Ohr Pharmaceutical, Inc. 8-K
Exhbit 10.52
EMPLOYMENT
AGREEMENT
This
Employment Agreement (this “Agreement”) is made and entered into as of February 24, 2015, by and between Ohr Pharmaceutical,
Inc., a Delaware corporation with a place of business at 000 Xxxxx Xxxxxx, 00xx xxxxx, Xxx Xxxx, XX 00000 (the
“Company”), and Xxxxx Xxxxxxxx residing at 0 Xxxxxx Xxxx, Xxxxxxxxx, XX 00000 (the “Employee”).
WHEREAS,
the Company and the Employee wish to establish terms, covenants, and conditions for the Employee’s employment with the Company
through this Agreement;
NOW,
THEREFORE, in consideration of the mutual agreements herein set forth, the parties hereto agree as follows:
| 1. | Duties.
From and after March 1, 2015 (the “Effective Date”), and based upon the terms
and conditions set forth herein, the Company agrees to employ the Employee and the Employee
agrees to be employed by the Company, as the Company’s Chief Clinical Officer.
During the Term (as defined in Section 2 below), the Employee agrees to devote substantially
all of his working time to the position he holds with the Company and to perform faithfully,
industriously, and to the best of his ability, experience and talent, the duties that
are assigned to him; provided that the Employee may devote a reasonable percentage of
his time, consistent with his current practices prior to the Effective Date, to other
commitments that do not conflict with his duties as an Employee. The Employee shall observe
and abide by the reasonable corporate policies and decisions of the Company. |
| 2. | Term
of this Agreement. Subject to Section 4 below, the initial term of this Agreement
(the “Initial Term”) shall be for a period commencing on the Effective Date
and ending on December 31, 2017; provided at the end of the Initial Term, the term will
automatically renew for successive one (1) year periods (each, a “Renewal Term”,
and collectively with the Initial Term, the “Term”) unless either party delivers
written notice of non-renewal to the other party at least sixty (60) days prior to the
expiration of the then-current initial Term or Renewal Term. |
| 3. | Compensation.
During the Term, the Company shall pay, and the Employee agrees to accept as full consideration
for the services to be rendered by the Employee hereunder, compensation consisting of
the following: |
| A. | Salary.
The Company shall pay the Employee a base salary equal to: (i) during the period ending
December 31, 2015, Two Hundred Thirty Thousand Dollars ($230,000) per year, (ii) during
the period commencing January 1, 2016 and ending December 31, 2016, Two Hundred Fifty
Thousand Dollars ($250,000), and (iii) during period commencing January 1, 2017 and ending
December 31, 2017, Two Hundred Seventy-Five Thousand Dollars ($275,000), in each case
payable in bi-weekly installments in accordance with Company practices. |
| B. | Signing
Bonus. Promptly after this Agreement is executed and delivered by the Employee, Employee
shall receive a signing bonus of Fifty Thousand Dollars ($50,000). |
| C. | Bonus.
The Employee shall be eligible to receive an annual performance bonus (“Annual
Bonus”) as follows: (i) for calendar 2015, the Annual Bonus shall be equal to the
sum of (A) One Hundred Twenty Thousand Dollars ($120,000), plus (B) in the discretion
of the Compensation Committee (the “Committee) of the Board of Directors, an additional
bonus which, if awarded, is expected to be in the range of Fifty Thousand Dollars to
One Hundred Thousand Dollars ($50,000-$100,000), (ii) in the discretion of the Committee,
at the end of each of 2016 and 2017, and any subsequent Renewal Term, a bonus which,
if awarded, is expected to be in the range of One Hundred Thousand Dollars ($100,000)
to Three Hundred Thousand Dollars ($300,000). All bonuses shall be paid within ninety
(90) days after the end of the applicable year of the Term. |
| D. | Benefits.
