Spherix Incorporated AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit 10.5
Spherix Incorporated
AMENDED AND RESTATED
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”), is entered into as of the 23rd day of March, 2004, between Spherix Incorporated, a Delaware corporation (the “Corporation”), and Xxxxxxx X. Xxxxx (the “Executive”).
WITNESSETH:
WHEREAS, the Corporation is engaged in providing information services in health, pharmaceutical and civic areas; in providing services in the areas of chemistry, biology, exobiology, microbiology, occupational health, air and water pollution and hazardous wastes control, industrial hygiene; and in the development of proprietary products; and
WHEREAS, the Executive has been engaged as an expert and corporate executive in major enterprises in the areas indicated above; and
WHEREAS, the Executive is presently, and has been since the formation of the Corporation, an Executive of the Corporation; and
WHEREAS, the Executive has led the Company’s effort to commercialize its non—fattening sugar as a major food products ingredient and for other non-food uses, and its safe—for—humans pesticides; and
WHEREAS, the Executive has relinquished the positions of CEO and President of Spherix as of September 1, 2003,
WHEREAS, the Company desires the Executive to continue to serve out the term of this Employment Agreement in the capacity of Executive Officer for Science, and the Executive desires to do so,
NOW, THEREFORE, in consideration of the mutual promises and covenants herein set forth and other good and valuable consideration, the receipt of which is hereby acknowledged, the Corporation and the Executive do hereby agree, each with the other, as follows:
1. Full-time Employment of Executive.
1.1. Duties and Status.
1.1.1. The Corporation hereby engages the Executive for the period (the “Employment Period”) specified in Section 4 and the Executive accepts such employment, on the terms and conditions set forth in this Agreement. During the Employment Period, the Executive shall serve as Executive Officer for Science, reporting directly to the Chief Executive Officer of the Corporation.
1.1.2. During the Employment Period, the Executive shall (i) devote his full-time and efforts to the business of the Corporation and its subsidiaries or affiliates, primarily, but without limitation, to the business of the BioSpherix Division, and will not engage in consulting work or any trade or business for his own account or for or on behalf of any other person, firm or corporation which competes, conflicts or interferes with the performance of his duties hereunder in any way and (ii) accept such additional office or offices to which he may be elected by the Board of Directors of the Corporation or its subsidiaries or affiliates, including, without limitation, any joint venture or subsidiary formed to commercialize the BioSpherix’s Division’s products, processes or services.
1.1.3. The Executive shall be required to perform the services and duties provided for in Section 1.1.1. only at the location where the Executive was employed immediately prior to the effective date of this Agreement, or at the Annapolis location of the BioSpherix Division. The Executive may schedule telecommuting via the internet from home as approved by the Compensation Committee and the Board of Directors of the Company at their May 15, 2002, Meetings. The Executive shall be entitled to vacation, leave of absence, and leave for illness or temporary disability in accordance with the policies of the Corporation in effect, which shall not be less favorable than
those in effect at the date of this Agreement; and any leave on account of illness or temporary disability which is short of total disability, as defined in the Corporation’s long-term disability insurance plan (“Total Disability”), shall not constitute a breach by the Executive of his agreements hereunder.
1.2. Compensation and General Benefits. The Executive shall be compensated as follows:
1.2.1. The Corporation shall pay the Executive an annual base salary of $118,000, effective January 1, 2004. Such salary shall be payable in equal, semi-monthly installments.
1.2.2. The Executive shall be eligible to participate in such profit—sharing, stock option, bonus, incentive and performance award programs which provide opportunities to receive compensation which are the greater of the opportunities (i) then provided by the Corporation to executives with reasonably comparable authority and duties (and in any event not lesser than those provided to executives with junior authority or duties), or (ii) available to the Executive immediately prior to the effective date of this Agreement.
1.2.3. The Executive shall be entitled to receive employee benefits, including, without limitation, pension, disability, group life, sickness, accident and health insurance programs and split-dollar life insurance programs, and perquisites provided by the Corporation to executives which are the greater of the employee benefits and perquisites (i) then provided by the Corporation to executives with comparable authority or duties (and in any event not lesser than those provided to executives with junior authority or duties), or (ii) available to the Executive immediately prior to the effective date of this Agreement. The health insurance benefits received by the Executive shall continue for the Executive and the Executive’s spouse following the retirement of the Executive and until the death of the survivor of the Executive and the Executive’s spouse.
1.2.4. The Corporation shall pay for continuous, lifetime, long-term care insurance for Dr. and Xxx. Xxxxx in recognition of their years of service to the Company.
