Document:

exv10w1

 

Exhibit 10.1

Execution Copy

 

DISCOVER CARD EXECUTION NOTE TRUST

Grantor

U.S. BANK NATIONAL ASSOCIATION

Secured Party

and

U.S. BANK NATIONAL ASSOCIATION

Securities Intermediary

COLLATERAL ACCOUNT CONTROL AGREEMENT

Dated as of July 26, 2007

 

 

 

          This Collateral Account Control Agreement, dated as of July 26, 2007 (this “Agreement”), among
DISCOVER CARD EXECUTION NOTE TRUST, a statutory trust created under the laws of the State of
Delaware (the “Grantor”), U.S. BANK NATIONAL ASSOCIATION, a national banking association organized
and existing under the laws of the United States of America, in its capacity as Indenture Trustee
(the “Secured Party”), and U.S. BANK NATIONAL ASSOCIATION, in its capacity as a “securities
intermediary” (as defined in Section 8-102 of the UCC) and a “bank” (as defined in Section 9-102 of
the UCC) (in such capacities, the “Securities Intermediary”). Capitalized terms used but not
defined herein shall have the meanings set forth in the Indenture, dated as of July 26, 2007 (the
“Indenture”) and the Indenture Supplement for the DiscoverSeries Notes, dated as of July 26, 2007,
in each case between the Grantor and the Secured Party. All references herein to the “UCC” shall
mean the Uniform Commercial Code as in effect in the State of New York from time to time.

          WHEREAS, the Grantor has granted to the Secured Party a first priority security interest in
the Pledged Accounts (defined below) pursuant to the Indenture;

          WHEREAS, the parties hereto are entering into this Agreement to perfect and ensure the
priority of such security interest;

          NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

     Section 1. Establishment and Maintenance of Collateral Accounts.

     (a) The Grantor has directed the Securities Intermediary to establish, and the Securities
Intermediary hereby does establish, the Collections Account and Issuer Accounts (in each case as
defined in the Indenture,) which are listed on Schedule 1 hereto (such accounts including each
subaccount thereof and each successor account thereto, collectively, the “Pledged Accounts”) each
to be maintained by the Securities Intermediary as a security intermediary in the name of the
Secured Party and for which the Secured Party is the customer of the Securities Intermediary, to
hold the funds deposited therein, in the case of the Collections Account, for the benefit of the
Secured Party and the Noteholders, and in the case of the Issuer Accounts, for the benefit of the
Secured Party and the applicable Noteholders. The Securities Intermediary covenants and agrees
that it shall not change the name or account number of any Pledged Account without the prior
written consent of the Secured Party. Schedule I hereto may be amended or supplemented from time to
time by written agreement of the parties, and from the date of any such amendment or supplement
each account listed thereon (including each subaccount thereof and each successor account thereto)
shall also be a Pledged Account hereunder.

     (b) Each of the parties hereto acknowledges and agrees that the Pledged Accounts are intended
to be “securities accounts” (as defined in Section 8-501 of the UCC).

     (c) The Securities Intermediary covenants and agrees that: (i) all securities or other
property underlying any financial assets credited to any Securities Account shall be registered in
the name of the Securities Intermediary, indorsed to the Securities Intermediary or indorsed in
blank or credited to another securities account maintained in the name of the Securities

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Intermediary; (ii) in no case will any financial asset credited to any Securities Account be
registered in the name of the Grantor, payable to the order of the Grantor or specially indorsed to
the Grantor except to the extent the foregoing have been specially indorsed to the Securities
Intermediary or indorsed in blank; and (iii) all property delivered to the Securities Intermediary
pursuant to the Indenture shall be promptly credited to one of the Pledged Accounts.

     Section 2. “Financial Assets” Election. The Securities Intermediary hereby agrees that each
item of property (including, without limitation, all Permitted Investments and any investment
property, financial asset, security, instrument or cash) credited to any Pledged Account shall be
treated as a “financial asset” within the meaning of Section 8-102(a)(9) of the UCC.

