Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into this first
day of July, 2005, by and between MedaSorb Technologies, LLC, (the "Company"),
and Xxxxx Xxxxxxxx ("Employee").
The Company wishes to employ Employee as Chief Financial Officer upon the
terms and conditions set forth in this Agreement and Employee is willing to
accept employment subject to the terms and conditions set forth below.
Accordingly, the parties, intending to be legally bound, agree as follows:
1. Employment and Term
1.1 Employment. Subject to the terms and conditions hereof, the Company
hereby employs Employee during the term of employment set forth in Section 1.2
to serve as Chief Financial Officer of the Company and perform such services and
duties as are normally and customarily associated with such position as well as
such other associated duties as the Chief Executive Officer (CEO) shall
determine. Employee hereby accepts such employment and agrees to devote
sufficient time, attention and energies during regular business hours to
effectively perform his duties and obligations hereunder.
1.2 Term. The term of employment of Employee under this Agreement shall be
one (1) year commencing July 1, 2005 and expiring on July 1 , 2006 (the "Term")
and automatically renewed thereafter from year to year unless within 120 days
prior to end of initial term or the end of any renewal year, either party gives
the other written notice of its intention not to renew in which event this
Agreement shall terminate at the end of the initial Term or the end of that
renewal year term, subject to the provisions for early termination set forth
herein.
2. Compensation. In consideration of the services to be rendered hereunder, the
Company hereby agrees to (a) pay Employee an annual base compensation of
$135,629 payable in equal semimonthly installments in accordance with the usual
practice of the Company which base compensation shall be subject to annual
review (but his compensation may not be reduced from then current level) by the
CEO, and (b) grant Management Units for that number of Membership Units which
equal to 1.8% of the outstanding Membership Units of the equity of the Company
determined and granted on July 1, 2005 at a Measurement Value of $0.50 per Unit
(the "Management Units") in lieu of all employee grants made prior to the date
hereof, said number of units to vest as follows: 66% on the date hereof, 20% on
12/31/05 and 14% on 12/31/06, subject to the terms hereof. Notwithstanding
anything set forth herein to the contrary, in the event of the issuance of
additional Membership Units, granting of options to third parties or the
issuance of securities convertible or exercisable into Membership Units of the
Company, then the Company agrees to immediately adjust in favor of the Employee
the number of Management Units granted hereunder to assure that Employee at all
times retains a 1.8% equity interest in the Company on a fully diluted basis
until 12-31-05. It is also understood that the Employee's Management Units will
be adjusted on the same basis as all other Unit holders to account for any stock
split, stock dividend, combination or recapitalization.
3. Benefits.
3.1 Participation in Plans. During the term hereof, Employee shall be
entitled to participate on the same terms as afforded other executive
officers in any group insurance, hospitalization, medical, dental, health
and accident, disability or similar plan or program of the Company now
existing or established hereafter to the extent that he is eligible under
the general provisions thereof; provided that in no case shall the
benefits be reduced or less than that granted, awarded or provided to
Employee on the date hereof.
3.2 Reasonable Business Expenses. Employee shall be allowed reimbursement
for reasonable business expenses in connection with the performance of his
duties hereunder upon presentation by Employee of the details of, vouchers
for, such expenses, including tourist class commercial air travel, and
Employee shall be furnished reasonable office space, assistance and
facilities.
3.3 Vacation. Employee shall be entitled to a vacation (without deduction
of salary or other compensation) for the period as is in conformity with
the Company's policy regarding vacations for management employees (but in
no event less than three weeks per year).
3.4 Bonuses. Employee may receive such discretionary bonuses as the CEO,
in its sole discretion and from time to time, deem appropriate.
3.5 Travel Expenses. Employee shall be allowed reimbursement for expenses
incurred while traveling to and from New York and MedaSorb facilities in
New Jersey.
