CHANGE IN CONTROL
AGREEMENT
THIS AGREEMENT
dated as of April 16, 2007 is made by and between EntreMed,
Inc. (the “Company”) and _____________ (the
“Executive”).
WHEREAS the
Company considers it essential to its best interests and to the
best interests of its stockholders to foster the continuous
employment of its key management personnel; and
WHEREAS the
Company recognizes that the possibility of a Change in Control (as
defined in Section 8.5 hereof) exists, as in the case of any
publicly-held corporation, and that such possibility, and the
uncertainty and questions that it may raise among management, may
result in the departure or distraction of management personnel to
the detriment of the Company and its stockholders; and
WHEREAS the
Company has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of
members of the Company’s management, including the Executive,
to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility
of a Change in Control;
NOW, THEREFORE, in
consideration of the premises and the mutual covenants herein
contained, the Company and the Executive hereby agree as
follows:
1.
Defined Terms . Definitions of certain capitalized terms
used in this Agreement are provided in Section 8 and elsewhere
in this Agreement.
2. Term
of Agreement . This Agreement shall become effective on the
date hereof and shall remain in effect indefinitely thereafter;
provided, however, that (a) except as provided in clause
(b) of this sentence, either the Company or the Executive may
terminate this Agreement by giving the other party at least one
(1) year advance written notice of such termination, and
(b) if a Change in Control shall have occurred during the term
of this Agreement, this Agreement may not be terminated until all
obligations of either party hereto have been performed in full and
the Coverage Period has expired without the occurrence of a
Triggering Event. Notwithstanding the foregoing, this Agreement
shall terminate upon the Executive’s Disability or death,
except as to obligations of the Company hereunder arising from a
Change in Control and/or a termination of the Executive’s
employment that, in either case, occurred prior to the
Executive’s Disability or death.
3.
Agreement of the Company . In order to induce the Executive
to remain in the employ of the Company, the Company agrees, under
the terms and conditions set forth herein, that, upon the
occurrence of both a Change in Control and a Triggering Event
during the term of this Agreement, the Company shall provide to the
Executive the payments and benefits described in this
Section 3 (the “Severance Benefits”).
3.1 Severance
Payment . In lieu of any further salary payments to the
Executive for periods subsequent to the Date of Termination, the
Company shall pay to the Executive a lump sum severance payment, in
cash, without discount, equal to the sum of (a) the product of
(x)
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___ months and
(y) the Executive’s Monthly Base Salary and (b) the
Executive’s Average Bonus.
3.2 Pro Rata
Current Year Bonus . The Company shall pay to the Executive a
pro rata portion of the Executive’s current year bonus equal
to the product of (a) the Current Year Bonus and (b) a
fraction, the numerator of which is the number of days in the
fiscal year prior to the occurrence of both a Change in Control and
a Triggering Event, and the denominator of which is the total
number of days in such fiscal year. For purposes of this Agreement,
“Current Year Bonus” means the. greater of (x) the
current percentage of annual base salary to which the Executive
would have been entitled for the fiscal year that includes the Date
of Termination under any bonus plan or program then in effect or
(y) ___ percent of the Executive’s current base
salary.
3.3
Reimbursement for COBRA Premiums . If the Executive elects
to receive continued coverage under the Company’s group
health plans(s) after the Date of Termination pursuant Part 6
of Title I of the Employee Retirement Income Security Act of 1974,
as amended, and Section 4980B of the Code (COBRA), the Company
shall pay or promptly reimburse Executive for the cost of required
premiums payable by the Executive for such Coverage during the
period of such coverage, but not for a period extending beyond ___
months after the Date of Termination.
3.4 Accrued
Compensation and Other Benefits . To the extent not theretofore
paid or provided, the Company shall timely pay or provide to the
Executive his or her Accrued Compensation and any other benefits to
which the Executive is entitled.
4.
