UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
__________________
FORM
8-K
Current
Report
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
__________________
Date of
Report (Date of earliest event reported):
July
16, 2008
BIOSANTE
PHARMACEUTICALS, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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001-31812
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58-2301143
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(State
or Other Jurisdiction of Incorporation)
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(Commission
File Number)
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(I.R.S.
Employer Identification Number)
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111
Barclay Boulevard
Lincolnshire,
Illinois
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60069
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(847)
478-0500
(Registrant’s
Telephone Number, Including Area Code)
N/A
(Former
Name or Former Address, If Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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£
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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£
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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£
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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£
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Section
5 – Corporate Governance and Management
Item
5.02. Departure of Directors or Certain
Officers; Election of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
(e) On
July 16, 2008, BioSante Pharmaceuticals, Inc. entered into amended and restated
employment letter agreements with each of Stephen M. Simes, BioSante’s Vice
Chairman, President and Chief Executive Officer, and Phillip B. Donenberg,
BioSante’s Chief Financial Officer, Treasurer and Secretary. The
amended and restated agreements replace in their entirety the prior agreements
which were entered into over 10 years ago when Messrs. Simes and Donenberg were
first hired as executives of BioSante. The amended and restated
agreements were entered into in part to ensure compliance with recently issued
regulations on non-qualified deferred compensation severance benefits as
mandated by Section 409A of the Internal Revenue Code of 1986, as amended, to
change the trigger for benefits in the event of a change in control from an
atypical modified single trigger to a more standard modified single trigger and
to make certain other changes to the agreements, including the amounts to be
paid upon a termination in connection with a change in control.
The
material terms of the amended and restated employment letter agreements
include:
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·
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A
continued “evergreen” term of up to three years for Mr.
Simes.
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·
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An
annual base salary for each executive, which remains unchanged from the
executive’s annual base salary for 2008 as set in January 2008 by
BioSante’s Board of Directors, upon recommendation of the Compensation
Committee, which base salary must increase each year by at least a minimum
rate consistent with any increase in the Consumer Price
Index.
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·
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Continued
eligibility for each executive to receive an annual performance bonus, the
amount and terms of payment of which will be determined by the Board of
Directors of BioSante.
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·
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If
the executive’s employment with BioSante is terminated without “cause” or
if the executive resigns for “good reason” (as those terms are defined in
the agreements), other than as a result of a “change of control” (as
defined in the agreements), or in the case of Mr. Simes, if his agreement
is not renewed each year, the executive will receive (i) a payment equal
to, in the case of Mr. Simes, the sum of his annual base salary as in
effect at the time of termination, his most recent annual bonus and his
annual car allowance, and in the case of Mr. Donenberg his annual base
salary, as in effect at the time of termination; (ii) substantially the
same health, dental, life insurance and disability benefits the executive
received prior to his termination for a period of up to 36 months, in the
case of Mr. Simes, and 12 months in the case of Mr. Donenberg; (iii) for
Mr. Simes, outplacement services of up to $30,000 and the use of an office
and reasonable secretarial support, in each case for up to one
year.
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·
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If
the executive’s employment with BioSante is terminated other than for
cause, if the executive terminates his employment for good reason or if
the executive terminates his employment for any reason during the 13th
month after a change in control, or in the case of Mr. Simes, if his
agreement is not renewed, in each case in connection with a change in
control, the executive will receive (i) a payment equal to, in the case of
Mr. Simes, the sum of: (aa) two times his annual base salary, plus (bb)
his most recent annual bonus, plus (cc) his maximum annual bonus (100% of
base salary) for the year in which the change in control occurs, and in
the case of Mr. Donenberg, the sum of 1½ times his annual base salary,
plus his maximum annual bonus (100% of base salary) for the year in which
the change in control occurs; (ii) substantially the same health, dental,
life insurance and disability benefits the executive received prior to his
termination for a period of up to 24 months for Mr. Simes and 18 months in
the case of Mr. Donenberg and (iii) outplacement services of up to
$30,000.
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·
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If
the executive’s employment with BioSante is terminated other than for
cause, or if in the case of Mr. Simes his agreement is not renewed, the
executive’s outstanding unvested stock options will become immediately
vested and exercisable in full and the time period within which the
executive will have to exercise the options will be one year from the date
of termination.
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·
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An
agreement by the executive not to compete with the Company, in each case
during the term of his employment with the Company, and if he is
terminated for cause or if he terminates his employment other than for
good reason, for one year
thereafter.
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Attached
as Exhibits 10.1 and 10.2 to this report are copies of the amended and restated
letter agreements with Simes and Donenberg, which are incorporated into this
report by this reference.
Section
9 – Financial Statements and Exhibits
Item
9.01. Financial Statements and Exhibits.
(c) Exhibits.
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Exhibit
No.
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Description
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10.1
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Amended
and Restated Employment Letter Agreement dated July 16, 2008 between
BioSante Pharmaceuticals, Inc. and Stephen M. Simes
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10.2
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Amended
and Restated Employment Letter Agreement dated July 16, 2008 between
BioSante Pharmaceuticals, Inc. and Phillip B.
Donenberg
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
BIOSANTE
PHARMACEUTICALS, INC.
By: /s/ Louis W.
Sullivan, M.D.
Louis W.
Sullivan, M.D.
Chairman
of the Board
Dated: July 16,
2008
BIOSANTE
PHARMACEUTICALS, INC.
FORM
8-K
Exhibit
Index
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Exhibit
No.
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Description
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Method
of Filing
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10.1
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Amended
and Restated Employment Letter Agreement dated July 16, 2008 between
BioSante Pharmaceuticals, Inc. and Stephen M. Simes
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Filed
herewith
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10.2
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Amended
and Restated Employment Letter Agreement dated July 16, 2008 between
BioSante Pharmaceuticals, Inc. and Phillip B. Donenberg
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Filed
herewith
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AMENDED
AND RESTATED EMPLOYMENT LETTER AGREEMENT
July 16,
2008
Mr.
Stephen M. Simes
ADDRESS
INTENTIONALLY OMMITTED
Dear
Stephen:
This
letter agreement (this “Agreement”) will amend and replace that certain
employment letter agreement between you and BioSante Pharmaceuticals, Inc.
(formerly known as Ben-Abraham Technologies, Inc.) (the “Company”) dated January
21, 1998, as amended through the date hereof.
The Board
of Directors of the Company considers the establishment and maintenance of a
sound and vital management team of the Company to be essential in protecting and
enhancing the best interests of the Company and its stockholders, and in this
connection recognizes that the possibility of a Change in Control may raise
uncertainty and questions that could result in the departure or distraction of
management personnel to the detriment of the Company and its
stockholders. The Board has determined that appropriate steps should
be taken to minimize the risk that Company executive management will depart
prior to a Change in Control, thereby leaving the Company without adequate
executive management personnel during such a critical period, and to reinforce
and encourage the continued attention and dedication of members of the Company’s
executive management to their assigned duties without distraction in
circumstances arising from the possibility of a Change in
Control. The Board recognizes that continuance of your position with
the Company involves a substantial commitment to the Company in terms of your
personal life and professional career and the possibility of foregoing present
and future career opportunities, for which the Company receives substantial
benefits. To induce you to remain in the employ of the Company, this
Agreement, which has been approved by the Board of Directors of the Company,
sets forth, among other things, the benefits that the Company agrees will be
provided to you in the event of a Change in Control under the circumstances
described below.
It is
intended that the payments and benefits provided under this Agreement will
comply, in form and operation, with the requirements of Section 409A of the Code
or an appropriate exception to the requirements of Section 409A and this
Agreement will be construed and administered in a manner that is consistent with
and gives effect to such intention.
Certain
capitalized terms that are used in this Agreement are defined in Exhibit A,
which is an integral part of this Agreement.
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I.
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Employment. Subject
to the terms and conditions described in this Agreement, the Company
agrees to continue to employ you as Vice Chairman, President and Chief
Executive Officer of the Company, and you agree to continue to be so
employed on the following terms and
conditions.
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II.
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Duties.
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A.
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You
agree to spend substantially all of your business hours on the Company’s
business. You will diligently perform the duties of your
position, within guidelines determined by the Board of
Directors. In particular, you will actively manage the
day-to-day business of the Company and shall set corporate policies, under
the direction of the Board of Directors. More particularly,
your duties shall include the day-to-day responsibility for running and
administering the Company. You will report to the Board of
Directors, who will be responsible for evaluating your job performance in
accordance with the Company’s annual performance review
process. The Company agrees that during the term of this
Agreement, as it may be extended, no one shall serve as CEO, except
you.
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B.
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During
the term of this Agreement, you will also serve as a Director of the
Company and will perform all such duties incident to such
service. Towards this end, the Company shall nominate you as a
nominee for director and solicit proxies for your election for so long as
this Agreement is in effect.
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C.
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While
you are employed by the Company, except as otherwise permitted by the
Company’s Conflict of Interest policy or this Agreement, you will not
engage in any business activity or outside employment that conflicts with
the Company’s interests or adversely affect the performance of your duties
for the Company.
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D.
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You
shall be based at, and shall perform your duties at an office located in,
Lincolnshire, Illinois, where the corporate headquarters of the Company
shall also be located. The Company agrees that the other
officers and executives of the Company (except for those who are directly
involved in the research and development activities of the Company that
are currently conducted in Doylestown, Pennsylvania) shall also be located
in the same corporate headquarters. However, you shall also
travel to other locations at such times as may be appropriate for the
performance of your duties under this
Agreement.
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III.
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Term. This
Agreement is effective July 16, 2008 (the “Effective Date”), and will
terminate on December 31, 2010, unless earlier terminated pursuant to
Section V of this Agreement (the “Base Term”). Commencing on
January 1, 2009 and on each January 1st thereafter, the term of your
employment will be automatically extended for one (1) additional year
unless on or before October 1st immediately preceding any such extension,
either party gives written notice to the other of the cessation of further
extensions, in which case no further automatic extensions will
occur. For the avoidance of any doubt, the parties hereby
understand and acknowledge that absent any termination or non-renewal of
this Agreement in accordance with the provisions of this Agreement, the
term of this Agreement at any given time will be at least two years and
will be no more than three years. In the event that the Company
terminates your employment by electing not to renew this Agreement, other
than for “Cause” as defined herein, and you are willing and able to renew
this Agreement and continue providing such services, you will be paid the
amount described in Section V.C below or Section V.F. below if such
election occurs within the period beginning on the date of a Change in
Control and ending on the last day of the first full calendar month
following the second year anniversary date of the Change in Control or
prior to a Change in Control if your Termination of Employment was either
a condition of the Change in Control or was at the request or insistence
of a Person related to the Change in
Control.
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IV.
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Compensation.
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A.
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Base
Salary. The Company agrees to pay you an annual base
salary of Four Hundred Seventeen Thousand Six Hundred and Forty Dollars
($417,640) in accordance with the Company’s standard payroll practices
(“Base Salary”). In subsequent years, the Board of Directors
shall have the sole discretion to establish your Base Salary, except that,
at a minimum, it shall be adjusted upward consistent with changes to the
Consumer Price Index.
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B.
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Annual
Bonus. You will be eligible to receive an annual
performance bonus. The amount of said bonus and the terms of
payment shall be determined in the sole discretion of the Compensation
Committee and approved by the Board of
Directors.
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C.
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Options. In
the event that your employment is terminated by the Company other than for
Cause (as hereinafter defined), or if the Company elects not to renew this
Agreement, or if you are not nominated by the Company for reelection to
the Board of Directors other than for Cause (as hereinafter defined), all
outstanding stock options and shares that are held by you or your estate
will immediately become exercisable and all restrictions against
disposition, if any, which have not otherwise lapsed shall immediately
lapse, and the period within which they may be exercised will be one year
following such termination of
employment.
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D.
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Benefits. In
addition to the other compensation to be paid under this Section IV, you
will be entitled to participate in all Benefit Plans available to all
full-time, eligible employees hereafter established by the Company, in
accordance with the terms and conditions of such plans. These
plans shall include, but not be limited to, the following: a
401(k) plan; group hospitalization, health, dental, disability (for which
the Company agrees to obtain the maximum long-term disability insurance
benefit allowed by applicable law), and term life insurance. In
addition, the Company agrees to reimburse you for the amount of the annual
insurance premiums for your supplemental term life insurance (in the
amount of $1.1 million) and your supplemental long-term disability
insurance. The premium reimbursements made under this Section
IV.D will be made as soon as reasonably practicable but no later than 30
days after you submit a request for reimbursement to the Company, along
with any appropriate back-up documentation, provided that the
reimbursement is, in all cases, made on or before the last day of the
calendar year in which the cost of the premium was incurred by
you. The Company will make an additional tax gross up payment
to you in an amount equal to your federal, state and local tax liability
on the reimbursement of your insurance premiums under this Section IV.D,
plus an additional amount sufficient to permit you to retain a net amount
after all federal, state and local taxes equal to the initial tax
liability for the premium reimbursement. The tax gross up
payment will be made as soon as reasonably practicable but no later than
30 days after the gross-up calculation has been computed by the Company,
provided that the tax gross up payment, in all cases, will be paid by no
later than December 31 of the calendar year next following the calendar
year in which the related taxes are remitted to the appropriate taxing
authority.
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E.
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Reimbursement of
Business Expenses. In addition to payment of
compensation under this Section IV, the Company agrees to reimburse you
for all reasonable out-of-pocket business expenses incurred by you on
behalf of the Company, provided that you properly account to the Company
for all such expenses in accordance with the rules and regulations of the
Internal Revenue Service promulgated under the Internal Revenue Code of
1986, as amended, and in accordance with the standard policies of the
Company relating to reimbursement of business
expenses.
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F.
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Automobile
Allowance. The Company shall provide you with a monthly
stipend of One Thousand Dollars ($1,000.00) for your automobile
use.
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G.
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Vacation. You
are entitled to four (4) weeks of paid vacation per calendar
year.
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V.
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Termination.
