SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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EXECUTION
COPY
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SECOND
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This
Employment Agreement (the "Agreement"), is entered into as of December 20,
2007
(the "Effective Date"), between LEV PHARMACEUTICALS, INC., a Delaware
corporation (with its successors and assigns, referred to as the "Company"),
and
Xxxxxx Xxxxxx (referred to as "Xxxxxx").
WHEREAS,
the Company and Xxxxxx are party to an Employment Agreement dated as of November
1, 2004, as amended and restated on January 17, 2007 (the "Original Employment
Agreement");
WHEREAS,
the Company and Xxxxxx mutually desire to further amend and restate the terms
of
such Original Employment Agreement upon the terms and conditions set forth
herein.
NOW,
THEREFORE, in consideration of the foregoing premises and of the mutual
agreements and covenants hereinafter set forth, the parties hereto agree to
the
terms and conditions of this Agreement as follows:
1.
Employment
for Term.
The
Company hereby continues to employ Xxxxxx and Xxxxxx hereby accepts such
continued employment with the Company for the period beginning on the Effective
Date and ending December 31, 2012, or upon the earlier termination of the Term
pursuant to Section 6 (the "Initial Term"). This Agreement shall be
automatically renewed for additional one-year periods (the "Renewal Terms;"
together with the Initial Term, the "Term") unless either party notifies the
other in writing of its intention not to so renew this Agreement no less than
90
days prior to the expiration of the Initial Term or a Renewal Term. The
termination of Xxxxxx'x employment under this Agreement shall end the Term
but
shall not terminate Xxxxxx'x or the Company's other obligations that are
intended to survive the termination of this Agreement (including without
limitation, the payments under Section 7 and 8 and Xxxxxx’x obligations under
Section 9).
2.
Position
and Duties.
During
the Term, Xxxxxx shall serve as Chairman of the Board and Executive Vice
President of the Company, perform such duties as are consistent with his
position and report to the Board of Directors of the Company. During the Term,
Xxxxxx shall also hold such additional positions and titles as the Board of
Directors of the Company (the "Board") may determine from time to time. During
the Term, Xxxxxx shall devote as much time as is necessary to satisfactorily
perform his duties as an employee and officer of the Company. The Company shall
nominate Xxxxxx, and use its best efforts to have Xxxxxx elected, to the Board
of Directors of the Company (the "Board") throughout the Term of this Agreement
and shall include him in the management slate for election as a director at
every stockholders meeting during the Term at which his term as a director
would
otherwise expire. Xxxxxx agrees to accept election, and to serve during the
Term, as director of the Company.
3.
Compensation.
(a)
Base
Salary.
The
Company shall continue to pay Xxxxxx a base salary of $425,000 per annum (as
it
may be increased (but not decreased) from time to time including, without
limitation, by virtue of this Section 3(a), the "Base Salary"), provided
that
such
Base Salary shall increase to $500,000 effective upon the date on which FDA
approval of the drug Cinryze
is
obtained (the "FDA Approval Date"). The Base Salary shall be payable at least
monthly on the Company's regular pay cycle for professional employees.
(b) Annual
Increases.
The
Base Salary shall be increased at the end of each year of service (commencing
at
the end of 2007) by the greater of (i) 4% or (ii) a percentage equal to the
increase, if any, in the United States Department of Labor Consumer Price Index
(or comparable index, if available) for the New York metropolitan area over
the
previous 12 months.
(c) Equity.
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(i)
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On
the Effective Date, the Company shall grant to Xxxxxx 2,000,000 shares
of
restricted common stock of the Company (the "New Restricted Stock").
The
vesting schedule applicable to the New Restricted Stock is as follows:
50%
of the New Restricted Stock shall vest and the restrictions thereon
shall
lapse on the FDA Approval Date and thereafter 25% of the New Restricted
Stock shall vest and the restrictions thereon shall lapse on each
of the
first and second anniversaries of the FDA Approval Date subject to
Xxxxxx’x continued employment on the applicable vesting dates, except as
provided below in Section 7. The New Restricted Stock shall be evidenced
by a restricted stock award agreement that incorporates the terms
herein,
including, but not limited to, granting Xxxxxx the election to have
the
Company withhold that number of shares sufficient to satisfy the
minimum
tax withholding obligations from the shares at the time of vesting
to
satisfy such tax withholding obligation. In the event of a Change
in
Control (as defined below), the unvested shares of New Restricted
Stock
shall be assumed by the acquiring company and converted into restricted
stock of the acquiring company (or parent company) in a manner designed
to
preserve the economic value of the New Restricted Stock immediately
prior
to the Change in Control and in a manner consistent with the treatment
of
other stockholders; provided that if the consideration received in
the
Change in Control is in the form of cash, the acquiring company (or
the
acquirer’s parent company) may either assume such unvested shares of New
Restricted Stock as provided above or may pay Xxxxxx an amount in
cash on
each applicable vesting date for such shares as if the New Restricted
Stock was assumed as provided above based upon the fair market value
of
the acquiring company’s (or its parent’s) capital stock on each of the
applicable vesting dates. For the purposes hereof, “fair market value”
shall be either (A) the average of the high and low or closing bid
and
asked prices of the acquiring company’s (or its parent’s) capital stock on
each vesting date if such stock is listed for trading on a national
securities exchange, the NASDAQ Stock Market or is traded on the
over-the-counter bulletin board or (B) if the acquiring company’s (or its
parent’s) capital stock is not publicly traded, then as determined by an
independent valuation company mutually acceptable to Xxxxxx and the
acquirer. The award agreement shall contain such other customary
terms
that are consistent with the terms of the Company's 2004 Omnibus
Incentive
Compensation Plan (the “Plan”).
