Document:

Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

This Agreement is made and entered into on January 1,
2009 by and among Manhattan Bancorp (“MB”),
Bank of Manhattan, N.A. (the “Bank”)
and Jeffrey M. Watson (“Executive”)
for the purposes set forth hereinafter (“Agreement”).

 

W I T N E S S E T H

 

WHEREAS, MB is a California corporation and bank
holding company registered under the Bank Holding Company Act of 1956, as
amended, subject to the supervision and regulation of the Board of Governors of
the Federal Reserve System (“FRB”);

 

WHEREAS, MB is the parent holding company for the
Bank, which is a national banking association and wholly-owned subsidiary of
MB, subject to the supervision and regulation of the Office of the Comptroller
of the Currency (“OCC”);

 

WHEREAS, Executive is currently the President and
Chief Executive Officer of the Bank and MB 
pursuant to an Employment Agreement dated December 5, 2008 between
the Bank, MB and Executive (the “Prior
Agreement”);

 

WHEREAS, Executive also serves as the President and
Chief Executive Officer of MB and as a director of the Bank and MB; and

 

WHEREAS, it is the intention of the parties to enter
into an employment agreement for the purposes of assuring the continued
services of Executive as the President and Chief Officer of the Bank and as the
President and Chief Executive Officer of MB.

 

NOW, THEREFORE, in consideration of the mutual
covenants and agreements contained herein, MB, the Bank and Executive agree as
follows:

 

A.                                   TERM OF EMPLOYMENT

 

The term of this
Agreement (“Term”) shall commence January 1,
2009 (the “Effective Date”), and
end three (3) years thereafter, subject, however, to prior termination of
this Agreement as hereinafter provided. 
Where used herein, “Term” shall refer to the entire period of employment
of Executive by the Bank hereunder, whether for the period provided above, or
whether terminated earlier as hereinafter provided.  The Prior Agreement is hereby terminated and
replaced by this Agreement.  This does
not replace or impair the Stock Option Agreements between MB and Executive
dated August 10, 2007, September 27, 2007 and December 18, 2008
(the “Stock Option Agreements”),
which shall remain in full force and effect.

 

 

B.                                     DUTIES OF EXECUTIVE

 

1.                                       Duties.  Executive shall perform the duties of President
and Chief Executive Officer of the Bank and MB, reporting directly to the Board
of Directors (the “Board”) of the
Bank and MB, and subject, at all times, to the powers vested by law in the
Board of the Bank and MB and their respective shareholders.  Executive shall also serve as a member of the
Boards of MB and Bank throughout the Term. 
During the Term, Executive shall perform the services herein
contemplated to be performed by Executive faithfully, diligently and to the
best of Executive’s ability, consistent with the highest and best standards of
the banking industry and in compliance with all applicable laws and the Bank’s
and MB’s Articles of Association or Incorporation, Bylaws and internal written
policies.

 

2.                                       Conflicts of Interest.  Except as permitted by the prior written
consent of the Board of MB or Bank, Executive shall devote Executive’s entire
productive time, ability and attention to the business of the Bank and MB
during the Term and Executive shall not directly or indirectly render any services
of a business, commercial or professional nature, to any other person, firm or
corporation, whether for compensation or otherwise, which are in conflict with
the Bank’s or MB’s interests. 
Notwithstanding the foregoing, Executive may make investments of a
passive nature in any business or venture, provided that such business or
venture is not in competition, directly or indirectly, in any manner with the
Bank or MB.

 

C.                                     COMPENSATION

 

1.                                       Salary.  For Executive’s services hereunder, the Bank
or MB shall pay or cause to be paid as annual base salary (the “Base Salary”) to Executive not less than
Two Hundred Twenty Five Thousand Dollars ($225,000) for the first year of the
Term, with annual increases in the discretion of the Boards or the Bank’s and
MB’s Compensation Committees.  Base
Salary shall be payable in equal installments in conformity with the Bank’s
normal payroll period.

 

2.                                       Bonuses. Any bonuses shall be as
determined by the Boards of the Bank and MB, in their sole discretion.

 

D.                                    EXECUTIVE BENEFITS

 

1.                                       Vacation.  Executive shall be entitled to vacation
during each year of the Term consistent with the Bank’s approved vacation
schedule and policy, which shall provide Executive with not less than four (4) weeks
vacation for each year of the Term.  Executive
is encouraged to use all accrued vacation benefits and will be expected to take
vacation in the year it is earned. 
Accrual of any unused vacation shall be determined in accordance with
the Bank’s Personnel Policy as in effect from time to time and shall be subject
to any limitations set forth therein.

 

2.                                       Group Medical and Other Insurance Benefits.  The Bank shall provide for
Executive, at the Bank’s expense, group medical and other insurance benefits in
accordance with the Bank’s Personnel Policy as in effect from time to
time.  All coverage under this paragraph
shall be in existence or shall take effect as of the Effective Date
hereof.  The Bank’s and MB’s liability to
Executive for any breach of this paragraph shall be limited to the amount of 

 

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premiums required hereunder to be payable by the Bank to obtain or
maintain, as applicable, the coverage contemplated herein.

 

3.                                       Stock Option. MB has granted
Executive under the Stock Option Agreements options to purchase 174,382 of
shares of MB’s authorized but unissued Common Stock, at the fair market value
of the stock on the date of grant which equals the price at which such shares
were sold by MB prior to the Effective Date. 
Such option has a term of ten (10) years and shall vest in three
installments of 33.33% per year over a period of three (3) years, with the
first such installment to vest one year from the date of grant, and with
subsequent installments vesting two and three years thereafter.  To the maximum extent permitted by law, the
option will qualify as an “incentive stock option” within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended.  Such stock option has been granted to
Executive, pursuant to MB’s Stock Option Plan (the “Plan”) and the Stock Option Agreement.

 

4.                                       Auto Allowance.  During the Term, Executive shall be entitled
to receive One Thousand Dollars ($1,000) per month as a car allowance.

 

5.                                       Club Membership.  Executive shall be provided with an executive
membership at Palos Verdes Country Club at the Bank’s expense.  The Bank shall pay or reimburse Executive for
all dues associated with such membership and reimburse Executive for all
business expenses in accordance with Bank’s reimbursement policies.

 

E.                                      REIMBURSEMENT FOR BUSINESS EXPENSES

 

Executive shall be
entitled to reimbursement by the Bank or MB for any ordinary and necessary
business expenses incurred by Executive in the performance of Executive’s
duties in accordance with the Bank’s and MB’s reimbursement policies in effect
from time to time, provided that each such expenditure is of a nature
qualifying it as a proper deduction on the federal and state income tax returns
of the Bank and MB as a business expense and not as deductible compensation to
Executive; and Executive furnishes to the Bank and MB adequate records and
other documentary evidence required by federal and state statutes and
regulations issued by the appropriate taxing authorities for the substantiation
of such expenditures as deductible business expenses of the Bank and not as
deductible compensation to Executive.

 

F.                                      TERMINATION

 

1.                                       Termination for Cause.  The Bank or MB may terminate this Agreement
at any time by action of its Board for cause (“Cause”).  For purposes
of this Agreement termination for “Cause” shall mean termination because of
Executive’s personal dishonesty, incompetence, willful misconduct, any breach
of fiduciary duty involving personal profit, intentional failure to perform
stated duties, willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) or final cease-and-desist order or
material breach of any provision of this Agreement.  For purposes of this Agreement, no act, or
the failure to act, on Executive’s part shall be considered “willful” unless
done, or omitted to be done, not in good faith and without reasonable belief
that the action or omission was in the best interests of the Bank or MB.  Termination under this Paragraph shall not
prejudice any remedy that the Bank or MB may have at law, in equity, or under
this Agreement.

