IDM PHARMA, INC.
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED &
RESTATED EMPLOYMENT AGREEMENT (this “ Agreement
”) is effective as of December 11, 2008 (the “
Effective Date ”), by and between
IDM Pharma Inc.
, a Delaware corporation (the “ Company
”), and Timothy C. Melkus (the
“Executive” ). This Agreement shall
replace and supersede that certain Employment Agreement between
Executive and the Company entered into effective as of
December 3, 2007 (the “ Prior Agreement
”). The Company and the Executive are hereinafter
collectively referred to as the “ Parties
”, and individually referred to as a “
Party. ”
A.
The Company and Executive previously entered into the Prior
Agreement and desire to amend and restate the Prior Agreement in
its entirety as set forth herein, effective as of the Effective
Date, in order to clarify the application of Section 409A of
the Internal Revenue Code of 1986, as amended (the “
Code ”), and the regulations and other guidance
thereunder and any state law of similar effect (collectively
“ Section 409A ”), to the benefits
provided to Executive under the Prior Agreement.
B.
The Company desires to retain the Executive’s experience,
skills, abilities, background and knowledge and is willing to
engage the Executive’s services on the terms and conditions
set forth in this Agreement.
C.
The Executive desires to be in the employ of the Company and is
willing to accept such employment on the terms and conditions set
forth in this Agreement.
In consideration
of the foregoing Recitals and the mutual promises and covenants
herein contained, and for other good and valuable consideration,
the Parties, intending to be legally bound, agree as
follows:
1.1 Term. The Company hereby employs the Executive, and the
Executive hereby accepts employment by the Company, upon the terms
and conditions set forth in this Agreement. Executive’s
employment under this Agreement shall continue until it is
terminated pursuant to Section 4 herein (the
“Term” ).
1.2 Title . The Executive shall have the title of Senior
Vice President, Business Development and Operations of the Company
and shall serve in such other capacity or capacities as the
President and Chief Executive Officer of the Company may from time
to time prescribe.
1.
1.3 Duties. The Executive shall do and perform all services,
acts or things necessary or advisable to manage and conduct the
business of the Company and which are normally associated with the
position of Senior Vice President, Business Development and
Operations. The Executive shall report to the President and Chief
Executive Officer.
1.4 Policies and Practices. The employment relationship
between the Parties shall be governed by the policies and practices
established by the Company and the Board. The Executive will
acknowledge in writing that he has read the Company’s
Employee Handbook that will govern the terms and conditions of his
employment with the Company, along with this Agreement. In the
event that the terms of this Agreement differ from or are in
conflict with the Company’s policies or practices or the
Company’s Employee Handbook, this Agreement shall
control.
2. Loyal and Conscientious Performance;
Noncompetition.
2.1 Loyalty . During the Executive’s employment by the
Company, the Executive shall devote Executive’s full business
energies, interest, abilities and productive time to the proper and
efficient performance of Executive’s duties under this
Agreement.
2.2 Covenant not to Compete . During the term of this
Agreement, and during any period in which the Executive receives
severance benefits from the Company, the Executive shall not engage
in competition with the Company and/or any of its controlled
Affiliates (as defined below), either directly or indirectly, in
any manner or capacity, as adviser, principal, agent, affiliate,
promoter, partner, officer, director, employee, stockholder, owner,
co-owner, consultant, or member of any association or otherwise, in
any phase of the business of developing, manufacturing and
marketing of products or services that are in the same field of use
or which otherwise compete with the products or services of the
Company, except with the prior written consent of the
Company’s Board. For purposes of this Agreement,
“Affiliate,” means, with respect to any
specific entity, any other entity that, directly or indirectly,
through one or more intermediaries, controls, is controlled by or
is under common control with such specified entity. Ownership by
the Executive, in professionally managed funds over which the
Executive does not have control or discretion in investment
decisions, or as a passive investment, of less than two percent
(2%) of the outstanding shares of capital stock of any corporation
with one or more classes of its capital stock listed on a national
securities exchange or publicly traded on the Nasdaq Stock Market
or in the over-the-counter market shall not constitute a breach of
this Section 2.2.
2.3 Agreement not to Participate in Company’s
Competitors . During the Term, the Executive agrees not to
acquire, assume or participate in, directly or indirectly, any
position, investment or interest known by Executive to be adverse
or antagonistic to the Company, its business or prospects,
financial or otherwise or in any company, person or entity that is,
directly or indirectly, in competition with the business of the
Company or any of its Affiliates. Ownership by the Executive, in
professionally managed funds over which the Executive does not have
control or discretion in investment decisions, or as a passive
investment, of less than two percent (2%) of the outstanding shares
of capital stock of any corporation with one or more classes of its
capital stock listed on a national securities exchange or publicly
traded
2.
on the Nasdaq
Stock Market or in the over-the-counter market shall not constitute
a breach of this Section 2.3.
