EMPLOYMENT AGREEMENT
This EMPLOYMENT
AGREEMENT, effective as of March 27, 2009 (the “Commencement
Date”), is made by and between Neurogen Corporation, a
Delaware corporation (the “Company”) with offices at 45
Northeast Industrial Road, Branford, Connecticut 06405, and Thomas
Pitler, who currently resides in Madison, Connecticut
06443 (the “Employee”).
WHEREAS, the Company and the Employee desire to
maintain an employment relationship; and
WHEREAS, the Company and the Employee desire to
enter into this Agreement to address, on the terms and conditions
hereinafter set forth, certain matters relating to such
employment.
NOW, THEREFORE, the Company and the Employee
agree as follows:
For purposes of this Agreement
“cause” means:
(i) the Employee is
convicted of a felony or entry of a plea of nolo contendere (or
similar plea) in a criminal proceeding for commission of a felony
or serious misdemeanor;
(ii) any willful act or
omission by the Employee which constitutes gross misconduct or
gross negligence and which results in demonstrable material harm to
the Company;
(iii) the
Employee’s habitual drug or alcohol abuse;
(iv) the
Employee’s willful and continuous failure to perform his
duties with the Company after reasonable notice of such
failure;
(v) the
Employee’s participation in any act of dishonesty intended to
result in his material personal enrichment at the expense of the
Company; or
(vi) the
Employee’s failure to substantially comply with the terms set
forth in the Proprietary Information and Inventions Agreement
between the Employee and the Company.
No act, or failure to act, by the Employee shall
be considered “willful” unless committed in bad faith
and without a reasonable belief that the act or omission was in the
Company’s best interest.
For purposes of this Agreement “good
reason” means and shall be deemed to exist if, without the
prior written consent of the Employee,
(i) the Company
permanently relocates the primary place of performance of the
duties specified in Section 3 of this Agreement to a location more
than fifty (50) miles from its current offices located in Branford,
Connecticut;
(ii) the
Employee’s rate of Base Salary (as hereinafter defined) is
materially decreased by the Company (other than in connection with
an across the board salary reduction agreed to by the
Employee);
(iii) the Company fails
to obtain the full assumption of this Agreement by a successor
entity in accordance with Section 12(b) of this Agreement;
or
(iv) the Board of
Directors of the Company (the “Board”) or the
Company’s stockholders, either or both, as may be required to
authorize the same, shall approve any liquidation or dissolution of
the Company, or the sale of all or substantially all of the assets
of the Company.
The term of Employee’s employment under
this Agreement shall, unless earlier terminated under Section 7
herein or extended as hereinafter provided, be for a period
commencing as of (the “Commencement Date”) and
terminating on March 26, 2010, subject to the terms and conditions
contained in this Agreement (the “Employment Period”).
The Employment Period shall automatically be extended commencing on
March 27, 2010 and thereafter on the relevant anniversary of the
Commencement Date, for successive one (1) year periods unless, not
later than ninety (90) days prior to March 27, 2010 or any such
anniversary, either party to this Agreement shall give written
notice to the other that such party does not wish to extend or
further extend the Employment Period beyond its then already
automatically extended term, if any.
During the Employment Period, the Employee shall
devote substantially all of his business time, during normal
business hours, to the business and affairs of the Company and the
Employee shall use his best efforts to perform faithfully and
efficiently the duties and responsibilities contemplated by this
Agreement; provided, however, the Employee may manage his personal,
financial and legal affairs and engage in any activities of a
volunteer, civic or business nature, as long as such activities do
not materially interfere with Employee’s
responsibilities.
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COMPENSATION
AND OTHER BENEFITS
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As compensation for the Employee’s
services under this Agreement, beginning on the Commencement Date
and until the termination of the Employment Period, the Employee
shall be paid by the Company a base salary of $280,000 per annum,
payable in equal semi-monthly
installments in
accordance with the Company’s normal payroll practices, which
base salary may be increased but not decreased (other than in
connection with an across the board salary reduction agreed to by
the Employee) during the Employment Period at the sole discretion
of the Board or the Board’s designee (the “Base
Salary”). Such increased (or decreased) Base Salary shall
then constitute the “Base Salary’ for purposes of this
Agreement.
In addition to the Base Salary, at the sole
discretion of the Board of Directors or its designee, the Employee
is eligible to receive such annual bonuses during the Employment
Period as the Board or its designee, in its sole discretion, may
approve. It is anticipated that annual bonus awards, if any, will
be calculated on the basis of both Company and individual
performance and that Employee’s annual target bonus for
complete achievement of all Company and individual objectives will
be targeted at a level equal to twenty five (25%) of
Base Salary. Notwithstanding anything in this Agreement to the
contrary, the Company reserves the right at the sole discretion of
the Board or its designee at any time and without notice to change
or abandon altogether any or all of it’s incentive
compensation policies and practices, including the award of any
annual bonuses or the determination not to make any such awards in
any year.
