Employment Agreement - EntreMed Inc. and John W. Holaday Jr.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made this 1st day of January, 1999 by
and between ENTREMED, INC., a Delaware corporation having its principle office
at 9610 Medical Center Drive, Suite 200, Rockville, MD 20850 (the "Company") and
Dr. John W. Holaday, Jr., an individual residing at 6502 Hillmead Road,
Bethesda, MD 20817 ("Dr. Holaday").
FOR AND IN CONSIDERATION of the mutual premises, agreements and covenants
contained herein, the parties hereto, intending to be legally bound, do hereby
agrees as follows:
1. Employment; Position and Duties
The Company hereby agrees to employ Dr. Holaday to act as, and to exercise all
of the powers and functions of, its Chief Executive Officer and Chairman during
the Term hereof (as set forth in paragraph 4 herein) and to perform such acts
and duties and to generally furnish such services to the Company and its
subsidiaries (if any) as is customary for a senior management person with a
similar position in like companies; and he shall have such specific powers,
duties and Chief Executive Officer and Chairman responsibilities as the Board of
Directors of the Company (the "Board") shall from time to time reasonably
prescribe, provided that such duties are consistent with Dr. Holaday's senior
management position. Dr. Holaday hereby agrees to accept such employment and
shall perform and discharge faithfully, diligently, and to the best of his
abilities such duties and responsibilities and shall devote sufficient working
time and efforts to the business and affairs of the Company and its
subsidiaries; provided however, that, to the extent consistent with the needs of
the Company, Dr. Holaday shall be entitled to expend a reasonable amount of time
on civic, public, industry, and philanthropic activities and on the management
of his own investments and assets.
2. Place of Employment
During his employment hereunder, Dr. Holaday's principle place of employment
shall be located at the Company's corporate headquarters, wherever located as
designated from time to time by the Board; provided however, that
notwithstanding the foregoing Dr. Holaday shall be required to conduct his
duties and responsibilities hereunder (except for routine and customary business
travel) primarily from the executive offices located in Rockville, Maryland.
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3. Compensation
(a) Base Salary. The Company shall pay to Dr. Holaday an annual base salary
("Base Salary") of $325,000, payable in accordance with the Company's customary
payroll policy for its executives, and subject to applicable tax and payroll
deductions.
(b) Base Salary Adjustments. Dr. Holaday's Base Salary shall be reviewed
annually by the Company's Board of Directors which may make such upward
adjustments as within its discretion deems appropriate; however, the base salary
will be increased by at least a minimum of a 10% annually.
(c) Incentive Compensation. Dr. Holaday's Incentive Compensation, if any,
shall be determined annually by the Company's Board of Directors.
(d) Certain Other Benefits. During the Term of this Agreement, Dr. Holaday
shall be entitled to equally participate in any and all employee benefit plans
and arrangements which are available to senior executive officers of the
company, including without limitation, group medical and life insurance plans,
and automobile expense reimbursement allowances or company-provided automobiles.
4. Term
The term of Dr. Holaday's employment with the Company shall be for a three-year
period commencing January 1, 1999, or earlier and continuing through December
31, 2001 (the "Initial Term"); provided, however, that this Agreement shall be
automatically renewed for successive one-year periods (each a "Successor Term";
and together with the Initial Term, generally referred to "The Term") unless
either party hereto gives written notice of termination to the other party at
least twelve months prior to the expiration of the Initial Term or of any
Successor Term. By way of illustration, if neither party gives to the other
party a written notice of termination by December 31, 2000, this Agreement shall
be automatically renewed for a one-year period ending on December 31, 2002.
5. Stock Options
Periodic stock and incentive stock option grants to Dr. Holaday if any, shall be
determined by the Board of Directors.
