EXHIBIT
10.5
EMPLOYMENT
AGREEMENT
This Employment Agreement
(“Agreement”) is made as of the 16th day of October,
2009 (the “Effective Date”) between Alfacell
Corporation, a Delaware corporation (the “Company”),
and Charles Muniz (the “Executive”).
WHEREAS, the Company desires to continue
to employ the Executive and the Executive desires to continue to be
employed by the Company on the terms contained herein.
NOW, THEREFORE, in consideration of the
mutual covenants and agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1.
Position and Duties
. The Executive shall serve as the
President, Chief Executive Officer and Chief Financial Officer of
the Company, and shall have supervision and control over and
responsibility for the day-to-day business and affairs of the
Company and shall have such other powers and duties as may from
time to time be prescribed by the Board of Directors of the Company
(the “Board”), provided that such duties are consistent
with the Executive’s position. The Executive shall
devote his full working time and efforts to the business and
affairs of the Company. Notwithstanding the foregoing, the
Executive may serve on other boards of directors, with the approval
of the Board, or engage in religious, charitable or other community
activities as long as such services and activities are disclosed to
the Board and do not materially interfere with the
Executive’s performance of his duties to the Company as
provided in this Agreement.
2.
Term . The Executive’s term of employment
under this Agreement starts on the Effective Date of this Agreement
and continues until the earlier of (i) the two-year
anniversary of the Effective Date and (ii) termination
pursuant to Section 4 below (the “Term”); provided
that the Term shall automatically renew for successive 1-year
periods unless terminated in writing by either party 30 days prior
to the end of the Term in accordance with Section 4
hereof.
3.
Compensation and Related
Matters .
(a)
Base Salary . The Executive’s initial annual base
salary shall be $300,000. The Executive’s base salary
shall be redetermined annually by the Board or the Compensation
Committee. The base salary in effect at any given time is
referred to herein as “Base Salary.” The Base
Salary shall be payable in a manner that is consistent with the
Company’s usual payroll practices for senior
executives.
(b)
Incentive Compensation
. The Executive shall be eligible
to receive cash incentive compensation or annual stock option
awards as determined by the Board or the Compensation Committee
from time to time. To earn incentive compensation or be
awarded annual stock option awards, the Executive must be employed
by the Company on the day such incentive compensation is paid or
such awards are granted.
(c)
Expenses . The Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by him in
performing services hereunder, in accordance with the policies and
procedures then in effect and established by the Company for its
senior executive officers.
(d)
Other Benefits . The Executive shall be entitled to continue
to participate in or receive benefits under all of the
Company’s Employee Benefit Plans in effect on the date
hereof, or under plans or arrangements that provide the Executive
with benefits at least substantially equivalent to those provided
under such Employee Benefit Plans. As used herein, the term
“Employee Benefit Plans” includes, without limitation,
each pension and retirement plan; supplemental pension, retirement
and deferred compensation plan; savings and profit-sharing plan;
stock ownership plan; stock purchase plan; stock option plan; life
insurance plan; medical insurance plan; disability plan; and health
and accident plan or arrangement established and maintained by the
Company on the date hereof for employees of the same status within
the hierarchy of the Company. The Executive shall be entitled
to participate in or receive benefits under any employee benefit
plan or arrangement which may, in the future, be made available by
the Company to its executives and key management employees, subject
to and on a basis consistent with the terms, conditions and overall
administration of such plan or arrangement. Any payments or
benefits payable to the Executive under a plan or arrangement
referred to in this Section 3(d) in respect of any calendar
year during which the Executive is employed by the Company for less
than the whole of such year shall, unless otherwise provided in the
applicable plan or arrangement, be prorated in accordance with the
number of days in such calendar year during which he is so
employed. Should any such payments or benefits accrue on a
fiscal (rather than calendar) year, then the proration in the
preceding sentence shall be on the basis of a fiscal year rather
than calendar year.
(e)
Vacations . The Executive shall be entitled to accrue up
to 20 paid vacation days in each year, which shall be accrued
ratably. The Executive shall also be entitled to all paid
holidays given by the Company to its executives.