     Section 3. Secured Party’s Control of the Pledged Accounts. If at any time the Securities
Intermediary shall receive from the Secured Party an entitlement order (i.e., an order directing
transfer or redemption of any financial asset relating to a Pledged Account) or instruction
(including, without limitation instructions with respect to disposition of funds in the accounts),
the Securities Intermediary shall comply with such entitlement order or instruction without further
consent by the Grantor or any other Person. If the Grantor is otherwise entitled to give any
entitlement orders or instructions with respect to the Pledged Account in accordance with Section 4
hereof and such entitlement orders or instructions conflict with instructions of the Secured Party,
the Securities Intermediary shall comply with the entitlement orders and instructions issued by the
Secured Party.

     Section 4. Grantor’s Access to the Account. If at any time the Secured Party delivers to the
Securities Intermediary a notice of sole control in substantially the form set forth in Exhibit A
hereto (a “Notice of Sole Control”), the Securities Intermediary agrees that after receipt of such
notice, it will take all directions with respect to the Pledged Accounts solely from the Secured
Party and shall not comply with instructions or entitlement orders of the Grantor or any other
Person.

     Section 5. Subordination of Lien; Waiver of Set-Off. In the event that the Securities
Intermediary has or subsequently obtains by agreement, by operation of law or otherwise a security
interest in any Pledged Account or any financial assets, cash or other property credited thereto,
the Securities Intermediary hereby agrees that such security interest shall be subordinate to the
security interest of the Secured Party. The financial assets, money and other items credited to
any Pledged Account will not be subject to deduction, set-off, banker’s lien, or any other right in
favor of any Person other than the Secured Party (except that the Securities Intermediary may
set-off the face amount of any checks which have been credited to such Pledged Account but are
subsequently returned unpaid because of uncollected or insufficient funds).

     Section 6. Choice of Law.
This Agreement shall be governed by the laws of the State of New York. Regardless of any
provision in any other agreement, for purposes of the UCC, with respect to each Pledged Account,
New York shall be deemed to be the securities intermediary’s “jurisdiction” (within the meaning of
Sections 8-110 and 9-304 of the UCC). The Pledged Accounts shall be governed by the laws of the
State of New York.

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     Section 7. Conflict with Other Agreements. In the event of any conflict between this
Agreement (or any portion thereof) and any other agreement now existing or hereafter entered into,
the terms of this Agreement shall prevail.

     Section 8. Security Intermediary’s Representations and Warranties; Covenants. The Securities
Intermediary hereby represents, warrants, covenants and agrees that:

          (a) There are no other agreements entered into between the Securities Intermediary and the
Grantor with respect to any Pledged Account.

          (b) It has not entered into, and until the termination of this Agreement will not enter into,
any agreement with any other Person relating to the Pledged Accounts and/or any financial assets
credited thereto pursuant to which it agrees or has agreed to comply with “entitlement orders” (as
defined in Section 8-102(a)(8) of the UCC) of such other Person.

          (c) It has not entered into, and until the termination of this Agreement will not enter into,
any agreement with the Grantor or the Secured Party purporting to limit or condition the obligation
of the Securities Intermediary to comply with entitlement orders or instructions.

          (d) The Pledged Accounts have been established as set forth in Section 1 of this Agreement and
will be maintained in the manner set forth herein until the termination of this Agreement.

          (e) The Securities Intermediary represents and warrants that this Agreement is the legal,
valid, binding and enforceable obligation of the Securities Intermediary, enforceable against it in
accordance with its terms, subject to (x) the effect of bankruptcy, insolvency, or similar laws
affecting generally the enforcement of creditor’s rights and (y) general equitable principles.