1.2.5. The Corporation shall reimburse the Executive for all reasonable expenses incurred by the Executive in the performance of his duties hereunder.
1.2.6. Following his complete retirement from the Corporation, the Executive is to receive a cash payment of $12,500 each quarter of each year for life. Such payments will be made within 10 days after the end of each calendar quarter and shall be subject to any deductions the Corporation is required to make under applicable State or Federal law.
2. Competition; Confidential Information.
2.1. General. The Executive and the Corporation recognize that due to the nature of his prior association with the Corporation and of his engagements hereunder, and the relationship of the Executive to the Corporation, both in the past as an executive and in the future hereunder, the Executive has had access to and has acquired, will have access to and will acquire, and has assisted in and may assist in developing, confidential and proprietary information relating to the business and operations of the Corporation and its affiliates, including, without limiting the generality of the foregoing, information with respect to their present and prospective research projects; products, systems and processes (whether or not patentable); customers and agents; and sales and marketing methods. The Executive acknowledges that such information has been and will continue to be of central importance to the business of the Corporation and its affiliates and that disclosure of it to or its use by others could cause substantial loss to the Corporation. The Executive and the Corporation also recognize that an important part of the Executive’s duties will be to develop good will for the Corporation and its affiliates through his personal contact with customers, agents and others having business relationships with the Corporation and its affiliates, and that there is a danger that this good will, a proprietary asset of the Corporation and its affiliates, may follow the Executive if and when his relationship with the Corporation is terminated. The Executive accordingly agrees as follows:
2.2. Non-Competition.
2.2.1. During the Employment Period the Executive will not, directly or indirectly, either individually or as owner, partner, agent, employee, consultant or otherwise, except for the account of and on behalf of
2
the Corporation or their affiliates, engage in any activity competitive with the business of the Corporation or its affiliates, nor will he, in competition with the Corporation or its affiliates, solicit or otherwise attempt to establish for himself or any other person, firm or entity, any business relationships with any person, firm or corporation which was, at any time during the Employment Period, a customer of the Corporation or one of its affiliates.
2.2.2. Nothing in this Section 2.2. shall be construed to prevent the Executive from owning, as an investment, not more than 1% of a class of equity securities issued by any competitor of the Corporation or its affiliates and publicly traded and registered under Section 12 of the Securities Exchange Act of 1934.
2.3. Trade Secrets. The Executive will keep confidential any trade secrets or confidential or proprietary information of the Corporation and its affiliates which are now known to him or which hereafter may become known to him as a result of his employment or association with the Corporation and shall not at any time directly or indirectly disclose any such information to any person, firm or corporation, or use the same in any way other than in connection with the business of the Corporation or its affiliates during and at all times after the expiration of the Employment Period. For purposes of this Agreement, “trade secrets or confidential or proprietary information” means information unique to the Corporation or any of its affiliates which has a significant business purpose and is not known or generally available from sources outside the Corporation or any of its affiliates or typical of industry practice.
2.4. Intellectual Property. Throughout the Employment Period, the Executive will disclose to the Corporation all processes, operations, products or improvements developed by him which relate directly or indirectly to the business of the Corporation or its affiliates which may be patentable or copyrightable. The Executive agrees that such will be the property of the Corporation and that he will, at the Corporation’s request and cost, do whatever is necessary to secure the rights thereto by patent or copyright.
3. Corporation’s Remedies for Breach. It is recognized that damages in the event of breach of Section 2 by the Executive would be difficult, if not impossible, to ascertain, and it is therefore agreed that the Corporation, in addition to and without limiting any other remedy or right they may have, shall have the right to an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such breach, and the Executive hereby waives any and all defenses he may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief. The existence of this right shall not preclude any other rights and remedies at law or in equity which the Corporation may have.
4. Employment Period.
4.1. Duration. The Employment Period shall commence on the effective date of this Agreement and shall continue until the earlier of (i) close of business on December 31, 2004 or (ii) any termination of this Agreement that does not constitute an improper termination as defined in Section 4.3.1.
4.2. Termination Payments.
4.2.1. In the event of an improper termination of this Agreement (as defined in Section 4.3.1. of this Agreement), the Corporation shall pay to the Executive and provide him with the following:
4.2.1.1. During the remainder of the Employment Period, the Corporation shall continue to pay the Executive his salary at the rate and as required by Section 1.2.1 and in effect immediately prior to the date of termination.
