EXHIBIT 10.1
EMPLOYMENT
AGREEMENT
This Employment Agreement (this
“Agreement”) is made as of this 6th day of April, 2007
(the “Effective Date”), by and between Emisphere
Technologies, Inc., a Delaware corporation (the
“Company”), and Michael V. Novinski (the
“Executive”).
WHEREAS, the Company wishes to secure
the employment of the Executive and the Executive wishes to be so
employed by the Company.
NOW, THEREFORE, in consideration of
the mutual covenants and promises herein contained and intending to
be legally bound hereby, it is hereby agreed by and between the
parties as follows:
(1) Employment . Subject
to the terms and conditions of this Agreement, the Company hereby
employs the Executive to perform such duties as may from time to
time be prescribed by the Board of Directors (the
“Board”) of the Company, subject in all instances to
the general supervision and direction of the Board of the Company.
The Executive hereby accepts such employment.
(2) Duties .
(a) Generally . The
Executive shall serve as President and Chief Executive Officer of
the Company and shall perform and discharge fully and faithfully
such duties as are assigned to him pursuant to Section 1. The
Executive’s initial duties and responsibilities hereunder
shall include, but not be limited to, those customarily performed
by the president and chief executive officer of a similarly sized
publicly held technology company. The Company shall use its
commercially reasonable efforts to ensure that Executive is elected
as a director of the Company within a reasonable time following the
date this Agreement is executed by both parties and that he remains
a director for the duration of his employment relationship with the
Company. The Executive will operate within the bylaws, guidelines,
budgets, policies and procedures now or hereafter established by
the Company, copies of which shall be provided to the Executive or
of which the Executive is aware.
(b) Other Activities .
Anything herein to the contrary notwithstanding, nothing in this
Agreement shall preclude Executive from (i) serving on the
boards of directors of reasonable number of other corporations
(subject to the last sentence of this Section 2(b)), trade
associations and/or charitable organizations, (ii) engaging in
charitable activities and community affairs, and
(iii) managing his personal investments and affairs, provided
that such activities do not materially interfere with the proper
performance of his duties and responsibilities under this
Agreement. In the event Executive desires to serve on the board of
directors of a for profit corporation, he shall request and obtain
the prior approval of the Board of the Company.
(c) Place of Employment
. Executive’s principal place of employment shall be at
Company’s corporate offices, which are currently located at
765 Old Saw Mill River Road, Tarrytown, New York 10591.
(3) Salary . The Company
shall pay the Executive, during the Term (as defined below) of this
Agreement, a salary of $550,000 (as calculated on an annualized
basis) (the “Salary”), before applicable local, state
and federal withholding taxes, payable in accordance with normal
Company pay policies.
(4) Bonus . During the
Term, the Executive will be eligible to receive a bonus of up to
$550,000 based on a full calendar year (i.e. January 1 through
December 31). Since the year in which this Agreement is
entered into (i.e. 2007) is not a full calendar year, any bonus for
year 2007 will be calculated on a pro rata basis. Any such bonus
shall be paid no later than March 15th of each year (for the
previous year). The bonus shall be based on Executive’s
individual performance in accordance with a bonus plan to be
determined in the sole discretion of the Board of the Company.
(5) Stock Options . Upon
the Effective Date, Company will grant to the Executive a
non-qualified stock option (the “Option”) to purchase
1,000,000 shares of the Company’s Common Stock (the
“Option Shares”) in accordance with the Company’s
equity compensation plan, as amended from time to time (the
“Compensation Plan”) pursuant to which the Option
Shares are granted. The exercise price for 500,000 Option Shares
will be equal to the fair market value of a share of the
Company’s Common Stock on the date of grant. The exercise
price for the other 500,000 Option Shares will be equal to two
times (2x) the fair market value of a share of the Company’s
Common Stock on the date of grant. The Option shall vest according
to the following vesting schedule:
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1.
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25% shall vest immediately upon the date of
grant;
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2.
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25% shall vest on the one year anniversary of
the date of grant;
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3.
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25% shall vest on the second year anniversary
of the date of grant; and
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4.
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25% shall vest on the third year anniversary
of the date of grant.