4. Early Termination of Employment
4.1 Termination for Justifiable Cause. In addition to termination pursuant
to Section 1.2, the Company, by written notice to Employee authorized by the CEO
may terminate Employee's employment for "justifiable cause", which shall mean
any of the following events: (a) adjudication by a court of competent
jurisdiction that Employee has committed an act of fraud or dishonesty resulting
or intended to result, directly or indirectly, in personal enrichment at the
expense of the Company; (b) an indictment of a felony (other than a motor
vehicle related matter) involving moral turpitude; (c) repeated failure or
refusal by Employee to follow written policies and directions reasonably
established by the CEO that go uncorrected for a period of thirty (30)
consecutive days after written notice has been provided to Employee; or (d)
persistent willful failure by Employee to fulfill his duties hereunder that goes
uncorrected for a period of thirty (30) consecutive days after written notice
has been provided Employee.
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4.2 In the event that the CEO reasonably determines that the Employee has
committed a felony (other than a motor vehicle related matter), a material act
of fraud or other willful tort against the Company, it shall have the right to
suspend Employee from his position and duties hereunder without compensation
until such time as either the action is dropped or no longer pursued or a final
adjudication of Employee's actions is made by a court (whether civil or criminal
as appropriate) of competent jurisdiction. Should said adjudication find
Employee innocent (or not at fault) or the action is dropped or no longer
pursued, the Company shall promptly pay him all unpaid back salary together with
interest on said amount (at the average consumer loan rate published by
Citibank, N.A., during the suspension period) and, if said final adjudication is
rendered or action dropped or no longer pursued within 12 months of Employee's
suspension, he may, at his option, be reinstated to his position and this
Agreement continued as if never interrupted.
4.3 Permanent Disability of Employee. The Company shall have the right to
terminate Employee's employment hereunder if the CEO shall in good faith and on
the basis of reasonable medical evidence determine that Employee, by reason of
physical or mental disability, has been unable to perform the services required
of him hereunder for more than 120 consecutive days or an aggregate of 180
calendar days, during any 12-month period. Such termination shall be effective
as of the last day of the month following the month in which the Company shall
have given notice to Employee of its intention to terminate pursuant to this
paragraph. Company paid Disability Benefits will be activated 90 days after
termination.
4.4 Compensation Upon Early Termination.
(a) In the event of termination of this Agreement for "justifiable
cause" as described in Section 4.1, or pursuant to Section 1.2
hereof, Employee shall be entitled to the compensation earned by him
before the effective date of termination, as provided for in this
Agreement, computed pro rata up to and including that date, in lieu
of salary and other benefits under this Agreement.
(b) If prior to the expiration of the term of this Agreement
Employee dies, the Company shall continue Employee's compensation
and coverage of Employee's direct dependents (if any and if they are
eligible) under all plans or programs of the types listed in Section
3.1 for a period of 120 days, provided that no benefits will
continue past the end of the term of this Agreement.
(c) Upon a Change of Control or upon Employee's termination for
"Good Reason" as defined below, Employee shall then be entitled to
receive, in lieu of salary and other benefits under this Agreement,
(i) an amount equal to his then-current base salary, payable monthly
in arrears without interest for a period of one year, (ii) continued
coverage under all plans or programs of the types listed in Section
3.1 until the sooner of 1 year or one (1) month after Employee
becomes otherwise employed and eligible for other comparable
coverage, and (iii) all other benefits provided to Employee under
this Agreement for a period of thirty (30) days.
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4.5 In the event Employee is terminated for any reason other than for
"justifiable cause" as defined in Section 4.1 hereof, death, disability or
voluntary termination (unless the Company and Employee mutually agree to such
voluntary termination), then all unexercised options granted to Employee under
the Company's option plan (including without limitation the Management Units
granted pursuant to Section 2(b) hereof) shall be deemed fully vested and
exercisable immediately upon Employee's termination. The foregoing benefit shall
be in addition to, and not in lieu of, any similar benefit that may be contained
in any other agreement between the Company and Employee.
4.6 (a) Upon the occurrence of a Change of Control of the Company or
Employee terminates for Good Reason pursuant to Section 4.6(d), all options
granted to Employee under the Company option plan and the Management Units
granted to Employee pursuant to Section 2(b) hereof shall be automatically fully
vested and exercisable immediately upon a Change of Control.
