Exhibit 10.1
EMPLOYMENT
AGREEMENT
This EMPLOYMENT AGREEMENT (this
“Agreement”), dated as of August 10, 2009, is made by
and between Rexahn Pharmaceuticals, Inc., a Delaware corporation
(the “Company”), and Chang Ho Ahn (the
“Executive”).
W
I T N
E S S E T H
:
WHEREAS, the Company desires to employ the
Executive pursuant to the terms and conditions contained in this
Agreement; and
WHEREAS, the Executive desires to accept such
employment pursuant to the terms and conditions contained in this
Agreement;
NOW, THEREFORE, in consideration of the
premises, and of the mutual covenants and agreements hereinafter
contained, the parties hereto agree as follows:
1 .
Term . The
Executive’s employment under this Agreement shall commence on
the date first written above, and unless sooner terminated pursuant
to Section 7 below, shall continue through the third anniversary of
such date (hereinafter, such period of employment is referred to as
the “Term”). Should the Executive’s
employment continue beyond the Term, such employment shall become
“at-will,” unless the Company’s Board of
Directors (the “Board”) and the Executive agree to an
extension of the Term in a writing expressly referencing this
Agreement.
2 .
Title . During the Term, the
Executive will serve as the Chairman of the Board & Chief
Executive Officer of the Company.
3 .
Duties . During the Term,
the Executive will be responsible for such duties and
responsibilities as are consistent with his position or past
practices of the Company, or as may be assigned to him from time to
time by the Board. The Executive agrees to devote his
full time, attention, skill and energy to the duties set forth
herein and to the business of the Company, and to use his best
efforts to promote the success of the Company’s
business.
4.
Reporting .
During the Term, the Executive will report directly to the
Board.
5.
Location . During the
Term, the Executive shall be based in the Company’s
Rockville, Maryland offices. However, the Executive
acknowledges that in order to effectively perform his duties, he
will occasionally be required to travel for business
purposes.
6.
Compensation .
(a)
Base Salary . During the Term, the
Executive will receive an annual base salary of $350,000 (the
“Base Salary”), payable in accordance with the
Company’s normal payroll practices as in effect from time to
time. Such Base Salary shall be subject to periodic
review by the Compensation Committee of the Board (the
“Compensation Committee”), and may be increased in the
sole discretion of the Compensation Committee.
(b)
Annual Cash Bonus . During the Term,
the Executive shall be eligible to receive an annual
cash bonus for each fiscal year, as determined by the
Compensation Committee in its sole discretion. Any such
bonus shall be paid to the Executive within 60 days after the date
the Compensation Committee determines to award such
bonus. In order to receive any cash bonus payable
pursuant to this Section 6(b), the Executive must be actively
employed by the Company on the date on which such bonus is
scheduled to be paid to the Executive.
(c)
Stock Option Awards . During
the Term, the Executive shall be eligible for awards of options to
purchase shares of the Company’s common stock (the
“Stock Options”), such Stock Options to be awarded in
the sole discretion of the Compensation Committee and in accordance
with the terms of the Company’s Stock Option Plan, as such
Stock Option Plan may be amended, suspended or terminated from time
to time.
(d)
Additional Bonuses on Occurrence of Certain
Events . Periodically, and no less frequently than
once per year, the Compensation Committee will meet and determine
in its discretion whether the Executive should be entitled to
receive an additional bonus in consideration of his role in
bringing about such events:
(i) the
completion by the Company of a successful end-of-Phase 2
meeting with the Food and Drug Administration for any drug
candidate;
(ii) the
completion by the Company of pivotal trials of any drug
candidate;
(iii) the
filing by the Company of a New Drug Application with the Food and
Drug Administration with respect to any drug candidate;
(iv) the
approval by the Food and Drug Administration of a New Drug
Application filed therewith by the Company with respect to any drug
candidate;
(v) the
receipt by the Company of additional equity or debt financing;
or
(vi) the
execution by the Company of an agreement that may lead to the
payment to the Company of up-front or milestone
payments.
(d)
Vacation . During the Term, the Executive
shall be entitled to vacation benefits in accordance with the
Company’s vacation policy for management and
officers.
(e)
Benefits . During the Term,
and provided that the Executive satisfies, and continues to
satisfy, any plan eligibility requirements, the Executive shall be
entitled to participate in, and receive benefits under, any
retirement savings plan or welfare benefit plan made available by
the Company to similarly-situated Executives, as such plans may be
in effect from time to time.
(f)
Reimbursement of Business Expenses . The Company
will reimburse the Executive for all reasonable and
properly-documented business-related expenses incurred or paid by
him in connection with the performance of his duties
hereunder.
(g)
Term Life Insurance . The Company
shall provide the Executive, at the Company’s cost, with term
life insurance coverage in an amount equal to two times Base
Salary, for which the Executive may designate the
beneficiary.