During the Term of this Agreement, the Employee will receive such employee benefits,
including health care insurance, vacation days and participation in the Company’s
401K Plan (without Company matching contributions), as are generally available from time
to time to senior employees of the Company; provided that if the Employee chooses not
to participate in the Company’s health care insurance, the Company will reimburse
the Employee for up to $23,000 in health care insurance expenses per year. |
| E. | Stock
Options. On the Effective Date, the Company shall grant to the Employee five year
options in the Company’s customary form (the “Options”) subject to
the Company’s 2014 Incentive Stock Plan (the “Plan”), exercisable (when
vested) to purchase for cash or by cashless exercise up to 200,000 shares of Company
Common Stock at a price equal to the closing price of such shares on the date of this
Agreement, vesting, provided the Employee is still employed by the Company, as follows:
(i) 50,000 shares on the Effective Date, (ii) 50,000 shares on December 31, 2015, and
(iii) 50,000 shares on December 31, 2016, and (iv) 50,000 shares on December 31, 2017;
provided that 75,000 of the Options (consisting of 50,000 Options vesting on December
31, 2017 and 25,000 Options vesting on December 31, 2016) are granted subject to stockholder
approval of the Company’s proposed increase in the Plan, submitted for approval
at the March 10, 2015 Annual Meeting of Stockholders of the Company. |
| (i) | On
the Effective Date, the Employee shall be granted an equity award (the “Award”)
under the Plan of 60,000 shares (the “Incentive Shares”) of Restricted Stock
(as defined in the Plan), which Incentive Shares will vest as follows: |
| (A) | 30,000
of the Incentive Shares shall vest on January 1, 2016; |
| (B) | 15,000
of the Incentive Shares shall vest on January 1, 2017; and |
| (C) | 15,000
of the Incentive Shares shall vest on January 1, 2018. |
| (ii) | Except
as otherwise provided herein, any Incentive Shares that have not vested as of the date
of the termination of the Employee’s employment for any reason shall be deemed
void and not issued. Certificates for unvested Incentive Shares shall be retained in
custody by the Company. None of the Incentive Shares may be transferred prior to the
applicable vesting date, and thereafter only in compliance with the terms of this Agreement
and the Plan. |
| (iii) | Upon
termination of the Employee’s employment for cause (as defined below), the Company
will have the right and option to purchase, and the Employee will have the obligation
to sell, all of the Employee’s Incentive Shares, which option may be exercised
by the Company within ninety (90) days following such termination of employment by giving
written notice thereof to the Employee. The purchase price for such Incentive Shares
will be $0.01 per Incentive Share. Settlement of the purchase will be made at the principal
office of the Company within 30 days after delivery of such written notice. |
| (iv) | The
Employee represents, warrants and covenants as follows: |
| (A) | the
Employee is acquiring the Incentive Shares for the Employee’s own account for investment
only, and not with a view to, or for sale in connection with, any distribution of the
Incentive Shares in violation of the Securities Act of 1933, as amended (the “Securities
Act”), or any rule or regulation under the Securities Act; |
| (B) | the
Employee has sufficient experience in business, financial and investment matters to be
able to evaluate the risks involved in acquiring the Incentive Shares and to make an
informed investment decision with respect to such acquisition; and |
| (C) | the
Employee understands that: |
| (1) | the
offer and sale of the Incentive Shares have not been registered under the Securities
Act, and the Incentive Shares are “restricted securities” within the meaning
of Rule 144 under the Securities Act; |
| (2) | the
Incentive Shares cannot be sold, transferred or otherwise disposed of unless they are
subsequently registered under the Securities Act or an exemption from registration is
then available; and |
| (3) | there
is now no registration statement on file with the Securities and Exchange Commission
with respect to the offer and sale of any stock of the Company, and the Company has no
obligation or current intention to register the offer and sale of the Incentive Shares
under the Securities Act. |
| (v) | The
Incentive Shares shall be subject to restrictions imposed on Restricted Stock by the
Plan and this Agreement. |
| (vi) | Certificates
for the Incentive Shares shall bear legends setting forth the restrictions set forth
in this Agreement. |
| G. | Expenses.