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| (ii) | Xxxxxx has previously been granted a fully vested option to purchase 1,427,450 shares at a per share exercise price of $.30 under the Plan and such option will remain outstanding through November 1, 2014 in accordance with the applicable option agreement (the “2004 Options”). |
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(iii)
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Pursuant
to the Plan, Xxxxxx was granted a nonqualified stock option to purchase
1,600,000 shares of the Company's Common Stock at a per share exercise
price of $1.60 on January 17, 2007 (the "Jan 2007 Options"). The
Jan 2007
Options will remain outstanding in accordance with the applicable
option
agreement and the applicable provisions of the Amended and Restated
Employment Agreement with Xxxxxx dated January 17, 2007 which are
incorporated herein.
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(iv)
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The
Company covenants to maintain a Form S-8 Registration Statement on
file
with the SEC with respect to the equity awards made to
Xxxxxx.
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(d) Bonus.
Xxxxxx
shall be eligible to receive an annual cash bonus, the amount of which to be
determined in the discretion of the Compensation Committee based upon its
assessment of Xxxxxx’x and the Company’s performance. Commencing in the fiscal
year in which the FDA Approval Date occurs, Xxxxxx’x bonus opportunity shall be
in a target range between 75% and 200% of Base Salary, 75% being the bonus
amount if the performance objectives are met by Xxxxxx as determined by the
Compensation Committee in its reasonable discretion and the bonus amount shall
increase to the extent that the Compensation Committee may determine in its
discretion that Xxxxxx exceeded such objectives and engaged in outstanding
performance. Xxxxxx is entitled to such bonus so long as he remains in the
employ of the Company through the end
of
the applicable fiscal year, except as provided below. Any such bonus for a
particular fiscal year will be paid no later than the following March
15.
(e) Other
and Additional Compensation.
The
preceding sections establish the minimum compensation during the Term and shall
not preclude the Compensation Committee from awarding Xxxxxx a higher salary
or
any bonuses or stock options, restricted stock or other forms of equity awards
in the discretion of the Committee during the Term at any time. The Company
shall pay Xxxxxx a monthly car allowance of $1,000.
4.
Employee
Benefits.
During
the Term, Xxxxxx shall be entitled to participate at the same level as other
senior executive officers of the Company in any group insurance,
hospitalization, medical, health and accident, disability, fringe benefit and
tax-qualified retirement plans or programs of the Company now existing or
hereafter established to the extent that he is eligible under the general
provisions thereof. For the term of this Agreement, Xxxxxx shall be entitled
to
paid vacation at the rate of (4) weeks per annum.
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5.
Expenses.
The
Company shall reimburse Xxxxxx for actual out-of-pocket expenses incurred by
him
in the performance of his services for the Company upon the receipt of
appropriate documentation of such expenses.
6.
Termination.
(a)
General.
The
Term shall end immediately upon Xxxxxx'x death. Xxxxxx’x employment may also be
terminated by the Company with or without Cause or as a result of Xxxxxx’x
Disability, as defined in Section 7 or by Xxxxxx with or without Good Reason
(as
such terms are defined below).
(b)
Notice
of Termination.
Either
party shall give written notice of termination to the other party, which shall
include a statement as to the reason for the termination.
7.
Severance
Benefits.
(a)
Cause
Defined.
"Cause"
means (i) willful malfeasance or willful misconduct by Xxxxxx in connection
with
his employment; (ii) Xxxxxx'x gross negligence in performing any of his duties
under this Agreement; (iii) Xxxxxx'x conviction of, or entry of a plea of guilty
to, or entry of a plea of nolo contendre with respect to, any crime other than
a
traffic violation or infraction which is a misdemeanor; (iv) Xxxxxx'x material
breach of any written policy applicable to all employees adopted by the Company
which is not cured to the reasonable satisfaction of the Company within thirty
(30) business days after notice thereof; or (v) material breach by Xxxxxx of
any
of his obligations in this Agreement which is not cured to the reasonable
satisfaction of the Company within thirty (30) business days after notice
thereof.
(b)
Disability
Defined.
"Disability" shall mean (i) Xxxxxx'x incapacity due to physical or mental
illness that results in his being substantially unable to perform his duties
hereunder for six consecutive months (or for six months out of any nine month
period) or (ii) a qualified independent physician mutually acceptable to the
Company and Xxxxxx determines that Xxxxxx is mentally or physically disabled
so
as to be unable to regularly perform the duties of his position and such
condition is expected to be of a permanent duration. During a period of
Disability while he remains an employee of the Company, Xxxxxx shall continue
to
receive his Base Salary hereunder, provided that if the Company provides Xxxxxx
with disability insurance coverage, payments of Xxxxxx'x Base Salary shall
be
reduced by the amount of any disability insurance payments received by Xxxxxx
due to such coverage. The Company shall give Xxxxxx written notice of
termination which shall take effect sixty (60) days after the date it is sent
to
Xxxxxx unless Xxxxxx shall have returned to the performance of his duties
hereunder during such sixty (60) day period (whereupon such notice shall become
void). In the event that the Company terminates Xxxxxx’x employment as a result
of his Disability, Xxxxxx shall be entitled to the same benefits as if his
employment had been terminated by the Company without Cause.
