10.23
June 22, 1999
Xxxxxxx X. Xxx, Ph.D.
c/o Chesapeake Biological Laboratories, Inc.
0000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Xxxx:
This letter contains the agreement between Xxxxxxx X. Xxx
("Xxx") and Chesapeake Biological Laboratories, Inc. ("CBL") relative to
Xxx'x resignation as an employee and director of CBL. Xxx and CBL
hereby agree as follows:
1. RESIGNATION AS EMPLOYEE, DIRECTOR AND CHAIRMAN OF THE BOARD. Xxx
hereby resigns as an employee, director and Chairman of the Board of CBL, which
resignation shall be effective on June 30, 1999.
2. CONSULTING PAYMENT. Xxx agrees to provide consulting services to CBL
from July 1, 1999, through June 30, 2000. As consideration for these services,
CBL shall pay Xxx $122,500, payable in 12 equal monthly installments of $10,208,
beginning on July 1, 1999, and continuing on the first day of each month
thereafter through June 1, 2000, regardless of the death or disability of Xxx.
Xxx shall make himself available to consult with CBL, as reasonably requested by
CBL, during normal business hours during this period, provided that Xxx shall
not be required to provide more than 10 hours of consulting services per month
and, in any event, not more than a total of 120 hours during such 12 month
period.
3. PAYMENT OF AMOUNT DUE UNDER FEBRUARY 10, 1999 LETTER. By letter
dated February 10, 1999, CBL agreed to pay Xxx $120,000 following occurrence of
a "Qualifying Event," as defined therein. CBL agrees to pay Xxx such $120,000
even though a Qualifying Event has not occurred. Such amount shall be paid in 12
equal installments of $10,000, beginning on July 1, 1999, and continuing on the
first day of each month thereafter through June 1, 2000, regardless of the death
or disability of Xxx. In the event that a Qualifying Event does occur on or
before December 31, 1999, CBL agrees to pay Xxx an additional $65,000 no later
than 30 days after such occurrence.
4. ACCELERATION UPON NON-PAYMENT. In the event any payments referred to
in paragraphs 2 and 3 of this letter are more than 15 business days late on two
occasions, all amounts referred to in paragraphs 2 and 3 of this letter shall
become immediately due and payable.
5. EFFECT OF CHANGE IN CONTROL. In the event of a Change in Control in
CBL, as defined in Section 1(d) of the Employment Agreement, dated July 1, 1995,
as amended by agreements dated November 21, 1996 and February 10, 1999, between
CBL and Xxx (collectively, the "Xxx Employment Agreement"), all amounts referred
to in paragraphs 2 and 3 of this letter shall become immediately due and
payable.
6. INSURANCE BENEFITS. CBL agrees to continue to provide those
insurance benefits to Xxx that CBL agreed to provide under Section 7(d) of the
Xxx Employment Agreement through June 30, 2001, or earlier if Xxx so elects in
writing. CBL will provide Xxx proof of such continuation of benefits upon Xxx'x
written request. If Xxx elects to discontinue receiving such insurance benefits
from CBL, CBL shall pay Xxx, within 10 days after the end of each full month
thereafter through June 30, 2001, an amount equal to 25% of what CBL's cost of
providing benefits to Xxx would have been if Xxx continued to receive them
during such month. CBL shall provide to Xxx evidence of such costs upon Xxx'x
request. CBL agrees to use reasonable efforts (i) to assign ownership of any
life insurance policy owned by CBL and pursuant to which Xxx is the beneficiary
to Xxx and (ii) to convert any policy relating to disability benefits payable to
Xxx to an individual policy owned by Xxx.
7. OPTIONS. CBL agrees that all unexpired stock options previously
granted to Xxx shall become fully vested on June 22, 1999, and shall remain
exercisable thereafter in accordance with the applicable option agreements until
the expiration dates stated in such option agreements notwithstanding the fact
Xxx will no longer be an employee of CBL. Xxx acknowledges that the foregoing
will cause all such options to be disqualified for incentive stock option
treatment. All such qualified options shall be converted to non-qualified stock
options. All such options
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are described on Schedule A hereto. In the event and to the extent such
amendments to Xxx'x options described in this paragraph 7 and attached hereto as
Schedule B are not permitted or possible for any reason or such option
agreements, as amended, are for any reason deemed invalid, CBL will grant to Xxx
as soon as practicable one or more non-qualified stock options, consistent with
the terms of the April 8, 1999 letter agreement between CBL and Xxx (the related
terms of which letter agreement shall specifically survive the execution of this
letter agreement).
8. COMPUTER. Xxx shall be entitled to retain the laptop computer
provided to him by CBL. Xxx agrees to purge all CBL files from the computer,
without retaining any copies thereof, prior to June 30, 1999. Xxx agrees that,
except for the laptop computer, he will return to CBL any and all CBL property
or documents in his possession on or before June 30, 1999.