The Company shall reimburse the Employee for all reasonable out-of-pocket expenses incurred
by him in the performance of his duties hereunder, including expenses for travel, entertainment
and similar items, promptly after the presentation by the Employee, from time-to-time,
of an itemized account of such expenses. |
| A. | For
Cause. The Company may terminate the employment of the Employee prior to the end
of the Term of this Agreement “for cause.” Termination “for cause”
shall be defined as a termination by the Company of the employment of the Employee occasioned
by (i) the failure by the Employee to cure a willful breach of a material duty imposed
on the Employee under this Agreement within thirty (30) days after written notice thereof
by the Company or the continuation by the Employee after written notice by the Company
of a willful neglect of a duty imposed on the Employee under this Agreement, (ii) the
Employee’s conviction of (or plea of guilty or nolo contendere to) a misdemeanor
which constitutes a crime of moral turpitude and, in the good faith opinion of the Committee,
materially damages the Company or to any subsidiary or affiliate of the Company, (iii)
the Employee’s conviction of (or plea of guilty or nolo contendere to) a felony
(including, without limitation, any felony constituting a crime of moral turpitude),
(iv) any act of gross negligence or corporate waste by the Employee that adversely affects
the Company, (v) the commission of any intentional tort by the Employee against the Company
causing loss, damages or harm to the Company, (vi) the misappropriation of proprietary
information or confidential information, or (vii) any breach of the Invention Assignment
Agreement. In the event of termination by the Company “for cause,” all salary,
benefits and other payments shall cease at the time of termination, and the Company shall
have no further obligations to the Employee. |
| B. | Resignation.
If the Employee resigns for any reason, all salary, benefits and other payments (except
as otherwise provided in Section 4G below) shall cease at the time such resignation becomes
effective. At the time of any such resignation, the Company shall pay the Employee the
value of any accrued but unused vacation time, and the amount of all accrued but previously
unpaid base salary through the date of such termination. The Company shall promptly reimburse
the Employee for the amount of any expenses incurred prior to such termination by the
Employee as required under Section 3G above. |
| C. | Disability,
Death. The Company may terminate the employment of the Employee prior to the end
of the Term of this Agreement if the Employee has been unable to perform his duties hereunder
or a similar job for a continuous period of six (6) months due to a physical or mental
condition that, in the opinion of a licensed physician, will be of indefinite duration
or is without a reasonable probability of recovery for a period of at least six (6) months.
The Employee agrees to submit to an examination by a licensed physician chosen by the
Company in order to obtain such opinion, at the request of the Company, made after the
Employee has been absent from his place of employment for at least six (6) months. The
Company shall pay for any requested examination. However, this provision does not abrogate
either the Company’s or the Employee’s rights and obligations pursuant to
the Family and Medical Leave Act of 1993, and a termination of employment under this
Section 4C shall not be deemed to be a termination for cause. |
If
during the Term of this Agreement, the Employee dies or his employment is terminated because of his disability, all salary, benefits
and other payments shall cease at the time of death or disability, provided, however, that the Company shall provide such health,
dental and similar insurance or benefits as were provided to Employee immediately before his termination by reason of death or
disability, to Employee or his family (in accordance with Company policies) for the lesser of twelve (12) months after such termination
or the full un-expired Term of this Agreement on the same terms and conditions (including cost) as were applicable before such
termination. In addition, for the first six (6) months of disability, the Company shall pay to the Employee the difference, if
any, between any cash benefits received by the Employee from a Company-sponsored disability insurance policy and the Employee’s
base salary hereunder in accordance with Section 3A above. At the time of any such termination, the Company shall pay the Employee,
the value of any accrued but unused vacation time, and the amount of all accrued but previously unpaid base salary through the
date of such termination (subject to withholding). The Company shall promptly reimburse the Employee for the amount of any expenses
incurred prior to such termination by the Employee as required under Section 3G above.
| D. | Termination
without Cause. A termination without cause is a termination of the employment of
the Employee by the Company that is not “for cause” |
and
not occasioned by the resignation, death or disability of the Employee. If the Company terminates the employment of the Employee
without cause before the end of the Term of this Agreement, the Company shall, at the time of such termination, pay to the Employee
the severance payment provided in Section 4F below together with the value of any accrued but unused vacation time and the amount
of all accrued but previously unpaid base salary through the date of such termination and shall provide him with all of his benefits
under Section 3C above for the greater of six (6) months or the full un-expired Term of this Agreement; except as limited by Sections
4I and 6 and subject to the Employee’s execution and non-revocation of a release in the form attached hereto as Exhibit
B in accordance with its terms. The Company shall promptly reimburse the Employee for the amount of any expenses incurred prior
to such termination by the Employee as required under Section 3G above.
