Exhibit 10.37
AMENDED AND RESTATED
SEVERANCE AGREEMENT
This Amended and Restated Severance Agreement is made as of the 7th day
of May 2004, between Enzon Pharmaceuticals, Inc., a Delaware corporation, with
offices in Bridgewater, New Jersey (the "Company"), and XXXXX DEL XXXXX
("Executive"), a resident of New Jersey.
BACKGROUND
A. The Company and Executive previously entered into a Severance
Agreement dated 12/27/03 (the "Previous Agreement"). The parties hereto desire
that this Amended and Restated Severance Agreement (this "Agreement") supercede
the Previous Agreement.
B. This Agreement is intended to specify the financial arrangements
that the Company will provide to the Executive upon Executive's separation from
employment with the Company under any of the circumstances described herein.
C. Executive is employed by the Company in the capacity of S.V.P.,
OPERATIONS, and, as such, is a key executive of the Company.
D. This Agreement is entered into by the Company in the belief that it
is in the best interests of the Company and its shareholders to provide stable
conditions of employment for Executive notwithstanding the possibility, threat
or occurrence of certain types of change in control, thereby enhancing the
Company's ability to attract and retain highly qualified people.
E. The Company believes that it is important that it receive certain
assurances with respect to its Confidential Information, proprietary
information, intellectual property, trade secrets and Executive's work product,
and that the Company receive certain protections with respect to Executive's
activities following termination of Executive's employment, and the Company is
willing to offer Executive the compensation, bonuses and other benefits set
forth in this Agreement in order to obtain such assurances and protections.
TERMS
To assure the Company that it will have the continued dedication of
Executive notwithstanding the possibility, threat or occurrence of a bid to take
over control of the Company, and to induce Executive to remain in the employ of
the Company, in consideration of the foregoing premises and for other good and
valuable consideration, the Company and Executive agree as follows:
1. Term of Agreement. The term of this Agreement ("Term") shall
commence on the date hereof as first written above and shall continue through
December 31, 2004; provided that commencing on January 1, 2005 and each January
1 thereafter, the term of this Agreement shall automatically be extended for one
additional year unless not later than September 30 of the preceding year, the
Company shall have given notice that it does not wish to extend this Agreement;
and provided, further, that notwithstanding any such notice by the Company not
to extend, in the event that there occurs, during the Term, a Change in Control,
as defined in Section 6(c) hereof, this Agreement shall continue in effect for a
period of 12 months beyond the date of such Change in Control.
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2. Severance upon Termination without Cause or Termination by Executive
for Good Reason in Connection with Change in Control. Subject to the limitation
set forth in Section 3 hereof, in the event the Company terminates Executive's
employment without Cause, or in the event of a Termination by Executive for Good
Reason, and either such termination occurs within the period which commences
ninety (90) days before and ends one (1) year following a Change in Control:
(a) Executive shall receive his or her Base Salary through the
date of termination;
(b) Executive shall receive a pro rated portion of the Target
Bonus (based on the Base Salary at the time of such termination) which
would have been payable to Executive for the fiscal year during which
such termination occurs;
(c) in the event of a Change in Control defined in Section
7(c)(i)-(vi), Executive shall receive cash payments equal to ONE AND
ONE-HALF (1 1/2) TIMES the sum of the following: (i) his or her Base
Salary at the time of such termination and (ii) the Target Bonus (based
on the Base Salary immediately prior to such termination) for the
fiscal year in which such termination occurs;
(d) in the event of a Change in Control defined in Section
7(c)(vii), Executive shall receive cash payments equal to THREE-FOURTHS
(3/4) times the sum of the following: (i) his or her Base Salary at the
time of such termination and (ii) the Target Bonus (based on the Base
Salary immediately prior to such termination) for the fiscal year in
which such termination occurs;
(d) Executive shall continue to be entitled to any deferred
compensation and other unpaid amounts and benefits earned and vested
prior to Executive's termination;
(e) if Executive and Executive's Family Members have medical
and dental coverage on the date of such tennination under a group
health plan sponsored by the Company, the Company will reimburse
Executive for the total applicable premium cost for medical and dental
coverage under COBRA for Executive and Executive's Family Members for a
period of up to EIGHTEEN (18) MONTHS in the case of a Change in Control
defined in Section 7(c)(i)-(vi), or NINE (9) MONTHS in the case of a
Change in Control defined in Section 7(c)(vii), commencing on the date
of such termination; provided, that the Company shall have no
obligation to reimburse Executive for the premium cost of COBRA
coverage as of the date Executive and Executive's Family Members become
eligible to obtain comparable benefits from a subsequent employer;
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(f) the Company shall provide Executive outplacement
assistance, as determined by the Company in its discretion.