During the Employment Period, the Employee shall
be eligible to participate in all employee and incentive benefit
plans and programs maintained from time to time by the Company for
the benefit of senior executives, During the Employment Period, the
Employee, Employee’s spouse, if any, and their eligible
dependents, if any, shall be eligible to participate in and be
covered under all the employee and dependent health and welfare
benefit plans or programs maintained from time to time by the
Company. However, the Company shall have no obligations under this
Section 4(c) unless and until the Employee has met any generally
applicable eligibility requirements for participation in such plans
and programs.
At the sole discretion of the Board of Directors
or its designee, the Employee is eligible to receive such stock
option grants during the Employment Period as the Board or its
designee, in its sole discretion, may approve. It is anticipated
that stock option awards, if any, will be calculated on the basis
of both Company and individual performance. Notwithstanding
anything in this Agreement to the contrary, the Company reserves
the right at the sole discretion of the Board or its designee at
any time and without notice to change or abandon altogether any or
all of it’s incentive compensation policies and practices,
including the award of any stock options or the determination not
to make any such awards in any year.
(a)
During the Employment Period and for one year after the date of any
such termination of employment, the Employee agrees that, without
the prior express written consent of the Company, he shall not,
directly or indirectly, for his own benefit or as an employee,
owner, shareholder, partner, consultant, (or in any other
representative capacity) for any other person, firm, partnership,
corporation or other entity (other than the Company), (i) engage in
the
(b)
discovery, research and/or development of therapeutic, diagnostic
or prophylactic products which work through the same biological
mechanisms and are being pursued for the same therapeutic
indications as products which at the time of such termination are
under active clinical or pre-clinical development or have been
pre-clinically or clinically developed by the Company and which the
Company has not abandoned (“Related Programs”) or (ii)
solicit or hire (or direct another to solicit or hire) the services
of any employee of the Company or attempt to induce any such
employee or any consultant to the Company to leave the employ of
the Company (except when such acts are performed in good faith by
the Employee on behalf of the Company). For clarity, an
example of the Company’s Related Programs as of the date of
this Agreement is the development of a dopamine D2 partial agonist
for Parkinson’s disease or Restless Legs
Syndrome. Notwithstanding the above, this provision
shall not be deemed to prevent or prohibit Employee from being
employed during such one year period by another entity in a
managerial role where Employee has overall responsibility for
managing (or assisting in the management of) a research and
development portfolio which includes one or more Related Programs,
provided that Employee does not violate the terms of Section 6
hereof and does not during such one year term actively advise or
direct the discovery, research or development efforts of such other
entity in the Related Program(s). During the Employment Period, the
Employee shall not own more than 2% of the outstanding common stock
of any corporation, The provisions of this Section 5 shall not be
deemed to reduce in any way any other fiduciary, contractual or
other legal obligation the Employee may have to the Company,
including without limitation any obligation which may arise by
virtue of any corporation law, securities law, patent or
intellectual property law or right, the common law, other
agreements with the Company or otherwise.
For purposes of
Section 5 of this Agreement, the term “solicit” shall
mean any communication of any kind whatsoever, regardless of by
whom initiated, inviting, encouraging, or requesting any person or
entity to take or refrain from taking any action.
(c)
The
Employee agrees to comply with the terms of set forth in the
Proprietary Information and Inventions Agreement previously entered
into by the Company and Employee.
(d)
If at
any time within twelve (12) months after the date on which the
Employee exercises a Company stock option or stock appreciation
right, or on which Company restricted stock vests, or on which
income is realized by the Employee in connection with any other
Company equity-based award (each of which events is a
“Realization Event”), the Employee breaches any
provision of Section 5(a) or 5(b) of the Agreement in more than a
minor, deminimus or trivial manner that causes or is likely it
cause, more than deminimus financial or reputational harm to the
Company (and, if such breach is susceptible to cure, the Employee
does not cure such breach and harm within ten (10) days after the
Employee’s receipt of written notice of such breach of the
Company which specifies in reasonable detail the facts and
circumstances claimed to be the basis for such breach), then (i)
the Employee shall forfeit all of Employee’s unexercised
(including unvested) Neurogen Corporation stock options and
restricted stock and (ii) any gain realized within the twelve (12)
months prior to such breach from the exercise of any Company stock
options or the vesting of any Company restricted stock or other
equity-based awards by the Employee from the Realization Event
shall be paid by the Employee to the Company upon written notice
from the Company within ninety (90) days of such notice (such
payments may be made in increments over such period). Such gain
shall be determined after reduction for any
(e)
taxes
paid (or, if such gain is determined before such taxes are paid,
owing, provided that such taxes are actually paid in a timely
manner) by the Employee which are attributable to such gain as of
the date of the Reali