 

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2.                                       Death or Disability.  In the event of Executive’s death or if
Executive is found to be physically or mentally disabled (as hereinafter defined)
by the Board of Bank or MB in good faith, this Agreement shall terminate
without any further liability or obligation by the Bank to Executive.  For purposes of this Agreement only, physical
or mental disability shall be defined as Executive having been unable to fully
perform under this Agreement for a continuous period of ninety (90) days or a
cumulative period of one-hundred eighty (180) days in any calendar year, or, if
applicable, such other periods as may be defined in the Bank’s Personnel Policy
or in applicable disability insurance policies as in effect from time to
time.  If there should be a dispute
between the Bank or MB and Executive as to Executive’s physical or mental
disability for purposes of this Agreement, the question shall be settled by the
opinion of an impartial reputable physician or psychiatrist agreed upon by the
parties or their representatives, or if the parties cannot agree within ten (10) days
after a request for designation of such party, then by a physician or
psychiatrist designated by the Los Angeles County Medical Association.  The certification of such physician or
psychiatrist as to the question in dispute shall be final and binding upon the
parties hereto.  The Bank or MB shall
bear the costs of such physician or psychiatrist selected to determine such
matter.

 

3.                                       Supervisory Matters.  If Executive is suspended and/or temporarily
prohibited from participating in the conduct of the Bank’s affairs by notice
served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit
Insurance Act (12 U.S.C. Section 1818(e)(3) and (g)(1)), the Bank’s
obligations under this Agreement shall be suspended as of the date of service,
unless stayed by appropriate proceedings. 
If the charges in the notice are dismissed, the Bank may in its discretion:  (i) pay Executive all or part of the
compensation withheld while its obligations under this Agreement were
suspended; and (ii) reinstate (in whole or in part) any of its obligations
which were suspended.  If Executive is
removed and/or permanently prohibited from participating in the conduct of the
Bank’s affairs by an order issued under Section 8(e)(3) or i(g)(1) of
the Federal Deposit Insurance Act (12 U.S.C. Section 1818(e)(3) or
(g)(1)), all obligations of the Bank under this Agreement shall terminate as of
the effective date of the order, but vested rights of the parties shall not be
affected.  If the Bank is in default (as
defined in Section 3(x)(1) of the Federal Deposit Insurance Act (12
U.S.C. Section 1813(x)(1)), all obligations under this Agreement shall
terminate as of the date of default, but vested rights of the parties shall not
be affected.  All obligations under this
Agreement shall be terminated, except to the extent that it is determined that
continuation of the Agreement is necessary for the continued operation of the
Bank; (i) by the Federal Deposit Insurance Corporation at the time that
the Federal Deposit Insurance Corporation enters into an agreement to provide
assistance to or on behalf of the Bank under the authority contained in Section 11
of the Federal Deposit Insurance Act (12 U.S.C. Section 1821); or (ii) by
the Federal Deposit Insurance Corporation or the United States Comptroller of
the Currency or his or her designee, at the time that the Federal Deposit
Insurance Corporation or the United States Comptroller of the Currency or his
or her designee approves a supervisory merger to resolve problems related to
the operation of the Bank or when the Bank is in an unsafe or unsound
condition.  All rights of the parties
that have already vested, however, shall not be affected by such action.

 

4.                                       Termination Without Cause.  Notwithstanding anything to the contrary
contained herein, it is agreed by the parties hereto that the Bank or MB may at
any time without Cause and for any reason immediately terminate this Agreement
and Executive’s employment by the Bank by action of their respective
Boards.  Upon such termination by the
Bank or MB all 

 

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benefits provided by the Bank or MB hereunder to Executive shall
thereupon cease, except as provided in this Subparagraph F.4 or Subparagraph
F.5, and Executive shall be deemed to have voluntarily resigned as a director,
officer and employee of the Bank and MB and any corporation, partnership, venture,
limited liability company or other entity controlled by, controlling or under
common control with the Bank or MB, and shall deliver such written resignation
as Bank or MB may request. 
Notwithstanding the foregoing, it is agreed that in the event of such
termination without Cause by the Bank or MB upon the delivery to the Bank by
Executive of a waiver and release in substantially the form of Attachment “A”
to this Agreement, and Executive’s compliance with the terms thereof, Executive
shall be entitled to, upon the effective date of termination, payment of a lump
sum equivalent to twenty four (24) months’ base salary as such base salary is
in effect on the date of termination of employment, plus continuation of
Executive’s medical benefits for a period of twenty four (24) months following
such termination, with Bank continuing to pay Executive’s share of premiums and
associated costs as if Executive continued to be employed with the Bank and MB;
provided, however, that the Bank’s and MB’s obligation to provide such coverage
shall be terminated if Executive is eligible to receive comparable substitute
coverage from another employer at any time during such twenty four month
period.  Executive agrees to advise the Bank
and MB immediately if such comparable substitute coverage is available from
another employer.  Notwithstanding any
provision to the contrary in this Subparagraph F.4, no severance benefits shall
be payable to Executive hereunder if Executive’s employment is terminated for
any of the reasons delineated in Subparagraphs F.1, F.2 or F.3 hereof or while
grounds for termination under such Subparagraphs exist, and no severance
benefits shall be payable to Executive under this Subparagraph F.4 if payments
are required to be made to Executive under Subparagraph F.5 hereof.

 

5.                                       Termination Following Change in Control.

 

(a)                                  In the event a Change in
Control of the Bank or MB occurs (as defined below) and Executive’s employment
as President and Chief Executive Officer of the Bank or MB is terminated without
Cause by the Bank or MB, then Executive shall be entitled, upon such
termination of employment and upon delivery to the Bank of an executed waiver
and release in substantially the form of Attachment “A” to this Agreement, to
payment of a lump sum equivalent to two (2) times the highest annual cash
compensation amount paid to Executive by the Bank or MB within the three years’
preceding the Change in Control and to the continuation of Executive’s coverage
under the group medical care provided at the time of termination for a period
of twenty four (24) months following such termination; provided, however, that
the Bank’s obligation to provide such coverage shall be terminated if Executive
obtains comparable substitute coverage from another employer at any time during
such 24-month period.  Executive agrees
to advise the Bank and MB immediately if such comparable substitute coverage is
obtained from another employer. 
Notwithstanding any provision to the contrary in this Subparagraph F.5,
no severance benefits shall be payable to Executive hereunder if Executive’s
employment is terminated for any of the reasons delineated in Subparagraphs
F.1, F.2 or F.3 hereof or while grounds for termination under such
Subparagraphs exist.

