Document:

Exhibit
10.1

 

PROCESSA
PHARMACEUTICALS INC.

 

EMPLOYMENT
AGREEMENT

 

October
1, 2020

 

This
Employment Agreement is entered into as of the date of the last signature affixed hereto, by and between Processa Pharmaceuticals
Inc., a Delaware corporation (“Processa”), and R. Michael Floyd, (“Employee”).

 

In
consideration of the mutual promises and covenants set forth herein, and other good and valuable consideration, the sufficiency
of which is hereby acknowledged, Processa and Employee hereby agree as follows:

 

	 	1.	Position
    of Employment. Processa will employ the Employee in the position of Chief Operations Officer (COO) and, as COO, Employee will
    report to the CEO. Processa retains the right to change Employee’s title, duties, and reporting relationships as may
    be determined to be in the best interests of Processa; provided, however, that any such change in Employee’s duties
    shall be consistent with Employee’s training, experience, and qualifications.
	 	 	 
	 	 	The
    terms and conditions of the Employee’s employment shall, to the extent not addressed or described in this Employment
    Agreement, be governed by Processa’s Policies and Procedures Manual and existing practices. In the event of a conflict
    between this Employment Agreement and the Policies and Procedures Manual or existing practices, the terms of this Agreement
    shall govern.
	 	 	 
	 	2.	Term
    of Employment. Employee’s employment with Processa shall begin on October 1, 2020. This agreement will remain in effect
    for 3 years, after which time the agreement will renew annually, after which time continued employment shall be on an “at
    will” basis, unless:

 

	 	a.	Employee’s
    employment is terminated by either party in accordance with the terms of Section 5 of this Employment Agreement; or
	 	 	 
	 	b.	Such
    term of employment is extended or shortened by a subsequent agreement duly executed by each of the parties to this Employment
    Agreement, in which case such employment shall be subject to the terms and conditions contained in the subsequent written
    agreement.

 

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	 	3.	Compensation
    and Benefits.

 

	 	a.	Base
    Salary. Employee shall receive an annual base salary of $87,500, for a full-time effort, commensurate with other C-Suite Executives
    in Processa, other than the CEO. Any increases in Employee’s Base Salary for years beyond December 31, 2020 shall be
    at the sole discretion of the Processa Board of Directors, and nothing herein shall be deemed to require any such increase.
	 	 	 
	 	b.	Stock
    Options and Restricted Stock Units. Subject to approval by the Processa’s Board of Directors (the “Board”),
    and pursuant to the Processa’s 2017 Stock Plan (the “Plan”), Processa may grant Employee an option to purchase
    shares of Processa’s common stock at the fair market value as determined by the Board as of the date of grant (the “Option”)
    and commensurate with other C-Suite Executives in Processa, other than the CEO. The specifics of the stock options will be
    described in the Stock Option Agreement and Stock Option Award provided to the Employee. Processa may also grant Employee
    Restricted Stock Units of Processa’s common stock commensurate with other C-Suite Executives in Processa, other than
    the CEO. The specifics of the Restricted Stock Units will be described in the Restricted Stock Unit Agreement and Restricted
    Stock Unit Award provided to the Employee.
	 	 	 
	 	c.	Incentive
    and Deferred Compensation. Employee shall be eligible to participate in all incentive and deferred compensation programs available
    to other executives or officers of Processa, such participation to be in the same form, under the same terms, and to the same
    extent that such programs are made available to other such executives or officers. Nothing in this Employment Agreement shall
    be deemed to require the payment of bonuses, awards, or incentive compensation to Employee if such payment would not otherwise
    be required under the terms of Processa’s incentive compensation programs.
	 	 	 
	 	d.	Employee
    Benefits. Employee shall be eligible to participate in all employee benefit plans, policies, programs, or perquisites in which
    other Processa executive or officers participate, including the Processa Stock Option program. The terms and conditions of
    Employee’s participation in Processa’s employee benefit plans, policies, programs, or perquisites shall be governed
    by the terms of each such plan, policy, or program.

 

	 	4.	Duties
    and Performance. The Employee acknowledges and agrees that he is being offered a position of employment by the Processa with
    the understanding that the Employee possesses a unique set of skills, abilities, and experiences which will benefit Processa,
    and he agrees that his continued employment with Processa, whether during the term of this Employment Agreement or thereafter,
    is contingent upon his successful performance of his duties in his position as noted above, or in such other position to which
    he may be assigned.

 

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	 	a.	General
    Duties.

