Document:

EX-10.1

 

Exhibit 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     AMENDED
AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”)
dated as of April 27, 2007,
between Enzon Pharmaceuticals, Inc. (the “Company”), a Delaware corporation with offices in
Bridgewater, New Jersey, and Jeffrey H. Buchalter (the “Executive”), a resident of Warren, New
Jersey.

     WHEREAS, the Company and the Executive are parties to that certain Employment Agreement, dated
as of December 22, 2004 (the “Employment Agreement”).

     WHEREAS, the Company and the Executive desire to amend and restate the Employment Agreement as
set forth in this Amended and Restated Employment Agreement.

     WHEREAS, the Company wishes to employ the Executive to render services for the Company on the
terms and conditions set forth in this Agreement, and the Executive wishes to be retained and
employed by the Company on such terms and conditions;

     NOW, THEREFORE, in consideration of the premises, the mutual agreements set forth below and
other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged,
the parties agree as follows:

     1. Employment. The Company hereby employs the Executive, and the Executive accepts
such employment and agrees to perform services for the Company, for the period and upon the other
terms and conditions set forth in this Agreement.

     2. Term. The term of the Executive’s employment hereunder commenced on December 22,
2004 (the “Commencement Date”), and unless terminated at an earlier date in accordance with Section
9 hereof, shall extend through such date, not earlier than December 31, 2009, which is twelve (12)
months following the date on which either party hereto receives written notice (a “notice of
non-renewal”) from the other party that such other party does not wish for the term hereof to
continue beyond such twelve (12) month period (the “Term”). Subject to possible earlier
termination in accordance with Section 9 hereof, unless and until a notice of non-renewal is given
by a party, the Term shall always have at least twelve (12) months remaining, and all of the
provisions of this Agreement shall continue in full force and effect during such period.

     3. Position and Duties.

     (a) Service with Company. During the term of the Executive’s employment, the
Executive shall serve in the positions of President and Chief Executive Officer of the Company and
the chairman of the Company’s Board of Directors (the “Board”) (the “Chairman of the Board”), and
Executive shall have the authority, duties and responsibilities associated with those positions,
including, without limitation, the authority and duty generally to supervise and direct
the business of the Company, subject to the control and direction of the Board and of any duly
authorized Committee of the Board.

 

 

     (b) Performance of Duties.

     (i) Subject to the provisions hereof, the Executive agrees to serve the Company
faithfully and to the best of his ability and to devote his full time, attention and efforts
to the business and affairs of the Company during his employment by the Company.

     (ii) Executive has provided the Company with: 1) a draft of a Consulting Agreement
between Executive and Genzyme Corporation (“Genzyme”) (such draft substantially in the form
as previously sent to the Company being the “Consulting Agreement”); and 2) the Employment
Agreement, dated as of January 1, 2002, agreed to by Executive and Executive’s former
employer (the “Employee Agreement”) which, to the best of Executive’s knowledge, are the
only agreements which could arguably restrict or interfere with his employment activities
subsequent to the termination of his employment with such former employer. Company agrees
that the execution by Executive of and the performance by Executive of his obligations under
the Consulting Agreement shall not constitute a breach of this Agreement, and Company
specifically authorizes Executive to fulfill the terms of the Consulting Agreement.
Further, in the event that Genzyme elects not to execute the Consulting Agreement or in the
event the Consulting Agreement is terminated (other than termination by or at the behest of
the Executive or as a result of Executive’s refusal to perform the services required of him
under the Consulting Agreement, provided such refusal to perform is not related to
Executive’s employment pursuant to this Agreement) then the Company shall pay to Executive
an amount which is equal to 50% of the payments which would have been payable to Executive
under the Consulting Agreement and were not paid by Genzyme (such payments by the Company
being referred to herein as “Consulting Agreement Payments”). Any Consulting Agreement
Payments made by the Company to Executive shall be made at the same time (the “Consulting
Agreement Payment Date”) and subject to the same conditions as the corresponding payments
which would have been made to Executive under the Consulting Agreement. In no event shall
the Consulting Agreement Payments made by the Company exceed $750,000. The Company and the
Executive agree that any Consulting Agreement Payments required to be made by the Company
pursuant to this 3(b)(ii) shall be in the form of shares of the Company’s common stock (the
“Common Stock”) issued pursuant to the Company’s 2001 Incentive Stock Plan, as amended (the
“Stock Plan”) and the number of shares of Common Stock to be issued to the Executive as a
Consulting Agreement Payment shall be determined by dividing the amount of the Consulting
Agreement Payment by the last reported sale price of a share of Common Stock as reported by
the Nasdaq Stock Market on any such Consulting Agreement Payment Date or, if the Nasdaq
Stock Market is not open on such Consulting Agreement Payment Date, on the day next
preceding such Consulting Agreement Payment Date on which the Nasdaq Stock Market is open.
Any tranche of shares of Common Stock issued to the Executive pursuant to this Section
3(b)(ii) shall vest in three equal amounts on each of the first three anniversary dates of
the Consulting Agreement Payment Date on which they were issued. Executive shall pay to the
Company an
amount equal to the aggregate par value of any such Common Stock issued pursuant to
this Section 3(b)(ii) at the time of issuance. The grant of such Common Stock shall be
represented by, and subject to, the terms of a restricted stock agreement substantially
similar to the agreement annexed hereto as Exhibit B. If the number of shares of Common
Stock available for issuance under

 

 

the Stock Plan on any Consulting Agreement Payment Date
is not sufficient to enable the Company to meet its obligations under this Paragraph, then
the Company shall cover any deficiency in the required payment amount by making an
additional payment in the form of cash or, at the Company’s sole option, shares of Common
Stock issued outside of the Stock Plan. Prior to the issuance of any Common Stock pursuant
to this Section 3(b)(ii) to the Executive, the Company shall cause such issuance to be
registered under the Securities Act of 1933, as amended (the “1933 Act”), such that
Executive will be able to sell such common stock without complying with the holding period
required under Rule 144 promulgated under the 1933 Act.

     (iii) Executive agrees that he will not use on behalf, or for the benefit, of the
Company or disclose to the Company any confidential information of or concerning his former
employer or, to the extent prohibited by the Consulting Agreement, Genzyme. It is the
Company’s intention that Executive not breach any confidentiality agreement he may have with
his former employer or Genzyme. Based on his knowledge of his former employer’s business
and confidential information and the information concerning the Company’s business
heretofore provided to Executive by the Company or publicly available, to the best of
Executive’s knowledge, his entering into and performing this Agreement will not constitute a
breach of the Employee Agreement or the Consulting Agreement as same may be executed by
Executive and Genzyme or any other obligation of the Executive. Executive will not render
or perform services for any other corporation, firm, entity or person which are inconsistent
with the provisions of this Agreement other than pursuant to the terms of the Consulting
Agreement.

