Document:

Unassociated Document

Exhibit 10.2 

CHANGE IN CONTROL AGREEMENT

This Change in Control Agreement (“Agreement”) dated as of September 7, 2010 is entered into by and between Black Hills Corporation (“Company”) and ________________ (“Employee”).

1.   RECITALS.

The Board of Directors of the Company (“Board”) has determined that it is in the best interests of the Company and its shareholders to encourage the Employee’s full attention and dedication to the Company currently and in the event of any threatened or pending Change in Control (as defined below).  Therefore, in order to accomplish these objectives, the Board has caused the Company to enter into this Agreement.

2.           DEFINITIONS.

 

“AFFILIATE” shall have the meaning ascribed to such term in rule 12b-2 of the General Rules and Regulations of the Exchange Act.

 

“BENEFICIAL OWNER” or “BENEFICIAL OWNERSHIP” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

 

“CAUSE” means those events or conditions described in subsections 9(a)(1) and (2).

 

“CHANGE IN CONTROL” shall mean any of the following events:

(a)   The acquisition in a transaction or series of transactions by any Person of Beneficial Ownership of thirty percent (30%) or more of the combined voting power of the then outstanding shares of common stock of the Company; provided, however, that for purposes of this Agreement, the following acquisitions will not constitute a Change in Control: (A) any acquisition by the Company; (B) any acquisition of common stock of the Company by an underwriter holding securities of the Company in connection with a public offering thereof; and (C) any acquisition by any Person pursuant to a transaction which complies with subsections (c)(i), (ii) and (iii);

(b)   Individuals who, as of December 31, 2009 are members of the Board (the “Incumbent Board”), cease for any reason to constitute at least a majority of the members of the Board; provided, however, that if the election, or nomination for election by the Company’s common shareholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Agreement, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened “Election Contest” (as described in Rule 14a-11 promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a “Proxy Contest”) including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest;

  

  

  

 

(c)   Consummation, following shareholder approval, of a reorganization, merger, or consolidation of the Company and/or its subsidiaries, or a sale or other disposition (whether by sale, taxable or non-taxable exchange, formation of a joint venture or otherwise) of fifty percent (50%) or more of the assets of the Company and/or its subsidiaries (each a “Business Combination”), unless, in each case, immediately following such Business Combination, (i) all or substantially all of the individuals and entities who were beneficial owners of shares of the common stock of the Company immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the then outstanding shares of the entity resulting from the Business Combination or any direct or indirect parent corporation thereof (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one (1) or more subsidiaries) (the “Successor Entity”) (ii) no Person (excluding any Successor Entity or any employee benefit plan or related trust, of the Company or such Successor Entity) owns, directly or indirectly, thirty percent (30%) or more of the combined voting power of the then outstanding shares of common stock of the Successor Entity, except to the extent that such ownership existed prior to such Business Combination; and (iii) at least a majority of the members of the Board of Directors of the entity resulting from such Business Combination or any direct or indirect parent corporation thereof were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such Business Combination; or

(d)           Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company, except pursuant to a Business Combination that complies with subsections (c)(i), (ii), and (iii) above.

(e)           A Change in Control shall not be deemed to occur solely because any Person (the “Subject Person”) acquired Beneficial Ownership of more than the permitted amount of the then outstanding Common Stock as a result of the acquisition of Common Stock by the Company which, by reducing the number of shares of Common stock then outstanding, increases the proportional number of shares Beneficially Owned by the Subject Persons, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Common Stock by the Company, and after such stock acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Common Stock which increases the percentage of the then outstanding common Stock Beneficially Owned by the Subject Person, then a Change in Control shall occur.

(f)           A Change in Control shall not be deemed to occur unless and until all regulatory approvals required in order to effectuate a Change in Control of the Company have been obtained and the transaction constituting the Change in Control has been consummated.

“CODE” means the Internal Revenue Code of 1986, as amended.

“DISABILITY” means a physical or mental infirmity because of which Employee is receiving benefits under the Company sponsored long-term disability plan in which the Employee participates.

“DISABILITY DATE” means the date subsequent to a Change in Control on which the Employee is determined to have a Disability.

  

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“EFFECTIVE DATE” means the first date on which a Change in Control occurs.  The Effective Date does not occur and no benefits shall be paid under this Agreement if for any reason the Employee is not an employee of the Company on the day prior to the Effective Date.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“EXCHANGE ACT” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.

“GOOD REASON” means those events or conditions described in subsections 9(c)(i) through (vi) below.

“NONQUALIFIED DEFERRED COMPENSATION PLAN” means the Company’s Nonqualified Deferred Compensation Plan as amended and restated effective January 1, 2010, and as amended or replaced from time to time thereafter prior to the Effective Date.

“NOTICE OF TERMINATION” means a notice which indicates the specific termination provision in this Agreement, if any, relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employee’s employment under the provisions so indicated.  Any purported termination by the Company or Employee shall be communicated by written notice of termination to the other.

“OMNIBUS INCENTIVE COMPENSATION PLAN” means the incentive compensation plan known as the “Black Hills Corporation 2005 Omnibus Incentive Compensation Plan” as effective May 25, 2005, and as amended or replaced from time to time thereafter prior to the Effective Date.

“2005 PENSION EQUALIZATION PLAN” means the Company’s 2005 Pension Equalization Plan as in effect on January 1, 2008 and as amended or replaced from time to time thereafter prior to the Effective Date.

“PENSION PLAN” means the Company’s tax qualified defined benefit pension plan as amended and restated effective October 1, 2000, and as amended from time to time thereafter prior to the Effective Date.

“PERSON” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d).

“PROTECTION PERIOD” means the time period beginning on the Effective Date and which shall expire on the second anniversary of the Effective Date; provided, that the Protection Period shall in no event extend beyond the first day of the month following the month in which the Employee attains age 65, if Employee is an executive officer of the Company of the Effective Date.

“RELATED COMPANY” means any business organization or legal entity that directly or indirectly, controls, is controlled by or is under common control with the Company.  For purposes of this definition, the term “control” (including the terms “controlling”,

  

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“controlled by”, and “under common control with”) includes the possession, direct or indirect, of the power to vote 50 percent or more of the voting equity securities, membership interest, or other voting interest, or to direct or cause the direction of the management and policies of such business organization or other legal entity, whether through the ownership of voting equity securities, membership interest, by contract, or otherwise.

 

“RESTORATION PLAN” means the Company’s Restoration Plan as in effect on January 1, 2008 and as amended or replaced from time to time thereafter prior to the Effective Date.

“RETIREE HEALTHCARE PLAN” means the Company’s Retiree Healthcare Plan as amended and restated effective January 1, 2010, and as further amended from time to time thereafter prior to the Effective Date.

“RETIREMENT SAVINGS PLAN” means the Black Hills Corporation Retirement Savings Plan (401K) as amended and restated effective January 1, 2000, and as further amended from time to time thereafter prior to the effective date.

“SEVERANCE COMPENSATION” means the Employee’s base salary and annual incentive target on the date of the Change in Control.

“SUBSIDIARY” means any corporation, partnership, limited liability company, joint venture, or other entity in which the Company has a majority voting interest.

“SUCCESSOR EMPLOYER” means any Successor Entity (as defined in the definition of “Change in Control” herein) or any other successor in interest or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) of the business and/or assets of the Company.

“TERMINATION DATE” means the date, subsequent to the Effective Date, of the Employee’s separation from service (as defined for purposes of Code Section 409A) with the Company and all Related Companies.

“WELFARE BENEFITS” means the Black Hills Corporation Medical and Dental Plan, the Black Hills Corporation Flexible Benefit Plan, and the Black Hills Corporation Employee Life and long-Term Disability Plan, and the Short-Term Disability Plan, as the plans and the terms and conditions thereof exist on the day prior to the Effective Date.  Following the Employee’s Termination Date, the term Welfare Benefits shall not include a “flexible spending arrangement” (within the meaning of Proposed Regulation Section 1.125-5(a) or subsequent authoritative guidance).

3.   TERM OF AGREEMENT.

The Term of this Agreement shall commence on the date of execution and shall continue in effect until November 15, 2013.  If no Change in Control shall have occurred during the Term, this Agreement shall expire.  If a Change in Control occurs during the Term, this Agreement shall remain in effect for full performance according to its terms.  Upon expiration of this Agreement, the Company, by action of its Board of Directors, may elect to renew or not renew this Agreement, or may offer to renew the Agreement subject to modifications of any term or condition, at its discretion.  The Board of Directors may, in its discretion, terminate this

  

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Agreement prior to the expiration of the Term, in the event that Employee, for any reason, ceases to be employed with the Company in a position as an executive officer within the meaning of the Exchange Act.

	
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EMPLOYMENT.

Subject to the provisions of this Agreement, during the Protection Period the Company agrees to continue to employ the Employee and the Employee agrees to remain in the employ of the Company.  During the Protection Period, the Employee shall be employed at a position substantially similar to Employee’s position prior to the Change in Control or in such other capacity as may be mutually agreed to in writing by the parties.  Employee shall perform the duties, undertake the responsibilities and exercise the authority customarily performed, undertaken and exercised by persons situated in a similar capacity.

During the Protection Period, excluding periods of vacation, sick leave or another approved leave of absence, Employee agrees to devote full attention and time during usual business hours to the business and affairs of the Company to the extent necessary to discharge the responsibilities assigned to Employee hereunder.  It is expressly understood and agreed that to the extent that any civic, charitable or industry-related activities have been conducted by Employee prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of Employee’s responsibilities to the Company.  In addition, if Employee serves on a public Board of Directors prior to the effective date, the Employee shall retain the right to continue to serve on that particular public Board.

