EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT (the Agreement) dated March 11, 2009 by and between Synergy Pharmaceuticals,, Inc., a company incorporated under the laws of Florida (the Company), and Gary S. Jacob, Ph.D., an individual (the Executive) with reference to the following facts:
Callisto Pharmaceuticals, Inc., a Delaware corporation (Callisto) owns approximately 68% of the outstanding common stock of the Company.
Executive serves as the CEO of Callisto and has been appointed President and Acting Chief Executive Officer of the Company.
Both Callisto Research and Synergy are engaged in the business of developing and marketing drug products.
Company and Executive desire to enter into an agreement to provide for Executives employment by the Company upon the terms and conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the foregoing facts and mutual agreements set forth below, the parties, intending to be legally bound, agree as follows:
1. Employment. The Company hereby agrees to employ Executive, and Executive hereby accepts such employment and agrees to perform Executives duties and responsibilities in accordance with the terms and conditions hereinafter set forth.
1.1 Duties and Responsibilities. Executive shall serve as Acting Chief Executive Officer and President. During the Employment Term, Executive shall perform all duties and accept all responsibilities incident to such positions and other appropriate duties as may be assigned to Executive by the Companys Board of Directors from time to time, and by the Chief Executive Officer, when a Chief Executive Officer is appointed. Executive shall also serve as a director of the Company if requested by the Companys Board of Directors, and as an officer of one or more of the Companys subsidiaries without any additional compensation. The Company shall retain full direction and control of the manner, means and methods by which Executive performs the services for which he is employed hereunder and of the place or places at which such services shall be rendered. The Executive also agrees that in the absence of a Chief Accounting Officer, he will sign various federal and state securities filings as the Companys principal accounting officer.
1.2 Employment Term. The term of Executives employment under this Agreement shall commence as of August 1, 2008 (the Effective Date) and shall continue until December 31, 2011, unless earlier terminated in accordance with Section 4 hereof. The term of Executives employment shall be automatically renewed for successive one (1) year periods until the Executive or the Company delivers to the other party a written notice of their intent not to renew the Employment Term,
such written notice to be delivered at least sixty (60) days prior to the expiration of the then-effective Employment Term as that term is defined below. The period commencing as of the Effective Date and ending December 31, 2011 or such later date to which the term of Executives employment under the Agreement shall have been extended Agreement is referred to herein as the Employment Term and the end of the Employment Term is referred to herein as the Expiration Date.
1.3 Extent of Service. Except for discharging his duties as Chief Executive Officer of Callisto, the Companys corporate parent, during the Employment Term, Executive agrees to use Executives best efforts to carry out the duties and responsibilities under Section 1.1 hereof and to devote substantially all Executives business time, attention and energy thereto. Executive further agrees not to work either on a part-time or independent contracting basis for any other business or enterprise during the Employment Term without the prior written consent of the Companys Board of Directors (the Board), which consent shall not be unreasonably withheld.
1.4 Base Salary.
(a) The Company shall pay Executive a base salary (the Base Salary) at the annual rate of $300,000 (U.S.) payable at such times as the Company customarily pays its other senior level executives (but in any event no less often than monthly). The Base Salary shall be subject to all state, federal, and local payroll tax withholding and any other withholdings required by law. The overall cap of $300,000 shall not be diminished by any bonus or accelerated payment benefit given to Executive by Callisto. The Executives Base Salary may be increased, but not decreased by the Compensation Panel. Once increased, such increased amount shall constitute the Executives Base Salary and shall not be decreased.
(b) It is expressly acknowledged that Executives Base Salary shall be allocated between the Company and Callisto, so that the aggregate Base Salary payable to the Executive during the Employment Term from the Company and Callisto will not exceed $300,000 (or such higher amount as is determined by the committee of the Companys and/or Callistos Board of Directors empowered to fix or review compensation of the other executive officers of the Company (the Compensation Panel). The current estimate of such allocation is that 75% of the Executives Base Salary shall be payable by the Company and 25% of such Base Salary shall by payable by Callisto, however such allocation may change, no more frequently than once each fiscal quarter as determined in good faith by the Companys Chief Financial Officer. At any time if Callisto is not obligated to or does not pay its allocated share of Executives Base Salary, the Company shall pay Executives Base Salary in full, irrespective of any accounting allocation. The overall cap of $300,000 shall not be
diminished by any bonus or accelerated payment benefit given to Executive by Callisto.