 

(b)                                 A “Change in Control” of the Bank occurs upon
the effective date of the first to occur of the following events:

 

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(i)                                     Merger, Consolidation, and
Other Transactions.  Any (A) merger
where the Bank or MB, or a corporation in which the Bank’s or MB’s shareholders
as constituted immediately prior to the merger do not own at least 50% of such
corporation’s common stock or 50% of the common stock of the parent of such
corporation following such merger in the same proportions as their ownership
interests in the Bank or MB prior to such transaction, is not the surviving
corporation; (B) a transfer of all or a substantial portion (50% or more)
of the assets of the Bank or MB to another corporation or other person in which
the Bank’s or MB’s shareholders as constituted immediately prior to such
transfer do not own at least 50% of the common stock or 50% of the common stock
of the parent of such corporation (or an equivalent economic interest in the
case of a transferee that is not a corporation) following such transfer in the
same proportions as their ownership interests in the Bank or MB prior to such
transaction; or (C) the liquidation or dissolution of the Bank or MB,
except for a liquidation or dissolution in which the assets and liabilities of the
Bank or MB are transferred to a transferee in which the owners of the Bank’s or
MB’s common stock as constituted immediately prior to the transaction own at
least 50% of the common stock or 50% of the common stock of the parent of the
transferee (or an equivalent economic interest in the case of a transferee that
is not a corporation) following such liquidation or dissolution in the same
proportions as their ownership interests in the Bank or MB prior to such
transaction; or

 

(ii)                                  Majority Stockholder.  Any person (as such term is used in Section 13(d) of
the securities Exchange Act of 1934, as amended (the “Exchange Act”)), together with its
affiliates (but excluding the Bank’s employee benefit plans and the individuals
who were the Bank’s or MB’s officers or directors on the date of this Agreement
or their affiliates), becomes the beneficial owner (within the meaning of Rule 13(d)(3) under
the Exchange Act) of more than 50% of the Bank’s or MB’s outstanding common
stock.

 

(iii)                               Regulatory Exception.  Notwithstanding anything else to the contrary
set forth herein, a “Change in Control” shall not include any sale of stock or
securities, merger, transfer of assets, consolidation, liquidation,
reorganization or other transaction instituted by or at the request of the OCC,
FRB or the Federal Deposit Insurance Corporation to resolve any supervisory
concerns respecting the Bank or MB.

 

(c)                                  Notwithstanding anything to
the contrary in this Subparagraph F.5, no severance benefits shall be payable
to Executive hereunder if Executive’s employment is terminated for any of the
reasons delineated in Subparagraphs F.1, F.2 or F.3 hereof or while grounds for
termination under such Subparagraphs exist.

 

6.                                       Golden
Parachute Limitation.  Severance
compensation under Subparagraphs F.4 and F.5 hereof will be reduced as provided
below to avoid the penalties imposed on “parachute payments” under the Internal
Revenue Code of 1986 (the “Code”).

 

(a)                                  If the present value of all
Executive’s severance compensation provided by MB or the Bank under
Subparagraph F.4 or F.5 hereof and outside this Agreement is high enough to
cause any such payment to be a “parachute payment” (as defined in Section 280G(b)(2) of
the Code), then one or more of such payments will be reduced by the minimum
amount required to prevent the severance compensation under this Agreement from
being a “parachute payment.”

 

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(b)                                 Executive may direct the
Bank and MB regarding the order of reducing severance compensation and other
payments from the Bank or MB to comply with this Subparagraph F.6.

 

7.                                       Section 409A Limitation.  It is the intention of Employer and Executive
that the severance and other benefits payable to Executive under this Agreement
either be exempt from, or otherwise comply with, Section 409A (“Section 409A”) of the Internal Revenue
Code of 1986, as amended. 
Notwithstanding any other term or provision of this Agreement, to the
extent that any provision of this Agreement is determined by Employer, with the
advice of its independent accounting firm or other tax advisors, to be subject
to and not in compliance with Section 409A, including, without limitation,
the definition of “Change in Control” or the timing of commencement and
completion of severance benefit and/or other benefit payments to Executive
hereunder in connection with a merger, recapitalization, sale of shares or
other “Change in Control”, or the amount of any such payments, such provisions
shall be interpreted in the manner required to comply with Section 409A.  Employer and Executive acknowledge and agree
that such interpretation could, among other matters, (i) limit the
circumstances or events that constitute a “change in control;” (ii) delay
for a period of six (6) months or more, or otherwise modify the
commencement of severance and/or other benefit payments; and/or (iii) modify
the completion date of severance and/or other benefit payments.  Employer and Executive further acknowledge
and agree that if, in the judgment of Employer, with the advice of its
independent accounting firm or other tax advisors, amendment of this Agreement
is necessary to comply with Section 409A, Employer and Executive will
negotiate reasonably and in good faith to amend the terms of this Agreement to
the extent necessary so that it complies (with the most limited possible
economic effect on Employer and Executive) with Section 409A.  For example, if this Agreement is subject to Section 409A
and it requires that severance and/or other benefit payments must be delayed
until at least six (6) months after Executive terminates employment, then
Employer and Executive would delay payments and/or promptly seek a written
amendment to this Agreement that would, if permissible under Section 409A,
eliminate any such payments otherwise payable during the first six (6) months
following Executive’s termination of employment and substitute therefor a lump
sum payment or an initial installment payment, as applicable, at the beginning
of the seventh (7th) month following Executive’s termination of employment
which in the case of an initial installment payment would be equal in the
aggregate to the amount of all such payments thus eliminated.

 

G.                                     GENERAL PROVISIONS

 

1.                                       Trade Secrets.  During the Term, Executive will have access
to and become acquainted with what Executive and the Bank and MB acknowledge
are trade secrets, to wit, knowledge or data concerning the Bank and MB,
including their operations and methods of doing business, and the identity of
customers of the Bank and MB, including knowledge of their financial condition
and their financial needs.  Executive
shall not disclose any of the aforesaid trade secrets, directly or indirectly,
or use them in any way either during the Term or thereafter, except as required
in the course of Executive’s employment with the Bank or MB.

 

2.                                       Indemnification.  To the extent permitted by law, applicable
statutes and the Bylaws or resolutions of the Bank in effect from time to time,
the Bank and MB shall indemnify Executive against liability or loss arising out
of Executive’s actual or asserted 

 

7

 

misfeasance or non-feasance in the performance of Executive’s duties or
out of any actual or asserted wrongful act against, or by, the Bank or MB
including but not limited to judgments, fines, settlements and legal and other
expenses incurred in the defense of actions, proceedings and appeals
therefrom.  However, the Bank and MB
shall have no duty to indemnify Executive with respect to any claim, issue or
matter as to which Executive has been adjudged to be liable to the Bank or MB
in the performance of his duties, unless and only to the extent that the court
in which such action was brought shall determine upon application that, in view
of all of the circumstances of the case, Executive is fairly and reasonably
entitled to indemnification for the expenses which such court shall
determine.  The Bank and MB shall
endeavor to apply for and obtain Directors and Officers Liability Insurance to
indemnify and insure the Bank, MB and Executive from and against the aforesaid
liabilities.  The provisions of this
paragraph shall apply to the estate, executor, administrator, heirs, legatees
or devisees of Executive.  The
obligations of the Bank and MB under this Subparagraph G.2 shall continue
through and after the Term of this Agreement.

 

3.                                       Return of Documents.  Executive expressly agrees that all manuals,
documents, files, reports, studies, instruments or other materials used and/or
developed by Executive during the Term are solely the property of the Bank and
MB, and that Executive has no right, title or interest therein.  Upon termination of this Agreement, Executive
or Executive’s representative shall promptly deliver possession of all of said
property to the Bank in good condition.

 

4.                                       Non-solicitation.  During the Term and for a period of one year
thereafter, Executive shall not, directly or indirectly, engage or participate
in the solicitation or any attempt to solicit employees of the Bank or MB to
work for any person, firm or business.

