EMPLOYMENT AGREEMENT
Exhibit
10.1
This
Agreement (the “Agreement”)
is
entered into as of July
7,
2006 (the “Effective
Date”)
by and
between MANHATTAN PHARMACEUTICALS, INC., a Delaware corporation with an office
at 000 Xxxxxxx Xxxxxx, 0xx
Xxxxx,
Xxx Xxxx, XX 00000 (the “Company”),
and
Xxxxxxx
X. XxXxxxxxxx,
residing
00 Xxxxx Xxxxxx, Xxxx Xxxxxxxx, XX 00000 (the
“Executive”).
W
I T N E S S E T H:
WHEREAS,
the Company desires to employ the Executive as Chief Financial Officer of the
Company and the Executive desires to serve the Company in that capacity, all
upon the terms and subject to the conditions contained in this
Agreement.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto hereby agree as follows:
1. Employment.
(a) Services.
The
Executive will be employed by the Company and shall serve as Chief Financial
Officer of the Company and shall perform, subject to the direction of the Chief
Executive Officer of the Company, such services and duties as are customarily
performed by the Chief Financial Officer (the “Services”).
The
Executive shall also have such other powers and duties as may be from time
to
time prescribed by the Chief Executive Officer or the Board of Directors of
the
Company (the “Board”),
provided that the nature of the Executive’s powers and duties so prescribed
shall not be inconsistent with the Executive’s position and duties
hereunder.
(b) Acceptance.
The
Executive hereby accepts such employment and agrees to render the
Services.
2. Term.
The
Executive's employment under this Agreement shall commence as of July 10, 2006
(the “Commencement
Date”)
and
shall continue for a term of three (3) years (the “Initial
Term”),
unless sooner terminated pursuant to Section 8 of this Agreement.
Notwithstanding anything to the contrary contained herein, the provisions of
this Agreement governing protection of the Company’s Confidential and
Proprietary Information (as defined in Section 5(a) hereof) shall continue
in
effect as specified in Section 5 hereof and survive the expiration or
termination hereof. This Agreement may be renewed for one or more additional
one
year periods (each, an “Additional
Term”
and,
together with the Initial Term, the “Term”)
if
the
Company and the Executive agree in writing on the terms of such renewal not
less
than 30 days prior to the end of the then current Term. If the Company and
the
Executive have not agreed on the terms of such renewal prior to such date,
this
Agreement shall terminate at the end of the then current term (a “Non-Renewal
Event”).
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3. Best
Efforts; Place of Performance.
(a) During
the Term, the Executive shall devote substantially all of his business time,
attention and energies to the business and affairs of the Company and
shall
use his best efforts to advance the best interests of the Company and shall
not
during the Term be actively engaged in any other business activity, whether
or
not such business activity is pursued for gain, profit or other pecuniary
advantage. Notwithstanding the foregoing, Executive may fulfill his obligation
to provide consulting services pursuant to that certain Separation Agreement
dated March 16, 2006 between Executive and Vyteris Holdings (Nevada) Inc.,
and
with the prior written consent of the Company, Executive may serve as a member
of boards of directors of other organizations not affiliated with the Company
or
serve as an adjunct professor or similar position at an academic institution;
provided, however, that the business or activities of any organization on which
Executive proposes to serve as a director shall not compete with, or be likely
to compete with, the Company’s business and activities; and provided further,
however, that such service by Executive shall not interfere, or be likely to
interfere, with the performance by Executive of the Services to be performed
hereunder.
(b) The
duties to be performed by the Executive hereunder shall be performed primarily
at the principal office of the Company in New York, New York, subject to
reasonable travel requirements on behalf of the Company, or such other place
as
the Board may reasonably designate. Notwithstanding the foregoing, Executive
acknowledges that the Company may be relocated to another city within the United
States with the consent and approval of the Board.
4. Compensation.
As full
compensation for the performance by the Executive of his duties under this
Agreement, the Company shall pay the Executive as follows:
(a) Base
Salary.
