EXHIBIT 10.42
RETENTION AGREEMENT
THIS RETENTION AGREEMENT (this "Agreement") is made as of the 21st day
of January, 2002 (the "Effective Date") by and between Neose Technologies, Inc.
(the "Company") and David A. Zopf, M.D. ("Employee").
WHEREAS, the Employee serves as a senior executive of the Company; and
WHEREAS, the Company and Employee desire to establish certain
protections for Employee in the event of his or her termination of employment
without Cause or resignation for Good Reason; and
NOW THEREFORE, in consideration of these premises and intending to be
legally bound hereby, the parties agree as follows:
SECTION 1. Definitions. To the extent not defined in the preamble of this
Agreement, capitalized terms used herein will have the meanings provided below:
1.1. "Annual Salary" means, as of any given date, the annual base rate
of salary payable to Employee by the Company, as then in effect; provided,
however, that in the case of a resignation by Employee for the Good Reason
described in Section 1.8.3, "Annual Salary" will mean the annual base rate of
salary payable to Employee by the Company, as in effect immediately prior to the
reduction giving rise to the Good Reason.
1.2. "Board" means the Board of Directors of the Company.
1.3. "Cause" means any of the following:
1.3.1. Employee's engagement in dishonesty, willful misconduct or
fraud in the performance of his or her duties to the Company;
1.3.2. Employee's conviction of, or plea of guilty or nolo
contendere to, any felony or of any lesser crime or offense involving moral
turpitude;
1.3.3. Employee's refusal to carry out the reasonable instructions
of the Board, which instructions are consistent with Employee's
responsibilities; or
1.3.4. any willful violation by Employee of any statute,
regulation or ordinance the compliance with which is necessary for the operation
of the business of the Company.
1.4. "Change in Control" means a change in ownership or control of the
Company effected through either of the following transactions:
1.4.1. the direct or indirect acquisition by any person or related
group of persons (other than the Company or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Company) of
beneficial ownership (within the meaning of Rule 13(d)(3) of the Securities
Exchange Act of 1934, as amended) of securities possessing more than 50% of the
total combined voting power of the Company's outstanding securities;
1.4.2. a change in the composition of the Board over a period of
thirty-six (36) 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 who either (a) have been Board members continuously
since the beginning of such period or (b) have been elected or nominated for
election as Board members during such period by at least a majority of the Board
members described in clause (a) who were still in office at the time such
election or nomination was approved by the Board;
1.4.3. a merger or consolidation in which the Company's
shareholders, as determined immediately prior to the transaction, do not hold
more than 50% of the total combined voting power of the combined company upon
completion of the transaction;
1.4.4. the sale, transfer or other disposition of all or
substantially all of the Company's assets; or
1.4.5. a complete liquidation or dissolution of the Company;
provided, however, for purposes of determining the precise date of any Change in
Control, an event described above will be deemed to have occurred on the date on
which the last condition required for the consummation of that event is
fulfilled or otherwise completed.
1.5. "Code" means the Internal Revenue Code of 1986, as amended.
1.6. "Covered Termination" means a resignation by Employee with Good
Reason or a termination of Employee's employment by the Company without Cause
(but not including a termination by reason of the Employee's death or
Disability).
1.7. "Disability" means a condition that would give rise to an
entitlement to benefits under the terms of the Company's long term disability
plan or, if no such plan is then in effect, a condition that would prevent
Employee from performing the essential functions of his or her job, as
determined by the Board in its discretion.
1.8. "Excess Parachute Payment" has the same meaning as used in Section
280G(b)(1) of the Code.