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The terms and conditions of the Option will be more fully
described in a certain separate option agreement by and between the
Company and the Executive (the “Option Agreement”), and
subject to the terms of the Compensation Plan.
(6) Expenses . The
Executive shall be reimbursed for all reasonable, ordinary, and
necessary business expenses in accordance with Company policy. The
Executive shall furnish the Company with the appropriate
documentation relating to such expenses and shall comply with any
additional requirements of the Company generally applicable to the
Company’s Executives in connection therewith.
(7) Benefits . During
the Term hereof, the Executive shall be entitled to the benefits
generally made available to similarly situated employees of the
Company as offered from time to time and as approved by the Board
of the Company.
(8) Vacation . For each
year during the Term, the Executive shall be entitled to four
(4) weeks paid vacation (“Vacation”), however,
Executive may not take more than two (2) weeks of such
Vacation in any 90 day period. Notwithstanding the foregoing,
Vacation is to be taken at such times as not to unduly disrupt the
business of the Company in accordance with the Vacation policies of
the Company in effect from time to time. Sick, religious and
personal days as well as other leave of absences shall be governed
by the policies of the Company in effect from time to time.
(9) Other Expenses . The
Executive will be eligible to receive the following:
(a) Car Allowance. During the
Term, the Company shall provide the Executive with a car allowance
of $18,000 per year and in any case not more than $1,500 a
month.
(b) Air Travel. During the
Term, the Company shall pay or reimburse Executive for the expenses
of Executive’s business class air travel taken for purposes
of Company business.
(c) Life Insurance. The Company
will reimburse the Executive up to $15,000 per year for life
insurance premiums.
(10) Full-Time Duties .
The Executive shall devote his full working time, attention and
best efforts to fulfill his duties hereunder and, to the business
and interest of the Company and its affiliates during the Term of
this Agreement.
(11) Term and
Termination .
(a) Unless terminated under
Sections 11(b), 11(c), 11(d), or 11(e) of this Agreement, this
Agreement shall commence on the Effective Date and shall expire as
of the third (3 rd ) anniversary of the Effective Date
(the “Initial Term”). The Agreement shall automatically
renew for additional one (1) year periods unless either party
provides notice of non-renewal to the other party at least sixty
(60) days prior to the anniversary of the Effective Date for
the first renewal period and at least sixty (60) days prior to
the anniversary of the Effective Date for each subsequent renewal
period (each a “Renewal Term”). Any period calculated
in this Section 11(a) is defined as the “Term.”
(b) Death or Disability . The
Company may terminate the Executive’s employment hereunder at
any time after having established the Executive’s death or
long-term disability. For purposes of this Agreement,
“long-term disability” shall mean the incapacity, by
accident, sickness or otherwise so as to render the Executive
mentally or physically incapable of devoting to the business of the
Company his full time, commercially reasonable efforts, skill and
attention, and such condition continues for a period of ninety
(90)consecutive days or one hundred twenty (120) total days in any
twelve (12) month period. In the event the Executive’s
employment terminates as a result of death or long term disability,
then the Executive shall be entitled to the following:
(i) The
payment of Salary through the date of termination;
(ii) The
payment of a pro-rata annual bonus based on the target bonus for
the year of termination, payable within 60 days following
termination;
(iii) All
unvested or unexercisable equity compensation becomes fully vested
and remains exercisable for the remainder of the originally
scheduled term.
(iv) In the
event of a disability termination, continued participation in the
Company’s health benefit plan for a period equal to the
lesser of twelve (12) months or his becoming eligible to
participate in the health benefit plan of a new employer; and
(v) The
payment of any benefits or other amounts earned, accrued or owing
under the plans and programs of the Company.
