EMPLOYMENT AGREEMENT
Exhibit 10.2
EXECUTION
COPY
THIS
EMPLOYMENT AGREEMENT (the “Agreement”), effective as of
this 1st day of July, 2019, is entered into by Palatin
Technologies, Inc., a Delaware corporation with its principal place
of business at 0X Xxxxx Xxxxx Xxxxx, Xxxxxxxx, XX, 00000 (the
“Company”), and Xxxxxxx X. Xxxxx
(“Employee”).
The
Company desires to continue employing the Employee, and the
Employee desires to continue to be employed by the Company. In
consideration of the mutual covenants and promises contained
herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto,
the parties agree that the following terms of this Employment
Agreement shall supersede in all respects any prior agreements
governing employment between the parties:
1.0
Term of
Employment. The Company hereby agrees to continue employing
the Employee, and the Employee hereby accepts the continuation of
employment with the Company, upon the terms set forth in this
Agreement, for the period commencing on July 1, 2019 (the
“Commencement Date”) and ending on June 30, 2022 unless
sooner terminated in accordance with the provisions of Section 4
(the “Employment Period”).
2.0
Position Title & Capacity.
2.1
The Employee shall
serve as Chief Financial Officer and Chief Operating Officer, with
responsibilities consistent with this position and as the
Company’s Board of Directors (the "Board") may determine from
time to time, with powers and duties as may be determined, from
time to time, by the Board, consistent with the Employee’s
position. The Employee shall report to the Company’s Board of
Directors. The Employee shall be based at the Company’s
corporate headquarters, which is based in Cranbury, New Jersey. The
Employee shall also be available for travel at such times and to
such places as may be reasonably necessary in connection with the
performance of his duties hereunder.
2.2
The Employee may
serve as an employee director on the Board as determined and
approved by the Board during the Employment Period and for no
additional compensation; however, upon termination of employment
for any reason, the Employee will no longer serve as a member of
the Company’s Board of Directors and will take any and all
actions necessary to effectuate such resignation as may be
reasonably requested by the Company.
2.3
The Employee hereby
accepts such employment and agrees to undertake the duties and
responsibilities inherent in such position and such other duties
and responsibilities as the Board shall from time to time
reasonably assign to him. The Employee agrees to devote
substantially all of his business time, attention and energies to
the business and interests of the Company during the Employment
Period. The Employee agrees to abide by the rules, regulations,
instructions, personnel practices and policies of the Company and
any changes therein which may be adopted from time to time by the
Company. The Employee acknowledges receipt of copies of all such
rules and policies committed to writing as of the date of this
Agreement.
2.4
The Employee
specifically covenants, warrants and represents to the Company that
he has the full, complete and entire right and authority to enter
into this Agreement, that he has no agreement, duty, commitment or
responsibility of any kind or nature whatsoever with any
corporation, partnership, firm, company, joint venture or other
entity or other person which would conflict in any manner
whatsoever with any of his duties, obligations or responsibilities
to the Company pursuant to this Agreement, that he is not in
possession of any document or other tangible property of any
corporation, partnership, firm, company, joint venture or other
entity or other person of a confidential or proprietary nature
which would conflict in any manner whatsoever with any of his
duties, obligations or responsibilities to the Company pursuant to
his Agreement, and that he is fully ready, willing and able to
perform each and all of his duties, obligations and
responsibilities to the Company pursuant to this
Agreement.
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3.0
Compensation and
Benefits. During the Employment Period, unless sooner
terminated in accordance with the provisions of Section 4, the
Employee shall receive the following compensation and
benefits:
3.1
Salary. The
Company shall pay the Employee, in equal semi-monthly installments
or otherwise in accordance with the Company’s standard
payroll policies as such policies may exist from time to time, an
annual base salary of $550,000. Such salary shall be subject to
review, as determined by the Company’s Compensation Committee
and approved by the Board, on an annual basis, but the Board shall
not decrease the Employee’s annual base salary at any such
annual review.