6. Unauthorized Disclosure
While employed by the Company, Dr. Holaday shall not, without the written
consent of the Company, disclose to any person, other than person to whom
disclosure is reasonably necessary or appropriate in connection with the
performance by Dr. Holaday of his duties as an executive officer of the Company,
any material confidential information obtained by Dr. Holaday while in the
employ of the Company with respect to the businesses of the Company or any of
its subsidiaries, including but not limited to, operations, pricing, contractual
or personnel date, products, discoveries, improvements, trade secrets, license
agreements, marketing information, suppliers, dealers, principles, customers, or
methods of distribution, or any other confidential information the disclosure of
which knows, or in the exercise of reasonable care should know will be damaging
to the Company; provided,
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however, that confidential information shall not include any information known
generally to the public (other than as a result of unauthorized disclosure by
Dr. Holaday) or any information so otherwise considered by the Company to be
confidential.
7. Indemnification of Dr. Holaday
The Company shall immediately indemnify Dr. Holaday if Dr. Holaday is made a
party, or threatened to be made a party, to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative, or
investigative, because Dr. Holaday is or was an officer or director or the
Company or any of its subsidiaries, affiliates, or successors, against expenses
(including reasonable attorneys fees and disbursements), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding to the fullest extent and in the manner set
forth in a permitted by the General Corporation Law of the State of Delaware and
any other applicable law in effect from time to time and reimburse such costs as
incurred, but in any event no later than 30 days from date of presentment to the
Company. Such presentment may at the option of Dr. Holaday be in the form of an
invoice directly from Dr. Holaday's attorney or other provider, and in this
event, the Company agrees to reimburse said provider directly, as opposed to
having Dr. Holaday pay the invoice and then seek reimbursement from the Company.
8. Termination
(a) Termination Upon Death. If Dr. Holaday dies during the Term of this
Agreement, Dr. Holaday's legal representatives shall be entitled to receive the
Base Salary through the last day of the twelve months following the month in
which Dr. Holaday's death occurred. If in respect of the fiscal year in which
Dr. Holaday dies he would otherwise have been entitled to receive incentive
compensation under paragraph 3(c) by reason of the operations of the Company
during such fiscal year, Dr. Holaday's legal representatives shall be entitled
to receive a pro rata portion of such incentive compensation determined by
multiplying the dollar amount of the incentive compensation involved by a
fraction, the numerator of which shall be the number of complete calendar months
that elapsed during the fiscal year through the end of the month in which Dr.
Holaday died and denominator of which shall be twelve.
(b) Termination Upon Disability or Incapacity. The Company may terminate
Dr. Holaday's employment hereunder at the end of any calendar month by giving
written notice of termination to Dr. Holaday in the event of Dr. Holaday's
incapacity due to physical or mental illness which prevents the proper
performance of the duties of Chief Executive Officer as set forth herein or
established pursuant hereto for a substantial portion of any six-month period of
Dr. Holaday's Term of employment hereunder. Any questions as to the existence or
extent of illness or incapacity of Dr. Holaday, upon which the Company and Dr.
Holaday cannot agree, shall be determined by a qualified independent physician
selected by the Company and approved by Dr. Holaday(or, if Dr. Holaday is unable
to give such approval, by any adult member of the immediate family or the duly
appointed guardian of Dr. Holaday). The determination of such physician
certified in writing to the Company and to Dr. Holaday shall be final and
conclusive for all purposes
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of this Agreement. In the event of any such termination pursuant to this
subparagraph 8(b), Dr. Holaday shall be entitled to receive his Base Salary
through the last day of the six months in which this Agreement is terminated.
If in respect of the fiscal year in which Dr. Holaday's employment terminates
pursuant to his subparagraph 8(b) he would otherwise have been entitled to
receive incentive compensation under paragraph 3(c) by reason of the operations
of the Company during such fiscal year, Dr. Holaday shall be entitled to receive
a pro rata portion of such incentive compensation determined by multiplying the
dollar amount of the incentive compensation by a fraction, the numerator of
which shall be the number of complete calendar months that elapsed during the
fiscal year through the end of the month in which Dr. Holaday's employment
terminated pursuant to this subparagraph 8(b) and the denominator of which shall
be twelve.
