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Exhibit 10.7
INTRACEL CORPORATION
EMPLOYMENT AGREEMENT
Agreement made as of this 2nd day of January, 1998, by and among Michael
G. Hanna, Jr. of Frederick, Maryland ("Employee") and Intracel Corporation (the
"Company").
PREAMBLE
In connection with the closing ("Closing") of the merger (the "Merger")
of PerImmune Holdings, Inc. ("PerImmune") with a wholly owned subsidiary of the
Company, the Board of Directors of the Company recognizes Employee's potential
contribution to the growth and success of the Company and desires to assure the
Company of Employee's employment in an executive capacity as President (Chief
Scientific Officer) and to compensate him therefor. Employee wants to be
employed by the Company and to commit himself to serve the Company on the terms
herein provided.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties, the parties agree as follows:
1. Definitions
"Benefits" shall mean all the fringe benefits approved by the Board from
time to time and established by the Company for the benefit of employees
generally and/or for key employees of the Company as a class, including, but not
limited to, regular holidays, vacations, absences resulting from illness or
accident, health insurance, disability and medical plans (including dental and
prescription drug), group life insurance, and pension, profit-sharing and stock
bonus plans or their equivalent.
"Board" shall mean the Board of Directors of the Company, together with
an executive committee thereof (if any), as same shall be constituted from time
to time.
"Cause" for termination shall mean (i) Employee's final conviction of a
felony involving a crime of moral turpitude, (ii) acts of Employee which, in the
judgment of the Board, constitute willful fraud on the part of Employee in
connection with his duties under this Agreement, including but not limited to
misappropriation or embezzlement in the performance of duties as an employee of
the Company, or the willful engagement in conduct materially injurious to the
Company and in violation of the covenants contained in this Agreement, or (iii)
gross misconduct in connection with the performance of the Employee's duties
hereunder, including but not limited to the willful failure of Employee either
to (a) continue to obey lawful written instructions of the Board which are
consistent with Employee's responsibilities under this Agreement after thirty
(30) days notice in writing of Employee's failure to do so and the Board's
intention to terminate Employee if such failure is not corrected, or (b) correct
any conduct of Employee which constitutes a material breach of this Agreement
after thirty (30) days notice in
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writing of Employee's failure to do so and the Board's intention to terminate
Employee if such failure is not corrected. Any act, or failure to act, based
upon authority given pursuant to a resolution duly adopted by the Board, based
upon the advice of counsel for the Company or upon the instructions of the
Company's chief executive officer or another senior officer of the Company shall
be conclusively presumed to be done, or omitted to be done, by Employee in good
faith and in the best interests of the Company. Cause shall not exist unless and
until the Company has delivered to Employee a copy of a resolution duly adopted
by a majority of the entire Board (excluding Employee if Employee is a Board
member) at a meeting of the Board called and held for such purpose, finding that
in the good faith opinion of the Board, an event set forth above has occurred
and specifying the particulars thereof in detail. The Company must notify
Executive of any event constituting Cause within ninety (90) days following the
Company's knowledge of its existence; provided, that the failure to so notify
the Employee shall not be deemed to nullify the existence of Cause.
"Chairman" shall mean that individual designated by the Board from time
to time as its chairman, to preside over meetings of the Board.
"Chief Scientific Officer" shall mean the individual having
responsibility to the Board for direction and management of the scientific
activities of the Company and who reports and is accountable only to the Board.
For purposes of this Agreement, the Chief Scientific Officer shall also carry
the title, "President (Chief Scientific Officer)".
"Common Stock" shall mean the common stock, par value $.0001 per share,
of the Company or a successor in interest to the Company.
"Company" shall mean Intracel Corporation, a Delaware corporation, or
its successor together with such subsidiaries of the Company as may from time to
time exist.
"Disability" shall mean a written determination by a physician mutually
agreeable to the Company and Employee (or, in the event of Employee's total
physical or mental disability, Employee's legal representative) that Employee is
physically or mentally unable to perform his duties as President (Chief
Scientific Officer) under this Agreement and that such disability can reasonably
be expected to continue for a period of six (6) consecutive months.