| E. | End
of the Term of this Agreement. Except as otherwise provided in Sections 4F and 4G
below, the Company may terminate the employment of the Employee at the end of the Term
of this Agreement without any liability on the part of the Company to the Employee. If
the Employee continues to be an employee of the Company after the Term of this Agreement
ends, his employment shall be governed by the terms and conditions of this Agreement,
but he shall be an employee at will and his employment may be terminated at any time
by either the Company or the Employee without notice and for any reason not prohibited
by law or no reason at all. If the Company terminates the employment of the Employee
at the end of the Term of this Agreement without cause, the Company shall, at the time
of such termination, pay to the Employee the value of any accrued but unused vacation
time and the amount of all accrued but previously unpaid base salary through the date
of such termination. The Company shall promptly reimburse the Employee for the amount
of any reasonable expenses incurred prior to such termination by the Employee as required
under Section 3G above. |
| X. | Xxxxxxxxx.
If the employment of the Employee is terminated by the Company without cause before the
end of the Term of this Agreement, the Employee shall be paid, as a severance payment
at the time of such termination, the amount equal to the greater of (i) 50% of the annual
base salary in effect at the time of termination and (ii) the base salary payable through
the end of the Term; except as limited by Sections 4I and 6 and subject to the Employee’s
execution and non-revocation of a release in the form attached hereto as Exhibit B in
accordance with its terms. |
| G. | Change
of Control Severance. (i) In addition to the rights of the Employee under the Company’s
employee benefit plans under Section 3D above, but in lieu of any severance payment under
Section 4F above, if there is a Change in Control (as defined below) of the Company during
the Term and the employment of the Employee is concurrently or within 12 months of the
Change of Control (but prior to the end of the Term) terminated (a) by the Company without
cause or (b) by the resignation of the Employee because he has reasonably determined
in good faith that his titles, authorities, responsibilities, salary, bonus opportunities
or benefits have been materially diminished, that a material adverse change in his working
conditions has occurred, that his services are no longer required in light of the Company’s
business plan, or the Company has materially breached this Agreement, the Company shall
pay the Employee, as a severance payment, at the time of such termination, the amount
of Three Hundred Fifty Thousand Dollars ($500,000), together with the value of any accrued
but unused vacation time, and the amount of all accrued but previously unpaid base salary
through the date of termination, and shall provide him with all of this benefits under
Section 3D above for the lesser of twelve (12) months or the full un-expired Term of
this Agreement; except as limited by Section 6 and Section 4I and subject to the Employee’s
execution and non-revocation of a Release in accordance with Section 6C. The Company
shall promptly reimburse the Employee for the amount of any expenses incurred prior to
such termination by the Employee as required under Section 3G above. Notwithstanding
the foregoing, before the Employee may resign pursuant to Section 4G(i)(c) above, the
Employee shall deliver to the Company a written notice of the Employee’s intent
to terminate his employment pursuant to Section 4G(i)(c), and the Company shall have
been given a reasonable opportunity to cure any such act, omission or condition within
thirty (30) days after the Company’s receipt of such notice. |
| (ii) | For
the purpose of this Agreement, a Change in Control of the Company has occurred when:
(a) any person (defined for the purposes of this Section 4G to mean any person within
the meaning of Section 13(d) of the Securities Exchange Act of 1934 (the “Exchange
Act”)), other than a participant in a transaction approved by its Board of Directors
for the principal purpose of raising additional capital, either directly or indirectly,
acquires beneficial ownership (determined under Rule 13d-3 of the Regulations promulgated
by the Securities and Exchange Commission under Section 13(d) of the Exchange Act) of
securities issued by the Company having forty five percent (45%) or more of the voting
power of all the voting securities; (b) a majority of the Directors elected at any meeting
of the holders of voting securities of the Company are persons who were not nominated
for such election by the Board of Directors or a duly constituted committee of the Board
of Directors having authority in such matters; (c) the stockholders of the Company approve
a merger or consolidation of the Company with another person other than a merger or consolidation
in which the holders of the Company’s voting securities issued and outstanding
immediately before such merger or consolidation continue to hold voting securities in
the surviving or resulting corporation (in the same relative proportions to each other
as existed before such event) comprising fifty one percent (51%) or more of the voting
