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EXHIBIT 10.27
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into this 16th day of January, 1998, by and
between Martek Biosciences Corporation, a Delaware corporation having its
principle office at 0000 Xxxxxx Xxxx, Xxxxxxxx, XX 00000 (the "Company") and
Xxxxx X. Xxxx, residing at 00000 Xxxxxxxxxxx Xx., Xxxxxxx, XX 00000 (the
"Executive").
WHEREAS, the Company desires to employ the Executive as its Chief Financial
Officer; and
WHEREAS, the Executive is skilled in the financial areas relevant to the
Company's business and desires to enter into employment with the Company;
NOW THEREFORE, the Company and Executive, in consideration of the premises and
of the respective mutual promises and agreements contained herein, agree with
each other as follows:
1. Definitions.
1.1 Change in Control. Shall be deemed to occur where the Company has
merged or consolidated with or into any other corporation, firm or business
entity or has sold or transferred substantially all of its assets to another
corporation, firm or business entity or has sold fifty percent or more of the
equity investment and voting control in the Company in any twelve month period
other than through a public or private offering of the Company's securities
whereby the primary goal of the new owners of the Company's stock is investment
appreciation or income and not control of the Company.
1.2 Cause. Shall be defined as those situations where the Executive has
breached this Agreement in any material respect, which breach is not cured by
the Executive or is not capable of being cured within thirty days after written
notice of such breach is delivered to Executive, or where the Executive has
engaged in willful and material failure to perform his duties as an employee of
the Company. Cause shall also include the Executive's
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conviction of a criminal offense (other than minor traffic violations) or an act
of moral turpitude, and the Executive's failure to act in the best interests of
the Company or to follow a reasonable direction from the Company's Board of
Directors, which direction is not cured by the Executive or is not capable of
being cured by the Executive within thirty (30) days after written notice is
delivered to the Executive.
1.3 Disability. Disability shall mean the Executive's inability to
perform the essential functions of his job for a continuous period of not less
than 180 days.
2. Term. The term of this Agreement shall be for a period of three years
commencing on the date the Executive begins his employment with the Company (the
"Initial Employment Date") unless earlier terminated as hereinafter provided.
Such Initial Employment Date shall commence on or before March 1, 1998.
3. Position and Duties. The Company hereby employs the Executive and the
Executive agrees to work for the Company as its Chief Financial Officer during
the term of this Agreement. The Executive agrees to devote his full time,
attention and efforts to the business and affairs of the Company during the term
of this Agreement, and hereby confirms that he is under no contractual
commitments inconsistent with his obligations as set forth in this Agreement,
and that during the term of this Agreement, he will not render or perform
services for any other corporation, firm, entity or person which are
inconsistent with the provisions of this Agreement. During the term of this
Agreement, the Executive agrees to perform such reasonable employment duties as
the Chief Executive Officer or Board of Directors of the Company may assign to
him from time to time. The Executive also agrees to serve, for any period for
which he is elected, as an officer of the Company; provided, however, that the
Executive shall not be entitled to any additional compensation for serving as an
officer of the Company. Notwithstanding the above, the Executive shall be
permitted to work less than full time for the Company prior to March 15, 1998,
but shall be compensated on a pro-rata basis for any such period of less than
full time work.
4. Compensation.
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4.1 Base Salary. During the first year of this Agreement, the Company
will pay the Executive a base salary of $140,000.00 per annum, payable in its
normal pay increments in force from time to time (semi-monthly installments as
of the date of this Agreement) for all the services to be rendered by the
Executive under this Agreement. The compensation payable to the Executive during
each subsequent year during the term of this Agreement shall be as mutually
agreed to by the Company and Executive prior to the commencement of each
contract year.
4.2 Incentive Compensation. In addition to the base salary described in
Section 4.1 above, the Executive shall be eligible, in the discretion of the
Company's Board of Directors, to participate in any incentive compensation plans
which may be established by the Board of Directors of the Company from time to
time.
4.3 Stock Option. The Company shall grant the Executive an option to
purchase 50,000 shares of the Company's common stock, under the Company's Stock
Option Plan, effective on the Executive's Initial Employment Date. Such stock
option shall be subject to the terms of a separate stock option agreement, but
such separate agreement shall call for the term of the options to be for ten
years and for 20% of the options to vest on the date that is six months after
the Initial Employment Date, an additional 20% of the options to vest on the
date that is one year after the Initial Employment Date, an additional 20% of
the options to vest on the date that is two years after the Initial Employment
Date, an additional 20% of the options to vest on the date that is three years
after the Initial Employment Date and the balance to vest on the date that is
four years after the Initial Employment Date. To the extent that the terms of
the separate stock option agreement are in conflict, in matters other than the
stock option vesting period, with the terms set forth herein, the terms of the
separate stock option agreement shall govern.