1.9. "Good Reason" means, without Employee's prior written consent, any
of the following:
1.9.1. the reduction of Employee's title, authority, duties or
responsibilities, or the assignment to Employee of duties that are inconsistent,
in a material respect, with Employee's position;
1.9.2. the relocation of the Company's headquarters more than
fifteen (15) miles from Horsham, Pennsylvania, unless such move reduces
Employee's commuting time; or
1.9.3. a reduction in Employee's Annual Salary;
-2-
provided, however, the foregoing events or conditions will constitute Good
Reason only if Employee provides the Company with written objection to the event
or condition within sixty (60) days following the occurrence thereof, the
Company does not reverse or otherwise cure the event or condition within thirty
(30) days of receiving that written objection and Employee resigns his or her
employment within ninety (90) days following the expiration of that cure period.
1.10. "Overpayment" means any amount paid to Employee in excess of the
maximum payment limit of Section 3.2.1 of this Agreement.
SECTION 2. Benefits Upon Covered Termination.
2.1. Employee's Entitlement. Within five (5) days after the occurrence
of a Covered Termination, the Company will:
2.1.1. pay Employee all of his or her accrued and unpaid Annual
Salary, including payment for any accrued but unused vacation days, through the
date of the Covered Termination;
2.1.2. pay Employee any annual bonus payable with respect to a
fiscal year of the Company ending prior to the Covered Termination; and
2.1.3. pay Employee a lump sum payment of an amount equal to the
Annual Salary of the Employee as of the date of the Covered Termination.
2.2. Waiver Of Insurance Premium. Company hereby waives, conditioned
and effective upon the occurrence of a Covered Termination, any applicable
premium otherwise due for any group health continuation coverage elected by the
Employee or his or her spouse or dependents under COBRA (29
U.S.C.ss.ss.1161-1169) for coverage through the first anniversary of the date of
the Covered Termination.
2.3. Release. Notwithstanding the foregoing, no amount will be paid or
benefit or right provided under Sections 2.1.3 or 2.2 unless, following any
Covered Termination, Employee executes and delivers to the Company a release
substantially identical to that attached hereto as Exhibit A in a manner
consistent with the requirements of the Older Workers Benefit Protection Act.
SECTION 3. Covered Termination Following a Change in Control.
3.1. Employee's Additional Entitlement. If a Covered Termination occurs
within the eighteen (18) month period beginning upon any Change in Control, then
subject to the execution of the release described above in Section 2.3, in
addition to the payments and benefits described above in Section 2 and
notwithstanding anything to the contrary contained in any other agreement
between Employee and the Company and any equity incentive plan of the Company,
Employee will be deemed to continue to be employed by the Company through the
first anniversary of the Covered Termination for purposes of any vesting,
forfeiture, survival, exercise or similar term or condition applicable to any
stock option, restricted stock, phantom stock, stock appreciation right or other
equity-based incentive held by Employee immediately prior to his or her
termination.
-3-
3.2. Maximum Payment Limit.
3.2.1. If any payment or benefit due under this Agreement,
together with all other payments and benefits that Employee receives, or is
entitled to receive, from the Company or any of its subsidiaries, affiliates or
related entities, would (if paid or provided) constitute an Excess Parachute
Payment, the amounts otherwise payable and benefits otherwise due under this
Agreement will be limited to the minimum extent necessary to ensure that no
portion thereof will fail to be tax-deductible to the Company by reason of
Section 280G of the Code. The determination of whether any payment or benefit
would (if paid or provided) constitute an Excess Parachute Payment will be made
by the Board, in its sole discretion, based on the advice of the Company's
auditors.
3.2.2. If, notwithstanding the initial application of Section
3.2.1, the Internal Revenue Service determines that any amount paid or benefit
provided to Employee would constitute an Excess Parachute Payment, Section 3.2.1
will be reapplied based on the Internal Revenue Service's determination and any
Overpayment will be deemed to be a loan from the Company to Employee. Employee
will be required to repay that loan immediately upon receipt of written notice
of the applicability of this section, together with interest from the date the
Overpayment was paid to Employee (determined at the applicable federal rate in
effect under Section 1274(d) of the Code as of the date of the Overpayment).