"Employee" shall mean Michael Hanna and, if the context requires, his
heirs, personal representatives, and permitted successors and assigns.
"Employment Period" shall mean the period of the Employee's employment
hereunder which commences on the date hereof and shall continue for the term of
this Agreement.
"FDA" shall mean the United States Food and Drug Administration or any
successor agency thereto.
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"MAA" shall mean Market Authorization Authority (Europe).
"Person" shall mean any natural person, incorporated entity, limited or
general partnership, business trust, association, agency (governmental or
private), division, political sovereign, or subdivision or instrumentality,
including those groups identified as "persons" in Sections 13(d)(3) and 14(d)(2)
of the Securities Exchange Act of 1934.
"Shares" shall mean shares of Common Stock of the Company that Employee
owns from time to time.
"Territory" shall mean any state of the United States and any equivalent
section or area of any country in which the Company has revenue-producing
customers or activities.
2. Position and Responsibilities.
2.1. Position. During the term of this Agreement, Employee shall serve as
Chairman of the Board and President (Chief Scientific Officer) and in such
additional management position(s) as the Board shall designate. In this capacity
Employee shall, subject to the bylaws of the Company, and to the direction of
the Board, serve the Company by performing such duties and carrying out such
responsibilities as are normally related to the position of Chairman of the
Board and President (Chief Scientific Officer) in accordance with the standards
of the industry. Without limiting the foregoing, Employee shall report directly
to the Board of Directors and will have primary responsibility for (1) all
research and development activities of the Company, including any and all
required governmental or regulatory filings, (2) employment and termination of
any key research and development employees, (3) entering into agreements by and
on behalf of the Company relating to the foregoing, subject to any plans and
budgets adopted by the Board of Directors relating thereto and (4) until such
time as a Chief Operating Officer for the Company is hired, overseeing the
manufacturing operation of the Company's Rockville, Maryland facility and shall
also be responsible for implementing the Company's integration plan for
research, development and manufacturing operations. The Board shall either vote,
or recommend to the shareholders of the Company, as appropriate, that during the
term of employment pursuant to this Agreement: (i) Employee be nominated for
election as a director of the Company at each meeting of shareholders held for
the election of directors of the Company and as Chairman of the Board at the
appropriate meetings of the Board; (ii) Employee be elected to and continue to
serve in the office of Chairman of the Board and President (Chief Scientific
Officer) of the Company and such of its subsidiaries as the Employee may select
(and such other office, if any, as shall be denominated that of the Chairman of
the Board or President (Chief Scientific Officer) of the Company or such
subsidiary in the Company's or such subsidiary's Bylaws or other constituent
instruments); (iii) Employee be elected to and continue to serve on the Board of
each subsidiary of the Company; (iv) if the Board of the Company or any of its
subsidiaries shall appoint an executive committee (or similar committee
authorized to exercise the general powers of the Board), Employee be elected to
and continue to serve on such committee; and (v) neither the Company nor any of
its subsidiaries shall confer on any other
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officer or employee of the Company authority, responsibility, powers or
prerogatives superior or equal to the authority, responsibility, prerogatives
and powers vested in Employee hereunder.
2.2. Best Efforts Covenant. During the term of this Agreement, Employee will, to
the best of his ability, devote his full professional and business time and best
efforts to the performance of his duties for the Company and its subsidiaries
and affiliates, other than due to Disability or vacation.
2.3. Exclusivity Covenant. During the Agreement's term, Employee will not
undertake or engage in any other employment, occupation or business enterprise
other than a business enterprise in which Employee does not actively participate
and acting as a partner in Brooklawn Limited Partnership. Further, Employee
agrees not to acquire, assume, or participate in, directly or indirectly, any
position, investment, or interest in the Territory adverse or antagonistic to
the Company, its business or prospects, financial or otherwise, or take any
action towards any of the foregoing. The provisions of this Section 2.3 and 2.4
shall not prevent Employee from owning shares of any competitor of the Company
so long as such shares (i) do not constitute more than 5% of the outstanding
equity of such competitor, or (ii) are regularly traded on a recognized exchange
or listed for trading by NASDAQ in the over-the-counter market.
