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 5, 2011
Immunomedics, Inc.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 000-12104 | 61-1009366 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
| 300 American Road, Morris Plains, New Jersey | 07950 | |||
| (Address of Principal Executive Offices) | (Zip Code) | |||
(973) 605-8200
(Registrant’s telephone number, including area code)
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425). |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12). |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)). |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)). |
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On July 5, 2011, Immunomedics, Inc., a Delaware corporation (the “Company”) entered into (i) the Fourth Amended and Restated Employment Agreement with Cynthia L. Sullivan pertaining to Ms. Sullivan’s service to the Company as the Company’s President and Chief Executive Officer (the “Sullivan Agreement”) and (ii) the Third Amended and Restated Employment Agreement with Dr. David M. Goldenberg pertaining to Dr. Goldenberg’s service to the Company as its Chief Scientific Officer and Chief Medical Officer (the “Goldenberg Agreement”). The Compensation Committee (the “Compensation Committee”) of the Company’s Board of Directors (the “Board”) reviewed the prior agreements with each of Ms. Sullivan and Dr. Goldenberg. While many of the provisions remain unchanged, the amended agreements remove certain provisions, such as automatic renewals and 280G tax gross-up provisions. A summary of the entire agreements is set forth below.
Cynthia L. Sullivan
The Sullivan Agreement, which is effective as of July 1, 2011, will continue, unless earlier terminated by the parties, until July 1, 2014 (the “Sullivan Term”). The automatic renewal provision that was included in Ms. Sullivan’s prior employment agreement has been eliminated. Ms. Sullivan’s current annual base salary under the Sullivan Agreement is $558,600, which shall be reviewed annually (including in 2011) by the Board or the Compensation Committee. Ms. Sullivan is also eligible to participate in the Company’s incentive compensation plan in place for its senior level executives. In connection with her participation in the Company’s incentive plan, Ms. Sullivan is eligible to receive an annual discretionary bonus determined by the Compensation Committee based upon certain performance standards to be determined by the Compensation Committee.
The expiration of the Sullivan Agreement in the absence of a successor employment agreement shall be deemed a termination of Ms. Sullivan’s employment without “cause” (as defined in the Sullivan Agreement) for purposes of the Sullivan Agreement; provided, however, that if the Company presents to Ms. Sullivan, on or before March 1, 2014, a written offer to extend the Sullivan Term on substantially the same terms and conditions as set forth in the Sullivan Agreement or on terms and conditions that, in the aggregate, are more economically favorable to Ms. Sullivan than as set forth in the Sullivan Agreement, as determined in the good faith discretion of the Compensation Committee, and Ms. Sullivan does not accept such offer, then the expiration of the Sullivan Agreement in the absence of a successor employment agreement shall be deemed a voluntary termination of Ms. Sullivan’s employment for purposes of the Sullivan Agreement.
Ms. Sullivan’s annual bonus target was increased to 50% of her base salary, subject to achievement of performance goals, with a potential payout from 0 to 150% of the target amount. Ms. Sullivan will also be eligible to receive equity compensation awards under the Company’s 2006 Stock Incentive Plan, or any such successor equity compensation plan as may be in place from time to time.
In the event Ms. Sullivan’s employment is terminated without “cause” (as defined in the Sullivan Agreement) or Ms. Sullivan terminates employment for “good reason” (as defined in the Sullivan Agreement), the Sullivan Agreement provides that Ms. Sullivan will be entitled to receive severance payments in an amount equal to the sum of: (x) 200% of her base salary in effect at the time of her termination, and (y) 200% of the target bonus established for the fiscal year in which her employment terminates. The severance amount will be paid in monthly installments over the 24-month period following her termination. Ms. Sullivan also will be entitled to receive the annual bonus earned based on actual performance, if any, payable for the fiscal year in which the termination occurs (prorated to reflect her actual period of service during such fiscal year). In addition, the Company will pay Ms. Sullivan for the incremental cost of maintaining continued medical coverage for herself and any eligible dependents for a period of 18 months following her termination date above the required monthly employee payment for such coverage calculated as if Ms. Sullivan had continued to be an employee of the Company throughout such period.
In the event Ms. Sullivan’s employment terminates without cause or for good reason within one year following a “change of control” (as defined in the Sullivan Agreement), the Sullivan Agreement provides that Ms. Sullivan will be entitled to receive a lump sum severance payment in an amount equal to the sum of (x) 300% of her base salary in effect at the time of her termination and (y) 300% of the target bonus established for the fiscal
year in which the date of termination occurs. Ms. Sullivan also will be entitled to receive the annual bonus earned based on actual performance, if any, payable for the fiscal year in which the termination occurs (prorated to reflect her actual period of service during such fiscal year). In addition, for a period of 18 months following such termination, the Company will pay Ms. Sullivan for the incremental cost of maintaining continued medical coverage for herself and any eligible dependents above the required monthly employee payment for such coverage calculated as if Ms. Sullivan had continued to be an employee of the Company throughout such period.
As a condition to payment of the severance described above, Ms. Sullivan is required to execute a written release of any and all claims against the Company and all related parties with respect to all matters arising out of her employment by the Company, or the termination thereof.
Although Ms. Sullivan had a right in her prior employment agreement to a tax gross-up with respect to any federal excise tax imposed on any payments or benefits received in connection with a change of control that are deemed to constitute parachute payments under Section 280G of the Internal Revenue Code, such right has been eliminated in the Sullivan Agreement.
Upon termination without cause or for good reason within one year following a “change of control” (as defined in the Sullivan Agreement), all stock options, restricted stock and other equity rights held by Ms. Sullivan will become fully vested and exercisable. In addition, all stock options held by Ms. Sullivan will remain exercisable for a period of 24 months following the end of the remaining balance of the term of her employment agreement. In no event, however, will the option be exercisable beyond its original term or beyond the extension period permitted under Section 409A of the Internal Revenue Code.
Upon termination due to death or disability, Ms. Sullivan shall be entitled to the annual bonus earned based on actual performance, if any, payable for the fiscal year in which the termination occurs, prorated for her period of service during that year.
The Sullivan Agreement provides that throughout the Sullivan Term and for a period of two (2) years thereafter, Ms. Sullivan shall not (i) without the prior written approval of the Board, compete, directly or indirectly, in the United States or Canada, with the Company in the field of therapeutic antibodies for cancer; or (ii) directly or indirectly solicit any Company customer or employee of the Company. The Sullivan Agreement also provides that Ms. Sullivan shall, during the Sullivan Term and at all times thereafter, keep confidential all trade secrets and confidential information of the Company. In the event Ms. Sullivan breaches any of the restrictive covenants in the Sullivan Agreement, all severance payments otherwise owed to Ms. Sullivan shall cease immediately.
Dr. David M. Goldenberg
The Goldenberg Agreement, which is effective as of July 1, 2011, will continue, unless earlier terminated by the parties, until July 1, 2016 (the “Goldenberg Term”). The automatic renewal provision that was included in Dr. Goldenberg’s prior employment agreement has been eliminated. Dr. Goldenberg’s annual base salary under the Goldenberg Agreement is his current salary of $525,000, which shall be reviewed annually (including in 2011) by the Board or the Compensation Committee. Dr. Goldenberg also remains eligible to participate in the Company’s incentive compensation plan that is in place for its senior level executives. In connection with his participation in the Company’s incentive plan, Dr. Goldenberg will continue to be eligible to receive an annual discretionary bonus determined by the Compensation Committee based upon certain performance standards to be determined by the Compensation Committee. Dr. Goldenberg’s annual bonus target was increased to 50% of his base salary, subject to achievement of performance goals, with a potential payout from 0 to 150% of the target amount. Dr. Goldenberg will also be eligible to receive equity compensation awards under the Company’s 2006 Stock Incentive Plan, as amended, or any such successor equity compensation plan as may be in place from time to time, at the discretion of the Compensation Committee.
Dr. Goldenberg continues to be eligible to receive certain additional incentive compensation related to the Company’s net income or loss (the “Additional Incentive Compensation”), which remain unchanged from his prior agreement. With respect to any fiscal year during the Goldenberg Term and thereafter throughout the non-competition period, as described in the Goldenberg Agreement in which the Company records positive net income, Dr. Goldenberg shall receive a sum equal to one and one-half percent (1.5%) of the Company’s Annual Net Revenue (as defined in the Goldenberg Agreement) for each such fiscal year. With respect to any fiscal year during the Goldenberg Term in which the Company records an annual net loss, Dr. Goldenberg shall receive a sum equal to three quarters of one percent (0.75%) of the total Consideration (as defined in the Goldenberg Agreement) the Company receives from any third party transaction, with certain exceptions.
Dr. Goldenberg continues to be eligible to receive royalty payments on royalties received by the Company. The Company shall pay Dr. Goldenberg for each full fiscal year of the Company, a sum equal to a percentage of the annual Product Royalties (as defined in the Goldenberg Agreement) the Company receives on each of the products for which Dr. Goldenberg is an Inventor (as defined in the Goldenberg Agreement), and all products using, related to or derived from products for which Dr. Goldenberg is an Inventor, which payments shall continue for each Patented Product (as defined in the Goldenberg Agreement) for the remaining Life (as defined in the Goldenberg Agreement) of the Patent (as defined in the Goldenberg Agreement) covering each Patented Product (“Patent Lifetime Royalty Payments”). The percentage of Product Royalties that the Company will pay to Dr. Goldenberg on each Patented Product will be determined based on the percentage of Product Royalties that the Company must pay to external third parties.
Patent Lifetime Royalty Payments shall be due and owing from the Company to Dr. Goldenberg (or his estate or designated beneficiaries) throughout the Life of each Patent both during his employment with the Company and after his employment terminates, except that Patent Lifetime Royalty Payments shall not be payable in the event an arbitrator or court finds that Dr. Goldenberg committed a material breach of his covenants contained in the Goldenberg Agreement. During the Goldenberg Term of the Goldenberg Agreement, any quarterly payment of Patent Lifetime Royalty Payments will be paid to Dr. Goldenberg only to the extent that such Patent Lifetime Royalty Payments exceed the quarterly Minimum Payment (as defined in the Goldenberg Agreement) paid to him as described below.
In the event the Company completes a Disposition (as defined in the Goldenberg Agreement) during the Goldenberg Term, or within three (3) years thereafter, of any one or more of the Company’s Undeveloped Assets (as defined in the Goldenberg Agreement) for which Dr. Goldenberg was an Inventor, the Company will pay Dr. Goldenberg a sum equal to at least twenty percent (20%), or more (as determined by the Board), of the Consideration the Company receives from each Disposition; provided, however that no such payment shall be due in the event an arbitrator or court finds that Dr. Goldenberg committed a material breach of his covenants contained in the Goldenberg Agreement. The Company’s obligation to compensate Dr. Goldenberg upon Dispositions of Undeveloped Assets applies to all Dispositions completed within the Goldenberg Term or within three (3) years thereafter, even if the Company actually receives the Consideration at some time after the three (3) year period elapses.
The Company agrees to make a minimum payment of $150,000 (the “Minimum Payments”) to Dr. Goldenberg during each of the Company’s fiscal years during the Goldenberg Term of the Goldenberg Agreement, payable in equal quarterly payments, as an advance against the amounts due to Dr. Goldenberg as Additional Incentive Compensation, Patent Lifetime Royalty Payments and Dispositions of Undeveloped Assets.
The Goldenberg Agreement provides that in the event the Company terminates Dr. Goldenberg at any time without “Good Cause” (as defined in the Goldenberg Agreement) or Dr. Goldenberg resigns for “Good Reason” (as defined in the Goldenberg Agreement), Dr. Goldenberg will be entitled to receive a lump-sum severance payment in an amount equal to 3.00 times his Total Annual Compensation for the contract year in which the termination occurs. For this purpose, “Total Annual Compensation” is the sum of Dr. Goldenberg’s annual base salary in effect at that time, the target bonus established for the fiscal year in which the date of termination occurs, the Minimum Payments due for that contract year, and the Additional Incentive Compensation. In addition, the Company will pay Dr. Goldenberg for the incremental cost of maintaining continued medical coverage for himself and any eligible dependents for a period of 24 months following his termination date above the required monthly employee payment for such coverage calculated as if Dr. Goldenberg had continued to be an employee of the Company throughout such period. Dr. Goldenberg will also be entitled to any benefits accrued in accordance with the terms of any applicable benefit plan and program of the Company. In the event the Company requests that Dr. Goldenberg provide services to the Company after his employment has terminated, the Company will pay for the reasonable cost of an office and administrative assistant support for Dr. Goldenberg.
The Goldenberg Agreement also provides that in the event of a “Change of Control” (as defined in the Goldenberg Agreement), if Dr. Goldenberg terminates his employment upon ninety (90) days prior written notice to the Company or its successor, to be effective not later than the second anniversary of a Change of Control of the
Company, Dr. Goldenberg will be entitled to receive a lump sum severance payment in an amount equal to 3.00 times his Total Annual Compensation. In addition, Dr. Goldenberg will receive, for a period of 36 months following such termination, all medical and dental coverages in effect on the date of termination or, at the Company’s election, cash in lieu of such coverage in an amount equal to Dr. Goldenberg’s after-tax cost of continuing comparable coverage. Dr. Goldenberg will also be entitled to receive any benefits accrued in accordance with the terms of any applicable benefit plan and program of the Company.
The Company may require Dr. Goldenberg to execute a written release of any and all claims against the Company and all related parties with respect to all matters arising out of Dr. Goldenberg’s employment by the Company, or the termination thereof as a condition to receiving the severance payments described above.
Although Dr. Goldenberg had a right in his prior employment agreement to a tax gross-up with respect to any federal excise tax imposed on any payments or benefits received in connection with a change of control that are deemed to constitute parachute payments under Section 280G of the Internal Revenue Code, such right has been eliminated in the Goldenberg Agreement.
The Goldenberg Agreement provides, consistent with Dr. Goldenberg’s prior employment agreement, that upon the occurrence of a change of control (as defined in the Goldenberg Agreement), all stock options, restricted stock and other equity rights held by Dr. Goldenberg will become fully vested and/or exercisable, as the case may be, on the date on which the change in control occurs, and all stock options held by Dr. Goldenberg shall remain exercisable, notwithstanding anything in any other agreement governing such options, for a period of twenty-four (24) months following the end of the remaining balance of the Goldenberg Term; provided, however, that in no event will the option be exercisable (a) beyond its original term; or (b) beyond the extension period permitted under Section 409A of the Internal Revenue Code.