(g)
Withholdings . All payments
made under this Section 6, or under any other provision of this
Agreement, shall be subject to any and all federal, state and local
taxes and other withholdings to the extent required by applicable
law.
7.
Termination of Employment .
(a)
Due to Death . The Executive’s
employment with the Company will automatically terminate
immediately upon his death.
(b)
Due to Disability . If the Executive
incurs a “Disability” (as defined below) during the
Term, then the Company, in its sole discretion, shall be entitled
to terminate the Executive’s employment immediately upon
written notice to the Executive of such decision. For
purposes of this Agreement, “Disability” shall mean a
physical or mental impairment that prevents the Executive from
performing the essential duties of his position, with or without
reasonable accommodation, for (i) a period of 90
consecutive calendar days or (ii) an aggregate of 90 work days in
any period of six months. The determination
of whether the Executive incurred a Disability shall be made by the
Board, in its sole discretion, after consultation with the
Executive’s physician.
(c)
By the Company With Cause . During
the Term, the Company shall be entitled to terminate the
Executive’s employment with “Cause” (as defined
below) by providing written notice to the Executive of such
decision. No advance notice period is required for a
termination by the Company with Cause. The Company
reserves the right to withdraw any and all duties and
responsibilities from the Executive, and to exclude the Executive
from the Company’s premises, upon delivery of such notice of
termination. For purposes of this Agreement,
“Cause” shall mean any of the following: (i)
the commission by the Executive of an act of malfeasance,
dishonesty, fraud or breach of trust against the Company or any of
its Executives, clients or suppliers; (ii) the breach by the
Executive of any of his obligations under this Agreement, or any
other agreement between the Executive and the Company; (iii) the
Executive’s failure to comply with the Company’s
written policies; (iv) the Executive’s failure, neglect or
refusal to perform his duties under this Agreement, or to follow
the lawful written directions of the Board; (v) the
Executive’s indictment, conviction of or plea of guilty or no
contest to, any felony or any crime involving moral turpitude; (vi)
any act or omission by the Executive involving dishonesty or fraud
or that is, or is reasonably likely to be, injurious to the
financial condition or business reputation of the Company, or that
otherwise is injurious to the Company’s Executives, clients
or suppliers; or (vii) the inability of the Executive, as a result
of repeated alcohol or drug use, to perform the duties and/or
responsibilities of his position.
(d)
By the Executive Without Good Reason
. During the Term, the Executive shall be entitled to
terminate his employment with the Company by providing the Company
with at least 30 days’ advance written notice of such
decision. The Company reserves the right to withdraw any
and all duties and responsibilities from the Executive, and to
exclude the Executive from the Company’s premises, upon
delivery of such notice of termination.
(e)
By the Company Without Cause
. During the Term, the Company shall be entitled to
terminate the Executive’s employment without Cause by
providing written notice to the Executive of such
decision. No advance notice period is required for a
termination by the Company without Cause. The Company
reserves the right to withdraw any and all duties and
responsibilities from the Executive, and to exclude the Executive
from the Company’s premises, upon delivery of such notice of
termination.
(f)
By the Executive With Good Reason .
(i)
The Executive may voluntarily terminate his
employment for “Good Reason” by notifying the Company
in writing, within 90 days after the initial existence of one of
the events below, that the Executive intends to terminate his
employment for Good Reason, and, if such Good Reason is not cured
in accordance with the cure provision set forth below, the
Executive must actually terminate employment no later than six
months following the initial existence of such Good Reason.
“Good Reason” means the occurrence of any of the
following events:
(A) a material diminution in the
Executive’s duties, responsibilities or authority
inconsistent with the Executive’s position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith that is
remedied by the Company after receipt of notice thereof given by
the Executive;
(B) A
change in the Executive’s reporting from solely and directly
to the Board;
(C) a
material reduction in the Executive’s Base Salary;
(D) the
Company’ requiring the Executive to be based at any office
that is more than 40 miles from the Executive’s current
office in Rockville, Maryland; or
(E) any
action or inaction by either of the Company that constitutes a
material breach of the terms and provisions of this Agreement (and
its Exhibits).
(ii) Anything
herein to the contrary notwithstanding, the Executive’s
employment shall not be terminated for Good Reason unless he
provides written notice to the Company stating the basis of such
termination and the Company fail to cure the action or inaction
that is such basis within 30 days after receipt of such
notice.
8.
Compensation Upon Termination of Employment .
(a)
Termination by Reason of Death, Disability, for
Cause or by the Executive . Subject to Section 8(c)
below, if the Executive’s employment is terminated pursuant
to Section 7(a), 7(b), 7(c) or 7(d) above, then the Company shall
pay to the Executive (or his estate, as appropriate), within 30
days of his termination date:
(i)
the Base Salary to which he is otherwise entitled for the
period ending on the termination date, and
(ii)
the Base Salary to which he is entitled for any accrued but
unused vacation days as of the termination date.