 

	 	1.	Employee
    shall render to the very best of Employee’s ability, on behalf of the Processa, services to and on behalf of the Processa,
    and shall undertake diligently all duties assigned to him by the Processa.
	 	 	 
	 	2.	Employee
    shall devote his full time, energy and skill to the performance of the services in which Processa is engaged, at such time
    and place as Processa may direct. Employee shall not undertake, either as an owner, director, shareholder, employee or otherwise,
    the performance of services for compensation (actual or expected) for any other entity without the express written consent
    of the Board of Directors.
	 	 	 
	 	3.	Employee
    shall faithfully and industriously assume and perform with skill, care, diligence and attention all responsibilities and duties
    connected with his employment on behalf of Processa.
	 	 	 
	 	4.	Employee
    shall have no authority to enter into any contracts binding upon Processa, or to deliberately create any obligations on the
    part of Processa, except as may be specifically authorized by the Board of Directors of Processa.

 

	 	b.	Specific
    Duties. 

 

	 	1.	Plans,
    coordinates, and oversees all aspects of investor relations, related meetings, and public relations.
	 	 	 
	 	2.	Assists
    the CEO with general operations of the Company.
	 	 	 
	 	3.	Other
    duties as assigned.

 

	 	5.	Termination
    of Employment. Employee’s employment with Processa may be terminated, prior to the expiration of the term of this Employment
    Agreement, in accordance with any of the following provisions:

 

	 	a.	Termination
    by Employee. The Employee may terminate his employment at any time during the course of this agreement by giving 8 weeks’
    notice in writing to the Board of Directors of Processa. During the notice period, Employee must fulfill all his duties and
    responsibilities set forth above and use his best efforts to train and support his replacement, if any. Failure to comply
    with this requirement may result in Termination for Cause described below, but otherwise Employee’s salary and benefits
    will remain unchanged during the notification period.

 

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	 	b.	Termination
    by Employee for Good Reason. The Employee may terminate employment with the Company for Good Reason. “Good Reason”
    shall mean the occurrence without Employee’s written consent, of one or more of the following events: (i) the Company
    reduces Employee’s base salary to a salary not typical of the other C-Suite Executives in Processa, other than the CEO,
    (ii) the Company materially decreases Employee’s responsibilities, (iii) the Company relocates Employee’s principal
    place of work to a location more than fifty (50) miles from the location of Employee’s principal place of work on the
    date of this Agreement, or (iv) the Company materially breaches the terms of this Agreement; provided that no such event shall
    constitute Good Reason hereunder unless (a) Employee shall have given written notice to the Company of Employee’s intent
    to resign for Good Reason within 30 days after Employee becomes aware of the occurrence of any such event (specifying in detail
    the nature and scope of the event), (b) such event or occurrence shall not have been cured within 30 days of the Company’s
    receipt of such notice, (c) any Termination by Employee for Good Reason following such 30 day cure period must occur no later
    than the date that is 30 days following the expiration of such 30 day cure period. Employee’s Termination for Good Reason
    shall be treated as involuntary.
	 	 	 
	 	c.	Termination
    by Processa Without Cause. Processa may terminate Employee’s employment at any time during this agreement by giving
    fifty-two (52) weeks’ notice in writing to the Employee. During the notice period, Employee must fulfill all of Employee’s
    duties and responsibilities set forth above and use Employee’s best efforts to train and support Employee’s replacement,
    if any. Failure of Employee to comply with this requirement may result in Termination for Cause described below, but otherwise
    Employee’s salary and benefits will remain unchanged during the notification period. Processa, may, in its sole discretion,
    give Employee severance pay in the amount of the remaining notice period in lieu of actual employment, and nothing herein
    shall require Processa to maintain employee in active employment for the duration of the notice period.
	 	 	 
	 	d.	Termination
    by Processa For Cause. Processa may, at any time and without notice, terminate the Employee for “cause”. Termination
    by Processa of the Employee for “cause” shall include but not be limited to termination based on any of the following
    grounds: (a) failure to perform the duties of the Employee’s position in a satisfactory manner; (b) fraud, misappropriation,
    embezzlement or acts of similar dishonesty; (c) conviction of a felony involving moral turpitude; (d) illegal use of drugs
    or excessive use of alcohol in the workplace; (e) intentional and willful misconduct that may subject Processa to criminal
    or civil liability; (f) breach of the Employee’s duty of loyalty, including the diversion or usurpation of corporate
    opportunities properly belonging to Processa; (g) willful disregard of Processa policies and procedures; and (h) breach of
    any of the material terms of this Agreement.