     (iv) While he remains employed by the Company, the Executive may participate in
reasonable charitable activities and personal investment activities so long as such
activities do not conflict or interfere with the performance of his obligations under this
Agreement. Subject to the prior approval of the Board, which will not be unreasonably
withheld, Executive may join and serve on the board of directors of other companies,
provided that such other company is not a competitor of the Company and such service would
not interfere with Executive’s obligations to the Company hereunder or involve or
potentially involve a conflict of interest, as determined by the Board.

     4. Compensation.

     (a) Base Salary. The Company shall pay to the Executive, less applicable deductions
and withholdings, base salary (the “Base Salary”) at an annual rate of Seven Hundred Seventy Five
Thousand Dollars ($775,000) per year, which Base Salary shall be paid in accordance with the
Company’s normal payroll procedures and policies for its senior management. The compensation
payable to Executive during each fiscal year of the Company shall be established by the Board or
the Compensation Committee thereof following an annual performance review,
but in no event shall the annual rate of Base Salary for any successive year of the Term be
less than the highest annual rate of Base Salary in effect during the previous year of the Term.

 

 

     (b) Annual Bonus. Commencing with the fiscal year ending June 30, 2005, Executive
shall be entitled to participate in the Company’s bonus plan for management and any successor bonus
plan covering management (the “Bonus Plan”). Under the Bonus Plan, the Executive shall be eligible
to receive a performance-based cash bonus for each year of employment (commencing July 1, 2004) in
an amount, and based on individual and/or corporate objectives, targets and factors (and evaluation
as to the extent of achievement thereof), to be established and determined by the Board in its
discretion following consultation between the Board and Executive prior to, or within sixty (60)
days after the commencement of, each fiscal year (the “Performance Criteria”). Under the Bonus
Plan for Executive, (i) the minimum cash bonus shall be zero (0), (ii) the target cash bonus shall
equal 100% of the Base Salary (the “Target Bonus”), and (iii) the maximum cash bonus shall equal
200% of Base Salary. Notwithstanding the foregoing, and subject to the provisions of Section 10
hereof Executive shall be entitled to receive a guaranteed minimum cash bonus in the amount of Four
Hundred Twelve Thousand Five Hundred Dollars ($412,500) for the fiscal year ending June 30, 2005,
which bonus shall be payable in July 2005 (the “2005 Bonus”). Within sixty (60) days after the end
of each fiscal year, the Board, based upon its evaluation as to the extent of Executive’s
achievement of the Performance Criteria, shall award Executive his performance-based cash bonus, if
any, hereinafter referred to as the “Earned Bonus.”

     (c) Participation in Benefit Plans; Indemnification. While he is employed by the
Company, Executive shall also be eligible to participate in any incentive and employee benefit
plans or programs which may be offered by the Company to the extent that Executive meets the
requirements for each individual plan and in all other plans in which Company executives
participate. The Company provides no assurance as to the adoption or continuance of any particular
employee benefit plan or program, and Executive’s participation in any such plan or program shall
be subject to the provisions, rules and regulations applicable thereto. To the extent the
Company’s group life insurance plan available for Executive provides for a death benefit of less
than $3 million and the Company’s long-term disability insurance policy provides for an annual
disability benefit to Executive of less than $500,000, the Company shall reimburse Executive for an
aggregate of up to $15,000 per year to cover Executive’s cost of acquiring supplemental group term
life insurance and supplemental long-term disability insurance to provide benefits that cover the
foregoing deficiencies in coverage under the Company’s policies. The Company shall indemnify
Executive and hold him harmless from and against any claim, liability and expense (including,
without limitation, reasonable attorney fees) made against or incurred by him in connection with
his employment by the Company or his membership on the Board, in a manner and to an extent that is
not less favorable to the Executive as the indemnification protection that is afforded by the
Company to any other senior officer or director and that is consistent with industry custom and
standards.

     (d) Expenses. The Company will pay or reimburse Executive for all reasonable and
necessary out-of-pocket expenses incurred by him in the performance of his duties under this
Agreement, subject to the Company’s normal policies for expense verification. The Company shall
also reimburse Employee for the reasonable and necessary costs of relocating his household goods
from San Antonio and other reasonable and necessary moving and interim housing
expenses incurred in connection with the move of Employee and his family from San Antonio,
Texas to the New Jersey area. Such reasonable and necessary moving and interim housing expenses
shall include, but not be limited to (1) realtor commissions and customary closing costs
in
connection with the sale of his home in Texas and interim loan closing costs and permanent loan

 

 

closing costs relating to the acquisition of his home in the New Jersey area, (2) interest payments
on the mortgage loan relating to his home in Texas until such time as his home in Texas shall have
been sold and (3) extra or redundant costs (other than the principal payments on his mortgage loan
relating to his home in Texas) associated with, or incurred in connection with, the continued
ownership of his home in Texas pending its sale. In addition, the Company shall provide an
additional payment to Executive such that after taking into account any taxes on such payment,
Executive shall retain a sufficient amount equal to any income tax liability incurred by Executive
in connection with the foregoing payments and reimbursements under this subparagraph (d)(i).

     (i) The Company will also bear the cost of a corporate country club membership, at
Fiddler’s Elbow Country Club, for use by Executive during the Term. Subject to the accuracy
of the representations by Executive in Section 3(b) hereof, the Company shall reimburse
Executive for all reasonable costs incurred by Executive in defending any action by
Executive’s prior employer or Genzyme which seeks to prevent or restrict Executive from
performing his duties and obligations to the Company hereunder.

     (e) Stock Options.

     (i) Subject to Executive commencing his employment hereunder as the Company’s President
and Chief Executive Officer on the Commencement Date, Executive shall be granted an option
to purchase 725,000 shares of Common Stock (the “Option”) pursuant to the Stock Plan and the
form of Non-Qualified Stock Option Agreement attached hereto as Exhibit A (the “Option
Agreement”) with an exercise price per share equal to the last reported sale price of a
share of Common Stock as reported by the Nasdaq Stock Market on the Commencement Date or, if
the Nasdaq Stock Market is not open on the Commencement Date, on the day next preceding the
Commencement Date on which the Nasdaq Stock Market is open. The Option shall vest and be
exercisable as to 225,000 shares on the Commencement Date, and as to an additional 125,000
shares on each of the first four anniversaries of the Commencement Date. In addition, at
the discretion of the Board of Directors (or its applicable committee), Executive shall be
entitled to receive further grants of stock options, subject to the terms of the Stock Plan.

