AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Employment Agreement is made as of the 14 day of December, 1999,
by and between Symbollon Corporation, a Delaware corporation with its principal
place of business at 00 Xxxxxx Xxxxx, Xxxxxxxxxx, XX 00000 (the "Company"), and
Xxxx X. Xxxxxxx, residing at 00 Xxxxxxxxxxxx Xxxxx, Xxxxxxxxxxxx, XX 00000 (the
"Employee").
In consideration of the mutual promises contained in this Agreement,
the parties agree as follows:
1. Titles and Responsibilities. The Company employs the Employee, and
the Employee accepts employment, as Chief Executive Officer and Chief Scientific
Officer of the Company. The Employee shall be directly responsible for
management of all business operations and setting of overall corporate strategy.
Subject to the general direction and control of the Board of Directors of the
Company (the "Board"), the Employee agrees to devote his full time and best
efforts to his duties and responsibilities for the Company, subject only to the
provisions of Section 7 of this Agreement. The Employee shall report directly to
the Board.
2. Term. The term of this Agreement shall be deemed to have commenced
as of the date hereof and, subject to the provisions of Section 12 of this
Agreement, shall continue in full force and effect until December 31, 2005.
3. Base Salary. During the term of this Agreement, the Employee shall
be entitled to receive base salary at the rate of $175,000 per year, payable not
less than monthly in arrears, commencing January, 2000. The Employee's base
salary (at the rate then in effect) shall be increased each year by a
cost-of-living factor determined by reference to the Consumers Price Index for
All Urban Consumers applicable to Boston, Massachusetts, published by the Bureau
of Labor Statistics of the U.S. Department of Labor (the "Index"). The amount of
such increase shall be effective in January of each year, commencing January,
2001, and shall be equal to the percentage increase in the Index from the
previous January. The Company may, but shall not be obligated to, increase the
Employee's base salary in any year in an amount in excess of the cost-of-living
factor provided above.
4. Bonuses.
(a). Annual. In addition to the base salary described in Section 3,
during the term of this Agreement, the Employee may be entitled in each calendar
year to receive a cash bonus, stock options and/or such other bonuses, in such
amounts and on such terms as the Board or the Compensation Committee of the
Board (the "Compensation Committee") may determine. In the event of the
termination of the employment of the Employee for (i) any reason other than
Cause or (ii) by reason of Constructive Discharge, the Employee shall be
entitled to receive an amount equal to the bonus which would otherwise have been
payable to the Employee under any established Company incentive plans, if any,
in effect at the time in respect of the year during which such termination
occurs, pro rated for the portion of the year in which such termination occurs.
(b). Signing. As an incentive to execute this Agreement, the
Employee shall be granted as of the date hereof options to purchase Class A
Common Stock as detailed on Exhibit A hereto.
5. Employee Benefits. The Employee shall have the right to participate
in all benefit plans and programs generally made available to executives of the
Company, including without limitation health, dental, life, and disability
insurance, vacation programs, retirement plans, employee stock plans or benefits
and profit sharing plans.
6. Reimbursement of Expenses. The Company shall reimburse the Employee
for all reasonable and necessary expenses incurred by him in the performance of
his duties hereunder, following his appropriate substantiation thereof, in each
case in accordance with the Company's policies as in effect from time to time.
7. Outside Consulting. With prior notification to the Compensation
Committee, the Employee may provide consulting services to third parties. The
Employee may serve as a consultant in any field which does not directly compete
with the Company, including without limitation, medical diagnostic products,
provided, that in no event shall such proposed consulting interfere with the
operations of the Company or the performance of the Employee's duties under this
Agreement more particularly described in Section 1 hereof. If the Compensation
Committee shall determine that any consulting activity engaged in by the
Employee is not permitted hereunder, the Compensation Committee shall provide
the Employee a written statement setting forth the basis for its determination.
The Employee agrees that in no event will he devote more than four days per
month in the aggregate in his capacity as a consultant to third parties.