2.4. Post-Employment Noncompetition Covenant. Except with the prior written
consent of the Board, Employee shall not engage in activities in the Territory
either on Employee's own behalf or that of any other business organization,
which are in direct or indirect competition with the Company for a period of one
(1) year subsequent to Employee's voluntary withdrawal from employment with the
Company, or the Company's termination of Employee's employment for Cause;
provided, that the foregoing shall not apply if Employee is terminated for
reasons other than Cause. It is understood and agreed that nothing in this
Section 2.4 shall prevent the Employee from owning 5% or less of the outstanding
equity of any competitor or owning any outstanding equity of any competitor so
long as such shares are regularly traded on a recognized exchange or listed for
trading by NASDAQ in the over the counter market. Employee and the Company
expressly declare that the territorial and time limitations contained in this
Section and the definition of "Territory" are entirely reasonable at this time
and are properly and necessarily required for the adequate protection of the
business and intellectual property of the Company. If such territorial or time
limitations, or any portions thereof, are deemed to be unreasonable by a court
of competent jurisdiction, whether due to passage of time, change of
circumstances or otherwise, Employee and the Company agree to a reduction of
said territorial and/or time limitations to such areas and/or periods of time as
said court shall deem reasonable.
For a period of one year subsequent to Employee's voluntary withdrawal
from employment with the Company, or the Company's termination of Employee's
employment for Cause, or if this Agreement terminates after the end of the
Initial Period (as defined), Employee will not without the express prior written
approval of the Board (i) directly or indirectly, in one or a series of
transactions, recruit, solicit or otherwise induce or influence any proprietor,
partner, stockholder, lender, director, officer, employee, sales agent, joint
venturer, investor, lessor,
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supplier, customer, agent, representative or any other person which has a
business relationship with the Company or had a business relationship with the
Company within the twenty-four (24) month period preceding the date of the
incident in question, to discontinue, reduce, or modify such employment, agency
or business relationship with the Company, or (ii) employ or seek to employ or
cause any business organization in direct or indirect competition with the
Company to employ or seek to employ any person or agent who is then (or was at
any time within six months prior to the date the Employee or the competitive
business employs or seeks to employ such person) employed or retained by the
Company; provided, that the foregoing shall not apply if Employee is terminated
for reasons other than Cause. Notwithstanding the foregoing, nothing herein
shall prevent the Employee from providing a letter of recommendation to an
employee with respect to a future employment opportunity.
2.5. Confidential Information. Employee recognizes and acknowledges that the
Company's trade secrets and proprietary information and know-how, as they may
exist from time to time ("Confidential Information"), are valuable, special and
unique assets of the Company's business, access to and knowledge of which are
essential to the performance of Employee's duties hereunder. Employee will not,
during or after the term of his employment by the Company, in whole or in part,
disclose such secrets, information or know-how to any Person for any reason or
purpose whatsoever, nor shall Employee make use of any such property for his own
purposes or for the benefit of any Person (except the Company) under any
circumstances during or after the term of his employment, provided that after
the term of his employment these restrictions shall not apply to such secrets,
information and know-how which are then in the public domain (provided that
Employee was not responsible, directly or indirectly, for such secrets,
information or processes entering the public domain without the Company's
consent). Employee shall have no obligation hereunder to keep confidential any
Confidential Information if and to the extent disclosure of any thereof is
specifically required by law; provided, however, that in the event disclosure is
required by applicable law, the Employee shall provide the Company with prompt
notice of such requirement, prior to making any disclosure, so that the Company
may seek an appropriate protective order. Employee agrees to hold as the
Company's property all memoranda, books, papers, letters, customer lists,
processes, computer software, records, financial information, policy and
procedure manuals, training and recruiting procedures and other data, and all
copies thereof and therefrom, in any way relating to the Company's business and
affairs, whether made by him or otherwise coming into his possession, and on
termination of his employment, or on demand of the Company at any time, to
deliver the same to the Company. Employee agrees that he will not use or
disclose to other employees of the Company, during the term of this Agreement,
confidential information belonging to his former employers.