3.2
Cash Performance
Bonus. The Employee will be included in the Company’s
annual bonus compensation program based on a June 30th year end in an
amount to be decided by the Company’s Compensation Committee
and approved by the Board, payable no later than September
30th of
each year during the Employment Period. The annual incentive bonus
target shall be set by the Compensation Committee, but shall be no
less than sixty percent (60%) of annual base salary and will be
based on specific performance objectives as predetermined by the
Compensation Committee, with the Compensation Committee determining
the June 30th year end percent
achievement of performance objectives. The Compensation Committee
may recommend a discretionary additional amount based on
performance.
3.3
Stock
Options. As additional compensation for services rendered,
the Company has granted to the Employee the right and option to
purchase shares of the Company’s Common Stock and in the
future may grant additional options to purchase shares of the
Company’s Common Stock to the Employee in accordance with the
terms of the Company’s stock plan then in effect.
Notwithstanding any option certificate or agreement to the
contrary, the following provisions apply to all options granted to
the Employee either prior to or after the Commencement
Date:
(a)
All such options
that are not vested as of the Date of Termination (as defined in
Section 6) shall immediately vest and become fully exercisable as
of the Date of Termination, except in the case of termination: (i)
for Cause (as defined in Section 6) or (ii) at the election of the
Employee for any reason other than pursuant to Section 4.1 or for
Good Reason pursuant to Section 4.4 or 4.5. Notwithstanding the
foregoing if upon a Change in Control as defined in Section 6.5 (c)
or (d), any of the options are terminated in connection with the
Change in Control, then all such options that are not vested as of
the date of the Change in Control shall immediately vest and become
fully exercisable immediately prior to the Change in Control;
and
(b)
All of such options
that are vested as of the Date of Termination and that were
outstanding immediately prior to the Commencement Date shall expire
on the first to occur of: (i) 24 months following the
Employee’s retirement; (ii) 24 months following the
Employee’s Date of Termination other than (A) for Cause (as
defined in Section 6), or (B) termination at the election of the
Employee pursuant to Section 4.6; (iii) the expiration date of the
option as set forth in the applicable option certificate or
agreement; or (iv) as otherwise provided in the applicable option
plan in the event of the dissolution or liquidation of the Company,
or a merger, reorganization or consolidation in which the Company
is not the surviving corporation. For purposes of this subsection,
“retirement” requires that the Employee not render
services of any nature for any entity as a regular employee, and
not render services of any nature for any entity for more than an
average of twenty (20) hours per week as a consultant or term
employee. All of such options that were granted on or after the
Commencement Date shall expire on the expiration date of the option
as set forth in the applicable option certificate or agreement in
the event the Employee’s employment terminates other than (A)
for Cause (as defined in Section 6), or (B) at the election of the
Employee pursuant to Section 4.6.
Nothing
in this Section 3.3 shall apply to or affect any equity award that
is not either an incentive stock option under Section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”)
or a non-qualified stock option.
3.4
Restricted Share
Units. As additional
compensation for services rendered, the Company has granted to the
Employee restricted share units for the issuance of the
Company’s Common Stock and in the future may grant additional
restricted share units for the issuance of the Company’s
Common Stock
to the Employee in accordance with the
terms of the Company’s
stock plan then in effect. Notwithstanding any restricted share
unit certificate or agreement to the contrary, all restricted share
units granted to the Employee either prior to or after the
Commencement Date that are not
vested as of the Date of Termination (as defined in Section 6)
shall immediately vest as of the Date of Termination, except in the
case of termination: (a) for Cause (as defined in Section 6) or (b)
at the election of the Employee for any reason other than
pursuant to Section 4.1
or for Good Reason pursuant to
Section 4.4 or 4.5. To the extent that vesting of any such
restricted shares units otherwise would have been contingent upon
the achievement of performance objectives, vesting of such
restricted share units pursuant to this Section 3.4 shall be (i) at
the “target” level, regardless of achievement of
performance objectives, in the case of termination pursuant to
Section 4.3 or 4.5; or (ii) based upon actual achievement of
performance objectives as determined after the end of the
applicable performance period, in the case of termination under any
other circumstances entitling the Employee to accelerated vesting
pursuant to this Section 3.4. Notwithstanding the foregoing, if
upon a Change in Control as defined in Section 6.5 (c) or (d), any
of the restricted share units are terminated in connection with the
Change in Control, then all such restricted share units that are
not vested as of the date of the Change in Control shall vest as of
the date of the Change in Control.