The Company acknowledges that the Employee is a principal of and
participant in K&R Associates, that K&R Associates owns rights to certain
elements of the Company's technology as it relates to the disinfection of
contact lenses, and that the Employee is currently providing consulting services
to K&R Associates and Ciba-Vision Corporation in the field of contact lens
disinfection. The Company hereby consents to the Employee's aforementioned
consulting activities.
8. Severance and Other Arrangements.
(a) Generally. In the event of the termination of the
employment of the Employee by the Company without Cause, or by the Employee as
the result of a Constructive Discharge, the Company shall:
(i). Continue to pay the Employee, in accordance with the
Company's normal payroll practices and policies in effect from time to time
(including any required withholding), his base salary at the monthly base salary
rate in effect for such Employee immediately prior to the termination of his
employment) for a period of eighteen (18) months following the termination of
the Employee's employment.
(ii). Provide the Employee with health, dental, life and
disability insurance substantially similar to that which the Employee was
receiving immediately prior to the termination of his employment until the
earlier of: (x) the date which is eighteen (18) months following the termination
of the Employee's employment; or (y) the date the Employment begins receiving
substantially similar insurance from a subsequent employer. The end of the
period during which severance is paid, rather than the termination date of
employment, will be deemed to be a "qualifying event" which would entitle the
Employee to acquire at his own expense during the minimum election period
permitted by the Consolidated Omnibus Budget Reconciliation Act (commonly known
as "COBRA") or such law as may then be in effect continuation of coverage under
the Company's health and benefit plans.
(iii). Provide that the Employee shall have three (3) years to
exercise any then-exercisable, unexpired installments of any stock options held
by the Employee on the Employee's last date of employment or if later, the date
when the Employee ceases to be a member of the Board.
(b) Disability. In the event of any illness (mental or physical) or
accident which renders the Employee unable to perform his duties and
responsibilities, the Company shall, during the first 3 months of any such
illness or after such accident, as the case may be, continue to pay the
Employee's base salary hereunder; and thereafter, during any such period in
excess of 3 months the Company shall supplement any disability benefits which
the Employee is entitled to receive under the Company's disability plans then in
effect, for a period of up to 9 additional months, in an amount such that,
together with any amounts the Employee is entitled to receive under such plans,
the Employee shall receive an aggregate amount equal to his base salary during
such period.
(c). Change of Control. Upon a Change of Control, all stock
options held by the Employee shall vest and become immediately exercisable
in full.
9. Non-competition. During the term of this Agreement and thereafter
the Employee will not directly or indirectly, participant in any business that
utilizes the Company's proprietary information, know-how or trade secrets in any
field of activity, including specifically those fields that are competitive with
the business of the Company, nor will the Employee interfere with the
contractual relations between the Company and any of its employees. The
provisions of this Section shall not prohibit the ownership of stock in any
entity whose stock is publicly traded or 5% or less of the outstanding stock of
any entity whose stock is not publicly traded.
The Company acknowledges that certain rights to commercialize the
Company's enzyme-based iodine technology in the field of contact lens
disinfection are owned by K&R Associates.
10. Ownership of Developments. The Employee agrees that any work or
research, or the result thereof including without limitation, inventions,
processes, formula, data, information, programs, systems, software or know-how
(hereinafter collectively "Proprietary Information") made, conceived or
developed by Employee, alone or in connection with others, prior to or during
the term of his employment under this Agreement, whether during or out of the
usual hours of employment, which are related to the business, research and
development work within the Company's Field of Operation are the sole and
exclusive property of the Company. The Employee agrees that he will fully assign
the foregoing to Company. The Employee further agrees to disclose all
Proprietary Information completely and in writing to the Board. To the extent of
the Employee's interest therein, all papers and records of every kind, relating
to Proprietary Information included within the terms of this Agreement, which
shall at any time come into the possession of the Employee shall be the sole and
exclusive property of the Company and shall be surrendered to the Company upon
termination of the Employee's employment by the Company or upon the Company's
request at any time either during or after the termination of such employment.