     Section 9. Adverse Claims. The Securities Intermediary represents and warrants that, except
for the claims and interest of the Secured Party and of the Grantor in the Pledged Accounts, it has
no actual knowledge of any security interest in, lien on or claim to, or other interest in, any
Pledged Account or in any “financial asset” (as defined in Section 8-102(a) of the UCC) credited
thereto. If an officer of the Securities Intermediary receives written notice that any Person
asserts any lien, encumbrance or adverse claim (including any writ, garnishment, judgment, warrant
of attachment, execution or similar process) against the Pledged Accounts or in any financial asset
carried therein known to the Securities Intermediary, the Securities Intermediary will
promptly notify the Secured Party and the Grantor thereof.

     Section 10. Indemnification of Securities Intermediary.

          (a) The Grantor and the Secured Party hereby agree that (x) the Securities Intermediary is
released from any and all liabilities to the Grantor and the Secured Party arising from the terms
of this Agreement and the compliance of the Securities Intermediary with the terms hereof, except
to the extent that such liabilities arise from the Securities Intermediary’s bad faith, willful
misconduct or negligence and (y) the Grantor, its successors and assigns shall at all times
indemnify and save harmless the Securities Intermediary from and against any loss, liability or
expense incurred without bad faith, willful misconduct or negligence on the part of

4

 

the Securities
Intermediary, its officers, directors and agents, arising out of or in connection with the
execution and performance of this Agreement or the maintenance of the Pledged Accounts, including
the reasonable costs and expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their powers or duties hereunder.
Anything in this Agreement notwithstanding, in no event shall the Securities Intermediary or
Secured Party be liable for special, indirect, or consequential loss or damage of any kind
whatsoever (including, but not limited to, lost profits), even if the Securities Intermediary or
the Secured Party has been advised of such loss or damage and regardless of the form of action.
The provisions of this Section shall survive termination of this Agreement and the resignation or
removal of the Securities Intermediary for any reason.

          (b) This Agreement shall not subject the Securities Intermediary to any duty, obligation or
liability except as is expressly set forth herein and the Securities Intermediary shall satisfy
those duties expressly set forth in this Agreement so long as it acts without negligence, willful
default or fraud. In particular (without implied limitation), the Securities Intermediary need not
investigate whether the Secured Party is entitled to give any entitlement order, Notice of Sole
Control or any other directions, instructions or other orders in any instance. Without limiting
the generality of the foregoing, the Securities Intermediary shall not be subject to any fiduciary
or other implied duties, and the Securities Intermediary shall not have any duty to take any
discretionary action or exercise any discretionary powers.

     Section 11. Successors; Assignment. The terms of this Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective corporate successors and
assigns, except that neither the Grantor nor the Securities Intermediary may delegate their
obligations hereunder without the prior written consent of the Secured Party. The Secured Party
agrees to send written notice to the Securities Intermediary and Standard & Poor’s of any such
delegation.

     Section 12. Notices.

          (a) Any notice, request or other communication required or permitted to be given under this
Agreement shall be in writing and deemed to have been properly given when delivered in Person, or
when sent by telecopy, electronic mail, or other electronic means and electronic confirmation of
error free receipt is received or two (2) Business Days after being sent by certified or registered
United States mail, return receipt requested, postage prepaid, addressed to the party at the
address set forth below.

          Grantor:

Discover Card Execution Note Trust

c/o Wilmington Trust Company

Rodney Square North, 1100 N. Market Street

Wilmington, Delaware 19890-0001

Attention: Corporate Trust Administration

Fax: 302-636-4140

Email: jluce@wilmingtontrust.com

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with copies to:

Richards, Layton & Finger, P.A.