5.           COMPENSATION.

During the Protection Period, the Company agrees to pay or cause to be paid to Employee Annual Compensation at a rate at least equal to the highest rate of the Employee’s Annual Compensation as in effect at any time within one year preceding the Effective Date, and as may be increased from time to time.  Such Annual Compensation shall be payable in accordance with the Company’s customary practices applicable to its officers and employees.  For purposes of this Agreement, Annual Compensation shall mean all of the following compensation paid to the Employee by the Company during a calendar year including (a) base salary, targeted annual incentive bonus, targeted long-term incentive grants and awards; and (b) Company Matching Contributions and Company Retirement Contributions or other benefits payable under the Retirement Savings Plan and Supplemental Matching Contributions, Supplemental Retirement Contributions and Supplemental Target Contributions under the Nonqualified Deferred Compensation Plan.

6.           EMPLOYEE WELFARE AND PENSION BENEFITS.

During the Protection Period, the Company or the Successor Employer shall provide to the Employee the Welfare Benefits (including Retiree Healthcare Plan credits for purposes of this Section 6) and the Pension Plan, including supplemental medical insurance, travel accident insurance, short-term disability, long-term disability or life insurance benefits, or other substantially similar employee welfare and pension benefits, but in no event on a basis less favorable in terms of benefit levels and coverage than the Welfare Benefits and the Pension Plan.  Subsequent to the Protection Period, the Company or Successor Employer shall provide to the Employee ongoing Welfare Benefits (whether in active or subsequent inactive status) under terms at least as favorable as provided to other Company or Successor Employer employees.  In the

  

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event Employee is not a participant in a Welfare Benefits plan or the Pension Plan prior to the Effective Date, then Company shall have no obligation to provide that Welfare Benefits plan or the Pension Plan or other substantially similar employee welfare and pension benefits as provided in this Section 6.  For purposes of this Section 6, if the Employee is not entitled to any future benefit accruals in the Pension Plan as of the Effective Date the Employee shall not be treated as a participant in the Pension Plan, for purposes of accruing benefits under the Pension Plan.

7.           2005 PENSION EQUALIZATION PLAN; RESTORATION PLAN.

If Employee was a participant in the 2005 Pension Equalization Plan prior to the Effective Date, then during the Protection Period, the Company or Successor Employer shall continue to provide Employee with coverage and participation under the 2005 Pension Equalization Plan or a substantially similar supplemental retirement plan.

If Employee was a participant in the Restoration Plan prior to the Effective Date, then during the Protection Period, the Company or Successor Employer shall continue to provide Employee with coverage and participation under the Restoration Plan or a substantially similar supplemental retirement plan.  For purposes of this Section 7, if the Employee is not entitled to any future benefit accruals in the Restoration Plan as of the Effective Date the Employee shall not be treated as a participant in the Restoration Plan, for purposes of accruing benefits under the Restoration Plan.

In no event shall coverage during the Protection Period be on a basis less favorable in terms of benefit levels and coverage than the 2005 Pension Equalization Plan and the Restoration Plan.

8.           OTHER BENEFITS.

(a)   Fringe Benefits, Perquisites, Vacation and Sick Leave.  During the Protection Period, Employee shall be entitled to all fringe benefits, perquisites, and paid-time-off generally made available by the Company and Successor Employer to its executives or other employees.  Unless otherwise provided herein, the fringe benefits, perquisites, and paid-time-off provided to Employee shall be on the same basis and terms as other similarly situated employees of the Company, but in no event shall be less favorable than the most favorable fringe benefits, perquisites, or paid-time-off to Employee at any time within one year period preceding the Effective Date, or if more favorable, at any time thereafter.

(b)   Expenses.  Employee shall be entitled to receive prompt reimbursement of all expenses reasonably incurred by him in connection with the performance of his duties hereunder or for promoting, pursuing or otherwise furthering the business or interests of the Company or Successor Employer.  All reimbursements under this Section 8(b) will be paid as promptly as administratively practicable, but in no event later than by December 31st of the year next following the calendar year in which the expense was incurred.

(c)   Indemnity.  If, at the time of a Change in Control, the Employee was covered by an Indemnity Agreement and/or Directors’ and Officers’ Insurance (D & O) coverage, then the Indemnity Agreement and D & O coverage shall continue in full force and effect throughout the Protection Period, and beyond the Protection Period, with respect to claims arising out of acts or omissions of the Employee prior to a Change in Control.  If,

  

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following a Change in Control, Company or the Successor Employer adopts substitute Indemnity Agreements, and/or D & O coverage, for employees having substantially the same authority, duties, and responsibilities as Employee, then Employee shall be entitled to receive the benefit of such protection with respect to claims arising from acts or omissions of Employee following a Change in Control.  Payment for expenses to be reimbursed under this Section 8(c) shall be made in accordance with the time specified under the Indemnity Agreement or D & O coverage, but in no event later than by December 31st of the year next following the year in which the expense was incurred.

	
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TERMINATION.

During the Protection Period, Employee’s employment hereunder may be terminated under the following circumstances:

(a)   Cause.  The Company may terminate Employee’s employment for “Cause.”  A termination of employment is for “Cause” if Employee (1) enters a guilty plea, pleads nolo contendre to, or is convicted of a felony offense that is demonstrably injurious to the Company; (2) intentionally engages in other conduct which is demonstrably injurious to the Company, monetarily or otherwise; or (3) fails, after reasonable request, to cooperate with the Company or governmental authorities in connection with a civil or criminal regulatory investigation or proceeding, or other civil litigation involving the company; provided, however, that no termination of Employee’s employment shall be for Cause as set forth in clauses (2) or (3), unless (i) there shall have been delivered to Employee a copy of a written Notice of Termination, at least thirty (30) days in advance of the Termination Date, setting forth that Employee was guilty of the conduct set forth in such applicable clause and specifying the particulars thereof in detail; and (ii) Employee shall have been provided an opportunity to be heard by the Board (with the assistance of Employee’s counsel if Employee so desires).  No act,  nor failure to act, on Employee’s part shall be considered “intentional” unless he has acted, or failed to act, with an absence of good faith and without a reasonable belief that his action or failure to act was in the best interest of the Company.  Notwithstanding anything contained in this Agreement to the contrary, no failure to perform by Employee after a Notice of Termination is given to the Employee shall constitute Cause for purposes of this Agreement.

(b)   Disability.  The Company may terminate Employee’s employment after the Employee’s Disability Date.  Employee shall be entitled to the compensation and benefits provided for under this Agreement for any period during the Protection Period and prior to the Employee’s Disability Date, during which Employee is unable to work due to a physical or mental infirmity, and up to the Employee’s Disability Date.  Notwithstanding anything contained in this Agreement to the contrary, and subject to applicable law and the provisions of the Company’s long-term disability policy, until the Termination Date specified in a Notice of Termination relating to Employee’s Disability, Employee shall be entitled to return to his position with the Company as set forth in this Agreement, in which event no Disability Date will be deemed to have occurred.

(c)   Good Reason.  During the Protection Period, the Employee may terminate his employment for “Good Reason.”  For purposes of this Agreement, “Good Reason” shall mean the occurrence after the Effective Date of any of the events or conditions described below.

  

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(i)   A material reduction of the Employee’s authority, duties, or responsibilities from those in effect immediately prior to the Effective Date; provided that, any reduction in the foregoing resulting merely from the acquisition of the Company, or any Business Combination, by reason of which the Company thereafter exists as a subsidiary or division of another entity, shall not constitute Good Reason;

 

(ii)   A material reduction in the Employee’s “base compensation” within the meaning of such term under the Final Treasury Regulations issued under Code Section 409A, or a failure to pay the Employee any compensation or benefits to which he is entitled within a reasonable period after the date due, provided that such failure to pay constitutes a material breach under subsection 9(c)(vi) (unless otherwise specified in authority under Code Section 409A, a material reduction in base compensation for this purpose shall occur if the Employee’s base compensation is reduced by two percent (2%) or more of the base compensation as in effect immediately prior to such reduction);

(iii)   Any material breach by the Company of any provision of this Agreement, including, but not limited to, the Company’s failure to provide the Employee Welfare and Pension Benefits or the Pension Equalization Plan or Restoration Plan benefits, as set forth in Sections 6 and 7, provided that such failure constitutes a material breach under subsection 9(c)(vi);

(iv)   The Company’s requiring the Employee to be based outside a 50-mile radius from Employee’s usual and normal place of work prior to the Change in Control, except for reasonably required travel on the Company’s business which is not substantially greater than such travel requirements prior to the Effective Date;

(v)   Any purported termination of the Employee’s employment for Cause by the Company which does not comply with the terms of Section 9(a), provided that such termination constitutes a material breach under subsection 9(c)(vi); or

(vi)    Any other action or inaction that constitutes a material breach by the Company of the agreements under which the Employee provides services including, but not limited to, the failure of the Company to obtain an agreement, satisfactory to the Employee, from any Successor Employer or assign of the Company, to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be obligated to perform under this Agreement, as contemplated in Section 14.

In order to effectuate a termination for Good Reason under this Section 9(c), the Employee shall, within 90 days after the initial existence of the condition, deliver written notice to the Company stating the grounds for Good Reason in support of termination.  The Company may, within 30 days after receipt of such notice, remedy the condition, in which case the Good Reason for termination shall be deemed not to have occurred.  For purposes of determining the amount of any cash payment payable to the Employee in accordance with Section 10, any reduction in compensation or benefit that would constitute Good Reason hereunder shall be deemed not to have occurred.

  

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COMPENSATION UPON TERMINATION.