Employee shall use his best efforts to prevent the removal of any
Confidential Information from the premises of the Company, except as required in
his normal course of employment by the Company. Employee shall use his best
efforts to cause all persons or entities to whom any Confidential Information
shall be disclosed by him hereunder to observe the terms and conditions set
forth herein as though each such person or entity was bound hereby.
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2.6. [Intentionally Omitted]
2.7. Records, Files. All records, files, drawings, documents, equipment and the
like relating to the business of the Company which are prepared or used by
Employee during the term of his employment under this Agreement shall be and
shall remain the sole property of the Company.
2.8. Equitable Relief. Employee acknowledges that his services to the Company
are of a unique character which give them a special value to the Company.
Employee further recognizes that violations by Employee of any one or more of
the provisions of this Section 2 may give rise to losses or damages for which
the Company cannot be reasonably or adequately compensated in an action at law
and that such violations may result in irreparable and continuing harm to the
Company. Employee agrees that, therefore, in addition to any other remedy which
the Company may have at law and equity, including the right to withhold any
payment of compensation under Section 4 of this Agreement, the Company shall be
entitled to injunctive relief to restrain any violation, actual or threatened,
by Employee of the provisions of this Agreement.
3. Compensation.
3.1. Minimal Annual Compensation. The Company shall pay to Employee for the
services to be rendered hereunder a base salary at an annual rate of two hundred
thousand dollars ($200,000) ("Minimum Annual Compensation"). There shall be an
annual review for merit by the Board and an increase as deemed appropriate to
reflect the value of services by Employee. At no time during the term of this
Agreement shall Employee's annual base salary fall below Minimum Annual
Compensation. In addition, if the Board increases Employee's annual compensation
at any time during the term of this Agreement, such increased annual
compensation shall become a floor below which Employee's compensation shall not
fall at any future time during the term of this Agreement and shall become
"Minimum Annual Compensation".
Employee's salary shall be payable in periodic installments in
accordance with the Company's usual practice for similarly situated employees of
the Company.
3.2. Incentive Compensation. In addition to Minimum Annual Compensation,
Employee shall be entitled to receive payments under the Company's incentive
compensation and/or bonus program(s) (as in effect from time to time), if any,
in such amounts as are determined by the Board to be appropriate for similarly
situated employees of the Company. In addition, without limiting the generality
of the foregoing, Employee shall be paid the following bonuses with respect to
calendar year 1998: (i) $50,000 if the Company's initial cancer center commences
treatment of its first patient prior to December 31, 1998 and (ii) $50,000 if
Humaspect receives FDA or MAA final approval prior to September 30, 1998.
3.3. Participating in Benefits. Employee shall be entitled to all Benefits for
as long as such Benefits may remain in effect and/or any substitute or
additional Benefits made available in the future to similarly situated employees
of the Company, subject to and on a basis consistent with
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the terms, conditions and overall administration of such Benefits adopted by the
Company. Benefits paid to Employee shall not be deemed to be in lieu of other
compensation to Employee hereunder as described in this Section 3.
3.4. Specific Benefits.
During the term of this Agreement (and thereafter to the extent this
Agreement shall require):
(a) Employee shall be entitled to six (6) weeks of paid vacation time per year,
to be taken at times mutually acceptable to the Company and Employee.
(b) The Company shall provide fully paid accident and health insurance for
Employee and his family with limits and extent of coverage similar to that
provided by Employee's previous employer.
(c) The Company shall obtain at its expense (subject to Employee's insurability)
an insurance policy on the life of Employee, subject to the last sentence of
this Section 3.04(c), in the face amount of $2,000,000 that provides it is fully
funded after no more than five (5) years of premium payments. Employee shall
have the exclusive right to designate the beneficiaries of such policy and
change such beneficiaries from time to time. Such policy and the proceeds and
cash value thereof shall be the sole property of Employee, and the Company shall
not retain any benefit therein. The Company shall not be obligated to pay
premiums for such insurance in excess of $15,000 per annum.
(d) Employee shall be entitled to sick leave benefits during the employment
period in accordance with the customary policies of the Company for its
executive officers, but in no event less than one (1) month per year.