 

5.                                       Controlling Law.  This Agreement is to be governed by and
construed in accordance with the laws of the United States and, to the extent
not inconsistent therewith, the laws of the State of California.

 

6.                                       Invalid Provisions.  Should any provision of this Agreement for
any reason be declared invalid, void, or unenforceable by a court of competent
jurisdiction, the validity and binding effect of any remaining portion shall
not be affected, and the remaining portions of this Agreement shall remain in
full force and effect as if this Agreement had been executed with said
provision eliminated.

 

7.                                       Entire Agreement.  This Agreement and the Stock Option Agreement
contain the entire agreement of the parties. 
It supersedes any and all other agreements, either oral or in writing,
between the parties hereto with respect to the employment of Executive by the
Bank and MB.  Each party to this
Agreement acknowledges that no representations, inducements, promises, or
agreements, oral or otherwise, have been made by any party, or anyone acting on
behalf of any party, which are not embodied herein, and that no other
agreement, statement, or promise not contained in this Agreement shall be valid
or binding.  This Agreement may not be
modified or amended by oral agreement, but only by an agreement in writing
signed by both the Bank and MB, and Executive.

 

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8.                                       Notice.  For the purposes of this Agreement, notices,
demands and all other communications provided for in this Agreement shall be in
writing and shall be personally delivered or (unless otherwise specified)
mailed by United States mail, or sent by facsimile, provided that the facsimile
cover sheet contains a notation of the date and time of transmission, and shall
be deemed received:  (i) if
personally delivered, upon the date of delivery to the address of the person to
receive such notice, (ii) if mailed in accordance with the provisions of
this Subparagraph G.8, three (3) business days after the date placed in
the United States mail, or (iii) if given by facsimile, when sent.  Notices shall be addressed to the Bank and MB
at their main office and to Executive at the address then maintained by the
Bank and MB in its records for Executive, or to such other respective addresses
as the parties hereto shall designate to the other by like notice.

 

9.                                       Arbitration.  Any dispute or controversy
arising under or in connection with this Agreement, the inception or
termination of Executive’s employment, or any alleged discrimination or
statutory or tort claim related to such employment, including issues raised
regarding the Agreement’s formation, interpretation or breach, shall be settled
exclusively by binding arbitration in Los Angeles, California in accordance
with the National Rules for the Resolution of Employment Disputes of the
American Arbitration Association (“AAA”).  Without limiting the foregoing, the following
potential claims by Executive could be subject to arbitration under the
Arbitration Agreement:  claims for wages
or other compensation due; claims for breach of any contract or covenant
(express or implied) under which Executive believes he would be entitled to
compensation or benefits; tort claims related to such employment; claims for
discrimination and harassment (including, but not limited to, race, sex,
religion, national origin, age, marital status or medical condition,
disability, sexual orientation, or any other characteristic protected by
federal, state or local law); claims for benefits (except where an employee
benefit or pension plan specifies that its claims procedure shall culminate in
an arbitration or other procedure different from this one); and claims for
violation of any public policy, federal, state or other governmental law,
statute, regulation or ordinance.  The
arbitration will be conducted in Los Angeles County.  The arbitration shall provide for written
discovery and depositions adequate to give the parties access to documents and
witnesses that are essential to the dispute. 
The arbitrator shall have no authority to add to or to modify this
Agreement, shall apply all applicable law, and shall have no lesser and no
greater remedial authority than would a court of law resolving the same claim
or controversy.  The arbitrator shall
issue a written decision that includes the essential findings and conclusions
upon which the decision is based, which shall be signed and dated.  Executive and the Bank and MB shall each bear
his or their own costs and attorneys’ fees incurred in conducting the
arbitration and, except in such disputes where Executive assets a claim
otherwise under a state or federal statute prohibiting discrimination in
employment (“a  Statutory Claim”), or unless required
otherwise by applicable law, shall split equally the fees and administrative
costs charged by the arbitrator and AAA between Executive, on the one hand, and
Bank and MB on the other hand.  In
disputes where Executive asserts a Statutory Claim against the Bank or MB,
Executive shall be required to pay only the AAA filing fee to the extent such
filing fee does not exceed the fee to file a complaint in state or federal
court.  Executive shall pay the balance
of the arbitrator’s fees and administrative costs.  Judgment may be entered on the arbitrator’s
award in any court having jurisdiction.

 

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

 

	
   

  	
  BANK
  OF MANHATTAN, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Harry
  Chenoweth

  
	
   

  	
   

  	
  Harry Chenoweth

  
	
  /s/ Jeffrey M.
  Watson

  	
   

  	
   

  	
  Chairman,Compensation
  Committee

  
	
  Jeffrey
  M. Watson

  	
  MANHATTAN
  BANCORP

  
	
  (“Executive”)

  	
   

  
	
   

  	
  By:

  	
  /s/Harry
  Chenoweth

  
	
   

  	
   

  	
  Harry Chenoweth

  
	
   

  	
   

  	
  Chairman,
  Compensation Committee

  
				

 

10Exhibit 10.1

 

EMPLOYMENT
AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”) is entered into this
6 day of January, 2009 (the “Effective Date”), between Avery W.
Catlin. (the “Executive”) and CELLDEX THERAPEUTICS, INC., a Delaware
corporation (the “Company”) (collectively, the Executive and the Company shall
be referred to as the “Parties”).  In
consideration of the mutual promises and agreements contained herein, the
Parties agree as follows:

 

1.                                      PURPOSE.  The Company desires to avail itself of the
services of the Executive as Senior Vice President,
Chief Financial Officer and Secretary, and the Executive desires to
provide such services in accordance with the terms of this Agreement.  The Parties agree that the duties and
obligations expected of the Executive and of the Company are as set forth in
this Agreement.

 

2.                                      EFFECTIVE
DATE AND TERM.  This Agreement shall
be effective, and its term (the “Term”) shall commence as of the Effective
Date.  The Term shall continue through
and until December 31, 2011 (the “Initial Term”), unless terminated sooner
as provided by this Agreement or extended by the Parties.  The Term shall be automatically renewed for
successive periods of one year each (each, a “Renewal Term”), unless either
Party gives to the other written notice of intent not to renew at least ninety
(90) days prior to the expiration of the Initial Term or any Renewal Term (a “Notice
of Non-Renewal”).

 

3.                                      COMPENSATION.

 

A.                                    Salary.  During the Term, the Company shall pay or
cause to be paid to the Executive, in installments pursuant to the Company’s
payroll practices as in effect from time to time, a base salary of $288,250 per annum or such greater amount as may from time
to time be determined by the Board of Directors or the Compensation Committee
thereof (the “Board”) of the Company (the “Base Salary”).  The Base Salary shall be reviewed annually in
accordance with the Company’s compensation and review policies and, in the sole
discretion of the Board, may be increased.