Upon termination of Employee’s employment, prior to the end of the Protection Period, Employee shall be entitled to the following compensation and benefits:

(a)   If Employee’s employment with the Company shall be terminated (i) by the Company for Cause or Disability, or (ii) by reason of Employee’s death, or (iii) by Employee without “Good Reason” pursuant to Section 9(c), the Company shall pay Employee all amounts earned or accrued through the Termination Date, but not paid as of the Termination Date, including all Annual Compensation, reimbursement for reasonable and necessary expenses incurred by Employee on behalf of the Company during the period ending on the Termination Date, together with accrued vacation pay, and paid time off (collectively “Accrued Compensation”).  In addition to the foregoing, if the Employee’s employment is terminated by the Company for Disability or by reason of the Employee’s death, the Company shall pay to the Employee or his beneficiaries an amount equal to the “Pro Rata Bonus” shall mean an amount equal to 100% of the target bonus that the Employee would have been eligible to receive for the Company’s fiscal year in which the Employee’s employment terminates, multiplied by a fraction, the numerator of which is the number of days in such fiscal year through the Termination Date and the denominator of which is 365.  All amounts payable under this Section 10(a) shall be paid in a lump sum within 60 days following the Employee’s Termination Date.

(b)   If the Employee’s employment with the Company shall be terminated (other than by reason of death) (i) by the Company other than for Cause or Disability, or (ii) by Employee for Good Reason, then following his Termination Date, the Employee shall be entitled to the following:

(i)   The Company shall pay Employee all Accrued Compensation and a Pro Rata Bonus.

(ii)   The Company shall pay Employee, in lieu of any further compensation for periods subsequent to the Termination Date, a lump sum severance payment, in cash, in an amount equal to two times (2x) the Employee’s Severance Compensation.  Notwithstanding the foregoing, if the Employee is an executive officer who has attained the age of 63 on the Termination Date, the severance payment to be paid under this subsection shall be the amount described above multiplied by a fraction, the numerator of which shall be the number of days remaining until the Employee’s 65th birthday, and the denominator of which shall be 730.  The lump sum severance payment described in this paragraph shall be paid within 60 days after the Employee’s Termination Date (unless the Company’s deduction for the payment is restricted by Code Section 162(m), in which case payment must be made as soon as practicable or as soon as the payment becomes deductible).

(iii)   Within ten (10) business days after the Termination Date, and as a condition of receiving payments provided in subsection 10(b)(ii) above, Employee shall execute and deliver to Company the Waiver and Release Agreement (“Release”) in the same form as attached hereto as Exhibit A.  The severance payment shall not be paid unless the Employee has executed and delivered the Release, and the Release has become irrevocable as provided therein.  Prior to the Effective Date, the Company may revise the Release to

  

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conform to applicable law, so long as the Release does not increase the obligations of Employee thereunder.

(iv)   If Employee, prior to the Termination Date, was a participant in any Welfare Benefits, the Company or the Successor Employer, or any affiliate of the Successor Employer as determined under the rules of Code Sections 414(b) and (c), shall at its expense continue on behalf of Employee and his dependents and beneficiaries, for a period of two (2) years following the Termination Date, the Welfare Benefits or similar benefits no less favorable than the benefit levels and coverage provided to Employee prior to the Termination Date.  Following the two year period, the Company or the Successor Employer shall provide to the Employee Welfare Benefits (whether in active or subsequent inactive status) under terms at least as favorable as provided to other Company or Successor Employer employees.  Employee shall pay the employee portion of applicable premiums required to be paid by similarly-situated active employees (or retired employees in the case that the Employee is retired) of the Company.  At its election, the Company may provide Employee and his dependents with equivalent benefits outside the Welfare Benefits plans (though not by method of direct cash payment).   The Company’s obligation with respect to the foregoing benefit shall be discontinued in the event that Employee becomes covered under the health insurance coverage of a subsequent employer, other than the Successor Employer or any affiliate thereof, which does not contain any exclusion or limitation with respect to any preexisting condition of the Employee and his dependents.  For purposes of this provision, Employee shall have a duty to inform Company as to the terms and conditions of any subsequent employment and the corresponding benefits earned from such employment.  The continued coverage or provision of equivalent benefits under this subsection 10(b)(iv) or subsection 10(b)(v) shall be provided in a manner that is intended to satisfy an exception to Code Section 409A, and therefore not treated as an arrangement providing for nonqualified deferred compensation that is subject to taxation under Code Section 409A, including (i) providing such benefits on a nontaxable basis to Employee, (ii) providing for the reimbursement of medical expenses incurred during the time period during which Employee would be entitled to continuation coverage under a group health plan of the Company pursuant to Code Section 4980B (i.e., COBRA continuation coverage), (iii) providing that such benefits constitute the reimbursement or provision of in-kind benefits payable at a specified time or pursuant to a fixed schedule as permitted under Code Section 409A, or (4) such other manner as determined to be in compliance with an exception from being treated as nonqualified deferred compensation that is subject to taxation under Code Section 409A.

(v)           If Employee was a participant in the Retiree Healthcare Plan immediately prior to a Change in Control, then as of Employee’s Termination Date, the Employee’s benefit under the Retiree Healthcare Plan shall be determined as if (i) Employee had completed an additional two (2) Years of Plan Participation (as defined in the Retiree Healthcare Plan), and (ii) Employee were two (2) years older for determining eligibility for plan benefits. Furthermore, if the Employee is not eligible for benefits after the age and participation adjustment, then the Retirement Medical Savings Account (after adjustment for two years of participation) will be considered vested, and upon attainment of age 55 the Employee shall be deemed eligible for Retiree Healthcare Plan benefits,

  

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with the vested Retirement Medical Savings Account available to offset premiums.  At its election, the Company may provide Employee and his dependents with equivalent benefits outside the Retiree Healthcare Plan (though not by method of direct cash payment).

(vi)    If Employee was a participant in the 2005 Pension Equalization Plan immediately prior to a Change in Control, then as of Employee’s Termination Date, the Employee’s benefit under the 2005 Pension Equalization Plan shall be determined as if (i) Employee had completed an additional two (2) Years of Plan Participation (as defined in the 2005 Pension Equalization Plan), and (ii) Employee received Annual Compensation (as defined in Section 5) during each additional Year of Plan Participation.

If Employee was a participant in the Restoration Plan and the Pension Plan immediately prior to a Change in Control, then as of Employee’s Termination Date, Employee’s Restoration Plan benefit shall be determined as if (i) Employee completed two (2) additional years of Credited Service under the Pension Plan, and (ii) the Employee received Annual Compensation (as defined in Section 5) during each additional year of Credited Service.  For purposes of this subsection 10(b)(vi), if the Employee is not entitled to any future benefit accruals in the Restoration Plan as of the Effective Date the Employee shall not receive any additional Credited Service or Annual Compensation when determining their Restoration benefit.

Furthermore, the Employee shall be made 100% vested for purposes of both the 2005 Pension Equalization Plan and Restoration Plan, if the Employee is a participant in such plans (for purposes of this subsection) and is not already fully vested.

(vii)    If Employee was a participant in the Nonqualified Deferred Compensation Plan immediately prior to a Change in Control, then as of Employee’s Termination Date, Employee’s Non-Elective Account in the Nonqualified Deferred Compensation Plan shall become immediately vested and be determined as if (i) Employee had completed two (2) additional Plan Years of participation and earned the related Supplemental Matching Contributions, Supplemental Retirement Contributions, and Supplemental Target Contributions (all as defined in the Nonqualified Deferred Compensation Plan); no investment earnings shall be attributed for this additional period, and (ii) Employee received Annual Compensation (as defined in Section 5) during each additional Plan Year of participation.

For purposes of this subsection 10(b)(vii), the additional contributions under the Nonqualified Deferred Compensation Plan (Supplemental Matching Contributions, Supplemental Retirement Contributions, and Supplemental Target Contributions) shall be determined without regard to any offsets from the Retirement Savings Plan.  (This has the same effect as if the Supplemental Matching Contributions and Supplemental Retirement Contributions were determined on total pay rather than only on pay over IRS pay limits.)

(viii)   Notwithstanding any provision herein to the contrary, if the Employee is a “specified employee” (as defined for purposes of Code Section 409A), no

  

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payment under this Agreement shall be made before the date which is six (6) months after the date of the Employee’s Termination Date, or such earlier date upon which such amount can be paid or provided under Code Section 409A without being subject to additional taxes thereunder, if such payment constitutes deferred compensation subject to Code Section 409A.  To the extent that the Agreement provides for such nonqualified deferred compensation, it is intended to be compliant with Code Section 409A, and shall be interpreted and administered accordingly.

	
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OFFSET.

Employee shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, and except as provided in Section 10(b)(iv), such payments shall not be reduced whether or not Employee obtains other employment.

	
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TAX EFFECT.

No additional payments shall be made to the Employee to account for any excise taxes, income taxes, interest or penalties the employee may incur due to receipt of any Severance Compensation payment or distribution of any type by the Company.

In the event it shall be determined that any Severance Compensation payment or distribution of any type by the Company, or by any Affiliate of the Company, or by any Person who acquires ownership or effective control of the Company or ownership of a substantial portion of the Company’s assets (within the meaning of Code Section 280G) or any Affiliate of such Person, to or for the benefit of the Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the “Total Payments”) (including but not limited to distribution of stock or options which vest upon a Change in Control pursuant to the Omnibus Incentive Stock Plan), is or will be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), and the amount of the Total Payments after reducing for the Excise Tax does not exceed the largest amount that would result in no portion of the Total Payments being subject to the Excise Tax (the “Safe Harbor Amount”), the Employee’s Total Payments shall be reduced to an amount equal to the Safe Harbor Amount.  However, if the amount of the Total Payments after reducing for the Excise Tax exceeds the Safe Harbor Amount, then no reduction shall be applied to the Total Payments.  In applying any reduction required herein, Employee may elect whether the non-cash severance benefits or the cash severance benefits shall first be reduced.

	
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OUTPLACEMENT SERVICES.