One Rodney Square

920 North King Street

Wilmington, Delaware 19801

Attention: Doneene Damon

Fax: (302) 651-7701

Email: damon@rlf.com, and

Latham & Watkins LLP

Sears Tower, Suite 5800

233 South Wacker Drive

Chicago, IL 60606

Attention: Ellen Marks

Fax: (312) 993-9767

Email: ellen.marks@lw.com

          Secured Party:

U.S. Bank National Association

209 South LaSalle Street, Suite 300

Chicago, IL 60604

Attention: Corporate Trust Services

Fax: 312-325-8905

Email: PATRICIA.CHILD@usbank.com

          Securities Intermediary:

U.S. Bank National Association

209 South LaSalle Street, Suite 300

Chicago, IL 60604

Attention: Corporate Trust Services

Fax: 312-325-8905

Email: PATRICIA.CHILD@usbank.com

          (b) Any party may change its address for notices by giving notice to the other parties hereto
in the manner set forth above.

     Section 13. Bankruptcy, Non-Petition and Limited Recourse. Notwithstanding any other
provision of this Agreement, each of the Secured Party and the Securities Intermediary agrees that
it will not at any time institute against the Issuer, any Master Trust or any special purpose
entity that acts as a depositor with respect to any Master Trust or the Issuer, or join in any
institution against the Issuer, any Master Trust or any special purpose entity that acts as a
depositor with respect to any Master Trust or the Issuer of, any receivership, insolvency,
bankruptcy or other similar proceedings, or other proceedings under any United States federal or
state bankruptcy or similar law in connection with any obligations relating to the Notes, the
Indenture, any Derivative Agreement, any Supplemental Credit Enhancement Agreement, any

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Supplemental Liquidity Agreement, any Collateral Certificate (including the Series 2007-CC
Collateral Certificate), any Pooling and Servicing Agreement (including the DCMT Pooling and
Servicing Agreement) and any Series Supplement. Notwithstanding any other provision of this
Agreement, the obligations of the Grantor hereunder, if any, shall be limited to amounts available
from the Collateral and following their application in accordance with the Indenture, any
outstanding obligations of or claims against the Company hereunder shall be extinguished. The
provisions of this Section 13 shall survive any termination of this Agreement.

     Section 14. Amendment. No amendment or modification of this Agreement or waiver of any right
hereunder shall be binding on any party hereto unless it is in writing and is signed by each of the
Grantor, the Secured Party and the Securities Intermediary.

     Section 15. Termination. The obligations of the Securities Intermediary to the Secured Party
pursuant to this Agreement shall continue in effect until the security interests of the Secured
Party in each of the Pledged Accounts have been terminated pursuant to the terms of the Indenture
and the Secured Party has notified the Securities Intermediary of such termination in writing. The
Secured Party agrees to provide Notice of Termination in substantially the form of Exhibit
B hereto to the Securities Intermediary upon the request of the Grantor on or after the
termination of the Secured Party’s security interest in the Pledged Accounts pursuant to the terms
of the Indenture. The termination of this Agreement shall not terminate the Pledged Accounts or
alter the obligations of the Securities Intermediary to the Grantor pursuant to any other agreement
with respect to the Pledged Accounts.

     Section 16. Counterparts. This Agreement may be executed in any number of counterparts, all of which shall constitute
one and the same instrument, and any party hereto may execute this Agreement by signing and
delivering one or more counterparts.

[Remainder of page intentionally blank; signature page follows]

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	 	 	DISCOVER CARD EXECUTION NOTE TRUST,  

as the Grantor
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Wilmington Trust Company,	 	 
	 

	 	 	 	not in its individual capacity but solely as

Owner Trustee	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jennifer A. Luce	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Jennifer A. Luce	 	 
	 

	 	 	 	Title: Sr. Financial Services Officer	 	 
	 
	 	 	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION,

as the Indenture Trustee
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Patricia M. Child	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Patricia M. Child	 	 
	 

	 	 	 	Title: Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION,
	 	 	as the Securities Intermediary
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Patricia M. Child	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Patricia M. Child	 	 
	 

	 	 	 	Title: Vice President	 	 

Signature Page to the Collateral Account Control Agreement

for Discover Card Execution Note Trust

 

 