SECTION 4. No Further Liabilities. Except as otherwise provided in Sections 2
and/or 3, all Annual Salary and benefits will cease at the time of the Covered
Termination and the Company shall have no further liability or obligation to
Employee following the Covered Termination. The payments, benefits and rights
described in Sections 2 and/or 3 will be paid and provided in lieu of and not in
addition to any other severance arrangement maintained by the Company. The
foregoing will not be construed to limit Employee's right to payment or
reimbursement for claims incurred prior to the date of such termination under
any insurance contract funding an employee benefit plan, policy or arrangement
of the Company in accordance with the terms of such insurance contract.
SECTION 5. Miscellaneous.
5.1. Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the Company and Employee and their respective successors,
executors, administrators and heirs. Employee may make any assignment of this
Agreement or any interest herein, by operation of law or otherwise. The Company
may assign this Agreement to any successor to all or substantially all of its
assets and business by means of liquidation, dissolution, merger, consolidation,
transfer of assets, or otherwise.
-4-
5.2. Notice. Any notice or communication required or permitted under
this Agreement shall be made in writing and (a) sent by overnight courier, (b)
mailed by certified or registered mail, return receipt requested or (c) sent by
telecopier, addressed as follows:
If to Employee:
David A. Zopf, M.D.
560 Beechtree Lane
Wayne, PA 19087
Fax:
If to Company:
Neose Technologies, Inc.
102 Witmer Road
Horsham, PA 19044
Attn: General Counsel
Fax: 215-441-5896
with a copy to:
Pepper Hamilton LLP
3000 Two Logan Square
18th & Arch Streets
Philadelphia, PA 19103
Attn: Barry M. Abelson, Esquire
Fax: 215-981-4750
or to such other address as either party may from time to time duly specify by
notice given to the other party in the manner specified above.
5.3. Entire Agreement; Amendments. Except for the Employment Agreement
dated April 1, 1992, as from time to time extended (the "Employment Agreement"),
this Agreement contains the entire agreement and understanding of the parties
hereto relating to the subject matter hereof, and merges and supersedes all
prior and contemporaneous discussions, agreements and understandings of every
nature relating to the subject matter. In the event of any conflict between the
provisions of this Agreement and the Employment Agreement, the provisions of
this Agreement will control. This Agreement may not be changed or modified,
except by an Agreement in writing signed by each of the parties hereto.
5.4. Waiver. Any waiver by either party of any breach of any term or
condition in this Agreement shall not operate as a waiver of any other breach of
such term or condition or of any other term or condition, nor shall any failure
to enforce any provision hereof operate as a waiver of such provision or of any
other provision hereof or constitute or be deemed a waiver or release of any
other rights, in law or in equity.
5.5. Governing Law. This Agreement shall be governed by, and enforced
in accordance with, the laws of the Commonwealth of Pennsylvania, without regard
to the application of the principles of conflicts of laws.
5.6. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law. However, if any provision of this Agreement is held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
will not affect any other provision, and this Agreement will be reformed,
construed and enforced as though the invalid, illegal or unenforceable provision
had never been herein contained.
-5-
5.7. Section Headings. The section headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation.
5.8. No Duty to Mitigate. Employee shall not be required to mitigate
damages or the amount of any payments provided for under this Agreement by
seeking other employment or otherwise, nor will any payment or benefit hereunder
be subject to offset or reduction in the event Employee does mitigate.
5.9. Costs of Enforcement. If any action at law or in equity is brought
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to recover, in addition to any other relief, reasonable attorneys'
fees, costs and disbursements.
5.10. Counterparts and Facsimiles. This Agreement may be executed,
including execution by facsimile signature, in one or more counterparts, each of
which shall be deemed an original, and all of which together shall be deemed to
be one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officer, and Employee has executed this
Agreement, in each case as of the date first above written.
NEOSE TECHNOLOGIES, INC.