(c) In the event Callisto is obligated to pay any item of compensation or reimburse expenses to Executive under this Agreement, Callisto fails to do so and the Company makes payment to the Executive pursuant to Section 1.4(b) of this Agreement, the Company shall be subrogated to all claims of the Executive against Callisto arising from Callistos failure to make payment to the extent of such payments made to the Executive.
1.5 Incentive Compensation.
(a) Bonus. Executive shall be eligible to earn a cash bonus of up to 50% of his Base Salary per full calendar year during the Employment Term (and a pro rated bonus for the period from August 1, 2008 to December 31, 2008) based on meeting performance objectives and bonus criteria to be mutually identified by Executive and the Compensation Panel. Bonuses, if any, shall be subject to all applicable tax and payroll withholdings. The bonus shall be determined on or before March 1 of each year of the Employment Term commencing March 1, 2009 and paid on or before April 14 of each year.
(b) Realization Bonus.
(i) In the event during the Term of this Agreement the Company enters into either a out-license agreement for any technology relating to the treatment of gastrointestinal disorders that grants exclusive marketing rights to a third party, engages in a merger transaction or a sale of substantially all of the assets of the Company that relate to the treatment of gastrointestinal disorders or enters into a joint venture in which the Company contributes such rights to the joint venture, in each case where the Enterprise Value (defined below) equals or exceeds the minimum value of $150 million, $200 million and $250 million in the first, second, third years of the Term or any years beyond the third year of the Term, respectively, (each, a Realization Transaction), or the license fees the Company contracts to receive (disregarding any contingencies to such payment) equals or exceeds $50 million, the Company shall accrue a bonus determined by multiplying the Enterprise Value (defined below) in the case of a merger, sale or the sum of the license fees actually received in the case of an out license, as the case may be, by 0.5% (one half percent).
(ii) The accrued bonuses shall be payable to Executive (a) in cash in full 5 business days after the closing of any Realization Transaction involving a sale or merger, notwithstanding that the consideration for such merger or sale consists in whole or in part of securities of the acquiring company; or (b) in cash 5 business days after the Companys receipt of license fees at the rate of 0.5% of license fees actually received. The expiration or termination of this Agreement shall not terminate or diminish the Executives right to receive bonus payments with respect to out license fees collected after the termination or expiration of this Agreement.
(iii) . The Enterprise Value in the case of a Change in Control in which consideration is payable to the Company in respect of its assets or business, shall mean the total cash and non-cash (including, without limitation, the assumption of debt) consideration received by the Company or in the case of a Change in Control in which consideration is payable to the Companys stockholders, the total cash and non-cash (including, without limitation, the assumption of debt) consideration payable to the Companys stockholders. Enterprise Value shall also include, if applicable, any cash or non-cash consideration payable to the Company or to the Companys stockholders on a contingent, earnout or deferred basis. To the extent that any consideration in a transaction is not received in cash upon the consummation of the Change in Control, the value of such non-cash consideration for purposes of calculating the Enterprise Value will be determined by the Board of Directors of the Company prior to the Change in Control in good faith. In the event that less than 100% of the stock or assets of the Company is purchased in the Change in Control transaction, the Enterprise Value shall be extrapolated from the percentage of the Companys capital stock or assets impacted in such Change in Control transaction to determine if the $400 million threshold was exceeded, but the Transaction Fee shall be calculated based on the actual consideration received by the Company or shareholders, as the case may be. Section 4.2(b)(i), however, shall not apply to any event resulting in a Change in Control in which neither the Company nor its stockholders receives consideration either upon, or in connection with, the occurrence or consummation of the event resulting in a Change in Control.