(c) With
Cause . The Company may terminate the Executive’s
employment hereunder at any time and without further obligation for
cause. For purposes of this Agreement, “cause” shall
mean the occurrence of any of the following events on the part of
the Executive during the Term hereof:
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(i)
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any act of personal dishonesty or a breach of
trust in connection with the Executive’s responsibilities to
the Company;
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(ii)
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the commission by the Executive of any crime
classified as a felony under any Federal, state or local law;
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(iii)
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violations by the Executive of the
Executive’s obligations under the ethics policy of the
Company in effect from time to time;
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(iv)
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any breach by the Executive of the Employee
Invention, Non-Disclosure, Non-Competition And Non-Solicitation
Agreement dated as of the date hereof by and between the Company
and the Executive (the “Invention Agreement”); or
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(v)
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violations by the Executive of the
Executive’s obligations under this Agreement or any
continuing violation or refusal to obey the directives and/or
instructions of the Board of the Company if Executive has received
30 days written notice of the alleged cause, specifying the
breach by Executive and the actions required to cure it, and such
identified breach remains uncured after such 30 day period.
Provided that no such notice shall be required for any repetitive
violation or refusal to obey the directives and/or instructions of
the Board of the Company or if such violation is not susceptible to
cure.
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(d) Without
Cause . The Company may terminate the Executive’s
employment hereunder at any time without cause.
(e) Executive
Termination . The Executive may terminate the Executive’s
employment hereunder at any time by giving no less than
30 days’ written notice to the Company. Company reserves
the right to accept Executive’s voluntary termination
immediately, without notice and without any further unearned future
payment obligation.
(12) Severance .
(a) Without Cause or Voluntary
Termination. If the Company terminates the Executive without cause
pursuant to Section 11(d) of this Agreement, or if the Executive
voluntarily terminates his employment for Good Reason (defined
below) within thirty (30) days after learning of the event
constituting Good Reason and (A) the Executive is not in
breach of the Invention Agreement (defined below), and (B) the
Executive executes, and does not revoke, the written Release
(defined below) in accordance with Section 14 of this
Agreement, and (C) the Executive, if he should be a director
of the Company, resigns from the Board of the Company in accordance
with Section 15 of this Agreement, then the Executive shall be
entitled to the following:
(i) The
payment of Salary through the date of termination;
(ii) The
payment of a pro-rata bonus based on the target bonus for the year
of termination, payable within 60 days following
termination;
(iii) A cash
payment equal to nine (9) months of Salary, paid to Executive
in accordance with standard Company payroll practices;
(iv) The
acceleration of the next two scheduled vesting dates of the Option
schedule, following the date of Executive’s termination of
employment;
(v) Continued participation in the Company’s health
benefit plan for a period equal to the lesser of twelve
(12) months or his becoming eligible to participate in the
health benefit plan of a new employer, and
(vi) The
payment of any benefits or other amounts earned, accrued or owing
under the plans and programs of the Company.
(b) Change of Control
(i) In the
event of a Change of Control (as defined below), all unvested
equity compensation shall immediately vest and remain exercisable
for the remainder of the originally scheduled term.
(13) Good Reason, Change of
Control.
(a) For purposes of this
Agreement, “Good Reason” means the occurrence of any
one of the following events during the Term hereof:
(i) any
material breach of the Agreement by the Company, including:
(1) a
material diminution in the position, authority, responsibilities or
benefits of the Executive;
(2) assignment of duties materially inconsistent with his
positions and duties described in this Agreement;
provided; however, that no act or
omission described in this Section 13(a)(i) shall constitute
Good Reason unless the Executive gives the Company
30 days’ prior written notice of such act or omission
and the Company fails to cure such act or omission within the
30-day period.
(b) For the
purposes of this Agreement, a “Change of Control”
means: (a) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”)), other than any individual, entity or group which, as
of the date of this Agreement, beneficially owns more than five
percent (5%) of the then outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”), of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of the then
Outstanding Company Common Stock; provided, however, that any
acquisition by the Company or its subsidiaries, or any employee
benefit plan (or related trust) of the Company or its subsidiaries
of 50% or more of Outstanding Company Common Stock shall not
constitute a Change in Control; and provided, further, that any
acquisition by an entity with respect to which, following such
acquisition, more than 50% of the then outstanding equity interests
of such entity, is then beneficially owned, directly or indirectly,
by all or substantially all of the individuals and entities who
were the beneficial owners of the Outstanding Company Common Stock
immediately prior to such acquisition of the Outstanding Company
Common Stock, shall not constitute a Change in Control; or (b) the
consummation of (i) a reorganization, merger or consolidation
(any of the foregoing, a “ Merger ”), in each
case, with respect to which all or substantially all of the
individuals and entities who were the beneficial owners of the
Outstanding Company Common Stock immediately prior to such Merger
do not, following such Merger, beneficially own, directly or
indirectly, more than 50% of the then outstanding shares of common
stock of the corporation resulting from Merger, or (ii) the
sale or other disposition of all or substantially all of the assets
of the Company, excluding (a) a sale or other disposition of
assets to a subsidiary of the Company; and (b) a sale or other
disposition of assets to any individual, entity or group which, as
of the date of this Agreement, beneficially owns more than five
percent (5%) of the then Outstanding Company Common Stock.