During
the Term, the Company shall pay the Executive an annual base salary (the
“Base
Salary”),
which
shall initially be equal to $205,000 per year. The Base Salary shall be paid
in
accordance with the Company’s normal payroll practices. The Base Salary will be
reviewed by the Board no less frequently than annually and may be increased
(but
not decreased).
(b) Discretionary
Bonus.
At
the
sole discretion of the Board, the Executive may receive an additional annual
bonus (the “Discretionary
Bonus”)
in an
amount up to 30% of his then current Base Salary, based upon his performance
on
behalf of the Company during the prior year. The Discretionary Bonus shall
be
payable either as a lump-sum payment or installments as determined by the Board
in its sole discretion. In addition, the
Board
shall annually review the Discretionary Bonus to determine whether an increase
in the amount thereof is warranted.
(c) Withholding.
The
Company shall withhold all applicable federal, state and local taxes and social
security and such other amounts as may be required by law from all amounts
payable to the Executive under this Section 4.
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(d) Equity
Compensation.
(i) Options.
The
Company shall grant the Executive a stock option to purchase 220,000 shares
of
the common stock, par value $0.001 per share (the “Common
Stock”)
of the
Company at a price per share equal to the last closing sale price of the Common
Stock as reported on the American Stock Exchange on the last trading day
immediately preceding the Commencement Date (the “First Option”).
The
Company shall also grant the Executive a stock option to purchase 60,000 shares
of Common Stock at a price equal to the greater of (i) $1.35 per share or (ii)
the last closing sale price of the Common Stock as reported on the American
Stock Exchange on the last trading day immediately preceding the Commencement
Date (the “Second
Option,”
and
together with the First Option, the “Options”).
The
Options
shall be governed by the Company’s 2003 Stock Option Plan (the “Plan”).
For
so long as the Executive is an employee of the Company, the Options shall vest,
if at all, in three equal and annual installments on the first, second and
third
anniversaries of the Commencement Date, respectively. The Options shall have
a
term of 10 years from date of grant and, subject to the provisions of Section
9
hereof, the vested Options shall remain exercisable for 90 days from the date
that the Executive is no longer an employee of the Company. In connection with
such grant, the Executive shall enter into the Company’s standard stock option
agreement which will incorporate the foregoing vesting schedule and the
provisions contained in Section 9 hereof.
The
Board shall review the aggregate number of stock options granted to the
Executive not less frequently than annually in order to determine whether an
increase in the number thereof is warranted.
(e) Expenses.
The
Company shall reimburse the Executive for all normal, usual and necessary
expenses incurred by the Executive in furtherance of the business and affairs
of
the Company, including reasonable travel and entertainment, upon timely receipt
by the Company of appropriate vouchers or other proof of the Executive’s
expenditures and otherwise in accordance with any expense reimbursement policy
as may from time to time be adopted by the Company.
(f) Other
Benefits.
The
Executive shall be entitled to all rights and benefits for which he shall be
eligible under any benefit or other plans (including, without limitation,
dental, medical, medical reimbursement and hospital plans, pension plans,
employee stock purchase plans, profit sharing plans, bonus plans and other
so-called “fringe” benefits) as the Company shall make available to its senior
executives from time to time (collectively, the “Fringe
Benefits”).
(g) Vacation.
The
Executive shall, during the Term, be entitled to vacation of three
non-consecutive weeks per annum,
in
addition to public holidays observed by the Company.
The
Executive shall not be entitled to carry any vacation forward to the next year
of employment.
(h) Indemnification.
The
Company will indemnify the Executive to the extent permitted by its charter
and
by-laws and by applicable law against all costs, charges and expenses,
including, without limitation, attorneys’ fees, incurred or sustained by the
Executive in connection with any action, suit or proceeding to which the
Executive may be made a party by reason of being an officer, director or
employee of the Company. In connection with the foregoing, the Executive will
be
covered under any liability insurance policy that protects other officers of
the
Company.
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5. Confidential
Information and Inventions.