(e) In recognition of the necessity of the use of an automobile to the efficient
and expeditious performance of Employee's services, duties and obligations to
and on behalf of the Company, the Company shall provide to Employee, at the
Company's sole cost and expense, a car to be chosen by Employee. In addition
thereto, the Company shall bear the expense of insurance, fuel and maintenance
therefor.
(f) In addition to the vacation provided pursuant to Section 3.04(a) hereof,
Employee shall be entitled to not less than ten (10) paid holidays (other than
weekends) per year, generally on such days on which the New York Stock Exchange
is closed to trading.
(g) Employee shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by him (in accordance with the policies and
procedures established by the Company or the Board for the similarly situated
employees of the Company) in performing services hereunder.
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(h) The Company shall pay the reasonable costs of preparation, by a professional
of Employee's choosing, of Employee's annual and estimated federal income tax
and Maryland State income tax returns in an amount not to exceed $1,000.
(i) The Company shall pay the reasonable costs of Employee's personal financial
planning by a professional of Employee's choosing in an amount not to exceed
$1,000.
(j) Employee shall be eligible to participate during the Employment Period in
Benefits not inconsistent or duplicative of those set forth in this Section 3.04
as the Company shall establish or maintain for its employees or executives
generally.
4. Termination.
4.1. Termination by Company for Other Than Cause. If during the term of this
Agreement the Company terminates the employment of Employee and such termination
is not for Cause, then, subject to the provisions hereof, the Company shall pay
to Employee an amount equal to the monthly portion of the Employee's Minimum
Annual Compensation multiplied by thirty six (36). To the extent that Employee
is not fully vested in retirement Benefits from any pension, profit sharing or
any other retirement plan or program (whether tax qualified or not) maintained
by the Company, the Company or the successor to the Company shall pay directly
to Employee the difference between the amounts which would have been paid to
Employee had he been fully vested on the date that his employment terminated and
the amounts actually paid or payable to Employee pursuant to such plans or
programs. In addition, the Company shall pay to Employee the remaining payments
of Minimum Annual Compensation under Section 3.1 relating to periods during
which Employee was employed by the Company, payments of vacation accrued
pursuant to Section 3.4 but not yet paid, and reimbursement of prior expenses
under Section 3.4. The Company shall also continue to provide, for a period of
three (3) years following Employee's termination, Employee (and Employee's
dependents, if applicable) with the same level of medical, dental, accident,
disability and life insurance benefits upon substantially the same terms and
conditions (including contributions required by Employee for such benefits) as
existed immediately prior to Employee's termination; provided, that, if Employee
cannot continue to participate in the Company plans providing such benefits, the
Company shall otherwise provide such benefits on the same after-tax basis as if
continued participation had been permitted. Notwithstanding the foregoing, in
the event Employee becomes reemployed with another employer and becomes eligible
to receive welfare benefits from such employer, the welfare benefits described
herein shall be secondary to such benefits during the period of Employee's
eligibility, but only to the extent that the Company reimburses Employee for any
increased cost and provides any additional benefits necessary to give Employee
the benefits provided hereunder.
4.2. Constructive Discharge. A "Constructive Discharge" shall be deemed to occur
if the Company assigns Employee any duties, or reduces Employee's duties, to
levels inconsistent with
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the position or positions listed in Section 2.1, fails to comply with the
provisions of Section 3, or engages in any other material breach of the terms of
this Agreement, and Employee may at his option terminate his employment and such
termination shall be considered to be a termination of Employee's employment by
the Company for reasons other than "Cause" for all purposes under this
Agreement.
4.3. Termination by the Company for Cause. The Company shall have the right to
terminate the employment of Employee for Cause. Effective as of the date that
the employment of Employee terminates by reason of Cause, this Agreement, except
for Sections 2.4 through 2.8, shall terminate and no further payments of the
compensation described in Section 3 (except for such remaining payments of
Minimum Annual Compensation under Section 3.1 relating to periods during which
Employee was employed by the Company, Benefits which are required by applicable
law to be continued, and reimbursement of prior expenses under Section 3.4)
shall be made.