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A.
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Early
Termination. Subject to the respective continuing
obligations of the parties pursuant to Sections VI, VII and VIII, this
Section sets forth the terms for early termination of this
Agreement.
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B.
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Termination for
Cause. The Company may terminate this Agreement and your
employment immediately for Cause. For this purpose, “Cause”
means any of the following: (1) fraud, (2) theft or
embezzlement of the Company’s assets, (3) a violation of law involving
moral turpitude, (4) your repeated and willful failure to follow
instructions of the Board provided that the conduct has not ceased or the
offense cured within thirty (30) days following written warning from the
Company that sets forth in reasonable detail the facts claimed to provide
the basis for such termination, and (5) your conviction (including a plea
of nolo contendere) of willfully engaging in illegal conduct constituting
a felony or gross misdemeanor under federal or state law which is
materially and demonstrably injurious to the Company or which impairs your
ability to substantially perform your duties for the
Company. In the event of termination for Cause pursuant to this
Section V.B, you will be paid at the usual rate your annual Base Salary,
car allowance, and any out-of-pocket expenses, through the date of
termination specified in any notice of termination and any amounts to
which you are entitled under any Company Benefit Plan in accordance with
the terms of such plan.
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C.
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Termination Without
Cause. Either you or the Company may terminate this
Agreement and your employment without Cause on thirty (30) days written
notice. In the event of your Termination of Employment by you
pursuant to this Section V.C, you will be paid at the usual rate of your
annual Base Salary, car allowance, and any out-of-pocket expenses incurred
on behalf of the Company and accounted for pursuant to Section IV.E
through the date of termination specified in such notice (but not to
exceed thirty (30) days from the date of such
notice). Notwithstanding any provision to the contrary
contained herein, in the event of your Termination of Employment by the
Company at any time for any reason other than for Cause, disability or
death:
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1.
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Subject
to Section V.G, the Company shall pay you a severance benefit, in a lump
sum payable no later than the fifth business day following the date of
termination, an amount equal to the sum of: (a) your Base Salary (includes
only regular cash salary and is determined before any reduction for
deferrals pursuant to any nonqualified deferred compensation plan or
arrangement, qualified cash or deferred arrangement or cafeteria plan) at
the rate in effect at the time of your Termination of Employment, plus
(ii) 100% of your annual bonus for the most recent fiscal year (regardless
of timing and manner of payment), plus (iii) 12 months of your car
allowance.
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2.
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You
shall be entitled to receive, until the earlier of (A) the expiration of
the “Severance Period” (which shall mean the longer of these two
periods: one year from the date of termination or the remaining
term of this Agreement), or (B) your obtaining full-time employment, life
insurance coverage substantially equivalent to the coverage you had on the
day immediately prior to your Termination of Employment, including
reimbursement of the cost of the premiums incurred on your supplemental
term life insurance, and any group term life insurance coverage then in
effect for your spouse and dependents. Reimbursement of the
cost of the premiums on your supplemental term life insurance under this
Section V.C.2 will be made as soon as reasonably practicable but no later
than 30 days after you submit a request for reimbursement to the Company,
along with any appropriate back-up documentation, provided that the
reimbursement is, in all cases, made on or before the last day of the
calendar year in which the cost of the premium is incurred by
you. You shall be required to pay no more for such life
insurance than you paid as an active employee immediately before your
Termination of Employment. In order to continue life insurance
coverage, you must timely elect continuation or the portability option
available under the Company’s group life insurance policy or policies and
pay the full premium for such coverage following Termination of
Employment. The Company will reimburse you for the amount by
which such life insurance premium exceeds the amount you paid for such
coverage as an active employee immediately prior to your Termination of
Employment. Such reimbursement will be made as soon as
reasonably practicable but no later than 30 days after you submit a
request for reimbursement to the Company, along with any appropriate
back-up documentation, provided that the reimbursement is, in all cases,
made on or before the last day of the calendar year following the calendar
year in which the cost of the premium was incurred by
you.
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3.
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Continuation
coverage will be provided to you under the Company’s group health and/or
dental plans, and, for each month of the Severance Period in which you
have continuation coverage, the Company will pay an amount equal to the
excess of (i) the portion of the monthly cost for your coverage under the
Company’s group health and/or dental plans that was borne by the Company
immediately prior to your Termination of Employment (subject to the rule
for coverage changes discussed below) over (ii) the portion of the monthly
cost for your coverage under the Company’s group health and/or dental
plans that is borne by the Company during the Severance
Period. Your coverage will be deemed to include any Company
contribution to a health savings account (or similar arrangement) for
you. If the level of your coverage changes during the Severance
Period, as, for example, from single to family coverage or to no coverage,
the amount which the Company shall pay will be determined as if the new
coverage level had been the level of coverage in effect immediately prior
to the Termination of Employment. You shall be entitled to health care
continuation coverage under the Company’s group health and/or dental plans
(which will run concurrently with any state or COBRA continuation) for up
to 36 months, which is through the end of the Severance Period, if you
have not become eligible to participate as an employee in a plan of
another employer providing group health and dental benefits to you and
your eligible family members and dependents, which plan does not contain
any exclusion or limitation with respect to any pre-existing condition of
you or any eligible family member or dependent who would otherwise be
covered under the Company’s plan but for this clause. If COBRA
or other continuation coverage is not available to you during any portion
of the Severance Period (other than by reason of your failure to elect
continuation coverage or to pay the required premiums for such coverage),
the Company will provide comparable medical benefits pursuant to an
alternative arrangement, such as an individual medical insurance contract,
and such alternative benefits will be treated as part of the Company’s
health and/or dental plan. Any reimbursement made under this
Section V.C.3 shall be made as soon as reasonably practicable but no later
than 30 days after you submit a request for reimbursement to the Company,
along with any appropriate back-up documentation, provided that the
reimbursement is, in all cases, made on or before the last day of the
calendar year following the calendar year in which any continuation
coverage payment was incurred.
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To the
extent you incur a tax liability (including foreign, federal, state and local
taxes) in connection with a benefit provided pursuant to this Section V.C.3
which you would not have incurred had you been an active employee of the Company
participating in the Company’s group health and dental plans, the Company will
make a payment to you in an amount equal to such tax liability plus an
additional amount sufficient to permit you to retain a net amount after all
taxes equal to the initial tax liability in connection with the
benefit. The payment pursuant to this Section V.C.3 will be made as
soon as reasonably practicable but no later than 30 days after your remittal of
a written request for payment accompanied by a statement indicating the basis
for and amount of your tax liability, provided that the tax gross up payment, in
all cases, will be paid by no later than December 31 of the calendar year next
following the calendar year in which the related taxes are remitted to the
appropriate taxing authority.
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4.
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For
the period commencing immediately following your Termination of Employment
and continuing for the duration of the Severance Period, the Company shall
provide continuation or conversion benefits under the Company’s group
short term and group long term disability insurance policies to provide
benefits that are substantially similar to those provided to you
immediately prior to your Termination of Employment; provided, if such
continuation or conversion is not allowed by or available under such
policy(ies), then the Company shall pay you in a lump sum the aggregate
dollar amount of the insurance premiums the Company would have incurred if
you had remained employed with the Company during the Severance
Period. In addition, the Company will continue to reimburse you
for the cost of the premiums you incur for your supplemental long-term
disability insurance coverage during the Severance Period. The
supplemental long-term disability insurance premium reimbursement made
under this Section V.C.4 will be made as soon as reasonably practicable
but no later than 30 days after you submit a request for reimbursement to
the Company, along with any appropriate back-up documentation, provided
that the reimbursement is, in all cases, made on or before the last day of
the calendar year in which the cost of the premium payment is incurred by
you.
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5.
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The
Company will make an additional tax gross up payment to you in an amount
equal to your federal, state and local tax liability on your supplemental
long-term disability insurance premium reimbursement plus an additional
amount sufficient to permit you to retain a net amount after all federal,
state and local taxes equal to the initial tax liability for the premium
reimbursement. The tax gross up payment will be made as soon as
reasonably practicable but no later than 30 days after the gross-up
calculation has been computed by the Company, provided that the tax gross
up payment, in all cases, will be paid by no later than December 31 of the
calendar year next following the calendar year in which the related taxes
are remitted to the appropriate taxing
authority.
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6.
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The
Company shall provide you with reasonable outplacement services at a
qualified agency selected by you up to a maximum amount of $30,000 and the
use of an office and reasonable secretarial support, in each case for up
to one year (unless you become otherwise employed within such
period).
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7.
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The
Company shall reimburse out-of-pocket expenses incurred by you on behalf
of the Company and accounted pursuant to Section
IV.E.
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8.
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The
Company shall reimburse you for any and all unused vacation days accrued
to the date of such termination.
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D.
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Termination for Good
Reason. You may terminate this Agreement upon thirty
(30) days written notice to the Company for Good Reason. For
this purpose, “Good Reason” means: (i) the assignment to you of
any duties inconsistent with your positions, duties, responsibilities and
status with the Company as of the date hereof, or a change in your
reporting responsibilities, titles or offices that is not reasonably
acceptable to you, or any removal of you from or any failure to re-elect
you to any of such positions; (ii) the failure of the Company to continue
in effect any fringe benefit or compensation plan, retirement plan, life
insurance plan, health or disability plan in which you were participating
(except as such change is prompted in good faith by a change in the law),
or the taking of any action by the Company, which could reasonably be
expected to adversely affect your participation in or materially reduce
your benefits under any such plans or deprive you of any material fringe
benefit enjoyed by you; (iii) the reduction of your salary or car
allowance or failure to increase such salary as is provided in Section
IV.A above; or (iv) any other material breach of this Agreement by the
Company. In any such case, subject to V.G., the Company will
pay you the amounts, and provide you the benefits, all as set forth in
Section V.C above.
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E.
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Termination In The
Event of Death or Permanent Disability. This Agreement
and your employment will terminate in the event of your death or permanent
disability.
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1.
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In
the event of your death, Base Salary and car allowance will be terminated
as of the end of the month in which death
occurs.
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2.
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Upon
your “disability,” the Company shall have the right to terminate your
employment. For the purposes of this Agreement, the term
“disability” shall mean your inability, due to illness, accident or any
other physical or mental incapacity, to substantially perform your duties
for a period of four (4) consecutive months or for a total of six (6)
months (whether or not consecutive) in any twelve (12) month period during
the term of this Agreement. Any termination pursuant to this
Section V.E.2 shall be effective on the date thirty (30) days after which
you shall have received written notice of the Company’s election to
terminate.
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3.
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Notwithstanding
any inability to perform your duties, upon your disability, you shall be
entitled to receive your compensation (including bonuses, if any) as
provided herein until the date upon which you begin to receive long-term
disability insurance benefits under the policy provided by the Company
pursuant to this Agreement, or, if later, upon your Termination of
Employment.
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F.
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Termination in
Connection with a Change in Control. Notwithstanding any
provision to the contrary contained herein, if and only if (i) your
Termination of Employment is by the Company for any reason other than for
Cause, or (ii) you terminate your employment with the Company for Good
Reason (which definition of Good Reason for purposes of this Section V.F.
also includes the following events in addition to those described in
Section V.D.: (aa) the failure by the Company to obtain from
any Successor the assent to this Agreement contemplated by Section IX.P.
of the Agreement; (bb) any purported termination by the Company of your
employment that is not properly effected pursuant to a Notice of
Termination and pursuant to any other requirements of this Agreement, and,
for purposes of this Section V.F., no such purported termination will be
effective; (cc) Company requiring you to be based at any office or
location that is more than thirty (30) miles further from the office or
location thereof immediately preceding a Change in Control, except for
required travel on the Company’s business and then only to the extent
substantially consistent with the business travel obligations which you
took on behalf of the Company during the year immediately preceding the
Change in Control; and (dd) any termination by you of your
employment for any reason during the first full calendar month following
the first year anniversary date of the Change in Control,) and (ii) the
Termination of Employment occurs either within the period beginning on the
date of a Change in Control and ending on the last day of the first full
calendar month following the second year anniversary date of the Change in
Control or prior to a Change in Control if your Termination of Employment
was either a condition of the Change in Control or was at the request or
insistence of a Person related to the Change in Control, you will become
entitled to the benefits described in this Section
V.F.:
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1.
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Subject
to Section V.G, not more than 10 days following the Date of Termination,
or, if later, not more than 10 days following the date of the Change in
Control, the Company will make a lump-sum cash payment to you in an amount
equal to the sum of (i) two times your Base Salary (includes only regular
cash salary and is determined before any reduction for deferrals pursuant
to any nonqualified deferred compensation plan or arrangement, qualified
cash or deferred arrangement or cafeteria plan) at the rate in effect
immediately prior to a Change in Control or at the time Notice of
Termination is given, whichever is greater, plus (ii) 100% of your annual
bonus for the most recent fiscal year (regardless of timing and manner of
payment), plus (iii) 100% of your maximum bonus (100% of Base
Pay) established for the year during which the Change in Control
occurs.
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2.