(c) Options. The Compensation Panel will consider grants of options to the Executive no less frequently than annually commencing March 1, 2010.
(d) Executive Benefits. The Executive shall be entitled to participate in all executive benefit or incentive compensation plans now maintained or hereafter established by the Company for the purpose of providing compensation and/or benefits to executives of the Company and any supplemental retirement, salary continuation, stock option, deferred compensation, supplemental medical or life insurance or other bonus or incentive compensation plans. Unless otherwise provided herein, the Executives participation in such plans shall be on the same basis and terms as other similarly situated executives of the Company. No additional compensation provided under any of such plans shall be deemed to modify or otherwise affect the terms of this Agreement or any of the Executives entitlements hereunder.
1.6 Other Benefits. During the Employment Term, Executive shall be entitled to participate in all employee benefit plans and programs made available to the Companys senior level executives as a group or to its employees generally, as such plans or programs may be in effect from time to time (the Benefit Coverages), including, without limitation, medical, dental, hospitalization, short-term and long-term disability and life insurance plans, accidental death and dismemberment protection and travel accident insurance. Executive shall be
provided office space and staff assistance appropriate for Executives position and adequate for the performance of his duties.
1.7 Reimbursement of Expenses; Vacation; Sick Days and Personal Days. Executive shall be provided with reimbursement of expenses related to Executives employment by the Company on a basis no less favorable than that which may be authorized from time to time by the Board, in its sole discretion, for senior level executives as a group. Executive shall be entitled to vacation and holidays in accordance with the Companys normal personnel policies for senior level executives, but not less than three (3) weeks of vacation per calendar year, provided Executive shall not utilize more than ten (10) consecutive business days without the express consent of the Board of Directors. Unused vacation time will be forfeited as of December 31 of each calendar year of the Employment Term. Executive shall be entitled to no more than an aggregate of ten (10) sick days and personal days per calendar year.
1.8 No Other Compensation. Except as expressly provided in Sections 1.4 through 1.8, Executive shall not be entitled to any other compensation or benefits.
2. Confidential Information. Executive recognizes and acknowledges that by reason of Executives employment by and service to the Company before, during and, if applicable, after the Employment Term, Executive will have access to certain confidential and proprietary information relating to the Companys business, which may include, but is not limited to, trade secrets, trade know-how, product development techniques and plans, formulas, customer lists and addresses, financing services, funding programs, cost and pricing information, marketing and sales techniques, strategy and programs, computer programs and software and financial information (collectively referred to as Confidential Information). Executive acknowledges that such Confidential Information is a valuable and unique asset of the Company and Executive covenants that he will not, unless expressly authorized in writing by the Company, at any time during the course of Executives employment use any Confidential Information or divulge or disclose any Confidential Information to any person, firm or corporation except in connection with the performance of Executives duties for the Company and in a manner consistent with the Companys policies regarding Confidential Information. Executive also covenants that at any time after the termination of such employment, directly or indirectly, he will not use any Confidential Information or divulge or disclose any Confidential Information to any person, firm or corporation, unless such information is in the public domain through no fault of Executive or except when required to do so by a court of law, by any governmental agency having supervisory authority over the business of the Company or by any administrative or legislative body (including a committee thereof) with apparent jurisdiction to order Executive to divulge, disclose or make accessible such information. All written Confidential Information (including, without limitation, in any computer or other electronic format) which comes into Executives possession during the course of Executives employment shall remain the property of the Company. Except as required in the performance of Executives duties for the Company, or unless expressly authorized in writing by the Company, Executive shall not remove any written Confidential Information from the Companys premises, except in connection with the performance of Executives duties for the Company and in a manner consistent with the Companys policies regarding Confidential Information. Upon termination of Executives employment, the Executive
agrees to return immediately to the Company all written Confidential Information (including, without limitation, in any computer or other electronic format) in Executives possession. As a condition of Executives continued employment with the Company and in order to protect the Companys interest in such proprietary information, the Company shall require Executives execution of a Confidentiality Agreement and Inventions Agreement in the form attached hereto as Exhibit B, and incorporated herein by this reference.
