that each installment of the Severance Benefits payments
provided for in this Agreement is a separate “payment”
for purposes of Treasury Regulation Section 1.409A- 2(b)(2)(i). For
the avoidance of doubt, it is intended that payments of the
Severance Benefits set forth in this Agreement satisfy, to the
greatest extent possible, the exemptions from the application of
Section 409A provided under Treasury Regulation Sections
1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9). However, if the
Company (or, if applicable, the successor entity thereto)
determines that the Severance Benefits constitute “deferred
compensation” under Section 409A and Executive is, on the
termination of service, a “specified employee” of the
Company or any successor entity thereto, as such term is defined in
Section 409A(a)(2)(B)(i) of the Code, then, solely to the extent
necessary to avoid the incurrence of the adverse personal tax
consequences under Section 409A, the timing of the Severance
Benefit payments shall be delayed until the earlier to occur of:
(i) the date that is six months and one day after Executive’s
Separation From Service, or (ii) the date of Executive’s
death (such applicable date, the “Specified Employee Initial
Payment Date”), the Company (or the successor entity
thereto, as applicable) shall (A) pay to Executive a lump sum
amount equal to the sum of the Severance Benefit payments that
Executive would otherwise have received through the Specified
Employee Initial Payment Date if the commencement of the payment of
the Severance Benefits had not been so delayed pursuant to this
Section and (B) commence paying the balance of the Severance
Benefits in accordance with the applicable payment schedules set
forth in this Agreement.
Notwithstanding
anything to the contrary set forth herein, Executive shall receive
the Severance Benefits described above, if and only if Executive
duly executes and returns to the Company within the applicable time
period set forth therein, but in no event more than forty-five days
following Separation From Service, the Release and permits the
release of claims contained therein to become effective in
accordance with its terms. Notwithstanding any other payment
schedule set forth in this Agreement, none of the Severance
Benefits will be paid or otherwise delivered prior to the effective
date of the Release. Except to the extent that payments may be
delayed until the Specified Employee Initial Payment Date pursuant
to the preceding paragraph, on the first regular payroll pay day
following the effective date of the Release, the Company will pay
Executive the Severance Benefits Executive would otherwise have
received under the Agreement on or prior to such date but for the
delay in payment related to the effectiveness of the Release, with
the balance of the Severance Benefits being paid as originally
scheduled. All amounts payable under the Agreement will be subject
to standard payroll taxes and deductions.
All
reimbursements and in-kind benefits provided under this Agreement
shall be made or provided in accordance with the requirements of
Section 409A to the extent that such reimbursements or in-kind
benefits are subject to Section 409A. All reimbursements for
expenses paid pursuant hereto that constitute taxable income to
Executive shall in no event be paid later than the end of the
calendar year next following the calendar year in which Executive
incurs such expense or pays such related tax. Unless otherwise
permitted by Section 409A, the right to reimbursement or in-kind
benefits under this Agreement shall not be subject to liquidation
or exchange for another benefit and the amount of expenses eligible
for reimbursement, or in-kind benefits, provided during any taxable
year shall not affect the expenses eligible for reimbursement, or
in-kind benefits to be provided, respectively, in any other taxable
year.
-10-
5. CONFIDENTIAL AND PROPRIETARY INFORMATION.
As a
condition of employment Executive agrees to execute and abide by
the PIIA.
6. ASSIGNMENT AND BINDING EFFECT.
This
Agreement shall be binding upon and inure to the benefit of
Executive and Executive’s heirs, executors, personal
representatives, assigns, administrators and legal representatives.
Because of the unique and personal nature of Executive’s
duties under this Agreement, neither this Agreement nor any rights
or obligations under this Agreement shall be assignable by
Executive. This Agreement shall be binding upon and inure to the
benefit of the Company and its successors, assigns and legal
representatives. Any such successor of the Company will be deemed
substituted for the Company under the terms of this Agreement for
all purposes. For this purpose, “successor” means any
person, firm, corporation or other business entity which at any
time, whether by purchase, merger or otherwise, directly or
indirectly acquires all or substantially all of the assets or
business of the Company.