11. Confidential Information. Employee covenants and agrees with the
Company that Employee will not during or after the term of employment disclose
to anyone (except to the extent reasonably necessary for Employee to perform his
duties hereunder) any Proprietary Information or other confidential information
concerning the business or affairs of the Company or of any of its affiliates or
subsidiaries or any of their customers which Employee may have acquired in the
course of or as incident to Employee's employment or prior dealings with the
Company or with any of its affiliates, including without limitation, customers
lists, or business trade secrets of, or methods or techniques used by Employee
or any of its affiliates in or about their respective business. Nothing
contained in this paragraph shall impair or restrict the right of Employee to
use or disclose any information already in the public domain.
12. Termination. Notwithstanding the provisions of Section 2 of this
Agreement, the Company shall have the right to terminate the employment of the
Employee for Cause or as a result of his death or Permanent Disability, and the
Employee shall have the right to terminate his employment as the result of a
Constructive Discharge, in each case without violation of the terms of this
Agreement.
In no event shall the Company terminate this Agreement without Cause,
unless the Employee shall have been granted a prior meeting with, and an
opportunity to be heard by, the Board, and a majority of the members of the
Board shall have determined that the Employee has (i) failed to fulfill his
duties to the Company in a satisfactory manner or (ii) engaged in conduct
detrimental to the Company.
13. Certain Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated:
"Cause" means (i) the deliberate dishonesty of the Employee
with respect to the Company or any subsidiary or affiliate thereof; (ii)
conviction of the Employee of a felony punishable by imprisonment for more than
one year or a fine of $100,000 or more; or (iii) the willful failure of Employee
to perform the material lawful duties assigned to him under this Agreement as
determined by the Board, which failure the Employee shall not have substantially
remedied within 30 days after receiving written notice from the Company
describing such failure in reasonable detail.
"Change of Control" means (i) the sale, lease, transfer or
other disposition by the Company of all or substantially all of its assets in a
single transaction or a series of related transactions; (ii) the merger or
consolidation of the Company with another entity in which the stockholders of
the Company immediately prior to such merger or consolidation hold less than 50%
of the outstanding voting stock of the surviving or resulting corporation
immediately following such transaction; or (iii) the sale or exchange (to or
with any person or entity other than the Company) by the stockholders of the
Company of more than 50% of the outstanding voting stock of the Company in a
single transaction or series of related transactions.
"Company's Field of Operation" means all therapeutic and/or
anti-microbial products, including without limitation iodine-based products, and
any additional products or services developed, marketed, distributed, planned,
sold or otherwise provided by the Company from time to time prior to or during
the term of this Agreement.
"Constructive Discharge" means the termination of employment
by the Employee on the grounds that (a) there has been a significant reduction
in the nature or scope of the Employee's responsibilities, authorities, powers,
functions or duties, (b) there has been a material change in the Company's
policies or management which was intended other than in good faith to and which
has resulted in the inability of the employee to exercise substantially the
responsibilities, authorities, powers, functions or duties exercised by him
immediately prior to such change, (c) there has been a decrease in the total
annual compensation payable by the Company to the Employee, other than as a
result of a material decrease in compensation payable to the Employee and to all
other employees of similar rank and stature of the Company on the basis of the
financial performance of the Company, provided, however, that nothing contained
herein shall be construed as giving the Company the right to decrease the
Employee's base salary specified in Section 3 hereof, (d) there has been a
Change of Control within the past twelve (12) months, or (e) the relocation of
the Company's business to a site more than twenty-five (25) miles from the
Employee's residence.
"Permanent Disability" means illness (mental or physical) or
accident which renders the Employee unable to perform his duties and
responsibilities for a period of six consecutive months or six months in any
twelve-month period, and which is confirmed to the Board as continuing at the
end of such period by expert medical opinion. Nothing contained in this
Agreement shall affect the right of the Employee to receive long-term disability
benefits under any long-term disability insurance plan(s) of the Company then in
effect.