The Company shall, at its expense, permit the Employee to participate in outplacement assistance services, as determined by the Company, which are: (a) as to executive officers, at a level appropriate for senior management of a public company; and (b) not more than six (6) months in duration.  Outplacement services shall be provided in kind; cash shall not be paid in lieu thereof, nor will cash compensation be increased if Employee declines or does not use outplacement services.  All outplacement services shall be provided by the last day of the second calendar year beginning after the Employee’s Termination Date.

  

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14.

	
SUCCESSORS AND ASSIGNS.

This Agreement shall be fully binding upon any Successor Employer or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to the business and/or assets of the Company, in the same manner and to the same extent that the Company would be obligated under this Agreement as if no succession had taken place.  In the case of any transaction in which a successor or assign would not by the foregoing provision, or by operation of law, be bound by this Agreement, the Company shall require such successor or assign to expressly and unconditionally assume and agree to perform all the obligations of the Company and each Employer under this Agreement, in the same manner and to the same extent that the Company and each Employer would be required to perform it if no such succession or assignment had taken place.  Any failure to obtain such assumption and continuation of this Agreement shall constitute a material breach hereof.

Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by the Employee, his beneficiaries or legal representatives, except by will or by the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by the Employee’s legal personal representative.

15.           FEES AND EXPENSES.

The company shall pay all legal fees and related expenses (including the costs of experts, evidence and counsel) reasonably and in good faith incurred by the Employee as they become due as a result of (a) the Employee’s termination of employment (including all such fees and expenses, if any, incurred in contesting or disputing any such termination of employment), (b) the Employee seeking to obtain or enforce any right or benefit provided by this Agreement or by any other plan or arrangement maintained by the Company under which the Employee is or may be entitled to receive benefits; provided, however, that the circumstances set forth in clauses (a) and (b) of this Section (other than as a result of the Employee’s termination of employment at the expiration of the Protection Period) occurred on or after the Effective Date.  For purposes of this Section 15, the Employee will not be deemed to have incurred legal fees or expenses reasonably or in good faith if, following resolution of a dispute under this Agreement, he has failed to prevail on at least one material issue in dispute.  In addition, only with regard to claims by the Employee based on wrongful termination, employment discrimination, the Fair Labor Standards Act, or worker’s compensation statutes, in no event shall the Company pay any legal fees or related expenses in accordance with this Section 15 unless (i) such fees and expenses are incurred with respect to a bona fide claim by the Employee and (ii) no payment of legal fees or related expenses shall be made with respect to such claims to the extent that they are incurred with respect to benefits that would have been paid regardless of a claim by the Employee, even if such amounts are paid or modified as part of a settlement or award resolving an actual bona fide claim.

16.           NOTICE.

For the purposes of this Agreement, notices and all other communications provided for in the Agreement (including the Notice of Termination) shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, addressed to the respective addresses last given by each party to the other.  All notices and communications shall be deemed to have been received on the date of delivery thereof on the third business day after the mailing thereof, except that notice of change of address shall be effective only upon receipt.

  

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17.           NONEXCLUSIVITY OF RIGHTS.

Except as expressly provided herein, nothing in this Agreement shall prevent or limit Employee’s continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company or any of its subsidiaries or affiliates and for which Employee may qualify, nor shall anything herein limit or reduce such rights as Employee may have under any other agreements with the Company or any of its subsidiaries or affiliates.  Amounts which are vested benefits or which Employee is otherwise entitled to receive under any plan or program of the Company or any of its subsidiaries or affiliates shall be payable in accordance with such plan or program, except as explicitly modified by this Agreement; provided, however, and notwithstanding anything contained in this Agreement, in the event that Employee is not a participant in or eligible to participate in any Welfare Benefits or the Pension Plan, then nothing contained in this Agreement shall be deemed to provide for or suggest the right in Employee to be a participant in or be eligible to participate in the Welfare Benefits or the Pension Plan.

18.           CONFIDENTIAL INFORMATION.

The Employee shall hold in a fiduciary capacity of the benefit of the Company all material proprietary information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Employee during the Employee’s employment by the Company or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the employee or representatives of the Employee in violation of this Agreement).  After termination of the Employee’s employment with the Company, the Employee shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it.

19.           MISCELLANEOUS.

No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Employee and the Company.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions  at the same or at any prior or subsequent time.  No agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.

20.           GOVERNING LAW.

This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of South Dakota.

21.           SEVERABILITY.

The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.

  

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22.           NO GUARANTEED EMPLOYMENT.

Employee and the Company acknowledge that, except as may otherwise be provided under any other written agreement between Employee and the Company, the employment of Employee by the Company is “at will” and, prior to the Effective Date, may be terminated by either Employee or the Company at any time.  Moreover, if prior to the Effective Date, Employee’s employment with the Company terminates, Employee shall have no further rights under this Agreement.

23.           NO ADMINISTRATION.

The parties hereto understand and agree that this Agreement shall not be subject to a separate ongoing administrative scheme to administer the benefits of this Agreement, as the parties agree that the benefits provided hereunder that are not subject to the terms of a separate plan are capable of simple or mechanical determination upon the happening or a required event or events.

	
24.

	
SUBSIDIARY DEEMED TO BE COMPANY FOR PORTIONS OF AGREEMENT.

In the event that subsequent to the date of this Agreement the Employee becomes an employee of a subsidiary or Affiliate of the Company, or in the event that any Employee is an employee of a subsidiary or Affiliate of the Company, the references to “Company” in this Agreement shall be deemed to be a reference to the subsidiary or Affiliate which may employ the Employee to the full extent necessary or appropriate to preserve the intent of this Agreement; provided, however, nothing herein shall mean or suggest that any benefits are applicable hereunder upon a Change in Control of a subsidiary or Affiliate rather than the Company.

25.           ENTIRE AGREEMENT.

This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, if any, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof.

Dated this____ day of ____________________, 2010.

BLACK HILLS CORPORATION

By:___________________________                                                      

EMPLOYEE

______________________________

  

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EXHIBIT A

WAIVER AND RELEASE AGREEMENT

This Waiver and Release Agreement (the “Waiver and Release”) is entered into by and among Black Hills Corporation (“Company”) and ________________ (“Employee”) this ____ day of ____________, _____.

1.           General Waiver and Release.  For and in consideration of the agreement of Company to provide Employee the severance benefits described in that certain Change in Control Agreement, dated as of ________________, 20__, between Employee and the Company (the “Agreement”), Employee, with the intention of binding himself and all of his heirs, executors, administrators and assigns, does hereby release, remise, acquit and forever discharge the Company, and all of their respective past and present officers, directors, stockholders, employees, agents, parent corporations, predecessors, subsidiaries, affiliates, estates, successors, assigns and attorneys (hereinafter collectively referred to as “Released Parties”) from any and all claims, charges, actions causes of action, sums of money due, suites, debts, covenants, contracts, agreements, rights, damages, promises, demands or liabilities (hereinafter collectively referred to as “Claims”) whatsoever, in law or in equity, whether known or unknown, suspected or unsuspected, which Employee, individually or as a member of any class, now has, owns or holds or has at any time heretofore ever had, owned or held against the Released Parties, which arise out of or are in any way connected with Employee’s employment with the Company or any of the Released Parties or the termination of any such employment relationship, including, but not by way of limitation, Claims pursuant to federal, state or local statute, regulation, ordinance or common-law for (i) employment discrimination; (ii) wrongful discharge; (iii) breach of contract; (iv) tort actions of any type, including those for intentional or negligent infliction of emotional harm; and (v) unpaid benefits, wages, compensation, commissions, bonuses or incentive payments of any type, except as follows:

 

	
  

	
a.

	
Those obligations of the Company and its affiliates under the Agreement, pursuant to which this Waiver and Release is being executed and delivered;

	
  

	
b.

	
Claims, if any, for Employee’s accrued or vested benefits under the retirement plans, savings plans, investment plans and employee welfare benefit plans, if any, of the Released Parties (within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), as amended; provided, however, that nothing herein is intended to or shall be construed to require the Released Parties to institute or continue in effect any particular plan or benefit sponsored by the Released Parties and the Company and all other Released Parties hereby reserve the right to amend or terminate any such plan or benefit at any time; and

	
  

	
c.

	
Any rights to indemnification or advancement of expenses to which Employee may otherwise be entitled pursuant to the Articles of Incorporation or Bylaws of any of the Released Parties, or by contract or applicable law, as a result of Employee’s service as an officer or director of any of the Released Parties.

A-1

  

  

  

Employee further understands and agrees that he has knowingly relinquished, waived and forever released any and all remedies arising out of the aforesaid employment relationship or the termination thereof, including, without limitation, claims for backpay front pay, liquidated damages, compensatory damages, general damages special damages, punitive damage, exemplary damages, costs, expenses and attorneys’ fees.

2.           Waiver and Release of ADEA Claims.  Without limiting the generality of the foregoing, and also for and in consideration of the Company’s agreement to provide Employee severance payments and benefits as described in the Agreement, Employee specifically acknowledges and agrees that he does hereby knowingly and voluntarily release the Company and all other Released Parties from any and all claims arising under the Age Discrimination in Employment Act, 29 U.S.C. Section 621, et seq. (“ADEA”), which Employee ever had or now has from the beginning of time up to the date this Waiver and Release is executed, including, but not by way of limitation, those ADEA Claims which are in any way connected with any employment relationship or the termination of any employment relationship which existed between the Company or any other Released Parties and Employee.  Employee also acknowledges that he has been provided with a notice, as required by the Older Workers Benefit Protection Act of 1990, that contains (i) information about the individuals covered under the Agreement, (ii) the eligibility factors for participation in the Agreement, (iii) the time limits applicable to the Agreement, (iv) the job titles and ages of the employees designated to participate in the Agreement, (v) and the ages of the employees in the same job classification who have not been designated to participate in the Agreement.  Employee further acknowledges and agrees that he has been advised to consult with an attorney prior to executing this Waiver and Release and that he has been given forty-five (45) days to consider this Waiver and Release prior to its execution.  Employee agrees that in the event that he executes this Waiver and Release prior to the expiration of the forty-five (45) day period, he shall waive the balance of said period.  Employee also understands that he may revoke this Waiver and Release of ADEA Claims at any time within seven (7) days following its execution and that, if Employee revokes this waiver and Release of ADEA Claims within such seven (7) day period, it shall not be effective or enforceable and he will not receive the above-described consideration or any payments provided for in the Agreement that have not been paid.