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3.5
Fringe-Benefits. The Employee shall be
entitled to participate in all benefit programs that the Company
establishes and makes available to its employees, if any, to the
extent that the Employee’s position, tenure, salary, age,
health and other qualifications make him eligible to participate.
The Employee shall also be entitled to holidays and annual vacation
leave in accordance with the Company’s policy as it exists
from time to time.
3.6
Reimbursement of Expenses. The Company
shall reimburse the Employee for all reasonable travel,
entertainment and other expenses incurred or paid by the Employee
in connection with, or related to, the performance of his duties,
responsibilities or services under this Agreement, upon
presentation by the Employee of documentation, expense statements,
vouchers and/or such other supporting information as the Company
may request, provided however, that the amount available for such
travel, entertainment and other expenses may be fixed in advance by
the Board.
3.7
Insurance. The Employee will be covered
under the Company’s Directors’ and Officers’
liability insurance to the same extent the Company’s
directors and other officers are covered.
4.0
Employment
Termination. The employment of the Employee by the Company
pursuant to this Agreement shall terminate upon the occurrence of
any of the following:
4.1
Expiration of the
Employment Period in accordance with Section 1, unless the Company
and Employee agree to extend the Agreement term or otherwise
continue Employee’s employment on mutually agreeable
terms.
4.2
At the election of
the Company, for Cause (as defined in Section 6), immediately upon
written notice by the Company to the Employee, which notice of
termination shall have been approved by a majority of the
Board.
4.3
Immediately upon
the death or determination of Disability (as defined in Section 6)
of the Employee.
4.4
At the election of
the Employee, for Good Reason (as defined in Section 6),
immediately upon written notice of not less than sixty (60) days
prior to termination by the Employee to the Company.
4.5
At the election of
the Company upon or within twelve (12) months following a Change in
Control (as defined in Section 6), or at the election of the
Employee for Good Reason (as defined in Section 6) upon or within
twelve (12) months following a Change in Control (as defined in
Section 6), immediately upon written notice of
termination.
4.6
At the election of
either party, upon written notice of termination.
5.0
Effect of Termination.
5.1
Compensation &
Benefits.
(a)
As referenced in
this section, compensation following the Employee’s
termination shall be in the form of severance. Severance will be
based on the employee’s base salary in effect as of the
employee’s last day of employment (without regard to any
reduction that constitutes Good Reason) and will be paid in one
lump-sum amount.
(b)
Severance is not
considered compensation for purposes of employee and employer
matching contributions under the 401(k) plan.
(c)
As referenced in
this section, upon termination of the Employee’s employment
with the Company, medical and dental benefits will be available to
the Employee, at his election, solely pursuant to the provisions of
COBRA with the Company paying the full cost of COBRA coverage for a
period up to 24 months if employment is terminated for any reason
except an Employee resignation without Good Reason (as defined in
Section 6) and a Company discharge for Cause (as defined in Section
6). If the Employee is discharged for Cause or the Employee resigns
without Good Reason, the Employee will be required to remit the
COBRA cost (102% of total benefit cost) of coverage.
(d)
Upon termination of
the Employee’s employment with the Company, apart from the
Employee’s election under COBRA to continue medical and
dental benefits (as described in Section 5.1(c)), the Employee will
cease to be eligible for participation in the Company’s
health and welfare insurance and any other fringe benefit programs
that pursuant to their contracts or Company policy require an
active employee status.
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5.2
Termination By The
Company or at Election of the Employee (other than for Good
Reason).