(f)
Stock Options . On the effective date the Executive shall be
granted an option (the “Option”) to purchase an
aggregate of 500,000 shares of the common stock of the Company (the
“Common Stock”). The Option shall be granted under and
in accordance with the Company’s 2004 Stock Incentive Plan
(the “Stock Plan”). The exercise price of the Option
shall be the fair market value as of the date the Option is granted
determined in accordance with the terms of the Stock Plan. The
exercise term of the Option shall be ten years from the date the
Option is granted. The Option shall vest as follows: 33.33% of the
Option shall vest on October 16, 2010; 33.33% of the Option shall
vest on October 16, 2011; and the remaining unvested portion of the
Option shall vest on October 16, 2012. In the event the
Executive’s employment with the Company is terminated for any
reason, the Option shall terminate as to shares that are unvested
as of the date of such termination. In the event the
Executive’s employment with the Company is terminated for any
reason other than for Cause in accordance with Section 3(c)
hereof, the Option shall remain exercisable as to the shares that
have vested as of the date the Executive’s employment is
terminated for a period that ends on the earlier of (i) the
original termination date of the Option and (ii) six months after
the date the Executive’s employment is terminated.
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4.
Termination . The Executive’s employment hereunder
may be terminated without any breach of this Agreement under the
following circumstances:
(a)
Death . The Executive’s employment hereunder
shall terminate upon his death.
(b)
Disability . The Company may terminate the
Executive’s employment if he is disabled and unable to
perform the essential functions of the Executive’s then
existing position or positions under this Agreement with or without
reasonable accommodation for a period of 180 days (which need not
be consecutive) in any 12-month period. If any question shall
arise as to whether during any period the Executive is disabled so
as to be unable to perform the essential functions of the
Executive’s then existing position or positions with or
without reasonable accommodation, the Executive may, and at the
request of the Company shall, submit to the Company a certification
in reasonable detail by a physician selected by the Company to whom
the Executive or the Executive’s guardian has no reasonable
objection as to whether the Executive is so disabled or how long
such disability is expected to continue, and such certification
shall for the purposes of this Agreement be conclusive of the
issue. The Executive shall cooperate with any reasonable
request of the physician in connection with such certification.
If such question shall arise and the Executive shall fail to
submit such certification, the Company’s determination of
such issue shall be binding on the Executive. Nothing in this
Section 4(b) shall be construed to waive the Executive’s
rights, if any, under existing law including, without limitation,
the Family and Medical Leave Act of 1993, 29 U.S.C. §2601
et seq . and the Americans with Disabilities Act, 42 U.S.C.
§12101 et seq.
(c)
Termination by Company for
Cause . The Company may
terminate the Executive’s employment hereunder for Cause by a
vote of the Board at a meeting of the Board called and held for
such purpose. For purposes of this Agreement,
“Cause” shall mean: (i) conduct by the
Executive constituting a material act of misconduct in connection
with the performance of his duties, including, without limitation,
misappropriation of funds or property of the Company or any of its
subsidiaries or affiliates other than the occasional, customary and
de minimis use of Company property for personal purposes;
(ii) the commission by the Executive of any felony or a
misdemeanor involving moral turpitude, deceit, dishonesty or fraud,
or any conduct by the Executive that would reasonably be expected
to result in material injury or reputational harm to the Company or
any of its subsidiaries and affiliates if he were retained in his
position; (iii) continued non-performance by the Executive of
his duties hereunder (other than by reason of the Executive’s
physical or mental illness, incapacity or disability) which has
continued for more than 30 days following written notice of such
non-performance from the Board; (iv) a breach by the Executive
of any of the provisions contained in Section 8 of this
Agreement; (v) a material violation by the Executive of the
Company’s written employment policies, or (vi) failure
to cooperate with a bona fide internal investigation or an
investigation by regulatory or law enforcement authorities, after
being instructed by the Company to cooperate, or the willful
destruction or failure to preserve documents or other materials
known to be relevant to such investigation or the inducement of
others to fail to cooperate or to produce documents or other
materials in connection with such investigation.
(d)
Termination Without Cause
. The Company may terminate the
Executive’s employment hereunder at any time without Cause.
Any termination by the
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Company of the Executive’s
employment under this Agreement which does not constitute a
termination for Cause under Section 4(c) and does not result
from the death or disability of the Executive under
Section 4(a)or (b) shall be deemed a termination without
Cause.
(e)
Termination by the
Executive . The
Executive may terminate his employment hereunder at any time for
any reason, including but not limited to Good Reason. For
purposes of this Agreement, “Good Reason” shall mean
that the Executive has complied with the “Good Reason
Process” (hereinafter defined) following the occurrence of
any of the following events: (i) a material diminution
in the Executive’s responsibilities, authority or duties;
(ii) a material diminution in the Executive’s Base
Salary except for across-the-board salary reductions based on the
Company’s financial performance or condition similarly
affecting all or substantially all senior management employees of
the Company; (iii) a material change in the geographic
location at which the Executive provides services to the Company;
or (iv) the material breach of this Agreement by the Company.