3.           Covenant Not to Sue.  Employee acknowledges and agrees that this Waiver and Release may not be revoked at any time after the expiration of the seven (7) day revocation period and that he will not institute any suit, action, or proceeding, whether at law or equity, challenging the enforceability of this Waiver and Release.  Should Employee ever attempt to challenge the terms of this Waiver and release, attempt to obtain an order declaring this Waiver and release to be null and void, or institute litigation against any of the released Parties based upon a Claim other than an ADEA Claim which is covered by the terms of this Waiver and Release, Employee will as a condition precedent to such action repay all monies paid to him under the terms of this Waiver and Release.  Furthermore, if Employee does not prevail in an action to challenge this Waiver and Release, to obtain an order declaring this Waiver and release to be null and void, or in any action against any of the Released Parties based upon a Claim other than an ADEA Claim which is covered by the Waiver and release set forth herein, Employee shall pay to the Company and/or the appropriate Released Parties all their costs and attorneys’ fees incurred in their defense of Employee’s action.

A-2

  

  

  

Provided, however that it is understood and agreed by the parties that Employee shall not be required to repay the monies paid to him under the terms of this Waiver and Release or pay the Company and/or the appropriate Released Parties all their costs and attorneys’ fees incurred in their defense of Employee’s action (except those attorneys’ fees or costs specifically authorized under federal law) in the event that Employee seeks to challenge his Waiver and Release of Claims under the ADEA.

4.           Denial of Liability.  Employee acknowledges and agrees that neither the payment of severance payments or benefits under the Agreement nor this Waiver and release is to be construed in any way as an admission of any liability whatsoever by Company or any of the other released Parties, by whom liability is expressly denied.

5.           Agreement Not to Seek Further Relief.  Employee acknowledges and agrees that he has not, with respect to any transaction or state of facts existing prior to the date of execution of this Waiver and Release, filed any complaints, charges or lawsuits against any of the Released Parties with any governmental agency or any court or tribunal, and that he will not do so at any time hereafter.  Employee further acknowledges and agrees that he hereby waives any right to accept any relief or recovery, including costs and attorneys’ fees that may arise from any charge or complaint before any federal, state or local court or administrative agency against the Released Parties.

6.           Company Property.  Employee agrees that he will not retain or destroy, and will immediately return to the Company, any and all property of the Company in his possession or subject to his control, including, but not limited to, keys, credit and identification cards, personal items or equipment provided for his use, customer files and information, all other files and documents relating to the Company and its business, together with all written or recorded materials, documents, computer disks, plans, records or notes or other papers belonging to the Company.  Employee further agrees not to make, distribute or retain copies of any such information or property.

7.           Confidentiality Agreement.  Employee acknowledges that the terms of this Waiver and Release must be kept confidential.  Accordingly, Employee agrees not to disclose or publish to any person or entity, except as required by law or as necessary to prepare tax returns, the terms and conditions or sums being paid in connection with this Waiver and Release.

8.           Cooperation.  Employee agrees to cooperate with the Company and its attorneys in connection with all lawsuits, claims, investigations, or similar proceedings, including the provision of testimony as my reasonably be required, arising out of or in any way related to Employee’s employment by the Company or any of its Subsidiaries.

9.           Acknowledgement.  Employee acknowledges that he has carefully read and fully understands the terms of this Waiver and Release and the Agreement and that this Waiver and Release is executed by Employee voluntarily and is not based upon any representations or statements of any kind made by the Company or any of the other Released Parties as to the merits, legal liabilities or value of his claims.  Employee further acknowledges that he has had a full and reasonable opportunity to consider this waiver Release and that he has not been pressured or in any way coerced into executing this Waiver and Release.

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10.           Choice of Laws.  This Waiver and Release and the rights and obligation so the parties hereto shall be governed and construed in accordance with the laws of the State of South Dakota.

11.           Severability.  With the exception of the waiver and releases contained in Sections 1 and 2 hereof, if any provision of this waiver and Release is unenforceable or is held to be unenforceable, such provision shall be fully severable, and this Waiver and Release and its terms shall be construed and enforced as if such unenforceable provision had never comprised a part hereof, the remaining provisions hereof shall remain in full force and effect, and the court construing the provisions shall add as a part hereof a provision as similar in terms and effect to such unenforceable provision as may be enforceable, in lieu of the unenforceable provision In the event that both of the releases contained in Sections 1 and 2 are unenforceable or are held to be unenforceable, the parties understand and agree that the remaining provisions of this Waiver and Release shall be rendered null and void and that neither party shall have any further obligation under any provision of this Waiver and Release.

12.           Entire Agreement.  This document contains all terms of the Waiver and Release and supersedes and invalidates any previous agreements or contracts regarding the same subject matter.  No representations, inducements, promises or agreements, oral or otherwise, which are not embodies herein shall be of any force or effect.

Please read this document carefully, as it includes a release of claims.

IN WITNESS WHEREOF, the undersigned acknowledges that he has read this Waiver and Release Agreement and sets his hand and seal this _______ day of ____________, 20__.

EMPLOYEE

________________________________

BLACK HILLS CORPORATION

By: _____________________________

Title:

A-4ex10_1.htm

Exhibit 10.1

 

AMENDED & RESTAED

EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”), dated as of September 9, 2010 is made by and between Rexahn Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and Chang Ho Ahn (the “Executive”).

W I T N E S S E T H :

WHEREAS, the Company desires to employ the Executive pursuant to the terms and conditions contained in this Agreement; and

WHEREAS, the Executive desires to accept such employment pursuant to the terms and conditions contained in this Agreement;

NOW, THEREFORE, in consideration of the premises, and of the mutual covenants and agreements hereinafter contained, the parties hereto agree as follows:

1.              Term.  The Executive’s employment under this Agreement shall commence on the date first written above, and unless sooner terminated pursuant to Section 7 below, shall continue through the third anniversary of such date (hereinafter, such period of employment is referred to as the “Term”) and thereafter shall be automatically renewed each year for a period of one year until terminated,

2.              Title.  During the Term, the Executive will serve as the Chief Executive Officer of the Company.

3.             Duties.  During the Term, the Executive will be responsible for such duties and responsibilities as are consistent with his position or past practices of the Company, or as may be assigned to him from time to time by the Company’s Board of Directors (the “Board”).  The Executive agrees to devote his full time, attention, skill and energy to the duties set forth herein and to the business of the Company, and to use his best efforts to promote the success of the Company’s business.

4.             Reporting.  During the Term, the Executive will report directly to the Board.

5.             Location.  During the Term, the Executive shall be based in the Company’s Rockville, Maryland offices.  However, the Executive acknowledges that in order to effectively perform his duties, he will occasionally be required to travel for business purposes.

  

  

  

6.             Compensation.

(a)            Base Salary.  During the Term, the Executive will receive an annual base salary of $350,000 (the “Base Salary”), payable in accordance with the Company’s normal payroll practices as in effect from time to time.  Such Base Salary shall be adjusted for inflation each year as determined by the Consumer Price Index and shall be subject to periodic review by the Compensation Committee of the Board (the “Compensation Committee”), and may be further increased in the sole discretion of the Compensation Committee.

(b)            Annual Cash Bonus.  During the Term, the Executive shall be eligible to receive an annual cash bonus for each fiscal year, as determined by the Compensation Committee in its sole discretion.  Any such bonus shall be paid to the Executive within 60 days after the date the Compensation Committee determines to award such bonus.  In order to receive any cash bonus payable pursuant to this Section 6(b), the Executive must be actively employed by the Company on the date on which such bonus is scheduled to be paid to the Executive.

(c)            Stock Option Awards.  During the Term, the Executive shall be eligible for awards of options to purchase shares of the Company’s common stock (the “Stock Options”), such Stock Options to be awarded in the sole discretion of the Compensation Committee and in accordance with the terms of the Company’s Stock Option Plan, as such Stock Option Plan may be amended, suspended or terminated from time to time.

(d)            Additional Bonuses on Occurrence of Certain Events.  Periodically, and no less frequently than once per year, the Compensation Committee will meet and determine in its discretion whether the Executive should be entitled to receive an additional bonus in consideration of his role in bringing about such events:

(i)             the completion by the Company of a successful  end-of-Phase 2 meeting with the Food and Drug Administration for any drug candidate;

(ii)            the completion by the Company of pivotal trials of any drug candidate;

(iii)           the filing by the Company of a New Drug Application with the Food and Drug Administration with respect to any drug candidate;

(iv)           the approval by the Food and Drug Administration of a New Drug Application filed therewith by the Company with respect to any drug candidate;

  

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(v)            the receipt by the Company of additional equity or debt financing; or

(vi)           the execution by the Company of an agreement that may lead to the payment to the Company of up-front or milestone payments.

(d)            Vacation.  During the Term, the Executive shall be entitled to vacation benefits in accordance with the Company’s vacation policy for management and officers.

(e)            Benefits.  During the Term, and provided that the Executive satisfies, and continues to satisfy, any plan eligibility requirements, the Executive shall be entitled to participate in, and receive benefits under, any retirement savings plan or welfare benefit plan made available by the Company to similarly-situated Executives, as such plans may be in effect from time to time.