 

B.                                    Annual Bonus.  With respect to each fiscal year of the
Company that ends during the Term, the Executive shall be eligible to receive
an annual bonus (the “Discretionary Bonus”) based upon the Executive’s overall
performance of the Services on behalf of the Company during such fiscal year,
and/or based upon the Company’s attainment of pre-established goals relating to
such fiscal year (which if applicable, will be determined by the Chief
Executive Officer (“CEO”) of the Company and the Board and communicated to the
Executive within 30 days following the beginning of the applicable fiscal
year).  Commencing with fiscal year 2009,
the CEO and the Board shall determine a target amount for the Discretionary
Bonus and communicate that to the Executive prior to February 1 of the
bonus year.  The attainment of any
applicable performance goals and the amount to be paid in respect of the
Discretionary Bonus shall be determined by the CEO or the Board in good faith
and in accordance with such written goals and policies as may be established
from time to time by the

 

 

Board and the CEO. 
The Discretionary Bonus, if any, shall be payable as a lump-sum payment
within sixty (60) days immediately following the last day of the applicable
fiscal year.

 

C.                                    Expenses.  The Company shall reimburse the Executive for
any travel, hotel, entertainment and other expenses reasonably incurred by the
Executive in furtherance of the Executive’s duties under this Agreement subject
to and in accordance with the Company’s applicable travel and expense
reimbursement policies.

 

D.                                    Employee
Benefits.  The Executive shall be
entitled to participate in any and all employee benefit plans in effect from
time to time that are provided generally to employees of the Company, and in
any executive perquisite programs in effect from time to time that provide
benefits to other executives of the Company of comparable stature and with
comparable duties and responsibilities. 
During the Term, the Company shall acquire and pay for, or reimburse the
Executive for, hospitalization, dental, major medical, or other health
insurance for the benefit of the Executive and his dependents at least equal to
that generally provided other executive employees under the Company’s group
health insurance plan(s).  The Executive
shall, during the Term, be entitled to paid time off in accordance with
applicable Company policies in effect from time to time, in addition to public
holidays observed by the Company.  The
Executive shall be entitled to twenty (20) business days of vacation each
year.  The Executive shall be entitled to
carry any unused vacation days over to the next calendar year.  However, in no event will Executive’s accrued
but unused vacation exceed 40 days.

 

E.                                      Directors’ and Officers’ Liability Insurance.  The Company shall indemnify the Executive to
the fullest extent permitted under its by-laws. 
During the Term, the Company shall acquire and pay for directors’ and
officers’ liability insurance coverage for its senior executive officers, and
the Executive shall be named as a covered officer under such policy during the
Term.

 

4.                                      DUTIES
OF THE EXECUTIVE.

 

A.                                    Duties.  During the Term, the Executive shall hold the
title of Senior Vice President, Chief Financial Officer and
Secretary, shall report directly to the CEO and shall perform such
duties as the Company may reasonably require and shall use his best efforts to
carry into effect the directions of the CEO.

 

B.                                    Representation.  During the Term, the Executive shall well and
faithfully serve the Company and use the Executive’s best efforts to promote
the interests of the Company.  The
Executive shall at all times give the Company the full benefit of his
knowledge, expertise, technical skill and ingenuity in the performance of his
duties and exercise of his powers and authority in the capacity or capacities
described in Section 4(A) hereof, as the case may be.

 

C.                                    Time
Devoted by Executive.  The Executive
agrees to devote substantially all of the Executive’s time and attention during
business hours and such additional time and attention as may reasonably be
required to perform his duties hereunder.

 

2

 

5.                                      RESTRICTIONS
ON THE EXECUTIVE.

 

A.                                    Non-Disclosure
of Confidential Information.  All
information learned or developed by the Executive during the course of the
Executive’s employment by the Company or any subsidiary thereof will be deemed “Confidential
Information” under the terms of this Agreement. 
Examples of Confidential Information include, but are not limited to,
business, scientific and technical information owned or controlled by the
Company, including the Company’s business plans and strategies; business
operations and systems; information concerning employees, customers, partners
and/or licensees; patent applications; trade secrets; inventions; ideas;
procedures; formulations; processes; formulae; data and all other information
of any nature whatsoever which relate to the Company’s business, science,
technology and/or products.  In addition,
Confidential Information shall include, but not be limited to, all information
which the Company may receive from third parties.  The Executive will not disclose to any person
at any time or use in any way, except as directed by the Company, either during
or after the employment of the Executive by the Company, any Confidential
Information.  The foregoing restrictions
shall not apply to information which is or becomes part of the public domain
though no act or failure to act by the Executive.  In addition to the foregoing, in the process
of the Executive’s employment with the Company, or thereafter, under no
condition is the Executive to use or disclose to the Company, or incorporate or
use in any of his work for the Company, any confidential information imparted
to the Executive or with which he may have come into contact while in the
employ of his former employer(s).

 

B.                                    Inventions.  The term “Invention” means any invention,
discovery, improvement, apparatus, implement, process, compound, composition or
formula, whether or not patentable, conceived or reduced to practice, in whole
or in part, by the Executive (alone, or jointly with others) during any term of
his employment by the Company and twelve (12) months thereafter which directly
or indirectly relates to the business, science, technology or products of the
Company and /or any Confidential Information. 
The Executive will keep, on behalf of the Company, complete, accurate,
and authentic accounts, notes, data, and records (“Records”) of each and every
Invention, which Records will, at all times, be the property of the
Company.  The Executive will comply with
the directions of the Company with respect to the manner and form of keeping or
surrendering Records and will surrender to the Company all Records at the end
of the Executive’s term of employment by the Company.

 

Each Invention
will be the sole and exclusive property of the Company. The Executive will, at
the request of the Company, make application in due form for United States
letters patent and foreign letters patent (each, a “Patent”) on any Invention and
execute any necessary documents in connection with the Patents.  The Executive will assign and transfer to the
Company all right, title, and interest of the Executive in any Patents or
Patent applications.  The Executive
agrees to cooperate with any actions necessary to continue, renew or retain the
Patents.  The Company will bear the
entire expense of applying for and obtaining the Patents.

 

For one year after
the termination of the term of the Executive’s employment by the Company, the
Executive will not file any applications for Patents on any Invention other
than those filed at the request of and on behalf of the Company.

 

3

 

The Executive, as
a condition of his employment, hereby represents that, to the best of his
knowledge, there is not as of the date of this Agreement any agreement or
obligation outstanding with or to any of his former employers or other party,
which would restrict, limit or in any way prohibit all or any portion of his
work or employment, nor is there in his possession any confidential information
used by any of his former employers or any other party (except as may have been
revealed in generally available publications or otherwise made publicly
available).

 

C.                                    Non-Competition;
Non-Solicitation.

 

(1)      Non-Competition.  During the Term, without the consent of the
Board, and thereafter as specifically provided in Subsection 6.A.(2) or
6.D.(2), the Executive may not directly or indirectly engage in, or have any
interest in, any business (whether as employee, officer, director, agent,
security holder, creditor, consultant, or otherwise) that competes with the
vaccine and/or antibody business of the Company or any subsidiary thereof (as
such business may exist during the Term).

 

(2)      Non-Solicitation of Employees.  During
the Term, and thereafter as specifically provided in Subsection 6.A.(2) or
6.D.(2), the Executive shall not, directly or indirectly induce or solicit any
employee or independent contractor of the Company or any subsidiary thereof to
terminate his or her employment with the Company for the purpose of  joining another company in which the
Executive has an interest (whether as an employee, officer, director, agent,
security holder, creditor, consultant, or otherwise).