3. Non-Competition; Non-Solicitation.
3.5 Non-Compete. The Executive hereby covenants and agrees that during the term of this Agreement and for a period of one year following the end of the Employment Term, the Executive will not, without the prior written consent of the Company, directly or indirectly, on his own behalf or in the service or on behalf of others, whether or not for compensation, engage in any business activity, or have any interest in any person, firm, corporation or business, through a subsidiary or parent entity or other entity (whether as a shareholder, agent, joint venturer, security holder, trustee, partner, Executive, creditor lending credit or money for the purpose of establishing or operating any such business, partner or otherwise) with any Competing Business in the Covered Area. For the purpose of this Section 3.1, (i) Competing Business means any biotechnology or pharmaceutical company, any contract manufacturer, any research laboratory or other company or entity (whether or not organized for profit) that has, or is seeking to develop, one or more products or therapies that is related to azaspiranes and guanylyl cyclase receptor agonists and (ii) Covered Area means all geographical areas of the United States and foreign jurisdictions where the Company then has offices and/or sells its products directly or indirectly through distributors and/or other sales agents. Notwithstanding the foregoing, the Executive may own shares of companies whose securities are publicly trades, so long as such securities do not constitute more than one percent (1%) of the outstanding securities of any such company.
3.6 Non-Solicitation. The Executive further agrees that as long as the Agreement remains in effect and for a period of one (1) year from its termination, the Executive will not divert any business of the Company and/or its affiliates or any customers or suppliers of the Company and/or the Companys and/or its affiliates business to any other person, entity or competitor, or induce or attempt to induce, directly or indirectly, any person to leave his or her employment with the Company.
3.7 Remedies. The Executive acknowledges and agrees that his obligations provided herein are necessary and reasonable in order to protect the Company and its affiliates and their respective business and the Executive expressly agrees that monetary damages would be inadequate to compensate the Company and/or its affiliates for any breach by the Executive of his covenants and agreements set forth herein. Accordingly, the Executive agrees and acknowledges that any such violation or threatened violation of this Section 3 will cause irreparable injury to the Company and that, in addition to any other remedies that may be available, in
law, in equity or otherwise, the Company and its affiliates shall be entitled to obtain injunctive relief against he threatened breach of this Section 3 or the continuation of any such breach by the Executive without the necessity of proving actual damages.
4.5 Termination Without Cause or for Good Reason.
(c) If this Agreement is terminated by the Company other than for Cause (as defined in Section 10.4 hereof) or as a result of Executives death or Permanent Disability (as defined in Section hereof), or if Executive terminates his employment for Good Reason (as defined in Section hereof) prior to the Expiration Date, Executive shall receive or commence receiving as soon as practicable in accordance with the terms of this Agreement:
(i) a severance payment (the Severance Payment), which amount shall be paid in a cash lump sum within ten (10) days of the date of termination, in an amount equal to the higher of the aggregate amount of the Executives Base Salary for the then remaining term of this Agreement or twelve times the average monthly Base Salary paid or accrued during the three full calendar months immediately preceding such termination;
(ii) expense compensation, which shall be paid in a lump sum payment within ten (10) days of the date of termination, in an amount equal to twelve times the sum of average Base Salary during the three full months immediately preceding such termination of providing the services to Executive set forth in Section and Executives reimbursed expenses set forth in Section ;
(iii) immediate vesting of all unvested stock options and the extension of the exercise period of such options to the later of the longest period permitted by the Companys stock option plans or ten years following the Termination Date;
(iv) payment in respect of compensation earned but not yet paid (the Compensation Payment) which amount shall be paid in a cash lump sum within ten (10) days of the date of termination; and
(v) payment of the cost of comprehensive medical insurance for Executive for a period of twelve months following the termination.