     (ii) The Option shall immediately and fully vest and become exercisable when the last
reported sale price of a share of the Common Stock is at least one hundred dollars ($100.00)
as reported on the Nasdaq Stock Market for at least twenty (20) consecutive trading days,
provided that, except as otherwise provided in Section 10 hereof, Executive is then employed
by the Company. Except as otherwise provided in Section 10 hereof, once the Option becomes
exercisable it shall remain exercisable until 5:00 p.m. New York City time on the tenth
(10th) anniversary of the Commencement Date. Except as
otherwise provided in this Agreement, the Option Agreement, a copy of which Executive
has received and reviewed, shall govern the terms of the Option.

 

 

     (f) Restricted Stock. Subject to Executive commencing his employment hereunder as the
Company’s President and Chief Executive Officer, no later than ten (10) days after the Commencement
Date, Executive shall be issued 75,000 shares of Common Stock (the “Restricted Stock”) pursuant to
the Stock Plan, which shares shall vest as to 22,500 shares on each of the third and fourth
anniversaries of the Commencement Date and as to 30,000 shares on the fifth anniversary of the
Commencement Date. Executive shall pay $750 to the Company for the Restricted Stock. The grant of
the Restricted Stock shall be represented by, and subject to, the terms of the Restricted Stock
Agreement annexed hereto as Exhibit B. Prior to the issuance of the Restricted Stock to the
Executive, the Company shall cause such issuance to be registered under the Securities Act of 1933,
as amended (the “1933 Act”), such that Executive will be able to sell the Restricted Stock without
complying with the holding period required under Rule 144 promulgated under the 1933 Act.

     (g) Vacation. Executive shall be entitled to vacations in accordance with the policy
of the Company with respect to its senior management, in effect from time to time.

     (h) Tax and Financial Planning Services. During each year of the term of this
Agreement, Company agrees to reimburse Executive, up to $10,000 per fiscal year, for the costs of
all tax return preparation, including any United States, state, or local returns, as well as for
professional estate and financial planning services, if any, with Executive choosing the tax and
other professionals who will provide such services. In addition, the Company shall pay or reimburse
the Executive for reasonable legal fees incurred in connection with this Agreement.

     5. Noncompetition and Confidentiality Covenant.

     (a) Noncompetition. The “Noncompete Period” shall be (i) the period of Executive’s
employment with the Company, and (ii) (A) the two (2) year period immediately following termination
of Executive’s employment with the Company in the event the Company terminates Executive’s
employment for Cause pursuant to Section 9(a)(iii) hereof, Executive voluntarily terminates his
employment (but not any termination by Executive for Good Reason pursuant to Section 9(c) hereof)
or Executive’s employment is terminated in a manner which entitles him to severance payments under
Section 10 hereof or (B) the one (1) year period following termination of Executive’s employment
with the Company if the Term ends as a result of a notice of non-renewal under Section 2 hereof.
In consideration for the compensation payable to Executive pursuant to this Agreement, including
without limitation the Option and Restricted Stock granted to Executive hereunder, during the
Noncompete Period, Executive will not directly, or indirectly, whether as an officer, director,
stockholder, partner, proprietor, associate, employee, consultant, representative or otherwise,
become, or be interested in or associated with any other person, corporation, firm, partnership or
entity, engaged to a significant degree in (x) developing, manufacturing, marketing or selling
enzymes, protein-based biopharmaceuticals or other pharmaceuticals that are modified using
polyethylene glycol (“PEG”), (y) developing, marketing or selling single-chain antigen-binding
proteins or (z) any technology or area of business in which the Company becomes involved to a
significant degree during the period of Executive’s employment with the Company. For purposes of
the preceding sentence, to determine whether
any entity is engaged in such activities to a “significant degree”, comparison will be made to
the Company’s operations at that time. In other words, an entity will be deemed to be engaged in
an activity to a significant degree if the number of employees and/or amount of funds devoted by

 

 

such entity to such activity would be material to the Company’s operations at that time.
Notwithstanding anything to the contrary contained herein, Executive shall be entitled to work with
or for (i) an entity that is developing, marketing or manufacturing monoclonal antibodies, (ii) a
licensee of the Company if the only activities conducted by such licensee that would be covered by
the restrictions in this Section 5(a) are conducted pursuant to, and covered by, the license
granted by the Company and (iii) an entity that is engaged in a research project that would be
covered by the restrictions in this Section 5(a) if such research project is not material to such
entity and Executive would have no direct involvement in such research project; provided in the
case of employment covered by clauses (ii) and (iii) Executive shall have provided the Board with a
detailed description of the proposed employment and obtained the written consent of the Board
(which consent will not be unreasonably withheld) prior to commencing any such employment.
Executive is hereby prohibited from ever using any of the Company’s proprietary information or
trade secrets to conduct any business, except for the Company’s business while Executive is
employed by the Company as provided in Section 5(b) hereof. The provisions contained in this
Section 5(a) shall survive the termination of Executive’s employment pursuant to Section 9 hereof
or otherwise. In the event Executive breaches any of the covenants set forth in this Section 5(a),
the running of the period of restriction set forth herein shall be tolled for the period during
which the breach exists and recommence upon Executive’s compliance with the terms of this Section
5(a).

     (b) Confidentiality.

     (i) Executive acknowledges that, by reason of his employment by the Company, he will
have access to confidential information of the Company, including, but not limited to,
information and knowledge pertaining to products, inventions, discoveries, improvements,
innovations, designs, ideas, trade secrets, proprietary information, manufacturing,
packaging, advertising, marketing, distribution and sales methods, sales and profit figures,
customer and vendor lists and relationships between the Company and dealers, distributors,
sales representatives, wholesalers, customers, suppliers and others who have business
dealings with them (“Confidential Information”). The Executive acknowledges that such
Confidential Information is a valuable and unique asset of the Company and covenants that,
both during and after the Term, he will not disclose any Confidential Information to any
person or entity, nor use the Confidential Information for any purpose, except as his duties
as an employee of the Company may require, without the prior written authorization of the
Board. The obligation of confidentiality imposed by this Section 5(b) shall not apply to
Confidential Information that otherwise becomes generally known to the public through no act
of the Employee in breach of this Agreement or any other party in violation of an existing
confidentiality agreement with the Company or which is required to be disclosed by court
order or applicable law.

     (ii) All records, designs, patents, business plans, financial statements, manuals,
memoranda, lists, research and development plans and products, and other property delivered
to or compiled by Executive for or on behalf of the Company or its vendors or customers that
pertain to the business of the Company shall be and remain the
property of the Company, and be subject at all times to its discretion and control.
Likewise, all formulae, correspondence, reports, records, charts, advertising materials and
other similar data pertaining to the business, activities or future plans of the Company
(and all copies thereof) that are collected by Executive shall be delivered promptly to the

 

 

Company without request by it upon termination of Executive’s employment.

     (c) Nonsolicitation of Employees. During the Noncompete Period, Executive shall not,
directly or indirectly, personally or through others, encourage to leave employment with the
Company, solicit for employment, or advise or recommend to any other person, firm, business, or
entity that they employ or solicit for employment, any employee of the Company or of any parent,
subsidiary, or affiliate of the Company.