 

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	 	e.	Termination
    By Death or Disability. The Employee’s employment and rights to compensation under this Employment Agreement shall terminate
    if the Employee is unable to perform the duties of his position due to death or disability lasting more than 90 days, and
    the Employee’s heirs, beneficiaries, successors, or assigns shall not be entitled to any of the compensation or benefits
    to which Employee is entitled under this Agreement, except: (a) to the extent specifically provided in this Employment Agreement
    (b) to the extent required by law; or (c) to the extent that such benefit plans or policies under which Employee is covered
    provide a benefit to the Employee’s heirs, beneficiaries, successors, or assigns.
	 	 	 
	 	f.	Termination
    of Employment for Good Reason Involving a Change of Control. Employee’s employment with Processa may be terminated in
    the event that a Change in Control occurs which is also a Cash Severance Change in Control (as defined below), and Employee’s
    employment with the Company is terminated by the Company Without Cause at any time within the three (3) month period before
    the date of such Cash Severance Change in Control or during the fifty-two (52) week period following the date of such Cash
    Severance Change in Control, Employee will receive severance as stated in Section 5.c.
	 	 	 
	 	 	For
    purposes of this Section, “Cash Severance Change in Control” shall mean and include:

 

	 	i.	Acquisition
    by any “Person” or “Group” of securities entitled to vote generally in the election of directors (“voting
    securities”) of the Company that represent 50% or more of the combined voting power of the Company’s then outstanding
    voting securities;
	 	ii.	Merger
    or consolidation in which the seller’s shareholders no longer control the surviving entity;
	 	iii.	Sale
    of substantially all assets to an unrelated entity.

 

	 	6.	Confidentiality.
    Employee agrees that at all times during Employee’s employment and following the conclusion of Employee’s employment,
    whether voluntary or involuntary, Employee will hold in strictest confidence and not disclose Confidential Information (as
    defined below) to anyone who is not also an employee of Processa or to any employee of Processa.

 

	 	a.	“Confidential
    Information” shall mean any trade secrets or Processa proprietary information, including but not limited to manufacturing
    techniques, processes, formulas, customer lists, inventions, experimental developments, research projects, operating methods,
    cost, pricing, financial data, business plans and proposals, data and information Processa receives in confidence from any
    other party, or any other secret or confidential matters of Processa. Additionally, Employee will not use any Confidential
    Information for Employee’s own benefit or to the detriment of Processa during Employee’s employment or thereafter.
    Employee also certifies that employment with Processa does not and will not breach any agreement or duty that Employee has
    to anyone concerning confidential information belonging to others.

 

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	 	7.	Expenses.
    Processa shall pay or reimburse Employee for any expenses reasonably incurred by him in furtherance of his duties hereunder,
    including expenses for entertainment, travel, meals and hotel accommodations, upon submission by him of vouchers or receipts
    maintained and provided to Processa in compliance with such rules and policies relating thereto as Processa may from time
    to time adopt.
	 	 	 
	 	8.	General
    Provisions.

 

	 	a.	Notices.
    All notices and other communications required or permitted by this Agreement to be delivered by Processa or Employee to the
    other party shall be delivered in writing to the address shown below, either personally, by facsimile transmission or by registered,
    certified or express mail, return receipt requested, postage prepaid, to the address for such party specified below or to
    such other address as the party may from time to time advise the other party, and shall be deemed given and received as of
    actual personal delivery, on the first business day after the date of delivery shown on any such facsimile transmission or
    upon the date or actual receipt shown on any return receipt if registered, certified or express mail is used, as the case
    may be.

 

Processa
Pharmaceuticals, Inc.:

 

Processa Pharmaceuticals, Inc.

7380 Coca Cola Drive

Suite 106

Hanover, MD 21076

Attn: Wendy Guy

 

Employee:

 

Robert Michael Floyd

5817 Ogden Court

Bethesda, MD 20816

 

	 	b.	Amendments
    and Termination; Entire Agreement. This Agreement may not be amended or terminated except by a writing executed by all of
    the parties hereto. This Agreement constitutes the entire agreement of Processa and Employee relating to the subject matter
    hereof and supersedes all prior oral and written understandings and agreements relating to such subject matter.
	 	 	 
	 	c.	Successors
    and Assigns. The rights and obligations of the parties hereunder are not assignable to another person without prior written
    consent; provided, however, that Processa, without obtaining Employee’s consent, may assign its rights and obligations
    hereunder to a wholly-owned subsidiary and provided further that any post-employment restrictions shall be assignable by Processa
    to any entity which purchases all or substantially all of Processa’s assets.