SCHEDULE 1

	 	 	 	 
	Exact Name of Account	 	 	Account Number
	 
	 	 	 
	Collections Account
	 	 
	 
	 	 
	Collections Account —
U.S. Bank National Association as Indenture
Trustee for the benefit of the Indenture Trustee
and the Noteholders

	 	Account No.: 117493000
	 
	 	 	 
	Issuer Accounts
	 	 	 
	 
	 	 	 
	DiscoverSeries Collections Account —
U.S. Bank National Association as Indenture
Trustee for the benefit of the Indenture Trustee
and the DiscoverSeries Noteholders

	 	Account No.: 117427000
	 
	 	 	 
	DiscoverSeries Interest Funding Account —
U.S. Bank National Association as Indenture
Trustee for the benefit of the Indenture Trustee
and the DiscoverSeries Noteholders

	 	Account No.: 117428000
	 
	 	 	 
	DiscoverSeries Principal Funding Account —
U.S. Bank National Association as Indenture
Trustee for the benefit of the Indenture Trustee
and the DiscoverSeries Noteholders

	 	Account No.: 117429000
	 
	 	 	 
	DiscoverSeries Accumulation Reserve Account —
U.S. Bank National Association as Indenture
Trustee for the benefit of the indenture Trustee
and the DiscoverSeries Noteholders

	 	Account No.: 117430000
	 
	 	 	 
	DiscoverSeries Class C Reserve Account —
U.S. Bank National Association as Indenture
Trustee for the benefit of the Indenture Trustee
and the DiscoverSeries Noteholders

	 	Account No.: 117431000
	 
	 	 	 
	DiscoverSeries Class D Reserve Account —
U.S. Bank National Association as Indenture
Trustee for the benefit of the Indenture Trustee
and the DiscoverSeries Noteholders

	 	Account No.: 117432000

 

 

Exhibit A

[            Date      ]

U.S. Bank National Association, as Securities Intermediary

[                                 ]

[                                 ]

Attention: [                                 ]

Re:    Notice of Sole Control

Ladies and Gentlemen:

          As referenced in the Collateral Account Control Agreement, dated July 26, 2007, among Discover
Card Execution Note Trust, you and the undersigned, we hereby give you notice of our sole control
over each of the Pledged Accounts and all financial assets or funds credited thereto. You are
hereby instructed not to accept any entitlement orders with respect to the Pledged Accounts or the
financial assets or funds credited thereto from any Person other than the undersigned, unless
otherwise ordered by a court of competent jurisdiction or otherwise directed by us in writing.

          You are instructed to deliver a copy of this notice by mail, facsimile transmission or
electronic mail to Discover Card Execution Note Trust.

	 	 	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 	 	 
	 	 	U.S. Bank National Association,
	 	 	as Indenture Trustee and Secured Party
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 

cc: Discover Card Execution Note Trust

 

 

Exhibit B

[          Date       ]

U.S. Bank National Association, as Securities Intermediary

[                                 ]

[                                ]

Attention: [                                ]

Re:    Termination of Collateral Account Control Agreement

          You are hereby notified that the Collateral Account Control Agreement dated July 26, 2007,
among Discover Card Execution Note Trust, you and the undersigned is terminated and you have no
further obligations to the undersigned pursuant to such Agreement. Notwithstanding any previous
instructions to you, you are hereby instructed to accept all future directions with respect to
account number(s) [                    ] from Discover Card Execution Note Trust or its agent. This notice
terminates any obligations you may have to the undersigned with respect to such account, however
nothing contained in this notice shall alter any obligations which you may otherwise owe to
Discover Card Execution Note Trust pursuant to any other agreement.

          You are instructed to deliver a copy of this notice by mail, facsimile transmission or
electronic mail to Discover Card Execution Note Trust.