(a)
If the Employee
elects to terminate his employment for any reason other than for
Good Reason pursuant to Section 4.4 or 4.5, no severance and/or
benefits shall be paid, and the Employee shall be entitled only to
receive payment of his earned but unpaid salary, and accrued
vacation, as of his last day of actual employment by the Company,
which amounts shall be paid within ten (10) days after the Date of
Termination;
(b)
If the Company
elects to terminate the Employee (other than for Cause) pursuant to
Section 4.6, or if the Employee’s employment terminates upon
the expiration of this Agreement pursuant to Section 4.1, the
Company shall pay to the Employee twenty-four (24) months of his
salary in effect on the Date of Termination in one-lump sum amount
within sixty (60) days after the Date of Termination, plus medical
and dental benefits (as described in Section 5.1(c));
(c)
If the Company
terminates the Employee for Cause pursuant to Section 4.2, no
severance and/or benefits shall be paid, and the Employee shall be
entitled only to receive payment of his earned but unpaid salary,
and accrued vacation, as of the Date of Termination. Employee may
elect COBRA medical and dental benefits, in which case the Employee
will be required to remit the COBRA cost (102% of total benefit
cost) of coverage.
5.3
Termination By
Employee Election For Good Reason. If the Employee
terminates employment at his election for Good Reason pursuant to
Section 4.4, other than as provided for in Section 5.4, the Company
shall pay to the Employee twenty-four (24) months of his salary in
effect on the Date of Termination in one-lump sum amount within
sixty (60) days after the Date of Termination, plus medical and
dental benefits (as described in Section 5.1(c)).
5.4
Termination
Following a Change In Control. If the Company terminates the
employment relationship upon or following a Change In Control
pursuant to Section 4.5, or if the Employee terminates employment
at his election for Good Reason upon or following a Change in
Control pursuant to Section 4.5:
(a)
The Company shall
pay to the Employee his annual salary in effect at that time in a
lump sum amount, calculated at two (2.0) times such annual salary,
within sixty (60) days after the Date of Termination, plus
medical/dental care benefits (as described in Section 5.1(c));
and
(b)
For a six (6) month
period after the Date of Termination, the Company shall reimburse
the Employee for reasonable fees and expenses actually incurred by
him for outplacement services in an amount, not to exceed $25,000,
mutually agreed upon by and between the Employee and the Company,
promptly, within ten days, receipt by the Company of satisfactory
evidence of payment of such fees and expenses, but in no event no
later than March 15 of the year following the year in which the
expenses were actually incurred.
5.5
Termination by
Reason of the Employee’s Death or Disability. If,
prior to the expiration of the Employment Period, the
Employee’s employment is terminated by the Employee’s
death or Disability pursuant to Section 4.3, the Company shall pay
to the Employee, or in the case of the Employee’s death, to
the estate of the Employee, twenty-four (24) months of his salary
in effect on the Date of Termination in one-lump sum amount within
sixty (60) days after the Date of Termination, plus medical and
dental benefits (as described in Section 5.1(c)).
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5.6
Withholding and
Deductions, 409A.
(a)
All payments
hereunder shall be subject to withholding and to such other
deductions as shall at the time of such payment be required
pursuant to any income tax or other law, whether of the United
States or any other jurisdiction, and, in the case of payments to
the executors or administrators to the Employee's estate, the
delivery to the Company of all necessary tax waivers and other
documents.