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Continuation
coverage will be provided to you under the Company’s group health and/or
dental plans, and, for each month of the Continuation Period (as defined
below), the Company will pay an amount equal to the excess of (i) the
portion of the monthly cost for your coverage under the Company’s group
health and/or dental plans that was borne by the Company immediately prior
to your Termination of Employment or, if greater, immediately prior to the
Change in Control (subject to the rule for coverage changes discussed
below) over (ii) the portion of the monthly cost for your coverage under
the Company’s group health and/or dental plans that is borne by the
Company during the Continuation Period. Your coverage will be
deemed to include any Company contribution to a health savings account (or
similar arrangement) for you. If the level of your coverage
changes during the Continuation Period, as, for example, from single to
family coverage or to no coverage, the amount which the Company shall pay
will be determined as if the new coverage level had been the level of
coverage in effect immediately prior to the Termination of Employment or
Change in Control, as the case may be. You shall be entitled to
continuation coverage under the Company’s group health and/or dental plans
(which will run concurrently with any state or COBRA continuation) for up
to twenty-four (24) months or until the end of the Continuation Period if
you have not become eligible to participate as an employee in a plan of
another employer providing group health and dental benefits to you and
your eligible family members and dependents, which plan does not contain
any exclusion or limitation with respect to any pre-existing condition of
you or any eligible family member or dependent who would otherwise be
covered under the Company’s plan but for this clause. If COBRA
or other continuation coverage is not available to you during any portion
of the Continuation Period (other than by reason of your failure to elect
continuation coverage or to pay the required premiums for such coverage),
the Company will provide comparable medical benefits pursuant to an
alternative arrangement, such as an individual medical insurance contract,
and such alternative benefits will be treated as part of the Company’s
health and/or dental plan. Any reimbursement made under this
Section V.F.2 shall be made as soon as reasonably practicable but no later
than 30 days after you submit a request for reimbursement to the Company,
along with any appropriate back-up documentation, provided that the
reimbursement is, in all cases, made on or before the last day of the
calendar year following the calendar year in which any continuation
coverage payment was incurred.
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For
purposes of this Section V.F.2, Section V.F.3 and Section V.F.4 the
“Continuation Period” is the period beginning on your Date of Termination and
ending on (x) the last day of the 24th month
that begins after your Date of Termination or, if earlier, (y) the date after
your Date of Termination on which you first becomes eligible to participate as
an employee in a plan of another employer providing group health and dental
benefits to you and your eligible family members and dependents, which plan does
not contain any exclusion or limitation with respect to any pre-existing
condition of yours or any eligible family member or dependent who would
otherwise be covered under the Company’s plan but for this Section
V.F.2.
To the
extent you incur a tax liability (including foreign, federal, state and local
taxes) in connection with a benefit provided pursuant to this Section V.F.2
which you would not have incurred had you been an active employee of the Company
participating in the Company’s group health and dental plans, the Company will
make a payment to you in an amount equal to such tax liability plus an
additional amount sufficient to permit you to retain a net amount after all
taxes equal to the initial tax liability in connection with the
benefit. The payment pursuant to this Section V.F.2 will be made as
soon as reasonably practicable but no later than 30 days after your remittal of
a written request for payment accompanied by a statement indicating the basis
for and amount of your tax liability, provided that the tax gross up payment, in
all cases, will be paid by no later than December 31 of the calendar year next
following the calendar year in which the related taxes are remitted to the
appropriate taxing authority.
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3.
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In
addition, during each month of the Continuation Period, you shall be
entitled to receive life insurance coverage substantially equivalent to
the coverage you had on the day immediately prior to your Termination of
Employment, including reimbursement of the premiums on your supplemental
term life insurance and any group term life insurance coverage then in
effect for your spouse and dependents. You shall be required to
pay no more for such life insurance than you paid as an active employee
immediately before your Termination of Employment. In order to
continue life insurance coverage, you must timely elect continuation or
the portability option available under the Company’s life insurance policy
or policies and pay the full premium for such coverage following
Termination of Employment. The Company will reimburse you for
the amount by which such life insurance premium exceeds the amount you
paid for such coverage as an active employee immediately prior to your
Termination of Employment. Such reimbursement will be made as
soon as reasonably practicable but no later than 30 days after you submit
a request for reimbursement to the Company, along with any appropriate
back-up documentation, provided that the reimbursement is, in all cases,
made on or before the last day of the calendar year following the calendar
year in which the premium was
incurred.
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4.
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For
the period commencing immediately following your Termination of Employment
and continuing for the duration of the Continuation Period, the Company
shall provide continuation or conversion benefits under the Company’s
group short-term and group long-term disability insurance policies to
provide benefits that are substantially similar to those provided to you
immediately prior to your Termination of Employment; provided, if such
continuation or conversion is not allowed by or available under such
policy(ies), then the Company shall pay you, in a lump sum, the aggregate
dollar amount of the insurance premiums the Company would have incurred if
you had remained employed with the Company during the Severance
Period. In addition, the Company will continue to reimburse you
for the cost of your supplemental long-term disability
insurance. The supplemental long-term disability insurance
premium reimbursement made under this Section V.F.4 will be made as soon
as reasonably practicable but no later than 30 days after you submit a
request for reimbursement to the Company, along with any appropriate
back-up documentation, provided that the reimbursement is, in all cases,
made on or before the last day of the calendar year in which the premium
payment is incurred by you.
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5.
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The
Company will make an additional tax gross up payment to you in an amount
equal to your federal, state and local tax liability on your supplemental
long-term disability insurance premium reimbursement plus an additional
amount sufficient to permit you to retain a net amount after all federal,
state and local taxes equal to the initial tax liability for the premium
reimbursement. The tax gross up payment will be made as soon as
reasonably practicable but no later than 30 days after the gross-up
calculation has been computed by the Company, provided that the tax gross
up payment, in all cases, will be paid by no later than December 31 of the
calendar year next following the calendar year in which the related taxes
are remitted to the appropriate taxing
authority.
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6.
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The
Company will provide you with reasonable outplacement services at a
qualified agency selected by you up to a maximum amount of $30,000 for up
to one year (unless you become otherwise employed within such
period).
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7.
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The
Company shall reimburse out-of-pocket expenses incurred by you on behalf
of the Company and accounted pursuant to Section
IV.E.
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8.
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The
Company shall reimburse you for any and all unused vacation days accrued
to the date of such termination.
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9.
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Notwithstanding
any other provisions of this Agreement or any other agreement, contract or
understanding heretofore or hereafter entered into between you and the
Company, if any “payments” (including, without limitation, any benefits or
transfers of property or the acceleration of the vesting of any benefits)
in the nature of compensation under any arrangement that is considered
contingent on a Change in Control for purposes of Section 280G of the
Code, together with any other payments that you have the right to receive
from the Company or any corporation that is a member of an “affiliated
group” (as defined in Section 1504(a) of the Code without regard to
Section 1504(b) of the Code) of which the Company is a member, would
constitute a “parachute payment” (as defined in Section 280G(b)(2) of the
Code), such “payments” will be reduced to the largest amount as will
result in no portion of such “payments” being subject to the excise tax
imposed by Section 4999 of the Code; provided, however, that such
reduction shall be made only if the aggregate amount of the payments after
such reduction exceeds the difference between (A) the amount of such
payments absent such reduction minus (B) the aggregate amount of the
excise tax imposed under Section 4999 of the Code attributable to any such
excess parachute payments. The parachute payments to be reduced under this
paragraph will be reduced in the following order: outplacement benefits,
life insurance benefits, reimbursement of supplemental disability
premiums, reimbursement of supplemental life insurance premiums,
disability benefits, dental benefits, lump sum cash severance, health plan
benefits, and option acceleration.
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10.
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Following
a Change in Control, the Company will indemnify and advance expenses to
you for damages, costs and expenses (including, without limitation,
judgments, fines, penalties, settlements and reasonable fees and expenses
of the Executive’s counsel) (the “Expenses”) incurred in connection with
all matters, events and transactions relating to your service to or status
with the Company or any other corporation, employee benefit plan or other
Person for which you served at the request of the Company to the extent
that the Company would have been required to do so under applicable law,
corporate articles, bylaws or agreements or instruments of any nature with
or covering you, including any indemnification agreement between the
Company and the Executive, as in effect immediately prior to the Change in
Control and to any further extent as may be determined or agreed upon
following the Change in Control.
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G.
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Six Month Suspension
for Specified Key Employees. Notwithstanding the
foregoing, if, at the time of your Termination of Employment, you are a
Specified Employee, then any payment under this Section V that constitutes
deferred compensation payable on account of a “separation from service”
under Code Section 409A shall be suspended and not made until the first
payroll date following the end of the six (6) month period following your
Termination of Employment, or, if earlier, upon your death. On
the first payroll date following the end of the six (6) month period
following your Termination of Employment, or, if earlier, upon
your death, the Company will pay you accrued interest on any suspended
payment, at an annual rate equal to 120% of the applicable Federal rate
(AFR), compounded semi-annually, determined under Code section 1274(d) in
effect for each month, from the date of Termination of Employment through
the date of payment.
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H.
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Entire Termination
Payment. The compensation provided for in Sections V.B,
V.C, V.D, V.E and V.F for early termination of this Agreement will
constitute your sole remedy for such termination. For the
avoidance of doubt, any payments and benefits to be provided to you
pursuant to Section V.C, V.D or V.E. shall not be paid to the extent your
employment is terminated following a “change in control” under
circumstances entitling you to benefits under Section V.F. You
will not be entitled to any other termination or severance payment or
benefit which might otherwise be payable or available to you under any
other agreement between you and the Company or under any severance pay
plan or policy of the Company. This Section V will not have any
effect on distributions to which you may be entitled at termination from
any tax qualified retirement plan or any other plan (other than a
severance payment or similar plan).
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I.
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Required Resignations
Upon Early Termination or Expiration. You agree that
upon any termination of your employment with the Company or expiration of
this Employment Agreement, such termination or expiration under this
Agreement will automatically and without further action be deemed to
constitute your simultaneous resignation from all director, officer,
trustee, agent and any other positions within the Company, all of its
affiliates (including but not limited to any entity that is a shareholder
of the Company and any subsidiaries and any parent of the Company), the
Company’s employee benefit plans, trusts and foundations (charitable or
otherwise) or any other similar position associated with the
Company. Simultaneously upon such termination of employment or
expiration of this employment agreement, you agree to execute and deliver
to the Company any and all documents, agreements, certificates, letters or
other written instruments confirming all such
resignations.
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VI.
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Inventions.
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A.
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You
agree that all Inventions (as defined below) you make, conceive, reduce to
practice or author (either alone or with others) during or within one year
after the term of this Agreement will be the Company’s sole and exclusive
property. You will, with respect to any such
Invention: (i) keep current, accurate, and complete records,
which will belong to the Company and be kept and stored on the Company’s
premises while you are employed by the Company; (ii) promptly and fully
disclose the existence and describe the nature of the Invention to the
Company in writing (and without request); (iii) assign (and you do hereby
assign) to the Company all of your rights to the Invention, any
applications you make for patents or copyrights in any country, and any
patents or copyrights granted to you in any country; and (iv) acknowledge
and deliver promptly to the Company any written instruments, and perform
any other acts necessary in the Company’s opinion to preserve property
rights in the Invention against forfeiture, abandonment, or loss and to
obtain and maintain patents and/or copyrights on the Invention and to vest
the entire right and title to the Invention in the
Company.
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B.
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“Inventions,”
as used in this Section, means any discoveries, improvements, creations,
ideas and inventions, including without limitation software and artistic
and literary works (whether or not they are described in writing or
reduced to practice) or other works of authorship (whether or not they can
be patented or copyrighted) that: (i) relate directly to the
Company’s business or the Company’s research or development during the
term of this Agreement; (ii) result from any work you perform for the
Company; (iii) use the Company’s equipment, supplies, facilities or trade
secret information; or (iv) you develop during any time that Section II
above obligates you to perform your employment
duties.
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The
requirements of this Section do not apply to an Invention for which no
equipment, supplies, facility or trade secret information of the Company was
used and which was developed entirely on your own time, and which neither (1)
relates directly to the Company’s business or to the Company’s actual or
demonstrably anticipated research or development, nor (2) results from any work
you performed for the Company. Except as previously disclosed to the
Company in writing, you do not have, and will not assert, any claims to or
rights under any Inventions as having been made, conceived, authored or acquired
by you prior to your employment by the Company.
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VII.
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Proprietary
Information.
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A.
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Except
as required in your duties to the Company, you will never, either during
or after your employment by the Company, use or disclose Proprietary
Information to any person not authorized by the Company to receive
it. When your employment with the Company ends, you will
promptly turn over to the Company all records and any compositions,
articles, devices, apparatus and other items that disclose, describe or
embody Proprietary Information, including all copies, reproductions and
specimens of the Proprietary Information in your possession, regardless of
who prepared them.
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B.
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“Proprietary
Information,” as used in this Section VII, means any nonpublic information
concerning the Company, including information relating to the Company’s
research, product development, engineering, purchasing, product costs,
accounting, leasing, servicing, manufacturing, sales, marketing,
administration and finances. This information includes, without
limitation: (i) trade secret information about the Company and
its products; (ii) “Inventions,” as defined in Section VI.B; (iii)
information concerning any of the Company’s past, current or possible
future products. Proprietary Information or confidential
information also includes any information which is not generally disclosed
and which is useful or helpful to the Company and/or which would be useful
or helpful to competitors. More specific examples include
financial data, sales figures for individual projects or groups of
projects, planned new projects or planned advertising programs, areas
where the Company intends to expand, lists of suppliers, lists of
customers, wage and salary data, capital investment plans, projected
earnings, changes in management or policies of the Company, testing data,
manufacturing methods, suppliers’ prices to us, or any plans we may have
for improving any of our products. This information is
confidential or Proprietary Information regardless of its form, e.g. oral,
written, electronic or other, and whether or not it is labeled as
“proprietary” or “confidential.” The Company’s Proprietary
Information or confidential information includes our information and that
of our affiliates and third parties concerning or relating to
us.
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VIII.
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Competitive
Activities.
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A.
|
You
agree that during your employment with the Company, you will not alone, or
in any capacity with another person or entity, (i) directly or indirectly
engage in any employment or activity that competes with the Company’s
business at the time your employment with the Company ends, within any
state in the United States or within Canada, (ii) interfere with the
Company’s relationships with any of its current or potential
customers.
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B.
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You
also agree that for a period of one year after the termination of this
Agreement for any one of the following reasons: (i) for “Cause”
as defined above, (ii) voluntarily by you without “Good Reason” as defined
above; or (iii) in the event of a non-renewal of the Agreement by you
other than for “Good Reason”, you will abide by clauses (i) and (ii) of
Section VIII.A above.
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IX.
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Miscellaneous.
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A.