(d) For purposes of this Agreement, Good Reason shall mean any of the following (without Executives express prior written consent):
(i) Any material breach by Company of any provision of this Agreement, including any material reduction by Company of Executives duties or responsibilities (except in connection with the termination of Executives employment for Cause, as a result of Permanent Disability, as a result of Executives death or by Executive other than for Good Reason);
(ii) A reduction by the Company in Executives Base Salary or any failure of the Company to reimburse Executive for material expenses described in Section 1.7;
(iii) The failure by the Company to obtain the specific assumption of this Agreement by any successor or assign of Company as provided for in Section 11 hereof;
(iv) Moving the principal offices of Company to a location outside of the Metropolitan New York Area; or
(v) Upon a Change of Control of Company (as such term is hereinafter defined).
(e) The following provisions shall apply in the event compensation provided in Section becomes payable to the Executive:
(i) if the severance compensation provided for in subsection above cannot be finally determined on or before the tenth day following such termination, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such compensation and shall pay the remainder of such compensation (together with interest at the Federal short-term rate provided in Section 1274(d)(7)(C)(1) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth day after the Date of Termination. In the event the amount of the estimated payment exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive payable on the fifth day after demand by the Company (together with interest at the Federal short-term rate provided in Section 1274(d)(7)(C)(1) of the Code).
(ii) If the payment of the Total Payments (as defined below) will be subject to the tax (the Excise Tax) imposed by Section 4999 of the Code, the Company shall pay the Executive on or before the tenth day following the Date of Termination, an additional amount (the Gross-Up Payment) such that the net amount retained by the Executive, after deduction of any Excise Tax on Total Payments and any federal and state and local income tax and Excise Tax
upon the payment provided for by this paragraph, shall be equal to the Total Payments. For purposes of determining whether any of the payments will be subject to the Excise Tax and the amount of such Excise Tax, (A) any payments or benefits received or to be received by the Executive in connection with a Change in Control of the Company or the Executives termination of employment, whether payable pursuant to the terms of Section 10 of this Agreement or any other plan, arrangement or agreement with the Company, its successors, any person whose actions result in a Change in Control of the Company or any corporation affiliated (or which, as a result of the completion of transaction causing such a Change in control, will become affiliated) with the Company within the meaning of Section 1504 of Code (the Total Payments) shall be treated as parachute payments within the meaning of Section 28OG(b)(2) of the Code, and all excess parachute payments within the meaning of Section 28OG(b)(1) shall be treated as subject to the Excise Tax, unless, in the opinion of tax counsel selected by the Companys independent auditors and acceptable to the Executive, the Total Payments (in whole or in part) do not constitute parachute payments, or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered within the meaning of Section 28OG(b)(4) of the Code either in their entirety or in excess of the base amount within the meaning of Section 28OG(b)(3) of the Code, or are otherwise not subject to the Excise Tax, (B) the amount of the Total Payments that shall be treated as subject to the Excise Tax shall be equal to the lesser of (I) the total amount of the Total Payments or (II) the amount of excess parachute payments or benefit shall be determined by the Companys independent auditors in accordance with the principles of Section 28OG(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executives residence an the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. In the event the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executives employment, the Executive shall repay to the Company at the time the amount of such reduction in Excise Tax is finally determined the portion of the Gross-Up Payment that can be repaid such that the Executive remains whole on an after-tax basis following such repayment (taking into account any reduction in income or excise
taxes to the Executive from such repayment) plus interest on the amount of such repayment at the Federal short-term rate provided in Section 1274(d)(1)(C)(i) of the Code. In the event the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executives employment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional gross-up payment in respect of such excess (plus any interest payable with respect to such excess) at the time that the amount of such excess is finally determined.
4.6 Permanent Disability. If Executive becomes totally and permanently disabled (as defined in the Companys disability benefit plan applicable to senior executive officers as in effect on the date thereof) (Permanent Disability), Company or Executive may terminate this Agreement on written notice thereof, and Executive shall receive or commence receiving, as soon as practicable:
(c) amounts payable pursuant to the terms of the disability insurance policy or similar arrangement which Company maintains for the Executive, if any, during the term hereof;
(d) the Compensation Payment which shall be paid to Executive as a cash lump sum within 30 days of such termination; and
(e) immediate vesting of all unvested stock options.