3. Compensation of the
Executive.
3.1 Base Salary. The Company shall pay the Executive a base
salary at the annualized rate of two hundred twenty thousand
dollars ($235,000) per year ( “Base
Salary” ), less payroll deductions and all required
withholdings, payable in regular periodic payments in accordance
with the Company’s normal payroll practices.
3.2 Discretionary Bonus. Provided the Executive meets the
conditions stated in this Section 3.2, the Executive shall be
eligible for an annual discretionary bonus (
“Bonus” ) target of thirty percent (30%)
of his annual salary, based on the Board’s determination, in
its sole discretion, of whether the Executive has met such
performance milestones as are established for the Executive by the
Board in consultation with the Executive ( “Performance
Milestones” ). The Performance Milestones will be
based on certain factors including, but not limited to, the
Executive’s performance and the Company’s financial
performance. The Board will have the sole discretion to award any
Bonus and to determine the amount of any such Bonus. The Executive
must be employed on the date the Bonus is awarded to be eligible
for the Bonus. No pro-rata Bonus will be available. Any Bonus will
be paid no later than March 15 of the calendar year following
the year in which the Bonus is awarded.
3.3 Changes to Compensation. The Executive’s
compensation may be changed from time to time by mutual agreement
of the Executive and the Company.
3.4 Employment Taxes . All of the Executive’s
compensation shall be subject to customary withholding taxes and
any other employment taxes as are commonly required to be collected
or withheld by the Company.
3.5 Benefits . The Executive shall, in accordance with
Company policy and the terms of the applicable plan documents,
continue to be eligible to participate in benefits under any
executive benefit plan or arrangement which may be in effect from
time to time and made available to the Company’s executive or
key management employees, provided however, that the
Executive shall be entitled to at least four (4) weeks of paid
vacation annually.
4.1 Termination By the Company . The Executive’s
employment with the Company may be terminated under the following
conditions:
4.1.1 Termination for Death or Disability . The
Executive’s employment with the Company shall terminate
effective upon the date of the Executive’s death or
“Complete Disability” (as defined in
Section 4.4.1), provided, however, that this
Section 4.1.1 shall in no way limit the Company’s
obligations to provide such reasonable accommodations to Executive
as may be required by law.
3.
4.1.2 Termination by the Company For Cause . The Company may
terminate the Executive’s employment under this Agreement for
“Cause” (as defined in Section 4.5.3) by delivery
of written notice to the Executive specifying the Cause or Causes
relied upon for such termination, provided that such notice is
delivered within two (2) months following the occurrence of
any event or events constituting “Cause”. Any notice of
termination given pursuant to this Section 4.1.2 shall effect
termination as of the date of the notice or such date as specified
in the notice.
4.1.3 Termination by the Company Without Cause . The Company
may terminate the Executive’s employment under this Agreement
at any time and for any reason, or no reason. Such termination
shall be effective on the date the Executive is so informed or as
otherwise specified by the Company.
4.2 Termination By The Executive . The Executive may
terminate his employment with the Company at any time and for any
reason or no reason, including, but not limited, under the
following conditions:
4.2.1 Good Reason . The Executive may terminate his
employment under this Agreement for “Good Reason” (as
defined below in Section 4.5.2) by delivery of written notice
to the Company specifying the “Good Reason” relied upon
by the Executive for such termination, provided that such notice is
delivered within sixty (60) days following the occurrence of
any event or events constituting Good Reason.
4.2.2 Without Good Reason . The Executive may terminate the
Executive’s employment hereunder for other than Good Reason
upon thirty (30) days written notice to the
Company.
4.3 Termination by Mutual Agreement of the Parties . The
Executive’s employment pursuant to this Agreement may be
terminated at any time upon a mutual agreement in writing of the
Parties. Any such termination of employment shall have the
consequences specified in such agreement.
4.4 Compensation Upon Termination .
4.4.1 Death or Complete Disability . If the
Executive’s employment shall be terminated by death or
Complete Disability as provided in Section 4.1.1, the Company
shall pay to the Executive, and/or Executive’s heirs, the
Executive’s Base Salary and accrued and unused vacation
benefits earned through the date of termination at the rate in
effect at the time of termination, less standard deductions and
withholdings, and the Company shall thereafter have no further
obligations to the Executive and/or Executive’s heirs under
this Agreement, except to the extent that the Executive and/or
Executive’s heirs is/are eligible for benefits pursuant to
any insurance policies maintained by the Company in connection with
his death or Complete Disability, and except as otherwise provided
by law.