 

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	 	d.	Severability;
    Provisions Subject to Applicable Law. All provisions of this Agreement shall be applicable only to the extent that they do
    not violate any applicable law and are intended to be limited to the extent necessary so that they will not render this Agreement
    invalid, illegal or unenforceable under any applicable law. If any provision of this Agreement or any application thereof
    shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of other provisions of this
    Agreement or of any other application of such provision shall in no way be affected thereby.
	 	 	 
	 	e.	Waiver
    of Rights. No waiver by Processa or Employee of a right or remedy hereunder shall be deemed to be a waiver of any other right
    or remedy or of any subsequent right or remedy of the same kind.
	 	 	 
	 	f.	Definitions;
    Headings; and Number. A term defined in any part of this Employment Agreement shall have the defined meaning wherever such
    term is used herein. The headings contained in this Agreement are for reference purposes only and shall not affect in any
    manner the meaning or interpretation of this Employment Agreement. Where appropriate to the context of this Agreement, use
    of the singular shall be deemed also to refer to the plural, and use of the plural to the singular.
	 	 	 
	 	g.	Counterparts.
    This Agreement may be executed in separate counterparts, each of which shall be deemed an original but both of which taken
    together shall constitute but one and the same instrument.
	 	 	 
	 	h.	Governing
    Laws and Forum. This Agreement shall be governed by, construed, and enforced in accordance with the laws of Maryland. The
    parties hereto further agree that any action brought to enforce any right or obligation under this Agreement shall be subject
    to the exclusive jurisdiction of the courts of Maryland.

 

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    	8 | PageExhibit 10.1
​
AAR CORP.
Fiscal 2021 Short-Term Incentive Plan
​
1.          Purpose.
​
The purpose of the AAR CORP. 2021 Short-Term Incentive Plan (“STIP”) is to provide an incentive for selected senior executives of AAR CORP. (the “Company”) and its subsidiaries to achieve the Company’s short-term performance goals by providing them with an annual cash incentive payment based on the financial and operating success of the Company.  The STIP payment for the fiscal year ending May 31, 2021 (“Fiscal 2021”) will be based on Earnings Per Share, Working Capital Turns and Strategic Objectives.
​
2.          Definitions.
​
(a)         “Board” means the Board of Directors of the Company.
​
(b)         “Bonus” means the annual cash incentive paid to a Participant under this STIP for Fiscal 2021.
​
(c)         “Cause” means the Participant’s unsatisfactory performance or conduct detrimental to the Company and its subsidiaries, as solely determined by the Company.
​
(d)         “Committee” means the Compensation Committee of the Board (the “Committee”).
​
(e)         “Company” means AAR CORP.
​
(f)         “Disability” means the inability of the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.
​
(g)         “Earnings Per Share” means adjusted diluted earnings per share from continuing operations as disclosed by the Company in its periodic reports filed with the Securities and Exchange Commission, excluding non-GAAP items included on the Company’s quarterly earnings releases, special charges or unusual or infrequent items incurred during the performance period, and as may be adjusted for changes in generally accepted accounting principles.
​
(h)         (h) “Fiscal 2021” means the Company’s fiscal year ending May 31, 2021.
​
(i)          “Participant” means any active executive of the Company or subsidiary who has been selected by the Committee as eligible to earn a Bonus under the STIP.
​
(j)          “Retirement” means the Participant’s voluntary termination of his employment, or his termination of employment by the Company or a subsidiary without Cause, when he has (i) attained age 65 or (ii) attained age 55 and his age plus the number of his consecutive years of service with the Company and subsidiaries is at least 75.
​
(k)         “Salary” means a Participant’s base annual salary earned during Fiscal 2021 while a Participant.
​
(l)          “STIP” means this AAR CORP. 2021 Short-Term Incentive Plan.
​
​