(a) The
Executive recognizes and acknowledges that in the course of his duties he is
likely to receive confidential or proprietary information owned by the Company,
its affiliates or third parties with whom the Company or any such affiliates
has
an obligation of confidentiality. Accordingly, during and after the Term, the
Executive agrees to keep confidential and not disclose or make accessible to
any
other person or use for any other purpose other than in connection with the
fulfillment of his duties under this Agreement, any Confidential and Proprietary
Information (as defined below) owned by, or received by or on behalf of, the
Company or any of its affiliates. “Confidential
and Proprietary Information”
shall
include, but shall not be limited to, confidential or proprietary scientific
or
technical information, data, formulas and related concepts, business plans
(both
current and under development), client lists, promotion and marketing programs,
trade secrets, or any other confidential or proprietary business information
relating to development programs, costs, revenues, marketing, investments,
sales
activities, promotions, credit and financial data, manufacturing processes,
financing methods, plans or the business and affairs of the Company or of any
affiliate or client of the Company. The Executive expressly acknowledges the
trade secret status of the Confidential and Proprietary Information and that
the
Confidential and Proprietary Information constitutes a protectable business
interest of the Company. The Executive agrees (i) not to use any such
Confidential and Proprietary Information for himself or others and (ii) not
to
take any Company material or reproductions (including but not limited to
writings, correspondence, notes, drafts, records, invoices, technical and
business policies, computer programs or disks) thereof from the Company’s
offices at any time during his employment by the Company, except as required
in
the execution of the Executive’s duties to the Company. The Executive agrees to
return immediately all Company material and reproductions (including but not
limited, to writings, correspondence, notes, drafts, records, invoices,
technical and business policies, computer programs or disks) thereof in his
possession to the Company upon request and in any event immediately upon
termination of employment.
(b) Except
with prior written authorization by the Company, the Executive agrees not to
disclose or publish any of the Confidential and Proprietary Information, or
any
confidential, scientific, technical or business information of any other party
to whom the Company or any of its affiliates owes an obligation of confidence,
at any time during or after his employment with the Company.
(c) The
Executive agrees that all inventions, discoveries, improvements and patentable
or copyrightable works (“Inventions”)
initiated, conceived or made by him, either alone or in conjunction with others,
during the Term
shall be
the sole property of the Company to the maximum extent permitted by applicable
law and, to the extent permitted by law, shall be “works made for hire” as that
term is defined in the United States Copyright Act (17 U.S.C.A., Section 101).
The Company shall be the sole owner of all patents, copyrights, trade secret
rights, and other intellectual property or other rights in connection therewith.
The Executive hereby assigns to the Company all right, title and interest he
may
have or acquire in all such Inventions; provided, however, that the Chief
Executive Officer may in its sole discretion agree to waive the Company’s rights
pursuant to this Section 5(c) with respect to any Invention that is not directly
or indirectly related to the Company’s business. The Executive further agrees to
assist the Company in every proper way (but at the Company’s expense) to obtain
and from time to time enforce patents, copyrights or other rights on such
Inventions in any and all countries, and to that end the Executive will execute
all documents necessary:
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(i) To
apply
for, obtain and vest in the name of the Company alone (unless the Company
otherwise directs) letters patent, copyrights or other analogous protection
in
any country throughout the world and when so obtained or vested to renew and
restore the same; and
(ii) To
defend
any opposition proceedings in respect of such applications and any opposition
proceedings or petitions or applications for revocation of such letters patent,
copyright or other analogous protection.
(d) The
Executive acknowledges that while performing the services under this Agreement
the Executive may locate, identify and/or evaluate patented or patentable
inventions having commercial potential in the fields of pharmacy,
pharmaceutical, biotechnology, healthcare, technology and other fields which
may
be of potential interest to the Company or one of its affiliates (the
“Third
Party Inventions”).
The
Executive understands, acknowledges and agrees that all rights to, interests
in
or opportunities regarding, all Third-Party Inventions identified by the
Company, any of its affiliates or either of the foregoing persons’ officers,
directors, employees (including the Executive), agents or consultants during
the
Employment Term shall be and remain the sole and exclusive property of the
Company or such affiliate and the Executive shall have no rights whatsoever
to
such Third-Party Inventions and will not pursue for himself or for others any
transaction relating to the Third-Party Inventions which is not on behalf of
the
Company.
