Employment Agreement - Pharmos Corp. and Robert W. Cook
EMPLOYMENT AGREEMENT
Employment Agreement dated as of December 15, 1997, between PHARMOS
CORPORATION, a Nevada corporation (with its successors and assigns, referred to
as the "Corporation"), and ROBERT W. COOK, (hereinafter referred to as "COOK").
PRELIMINARY STATEMENT
The Corporation desires to employ COOK as Vice President - Finance/Chief
Financial Officer of the Corporation, and COOK wishes to be employed by the
Corporation, upon the terms and subject to the conditions set forth in this
Agreement. The Corporation and COOK also wish to enter into the other agreements
set forth in this Agreement, all of which are related to COOK's employment under
this Agreement.
AGREEMENT
COOK and the Corporation therefore agree as follows:
1. Term of Employment. The Corporation hereby employs COOK and COOK hereby
accepts employment with the Corporation for the period (the "Initial Term")
commencing on January 1, 1998 (the "Commencement Date"), and ending on January
1, 1999, or upon the earlier termination of the Term pursuant to Section 6. The
Term will be extended automatically for an additional one year period (the
"Additional Term"; together with the Initial Term, the "Term"), unless either
party delivers written notice to the other of its or his election not to renew,
subject to the terms set forth in section 6. The termination of the Term for any
reason shall end COOK's employment under this Agreement, but shall not terminate
COOK's or the Corporation's other agreements in this Agreement.
2. Position and Duties. During the Term, COOK shall serve as Vice President
-Finance/Chief Financial Officer of the Corporation, which title shall be
adjusted as necessary to maintain its seniority in the event of subsequent
changes in the Corporation's title structure. COOK shall also hold such
additional positions and titles as the CEO of the Corporation or President may
determine from time to time. COOK shall report to the CEO and the President.
During the Term, COOK shall devote his full time and attention to performing his
duties as an employee of the Corporation.
3. Compensation.
(a) Base Salary. The Corporation shall pay COOK a base salary, beginning on
the first day of the Initial Term and ending on the last day of the Initial
Term, of not less than $165,000 per annum, payable monthly on the Corporation's
regular pay cycle for professional
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employees. Additionally, on the Commencement Date, the Corporation shall pay
COOK $20,000 as a one time signing bonus, in consideration for electing to join
the Corporation.
(b) Stock Options and Warrants. The Corporation shall grant to COOK no
fewer than 100,000 options or warrants to purchase Common Stock of the
Corporation (the "Initial Grant"). Of these options or warrants, 25% shall vest
immediately; and 25% will vest on each of the first, second and third
anniversaries of the Commencement Date. Such Options or Warrants will be granted
simultaneously with the Corporation's next grant of Options or Warrants to
employees, but in any event, no later than March 31, 1998. The exercise price
thereof will be the closing price of the Corporation's Common Stock as reported
on NASDAQ, on the date immediately prior to the date of the grant. The Option or
Warrant grant will be reflected in an agreement in the form currently provided
to existing employees.
(c) Other and Additional Compensation. Section 3(a) establishes the minimum
compensation during the Term and shall not preclude the Board of Directors ("the
Board") from awarding COOK a higher salary or any bonuses or stock options in
the event of a successful financing or otherwise, and in any event, in the
discretion of the Board.
4. Employee Benefits. During the Term, COOK shall be entitled to the
employee benefits, including 3 weeks vacation, a 401(k) plan, and current
health, dental and life insurance benefits made available by the Corporation.
5. Expenses. The Corporation shall reimburse COOK for actual out-of-pocket
expenses incurred by him in the performance of his services for the Corporation
upon the receipt of appropriate documentation of such expenses. The Corporation
shall, in addition, provide COOK with a monthly allowance of up to $400, to
defray his local transportation expenses in connection with his activities at
the Corporation.
6. Termination.
(a) General. The Term shall end immediately upon COOK's death, and for
Cause or Disability, as defined in Section 7. In addition, the Corporation may
elect to terminate this Agreement at any time by giving 180 days' prior written
notice, during the Initial Term, and by giving 90 days' prior written notice
during the entire Additional Term. COOK may elect to terminate this Agreement at
any time by giving 60 days' prior written notice at any time during the Term.