 

D.                                    Breach.  The Executive acknowledges that there may be
circumstances in which his breach of any covenant set forth in this Section 5
could cause substantial harm to the Company which may not be compensable by
monetary damages alone, and which could potentially entitle the Company to
injunctive relief.  However, by
acknowledging this possibility, the Executive is not agreeing to waive his
right to require the Company to meet its evidentiary burdens as required by law
in any cause of action brought by the Company seeking such injunctive
relief.  The restrictions contained in Subsection 5(c) above shall not
prohibit Executive from owning (beneficially or of record) less than 5% of any
class of equity or debt security issued by a publicly-held company, regardless
of whether that publicly-held company is otherwise a competitor of the Company.

 

6.                                      TERMINATION.

 

A.                                    Termination
for Cause by the Company.

 

(1)      This Agreement and the
Term may be terminated “for cause” by the Company pursuant to the provisions of
this Subsection 6.A.  If the Board
determines that “cause” exists for termination of the Executive’s employment,
written notice thereof must be given to the Executive describing the state of
affairs or facts deemed by the Board to constitute such cause.  Unless the Board determines that the conduct
constituting cause is not curable, the Executive shall have thirty (30) days
after receipt of such notice to cure the reason constituting cause and if the
Executive does so to the reasonable satisfaction of the Board, the Term shall
not be terminated for the cause specified in the notice.  During such thirty (30) day period, the Term 

 

4

 

shall continue and the Executive shall continue to
receive his full Base Salary, expenses and benefits pursuant to this Agreement.  If such cause is not cured to the Board’s
reasonable satisfaction within such thirty (30) day period, the Executive may
then be immediately terminated by a majority vote of the Board.  For purposes of this Agreement, the words “for
cause” or “cause” means (i) dishonest statements or acts of the Executive
with respect to the Company or any subsidiary or other affiliate of the
Company; (ii) the commission by or indictment of the Executive for (A) a
felony or (B) any misdemeanor involving moral turpitude, deceit,
dishonesty or fraud (indictment, for these purposes, meaning an indictment,
probable cause hearing or any other procedure pursuant to which an initial
determination of probable or reasonable cause with respect to such offense is
made); or (iii) gross negligence, willful misconduct or insubordination of
the Executive with respect to the Company or any subsidiary or other affiliate
of the Company.

 

(2)      In the event the Term is
terminated by the Company for cause, the provisions of Subsections 5.C.(1) and
5.C.(2) shall continue to apply for one year after the conclusion of the
Term.

 

(3)      In the event the Term is
terminated by the Company for cause, the Executive’s entire right to salary and
benefits hereunder (with the exception of Base Salary and Discretionary Bonus
earned and accrued prior to termination) shall cease upon such termination.

 

B.                                    Termination
Without Cause by the Company or for Good Reason by the Executive.

 

(1)      The Company shall have
the right to terminate the Term, at any time, without cause upon ninety (90)
days’ written notice to the Executive.

 

(2)      The Executive shall have
the right to terminate the Term for good reason on thirty (30) days written
notice to the Company.  For purposes of
this Agreement, the words “for good reason” or “good reason” shall be limited
to the following actions by the Company without the Executive’s consent:  (a) the assignment to the Executive of
any duties or responsibilities that results in a material diminution in the
Executive’s position or function; provided, however,
that a change in the Executive’s title or reporting relationships shall not
provide the basis for a termination with good reason unless he no longer
reports directly to the Chief Executive Officer or the Board; (b) a
relocation of the Executive’s business office to a location more than fifty
(50) miles from the location in Needham, Massachusetts at which the Executive
is working as of the Effective Date, except for required travel by the
Executive on the Company’s business to an extent substantially consistent with
the Executive’s business travel obligations as of the Effective Date; or (c) a
material breach by the Company of any provision of this Agreement or any other
material agreement between the Executive and the Company concerning the terms
and conditions of the Executive’s employment. 
Such a termination by the Executive for good reason shall not be
considered a resignation pursuant to Subsection 6.C.(1).

 

(3)      In the event the Term is
terminated pursuant to Subsection 6.B.(1) or 6.B.(2), or in the event that
the Company provides the Executive with a Notice of Non-Renewal that would be
effective in connection with the expiration of the Initial Term, and the
Executive’s employment with the Company terminates for any reason within 60
days following the expiration 

 

5

 

of the Initial Term, the Company shall pay the
Executive as a severance benefit a lump sum cash severance payment in an amount
equal to 200% of the Executive’s then existing annual Base Salary (i.e., twenty four (24) months of Base Salary) and, if and to
the extent the Executive timely elects to continue his health insurance
employee benefits pursuant to COBRA, then, as determined by the Company, either
(i) the cost to the Executive for such COBRA coverage will be no greater
than the cost of such coverage applicable to active employees of the Company or
(ii) the Executive will pay the applicable COBRA costs and the Company
will reimburse the Executive for such costs, subject to applicable tax
withholdings (the “Severance Benefits”). 
The foregoing lump sum cash payment shall be paid within 10 days
following the effectiveness of the Release (as defined below); provided,
however, that if
necessary to comply with the restriction in Section 409A(a)(2)(B) of
the Internal Revenue Code of 1986, as amended (the “Code”) concerning payments
to “specified employees,” such payment shall be delayed until the first
business day of the seventh month following the Executive’s termination of
employment and “separation from service” (within the meaning of Section 409A
of the Code).  Further, in the
event that the Term is terminated pursuant to Subsection 6.B.(1) or 6.B.(2) only,
25% of the Executive’s outstanding, unvested options, restricted stock and/or
equity awards shall become fully and immediately vested.  Notwithstanding
any provisions of the stock option plan or stock option agreement pursuant to
which any stock options subject to the preceding sentence were granted, the
Executive shall be entitled to exercise such vested equity awards until one
year from the date of termination of employment or the expiration of the stated
period of the vested equity award, whichever period is the shorter.

 

(4)      In the event the Term is
terminated or the Executive’s employment with the Company terminates in a
manner described in this Section 6.B., the provisions of Subsections 5.C.(1) and
5.C.(2) shall continue to apply for one year after the conclusion of the
Term.

 

(5)      Notwithstanding any
provision to the contrary contained herein, the Executive shall not be eligible
or entitled to receive the Severance Benefits unless he executes (and does not
revoke during any applicable revocation period) and deliver to the Company a
separation agreement and release of claims, in such form prepared in good faith
by the Company and provided to the Executive to review no later than 10 days
following the last day of his employment with the Company, within 60 days
following his last day of employment with the Company (the “Release”).

 

C.                                    Resignation
by the Executive.

 

(1)      The Executive shall have
the right to terminate the Term, by way of resignation, upon ninety (90) days’
written notice to the Company.  A
termination by the Executive for good reason pursuant to Subsection 6.B.(2) shall
not be considered a resignation pursuant to this Subsection 6.C.(1).

 

(2)      In the event the Term is
terminated pursuant to Subsection 6.C.(1), the provisions of Subsections 5.C.(1) and
5.C.(2) shall continue to apply for one year after the conclusion of the
Term.

 

6

 

(3)      In the event the Term is
terminated pursuant to Subsection 6.C.(1), the Executive’s entire right to
salary and benefits hereunder (with the exception of Base Salary and
Discretionary Bonus earned and accrued prior to termination) shall cease upon
such termination.