     6. Ventures. If, during the term of his employment, the Executive is engaged in or
associated with the planning or implementing of any project, program, venture or relationship
involving the Company and a third party or parties, all rights in such project, program, venture or
relationship shall belong to the Company. Except as approved by the Board, the Executive shall not
be entitled to any interest in such project, program, venture or relationship or to any commission,
finder’s fee or other compensation in connection therewith other than the compensation to be paid
to the Executive as provided in this Agreement.

     7. Acknowledgment. Executive agrees that the covenants and agreements contained in
Section 5 hereof are material to this Agreement; that each of such covenants is reasonable and
necessary to protect and preserve the Company’s interests, properties and business; that
irreparable loss and damage will be suffered by the Company should Executive breach any of such
covenants and agreements; that each of such covenants and agreements is separate, distinct and
severable not only from the other of such covenants and agreements but also from the other and
remaining provisions of this Agreement; that the unenforceability or breach of any such covenants
or agreement shall not affect the validity or enforceability of any other such covenant or
agreement or any other provision of this Agreement; and that, in addition to other remedies
available to it, the Company shall be entitled to both temporary and permanent injunctions and any
other rights or remedies it may have, at law or in equity, to end or prevent a breach or
contemplated breach by Executive of any such covenants or agreements.

     (a) Geographic Extent of Executive’s Obligations Concerning Section 5. The
restrictions contained in Section 5 are limited to the United States. Given the nature of the
Company’s business, the restrictions contained in Section 5 cannot be limited to any particular
geographic region within the United States. Therefore, the obligations of Executive under Section
5 shall apply to any geographic area in which the Company (i) has engaged in business during the
period of Executive’s employment with the Company through its investment or trading activities or
otherwise, or (ii) has otherwise established during the period of Executive’s employment with the
Company its goodwill, business reputation or any customer or vendor relations.

     (b) Limitation of Covenant. Ownership by Executive, as a passive investment, of less
than five percent of the outstanding shares of capital stock or equity of any corporation or other
entity that is publicly traded shall not constitute a breach of Section 5.

     (c) Blue Pencil Doctrine. The restrictions contained in Section 5 are limited to the
United States. If the duration or geographical extent of, or business activities covered by,
Section 5 are in excess of what is valid and enforceable under applicable law, then such provision shall

 

 

be construed to cover only that duration, geographical extent or activities that are valid
and enforceable. Executive acknowledges the uncertainty of the law in this respect and expressly
stipulates that this Agreement be given the construction which renders its provisions valid and
enforceable to the maximum extent (not exceeding its express terms) possible under applicable law.

     (d) Disclosure. Executive shall disclose to any prospective employer, prior to
accepting or continuing employment, the existence of Section 5 of this Agreement and shall provide
such prospective employer with a copy of Section 5 of this Agreement. The obligation imposed by
this subsection 7(d) shall terminate two years after the termination of Executive’s employment with
the Company.

     8. Intellectual Property and Related Matters.

     (a) Disclosure and Assignment. Executive will promptly disclose in writing to the
Company complete information concerning each and every product, invention, discovery, practice,
process or method, whether patentable or not, made, developed, perfected, devised, conceived or
first reduced to practice by Executive, either solely or in collaboration with others, during the
Term, or within six months thereafter, whether or not during regular working hours, relating either
directly or indirectly to the business, products, practices or techniques of the Company
(“Developments”). Executive, to the extent that he has the legal right to do so, hereby
acknowledges that any and all of the Developments are the property of the Company and hereby
assigns and agrees to assign to the Company any and all of Executive’s right, title and interest in
and to any and all of the Developments. At the request of the Company, Executive will confer with
the Company and its representatives for the purpose of disclosing all Developments to the Company,
as the Company shall reasonably request during the period ending one year after the Term.

     (b) Limitation on Section 8(a). The provisions of Section 8(a) shall not apply to any
Development meeting the following conditions:

      (i) such Development was developed entirely on the Executive’s own time;

      (ii) such Development was made without the use of any Company equipment, supplies,
facility or trade secret or customer information;

      (iii) such Development does not relate (A) directly to the business of the Company or
(B) to the Company’s actual or demonstrably anticipated research or product or customer
development; and

      (iv) such Development does not result from any work performed by the Executive for the
Company.

     (c) Assistance of Executive. Upon request and without further compensation therefor,
but at no expense to Executive, Executive will do all lawful acts, including but not limited to,
the execution of papers and lawful oaths and the giving of testimony, that in the opinion of the
Company, may be necessary or desirable in enforcing the Company’s intellectual property and trade secret rights, and for perfecting, affirming and recording the Company’s complete ownership and
title thereto.

 

 

     (d) Records. Executive will keep complete, accurate and authentic accounts, notes,
data and records of the Developments in the manner and form requested by the Company. Such
accounts, notes, data and records shall be the property of the Company, and, upon the earlier of
the Company’s request or the conclusion of his employment, Executive will promptly surrender same
to the Company.

     (e) Copyrightable Material. All right, title and interest in all copyrightable
material that Executive shall conceive or originate, either individually or jointly with others,
and which arise out of the performance of this Agreement, will be the property of the Company and
are by this Agreement assigned to the Company along with ownership of any and all copyrights in the
copyrightable material. Upon request and without further compensation therefor, but at no expense
to Executive, Executive shall execute all papers and perform all other acts necessary to assist the
Company to obtain and register copyrights on such materials in any and all countries. Where
applicable, works of authorship created by Executive for the Company in performing his
responsibilities under this Agreement shall be considered “works made for hire,” as defined in the
U.S. Copyright Act.

     (f) Know-How and Trade Secrets. All know-how and trade secret information conceived
or originated by Executive that arises out of the performance of his obligations or
responsibilities under this Agreement or any related material or information shall be the property
of the Company, and all rights therein are by this Agreement assigned to the Company.

     9. Termination of Employment.

     (a) Grounds for Termination. Executive’s employment pursuant to this Agreement shall
terminate prior to the expiration of the Term in the event that at any time:

     (i) Executive dies,

     (ii) Executive becomes disabled (as defined below), so that he cannot perform the
essential functions of his position with or without reasonable accommodation,

     (iii) The Board elects to terminate Executive’s employment for “Cause” and notifies
Executive in writing of such election, or

     (iv) The Board elects to terminate Executive’s employment without “Cause” and notifies
Executive in writing of such election.

     If Executive’s employment is terminated pursuant to clause (i), (ii) or (iii) of this Section
9(a), such termination shall be effective immediately. If Executive’s employment is terminated
pursuant to subsection (iv) of this Section 9(a), such termination shall be effective 30 days after
delivery of the notice of termination.