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No Adequate
Remedy. You understand that if you fail to fulfill your
obligations under this Agreement, the damages to the Company would be very
difficult to determine. Therefore, in addition to any other
rights or remedies available to the Company at law, in equity, or by
statute, you hereby consent to the specific enforcement of this Agreement
by the Company through an injunction or restraining order issued by an
appropriate court.
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B.
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Governing
Law. The laws of Illinois will govern the validity,
construction, and performance of this Agreement, without regard to the
conflict of laws principles of any
jurisdiction.
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C.
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Arbitration. Any
and all disputes which arise concerning the rights, duties or obligations
of either party under any provision of this Agreement shall be resolved
exclusively by binding arbitration in accordance with the following terms
and conditions. The party seeking arbitration shall commence a
proceeding in arbitration in Chicago, Illinois under the Rules of the
American Arbitration Association. Within one month from one of
the party’s request for arbitration, the party requesting arbitration
shall appoint one arbitrator and within one month of the date of such
appointment, the other party shall appoint an
arbitrator. Within three weeks of the date that the second
arbitrator is appointed, and prior to any examination of the merits of the
case, the two arbitrators shall mutually select a third
arbitrator. If either of the parties fails to appoint an
arbitrator or if the two arbitrators fail to appoint the third arbitrator
within the periods referred to above, one shall be appointed in accordance
with the Rules within fifteen (15) days of the expiry date of the
respective period referred to above. The three arbitrators so
selected shall constitute the arbitral panel. The arbitral
panel shall make its decisions by the majority of its
members. The arbitral panel shall render its decision and award
in writing within ninety (90) days from its final
constitution. There shall be no appeal from the decision and
award of the arbitral panel, which shall be final and binding on the
parties and may be entered in any court having jurisdiction
thereof.
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D.
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Rights in the Event of
Dispute. If, with respect to any alleged failure by the
Company to comply with any of the terms of this Agreement, you hire legal
counsel with respect to this Agreement or institute any negotiations or
institute or respond to legal action to assert or defend the validity of,
enforce your rights under, or recover damages for breach of this
Agreement, the Company shall pay, as they are incurred, your actual
expenses for attorneys’ fees and disbursements, together with such
additional payments, if any, as may be necessary so that the net-after-tax
payments to you equal such fees and disbursements, provided that such
payments shall be reimbursed by you to the Company if the Arbitration
panel rules in favor of the Company and further decides that such
reimbursement is appropriate. Further, pending the resolution
of any such claim or dispute, you shall not be deemed terminated for
purposes of this Agreement.
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E.
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No
Mitigation. You are not required to mitigate the amount
of any payments to be made pursuant to this Agreement by seeking other
employment or otherwise, nor shall the amount of any payments provided for
in this Agreement be reduced by any compensation earned by you as the
result of your self-employment or your employment by another employer
after the date of termination of your employment with the
Company.
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F.
|
Taxes. All
benefits to be provided to you in connection with this Agreement will be
subject to required withholding of federal, state and local income, excise
and employment-related taxes. The Company’s good faith
determination with respect to its obligation to withhold such taxes
relieves it of any obligation that such amounts should have been paid to
you.
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G.
|
Construction. Wherever
possible, each provision of this Agreement will be interpreted so that it
is valid under the applicable law. If any provision of this
Agreement is to any extent invalid under the applicable law, that
provision will still be effective to the extent it remains valid under the
applicable law. The remainder of this Agreement also will
continue to be valid, and the entire agreement will continue to be valid
in other jurisdictions.
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H.
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Amendments;
Waivers. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is
specifically agreed to in a writing that makes express reference to this
Agreement as the subject of such amendment, waiver or discharge and is
manually signed by you and a duly authorized officer of the
Company. No waiver by any party to this Agreement at any time
of any breach by another party to this Agreement of, or of compliance with
any condition or provision of this Agreement to be performed by such party
will be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No failure or
delay by either the Company or you in exercising any right or remedy under
this Agreement will waive any provision of the Agreement. Nor
will any single or partial exercise by either the Company or you of any
right or remedy under this Agreement preclude either the Company or you
from otherwise or further exercising these rights or remedies, or any
other rights or remedies granted by any law or any related
document.
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I.
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Entire Agreement;
Related Agreements and Other Arrangements. This
Agreement, including Exhibit A attached hereto and incorporated as an
integral part of this Agreement, is the entire agreement between the
parties and replaces all other oral negotiations, commitments, writings
and understandings between the parties concerning the matters in this
Agreement. To the extent that any provision of any Other
Arrangement limits, qualifies or is inconsistent with any provision of
this Agreement, then for purposes of this Agreement, while such Other
Arrangement remains in force, the provision of this Agreement will control
and such provision of such Other Arrangement will be deemed to have been
superseded, and to be of no force or effect, as if such Other Arrangement
had been formally amended to the extent necessary to accomplish such
purpose. Nothing in this Agreement prevents or limits your
continuing or future participation in any Other Arrangement for which you
may qualify, and nothing in this Agreement limits or otherwise affects the
rights you may have under any Other Arrangement. Amounts that
are vested benefits or which you are otherwise entitled to receive under
any Other Arrangement at or subsequent to the Date of Termination will be
payable in accordance with such Other Arrangement. For the
avoidance of doubt, if as of the Date of Termination, any earned but
unpaid bonus for a previous calendar year becomes due and owing under the
terms of the resolutions of the Board of Directors of the Company
providing for the payment of such bonus, nothing in this Agreement will
prevent the payment of such bonus in accordance with the terms of such
resolutions. You acknowledge that you have been advised to seek
legal counsel to review this Agreement with you before you sign
it.
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J.
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Payment;
Assignment. Benefits payable under this Agreement will
be paid only from the general assets of the Company. No Person
has any right to or interest in any specific assets of the Company by
reason of this Agreement. To the extent benefits under this
Agreement are not paid when due to you, you are a general unsecured
creditor of the Company with respect to any amounts
due. Benefits payable pursuant to this Agreement and the right
to receive future benefits may not be anticipated, alienated, sold,
transferred, assigned, pledged, encumbered or subject to any
charge.
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K.
|
Late
Payments. Except as provided under Section V.G.,
benefits not paid under Section V. of this Agreement when due will accrue
interest at the rate of 10% per year, or, if lesser, the maximum rate
permitted under applicable law, and shall be paid on the 5th day of the
month next following the month during which such interest
accrued.
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L.
|
Survival. The
respective obligations of, and benefits afforded to, the Company and you
which by their express terms or clear intent survive termination of your
employment with the Company or termination of this Agreement, as the case
may be, will survive termination of your employment with the Company or
termination of this Agreement, as the case may be, and will remain in full
force and effect according to their
terms.
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M.
|
Further
Assurances. The parties to this Agreement agree to
perform, or cause to be performed, such further acts and deeds and to
execute and deliver or cause to be executed and delivered, such additional
or supplemental documents or instruments as may be reasonably required by
the other party to carry into effect the intent and purpose of this
Agreement.
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N.
|
Interpretation. The
invalidity or unenforceability of all or any part of any provision of this
Agreement will not affect the validity or enforceability of the remainder
of such provision or of any other provision of this Agreement, which will
remain in full force and effect.
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O.
|
Severability and
Judicial Modification. If any portion of this Agreement
is adjudicated to be invalid or unenforceable, then a court of competent
jurisdiction shall amend, modify or delete that portion thus adjudicated
invalid or unenforceable. If any portion is deemed
unenforceable by virtue of its scope or limitation, the Company and you
agree that a court of competent jurisdiction shall modify such provision
to make it enforceable to the fullest extent permitted by Illinois
law.
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P.
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Successors. The
Company must seek to have any Successor, by agreement in form and
substance satisfactory to you, assent to the fulfillment by such Successor
of the Company’s obligations under this Agreement. Failure of
the Company to obtain such assent at least three (3) business days prior
to the time a Person becomes a Successor (or where the Company does not
have at least three business days’ advance notice that a Person may become
a Successor, within one business day after having notice that such Person
may become or has become a Successor) will constitute Good Reason for
termination by you of your employment. The date on which any such
succession becomes effective will be deemed the Date of Termination, and
Notice of Termination will be deemed to have been given on that
date. A Successor has no rights, authority or power with
respect to this Agreement prior to a Change in
Control.
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Q.
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Binding
Agreement. This Agreement inures to the benefit of, and
is enforceable by, you, your personal and legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If you die while employed by the Company or while any
amount would still be payable to you under this Agreement if you had
continued to live, all such amounts, unless otherwise provided in this
Agreement, will be paid in accordance with the terms of this Agreement to
your devisee, legatee or other designee or, if there be no such designee,
to your estate.
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R.
|
Notices. All
notices, requests and demands given to or made pursuant hereto will,
except as otherwise specified herein, be in writing and be delivered or
mailed to any such party at its address
which:
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1.
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In
the case of the Company will be:
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BioSante
Pharmaceuticals, Inc.
111
Barclay Boulevard
Lincolnshire,
IL 60069
Attention: Chairman
of the Board
With a
copy to:
Oppenheimer
Wolff & Donnelly LLP
Plaza VII
Building, Suite 3300
45 South
Seventh Street
Minneapolis,
MN 55402
Attention: Amy
E. Culbert, Esq.
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2.
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In
the case of employee will be:
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Stephen
M. Simes
ADDRESS
INTENTIONALLY OMMITTED
For the
purposes of this Agreement, notices and all other communications provided for
in, or required under, this Agreement will be deemed to have been duly given
when personally delivered or when mailed by United States registered or
certified mail, return receipt requested, postage prepaid and addressed to each
party’s respective address set forth above, or to such other address as either
party may have furnished to the other in writing in accordance with these
provisions, except that notice of change of address will be effective only upon
receipt.
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S.
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Captions. The
various headings or captions in this Agreement are for convenience only
and will not affect the meaning or interpretation of this
Agreement.
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T.
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Counterparts. This
Agreement may be executed in several counterparts, each of which will be
deemed to be an original, but all of which together will constitute one
and the same instrument. Facsimile execution and delivery of
this Agreement shall be legal, valid and binding execution and delivery
for all purposes.
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Would you
please confirm that this Agreement is in accordance with your understanding and
that you have received a copy of this letter by signing and dating it where
indicated below, and returning an executed copy for our records.
Very
truly yours,
BIOSANTE
PHARMACEUTICALS, INC.
/s/ Louis W. Sullivan, M.D.
By: Louis
W. Sullivan, M.D.
Its: Chairman
of the Board
Agreed to
and confirmed as of July 16, 2008:
/s/ Stephen M. Simes
Stephen
M. Simes
Exhibit
A
DEFINITIONS
For
purposes of the Agreement, the following terms will have the meaning set forth
below in this Exhibit A unless the context clearly requires
otherwise. Terms defined elsewhere in the Agreement will have the
same meaning throughout the Agreement.
1. “Affiliate” means any
person with whom the Company would be considered a single employer under
Sections 414(b) and 414(c) of the Code, namely (i) any corporation at least
eighty percent (80%) of whose outstanding securities ordinarily having the right
to vote at elections of directors is owned directly or indirectly by the Company
or (ii) any other form of business entity in which the Company, directly or
indirectly, owns eighty percent (80%) or more of the controlling interests in
such entity.
2. “Benefit Plan” means
any
(a) employee
benefit plan as defined in Section 3(3) of ERISA;
(b) cafeteria
plan described in Code Section 125;
(c) plan,
policy or practice providing for paid vacation, other paid time off or short-or
long-term profit sharing, bonus or incentive payments or perquisites;
or
(d) stock
option, stock purchase, restricted stock, phantom stock, stock appreciation
right or other equity-based compensation plan with respect to the securities of
any Affiliate
that is
sponsored, maintained or contributed to by the Company for the benefit of
employees (and/or their families and dependents) generally or you in particular
(and/or your family and dependents).
3. “Board” means the
board of directors of the Company duly qualified and acting at the time in
question. On and after the date of a Change in Control, any duty of
the Board in connection with this Agreement is nondelegable and any attempt by
the Board to delegate any such duty is ineffective.
4. “Change in Control”
means a Change in Control of the Company, as defined in the BioSante
Pharmaceuticals, Inc. 2008 Stock Incentive Plan, after the date of this
Agreement.
5. “Code” means the
Internal Revenue Code of 1986, as amended (including, when the context requires,
all regulations, rulings and authoritative interpretations issued
thereunder). Any reference to a specific provision of the Code
includes a reference to such provision as it may be amended from time to time
and to any successor provision.
6. “Company” means
BioSante Pharmaceuticals, Inc., any Successor and any Affiliate.
7. “Date of Termination”
following a Change in Control (or prior to a Change in Control if your
termination was either a condition of the Change in Control or was at the
request or insistence of any Person related to the Change in Control)
means:
(a) if your
employment is to be terminated by you, the date specified in the Notice of
Termination which in no event may be a date more than 30 days after the date on
which Notice of Termination is given unless the Company agree in writing to a
later date;
(b) if your
employment is to be terminated by the Company for Cause, the date specified in
the Notice of Termination; or
(c) if your
employment is terminated by reason of your death, the date of your death;
or
(d) if your
employment is to be terminated by the Company for any reason other than Cause or
your death, the date specified in the Notice of Termination, which in no event
may be a date earlier than 30 days after the date on which a Notice of
Termination is given, unless you expressly agree in writing to an earlier
date.
In the
case of termination by the Company of your employment for Cause, if you have not
previously expressly agreed in writing to the termination, then within the
30-day period after your receipt of the Notice of Termination, you may notify
the Company that a dispute exists concerning the termination, in which event the
Date of Termination will be the date set either by mutual written agreement of
the parties or by the judge or arbitrators in a proceeding as provided in
Section IX.C. of the Agreement. During the pendency of any such
dispute, you will continue to make yourself available to provide services to the
Company and the Company will continue to pay you your full compensation and
benefits in effect immediately prior to the date on which the Notice of
Termination is given (without regard to any changes to such compensation or
benefits that constitute Good Reason) and until the dispute is resolved in
accordance with Section IX.C. of the Agreement. You will be entitled
to retain the full amount of any such compensation and benefits without regard
to the resolution of the dispute unless the judge or arbitrators decide(s) that
your claim of a dispute was frivolous or advanced by you in bad
faith.
