|
SECOND AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
This
Employment Agreement (the "Agreement"), is entered into as of
December 20, 2007 (the "Effective Date"), between LEV
PHARMACEUTICALS, INC., a Delaware corporation (with its
successors and assigns, referred to as the "Company"), and
Joshua Schein (referred to as "Schein").
WHEREAS,
the Company and Schein are party to an Employment Agreement
dated as of November 1, 2004, as amended and restated on
January 17, 2007 (the "Original Employment
Agreement");
WHEREAS,
the Company and Schein mutually desire to further amend and
restate the terms of such Original Employment Agreement upon
the terms and conditions set forth herein.
NOW,
THEREFORE, in consideration of the foregoing premises and of
the mutual agreements and covenants hereinafter set forth, the
parties hereto agree to the terms and conditions of this
Agreement as follows:
1.
Employment for Term .
The Company hereby continues to employ Schein and Schein hereby
accepts such continued employment with the Company for the period
beginning on the Effective Date and ending December 31, 2012, or
upon the earlier termination of the Term pursuant to Section 6 (the
"Initial Term"). This Agreement shall be automatically renewed for
additional one-year periods (the "Renewal Terms;" together with the
Initial Term, the "Term") unless either party notifies the other in
writing of its intention not to so renew this Agreement no less
than 90 days prior to the expiration of the Initial Term or a
Renewal Term. The termination of Schein's employment under this
Agreement shall end the Term but shall not terminate Schein's or
the Company's other obligations that are intended to survive the
termination of this Agreement (including without limitation, the
payments under Section 7 and 8 and Schein’s obligations under
Section 9).
2.
Position and Duties. During
the Term, Schein shall serve as Chief Executive Officer of the
Company, perform such duties as are consistent with his position
and report to the Board of Directors of the Company. During the
Term, Schein shall also hold such additional positions and titles
as the Board of Directors of the Company (the "Board") may
determine from time to time. During the Term, Schein shall devote
as much time as is necessary to satisfactorily perform his duties
as an employee and officer of the Company. The Company shall
nominate Schein, and use its best efforts to have Schein elected,
to the Board of Directors of the Company (the "Board") throughout
the Term of this Agreement and shall include him in the management
slate for election as a director at every stockholders meeting
during the Term at which his term as a director would otherwise
expire. Schein agrees to accept election, and to serve during the
Term, as director of the Company.
3.
Compensation .
(a)
Base Salary .
The Company shall continue to pay Schein a base salary of $425,000
per annum (as it may be increased (but not decreased) from time to
time including, without limitation, by virtue of this Section 3(a),
the "Base Salary"),
provided that such
Base Salary shall increase to $500,000 effective upon the date on
which FDA approval of the drug
Cinryze is
obtained (the "FDA Approval Date"). The Base Salary shall be
payable at least monthly on the Company's regular pay cycle for
professional employees.
(b)
Annual Increases .
The Base Salary shall be increased at the end of each year of
service (commencing at the end of 2007) by the greater of (i) 4% or
(ii) a percentage equal to the increase, if any, in the United
States Department of Labor Consumer Price Index (or comparable
index, if available) for the New York metropolitan area over the
previous 12 months.
(c)
Equity .
| |
(i)
|
On
the Effective Date, the Company shall grant to Schein 2,000,000
shares of restricted common stock of the Company (the "New
Restricted Stock"). The vesting schedule applicable to the New
Restricted Stock is as follows: 50% of the New Restricted Stock
shall vest and the restrictions thereon shall lapse on the FDA
Approval Date and thereafter 25% of the New Restricted Stock shall
vest and the restrictions thereon shall lapse on each of the first
and second anniversaries of the FDA Approval Date subject to
Schein’s continued employment on the applicable vesting
dates, except as provided below in Section 7. The New Restricted
Stock shall be evidenced by a restricted stock award agreement that
incorporates the terms herein, including, but not limited to,
granting Schein the election to have the Company withhold that
number of shares sufficient to satisfy the minimum tax withholding
obligations from the shares at the time of vesting to satisfy such
tax withholding obligation. In the event of a Change in Control (as
defined below), the unvested shares of New Restricted Stock shall
be assumed by the acquiring company and converted into restricted
stock of the acquiring company (or parent company) in a manner
designed to preserve the economic value of the New Restricted Stock
immediately prior to the Change in Control and in a manner
consistent with the treatment of other stockholders; provided that
if the consideration received in the Change in Control is in the
form of cash, the acquiring company (or the acquirer’s parent
company) may either assume such unvested shares of New Restricted
Stock as provided above or may pay Schein an amount in cash on each
applicable vesting date for such shares as if the New Restricted
Stock was assumed as provided above based upon the fair market
value of the acquiring company’s (or its parent’s)
capital stock on each of the applicable vesting dates. For the
purposes hereof, “fair market value” shall be either
(A) the average of the high and low or closing bid and asked prices
of the acquiring company’s (or its parent’s) capital
stock on each vesting date if such stock is listed for trading on a
national securities exchange, the NASDAQ Stock Market or is traded
on the over-the-counter bulletin board or (B) if the acquiring
company’s (or its parent’s) capital stock is not
publicly traded, then as determined by an independent valuation
company mutually acceptable to Schein and the acquirer. The award
agreement shall contain such other customary terms that are
consistent with the terms of the Company's 2004 Omnibus Incentive
Compensation Plan (the “Plan”).