     (b) “Cause” Defined. “Cause” shall mean (i) the willful engaging by Executive in
illegal conduct or gross misconduct which is demonstrably and materially injurious to the

 

 

Company,
(ii) Executive’s refusal to attempt to perform his obligations to the Company hereunder (other than
any such failure resulting from illness or incapacity), which refusal is demonstrably and
materially injurious to the Company, but only after Executive has first received prior written
notice of such alleged refusal, and fifteen (15) days thereafter to perform his obligations to the
Company, or (iii) Executive’s breach of his obligations under this Agreement, which breach is
demonstrably and materially injurious to the Company, but only after Executive has first received
prior written notice of such alleged breach and fifteen (15) days thereafter to perform his
obligations to the Company For purposes of this Section 9(b), no act or failure to act on
Executive’s part shall be deemed “willful” unless done, or omitted to be done, by Executive not in
good faith and without reasonable belief that Executive’s action of omission was in the best
interest of the Company. Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for Cause unless and until the Company delivers to Executive a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters of the entire membership of the
Board (not including Executive) at a meeting of the Board called and held for such purpose (after
reasonable notice to Executive and an opportunity for Executive, together with counsel, to be heard
before the Board) finding that, in the good faith opinion of the Board, Executive engaged in
conduct set forth above and specifying the particulars thereof in reasonable detail.

     (c) Termination by Executive for Good Reason. Executive’s employment pursuant to this
Agreement may be terminated by Executive prior to the expiration of the Term in the event Executive
has a “Good Reason” to terminate his employment, which shall mean the following:

          (i) Any material adverse change in Executive’s status or position, including, without
limitation, any material adverse change in Executive’s status or position as a result of a
diminution in Executive’s position, duties, responsibilities or authority or the assignment
to Executive of any duties or responsibilities which are inconsistent with Executive’s
status or position, or any removal of Executive from or any failure to reappoint or reelect
Executive to such positions, it being understood that Executive’s not holding the positions
of President, Chief Executive Officer and Chairman of the Board, at any time and for any
reason without the Executive’s written consent will constitute Good Reason hereunder; or

          (ii) The failure of the Board to continue to maintain Executive as Chairman of the
Board at all times during the Term; or

          (iii) The failure of the Board to nominate Executive for reelection to the Board and
recommend to the Company’s stockholders that they vote in favor of Executive’s reelection to
the Board upon expiration of Executive’s term on the Board at any time during the Term; or

          (iv) A reduction in Executive’s annual Base Salary as the same may be increased from
time to time or failure to pay same; or

          (v) A reduction in the Target Bonus which could be paid to Executive under the Bonus
Plan below 100% of Executive’s Base Salary or a failure to pay when due any Earned Bonus
(including, without limitation, the guaranteed bonus for the fiscal
year ending June 30,
2005 under

 

 

Section 4(c) hereof), provided however, that the Company’s failure to actually
award any bonus to Executive, or the Company’s actually awarding a bonus to Executive which
is less than the Target Bonus, shall not constitute Good Reason; or

     (vi) The breach by the Company of any of its material obligations under this Agreement;
or

     (vii) The relocation of the Company’s principal executive offices to a location more
than thirty-five (35) miles from the location of such offices or the Company requiring
Executive to be based anywhere other than the Company’s principal executive offices, except
for required travel substantially consistent with Executive’s business obligations.

     Prior to the Executive being permitted to terminate his employment for Good Reason, the
Company shall have sixty (60) days to cure any such alleged breach, assignment, reduction or
requirement, after Executive provides the Company written notice of the actions or omissions
constituting such breach, assignment, reduction or requirement.

     (d) “Change of Control” Defined. Change of Control means the following:

            (i) “Board Change” which, for purposes of this Agreement, shall have occurred if, over
any twenty-four month period, a majority of the seats (other than vacant seats) on the
Company’s Board were to be occupied by individuals who were neither (A) nominated by at
least one-half (1/2) of the directors then in office (but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result of either an actual or
threatened election contest or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person (as defined herein) other than the Board) nor (B)
appointed by directors so nominated, or

            (ii) the acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”), (a
“Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of a majority of the then outstanding voting securities of the Company (the
“Outstanding Company Voting Securities”); provided, however, that the following acquisitions
shall not constitute a Change of Control: (A) any acquisition by the Company, or (B) any
acquisition by any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, or (C) any public offering or private
placement by the Company of its voting securities; or

            (iii) a consolidation of the Company with another entity or a merger of the Company
with another entity in which neither the Company nor a corporation that, prior to the merger
or consolidation, was a subsidiary of the Company, shall be the surviving entity; or

            (iv) a merger or consolidation of the Company following which either the Company or a
corporation that, prior to the merger or consolidation, was a
subsidiary of the Company,
shall be the surviving entity and a majority of the Outstanding Company Voting Securities is

 

 

owned by a Person or Persons who were not “beneficial owners” of a majority of the
Outstanding Company Voting Securities immediately prior to such merger or consolidation; or

     (v) a voluntary or involuntary liquidation of the Company; or

     (vi) a sale or disposition by the Company of at least 80% of its assets in a single
transaction or a series of transactions (other than a sale or disposition of assets to a
subsidiary of the Company in a transaction not involving a Change of Control or a change in
control of such subsidiary).

     (e) “Disabled” Defined. As used in this Agreement, the term “disabled” means any
mental or physical condition that renders Executive unable to perform the essential functions of
his position, with or without reasonable accommodation, for a period in excess of 180 days.

     (f) Surrender of Records and Property. Upon termination of his employment with the
Company, Executive shall deliver promptly to the Company all records, manuals, books, lists, blank
forms, documents, letters, memoranda, notes, notebooks, reports, data, tables, calculations or
copies thereof that relate in any way to the business, products, practices or techniques of the
Company, and all other property, trade secrets and confidential information of the Company,
including, but not limited to, all documents that in whole or in part contain any trade secrets or
confidential information of the Company, which in any of these cases are in his possession or under
his control.

     10. Effect of Termination.

     (a) Termination Without Cause or for Good Reason .

