Exhibit 10.65
IDM PHARMA, INC.
EMPLOYMENT AGREEMENT
This
Employment
Agreement (this “Agreement” )
is made and entered into effective as of August 27th, 2007 by
and among IDM Pharma
Inc. , a Delaware corporation (the
“Company” ) and Jeffrey W. Sherman,
M.D. (the “Executive” ). The Company
and the Executive are hereinafter collectively referred to as the
“Parties” , and individually referred to
as a “Party” .
Recitals
A. The Company desires
assurance of the association and services of the Executive in order
to retain the Executive’s experience, skills, abilities,
background and knowledge, and is willing to engage the
Executive’s services on the terms and conditions set forth in
this Agreement.
B. The Executive
desires to be in the employ of the Company, and is willing to
accept such employment on the terms and conditions set forth in
this Agreement.
Agreement
In consideration of the foregoing
Recitals and the mutual promises and covenants herein contained,
and for other good and valuable consideration, the Parties,
intending to be legally bound, agree as follows:
1. Employment.
1.1
Term. The Company hereby employs the Executive, and the
Executive hereby accepts employment by the Company, upon the terms
and conditions set forth in this Agreement. The term of this
Agreement shall begin on the Effective Date and shall continue
until it is terminated pursuant to Section 4 herein (the
“Term” ).
1.2
Title . The Executive shall have the title of Senior Vice
President Research and Development, Chief Medical Officer
(“CMO”) of the Company and shall serve in such other
capacity or capacities as the Board of Directors of the Company
(the “Board” ) may from time to time
prescribe.
1.3
Duties. The Executive shall do and perform all services, acts
or things necessary or advisable to manage and conduct the business
of the Company and which are normally associated with the position
of Senior Vice President Research and Development, Chief Medical
Officer. The Executive shall report to the President and Chief
Executive Officer.
1.4
Policies and Practices. The employment relationship between the
Parties shall be governed by the policies and practices established
by the Company and the Board. The Executive will acknowledge in
writing that he has read the Company’s Employee Handbook that
will govern the terms and conditions of his employment with the
Company, along with this Agreement. In the event that the terms of
this Agreement differ from or are in conflict with the
Company’s policies or practices or the Company’s
Employee Handbook, this Agreement shall control.
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2. Loyal and Conscientious Performance;
Noncompetition.
2.1
Loyalty . During the Executive’s employment by the
Company, the Executive shall devote Executive’s full business
energies, interest, abilities and productive time to the proper and
efficient performance of Executive’s duties under this
Agreement.
2.2
Covenant not to Compete . During the term of this Agreement,
and during any period in which the Executive receives severance
benefits from the Company, the Executive shall not engage in
competition with the Company and/or any of its controlled
Affiliates (as defined below), either directly or indirectly, in
any manner or capacity, as adviser, principal, agent, affiliate,
promoter, partner, officer, director, employee, stockholder, owner,
co-owner, consultant, or member of any association or otherwise, in
any phase of the business of developing, manufacturing and
marketing of products or services that are in the same field of use
or which otherwise compete with the products or services of the
Company, except with the prior written consent of the
Company’s Board. For purposes of this Agreement,
“Affiliate,” means, with respect to any
specific entity, any other entity that, directly or indirectly,
through one or more intermediaries, controls, is controlled by or
is under common control with such specified entity. Ownership by
the Executive, in professionally managed funds over which the
Executive does not have control or discretion in investment
decisions, or as a passive investment, of less than two percent
(2%) of the outstanding shares of capital stock of any corporation
with one or more classes of its capital stock listed on a national
securities exchange or publicly traded on the Nasdaq Stock Market
or in the over-the-counter market shall not constitute a breach of
this Section 2.2.
2.3
Agreement not to Participate in Company’s Competitors .
During the Term, the Executive agrees not to acquire, assume or
participate in, directly or indirectly, any position, investment or
interest known by Executive to be adverse or antagonistic to the
Company, its business or prospects, financial or otherwise or in
any company, person or entity that is, directly or indirectly, in
competition with the business of the Company or any of its
Affiliates. Ownership by the Executive, in professionally managed
funds over which the Executive does not have control or discretion
in investment decisions, or as a passive investment, of less than
two percent (2%) of the outstanding shares of capital stock of any
corporation with one or more classes of its capital stock listed on
a national securities exchange or publicly traded on the Nasdaq
Stock Market or in the over-the-counter market shall not constitute
a breach of this Section 2.3.
