Exhibit 99.2
SECOND AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
THIS SECOND AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is
entered into as of December 30, 2005, by and between STAR
SCIENTIFIC, INC., a Delaware corporation (the
“Company”), and PAUL L. PERITO
(“Executive”).
Recitals
A. The Company is engaged in the
commercialization of tobacco containing less toxins (principally
tobacco specific nitrosamines (“TSNA”)), development of
less toxic tobacco products and potentially reduced-risk tobacco
products, and the licensing, manufacture and sale of very low-TSNA
StarCured ® tobacco and tobacco products.
B. Executive is the Chairman of the
Board, President and Chief Operating Officer of the
Company.
C. The Company and Executive are
parties to a certain Amended and Restated Executive Employment
Agreement, dated as of June 14, 2002, as amended and modified
by that certain First Modification Agreement, dated as of
November 1, 2002 (the “First Modification”)
(collectively, the “Original Employment
Agreement”).
D. The Company and Executive desire
to modify and amend certain terms of the Original Employment
Agreement to consolidate all of the terms and conditions of the
Original Employment Agreement as so modified into a single amended
and restated employment agreement.
Agreement
NOW, THEREFORE, in consideration of
these premises, the mutual covenants and agreements of the parties
hereunder, and for other good and valuable consideration the
sufficiency and receipt of which are hereby acknowledged, the
parties hereto hereby agree as follows:
§ 1. Employment and
Duties .
1.1 Position . The Company
hereby employs Executive, and Executive hereby accepts employment
with the Company, as President and Chief Operating Officer of the
Company.
1.2 Duties . Executive agrees
to devote his best efforts, and shall have primary responsibility
within the Company, to oversee and manage (i) development and
management of the intellectual property, including all matters
relating to science and technology related to the Company’s
business and all related research and development, (ii) legal
affairs of the Company,
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including all matters concerning the
Company’s corporate governance and structure, securities laws
and other regulatory compliance, employment laws compliance and
counseling, contract negotiation and dispute resolution, and
litigation involving the Company, (iii) financial affairs of
the Company, (iv) government relations and lobbying concerning
the Company’s business and affairs, (v) public and
investor relations concerning the Company’s business and
affairs, and (vi) such other duties, including management and
oversight functions, consistent with the foregoing, assigned to him
by the Board of Directors of the Company (the “Board of
Directors”). Executive shall perform his duties in a
trustworthy, businesslike and loyal manner.
1.3 Authority to Select Counsel
and Government and Public Relations Professionals . Executive
shall have sole authority, subject only to confirmation and
ratification by the Board of Directors, to select all outside
counsel, lobbyists and other government relations professionals,
and public relations professionals as Executive deems necessary and
appropriate in the performance of his duties hereunder.
1.4 Reporting . Executive
shall report to the Board of Directors.
1.5 Place of Employment . The
Company shall maintain and pay all costs associated with the
Company’s Bethesda office which shall be the primary office
in which Executive shall perform his services hereunder, as well as
the Company’s primary office for the scientific and
regulatory functions of the company.
1.6 Change of Duties . The
duties of Executive may be modified from time to time by the mutual
consent of the Company and Executive without resulting in a
rescission of this Agreement. The mutual written consent of the
Company and Executive shall constitute execution of that
modification. Notwithstanding any such change, the employment of
Executive shall be construed as continuing under this Agreement as
so modified.
1.7 Devotion of Time to
Company’s Business . During the Term of this Agreement
(as such term is defined in Section 1.9. hereof),
Executive agrees (i) to devote substantially all of his
productive time, ability and attention to the business of the
Company during normal working hours, (ii) not to engage in any
other business duties or business pursuits whatsoever which
conflict with his duties to the Company, (iii) whether
directly or indirectly, not to render any services of a commercial
or professional nature to any individual, trust, partnership,
company, corporation, business, organization, group or other entity
(each, a “Person”) which conflict with his duties to
the Company, whether for compensation or otherwise, without the
prior written consent of the Board of Directors, and
(iv) whether directly or indirectly, not to acquire, hold or
retain more than a one percent (1%) interest in any business
competing with or similar in nature to the business of the Company
or any of its Affiliates (as such term is defined below);
provided, however , the expenditure of reasonable amounts of
time for litigation support, book projects, charitable,
professional educational or professional activities or, subject to
the foregoing, the making of passive personal investments shall not
be deemed a breach of this Agreement or require the prior written
consent of the Company if those activities do not materially
interfere with the services required of Executive under this
Agreement. For purposes of this Agreement, “Affiliates”
shall mean any Person that, directly or indirectly
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through one or more intermediaries,
controls or is controlled by, or is under common control with, the
Company.
1.8 Term . Unless sooner
terminated as provided in Section 4 hereof the term of
this Agreement shall commence on January 1, 2006 and shall
continue until December 31, 2006 (the “Term”), and
shall be renewable for successive one (1) year terms (each, a
“Renewal Term”) at the option of the Company. The
Company and Executive shall consult on extension of the Term as
soon as reasonably practicable in the month of September 2006.