     In the event the Company terminates Executive’s employment as the Company’s President and
Chief Executive Officer without Cause pursuant to Section 9(a)(iv) hereof or Executive terminates
such employment for Good Reason pursuant to Section 9(c) hereof,

     (i) Executive shall receive a lump sum cash payment equal to the sum of (1) any Base
Salary payable through the date of termination and any Earned Bonus which remains unpaid as
of the date of termination; (2) an amount equal to 400% of the Executive’s Base Salary in
effect at the time of his termination (or, if greater, the highest Base Salary in effect for
any prior year); and (3) the pro rata portion of the Target Bonus (based on the Base Salary
described in (i)(2) above) for the period worked during the fiscal year in which his
termination occurs;

     (ii) if Executive, and any spouse and/or dependents (“Family Members”) has medical,
dental and vision coverage on the date of such termination under a group health plan
sponsored by the Company, then, for the first four (4) years following the date of such
termination, the Company will pay the full cost of continuing at least comparable medical,
dental and vision coverage for the Executive and his covered Family Members and the full
cost of continuing at least comparable term life and long-term disability insurance
benefits, provided, that the Company shall have no obligation to pay for such
coverage if and to the extent the Executive and/or his Family Members become entitled to

 

 

receive
comparable benefits from and at the expense of a subsequent employer;

     (iii) the restricted stock (and/or cash equivalent, if any) granted to Executive
pursuant to Section 3(b)(ii) and the Restricted Stock granted pursuant to Section 4(f)
hereof shall vest immediately upon termination;

     (iv) to the extent the Option granted to Executive pursuant to Section 4(e) hereof has
not vested at the time of such termination the Option will vest immediately upon
termination;

     (v) the Option granted to Executive pursuant to Section 4(e) hereof which has vested or
become vested at the time or as a result of such termination will remain exercisable until
its expiration date; and

     (vi) Executive shall continue to be entitled to any deferred compensation and other
unpaid amounts and benefits earned and vested prior to or as a result of Executive’s
termination.

     (b) Termination For Cause. In the event the Company terminates Executive’s employment
as the Company’s President and Chief Executive Officer for Cause pursuant to Section 9(a)(iii)
hereof, (i) Executive shall be entitled to receive payment of any Base Salary payable through the
date of termination and any Earned Bonus which remains unpaid as of the date of termination, (ii)
Executive shall continue to be entitled to any deferred compensation and other unpaid amounts and
benefits earned and vested prior to Executive’s termination, (iii) to the extent the Option granted
to Executive pursuant to Section 4(e) hereof has vested prior to the date of Executive’s
termination the Option shall remain exercisable with respect to such vested portion of the Option
for a period of six months following Executive’s termination, (iv) to the extent the Option granted
to Executive pursuant to Section 4(e) hereof has not vested prior to the date of Executive’s
termination the Option will terminate with respect to such unvested portion of the Option as of the
date of such termination and will be of no further force and effect, and (v) Executive will forfeit
all unvested restricted stock (and/or cash equivalent, if any) granted to Executive pursuant to
Section 3(b)(ii) and the Restricted Stock granted pursuant to Section 4(f) hereof.

     (c) Death. In the event Executive’s employment as the Company’s President and Chief
Executive Officer is terminated as a result of Executive’s death, (i) Executive’s estate or
Executive’s duly designated beneficiaries shall be entitled to payment of any Base Salary payable
through the date of Executive’s death and any Earned Bonus which remains unpaid as of the date of
Executive’s death, (ii) Executive’s estate or Executive’s duly designated beneficiaries
shall be entitled to a pro rata amount of the Target Bonus (based on the Base Salary at the
time of death) for the fiscal year in which he dies, (iii) the Option granted under Section 4(e)
hereof and the restricted stock (and/or cash equivalent, if any) granted under Section 3(b)(ii) and
the Restricted Stock granted pursuant to Section 4(f) hereof shall become fully vested and, if
applicable, exercisable, with the Option remaining exercisable until the earlier of (A) three years
from the date of death and (B) the end of the remaining stated exercise term of the Option, and
(iv) Executive’s estate or Executive’s duly designated beneficiaries shall continue to be entitled

 

 

to any deferred compensation and other unpaid amounts and benefits earned and vested prior to
Executive’s death. If Executive’s Family Members have medical and dental coverage on the date of
such termination under a group health plan sponsored by the Company, the Company will reimburse
such Family Member for the total applicable premium cost for medical and dental coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1986, 29 U.S.C. Sections 1161-1168; 26 U.S.C.
Section 4980B(f), as amended, and all applicable regulations (referred to collectively as “COBRA”)
for such Family Members for a period of up to thirty-six (36) months commencing on the date of such
termination; provided the Company shall have no obligation to reimburse such Family Members for the
premium cost of COBRA coverage as of the date they become eligible to obtain comparable benefits
from another employer.

     (d) Disability. Upon termination of Executive’s employment as the Company’s President
and Chief Executive Officer on account of Executive’s disability pursuant to Section 9(a)(ii)
hereof, (i) Executive shall be entitled to payment of any Base Salary payable through the
commencement of long term disability payments to Executive under any plan provided or paid for by
the Company and any Earned Bonus which remains unpaid as of the date of the termination of
employment, (ii) Executive shall be entitled to a pro rata amount of the Target Bonus (based on the
Base Salary at the time of such termination) for the fiscal year in which his employment is
terminated, (iii) Executive shall be entitled to all compensation and benefits to which Executive
is entitled pursuant to the Company’s disability policies in effect as of the date of Executive’s
termination, (iv) the Option granted under Section 4(e) hereof and the restricted stock (and/or
cash equivalent, if any) granted under Section 3(b)(ii) and the Restricted Stock granted pursuant
to Section 4(f) hereof shall become fully vested and, if applicable, exercisable, with the Option
remaining exercisable until the earlier of (A) three years from the date of such termination of
Executive’s employment on account of Executive’s disability and (B) the end of the remaining stated
exercise term of the Option; and (v) Executive shall continue to be entitled to any deferred
compensation and other unpaid amounts and benefits earned and vested prior to or as a result of
Executive’s termination. If Executive and his Family Members have medical and dental coverage on
the date of such termination under a group health plan sponsored by the Company, the Company will
reimburse Executive for the total applicable premium cost for medical and dental coverage under
COBRA for Executive and his Family Members for a period of up to eighteen (18) months commencing on
the date of such termination; provided the Company shall have no obligation to reimburse Executive
and his Family Members for the premium cost of COBRA coverage as of the date they become eligible
to obtain comparable benefits from another employer.

     (e) Voluntary Resignation. In the event Executive voluntarily terminates his
employment as the Company’s President and Chief Executive Officer, other than for Good Reason, or
delivers to the Company a notice of non-renewal of this Agreement pursuant to Section 2 hereof, (i)
Executive shall be entitled to receive payment of any Base Salary payable
through the date of termination and any Earned Bonus which remains unpaid as of the date of
termination, (ii) Executive shall continue to be entitled to any deferred compensation and other
unpaid amounts and benefits earned and vested prior to Executive’s termination, (iii) to the extent
the Option granted to Executive pursuant to Section 4(e) hereof has
vested prior to the date of
such termination the Option shall remain exercisable with respect to such vested portion of the

 

 

Option for a period of twelve months following such termination, (iv) to the extent the Option
granted to Executive pursuant to Section 4(e) hereof has not vested prior to the date of such
termination the Option will terminate with respect to such unvested portion of the Option as of the
date of such termination and will be of no further force and effect, and (v) Executive will forfeit
all unvested restricted stock (and/or cash equivalent, if any) granted to Executive pursuant to
Section 3(b)(ii) and all unvested Restricted Stock granted pursuant to Section 4(f) hereof.