3. Effect of Change in Control. In the event of a Change of Control
(other than that described in Section 7(c)(vii) hereof), in addition to any
other consequences provided for in this Agreement,
(a) all options to acquire shares of the Company held by the
Executive shall become fully vested immediately prior to the effective
date of the Change in Control. Executive shall have a reasonable
opportunity to exercise all or any portion of such options prior to the
effective date of the Change in Control, and any options not exercised
prior to the effective date of the Change in Control shall terminate as
of the effective date of the Change in Control and will be of no
further force or effect. To the extent that this section 3(a) is
inconsistent with the provisions of the relevant plan and granting
instruments under which such options were issued, the Company and
Executive agree that such inconsistent provisions are hereby superceded
and the provisions of this Section 3(a) shall govern; and
(b) all shares of restricted stock and/or restricted stock
units awarded to Executive shall fully vest immediately prior to the
Change in Control.
4. Limitation. Notwithstanding anything stated in this Agreement to the
contrary, if the amounts that are payable and the benefits that are provided to
Executive under this Agreement either alone or together with other payments that
Executive has a right to receive from the Company or any of its affiliates (the
"Combined Amounts"), would constitute a "parachute payment" (as defined in Code
Section 280G or any successor provision), the Combined Amounts shall be reduced,
as necessary, to the largest amount as will result in no portion of the Combined
Amounts being either not deductible as a result of Code Section 280G (or any
successor provision) or subject to the excise tax imposed by Code Section 4999
(or any successor provision). The determination of any reduction in said amounts
and benefits pursuant to the foregoing provision shall be made by the Company in
good faith, and such determination shall be conclusive and binding on Executive;
provided, however, that notwithstanding the foregoing, the Company shall notify
Executive, as soon as possible after the date of Executive's termination of
employment (but in no event later than twenty (20) days prior to the payment
date of the sums due under Section 2) of the value attributed by the Company to
the continuation of health benefits (or payments related thereto) and the value
attributed by the Company to the acceleration (if any) of the vesting of options
and/or restricted stock and/or restricted stock units, and Executive shall have
the option to decline such benefits or the acceleration of the vesting of such
options and/or restricted stock and/or restricted stock units in a notice to the
Company given no later than ten (10) days prior to such payment date. If the
Combined Amounts (after having accounted for the reduction by the Company
described in the immediately preceding sentence) shall be disallowed in whole or
part as a deductible expense in determining the income tax liability of the
Company, Executive shall reimburse the company to the full extent of such
disallowance. The Company's Board of Directors shall enforce this obligation to
reimburse the Company immediately following such disallowance. The amounts
provided to Executive under this Agreement in connection with a Change in
Control, if any, shall be deemed allocated to such amounts and/or benefits to be
paid and/or provided as the Company's Board of Directors in its sole discretion
shall determine.
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5. Time of Payments. All payments made to Executive under any of the
subsections of Section 2 which are based upon Executive's salary or bonus shall
be made at times and in a manner which is in accordance with the Company's
standard payroll practices for senior management; provided that any such
payments will be paid to Executive on or before the second anniversary of the
termination of Executive's employment.
6. Release. Notwithstanding anything else herein to the contrary,
Executive shall not be entitled to realize or receive any termination related
benefits provided for under this Agreement, including, without limitation, all
post-termination payments and the acceleration of option or restricted stock or
restricted stock unit vesting schedules, unless Executive shall have executed
and delivered to the Company a full release (reasonably satisfactory to the
Company's counsel) of all claims against the Company and its affiliates,
successors and assigns.
7. Definitions.
(a) "Base Salary" means Executive's annual base salary as
established by the Board of Directors of the Company ("Board") or the
Compensation Committee from time to time.
(b) "Cause" means:
(i) the willful engaging by Executive in illegal
conduct or gross misconduct which is demonstrably and
materially injurious to the Company; or
(ii) Executive's refusal or inability to perform the
duties of his or her position as an executive employed by the
Company, which refusal or inability is demonstrably and
materially injurious to the Company; or
(iii) Executive's breach of his or her obligations
under this Agreement or any employment agreement between the
Company and Executive, which breach is demonstrably and
materially injurious to the Company; or
(iv) Executive's failure, where applicable, to
maintain Executive's immigration status with the U.S.
Immigration and Naturalization Service or the Executive's
failure to maintain valid employment authorization to provide
services to the Company.
For purposes of this Section 6(b), no act or failure
to act on Executive's part shall be deemed "willful" unless
done, or omitted to be done, by Executive not in good faith
and without reasonable belief that Executive's action of
omission was in the best interest of the Company.