The Goldenberg Agreement provides that throughout the Goldenberg Term and for a period of three (3) years thereafter, Dr. Goldenberg shall not (i) without the prior written approval of the Board, compete, directly or indirectly, in the United States or Canada, with the Company; or (ii) directly or indirectly solicit any Company customer or employee of the Company. The Goldenberg Agreement also provides that Dr. Goldenberg shall, during the Goldenberg Term and at all times thereafter, keep confidential all trade secrets and confidential information of the Company. The Goldenberg Agreement also provides that Dr. Goldenberg may continue to work and be compensated by the Center for Molecular Medicine and Immunology (also known as the Garden State Cancer Center) and the Company majority-owned subsidiary IBC Pharmaceuticals, Inc.
Copies of each of the Sullivan Agreement and Goldenberg Agreement are attached hereto as Exhibits 10.1 and 10.2.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit No. | Description | |
| 10.1 | Fourth Amended and Restated Employment Agreement, effective as of July 1, 2011, between Immunomedics, Inc. and Ms. Cynthia L. Sullivan. | |
| 10.2 | Third Amended and Restated Employment Agreement, effective as of July 1, 2011, between Immunomedics, Inc. and Dr. David M. Goldenberg. | |
SIGNATURES
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.
| IMMUNOMEDICS, INC. | ||||
| By: | /s/ Gerard G. Gorman | |||
| Name: | Gerard G. Gorman | |||
| Title: | Senior Vice President, Finance and | |||
| Business Development, and Chief Financial Officer | ||||
Date: July 8, 2011
Exhibit 10.1
FOURTH AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS FOURTH AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is entered into this 1st day of July, 2011 (the “Effective Date”) by and between Immunomedics, Inc., a Delaware corporation having its principal offices in Morris Plains, New Jersey (the “Company”), and Cynthia L. Sullivan (the “Executive”).
WHEREAS, the Executive is presently employed by the Company in the capacity of President and Chief Executive Officer, pursuant to that certain Third Amended and Restated Employment Agreement between the Company and Executive (the “Prior Employment Agreement”), dated June 15, 2010;
WHEREAS, the Company desires to continue to employ the Executive as its President and Chief Executive Officer, and the Executive desires to continue to serve in such capacity on behalf of the Company, upon the terms and conditions hereinafter set forth;
WHEREAS, the Company and the Executive desire to amend and restate the terms and conditions of the Prior Employment Agreement in order to reflect certain desired changes and clarifications in the terms and continue Executive’s employment with the Company upon the amended and restated terms and conditions of this Agreement;
WHEREAS, the Executive acknowledges that she has had an opportunity to consider this Agreement and consult with an independent advisor(s) of her choosing with regard to the terms of this Agreement, and enters into this Agreement voluntarily and with a full understanding of its terms; and
WHEREAS, the Company and the Executive have agreed that this Agreement will supersede and replace the Prior Employment Agreement as of the Effective Date.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:
1.1 Term. This Agreement and the Term shall terminate on July 1, 2014 (the “Term”), unless sooner terminated by either party as hereinafter provided. The expiration of this Agreement in the absence of a successor employment agreement shall be deemed a termination of the Executive’s employment for purposes of this Agreement, including a termination without Cause for purposes of Section 2; provided, however, that if the Company presents to the Executive, on or before March 1, 2014, a written offer to extend the Term on substantially the same terms and conditions as set forth in this Agreement or on terms and conditions that, in the aggregate, are more economically favorable to the Executive than as set forth in this Agreement, as determined in the good faith discretion of the Compensation Committee of the Board of Directors of the Company, and the Executive does not accept such offer, then the expiration of this Agreement in the absence of a successor employment agreement shall be deemed a termination of the Executive’s employment for purposes of this Agreement, including a voluntary termination for purposes of Section 2.4.
1.2 Duties and Responsibilities. Commencing on the Effective Date, Executive shall continue to serve as the President and Chief Executive Officer of the Company and shall perform all duties and accept all responsibilities incident to such position as may be reasonably assigned to Executive by the Company’s Board of Directors (the “Board”).
1.3 Extent of Service. Executive agrees to use Executive’s best efforts to carry out Executive’s duties and responsibilities under Section 1.2 hereof and, consistent with the other provisions of this Agreement, to devote substantially all of Executive’s business time, attention and energy thereto. The foregoing shall not be construed as preventing Executive from making investments in other businesses or enterprises, provided that Executive agrees not to become engaged in any other business activity which, in the reasonable judgment of the Board, is likely to interfere with Executive’s ability to discharge Executive’s duties and responsibilities to the Company.
1.4 Base Salary. For all the services rendered by Executive hereunder, the Company shall pay Executive a base salary (“Base Salary”) at the annual rate of $558,600, payable bi-weekly in installments at such times as the Company customarily pays its other senior level executives. Executive’s Base Salary shall be reviewed annually for appropriate increases by the Board or Compensation Committee of the Board (the “Compensation Committee”) pursuant to the normal performance review policies for senior level executives.
1.5 Annual Bonus. During the Term, the Executive shall be eligible to participate in the Company’s incentive compensation plan in place from time to time for its senior level executives generally, at levels determined by the Compensation Committee. The Company reserves the right to amend or rescind the incentive compensation plan at
any time in its discretion. In connection with Executive’s participation in the incentive compensation plan, the Executive shall be eligible to receive an annual discretionary bonus. The amount of the annual discretionary bonus, if any, will be determined by the Compensation Committee in its discretion, based on the Executive’s individual performance and Company performance as determined by the Compensation Committee. The Executive’s annual bonus target is 50% of Base Salary, subject to achievement of performance goals to be established by the Compensation Committee, with a potential payout from 0 to 150% of the target amount depending upon achievement of the performance goals. The discretionary annual bonus, if any, will be determined as of the end of each fiscal year during the Term and shall be paid as soon as practicable after the end of each fiscal year to which the bonus relates, but in no event, later than 2- 1/2 months after the end of such fiscal year, except as provided in Section 2. Except as otherwise specifically provided in Section 2, to be eligible to receive an annual bonus, or any portion thereof, the Executive must be employed by the Company both at the time the amount of the annual bonus, if any, is determined, and at the time the annual bonus, if any, is paid.
1.6 Equity Compensation. During the Term, pursuant to the terms and conditions of the Company’s 2006 Stock Incentive Plan or any successor equity compensation plan as may be in place from time to time, the Executive shall be eligible to receive, from time to time, awards in amounts, and subject to such terms, conditions and restrictions, as determined by the Compensation Committee in its sole discretion. Awards granted to the Executive, if any, shall be subject to the terms and conditions established within the Company’s 2006 Stock Incentive Plan (as amended from time to time) or any successor equity compensation plan as may be in place from time to time, as applicable, and the separate option agreement, restricted stock purchase agreement or stock award agreement between the Company and the Executive that sets forth the terms and conditions of the award (e.g., exercise price, expiration date and vesting schedule of stock options; and the restricted period and/or other restrictions such as performance objectives relating to stock awards).
1.7 Retirement and Welfare Plans. During the Term, Executive shall participate in employee retirement and welfare benefit plans made available to the Company’s senior level executives as a group or to its employees generally, as such retirement and welfare plans may be in effect from time to time and subject to the eligibility requirements of the plans. Nothing in this Agreement shall prevent the Company from amending or terminating any retirement, welfare or other employee benefit plans or programs from time to time as the Company deems appropriate.
1.8 Reimbursement of Expenses; Vacation. During the Term, Executive shall be provided with reimbursement of reasonable expenses related to Executive’s employment by the Company on a basis no less favorable than that which may be authorized from time to time for senior level executives as a group, and shall be entitled to six (6) weeks of vacation in accordance with the Company’s pay for time not worked policies.
2. Termination. Executive’s employment shall terminate upon the occurrence of any of the following events:
2.1 Termination Without Cause or Resignation for Good Reason Before A Change of Control.
(a) The Company may remove Executive at any time without Cause (as defined in Section 2.9) from the position in which Executive is employed hereunder upon not less than 30 days’ prior written notice to Executive. The Company shall have discretion to terminate Executive’s employment during the notice period and pay continued Base Salary in lieu of notice. In addition, Executive may initiate a termination of employment by resigning under this Section 2.1 for Good Reason (as defined in, and in accordance with the notice provisions set forth in Section 2.9).
(b) If Executive’s employment terminates as described in subsection (a) above and Executive executes and does not revoke a written release upon such removal, in a form provided by the Company, of any and all claims against the Company and all related parties with respect to all matters arising out of Executive’s employment by the Company, or the termination thereof (the “Release”), Executive shall be entitled to receive the following severance compensation, as long as Executive complies with the terms of Sections 4, 5, 6 and 7 below:
(i) Executive shall receive severance payments in an amount equal to the sum of: (x) being 2.00 times Executive’s annual Base Salary at the rate in effect at the time of Executive’s termination, and (y) being 2.00 times Executive’s target bonus established for the fiscal year in which the date of termination occurs. The severance amount shall be paid in separate equal monthly payments over the 24-month period following Executive’s termination of employment.
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(ii) The Company shall, for a period of 18 months following the date of Executive’s termination of employment, pay Executive each month an amount equal to the monthly COBRA medical insurance cost under the Company’s medical plan for Executive, and, where applicable, her spouse and eligible dependents, less an amount equal to the required monthly employee payment for such coverage calculated as if Executive had continued to be an employee of the Company throughout such period; provided that Executive, and, where applicable, her spouse and eligible dependents, are eligible for and timely elect to receive COBRA healthcare continuation coverage and provided further that the payments specified under this Section 2.1(b)(ii) shall cease if the Company’s statutory obligation to provide such COBRA healthcare continuation coverage terminates for any reason before the expiration of the 18-month period.
(iii) Executive shall receive any benefits earned, accrued and due in accordance with the terms of any applicable benefit plans and programs of the Company. In addition, Executive shall be entitled to the annual bonus earned based on actual performance, if any, payable for the fiscal year in which the termination occurs (prorated to reflect Executive’s actual period of service during such fiscal year) paid in accordance with Section 1.5 without regard to the last sentence of Section 1.5.
(iv) Except as otherwise required by Section 2.10, the benefits described in subsections (i) and (ii) above shall begin within 60 days after Executive’s termination date, subject to Executive’s execution and non-revocation of the Release; provided that notwithstanding any provision of this Agreement to the contrary, in no event shall the timing of Executive’s execution of the Release, directly or indirectly, result in Executive designating the calendar year of payment, and if a payment that is subject to execution of the Release could be made in more than one taxable year, payment shall be made in the later taxable year. The Company shall provide the Release to Executive on or before the termination date, and Executive shall execute the Release during the time period permitted by applicable law.
(v) Executive agrees that if Executive fails to comply with Section 4, 5, 6 or 7 below, all payments under this Section 2.1 shall immediately cease.
2.2 Termination Without Cause or Resignation for Good Reason After A Change of Control.
(a) If a Change of Control occurs and, during the one-year period commencing on the date of the Change of Control, the Company terminates Executive’s employment without Cause (upon not less than 30 days’ prior written notice to Executive) or Executive resigns for Good Reason (as defined in, and in accordance with the notice provisions set forth in Section 2.9), this Section 2.2 shall apply in lieu of Section 2.1. The Company shall have discretion to terminate Executive’s employment during the notice period and pay continued Base Salary in lieu of notice.
(b) If Executive’s employment terminates as described in subsection (a) above and Executive executes and does not revoke a Release, Executive shall be entitled to receive the following severance compensation, as long as Executive complies with the terms of Sections 4, 5, 6 and 7 below:
(i) Executive shall receive a lump sum severance payment in an amount equal to 3.00 times the sum of Executive’s annual Base Salary at the rate in effect at the time of Executive’s termination and Executive’s target bonus for the calendar year in which the date of termination occurs.
(ii) The Company shall, for a period of 18 months following the date of Executive’s termination of employment, pay Executive each month an amount equal to the monthly COBRA medical insurance cost under the Company’s medical plan for Executive, and, where applicable, her spouse and eligible dependents, less an amount equal to the required monthly employee payment for such coverage calculated as if Executive had continued to be an employee of the Company throughout such period; provided that Executive, and, where applicable, her spouse and eligible dependents, are eligible for and timely elect to receive COBRA healthcare continuation coverage and provided further that the payments specified under this Section 2.2(b)(ii) shall cease if the Company’s statutory obligation to provide such COBRA healthcare continuation coverage terminates for any reason before the expiration of the 18-month period.
(iii) Executive shall receive any benefits earned, accrued and due in accordance with the terms of any applicable benefit plans and programs of the Company. In addition, Executive shall be entitled to the annual bonus earned based on actual performance, if any, payable for the fiscal year in which the termination occurs (prorated to reflect Executive’s actual period of service during such fiscal year) paid in accordance with Section 1.5 without regard to the last sentence of Section 1.5.
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(iv) Except as otherwise required by Section 2.10, the lump sum payment described in subsection (i) shall be made, and the monthly payments described in subsection (ii) above shall begin, within 60 days after Executive’s termination date, subject to Executive’s execution and non-revocation of the Release; provided that notwithstanding any provision of this Agreement to the contrary, in no event shall the timing of Executive’s execution of the Release, directly or indirectly, result in Executive designating the calendar year of payment, and if a payment that is subject to execution of the Release could be made in more than one taxable year, payment shall be made in the later taxable year. The Company shall provide the Release to Executive on or before the termination date, and Executive shall execute the Release during the time period permitted by applicable law.
(v) Notwithstanding any provision to the contrary in the Company’s 2006 Stock Incentive Plan or any applicable plan, program or agreement, all stock options, restricted stock and other equity rights held by the Executive will become fully vested and/or exercisable, as the case may be, on the Executive’s termination date, and all stock options held by the Executive shall remain exercisable, notwithstanding anything in any other agreement governing such options, for a period of 24 months following the end of the remaining balance of the Term of the Agreement; provided, however, that in no event will the option be exercisable (i) beyond its original term; or (ii) beyond the extension period permitted under section 409A of the Code.
(c) Notwithstanding any vesting provision to the contrary in any applicable plan, program or agreement providing for supplemental retirement benefits or deferred compensation, upon the occurrence of a Change of Control, Executive’s accrued benefit under such plans, programs or agreements shall become fully vested on the date on which the Change in Control occurs, and Executive’s accrued benefit shall be immediately payable on the Executive’s date of termination, unless the Executive has made a valid election under such plan, program or agreement to defer payment of such accrued benefits or the Executive’s accrued benefit constitutes “deferred compensation” within the meaning of section 409A of the Code and the terms of the applicable plan, program or agreement provide otherwise with respect to the timing of payment of the accrued benefit.
(d) Executive agrees that if Executive materially breaches Section 4, 5, 6 or 7 below, all payments and benefits under this Section 2.2 shall immediately cease.