     (f) Termination Without Cause or For Good Reason In Connection With A Change in
Control. In the event the Company terminates Executive’s employment as the Company’s President
and Chief Executive Officer without Cause pursuant to Section 9(a)(iv) hereof or Executive
terminates such employment for Good Reason pursuant to Section 9(c) hereof within the period which
commences ninety (90) days before and ends two (2) years following a Change in Control, in lieu of
the provisions of Section 10(a) hereof,

     (i) Executive shall receive a lump sum cash payment equal to the sum of (1) any Base
Salary payable through the date of termination and any Earned Bonus which remains unpaid as
of the date of termination, (2) the pro rated portion of the Target Bonus (based on the Base
Salary at the time of such termination or, if higher, at the time during the 12 months
preceding the Change in Control) for the period worked during the fiscal year in which such
termination occurs, and (3) the product of 6 and Executive’s annual rate of Base Salary at
the time of such termination (or, if higher, at any time during the 12 months preceding the
Change in Control);

     (ii) if Executive and his Family Members have medical, dental and vision coverage on
the date of such termination under a group health plan sponsored by the Company, then, for
the first six (6) years following the date of such termination, the Company will pay the
full cost of continuing at least comparable medical, dental and vision coverage for the
Executive and his covered Family Members and the full cost of continuing at least comparable
term life and long-term disability insurance benefits; provided, that the Company shall have
no obligation to pay for coverage if and to the extent the Executive and his Family Members
become entitled to receive comparable benefits from and at the expense of a subsequent
employer; and

     (iii) Executive shall continue to be entitled to any deferred compensation and other
unpaid amounts and benefits earned and vested prior to Executive’s termination.

     In the event the Executive becomes entitled to payments and/or the accelerated vesting of the
Option and/or restricted stock under this Section 10(f) or Section 10(h) or any other payments or
benefits which are deemed to contingent upon a change in ownership or control pursuant to Section
280G of the Internal Revenue Code (“Code”), the Company shall cause its independent auditors
promptly to review, at the Company’s expense, the applicability of Section 4999 of the Code to such
payments and/or vesting. If such auditors shall determine that any
payment or distribution of any type by the Company to Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or otherwise (the “Total
Payments”), would be subject to the excise tax imposed by Section 4999 of the Code, or any interest
or penalties with respect to such excise tax (such excise tax, together with any such interest and
penalties, are collectively referred to as the “Excise Tax”), then Executive shall be entitled to
receive an additional cash payment (a “Gross-Up Payment”) within 30 days of such determination
equal to an amount such that after payment by Executive of all taxes
(including any interest or
penalties imposed with respect to

 

 

such taxes), including any Excise Tax, imposed upon the Gross-Up
Payment, Executive would retain an amount of the Gross-Up Payment equal to the Excise Tax imposed
upon the Total Payments. For purposes of the foregoing determination, Executive’s tax rate shall
be deemed to be the highest statutory marginal state and Federal tax rate (on a combined basis)
(including his share of F.I.C.A. and Medicare taxes) then in effect. If no determination by the
Company’s auditors is made prior to the time a tax return reflecting the Total Payments is required
to be filed by Executive, Executive will be entitled to receive a Gross-Up Payment calculated on
the basis of the Total Payments reported by Executive in such tax return, within 30 days of the
filing of such tax return. In all events, if any tax authority determines that a greater Excise
Tax should be imposed upon the Total Payments than is determined by the Company’s independent
auditors or reflected in Executive’s tax return pursuant to this Section 10(f), the Executive shall
be entitled to receive the full Gross-Up Payment calculated on the basis of the amount of Excise
Tax determined to be payable by such tax authority from the Company within 30 days of such
determination.

     (g) All payments made to Executive under any of the subsections of this Section 10 which are
based upon Executive’s salary or Bonus shall be made at or as soon as practicable after the
termination of Executive’s employment.

     (h) Notwithstanding anything to the contrary contained herein or in any other agreement or
plan, immediately prior to the occurrence of a Change of Control, the Option granted under Section
4(e) hereof and the restricted stock (and/or cash equivalent, if any) granted under Section
3(b)(ii) and the Restricted Stock granted pursuant to Section 4(f) hereof shall become fully vested
and, if applicable, exercisable, it being understood that Executive will be entitled to participate
in such transaction with respect to all of the shares covered by such awards.

     (i) Notwithstanding anything to the contrary contained herein, if Executive’s employment with
the Company terminates or is deemed terminated before the payment in full of the $412,500
guaranteed minimum bonus for 2005 (described in Section 4(b) hereof) and the Consulting Agreement
Payments (determined under Section 3(b) hereof), then, unless Executive’s employment is terminated
by him voluntarily without Good Reason or by the Company for Cause, the Executive shall be entitled
to receive from the Company (1) the full amount of the guaranteed minimum bonus promptly after the
termination of his employment, and (2) the balance of the Consulting Agreement Payments as and when
they would have been payable if Executive’s employment with the Company had continued.

     11. Miscellaneous.

     (a) Entire Agreement. This Agreement (including the exhibits, schedules and other
documents referred to herein) contains the entire understanding between the parties hereto with
respect to the subject matter hereof and supersedes any prior understandings, agreements or
representations, written or oral, relating to the subject matter hereof.

     (b) Counterparts. This Agreement may be executed in separate counterparts, each of
which will be an original and all of which taken together shall constitute one and the same
agreement, and any party hereto may execute this Agreement by signing any such counterpart.

 

 

     (c) Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law but if any provision
of this Agreement is held to be invalid, illegal or unenforceable under any applicable law or rule,
the validity, legality and enforceability of the other provision of this Agreement will not be
affected or impaired thereby.

     (d) Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, personal representatives and, to the
extent permitted by subsection (e), successors and assigns. The Company will require its
successors to expressly assume its obligations under this Agreement.

     (e) Assignability. Neither this Agreement nor any right, remedy, obligation or
liability arising hereunder or by reason hereof shall be assignable (including by operation of law)
by either party without the prior written consent of the other party to this Agreement, except that
the Company may, without the consent of the Executive, assign its rights and obligations under this
Agreement to any corporation, firm or other business entity with or into which the Company may
merge or consolidate, or to which the Company may sell or transfer all or substantially all of its
assets, or of which 50% or more of the equity investment and of the voting control is owned,
directly or indirectly, by, or is under common ownership with, the Company. After any such
assignment by the Company, and provided that such assignment arises by operation of law or involves
an express written assumption by the assignee, the Company shall be immediately released and
discharged from all further liability hereunder and such assignee shall thereafter be deemed to be
the Company for the purposes of all provisions of this Agreement.