|
| |
(ii) |
Schein has previously been granted a fully
vested option to purchase 1,427,450 shares at a per share exercise
price of $.30 under the Plan and such option will remain
outstanding through November 1, 2014 in accordance with the
applicable option agreement (the “2004
Options”). |
| |
(iii)
|
Pursuant
to the Plan, Schein was granted a nonqualified stock option to
purchase 1,600,000 shares of the Company's Common Stock at a per
share exercise price of $1.60 on January 17, 2007 (the "Jan 2007
Options"). The Jan 2007 Options will remain outstanding in
accordance with the applicable option agreement and the applicable
provisions of the Amended and Restated Employment Agreement with
Schein dated January 17, 2007 which are incorporated
herein.
|
| |
(iv)
|
The
Company covenants to maintain a Form S-8 Registration Statement on
file with the SEC with respect to the equity awards made to
Schein.
|
(d)
Bonus. Schein
shall be eligible to receive an annual cash bonus, the amount of
which to be determined in the discretion of the Compensation
Committee based upon its assessment of Schein’s and the
Company’s performance. Commencing in the fiscal year in which
the FDA Approval Date occurs, Schein’s bonus opportunity
shall be in a target range between 75% and 200% of Base Salary, 75%
being the bonus amount if the performance objectives are met by
Schein as determined by the Compensation Committee in its
reasonable discretion and the bonus amount shall increase to the
extent that the Compensation Committee may determine in its
discretion that Schein exceeded such objectives and engaged in
outstanding performance. Schein is entitled to such bonus so long
as he remains in the employ of the Company through the
end
of the applicable fiscal year, except as provided below. Any such
bonus for a particular fiscal year will be paid no later than the
following March 15 .
(e)
Other and Additional Compensation .
The preceding sections establish the minimum compensation during
the Term and shall not preclude the Compensation Committee from
awarding Schein a higher salary or any bonuses or stock options,
restricted stock or other forms of equity awards in the discretion
of the Committee during the Term at any time. The Company shall pay
Schein a monthly car allowance of $1,000.
4.
Employee Benefits .
During the Term, Schein shall be entitled to participate at the
same level as other senior executive officers of the Company in any
group insurance, hospitalization, medical, health and accident,
disability, fringe benefit and tax-qualified retirement plans or
programs of the Company now existing or hereafter established to
the extent that he is eligible under the general provisions
thereof. For the term of this Agreement, Schein shall be entitled
to paid vacation at the rate of (4) weeks per annum.
5.
Expenses .
The Company shall reimburse Schein for actual out-of-pocket
expenses incurred by him in the performance of his services for the
Company upon the receipt of appropriate documentation of such
expenses.
6.
Termination .
(a)
General .
The Term shall end immediately upon Schein's death. Schein’s
employment may also be terminated by the Company with or without
Cause or as a result of Schein’s Disability, as defined in
Section 7 or by Schein with or without Good Reason (as such terms
are defined below).
(b)
Notice of Termination .
Either party shall give written notice of termination to the other
party, which shall include a statement as to the reason for the
termination.
7.
Severance Benefits.
(a)
Cause Defined .