Notwithstanding the foregoing, with respect to the definitions
of Cause set forth in clauses (i)-(iii) above, Executive shall
not be deemed to have been terminated for Cause unless and
until the Company delivers to Executive a notice of such
termination for Cause. Such notice shall be in writing,
addressed to Executive, labeled "Personal and Confidential,"
and sent to the address for Executive set forth in Section
7(i) hereof. Any such notice shall describe, with
particularity, the conduct of Executive forming the basis for
such termination of employment. Any such notices shall become
effective on the 30th day following delivery thereof to
Executive if Executive has not cured the conduct identified in
such notice to the satisfaction of the Company, provided,
however, that the Company may elect to make such termination
effective immediately, in which case Executive's employment
shall terminate immediately upon delivery of the notice of
termination, but the Company shall continue to pay Executive
his or her salary during such 30-day period and the last day
of such 30-day period shall be deemed to be the date of
termination of his or her employment for purposes of any pro
rata calculations and determination of post-termination
periods under this agreement.
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(c) "Change in Control" means the following:
(i) "Board Change" which, for purposes of this
Agreement, shall have occurred if, over any twenty-four month
period, a majority of the seats (other than vacant seats) on
the Company's Board were to be occupied by individuals who
were neither (A) nominated by at least one-half (1/2) of the
directors then in office (but excluding, for purposes of
determining directors then in office, any director whose
initial assumption of office occurs as a result of either an
actual or threatened election contest, or other actual or
threatened solicitation of proxies or consents by or on behalf
of a Person (as defined herein) other than the Company or its
board of directors); nor (B) appointed by directors so
nominated, or
(ii) the acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934 (the "Exchange Act"), (a
"Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of a majority of the
then outstanding voting securities of the Company; provided,
however, that the following acquisitions shall not constitute
a Change of Control: (1) any acquisition by the Company, or
(2) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (3) any public
offering or private placement by the Company of its voting
securities; or
(iii) a consolidation of the Company with another
entity, or a merger of the Company with another entity in
which neither the Company nor a corporation that, prior to the
merger, was a subsidiary of the Company shall be the surviving
entity; or
(iv) a merger of the Company following which either
the Company or a corporation that, prior to the merger, was a
subsidiary of the Company shall be the surviving entity and a
majority of the then outstanding voting securities of the
Company is beneficially owned (within the meaning of
beneficial owner, as specified below) by a Person or Persons
who were not "beneficial owners," as defined in Rule l3d-3 of
the Exchange Act, of a majority of the Outstanding Company
Voting Securities immediately prior to such merger; or
(v) a voluntary or involuntary liquidation of the
Company;
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(vi) a sale or disposition by the Company of at least
80% of its assets in a single transaction or a series of
transactions (other than a sale or disposition of assets to a
subsidiary of the Company in a transaction not otherwise
involving a Change in Control or a change in control of such
subsidiary); or
(vii) anytime prior to December 31, 2005 someone
other than the person who is the Chief Executive Officer of
the Company as of the date hereof becomes the Company's chief
executive.
Transactions in which the Executive is part of the
acquiring group do not constitute a Change in Control.
(d) "Good Reason" means:
(i) any material adverse change in Executive's status
or position as an officer of the Company, including, without
limitation, any diminution in Executive's duties,
responsibilities or authority as of the Effective Date or the
assignment to Executive of any duties or responsibilities that
are inconsistent with Executive's status or position;
provided, however, that none of the foregoing shall be deemed
to have occurred by virtue of a change in Executive's
reporting relationship with respect to the Company's CEO as
long as Executive remains the Company's most senior Operations
executive;
(ii) a reduction in Executive's Base Salary or Target
Bonus; or
(iii) the relocation of the Company's principal
executive offices to a location more than thirty-five (35)
miles from the location of such offices (other than a
relocation that results in the location of the offices in
closer proximity to Executive's residence) or the Company
requiring Executive to be based anywhere other than the
Company's principal executive offices, except for required
travel substantially consistent with Executive's business
obligations; provided that
(iv) prior to Executive being permitted to terminate
his employment for Good Reason hereunder, the Company shall
have failed to cure any alleged condition described in
subparagraphs (i) - (iii) above within the "Cure Period"
(defined below). For purposes of this Paragraph 7(d), the term
"Cure Period" means the period commencing on the date of
receipt of Executive's notice referred to in the preceding
sentence and ending on the earlier of (A) sixty (60) days
thereafter or (B) two weeks prior to the first anniversary of
the relevant Change in Control.
(e) "Target Bonus" means the performance based cash bonus as
determined under the Company's bonus plan for management (and any
successor bonus plan covering management). The amount of Executive's
annual Target Bonus is determined by the Board in its discretion
following consultation between the Chief Executive Officer and
Executive prior to, or within sixty (60) days after the commencement
of, each fiscal year.