(b)
Notwithstanding
anything in this Agreement to the contrary, in the event it shall
be determined that any payment or distribution by the Company or
any of its affiliated companies to or for the benefit of the
Employee (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise) (a
“Payment”) would be an excess parachute payment within
the meaning of section 280G of the Code (such excess only, an
“Excess Payment”), then the Employee shall forfeit the
Excess Payments to the extent the after-tax value to the Employee
of the Payments as reduced by such forfeiture would be greater than
the after-tax value to the Employee of the Payments absent such
forfeiture. The forfeiture of Excess Payments, if applicable, shall
be applied by: first reducing the cash severance described in
Section 5.4(a) hereof, then to cancellation of accelerated vesting
of performance-based equity awards (based on the reverse order of
the date of grant), then to cancellation of accelerated vesting of
other equity awards (based on the reverse order of the date of
grant), and then to any other Payments on a pro-rata basis. All
determinations required to be made under this Section 5.6(b), and
the assumptions to be used in arriving at such determination, shall
be made by a major accounting firm with expertise in such matters
designated by the Company and reasonably acceptable to the Employee
(the “Accounting Firm”), which shall provide detailed
supporting calculations both to the Company and the Employee within
15 business days of the receipt of notice from the Employee that
there has been (or that there is likely to be) a Payment, or such
earlier time as is requested by the Company. In connection with
making determinations under this Section 5.6(b), the Accounting
Firm shall take into account the value of any reasonable
compensation for services to be rendered by the Employee before or
after the change in control, including any noncompetition
provisions that may apply to the Employee (whether set forth in
this Agreement or otherwise), and the Company shall cooperate in
the valuation of any such services, including any noncompetition
provisions. Any determination by the Accounting Firm in good faith
shall be binding upon the Company and the Employee. All fees and
expenses of the Accounting Firm for services performed pursuant to
this Section 5.6(b) shall be borne solely by the
Company.
(c)
As provided herein,
the Company shall pay the full cost of the Employee’s COBRA
premiums under this Section 5.
(d)
The payments and benefits provided for in Sections
5.2(b), 5.3, 5.4, 5.5, 5.6(b) and 5.6(c) of this Agreement are
intended to constitute a short-term deferral pursuant to Treas.
Reg. § 1.409A-1(b)(4) and thus not “nonqualified
deferred compensation” subject to Section 409A of the Code.
If the payments and benefits provided for in Sections 5.2(b), 5.3,
5.4, 5.5, 5.6(b) and 5.6(c) of this Agreement are deemed to provide
for the payment of non-qualified deferred compensation benefits in
connection with a separation of service under Section 409A(2)(a)(i)
of the Code, the following interpretations apply to Sections
5.2(b), 5.3, 5.4, 5.5, 5.6(b) and 5.6(c): (i) Any termination of
the Employee’s employment triggering payment of benefits
under Sections 5.2(b), 5.3, 5.4, 5.5, 5.6(b) and 5.6(c) must
constitute a “separation from service” under Section
409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h)
before distribution of such benefits can commence. To the extent
that the termination of Employee’s employment does not
constitute a separation of service under Section 409A(a)(2)(A)(i)
of the Code and Treas. Reg. §1.409A-1(h) (as the result of
further services that are reasonably anticipated to be provided by
Employee to the Company at the time the Employee’s employment
terminates), any benefits payable under Sections 5.2(b), 5.3, 5.4,
5.5, 5.6(b) and 5.6(c) that constitute deferred compensation under
Section 409A of the Code shall be delayed until after the date of a
subsequent event constituting a separation of service under Section
409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h). For
purposes of clarification, this Section 5.6(d) shall not cause any
forfeiture of benefits on the Employee’s part, but shall only
act as a delay until such time as a “separation from
service” occurs; (ii) If the Employee is a “specified employee”
(as that term is used in
Section 409A of the Code and regulations and other guidance issued
thereunder) on the date his separation from service becomes
effective, any benefits payable under Sections 5.2(b), 5.3, 5.4,
5.5, 5.6(b) and 5.6(c) that constitute non-qualified deferred
compensation under Section 409A of the Code shall be delayed until
the earlier of (A) the business day following the six-month
anniversary of the date his separation from service becomes
effective, and (B) the date of his death, but only to the extent necessary to
avoid such penalties under Section
409A of the Code. On the earlier of (A) the business day following
the six-month anniversary of the date his separation from service
becomes effective, and (B) the Employee’s death, the Company
shall pay the Employee in a lump sum the aggregate value of the
non-qualified deferred compensation that the Company otherwise
would have paid to the Employee prior to that date under Sections
5.2(b), 5.3, 5.4, 5.5, 5.6(b) and 5.6(c) of this Agreement; (iii)
It is intended that each installment of the payments and benefits
provided under Sections 5.2(b), 5.3, 5.4, 5.5, 5.6(b) and 5.6(c) of
this Agreement shall be treated as a separate “payment”
for purposes of Section 409A of the Code; (iv) Neither the Company
nor the Employee shall have the right to accelerate or defer the
delivery of any such payments or benefits except to the extent
specifically permitted or required by Section 409A of the Code);
and (v) to the extent that the period between the Date of
Termination and the date upon which payment is required to be made
or commence begins in one calendar year and ends in a second
calendar year, payment will be made or commence in the second
calendar year.