“Good Reason Process” shall mean that
(i) the Executive reasonably determines in good faith that a
“Good Reason” condition has occurred; (ii) the
Executive notifies the Company in writing of the first occurrence
of the Good Reason condition within 60 days of the first occurrence
of such condition; (iii) the Executive cooperates in good
faith with the Company’s efforts, for a period not less than
30 days following such notice (the “Cure Period”), to
remedy the condition; (iv) notwithstanding such efforts, the
Good Reason condition continues to exist; and (v) the
Executive terminates his employment within 60 days after the end of
the Cure Period. If the Company cures the Good Reason
condition during the Cure Period, Good Reason shall be deemed not
to have occurred.
(f)
Notice of Termination
. Except for termination as
specified in Section 4(a), any termination of the
Executive’s employment by the Company or any such termination
by the Executive shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this
Agreement, a “Notice of Termination” shall mean a
notice which shall indicate the specific termination provision in
this Agreement relied upon.
(g)
Date of Termination
. “Date of Termination”
shall mean: (i) if the Executive’s employment is
terminated by his death, the date of his death; (ii) if the
Executive’s employment is terminated on account of disability
under Section 4(b) or by the Company for Cause under
Section 4(c), the date on which Notice of Termination is
given; (iii) if the Executive’s employment is terminated
by the Company under Section 4(d), 30 days after the date on
which a Notice of Termination is given; (iv) if the
Executive’s employment is terminated by the Executive under
Section 4(e) without Good Reason, 30 days after the date on
which a Notice of Termination is given, and (v) if the
Executive’s employment is terminated by the Executive under
Section 4(e) with Good Reason, the date on which a Notice of
Termination is given after the end of the Cure Period.
Notwithstanding the foregoing, in the event that the
Executive gives a Notice of Termination to the Company, the Company
may unilaterally accelerate the Date of Termination and such
acceleration shall not result in a termination by the Company for
purposes of this Agreement.
5.
Compensation Upon
Termination .
(a)
Termination Generally
. If the Executive’s
employment with the Company is terminated for any reason, the
Company shall pay or provide to the Executive (or to his
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authorized representative or estate) any
earned but unpaid base salary, incentive compensation earned but
not yet paid, unpaid expense reimbursements, accrued but unused
vacation and any vested benefits the Executive may have under any
employee benefit plan of the Company (the “Accrued
Benefit”) on or before the time required by law but in no
event more than 30 days after the Executive’s Date of
Termination.
(b)
Termination by the Company Without
Cause or by the Executive with Good Reason . If the Executive’s employment is
terminated by the Company without Cause as provided in
Section 4(d), or the Executive terminates his employment for
Good Reason as provided in Section 4(e), then the Company
shall, through the Date of Termination, pay the Executive his
Accrued Benefit. In addition:
(i)
subject to the Executive signing a
general release of claims in favor of the Company and related
persons and entities in a form and manner satisfactory to the
Company (the “Release”) within the 21-day period
following the Date of Termination and the expiration of the
seven-day revocation period for the Release, the Company shall pay
the Executive an amount equal to the Executive’s current
annual Base Salary (the “Severance Amount”). The
Severance Amount shall be paid out in substantially equal
installments in accordance with the Company’s payroll
practice over 12 months, beginning on the first payroll date that
occurs 30 days after the Date of Termination. Solely for
purposes of Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), each installment payment is
considered a separate payment. Notwithstanding the foregoing,
if the Executive breaches any of the provisions contained in
Section 8 of this Agreement, all payments of the Severance
Amount shall immediately cease; and
(ii)
subject to the Executive’s
copayment of premium amounts at the active employees’ rate,
the Executive may continue to participate in the Company’s
group health, dental and vision program for 18 months; provided,
however, that the continuation of health benefits under this
Section shall reduce and count against the Executive’s rights
under the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended (“COBRA”).
6.
Change in Control Payment
. The provisions of this
Section 6 set forth certain terms of an agreement reached
between the Executive and the Company regarding the
Executive’s rights and obligations upon the occurrence of a
Change in Control of the Company. These provisions are
intended to assure and encourage in advance the Executive’s
continued attention and dedication to his assigned duties and his
objectivity during the pendency and after the occurrence of any
such ev