9. PERSONAL PROPERTY. Xxx shall be entitled to remove his personal
property from CBL within a reasonable period of time, but in any event prior to
July 15, 1999.
10. LEGAL EXPENSES. Promptly after Xxx'x signing of this letter, CBL
shall pay Xxx $1,000.00 to cover his legal expenses in connection with this
letter.
11. AMERICAN EXPRESS. CBL shall use commercially reasonable efforts to
cause Xxx to be released from any obligations as guarantor of CBL's corporate
American Express charge account.
12. CONFIDENTIALITY. Since as part of his employment, Xxx has had
access to information of a nature not generally disclosed to the public. Xxx
agrees to keep confidential and not disclose to anyone, all business,
proprietary and trade secret information about CBL in his possession. This
letter, its contents and all information pertaining to its negotiations are to
remain confidential. Each party agrees not to communicate any derogatory or
disparaging information concerning the other.
13. WHOLE AGREEMENT. Each party acknowledges that this agreement is a
full and accurate embodiment of the understanding between the parties and that
it supersedes any prior agreements or understandings made by the parties. The
terms of this agreement may not be modified, except by mutual consent of the
parties. Any and all modifications must be reduced to writing and signed by the
parties to be effective.
14. AUTHORIZATION. CBL has the corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement and the performance by CBL of this
Agreement and the consummation by CBL of the transactions contemplated hereby,
including the grant of options pursuant to paragraph 7 above, have been duly and
validly authorized by all necessary corporate action on the part of CBL,
including but not limited to approval by the CBL Board of Directors.
15. NO OTHER AGREEMENTS. CBL and Xxx each acknowledge that (i) the Xxx
Employment Agreement, is hereby terminated in its entirety and that there are no
other agreements, written or oral, between them, except the option agreements
referred to in paragraph 7 above and those set forth in this letter, each of
which shall remain in effect in accordance with its terms and (ii) Xxx is
entitled to no other or further compensation, remuneration or benefits except as
described in this letter.
16. FULL RELEASE. In keeping with the mutual intent of the parties for
an amicable separation, and as part of the parties' accord, each party releases
the other party of and from any and all claims, causes of action, demands,
obligations, agreements, promises, liability, damages, costs and/or fees arising
out of or relating to Xxx'x employment by CBL, including his separation from
employment and his resignation as a director of CBL. By this paragraph, each
party is waiving any claims which may exist against the other, including CBL,
its directors, officers, employees and agents, and all related or affiliated
persons, firms or entities of either party. This includes all rights and
obligations under any federal, state or local laws pertaining to employment.
However, nothing in this paragraph will affect the right of either party to
enforce rights or entitlements specifically provided for under this letter as
set forth above. Xxx and CBL agree that this release shall not apply to (a) the
obligation of CBL to indemnify Xxx as
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required by (i) law, (ii) the Articles of Incorporation of CBL, as amended, or
(iii) the By-laws of CBL, as amended or (b) the obligation of CBL's director and
officer liability insurance carrier to perform under such policy with respect to
Xxx.
17. ARBITRATION. CBL and Xxx agree that any controversy or claim
arising out of or relating to this Agreement or breach thereof shall be settled
by arbitration in Baltimore City, Maryland in accordance with the National Rules
of the American Arbitration Association (the "AAA"). Each Party shall appoint an
arbitrator who has expertise in the interpretation of this type of agreement and
these two arbitrators shall select a third neutral arbitrator from the AAA's
panel who also shall have expertise in the interpretation of this type of
agreements. In reaching their decision, the arbitrators shall have no authority
to change or modify any provision of this Agreement. Such arbitrators shall act
as the administrators and exclusive arbitrators with respect to all claims. The
non-prevailing party shall be responsible for all costs including reasonable
legal fees of the prevailing party. The decision of the arbitrators as to the
validity of the claim and amount of damages in respect to such claim shall be
binding and conclusive upon the Parties and may be entered in any court having
jurisdiction.
If the above terms are acceptable, kindly so indicate by countersigning
this letter in duplicate and returning one fully signed copy of the undersigned,
whereupon this letter will constitute the legally binding agreement between CBL
and Xxx, executed under seal.
Very truly yours,
Chesapeake Biological Laboratories, Inc.
By: /S/ XXXXXX X. XXXX (SEAL)
----------------------------
Xxxxxx X. Xxxx
President
Accepted and agreed this 22nd
day of June, 1999
/S/ XXXXXXX X. XXX, PH.D. (SEAL)
--------------------------
Xxxxxxx X. Xxx, Ph.D.
