Exhibit 10.42
EMPLOYMENT
AGREEMENT
AGREEMENT, made
and entered into as of the 8th day of August, 2007, by and between
ImClone Systems Incorporated, a Delaware corporation (the
"Company"), and John H. Johnson (the "Executive").
W I T N E S S E T
H
WHEREAS, the
Company desires to employ the Executive as its Chief Executive
Officer, and the Executive desires to accept such employment;
and
WHEREAS, the
Company and the Executive desire to enter into this employment
agreement (the "Agreement") embodying the terms of such
employment;
NOW, THEREFORE,
in consideration of the promises and mutual covenants contained
herein and for other good and valuable consideration, the receipt
of which is mutually acknowledged, the Company and the Executive
(individually a "Party" and together the "Parties") agree as
follows:
1.
Definitions.
(a) "Base
Salary" shall mean the Executive's base salary as determined in
accordance with Section 4 below.
(b) "Board"
shall mean the board of directors of the Company.
(c) "Cause"
shall mean:
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(1) an
indictment for, or a conviction of the Executive for, or a plea
of nolo contendere to, a felony, any crime under the federal or state securities
laws or regulations, or a misdemeanor involving moral turpitude;
or
(2) willful
misconduct or gross negligence by the Executive in the performance
of his duties hereunder; or
(3) a
willful failure by the Executive to attempt in good faith to
perform his duties hereunder, or a willful failure by the Executive
to attempt in good faith to carry out the legal directions of the
Board promptly and continuously, in either case after written
notice of such failure; or
(4) fraud,
embezzlement, theft or dishonesty by the Executive against the
Company or any Subsidiary; or
(5) or
any act of willful misconduct by the Executive bringing harm, or in
the good faith judgment of the Board, likely to bring harm to the
Company or any Subsidiary (economically or as to reputation);
or
(6) a
violation by the Executive of a written policy or procedure of the
Company or any Subsidiary of a material nature, as determined in
the good faith judgment of the Board; or
(7) a
mispresentation by the Executive of his credentials or experience;
or
(8) a
material breach by the Executive of any provision of this
Agreement, including a failure to purchase or maintain the equity
ownership holdings in accordance with Section 7 of this
Agreement, that is not cured (if capable of being cured) within
10 days of Executive's being given written notice from the
Company specifying such breach.
(d) "Change
of Control" shall mean when any "person" (as defined in
Section 13(d) and 14(d) of the Securities Exchange Act of
1934) (other than (i) any shareholder who, as of the date
hereof, has a Schedule 13D on file with the Securities and
Exchange Commission, (ii) any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or
any Subsidiary, or (iii) any corporation owned, directly or
indirectly, by the stockholders of the Company, in substantially
the same
proportions as their ownership of stock of the
Company), acquires, in a single transaction or a series of
transactions (whether by merger, consolidation, reorganization or
otherwise), "beneficial ownership" (as defined in Rule 13d-3
under the Securities Exchange Act of 1934) of securities
representing 100% of voting power of the Company
(e) "Code"
shall mean the Internal Revenue Code of 1986, as amended from time
to time.
(f) "Competitive
Activity" shall mean the Executive's engaging in an
activity—whether as an employee, consultant, principal,
member, agent, officer, director, partner, sole proprietor, or
shareholder (except as a less than 1% shareholder of a publicly
traded company)—that is competitive with any product marketed
and sold by the Company or any Subsidiary, or which would compete
with any product proposed to be developed or marketed and sold by
the Company or any Subsidiary and as to which the Company or any
Subsidiary has devoted significant efforts, provided that
such measurement shall be made at the earlier of the activity of
Executive, and termination hereunder; and provided ,
further , that after the Executive's termination hereunder,
the Executive shall not be deemed to be engaging in a Competitive
Activity if he provides services to a subsidiary, division or
affiliate of an entity engaged in a Competitive Activity
(a) if such subsidiary, division or affiliate is not itself
engaged in a Competitive Activity and not involved with therapeutic
antibodies, (b) the portions of the entity engaged in
Competitive Activity and/or therapeutic antibodies comprise no more
than 10% of the revenues of the business enterprise as a whole in
the fiscal year of the entity ending immediately prior to the
activity by the Executive, and (c) the Executive does not
directly or indirectly provide services to, supervise or manage the
employees of, or have any responsibilities regarding, the
Competitive Activity or the therapeutic antibody area.