(c)
Good
Reason Defined.
If the
Company (i) reassigns Xxxxxx'x base of operations outside of New York City,
(ii)
materially reduces Xxxxxx'x duties, responsibilities, positions or titles,
authority, powers, functions or reporting relationship during the Term,
including, without limitation, replacing Xxxxxx as Chairman, (iii) materially
breaches this Agreement or (iv) provides notice of nonrenewal of the Agreement
pursuant to Section 1 of this Agreement (each such event being "Good Reason")
then, at his option, Xxxxxx may treat such event as a termination of the Term
without Cause by the Company unless the Company has cured the event (if
susceptible to cure) within 30 business days of receipt of written notice from
Xxxxxx. For the sake of clarity, in the event of a Change in Control and the
Company becomes a subsidiary of another entity, whether publicly or privately
held, Xxxxxx’x duties, responsibilities, power and authority will be deemed to
have been materially reduced even if he remains Chairman of the Company
following the Change in Control unless Xxxxxx holds a position with the parent
company of authority equivalent to that held pursuant to this
Agreement.
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(d)
Accrued
Compensation Defined.
Accrued
Compensation shall mean an amount which shall include all amounts earned or
accrued by Xxxxxx through the date of termination of this Agreement but not
paid
as of such date, including (i) Base Salary, (ii) reimbursement for business
expenses incurred by the Xxxxxx on behalf of the Company, pursuant to the
Company’s expense reimbursement policy in effect at such time, (iii) expense
allowance, (iv) vacation pay per Company policy, and (v) bonuses and incentive
compensation earned and awarded prior to the date of termination. Accrued
Compensation shall be paid on the first regular pay date after the date of
termination (or earlier, if required by applicable law).
(e)
Termination.
(i)
Cause; Without Good Reason. If the Company ends the Term for Cause, or if Xxxxxx
resigns as an employee of the Company for reasons other than an event of Good
Reason, then the Company shall pay to Xxxxxx the Accrued Compensation but shall
have no obligation to pay Xxxxxx any amount, whether for salary, benefits,
bonuses, the New Restricted Stock, or other compensation or expense
reimbursements of any kind, accruing or vesting after the end of the Term,
and
such rights shall, except as otherwise required by law or pursuant to the
applicable award agreement or plan (including, without limitation, the document
evidencing the 2004 Options), be forfeited immediately upon the end of the
Term.
For the sake of clarity, the Jan 2007 Options, and the 2004 Options, to the
extent vested on the date of resignation without Good Reason will remain
outstanding through the expiration of the original ten year term.
(ii)
Without Cause; Good Reason; Death. In the event that the Company terminates
Xxxxxx’x employment hereunder without Cause, Xxxxxx terminates his employment
with Good Reason or his employment terminates as a result of his death, he
shall
be entitled to the Accrued Compensation and, subject to Section 21 below, the
following payments and benefits:
(A)
a
lump sum payment equal to the greater of (x) or (y):
(x)
(1)
two times his Base Salary in effect at the date of termination plus (2) two
times the greater of (the "Applicable Bonus") the bonus paid for the fiscal
year
prior to the date of termination or 100% of his Base Salary in effect at the
date of termination plus (3) a pro rated bonus for the year of termination
based
upon the Applicable Bonus; or
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(y)
(1)
Base Salary as if Xxxxxx remained in the employ of the Company through December
31, 2012 plus (2) bonus payments as if he remained in the employ of the Company
through December 31, 2012 based upon the Applicable Bonus.
Notwithstanding
the foregoing, in the event of the termination of Xxxxxx’x employment as a
result of his death, the lump sum payment pursuant to this Section 7(e)(ii)(A)
shall be the amount provided in (x) above.
The
lump
sum payment contemplated by this Section 7(e)(ii)(A) shall be made to the
Executive six months after the date of termination in accordance with the
requirements of Section 409A of the Internal Revenue Code of 1986, as
amended (“Section 409A”)
(except to the extent any future guidance issued by the Internal Revenue Service
under Section 409A does not subject such payment to Section 409A or
permits such earlier payment without additional tax or penalty).
(B)
continued participation in the health and welfare plans (or comparable plans)
provided by the Company to Xxxxxx at the time of termination for a period equal
to the greater of two years from the date of termination and December 31, 2012
or, if earlier until he is eligible for comparable coverage with a subsequent
employer the “Extended Benefit Period”); provided
that Xxxxxx shall (except to the extent any future guidance issued by the
Internal Revenue Service under Section 409A does not subject the payment of
such premiums by the Company to Section 409A) pay the amount of the
applicable premiums for the first six months of the Extended Benefit Period
in
accordance with the requirements of Section 409A, which amount will be
reimbursed to him in a lump sum at the end of such six-month period.
Xxxxxx
shall give the Company prompt notice of his eligibility of comparable
coverage.
(C)
the
Jan 2007 Options shall be deemed fully vested on the date of termination and
any
restrictions thereon shall lapse and the Jan 2007 Options shall remain
outstanding through the expiration of the original ten year term.
(D)
subject to the provisions of Section 3(c)(i), the New Restricted Stock shall
remain outstanding and continue to vest through the applicable vesting
dates.