4.4. [Intentionally omitted]
4.5. [Intentionally omitted]
4.6. Termination on Account of Employee's Disability. If Employee ceases to
perform services for the Company because he is suffering from a medically
determinable Disability and is therefore incapable of performing such services,
the Company shall continue to pay Employee an amount equal to two-thirds (2/3)
of Employee's Minimum Annual Compensation as in effect on the date of Employee's
cessation of services by reason of Disability less any amounts paid to Employee
as Workers Compensation, Social Security Disability benefits (or any other
disability benefits paid to Employee as federal, state, or local disability
benefits) and any amounts paid to Employee as disability payments under any
disability plan or program for a period ending on the earlier of: (a) the date
that Employee again becomes employed in a significant manner and on a
substantially full-time basis (in which case Employee shall be entitled to
receive the Minimum Annual Compensation without any adjustment); or (b) the date
that Employee attains normal retirement age, as such age is defined in a
retirement plan maintained by the Company.
4.7. All amounts payable to Employee under this Section 4 shall be payable in
one lump sum, not discounted, as soon as practicable after the event giving rise
to the payment and in no event later than twenty days after such termination.
4.8. Limitation on Payments by the Company
(a) Notwithstanding anything in this Agreement to the contrary, in the event it
shall be determined that any payment, award, benefit or distribution (or any
acceleration of any payment, award, benefit or distribution) by the Company (or
any of its affiliated entities) or any entity which effectuates a change of
control (or any of its affiliated entities) to or for the benefit of
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Employee (whether pursuant to the terms of this Agreement or otherwise) (the
"Payments") would be subject to the excise tax (the "Excise Tax") under Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code"), then the
amounts payable to Employee under this Agreement shall be the greater of (i) or
(ii), where (i) is the Payment, as reduced by the Excise Tax and (ii) is the
Payment, reduced to the maximum amount as will result in no portion of the
Payments being subject to the Excise Tax (the "Safe Harbor Cap"). For purposes
of reducing the Payments to the Safe Harbor Cap, only amounts payable to
Employee under this Agreement (and no other Payments) shall be reduced, unless
consented to by Employee.
(b) All determinations required to be made under this Section 4.8 shall be made
by the public accounting firm that is retained by the Company and reasonably
acceptable to the Employee (the "Accounting Firm"). If payments are reduced to
the Safe Harbor Cap, the Accounting Firm shall provide a reasonable opinion to
Employee that he is not required to report any Excise Tax on his federal income
tax return. All fees, costs and expenses (including, but not limited to, the
costs or retaining experts) of the Accounting Firm shall be borne by the
Company. The determination by the Accounting Firm shall be binding upon the
Company and Employee (except as provided in paragraph (c) below).
(c) If payments are reduced to the Safe Harbor Cap as provided in Section
4.8(a)(ii) and if it is established pursuant to a final determination of a court
or an Internal Revenue Service (the "IRS") proceeding which has been finally and
conclusively resolved, that Payments have been made to, or provided for the
benefit of, Employee by the Company, which are in excess of the limitations
provided in this Section 4.8(a)(ii) (hereinafter referred to as an "Excess
Payment"), such Excess Payment shall be deemed for all purposes to be a loan to
Employee made on the date Employee received the Excess Payment and Employee
shall repay the Excess Payment to the Company on demand, together with interest
on the Excess Payment at the applicable federal rate (as defined in Section
1274(d) of the Code) from the date of Employee's receipt of such Excess Payment
until the date of such repayment. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the determination, it is
possible that Payments which will not have been made by the Company should have
been made (an "Underpayment"), consistent with the calculations required to be
made under this Section 4.8(a). In the event that it is determined (i) by the
Accounting Firm, the Company (which shall include the position taken by the
Company, or together with its consolidated group, on its federal income tax
return) or the IRS or (ii) pursuant to a determination by a court, that an
Underpayment has occurred, the Company shall pay an amount equal to such
Underpayment to Employee within ten (10) days of such determination together
with interest on such amount at the applicable federal rate from the date such
amount would have been paid to Employee until the date of payment.