14. Miscellaneous.
(a) Notices. Any notice hereunder shall be effective if delivered
personally, by registered or certified mail, return receipt requested, by
overnight or special courier with a signed receipt, or by facsimile where
confirmation of receipt may be verified, at the addresses set forth in the
preamble to this Agreement or to any other properly noticed address given by the
parties to each other.
(b) Governing Law. This Agreement shall be construed and
governed by the law of the Commonwealth of Massachusetts.
(c) Amendments. This Agreement may not be modified or amended
orally. All amendments shall be in writing and signed by the Company and
Employee.
(d) Assignments. This Agreement may not be assigned in whole or in part
by the Employee. This Agreement may be assigned by the Company to any entity
acquiring or succeeding to control of ownership of the Company or substantially
all of the assets of the Company. This Agreement shall be binding upon and inure
to the benefit of the parties and to their permitted successors and assigns.
(e) Entire Agreement. This Agreement constitutes the entire
understanding of the parties with respect to its subject matter and
supersedes any other agreements between the parties with respect to such
subject matter.
(f) Enforceability. If any portion or provision 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 provisions of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
(g) 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.
(h) Arbitration. Any controversy or claim which arises out of or
relating to this Agreement, or the breach thereof (other than controversies or
claims with regard to Sections 9, 10 or 11 of this Agreement), shall be settled
by arbitration in accordance with the Rules of the American Arbitration
Association then in effect. The controversy or claim shall be submitted to three
arbitrators, one of whom shall be chosen by the Employee, one of whom shall be
chosen by the Company, and one of whom shall be chosen by the two so selected.
The party desiring arbitration shall give written notice to the other party of
its desire to arbitrate the particular matter in question, naming the arbitrator
selected by it. If the other party shall fail within a period of 15 days after
such notice shall have been given to reply in writing naming the arbitrator
chosen as above provided, or if the two arbitrators selected by the parties
shall fail within 15 days after their selection to agree upon the third
arbitrator, then either party may apply to the American Arbitration Association
for the appointment of an arbitrator to fill the place so remaining vacant. The
decision of any two of the arbitrators shall be final and binding upon the
parties hereto. Judgement upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof.
The proceedings shall be held in Boston, Massachusetts. The arbitrators
shall have no power to award punitive or exemplary damages or to ignore or vary
the terms of this Agreement, and shall be bound to apply controlling law.
Arbitration shall be binding and the remedy for the settlement of the
controversy or claims (except as set forth in the preceding paragraph of this
Section).
(i) Certain Remedies. The restrictions contained in Sections 9, 10 and
11 of this Agreement are necessary for the protection of the business and
goodwill of the Company and are considered by the Employee to be reasonable for
such purpose. Without limiting the remedies available to the Company, the
Employee acknowledges that a breach of any of the covenants contained in any of
such Sections 9, 10 and 11 would result in irreparable injury to the Company for
which there might be no adequate remedy at law, and that, in the event of such a
breach or threat thereof, the Company shall be entitled to obtain a temporary
restraining order and/or such other equitable relief as may be required to
enforce specifically any of the covenants of such Sections 9, 10 and 11. The
provisions of such Sections 9, 10 and 11 shall survive the termination of this
Agreement and shall continue thereafter indefinitely in full force and effect in
accordance with their respective terms.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date and year first above written.
SYMBOLLON CORPORATION
By: /s/ Xxxx X. Xxxxxxxxx
-------------------------------
Xxxx X. Xxxxxxxxx
President
/s/ Xxxx X. Xxxxxxx
-------------------------------
Xxxx X. Xxxxxxx
Exhibit A
Option Grant
Number of Shares Exercise Price Vesting Date
60,000 150% of Fair Market Value* First Anniversary
60,000 200% of Fair Market Value* Second Anniversary
60,000 250% of Fair Market Value* Third Anniversary
------
180,000
* Fair Market Value of the Class A Common Stock, as determined under the
Company's 1993 Employee Stock Option Plan, as amended, on the date of grant.