In all
cases, your Date of Termination must be consistent with your Termination of
Employment.
8. “ERISA” means the
Employee Retirement Income Security Act of 1974, as amended. Any
reference to a specific provision of ERISA includes a reference to such
provision as it may be amended from time to time and to any successor
provision.
9. “Exchange Act” means
the Securities Exchange Act of 1934, as amended. Any reference to a
specific provision of the Exchange Act or to any rule or regulation thereunder
includes a reference to such provision as it may be amended from time to time
and to any successor provision.
10. “Notice of
Termination” means a written notice given on or after the date of a
Change in Control (unless your termination before the date of the Change in
Control was either a condition of the Change in Control or was at the request or
insistence of any Person related to the Change in Control in which case the
written notice may be given before the date of the Change in Control) which
indicates the specific termination provision in the Agreement pursuant to which
the notice is given. Any purported termination by the Company or by
you on or after the date of a Change in Control (or before the date of a Change
in Control if your termination was either a condition of the Change in Control
or was at the request or insistence of any Person related to the Change in
Control) must be communicated by written Notice of Termination to be effective;
provided, however, that your failure to provide Notice of Termination will not
limit any of your rights under the Agreement except to the extent the Company
demonstrates that it suffered material actual damages by reason of such
failure.
11. “Other Arrangement” is
any Benefit Plan or other plan, policy or practice of the Company or any other
agreement between you and the Company, other than this Agreement.
12. “Person” means any
individual, corporation, partnership, group, association or other person, as
such term is used in Section 13(d) or Section 14(d) of the Exchange Act, other
than the Company, any Affiliate or any qualified retirement plan sponsored by
the Company or an Affiliate.
13. “Specified
Employee” You are a “Specified Employee”
if on the date of your Termination of Employment you are a “key employee”
(defined below), and the Company or any Affiliate has stock that is publicly
traded on an established securities market within the meaning of such term under
Section 409A(a)(2)(B) of the Code. For this purpose, you are a “key
employee” during the 12-month period beginning on the April 1 immediately
following a calendar year, if you were employed by the Company or any Affiliate
and satisfied, at any time during such preceding calendar year, the requirements
of Section 416(i)(1)(A)(i), (ii) or (iii) of the Code (applied in accordance
with the regulations issued thereunder and disregarding Section 416(i)(5) of the
Code). You will not be treated as a Specified Employee if you are not
required to be treated as a Specified Employee under Treasury Regulations issued
under Section 409A of the Code.
14. “Successor” means any
Person that succeeds to, or has the practical ability to control (either
immediately or solely with the passage of time), the Company’s business
directly, by merger, consolidation or other form of business combination, or
indirectly, by purchase of the Company’s outstanding securities ordinarily
having the right to vote at the election of directors or all or substantially
all of its assets or otherwise.
15. “Termination of
Employment” means a termination of your employment relationship with the
Company and all Affiliates or such other change in your employment relationship
with the Company and all Affiliates that would be considered a “separation from
service” under Section 409A of the Code. Your employment relationship
will be treated as remaining intact while you are on a military leave, a sick
leave or other bona fide leave of absence (pursuant to which there is a
reasonable expectation that you will return to perform services for the Company
or an Affiliate) but only if the period of such leave does not exceed six (6)
months, or if longer, so long as you retain a right to reemployment by the
Company or an Affiliate under applicable statute or by contract, provided,
however, a twenty-nine (29) month period of absence may be substituted for such
six (6) month period of absence where your leave is due to any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than six
(6) months and such impairment causes you to be unable to perform the duties of
your position of employment or any substantially similar position of
employment. In all cases, your Termination of Employment must
constitute a “separation from service” under Section 409A of the Code and any
“separation from service” under Section 409A of the Code shall be treated as a
Termination of Employment.
AMENDED
AND RESTATED EMPLOYMENT LETTER AGREEMENT
July 16,
2008
Mr.
Phillip B. Donenberg
ADDRESS
INTENTIONALLY OMMITTED
Dear
Phil:
This
letter agreement (this “Agreement”) will amend and replace that certain
employment letter agreement between you and BioSante Pharmaceuticals, Inc.
(formerly known as Ben-Abraham Technologies, Inc.) (the “Company”) dated June
11, 1998, as amended through the date hereof.
The Board
of Directors of the Company considers the establishment and maintenance of a
sound and vital management team of the Company to be essential in protecting and
enhancing the best interests of the Company and its stockholders, and in this
connection recognizes that the possibility of a Change in Control may raise
uncertainty and questions that could result in the departure or distraction of
management personnel to the detriment of the Company and its
stockholders. The Board has determined that appropriate steps should
be taken to minimize the risk that Company executive management will depart
prior to a Change in Control, thereby leaving the Company without adequate
executive management personnel during such a critical period, and to reinforce
and encourage the continued attention and dedication of members of the Company’s
executive management to their assigned duties without distraction in
circumstances arising from the possibility of a Change in
Control. The Board recognizes that continuance of your position with
the Company involves a substantial commitment to the Company in terms of your
personal life and professional career and the possibility of foregoing present
and future career opportunities, for which the Company receives substantial
benefits. To induce you to remain in the employ of the Company, this
Agreement, which has been approved by the Board of Directors of the Company,
sets forth, among other things, the benefits that the Company agrees will be
provided to you in the event of a Change in Control under the circumstances
described below.
It is
intended that the payments and benefits provided under this Agreement will
comply, in form and operation, with the requirements of Section 409A of the Code
or an appropriate exception to the requirements of Section 409A and this
Agreement will be construed and administered in a manner that is consistent with
and gives effect to such intention.
Certain
capitalized terms that are used in this Agreement are defined in Exhibit A,
which is an integral part of this Agreement.
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I.
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Employment. Subject
to the terms and conditions described in this Agreement, the Company
agrees to continue to employ you as Chief Financial Officer, Treasurer and
Secretary of the Company, and you agree to continue to be so employed on
the following terms and conditions.
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II.
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Duties.
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A.
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You
agree to perform, on a full-time basis, exercising best efforts, duties
commensurate with your position as Chief Financial Officer, Treasurer and
Secretary, including, but not limited to, preparing monthly financial
statements, complying with public reporting requirements, timely
completion of audits, tax returns, maintenance of Company budgets, Company
benefit plans, and other duties as shall be assigned to you from
time-to-time by the President of the Company or the Chairman of the Board
of Directors. You shall report directly to the President and
CEO of the Company.
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B.
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While
you are employed by the Company, except as otherwise permitted by the
Company’s Conflict of Interest policy or this Agreement, you will not
engage in any business activity or outside employment that conflicts with
the Company’s interests or adversely affect the performance of your duties
for the Company.
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C.
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You
shall be based at, and shall perform your duties at, an office located in
Lincolnshire, Illinois. However, you shall also travel to other
locations at such times as may be appropriate for the performance of your
duties under this Agreement
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III.
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Term. This
Agreement is effective July 16, 2008 (the “Effective Date”), and may be
terminated by either party pursuant to Section V of this
Agreement.
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IV.
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Compensation.
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A.
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Base
Salary. The Company agrees to pay you an annual base
salary of Two Hundred Thirty Two Thousand One Hundred and Forty Dollars
($232,140) in accordance with the Company’s standard payroll practices
(“Base Salary”). In subsequent years, the Board of Directors
shall have the sole discretion to establish your Base Salary, except that,
at a minimum, it shall be adjusted upward consistent with changes to the
Consumer Price Index.
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B.
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Annual
Bonus. You will be eligible to receive an annual
performance bonus. The amount of said bonus and the terms of
payment shall be determined in the sole discretion of the Compensation
Committee and approved by the Board of
Directors.
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C.
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Options. In
the event that your employment is terminated by the Company other than for
Cause (as hereinafter defined), all outstanding stock options and shares
that are held by you or your estate will immediately become exercisable
and all restrictions against disposition, if any, which have not otherwise
lapsed shall immediately lapse, and the period within which they may be
exercised will be one year following such termination of
employment.
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D.
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Benefits. In
addition to the other compensation to be paid under this Section IV, you
will be entitled to participate in all Benefit Plans available to all
full-time, eligible employees hereafter established by the Company, in
accordance with the terms and conditions of such plans. These
plans include, but are not limited to, the following: a 401(k)
plan; group hospitalization, health, dental, disability, and term life
insurance. In addition, the Company agrees to reimburse you for
the amount of the annual insurance premiums for your supplemental term
life insurance and your supplemental long-term disability
insurance. The premium reimbursements made under this Section
IV.D will be made as soon as reasonably practicable but no later than 30
days after you submit a request for reimbursement to the Company, along
with any appropriate back-up documentation, provided that the
reimbursement is, in all cases, made on or before the last day of the
calendar year in which the cost of the premium was incurred by
you. The Company will make an additional tax gross up payment
to you in an amount equal to your federal, state and local tax liability
on the reimbursement of your insurance premiums under this Section IV.D,
plus an additional amount sufficient to permit you to retain a net amount
after all federal, state and local taxes equal to the initial tax
liability for the premium reimbursement. The tax gross up
payment will be made as soon as reasonably practicable but no later than
30 days after the gross-up calculation has been computed by the Company,
provided that the tax gross up payment, in all cases, will be paid by no
later than December 31 of the calendar year next following the calendar
year in which the related taxes are remitted to the appropriate taxing
authority.
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E.
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Reimbursement of
Business Expenses. In addition to payment of
compensation under this Section IV, the Company agrees to reimburse you
for all reasonable out-of-pocket business expenses incurred by you on
behalf of the Company, provided that you properly account to the Company
for all such expenses in accordance with the rules and regulations of the
Internal Revenue Service promulgated under the Internal Revenue Code of
1986, as amended, and in accordance with the standard policies of the
Company relating to reimbursement of business
expenses.
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F.
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Automobile
Allowance. The Company shall provide you with a monthly
stipend of Six Hundred Dollars ($600.00) for your automobile
use.
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G.
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Vacation. You
are entitled to four (4) weeks of paid vacation per calendar
year.
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V.
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Termination.
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A.
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Early
Termination. Subject to the respective continuing
obligations of the parties pursuant to Sections VI, VII and VIII, this
Section sets forth the terms for early termination of this
Agreement.
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B.
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Termination for
Cause. The Company may terminate this Agreement and your
employment immediately for Cause. For this purpose, “Cause”
means any of the following: (1) fraud, (2) theft or
embezzlement of the Company’s assets, (3) a violation of law involving
moral turpitude, (4) your repeated and willful failure to follow
instructions of the Board provided that the conduct has not ceased or the
offense cured within thirty (30) days following written warning from the
Company that sets forth in reasonable detail the facts claimed to provide
the basis for such termination, and (5) your conviction (including a plea
of nolo contendere) of willfully engaging in illegal conduct constituting
a felony or gross misdemeanor under federal or state law which is
materially and demonstrably injurious to the Company or which impairs your
ability to substantially perform your duties for the
Company. In the event of termination for Cause pursuant to this
Section V.B, you will be paid at the usual rate your annual Base Salary,
car allowance, and any out-of-pocket expenses, through the date of
termination specified in any notice of termination and any amounts to
which you are entitled under any Company Benefit Plan in accordance with
the terms of such plan.
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C.
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Termination Without
Cause. Either you or the Company may terminate this
Agreement and your employment without Cause on thirty (30) days written
notice. In the event of your Termination of Employment by you
pursuant to this Section V.C, you will be paid at the usual rate of your
annual Base Salary, car allowance, and any out-of-pocket expenses incurred
on behalf of the Company and accounted for pursuant to Section IV.E
through the date of termination specified in such notice (but not to
exceed thirty (30) days from the date of such
notice). Notwithstanding any provision to the contrary
contained herein, in the event of your Termination of Employment by the
Company at any time for any reason other than for Cause, disability or
death:
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1.
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Subject
to Section V.G, the Company shall pay you a severance benefit, in twelve
(12) equal monthly installments consistent with the Company’s payroll, an
amount equal to your Base Salary (includes only regular cash salary and is
determined before any reduction for deferrals pursuant to any nonqualified
deferred compensation plan or arrangement, qualified cash or deferred
arrangement or cafeteria plan) at the rate in effect at the time of your
Termination of Employment.
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2.
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You
shall be entitled to receive, until the earlier of (A) the expiration of
the “Severance Period” (which shall mean one year from the date of
termination), or (B) your obtaining full-time employment, life insurance
coverage substantially equivalent to the coverage you had on the day
immediately prior to your Termination of Employment, including
reimbursement of the cost of the premiums incurred on your supplemental
term life insurance, and any group term life insurance coverage then in
effect for your spouse and dependents. Reimbursement of the
cost of the premiums on your supplemental term life insurance under this
Section V.C.2 will be made as soon as reasonably practicable but no later
than 30 days after you submit a request for reimbursement to the Company,
along with any appropriate back-up documentation, provided that the
reimbursement is, in all cases, made on or before the last day of the
calendar year in which the cost of the premium is incurred by
you. You shall be required to pay no more for such life
insurance than you paid as an active employee immediately before your
Termination of Employment. In order to continue life insurance
coverage, you must timely elect continuation or the portability option
available under the Company’s group life insurance policy or policies and
pay the full premium for such coverage following Termination of
Employment. The Company will reimburse you for the amount by
which such life insurance premium exceeds the amount you paid for such
coverage as an active employee immediately prior to your Termination of
Employment. Such reimbursement will be made as soon as
reasonably practicable but no later than 30 days after you submit a
request for reimbursement to the Company, along with any appropriate
back-up documentation, provided that the reimbursement is, in all cases,
made on or before the last day of the calendar year following the calendar
year in which the cost of the premium was incurred by
you.
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3.