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8. Miscellaneous.
(a) No Funding of Severance. Nothing contained in this
Agreement or otherwise shall require the Company to segregate, earmark
or otherwise set aside any funds or other assets to provide for any
payments required to be made under Section 2 hereof, and the rights of
Executive to any benefits hereunder shall be solely those of a general,
unsecured creditor of the Company.
(b) Beneficiaries. In the event of Executive's death, any
amount or benefit payable or distributable to Executive pursuant to
this Agreement shall be paid to the beneficiary designated by Executive
for such purpose in the last written instrument received by the Company
prior to Executive's death, if any, or, if no beneficiary has been
designated, to Executive's estate, but such designation shall not be
deemed to supersede any beneficiary designation under any benefit plan
of the Company.
(c) Entire Agreement. This Agreement contains the entire
understanding between the parties hereto with respect to the subject
matter hereof and supersedes any prior understandings, agreements or
representations, written or oral, relating to the subject matter
hereof.
(d) Counterparts. This Agreement may be executed in separate
counterparts, each of which will be an original and all of which taken
together shall constitute one and the same agreement, and any party
hereto may execute this Agreement by signing any such counterpart.
(e) Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and
valid under applicable law but if any provision of this Agreement is
held to be invalid, illegal or unenforceable under any applicable law
or rule, the validity, legality and enforceability of the other
provision of this Agreement will not be affected or impaired thereby.
(f) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives and, to the extent permitted
by Section 7(g), successors and assigns. The Company will require its
successors to expressly assume its obligations under this Agreement.
(g) Assignability. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof
shall be assignable (including by operation of law) by either party
without the prior written consent of the other party to this Agreement.
(h) Modification, Amendment, Waiver or Termination. No
provision of this Agreement may be modified, amended, waived or
terminated except by an instrument in writing signed by the parties to
this Agreement. No course of dealing between the parties will modify,
amend, waive or terminate any provision of this Agreement or any rights
or obligations of any party under or by reason of this Agreement. No
delay on the part of the Company in exercising any right hereunder
shall operate as a waiver of such right. No waiver, express or implied,
by the Company of any right or any breach by Executive shall constitute
a waiver of any other right or breach by Executive.
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(i) Notices. All notices, consents, requests, instructions,
approvals or other communications provided for herein shall be in
writing and delivered by personal delivery, overnight courier, mail,
electronic facsimile or e-mail addressed to the receiving party at the
address set forth herein. All such communications shall be effective
when received.
Address for the Executive:
Xxxxx del Xxxxx
000 Xxxxx 000/000
Xxxxxxxxxxx, XX 00000
Address for the Company:
Enzon Pharmaceuticals, Inc.
000 Xxxxx 000/000
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Vice President, Human Resources
Any party may change the address set forth above by notice to
each other party given as provided herein.
(j) Headings. The headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
(k) Governing Law. ALL MATTERS RELATING TO THE INTERPRETATION,
CONSTRUCTION, VALIDITY AND ENFORCEMENT OF THIS AGREEMENT SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW JERSEY, WITHOUT
GIVING EFFECT TO ANY CHOICE OF LAW PROVISIONS THEREOF.
(l) Arbitration. Any claim or controversy arising out of or
relating to this Agreement or the breach hereof shall be settled by
arbitration in accordance with the laws of the State of New Jersey.
Such arbitration shall be conducted in the State of New Jersey in
accordance with the rules then existing of the American Arbitration
Association. Judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. In the event of any
dispute arising under this Agreement, the respective parties shall be
responsible for the payment of their own legal fees and disbursements.
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(m) Third-Party Benefit. Nothing in this Agreement, express or
implied, is intended to confer upon any third party any rights,
remedies, obligations or liabilities of any nature whatsoever.
(n) Withholding Taxes. The Company may withhold from any
benefits payable under this Agreement or any other agreement all
federal, state, city or other taxes as shall be required pursuant to
any law or governmental regulation or ruling. Executive hereby agrees
to indemnify and hold harmless the Company should the Company fail to
withhold tax from any such payment from which tax is required to be
withheld.
(o) No Right to Continued Employment. Executive understands
that this Severance Agreement is not an employment contract and nothing
contained herein creates any right to continuous employment with the
Company, or to employment by the Company for any specified period of
time.
(p) Termination of Previous Agreement. The Previous Agreement
is hereby terminated and of no further force or effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first set forth above.
ENZON PHARMACEUTICALS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxx,
President and Chief Executive Officer
/s/ Xxxxx del Xxxxx
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Xxxxx del Campo
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