(e) Executive
agrees that he will promptly disclose to the Company, or any persons designated
by the Company, all improvements, Inventions made or conceived or reduced to
practice or learned by him, either alone or jointly with others, during the
Term.
(f) The
provisions of this Section 5 shall survive any termination of this
Agreement.
6. Non-Competition,
Non-Solicitation and Non-Disparagement.
(a) The
Executive understands and recognizes that his services to the Company are
special and unique and that in the course of performing such services the
Executive will have access to and knowledge of Confidential and Proprietary
Information (as defined in Section 5) and the Executive agrees that, during
the
Term and for a period of 12 months
thereafter, he shall not in any manner, directly or indirectly, on behalf of
himself or any person, firm, partnership, joint venture, corporation or other
business entity (“Person”),
enter
into or engage in any business which is engaged in any business directly or
indirectly competitive with the Company in the Business (as defined below)
(each, a “Restricted
Activity”)
within
the geographic area of the Company’s business, which is deemed by the parties
hereto to be worldwide. The Executive acknowledges that, due to the unique
nature of the Business, the loss of any of its clients or business flow or
the
improper use of its Confidential and Proprietary Information could create
significant instability and cause substantial damage to the Company and its
affiliates and therefore the Company has a strong legitimate business interest
in protecting the continuity of its business interests and the restriction
herein agreed to by the Executive narrowly and fairly serves such an important
and critical business interest of the Company. For purposes of this Agreement,
the “Business”
means
the development and commercialization of drugs and other biomedical technologies
in which the Company is actively engaged (1) for the treatment, detection or
prevention of dermatologic diseases, disorders, and conditions and (2) the
treatment, detection or prevention of any other diseases, disorders, and
conditions. Notwithstanding the foregoing, nothing contained in this Section
6(a) shall be deemed to prohibit the Executive from (i) engaging in a Restricted
Activity for or with respect to any subsidiary, division or affiliate or unit
(each, a “Unit”)
of a
Person if that Unit is not engaged in any business which is competitive with
the
Business of the Company, irrespective of whether some other Unit of such Person
engages in such competition (as long as the Executive does not engage in a
Restricted Activity for such other Unit), or (ii) acquiring or holding, solely
for investment, publicly traded securities of any corporation, some or all
of
the activities of which are competitive with the business of the Company so
long
as such securities do not, in the aggregate, constitute more than 4% of any
class or series of outstanding securities of such corporation.
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(b) During
the Term and for a period of 12 months thereafter, the Executive shall not,
directly or indirectly, without the prior written consent of the
Company:
(i) Solicit
or induce any employee of the Company or any of its affiliates to leave the
employ of the Company or any such affiliate; or hire for any purpose any
employee of the Company or any affiliate or any employee who has left the
employment of the Company or any affiliate within one year of the termination
of
such employee’s employment with the Company or any such affiliate or at any time
in violation of such employee’s non-competition agreement with the Company or
any such affiliate;
(ii) Solicit
or accept employment or be retained by any Person who, at any time during the
term of this Agreement, was an agent, client or customer of the Company or
any
of its affiliates where his position will be related to the business of the
Company or any such affiliate; or
(iii) Solicit
or accept the business of any agent, client or customer of the Company or any
of
its affiliates with respect to products, services or investments similar to
those provided or supplied by the Company or any of its affiliates.
(c) The
Company and the Executive each agree that both prior to and during the Term
and
at all times thereafter, neither party shall willfully or intentionally,
directly or indirectly disparage, whether or not true, the name or reputation
of
the other party or any of its affiliates, including but not limited to, any
officer, director, employee or shareholder of the Company or any of its
affiliates.
(d) The
Executive hereby acknowledges that any breach or threatened breach of any of
the
terms of Section 5 or 6 of hereof will result in substantial, continuing and
irreparable injury to the Company. Therefore, in addition to any other remedy
that may be available to the Company, the Company will be entitled to seek
injunctive or other equitable relief by a court of appropriate jurisdiction,
without posting of a bond, in the event of any breach or threatened breach
of
the terms of Section 5 or 6 hereof.