Limitations on Payments and Benefits . Notwithstanding any
other provision of this Agreement, in the event that any payment or
benefit received or to be received by the Executive in connection
with a Change in Control or the termination of the
Executive’s employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement)
(collectively, the “Total Benefits”) would be subject
to the excise tax imposed under Section 4999 of the Code (the
“Excise Tax”), then the Total Benefits shall be reduced
to the extent necessary so that no portion of the Total Benefits is
subject to the Excise Tax; provided, however that the reduction
provided for the by the foregoing provisions of this Section 4
shall apply and be made only if (a) the net amount of such Total
Benefits, as so reduced (and after deduction of the net amount of
federal, state and local income taxes and FICA and Medicare taxes
on such reduced Total Benefits), is greater than (b) the
excess of (i) the net amount of such Total Benefits, without
reduction (but after deduction of the net amount of federal, state
and local income taxes and FICA and Medicare taxes on such Total
Benefits), over (ii) the amount of Excise Tax to which the
Executive would be subject in respect of such Total Benefits. All
determinations required to be made under this Section 4 shall
be made by tax counsel selected by the Company and reasonably
acceptable to the Executive (“Tax Counsel”), which
determinations shall be conclusive and binding on the Executive and
the Company absent manifest error. All fees and expenses of Tax
Counsel shall be borne solely by the Company. Prior to any
reduction in the Executive’s Total Benefits pursuant to this
Section 4, (a) Tax Counsel shall provide the Executive and the
Company with a report setting forth its calculations and containing
related supporting information, and (b) the Executive shall be
entitled to specify which component(s) of the Total Benefits shall
be reduced in order to comply with the terms of this
Section 4.
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5. Timing
of Payments . The payments provided for in Sections 3.1
and 3.2 shall be made on the Date of Termination; provided,
however, that if the amounts of such payments cannot be finally
determined on or before such day, the Company shall pay to the
Executive on such day an estimate, as determined in good faith by
the Company, of the minimum amount of such payments and shall pay
the remainder of such payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code from the Date of
Termination to the payment of such remainder) as soon as the amount
thereof can be determined but in no event later than the thirtieth
(30th) day after the Date of Termination. In the event that the
amount of the estimated payments exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by
the Company to the Executive, payable on the fifth (5th) business
day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code from the Date of
Termination to the repayment of such excess).
6.
Termination Procedures .
6.1 Notice of
Termination . After a Change in Control, any termination of the
Executive’s employment (other than by reason of death) must
be preceded by a written Notice of Termination from the terminating
party to the other party hereto in accordance with Section 7.6
hereof. For purposes of this Agreement, a “Notice of
Termination” shall mean a notice which shall (a) specify
the date of termination (the “Date of Termination”)
which shall not be more than sixty (60) days from the date such
Notice of Termination is given, (b) indicate the notifying
party’s opinion regarding the specific provisions of this
Agreement that will apply upon such termination and (c) set forth
in reasonable detail the facts and circumstances claimed to provide
a basis for the application of the provisions indicated.
Termination of the Executive’s employment shall occur on the
specified Date of Termination even if there is a dispute between
the parties relating to the provisions of this Agreement applicable
to such termination.
6.2 Dispute
Concerning Applicable Termination Provisions . If within thirty
(30) days of receiving the Notice of Termination the party
receiving such notice notifies the other party that a dispute
exists concerning the provisions of this Agreement that apply to
such termination, the dispute shall be resolved either by mutual
written agreement of the parties or by expedited commercial
arbitration under the rules of the American Arbitration
Association. The parties shall pursue the resolution of such
dispute with reasonable diligence. Within five (5) days of
such a resolution, any party owing any payments pursuant to the
provisions of this Agreement shall make all such payments together
with interest accrued thereon at the rate provided in Section
1274(b)(2)(B) of the Code.
7.1
Section 409A . Notwithstanding anything in this
Agreement to the contrary, to the extent required to comply with
Section 409A of the Code, any payment of deferred compensation
(within the meaning of Section 409A of the Code) hereunder on
account of the Executive’s separation from service (within
the meaning of Section 409A of the Code) shall not be paid
before the date that is six months after the date of the separation
from service (or, if earlier, the Executive’s death). Any
payment(s), benefits and streams of payments and benefits to the
Executive which would have commenced during such six-month period
shall commence on the first day following the end of such period
and the term over which any stream of
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payments or
benefits shall be made shall run from the delayed commencement date
for its full term such that the delayed commencement shall not
shorten the term over which any payments or benefits hereunder are
provi
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