2.3 [INTENTIONALLY OMITTED]
2.4 Voluntary Termination. Executive may voluntarily terminate Executive’s employment for any reason upon 30 days’ prior written notice. In such event, after the effective date of such termination, except as provided in Section 2.2 with respect to a resignation for Good Reason, no further payments shall be due under this Agreement, except that Executive shall be entitled to any benefits earned, accrued and due in accordance with the terms of any applicable benefit plans and programs of the Company.
2.5 Disability. The Company may terminate Executive’s employment if Executive has been unable to perform the material duties of Executive’s employment for a period of 90 days in any 12-month period because of physical or mental injury or illness (“Disability”); provided, however, that the Company shall continue to pay Executive’s Base Salary until the Company acts to terminate Executive’s employment. Notwithstanding the foregoing, the Executive shall be deemed terminated for Disability if the Executive is disabled for a period of 12 months. Executive agrees, in the event of a dispute under this Section 2.5 relating to Executive’s Disability, to submit to a physical examination by a licensed physician jointly selected by the Board and Executive. If the Company terminates Executive’s employment for Disability, no further payments shall be due under this Agreement, except that Executive shall be entitled to any benefits earned, accrued and due in accordance with the terms of any applicable benefit plans and programs of the Company. In addition, Executive shall be entitled to the annual bonus earned based on actual performance, if any, payable for the fiscal year in which the termination occurs (prorated to the date Executive is determined to have a Disability) paid in accordance with Section 1.5 without regard to the last sentence of Section 1.5.
2.6 Death. If Executive dies while employed by the Company, the Company shall pay to Executive’s executor, legal representative, administrator or designated beneficiary, as applicable, any benefits earned, accrued and due under the Company’s benefit plans and programs in accordance with the terms and conditions contained therein. Otherwise, the Company shall have no further liability or obligation under this Agreement to Executive’s executors, legal representatives, administrators, heirs or assigns or any other person claiming under or through Executive. In addition, Executive shall be entitled to the annual bonus earned based on actual performance, if any, payable for the fiscal year in which the termination occurs (prorated to reflect Executive’s actual period of service during such fiscal year) paid in accordance with Section 1.5 without regard to the last sentence of Section 1.5.
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2.7 Cause. The Company may terminate Executive’s employment at any time for Cause (as defined in Section 2.9) upon written notice to Executive, in which event all payments under this Agreement shall cease. Executive shall be entitled to any benefits earned, accrued and due before Executive’s termination in accordance with the terms of any applicable benefit plans and programs of the Company.
2.8 Notice of Termination. Any termination of Executive’s employment shall be communicated by a written notice of termination to the other party hereto given in accordance with Section 11. The notice of termination shall (a) indicate the specific termination provision in this Agreement relied upon, (b) briefly summarize the facts and circumstances deemed to provide a basis for a termination of employment and the applicable provision hereof, and (c) specify the termination date in accordance with the requirements of this Agreement.
2.9 Definitions.
(a) “Cause” shall mean any of the following grounds for termination of Executive’s employment:
(i) Executive shall have been convicted of a felony, or enters in a plea of guilty or nolo contendere with respect thereto;
(ii) Executive intentionally and continually fails to perform Executive’s reasonably assigned material duties to the Company (other than a failure resulting from Executive’s incapacity due to physical or mental illness), which failure has continued for a period of at least 30 days after a written notice of demand for substantial performance, signed by a duly authorized officer of the Company, has been delivered to Executive specifying the manner in which Executive has failed substantially to perform;
(iii) Executive causes material, intentional, wrongful damage to the property of the Company;
(iv) Executive engages in public conduct that is harmful to the reputation of the Company;
(v) Executive engages in willful misconduct in the performance of Executive’s duties; or
(vi) Executive materially breaches Sections 4, 5, 6 or 7 below.
(b) “Change of Control” shall mean:
(i) A merger, consolidation or reorganization approved by the Company’s stockholders, unless securities representing more than 50% of the total and combined voting power of the outstanding voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly, by the persons who beneficially owned the Company’s outstanding voting securities immediately prior to such transaction; or
(ii) The sale, transfer or other disposition of all or substantially all of the Company’s assets as an entirety or substantially as an entirety, occurring within a 12-month period, and representing, at a minimum, not less than 40% of the total gross fair market value of all assets of the Company, to any person, entity, or group of persons acting in consort, other than a sale, transfer or disposition to: (A) a stockholder of the Company in exchange for or with respect to its stock; (B) an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company; (C) a person, or more than one person acting as a group, that owns, directly or indirectly, 50% or more of the total value or voting power of the outstanding stock of the Company; or (D) an entity, at least 50% of the total value or voting power of which is owned by a person described in (C); or
(iii) Any transaction or series of related transactions pursuant to which any person or any group of persons comprising a “group” within the meaning of Rule 13d-5(b)(l) under the Securities Exchange Act of 1934, as amended (other than the Company or a person that, prior to such transaction or series of related transactions, directly or indirectly controls, is controlled by or is under common control with, the Company) becomes directly or indirectly the beneficial owner (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of securities possessing (or convertible into or exercisable for securities possessing) more than 50% of the total combined voting power of the Company’s securities outstanding immediately after the consummation of such transaction or series of related transactions, whether such transaction involves a direct issuance from the Company or the acquisition of outstanding securities held by one or more of the Company’s stockholders; or
(iv) A change in the composition of the Board over a period of 12 consecutive months or less such that a majority of the Board members ceases by reason of one or more contested elections for Board membership to be comprised of individuals whose election is endorsed by a majority of the members of the Board immediately before the date of election.
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A transaction shall not constitute a Change of Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in the same proportions by the persons who held the Company’s securities immediately before such transaction.
(c) “Code” shall mean the Internal Revenue Code of 1986, as amended.
(d) “Good Reason” shall mean the occurrence of any of the following events or conditions, unless Executive has expressly consented in writing thereto, or except as a result of Executive’s physical or mental incapacity or as described in the last sentence of this subsection (d):
(i) A material reduction in Executive’s Base Salary;
(ii) The material diminution of the Executive’s duties, responsibilities, powers or authorities, including the assignment of any duties and responsibilities inconsistent with her position as President and Chief Executive Officer;
(iii) The Company requires that Executive’s principal office location be moved to a location more than 50 miles form Executive’s principal office location immediately before the change;
(iv) The failure of the Company to obtain the assumption of the obligations contained herein by any successor; or
(v) On or after a Change of Control, the removal of Executive from her office as President and Chief Executive Officer or a material reduction of Executive’s primary functional authorities, duties, or responsibilities as President and Chief Executive Officer of the Company from those in effect immediately prior to the Change of Control or the assignment of duties to Executive inconsistent with those of President and Chief Executive Officer of the Company, other than an insubstantial and inadvertent reduction or assignment that is remedied by the Company promptly after receipt of notice thereof given by Executive in accordance with the notice provisions below.
Notwithstanding the foregoing, Executive shall not have Good Reason for termination unless Executive gives written notice of termination for Good Reason within 15 days after the event or condition giving rise to Good Reason occurs and the Company does not correct the action or failure to act that constitutes the grounds for Good Reason, as set forth in Executive’s notice of termination, within 30 days after the date on which Executive gives written notice of termination and the Executive actually resigns from employment upon the expiration of the foregoing cure period. In the event of a cure of such event or condition constituting Good Reason by the Company, such event or condition shall no longer constitute Good Reason.
2.10 Required Postponement for Specified Executives.
(a) If Executive is considered a Specified Executive (as defined below) and payment of any amounts under this Agreement is required to be delayed for a period of six months after separation from service pursuant to section 409A of the Code, payment of such amounts shall be delayed as required by section 409A of the Code, and the accumulated postponed amounts, with accrued interest as described below, shall be paid in a lump sum payment within five days after the end of the six month period. If Executive dies during the postponement period prior to the payment of benefits, the amounts postponed on account of section 409A of the Code, with accrued interest as described in subsection (b) below, shall be paid to the personal representative of Executive’s estate within 60 days after the date of Executive’s death.
(b) If payment of any amounts under this Agreement is required to be delayed pursuant to Section 2.10(a), the Company shall pay interest on the postponed payments from the date on which the amounts otherwise would have been paid to the date on which such amounts are paid at an annual rate equal to the rate published in the Wall Street Journal as the “prime rate” as of Executive’s date of termination.
(c) The term “Specified Executive” means an employee who, at any time during the 12-month period ending on the identification date (defined below), is (i) an officer of the Company or a member of its controlled group (as determined for purposes of section 416(i) of the Code) who has annual compensation greater than $160,000 (or such other amount as may be in effect under section 416(i)(l) of the Code), (ii) a 5% owner of the Company or (iii) a 1% owner of the Company who has annual compensation greater than $150,000. The
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identification date shall be each December 31, and the determination of Specified Executives as of such identification date shall apply for the 12-month period following April 1 after the identification date. The determination of Specified Executives, including the number and identity of persons considered officers, shall be made by the Company in accordance with the provisions of sections 416(i) and 409A of the Code and the regulations issued thereunder.
3. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in or rights under any benefit, bonus, incentive or other plan or program provided by the Company and for which Executive may qualify; provided, however, that if Executive becomes entitled to and receives the payments provided for in Section 2 of this Agreement, Executive hereby waives Executive’s right to receive payments under any severance plan or similar program applicable to all employees of the Company.
4. Confidentiality. Executive agrees that Executive’s services to the Company and its subsidiaries and any successors or assigns (collectively, the “Employer”) were and are of a special, unique and extraordinary character, and that Executive’s position places Executive in a position of confidence and trust with the Employer’s customers and employees. Executive also recognizes that Executive’s position with the Employer will give Executive substantial access to Confidential Information (as defined below), the disclosure of which to competitors of the Employer would cause the Employer to suffer substantial and irreparable damage. Executive recognizes, therefore, that it is in the Employer’s legitimate business interest to restrict Executive’s use of Confidential Information for any purposes other than the discharge of Executive’s employment duties at the Employer, and to limit any potential appropriation of Confidential Information by Executive for the benefit of the Employer’s competitors and to the detriment of the Employer. Accordingly, Executive agrees as follows:
(a) Executive will not at any time, whether during or after the termination of Executive’s employment, reveal to any person or entity any of the trade secrets or confidential information of the Employer or of any third party which the Employer is under an obligation to keep confidential (including but not limited to trade secrets or confidential information respecting inventions, products, designs, methods, know-how, techniques, systems, processes, software programs, works of authorship, customer lists, projects, plans and proposals) (“Confidential Information”), except as may be required in the ordinary course of performing Executive’s duties as an employee of the Employer, and Executive shall keep secret all matters entrusted to Executive and shall not use or attempt to use any such information in any manner which may injure or cause loss or may be calculated to injure or cause loss whether directly or indirectly to the Employer.
(b) The above restrictions shall not apply to: (i) information that at the time of disclosure is in the public domain through no fault of Executive; (ii) information received from a third party outside of the Employer that was disclosed without a breach of any confidentiality obligation; (iii) information approved for release by written authorization of the Employer; or (iv) information that may be required by law or an order of any court, agency or proceeding to be disclosed; provided Executive shall provide the Employer notice of any such required disclosure once Executive has knowledge of it and will help the Employer to the extent reasonable to obtain an appropriate protective order.
(c) Further, Executive agrees that during Executive’s employment Executive shall not take, use or permit to be used any notes, memoranda, reports, lists, records, drawings, sketches, specifications, software programs, data, documentation or other materials of any nature relating to any matter within the scope of the business of the Employer or concerning any of its dealings or affairs otherwise than for the benefit of the Employer. Executive further agrees that Executive shall not, after the termination of Executive’s employment, use or permit to be used any such notes, memoranda, reports, lists, records, drawings, sketches, specifications, software programs, data, documentation or other materials, it being agreed that all of the foregoing shall be and remain the sole and exclusive property of the Employer and that, immediately upon the termination of Executive’s employment, Executive shall deliver all of the foregoing, and all copies thereof, to the Employer, at its main office.
(d) Executive agrees that upon the termination of Executive’s employment with the Employer, Executive will not take or retain without written authorization any documents, files or other property of the Employer, and Executive will return promptly to the Employer any such documents, files or property in Executive’s possession or custody, including any copies thereof maintained in any medium or format. Executive recognizes that all documents, files and property which Executive has received and will receive from the Employer, including but not limited to scientific research, customer lists, handbooks, memoranda, product specifications, and other materials (with the exception of documents relating to benefits to which Executive might be entitled following the termination
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of Executive’s employment with the Employer), are for the exclusive use of the Employer and employees who are discharging their responsibilities on behalf of the Employer, and that Executive has no claim or right to the continued use, possession or custody of such documents, files or property following the termination of Executive’s employment with the Employer.
5. Intellectual Property.
(a) If at any time or times during Executive’s employment Executive shall (either alone or with others) make, conceive, discover or reduce to practice any invention, modification, discovery, design, development, improvement, process, software program, work of authorship, documentation, formula, data, technique, know-how, secret or intellectual property right whatsoever or any interest therein (whether or not patentable or registrable under copyright or similar statutes or subject to analogous protection) (herein called “Developments”) that (i) relates to the business of the Employer or any customer of or supplier to the Employer or any of the products or services being developed, manufactured or sold by the Employer or which may be used in relation therewith, (ii) results from tasks assigned to Executive by the Employer or (iii) results from the use of premises or personal property (whether tangible or intangible) owned, leased or contracted for by the Employer, such Developments and the benefits thereof shall immediately become the sole and absolute property of the Employer and its assigns, and Executive shall promptly disclose to the Employer (or any persons designated by it) each such Development, and Executive hereby assigns any rights Executive may have or acquire in the Developments and benefits and/or rights resulting therefrom to the Employer and its assigns without further compensation and shall communicate, without cost or delay, and without publishing the same, all available information relating thereto (with all necessary plans and models) to the Employer.
(b) Upon disclosure of each Development to the Employer, Executive will, during Executive’s employment and at any time thereafter, at the request and cost of the Employer, sign, execute, make and do all such deeds, documents, acts and things as the Employer and its duly authorized agents may reasonably require:
(i) to apply for, obtain and vest in the name of the Employer alone (unless the Employer otherwise directs) letters patent, copyrights or other analogous protection in any country throughout the world and when so obtained or vested to renew and restore the same; and
(ii) to defend any opposition proceedings in respect of such applications and any opposition proceedings or petitions or applications for revocation of such letters patent, copyright or other analogous protection.