The
Company and the Executive agree that any such action for injunctive or equitable
relief shall be heard in a state or federal court located in the State of New
York and
each
of the parties hereto agrees to accept service of process by registered or
certified mail and to otherwise consent to the jurisdiction of such
courts.
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(e) The
rights and remedies of the Company enumerated in Section 6(d) shall be in
addition to and not in lieu of any other rights and remedies available to the
Company at law or in equity. If any of the covenants contained in this Section
6, or any part of any of them, is hereafter construed or adjudicated to be
invalid or unenforceable, the same shall not affect the remainder of the
covenant or covenants or rights or remedies which shall be given full effect
without regard to the invalid portions. If any of the covenants contained in
this Section 6 is held to be invalid or unenforceable because of the duration
of
such provision or the area covered thereby, the parties agree that the court
making such determination shall have the power to reduce the duration and/or
area of such provision and in its reduced form such provision shall then be
enforceable. No such holding of invalidity or unenforceability in one
jurisdiction shall bar or in any way affect the Company’s right to the relief
provided in this Section 6 or otherwise in the courts of any other state or
jurisdiction within the geographical scope of such covenants as to breaches
of
such covenants in such other respective states or jurisdictions, such covenants
being, for this purpose, severable into diverse and independent
covenants.
(f) In
the
event that an actual proceeding is brought in equity to enforce the provisions
of Section 5 or this Section 6, the Executive shall not urge as a defense that
there is an adequate remedy at law nor shall the Company be prevented from
seeking any other remedies which may be available.
(g) The
provisions of this Section 6 shall survive any termination of this
Agreement.
7. Representations
and Warranties.
(a) The
Executive hereby represents and warrants to the Company as follows:
(i) Neither
the execution or delivery of this Agreement nor the performance by the Executive
of his duties and other obligations hereunder violate or will violate any
statute, law, determination or award, or conflict with or constitute a default
or breach of any covenant or obligation under (whether immediately, upon the
giving of notice or lapse of time or both) any prior employment agreement,
contract, or other instrument to which the Executive is a party or by which
he
is bound;
and
(ii) The
Executive has the full right, power and legal capacity to enter and deliver
this
Agreement and to perform his duties and other obligations hereunder. This
Agreement constitutes the legal, valid and binding obligation of the Executive
enforceable against him in accordance with its terms. No approvals or consents
of any persons or entities are required for the Executive to execute and deliver
this Agreement or perform his duties and other obligations
hereunder.
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(b) The
Company hereby represents and warrants to the Executive that this Agreement,
the
employment of the Executive hereunder and the grant of the Options have been
duly authorized by and on behalf of the Company, including, without limitation,
by all required action by the Board.
8. Termination.
The Executive’s employment hereunder shall be terminated upon the Executive’s
death and may also be terminated as follows:
(a) The
Executive’s employment hereunder may be terminated by written notice to the
Executive from the Chief Executive Officer or the Board for Cause, effective
the
date of delivery of such notice. Any of the following actions by the Executive
shall constitute “Cause”:
(i) The
willful and repeated failure, disregard or refusal by the Executive to perform
his duties hereunder;
(ii) Any
willful, intentional or grossly negligent act by the Executive having the effect
of injuring, in a material way (whether financial or otherwise), the business
or
reputation of the Company or any of its affiliates, including but not limited
to, any officer, director, executive or shareholder of the Company or any of
its
affiliates;
(iii) Willful
misconduct by the Executive
in
respect of the duties or obligations of the Executive under this
Agreement,
including, without limitation, insubordination with respect to directions
received by the Executive from the Chief
Executive Officer, unless such direction was contrary to directions given by
the
Board;
(iv) The
Executive’s conviction of any felony or a misdemeanor involving moral turpitude
(including entry of a nolo contendere plea);
(v) The
determination by the Company based upon clear and convincing evidence, after
a
reasonable and good-faith investigation by the Company following a written
allegation by another employee of the Company, that the Executive engaged in
material harassment prohibited
by law
(including, without limitation, age, sex or race discrimination);
(vi) Any
misappropriation or embezzlement of the property of the Company or its
affiliates (whether or not a misdemeanor or felony);
(vii) A
breach
by the Executive of any of the provisions of Sections
5
or
6
hereof;
or
(viii) A
material breach by the Executive of any material provision of this Agreement
(other than those contained in Sections
5
or
6 hereof,
which are governed by clause (viii) above) that is not cured by the Executive
within 30 days after written notice thereof is given to the Executive by the
Company.