4.2.1.2. During the remainder of the Employment Period, the Executive shall continue to be treated as an executive (at the level provided for in Section 1.1.1.) under the provisions of the Corporation’s profit-sharing, bonus, incentive and performance award programs and any other incentive compensation arrangement described in Section 1.2.2. In addition, the Executive shall continue to be entitled to all benefits and service credits for benefits under any pension plan, or medical, insurance, split-dollar life insurance and other employee benefit plans, programs and arrangements of the Corporation described in Section 1.2.3. as if he were still employed during such period under this Agreement.
3
4.2.1.3. If, despite the provisions of Section 4.2.1.2., benefits or the right to accrue further benefits under any profit sharing, bonus, incentive or performance award programs or other long-term incentive compensation arrangement described in Section 1.2.2. shall not be provided under any such arrangement to the Executive, or his dependents, beneficiaries and estate, because he is no longer an employee of the Corporation, the Corporation shall, to the extent necessary, provide, pay or provide for payment of amounts equal to the after tax benefits to the Executive, his dependents, beneficiaries and estate.
4.2.1.4. If, despite the provisions of Section 4.2.1.2., benefits or service credits under any employee benefit plan, including, without limitation, benefits under any pension plan, or any medical, insurance, split-dollar life insurance and other employee benefit plans, programs and arrangements described in Section 1.2.3. shall not be payable or provided under any such plan to the Executive, or his dependents, beneficiaries and estate, because he is no longer an employee of the Corporation, the Corporation shall, to the extent necessary, pay or provide for payment of equivalent after tax benefits and service credits for such after tax benefit~ to the Executive, his dependents, beneficiaries and estate.
4.2.1.5. The Executive shall not be required to mitigate the amount of any payment: provided for in this Section 4.2 by seeking employment or otherwise, nor shall the amount of any payment provided for in this Section 4.2 be reduced by any compensation or remuneration earned by the Executive as the result of employment by another employer, or self-employment, or as a partner, after the date of termination or otherwise.
4.2.2. In the event of an improper termination, the Executive may elect, within 60 days after such termination, to elect to be paid a lump sum severance allowance, in lieu of termination payments, in an amount which is equal to the sum of all of the salary payments which he would have been entitled to receive in accordance with Section 4.2.1.1. In the event that the Executive makes an election pursuant to the preceding sentence to receive a lump sum severance allowance, then, in addition to such amount, he shall accelerate all future payments due with respect to (i) the pension benefits he would have accrued under any pension benefit plan maintained by the Corporation if he had remained in the employ of the Corporation for the remainder of the Employment Period, which benefits will be paid concurrently with, and in addition to, the benefits provided under such pension benefit plan, (ii) incentive compensation (including, but not limited to the right to participate in all of the Corporation’s profit sharing plans and to receive and exercise stock options and stock appreciation rights and to receive bonuses and performance awards and similar incentive compensation benefits) to which he would have been entitled under this Agreement if he had remained in the employ of the Corporation for the remainder of the Employment Period, and (iii) employee benefits (including, but not limited to, coverage under any disability, group life, sickness, accident and health insurance programs, split-dollar life insurance arrangements or programs and prerequisite) to which he would have been entitled under this Agreement if he had remained in the employ of the Corporation for the remainder of the Employment Period. By accelerating all future payments as described in this Section 4.2.2., the Executive will have the right to receive an amount equal to the commuted actuarial value of those payments within sixty (60) days after the date of Executive’s termination.
4.2.3. In the event of a termination other than an improper termination, the Executive shall be entitled to any salary accrued to the date of the termination, but shall not be entitled to any further salary or any further payments hereunder.
4.3. Definitions. The following terms shall have the specified meanings when used in the Sections specified:
4.3.1. In this Section 4, the term “improper termination” means termination (i) by the Corporation of the employment of the Executive with the Corporation for any reason other than death or Total Disability of the Executive, or cause; or (ii) of the employment of the Executive by resignation of the Executive due to (A) a significant change in the nature or scope of his authorities or duties from those contemplated in Section 1.1.1., (B) a merger or consolidation of the Corporation or other similar transaction which is likely to materially and adversely affect the financial ability of the Corporation or any successor assign thereto that agrees in writing to assume the obligations of the Corporation hereunder to perform this Agreement, (C) a reduction in total compensation and benefits from that provided in Section 1.2, or (D) the breach by the Corporation in any material respect of any other provision of this Agreement.