5. Company Stock.
5.1. Right of Employee to Sell Shares to the Company upon Death, Disability, or
Involuntary Termination Without Cause.
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(a) Put Option. If Employee at any time prior to the date three (3) years from
the date of this Agreement shall die, become Disabled, or be terminated without
Cause, Employee shall have the right and option (the "Put Option") to sell any
or all of the Shares to the Company at a price per Share equal to Fair Value (as
defined) as of the date of exercise of the Put Option by the Employee.
(b) Fair Value. For purposes of this Agreement, the Fair Value of a Share of
Common Stock of the Company, as of any date, is as follows: if market quotations
are readily available, a Share shall be valued at the last trade on the exchange
on which such Shares are primarily traded or, if not traded on an exchange, at
the closing bid price (or average of bid prices) last quoted by an established
over-the-counter quotation service. If the Shares are not publicly traded, then
a Share shall be valued by the Board, after considering all pertinent factors
and all appropriate information and data, including liquidity; without limiting
the generality of the foregoing, the Board shall consider and take into account
published guidelines, including those sponsored by the National Venture Capital
Association or any committee thereof. The Board may employ outside experts and
independent consultants at the expense of the Company to assist in the valuation
process; provided, however, that notwithstanding the above calculation, in no
event will Fair Value of a Share of Common Stock be less than the par value of
such Share.
(c) Exercise of Put Option and Closing. Employee may exercise the Put Option by
delivering to the Company written notice of exercise within sixty days after the
death, Disability or termination of the employment of Employee giving rise to
the Put Option as set forth in Section 5.1 (a) above. Such notice shall specify
the number of Shares to be sold. If and to the extent the Put Option is not so
exercised within such sixty-day period, the Put Option shall automatically
expire and terminate effective upon the expiration of such sixty days period. At
the time of delivery of notice of the exercise of the Put Option, Employee shall
tender to the Company at its principal offices the certificate or certificates
representing the Shares which the Company is obligated to purchase, duly
endorsed by Employee or with duly endorsed stock powers attached thereto, all in
form suitable for the transfer of such Shares to the Company. The date of
exercise of the Put Option shall be deemed to be the date the Company receives
notice of exercise from the Employee. Upon receipt thereof, the Company shall
indicate to the Employee the determination of the Fair Value of a Share as of
the date of exercise of the Put Option, and in the event the Employee does not
agree with such determination, the Employee shall have two (2) days to elect by
written notice to the Company not to proceed with the exercise of the Put
Option.
Within ten (10) days of its receipt of the notice and such Shares, the
Company shall deliver to Employee the amount of the Fair Value of a Share as of
the date of exercise of the Put Option multiplied by the number of Shares being
sold. The purchase price may be payable, at the option of the Company, in
cancellation of all or a portion of any outstanding indebtedness of Employee to
the Company or in cash (by bank or cashier's check) or both.
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(d) Right of Company to Delay Payment. If at any time the Company is unable to
repurchase Shares pursuant to the provisions of this Section 5 pursuant to the
provisions of applicable law or otherwise, or if it is determined by the Board
in their good-faith judgment that the payment of the entire purchase price of
such Shares pursuant to this Section 5 would be deleterious to the financial
position of the Company, the Company may elect to issue to the Employee a
promissory note for the unpaid portion of such purchase price (but not any
amounts then payable by the cancellation of outstanding indebtedness of Employee
to the Company). In the event that the Company determines that it is to issue
such a promissory note, it shall provide notice thereof to the Employee, and the
Employee shall thereupon have the right upon written notice to the Company
within two (2) days of his receipt of such notice to elect not to exercise the
Put Option. The promissory note shall contain the following terms: such deferred
portion of the purchase price shall thereafter be payable in three (3) equal
annual installments beginning on the date on which such purchase price was to be
paid but for the effect of this paragraph (d). The outstanding amount of such
installments shall bear interest at a floating rate equal to 2% per annum plus
the base rate announced from time to time by the New York, New York office of
Citibank, N.A. as its base rate for commercial loans, and such interest shall be
payable annually in arrears on each date that an installment of principal is
owing. The Company may prepay its obligations under this paragraph (d) in whole
or in part at any time, with such prepayments being applied first to interest
accrued but unpaid to the date of such prepayment and thereafter to installments
of principal in inverse order of their maturity. For so long as any interest or
principal remains owing under this paragraph (d), the Company shall not make any
distribution or dividend to the holders of its Common Stock.