Any
determination of Cause under this Section 8(a) will be made by the Board. With
respect to any such determination, the Board will act fairly and in utmost
good
faith and will give the Executive and his counsel an opportunity to appear
and
be heard at a meeting with the Board and present evidence on the Executive’s
behalf.
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(b) The
Executive’s employment hereunder may be terminated by the Chief Executive
Officer as a result of the Executive’s Disability. For purposes of this
Agreement, a termination for “Disability”
shall
occur (i) when the Chief Executive Officer has provided a written termination
notice to the Executive supported by a written statement from a reputable
independent physician to the effect that the Executive shall have become so
physically or mentally incapacitated as to be unable to resume, within the
ensuing 6 months, his employment hereunder by reason of physical or mental
illness or injury, or (ii) upon delivery of a written termination notice to
the
Executive by the Chief Executive Officer after the Executive has been unable
to
substantially perform his duties hereunder for 60 or more consecutive days,
or
more than 90 days in any consecutive 12 month period, by reason of any physical
or mental illness or injury. For purposes of this Section 8(b), the Executive
agrees to make himself available and to cooperate in any reasonable examination
by a reputable independent physician selected by the Company and reasonably
satisfactory to the Executive.
(c) The
Executive’s employment hereunder may be terminated by the Company (or an entity
that is a successor to the Company) by written notice to the Executive upon
the
occurrence of a Change of Control. For purposes of this Agreement, “Change
of Control”
means
(i) the acquisition, directly or indirectly, following the date hereof by any
person (as such term is defined in Section 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended), in one transaction or a series of related
transactions, of securities of the Company representing in excess of fifty
percent (50%) of the combined voting power of the Company’s then outstanding
securities if such person or his or its affiliate(s) do not own in excess of
50%
of such voting power on the date of this Agreement, or (ii) the sale or transfer
by the Company (whether direct or indirect, by sale of assets or stock, merger,
consolidation or otherwise) of all or substantially all of its business and/or
assets in one transaction or series of related transactions (other than a merger
effected exclusively for the purpose of changing the domicile of the
Company).
(d) The
Executive’s employment hereunder may be terminated by the Executive by written
notice to the Company for Good Reason, effective the date of delivery of such
notice. For purposes of this Agreement, “Good
Reason”
shall
mean the occurrence of any of the following:
(i) A
material breach by the Company of Xxxxxxx 0, Xxxxxxx 0(x) xx Xxxxxxx 0x) of
this
Agreement which is not cured by the Company within 30 days after written notice
thereof is given to the Company by the Executive;
(ii) A
change
in the lines of reporting such that the Executive no longer reports to either
the Chief Executive Officer or to the Board;
(iii) A
reduction in the Executive’s compensation or other benefits except such a
reduction in connection with a general reduction in compensation or other
benefits of all senior executives of the Company; or
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(e) The
Executive’s employment may be terminated by the Company for any reason or no
reason by delivery of written notice to the Executive effective thirty (30)
days
after the date of delivery of such notice.
(f) The
Executive’s employment may be terminated by the Executive in the absence of a
Good Reason by delivery of written notice to the Company effective thirty (30)
days after the date of delivery of such notice.
9. Compensation
Following Termination.
(a) If
the
Executive’s employment is terminated during the Term as a result of his death or
Disability, the Company shall promptly pay to the Executive or to the
Executive’s
estate, as applicable, his
then
current Base Salary and any accrued but unpaid Discretionary Bonus, the value
of
his accrued unused vacation days and expense reimbursement amounts through
the
date of death or Disability. Any portion of the Options that are
scheduled to vest by the end of the calendar year in which such termination
occurs shall be accelerated and vested as of the termination date. All Options
that have
not
vested
(or been
vested pursuant to the immediately preceding sentence to have
vested)
as of
the date of termination shall be deemed to have expired as of such date.
