Exhibit 10.3
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 Tae Heum (Ted) Jeong (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 Senior Vice President, Chief Financial
Officer & Secretary 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 Chief Executive
Officer.
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 $200,000 (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 Chief Executive Officer;
(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
proprieta