(E)
Release.
In the
event that Xxxxxx’x employment is terminated by the Company without Cause or by
Xxxxxx for Good Reason and in consideration of the payments described above
and
the Restrictive Covenants (as defined below) and the mutual releases, the
Company and Xxxxxx will enter into an agreement that contains a mutual release
of claims in a form reasonably satisfactory to the parties.
8.
Change
in Control Payment.
The
provisions of this paragraph 8 set forth the terms of an agreement reached
between Xxxxxx and the Company regarding Xxxxxx'x rights and obligations upon
the occurrence of a "Change in Control" (as hereinafter defined) of the Company
during the Term. These provisions are intended to assure and encourage in
advance Xxxxxx'x continued attention and dedication to his assigned duties
and
his objectivity during the pendency and after the occurrence of any such Change
in Control. The following provisions shall apply in the event of a Change in
Control, in addition to any payment or benefit that may be required pursuant
to
Section 7.
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(a) Equity.
Upon
the
occurrence of a Change in Control, all stock options (including, without
limitation, the Jan 2007 Options) and other stock-based grants (other than
the
New Restricted Stock) to Xxxxxx by the Company or that may be granted in the
future shall, irrespective of any provisions of his award agreements,
immediately and irrevocably vest and become exercisable.
(b)
Termination
Payments.
If
Xxxxxx’x employment terminates for any reason following a Change in Control
(other than by the Company for Cause or by Xxxxxx without Good Reason), he
shall
be entitled to the payments described in Section 7(e)(ii) except that (i) the
Base Salary component of the payment shall be the greater of the Base Salary
in
effect at the time of termination or $500,000 and (ii) the reference to 100%
of
Xxxxxx'x Base Salary in the definition of the Applicable Bonus contained in
Section 7(e)(ii)(A)(x)(1) shall be deemed 200%. In the event that a Change
in
Control occurs within eighteen months following Xxxxxx’x termination of
employment by the Company without Cause or by him for Good Reason and the
transaction that constituted such Change in Control was the subject of
substantive discussions at the time of such termination of employment as
evidenced by the Company and such potential acquirer having engaged in
communications (whether in person, via telephone or e-mail) or the execution
of
a non-disclosure agreement with the intent to commence discussions for a
potential acquisition of the Company, then Xxxxxx shall be entitled to receive
such additional payments described in this Section 8 (including the Transaction
Fee described below in Section 8(d)) as if his termination occurred on or
following a Change in Control.
(c) Rabbi
Trust.
Within
ten (10) days after the occurrence of the Change in Control, the Company shall
place immediately negotiable funds into a “rabbi” trust in an amount equal to
the payments that may be due (or will be due) to Xxxxxx as a result of the
Change in Control, including such additional amount as equals the "Gross Up
Payment" (as hereinafter defined) thereon but excluding the Transaction Fee
described below (which shall be paid to Xxxxxx on the date of the Change in
Control). Such trust shall be maintained pursuant to a standard rabbi trust
arrangement among the Company, Xxxxxx and an independent trustee providing
for
the timely payment to Xxxxxx of the amounts held in such trust in the event
Xxxxxx becomes entitled thereto under the applicable provisions of this
Agreement (the "Trust Arrangement"). The Trust Arrangement shall be maintained
until the earlier of (A) the payment to Xxxxxx of all sums held in the trust
or
(B) six years after the end of the fiscal year in which the Change in Control
occurred. This provision will be null and void if the establishment or
maintenance of such a trust would result in the imposition of a tax or penalty
under Section 409A.
(d) Transaction
Fee.
Xxxxxx
shall be entitled to a cash payment equal to 1.5% of the Enterprise Value (as
defined below) of the Company in a Change in Control so long as the Enterprise
Value exceeds $400 million. The “Enterprise Value” in
the case of a Change in Control in which consideration is payable to the Company
in respect of its assets or business, shall mean the total cash and non-cash
(including, without limitation, the assumption of debt) consideration received
by the Company or in the case of a Change in Control in which consideration
is
payable to the Company’s stockholders, the total cash and non-cash (including,
without limitation, the assumption of debt) consideration payable to the
Company’s stockholders. “Enterprise Value” shall also include, if applicable,
any cash or non-cash consideration payable to the Company or to the Company’s
stockholders on a contingent, earnout or deferred basis. To the extent that
any
consideration in a transaction is not received in cash upon the consummation
of
the Change in Control, the value of such non-cash consideration for purposes
of
calculating the Enterprise Value will be determined by the Board of Directors
of
the Company prior to the Change in Control in good faith. In the event that
less
than 100% of the stock or assets of the Company is purchased in the Change
in
Control transaction, the Enterprise Value shall be extrapolated from the
percentage of the Company’s capital stock or assets impacted in such Change in
Control transaction to determine if the $400 million threshold was exceeded,
but
the Transaction Fee shall be calculated based on the actual consideration
received by the Company or shareholders, as the case may be. This Section 8(d),
however, shall not apply to any event resulting in a Change in Control in which
neither the Company nor its stockholders receives consideration either upon,
or
in connection with, the occurrence or consummation of the event resulting in
a
Change in Control.
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(e)
Gross
Up Payment.
(1)
Excess
Parachute Payment.