(c) In the event the Employer is unable, after reasonable effort, to secure Executive’s signature on any letters patent, copyright or other analogous protection relating to a Development, whether because of Executive’s physical or mental incapacity or for any other reason whatsoever, Executive hereby irrevocably designates and appoints the Employer and its duly authorized officers and agents as Executive’s agent and attorney-in-fact, to act for and on Executive’s behalf and stead to execute and file any such application or applications and to do all other lawfully permitted acts to further the prosecution and issuance of letter patents, copyright and other analogous protection thereon with the same legal force and effect as if executed by Executive.
6. Non-Competition. While Executive is employed at the Employer and for a period of two (2) years after termination of Executive’s employment (for any reason whatsoever, whether voluntary or involuntarily), Executive will not, without the prior written approval of the Board, whether alone or as a partner, officer, director, consultant, agent, employee or stockholder of any company or other commercial enterprise, directly or indirectly engage in any business or other activity in the United States or Canada which competes with the Employer in the field of therapeutic antibodies for cancer. The foregoing prohibition shall not prevent Executive’s employment or engagement after termination of Executive’s employment by any company or business organization, as long as the activities of any such employment or engagement, in any capacity, do not involve work on matters related to the products being developed, manufactured, or marketed by the Employer during Executive’s employment with the Employer. Executive shall be permitted to own securities of a public company not in excess of five percent of any class of such securities and to own stock, partnership interests or other securities of any entity not in excess of five percent of any class of such securities and such ownership shall not be considered to be in competition with the Employer.
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7. Non-Solicitation. While Executive is employed at the Employer and for a period of two (2) years after termination of such employment (for any reason, whether voluntary or involuntarily), Executive agrees that Executive will not:
(a) directly or indirectly solicit, entice or induce any customer to become a customer of any other person, firm or corporation with respect to products then sold or under development by the Employer or to cease doing business with the Employer, and Executive shall not approach any such person, firm or corporation for such purpose or authorize or knowingly approve the taking of such actions by any other person; or
(b) directly or indirectly solicit or recruit any employee of the Employer to work for a third party other than the Employer (excluding newspaper or similar print or electronic solicitations of general circulation).
8. General Provisions.
(a) Executive acknowledges and agrees that the type and periods of restrictions imposed in Sections 4, 5, 6 and 7 of this Agreement are fair and reasonable, and that such restrictions are intended solely to protect the legitimate interests of the Employer, rather than to prevent Executive from earning a livelihood. Executive recognizes that the Employer competes worldwide, and that Executive’s access to Confidential Information makes it necessary for the Employer to restrict Executive’s post-employment activities in any market in which the Employer competes, and in which Executive’s access to Confidential Information and other proprietary information could be used to the detriment of the Employer. In the event that any restriction set forth in this Agreement is determined to be overbroad with respect to scope, time or geographical coverage, Executive agrees that such a restriction or restrictions should be modified and narrowed, either by a court or by the Employer, so as to preserve and protect the legitimate interests of the Employer as described in this Agreement, and without negating or impairing any other restrictions or agreements set forth herein.
(b) Executive acknowledges and agrees that if Executive should breach any of the covenants, restrictions and agreements contained herein, irreparable loss and injury would result to the Employer, and that damages arising out of such a breach may be difficult to ascertain. Executive therefore agrees that, in addition to all other remedies provided at law or at equity, the Employer shall be entitled to have the covenants, restrictions and agreements contained in Sections 4, 5, 6, and 7 specifically enforced (including, without limitation, by temporary, preliminary, and permanent injunctions and restraining orders) by any state or federal court in the State of New Jersey having equity jurisdiction and Executive agrees to subject Executive to the jurisdiction of such court.
(c) Executive agrees that if the Employer fails to take action to remedy any breach by Executive of this Agreement or any portion of the Agreement, such inaction by the Employer shall not operate or be construed as a waiver of any subsequent breach by Executive of the same or any other provision, agreement or covenant.
(d) Executive acknowledges and agrees that the payments and benefits to be provided to Executive under this Agreement are provided as consideration for the covenants in Sections 4, 5, 6, and 7 hereof.
9. Survivorship. The respective rights and obligations of the parties under this Agreement shall survive any termination of Executive’s employment to the extent necessary to the intended preservation of such rights and obligations.
10. Mitigation. Executive shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise and there shall be no offset against amounts due Executive under this Agreement on account of any remuneration attributable to any subsequent employment that Executive may obtain.
11. Notices. All notices and other communications required or permitted under this Agreement or necessary or convenient in connection herewith shall be in writing and shall be deemed to have been given when hand delivered or mailed by registered or certified mail, as follows (provided that notice of change of address shall be deemed given only when received):
If to the Company, to:
Immunomedics, Inc.
300 American Road
Morris Plains, NJ 07950
If to Executive, to:
Cynthia L. Sullivan
Immunomedics, Inc.
300 American Road
Morris Plains, NJ 07950
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or to such other names or addresses as the Company or Executive, as the case may be, shall designate by notice to each other person entitled to receive notices in the manner specified in this Section.
12. Contents of Agreement: Amendment and Assignment.
(a) This Agreement sets forth the entire understanding between the parties hereto with respect to the subject matter hereof and supercedes any and all prior agreements, including the Prior Employment Agreement, and understandings concerning Executive’s employment by the Company and cannot be changed, modified, extended or terminated except upon written amendment approved by the Board and executed on its behalf by a duly authorized officer and by Executive.
(b) All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, executors, administrators, legal representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of Executive under this Agreement are of a personal nature and shall not be assignable or delegatable in whole or in part by Executive. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business or assets of the Company, within 15 days of such succession, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform if no such succession had taken place.
13. Severability. If any provision of this Agreement or application thereof to anyone or under any circumstances is adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application and shall not invalidate or render unenforceable such provision or application in any other jurisdiction. If any provision is held void, invalid or unenforceable with respect to particular circumstances, it shall nevertheless remain in full force and effect in all other circumstances.
14. Remedies Cumulative; No Waiver. No remedy conferred upon a party by this Agreement is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to any other remedy given under this Agreement or now or hereafter existing at law or in equity. No delay or omission by a party in exercising any right, remedy or power under this Agreement or existing at law or in equity shall be construed as a waiver thereof, and any such right, remedy or power may be exercised by such party from time to time and as often as may be deemed expedient or necessary by such party in its sole discretion.
15. Withholding. All payments under this Agreement shall be made subject to applicable tax withholding, and the Company shall withhold from any payments under this Agreement all federal, state and local taxes as the Company is required to withhold pursuant to any law or governmental rule or regulation. Executive shall bear all expense of, and be solely responsible for, all federal, state and local taxes due with respect to any payment received under this Agreement.
16. Miscellaneous. This Agreement may be executed in counterparts, each of which is an original. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts.
17. Governing Law. This Agreement shall be governed by and interpreted under the laws of the State of New Jersey without giving effect to any conflict of laws provisions or canons of construction that construe agreements against the draftsperson.
18. Section 409A of the Code. This Agreement is intended to comply with section 409A of the Code and its corresponding regulations, to the extent applicable, and shall be so construed. Notwithstanding anything in this Agreement to the contrary, payments may only be made under this Agreement upon an event and in a manner permitted by section 409A of the Code, to the extent applicable. For purposes of section 409A of the Code, all payments to be made upon the termination of the Executive’s employment under this Agreement may only be made upon a “separation from service” under section 409A of the Code, each payment made under this Agreement shall be treated as a separate payment and the right to a series of installment payments under this Agreement is to be treated as a right to a series of separate payments. In no event shall Executive, directly or indirectly, designate the calendar year of payment. All reimbursements provided under this Agreement shall be made or provided in accordance with Section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement
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is for expenses incurred during the Term (or during such other time period specified in this Agreement), (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the taxable year following the year in which the expense is incurred, and (iv) the right to reimbursement is not subject to liquidation or exchange for another benefit. Nothing herein shall be construed as having modified the time and form of payment of any amounts or payments of “deferred compensation” within the meaning section 409A of the Code that were otherwise payable pursuant to the terms of any agreement between Company and the Executive in effect on or after January 1, 2005 and prior to the date of this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement as of the date first above written.
| IMMUNOMEDICS, INC. | ||
| By: | /s/ Gerard G. Gorman | |
| Name: | Gerard G. Gorman | |
| Title: | Senior Vice President, Finance and Business Development, and Chief Financial Officer | |
| EXECUTIVE | ||
| /s/ Cynthia L. Sullivan | ||
| Cynthia L. Sullivan | ||
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Exhibit 10.2
Third Amended and Restated Employment Agreement
by and between Immunomedics, Inc. and
Dr. David M. Goldenberg
Dated as of July 1, 2011
TABLE OF CONTENTS
| Page | ||||||
| 1. |
Employment |
4 | ||||
| 2. |
Term |
4 | ||||
| 3. |
Duties |
4 | ||||
| 4.1. |
Compensation |
5 | ||||
| 4.2. |
Additional Incentive Compensation |
6 | ||||
| 5. |
Vacation and Fringe Benefits |
9 | ||||
| 6. |
Research Contracts or Grants |
9 | ||||
| 7. |
Prior Inventions and Discoveries |
9 | ||||
| 8. |
Arbitration |
10 | ||||
| 9. |
Restrictive Covenants |
10 | ||||
| 10. |
Termination |
13 | ||||
| 11. |
Decisions and Determinations of the Board |
14 | ||||
| 12. |
Cooperation with Immunomedics After Expiration or Termination |
14 | ||||
| 13. |
Payment and Benefits on Termination or Expiration |
15 | ||||
| 14. |
[INTENTIONALLY OMITTED] |
17 | ||||
| 15. |
Parties in Interest |
17 | ||||
| 16. |
Notices |
18 | ||||
| 17. |
Governing Law |
19 | ||||
| 18. |
Captions; Word Meanings |
19 | ||||
| 19. |
Miscellaneous |
19 | ||||
| 20. |
Binding Effect |
19 | ||||
| 21. |
Entire Agreement |
20 | ||||
| 22. |
Severability |
20 | ||||
| 23. |
Survival of Provisions |
20 | ||||
| 24. |
Counterparts |
20 | ||||
THIRD AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“this Agreement”) is made and entered into as of July 1, 2011 (the “Effective Date”), by and between IMMUNOMEDICS, INC., a Delaware corporation with its principal office and place of business in Morris Plains, New Jersey (“Immunomedics” or the “Company”) and DR. DAVID M. GOLDENBERG, an individual presently residing in Mendham, New Jersey (“Dr. Goldenberg”).
PREMISES
WHEREAS, Dr. Goldenberg founded Immunomedics in 1982 and continuously since that time, has served as the Chair of its Board of Directors, as an executive of the Company, and as a significant shareholder of the Company; and
WHEREAS, Dr. Goldenberg invented and developed substantially all of the technology, and obtained the patents, on which Immunomedics’ business is based; and
WHEREAS, the parties entered into the Second Amended and Restated Employment Agreement, dated December 17, 2008 (the “Second Amended and Restated Agreement”), as amended by that certain amendment dated December 22, 2010; and
WHEREAS, the parties desire to amend and restate the terms and conditions of the Second Amended and Restated Agreement in its entirety in order to reflect certain desired changes and clarifications in the terms and continue Dr. Goldenberg’s employment with the Company upon the amended and restated terms and conditions of this Agreement; and
WHEREAS, Dr. Goldenberg acknowledges that he has had an opportunity to consider this Agreement and consult with an independent advisor(s) of his choosing with regard to the terms of this Agreement, and enters into this Agreement voluntarily and with a full understanding of its terms; and
WHEREAS, the Company and Dr. Goldenberg have agreed that this Agreement will supersede and replace the Second Amended and Restated Agreement as of the Effective Date.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Employment. Immunomedics agrees to continue the employment of Dr. Goldenberg, and Dr. Goldenberg accepts such continued employment, upon the terms and conditions set forth in this Agreement.
2. Term. Unless earlier terminated by either party pursuant to Section 10, this Agreement will continue for a five (5) year period (through July 1, 2016) (the “Term”). For purposes of this Agreement, “Contract Year” is defined as a period of twelve (12) consecutive calendar months beginning on July 1, 2011, or any anniversary thereof, and ending on the last day of the twelfth month thereafter. For purposes of this Agreement, “Term of Employment” shall mean the length of Dr. Goldenberg’s total employment from original hire through the end of the Term or through the date of termination if this Agreement is terminated during the Term pursuant to Section 10.
3. Duties.
(a) Description. Throughout the Term of this Agreement, Dr. Goldenberg shall serve as Chief Scientific Officer and Chief Medical Officer of Immunomedics and shall perform such duties in these roles, which are commensurate with Dr. Goldenberg’s expertise, experience, roles fulfilled within the Company, and professional standing and the needs of the Company from time to time, as the Board of Directors of Immunomedics (the “Board”), in consultation with Dr. Goldenberg, may determine from time to time. The Board may assign specific duties to Dr. Goldenberg after a review of Immunomedics’ needs. Dr. Goldenberg will report directly to the Board throughout the Term of this Agreement. Immunomedics reserves the right, subject to Section 10(f) below, to modify, but not diminish, the nature and scope of Dr. Goldenberg’s duties to meet the Company’s changing needs, provided that such duties and level of authority shall remain commensurate with Dr. Goldenberg’s expertise, experience and professional standing. If elected to such positions, Dr. Goldenberg may serve as a member of the Board, and as an executive officer and director of any subsidiary or affiliate of or successor to Immunomedics and, in the Board’s discretion, may be paid additional, reasonable compensation for such services.
(b) Best Efforts. Throughout the Term of this Agreement, Dr. Goldenberg shall faithfully, industriously and to the best of his ability, experience and talents, perform all of the duties contemplated by this Agreement and in accordance with his fiduciary duties as an officer and director of the Company. In the course of performing such duties, Dr. Goldenberg shall cooperate fully, to the best of his ability, with the Board and all officers, agents and employees of Immunomedics in all matters connected with the business of Immunomedics.
(c) Extent of Duties. Dr. Goldenberg shall devote such time to Immunomedics as is reasonably necessary to fulfill the duties contemplated by this Agreement. Notwithstanding any language to the contrary, Immunomedics acknowledges and authorizes Dr. Goldenberg to perform the following roles and to dedicate the time necessary to perform such roles, the scope of which Immunomedics acknowledges and agrees does not materially interfere with his performance of duties directly for Immunomedics:
(i) To serve as a member of the Board of Trustees of and to be employed (including without limitation as the President and/or Chief Executive Officer) by the Center for Molecular Medicine and Immunology (a/k/a Garden State Cancer Center) or any of its subsidiaries, affiliates, successors or any non-profit substitute entity (collectively the “Center”), provided, that any such subsidiary, affiliate, successor or non-profit substitute entity agrees to undertake all of the obligations of the Center pursuant to any existing or future license, proprietary rights or other equivalent agreement between Immunomedics and the Center.