4.7 Death. In the event of Executives death during the term of his employment hereunder, Executives estate or designated beneficiaries shall receive or commence receiving, as soon as practicable in accordance with the terms of this Agreement:
(c) compensation equal to one years Base Salary (calculate by multiplying the average monthly Base Salary paid or accrued for the three full calendar months immediately such event, which shall be paid within 30 days of such termination;
(d) any death benefits provided under the Executive benefit programs, plans and practices in which the Executive has an interest, in accordance with their respective terms;
(e) the Compensation Payment which shall be paid to Executives estate as a cash lump sum within 30 days of such termination; and
(f) such other payments under applicable plans or programs to which Executives estate or designated beneficiaries are entitled pursuant to the terms of such plans or programs.
4.8 Voluntary Termination by Executive: Discharge for Cause. The Company shall have the right to terminate this Agreement for Cause (as hereinafter defined). In the event that Executives employment is terminated by Company for Cause, as hereinafter defined, or by Executive other than for Good Reason or other than as a result of the Executives Permanent Disability or death, prior to the Termination Date, Executive shall be entitled only to receive, as a cash lump sum within 30 days of such termination, the Compensation Payment. As used herein, the term Cause shall be limited to (a) willful malfeasance or willful misconduct by Executive in connection with the services to the Company in a matter of material importance to the conduct of the Companys affairs which has a material adverse affect on the business of the Company, or (b) the conviction of Executive for commission of a felony. For purposes of this subsection, no act or failure to act on the Executives part shall be considered willful unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. Termination of this Agreement for Cause pursuant to this Section shall be made by delivery to Executive of a copy of a resolution duly adopted by the affirmative vote of all of the members of the Board of Directors called and held for such purpose (after 30 days prior written notice to Executive and reasonable opportunity for Executive to be heard before the Board of Directors prior to such vote), finding that in the good faith business judgment of such Board of Directors, Executive was guilty of conduct set forth in any of clauses (a) through (b) above and specifying the particulars thereof.
5. Change In Control.
5.5 Definition. For purposes of this Agreement, a Change in Control shall be deemed to have occurred if (i) there shall be consummated (A) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Companys Common Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Companys Common Stock immediately prior to the merger have substantially the same proportionate ownership of common stock of the surviving corporation immediately after the merger, or (B) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all the assets of the Company, or (ii) the stockholders of the Company shall approve any plan or proposal for the liquidation or dissolution of the Company, or (iii) any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934 (the Exchange Act)), other than the Company or any executive benefit plan sponsored by the Company, or such person on the Effective Date hereof is a 20% or more beneficial owner, shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company representing 20% or more of the combined voting power of the Companys then outstanding securities ordinarily (and apart from rights accruing in special circumstances) having the right to vote in the election of directors, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or
otherwise, or (iv) at any time during a period of two consecutive years, individuals who at the beginning of such period, constituted the Board of Directors of the Company shall cease for any reason to constitute at least a majority thereof, unless the election or the nomination for election by the Companys stockholders of each new director during such two-year period was approved by a vote of at least two-thirds of the directors then still in office, who were directors at the beginning of such two-year period.
5.6 Rights and Obligations. If a Change in Control of the Company shall have occurred while the Executive is director of the Company, the Executive shall be entitled to the compensation provided in Section of this Agreement upon the subsequent termination of this Agreement by either the Company, or the Executive within two years of the date upon which the Change in Control shall have occurred, unless such termination is a result of (i) the Executives death; (ii) the Executives Disability; (iii) the Executives Retirement; or (iv) the Executives termination for Cause.
6. Assignment. This Agreement shall be binding upon and inure to the benefit of the heirs and representatives of Executive and the assigns and successors of Company, but neither this Agreement nor any rights or obligations hereunder shall be assignable or otherwise subject to hypothecation by Executive (except by will or by operation of the laws of intestate succession or by Executive notifying the Company that cash payment be made to an affiliated investment partnership in which Executive is a control person) or by Company, except that Company may assign this Agreement to any successor (whether by merger, purchase or otherwise) to all or substantially all of the stock, assets or businesses of Company, if such successor expressly agrees to assume the obligations of Company hereunder.