Notice of renewal or, if applicable, the Company’s option not
to renew, shall be given to Executive in writing at least ninety
(90) days prior to the end of the Term or the applicable
Renewal Term, as the case may be. The Term, together with any
Renewal Terms shall be referred to in this Agreement as the
“Term of this Agreement.”
1.9 Observance of Company Rules,
Regulations and Policies . Executive shall duly, punctually and
faithfully perform and observe any and all rules, regulations and
policies which the Company may now or hereafter reasonably
establish governing the conduct of its business or its employees to
the extent such rules, regulations and policies are not in conflict
with this Agreement. Executive shall promptly provide written
notice to the Board of Directors of any such apparent conflict of
which Executive becomes aware.
§ 2. Compensation
.
2.1 Base Salary . During the
Term of this Agreement, the Company shall pay to Executive a base
salary of One Million Dollars ($1,000,000) per year (the
“Base Salary”), subject to increase from time to time
in the good faith discretion of the Board of Directors, payable in
arrears on a monthly or semi-monthly basis in accordance with the
Company’s standard payroll procedures in effect at the time
of payment.
2.2 Performance Bonuses . In
addition to the Base Salary, the Company shall pay to Executive
bonuses based on the Company’s performance and/or
Executive’s performance as follows:
(a) Discretionary/Special
Bonuses .
Based upon performance of the
Company as reflected by satisfaction of the performance goal listed
in Exhibit A , attached hereto, the Company shall pay
Executive a bonus in addition to Base Salary in such amount as may
be determined by the Board of Directors.
(b) Establishment of Annual Bonus
Performance Goals . The Company shall propose new performance
goals for purposes of determining additional annual bonuses payable
to Executive, in consultation with Executive. Upon determination of
the new performance goals, such performance goals shall be set
forth in a new exhibit or exhibits to replace Exhibit A ,
and the parties hereto shall execute and deliver an amendment to
this Agreement substituting such new exhibit or exhibits in lieu of
Exhibit A attached hereto, and making such other conforming
changes as may be necessary to reflect the new
performance
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goals and bonuses. The Company and
Executive will use their reasonable efforts to try to reach
agreement as to new performance goals by March 30,
2006.
2.3 Stock Options . The
Company and Executive acknowledge the entry on or about
April 27, 1999, into an agreement (the “1999
Option”) granting to Executive an option to purchase
1,000,000 shares of the Common Stock of the Company. The 1999
Option is hereby modified such that all references to
“Executive Employment Agreement therein shall be deemed to be
references to this Agreement (as the same may be modified, amended,
supplemented or replaced from time to time), with adjustments to
section references as necessary to reflect any renumbering or
movement of substantially similar sections from the Original
Employment Agreement to this Agreement. By way of example,
references to Sections 4(c), 4(e) and 4(f) of the “Executive
Employment Agreement” shall be deemed to be references to
Sections 4.3, 4.4 and 4.6, respectively, of this
Agreement.
2.4 Disposition Transaction .
Upon the occurrence of a Disposition Transaction, as defined below,
Executive shall be entitled to receive for each share of common
stock then owned by Executive and for each vested but unexercised
share subject to Executive’s Stock Option, consideration per
share of not less than, and payable on the same terms as, the
consideration per share received by Francis O’Donnell, Jr.,
M.D., Jonnie R. Williams, and/or Regent Court Technologies, L.L.C.,
as a result of the Disposition Transaction, and/or to participate
on terms no less favorable than terms available to Francis
O’Donnell, Jr., M.D., Jonnie R. Williams, and/or Regent Court
Technologies, L.L.C., in the case of a Deposition Transaction
involving issuance by the Company of shares of its stock in an
offering pursuant to a registration statement filed with the
Securities Exchange Commission. A “Disposition
Transaction” shall occur if at any time after the date
hereof, the Company, Francis O’Donnell, Jr., M.D., Jonnie R.
Williams, or Regent Court Technologies, L.L.C., or any combination
thereof (a) accepts any offer to purchase thirty percent
(30%) or more of the aggregate shares of capital stock of the
Company actually or beneficially owned by Francis O’Donnell,
Jr., M.D., Jonnie R. Williams, and/or Regent Court Technologies,
L.L.C., and/or (b) accepts any offer to purchase shares of the
capital stock of the Company constituting at least fifty percent
(50%) of all of the then outstanding shares of the Company,
and/or (c) accepts any offer to merge or consolidate the
Company, or enter into a share exchange, with another corporation
or entity, and/or (d) accepts any offer to sell all or
substantially all of the assets of the Company, and/or
(e) accepts any other offer to enter into a transaction the
result of which will be to transfer voting control of the Company
to any party other than Francis O’Donnell, Jr., M.D., Jonnie
R. Williams, and/or Regent Court Technologies, L.L.C. The Company
covenants and agrees not to enter into any Disposition Transaction
that does not expressly recognize and give effect to the terms of
this Section 2.4 .