(ii) To serve as a member of the Board of Directors of and to be employed (including without limitation as an executive officer) by the Company’s majority-owned subsidiary, IBC Pharmaceuticals, Inc. (“IBC”).
Immunomedics acknowledges that Dr. Goldenberg shall be entitled to spend such time as is necessary to fulfill his duties for the Center and IBC, provided that such duties do not materially interfere with his ability to perform any of his obligations under this Agreement. Such activity on behalf of the Center, and his activity on behalf of IBC to the extent consistent with the provisions hereof, shall not be deemed a breach of this Agreement. Any salary, fees or other income paid by the Center and IBC to Dr. Goldenberg in his respective capacity in each such entity shall be the property of Dr. Goldenberg and shall not diminish the compensation due him hereunder.
4.1. Compensation.
(a) Base Salary. In consideration for services rendered by Dr. Goldenberg pursuant to this Agreement, Immunomedics will pay Dr. Goldenberg a base salary at the rate of Five Hundred Twenty Five Thousand Dollars ($525,000.00) per Contract Year, payable in accordance with the Company’s regular payroll procedures (the “Base Salary”). The Board or the Compensation Committee of the Board (the “Compensation Committee”) will review Dr. Goldenberg’s Base Salary annually for appropriate increases, pursuant to the Company’s standard performance review policies for senior level executives.
(b) Annual Bonus. Throughout the Term of this Agreement, Dr. Goldenberg will be eligible to participate in the Company’s incentive compensation plan for senior level executives (the “Incentive Plan”) in accordance with the terms of the Incentive Plan. The Company reserves the right to amend or rescind its Incentive Plan at any time in its discretion, but will provide Dr. Goldenberg written notice of any changes at the same time and in the same manner as other Incentive Plan participants as may be required by law or regulation. In connection with his participation in the Incentive Plan, Dr. Goldenberg will be eligible to receive an annual discretionary bonus, as determined by the Compensation Committee, based on its assessment of Dr. Goldenberg’s individual performance and the Company’s overall performance. Dr. Goldenberg’s Annual Bonus Target is 50% of Base Salary, with a potential Bonus ranging from 0 to 150% of the Annual Bonus Target, conditional upon his achievement of performance goals as the Compensation Committee may establish and determine. The Compensation Committee will determine the amount of Dr. Goldenberg’s discretionary annual bonus, if any, as of the end of each fiscal year during the Term of this Agreement, and shall pay such Bonus as soon as practicable after such determination, but in no event later than 2.5 months after the end of each fiscal year, subject to the termination provisions contained in Section 10 of this Agreement.
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(c) Equity Compensation. Throughout the Term of this Agreement, Dr. Goldenberg is eligible to receive awards pursuant to the Company’s 2006 Stock Incentive Plan or any successor equity compensation plan of the Company, in amounts as determined by the Compensation Committee. Awards granted to Dr. Goldenberg, if any, will be subject to the provisions of the Company’s 2006 Stock Incentive Plan (including any amendments and/or successor equity plan(s) of the Company), as well as any separate option agreement, restricted stock purchase agreement or stock award agreement between Dr. Goldenberg and the Company, which states the terms and conditions of each such award (e.g., exercise price, expiration date, vesting schedule or stock options, and any restricted period and\or other restrictions such as performance objectives relating to stock awards). Nothing in this section shall impact or affect any equity compensation awards Dr. Goldenberg may have received at any earlier time during his Term of Employment.
4.2. Additional Incentive Compensation. In recognition of Dr. Goldenberg’s past and future integral involvement in and contribution to all aspects of Immunomedics’ scientific and creative activities, the Company shall make the following payments to Dr. Goldenberg as additional incentive compensation (“Additional Incentive Compensation”).
(a) The Additional Incentive Compensation payments to which Dr. Goldenberg is entitled include:
(i) Transactional Payments; Net Revenue Payments. With respect to any fiscal year during the Term of the Agreement in which Immunomedics records an annual net loss (determined by Immunomedics in a manner consistent with generally accepted accounting principles (“GAAP”) for the entire fiscal year as audited by Immunomedics’ independent registered public accounting firm), Immunomedics will pay to Dr. Goldenberg a sum equal to three quarters of one percent (.75%) of the total Consideration the Company receives from any third party transaction, excluding third party financing transactions and any Disposition of Undeveloped Assets. With respect to any fiscal year during the Term of the Agreement in which Immunomedics records positive net income (determined by Immunomedics in a manner consistent with GAAP) for the entire fiscal year as audited by Immunomedics’ independent registered public accounting firm, Immunomedics will pay to Dr. Goldenberg a sum equal to one and one-half percent (1.5%) of Immunomedics’ Annual Net Revenue (as defined in Section 4.2(d)) for each such fiscal year (unless Dr. Goldenberg’s employment terminates pursuant to Sections 10(a) or 10(e)), and thereafter throughout the non-competition period (as defined in Section 9(b)); and
(ii) Patent Lifetime Royalty Payments. Immunomedics will pay to Dr. Goldenberg for each full fiscal year of the Company, a sum equal to a percentage of the annual Product Royalties the Company receives each such fiscal year on each of the products for which Dr. Goldenberg is an Inventor, and all products using, related to or derived from products for which Dr. Goldenberg is an Inventor (“Patented Products”), which payments shall continue for each Patented Product for the remaining Life of the Patent covering each Patented Product (collectively “Patent Lifetime Royalty Payments”). The percentage of Product Royalties that Immunomedics will pay to Dr. Goldenberg on each Patented Product will be determined based on the percentage of Product Royalties that Immunomedics must pay to external third parties (any party other than a wholly owned subsidiary of Immunomedics) on each Patented Product, as follows:
(A) One percent (1%) of annual Product Royalties on Patented Products for which the Company pays a Royalty of more than 9.0 % to external third parties;
(B) One and one-half percent (1.5%) of annual Product Royalties on Patented Products for which the Company pays a Royalty of more than 6.0 % through 9.0 % to external third parties;
(C) Two percent (2%) of annual Product Royalties on Patented Products for which the Company pays a Royalty of more than 3.0% through 6.0 % to external third parties; or
(D) Three percent (3%) of annual Product Royalties on Patented Products for which the Company pays a Royalty of 3.0% or less to external third parties.
Patent Lifetime Royalty Payments under Section 4.2(a)(ii) shall be due and owing from Immunomedics to Dr. Goldenberg (or his estate or designated beneficiaries) throughout the Life of each Patent both during his employment with the Company and after his employment terminates, except that Lifetime Royalty Payments shall not be payable in the event an arbitrator or court finds that Dr. Goldenberg committed a material breach of his covenants contained in Section 9. During the Term of Dr. Goldenberg’s employment with Immunomedics only, any
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quarterly payment of Patent Lifetime Royalty Payments calculated under this Section 4.2(a)(ii) will be paid to Dr. Goldenberg (or his estate or designated beneficiaries) only to the extent that such Patent Lifetime Royalty Payments exceed the quarterly Minimum Payment paid to him pursuant to Section 4.2(c).
(b) Payments Upon Disposition of Undeveloped Assets. In the event the Company, with its Board’s approval, completes a Disposition during the Term of Employment, or within three (3) years thereafter, of any one or more of Immunomedics’ Undeveloped Assets for which Dr. Goldenberg was an Inventor, Immunomedics will pay Dr. Goldenberg (or his estate or designated beneficiaries) a sum equal to at least twenty percent (20%), or more (as determined by the Board), of the Consideration Immunomedics receives from each Disposition, upon receipt; provided, however that no such payment shall be due in the event an arbitrator or court finds that Dr. Goldenberg committed a material breach of his covenants contained in Section 9. Subject to the preceding conditions, the Company’s obligation to compensate Dr. Goldenberg (or his estate or designated beneficiaries) under this provision, if any, applies to all Dispositions completed within the Term of Employment or within three (3) years thereafter, even if the Company actually receives the Consideration at some time after the three (3) year period elapses.
(c) Minimum Payment. Immunomedics agrees to make a minimum payment of One Hundred Fifty Thousand Dollars ($150,000) to Dr. Goldenberg during each of Immunomedics’ fiscal years during the Term of this Agreement, payable in equal quarterly payments, as an advance against the amounts due to Dr. Goldenberg pursuant to Section 4.2(a) and (b) above. This minimum payment shall be prorated for any partial fiscal year of Immunomedics or partial year of service of Dr. Goldenberg covered by this Section 4.2.
(d) Definitions. As used in this Agreement, the following terms shall have the following meanings:
(i) “Annual Net Revenue” means Immunomedics’ total revenue determined for the fiscal year as determined by GAAP less (i) Consideration received upon Disposition of Undeveloped Assets, (ii) Product Royalties on Patented Products (as defined in Section 4.2(a)(ii)) and (iii) amounts recorded as revenue by Immunomedics during such fiscal year that are related to payments previously paid to Dr. Goldenberg under Section 4.2(a)(i) in any prior period. Further, Annual Net Revenue shall not include (A) net sales of any Acquired Asset, (B) any amounts received as cost reimbursement payments, and (C) any revenue generated from interest or investment income of the Company.
(ii) “Acquired Asset” means any product, technology or business to which Immunomedics acquired the rights from any third party (other than a wholly-owned subsidiary of Immunomedics), or affiliated group of such third parties, for an aggregate consideration in excess of Five Million Dollars ($5,000,000), provided that Immunomedics did not materially contribute to the invention or development of such asset prior to such acquisition. For purposes of this definition, Immunomedics will be deemed to have materially contributed to any product, technology or business which is covered by any Immunomedics’ patent.
(iii) “Consideration” means cash, asset(s) or property, tangible or intangible, which Immunomedics receives directly or indirectly, for a Disposition (the transfer of relevant assets), including but not limited to sales proceeds, license fees and licensing milestones, other milestone payments, up-front fees and sales bonuses. Consideration shall not include: (A) any consideration for or with respect to any Acquired Asset, (B) amounts paid to Immunomedics which clearly are intended to constitute reimbursement of direct out-of-pocket costs incurred by Immunomedics for research, development or preclinical or clinical trials of the product or products which are the subject of the Disposition, regardless of whether paid directly or indirectly, and however labeled, provided such amounts are paid pursuant to an agreement in effect at the time of such payment(s) and (C) any Patent Lifetime Royalty Payments (as defined in Section 4.2(a)(ii)). In calculating the value of Consideration received in a Disposition, Immunomedics will offset the value of any thing of value that it had to grant or provide to the other party in exchange for the Disposition as an express element of the transaction. The parties agree that any dispute with respect to the value of Consideration received in connection with any Disposition or any other dispute arising under this definition shall be submitted to arbitration pursuant to Section 8.
(iv) “Disposition” means any transfer, by way of sale, license or otherwise, to an unaffiliated third party, of any of Immunomedics’ right, title or interest in or to any one or more of its products, technologies, intellectual property, businesses or other assets. Disposition includes any arrangements,
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whereby, Immunomedics combines with another entity and forms a new entity in which Immunomedics holds any ownership interest and to which Immunomedics transfers, by way of sale, license or otherwise, any of Immunomedics’ right, title or interest in or to any one or more of its products, technologies, intellectual property, or businesses. “Disposition” shall not include a transfer of all or substantially all of the assets or stock of Immunomedics pursuant to a Change in Control (as defined in Section 10(f)) or similar corporate transaction of Immunomedics or to which it is a party.
(v) “Inventor” means a person(s) identified as an inventor of a patented product, formula or idea on the disclosures initially filed in the relevant patent office(s) for such patent.
(vi) “Life of a Patent” means the period beginning the first date on which a patent application is filed in any patent office covering any territory in the world and continuing as long as at least one (1) valid claim of the patent exists in any territory in the world. It is understood that for purposes of this definition, the patent office in which the patent initially is filed is not likely to be located in or covering the same territory in which the last valid patent claim remains, and that the Life of the Patent will cover all time periods between these two events.
(vii) “Product Royalties” means all Consideration designated as a royalty, which Immunomedics receives for the license or use of its technology(ies), products, inventions, patents, or other intellectual property. For purposes of this Agreement, a patent or copyright will be deemed valid in any territory in the world if at least one (1) valid claim of the patent or copyright exists in any territory in the world.
(viii) “Immunomedics” means Immunomedics and all of its direct and indirect subsidiaries or affiliates, including but not limited to IBC.
(ix) “Undeveloped Assets” means any technology, product, agent, intellectual property, business or other asset(s) or product(s) for which, at the time of Disposition, the Board of Directors of Immunomedics and Dr. Goldenberg have mutually determined that Immunomedics (A) is not currently budgeting for development, (B) has not set a time table for development, at a level consistent with the financial support or timetable given to any other major project or technology for which the Company currently is budgeting for either preclinical or clinical development, (C) has not funded with substantial research and development resources, or (D) has not entered Immunomedics’ sponsored Phase I or Phase II clinical trials.
(x) “Code” means the Internal Revenue Code of 1986, as amended.
(e) In Lieu of Other Payments. The Additional Incentive Compensation discussed in Sections 4.2(a)(i) and 4.2(a)(ii) of this Agreement shall be in lieu of all other royalties and percentage payments to which Dr. Goldenberg otherwise previously might have been entitled relative to Undeveloped Assets under prior agreements or otherwise, including but not limited to payments pursuant to the License Agreement or on any other prior agreement between the parties.
(f) Reports and Payments. Within forty-five (45) days after the last day of each of its fiscal quarters (other than the final quarter of each fiscal year), Immunomedics will provide Dr. Goldenberg with a written report that includes a preliminary computation (based upon unaudited financials) of Net Revenue, of Product Royalties, and of royalties on Patented Products (computed for such quarter in the same manner as Annual Net Revenue or annual Product Royalties is to be computed for a fiscal year) and Disposition Payments (if any), and all amounts due to Dr. Goldenberg pursuant to Sections 4.2(a)(i), 4.2(a)(ii), and 4.2(b) with respect to such fiscal quarter. Within two and one half (2 1/2) months after the last day of each of its fiscal years, Immunomedics will provide Dr. Goldenberg with a report that includes computation of Annual Net Revenue, of annual Product Royalties, of annual royalties on Patented Products, and Disposition Payments (if any) for the entire year and all amounts due with respect to that year (based on audited financials), as adjusted for the minimum payment provided to Dr. Goldenberg pursuant to Section 4.2(b) above. Immunomedics will pay or transfer to Dr. Goldenberg, within two and one half (2 1/2) months after the last day of each of its fiscal years, all amounts due pursuant to Sections 4.2(a)(i) and 4.2 (a)(ii) with respect to that year. Immunomedics will pay or transfer to Dr. Goldenberg any participation in Consideration to which he is entitled pursuant to Section 4.2(b) above within fifteen (15) calendar days following receipt of such Consideration by Immunomedics, regardless of how the Company may record the receipt of such Consideration for other accounting purposes. Immunomedics will provide such documentation as Dr. Goldenberg deems reasonably necessary to verify the Company’s calculations of the payments due to Dr. Goldenberg pursuant to Sections 4.2(a)(i), 4.2(a)(ii), and 4.2(b). At least once during each fiscal year, Dr. Goldenberg shall have the right to obtain access to Immunomedics sales and accounting books and records, and other documents Dr. Goldenberg deems reasonably necessary to confirm Immunomedics’ compliance with its obligations under this Agreement.