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SCHEDULE A
QUALIFIED OPTIONS
DATE OF GRANT # OF SHARES OPTION PRICE OUTSTANDING VESTED EXPIR. DATE
------------- ----------- ------------ ----------- ------ -----------
11/18/96 75,000 $3.44 75,000 18,750 11/18/01
7/2/97 30,130 $3.75 30,130 30,130 7/2/07
12/23/98 100,000 $3.8125 100,000 100,000 12/13/08
2/11/99 25,000 $3.8125 25,000 25,000 2/11/09
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SCHEDULE B
AMENDMENT NO. 1 TO QUALIFIED OPTIONS
CHESAPEAKE BIOLOGICAL LABORATORIES, INC.
AMENDMENT NO. 1 TO INCENTIVE STOCK OPTION AGREEMENTS
THIS AMENDMENT NO. 1 TO INCENTIVE STOCK OPTION AGREEMENTS
(this "Amendment No. 1") is made as of this 22nd day of June, 1999
(the "EFFECTIVE DATE"), by and between Chesapeake Biological Laboratories,
Inc., a Maryland corporation (the "COMPANY"), and Xxxxxxx X. Xxx
(the "OPTIONEE").
WHEREAS, pursuant to the terms and conditions of those certain
Incentive Stock Option Agreements dated November 18, 1996, July 2, 1997,
December 22, 1998, and February 11, 1999 (the "INCENTIVE STOCK OPTION
AGREEMENTS"), the Company previously granted the Optionee options to purchase
shares (75,000 shares, 30,130 shares, 100,000 shares, and 25,000 shares,
respectively) of the Company's Common Stock to provide incentives for the
Optionee and to promote the success of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Optionee and the Company agree to all of the terms and
conditions of the Incentive Stock Option Agreements as amended hereby.
2. The following sentences shall be inserted at the end of
Section 2 of the Incentive Stock Option Agreements:
"Notwithstanding anything to the contrary contained herein; (a) if the
Optionee's employment terminates, the 90-day limitation on exercise set forth in
Internal Revenue Code Section 422 shall not apply and the options shall remain
exercisable until 5 p.m. Baltimore time on the dates set forth below in Section
3, and (b) to the extent the options are not exercised prior to Optionee's
termination of employment, the options will survive as fully vested and fully
exercisable non-qualified stock option agreements."
3. Section 3 of each of the Incentive Stock Option Agreements
shall be deleted in their entirety and the following Section 3 shall be inserted
in lieu thereof:
"3. OPTION. The options are fully vested and will be
exercisable as to the covered shares in accordance with the following
schedule:
DATE OF INCENTIVE PERCENTAGE OF OPTIONED
STOCK OPTION AGREEMENT PERIOD SHARES SUBJECT TO EXERCISE
November 18, 1996 The date hereof and until the fifth (5)
Anniversary of November 18, 1996. 100%
July 2, 1997 The date hereof and until the tenth (10)
Anniversary of July 2, 1997. 100%
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December 22, 1998 The date hereof and until the tenth (10)
Anniversary of December 22, 1998. 100%
February 11, 1999 The date hereof and until the tenth (10)
Anniversary of February 11, 1999. 100%
4. The Option may be exercised by tender (via actual delivery or
attestation) to the Company of other shares of Stock of the Company which have a
Fair Market Value on the date of tender equal to the Exercise Price, provided
that such shares have been owned by the Optionee for a period of at least six
months or were purchased on the open market without assistance, direct or
indirect, from the Company;
5. If the Optionee dies prior to the Expiration Date, the Option
shall be exercisable during the 12-month period following the date of death of
the Optionee with respect to all vested shares, but in no event after the
Expiration Date, by the Optionee's executor, personal representative, or the
person(s) to whom this Option is transferred by will or the laws of descent and
distribution. Unless sooner terminated, this Option shall terminate in its
entirety upon the expiration of such 12-month period.
6. This Amendment No. 1 shall in all respects be governed by,
and construed and enforced in accordance with, the laws of the State of
Maryland.
7. General.
(a) Any party's failure to enforce any provision or
provisions of this Amendment No. 1 or the Incentive Stock Option Agreements
shall not in any way be construed as a waiver of any such provision or
provisions, nor shall such failure to enforce prevent that party thereafter from
enforcing each and every other provision of this Amendment No. 1 or the
Incentive Stock Option Agreements. The rights granted to the parties herein are
cumulative and shall not constitute a waiver of any party's right to assert all
other legal remedies available to it under the circumstances.
(b) This Amendment No. 1 may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which when
taken together shall constitute one and the same instrument.
(c) The Optionee and the Company agree to execute upon
request any further documents or instruments necessary or desirable to carry out
the purposes or intent of this Amendment No. 1 or the Incentive Stock Option
Agreements.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals as of the day and year first above written.
COMPANY
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CHESAPEAKE BIOLOGICAL LABORATORIES, INC.
By: /s/ XXXXXX X. XXXXXX (SEAL)
----------------------------
Xxxxxx X. Xxxxxx, Option Committee Chairman
OPTIONEE
By: /s/ XXXXXXX X.XXX, PH. D. (SEAL)
--------------------------------
Xxxxxxx X. Xxx, Ph.D.
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