(b) For purposes of this Agreement, "Change of Control" shall be
deemed to have occurred if, during the term of this agreement:
(i) the beneficial ownership of at least 50% of the Company's voting
securities or all or substantially all of the assets of the Company shall have
been acquired, directly or indirectly by a single person or a group of
affiliated persons, other that the Employee or a group in which the Employee is
a member, in any transaction or series of transactions; or
(ii) as the result of or in connection with any cash tender offer,
exchange offer, sale of assets, merger, consolidation or other business
combination of the Company with another corporation or entity the new Board of
Managers is comprised of a majority of Managers chosen or elected by the members
of the new/combined entity who were not members of the Company before such cash
tender offer, exchange offer, sale of assets, merger, consolidation or other
business combination of the Company with another corporation or entity
(c) For purposes of this Agreement, the date of Change of Control
shall mean the earlier to occur of:
(i) the first date on which a single person or group of affiliated
persons acquires the beneficial ownership of 50% or more of the Company's voting
securities or all or substantially all of the Company's assets in any
transaction or series of transactions; or
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(ii) the date on which a cash tender offer, exchange offer, sale of
assets, merger, consolidation other business combination resulting in the change
in the Board of Managers contemplated by Section 4.5 hereof is consummated.
(d) For purposes of this Agreement, the term "Good Reason" shall mean
the assignment to Employee of any duties that are not in the same corporate
capacity or area of operations or are not of the same general nature as
Employee's duties with Company without the Employee's express written consent.
5. Confidentiality and Non-Competition.
5.1 (i) Confidentiality. During the term of employment under this
Agreement, Employee will have access to and become acquainted with various
confidential information including without limitation, trade secrets, customer
relationships, formulas, devices, inventions, processes, know-how, financial
information and other compilations of information, records, and specifications,
which are owned by the Company. Employee shall not disclose any of the Company's
confidential information, directly or indirectly, or use them in any way, either
during the term of this Agreement or at any time thereafter, except as required
in the course of his employment for the Company. All files, records, documents,
drawings, specifications, equipment and similar items relating to the business
of the Company, whether prepared by Employee or otherwise coming into his
possession, shall remain the exclusive property of the Company and shall not be
removed from the premises of the Company under any circumstances whatsoever
without the prior written consent of the Company, and if removed shall be
immediately returned to the Company upon any termination of his employment and
no copies thereof shall be kept by Employee, provided, however, that Employee
shall be entitled to retain documents reasonably related to his interest as a
shareholder.
(ii) Inventions and Shop Right. Every invention, discovery or
improvement made or conceived by Employee related to the business of the Company
during his employment by the Company whenever and wherever made or conceived,
and whether or not during business hours, of any product, article, appliance,
tool, device, formula, process, machinery or pattern similar to, or which
constitutes an improvement, on those heretofore, now or at any time during this
employment, manufactured or used by the Company in connection with the
manufacture or process of any product heretofore or now or hereafter
manufactured by the Company, or of any product which shall or could reasonably
be manufactured in the reasonable expansion of the Company's business, shall be
and continue remain the Company's exclusive property, without any added
compensation or any reimbursement for expenses to Employee, and upon the
conception of any and every such invention, discovery or improvement and without
waiting to perfect or complete it, Employee promises and agrees that he will
immediately disclose it to the Company and to no one else and thenceforth will
treat it as the property and secret of the Company. Employee will also execute
any instruments requested from time to time by the Company to vest in it
complete title and ownership to such invention, discovery or improvement and
will, at the request of the Company, do such acts and execute such instruments
as the Company may require but at the Company's expense to obtain Letters Patent
in the United States and foreign countries, for such invention, discovery or
improvement and for the purpose of vesting title thereto in the Company, all
without any reimbursement for expenses or otherwise and without any additional
compensation of any kind to Employee.