(g) "Disability"
shall mean the Executive's inability, due to physical or mental
incapacity, to substantially perform his duties and
responsibilities under this Agreement for a period of (i) 6
consecutive months or (ii)180 days in any 12-month period, as
determined by the Board.
(h) "Effective
Date" shall mean August 27, 2007.
(i) "Good
Reason" shall mean, without the Executive's prior written consent,
the occurrence of any of the following events or actions within the
30-day period preceding a notice of termination of employment
delivered to the Company by the Executive:
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(1) a
reduction of the Executive's Base Salary or Target Bonus as a
percentage of Base Salary, except due to an across the board
reduction applicable to similarly situated senior-level executives
generally;
(2) the
failure to be elected or reelected the Chief Executive Officer of
the Company and its Subsidiaries;
(3) a
material breach by the Company of this Agreement;
(4) a
material diminution in the Executive's titles, authority, duties or
responsibilities, including but not limited to as a result of a
change in the Company's by-laws that is not legally
required;
(5) a
change in the reporting structure so that the Executive reports to
someone other than solely to the Board and the Chairman of the
Board;
(j) "Subsidiary"
shall mean a corporation of which the Company owns more than 50% of
the voting stock or any other business entity in which the Company
directly or indirectly has an ownership interest of more than
50%.
(k) "Term
of Employment" shall mean the period specified in Section 2
below.
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2.
Term of
Employment.
The Company
hereby employs the Executive, and the Executive hereby accepts such
employment, for the period commencing on the Effective Date and
ending on the fourth anniversary of the Effective Date, subject to
earlier termination of the Term of Employment in accordance with
the terms of this Agreement. The parties may, but shall not be
obligated to, extend the Term of Employment by written agreement.
If not so extended by written agreement, any employment after the
fourth anniversary shall be employment at will.
3.
Position, Duties and
Responsibilities; Reporting.
(a) As
of the Effective Date, the Executive shall be employed as the Chief
Executive Officer of the Company and its Subsidiaries and shall be
responsible for the general management of the affairs of the
Company and its Subsidiaries as provided in the Company's by-laws.
The Executive shall serve the Company and its Subsidiaries
faithfully, conscientiously and to the best of the Executive's
ability and shall promote the interests and reputation of the
Company and its Subsidiaries. The Executive shall devote
substantially all of the Executive's working time, attention,
knowledge, energy and skills to the duties of the Executive's
employment. The Executive, in carrying out his duties under this
Agreement, shall report solely to the Board and the Chairman of the
Board, and shall carry out the legal directives of the Board in
good faith. With the prior written approval of the Board (which may
be withheld or withdrawn at any time), the Executive may
(i) serve on the boards of directors of other corporations,
(ii) serve on the boards of trade associations and/or
charitable organizations, and (iii) engage in charitable
activities and community affairs. Additionally, the Executive may
manage his passive personal investments, provided that such
activities (including those in the prior sentence) do not
materially interfere and are not inconsistent with the effective
discharge of his duties and responsibilities to the Company and its
Subsidiaries.
(b) It
is the intention of the Parties that the Executive shall serve as a
member of the Board at all times during the Term of Employment and
the Company shall propose his nomination and renomination as such
during the Term of Employment, except as such is in conflict with
applicable law or regulations to which the Company is
subject.
4.
Base Salary
During the Term
of Employment, the Executive shall be paid an annualized Base
Salary of $600,000, payable in accordance with the regular payroll
practices of the Company. The Base Salary is subject to increase in
the sole discretion of the Board.
5.
Annual Incentive
Compensation Programs and Sign on Bonus.
(a) During
the Term of Employment, the Executive shall participate in the
Company's annual incentive compensation plan applicable to
senior-level executives as established and modified (in respect of
senior-level executives generally) from time to time by the Board
in its sole discretion. The Executive shall have an annual
incentive compensation opportunity under such plan with an annual
cash target award of 100% of Base Salary (the "Target Bonus").
Payment of annual incentive compensation awards shall be made at
the same time that other senior-level executives receive their
annual incentive compensation awards in the calendar year following
the year earned.