 

D.                                    Termination Upon Change in
Control.

 

(1)      For the purposes of this Agreement, a “Change in Control” shall mean
any of the following events that occurs following the Effective Date:

 

(a)                                  An acquisition (other than directly from the
Company) of any voting securities of the Company (the “Voting Securities”)
other than in a “Non-Control Acquisition” (as defined below) by any “Person”
(as the term “person” is used for purposes of Section 13(d) or 14(d) of
the Securities Exchange Act of 1934, as amended, (the “1934 Act”)) which
results in such Person first attaining “Beneficial Ownership” (within the
meaning of Rule 13d-3 promulgated under the 1934 Act) of fifty-one percent
(51%) or more of the combined voting power of the Company’s then outstanding
Voting Securities.  For purposes of the
foregoing, a “Non-Control Acquisition” shall mean an acquisition by (i) an
employee benefit plan (or a trust forming a part thereof) maintained by (x) the
Company or (y) any corporation or other Person of which a majority of its
voting power or its equity securities or equity interest is owned directly or
indirectly by the Company (a “Subsidiary”), or (ii) the Company or any
Subsidiary.

 

(b)                                  The individuals who, as of the date of this
Agreement, were members of the Board (the “Incumbent Board”) cease for any
reason to constitute at least 66 2/3% of the Board; provided,
however, that if the election, or a nomination for election by the
Company’s shareholders, of any new director was approved by a vote of at least
66 2/3% of the Incumbent Board, such new director shall 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 1934 Act) or other actual or threatened solicitation of the 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; or

 

(c)                                  The consummation of a transaction approved by
the Company’s shareholders and involving: 
(1) a merger, consolidation or reorganization in which the Company is
a constituent corporation, unless (i) the shareholders of the Company,
immediately  before such merger,
consolidation or reorganization, own, directly or indirectly immediately
following such merger, consolidation or reorganization, at least a majority of
the combined voting power of the outstanding voting securities of the
corporation resulting from such merger, consolidation or reorganization (the “Surviving
Corporation”) in substantially  the same
proportion as their ownership of the voting securities immediately before such
merger, consolidation or reorganization, (ii) the individuals who were
members of the Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation or reorganization constitute
at least a majority of the members of the board of directors of the Surviving
Corporation, and (iii) no Person other than (w) the Company, (x) any
Subsidiary, (y) any employee benefit plan (or any trust forming a part
thereof) maintained by the Company, the

 

7

 

Surviving Corporation or any Subsidiary, or (z) any
Person who, immediately prior to such merger, consolidation or reorganization
had Beneficial Ownership of fifty-one percent (51%) or more of the then outstanding
Voting Securities, has Beneficial Ownership of fifty-one percent (51%) or more
of the combined voting power of the Surviving Corporation’s then outstanding
voting securities (a transaction described in clauses (i) and (ii) shall
herein be referred to as a “Non-Control Transaction”); (2) a complete
liquidation or dissolution of the Company; or (3) an agreement for the
sale or other disposition of all or substantially all of the assets of the
Company to any Person (other than a transfer to a Subsidiary).

 

(d)                                  Notwithstanding the foregoing, a Change in
Control shall not be deemed to occur solely because the level of Beneficial
Ownership held by any Person (the “Subject Person”) exceeds the designated
percentage threshold of the outstanding Voting Securities as a result of a
repurchase or other acquisition of Voting Securities by the Company reducing
the number of shares outstanding, provided that if a Change in Control would
occur (but for the operation of this sentence) as a result of the acquisition
of Voting Securities by the Company, and after such share acquisition, the
Subject Person becomes the Beneficial Owner of any additional Voting Securities
which, assuming the repurchase or other acquisition had not occurred, increases
the percentage of the then outstanding Voting Securities Beneficially Owned by
the Subject Person over the designated percentage threshold, then a Change in
Control shall occur.

 

(2)      In the event of a termination of the Term pursuant to an event
described in Section 6.B. above, that occurs within a period of one year
immediately following a Change in Control, then this Section 6.D. shall
apply instead of Section 6.B., and the Company shall provide the Executive
the following benefits:

 

(a)                                  Amount:  In
addition to all compensation for services rendered by Executive to the Company
up to the date of termination, the Company shall pay to Executive, no later
than 10 days immediately following the date of such termination, a single
lump-sum payment in an amount equal to (i) twelve (12) times Executive’s
highest monthly base compensation (for avoidance of doubt, excluding the
Interim Accrued Bonus) paid hereunder during the preceding twenty-four month
period, plus (ii) the average of the Discretionary Bonuses (for avoidance
of doubt, excluding any Interim Accrued Bonus) received by the Executive during
the preceding two full fiscal years prior to the date of termination (i.e., (x) the sum of the Discretionary Bonus earned and
paid for each of the preceding two full fiscal years, divided by (y) 2).

 

(b)                                  Benefits:  In
addition to the payment described above, the Company shall provide the
Executive with the Severance Benefits.

 

(c)                                  Acceleration of Options:  One
hundred (100%) percent of the Executive’s outstanding, unvested options,
restricted stock and/or equity awards (“Equity Awards”) shall, immediately
prior to the consummation of the Change in Control, become fully and
immediately vested to the extent not already so provided under the terms of
such Equity Awards; provided, however, that if the acquirer in a Change in
Control grants Equity Awards having (in the reasonable opinion of the Board) a
value at least equal to the value of Executive’s then-unvested Company Equity
Awards, then 50% of the Executive’s outstanding, unvested

 

8

 

Company Equity Awards shall become fully and
immediately vested immediately prior to the consummation of the Change in
Control (and the remaining 50% shall terminate upon the consummation of the
Change in Control).  Notwithstanding any
provisions of the stock option plan or stock option agreement pursuant to which
any stock options subject to the preceding sentence were granted, the Executive
shall be entitled to exercise such Equity Awards until three years from the date
of termination of employment or the expiration of the stated period of the
Equity Award, whichever period is the shorter.

 

(d)                                Golden Parachute Payment
Provisions:  If any payment or benefit the Executive would
receive pursuant to a Change in Control from the Company or otherwise
(including, without limitation, the acceleration of any Company Equity Awards)
(“Payment”) would (i) constitute a “parachute payment” within the meaning
of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”),
and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999
of the Code (the “Excise Tax”), then such Payment shall be reduced to the
Reduced Amount.  The “Reduced Amount”
shall be either (x) the largest portion of the Payment that would result
in no portion of the Payment being subject to the Excise Tax or (y) the
largest portion, up to and including the total, of the Payment, whichever
amount, after taking into account all applicable federal, state and local
employment taxes, income taxes, and the Excise Tax (all computed at the highest
applicable marginal rate), results in the Executive’s receipt, on an after-tax
basis, of the greater amount of the Payment notwithstanding that all or some
portion of the Payment may be subject to the Excise Tax. If a reduction in
payments or benefits constituting “parachute payments” is necessary so that the
Payment equals the Reduced Amount, reduction shall occur in the following order
unless the Executive elects in writing a different order (provided,
however, that such election shall be subject to Company approval if
made on or after the effective date of the event that triggers the Payment):
reduction of cash payments; cancellation of accelerated vesting of stock
options or equity awards; reduction of employee benefits.  In the event that acceleration of vesting of
stock option or equity award compensation is to be reduced, such acceleration
of vesting shall be cancelled in the reverse order of the date of grant of the
Executive’s stock options or equity awards unless the Executive elects in
writing a different order for cancellation.

 

The accounting firm engaged by the Company for general audit purposes
as of the day prior to the effective date of the Change in Control shall
perform the foregoing calculations and shall make all determinations relating
to the reduction of parachute payments described in the foregoing
paragraph.  If the accounting firm so
engaged by the Company is also serving as accountant or auditor for the
individual, entity or group effecting the Change in Control, the Company shall
appoint a nationally recognized accounting firm to make the determinations
required hereunder.  The Company shall
bear all expenses with respect to the determinations by such accounting firm
required to be made hereunder.