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5.2 Non-Competition. In the event of a termination of this Agreement for
any reason, Employee shall be prohibited for a period of one (1) year from the
effective date of this separation from engaging in any business in competition
with that of the Company in those states within the United States and those
countries outside the United States in which the Company at the time of
Employee's separation has conducted business or where Company has written a
reasonable plan to conduct business in the next 12 months or directly or
indirectly advising or consulting to or otherwise performing services for or
providing assistance to any person, firm, corporation, or other entity engaged
in such competitive business, provided, however, nothing herein contained shall
be construed as (a) preventing Employee from investing his personal assets in
any businesses which do not compete directly or indirectly with the Company,
provided such investment or investments do not require any services on his part
in the operation of the affairs of the entity in which such investment is made
and in which his participation is solely that of an investor, (b) preventing
Employee from purchasing securities in any corporation whose securities in any
corporation whose securities are regularly traded, if such purchases shall not
result in his owning beneficially at any time 3% or more of equity securities of
any corporation engaged in a business which is competitive, directly or
indirectly, to that of the Company, (c) preventing Employee from engaging in any
activities, if he receives the prior authorization of the Managers.
Notwithstanding anything herein to the contrary this Section 5.2 shall not be
effective in the event Employee has been discharged for any reason other than
"justifiable cause" or voluntarily leaves the employment of the Company with the
mutual agreement of the Company.
5.3 Subsequent to the termination of this Agreement, Employee will not for
a period of one (1) year materially interfere with or disrupt the Company's
business relationship with its customers or suppliers or employ any person who
was employed with the Company at any time during the 6 months prior to
Employee's termination, or for a period of three (3) years, directly or
indirectly solicit any of the employees to leave the employ of the Company.
6. Notices. All notices under this Agreement shall be in writing and shall be
deemed effective when delivered in person (in the Company's case, to its
President or Secretary) or forty eight (48) hours after deposit thereof in the
U.S. mail, postage prepaid, addressed to Employee, at last known address as
carried in the records of the Company, or to the Company, at the corporate
headquarters, to the attention of the Secretary, or to such other address as the
party to be notified may specify by notice to the other party.
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7. Assigns and Successors. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company and the rights and obligations of Employee shall move
to the benefit of and shall be binding on Employee and his legal representatives
or heirs. This agreement constitutes a personal service agreement and Employee's
obligations hereunder may not be transferred or assigned by Employee.
8. Amendment Waiver. This Agreement may be amended, and any right or claim
hereunder waived, only by a written instrument signed by both Employee and the
Company, following authorization by the CEO. Nothing in this Agreement, express
or implied, is intended to confer upon any third person any rights or remedies
under or by reason of this Agreement. No amendment or waiver of this Agreement
requires the consent of any individual, partnership, corporation or other entity
not a party of this Agreement.
9. Injunction.
(a) Should Employee at any time violate or threaten to violate any of the
provisions of this Agreement, the Company shall be entitled to an injunction
restraining Employee from doing or continuing to do or performing any such acts,
and Employee hereby consents to the issuance of such an injunction.
(b) In the event that a proceeding is bought in equity to enforce the
provisions of this paragraph, Employee shall not urge as a defense that there is
an adequate remedy at law, nor shall the Company be prevented from seeking any
other remedies which may be available.
(c) The existence of a claim or cause of action by the Company against
Employee, or by Employee against the Company, whether predicated upon this
Agreement or otherwise, shall not constitute a defense to the endorsement by the
Company of the foregoing restrictive covenants but shall be litigated
separately.
(d) The provisions of this Section 9 shall survive termination of this
Agreement.
10. Governing Law and Jurisdiction. This Agreement in its interpretation and
application and enforcement shall be governed by the law of the State of New
Jersey without application of its conflict of laws provisions, and any legal
action commenced by either party seeking interpretation, application and/or
enforcement of this Agreement shall be brought only in the State of New Jersey
of federal court sitting in Princeton, NJ.
11. Prior Agreements. This Agreement supercedes and replaces any and all prior
agreements between the parties as to its subject matter.
12. Construction. Paragraph headings are for convenience only and shall not be
considered a part of the terms and provisions of this Agreement.
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13. Effective Date. The effective date of this Agreement shall be July 1, 2005.
IN WITNESS WHEREOF, the parties have executed this Agreement.
MEDASORB TECHNOLOGIES, LLC EMPLOYEE
By: ___________________________________ ____________________
Xx Xxxxx, President and Xxxxx Xxxxxxxx
Chief Executive Officer
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