(e) Termination of Put Option. The Put Option shall terminate upon the closing
of an underwritten public offering pursuant to an effective registration
statement pursuant to the Securities Act of 1933, as amended covering the
offering and sale of Common Stock.
6. Miscellaneous.
6.1. Assignment. This Agreement and the rights and obligations of the parties
hereto shall bind and inure to the benefit of each of the parties hereto and
shall also bind and inure to the benefit of any successor or successors of the
Company in a reorganization, merger or consolidation and any assignee of all or
substantially all of the Company's business and properties, but, except as to
any such successor of the Company, neither this Agreement nor any rights or
benefits hereunder may be assigned by the Company or Employee. The Company
agrees that in connection with any business combination, it will cause any
successor entity to the Company unconditionally to assume and for any parent
corporation in such business combination to guarantee, by written instrument
delivered to Employee (or his beneficiary or estate), all of the obligations of
the Company hereunder. Failure of the Company to obtain such assumption and
guarantee prior to the effectiveness of any such business combination, shall be
a material breach of this Agreement and shall constitute a termination not for
Cause by the Company hereunder and shall entitle Employee to compensation and
other benefits from the Company in the same amount and on the same terms as
Employee would be entitled hereunder if
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Employee's employment were terminated pursuant to Section 4.1 hereof. For
purposes of implementing the foregoing, the date on which any such business
combination becomes effective shall be deemed the date of termination pursuant
to Section 4.1. If Employee shall die while any amounts would be payable to
Employee hereunder had Employee continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to such person or persons appointed in writing by employee to receive
such amounts or, if no person is so appointed, to Employee's estate.
6.2. Term. Except as otherwise provided, the term of this Agreement shall endure
until the earlier of (i) three years from the date of this Agreement (the
"Initial Period") or (ii) the Employee's employment with the Company is
terminated by either party on 30 days notice, the consequences of such
termination as provided herein. Following such three year period, the parties
shall negotiate this Agreement annually. To the extent termination benefits
depend on a certain number of months, the first and last months shall be counted
as whole months.
6.3. Governing Law. This Agreement shall be construed in accordance with and
governed for all purposes by the laws of the State of New York.
6.4. Interpretation. In case any one or more of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had never been contained
herein.
6.5. Notice. Any notice required or permitted to be given hereunder shall be
effective when received and shall be sufficient if in writing and if personally
delivered or sent by prepaid cable,
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telex or registered air mail, return receipt requested, to the party to receive
such notice at its address set forth at the end of this Agreement or at such
other address as a party may by notice specify to the other.
6.6. Amendment and Waiver. This Agreement may not be amended, supplemented
or waived except by a writing signed by the party against which such amendment
or waiver is to be enforced. The waiver by any party of a breach of any
provision of this Agreement shall not operate to, or be construed as a waiver
of, any other breach of that provision nor as a waiver of any breach of another
provision.
6.7. Binding Effect. Subject to the provisions of Section 4 hereof, this
Agreement shall be binding on the successors and assigns of the parties hereto.
6.8 Survival of Rights and Obligations. All rights and obligations of
Employee or the Company arising during the term of this Agreement shall
continue to have full force and effect after the termination of this Agreement
unless otherwise provided herein.
6.9 Reimbursement of Expenses. If any contest or dispute shall arise under
this Agreement involving termination of Employee's employment with the Company
or involving the failure or refusal of the Company to perform fully in
accordance with the terms hereof, the Company shall reimburse Employees, on a
current basis, for all reasonable legal fees and expenses, if any, incurred by
Employee in connection with such contest or dispute if Employee is successful
in such contest or dispute.
INTRACEL CORPORATION
By /s/ [SIG]
---------------------------
/s/ MICHAEL G. HANNA, JR.
-----------------------------
Michael G. Hanna, Jr.
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