4.4.2 With Cause or Without Good Reason. If the
Executive’s employment shall be terminated by the Company for
Cause, or if the Executive terminates employment hereunder without
Good Reason, the Company shall pay the Executive’s
Base
4.
Salary and
accrued and unused vacation benefits earned through the date of
termination at the rate in effect at the time of termination, less
standard deductions and withholdings, and the Company shall
thereafter have no further obligations to the Executive under this
Agreement, except as provided by law.
4.4.3 Without Cause or For Good Reason. If the Company
terminates the Executive’s employment without Cause or the
Executive terminates his employment for Good Reason, the Company
shall pay the Executive’s Base Salary and accrued and unused
vacation earned through the date of termination, at the rate in
effect at the time of termination subject to standard deductions
and withholdings. In addition, subject to the limitations stated in
Section 4.4.5 herein and upon the Executive’s furnishing
an effective Release within the applicable time period set forth
therein, but in no event later than forty-five (45) days
following termination of employment and permitting the Release
Effective Date to occur as provided by Section 4.7 of this
Agreement, the Executive shall be entitled to:
(i) the equivalent of the Executive’s annual
Base Salary in effect at the time of termination for a period of
six (6) months (the “Severance
Period” ), less standard deductions and withholdings,
to be paid over a period of six (6) months after the date of
termination pursuant to the Company’s standard payroll
practices; and
(ii) in the event the Executive elects continued
coverage under COBRA, the Company will pay the same portion of
Executive’s COBRA health insurance premium as the percentage
of health insurance premiums that it paid during the
Executive’s employment up until the earlier of either
(i) the last day of the Severance Period or, (ii) the
date on which the Executive begins full-time employment with
another company or business entity which provides comparable health
insurance coverage to the Executive; provided, however,
that
(iii) if such termination shall occur on or after the
first anniversary of the effective date of the Prior Agreement, the
Severance Period shall be increased to twelve (12) months for
purposes of calculating the benefits owed to the Executive pursuant
to 4.4.3 (i) and (ii).
4.4.4 Equity Award Acceleration.
(i) Not in connection with a Change in Control. In the
event that the Executive’s employment is terminated without
Cause or for Good Reason before the first anniversary of the
effective date of the Prior Agreement, and such termination is not
effected within the ninety (90) days immediately preceding or
the twelve (12) months immediately following a Change in
Control (as defined in Section 4.5.3), the vesting of
the Stock Award shall be accelerated such that the Stock Award
shares shall be fully vested and immediately
exercisable.
(ii) In connection with a Change in Control. In the
event that the Executive’s employment is terminated without
Cause or for Good Reason within the ninety (90) days
immediately preceding or the twelve (12) months immediately
following a Change in Control of the Company which Change in
Control is consummated after the first anniversary of the effective
date of the Prior Agreement, the vesting of the Stock Award shall
be fully
5.
accelerated
such that on the effective date of such termination one hundred
percent (100%) of the Stock Award shares shall be fully vested and
immediately exercisable. Further, in the event that the
Executive’s employment is terminated without Cause or for
Good Reason within the ninety (90) days immediately preceding
or the twelve (12) months immediately following a Change in
Control of the Company which Change in Control is consummated on or
before the first anniversary of the effective date of the Prior
Agreement, the vesting of the Stock Award shall be accelerated such
that on the effective date of such termination the Stock Award
shares that are unvested as of the effective date of such
termination shall be fully vested and immediately
exercisable.
(iii) Release and waiver. Any acceleration pursuant to
this Section 4.4.4 shall be conditioned upon and subject to
the Executive’s delivery to the Company of a fully effective
Release in accordance with the terms specified in Section 4.7
hereof and such acceleration shall be in addition to the benefits
provided by Section 4.4.3 hereof.
4.4.5 Conditions. Notwithstanding any provisions in this
Agreement to the contrary, the Company’s obligations and the
Executive’s rights pursuant to Section 4.4.3 shall cease
and be rendered a nullity immediately should the Executive violate
any provision of Section 2.2 herein, or should the Executive
violate the terms and conditions of the Executive’s
Proprietary Information and Inventions Agreement.
4.5 Definitions . For purposes of this Agreement, the
following terms shall have the following meanings:
4.5.1 Complete Disability . “Complete
Disability” shall mean the inability of the Executive
to perform the Executive’s duties under this Agreement,
whether with or without reasonable accommodation, because the
Executive has become permanently disabled within the meaning of any
policy of disability income insurance covering employees of the
Company then in force. In the event the Company has no policy of
disability income insurance covering employees of the Company in
force when the Executive becomes disabled, the term
“Complete Disability” shall mean the
inability to engage in any substantial gainful activity by reason
of any medically determinable
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