4.3.2. In Section 4.3.1. the term “cause” means (i) a final judicial finding that Executive has been guilty of fraud, misappropriation or intentional material damage to the property or business of the Corporation or
4
the commission of a felony; (ii) continuance of willful and repeated failure by the Executive to perform his duties in compliance with this Agreement after written notice to the Executive by the Board of Directors specifying such failure, provided that such “cause” shall have been found by a majority vote of the Board of Directors of the Corporation after at least 10 days’ written notice to the Executive specifying the cause proposed to be claimed and after an opportunity for the Executive to be heard at meetings of such Boards of Directors; or (iii) a violation of Section 2 of this Agreement.
4.3.3. In Section 4.2., “Employment Period” shall mean the full period for which the Employment Period would have continued, without any improper termination, under Section 4.3.1.
4.3.4. In Section 2.2.1., “Employment Period” shall mean the full period for which the Employment Period would have continued under Section 4.1. in the event of any termination of the employment of the Executive which is not an improper termination as defined in Section 4.3.1.
5. Legal Costs. If the Corporation shall fail to pay or provide for payment of any amounts required to be paid or provided for hereunder at any time, the Executive shall be entitled to consult with counsel, and the Corporation agrees to pay the reasonable fees and expenses of independent counsel for the Executive in advising him or in bringing any proceedings, or in defending any proceedings, involving the Executive’s rights under this Agreement, such right to reimbursement to be immediate upon the presentment by Executive of written xxxxxxxx for such reasonable fees and expenses. The Executive shall be entitled to the prime rate of interest established from time to time at Bank of America, or its successors or successors in interest for any payments of such expenses, or any other payments under this Agreement, that are overdue.
6. Notices. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and if sent by registered or certified mail to the Executive at the last address he has filed in writing with the Corporation or, in the case of the Corporation, at its principal executive offices.
7. Binding Agreement. This Agreement shall be effective as of the effective date hereof and shall be binding upon and inure to the benefit of the Executive, his executors, administrators and personal representatives. The rights and obligations of the Corporation under this Agreement shall inure to the benefit of and shall be binding upon any successor of the Corporation as defined in Section 1-101(u) of the Maryland General Corporation Law as now in effect; provided, that this Agreement may not be assigned by the Corporation without the consent of the Executive, and in the case of a successor by transfer of all or substantially all of the assets of the Corporation, or any other successor in which the Corporation does not cease to exist by operation of the transaction in question as a matter of law, the Corporation shall not be relieved of its obligations hereunder.
8. Corollary Agreements. This Agreement is made as a corollary to the agreements provided per the Resolution concerning the Executive’s retirement provisions passed by the Board of Directors on March 23, 2004, and the Revised Consulting Agreement passed by the Board of Directors on March 23, 2004, together with which it constitutes the entire understanding of the Executive and the Corporation with respect to the subject matters therein and supersedes any and all prior understandings written or oral (including but not limited to the Employment Agreement dated as of May 15, 2002, as amended, between the Corporation and the Executive). This Agreement may not be changed, modified, or discharged orally, but only by an instrument in writing signed by the parties. This Agreement shall be governed by the laws of the State of Maryland and the invalidity or unenforceability of any provisions hereof shall in no way affect the validity or enforceability of any other provision.
9. Indemnification. In addition to any indemnification rights the Executive may have by statute, by-law or otherwise, the Corporation to the fullest extent permitted by, and in accordance with and subject to the requirements of, the General Corporation Law of the State of Delaware, (i) shall indemnify the Executive and hold him harmless for all losses, costs, expenses or liabilities (whether or not arising during the Employment and pay all expenses, including reasonable attorneys’ fees and court fees, actually and necessarily incurred by the Executive in connection with the investigation or defense of, or being a witness in, any such action, suit or proceeding and in connection with any appeal thereof.
5
IN WITNESS WHEREOF, the parties have executed, under seal, and delivered this Agreement the date first above written.
|
|
SPHERIX INCORPORATED |
|||||||
|
|
Board of Directors |
|||||||
|
(SEAL) |
|
|||||||
|
|
|
|||||||
|
|
|
|||||||
|
ATTEST: |
|
|
By: |
|
|
|||
|
|
Xxxxxxxxx X. Xxxxxxx |
|
Xxxxxx X. Xxxxxxx, Chair |
|||||
|
|
Corporate Secretary |
|
Compensation Committee |
|||||
|
|
|
|||||||
|
|
|
|||||||
|
WITNESS: |
|
|
By: |
|
|
|||
|
|
|
Xxxxxxx X. Xxxxx |
||||||
6