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Continuation
coverage will be provided to you under the Company’s group health and/or
dental plans, and, for each month of the Severance Period in which you
have continuation coverage, the Company will pay an amount equal to the
excess of (i) the portion of the monthly cost for your coverage under the
Company’s group health and/or dental plans that was borne by the Company
immediately prior to your Termination of Employment (subject to the rule
for coverage changes discussed below) over (ii) the portion of the monthly
cost for your coverage under the Company’s group health and/or dental
plans that is borne by the Company during the Severance
Period. Your coverage will be deemed to include any Company
contribution to a health savings account (or similar arrangement) for
you. If the level of your coverage changes during the Severance
Period, as, for example, from single to family coverage or to no coverage,
the amount which the Company shall pay will be determined as if the new
coverage level had been the level of coverage in effect immediately prior
to the Termination of Employment. You shall be entitled to health care
continuation coverage under the Company’s group health and/or dental plans
(which will run concurrently with any state or COBRA continuation) for up
to 12 months, which is through the end of the Severance Period, if you
have not become eligible to participate as an employee in a plan of
another employer providing group health and dental benefits to you and
your eligible family members and dependents, which plan does not contain
any exclusion or limitation with respect to any pre-existing condition of
you or any eligible family member or dependent who would otherwise be
covered under the Company’s plan but for this clause. If COBRA
or other continuation coverage is not available to you during any portion
of the Severance Period (other than by reason of your failure to elect
continuation coverage or to pay the required premiums for such coverage),
the Company will provide comparable medical benefits pursuant to an
alternative arrangement, such as an individual medical insurance contract,
and such alternative benefits will be treated as part of the Company’s
health and/or dental plan. Any reimbursement made under this
Section V.C.3 shall be made as soon as reasonably practicable but no later
than 30 days after you submit a request for reimbursement to the Company,
along with any appropriate back-up documentation, provided that the
reimbursement is, in all cases, made on or before the last day of the
calendar year following the calendar year in which any continuation
coverage payment was incurred.
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To the
extent you incur a tax liability (including foreign, federal, state and local
taxes) in connection with a benefit provided pursuant to this Section V.C.3
which you would not have incurred had you been an active employee of the Company
participating in the Company’s group health and dental plans, the Company will
make a payment to you in an amount equal to such tax liability plus an
additional amount sufficient to permit you to retain a net amount after all
taxes equal to the initial tax liability in connection with the
benefit. The payment pursuant to this Section V.C.3 will be made as
soon as reasonably practicable but no later than 30 days after your remittal of
a written request for payment accompanied by a statement indicating the basis
for and amount of your tax liability, provided that the tax gross up payment, in
all cases, will be paid by no later than December 31 of the calendar year next
following the calendar year in which the related taxes are remitted to the
appropriate taxing authority.
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4.
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For
the period commencing immediately following your Termination of Employment
and continuing for the duration of the Severance Period, the Company shall
provide continuation or conversion benefits under the Company’s group
short term and group long term disability insurance policies to provide
benefits that are substantially similar to those provided to you
immediately prior to your Termination of Employment; provided, if such
continuation or conversion is not allowed by or available under such
policy(ies), then the Company shall pay you in a lump sum the aggregate
dollar amount of the insurance premiums the Company would have incurred if
you had remained employed with the Company during the Severance
Period. In addition, the Company will continue to reimburse you
for the cost of the premiums you incur for your supplemental long-term
disability insurance coverage during the Severance Period. The
supplemental long-term disability insurance premium reimbursement made
under this Section V.C.4 will be made as soon as reasonably practicable
but no later than 30 days after you submit a request for reimbursement to
the Company, along with any appropriate back-up documentation, provided
that the reimbursement is, in all cases, made on or before the last day of
the calendar year in which the cost of the premium payment is incurred by
you.
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5.
|
The
Company will make an additional tax gross up payment to you in an amount
equal to your federal, state and local tax liability on your supplemental
long-term disability insurance premium reimbursement plus an additional
amount sufficient to permit you to retain a net amount after all federal,
state and local taxes equal to the initial tax liability for the premium
reimbursement. The tax gross up payment will be made as soon as
reasonably practicable but no later than 30 days after the gross-up
calculation has been computed by the Company, provided that the tax gross
up payment, in all cases, will be paid by no later than December 31 of the
calendar year next following the calendar year in which the related taxes
are remitted to the appropriate taxing
authority.
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6.
|
The
Company shall reimburse out-of-pocket expenses incurred by you on behalf
of the Company and accounted pursuant to Section
IV.E.
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7.
|
The
Company shall reimburse you for any and all unused vacation days accrued
to the date of such termination.
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D.
|
Termination for Good
Reason. You may terminate this Agreement upon thirty
(30) days written notice to the Company for Good Reason. For
this purpose, “Good Reason” means: (i) the assignment to you of
any duties inconsistent with your positions, duties, responsibilities and
status with the Company as of the date hereof, or a change in your
reporting responsibilities, titles or offices that is not reasonably
acceptable to you, or any removal of you from or any failure to re-elect
you to any of such positions; (ii) the failure of the Company to continue
in effect any fringe benefit or compensation plan, retirement plan, life
insurance plan, health or disability plan in which you were participating
(except as such change is prompted in good faith by a change in the law),
or the taking of any action by the Company, which could reasonably be
expected to adversely affect your participation in or materially reduce
your benefits under any such plans or deprive you of any material fringe
benefit enjoyed by you; (iii) the reduction of your salary or car
allowance or failure to increase such salary as is provided in Section
IV.A above; or (iv) any other material breach of this Agreement by the
Company. In any such case, subject to V.G., the Company will
pay you the amounts, and provide you the benefits, all as set forth in
Section V.C above.
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|
E.
|
Termination In The
Event of Death or Permanent Disability. This Agreement
and your employment will terminate in the event of your death or permanent
disability.
|
|
1.
|
In
the event of your death, Base Salary and car allowance will be terminated
as of the end of the month in which death
occurs.
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|
2.
|
Upon
your “disability,” the Company shall have the right to terminate your
employment. For the purposes of this Agreement, the term
“disability” shall mean your inability, due to illness, accident or any
other physical or mental incapacity, to substantially perform your duties
for a period of four (4) consecutive months or for a total of six (6)
months (whether or not consecutive) in any twelve (12) month period during
the term of this Agreement. Any termination pursuant to this
Section V.E.2 shall be effective on the date thirty (30) days after which
you shall have received written notice of the Company’s election to
terminate.
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|
3.
|
Notwithstanding
any inability to perform your duties, upon your disability, you shall be
entitled to receive your compensation (including bonuses, if any) as
provided herein until the date upon which you begin to receive long-term
disability insurance benefits under the policy provided by the Company
pursuant to this Agreement, or, if later, upon your Termination of
Employment.
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|
F.
|
Termination in
Connection with a Change in Control. Notwithstanding any
provision to the contrary contained herein, if and only if (i) your
Termination of Employment is by the Company for any reason other than for
Cause, or (ii) you terminate your employment with the Company for Good
Reason (which definition of Good Reason for purposes of this Section V.F.
also includes the following events in addition to those described in
Section V.D.: (aa) the failure by the Company to obtain from
any Successor the assent to this Agreement contemplated by Section IX.P.
of the Agreement; (bb) any purported termination by the Company of your
employment that is not properly effected pursuant to a Notice of
Termination and pursuant to any other requirements of this Agreement, and,
for purposes of this Section V.F., no such purported termination will be
effective; (cc) Company requiring you to be based at any office or
location that is more than thirty (30) miles further from the office or
location thereof immediately preceding a Change in Control, except for
required travel on the Company’s business and then only to the extent
substantially consistent with the business travel obligations which you
took on behalf of the Company during the year immediately preceding the
Change in Control; and (dd) any termination by you of your
employment for any reason during the first full calendar month following
the first year anniversary date of the Change in Control), and (ii) the
Termination of Employment occurs either within the period beginning on the
date of a Change in Control and ending on the last day of the first full
calendar month following the second year anniversary date of the Change in
Control or prior to a Change in Control if your Termination of Employment
was either a condition of the Change in Control or was at the request or
insistence of a Person related to the Change in Control, you will become
entitled to the benefits described in this Section
V.F.:
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|
1.
|
Subject
to Section V.G, not more than 10 days following the Date of Termination,
or, if later, not more than 10 days following the date of the Change in
Control, the Company will make a lump-sum cash payment to you in an amount
equal to the sum of (i) 1½ times your Base Salary (includes
only regular cash salary and is determined before any reduction for
deferrals pursuant to any nonqualified deferred compensation plan or
arrangement, qualified cash or deferred arrangement or cafeteria plan) at
the rate in effect immediately prior to a Change in Control or at the time
Notice of Termination is given, whichever is greater, plus (ii) 100% of
your maximum bonus (100% of Base Pay) established for the year during
which the Change in Control occurs.
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|
2.
|
Continuation
coverage will be provided to you under the Company’s group health and/or
dental plans, and for each month of the Continuation Period (as defined
below), the Company will pay an amount equal to the excess of (i) the
portion of the monthly cost for your coverage under the Company’s group
health and/or dental plans that was borne by the Company immediately prior
to your Termination of Employment or, if greater, immediately prior to the
Change in Control (subject to the rule for coverage changes discussed
below) over (ii) the portion of the monthly cost for your coverage under
the Company’s group health and/or dental plans that is borne by the
Company during the Continuation Period. Your coverage will be
deemed to include any Company contribution to a health savings account (or
similar arrangement) for you. If the level of your coverage
changes during the Continuation Period, as, for example, from single to
family coverage or to no coverage, the amount which the Company shall pay
will be determined as if the new coverage level had been the level of
coverage in effect immediately prior to the Termination of Employment or
Change in Control, as the case may be. You shall be entitled to
continuation coverage under the Company’s group health and/or dental plans
(which will run concurrently with any state or COBRA continuation) for up
to eighteen (18) months or until the end of the Continuation Period if you
have not become eligible to participate as an employee in a plan of
another employer providing group health and dental benefits to you and
your eligible family members and dependents, which plan does not contain
any exclusion or limitation with respect to any pre-existing condition of
you or any eligible family member or dependent who would otherwise be
covered under the Company’s plan but for this clause. If COBRA
or other continuation coverage is not available to you during any portion
of the Continuation Period (other than by reason of your failure to elect
continuation coverage or to pay the required premiums for such coverage),
the Company will provide comparable medical benefits pursuant to an
alternative arrangement, such as an individual medical insurance contract,
and such alternative benefits will be treated as part of the Company’s
health and/or dental plan. Any reimbursement made under this
Section V.F.2 shall be made as soon as reasonably practicable but no later
than 30 days after you submit a request for reimbursement to the Company,
along with any appropriate back-up documentation, provided that the
reimbursement is, in all cases, made on or before the last day of the
calendar year following the calendar year in which any continuation
coverage payment was incurred.
|
For
purposes of this Section V.F.2, Section V.F.3 and Section V.F.4 the
“Continuation Period” is the period beginning on your Date of Termination and
ending on (x) the last day of the 18th month
that begins after your Date of Termination or, if earlier, (y) the date after
your Date of Termination on which you first becomes eligible to participate as
an employee in a plan of another employer providing group health and dental
benefits to you and your eligible family members and dependents, which plan does
not contain any exclusion or limitation with respect to any pre-existing
condition of yours or any eligible family member or dependent who would
otherwise be covered under the Company’s plan but for this Section
V.F.2.
To the
extent you incur a tax liability (including foreign, federal, state and local
taxes) in connection with a benefit provided pursuant to this Section V.F.2
which you would not have incurred had you been an active employee of the Company
participating in the Company’s group health and dental plans, the Company will
make a payment to you in an amount equal to such tax liability plus an
additional amount sufficient to permit you to retain a net amount after all
taxes equal to the initial tax liability in connection with the
benefit. The payment pursuant to this Section V.F.2 will be made as
soon as reasonably practicable but no later than 30 days after your remittal of
a written request for payment accompanied by a statement indicating the basis
for and amount of your tax liability, provided that the tax gross up payment, in
all cases, will be paid by no later than December 31 of the calendar year next
following the calendar year in which the related taxes are remitted to the
appropriate taxing authority.
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3.
|
In
addition, during each month of the Continuation Period, you shall be
entitled to receive life insurance coverage substantially equivalent to
the coverage you had on the day immediately prior to your Termination of
Employment, including reimbursement of the premiums on your supplemental
term life insurance and any group term life insurance coverage then in
effect for your spouse and dependents. You shall be required to
pay no more for such life insurance than you paid as an active employee
immediately before your Termination of Employment. In order to
continue life insurance coverage, you must timely elect continuation or
the portability option available under the Company’s life insurance policy
or policies and pay the full premium for such coverage following
Termination of Employment. The Company will reimburse you for
the amount by which such life insurance premium exceeds the amount you
paid for such coverage as an active employee immediately prior to your
Termination of Employment. Such reimbursement will be made as
soon as reasonably practicable but no later than 30 days after you submit
a request for reimbursement to the Company, along with any appropriate
back-up documentation, provided that the reimbursement is, in all cases,
made on or before the last day of the calendar year following the calendar
year in which the premium was
incurred.
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|
4.
|
For
the period commencing immediately following your Termination of Employment
and continuing for the duration of the Continuation Period, the Company
shall provide continuation or conversion benefits under the Company’s
group short-term and group long-term disability insurance policies to
provide benefits that are substantially similar to those provided to you
immediately prior to your Termination of Employment; provided, if such
continuation or conversion is not allowed by or available under such
policy(ies), then the Company shall pay you, in a lump sum, the aggregate
dollar amount of the insurance premiums the Company would have incurred if
you had remained employed with the Company during the Severance
Period. In addition, the Company will continue to reimburse you
for the cost of your supplemental long-term disability
insurance. The supplemental long-term disability insurance
premium reimbursement made under this Section V.F.4 will be made as soon
as reasonably practicable but no later than 30 days after you submit a
request for reimbursement to the Company, along with any appropriate
back-up documentation, provided that the reimbursement is, in all cases,
made on or before the last day of the calendar year in which the premium
payment is incurred by you.