	 	 	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 	 	 
	 	 	U.S. Bank National Association,
	 	 	as Indenture Trustee and Secured Party
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:Exhibit 10.3

 

Exhibit 10.3

Employment Agreement

     This Employment Agreement (the “Agreement”) is made and entered into effective as of July 25,
2007 (the “Effective Date”) by and between Innovive Pharmaceuticals, Inc., a Delaware corporation
(the “Company”) and Steven Kelly (“Employee”), a resident of New York. This Agreement is being
executed contemporaneously with the Nonsolicitation, Nondisclosure and Developments Agreement
attached hereto as Exhibit A (the “NNDA”). This Agreement supersedes the Employment
Agreement dated June 2, 2004 between the parties hereto.

     NOW, THEREFORE, for and in consideration of the premises and mutual covenants contained
herein, and for good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and subject to the terms and conditions hereinafter set forth, the parties hereto
enter into this Agreement and agree as follows.

     1. DUTIES. Employee shall perform all assigned duties competently, diligently and
efficiently and shall follow the reasonable and lawful instructions and directions of the Board of
Directors of the Company. Employee shall serve as President and Chief Executive Officer of the
Company and will be a full-time employee of the Company and shall devote all of his professional
time to his duties. The Company will use its best efforts to have Employee elected to the Board of
Directors at all times he serves as Chief Executive Officer.

     2. COMPENSATION.

     (a) Salary. The Company will pay Employee for services rendered hereunder at
the rate of Three Hundred Seventy Five Thousand Dollars ($375,000) per year, less all
applicable local, state and federal taxes and any other deductions required by law or
properly authorized by Employee, payable in accordance with the Company’s usual payroll
practices (the “Base Pay”), which amount may be increased or decreased from time to time by
the Compensation Committee of the Board of Directors of the Company (the “Committee”). The
Base Pay will be retroactive to June 2, 2007.

     (b) Guaranteed Bonus. The Company will pay Employee a guaranteed annual bonus
of $50,000, payable for the first year of this contract on the date hereof and payable for
each subsequent year on the first business day of July.

     (c) Annual Bonus. Employee will be eligible for a performance-based bonus of
up to fifty percent (50%) of Base Pay at the discretion of the Committee.

     (d) Grant of Stock Option. In consideration of his continued service,
Employee will be granted an option to purchase Two Hundred Twenty Five Thousand (225,000)
shares of the Company’s common stock, half at $4.00 per

 

 

share and half at $5.00 per share. Such option shall be an incentive stock option to
the extent eligible under the Internal Revenue Code of 1986, as amended. Such option shall
vest and become exercisable as to one third of such shares on the one-year anniversary of
the date of this Agreement and thereafter shall vest in twenty four (24) equal monthly
installments, provided in each case Employee remains an employee of the Company on such
dates.

     (e) Eligibility for Annual Awards. Employee shall be eligible for annual
grants of stock options, performance shares, stock appreciation rights or such other equity
or performance based awards as determined by the Committee in its discretion.

     3. OTHER BENEFITS. Employee may participate in any of the Company’s benefit plans or
programs available to similarly situated employees, provided, however, that Employee’s
participation is subject to the applicable terms, conditions and eligibility requirements of any
such plans and programs, some of which are in the plan administrator’s discretion as they may exist
from time to time. Employee shall be eligible for twenty (20) days of paid vacation per calendar
year. Employee shall not be entitled to carry any vacation forward to the next year of employment
and shall not receive any compensation for unused vacation days.

     4. RESTRICTIVE COVENANTS.

   (a) Employee agrees that, while employed or retained by the Company in any capacity and
for a period of one (1) year following the termination of Employee’s employment relationship
with the Company, regardless of the reason for such termination (unless such termination
resulted from the Company’s decision to cease operations other than in connection with a
disposition of its assets for value), Employee shall observe the following separate and
independent covenants:

     (i) Noncompetition. Employee shall not, without the prior written
consent of the Committee, directly or indirectly, alone or as a partner, joint
venturer, officer, director, employee, consultant, agent, independent contractor or
stockholder of any company or business, engage in any business activity that is in
competition in the geographical area set forth below with any of the products being
developed, marketed, distributed, sold or otherwise provided by the Company in the
fields of oncology and hematology. Employee’s ownership of not more than five
percent (5%) of the shares of stock of any corporation having a class of equity
securities actively traded on a national securities exchange shall not be deemed,
in and of itself, to violate the prohibitions of this paragraph.