Upon the Corporation's termination of the Term for Cause, COOK shall have ten
(10) days to cure said Cause.
(b) Notice of Termination. The Corporation shall notify COOK in writing of
its termination of employment for Cause or Disability. The Corporation's failure
to give notice under this Section 6(b) shall not, however, affect the validity
of the Corporation's termination of the Term.
(c) Termination for Cause. Upon the Corporation's termination of the Term
for Cause, as defined in Section 7(a), below, all compensation due COOK under
this
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Agreement will cease. Moreover, all options and warrants to purchase Common
Stock of the Corporation shall expire upon such termination.
(d) Termination upon Change in Ownership. In the event that the Corporation
terminates its relationship with COOK pursuant to a change of ownership of at
least fifty percent (50%) of the outstanding Common Stock of the Corporation (on
a fully converted basis) by sale, merger, consolidation or other means (a
"Change in Ownership"), certain options and warrants to purchase Common Stock of
the Corporation included in the Initial Grant shall fully vest subject to the
following schedule:
1. During the Initial Term, 25,000 options or warrants will vest fully,
(in addition to the 25,000 options or warrants that fully vest upon
the execution of this Agreement).
2. During the Additional Term, 50,000 options or warrants will vest
fully.
7. Definitions.
(a) "Cause" Defined. "Cause" means (i) willful malfeasance or willful
misconduct by COOK in connection with his employment; (ii) COOK's gross
negligence in performing any of his duties under this Agreement; (iii) COOK's
conviction of, or entry of a plea of guilty to, or entry of a plea of nolo
contendere with respect to, any felony (iv) COOK's material breach of any
written policy applicable to all employees adopted by the Corporation; or (v)
material breach by COOK of any of his agreements in this Agreement.
(b) Disability Defined. "Disability" shall mean COOK's incapacity due to
physical or mental illness that results in his being unable to substantially
perform his duties hereunder for six consecutive months (or for six months out
of any nine-month period). During a period of Disability, COOK shall continue to
receive his base salary hereunder, provided that if the Corporation provides
COOK with disability insurance coverage, payments of COOK's base salary shall be
reduced by the amount of any disability insurance payments received by COOK due
to such coverage.
8. Confidentiality.
(a) "Corporation Information" Defined. "Corporation Information" means all
information, knowledge or data of or pertaining to (i) the Corporation, its
employees and all work undertaken on behalf of the Corporation, and (ii) any
other person, firm, corporation or business organization with which the
Corporation may do business during the Term, that is not in the public domain
(and whether relating to methods, processes, techniques, discoveries, pricing,
marketing or any other matters).
(b) Confidentiality. COOK hereby recognizes that the value of all trade
secrets and other proprietary data and all other information of the Corporation
not in the public
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domain disclosed by the Corporation in the course of his employment with the
Corporation is attributable substantially to the fact that such confidential
information is maintained by the Corporation in strict confidentiality and
secrecy and would be unavailable to others without the expenditure of
substantial time, effort or money. COOK therefore, except as provided in the
next two sentences, covenants and agrees that all Corporation Information shall
be kept secret and confidential at all times during and after the end of the
Term and shall not be used or divulged by him outside the scope of his
employment as contemplated by this Agreement, except as the Corporation may
otherwise expressly authorize by action of the Board. In the event that COOK is
requested in a judicial, administrative or governmental proceeding to disclose
any of the Corporation Information, COOK will promptly so notify the Corporation
so that the Corporation may seek a protective order or other appropriate remedy
and/or waive compliance with this Agreement. If disclosure of any of the
Corporation Information is required, COOK may furnish the material so required
to be furnished, but COOK will furnish only that portion of the Corporation
Information that legally is required.