(b) The
Company shall pay the Executive a sign on bonus of $100,000 in cash
within thirty (30) days after the Effective Date. In the event
the Executive voluntarily resigns without Good Reason or is
terminated for Cause within one (1) year of the Effective
Date, he shall promptly refund such sign-on bonus.
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6.
Long-Term Incentive
Compensation Grants.
(a) The
Executive shall receive on the Effective Date a grant of $1,000,000
in restricted stock units in respect of the Company's common stock
(the "RSU's") pursuant to the Company's 2006 Stock Incentive Plan
(the "Plan"), valued at the closing price of the Company's common
stock on the Effective Date. The RSU's will vest 25% on each of the
first four anniversaries of the Effective Date, subject to the
Executive's continuous employment, except that the RSU's shall
immediately vest in full upon the earlier to occur of (i) a
Change in Control and (ii) a termination of the Executive's
employment hereunder without Cause, or for Good Reason. The RSU's
which are vested at the time of Executive's separation from service
will be settled and paid subject to Section 23 below promptly
after the Executive's separation from service for any reason. Other
terms and conditions relating to the RSU's shall be contained in an
award agreement between the Company and the Executive in the
Company's standard form, as modified to include the provisions of
this Section 6(a).
(b) The
Executive shall receive on the Effective Date a grant of an option
to purchase 350,000 shares of the Company's common stock (the
"Option") pursuant to the Plan. The exercise price of the Option
will be the closing price of the Company's common stock on the
Effective Date. The Option will vest 25% on each of the first four
anniversaries of the Effective Date, subject to the Executive's
continuous employment, except that the Option shall immediately
vest in full upon the earlier to occur of (i) a Change in
Control and (ii) a termination of the Executive's employment
without Cause or for Good Reason. The Option shall expire on the
10th anniversary of the date of grant, or sooner if there is a
termination of the Executive's employment and, in such case, as
provided under the Plan and grant. Other terms and conditions
relating to the Option shall be contained in an award agreement
between the Company and the Executive in the Company's standard
form, as modified to include the provisions of this
Section 6(b).
(c) During
the Employment Term, the Executive shall be eligible to participate
in the Company's applicable long-term incentive compensation
plan(s) on the same basis as generally available to other
senior-level executives, as may be established and modified (in
respect of senior-level executives generally) from time to time by
the Board in its sole discretion.
7.
Equity
Purchase.
Executive
hereby agrees that, subject to compliance with applicable Federal
and State securities laws, applicable Company policies and the
rules of the stock exchange on which the Company's common stock is
listed, including but not limited to insider trading rules (each, a
"Restriction"), during the period beginning as of the date which is
three (3) business days following the public announcement of
the Executive's employment with the Company and ending ninety
(90) days after the Effective Date, Executive shall purchase
shares of common stock of the Company in the market or from the
Company, as the parties mutually agree, with a market value (at the
time of purchase) of $500,000, it being agreed that such ninety
(90) day period shall be extended for the period of time the
Executive is prevented from purchasing such shares as a result of
any of the Restrictions if the Executive is unable to purchase the
shares in the market and the Company is unable or unwilling to
issue and sell the shares to the Executive or the Executive is
prevented by the Restrictions from buying the shares from the
Company. Executive shall hold such number of shares so purchased
during the Term of Employment and for a period of at least one year
thereafter; provided
the requirement to hold such shares shall terminate
on the earlier to occur of a termination of the Executive's
employment without Cause, for Good Reason, or upon a death or a
Disability termination. In addition, such obligation shall
terminate on a corporate transaction where shares of the Company
are exchanged for cash. Such shares acquired by the Executive
pursuant to this Section 7 shall be legended with the
restrictions and their termination as set forth herein, and the
Company's books shall reflect such restrictions and their
termination.
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8.
Employee Benefit
Programs.
(a) During
the Term of Employment, the Executive shall be entitled to
participate in all employee welfare and pension benefit plans,
programs and/or arrangements applicable to the Company's
senior-level executives generally upon the terms and conditions, as
modified from time to time, of such plans, programs and
arrangements. The Executive shall be entitled to participate in the
Company's vacation and other time off programs in accordance with
the terms thereof in effect from time to time (including but not
limited to those as to carry forward of, or payment for, unused
vacation), provided that his annual accrual and entitlement to
vacation days over each year of vacation measurement (prorated for
partial years) shall be at least four weeks.