5.7
Release of
Claims. The
Employee’s entitlement to severance, payment of COBRA
premiums, and accelerated vesting of options, restricted share
units and other equity incentive awards, is contingent upon the
Employee’s execution, within 21 days after the Date of
Termination (or such longer period as required by applicable law),
and non-revocation of a general release of claims in a form
prepared by the Company and presented to the Employee upon
termination of his employment hereunder, as well as the
Employee’s compliance with the provisions of Section 7
hereof.
5.8
No Requirement to
Mitigate. The Employee shall not be required to mitigate the
amount of any payment provided for in this Section 5 by seeking
other employment or otherwise.
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6.0
Definitions.
For purposes of this Agreement the following definitions
apply:
6.1
“Cause”
shall mean the occurrence of any of the following
circumstances:
(a)
(i) the
Employee’s material breach of, or habitual neglect or failure
to perform the material duties which he is required to perform
under, the terms of this Agreement; (ii) the Employee’s
material failure to follow the reasonable directives or policies
established by or at the direction of the Board; or (iii) the
Employee’s engaging in conduct that is materially detrimental
to the interests of the Company such that the Company sustains a
material loss or injury as a result thereof, provided that the
breach or failure of performance by the Employee under
subparagraphs (i) through (iii) hereof is not cured, to the extent
cure is possible, within ten (10) days of the delivery to the
Employee of written notice thereof;
(b)
the willful breach
by the Employee of Section 7 of this Agreement or any provision of
any confidentiality, invention and non-disclosure, non-competition
or similar agreement between the Employee and the Company;
or
(c)
the conviction of
the Employee of, or the entry of a pleading of guilty or nolo
contendere by the Employee to, any crime involving moral turpitude
or any felony.
6.2
“Date of
Termination”
shall mean the Employee’s last day of actual employment by
the Company (or its successor) for any reason including death or
Disability.
6.3
“Disability”
shall mean the inability of the Employee, by reason of illness,
accident or other physical or mental disability, for a period of
120 days, whether or not consecutive, during any 360-day period, to
perform the services contemplated under this Agreement. A
determination of disability shall be made by a physician
satisfactory to both the Employee and the Company; provided,
however, that if the Employee and the Company do not agree on a
physician, the Employee and the Company shall each select a
physician and these two together shall select a third physician,
whose determination as to disability shall be binding on all
parties.