(b)
Other Termination . If the Executive’s
employment is terminated pursuant to Section 7(e) or 7(f) above,
but not under the circumstances contemplated by Section 8(c) below,
then the Company shall pay to the Executive, within 30 days of his
termination date (but in all cases subject to Section 8(d) below
and not before the applicable general release becoming effective in
accordance with its terms), the following amounts:
(i)
the Base Salary to which he is otherwise entitled for
the period ending on the termination date;
(ii)
the Base Salary to which he is entitled for any accrued but unused
vacation days as of the termination date; and
(iii) an
amount equal to his then current Base Salary for the period
beginning on the termination date ending upon the last day of the
Term.
(c)
Change of Control .
(i)
If the Executive’s employment is terminated by
the Company without Cause (and not as a result of death or a
Disability) and such termination date falls within the one-year
period immediately following a “Change of Control” (as
defined in the Company’s Stock Option Plan as in effect on
the date hereof) (a “Change in Control Termination”),
then the Company shall pay to the Executive, within 30 days of his
termination date (but in all cases subject to Section 8(d) below
and not before the applicable general release becoming effective in
accordance with its terms), the following amounts:
(A) the
Base Salary to which he is otherwise entitled for the period ending
on the termination date;
(B)
the Base Salary to which he is entitled for any accrued but unused
vacation days as of the termination date;.
(C) the
greater of (1) an amount equal to twice his then current annual
Base Salary and (2) an amount equal to his then current Base Salary
for the period beginning on the termination date ending upon the
last day of the Term; and
(D) an
amount equal to a pro-rata portion of the bonus to which the
Executive otherwise might have been entitled pursuant to Section
6(b) above, assuming for such purposes that the Executive would
have received a bonus for that fiscal year equal to one-half of his
then current Base Salary ( e.g. , if one-third of the fiscal
year elapsed prior to the termination date, then the Executive
would receive a bonus equal to one-third of one-half of his Base
Salary).
(ii) Following
a Change in Control Termination, the Company also shall provide the
Executive with continued coverage under the Company’s health
insurance plan for a period of 18 months following his termination
date, provided that the Executive makes a timely election to
continue such coverage under the federal law known as
“COBRA” (such continued coverage to run concurrently
with the Company’s obligations under COBRA and any other
similar state law).
(iii) Following
a Change in Control Termination, the Executive shall be required,
in good faith, to seek other employment with another employer in a
position comparable to his position with the Company, and otherwise
to mitigate the payment obligations of the Company set forth under
this Section 8(c). The obligations of the Company under
this Section 8(c) shall be reduced on a dollar-for-dollar basis
(and subject to set-off by the Company and to reimbursement by the
Executive) by the amount of any payments and the value of any
benefits (as such value is reasonably determined by the Company)
received by the Executive for services rendered to any other party
during the one-year period following the date of his
termination.
(iv) Immediately
prior to a Change in Control, all options, restricted stock and
other equity-based awards granted to the Executive by the Company
and held by him immediately prior to such a Change in Control shall
become immediately and fully vested and, in the case of stock
options, shall remain exercisable for their respective original
terms.
(d)
Release Required; Certain Limitations on the Company’s
Obligations Hereunder . The obligations of the
Company to the Executive under this Section 8 shall be subject to
the Executive’s execution of a customary general release in
favor of the Company, in the form of Exhibit A hereto or in
such other form reasonably satisfactory to the
Company. Other than as expressly set forth in this
Section, the Company shall have no payment or other obligations to
the Executive following a termination of his employment by the
Company.
9.
Confidential Information .
(a)
Non-Use and Non-Disclosure of Confidential
Information . The Executive acknowledges that,
during the course of his employment with the Company, he will have
access to information about the Company and/or its subsidiaries and
their clients and suppliers, that is confidential and/or
proprietary in nature, and that belongs to the Company and/or its
subsidiaries. As such, at all times, both during the
Term and thereafter, the Executive will hold in the strictest
confidence, and not use or attempt to use except for the benefit of
the Company and/or its subsidiaries, and not disclose to any other
person or entity (without the prior written authorization of the
Board) any “Confidential Information” (as defined
below). Notwithstanding anything contained in this
Section 9, the Executive will be permitted to disclose any
Confidential Information to the extent required by validly-issued
legal process or court order, provided that the Executive notifies
the Company and/or its subsidiaries immediately of any such legal
process or court order in an effort to allow the Company and/or its
subsidiaries to challenge such legal process or court order, if the
Company and/or its subsidiaries so elects, prior to the
Executive’s disclosure of any Confidential
Information.
(b)
No Breach . The Executive represents and
warrants that he has not and will not make unauthorized disclosure
to the Company of any confidential information or trade secrets of
any third party or otherwise breach any obligation of
confidentiality to any third party.
(c)
Definition of “Confidential Information”
. For purposes of this Agreement, “Confidential
Information” means any confidential or proprietary
information