power for all purposes
of the surviving or resulting corporation; or (d) the stockholders of the Company approve a transfer of substantially all of the
assets of the Company to another person other than a transfer to a transferee, fifty one percent (51%) or more of the voting power
of which is owned or controlled by the Company or by the holders of the Company’s voting securities issued and outstanding
immediately before such transfer in similar relative proportions to each other as existed before such event. |
| H. | Benefit
and Stock Plans. To the extent the Plan or a benefit plan which covers the Employee
has specific provisions concerning termination of employment, or the death or disability
of an employee (e.g., life insurance or disability insurance), then such benefit plan
shall control the disposition of the benefits, Options or Awards. |
| X. | Xxxxxxxxx
Limits. Notwithstanding any other provision of this Agreement, no payment shall be
made or benefit provided pursuant to Section 4F or 4G following the date the Employee
first violates the Invention Assignment Agreement. |
| 5. | Invention
Assignment Agreement. Employee has executed an Invention Assignment and Confidential
Information Agreement (the “Invention Assignment Agreement”) as a condition
of employment with the Company. The Invention Assignment Agreement shall not be limited
by this Agreement in any manner, and the Employee shall act in accordance with the provisions
of the Invention Assignment Agreement at all times during the Term of this Agreement. |
| A. | General.
The parties hereto acknowledge and agree that, to the extent applicable, this Agreement
shall be interpreted in accordance with, and incorporate the terms and conditions required
by Section 409A of the Internal Revenue Code (the “Code”) and the Department
of Treasury regulations and other interpretive guidance issued thereunder, including
without limitation any such regulations or other guidance that may be issued after the
Effective Date. Notwithstanding any provision of this Agreement to the contrary, in the
event that the Company determines that any amounts payable hereunder will be immediately
taxable to the Employee under Section 409A, the Company reserves the right (without any
obligation to do so or to indemnify the Employee for failure to do so) to (i) adopt such
amendments to this Agreement and appropriate policies and procedures, including amendments
and policies with retroactive effect, that the Company determines to be necessary or
appropriate to preserve the intended tax treatment of the benefits provided by this Agreement,
to preserve the economic benefits of this Agreement and to avoid less favorable accounting
or tax consequences for the Company or (ii) take such other actions as the Company determines
to be necessary or appropriate to exempt the amounts payable hereunder from Section
409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder. No provision
of this Agreement shall be interpreted or construed to transfer any liability for failure to comply with the requirements of Section
409A from the Employee or any other individual to the Company or any of its affiliates, employees or agents. |
| B. | Separation
from Service under Section 409A. Notwithstanding any provision to the contrary in
this Agreement: (i) no amount shall be payable pursuant to Section 4F or 4G unless the
termination of the Employee’s employment constitutes a “separation from service”
within the meaning of Section 1.409A-1(h) of the Department of Treasury Regulations;
(ii) for purposes of Section 409A, the Employee’s right to receive installment
payments pursuant to Section 4F or 4G shall be treated as a right to receive a series
of separate and distinct payments; and (iii) to the extent that any reimbursement of
expenses or in-kind benefits constitutes “deferred compensation” under Section
409A, such reimbursement or benefit shall be provided no later than December 31 of the
year following the year in which the expense was incurred. The amount of expenses reimbursed
in one year shall not affect the amount eligible for reimbursement in any subsequent
year. The amount of any in-kind benefits provided in one year shall not affect the amount
of in-kind benefits provided in any other year. Notwithstanding any provision to the
contrary in this Agreement, if the Employee is deemed at the time of his separation from
service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i)
of the Code, to the extent delayed commencement of any portion of the termination benefits
to which the Employee is entitled under this Agreement is required in order to avoid
a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of
the Employee’s termination benefits shall not be provided to the Employee prior
to the earlier of (x) the expiration of the six-month period measured from the date of
the Employee’s “separation from service” with the Company (as such
term is defined in the Treasury Regulations issued under Section 409A of the Code) or
(y) the date of the Employee’s death; upon the earlier of such dates, all payments
deferred pursuant to this sentence shall be paid in a lump sum to the Employee, and any
remaining payments due under the Agreement shall be paid as otherwise provided herein. |
| C. | Release.