4.4 Participation in Benefit Plans. The Executive shall also be entitled
to participate in all employee benefit plans or programs in place from time to
time (including the Company's Paid Time Off Program which, at the date of this
Agreement, provides twenty-seven paid days off, including vacation days, sick
days, holidays and all other days off, during the first year of the Executive's
employment with the Company) to the extent that his position, title, tenure,
salary, age, health and other qualifications make him eligible to participate.
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4.5 Relocation Expenses. The Company will reimburse the Executive for up
to an aggregate of $65,000.00 in relocation expenses incurred by the Executive
in order to move closer to the Company's offices. Such relocation expenses shall
include up to $21,000.00 in loss, prior to sales costs, of value of the
Executive's current home, up to $32,000.00 in costs of selling the Executive's
current home, up to $4,500.00 in moving costs and other out-of-pocket costs, up
to $10,000 in closing costs on the Executive's new home, and $3,500.00 of
miscellaneous costs. If the Executive does not incur a loss on the sale of
Executive's current home and also incurs less than $32,000.00 in costs of
selling Executive's current home, the difference between the actual costs
incurred in selling executive's current home and $32,000.00 shall be applied
towards closing costs and or loan initiation costs related to Executive's new
home. Except as noted above, reimbursable relocation costs shall not include any
loan initiation costs or finance points on the Executive's mortgage loan for his
new home. All reimbursable relocation costs, except for the $3,500.00 of
miscellaneous costs specified above, shall be reimbursed to the Executive by the
Company within thirty days of providing appropriate expense verification to the
Company. The $3,500.00 of miscellaneous expenses shall be paid to the Executive
within sixty days of the Initial Employment Date.
4.6 Other Expenses. The Company will pay or reimburse the executive for
all reasonable out-of-pocket expenses incurred by him in the performance of his
duties under this Agreement, subject to the presentment of appropriate vouchers
in accordance with the Company's normal policies for expense verification.
5.0 Termination. Either party may terminate this Agreement by giving the
other party thirty days advance written notice of its intent to terminate. If
the Company terminates this Agreement for reasons other than for Cause as is
defined herein or due to the death or Disability of the Executive, the Company
shall pay the Executive, within thirty days of the effective date of such
termination, a "Severance Fee," as additional compensation, equal to twelve
months base salary except that any such Severance Fee shall be reduced by one
twelfth for each month that the length of the Agreement, prior to the effective
date of the termination, exceeds twenty-four. In the case that a Change of
Control has taken effect, and this Agreement is terminated by the successor
organization, such Severance Fee shall be increased by fifty percent. In
addition, solely for
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purposes of paying and calculating a Severance Fee in the case of a Change in
Control, any downgrading of the Executive's position, resulting in the Executive
not being the Chief Financial Officer of the combined entity (regardless of
whether the Executive remains in the employ of the combined entity) or the
Executive's decision to refuse a requested relocation shall be considered to be
a termination of this Agreement.
6.0 Assignment. The Executive shall not be permitted to assign this
Agreement. The Company shall have the right to assign this agreement to its
successors or assigns and all covenants and agreements hereunder shall enure to
the benefit of and be enforceable by or against its said successors or assigns.
The terms "successor" and "assign" shall include any corporation, firm or other
business entity with or into which the Company may merge or consolidate, or to
which the Company may sell or transfer all or substantially all of its assets,
or of which fifty percent or more of the equity investment and of the voting
control is owned, directly or indirectly, by or is in common ownership with, the
Company. After any such assignment by the Company, the Company shall be
discharged from all further liability hereunder and such assignee shall
thereafter be deemed to be the Company for the purposes of all provisions of
this Agreement.
7.0 Miscellaneous.
7.1 Governing Law. This Agreement is made under and shall be governed by
and construed in accordance with the laws of the State of Maryland.
7.2 Entire Agreement. Amendments and No Waiver. This Agreement
constitutes the entire understanding of the parties with respect to the subject
matter hereof and supersedes any and all prior understandings written or oral.
This Agreement may not be changed, modified, or discharged orally, but only by
an instrument in writing signed by the parties. The invalidity or
unenforceability of any provisions hereof shall in no way affect the validity or
enforceability of any other provision. If any provision of this Agreement is so
broad as to be unenforceable, such provision shall be interpreted to be only so
broad as is enforceable. No express or implied waiver by either party hereto of
any event of default hereunder shall in any way be, or be construed as, a waiver
of any future or subsequent event of default.
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IN WITNESS WHEREOF, the Company has hereunto signed its name by its Chief
Executive Officer, and the Executive has signed his name, all as of the day and
year first above written.
MARTEK BIOSCIENCES CORPORATION
BY: [sig]
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Name: Xxxxx Xxxxxxx, Xx.
Title: Chief Executive Officer
XXXXX X. XXXX
[sig]
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Executive
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