(c) Termination for Cause. The Company may terminate Dr. Holaday's
employment hereunder for "cause" (as hereinafter defined) by giving written
notice of termination of this Agreement, the Company shall have "cause" to
terminate Dr. Holaday's employment hereunder upon Dr. Holaday's (i) habitual
drunkenness or drug addiction or willful failure materially to perform and
discharge his duties and responsibilities hereunder, or (ii) misconduct that is
materially and significantly injurious to the Company, or (iii) conviction of a
felony involving the personal dishonesty of Dr. Holaday or moral turpitude, or
(iv) conviction of Dr. Holaday of any crime or offense involving the property of
the Company. Upon any such termination for cause under this subparagraph 8(c)
the Company shall pay Dr. Holaday his Base Salary through the date of
termination, and the Company shall have no further obligations under this
Agreement.
(d) Termination without Cause. The Company shall have the right to
terminate Dr. Holaday's employment under this Agreement at any time, without
cause, by giving Dr. Holaday not less than sixty (60) days prior written notice
of such termination. Until the effective date of any such termination, the
Company shall continue to pay to Dr. Holaday the full compensation specified in
this Agreement. In addition, on the effective date of termination, the Company
shall pay to Dr. Holaday the full amount of all Base Salary to which Dr. Holaday
would otherwise have been paid throughout the remaining Term (including any
Successor Term, if applicable) of this Agreement.
9. Reimbursement of Legal Fees
The Company agrees to reimburse Dr. Holaday for reasonable attorneys fees
incurred if Dr. Holaday or the Company sues on this Agreement and the Company is
not wholly successful on the merits of the suit.
10. Application for Insurance
The Company at its option has the right to obtain a "key-man" life insurance
policy, at the Company's expense, with the Company being the sole beneficiary of
such policy. Dr. Holaday hereby agrees to undergo the necessary physical
examinations and disclose any pertinent disclaimers and information to obtain
said policy. The Company shall also
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be required to provide split-dollar insurance as is presently in place for the
benefit of Dr. Holaday's beneficiaries at the Company's expense.
11. Miscellaneous
(a) Assignments and Binding Effect. The respective rights and obligations
of the parties under this Agreement shall be binding upon the parties hereto and
their heirs, executors, administrators, successors, and assigns, including, in
the case of the Company, any other corporation or entity with which the Company
may be merged or otherwise combined or which may acquire all or substantially
all of the Company's assets and, in the case of Dr. Holaday, his estate or other
legal representatives; provided that Dr. Holaday may not assign his rights
hereunder without prior written consent of the Company.
(b) Governing Law. This Agreement shall be governed as to its validity,
interpretation and effect by the laws of the State of Maryland.
(c) Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid, illegal, or unenforceable for any
reason, the remaining provisions and portions of this Agreement shall remain in
full force and effect to the fullest extent permitted by law. Such invalid,
illegal or unenforceable provision(s) shall be deemed modified to the extent
necessary to make it (them) valid, legal, and enforceable.
(d) Entire Agreement; Amendments. This Agreement constitutes the entire
Agreement and understanding of the Company and Dr. Holaday with respect to the
terms of Dr. Holaday's employment with the Company and supersedes all prior
discussions, understandings and agreements with respect thereto except to those
agreements relating to the assignment of patents and inventions to which Dr.
Holaday acknowledges signing a Combined Non-disclosure and Patent Employee
Agreement which will remain in effect.
(e) Captions. All captions and headings used herein are for convenient
reference only and do not form part of this Agreement.
(f) Waiver. The waiver of a breach of any term or provision of this
Agreement shall not operate as or be construed to be a waiver of any other or
subsequent breach of this Agreement.
(g) Notice. Any notice or communication required or permitted under this
Agreement shall be made in writing and shall be delivered by hand, or mailed by
registered or certified mail, return receipt requested, first class postage
prepaid, addressed as follows:
If to Dr. Holaday:
6502 Hillmead Road
Bethesda, Maryland 20877
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If to the Company:
EntreMed, Inc.
9610 Medical Center Drive, Suite 200
Rockville, Maryland 20850
Attn.: Chief Financial Officer
(h) Counterparts. This Agreement may be executed in counterparts, each of
which shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first above written.
/s/ JOHN W. HOLADAY, JR.
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John W. Holaday, Jr.
ENTREMED, INC.
By: /S/ JOHN C. THOMAS
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John C. Thomas, for the
Board of Directors Compensation Committee
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