7. NOTICES.
All
notices or demands of any kind required or permitted to be given by
the Company or Executive under this Agreement shall be given in
writing and shall be personally delivered (and receipted for) or
faxed during normal business hours or mailed by certified mail,
return receipt requested, postage prepaid, addressed as
follows:
If
to the Company:
000
Xxxxxxxx Xxxxxx
Xxxxxxxxx
Biotechnology Incubator, Xxxxx 000
Xxxxxxxx, Xxx Xxxx
00000
(000)
000-0000
Attn:
CEO and Board of Directors
If
to Executive:
Xxxxxx
Xxxxxxxxxxxx
[******]
Any
such written notice shall be deemed given on the earlier of the
date on which such notice is personally delivered or three (3) days
after its deposit in the United States mail as specified above.
Either Party may change its address for notices by giving notice to
the other Party in the manner specified in this
Section.
-11-
8. CHOICE OF LAW.
This
Agreement shall be construed and interpreted in accordance with the
internal laws of the State of New York without regard to its
conflict of laws principles.
9. INTEGRATION.
This
Agreement, including Exhibit
A and the PIIA, contains the complete, final and exclusive
agreement of the Parties relating to the terms and conditions of
Executive’s employment and the termination of
Executive’s employment, and supersedes all prior and
contemporaneous oral and written employment agreements or
arrangements between the Parties.
This
Agreement cannot be amended or modified except by a written
agreement signed by Executive and the Company.
11. WAIVER.
No
term, covenant or condition of this Agreement or any breach thereof
shall be deemed waived, except with the written consent of the
Party against whom the wavier is claimed, and any waiver or any
such term, covenant, condition or breach shall not be deemed to be
a waiver of any preceding or succeeding breach of the same or any
other term, covenant, condition or breach.
12. SEVERABILITY.
The
finding by a court of competent jurisdiction of the
unenforceability, invalidity or illegality of any provision of this
Agreement shall not render any other provision of this Agreement
unenforceable, invalid or illegal. Such court shall have the
authority to modify or replace the invalid or unenforceable term or
provision with a valid and enforceable term or provision, which
most accurately represents the Parties’ intention with
respect to the invalid or unenforceable term, or
provision.
13. INTERPRETATION; CONSTRUCTION.
The
headings set forth in this Agreement are for convenience of
reference only and shall not be used in interpreting this
Agreement. This Agreement has been drafted by legal counsel
representing the Company, but the Executive has been encouraged to
consult with, and has consulted with, Executive’s own
independent counsel and tax advisors with respect to the terms of
this Agreement. The Parties acknowledge that each Party and its
counsel has reviewed and revised, or had an opportunity to review
and revise, this Agreement, and any rule of construction to the
effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of this
Agreement.
-12-
14. REPRESENTATIONS AND WARRANTIES.
Executive
represents and warrants that Executive is not restricted or
prohibited, contractually or otherwise, from entering into and
performing each of the terms and covenants contained in this
Agreement, and that Executive’s execution and performance of
this Agreement will not violate or breach any other agreements
between the Executive and any other person or entity.
15. COUNTERPARTS.
This
Agreement may be executed in two counterparts, each of which shall
be deemed an original, all of which together shall contribute one
and the same instrument. Signatures to this Agreement transmitted
by fax, by email in “portable document format”
(“.pdf”) or by any other electronic means intended to
preserve the original graphic and pictorial appearance of this
Agreement shall have the same effect as physical delivery of the
paper document bearing original signature.
16.
ARBITRATION.
To
ensure the rapid and economical resolution of disputes that may
arise in connection with the Executive’s employment with the
Company, Executive and the Company agree that any and all disputes,
claims, or causes of action, in law or equity, arising from or
relating to Executive’s employment, or the termination of
that employment, will be resolved, to the fullest extent permitted
by law, by final, binding and confidential arbitration pursuant to
the Federal Arbitration Act in New York, New York conducted by the
Judicial Arbitration and Mediation Services/Endispute, Inc.
(“JAMS”),
or its successors, under the then current rules of JAMS for
employment disputes; provided that the arbitrator shall: (a) have
the authority to compel adequate discovery for the resolution of
the dispute and to award such relief as would otherwise be
permitted by law; and (b) issue a written arbitration decision
including the arbitrator’s essential findings and conclusions
and a statement of the award. Accordingly, Executive and the
Company hereby waive any right to a jury trial. Both Executive and
the Company shall be entitled to all rights and remedies that
either Executive or the Company would be entitled to pursue in a
court of law. The Company shall pay any JAMS filing fee and shall
pay the arbitrator’s fee. The arbitrator shall have the
discretion to award attorneys fees to the party the arbitrator
determines is the prevailing party in the arbitration. Nothing in
this Agreement is intended to prevent either Executive or the
Company from obtaining injunctive relief in court to prevent
irreparable harm pending the conclusion of any such arbitration.