 

 

     Employee acknowledges that the nature of the Company’s business and the
services he renders to the Company are such that it would be unfair to permit him
to perform services for or otherwise engage in any competing business during the
period specified in Section 4(a) regardless of the location in the United States
(or, if the United States is too broad, then the State of New York), and that such
activity is appropriately prohibited by this Section 4(a) throughout the United
States (or, if the United States is too broad, then the State of New York).

     (ii) Nonsolicitation of the Company’s Strategic Partners. Employee
will not, without the prior written consent of the Committee, on Employee’s own
behalf or in the service or on behalf of others, solicit, divert, or attempt to
solicit or divert, for the purpose of providing the “Covered Products” (as defined
below), any entity or individual who was a licensee, licensor or strategic partner
of the Company during the last twelve (12) months that Employee was employed or
retained by the Company. For purposes of this Agreement, the “Covered Products”
are defined as products that are competitive with or similar in purpose or function
to the Company’s products in the field of oncology. Notwithstanding the foregoing,
nothing in this subparagraph (ii) shall be construed to limit the scope or
generality of subsection (i) above.

     (iii) Nonsolicitation of Employees. Employee will not, without the
prior written consent of the Committee, on Employee’s own behalf or in the service
or on behalf of others, solicit, divert or hire, or attempt to solicit, divert or
hire, any person then employed by the Company or employed by the Company within the
twelve (12) month period prior to such solicitation, diversion or hiring, whether
or not such employee is a full-time or a temporary employee of the Company, whether
or not such employment is pursuant to written agreement, and whether or not such
employment is at will.

     (b) Employee acknowledges and agrees that the time and territory of the restrictive
covenants contained in this Section are necessary for the protection of the Company’s
legitimate business interests and do not unfairly restrict Employee’s ability to hold
gainful employment.

     5. RIGHT TO INJUNCTION. The parties agree that any breach of this Agreement by either
of them will cause irreparable damage to the other party. In the event of such breach or
threatened breach, each of the parties shall have, in addition to any and all remedies at law, the
right to an injunction, specific performance and other equitable relief to prevent the violation of
the other party’s obligations hereunder.

     6. CONSIDERATION TO EMPLOYEE. In consideration of Employee’s execution of this
Agreement, the Company agrees to (a) employ Employee, subject to Section 7 below, and (b) upon his
termination by the Company without “Cause” (as

 

 

defined below) or termination of employment by Employee for “Good Reason” (as defined below), (i)
pay to Employee an amount equal to six (6) months Base Pay, which shall be payable either upon
termination of Employee’s employment with the Company or on the Company’s regular payroll schedule,
at the sole option of the Company, (ii) continue to pay for Employee’s health insurance (or
reimburse Employee for the premiums payable by Employee with respect to health insurance in an
amount equal to that paid by the Company immediately prior to such termination of employment) for a
period of six (6) months from such termination and (iii) all stock options, restricted stock and
other equity rights subject to any time-based vesting or restrictions shall immediately vest and
such restrictions shall lapse. Any payments required to be made by the Company pursuant to this
Section 6 shall be reduced by any applicable withholdings for taxes and other withholdings
authorized by Employee or required by law and shall be conditioned upon Employee executing and
delivering (and not revoking) a separation agreement satisfactory in form and content to the
Company providing for, among other things, mutual non-disparagement, a release of all claims by
Employee against the Company and a reaffirmation of the restrictive covenants set forth in this
Agreement.