3. Compensation of the
Executive.
3.1
Base Salary. The Company shall pay the Executive a base salary
at the annualized rate of three hundred thousand dollars ($300,000)
per year ( “Base Salary” ), less payroll
deductions and all required withholdings, payable in regular
periodic payments in accordance with the Company’s normal
payroll practices. Such base salary shall be prorated for any
partial year of employment on the basis of a 365-day fiscal
year.
3.2
Discretionary Bonus. Provided the Executive meets the
conditions stated in this Section 3.2, the Executive shall be
eligible for an annual discretionary bonus (
“Bonus” ) of up to a maximum of
thirty-five percent (35%) of his annual salary, based on the
Board’s determination, in its sole discretion, of whether the
Executive has met such performance milestones as are established
for the Executive by the Board in consultation with the Executive (
“Performance Milestones” ). The
Performance Milestones will be based on certain factors
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including, but not limited to, the Executive’s performance
and the Company’s financial performance. The Board will have
the sole discretion to award any Bonus, to determine the amount of
any such Bonus, and to determine the timing of the payment of any
Bonus. The Executive must be employed on the date the Bonus is
awarded to be eligible for the Bonus. No pro-rata Bonus will be
available.
3.3
Stock Options. Subject to approval by the Board, to such
shareholder approval as may be required, and to the terms of the
Company’s 2000 Stock Plan, as amended (the
“Plan” ), the Executive shall be granted
an option to purchase one hundred thousand (100,000) shares of the
Company’s common stock (the
“Option” ). The exercise price of the
Option will be set at the closing price of the Company’s
common stock as quoted on the Nasdaq Global Market on the date of
the grant. The Option will vest daily in equal installments over a
period of four (4) years from the effective date of this
Agreement for so long as the Executive provides Continuous Service
(as defined in the Plan) to the Company.
3.4
Restricted Stock Award. Subject to approval by the Board and
the terms of the Plan, the Executive will be granted a stock award
covering twenty thousand (20,000) shares of the Company’s
common stock (the “Stock Award” ). Ten
thousand (10,000) shares of the Stock Award shall vest on the first
anniversary of the effective date of this Agreement and the
remaining ten thousand (10,000) shares of the Stock Award shall
vest on the second anniversary of the effective date of this
Agreement, provided in both instances that the Executive shall have
provided Continuous Service (as defined in the Plan) to the Company
through the vesting date(s). The Stock Award shares shall issue
upon the earlier of i) the fifth anniversary of the grant date; or
ii) the date upon which the Executive’s employment by the
Company terminates, subject to, in the case of either termination
by the Company of the Executive’s employment without
“Cause” (as defined below) or termination by the
Executive of the Executive’s employment for “Good
Reason” (as defined below), the Executive’s delivery of
a fully effective waiver and release as provided by
Section 4.4.3 of this Agreement in exchange for any
acceleration of shares provided by Section 4.4.3 (iii) or
(iv).
3.5
Signing Bonus. The Executive shall receive a signing bonus of
fifteen thousand Dollars ($15,000.00), less payroll deductions and
required withholdings, in connection with his assumption of the
duties specified in this Agreement, said bonus to be paid within
thirty (30) days of said assumption of duties.
3.6
Legal Review. Upon the Executive’s submission of
appropriate itemized proof and verification of reasonable and
customary legal fees incurred by the Executive in obtaining legal
advice associated with review of this Agreement, the Company shall
pay for such legal fees up to a maximum of two thousand dollars
($2,000) subject to receipt of appropriate proof and verification
of such legal fees.
3.7
Changes to Compensation. The Executive’s compensation may
be changed from time to time by mutual agreement of the Executive
and the Company.
3.8
Employment Taxes . All of the Executive’s compensation
shall be subject to customary withholding taxes and any other
employment taxes as are commonly required to be collected or
withheld by the Company.