Notwithstanding the foregoing, Executive and the Company each have
the right to resolve any issue or dispute involving confidential,
proprietary or trade secret information, or intellectual property
rights, by Court action instead of arbitration.
17. INDEMNIFICATION.
The
Company shall defend and indemnify Executive in his capacity as
Chief Financial Officer of the Company to the fullest extent
permitted under the Delaware General Corporation Law
(“DGCL”). The Company shall also maintain a policy for
indemnifying its officers and directors, including but not limited
to the Executive, for all actions permitted under the DGCL taken in
good faith pursuit of their duties for the Company, including but
not limited to maintaining an
appropriate level of Directors and Officers Liability coverage and
maintaining the inclusion of such provisions in the Company’s
by-laws or articles of incorporation, as applicable and customary.
The rights to indemnification shall survive any termination of this
Agreement.
-13-
18. TRADE SECRETS OF OTHERS.
It is
the understanding of both the Company and Executive that Executive
shall not divulge to the Company and/or its subsidiaries any
confidential information or trade secrets belonging to others,
including Executive’s former employers, nor shall the Company
and/or its Affiliates seek to elicit from Executive any such
information. Consistent with the foregoing, Executive shall not
provide to the Company and/or its Affiliates, and the Company
and/or its Affiliates shall not request, any documents or copies of
documents containing such information.
19. ADVERTISING WAIVER.
Executive agrees to
permit the Company, and persons or other organizations authorized
by the Company, to use, publish and distribute advertising or sales
promotional literature concerning the products and/or services of
the Company, or the machinery and equipment used in the provision
thereof, in which Executive’s name and/or pictures of
Executive taken in the course of Executive’s provision of
services to the Company appear. Executive hereby waives and
releases any claim or right Executive may otherwise have arising
out of such use, publication or distribution.
20. NO MITIGATION.
Executive shall not
be required to mitigate damages or the amount of any payment
provided for under this Agreement by seeking other employment or
otherwise after the termination of his employment hereunder, and
any amounts earned by Executive, whether from self-employment, as a
common-law employee or otherwise, shall not reduce the amount of
any payment otherwise payable to him.
[SIGNATURE PAGE FOLLOWS]
-14-
IN WITNESS WHEREOF, the Parties have
executed this Agreement as of the date first above
written.
By:
/s/ Xxxxx
Xxxxxxxxxx
Name:
Xxxxx Xxxxxxxxxx
Its:
CEO
Date:
1/1/20
EXECUTIVE:
/s/ Xxxxxx
Xxxxxxxxxxxx
Xxxxxx
Xxxxxxxxxxxx
Dated: Effective as of
1/2/20
-15-
EXHIBIT
A
\
RELEASE
AND WAIVER OF CLAIMS
TO
BE SIGNED ON OR FOLLOWING THE SEPARATION DATE ONLY
In
consideration of the payments and other benefits set forth in the
Employment Agreement effective as of January 2, 2020, to which this
form is attached, I, Xxxxx Xxxxxxxxxx, hereby furnish AZURRX BIOPHARMA, INC. (the “Company”),
with the following release and waiver (“Release and
Waiver”).