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|
5.
|
The
Company will make an additional tax gross up payment to you in an amount
equal to your federal, state and local tax liability on your supplemental
long-term disability insurance premium reimbursement plus an additional
amount sufficient to permit you to retain a net amount after all federal,
state and local taxes equal to the initial tax liability for the premium
reimbursement. The tax gross up payment will be made as soon as
reasonably practicable but no later than 30 days after the gross-up
calculation has been computed by the Company, provided that the tax gross
up payment, in all cases, will be paid by no later than December 31 of the
calendar year next following the calendar year in which the related taxes
are remitted to the appropriate taxing
authority.
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|
6.
|
The
Company will provide you with reasonable outplacement services at a
qualified agency selected by you up to a maximum amount of $30,000 for up
to one year (unless you become otherwise employed within such
period).
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|
7.
|
The
Company shall reimburse out-of-pocket expenses incurred by you on behalf
of the Company and accounted pursuant to Section
IV.E.
|
|
8.
|
The
Company shall reimburse you for any and all unused vacation days accrued
to the date of such termination.
|
|
9.
|
Notwithstanding
any other provisions of this Agreement or any other agreement, contract or
understanding heretofore or hereafter entered into between you and the
Company, if any “payments” (including, without limitation, any benefits or
transfers of property or the acceleration of the vesting of any benefits)
in the nature of compensation under any arrangement that is considered
contingent on a Change in Control for purposes of Section 280G of the
Code, together with any other payments that you have the right to receive
from the Company or any corporation that is a member of an “affiliated
group” (as defined in Section 1504(a) of the Code without regard to
Section 1504(b) of the Code) of which the Company is a member, would
constitute a “parachute payment” (as defined in Section 280G(b)(2) of the
Code), such “payments” will be reduced to the largest amount as will
result in no portion of such “payments” being subject to the excise tax
imposed by Section 4999 of the Code; provided, however, that such
reduction shall be made only if the aggregate amount of the payments after
such reduction exceeds the difference between (A) the amount of such
payments absent such reduction minus (B) the aggregate amount of the
excise tax imposed under Section 4999 of the Code attributable to any such
excess parachute payments. The parachute payments to be reduced under this
paragraph will be reduced in the following order: outplacement benefits,
life insurance benefits, reimbursement of supplemental disability
premiums, reimbursement of supplemental life insurance premiums,
disability benefits, dental benefits, lump sum cash severance, health plan
benefits, and option acceleration.
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|
10.
|
Following
a Change in Control, the Company will indemnify and advance expenses to
you for damages, costs and expenses (including, without limitation,
judgments, fines, penalties, settlements and reasonable fees and expenses
of the Executive’s counsel) (the “Expenses”) incurred in connection with
all matters, events and transactions relating to your service to or status
with the Company or any other corporation, employee benefit plan or other
Person for which you served at the request of the Company to the extent
that the Company would have been required to do so under applicable law,
corporate articles, bylaws or agreements or instruments of any nature with
or covering you, including any indemnification agreement between the
Company and the Executive, as in effect immediately prior to the Change in
Control and to any further extent as may be determined or agreed upon
following the Change in Control.
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|
G.
|
Six Month Suspension
for Specified Key Employees. Notwithstanding the
foregoing, if, at the time of your Termination of Employment, you are a
Specified Employee, then any payment under this Section V that constitutes
deferred compensation payable on account of a “separation from service”
under Code Section 409A shall be suspended and not made until the first
payroll date following the end of the six (6) month period following your
Termination of Employment, or, if earlier, upon your death. On
the first payroll date following the end of the six (6) month period
following your Termination of Employment, or, if earlier, upon
your death, the Company will pay you accrued interest on any suspended
payment, at an annual rate equal to 120% of the applicable Federal rate
(AFR), compounded semi-annually, determined under Code section 1274(d) in
effect for each month, from the date of Termination of Employment through
the date of payment.
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|
H.
|
Entire Termination
Payment. The compensation provided for in Sections V.B,
V.C, V.D, V.E and V.F for early termination of this Agreement will
constitute your sole remedy for such termination. For the
avoidance of doubt, any payments and benefits to be provided to you
pursuant to Section V.C, V.D or V.E. shall not be paid to the extent your
employment is terminated following a “change in control” under
circumstances entitling you to benefits under Section V.F. You
will not be entitled to any other termination or severance payment or
benefit which might otherwise be payable or available to you under any
other agreement between you and the Company or under any severance pay
plan or policy of the Company. This Section V will not have any
effect on distributions to which you may be entitled at termination from
any tax qualified retirement plan or any other plan (other than a
severance payment or similar plan).
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|
I.
|
Required Resignations
Upon Early Termination or Expiration. You agree that
upon any termination of your employment with the Company, such termination
under this Agreement will automatically and without further action be
deemed to constitute your simultaneous resignation from all director,
officer, trustee, agent and any other positions within the Company, all of
its affiliates (including but not limited to any entity that is a
shareholder of the Company and any subsidiaries and any parent of the
Company), the Company’s employee benefit plans, trusts and foundations
(charitable or otherwise) or any other similar position associated with
the Company. Simultaneously upon such termination of employment
or expiration of this employment agreement, you agree to execute and
deliver to the Company any and all documents, agreements, certificates,
letters or other written instruments confirming all such
resignations.
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|
VI.
|
Inventions.
|
|
A.
|
You
agree that all Inventions (as defined below) you make, conceive, reduce to
practice or author (either alone or with others) during or within one year
after the term of this Agreement will be the Company’s sole and exclusive
property. You will, with respect to any such
Invention: (i) keep current, accurate, and complete records,
which will belong to the Company and be kept and stored on the Company’s
premises while you are employed by the Company; (ii) promptly and fully
disclose the existence and describe the nature of the Invention to the
Company in writing (and without request); (iii) assign (and you do hereby
assign) to the Company all of your rights to the Invention, any
applications you make for patents or copyrights in any country, and any
patents or copyrights granted to you in any country; and (iv) acknowledge
and deliver promptly to the Company any written instruments, and perform
any other acts necessary in the Company’s opinion to preserve property
rights in the Invention against forfeiture, abandonment, or loss and to
obtain and maintain patents and/or copyrights on the Invention and to vest
the entire right and title to the Invention in the
Company.
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|
B.
|
“Inventions,”
as used in this Section, means any discoveries, improvements, creations,
ideas and inventions, including without limitation software and artistic
and literary works (whether or not they are described in writing or
reduced to practice) or other works of authorship (whether or not they can
be patented or copyrighted) that: (i) relate directly to the
Company’s business or the Company’s research or development during the
term of this Agreement; (ii) result from any work you perform for the
Company; (iii) use the Company’s equipment, supplies, facilities or trade
secret information; or (iv) you develop during any time that Section II
above obligates you to perform your employment
duties.
|
The
requirements of this Section do not apply to an Invention for which no
equipment, supplies, facility or trade secret information of the Company was
used and which was developed entirely on your own time, and which neither (1)
relates directly to the Company’s business or to the Company’s actual or
demonstrably anticipated research or development, nor (2) results from any work
you performed for the Company. Except as previously disclosed to the
Company in writing, you do not have, and will not assert, any claims to or
rights under any Inventions as having been made, conceived, authored or acquired
by you prior to your employment by the Company.
|
VII.
|
Proprietary
Information.
|
|
A.
|
Except
as required in your duties to the Company, you will never, either during
or after your employment by the Company, use or disclose Proprietary
Information to any person not authorized by the Company to receive
it. When your employment with the Company ends, you will
promptly turn over to the Company all records and any compositions,
articles, devices, apparatus and other items that disclose, describe or
embody Proprietary Information, including all copies, reproductions and
specimens of the Proprietary Information in your possession, regardless of
who prepared them.
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|
B.
|
“Proprietary
Information,” as used in this Section VII, means any nonpublic information
concerning the Company, including information relating to the Company’s
research, product development, engineering, purchasing, product costs,
accounting, leasing, servicing, manufacturing, sales, marketing,
administration and finances. This information includes, without
limitation: (i) trade secret information about the Company and
its products; (ii) “Inventions,” as defined in Section VI.B; (iii)
information concerning any of the Company’s past, current or possible
future products. Proprietary Information or confidential
information also includes any information which is not generally disclosed
and which is useful or helpful to the Company and/or which would be useful
or helpful to competitors. More specific examples include
financial data, sales figures for individual projects or groups of
projects, planned new projects or planned advertising programs, areas
where the Company intends to expand, lists of suppliers, lists of
customers, wage and salary data, capital investment plans, projected
earnings, changes in management or policies of the Company, testing data,
manufacturing methods, suppliers’ prices to us, or any plans we may have
for improving any of our products. This information is
confidential or Proprietary Information regardless of its form, e.g. oral,
written, electronic or other, and whether or not it is labeled as
“proprietary” or “confidential.” The Company’s Proprietary
Information or confidential information includes our information and that
of our affiliates and third parties concerning or relating to
us.
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|
VIII.
|
Competitive
Activities.
|
|
A.
|
You
agree that during your employment with the Company, you will not alone, or
in any capacity with another person or entity, (i) directly or indirectly
engage in any employment or activity that competes with the Company’s
business at the time your employment with the Company ends, within any
state in the United States or within Canada, (ii) in any way interfere or
attempt to interfere with the Company’s relationships with any of its
current or potential customers, or (iii) solicit for employment any of the
Company’s then employees on your own behalf or on behalf of any other
entity competing with the Company.
|
|
B.
|
You
also agree that for a period of one year after the termination of this
Agreement for any one of the following reasons: (i) for “Cause”
as defined above, or (ii) voluntarily by you without “Good Reason” as
defined above, you will abide by clauses (ii) and (iii) of Section VIII.A
above.
|
|
IX.
|
Miscellaneous.
|
|
A.
|
No Adequate
Remedy. You understand that if you fail to fulfill your
obligations under this Agreement, the damages to the Company would be very
difficult to determine. Therefore, in addition to any other
rights or remedies available to the Company at law, in equity, or by
statute, you hereby consent to the specific enforcement of this Agreement
by the Company through an injunction or restraining order issued by an
appropriate court.
|
|
B.
|
Governing
Law. The laws of Illinois will govern the validity,
construction, and performance of this Agreement, without regard to the
conflict of laws principles of any
jurisdiction.
|
|
C.
|
Arbitration. Any
and all disputes which arise concerning the rights, duties or obligations
of either party under any provision of this Agreement shall be resolved
exclusively by binding arbitration in accordance with the following terms
and conditions. The party seeking arbitration shall commence a
proceeding in arbitration in Chicago, Illinois under the Rules of the
American Arbitration Association. Within one month from one of
the party’s request for arbitration, the party requesting arbitration
shall appoint one arbitrator and within one month of the date of such
appointment, the other party shall appoint an
arbitrator. Within three weeks of the date that the second
arbitrator is appointed, and prior to any examination of the merits of the
case, the two arbitrators shall mutually select a third
arbitrator. If either of the parties fails to appoint an
arbitrator or if the two arbitrators fail to appoint the third arbitrator
within the periods referred to above, one shall be appointed in accordance
with the Rules within fifteen (15) days of the expiry date of the
respective period referred to above. The three arbitrators so
selected shall constitute the arbitral panel. The arbitral
panel shall make its decisions by the majority of its
members. The arbitral panel shall render its decision and award
in writing within ninety (90) days from its final
constitution. There shall be no appeal from the decision and
award of the arbitral panel, which shall be final and binding on the
parties and may be entered in any court having jurisdiction
thereof.
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|
D.
|
Rights in the Event of
Dispute. If, with respect to any alleged failure by the
Company to comply with any of the terms of this Agreement, you hire legal
counsel with respect to this Agreement or institute any negotiations or
institute or respond to legal action to assert or defend the validity of,
enforce your rights under, or recover damages for breach of this
Agreement, the Company shall pay, as they are incurred, your actual
expenses for attorneys’ fees and disbursements, together with such
additional payments, if any, as may be necessary so that the net-after-tax
payments to you equal such fees and disbursements, provided that such
payments shall be reimbursed by you to the Company if the Arbitration
panel rules in favor of the Company and further decides that such
reimbursement is appropriate. Further, pending the resolution
of any such claim or dispute, you shall not be deemed terminated for
purposes of this Agreement.
|
|
E.
|
No
Mitigation. You are not required to mitigate the amount
of any payments to be made pursuant to this Agreement by seeking other
employment or otherwise, nor shall the amount of any payments provided for
in this Agreement be reduced by any compensation earned by you as the
result of your self-employment or your employment by another employer
after the date of termination of your employment with the
Company.
|
|
F.
|
Taxes. All
benefits to be provided to you in connection with this Agreement will be
subject to required withholding of federal, state and local income, excise
and employment-related taxes. The Company’s good faith
determination with respect to its obligation to withhold such taxes
relieves it of any obligation that such amounts should have been paid to
you.
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|
G.
|
Construction. Wherever
possible, each provision of this Agreement will be interpreted so that it
is valid under the applicable law. If any provision of this
Agreement is to any extent invalid under the applicable law, that
provision will still be effective to the extent it remains valid under the
applicable law. The remainder of this Agreement also will
continue to be valid, and the entire agreement will continue to be valid
in other jurisdictions.
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|
H.
|
Amendments;
Waivers. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is
specifically agreed to in a writing that makes express reference to this
Agreement as the subject of such amendment, waiver or discharge and is
manually signed by you and a duly authorized officer of the
Company. No waiver by any party to this Agreement at any time
of any breach by another party to this Agreement of, or of compliance with
any condition or provision of this Agreement to be performed by such party
will be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No failure or
delay by either the Company or you in exercising any right or remedy under
this Agreement will waive any provision of the Agreement. Nor
will any single or partial exercise by either the Company or you of any
right or remedy under this Agreement preclude either the Company or you
from otherwise or further exercising these rights or remedies, or any
other rights or remedies granted by any law or any related
document.