(b) If
the
Executive’s employment is terminated during the Term (i) by the Company for
Cause or (ii) by the Executive in the absence of a Good Reason, the Company
shall continue paying to the Executive through the date of termination his
then
current Base Salary, the value of his accrued unused vacation days and expense
reimbursement amounts (collectively, the “Accrued
Compensation”),
and
the Executive shall have no further entitlement to any other compensation or
benefits from the Company. Any portion of
the
Options that
have
not
vested as
of the
date of termination shall be deemed to have expired as of such date. Any
portion of Options
that have vested as of the date of termination shall remain exercisable for
a
period of 90 days following the date of such termination.
(c) If
the
Executive’s employment is terminated during the Term by the Company (or its
successor) upon the occurrence of a Change of Control and on the date of
termination pursuant to this Section 9(c) the Fair Market Value (as defined
herein) of the Company’s outstanding Common Stock, in the aggregate, is less
than $80,000,000, then the Company (or its successor, as applicable) shall
(i)
pay the Executive the Accrued Compensation through the date of such termination
and (ii) continue to pay to the Executive his then current annualized Base
Salary and provide him with the Fringe Benefits for a period of six months
following the date of such termination. All Options that are
scheduled to vest by the end of the calendar year in which such termination
occurs shall be accelerated and deemed to have vested as of the termination
date. Any Options that have vested (or been deemed pursuant to the immediately
preceding sentence to have vested) as
of the
date of the Executive’s termination shall remain exercisable for a period of 90
days following the date of such termination. All Options that have
not
vested
(or been
deemed pursuant to the immediately preceding sentence to have
vested)
as of
the date of termination shall be deemed to have expired as of such date. “Fair
Market Value” shall mean the average closing sale price of the Common Stock for
the ten (10) business days preceding the Change of Control, as quoted on a
national securities exchange, the Nasdaq Stock Market or the Over-the-Counter
Bulletin Board, as applicable, or if the Common Stock is not then traded or
quoted on any such stock exchange or stock market, then such price as determined
in good faith by the Board on the date of such Change of Control.
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(d) If
the
Executive’s employment is terminated during the Term either (1) by the Company
other than as a result of the Executive’s death or Disability and other than for
one of the reasons specified in Sections 9(a), 9(b) or 9(c), or (2) by the
Executive for a Good Reason, then the Company shall (i) pay the Executive the
Accrued Compensation through the date of such termination, and (ii) continue
to
pay to the Executive his then current annualized Base Salary and provide him
with the Fringe Benefits for a period of six (6) months following the date
of
such termination. The Company’s obligation under clause (ii) in the preceding
sentence shall be subject to offset by any amounts otherwise received by the
Executive from any employment during the 6-month period following the
termination of his employment. All Options shall
be
accelerated and deemed to have vested as of the termination date. Any
Options that have vested (or been deemed pursuant to the immediately preceding
sentence to have vested) as
of the
date of the Executive’s termination shall remain exercisable for a period of 90
days following the date of such termination.
(e) This
Section 9 sets forth the only obligations of the Company with respect to the
termination of the Executive’s employment with the Company, and the Executive
acknowledges that, upon the termination of his employment, he shall not be
entitled to any payments or benefits which are not explicitly provided in this
Section 9.
(f) Unless
otherwise expressly agreed to in writing by the Company and Executive, upon
termination of the Executive’s employment with the Company for any reason, the
Executive shall be deemed to have resigned as an officer of the Company and,
if
applicable, as a director and officer of any subsidiary of the Company,
effective as of the date of such termination.
(g) Notwithstanding
anything to the contrary contained in this Section 9, other than the Accrued
Compensation, the Company shall have no obligation to pay, and Executive shall
have no obligation to receive, any compensation or other consideration
(including without limitation the acceleration of any unvested Options) upon
termination of Executive’s employment unless Executive executes a separate
agreement releasing the Company from any and all liability in connection with
the termination of Executive’s employment.