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5. Vacation and Fringe Benefits.
(a) Vacation. Dr. Goldenberg shall be entitled to a total of six (6) weeks paid vacation during each Contract Year throughout the Term of this Agreement. Vacation benefits are subject to all other terms and conditions of Immunomedics’ standard vacation policies including but not limited to those relating to accrual of vacation time.
(b) Expenses. It is understood that Dr. Goldenberg will incur reasonable and necessary expenses in connection with his employment and Immunomedics will reimburse Dr. Goldenberg for any such expenses in accordance with policies and limits as adopted by the Board.
(c) Employee Benefit Plans. In addition to the benefits expressly mentioned in this Agreement, Dr. Goldenberg shall receive all of the employment-related benefits established by the Board for executive officers and such additional benefits as the Board may award to him from time to time. For purposes of this Agreement, employment-related benefits shall include, without limitation, participation in all employee welfare benefit plans and employee pension benefit plans (as those terms are defined in the Employee Retirement Income Security Act of 1974, as amended), which Immunomedics may maintain from time to time during the Term of Employment.
6. Research Contracts or Grants. During the Term of this Agreement, Dr. Goldenberg occasionally may apply for research contracts for which he would be named as principal research scientist or investigator. In such event, Dr. Goldenberg shall:
(a) Deliver copies of such applications to Immunomedics prior to submission to the grantor or other contract entity.
(b) Make such changes to application as Immunomedics may reasonably request.
(c) Submit such application naming Immunomedics as grantee or contract beneficiary.
(d) Allow a mutually acceptable representative of Immunomedics to be present and participate in all negotiations related to the proposed contract. All such contracts shall be subject to any internal approval process the Board may establish.
The provisions of this Section 6 shall not be applicable with respect to any research contracts for which Dr. Goldenberg may apply on behalf of the Center.
7. Prior Inventions and Discoveries.
(a) Discoveries. In exchange for Immunomedics’ agreement to provide the Additional Incentive Compensation detailed in Sections 4.2(a)(i), 4.2(a)(ii) and 4.2(b) of this Agreement, Dr. Goldenberg agrees to forego any right to any additional compensation or consideration he otherwise would have the right to receive based on any ownership or interest he has in any and all ideas, inventions, improvements, discoveries, developments, products, compounds, compositions, apparatus, methods, formulae, processes, applications or uses that he made or conceived (solely or jointly with another or others or by material contribution thereto in the course of his significant involvement in the direction of Immunomedics’ research and technology programs) during the Term of Employment (collectively “Discoveries”). Dr. Goldenberg acknowledges that any interest he has or had in such Discoveries shall be the sole and exclusive property of Immunomedics, subject to any other applicable provisions of this Agreement or any other agreements between the parties.
(i) Notwithstanding this provision, Immunomedics acknowledges that it does not have any interest in any Discoveries that Dr. Goldenberg made/makes or conceived/conceives (solely or jointly with another or others or by material contribution thereto in the course of any significant involvement in the direction of the Center’s research and technology programs) related to research performed by or for the Center in the course of his duties for the Center (“Center Discoveries”), and with respect to which Dr. Goldenberg has no individual retained interest other than a royalty interest, and regardless of whether Immunomedics also may have an interest in the subject of such research. Dr. Goldenberg shall retain any royalty interest he may have in any Center Discoveries. Immunomedics’ ownership rights in and to any Discovery made or conceived by Dr. Goldenberg (solely or jointly with another or others or by material contribution thereto) in the course of any significant involvement by Dr. Goldenberg in the research or other activities of IBC, shall be only as may be expressly provided in any license, proprietary rights or other equivalent existing or future agreement that may exist between Immunomedics and IBC.
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(ii) Notwithstanding this provision (Section 7(a)), Immunomedics further acknowledges that it does not have any interest in any Discoveries (patented or unpatented) that Dr. Goldenberg made/makes or conceived/conceives (solely or jointly with another or others or by material contribution thereto), which are related to research performed by Dr. Goldenberg independent of his duties and responsibilities for Immunomedics or the Center, provided that such Discoveries do not involve or relate to any technologies, research, or products being produced or developed by Immunomedics or by the Center, and provided that neither Immunomedics nor the Center made any material contribution to such Discoveries.
(b) Disclosures. Dr. Goldenberg acknowledges and agrees that he has provided Immunomedics with relevant information regarding all Discoveries covered under this Agreement. Dr. Goldenberg further agrees to provide Immunomedics with relevant information regarding any new Discoveries he might make at any time during the Term of this Agreement and to comply with his fiduciary duties to Immunomedics.
(c) Cooperation of Dr. Goldenberg. Both during and following the Term of Employment, upon the request of Immunomedics, Dr. Goldenberg shall execute and deliver any documents and give all reasonable assistance which may be essential or desirable to secure to, assign and vest in Immunomedics the sole and exclusive right, title and interest in and to all Discoveries and other intellectual property. Such reasonable assistance may include but not be limited to the execution and delivery of patent applications, assignments, affidavits, priority claims and other documents that Immunomedics, in its sole discretion, may determine are essential or desirable to obtain, maintain and/or defend such patents and to secure to and vest all appropriate rights in Immunomedics. In addition, Dr. Goldenberg agrees that during and following the Term of Employment, at the request of Immunomedics, he generally will cooperate, appear and give evidence in any meetings or proceedings which may arise in connection with Immunomedics’ efforts to secure, assign and vest for the Company the sole and exclusive right, title and interest in and to all Discoveries and other intellectual property. Immunomedics agrees to reimburse Dr. Goldenberg for all reasonable expenses he incurs in providing such cooperation to Immunomedics. For purposes of this section, reasonable expenses may include but not be limited to travel costs, out of pocket expenses, and any loss of salary or wages from another employer (if Dr. Goldenberg no longer is employed by Immunomedics). Any legal proceedings in connection with such matter shall be conducted by attorneys chosen and paid by Immunomedics. Correspondingly, Immunomedics will provide all reciprocal support and reasonable assistance to Dr. Goldenberg that he may require to perfect his interest in any patent or Discovery, consistent with the terms of this Agreement.
(d) Dispute Resolution. In the event that a dispute should arise regarding whether any Discoveries are the property of Immunomedics, or belong to the Center, if the relevant parties are not able to reach agreement, they shall submit the dispute to final and binding arbitration pursuant to Section 8 of this Agreement.
8. Arbitration. All disputes arising under this Agreement, other than actions to enforce the restrictions detailed in Section 9, or as otherwise expressly stated in this Agreement, shall be subject to final and binding arbitration between the parties. Such arbitration shall be submitted to a single arbitrator selected by mutual agreement of the parties, and shall be conducted at a mutually agreeable site located within a ten (10) mile radius of Immunomedics’ principal office in Morris Plains, New Jersey. All arbitration proceedings shall be conducted pursuant to the American Arbitration Association Rules for Employment Disputes.
9. Restrictive Covenants.
(a) Confidentiality. Dr. Goldenberg agrees that his services to Immunomedics were and are of a special, unique and extraordinary character, and that his position places him in a position of confidence and trust with Immunomedics’ customers and employees. Dr. Goldenberg also recognizes that his position with Immunomedics gives him substantial access to Confidential Information (as defined below), the disclosure of which to competitors of Immunomedics would cause Immunomedics to suffer substantial and irreparable damage. Therefore, Dr. Goldenberg recognizes that it is in Immunomedics’ legitimate business interest to restrict Dr. Goldenberg’s use of Confidential Information for any purposes other than the discharge of his employment duties at Immunomedics, and to limit any potential appropriation of Confidential Information by Dr. Goldenberg for the benefit of Immunomedics’ competitors and to the detriment of Immunomedics. Accordingly, Dr. Goldenberg agrees as follows:
(i) Throughout the Term of this Agreement and at all times thereafter, Dr. Goldenberg will not at any time reveal to any person or entity any of the trade secrets or confidential information of Immunomedics, or of any third party, which Immunomedics is under an obligation to keep confidential (including but not limited to trade secrets and non-public information regarding inventions, products, designs, methods, know-how, techniques, systems, processes, software programs, works of authorship, customer lists, projects, intellectual property, plans and proposals) (“Confidential Information”), except as may be required in the ordinary course of performing Dr. Goldenberg’s duties as an employee of Immunomedics or for the benefit of Immunomedics, with the Company’s knowledge and consent. Dr. Goldenberg will keep secret all matters entrusted to him and not use or attempt to use any Confidential Information in any manner which may injure or cause direct or indirect loss to Immunomedics.
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(ii) Confidential Information shall not include (and the above restrictions shall not apply to): (A) information that at the time of disclosure is in the public domain through no fault of Dr. Goldenberg; (B) information Dr. Goldenberg receives from a third party outside of Immunomedics that was disclosed without a breach of any confidentiality obligation; (C) information approved for release by written authorization of Immunomedics; or (D) information that may be required by law or an order of any court, agency or proceeding to be disclosed. In the event that Dr. Goldenberg is requested or required by law or an order of any court, agency or proceeding to disclose Confidential Information, Dr. Goldenberg will provide Immunomedics with prompt notice of such request so that Immunomedics may timely seek an appropriate protective order or waive Dr. Goldenberg’s confidentiality obligations under this Agreement. Dr. Goldenberg will provide reasonable assistance to Immunomedics in the event the Company notifies him that it intends to seek to obtain an appropriate protective order. If Dr. Goldenberg gives such notice to Immunomedics, but does not receive timely notice of either a protective order or a waiver from the Company and, in the written or oral opinion of his legal counsel (the reasonable fee for which opinion shall be paid or reimbursed by Immunomedics), Dr. Goldenberg is compelled to disclose Confidential Information or face liability for contempt or other censure or penalty, then Dr. Goldenberg may disclose such Confidential Information to the extent so required, without violating this provision or incurring any liability under the Agreement.
(iii) Return of Company Property. Dr. Goldenberg agrees that upon the termination of his employment with Immunomedics, regardless of the timing or reason for termination, he will not take or retain, without written authorization, any documents, files or other property of Immunomedics. Except as provided in this Agreement, Dr. Goldenberg will return promptly to Immunomedics any such documents, files or property in his possession or custody, including any copies thereof maintained in any medium or format. Dr. Goldenberg recognizes that all documents, files and property containing Confidential Information which he has received and will receive from Immunomedics, including but not limited to scientific research, customer lists, handbooks, memoranda, product specifications, and other materials are for the exclusive use of Immunomedics and its employees while working on behalf of Immunomedics, and that Dr. Goldenberg has no claim or right to the continued use, possession or custody of such documents, files or property following the termination of his employment.
Notwithstanding this provision, Immunomedics acknowledges and agrees that Dr. Goldenberg may retain all working documents that he determines he may need with regard to any patent(s) he is preparing for filing, pursuing, or prosecuting on behalf of Immunomedics. Immunomedics further acknowledges and agrees that any materials created prior to Dr. Goldenberg’s employment by Immunomedics, and any materials created in connection with his employment with the Center or IBC (“Non-proprietary Materials”) are not the property of Immunomedics, and all materials that are generally available to the public and/or in the public domain (“Public Materials”), are not the exclusive property of Immunomedics. Immunomedics further agrees that Dr. Goldenberg may retain possession of all Non-Proprietary Materials and may retain copies of all Public Materials, at all times following the end of his employment.
(b) Non-Competition. Throughout the Term of Employment and for a period of three (3) years thereafter, Dr. Goldenberg will not, without the prior written approval of the Board, whether alone or as a partner, officer, director, consultant, agent, employee or stockholder of any company or other commercial enterprise, directly or indirectly engage in any business or other activity in the United States or Canada which competes with Immunomedics. The foregoing prohibition shall not prevent Dr. Goldenberg’s employment or
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engagement following his Term of Employment, with any company or business organization, as long as the activities of any such employment or engagement, in any capacity, do not involve work on matters related to the products being researched, developed, manufactured, or marketed by Immunomedics during the Term of Employment. Dr. Goldenberg shall be permitted to own securities of a public company not in excess of five percent (5%) of any class of such securities and to own stock, partnership interests or other securities of any entity not in excess of five percent (5%) of any class of such securities, and to own any amount of interest in the Center, Immunomedics, and/or in IBC (or a subsidiary or affiliate of same), and such ownership taken alone shall not be considered to be in competition with Immunomedics or a violation of this Agreement.
(c) Non-Solicitation. Throughout the Term of Employment and for a period of three (3) years thereafter, Dr. Goldenberg agrees that he will not:
(i) directly or indirectly solicit, entice or induce any Immunomedics’ customer to become a customer of any other person, firm or corporation with respect to products then sold or under development by Immunomedics, or to cease doing business with Immunomedics, and Dr. Goldenberg shall not approach any such person, firm or corporation for such purpose or authorize or knowingly approve the taking of such actions by any other person; or
(ii) directly or indirectly solicit or recruit any employee of Immunomedics to work for a third party other than Immunomedics (excluding the Center and excluding newspaper or similar print or electronic solicitations of general circulation); provided, however, that the otherwise applicable non-solicitation period shall not be reduced in the event of Dr. Goldenberg’s termination for Cause or the cessation of Severance Payments as a result of Dr. Goldenberg’s violation of his obligations under this Section 9.
(d) Enforcement.
(i) Dr. Goldenberg acknowledges and agrees that the type and periods of restrictions imposed in this Section 9 of this Agreement are fair and reasonable, and that such restrictions are intended solely to protect the legitimate interests of Immunomedics, rather than to prevent Dr. Goldenberg from earning a livelihood. Dr. Goldenberg recognizes that Immunomedics competes worldwide, and that his access to Confidential Information makes it necessary for Immunomedics to restrict his post-employment activities in any market in which Immunomedics competes, and in which his access to Confidential Information and other proprietary information could be used to the detriment of Immunomedics.