6.4
“Good
Reason” shall mean the occurrence of any of the
following circumstances, and the Company’s failure to cure
such circumstances within thirty (30) days of the delivery to the
Company of written notice by the Employee of such circumstances;
provided that the Employee gives notice to the Company of the
existence of the event or condition constituting Good Reason within
thirty (30) days after such event or condition initially occurs or
exists, and the Employee terminates his employment within one
hundred and twenty (120) days after the initial occurrence of the
event or condition constituting Good Reason:
(a)
any material
adverse change in the Employee’s duties, authority or
responsibilities as described in Section 2.1 hereof which causes
the Employee’s position with the Company to become of
significantly less responsibility or assignment of duties and
responsibilities inconsistent with the Employee’s
position;
(b)
a material
reduction in the Employee’s salary as in effect on the
Commencement Date or as the same may be increased from time to
time;
(c)
the failure of the
Company to continue in effect any material compensation or benefit
plan in which the Employee participates as in effect on the
Commencement Date, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect
to such plan, or the failure by the Company to continue the
Employee’s participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of the
Employee’s participation relative to other participants, as
in effect on the Commencement Date;
(d)
any material
adverse change in the Employee’s compensation resulting from
(i) the failure by the Company to continue to provide the Employee
with benefits substantially similar to those enjoyed by the
Employee under any of the Company’s health and welfare
insurance, retirement and other fringe-benefit plans insurance, in
which the Employee was participating as in effect on the
Commencement Date, (ii) the taking of any action by the Company
which would directly or indirectly materially reduce any of such
benefits, or (iii) the failure by the Company to provide the
Employee with the number of paid vacation days to which he is
entitled in accordance with the Company’s normal vacation
policy in effect on the Commencement Date or in accordance with any
agreement between the Employee and the Company existing at that
time; or
(e)
the relocation of
the Employee to a location which is a material distance from
Cranbury, New Jersey.
(f)
For purposes of
this Agreement, “Good Reason” shall be interpreted in a
manner, and limited to the extent necessary, so that it will not
cause adverse tax consequences for either party with respect to
Section 409A of the Code, and any successor statute, regulation and
guidance thereto.
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6.5
“Change in
Control” shall mean the occurrence of any of the
following events:
(a)
any
“person,” as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) (other than the Company, any trustee or
other fiduciary holding securities under an employee benefit plan
of the Company, or any corporation owned directly or indirectly by
the stockholders of the Company in substantially the same
proportion as their ownership of stock of the Company) becomes the
“beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing more than 50% of the combined voting power of the
Company’s then outstanding securities;
(b)
the date the
individuals who, during any twelve month period, constitute the
Board (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board, provided that any
person becoming a director during the twelve month period whose
election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election
contest relating to the election of the directors of the Company,
as such terms are used in Rule 14a-11 of Regulation 14A under the
Exchange Act) shall be, for purposes of this Agreement, considered
as though such person were a member of the Incumbent
Board;
(c)
a merger or
consolidation of the Company approved by the stockholders of the
Company with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) 50% or more of the
combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation effected to
implement a re-capitalization of the Company (or similar
transaction) in which no “person” (as defined in
Section 6.4(a)) acquires more than 50% of the combined voting power
of the Company’s then outstanding securities; or
(d)
a sale of all or
substantially all of the assets of the Company.
7.0
Restrictive Covenants.
(a)
For the purposes of
this Agreement:
(i)
“Competing Products” means any
products or processes of any person or organization other than the
Company in existence or under development, which are substantially
the same, may be substituted for, or applied to substantially the
same end use as the products or processes that the Company is
developing or has developed or commercialized during the time of
the Employee’s employment with the Company.
(ii)
“Competing Organization”
means any person or organization engaged in, or with definitive
plans to become engaged in, research or development, production,
distribution, marketing or selling of a Competing
Product.
(b)
The Employee
acknowledges that he has, on or prior to the date of the Agreement,
executed and delivered to the Company an Employee Agreement on
Confidentiality, Intellectual Property, Debarment Certification and
Conflict of Interest (the “Confidentiality Agreement”)
and the Employee hereby affirms and ratifies his obligations
thereunder; and the Employee agrees that after termination by the
Company for Cause pursuant to Section 4.2 (except in the case where
such termination occurs within 12 months following a Change in
Control), by the Employee pursuant to Section 4.6, or by either
party upon expiration of the Employment Period, he will not render
services of any nature, directly or indirectly, to any Competing
Organization in connection with any Competing Product within any
geographical territory as the Company and such Competing
Organization are or would be in actual competition, for a period of
twenty-four (24) months, commencing on the Date of
Termination.