Notwithstanding anything to the contrary in this Agreement, to the extent that any payments
of “nonqualified deferred compensation” (within the meaning of Section 409A)
due under this Agreement as a result of the Employee’s termination of employment
are subject to the Employee’s execution and delivery and non-revocation of a Release,
(i) the Company shall deliver the Release to the Employee within ten (10) business days
following the date of termination, (ii) if the Employee fails to execute the Release
on or prior to the Release Expiration Date (as defined below) or timely revokes his acceptance
of the Release thereafter, the Employee shall not be entitled to any payments or benefits
otherwise conditioned on the Release, and (iii) in any case where the date of termination
and the tenth day following the Release Expiration Date fall in two separate taxable
years, any payments required to be made to the Employee that are conditioned on the Release
and are treated as nonqualified deferred compensation for purposes of Section 409A shall
be made in the later taxable year. For purposes of this Section 6, “Release Expiration
Date” shall mean the date that is twenty-one (21) days following the date upon
which the Company timely delivers the Release to the Employee, or, in the event that
the Employee’s termination of employment is “in connection with an exit incentive
or other employment termination program” (as such phrase is defined in the Age
Discrimination in Employment Act of 1967), the date that is forty-five (45) days following
such delivery date. To the extent that any payments of nonqualified deferred compensation
(within the meaning of Section 409A) due under this Agreement as a result of the Employee’s
termination of employment are delayed pursuant to this Section 6C, such amounts shall
be paid in a lump sum on the first payroll date following the date that the Employee
executes and does not revoke the Release (and the applicable revocation period has expired)
or, in the case of any payments subject to Section 6C(iii), on the first payroll period
to occur in the subsequent taxable year, if later. |
| 7. | Arbitration.
Any dispute or controversy arising under or in connection with this Agreement shall be
settled exclusively by arbitration in New York, NY, in accordance with the non-union
employment arbitration rules of the American Arbitration Association (“AAA”)
then in effect. If specific non-union employment dispute rules are not in effect, then
AAA commercial arbitration rules shall govern the dispute. If the amount claimed exceeds
$100,000, the arbitration shall be before a panel of three arbitrators. Judgment may
be entered on the arbitrator’s award in any court having jurisdiction. The Company
shall indemnify the Employee against and hold him harmless from any attorney’s
fees, court costs and other expenses incurred by the Employee in connection with the
preparation, commencement, prosecution, defense, or enforcement of any arbitration, award,
confirmation or judgment in order to assert or defend any right or obtain any payment
under Section 4G above; without regard to the success of the Employee or his attorney
in any such arbitration or proceeding. |
| 8. | No
Restraint. The Employee represents and warrants that he is not subject to any employment,
non-competition, non-solicitation or non-disclosure agreement that would prevent him
from entering into this Agreement or performing his services hereunder. In the event
that the Employee is in possession of any confidential non-public information by virtue
of his prior employment, the Employee further represents and warrants that he will not
engage in any activity that is inconsistent with the rights of such prior employer, which
could subject the Company to liability. |
| 9. | Governing
Law. This Agreement shall be governed by and construed in accordance with the laws
of the State of New York. |
| 10. | Validity.
The invalidity or unenforceability of any provision or provisions of this Agreement shall
not affect the validity or enforceability of any other provision of this Agreement, which
shall remain in full force and effect. |
| 11. | Entire
Agreement. This Agreement (together with the Invention Assignment Agreement) constitutes
the entire understanding between the parties with respect to the subject matter hereof.
This Agreement may not be amended except in writing executed by the parties hereto. |
| 12. | Effect
on Successors of Interest. This Agreement shall inure to the benefit of and be binding
upon heirs, administrators, executors, successors and assigns of each of the parties
hereto. Notwithstanding the above, the Employee recognizes and agrees that his obligation
under this Agreement may not be assigned without the consent of the Company. |
[Signature
Page Follows]
IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Employment Agreement as of the date first written above.
| Ohr
Pharmaceutical, Inc. |
EMPLOYEE |
| |
|
| |
|
| By:__________________________________ |
______________________________________ |
| Xxx Xxxxxxxxxx |
Xxxxx Xxxxxxxx |
| Chairman |
|