By:/s/ P. Sherrill Neff
------------------------------------
P. Sherrill Neff
President and Chief Operating Officer
/s/ David A. Zopf, M.D.
---------------------------
David A. Zopf, M.D.
-6-
EXHIBIT A
RELEASE AND NON-DISPARAGEMENT AGREEMENT
THIS RELEASE AND NON-DISPARAGEMENT AGREEMENT (this "Release")
is made as of the ___ day of _______, _____ by and between [Employee]
("Employee") and NEOSE TECHNOLOGIES, INC. (the "Company").
WHEREAS, Employee's employment as an executive of the Company
has terminated; and
WHEREAS, pursuant to Sections 2 [and 3] of the Retention
Agreement by and between the Company and Employee dated as of __________, 2002
(the "Retention Agreement"), the Company has agreed to pay Employee certain
amounts and to provide him or her with certain rights and benefits, subject to
the execution of this Release.
NOW THEREFORE, in consideration of these premises and the
mutual promises contained herein, and intending to be legally bound hereby, the
parties agree as follows:
SECTION 1. Consideration. Employee acknowledges that: (i) the payments, rights
and benefits set forth in Sections 2 [and 3] of the Retention Agreement
constitute full settlement of all his or her rights under the Retention
Agreement, (ii) he or she has no entitlement under any other severance or
similar arrangement maintained by the Company, and (iii) except as otherwise
provided specifically in this Release, the Company does not and will not have
any other liability or obligation to Employee. Employee further acknowledges
that, in the absence of his or her execution of this Release, the severance
benefits specified in Sections 2.1.3[,][and] 2.1.4 [and 3] of the Retention
Agreement would not otherwise be due to Employee.
SECTION 2. Release and Covenant Not to Sue. Employee hereby fully and forever
releases and discharges Company and its parents, affiliates and subsidiaries,
including all predecessors and successors, assigns, officers, directors,
trustees, employees, agents and attorneys, past and present, from any and all
claims, demands, liens, agreements, contracts, covenants, actions, suits, causes
of action, obligations, controversies, debts, costs, expenses, damages,
judgments, orders and liabilities, of whatever kind or nature, direct or
indirect, in law, equity or otherwise, whether known or unknown, arising through
the date of this Release, out of his or her employment by the Company or the
termination thereof, including, but not limited to, any claims for relief or
causes of action under the Age Discrimination in Employment Act, 29 U.S.C. ss.
621 et seq., or any other federal, state or local statute, ordinance or
regulation regarding discrimination in employment and any claims, demands or
actions based upon alleged wrongful or retaliatory discharge or breach of
contract under any state or federal law. Employee expressly represents that he
or she has not filed a lawsuit or initiated any other administrative proceeding
against the Company or any Affiliate, and that he or she has not assigned any
claim against the Company or any Affiliate to any other person or entity.
Employee further promises not to initiate a lawsuit or to bring any other claim
against the Company or any Affiliate arising out of or in any way related to his
or her employment by the Company or the termination of that employment. The
forgoing will not be deemed to release the Company from (a) claims solely to
enforce this Release, (b) claims solely to enforce Sections 2 [and 3] of the
Retention Agreement, or (c) claims for indemnification under the Company's
By-Laws, under any indemnification agreement between the Company and Employee or
under any similar agreement.
SECTION 3. Restrictive Covenants. Employee acknowledges that the terms of the
[Confidentiality and Non-Compete Agreement] by and between the Employee and the
Company dated _____ (the "Non-Compete Agreement") will survive the termination
of his or her employment. Employee affirms that the restrictions contained in
the Non-Compete Agreement are reasonable and necessary to protect the legitimate
interests of the Company, that he or she received adequate consideration in
exchange for agreeing to those restrictions and that he or she will abide by
those restrictions.
SECTION 4. Non-Disparagement. The Company (meaning, solely for this purpose,
Company's directors and executive officers and other individuals authorized to
make official communications on Company's behalf) will not disparage Employee or
Employee's performance or otherwise take any action which could reasonably be
expected to adversely affect Employee's personal or professional reputation.