(14) Release as a Condition
Precedent to Certain Payments . Executive agrees, as a
condition to the receipt of the termination payments and benefits
provided for in Section 12, that he will immediately upon
termination of this Agreement execute a release agreement (the
“Release”), in substantially the form attached hereto
as Exhibit A , releasing any and all claims arising out
of Executive’s employment (other than enforcement of this
Agreement, Executive’s rights under any Company incentive
compensation and employee benefit plans and programs to which he is
entitled under this Agreement, and any claim for any tort for
personal injury not arising out of or related to his termination of
employment) which Release shall include a non-disparagement
agreement.
(15) Board Resignation as a
Condition Precedent to Certain Payments . Executive agrees, as
a condition to the receipt of the termination payments and benefits
provided for in Section 12, and notwithstanding giving the
Release pursuant to Section 14 of this Agreement, that should
Executive be a director of the Company he shall automatically be
deemed to have resigned from the Board of the Company whether or
not such written resignation is tendered.
(16) Conditions Precedent to
Effectiveness of Agreement . It shall be a condition precedent
to the effectiveness of this Agreement that the Parties shall have
entered into an Invention Agreement in substantially the form
attached hereto as Exhibit B .
(17) Confidentiality After
Termination. The confidentiality provisions of this Agreement
set forth in Section 16 above shall remain in full force and
effect for three (3) years after the termination of this
Agreement.
(18) Notices . Any
notice or other communication in connection with this Agreement
shall be deemed to be delivered if in writing (addressed as
provided below) and if either: (a) actually delivered
(electronically or physically) at said address; or (b) in the
case of a letter, three (3) business days shall have elapsed
after the same shall have been deposited in the United States mail,
postage prepaid and registered or certified, return receipt
requested or forty eight (48) hours shall have elapsed after
the same shall have been deposited with a nationally recognized
overnight courier; or (c) by facsimile, when transmission
acknowledged by telephonic receipt:
If to the
Company, to:
Emisphere Technologies, Inc.
765 Old Saw Mill
River Road
Tarrytown, New
York 10591
Attention:
Chairman of the Board of Directors
Tel:
914-347-2220
Fax
914-347-2498
with a copy
to:
Brown Rudnick Berlack Israels LLP
One Financial Center
Boston, MA 02111
Attention: Timothy C. Maguire, Esq.
Tel: (617) 856-8200
Fax: (617) 856-8201
If to Executive
to:
Michael V.
Novinski
8 Alexandra
Lane
Long Valley, NJ
07853
with a copy
to:
Andrew Berns,
Esq.
Einhorn, Harris,
Ascher, Barbarito, Frost & Ironson, P.A
165 E. Main
Street #2
Denville, NJ
07834
(19) Disclosure .
Executive shall disclose to the Company, on the effective date of
this Agreement, any of Executive’s outside activities,
interests or participation in the development or sale of any and
all prior, current, or pending inventions which directly or
indirectly, (i) conflict or may conflict with the best
interests of the Company; (ii) relate to any of the
Company’s product lines or services; or (iii) relate to
any activity, project or the like that Executive may be or has been
involved with on behalf of the Company.
(20) Indemnification .
Executive shall be entitled to indemnification from the Company as
may be provided in the Company’s Certificate of Incorporation
and Bylaws to officers and directors of the Company. In addition,
the Executive will be covered under any directors and
officers’ liability insurance policy for his acts (or
non-acts) as an officer or director of the Company or any of its
subsidiaries or affiliates to the extent the Company provides such
coverage for its senior executive officers. The Executive’s
rights under this Section