In
exchange for the consideration provided to me by the Employment
Agreement that I am not otherwise entitled to receive, I hereby
generally and completely release the Company and its current and
former directors, officers, employees, stockholders, partners,
agents, attorneys, predecessors, successors, parent and subsidiary
entities, insurers, affiliates, and assigns (collectively, the
“Released
Parties”) from any and all claims, liabilities and
obligations, both known and unknown, that arise out of or are in
any way related to events, acts, conduct, or omissions occurring
prior to or on the date that I sign this Agreement (collectively,
the “Released
Claims”). Except as provided below, the Released
Claims include, but are not limited to: (a) all claims arising out
of or in any way related to my employment with the Company, or the
termination of that employment; (b) all claims related to my
compensation or benefits from the Company including salary,
bonuses, commissions, vacation pay, expense reimbursements,
severance pay, fringe benefits, stock, stock options, or any other
ownership interests in the Company; (c) all claims for breach of
contract, wrongful termination, and breach of the implied covenant
of good faith and fair dealing; (d) all tort claims, including
claims for fraud, defamation, emotional distress, and discharge in
violation of public policy; and (e) all federal, state, and local
statutory claims, including claims for discrimination, harassment,
retaliation, misclassification, attorneys’ fees, or other
claims arising under the federal Civil Rights Act of 1964 (as
amended), the federal Americans with Disabilities Act of 1990, the
federal Age Discrimination in Employment Act of 1967 (as amended)
(the “ADEA”), the
fair employment practices statutes of the state or states in which
I have provided services to the Company and/or any other federal,
state or local law, regulation or other requirement.
Notwithstanding the foregoing, the following are not included in
the Released Claims (the “Excluded
Claims”): (a) any rights or claims under the Agreement
or any other written agreement between the Company and me,
including any stock option award agreement or plan, (b) any rights
or claims that may arise as a result of events occurring after the
date this Release and Waiver is executed or which otherwise cannot
lawfully be waived, (c) any indemnification rights I may have as a
former officer or director of the Company or its subsidiaries or
affiliated companies, including any rights or claims for
indemnification I may have pursuant to any written indemnification
agreement with the Company to which I am a party, the charter,
bylaws, or operating agreements of the Company, or under applicable
law; (d) any claims for benefits under any directors’ and
officers’ liability policy maintained by the Company or its
subsidiaries or affiliated companies in accordance with the terms
of such policy, (e) any rights or claims under any employee benefit
or compensation plan or program in which I participate or
participated (or was eligible to participate), (f) any rights or
claims to unemployment compensation, and (g) reimbursement for
business expenses which are consistent with the Company’s
reimbursement policy. I hereby represent and warrant that, other
than the Excluded Claims, I am not
aware of any claims I have or might have against any of the
Released Parties that are not included in the Released
Claims.
-16-
I
expressly waive and relinquish any and all rights and benefits
under any applicable law or statute providing, in substance, that a
general release does not extend to claims which a party does not
know or suspect to exist in his or his favor at the time of
executing the release, which if known by him or his would have
materially affected the terms of such release.
I
acknowledge that, among other rights, I am waiving and releasing
any rights I may have under ADEA, that this Release and Waiver is
knowing and voluntary, and that the consideration given for this
Release and Waiver is in addition to anything of value to which I
was already entitled as an executive of the Company. If I am 40
years of age or older upon execution of this Release and Waiver, I
further acknowledge that I have been advised, as required by the
Older Workers Benefit Protection Act, that: (a) the release and
waiver granted herein does not relate to claims under the ADEA
which may arise after this Release and Waiver is executed; (b) I
should consult with an attorney prior to executing this Release and
Waiver; and (c) I have twenty-one (21) days from the date of
termination of my employment with the Company in which to consider
this Release and Waiver (although I may choose voluntarily to
execute this Release and Waiver earlier); (d) I have seven (7) days
following the execution of this Release and Waiver to revoke my
consent to this Release and Waiver; and (e) this Release and Waiver
shall not be effective until the seven (7) day revocation period
has expired without my having previously revoked this Release and
Waiver.
I
acknowledge my continuing obligations under my Proprietary
Information and Inventions Agreement. Pursuant to the Proprietary
Information and Inventions Agreement I understand that among other
things, I must not use or disclose any confidential or proprietary
information of the Company and I must immediately return all
Company property and documents (including all embodiments of
proprietary information) and all copies thereof in my possession or
control. I understand and agree that my right to the severance pay
I am receiving in exchange for my agreement to the terms of this
Release and Waiver is contingent upon my continued compliance with
my Proprietary Information and Inventions Agreement.
This
Release and Waiver constitutes the complete, final and exclusive
embodiment of the entire agreement between the Company and me with
regard to the subject matter hereof. I am not relying on any
promise or representation by the Company that is not expressly
stated herein. This Release and Waiver may only be modified by a
writing signed by both me and a duly authorized officer of the
Company.
Date:
By:
Xxxxxx
Xxxxxxxxxxxx
-17-