Similarly, Employee will not disparage Company or any of its directors,
officers, agents or employees or otherwise take any action which could
reasonably be expected to adversely affect the reputation of the Company or the
personal or professional reputation of any of the Company's directors, officers,
agents or employees.
SECTION 5. Cooperation. Employee further agrees that, subject to reimbursement
of his or her reasonable expenses, he or she will cooperate fully with the
Company and its counsel with respect to any matter (including litigation,
investigations, or governmental proceedings) which relates to matters with which
Employee was involved during his or her employment with Company. Employee shall
render such cooperation in a timely manner on reasonable notice from the
Company.
SECTION 6. Rescission Right. Employee expressly acknowledges and recites that
(a) he or she has read and understands this Release in its entirety, (b) he or
she understands the terms of this Release has entered into this Release
knowingly and voluntarily, without any duress or coercion; (c) he or she has
been advised orally and is hereby advised in writing to consult with an attorney
with respect to this Release before signing it; (d) he or she was provided
twenty-one (21) calendar days after receipt of the Release to consider its terms
before signing it; and (e) he or she is provided seven (7) calendar days from
the date of signing to terminate and revoke this Release, in which case this
Release shall be unenforceable, null and void. Employee may revoke this Release
during those seven (7) days by providing written notice of revocation to the
Company.
A-2
SECTION 7. Challenge. If Employee violates or challenges the enforceability of
any provisions of the [Non-Compete Agreement] or this Release, no further
payments, rights or benefits under Sections 2 [and 3] of the Retention Agreement
will be due to Employee.
SECTION 8. Miscellaneous.
8.1. No Admission of Liability. This Release is not to be construed as
an admission of any violation of any federal, state or local statute, ordinance
or regulation or of any duty owed by the Company to Employee. There have been no
such violations, and the Company specifically denies any such violations.
8.2. No Reinstatement. Employee agrees that he or she will not apply
for reinstatement with the Company or seek in any way to be reinstated,
re-employed or hired by the Company in the future.
8.3. Successors and Assigns. This Release shall inure to the benefit of
and be binding upon the Company and Employee and their respective successors,
executors, administrators and heirs. Employee may make any assignment of this
Release or any interest herein, by operation of law or otherwise. The Company
may assign this Release to any successor to all or substantially all of its
assets and business by means of liquidation, dissolution, merger, consolidation,
transfer of assets, or otherwise.
8.4. Severability. Whenever possible, each provision of this Release
will be interpreted in such manner as to be effective and valid under applicable
law. However, if any provision of this Release is held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
will not affect any other provision, and this Release will be reformed,
construed and enforced as though the invalid, illegal or unenforceable provision
had never been herein contained.
8.5. Entire Agreement; Amendments. Except as otherwise provided herein,
this Release contains the entire agreement and understanding of the parties
hereto relating to the subject matter hereof, and merges and supersedes all
prior and contemporaneous discussions, agreements and understandings of every
nature relating subject matter hereof. This Release may not be changed or
modified, except by an Agreement in writing signed by each of the parties
hereto.
8.6. Governing Law. This Release shall be governed by, and enforced in
accordance with, the laws of the Commonwealth of Pennsylvania without regard to
the application of the principles of conflicts of laws.
8.7. Counterparts and Facsimiles. This Release may be executed,
including execution by facsimile signature, in one or more counterparts, each of
which shall be deemed an original, and all of which together shall be deemed to
be one and the same instrument.
A-3
IN WITNESS WHEREOF, the Company has caused this Release to be
executed by its duly authorized officer, and Employee has executed this Release,
in each case as of the date first above written.
NEOSE TECHNOLOGIES, INC.
By:_____________________________________
Name & Title:___________________________
[EMPLOYEE]
________________________________________
A-4