(b) Notwithstanding
anything elsewhere to the contrary, the Executive shall not be
eligible to participate in the Company's Change-in-Control Plan,
the Senior Executive Severance Plan, or any other severance plan,
except as specifically agreed to by the Company; it being intended
that the severance provisions herein are intended to be in lieu of
benefits under any other severance program.
9.
Reimbursement of Business
Expenses.
The Company
shall reimburse the Executive for all reasonable business expenses
reasonably incurred during the Employment Term in connection with
carrying out the business of the Company in accordance with the
Company's policy, subject to such documentation as the Company's
policy may require and such reimbursement shall occur no later than
June 30 of the calendar year following the calendar year in
which they were incurred.
10.
Termination of
Employment.
(a)
Termination of Employment
Due to Death. In
the event of the Executive's death during the Term of Employment,
the Term of Employment shall end as of the date of the Executive's
death and his estate and/or beneficiaries, as the case may be,
shall be entitled to the following:
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(1) Base
Salary earned but not paid through the date of termination, payable
within 15 days of the date of termination;
(2) any
incentive compensation earned for a fiscal year ending prior to the
date of termination, payable when such compensation is otherwise
paid to other senior executives generally in the calendar year of
termination; and
(3) any
amounts earned, accrued or owing to the Executive but not yet paid
under Sections 8 and 9 (and the plans, programs or policies
referred to therein), payable at the time set forth in the relevant
plan, program or policy (together with (1) and (2), the
"Accrued Obligations").
(b)
Termination of Employment
Due to Disability. The Company may terminate the
Executive's employment due to Disability by written notice pursuant
to Section 25 hereof. In such event, the Term of Employment
shall end as of the date of the termination of the Executive's
employment specified in such notice, and the Executive shall be
entitled to the Accrued Obligations.
(c)
Termination of Employment
by the Company for Cause. If the Company terminates the
Executive's employment for Cause during the Term of Employment, the
Term of Employment shall end as of the date of the termination of
the Executive's employment for Cause and the Executive shall be
entitled to the amounts set forth in clauses (1) and
(3) of Section 10(a) above. Notwithstanding anything
elsewhere to the contrary, if the Company becomes aware of facts or
circumstances which occurred or existed during the Term of
Employment and which constituted "Cause," the Executive shall only
be entitled to the amounts set forth in clauses (1) and (3),
and the Executive shall have an obligation to repay any excess
amounts (including without limitation the value of equity that
would not have vested) otherwise received.
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(d)
Termination of Employment
by the Company Without Cause. If the Executive's employment is
terminated by the Company without Cause, other than due to death or
Disability, the Term of Employment shall end as of the date of such
termination and the Executive shall be entitled to the following,
subject to Sections 10(g) and 10(k) and compliance with the
Executive's obligations pursuant to Sections 11,
12(a) & (b), and 13:
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(1) the
Accrued Obligations;
(2) a
pro rata annual cash bonus award for the year of termination, based
on actual results, payable in the following calendar year at the
time bonuses are paid to similarly situated senior-level executives
generally;
(3) his
annual Base Salary, at the rate in effect on the date of
termination (without giving effect to any decrease in such rate
which has given rise to Good Reason), payable in installments for a
period of 12 months, commencing (subject to the provisos
below) on the first regular payroll date after the date of
termination in accordance with the Company's regular payroll
practices applicable to payment of salaries, provided that no
amounts shall be due prior to the effective date of the release
described in Section 10(k) and the first installment
thereafter shall include all payments that would otherwise have
been made prior to the effective date of the release; and provided
further that payments pursuant to this section shall be subject to
delay in accordance with Section 23(b) hereof;
(4) full
and immediate vesting of the Option, which shall remain exercisable
for ninety days after the date of termination;
(5) full
and immediate vesting of the RSU's, and settlement of the RSU's in
accordance with the terms of the applicable award agreement which
will be consistent with Section 6(a) hereof;
(6) provided
he timely elects COBRA health continuation coverage and timely pays
the amount payable by similarly situated active senior-level
employees, the Company shall continue to provide medical coverage
for Executive and his eligible dependents until the earliest of
(x) one (1) year from his termination,
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