In the
event it shall be determined that any payment or distribution or benefit
received or to be received by Xxxxxx pursuant to the terms of this Agreement
or
any other payment or distribution or benefit made or provided by the Company
or
any of its affiliates, to or for the benefit of Xxxxxx (a "Payment") would
be
subject to the excise tax imposed by Section 4999 of the United States Internal
Revenue Code (the "Code"), or any interest or penalties are incurred by Xxxxxx
with respect to such excise tax (such excise tax, together with any such
interest and penalties, is hereinafter collectively referred to as the "Excise
Tax"), then Xxxxxx shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by Xxxxxx of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income and employment taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, Xxxxxx retains an amount of the Gross-Up Payment equal to
the
sum of (x) the Excise Tax imposed upon the Payments and (y) the product of
any
deductions actually disallowed under Section 68 of the Code solely as a direct
result of the inclusion of the Gross-Up Payment in the Executive's adjusted
gross income and the highest applicable marginal rate of federal income taxation
for the calendar year in which the Gross-Up Payment is to be made.
In
the
event the Company’s payment of the Gross-Up Payment would cause the payment cap
described in Section 8(g) below (the “Cap”) to be exceeded, then Xxxxxx shall be
deemed to have automatically waived his right to receive the Gross-Up Payment
to
the extent by which the Gross-Up Payment exceeds the Cap. In such an event,
Xxxxxx shall remain directly liable for payment of the amount by which the
Excise Tax exceeds the Cap and the Company shall have no liability for such
payment. In the event that the aggregate amount of the Company’s payments (or
payment obligations) pursuant to Sections 8(b) through 8(d) would be in excess
of the Cap, then this Section 8(e) shall automatically be deemed cancelled
and
the Company shall have no liability for the Gross-Up Payment. In the event
that
the Company’s obligation to pay the Gross-Up Payment is limited or cancelled in
its entirety, the Company and Xxxxxx shall cooperate with each other in good
faith in connection with the determination as to whether an Excise Tax is due
and the amount of such Excise Tax.
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(2)
Applicable
Rates.
For
purposes of determining the amount of the Gross Up Payment, Xxxxxx will be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross Up Payment is to be
made
and state and local income taxes at the highest marginal rates of taxation
in
the state and locality where taxes thereon are lawfully due, net of the maximum
reduction (if any) in federal income taxes that could be obtained from deduction
of deductible state and local taxes.
(3)
Determination
of Gross Up Payment Amount.
The
determination of whether the Excise Tax is payable and the amount thereof will
be based upon the opinion of tax counsel selected by Xxxxxx and reasonably
approved by the Company, which approval will not be unreasonably withheld or
delayed whether or not the Company is required to make the Gross-Up Payment.
If
such opinion is not finally accepted by the Internal Revenue Service (or state
and local taxing authorities), then appropriate adjustments to the Excise Tax
will be computed and additional Gross Up Payments will be made in the manner
provided by this subparagraph (e).
(4)
Payment.
Subject
to the applicability of the Cap, the Company will pay the estimated amount
of
the Gross-Up Payment in cash to Xxxxxx at the time specified in this Agreement.
Xxxxxx and the Company agree to reasonably cooperate in good faith in the
determination of the actual amount of the Gross Up Payment. Further, Xxxxxx
and
the Company agree to make such adjustments to the estimated amount of the Gross
Up Payment as may be necessary to equal the actual amount of the Gross Up
Payment, which in the case of the Company will refer to refunds of prior
overpayments by the Company and in the case of Xxxxxx will refer to additional
payments to Xxxxxx to make up for prior underpayments.
(f)
Definitions.
For
purposes of this paragraph 8, the following terms shall have the following
meanings:
"Change
in Control" shall mean any of the following:
(1)
the
acquisition by any individual, entity, or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) (the "Acquiring Person"), other than
the Company, or any of its Subsidiaries or any Excluded Group (as defined
herein), of beneficial ownership (within the meaning of Rule 13d-3- promulgated
under the Exchange Act) of 35% or more of the combined voting power or economic
interests of the then outstanding voting securities of the Company entitled
to
vote generally in the election of directors; provided however, that any transfer
from Xxxxxx or Xxxxxx Xxxxxx (the "Excluded Group") will not result in a Change
in Control if such transfer was part of a series of related transactions the
effect of which, absent the transfer to such Acquiring Person by the Excluded
Group, would not have resulted in the acquisition by such Acquiring Person
of
35% or more of the combined voting power or economic interests of the then
outstanding voting securities; or
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(2)
during any period of 12 consecutive months after the date of this Agreement,
the
individuals who at the beginning of any such 12-month period constituted a
majority of the Directors (the "Incumbent Non-Investor Majority") cease for
any
reason to constitute at least a majority of such Directors; provided that (i)
any individual becoming a director whose election, or nomination for election
by
the Company's stockholders, was approved by a vote of the stockholders having
the right to designate such director and (ii) any director whose election to
the
Board or whose nomination for election by the stockholders of the Company was
approved by the requisite vote of directors entitled to vote on such election
or
nomination in accordance with the Certificate of Incorporation of the Company,
shall, in each such case, be considered as though such individual were a member
of the Incumbent Non-Investor Majority, but excluding, as a member of the
Incumbent Non-Investor Majority, any such 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-2 of Regulation 14A promulgated under the Exchange Act) and further
excluding any person who is an affiliate or associate of an Acquiring Person
having or proposing to acquire beneficial ownership of 25% or more of the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors; or
(3)
the
consummation by the Company of a reorganization, merger or consolidation, in
each case, with respect to which all or substantially all of the individuals
and
entities who were the respective beneficial owners of the voting securities
of
the Company immediately prior to such reorganization, merger, or consolidation
do not, following such reorganization, merger, or consolidation, beneficially
own, directly or indirectly, more than 50% of the combined voting power of
the
then outstanding voting securities entitled to vote generally in the election
of
directors of the Company resulting from such reorganization, merger, or
consolidation; or
(4)
the
sale or other disposition of assets representing 50% or more of the assets
of
the Company in one transaction or series of related transactions not initiated
or commenced by any person within the Excluded Group; or
(5)
a
"Fundamental Change in Business" as hereinafter defined; or
(6)
a
"Hostile Takeover" as hereinafter defined is declared.