Executive, as such and as a Director of the Company, shall be indemnified by the Company against all liability incurred by the Executive in connection with any proceeding, including, but not necessarily limited to, the amount of any judgment obtained against Executive, the amount of any settlement entered into by the Executive and any claimant with the approval of the Company, attorneys fees, actually and necessarily incurred by him in connection with the defense of any action, suit, investigation or proceeding or similar legal activity, regardless of whether criminal, civil, administrative or investigative in nature (Claim), to which he is made a party or is otherwise subject to, by reason of his being or having been a director, officer, agent or employee of the Company, to the full extent permitted by applicable law and the Certificate of Incorporation of the Company.. Such right of indemnification will not be deemed exclusive of any other rights to which Executive may be entitled under Companys Certificate of Incorporation or By-laws, as in effect from time to time, any agreement or otherwise.
8. General Provisions.
8.5 Modification: No Waiver. No modification, amendment or discharge of this Agreement shall be valid unless the same is in writing and signed by all parties hereto. Failure of any party at any time to enforce any provisions of this
Agreement or any rights or to exercise any elections hall in no way be considered to be a waiver of such provisions, rights or elections and shall in no way affect the validity of this Agreement. The exercise by any party of any of its rights or any of this elections under this Agreement shall not preclude or prejudice such party from exercising the same or any other right it may have under this Agreement irrespective of any previous action taken.
8.6 Notices. All notices and other communications required or permitted hereunder or necessary or convenient in connection herewith shall be in writing and shall be deemed to have been given when hand delivered or mailed by registered or certified mail as follows (provided that notice of change of address shall be deemed given only when received):
If to the Company, to:
Synergy Pharmaceuticals, Inc.
420 Lexington Avenue, Suite 60
New York, NY 10070
If to Executive, to:
Gary S. Jacob, Ph.D.
Or to such other names or addresses as the Company or Executive, as the case may be, shall designate by notice to each other person entitled to receive notices in the manner specified in this Section.
8.7 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.
8.8 Further Assurances. Each party to this Agreement shall execute all instruments and documents and take all actions as may be reasonably required to effectuate this Agreement.
8.9 Severability. Should any one or more of the provisions of this Agreement or of any agreement entered into pursuant to this Agreement be determined to be illegal or unenforceable, then such illegal or unenforceable provision shall be modified by the proper court or arbitrator to the extent necessary and possible to make such provision enforceable, and such modified provision and all other provisions of this Agreement and of each other agreement entered into pursuant to this Agreement shall be given effect separately from the provisions or portion thereof determined to be illegal or unenforceable and shall not be affected thereby.
8.10 Successors and Assigns. Executive may not assign this Agreement without the prior written consent of the Company. The Company may assign its rights without the written consent of the executive, so long as the Company or its assignee complies with the other material terms of this Agreement. The rights and obligations of the Company under this Agreement shall inure to the benefit of and
be binding upon the successors and permitted assigns of the Company, and the Executives rights under this Agreement shall inure to the benefit of and be binding upon his heirs and executors. The Companys subsidiaries and controlled affiliates shall be express third party beneficiaries of this Agreement.
8.11 Entire Agreement. This Agreement supersedes all prior agreements and understandings between the parties, oral or written. No modification, termination or attempted waiver shall be valid unless in writing, signed by the party against whom such modification, termination or waiver is sought to be enforced.
8.12 Counterparts; Facsimile. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original, and all of which taken together shall constitute one and the same instrument. This Agreement may be executed by facsimile with original signatures to follow.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement as of the date first written above.
SYNERGY PHARMACEUTICALS, INC.
/s/ Gary S. Jacob
/s/ Bernard Denoyer
Gary S. Jacob, Ph.D.
Bernard Denoyer, Senior Vice President, Finance