 

The accounting firm engaged to make the determinations hereunder
shall provide its calculations, together with detailed supporting
documentation, to the Company and the Executive within fifteen (15) calendar
days after the date on which the Executive’s right to a Payment is triggered
(if requested at that time by the Company or the Executive) or such other time
as requested by the Company or the Executive. 
If the accounting firm determines that no Excise Tax is payable with
respect to a Payment, either before or after the application of the Reduced
Amount, it shall furnish the Company and the Executive with an

 

9

 

opinion reasonably
acceptable to the Executive that no Excise Tax will be imposed with respect to
such Payment.  Any good faith
determinations of the accounting firm made hereunder shall be final, binding
and conclusive upon the Company and the Executive.

 

E.                                      Termination
for Disability.

 

(1)      Should the Executive be
absent from work as a result of personal injury, sickness or other disability
for any continuous period of time exceeding one hundred eighty (180) days, the
Term may be terminated by the Company, upon written notice given to the
Executive, because of the Executive’s disability.

 

(2)      In the event the Term is
terminated pursuant to Subsection 6.E.(1), the Company shall have no further
obligation to the Executive except to pay to the Executive any Base Salary or
Discretionary Bonus accrued but remaining unpaid prior to termination of the
Term (and to provide the Executive with the benefits under any disability
insurance or disability benefits plan then-maintained by the Company for the
Executive’s benefit, in accordance with the terms and conditions of such
plan).  In addition, notwithstanding any
provisions of the stock option plan or stock option agreement pursuant to which
any stock options were granted, the Executive shall be entitled to exercise any
of Executive’s stock options vested as of the final day of the Term until
eighteen months from the final day of the Term or the expiration of the stated
period of the option, whichever period is the shorter.

 

F.                                      Termination
Upon Death.  The Term shall terminate
upon the death of the Executive and the Company shall have no further
obligation to the Executive or his estate except to pay the Executive’s estate
any Base Salary or Discretionary Bonus earned and accrued but remaining unpaid
prior to his death.  In addition,
notwithstanding any provisions of the stock option plan or stock option
agreement pursuant to which any stock options were granted, the Executive’s
estate shall be entitled to exercise any of Executive’s stock options vested as
of the final day of the Term until eighteen months from the final day of the
Term or the expiration of the stated period of the option, whichever period is
the shorter.

 

7.                                      MISCELLANEOUS.

 

A.                                    Notice.  Any notice to be given hereunder shall either
be delivered personally and/or sent by first class certified mail and regular
mail.  The address for service on the
Company shall be its registered office, and the address for service on the
Executive shall be his last known place of residence.  A notice shall be deemed to have been served
as follows:

 

(1)      if personally delivered,
at the time of delivery; and/or

 

(2)      if posted, at the
expiration of 48 hours (10 days if international) after the envelope containing
the same was delivered into the custody of the postal authorities.

 

B.                                    Taxes.  Any payments made pursuant to this
Agreement shall be subject to any tax or similar withholding requirements under
applicable federal, state or local employment or income tax laws or similar
statutes or other provisions of law then in effect.  This Agreement is intended to comply with the
requirements of Section 409A (“Section 409A”) of the Code and the
regulations thereunder.  To the extent
that any provision in this Agreement is

 

10

 

ambiguous as to its compliance with Section 409A, the provision
shall be interpreted in a manner so that no payment due to the Executive shall
be deemed subject to an “additional tax” within the meaning of Section 409A(a)(1)(B) of
the Code.  For purposes of Section 409A,
each payment made under this Agreement shall be treated as a separate payment.
Notwithstanding anything contained herein to the contrary, the Executive shall
not be considered to have terminated employment with the Company for purposes
of Section 6 hereof unless the Executive has incurred a “termination of
employment” from the Company within the meaning of Treasury Regulation
§1.409A-1(h)(1)(ii) promulgated under Section 409A of the Code.
Notwithstanding the foregoing, if necessary to comply with the restriction in Section 409A(a)(2)(B) of
the Code concerning payments to “specified employees,” any payment made to the
Executive pursuant to this Agreement on account of the Executive’s separation
from service that would otherwise be due hereunder within six months after such
separation from service shall nonetheless be delayed until the first business
day of the seventh month following the Executive’s separation from
service.  In no event may the Executive,
directly or indirectly, designate the calendar year of any payment.  All reimbursements provided under this
Agreement shall be made or provided in accordance with the requirements of Section 409A,
including, where applicable, the requirement that (i) any reimbursement is
for expenses incurred during the Executive’s lifetime (or during a shorter
period of time specified in this Agreement), (ii) the amount of expenses
eligible for reimbursement during a calendar year may not affect the expenses
eligible for reimbursement in any other calendar year, (iii) the
reimbursement of an eligible expense will be made on or before the last day of
the calendar year following the year in which the expense is incurred, and (iv) the
right to reimbursement is not subject to liquidation or exchange for another
benefit.  The Executive further
acknowledges that, while this Agreement is intended to comply with Section 409A,
any tax liability incurred by the Executive under Section 409A is solely
the responsibility of the Executive.

 

C.                                    Binding
Effect.  This Agreement shall be
binding upon and inure to the benefit of the Parties hereto and their respective
heirs, personal representatives, successors and assigns, provided that neither
Party shall assign any of its rights or privileges hereunder without the prior
written consent of the other Party except that the Company may assign its
rights hereunder to a successor in ownership of all or substantially all the
assets of the Company.

 

D.                                    Severability.  Should any part or provision of this
Agreement be held unenforceable by a court of competent jurisdiction, the
validity of the remaining parts or provisions shall not be affected by such
holding, unless such enforceability substantially impairs the benefit of the
remaining portions of the Agreement.

 

E.                                      Waiver.  No failure or delay on the part of either
Party in the exercise of any right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
privilege preclude other or further exercise thereof or of any other right of
privilege.

 

F.                                      Captions.  The captions used in this Agreement are for
convenience only and are not to be used in interpreting the obligations of the
Parties under this Agreement.

 

G.                                    Choice
of Law.  The validity, construction
and performance of this Agreement and all matters directly or indirectly
arising hereunder shall be governed by the laws

 

11

 

of the State of Delaware, without regard to choice of laws provisions,
and the Company and the Executive irrevocably consent to the exclusive
jurisdiction and venue of the federal and state courts located within Delaware,
and courts with appellate jurisdiction therefrom, in connection with any matter
based upon or arising out of this Agreement.

 

H.                                    Entire
Agreement.  This Agreement embodies
the entire understanding of the Parties as it relates to the subject matter
contained herein and as such, supersedes any prior agreement or understanding
between the Parties relating to the terms of employment of the Executive (but
not any option grant agreement issued by the Company to the Executive), including
without limitation any agreement between the Executive and any other company
acquired by the Company or with respect to which the Company is a successor in
interest.  No amendment or modification
of this Agreement shall be valid or binding upon the Parties unless in writing
executed by the Parties.

 

IN
WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first written above.

 

 

	
   

  	
  CELLDEX THERAPEUTICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anthony S. Marucci

  
	
   

  	
  Title:  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Avery W. Catlin

  
	
   

  	
  AVERY W. CATLIN

  

 

12

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