2.5 Incentive Plans . In
addition to all other benefits and compensation provided by this
Agreement, Executive shall be eligible to participate in such of
the Company’s equity, compensation and incentive plans as are
generally available to any of the management executives of the
Company, including without limitation any executive and performance
bonus or incentive plans.
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2.6 Vacation . Executive
shall be entitled to such annual vacation time with full pay as the
Company may provide in its standard policies and practices for any
other management executives; provided, however, that in any
event Executive shall be entitled to a minimum of twenty
(20) days annual paid vacation time.
2.7 Directors and Officers
Liability Insurance; Professional Liability Insurance .
Executive shall be entitled to participation in, and have the
benefit of directors and officers liability insurance providing
coverage in an amount of less than that provided by the Company for
its Chief Executive Officer and/or Chairman of the Board. The
Company shall acquire and maintain professional liability insurance
for Executive insuring against any claims against Executive arising
from his performance of legal services to the Company while acting
in his capacity as an officer and employee of the
Company.
2.8 Term Life Insurance . The
Company shall maintain the term life insurance policy in the amount
of $5,000,000 presently provided by the Company with the Perito
1995 Family Trust U/A/D 53195, Robin Crawford Perito, Trustee, as
beneficiary thereunder, and shall pay the premiums due on such
policy and maintain such policy in full force and effect during the
Term of this Agreement.
2.9 Disability Insurance .
The Company shall maintain the disability insurance policy
presently provided by the Company and the Company shall pay the
premiums due on such policy and maintain such policy in full force
and effect during the Term of this Agreement.
2.10 Automobile . The Company
will furnish Executive with an automobile equipped with a car
telephone and will reimburse Executive all reasonable costs and
expenses relating to Executive’s use of such automobile and
car telephone, including without limitation, amounts incurred for
insurance, gas and general maintenance and repairs.
2.11 Mobile Telephone .
Executive shall have use of a wireless mobile telephone of his
choice and the Company will be responsible for payment of all
business usage charges and all usual operational and maintenance
expenses associated with the use by Executive of such
telephone.
2.12 Club Dues . The Company
shall reimburse Executive for monthly and/or annual dues related to
Executives membership in the City Club, Georgetown Club, University
Club and Kenwood Golf Club.
2.13 Outside Counsel for
Executive . In order for Executive to have the benefit of
counsel to advise and counsel Executive with respect to the
employment issues relating to terms of this Agreement, the Company
shall pay the reasonable attorneys’ fees and expenses
incurred by Executive in connection with such advise and counsel
and the drafting and execution of this Agreement.
2.14 Other Benefits .
Executive shall participate in and have the benefits of all present
and future vacation, holiday, paid leave, unpaid leave, life,
accident, disability, dental, vision and health insurance plans,
pension, profit-sharing and savings plans and all other
plans
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and benefits which the Company now
or in the future from time to time makes available to any of its
management executives.
2.15 Withholding . The
parties shall comply with all applicable legal withholding
requirements in connection with all regular monthly and/or
bi-monthly compensation payable to Executive hereunder.
§ 3. Expense
Reimbursement .
3.1 General Business Expenses
. The Company shall reimburse Executive for all business travel and
other out-of-pocket expenses reasonably incurred by Executive in
the course of performing his duties under this Agreement. All
reimbursable expenses shall be appropriately documented and shall
be in reasonable detail and in a format and manner consistent with
the Company’s expense reporting policy, as well as applicable
federal and state tax record keeping requirements.
3.2 Professional Educational
Expenses and Fees . In addition, the Company shall reimburse
Executive for (i) all reasonable expenses incurred for
continuing education courses required to maintain Executive’s
professional status and bar membership as an attorney, and
(ii) all reasonable professional fees, licenses, and dues
associated with Executive’s professional status and bar
membership as an attorney.
§ 4. Termination and Rights
on Termination . This Agreement shall terminate upon the
occurrence of any of the following events:
4.1 Death . Upon the death of
Executive, in which event the Company shall, within thirty
(30) days of receiving notice of such death, pay
Executive’s estate all salary and other compensation
hereunder, then due and payable and all accrued vacation pay and
bonuses, if any, in each case payable or accrued through the date
of death. In addition, the Company shall pay Executive’s
estate, at the time or times otherwise payable under the terms of
this Agreement, all salary and accrued benefits that would have
been payable hereunder by the Company to Executive during the one
year period immediately following Executive’s death. Any
payment due under this Section 4.1 may be funded by one
or more policies of life insurance to be purchased by the Company
and which provide for a benefit in the amount payable to Executive
as beneficiary under such policy or policies equal to that due
Executive under this Section. In the event the Company purchases
such policy or policies and thereafter maintains such policy or
policies in continuous and full force and effect during the term
hereof, then Executive agrees to look solely to such policy or
policies for payment of any amount due hereunder; provided,
however, that in the event the Company does not purchase such
policy or policies and thereafter maintain such policy or policies
in continuous and full force and effect during term hereof, then
the Company shall be directly and fully obligated to Executive for
such payment.
4.2 Dis