"Fundamental
Change in Business" shall mean that the Company, at any time, no longer spends
at least fifty percent (50%) of its annual budget on activities related to
biotechnology or pharmaceuticals.
"Hostile
Takeover" shall mean any Change in Control which at any time is declared by
at
least a majority of the Board, directly or indirectly, to be hostile or not
in
the best interests of the Company, or in which an attempt is made (irrespective
of whether successful) to wrest control away from the incumbent management
of
the Company, or with respect to which the Board makes any effort to resist.
10
(g) Payment
Cap.
Notwithstanding anything to the contrary contained in this Agreement, in the
event of a Change in Control, the Company’s maximum obligation (the “Cap”) under
this Section 8 shall be as follows:
|
(i)
|
3.25%
of the Enterprise Value if the Enterprise Value is less than $750
million;
|
|
(ii)
|
3.0%
of the Enterprise Value if the Enterprise Value is $750 million or
more
but less than $1.2 billion;
|
|
(iii)
|
2.5
% of the Enterprise Value if the Enterprise Value is $1.2 billion
or more
but less than $1.75 billion;
|
|
(iv)
|
2.0%
of the Enterprise Value if the Enterprise Value is $1.75 billion
or
more;
|
provided
that such Cap shall not apply to, or include any value attributable to, the
stock options (including the acceleration provided for under Section 8(a))
or
the New Restricted Stock. In the event that the aggregate amount of the
Company’s payments (or payment obligations) pursuant to this Section 8 would be
in excess of the Cap (which shall not apply to the equity as described above),
then the Company shall pay to Xxxxxx, in accordance with the relevant provisions
of Section 8, the amounts to which he is entitled under Section 8 up to the
Cap
and shall have no further liability or obligation for any other payments
hereunder (other than the equity described above). In such an event, Xxxxxx
shall be deemed to have automatically waived his right to receive any payments
in excess of the Cap (other than the equity described above). For the sake
of
clarity, however, any Gross-Up Payment attributable to any equity awards will
be
subject to the Cap.
9.
Confidentiality,
Ownership, and Covenants.
(a)
"Company
Information" and "Inventions" Defined.
"Company Information" means all information, knowledge or data of or pertaining
to (i) the Company, its employees and all work undertaken on behalf of the
Company, and (ii) any other person, firm, Company or business organization
with
which the Company may do business during the Term, that is not in the public
domain (and whether relating to methods, processes, techniques, discoveries,
pricing, marketing or any other matters). "Inventions" collectively refers
to
any and all inventions, trade secrets, ideas, processes, formulas, source and
object codes, data, programs, other works of authorship, know-how, improvements,
research, discoveries, developments, designs, and techniques regarding any
of
the foregoing.
(b)
Confidentiality.
Xxxxxx
hereby recognizes that the value of all trade secrets and other proprietary
data
and all other information of the Company not in the public domain disclosed
by
the Company in the course of his employment with the Company may be attributable
substantially to the fact that such confidential information is maintained
by
the Company in strict confidentiality and secrecy and would be unavailable
to
others without the expenditure of substantial time, effort or money. Xxxxxx,
therefore, except as provided in the next two sentences, covenants and agrees
that all Company Information shall be kept secret and confidential at all times
during or after the Term and shall not be used or divulged by him outside the
scope of his employment as contemplated by his Agreement, except as the Company
may otherwise expressly authorize by action of the Board. In
the
event that Xxxxxx is requested in a judicial, administrative or governmental
proceeding to disclose any of the Company Information, Xxxxxx will promptly
so
notify the Company so that the Company may seek a protective order of other
appropriate remedy and/or waive compliance with this Agreement. If disclosure
of
any of the Company Information is required, Xxxxxx may furnish the material
so
required to be furnished, but Xxxxxx will furnish only that portion of the
Company Information that legally is required.
(c)
Ownership
of Inventions, Patents and Technology.
Xxxxxx
hereby assigns to the Company all of Xxxxxx'x rights (including patent rights,
copyrights, trade secret rights, and all other rights throughout the world),
title and interest in and to Inventions, whether or notpatentable or registrable
under copyright or similar statutes, made or conceived or reduced to practice
or
learned by Xxxxxx, either alone or jointly with others, during the course of
the
performance of services for the Company. Xxxxxx shall also assign to, or as
directed by, the Company, all of Xxxxxx'x right, title and interest in and
to
any and all Inventions, the full title to which is required to be in the United
States government of any of its agencies. The Company shall have all right,
title and interest in all research and work product produced by Xxxxxx as an
employee of the Company, including, but not limited to, all research materials
and lab books.