​

(m)        “Strategic Objectives” means the qualitative performance goals set by the Committee at its first meeting of Fiscal 2021.
​
(n)         “Working Capital Turns” means net sales from continuing operations divided by average working capital, where working capital is defined as net accounts receivable plus net inventories minus accounts payable, excluding non-GAAP items included on the Company’s quarterly earnings releases, special charges or unusual or infrequent items incurred during the performance period, and as may be adjusted for changes in generally accepted accounting practices.
​
3.          Administration.
​
The STIP shall be administered by the Committee. The Committee has full authority to select the senior executives eligible to participate in the STIP and determine when the senior executive’s participation in the STIP will begin and end. Subject to the express provisions of the STIP, the Committee shall be authorized to interpret the STIP and to establish, amend and rescind any rules and regulations relating to the STIP and to make all other determinations deemed necessary or advisable for the proper administration of the STIP. The determinations of the Committee in the proper administration of the STIP shall be conclusive and binding.
​
4.          Eligibility and Participation.
​
Participation in the STIP is limited to those senior executives of the Company or a subsidiary who the Committee designates as Participants. When the Committee selects an executive to become a Participant under the STIP, it shall designate the date as of which the executive’s participation shall begin.
​
5.          Annual Bonus Awards.
​
(a)         Determination of Participants, Performance Goals and Target Bonus Amounts. In the beginning of Fiscal 2021, the Committee shall (i) determine the Participants for Fiscal 2021, (ii) establish threshold, target and maximum Earnings Per Share and Working Capital Turns performance goals, and (iii) approve the target Bonus payment for each Participant expressed as a percentage of the Participant’s Salary.
​
(b)        Bonus Payment. As soon as reasonably practicable after the end of Fiscal 2021, the Committee shall determine the extent to which each of the Earnings Per Share and Working Capital Turns targets and the Strategic Objectives were attained for Fiscal 2021. The Bonus payable to each Participant will be equal to the sum of (i) 40% of the Participant’s target Bonus multiplied by the applicable Earnings Per Share Multiplier Percentage, (ii) 20% of the Participant’s target Bonus multiplied by the Working Capital Turns Multiplier Percentage and (iii) 40% of the Participant’s target Bonus multiplied by the applicable Strategic Objectives Multiplier Percentage as determined by the Committee in its discretion (except in each case for such lower amounts as otherwise determined by the Committee in its discretion):
​
	Earnings Per Share (40%)
	​
	Working Capital Turns (20%)
	​

	Percentage 
Achievement Level
	    
	Multiplier 
Percentage
	    
	Percentage Achievement
Level
	    
	Multiplier 
Percentage
	 

	Below Threshold (<75%)
	​
	0
	%  
	Below Threshold (<75%)
	​
	0
	%

	Threshold (75%)
	​
	50
	%  
	Threshold (75%)
	​
	50
	%

	Target (100%)
	​
	100
	%  
	Target (100%)
	​
	100
	%

	Maximum (125%)
	​
	200
	%  
	Maximum (125%)
	​
	200
	%

​
​

-2-

Achievement of Earnings Per Share and Working Capital Turns targets between established ranges will be paid out on a straight-line basis within the targeted payout ranges, up to the maximum 200% payout. The Committee shall use its discretion to determine the Multiplier Percentage and payout range for achievement of the Strategic Objectives, up to a maximum 200% payout.
​
6.          STIP Limitations.
​
Notwithstanding Section 5, (a) the Committee retains full discretion to determine whether any Bonus will be payable for Fiscal 2021, regardless of performance results and (b) no Bonus shall be paid under the STIP to a Participant whose employment with the Company and all subsidiaries terminates during Fiscal 2021 unless the termination is due to death, Disability or Retirement, or as otherwise approved by the Committee. If the Participant terminates during Fiscal 2021 due to death, Disability or Retirement, the Participant shall be entitled to a pro rata portion of the Bonus the Participant would have earned under the STIP had the Participant remained employed through the end of Fiscal 2021. Such Bonus will be paid at the same time Bonuses are paid to active Participants, unless otherwise directed by the Committee.
​
7.          Payment of Bonuses.
​
A Participant’s Bonus for Fiscal 2021 shall be paid in cash to the Participant, or to the Participant’s beneficiary (or beneficiaries) in the event of the Participant’s death, within three months after the end of Fiscal 2021, unless the Participant has previously elected to have all or a portion of the Bonus deferred in accordance with the AAR CORP. Supplemental Key Executive Retirement Plan. The Company shall deduct all taxes required by law to be withheld from all Bonus payments.
​
8.          No Assignment.
​
Except in the event of a Participant’s death, the rights and interests of a Participant under the STIP shall not be assigned, encumbered or transferred.
​
9.          Termination of Participation.
​
The Committee reserves the right to cancel a Participant’s participation in the STIP at any time.
​
10.         Employment Rights.
​
Nothing contained in the STIP shall be construed as conferring a right upon any Participant to continue in the employment of the Company or any subsidiary.
​
11.         Amendment/Termination.
​
The Board may either amend or terminate the STIP at any time, without the consent of the Participants and without the approval of the stockholders of the Company; provided, that such modification or elimination shall not affect the obligation of the Company to pay any Bonus after it has been determined by the Committee under the STIP.

-3-

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