(c)
The Employee agrees
that he will not, during the Employment Period and for a period of
nine (9) months commencing on the Date of Termination, directly or
indirectly employ, solicit for employment, or advise or recommend
to any other person that they employ or solicit for employment, any
person whom he knows to be an employee of the Company or any
parent, subsidiary or affiliate of the Company.
(d)
In the event a
court of competent jurisdiction should find any provision in this
Section 7 to be unfair or unreasonable, such finding shall not
render such provision unenforceable, but, rather, this provision
shall be modified as to subject matter, time and geographic area so
as to render the entire section valid and enforceable.
7
8.0
Notices. All
notices required or permitted under this Agreement shall be in
writing and shall be deemed effective upon either: (a) personal
delivery; or (b) three (3) days following deposit with the United
States Postal Service for delivery by registered or certified mail,
postage prepaid, or one (1) day following deposit with a reputable
overnight courier service, addressed to the other party at the
address shown above, or at such other address or addresses as
either party shall designate to the other in accordance with this
Section 8.
9.0
Pronouns.
Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular forms of nouns and pronouns shall
include the plural, and vice versa.
10.0
Entire
Agreement. This Agreement, together with the Confidentiality
Agreement, constitutes the entire agreement between the parties and
supersedes all prior agreements and understandings, whether written
or oral, relating to the subject matter of this Agreement,
including the Employment Agreement between the Company and the
Employee dated as of July 1, 2016.
11.0
Amendment.
This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Employee. Any such
amendment shall comply with the requirements of Section 409A of the
Code, if applicable.
12.0
Governing
Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of New Jersey, without regard
to its principles of conflict of laws.
13.0
Successors and
Assigns. This Agreement shall be binding upon and inure to
the benefit of both parties and their respective successors and
assigns, including any corporation with which or into which the
Company may be merged or which may succeed to its assets or
business; provided, however, that the obligations of the Employee
are unique and personal and shall not be assigned by
him.
14.0
Waiver of Breach.
14.1
Waiver by the
Company. No delay or
omission by the Company in exercising any right under this
Agreement shall operate as a waiver of that or any other right. A
waiver or consent given by the Company on any one occasion shall be
effective only in that instance and shall not be construed as a bar
or waiver of any right on any other occasion. No waiver by the
Company shall be valid unless in writing signed by an authorized
officer of the Company and approved by a majority of the
Board.
14.2
Waiver by the
Employee. No delay or
omission by the Employee in exercising any right under this
Agreement shall operate as a waiver of that or any other right. A
waiver or consent given by the Employee on any one occasion shall
be effective only in that instance and shall not be construed as a
bar or waiver of any right on any other occasion. No waiver by the
Employee shall be valid unless in a writing signed by the
Employee.
15.0
Miscellaneous.
15.1
The captions of the
sections of this Agreement are for convenience of reference only
and in no way define, limit or affect the scope or substance of any
section of this Agreement.
15.2
In case any
provision of this Agreement shall be invalid, illegal or otherwise
unenforceable, the validity, legality and enforceability of the
remaining provisions shall in no way be affected or impaired
thereby.
16.0
Survival.
The provisions of Sections 3.3, 5, 6, 7 and 8 shall survive the
termination of this Agreement.
17.0
Timing of
Reimbursements. All reimbursements made by the Company
pursuant to this Agreement will be made within 30 days from the
date the Employee submits documentation of the expenses. Employee
will submit documentation substantiating expenses within 30 days
from the date the expenses are incurred.
8
EXECUTION COPY
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as
an instrument under seal effective as of the day and year set forth
above.
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PALATIN
TECHNOLOGIES, INC.
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EMPLOYEE
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/s/ Xxxx
Xxxxx
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/s/ Xxxxxxx X.
Xxxxx
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Name: Xxxx
Xxxxx
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Name: Xxxxxxx X.
Xxxxx
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Title:
Chief
Executive Officer and President
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Title:
Executive V.P.,
Chief Financial Office rand Chief Operating
Officer
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Date: June 26,
2019
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Date: June 26,
2019
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9