(d)
Non-Competition.
During
his employment with the Company and for a period of one year after the
termination of such employment for any reason (the “Restricted Period”), Xxxxxx
agrees that he will not enter into or become associated with or engage in any
other business (whether as a partner, officer, director, shareholder, employee,
consultant, or otherwise), which
business is in direct competition with the Company (a "Competitive Business").
For purposes of this Agreement, the Company shall be deemed to be actively
engaged (a) on the date hereof in the development and commercialization of
therapeutic products for the treatment of hereditary angioedema and (b) in
the
future during the Term of this Agreement in any other material business in
which
the Company actually devotes substantive resources to study, develop or pursue
and in which Executive is directly and actively involved. Notwithstanding the
foregoing, (x) the ownership by Xxxxxx of less than five percent of the shares
of any publicly held corporation shall not violate the provisions of this
Article VII, and (y) Xxxxxx shall not be required to comply with any provision
of this Section 9(d) following termination of this Agreement if the amounts
required to be paid under Sections 7 or 8 of this Agreement are not timely
paid.
11
(e)
Nonsolicitation
of Employees. During
the Restricted Period, Xxxxxx will not, without the Company’s written consent,
solicit any employee or
independent contractor of
the Company for the purposes of hiring such individual for Xxxxxx or an entity
in which Xxxxxx has a material interest. Such provision shall not apply to
Xxxxxx Xxxxxx.
(f)
Remedies.
Xxxxxx
hereby acknowledges that the covenants and agreements contained in Section
9
(the "Restrictive Covenants") are reasonable and valid in all respects and
that
the Company is entering into this Agreement, inter alia, on such
acknowledgement. If Xxxxxx breaches, or threatens to commit a breach, of any
of
the Restrictive Covenants, the Company shall have the following rights and
remedies, each of which rights and remedies shall be independent of the other
and severally enforceable, and all of which rights and remedies shall be in
addition to, and not in lieu of, any other rights and remedies available to
the
Company under law or in equity: (i) the right and remedy to have the Restrictive
Covenants specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company and that money damages will not provide
an adequate remedy to the Company; (ii) the right and remedy to require Xxxxxx
to account for and pay over to the Company such damages as are recoverable
at
law as the result of any transactions constituting a breach of any of the
Restrictive Covenants; (iii) if any court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable, the remainder
of
the Restrictive Covenants shall not thereby be affected and shall be given
full
effect, without regard to the invalid portions; and (iv) if any court construes
any of the Restrictive Covenants, or any part thereof, to be unenforceable
because of the duration of such provision or the area covered thereby, such
court shall have the power to reduce the duration or area of such provision
and,
in its reduced form, such provision shall then be enforceable and shall be
enforced.
12
(g)
Jurisdiction.
The
parties intend to and hereby confer jurisdiction to enforce the Restrictive
Covenants upon the courts of any jurisdiction within the geographical scope
of
such Covenants. If the courts of any one or more such jurisdictions hold the
Restrictive Covenants wholly unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of the parties that such determination
not bar or in any way affect the Company's right to the relief provided above
in
the courts of any other jurisdiction, within the geographical scope of such
Covenants, as to breaches of such Covenants in such other respective
jurisdiction such Covenants as they relate to each jurisdiction being, for
this
purpose, severable into diverse and independent covenants.
10.
Successors
and Assigns.
(a)
Xxxxxx.
This
Agreement is a personal contract, and the rights and interests that the
Agreement accords to Xxxxxx may not be sold, transferred, assigned, pledged,
encumbered, or hypothecated by him. All rights and benefits of Xxxxxx shall
be
for the sole personal benefit of Xxxxxx, and no other person shall acquire
any
right, title or interest under this Agreement by reason of any sale, assignment,
transfer, claim or judgment or bankruptcy proceedings against Xxxxxx. Except
as
so provided, this Agreement shall inure to the benefit of and be binding upon
Xxxxxx and his personal representatives, distributes and legatees.
(b)
The
Company.
This
Agreement shall be binding upon the Company and inure to the benefit of the
Company and of its successors and assigns, including (but not limited to) any
Company that may acquire all or substantially all of the Company's assets or
business or into or with which the Company may be consolidated or merged. In
the
event that the Company sells all or substantially all of its assets, merges
or
consolidates, otherwise combines or affiliates with another business, dissolves
and liquidates, or otherwise sells or disposes of substantially all of its
assets, then this Agreement shall continue in full force and effect. The
Company's obligations under this Agreement shall cease, however, if the
successor to, the purchaser or acquirer either of the Company or of all or
substantially all of its assets, or the entity with which the Company has
affiliated, shall assume in writing the Company's obligations under this
Agreement (and deliver and executed copy of such assumption to Xxxxxx), in
which
case such successor or purchaser, but not the Company, shall thereafter be
the
only party obligated to perform the obligations that remain to be performed
on
the part of the Company under this Agreement.
13
11.
Entire
Agreement.
This
Agreement (together with the equity award agreements referred to herein)
represents the entire agreement between the parties concerning Xxxxxx'x
employment with the Company and supersedes all prior negotiations, discussions,
understanding and agreements, whether written or oral, between Xxxxxx and the
Company relating to the subject matter of this Agreement (including, without
limitation, the Original Employment Agreement (other than with respect to the
option referenced therein, as amended).