"Cause" means (i) willful malfeasance or willful misconduct by
Schein in connection with his employment; (ii) Schein's gross
negligence in performing any of his duties under this Agreement;
(iii) Schein's conviction of, or entry of a plea of guilty to, or
entry of a plea of nolo contendre with respect to, any crime other
than a traffic violation or infraction which is a misdemeanor; (iv)
Schein's material breach of any written policy applicable to all
employees adopted by the Company which is not cured to the
reasonable satisfaction of the Company within thirty (30) business
days after notice thereof; or (v) material breach by Schein of any
of his obligations in this Agreement which is not cured to the
reasonable satisfaction of the Company within thirty (30) business
days after notice thereof.
(b)
Disability Defined .
"Disability" shall mean (i) Schein's incapacity due to physical or
mental illness that results in his being substantially unable to
perform his duties hereunder for six consecutive months (or for six
months out of any nine month period) or (ii) a qualified
independent physician mutually acceptable to the Company and Schein
determines that Schein is mentally or physically disabled so as to
be unable to regularly perform the duties of his position and such
condition is expected to be of a permanent duration. During a
period of Disability while he remains an employee of the Company,
Schein shall continue to receive his Base Salary hereunder,
provided that if the Company provides Schein with disability
insurance coverage, payments of Schein's Base Salary shall be
reduced by the amount of any disability insurance payments received
by Schein due to such coverage. The Company shall give Schein
written notice of termination which shall take effect sixty (60)
days after the date it is sent to Schein unless Schein shall have
returned to the performance of his duties hereunder during such
sixty (60) day period (whereupon such notice shall become void). In
the event that the Company terminates Schein’s employment as
a result of his Disability, Schein shall be entitled to the same
benefits as if his employment had been terminated by the Company
without Cause.
(c)
Good Reason Defined .
If the Company (i) reassigns Schein's base of operations outside of
New York City, (ii) materially reduces Schein's duties,
responsibilities, positions or titles, authority, powers, functions
or reporting relationship during the Term, including, without
limitation, replacing Schein as Chief Executive Officer, (iii)
materially breaches this Agreement or (iv) provides notice of
nonrenewal of the Agreement pursuant to Section 1 of this Agreement
(each such event being "Good Reason") then, at his option, Schein
may treat such event as a termination of the Term without Cause by
the Company unless the Company has cured the event (if susceptible
to cure) within 30 business days of receipt of written notice from
Schein. For the sake of clarity, in the event of a Change in
Control and the Company becomes a subsidiary of another entity,
whether publicly or privately held, Schein’s duties,
responsibilities, power and authority will be deemed to have been
materially reduced even if he remains Chief Executive Officer of
the Company following the Change in Control unless Schein holds a
position with the parent company of authority equivalent to that
held pursuant to this Agreement.
(d)
Accrued Compensation Defined. Accrued
Compensation shall mean an amount which shall include all amounts
earned or accrued by Schein through the date of termination of this
Agreement but not paid as of such date, including (i) Base Salary,
(ii) reimbursement for business expenses incurred by the Schein on
behalf of the Company, pursuant to the Company’s expense
reimbursement policy in effect at such time, (iii) expense
allowance, (iv) vacation pay per Company policy, and (v) bonuses
and incentive compensation earned and awarded prior to the date of
termination. Accrued Compensation shall be paid on the first
regular pay date after the date of termination (or earlier, if
required by applicable law).
(e)
Termination .
(i) Cause; Without Good Reason. If the Company ends the Term for
Cause, or if Schein resigns as an employee of the Company for
reasons other than an event of Good Reason, then the Company shall
pay to Schein the Accrued Compensation but shall have no obligation
to pay Schein any amount, whether for salary, benefits, bonuses,
the New Restricted Stock, or other compensation or expense
reimbursements of any kind, accruing or vesting after the end of
the Term, and such rights shall, except as otherwise required by
law or pursuant to the applicable award agreement or plan
(including, without limitation, the document evidencing the 2004
Options), be forfeited immediately upon the end of the Term. For
the sake of clarity, the Jan 2007 Options, and the 2004 Options, to
the extent vested on the date of resignation without Good Reason
will remain outstanding through the expiration of the original ten
year term.