     (f) Modification, Amendment, Waiver or Termination. No provision of this Agreement
may be modified, amended, waived or terminated except by an instrument in writing signed by the
parties to this Agreement. No course of dealing between the parties will modify, amend, waive or
terminate any provision of this Agreement or any rights or obligations of any party under or by
reason of this Agreement. No delay on the part of the Company in exercising any right hereunder
shall operate as a waiver of such right. No waiver, express or implied, by the Company of any
right or any breach by Executive shall constitute a waiver of any other right or breach by
Executive.

     (g) Notices. All notices, consents, requests, instructions, approvals or other
communications provided for herein shall be in writing and delivered by personal delivery,
overnight courier, mail, electronic facsimile or e-mail addressed to the receiving party at the
address set forth herein. All such communications shall be effective when received.

Address for the Executive:

 

 

Address for the Company:

Enzon Pharmaceuticals, Inc.

685 Route 202/206

Bridgewater, New Jersey 08807

Attn: General Counsel

Any party may change the address set forth above by notice to each other party given as provided
herein.

     (h) Headings. The headings contained in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this Agreement.

     (i) Governing Law. ALL MATTERS RELATING TO THE INTERPRETATION, CONSTRUCTION, VALIDITY
AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
JERSEY, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW PROVISIONS THEREOF.

     (j) Resolution of Certain Claims — Injunctive Relief. The Executive acknowledges that
it would be difficult to fully compensate the Company for damages resulting from any breach by him
of the provisions of this Agreement. Accordingly, the Executive agrees that, in addition to, but
not to the exclusion of any other available remedy, the Company shall have the right to enforce the
provisions of Sections 5 through 8 or 9(f) by applying for and obtaining temporary and permanent
restraining orders or injunctions from a court of competent jurisdiction without the necessity of
filing a bond therefor, and without the necessity of proving actual damages, and the Company shall
be entitled to recover from the Executive its reasonable attorneys’ fees and costs in enforcing the
provisions of Sections 5 through 8 or 9(f).

     (k) Arbitration. Except as otherwise specifically provided for hereunder, any claim
or controversy arising out of or relating to this Agreement or the breach hereof shall be settled
by arbitration in accordance with the laws of the State of New Jersey. Such arbitration shall be
conducted in the State and City of New Jersey in accordance with the rules then existing of the
American Arbitration Association which pertain to employment disputes. Judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction thereof. In the event
of any dispute arising under this Agreement, the respective parties shall be responsible for the
payment of their own legal fees and disbursements.

     (l) Third-Party Benefit. Nothing in this Agreement, express or implied, is intended
to confer upon any other person any rights, remedies, obligations or liabilities of any nature
whatsoever.

     (m) Withholding Taxes. The Company may withhold from any benefits payable under this
Agreement all federal, state, city or other taxes as shall be required pursuant to any law or
governmental regulation or ruling.

 

 

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

	 	 	 	 	 
	ENZON PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 
	By:
	 	/s/
Goran A. Ando

	 	 
	Name: Goran A. Ando	 	 
	Title: Director and Chairman, Compensation Committee	 	 
	 
	 	 	 	 
	EXECUTIVE:	 	 
	 
	 	/s/
Jeffrey H. Buchalter 	 	 
	 	 	 
	Jeffrey H. Buchalter	 	 

 

 

EXHIBIT A

NON-QUALIFIED STOCK OPTION AGREEMENT

 

 

EXHIBIT B

RESTRICTED STOCK AWARD AGREEMENTEX-10.2

 

Exhibit
10.2

April 1, 2007

ENZON PHARMACEUTICALS, INC.

2007 Outside Director Compensation Plan

Annual Retainers:

On an annual basis, outside directors will receive:

	 	•	 	a cash retainer of $25,000;
	 
	 	•	 	an additional cash retainer of $18,000 for service as chair of the Audit and Finance
Committee;
	 
	 	•	 	an additional cash retainer of $8,000 for service as chair of the Compensation
Committee;
	 
	 	•	 	an additional cash retainer of $5,000 for service as chair of any other committee of
the board;
	 
	 	•	 	an additional cash retainer of $8,000 for service as a member of the Audit and
Finance Committee; and
	 
	 	•	 	an additional cash retainer of $4,000 for service as a member of any other committee
of the board.

The cash elements above are to be paid quarterly at the end of each quarter, beginning with the
second quarter of calendar 2007.

Meeting Fees:

For each meeting attended, outside directors will receive:

	 	•	 	a meeting attendance fee of $1,500 cash for each meeting of the full board attended
in-person;
	 
	 	•	 	a meeting attendance fee of $1,000 cash for each meeting of the full board attended
by telephone;
	 
	 	•	 	a meeting attendance fee of $1,000 cash for each meeting of a committee attended,
either in-person or by telephone.

Annual Equity Grants:

On an annual basis, outside directors will receive:

	 	•	 	a grant of stock options on the first trading day of the calendar year with a value
of $75,000 (the “Annual Option Grant”). The number of
options in the Annual Option Grant will be based on a Black-Scholes value and will be at an exercise price equal

 

 

April 1, 2007

	 	 	 	to
the closing price of our Common Stock on the Nasdaq Global Market on the date of grant.
The Annual Option Grant vests in one tranche on the first anniversary of the date of
grant if the recipient director remains on our board on that date. Once vested, options
granted pursuant to the Annual Option Grant expire on the 10th anniversary of the date
of grant; and

	 	•	 	a grant of restricted stock units on the first trading day after June 30 of each
calendar year with a value of $75,000 (the “Annual Restricted Stock Grant”). The
number of shares issued in the Annual Restricted Stock Grant will be equal to $75,000
divided by the closing price of our Common Stock on the Nasdaq Global Market on the
date of grant. The shares covered by the Annual Restricted Stock Grant vest in three
equal tranches on each of the first three anniversaries of the date of grant if the
recipient director remains on our board on each such date.

These grants are made under the 2001 Incentive Stock Plan.

Welcome Grant:

	 	•	 	Upon being initially elected to the board, a new elected director will receive a
“welcome grant” of stock options with a Black-Scholes value of $75,000 (the exercise
price of which will be equal to the closing price of our Common Stock on the Nasdaq
Global Market on the date of grant) and a grant of restricted stock units with a value
of $75,000 (the number of shares covered by such grant being equal to $75,000 divided
by the closing price of our Common Stock on the Nasdaq Global Market on the date of
grant). The options and restricted stock units included in the Welcome Grant vest in
three equal tranches on each of the first three anniversaries of the date of grant, if
the recipient director remains on the Board on each such date.

Non-Executive Chairperson:

	 	•	 	If the Chairperson of the Board is a non-executive of the Company, such
Non-Executive Chairperson of the Board receives double the Annual Equity Grants, as
well as double the amounts in the “Welcome Grant”.

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