(f)             Reimbursement of Business Expenses.  The Company will reimburse the Executive for all reasonable and properly-documented business-related expenses incurred or paid by him in connection with the performance of his duties hereunder.

(g)            Term Life Insurance.  The Company shall provide the Executive, at the Company’s cost, with term life insurance coverage in an amount equal to four times Base Salary, for which the Executive may designate the beneficiary.

(g)            Withholdings.  All payments made under this Section 6, or under any other provision of this Agreement, shall be subject to any and all federal, state and local taxes and other withholdings to the extent required by applicable law.

7.              Termination of Employment.

(a)            Due to Death.  The Executive’s employment with the Company will automatically terminate immediately upon his death.

(b)            Due to Disability.  If the Executive incurs a “Disability” (as defined below) during the Term, then the Company, in its sole discretion, shall be entitled to terminate the Executive’s employment immediately upon written notice to the Executive of such decision.  For purposes of this Agreement, “Disability” shall mean a physical or mental impairment that prevents the Executive from performing the essential duties of his position, with or without reasonable accommodation, for (i) a period of  90 consecutive calendar days or (ii) an aggregate of 90 work days in any period of  six months.  The determination of whether the Executive incurred a Disability shall be made by the Board, in its sole discretion, after consultation with the Executive’s physician.

  

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(c)            By the Company With Cause.  During the Term, the Company shall be entitled to terminate the Executive’s employment with “Cause” (as defined below) by providing written notice to the Executive of such decision.  No advance notice period is required for a termination by the Company with Cause.  The Company reserves the right to withdraw any and all duties and responsibilities from the Executive, and to exclude the Executive from the Company’s premises, upon delivery of such notice of termination.  For purposes of this Agreement, “Cause” shall mean any of the following:  (i) the commission by the Executive of an act of malfeasance, dishonesty, fraud or breach of trust against the Company or any of its Executives, clients or suppliers; (ii) the breach by the Executive of any of his obligations under this Agreement, or any other agreement between the Executive and the Company; (iii) the Executive’s failure to comply with the Company’s written policies; (iv) the Executive’s failure, neglect or refusal to perform his duties under this Agreement, or to follow the lawful written directions of the Board; (v) the Executive’s indictment, conviction of or plea of guilty or no contest to, any felony or any crime involving moral turpitude; (vi) any act or omission by the Executive involving dishonesty or fraud or that is, or is reasonably likely to be, injurious to the financial condition or business reputation of the Company, or that otherwise is injurious to the Company’s Executives, clients or suppliers; or (vii) the inability of the Executive, as a result of repeated alcohol or drug use, to perform the duties and/or responsibilities of his position.

(d)            By the Executive Without Good Reason.  During the Term, the Executive shall be entitled to terminate his employment with the Company by providing the Company with at least 30 days’ advance written notice of such decision.  The Company reserves the right to withdraw any and all duties and responsibilities from the Executive, and to exclude the Executive from the Company’s premises, upon delivery of such notice of termination.

(e)            By the Company Without Cause.  During the Term, the Company shall be entitled to terminate the Executive’s employment without Cause by providing written notice to the Executive of such decision.  No advance notice period is required for a termination by the Company without Cause.  The Company reserves the right to withdraw any and all duties and responsibilities from the Executive, and to exclude the Executive from the Company’s premises, upon delivery of such notice of termination.

(f)             By the Executive With Good Reason.

(i)             The Executive may voluntarily terminate his employment for “Good Reason” by notifying the Company in writing, within 90 days after the initial existence of one of the events below, that the Executive intends to terminate his employment for Good Reason, and, if such Good Reason is not cured in accordance with the cure provision set forth below, the Executive must actually terminate employment no later than six months following the initial existence of such Good Reason. “Good Reason” means the occurrence of any of the following events:

  

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(A)           a material diminution in the Executive’s duties, responsibilities or authority inconsistent with the Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith that is remedied by the Company after receipt of notice thereof given by the Executive:

(B)           A change in the Executive’s reporting from solely and directly to the Board;

(C)           a material reduction in the Executive’s Base Salary;

(D)           the Company’ requiring the Executive to be based at any office that is more than 40 miles from the Executive’s current office in Rockville, Maryland; or

(E)            any action or inaction by either of the Company that constitutes a material breach of the terms and provisions of this Agreement (and its Exhibits).

(ii)            Anything herein to the contrary notwithstanding, the Executive’s employment shall not be terminated for Good Reason unless he provides written notice to the Company stating the basis of such termination and the Company fail to cure the action or inaction that is such basis within 30 days after receipt of such notice.

8.              Compensation Upon Termination of Employment.

(a)            Termination by Reason of Death, Disability, for Cause or by the Executive.  Subject to Section 8(c) below, if the Executive’s employment is terminated pursuant to Section 7(a), 7(b), 7(c) or 7(d) above, then the Company shall pay to the Executive (or his estate, as appropriate), within 30 days of his termination date:

(i)             the Base Salary to which he is otherwise entitled for the period ending on the termination date, and

(ii)            the Base Salary to which he is entitled for any accrued but unused vacation days as of the termination date.

  

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(b)            Other Termination.  If the Executive’s employment is terminated pursuant to Section 7(e) or 7(f) above, but not under the circumstances contemplated by Section 8(c) below, then the Company shall pay to the Executive, within 30 days of his termination date (but in all cases subject to Section 8(d) below and not before the applicable general release becoming effective in accordance with its terms), the following amounts:

(i)             the Base Salary to which he is otherwise entitled for the period ending on the termination date;

(ii)            the Base Salary to which he is entitled for any accrued but unused vacation days as of the termination date; and

(iii)           an amount equal to his then current Base Salary for the period beginning on the termination date ending upon the last day of the Term.

(c)            Change of Control.

(i)             If the Executive’s employment is terminated by the Company without Cause (and not as a result of death or a Disability) and such termination date falls within the one-year period immediately following a “Change of Control” (as defined in the Company’s Stock Option Plan as in effect on the date hereof) (a “Change in Control Termination”), then the Company shall pay to the Executive, within 30 days of his termination date (but in all cases subject to Section 8(d) below and not before the applicable general release becoming effective in accordance with its terms), the following amounts:

(A)           the Base Salary to which he is otherwise entitled for the period ending on the termination date;

(B)           the Base Salary to which he is entitled for any accrued but unused vacation days as of the termination date;

(C)           the greater of (1) an amount equal to twice his then current annual Base Salary and (2) an amount equal to his then current Base Salary for the period beginning on the termination date ending upon the last day of the Term;

(D)           an amount equal to a pro-rata portion of the bonus to which the Executive otherwise might have been entitled pursuant to Section 6(b) above, assuming for such purposes that the Executive would have received a bonus for that fiscal year equal to one-half of his then current Base Salary (e.g., if one-third of the fiscal year elapsed prior to the termination date, then the Executive would receive a bonus equal to one-third of one-half of his Base Salary); and

  

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(E)            cash payment to offset (on an after-tax basis) any incremental additional state and federal income tax that the Executive pays as a result of Section 8(c)(i)(C) and Section 8(c)(i)(D) (accelerating payment to the year of separation) subjecting him to a higher marginal tax rate bracket in the year of payment, as calculated by the Company in its discretion.

(ii)            Following a Change in Control Termination, the Company also shall provide the Executive with continued coverage under the Company’s health insurance plan for a period of 18 months following his termination date, provided that the Executive makes a timely election to continue such coverage under the federal law known as “COBRA” (such continued coverage to run concurrently with the Company’s obligations under COBRA and any other similar state law).

(iii)           [RESERVED]

(iv)           Immediately prior to a Change in Control, all options, restricted stock and other equity-based awards granted to the Executive by the Company and held by him immediately prior to such a Change in Control shall become immediately and fully vested and, in the case of stock options, shall remain exercisable for their respective original terms.

(d)            Release Required; Certain Limitations on the Company’s Obligations Hereunder.  The obligations of the Company to the Executive under this Section 8 shall be subject to the Executive’s execution of a customary general release in favor of the Company, in the form of Exhibit A hereto or in such other form reasonably satisfactory to the Company.  Other than as expressly set forth in this Section, the Company shall have no payment or other obligations to the Executive following a termination of his employment by the Company.

9.             Confidential Information.

(a)            Non-Use and Non-Disclosure of Confidential Information.  The Executive acknowledges that, during the course of his employment with the Company, he will have access to information about the Company and/or its subsidiaries and their clients and suppliers, that is confidential and/or proprietary in nature, and that belongs to the Company and/or its subsidiaries.  As such, at all times, both during the Term and thereafter, the Executive will hold in the strictest confidence, and not use or attempt to use except for the benefit of the Company and/or its subsidiaries, and not disclose to any other person or entity (without the prior written authorization of the Board) any “Confidential Information” (as defined below).  Notwithstanding anything contained in this Section 9, the Executive will be permitted to disclose any Confidential Information to the extent required by validly-issued legal process or court order, provided that the Executive notifies the Company and/or its subsidiaries immediately of any such legal process or court order in an effort to allow the Company and/or its subsidiaries to challenge such legal process or court order, if the Company and/or its subsidiaries so elects, prior to the Executive’s disclosure of any Confidential Information.

  

7

  

(b)            No Breach.  The Executive represents and warrants that he has not and will not make unauthorized disclosure to the Company of any confidential information or trade secrets of any third party or otherwise breach any obligation of confidentiality to any third party.