3.9
Benefits . The Executive shall, in accordance with Company
policy and the terms of the applicable plan documents, be eligible
to participate in benefits under any
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executive benefit plan or arrangement which may be in effect from
time to time and made available to the Company’s executive or
key management employees, provided however, that the
Executive shall be entitled to at least four (4) weeks of paid
vacation annually.
4. Termination.
4.1
Termination By the Company . The Executive’s employment
with the Company may be terminated under the following
conditions:
4.1.1 Termination for Death or Disability . The
Executive’s employment with the Company shall terminate
effective upon the date of the Executive’s death or
“Complete Disability” (as defined in
Section 4.4.1), provided, however, that this
Section 4.1.1 shall in no way limit the Company’s
obligations to provide such reasonable accommodations to Executive
as may be required by law.
4.1.2 Termination by the Company For Cause . The Company may
terminate the Executive’s employment under this Agreement for
“Cause” (as defined in Section 4.5.3) by delivery
of written notice to the Executive specifying the Cause or Causes
relied upon for such termination, provided that such notice is
delivered within two (2) months following the occurrence of
any event or events constituting “Cause”. Any notice of
termination given pursuant to this Section 4.1.2 shall effect
termination as of the date of the notice or such date as specified
in the notice.
4.1.3 Termination by the Company Without Cause . The Company
may terminate the Executive’s employment under this Agreement
at any time and for any reason, or no reason. Such termination
shall be effective on the date the Executive is so informed or as
otherwise specified by the Company.
4.2
Termination By The Executive . The Executive may terminate his
employment with the Company at any time and for any reason or no
reason, including, but not limited, under the following
conditions:
4.2.1 Good Reason . The Executive may terminate his
employment under this Agreement for “Good Reason” (as
defined below in Section 4.5.2) by delivery of written notice
to the Company specifying the “Good Reason” relied upon
by the Executive for such termination, provided that such notice is
delivered within two (2) months following the occurrence of
any event or events constituting Good Reason.
4.2.2 Without Good Reason . The Executive may terminate the
Executive’s employment hereunder for other than Good Reason
upon thirty (30) days written notice to the Company.
4.3
Termination by Mutual Agreement of the Parties . The
Executive’s employment pursuant to this Agreement may be
terminated at any time upon a mutual agreement in writing of the
Parties. Any such termination of employment shall have the
consequences specified in such agreement.
4.4
Compensation Upon Termination .
4.4.1 Death or Complete Disability . If the
Executive’s employment shall be terminated by death or
Complete Disability as provided in Section 4.1.1, the
Company
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shall
pay to the Executive, and/or Executive’s heirs, the
Executive’s Base Salary and accrued and unused vacation
benefits earned through the date of termination at the rate in
effect at the time of termination, less standard deductions and
withholdings, and the Company shall thereafter have no further
obligations to the Executive and/or Executive’s heirs under
this Agreement, except to the extent that the Executive and/or
Executive’s heirs is/are eligible for benefits pursuant to
any insurance policies maintained by the Company in connection with
his death or Complete Disability, and except as otherwise provided
by law.
4.4.2 With Cause or Without Good Reason. If the
Executive’s employment shall be terminated by the Company for
Cause, or if the Executive terminates employment hereunder without
Good Reason, the Company shall pay the Executive’s Base
Salary and accrued and unused vacation benefits earned through the
date of termination at the rate in effect at the time of
termination, less standard deductions and withholdings, and the
Company shall thereafter have no further obligations to the
Executive under this Agreement, except as provided by law.
4.4.3 Without Cause or For Good Reason. If the Company
terminates the Executive’s employment without Cause or the
Executive terminates his employment for Good Reason, the Company
shall pay the Executive’s Base Salary and accrued and unused
vacation earned through the date of termination, at the rate in
effect at the time of termination subject to standard deductions
and withholdings. In addition, subject to the limitations stated in
Section 4.4.5 herein and upon the Executive’s furnishing
to the Company an effective waiver and release of claims (a form of
which is attached hereto as Exhibit A ), the Executive
shall be entitled to:
(i) the equivalent of the Executive’s annual
Base Salary in effect at the time of termination for a period of
six (6) months (the “Severance
Period” ), less standard deductions and withholdings,
to be paid over a period of six (6) months after the date of
termination pursuant to the Company’s standard payroll
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