12.
Amendment
or Modification, Waiver.
No
provision of this Agreement may be amended or waived unless such amendment
or
waiver is agreed to in writing signed by Xxxxxx and by a duly authorized officer
of the Company. No waiver by any party to this Agreement or any breach by
another party of any condition or provision of this Agreement to be performed
by
such other party shall be deemed a waiver of a similar or dissimilar condition
or provision at the same time, any prior time or any subsequent time.
13.
Notices.
Any
notice to be given under this Agreement shall be in writing and delivered
personally or sent by overnight courier or registered or certified mail, postage
prepaid, return receipt requested, addressed to the party concerned at the
address indicated below, or to such other address of which such party
subsequently may give notice in writing:
| If to Xxxxxx: | to the address specified in the payroll records of the Company | |
| If to the Company: | 000 Xxxxx Xxxxxx | |
|
Xxxxx
0000
Xxx
Xxxx, XX 00000
|
14.
Severability.
If any
provision of this Agreement or the application of any such provision to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid and unenforceable to any extent, the remainder of
this Agreement or the application of such provision to such person or
circumstances other than those to which it is so determined to be invalid and
unenforceable shall not be affected, and each provision of this Agreement shall
be validated and shall be enforced to the fullest extent permitted by law.
If
for any reason any provision of this Agreement containing restrictions is held
to cover an area or to be for a length of time that is unreasonable or in any
other way is construed to be too broad or to any extent invalid, such provision
shall not be determined to be entirely null, void and of no effect; instead,
it
is the intention and desire of both the Company and Xxxxxx that, to the extent
that the provision is or would be valid or enforceable under applicable law,
any
court of competent jurisdiction shall construe and interpret or reform this
Agreement to provide for a restriction having the maximum enforceable area,
time
period and such other constraints or conditions (although not greater than
those
contained currently contained in this Agreement) as shall be valid and
enforceable under the applicable law.
14
15.
Survivorship.
The
respective rights and obligations of the parties hereunder shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.
16.
Headings.
All
descriptive headings of sections and paragraphs in this Agreement are intended
solely for convenience of reference, and no provision of this Agreement is
to be
construed by reference to the heading of any section or paragraph.
17.
Withholding
Taxes.
All
salary, benefits, reimbursements and any other payments to Xxxxxx under this
Agreement shall be subject to all applicable payroll and withholding taxes
and
deductions required by any law, rule or regulation of and federal, state or
local authority.
18.
Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original but all of which together constitute one and same
instrument.
19.
Applicable
Law; Arbitration.
The
validity, interpretation and enforcement of this Agreement and any amendments
or
modifications hereto shall be governed by the laws of the State of New York,
as
applied to a contract executed within and to be performed in such State. The
parties agree that any disputes shall be definitively resolved by binding
arbitration before the American Arbitration Association in New York, New York
and consent to the jurisdiction to the federal courts of the Southern District
of New York or, if there shall be no jurisdiction, to the state courts located
in New York County, New York, to enforce any arbitration award rendered with
respect thereto. Each party shall choose one arbitrator and the two arbitrators
shall choose a third arbitrator. All costs and fees related to such arbitration
(and judicial enforcement proceedings, if any) shall be borne by the Company
unless Xxxxxx’x claim is deemed to be frivolous by the arbitrator(s) or judge.
The Company shall pay the reasonable legal fees and expenses of counsel
(collectively, the "Fees") incurred by Xxxxxx in the event there is a dispute
hereunder as follows: if such dispute is settled, the Company shall pay the
Fees
or, in the event that it is resolved by binding arbitration or a judgment,
the
Company shall pay the Fees unless the arbitrator or judge finds that Xxxxxx’x
claim was frivolous.
20. Legal
Fees.
The
Company shall reimburse Xxxxxx for the reasonable expenses of his counsel in
drafting and negotiating this Agreement on an after tax basis.
21. Section
409A.
The
payments provided for herein are intended to comply with the terms of Section
409A of the Internal Revenue Code. In the event, however, that any such payments
are determined to be subject to 409A, then the Company will make such
adjustments as are reasonably required to comply with such section, including
delaying any such payments that would have been required to be paid to Xxxxxx
pursuant to this Agreement during the first six months following the termination
of Xxxxxx’x employment until the end of such six-month period in accordance with
the requirements of Section 409A.
15
22. Indemnification.
The
Company shall, to the maximum extent permitted by law, indemnify and hold Xxxxxx
harmless against, and shall purchase director and officer indemnity insurance
on
behalf of Xxxxxx for, expenses, including reasonable attorneys fees (the
attorney to be selected by Xxxxxx), judgments, fines, settlements and other
amounts actually and reasonably incurred in connection with any proceeding
or
claim (or threatened proceeding or claim) arising by reason of Xxxxxx’x
employment by the Company. The Company shall advance to Xxxxxx any expense
incurred in defending any such proceeding or claim (or threatened proceeding
or
claim) to the maximum extent permitted by law.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first written above.
| Lev Pharmaceuticals, Inc. | ||
| |
|
|
| By: | /s/ Xxxx X. Xxxxxxx | |
|
Xxxx X. Xxxxxxx |
||
| Chairman of the Compensation Committee | ||
| /s/ Xxxxxx Xxxxxx | ||
|
Xxxxxx Xxxxxx |
||
16