(c)            Definition of “Confidential Information”.  For purposes of this Agreement, “Confidential Information” means any confidential or proprietary information that belongs to the Company and/or its subsidiaries, or any of their clients or suppliers, including without limitation, technical data, market data, trade secrets, trademarks, service marks, copyrights, other intellectual property, know-how, research, business plans, product information, projects, services, client lists and information, client preferences, client transactions, supplier lists and information, supplier rates, software, hardware, technology, inventions, developments, processes, formulas, designs, drawings, marketing methods and strategies, pricing strategies, sales methods, financial information, revenue figures, account information, credit information, financing arrangements and other information disclosed to the Executive by the Company and/or its subsidiaries in confidence, directly or indirectly, and whether in writing, orally or by electronic records, drawings, pictures or inspection of tangible property.  “Confidential Information” does not include any of the foregoing information that has entered the public domain other than by a breach of this Agreement.

10.           Return of Company Property.  Upon the termination of the Executive’s employment with the Company (whether upon the expiration of the Term or thereafter), or at any time during such employment upon request by the Board, the Executive will promptly deliver to the Board (or its representative) and not keep in his possession, recreate or deliver to any other person or entity, any and all property that belongs to the Company and/or its subsidiaries, or that belongs to any other third party and is in the Executive’s possession as a result of his employment with the Company, including without limitation, computer hardware and software, pagers, PDA’s, Blackberries, cell phones, other electronic equipment, records, data, client lists and information, supplier lists and information, notes, reports, correspondence, financial information, account information, product information, files, electronically-stored information and other documents and information, including any and all copies of the foregoing.

  

8

  

11.           Intellectual Property.

(a)            Prior Inventions.  The Executive hereby acknowledges and agrees that he has made no invention, original work of authorship, development, improvement, and trade secret prior to the commencement of his employment with the Company, that belong solely to the Executive or belong to the Executive jointly with others (subject to the restriction in Section 9(b))(collectively referred to as “Prior Inventions”)), that relate in any way to any of the Company’s and/or its subsidiaries’ actual or proposed businesses, products, services or research and development, and that are not assigned to the Company and/or its subsidiaries herein).  If in the course of the Executive’s employment with the Company (whether during the Term or thereafter), he incorporates into any Company’s or its subsidiaries’ products, processes, services or machines, a Prior Invention owned by the Executive or in which he has an interest, then the Company is hereby granted and shall have a non-exclusive, royalty-free, irrevocable, perpetual, worldwide license (with the right to sublicense) to make, have made, copy, modify, make derivative works of, use, sell and otherwise distribute such Prior Invention as part of, or in connection with, such product, process, service or machine.

(b)            Assignment of Inventions.  The Executive will promptly make full written disclosure to the Board, will hold in trust for the sole right and benefit of the Company, and hereby assigns to the Company or its designee, all his right, title and interest throughout the world in and to any and all inventions, original works of authorship, developments, concepts, know-how, improvements or trade secrets, whether or not patentable or registerable  under copyright or similar laws, that he may solely or jointly conceive or develop or reduce to practice, or cause to be developed or reduced to practice, during his employment with the Company (whether during the Term or thereafter) that (i) relate at the time of conception, development or reduction to practice to the actual or demonstrably proposed business or research and development activities of the Company and/or its subsidiaries, (ii) result from or relate to any work performed for the Company and/or its subsidiaries, whether or not during normal business hours or (iii) are developed through the use of Confidential Information (collectively referred to as “Inventions”).  The Executive further acknowledges that all Inventions that are made by him (solely or jointly with others) within the scope of and during the period of his employment with the Company and/or its subsidiaries (whether during the Term or thereafter) are “works made for hire” (to the greatest extent permitted by applicable law) and are compensated by his salary, unless regulated otherwise by law.

(c)            Maintenance of Invention Records.  The Executive will keep and maintain adequate and current written records of all Inventions made by him (solely or jointly with others) during his employment with the Company and/or its subsidiaries (whether during the Term or thereafter).  The records may be in the form of notes, sketches, drawings, flow charts, electronic data or recordings, laboratory notebooks or any similar format.  The records will be available to and remain the sole property of the Company and its subsidiaries at all times.  The Executive will not remove such records from the Company’s or its subsidiaries’ business premises except as expressly permitted by Company policy that may, from time to time, be revised at the sole discretion of the Company.

  

9

  

(d)            Further Assistance.  The Executive will assist the Company or its designee, at the Company’s expense, in every way to secure the Company’s rights in any Inventions and any copyrights, patents, trademarks, trade secrets, moral rights or other intellectual property rights relating thereto in any and all countries, including without limitation, the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments, records and all other instruments that the Company shall deem necessary in order to apply for, obtain, maintain and transfer such rights and in order to assign and convey to the Company, its successors, assigns and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, trademarks, trade secrets, moral rights or other intellectual property rights relating thereto.  The Executive acknowledges that his obligation to execute, or cause to be executed, when it is in his power to do so, any such instrument or papers shall continue after the termination of his employment with the Company until the expiration of the last such intellectual property right in any country.  If the Company is unable, because of the Executive’s mental or physical incapacity or unavailability for any other reason, to secure his signature to apply for or to pursue any application for any patents or copyright registrations covering Inventions assigned to the Company above, then the Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as his agent and attorney in fact, to act for and in his behalf and stead to execute and file any such applications and to do all other lawfully-permitted acts to further the application for, prosecution, issuance, maintenance or transfer of letters patent or copyright registrations thereon with the same legal force and effect as if originally executed by the Executive.  The Executive hereby waives and irrevocably quitclaims to the Company and/or its subsidiaries any and all claims, of any nature whatsoever, that he now or hereafter has for infringement of any and all Inventions assigned to the Company and/or its subsidiaries.

12.           No Prior Restrictions.  The Executive represents and warrants that his employment with the Company will not violate, or cause him to be in breach of, any obligation or covenant made to any former employer or other third party, and that during the course of his employment with the Company (whether during the Term or thereafter), he will not take any action that would violate or breach any legal obligation that he may have to any former employer or other third party.

13.           No Interference with Executives and Customers.  The Executive agrees that, during the Executive’s employment with the Company and for a period of  12 months immediately thereafter, the Executive will not, directly or indirectly through another entity, for himself or any other person or entity, (i) induce or solicit, or attempt to induce or solicit, any Executive or independent contractor of the Company or its subsidiaries (or any individual who was employed or engaged by the Company or its subsidiaries during the one-year period immediately before the termination of the Executive’s employment) to leave the employment of, or to cease his or her contracting relationship with, the Company or its subsidiaries, (ii) interfere in any way with the employment relationship between the Company or its subsidiaries or their Executives and independent contractors, (iii) hire or engage any Executive or independent contractor of the Company or its subsidiaries (or any individual who was employed or engaged by the Company or its subsidiaries during the one-year period immediately before the termination of the Executive’s employment) or (iv) induce or attempt to induce any customer, supplier, licensee or other business relation of the Company or its subsidiaries to cease doing business with the Company or its subsidiaries, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation and the Company or its subsidiaries.

  

10

  

14.           Non-Disparagement.  Both during and after the Executive’s employment with the Company, the Executive will not disparage, portray in a negative light, or take any action that would be harmful to, or lead to unfavorable publicity for, the Company or any of its current or former clients, suppliers, officers, directors, Executives, agents, consultants, contractors, owners, parents, subsidiaries or divisions, whether in public or private, including without limitation, in any and all interviews, oral statements, written materials, electronically-displayed materials and materials or information displayed on Internet-related sites.

15.           Equitable Relief.  The Executive acknowledges that the remedy at law for his breach of Sections 9, 10, 11, 13 and 14 above will be inadequate, and that the damages flowing from such breach will not be readily susceptible to being measured in monetary terms.  Accordingly, upon a violation of any part of such sections, the Company shall be entitled to immediate injunctive relief (or other equitable relief) and may obtain a temporary order restraining any further violation.  No bond or other security shall be required in obtaining such equitable relief, and the Executive hereby consents to the issuance of such equitable relief.  Nothing in this Section 15 shall be deemed to limit the Company’s remedies at law or in equity for any breach by the Executive of any of the parts of Sections 9, 10, 11, 13 and 14 above which may be pursued or availed of by the Company.

16.           Judicial Modification.  The Executive acknowledges that it is the intent of the parties hereto that the restrictions contained or referenced in Sections 9, 10, 11, 13 and 14 above be enforced to the fullest extent permissible under the laws of each jurisdiction in which enforcement is sought.  If any of the restrictions contained or referenced in such Sections is for any reason held by an arbitrator or court to be excessively broad as to duration, activity, geographical scope or subject, then such restriction shall be construed, judicially modified or “blue penciled” in such jurisdiction so as to thereafter be limited or reduced to the extent required to be enforceable in such jurisdiction under applicable law.

  

11

  

17.           Arbitration.  Other than actions seeking injunctive relief to enforce the provisions of Sections 9, 10, 11, 13 and 14 above (which actions may be brought by the Company in a court of appropriate jurisdiction), any dispute or controversy between the parties hereto, whether during the Term or thereafter, including without limitation, matters relating to this Agreement, the Executive’s employment with the Company and the cessation thereof, and all matters arising under any federal, state or local statute, rule or regulation or principle of contract law or common law, including but not limited to any and all medical leave statutes, wage-payment statutes, employment discrimination statutes and any other equivalent federal, state or local statute, shall be settled by arbitration administered by the American Arbitration Association (“AAA”) in Washington, D.C. pursuant to the AAA’s National Rules for the Resolution of Employment Disputes (or their equivalent), which arbitration shall be confidential, final and binding to the fullest extent permitted by law.  Each party hereto shall be responsible for paying one-half of the cost of the arbitration (including the cost of the arbitrator), and all of the cost of its own attorneys’ fees and costs, incurred under this Section 18, unless otherwise apportioned by the arbitrator in accordance with applicable law.