     For the purposes of this Agreement, “Cause” is defined as (i) any material breach by Employee
of this Agreement or the NNDA, which breach is not cured, if susceptible to cure, within five (5)
days after written notice to Employee; (ii) Employee ‘s gross neglect of duty, which failure
continues for more than five (5) days after written notice to Employee; (iii) willful or reckless
misconduct by Employee which is materially injurious to Company; (iv) indictment of Employee under
a felony charge or commission of a criminal act by Employee that results in an active sentence of
at least thirty (30) days imprisonment; or (v) any act by Employee which is a grossly negligent or
an intentional violation of the Company’s policies or rules, including without limitation any act
of harassment. For purposes of this Agreement, “Good Reason” is defined as (i) a reduction of Base
Pay below that amount set forth in Section 2 hereof without Employee’s consent or without a similar
percentage decrease for all employees of a similar level; (ii) relocation of Employee outside of a
50-mile radius of the Company’s current location in New York, New York without Employee’s consent
(reasonably required travel outside of such area shall not constitute the relocation of Employee),
or (iii) a material reduction in Employee’s duties without Employee’s consent, provided that a
change in Employee’s specific title or duties will not constitute Good Reason so long as following
any such change Employee’s title and duties are commensurate with a position as a key employee as
such term is generally understood.

     Upon termination of Employee’s employment with the Company, Employee shall be entitled to
receive payment for all accrued and unpaid Base Pay. Eligibility and timing of payment of
unreimbursed expenses will be pursuant to the Company’s then-prevailing policies.

     7. EMPLOYMENT AT-WILL. Employee understands and agrees that this Agreement does not
create an obligation of the Company to continue Employee’s employment for any defined period of
time, and that Employee’s employment

 

 

relationship with the Company may be terminated by the Company or by Employee at any time for any
or no reason with or without cause.

     8. WAIVERS. Any waiver by either party of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach of such provision or any
other provision hereof.

     9. SEVERABILITY. The parties hereby agree that each provision herein shall be treated
as a separate and independent clause, and the unenforceability of any one clause shall in no way
impair the enforceability of any of the other clauses herein. Moreover, if one or more of the
provisions contained in this Agreement shall for any reason be held to be excessively broad as to
scope, activity or subject so as to be unenforceable at law, such provision or provisions shall be
construed by the appropriate judicial body by limiting and reducing it or them, so as to be
enforceable to the maximum extent compatible with the applicable law as it shall then exist. The
terms of this Agreement will control over any conflicting terms in the NNDA.

     10. SURVIVAL. Sections 4, 5, 6, 7, 8, 9, 10, 11 and 12 of this Agreement shall
survive the termination of this Agreement and Employee’s employment regardless of the manner of
such termination and shall be binding upon Employee’s heirs, executors, administrators and legal
representatives.

     11. ASSIGNABILITY; AMENDMENT; TERMINATION OF PRIOR AGREEMENT. The term “Company”
shall include the company named on the first page of this Agreement and any of its subsidiaries,
subdivisions or affiliates. This Agreement shall inure to the benefit of and be enforceable by the
parties hereto and their successors and permitted assigns. This Agreement may not be assigned by
Employee without the prior written consent of the Company. This Agreement may be amended only in a
writing signed by each of the parties hereto.

     12. GOVERNING LAW. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to the conflict of laws principles thereof.
This Agreement may be executed in counterparts.

[The Next Page is the Signature Page]

 

 

     IN WITNESS WHEREOF, the undersigned have executed this Employment Agreement as a sealed
instrument as of the date first above written.

	 	 	 	 	 	 	 
	 	 	EMPLOYEE:
	 
	 	 	 	 	 	 
	 	 	Signature:                                                            (SEAL)	 	 
	 

	 	 	 	Steven Kelly	 	 
	 
	 	 	 	 	 	 
	 	 	COMPANY:	 	 
	 
	 	 	 	 	 	 
	 	 	Innovive Pharmaceuticals, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	J. Gregory Jester, CFO

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