(ii) Injunctive Relief. Dr. Goldenberg acknowledges and agrees that if he breaches any of the covenants, restrictions and agreements contained in this Section 9, Immunomedics will suffer irreparable loss and injury, and that damages arising out of such a breach may be difficult to ascertain. Therefore, Dr. Goldenberg agrees that, in addition to all other remedies provided at law or at equity, Immunomedics shall be entitled to have the covenants, restrictions and agreements contained in this Section 9 specifically enforced (including, without limitation, by temporary, preliminary, and permanent injunctions and restraining orders) by any state or federal court in the State of New Jersey having equity jurisdiction and Dr. Goldenberg agrees to be subject to the jurisdiction of such court.
(iii) Monetary Relief. In addition to its right to seek an injunction, in the event Dr. Goldenberg breaches any provision of this Section 9, Immunomedics also shall have the right to pursue monetary damages against Dr. Goldenberg for such breach.
(iv) If either party fails to take action to remedy any breach of this Agreement or any portion of this Agreement by the other party, such inaction shall not operate or be construed as a waiver of any subsequent breach by either party of the same or any other provision, agreement or covenant.
(v) Dr. Goldenberg acknowledges and agrees that the payments and benefits to be provided to him under this Agreement are provided, in part, as consideration for the covenants in this Section 9.
(vi) In the event that any court of competent jurisdiction or any arbitration determines that any restriction contained in this Agreement is overly broad with respect to scope, time or geographical coverage, the parties agree that such restriction(s) may be modified and narrowed, either by a court, arbitrator, or by Immunomedics only to the extent necessary to make this provision enforceable, and that such determination will not affect the enforceability of any other provision of this Agreement.
(e) Exclusions Relating to the Center. Immunomedics and Dr. Goldenberg agree that any work that Dr. Goldenberg performs for or on behalf of the Center and/or any of its affiliates, and any documents or other
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confidential information or materials developed, assembled, or received while performing such work, are not subject to the provisions of this Section 9, and that any such work will not constitute a violation of the terms of this Agreement.
10. Termination. Notwithstanding the provisions of Section 2 above, the employment of Dr. Goldenberg shall terminate upon the happening of any of the following events:
(a) The death of Dr. Goldenberg.
(b) Immunomedics and Dr. Goldenberg mutually agree to terminate this Agreement.
(c) At Immunomedics’ option, if Dr. Goldenberg suffers a Permanent Disability. For purposes of this Agreement, Dr. Goldenberg shall be deemed to have incurred a “Permanent Disability” if, by reason of his physical or mental medical condition, as determined by a physician jointly designated by Immunomedics and Dr. Goldenberg, he is unable to perform his duties under this Agreement for a period of (i) 180 consecutive days, or (ii) 245 days in any 365 consecutive days period. Dr. Goldenberg will not be deemed Permanently Disabled if he submits a written opinion by a physician designated by or reasonably satisfactory to Immunomedics stating that Dr. Goldenberg will be able to resume continuous full-time performance of his obligations under this Agreement within 365 days following the commencement of such disability and Dr. Goldenberg actually returns to full-time work within the same 365 day period. In the event Dr. Goldenberg and Immunomedics cannot agree upon a physician to determine whether Dr. Goldenberg is suffering a Permanent Disability, they each may select a physician and the two physicians so selected will jointly select a third physician, who will examine Dr. Goldenberg to determine whether he is suffering a Permanent Disability, and will provide a written report of his/her conclusions all parties.
(d) By Dr. Goldenberg, for Good Reason. For purposes of this Agreement, Good Reason is defined as occurrence of any of the following events or conditions, unless Dr. Goldenberg has expressly consented in writing thereto, or except as a result of Dr. Goldenberg’s physical or mental incapacity or as described in the last sentence of this subsection (d):
(i) A material reduction in Dr. Goldenberg’s Base Salary;
(ii) The material diminution of the Dr. Goldenberg’s duties, responsibilities, powers or authorities, including the assignment of any duties and responsibilities inconsistent with his position as Chief Scientific Officer and Chief Medical Officer of Immunomedics; or
(iii) Immunomedics requires that Dr. Goldenberg’s principal office location be moved to a location more than 50 miles from his principal office location immediately before the change.
Notwithstanding the foregoing, Dr. Goldenberg shall not have Good Reason for termination unless he gives written notice of termination for Good Reason within 15 days after the event giving rise to Good Reason occurs and Immunomedics does not correct the action or failure to act that constitutes the grounds for Good Reason, as set forth in Dr. Goldenberg’s notice of termination, within 30 days after the date on which he gives written notice of termination and Dr. Goldenberg actually resigns from employment upon the expiration of the foregoing cure period. In the event of a cure of such event or condition constituting Good Reason by the Company, such event or condition shall no longer constitute Good Reason.
(e) By the Company, for “Good Cause,” which means:
(i) Dr. Goldenberg commits continued, knowing and intentional neglect, substantial nonperformance or a demonstrated continuing inability to perform his obligations under this Agreement (other than due to physical or mental disability) and Immunomedics provides him with written notice of such deficiencies and ninety (90) days to correct such deficiencies; or
(ii) An arbitrator or a court finds that Dr. Goldenberg committed an act of fraud or dishonesty related to the performance of duties under this Agreement; or
(iii) Dr. Goldenberg commits any material breach of any of the provisions of this Agreement other than those covered under Sections 10(e)(i) or 10(e)(ii), and fails to cure such breach within ninety (90) days after receiving written notice from Immunomedics of such breach.
(f) By Dr. Goldenberg upon ninety (90) days prior written notice to Immunomedics or its successor, to be effective not later than the second anniversary of a Change in Control of Immunomedics. For purposes of this Agreement, a Change of Control of Immunomedics is defined as:
(i) A merger, consolidation or reorganization approved by the Company’s stockholders, unless securities representing more than fifty percent (50%) of the total and combined voting power of the outstanding voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly, by the persons who beneficially owned the Company’s outstanding voting securities immediately prior to such transaction; or
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(ii) The sale, transfer or other disposition of all or substantially all of the Company’s assets as an entirety or substantially as an entirety, occurring within a 12-month period, and representing, at a minimum, not less than 40 percent of the total gross fair market value of all assets of the Company, to any person, entity, or group of persons acting in consort, other than a sale, transfer or disposition to: (A) a shareholder of the Company in exchange for or with respect to its stock; (B) an entity, 50 percent or more of the total value or voting power of which is owned, directly or indirectly, by the Company; (C) a person, or more than one person acting as a group, that owns, directly or indirectly, 50 percent or more of the total value or voting power of the outstanding stock of the Company; or (D) an entity, at least 50 percent of the total value or voting power of which is owned by a person described in (C); or
(iii) Any transaction or series of related transactions pursuant to which any person or any group of persons comprising a “group” within the meaning of Rule 13d-5(b)(1) under the Securities Exchange Act of 1934, as amended (other than the Company or a person that, prior to such transaction or series of related transactions, directly or indirectly controls, is controlled by or is under common control with, the Company) becomes directly or indirectly the beneficial owner (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of securities possessing (or convertible into or exercisable for securities possessing) more than fifty percent (50%) of the total combined voting power of the Company’s securities outstanding immediately after the consummation of such transaction or series of related transactions, whether such transaction involves a direct issuance from the Company or the acquisition of outstanding securities held by one or more of the Company’s stockholders; or
(iv) A change in the composition of the Board over a period of twelve (12) consecutive months or less such that a majority of the Board members ceases by reason of one or more contested elections for Board membership to be comprised of individuals whose election is endorsed by a majority of the members of the Board immediately before the date of election.
A transaction shall not constitute a Change of Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in the same proportions by the persons who held the Company’s securities immediately before such transaction.
(g) Except as provided in Sections 10(a), 10(c) or 10(e)(ii), with respect to death, Permanent Disability and fraud/dishonesty, respectively, termination by either party hereunder shall be effective upon the effective date of notice of such termination by the terminating party to the other party specifying the reasons, if any, for such termination.
(h) The foregoing provisions of this Section 10 notwithstanding, Dr. Goldenberg will not be deemed to have had a termination of employment prior to the date as of which Immunomedics and Dr. Goldenberg reasonably anticipate that the level of future services to be provided by Dr. Goldenberg to Immunomedics, whether as an employee or an independent contractor, will permanently decrease to a level which is less than fifty (50) percent of the average level of services provided over the immediately preceding thirty-six (36) months.
11. Decisions and Determinations of the Board. Neither Dr. Goldenberg nor any of his affiliates shall participate in any decision by the Board, or any Board committee, which affects any of his rights or obligations under this Agreement. Except as otherwise expressly provided in this Agreement, all actions of the Board provided for in this Agreement, including but not limited to determinations, consents and approvals, shall be in the Board’s sole and uncontrolled discretion.
12. Cooperation with Immunomedics After Expiration or Termination. Following the end of the Term of Employment, regardless of timing or cause, Dr. Goldenberg will cooperate fully with Immunomedics in all matters relating to the winding up of work on behalf of Immunomedics and the orderly transfer of any pending work to other employees of Immunomedics. Dr. Goldenberg agrees to be available and to provide services on a full-time or part-time basis, as Immunomedics may request, during the first thirty (30) calendar days following the end of his employment. In consideration for the Patent Lifetime Royalty Payments set out in Section 4.2(a)(ii) of this Agreement, Dr. Goldenberg specifically agrees to provide to Immunomedics all assistance reasonably necessary to
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assist Immunomedics in defending and prosecuting any patents in force. This obligation will continue for the life of the patent, provided Dr. Goldenberg is medically able to provide such assistance. Nothing herein shall limit Immunomedics’ obligation to pay, and Dr. Goldenberg’s or his estate’s right to receive, the Additional Incentive Compensation, Patent Lifetime Royalty Payments and Disposition Payments under Sections 4.2(a)(ii) and 4.2(b) of this Agreement, for the specified periods or throughout the Life of the Patents, as the case may be.
13. Payment and Benefits on Termination or Expiration.
(a) [INTENTIONALLY OMITTED]
(b) Guaranteed Payments. Not later than sixty (60) days following the termination of Dr. Goldenberg’s employment, regardless of the reason or timing of the termination, Immunomedics will make payment to Dr. Goldenberg for all annual Base Salary, Bonus, Minimum Payments, and Additional Incentive Compensation earned through the date of termination, any benefits accrued in accordance with the terms of any applicable benefit plans and programs of the Company (including but not limited to earned but unused vacation), and will continue all payments pursuant to Section 4.2(a)(ii) and 4.2(b) for the time periods provided in those sections of this Agreement (collectively, “Guaranteed Payments”). There are no preconditions to Immunomedics’ obligation to pay, and to Dr. Goldenberg’s right to receive, Guaranteed Payments under this Section 13(b) of this Agreement.
(c) Severance
(i) If Dr. Goldenberg’s employment terminates pursuant to Section 10(a) (death), in addition to receiving the Guaranteed Payments, his estate will receive a Severance Payment equal to the amount of the Annual Target Bonus, if any, (pursuant to Section 4.1(b)) payable for the fiscal year in which the termination occurs (prorated to reflect Dr. Goldenberg’s actual period of service during such fiscal year), such amount to be paid within sixty (60) days following the date of Dr. Goldenberg’s death.
(ii) If Dr. Goldenberg’s employment terminates by mutual agreement of the parties pursuant to Section 10(b) (mutual agreement), 10(c) (permanent disability) or pursuant to expiration as set forth in Section 2, in addition to receiving the Guaranteed Payments, Dr. Goldenberg will receive payment for the Annual Target Bonus, if any, (pursuant to Section 4.1(b)) payable for the fiscal year in which the termination occurs (prorated to reflect Dr. Goldenberg’s actual period of service during such fiscal year), such amount to be paid within sixty (60) days following the date of termination of employment, and any other benefits or payments to which the parties may agree.
(iii) If Dr. Goldenberg’s employment terminates for Good Cause pursuant to Section 10(e), the only post-termination payment or benefit he will receive is the Guaranteed Payments.
(iv) If Immunomedics terminates Dr. Goldenberg’s employment without Good Cause (as defined in Section 10(e)), or if Dr. Goldenberg terminates his employment for Good Reason pursuant to Section 10(d), in addition to the Guaranteed Payments, Immunomedics will pay Dr. Goldenberg a Severance payment, paid in a lump sum, in an amount equal to three times (3x) his Total Annual Compensation (as such exists as of the date of termination), such lump sum to be paid within sixty (60) days following the date of termination of Dr. Goldenberg’s employment. “Total Annual Compensation” shall include all cash payments due to Dr. Goldenberg for the applicable Contract Year as set out in Sections 4.1(a) and (b), 4.2(a)(i), and 4.2(c), but shall not include payments provided pursuant to Sections 4.2(a)(ii) and 4.2(b) (which shall continue pursuant to the terms of those Sections).
(A) In the event Dr. Goldenberg’s employment terminates as provided in Section 13(c)(iv), for a period of two (2) years following the date of termination of employment (the “Severance Period”), the Company will, to the extent permitted under the Code, continue to provide to Dr. Goldenberg all of the benefits of his employment, as if he remained employed, as set out in Section 5(c), except that Immunomedics shall, during the Severance Period , pay Dr. Goldenberg each month an amount equal to the monthly COBRA medical insurance cost under Immunomedics’ medical plan for Dr. Goldenberg and any eligible dependent(s) (less any required employee payments calculated as if Dr. Goldenberg had continued to be an employee), and all other employee benefits pursuant to Section 5(c) which are subject to COBRA. Throughout the Severance Period, in the event Immunomedics requests that Dr. Goldenberg provide services to Immunomedics, then Immunomedics will pay for the reasonable cost of an office and administrative assistant support for Dr. Goldenberg, and all reasonable expenses to set up and maintain such office (including telephone, fax and Internet access, office supplies and
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equipment, furniture, etc.), at a reasonable location of Dr. Goldenberg’s choice, but only to the extent such office, administrative assistant support and related expenses are necessary for Dr. Goldenberg to adequately provide such services.
(v) If Dr. Goldenberg terminates his employment following a Change in Control pursuant to Section 10(f), in addition to the Guaranteed Payments, Immunomedics will pay Dr. Goldenberg, in a lump sum within sixty (60) days following the date of his termination of employment, a Severance payment in an amount equal to three times (3x) his Total Annual Compensation, as previously defined above, (as such exists as of the date of termination).