18.           Notices.  All notices and other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered and received by the other party, or when sent by recognized overnight courier to the following addresses:

If to the Company:

15245 Shady Grove Road

Suite 455

Rockville, Maryland 20850

Attention:  Secretary

If to the Executive:

at the Executive’s home address

as reflected on the Company’s records

  

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or to such other address as either party hereto will have furnished to the other in writing in accordance with this Section 18, except that such notice of change of address shall be effective only upon receipt.

19.           Severability.  In the event that any of the provisions of this Agreement, or the application of any such provisions to the Executive or the Company with respect to obligations hereunder, is held to be unlawful or unenforceable by any court or arbitrator, the remaining portions of this Agreement shall remain in full force and effect and shall not be invalidated or impaired in any manner.

20.           Waiver.  No waiver by any party hereto of the breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of any other term or covenant contained in this Agreement.

21.           Entire Agreement.  This Agreement amends and restates in entirety the prior employment agreement between the Executive and the Company.  This Agreement contains the entire agreement between the Executive and the Company with respect to the subject matter of this Agreement, and supersedes any and all prior agreements and understandings, oral or written, between the Executive and the Company with respect to the subject matter of this Agreement, including without limitation that certain Employment Agreement dated as of August 10, 2009 between the Company and the Executive.

22.           Amendments.  This Agreement may be amended only by an agreement in writing signed by the Executive and an authorized representative of the Company (other than the Executive).

23.           Section 409A Provisions

(a)            Six-Month Wait for Key Executives Following Separation from Service.  To the extent that any amount payable or benefit to be provided under this Agreement or any other agreement between the parties hereto constitutes an amount payable or benefit to be provided under a “nonqualified deferred compensation plan” (as defined in Internal Revenue Code Section 409A (“Section 409A”)) upon a “separation from service” (as defined in Section 409A), including any amount payable under Section 8 above, and to the extent that the Executive is deemed to be a “specified employee” (as that term is defined in Section 409A and pursuant to procedures established by the Company) on the “separation from service” date, then, notwithstanding any other provision in this Agreement or any other agreement to the contrary, such payment or benefit provision will not be made to the Executive during the six-month period immediately following the Executive’s “separation from service” date.  Instead, on the first day of the seventh month following such “separation from service" date, all amounts that otherwise would have been paid or provided to the Executive during that six-month period, but were not paid or provided because of this Section 23(a), will be paid or provided to the Executive at such time, with any cash payment to be made in a single lump sum (without any interest with respect to that six-month period).  This six-month delay will cease to be applicable if the Executive “separates from service” due to death or if the Executive dies before the six-month period has elapsed.

  

13

  

(b)            Section 409A Compliance.  While the Company does not guarantee any particular tax treatment, this Agreement is intended to comply with the requirements of Section 409A and the regulations thereunder, including those requirements that delineate when compensation is exempt from Section 409A, and shall be limited, construed and interpreted in accordance with such intent.

24.           Successors and Assigns.  Because the Executive’s obligations under this Agreement are personal in nature, the Executive’s obligations may only be performed by the Executive and may not be assigned by him.  This Agreement is also binding upon the Executive’s successors, heirs, executors, administrators and other legal representatives, and shall inure to the benefit of the Company and its subsidiaries, successors and assigns.

25.           Consultation with Counsel.  The Executive acknowledges that he has had a full and complete opportunity to consult with counsel of his own choosing concerning the terms, enforceability and implications of this Agreement.

26.           No Other Representations.  The Executive acknowledges that the Company has made no representations or warranties to the Executive concerning the terms, enforceability or implications of this Agreement other than as reflected in this Agreement.

27.           Headings.  The titles and headings of sections and subsections contained in this Agreement are included solely for convenience of reference and will not control the meaning or interpretation of any of the provisions of this Agreement.

28.           Counterparts.  This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, and such counterparts shall together constitute but one agreement.

29.           Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Maryland, without giving effect to its conflict of laws principles.

[Signature page follows]

  

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

	
REXAHN PHARMACEUTICALS, INC.

	  	
CHANG HO AHN

	  	  	  	  
	  	  	  	  
	By:  	/s/ TAE HEUM JEONG	  	
/s/ CHANG HO AHN

	
  Name:  

	
Tae Heum Jeong

	  	
Signature

	
  Title:

	
Senior Vice President, Chief

	  	  
	  	
Financial Officer & Secretary

	  	  

[Signature page to Employment Agreement]

  

15

  

EXHIBIT A

RELEASE

(a)            In consideration of the payments and benefits set forth in Section 8 of the Employment Agreement, except for the rights expressly provided herein, the Executive for himself, his heirs, administrators, representatives, executors, successors and assigns (collectively “Releasors”) does hereby irrevocably and unconditionally release, acquit and forever discharge the Company, its subsidiaries and their respective current and former officers, directors, employees, representatives, agents, attorneys, shareholders, in their official capacities (collectively, “Releasees”), and each of them from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, remedies, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys’ fees and costs) of any nature whatsoever arising out of or relating to his employment relationship, or the termination of that relationship, with the Company and its subsidiaries, known or unknown, whether in law or equity and whether arising under federal, state or local law including, without limitation, any such claim under the Corporate and Criminal Fraud Accountability Act of 2002, also known as the Sarbanes Oxley Act; any claim for discrimination based upon race, color, ethnicity, sex, age (including under the Age Discrimination in Employment Act of 1967 (the “ADEA”) and the Older Workers Benefit Protection Act of 1990), national origin, religion, disability, retaliation or any other unlawful criterion or circumstance, the New York State Human Rights Law; and any other federal, state or local laws, rules or regulations, whether equal employment opportunity laws, rules or regulations or otherwise, which the Executive and the other Releasors had, now have or may have in the future against each or any of the Company, or any other Releasees from the beginning of the world until the date the Executive signed this Agreement (the “Execution Date”) relating to the Executive’s employment with the Company and its subsidiaries.  Anything herein to the contrary notwithstanding, nothing herein shall release the Company or any other Releasees from any claims or damages based on: (i) any right or claim that arises after the Execution Date, (ii) any right, including a right to a payment or benefit, the Executive may have under this Agreement or for accrued or vested benefits and stock based awards pursuant to the terms and conditions of the applicable plan document, (iii) the Executive’s eligibility for indemnification, in accordance with applicable laws or the certificate of incorporation or by-laws of the Company, or under any applicable insurance policy, with respect to any liability the Executive incurs or has incurred as a director, officer or employee of the Company and its subsidiaries or (iv) any right the Executive may have to obtain contribution as permitted by law in the event of entry of judgment against him as a result of any act or failure to act for which he and the Company or any other Releasee are jointly liable.

  

Exhibit A - Page 1

  

(b)            The Executive acknowledges that: (i) this entire Agreement is written in a manner calculated to be understood by him; (ii) he has been advised to consult, and has consulted with, an attorney before executing this Agreement; (iii) he was given a period of twenty-one (21) days within which to consider this Agreement; and (iv) to the extent he executes this Agreement before the expiration of the twenty-one-day period, he does so knowingly and voluntarily and only after consulting his attorney.  The Executive shall have the right to cancel and revoke this Agreement during a period of seven days following the Execution Date, and this Agreement shall not become effective, and no money shall be paid hereunder prior to the expiration of such seven-day period (the “Revocation Date”).  The seven-day period of revocation shall commence upon the Execution Date.  In order to revoke this Agreement, the Executive shall deliver to the Company’s Secretary, prior to the expiration of said seven-day period, a written notice of revocation.  Upon such revocation, this Agreement shall be null and void and of no further force or effect on either party.

(c)            The Executive acknowledges and agrees that the consideration provided to him exceeds anything to which he is otherwise entitled and that he is owed no wages, commissions, bonuses, finder’s fees, equity or incentive awards, severance pay, vacation pay or any other compensation or vested benefits or payments or remuneration of any kind or nature other than as specifically provided for in this Agreement.  If the Executive should hereafter make any claim or demand or commence or threaten to commence any action, claim or proceeding against the Company or any other Releasees with respect to any cause, matter or thing which is the subject of the Executive’s release hereunder, this Agreement may be raised as a complete bar to any such action, claim or proceeding, and the Company or any other Releasees, as applicable may recover from the Executive all costs incurred in connection with such action, claim or proceeding, including attorneys’ fees.

(d)            The Executive represents and agrees that he has not filed any lawsuits against any of the Company or any other Releasees, or filed or caused to be filed any charges or complaints against the Company or any other Releasees with any municipal, state or federal agency charged with the enforcement of any law.  Pursuant to and as a part of the Executive’s release and discharge of the Company or any other Releasees, as set forth herein, the Executive agrees to the fullest extent permitted by law, not to sue or file a charge, complaint, grievance or demand for arbitration against the Company, the Affiliated Entities or any other Releasees in any forum with respect to any matter which is the subject of the Executive’s release hereunder.

 

  

Exhibit A - Page 2

  

 

(e)            The Company, on behalf of itself and the other Releasees, also agrees that, subject to this Agreement becoming effective, they hereby irrevocably and unconditionally release, acquit and forever discharge the Executive from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, remedies, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys’ fees and costs) of any nature whatsoever, known or unknown, whether in law or equity and whether arising under federal, state or local law that any Releasee had, now has, or may have in the future against the Executive and the other Releasors from the beginning of the world until the Execution Date arising out of or relating to the Executive’s employment relationship or the termination of that relationship with the Company and/or its subsidiaries, except that this paragraph shall not apply to: (i) any act that constitutes a criminal act under any Federal, state or local law committed or perpetuated by the Executive during the course of the Executive’s employment with the Company or its affiliates or thereafter prior to the Execution Date (including any criminal act of fraud, misappropriation of funds or embezzlement or any other criminal action); (ii) any act of fraud or theft committed by the Executive in connection with his employment with the Company or thereafter prior to the Execution Date; or (iii) the Executive’s obligations under this Agreement.

 

 

Exhibit A - Page 3

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