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|
I.
|
Entire Agreement;
Related Agreements and Other Arrangements. This
Agreement, including Exhibit A attached hereto and incorporated as an
integral part of this Agreement, is the entire agreement between the
parties and replaces all other oral negotiations, commitments, writings
and understandings between the parties concerning the matters in this
Agreement. To the extent that any provision of any Other
Arrangement limits, qualifies or is inconsistent with any provision of
this Agreement, then for purposes of this Agreement, while such Other
Arrangement remains in force, the provision of this Agreement will control
and such provision of such Other Arrangement will be deemed to have been
superseded, and to be of no force or effect, as if such Other Arrangement
had been formally amended to the extent necessary to accomplish such
purpose. Nothing in this Agreement prevents or limits your
continuing or future participation in any Other Arrangement for which you
may qualify, and nothing in this Agreement limits or otherwise affects the
rights you may have under any Other Arrangement. Amounts that
are vested benefits or which you are otherwise entitled to receive under
any Other Arrangement at or subsequent to the Date of Termination will be
payable in accordance with such Other Arrangement. For the
avoidance of doubt, if as of the Date of Termination, any earned but
unpaid bonus for a previous calendar year becomes due and owing under the
terms of the resolutions of the Board of Directors of the Company
providing for the payment of such bonus, nothing in this Agreement will
prevent the payment of such bonus in accordance with the terms of such
resolutions. You acknowledge that you have been advised to seek
legal counsel to review this Agreement with you before you sign
it.
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|
J.
|
Payment;
Assignment. Benefits payable under this Agreement will
be paid only from the general assets of the Company. No Person
has any right to or interest in any specific assets of the Company by
reason of this Agreement. To the extent benefits under this
Agreement are not paid when due to you, you are a general unsecured
creditor of the Company with respect to any amounts
due. Benefits payable pursuant to this Agreement and the right
to receive future benefits may not be anticipated, alienated, sold,
transferred, assigned, pledged, encumbered or subject to any
charge.
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|
K.
|
Late
Payments. Except as provided under Section V.G.,
benefits not paid under Section V. of this Agreement when due will accrue
interest at the rate of 10% per year, or, if lesser, the maximum rate
permitted under applicable law, and shall be paid on the 5th day of the
month next following the month during which such interest
accrued.
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|
L.
|
Survival. The
respective obligations of, and benefits afforded to, the Company and you
which by their express terms or clear intent survive termination of your
employment with the Company or termination of this Agreement, as the case
may be, will survive termination of your employment with the Company or
termination of this Agreement, as the case may be, and will remain in full
force and effect according to their
terms.
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|
M.
|
Further
Assurances. The parties to this Agreement agree to
perform, or cause to be performed, such further acts and deeds and to
execute and deliver or cause to be executed and delivered, such additional
or supplemental documents or instruments as may be reasonably required by
the other party to carry into effect the intent and purpose of this
Agreement.
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N.
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Interpretation. The
invalidity or unenforceability of all or any part of any provision of this
Agreement will not affect the validity or enforceability of the remainder
of such provision or of any other provision of this Agreement, which will
remain in full force and effect.
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O.
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Severability and
Judicial Modification. If any portion of this Agreement
is adjudicated to be invalid or unenforceable, then a court of competent
jurisdiction shall amend, modify or delete that portion thus adjudicated
invalid or unenforceable. If any portion is deemed
unenforceable by virtue of its scope or limitation, the Company and you
agree that a court of competent jurisdiction shall modify such provision
to make it enforceable to the fullest extent permitted by Illinois
law.
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P.
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Successors. The
Company must seek to have any Successor, by agreement in form and
substance satisfactory to you, assent to the fulfillment by such Successor
of the Company’s obligations under this Agreement. Failure of
the Company to obtain such assent at least three (3) business days prior
to the time a Person becomes a Successor (or where the Company does not
have at least three business days’ advance notice that a Person may become
a Successor, within one business day after having notice that such Person
may become or has become a Successor) will constitute Good Reason for
termination by you of your employment. The date on which any such
succession becomes effective will be deemed the Date of Termination, and
Notice of Termination will be deemed to have been given on that
date. A Successor has no rights, authority or power with
respect to this Agreement prior to a Change in
Control.
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Q.
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Binding
Agreement. This Agreement inures to the benefit of, and
is enforceable by, you, your personal and legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If you die while employed by the Company or while any
amount would still be payable to you under this Agreement if you had
continued to live, all such amounts, unless otherwise provided in this
Agreement, will be paid in accordance with the terms of this Agreement to
your devisee, legatee or other designee or, if there be no such designee,
to your estate.
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R.
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Notices. All
notices, requests and demands given to or made pursuant hereto will,
except as otherwise specified herein, be in writing and be delivered or
mailed to any such party at its address
which:
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1.
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In
the case of the Company will be:
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BioSante
Pharmaceuticals, Inc.
111
Barclay Boulevard
Lincolnshire,
IL 60069
Attention: Chairman
of the Board
With a
copy to:
Oppenheimer
Wolff & Donnelly LLP
Plaza VII
Building, Suite 3300
45 South
Seventh Street
Minneapolis,
MN 55402
Attention: Amy
E. Culbert, Esq.
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2.
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In
the case of employee will be:
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Phillip
B. Donenberg
ADDRESS
INTENTIONALLY OMMITTED
For the
purposes of this Agreement, notices and all other communications provided for
in, or required under, this Agreement will be deemed to have been duly given
when personally delivered or when mailed by United States registered or
certified mail, return receipt requested, postage prepaid and addressed to each
party’s respective address set forth above, or to such other address as either
party may have furnished to the other in writing in accordance with these
provisions, except that notice of change of address will be effective only upon
receipt.
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S.
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Captions. The
various headings or captions in this Agreement are for convenience only
and will not affect the meaning or interpretation of this
Agreement.
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T.
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Counterparts. This
Agreement may be executed in several counterparts, each of which will be
deemed to be an original, but all of which together will constitute one
and the same instrument. Facsimile execution and delivery of
this Agreement shall be legal, valid and binding execution and delivery
for all purposes.
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Would you
please confirm that this Agreement is in accordance with your understanding and
that you have received a copy of this letter by signing and dating it where
indicated below, and returning an executed copy for our records.
Very
truly yours,
BIOSANTE
PHARMACEUTICALS, INC.
/s/ Loius W. Sullivan,
M.D.
By: Louis
W. Sullivan, M.D.
Its: Chairman
of the Board
Agreed to
and confirmed as of July 16, 2008:
/s/ Phillip B. Donenberg
Phillip
B. Donenberg
Exhibit
A
DEFINITIONS
For
purposes of the Agreement, the following terms will have the meaning set forth
below in this Exhibit A unless the context clearly requires
otherwise. Terms defined elsewhere in the Agreement will have the
same meaning throughout the Agreement.
1. “Affiliate” means any
person with whom the Company would be considered a single employer under
Sections 414(b) and 414(c) of the Code, namely (i) any corporation at least
eighty percent (80%) of whose outstanding securities ordinarily having the right
to vote at elections of directors is owned directly or indirectly by the Company
or (ii) any other form of business entity in which the Company, directly or
indirectly, owns eighty percent (80%) or more of the controlling interests in
such entity.
2. “Benefit Plan” means
any
(a) employee
benefit plan as defined in Section 3(3) of ERISA;
(b) cafeteria
plan described in Code Section 125;
(c) plan,
policy or practice providing for paid vacation, other paid time off or short-or
long-term profit sharing, bonus or incentive payments or perquisites;
or
(d) stock
option, stock purchase, restricted stock, phantom stock, stock appreciation
right or other equity-based compensation plan with respect to the securities of
any Affiliate
that is
sponsored, maintained or contributed to by the Company for the benefit of
employees (and/or their families and dependents) generally or you in particular
(and/or your family and dependents).
3. “Board” means the
board of directors of the Company duly qualified and acting at the time in
question. On and after the date of a Change in Control, any duty of
the Board in connection with this Agreement is nondelegable and any attempt by
the Board to delegate any such duty is ineffective.
4. “Change in Control”
means a Change in Control of the Company, as defined in the BioSante
Pharmaceuticals, Inc. 2008 Stock Incentive Plan, after the date of this
Agreement.
5. “Code” means the
Internal Revenue Code of 1986, as amended (including, when the context requires,
all regulations, rulings and authoritative interpretations issued
thereunder). Any reference to a specific provision of the Code
includes a reference to such provision as it may be amended from time to time
and to any successor provision.
6. “Company” means
BioSante Pharmaceuticals, Inc., any Successor and any Affiliate.
7. “Date of Termination”
following a Change in Control (or prior to a Change in Control if your
termination was either a condition of the Change in Control or was at the
request or insistence of any Person related to the Change in Control)
means:
(a) if your
employment is to be terminated by you, the date specified in the Notice of
Termination which in no event may be a date more than 30 days after the date on
which Notice of Termination is given unless the Company agree in writing to a
later date;
(b) if your
employment is to be terminated by the Company for Cause, the date specified in
the Notice of Termination; or
(c) if your
employment is terminated by reason of your death, the date of your death;
or
(d) if your
employment is to be terminated by the Company for any reason other than Cause or
your death, the date specified in the Notice of Termination, which in no event
may be a date earlier than 30 days after the date on which a Notice of
Termination is given, unless you expressly agree in writing to an earlier
date.
In the
case of termination by the Company of your employment for Cause, if you have not
previously expressly agreed in writing to the termination, then within the
30-day period after your receipt of the Notice of Termination, you may notify
the Company that a dispute exists concerning the termination, in which event the
Date of Termination will be the date set either by mutual written agreement of
the parties or by the judge or arbitrators in a proceeding as provided in
Section IX.C. of the Agreement. During the pendency of any such
dispute, you will continue to make yourself available to provide services to the
Company and the Company will continue to pay you your full compensation and
benefits in effect immediately prior to the date on which the Notice of
Termination is given (without regard to any changes to such compensation or
benefits that constitute Good Reason) and until the dispute is resolved in
accordance with Section IX.C. of the Agreement. You will be entitled
to retain the full amount of any such compensation and benefits without regard
to the resolution of the dispute unless the judge or arbitrators decide(s) that
your claim of a dispute was frivolous or advanced by you in bad
faith.
In all
cases, your Date of Termination must be consistent with your Termination of
Employment.
8. “ERISA” means the
Employee Retirement Income Security Act of 1974, as amended. Any
reference to a specific provision of ERISA includes a reference to such
provision as it may be amended from time to time and to any successor
provision.
9. “Exchange Act” means
the Securities Exchange Act of 1934, as amended. Any reference to a
specific provision of the Exchange Act or to any rule or regulation thereunder
includes a reference to such provision as it may be amended from time to time
and to any successor provision.
10. “Notice of
Termination” means a written notice given on or after the date of a
Change in Control (unless your termination before the date of the Change in
Control was either a condition of the Change in Control or was at the request or
insistence of any Person related to the Change in Control in which case the
written notice may be given before the date of the Change in Control) which
indicates the specific termination provision in the Agreement pursuant to which
the notice is given. Any purported termination by the Company or by
you on or after the date of a Change in Control (or before the date of a Change
in Control if your termination was either a condition of the Change in Control
or was at the request or insistence of any Person related to the Change in
Control) must be communicated by written Notice of Termination to be effective;
provided, however, that your failure to provide Notice of Termination will not
limit any of your rights under the Agreement except to the extent the Company
demonstrates that it suffered material actual damages by reason of such
failure.
11. “Other Arrangement” is
any Benefit Plan or other plan, policy or practice of the Company or any other
agreement between you and the Company, other than this Agreement.
12. “Person” means any
individual, corporation, partnership, group, association or other person, as
such term is used in Section 13(d) or Section 14(d) of the Exchange Act, other
than the Company, any Affiliate or any qualified retirement plan sponsored by
the Company or an Affiliate.
13. “Specified
Employee” You are a “Specified Employee”
if on the date of your Termination of Employment you are a “key employee”
(defined below), and the Company or any Affiliate has stock that is publicly
traded on an established securities market within the meaning of such term under
Section 409A(a)(2)(B) of the Code. For this purpose, you are a “key
employee” during the 12-month period beginning on the April 1 immediately
following a calendar year, if you were employed by the Company or any Affiliate
and satisfied, at any time during such preceding calendar year, the requirements
of Section 416(i)(1)(A)(i), (ii) or (iii) of the Code (applied in accordance
with the regulations issued thereunder and disregarding Section 416(i)(5) of the
Code). You will not be treated as a Specified Employee if you are not
required to be treated as a Specified Employee under Treasury Regulations issued
under Section 409A of the Code.
14. “Successor” means any
Person that succeeds to, or has the practical ability to control (either
immediately or solely with the passage of time), the Company’s business
directly, by merger, consolidation or other form of business combination, or
indirectly, by purchase of the Company’s outstanding securities ordinarily
having the right to vote at the election of directors or all or substantially
all of its assets or otherwise.
15. “Termination of
Employment” means a termination of your employment relationship with the
Company and all Affiliates or such other change in your employment relationship
with the Company and all Affiliates that would be considered a “separation from
service” under Section 409A of the Code. Your employment relationship
will be treated as remaining intact while you are on a military leave, a sick
leave or other bona fide leave of absence (pursuant to which there is a
reasonable expectation that you will return to perform services for the Company
or an Affiliate) but only if the period of such leave does not exceed six (6)
months, or if longer, so long as you retain a right to reemployment by the
Company or an Affiliate under applicable statute or by contract, provided,
however, a twenty-nine (29) month period of absence may be substituted for such
six (6) month period of absence where your leave is due to any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than six
(6) months and such impairment causes you to be unable to perform the duties of
your position of employment or any substantially similar position of
employment. In all cases, your Termination of Employment must
constitute a “separation from service” under Section 409A of the Code and any
“separation from service” under Section 409A of the Code shall be treated as a
Termination of Employment.