9. Successors and Assigns.
(a) COOK. This Agreement is a personal contract, and the rights and
interests that the Agreement accords to COOK may not be sold, transferred,
assigned, pledged, encumbered, or hypothecated by him. All rights and benefits
of COOK shall be for the sole personal benefit of COOK, and no other person
shall acquire any right, title or interest under this Agreement by reason of any
sale, assignment, transfer, claim or judgment or bankruptcy proceedings against
COOK. Except as so provided, this Agreement shall inure to the benefit of and be
binding upon COOK and his personal representatives, distributees and legatees.
(b) The Corporation. This Agreement shall be binding upon the Corporation
and inure to the benefit of the Corporation and of its successors and assigns.
10. Entire Agreement. This Agreement represents the entire agreement
between the parties concerning COOK's employment with the Corporation and
supersedes all prior negotiations, discussions, understandings and agreements,
whether written or oral, between COOK and the Corporation relating to the
subject matter of this Agreement.
11. Amendment or Modification, Waiver. No provision of this Agreement may
be amended or waived unless such amendment or waiver is agreed to in writing
signed by COOK and by a duly authorized officer of the Corporation. No waiver by
any party to this Agreement of any breach by another party of any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of a similar or dissimilar condition or provision at the same time, any
prior time or any subsequent time.
12. Notices. Any notice to be given under this Agreement shall be in
writing and delivered personally or sent by overnight courier or registered or
certified mail, postage prepaid, return receipt requested, addressed to the
party concerned at the address indicated below, or to such other address of
which such party subsequently may give notice in writing:
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If to COOK: Robert W. Cook
119 Hunterdon Blvd.
Murray Hill NJ 07974
Attention: Robert W. Cook
If to the Corporation: Pharmos Corporation
33 Wood Avenue S. Suite 466
Iselin, NJ 08630
Attention: President
with a copy to: Ehrenreich Eilenberg Krause & Zivian
11 East 44th Street
New York, NY 10017
Attention: Adam D. Eilenberg, Esq.
Any notice delivered personally or by overnight courier shall be deemed given on
the date delivered and any notice sent by registered or certified mail, postage
prepaid, return receipt requested, shall be deemed given on the date mailed.
13. Severability. If any provision of this Agreement or the application of
any such provision to any party or circumstances shall be determined by any
court of competent jurisdiction to be invalid and unenforceable to any extent,
the remainder of this Agreement or the application of such provision to such
person or circumstances other than those to which it is so determined to be
invalid and unenforceable shall not be affected, and each provision of this
Agreement shall be validated and shall be enforced to the fullest extent
permitted by law. If for any reason any provision of this Agreement containing
restrictions is held to cover an area or to be for a length of time that is
unreasonable or in any other way is construed to be too broad or to any extent
invalid, such provision shall not be determined to be entirely null, void and of
no effect; instead, it is the intention and desire of both the Corporation and
COOK that, to the extent that the provision is or would be valid or enforceable
under applicable law, any court of competent jurisdiction shall construe and
interpret or reform this Agreement to provide for a restriction having the
maximum enforceable area, time period and such other constraints or conditions
(although not greater than those contained currently contained in this
Agreement) as shall be valid and enforceable under the applicable law.
14. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
15. Headings. All descriptive headings of sections and paragraphs in this
Agreement are intended solely for convenience of reference, and no provision of
this Agreement is to be construed by reference to the heading of any section or
paragraph.
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16. Withholding Taxes. All salary, benefits, reimbursements and any other
payments to COOK under this Agreement shall be subject to all applicable payroll
and withholding taxes and deductions required by any law, rule or regulation of
and federal, state or local authority.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together constitute one and same instrument.
18. Applicable Law: Jurisdiction. The laws of the State of New York shall
govern the interpretation, validity and performance of the terms of this
Agreement, without reference to rules relating to conflicts of law. Any suit,
action or proceeding against COOK with respect to this Agreement, or any
judgment entered by any court in respect thereof, may be brought in any court of
competent jurisdiction in the State of New York, as the Corporation may elect in
its sole discretion, and COOK hereby submits to the exclusive jurisdiction of
such courts for the purpose of any such suit, action, proceeding or judgment.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
/S/ROBERT. W. COOK
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ROBERT W. COOK
PHARMOS CORPORATION
By: /s/GAD RIESENFELD
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Gad Riesenfeld, President
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