(ii)
Without Cause; Good Reason; Death. In the event that the
Company terminates Schein’s employment hereunder without
Cause, Schein terminates his employment with Good Reason or
his employment terminates as a result of his death, he shall
be entitled to the Accrued Compensation and, subject to
Section 21 below, the following payments and
benefits:
(A)
a lump sum payment equal to the greater of (x) or
(y):
(x)
(1) two times his Base Salary in effect at the date of
termination plus (2) two times the greater of (the "Applicable
Bonus") the bonus paid for the fiscal year prior to the date
of termination or 100% of his Base Salary in effect at the
date of termination plus (3) a pro rated bonus for the year of
termination based upon the Applicable Bonus; or
(y)
(1) Base Salary as if Schein remained in the employ of the
Company through December 31, 2012 plus (2) bonus payments as
if he remained in the employ of the Company through December
31, 2012 based upon the Applicable Bonus.
Notwithstanding
the foregoing, in the event of the termination of
Schein’s employment as a result of his death, the lump
sum payment pursuant to this Section 7(e)(ii)(A) shall be the
amount provided in (x) above.
The
lump sum payment contemplated by this Section 7(e)(ii)(A)
shall be made to the Executive six months after the date of
termination in accordance with the requirements of
Section 409A of the Internal Revenue Code of 1986, as
amended (“
Section 409A ”)
(except to the extent any future guidance issued by the Internal
Revenue Service under Section 409A does not subject such
payment to Section 409A or permits such earlier payment
without additional tax or penalty).
(B)
continued participation in the health and welfare plans (or
comparable plans) provided by the Company to Schein at the
time of termination for a period equal to the greater of two
years from the date of termination and December 31, 2012 or,
if earlier until he is eligible for comparable coverage with a
subsequent employer the “Extended Benefit
Period”);
provided that Schein shall (except to the extent any future
guidance issued by the Internal Revenue Service under
Section 409A does not subject the payment of such premiums by
the Company to Section 409A) pay the amount of the applicable
premiums for the first six months of the Extended Benefit Period in
accordance with the requirements of Section 409A, which amount
will be reimbursed to him in a lump sum at the end of such
six-month period .
Schein shall give the Company prompt notice of his eligibility of
comparable coverage.
(C)
the Jan 2007 Options shall be deemed fully vested on the date
of termination and any restrictions thereon shall lapse and
the Jan 2007 Options shall remain outstanding through the
expiration of the original ten year term.
(D)
subject to the provisions of Section 3(c)(i), the New
Restricted Stock shall remain outstanding and continue to vest
through the applicable vesting dates.
(E)
Release .
In the event that Schein’s employment is terminated by the
Company without Cause or by Schein for Good Reason and in
consideration of the payments described above and the Restrictive
Covenants (as defined below) and the mutual releases, the Company
and Schein will enter into an agreement that contains a mutual
release of claims in a form reasonably satisfactory to the
parties.
8.
Change in Control Payment .
The provisions of this paragraph 8 set forth the terms of an
agreement reached between Schein and the Company regarding Schein's
rights and obligations upon the occurrence of a "Change in Control"
(as hereinafter defined) of the Company during the Term. These
provisions are intended to assure and encourage in advance Schein's
continued attention and dedication to his assigned duties and his
objectivity during the pendency and after the occurrence of any
such Change in Control. The following provisions shall apply in the
event of a Change in Control, in addition to any payment or benefit
that may be required pursuant to Section 7.
(a)
Equity. Upon
the occurrence of a Change in Control, all stock options
(including, without limitation, the Jan 2007 Options) and other
stock-based grants (other than the New Restricted Stock) to Schein
by the Company or that may be granted in the future shall,
irrespective of any provisions of his award agreements, immediately
and irrevocably vest and become exercisable.
(b)
Termination Payments .
If Schein’s employment terminates for any reason following a
Change in Control (other than by the Company for Cause or by Schein
without Good Reason), he shall be entitled to the payments
described in Section 7(e)(ii) except that (i) the Base Salary
component of the payment shall be the greater of the Base Salary in
effect at the time of termination or $500,000 and (ii) the
reference to 100% of Schein's Base Salary in the definition of the
Applicable Bonus contained in Section 7(e)(ii)(A)(x)(1) shall be
deemed 200%. In the event that a Change in Control occurs within
eighteen months following Schein’s termination of employment
by the Company without Cause or by him for Good Reason and the
transaction that constituted such Change in Control was the subject
of substantive discussions at the time of such termination of
employment as evidenced by the Company and such potential acquirer
having enga
|