(h) The
provisions of this Section 9 shall survive any termination of this
Agreement.
10. Miscellaneous.
(a) This
Agreement shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New York, without giving effect to its principles
of conflicts of laws.
(b) Any
dispute arising out of, or relating to, this Agreement or the breach thereof
(other than Sections 5 or 6 hereof), or regarding the interpretation thereof,
shall be finally settled by arbitration conducted in New York, New York in
accordance with the commercial arbitration rules of the American Arbitration
Association then in effect before a single arbitrator appointed in accordance
with such rules. Judgment upon any award rendered therein may be entered and
enforcement obtained thereon in any court having jurisdiction. The arbitrator
shall have authority to grant any form of appropriate relief, whether legal
or
equitable in nature, including specific performance. For the purpose of any
judicial proceeding to enforce such award or incidental to such arbitration
or
to compel arbitration and for purposes of Sections 5 and 6 hereof, the parties
hereby submit to the exclusive jurisdiction of the courts of the State of New
York or the United States District Court for the Southern District of New York
and agree that service of process in such arbitration or court proceedings
shall
be satisfactorily made upon it if sent by registered mail addressed to it at
the
address referred to in paragraph (g) below. The
costs
of such arbitration shall be borne proportionate to the finding of fault as
determined by the arbitrator. Judgment on the arbitration award may be entered
by any court of competent jurisdiction.
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(c) This
Agreement shall be binding upon and inure to the benefit of the parties hereto,
and their respective heirs, legal representatives, successors and permitted
assigns.
(d) This
Agreement, and the Executive’s rights and obligations hereunder, may not be
assigned by the Executive. The Company may assign its rights, together with
its
obligations, hereunder in connection with any sale, transfer or other
disposition of all or substantially all of its business or assets.
(e) This
Agreement cannot be amended orally, or by any course of conduct or dealing,
but
only by a written agreement signed by the parties hereto.
(f) The
failure of either party to insist upon the strict performance of any of the
terms, conditions and provisions of this Agreement shall not be construed as
a
waiver or relinquishment of future compliance therewith, and such terms,
conditions and provisions shall remain in full force and effect. No waiver
of
any term or condition of this Agreement on the part of either party shall be
effective for any purpose whatsoever unless such waiver is in writing and signed
by such party.
(g) All
notices, requests, consents and other communications, required or permitted
to
be given hereunder, shall be in writing and shall be delivered personally or
by
an overnight courier service or sent by registered or certified mail, postage
prepaid, return receipt requested, to the parties at the addresses set forth
on
the first page of this Agreement, and shall be deemed given when so delivered
personally or by overnight courier, or, if mailed, five days after the date
of
deposit in the United States mail. Either party may designate another address,
for receipt of notices hereunder by giving notice to the other party in
accordance with this paragraph (g).
(h) This
Agreement, together with the stock option agreements evidencing the Options,
sets forth the entire agreement and understanding of the parties relating to
the
subject matter hereof, and supersedes all prior agreements, arrangements and
understandings, written or oral, relating to the subject matter hereof. No
representation, promise or inducement has been made by either party that is
not
embodied in this Agreement, and neither party shall be bound by or liable for
any alleged representation, promise or inducement not so set forth.
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(i) As
used
in this Agreement, “affiliate” of a specified Person shall mean and include any
Person controlling, controlled by or under common control with the specified
Person.
(j) The
section headings contained herein are for reference purposes only and shall
not
in any way affect the meaning or interpretation of this Agreement.
(k) This
Agreement may be executed in any number of counterparts, each of which shall
constitute an original, but all of which together shall constitute one and
the
same instrument.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as an
instrument under seal as of the date first above written.
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MANHATTAN
PHARMACEUTICALS, INC..
By:
/s/
Xxxxxxx
Xxxx
Name:
Xxxxxxx Xxxx
Title:
President & Chief Executive Officer
EXECUTIVE
/s/
Xxxxxxx X.
XxXxxxxxxx
Xxxxxxx
X. XxXxxxxxxx
|
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