(A) In the event Dr. Goldenberg’s employment terminates as provided in Section 13(c)(v), for or a period of three (3) years following the date of termination of employment (the “Enhanced Severance Period”), the Company or its successor, as the case may be, will, to the extent permitted under the Code, continue to provide to Dr. Goldenberg all of the benefits of his employment, as if he remained employed, as set out in Section 5(c), except that Immunomedics shall, during the Enhanced Severance Period, pay Dr. Goldenberg each month an amount equal to the monthly COBRA medical insurance cost under Immunomedics’ medical plan for Dr. Goldenberg and any eligible dependent(s) (less any required employee payments calculated as if Dr. Goldenberg had continued to be an employee), and all other employee benefits pursuant to Section 5(c) which are subject to COBRA. Throughout the Enhanced Severance Period, in the event Immunomedics requests that Dr. Goldenberg provide services to Immunomedics, then Immunomedics will pay for the reasonable cost of an office and administrative assistant support for Dr. Goldenberg, and all reasonable expenses to set up and maintain such office (including telephone, fax and Internet access, office supplies and equipment, furniture, etc.), at a reasonable location of Dr. Goldenberg’s choice, but only to the extent such office, administrative assistant support and related expenses are necessary for Dr. Goldenberg to adequately provide such services.
(d) In the event Dr. Goldenberg should expire during either Severance Period, Immunomedics will continue to make all Severance Cash Payments to his estate through the end of the Severance Period, continue to pay his estate a monthly amount for the cost of medical coverage for Dr. Goldenberg’s eligible dependents in accordance with Sections 13(c)(iv)(A) or 13(c)(v)(A), as applicable, and will continue to pay all Patent Lifetime Royalty Payments under Section 4.2(a)(ii) for the Life of each Patent.
(e) Specific Issues in the Event of a Change in Control (regardless of whether Dr. Goldenberg terminates his employment):
(i) Notwithstanding any provision to the contrary in the Company’s 2006 Stock Incentive Plan or any applicable plan, program or agreement, upon the occurrence of a Change of Control, all stock options, restricted stock and other equity rights held by Dr. Goldenberg will become fully vested and/or exercisable, as the case may be, on the date on which the Change in Control occurs, and all stock options held by Dr. Goldenberg shall remain exercisable, notwithstanding anything in any other agreement governing such options, for a period of twenty-four (24) months following the end of the remaining balance of the Term of the Agreement; provided, however, that in no event will the option be exercisable (a) beyond its original term; or (b) beyond the extension period permitted under Section 409A of the Code.
(ii) Notwithstanding any vesting provision to the contrary in any applicable plan, program or agreement providing for supplemental retirement benefits or deferred compensation, upon the occurrence of a Change of Control, Dr. Goldenberg’s accrued benefit under such plans, programs or agreements shall become fully vested on the date on which the Change in Control occurs, and Dr. Goldenberg’s accrued benefit shall be immediately payable on Dr. Goldenberg’s date of termination, unless Dr. Goldenberg has made a valid election under such plan, program or agreement to defer payment of such accrued benefits or Dr. Goldenberg’s accrued benefit constitutes “deferred compensation” within the meaning of section 409A of the Code and the terms of the applicable plan, program or agreement provides otherwise with respect to the timing of payment of the accrued benefit.
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(f) Required Postponement for Specified Executives.
(i) If Dr. Goldenberg is considered a Specified Executive (as defined below) and payment of any amounts under this Agreement is required to be delayed for a period of six months after separation from service pursuant to Section 409A of the Code, payment of such amounts shall be delayed as required by Section 409A, and the accumulated postponed amounts, with accrued interest as described below, shall be paid in a lump sum payment within five days after the end of the six month period. If Dr. Goldenberg dies during the postponement period prior to the payment of benefits, the amounts postponed on account of Section 409A, with accrued interest as described in subsection (b) below, shall be paid to the personal representative of Dr. Goldenberg’s estate within 60 days after the date of Dr. Goldenberg’s death.
(ii) If payment of any amounts under this Agreement is required to be delayed pursuant to Section 13(f)(i), the Company shall pay interest on the postponed payments from the date on which the amounts otherwise would have been paid to the date on which such amounts are paid at an annual rate equal to the rate published in the Wall Street Journal as the “prime rate” as of Dr. Goldenberg’s date of termination.
(iii) The term “Specified Executive” means an employee who, at any time during the 12-month period ending on the identification date (defined below), is (i) an officer of the Company or a member of its controlled group (as determined for purposes of section 416(i) of the Code) who has annual compensation greater than $135,000 (or such other amount as may be in effect under Section 416(i)(1) of the Code), (ii) a 5% owner of the Company or (iii) a 1% owner of the Company who has annual compensation greater than $150,000. The identification date shall be each December 31, and the determination of Specified Executives as of such identification date shall apply for the 12-month period following April 1 after the identification date. The determination of Specified Executives, including the number and identity of persons considered officers, shall be made by the Company in accordance with the provisions of Sections 416(i) and 409A of the Code and the regulations issued thereunder.
(g) Required Release. As a condition to receiving any Severance Payments under this Section (other than Guaranteed Payments, which are not subject to this condition), Immunomedics may require Dr. Goldenberg to execute a written release of any and all claims against the Company and all related parties with respect to all matters arising out of Dr. Goldenberg’s employment by the Company, or the termination thereof (the “Release”) in a form provided by the Company but acceptable to Dr. Goldenberg. The Company hereby agrees that it will provide Dr. Goldenberg with the form of release agreement on or within seven days after Dr. Goldenberg’s separation from service and, to be entitled to any Severance Payments under this Section 13 (other than Guaranteed Payments, which are not subject to this condition), Dr. Goldenberg must execute, and not revoke, it during the minimum time period permitted by applicable law. Notwithstanding any provision of this Agreement to the contrary, in no event shall the timing of Dr. Goldenberg’s execution of the Release, directly or indirectly, result in Dr. Goldenberg designating the calendar year of payment, and if a payment that is subject to execution of the Release could be made in more than one taxable year, payment shall be made in the later taxable year.
Subject to Dr. Goldenberg’s execution and non-revocation of the Release, the Severance Payments (other than Guaranteed Payments, which are not subject to this condition) shall be paid or commence being paid within 60 days after Dr. Goldenberg’s separation from service but not earlier than the date on which the Release becomes effective and not in contravention of any delay required by Section 13(f). If, however, the period during which Dr. Goldenberg has discretion to execute and/or revoke the Release straddles two calendar years, the Severance Payments (other than Guaranteed Payments, which are not subject to this condition) shall not be paid or commence being paid, as applicable, before the beginning of the second of the two calendar years, regardless of within which calendar year Dr. Goldenberg actually delivers the executed Release to the Company. Consistent with Section 409A, Dr. Goldenberg may not, directly or indirectly, designate the calendar year of payment.
14. [INTENTIONALLY OMITTED]
15. Parties in Interest. This Agreement is personal in nature and no party to this Agreement may assign or transfer this Agreement or any rights or obligations hereunder, without the first obtaining the express written consent of the other party.
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16. Notices. All notices, proposals, submissions, offers, approvals, agreements, elections, consents, acceptances, waivers, reports, plans, requests, instructions, options or other exercise of rights, and other communications required or permitted to be made or given hereunder (all of the foregoing hereinafter collectively referred to as “communications”) shall be in writing, signed by or on behalf of the notifying party, and shall be deemed to have been duly made or given when (i) delivered personally with receipt acknowledged, (ii) sent by registered or certified mail or equivalent, return receipt requested, (iii) sent by facsimile or (iv) sent by recognized overnight courier for delivery within 48 hours, in each case addressed or sent to the parties at the following addresses or facsimile numbers or to such other or additional address or facsimile number as any party shall hereafter specify by Communication to the other parties:
| To: | Immunomedics, Inc. | |||
| 300 American Road | ||||
| Morris Plains, New Jersey 07950 | ||||
| Attn: Chief Executive Officer | ||||
| and Corporate Secretary | ||||
| Fax #: (973) 605-8282 | ||||
| with a copy to (which shall not constitute notice): |
Andrew P. Gilbert, Esq. | |||
| DLA Piper LLP (US) | ||||
| 300 Campus Drive, Suite 100 | ||||
| Florham Park, New Jersey 07932 | ||||
| Fax #: (973) 520-2573 | ||||
| To: | Dr. David M. Goldenberg at the address provided to the Company | |||
| with a copy to (which shall not constitute notice): |
Douglas S. Zucker, Esq. | |||
| Bauch Zucker Hatfield LLC | ||||
| 871 Mountain Ave., Suite 200 | ||||
| Springfield, New Jersey 07081 | ||||
| Fax #: (973) 376-4033 | ||||
or to the appropriate attorney of record for Immunomedics or Dr. Goldenberg, respectively. Notice of change of address shall be deemed given when actually received or upon refusal to accept delivery thereof; all other communications shall be deemed to have been given, received and dated on the earliest of: (1) when actually received or upon refusal to accept delivery thereof, (ii) on the date when delivered personally, (iii) one (1) day after being sent by facsimile or telex, (iv) 48 hours after being sent by overnight courier and (v) three (3) business days after mailing.
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17. Governing Law. This Agreement and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the state of New Jersey, without giving effect to the principles of conflict of laws.
(a) Section 409A of the Code. This Agreement is intended to comply with Section 409A of the Code and its corresponding regulations, to the extent applicable, and shall be so construed. Notwithstanding anything in this Agreement to the contrary, payments may only be made under this Agreement upon an event and in a manner permitted by Section 409A of the Code, to the extent applicable. For purposes of Section 409A of the Code, each payment under this Agreement shall be treated as a separate payment and the right to a series of installment payments shall be treated as the right to a series of separate payments. All reimbursements or in-kind benefits provided under this Agreement shall be made or provided in accordance with Section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during Dr. Goldenberg’s lifetime (or during a shorter time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement or the amount of in-kind benefits provided during a calendar year may not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other calendar year, except for any medical reimbursement arrangement providing for the reimbursement of expenses referred to in Section 105(b) of the Code, (iii) the reimbursement of an eligible expense will be made on or before the last day of the taxable year following the year in which the expense is incurred, and (iv) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit. Nothing herein shall be construed as having modified the time and form of payment of any amounts or payments of “deferred compensation” within the meaning section 409A of the Code that were otherwise payable pursuant to the terms of any agreement between Company and Dr. Goldenberg in effect on or after January 1, 2005 and prior to the date of this Agreement. If Dr. Goldenberg is considered a specified employee (as defined under Section 409A of the Code) and payment of any amounts under this Agreement is required to be delayed for a period of six months after separation from service pursuant to section 409A of the Code, payment of such amounts shall be delayed as required by section 409A of the Code, and the accumulated postponed amounts, with accrued interest as described below, shall be paid in a lump sum payment within five days after the end of the six month period. If Dr. Goldenberg dies during the postponement period prior to the payment of benefits, the amounts postponed on account of section 409A of the Code, with accrued interest as described below, shall be paid to the personal representative of Dr. Goldenberg’s estate within 60 days after the date of Dr. Goldenberg’s death. If payment of any amounts under this Agreement is required to be delayed pursuant to the preceding sentence, the Company shall pay interest on the postponed payments from the date on which the amounts otherwise would have been paid to the date on which such amounts are paid at an annual rate equal to the rate published in the Wall Street Journal as the “prime rate” as of Dr. Goldenberg’s date of termination.
18. Captions; Word Meanings. Captions contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope of this Agreement or any provision hereof. The words “hereby”, “herein”, “hereinabove”, “hereinafter”, “hereof” and “hereunder”, when used anywhere in this Agreement, refer to this Agreement as a whole and not merely to a subdivision in which such words appear, unless the context otherwise requires. The singular shall include the plural, the conjunctive shall include the disjunctive and the masculine gender shall include the feminine and neuter, and vice versa, unless the context otherwise requires.
19. Miscellaneous.
(a) Proration. Wherever in this Agreement there is provision for proration of Annual Net Sales or any other calculation for any partial fiscal year, such proration shall be effected by multiplying the total Annual Net Sales or other annualized figure as the case may be, by a fraction, the numerator of which shall be the actual number of days included in such partial fiscal year and the denominator of which shall be 365.
(b) Offsets. Wherever provision is made in this Agreement for the payment of any amounts by one party hereto to another, such amounts either may be paid directly by the party obligated to make the payments to the other party or, at the option of the party obligated to make such payments and with the consent of the other party, the obligated party may offset the amounts it is obligated to pay against all or part of any amounts owed that the other party is obligated to pay the first party, pursuant to or in connection with this Agreement, but not in contravention of any deferred compensation offset prohibition under section 409A of the Code.
20. Binding Effect. This Agreement and all the terms and provisions hereof shall be binding upon and shall inure to the benefit of the parties, their respective legal representatives, heirs, successors and permitted assigns.
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21. Entire Agreement. This Agreement, together with the documents specifically referenced herein, each of which is incorporated by reference and be governed by the provisions of this Agreement constitutes the entire agreement between the parties. This Agreement supersedes and replaces any other prior agreement or understandings between Dr. Goldenberg and Immunomedics on any subject covered by this Agreement. This Agreement may not be modified or amended in any manner other than in writing executed by or on behalf of both parties on a date subsequent to the date of this Agreement.
22. Severability. If an arbitrator or court of competent jurisdiction should determine that any provision of this Agreement is overly broad in scope or duration, prohibited or unenforceable, the parties may meet and attempt to reach agreement on a mutually acceptable modification that would be enforceable. If the parties cannot reach agreement on a modification within a reasonable time period, the arbitrator or court shall have the authority to modify that portion of the Agreement only to the minimal extent possible to make it legally enforceable, and the balance of the Agreement shall remain in force without regard for the prohibited portion.
23. Survival of Provisions. The provisions of Sections 4.1, 4.2, 5, 7, 8 through 13, 15, 16, 17, 19, 22 and 23 of this Agreement, and the provisions of any agreement incorporated by reference herein, shall survive expiration of the term or termination of employment for any reason.
24. Counterparts. This Agreement is written in the English language and may be executed in any number of English language counterparts and each such duplicate counterpart shall constitute an original, any one of which may be introduced in evidence or used for any other purpose without the production of its duplicate counterpart. Moreover, notwithstanding that any of the parties did not execute the same counterpart, each counterpart shall be deemed for all purposes to be an original, and all such counterparts shall constitute one and the same instrument, binding on all of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day, month and year first above written.
| IMMUNOMEDICS, INC. | ||
| (“Immunomedics”) | ||
| By: | /s/ Gerard G. Gorman | |
| Gerard G. Gorman | ||
| Senior Vice President, Finance and Business Development, and Chief Financial Officer | ||
| /s/ Dr. David M. Goldenberg | ||
| Dr. David M. Goldenberg | ||
| (“Dr. Goldenberg”) | ||
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