Letter Agreement dated September 10, 2021, between the Company and Patrick Fabbio
520 Broad Street
Newark, NJ 07102
September 10, 2021
It is our pleasure to offer you a position at Rafael Holdings, Inc. (“Rafael” or the “Company”). This letter agreement (the “Letter Agreement”) outlines the terms of your employment at the Company as follows:
|1.||Position and Duties:|
|You will work as Chief Financial Officer of the Company and, upon approval by the Board of Directors of the Company, you shall serve as an executive officer of the Company. In this role, you will have the duties and responsibilities customary for a chief financial officer of a similarly situated entity to the Company (the “Position”), reporting to the Chief Executive Officer or to such other person as designated by the Company from time to time (in either case, as relevant, your “Supervisor”). This is a full-time position for which you agree to devote one hundred percent of your working hours. You will work at the Company’s 520 Broad Street, Newark, NJ headquarters, or such other location designated by the Company, on a regular basis, and you will travel for purposes of Company business, in accordance with the Company’s needs, as such needs are determined by your Supervisor.|
|Notwithstanding the foregoing, with the prior written consent of the CEO (which consent shall not be unreasonably withheld), you shall be permitted to act or serve as a consultant, director, trustee, or committee member of any type of business, civic, or charitable organization, provided that such activities do not, individually or in the aggregate, create a potential or actual conflict with the interests of the Company or materially interfere with your service to the Company or duties hereunder (in each case, as determined by the CEO)|
|Youremployment at the Company will commence on September 13th, 2021 (the “Start Date”). Please note that your employment shall be at will and shall not be for any set or fixed period of time, and shall continue until terminated by either you or the Company in accordance with Section 7 below (your period of employment at the Company, the “Term”).|
|During the Term, you will be compensated at an annual base salary rate of $425,000.00 (the “Base Salary”), which will be paid to you on a prorated basis less payroll deductions and required withholdings, in accordance with the Company’s standard payroll procedures. Your position is classified as exempt for purposes of relevant wage-hour law and therefore you will not be entitled to overtime pay.|
520 Broad Street
Newark, NJ 07102
|In addition to the Base Salary, you will also be eligible for an annual discretionary bonus in an amount up to 40% of your Base Salary (prorated for your initial year of employment), your entitlement to which and any amount thereof to be determined in the sole and absolute discretion of the Company.|
|In addition, within thirty (30) days of your Start Date you will receive a sign on bonus of $50,000 less standard payroll deductions and required withholdings, in accordance with the Company’s payroll procedures (“Sign on Bonus”). Should you resign either (i) “without good reason” or are (ii) terminated “for cause” (in accordance with section 7(b)below) within a one (1) year period from your Start Date you shall be required to return the Sign on Bonus within thirty (30) days of your last date of employment.|
|4.||Paid Time Off and Benefits:|
|In addition to Company-designated paid holidays, each calendar year you shall be entitled to take paid time off in accordance with the Company’s applicable policies, as may be updated from time to time, and applicable law.|
|As a full-time employee of the Company, you will be eligible for health insurance coverage and other employee benefits, in each case as available to similarly situated employees, in accordance with the relevant plans, as such plans are adopted by the Company.|
|You shall also be entitled to reimbursement for pre-approved business expenses incurred by you in the course of your performance of your duties, as per Company policy, provided that you submit to the Company applicable invoices and other documentation, in form and in substance in accordance with Company policy.|
|Subject to the approval of the Compensation Committee of the Board of Directors of the Company you will be entitled to an initial grant of employee stock options to purchase shares of Class B common stock with a fair market value, based on a Black-Scholes option pricing model of $2,500,000 on the date of grant (the “Options”). The Options shall be submitted for approval at the Company’s next regularly scheduled quarterly Compensation Committee Meeting of the Board of Directors of the Company held post your Start Date, and if approved, granted within thirty (30) days thereafter. The vesting schedule shall be as follows: Options with respect to twenty-five percent (25%) of the underlying shares shall vest on the first anniversary of the grant date and additional Options with respect to two and eight hundred thirty-three thousandths’ percent (2.0833%) (in each case, rounded to a whole number of shares) of the underlying shares shall vest on each monthly anniversary of the first anniversary, so that all Options shall vest by the fourth anniversary of the grant date. The terms and conditions of the grant of the Options shall be as set forth in the Company’s 2018 Stock Option and Incentive Plan, as amended from time to time (the “Plan”) and the related grant agreement and related terms as required by the Company.|
520 Broad Street
Newark, NJ 07102
|All unvested Options shall terminate if your full-time employment with the Company shall cease for any reason. Notwithstanding the foregoing, if, after your Start Date, there is a sale or merger where the Company is not the surviving entity or change in control where more than 50% of the Company is sold (specifically excluding from the definition a sale/merger or change of control where the counterparty is Rafael Pharmaceuticals or a current shareholder or an affiliate of a current shareholder) (“Change of Control”), and you remain continuously employed by the Company through the Change of Control, one hundred percent (100%) of the then unvested Options will become vested and exercisable immediately prior to (and contingent on) the occurrence of the sale or merger.|
|You will be eligible to receive additional equity grants at the sole discretion of the Compensation Committee of the Board.|
|During the Term, the Company may provide you with the benefit of using Company property, such as, but not limited to, a Company-provided laptop. You are obligated to use such Company property in accordance with Company guidelines, and to return any such property to the Company upon the Company’s request, but in any case, upon the termination of your employment, regardless of the reason for such termination.|
|Your employment at the Company may be terminated as set forth below:|
(a) Death; Disability. Your employment at the Company shall terminate upon your death or, as permitted by law, “Disability” (as hereafter defined). Upon any such termination, you (or, in the event of your death, your estate) shall receive the Base Salary and all benefits as generally eligible, in each case through the Date of Termination (as hereafter defined). You (and, in the event of your death, your estate) shall not be entitled to any other amounts or benefits from the Company other than as set forth in this Section 7(a). For purposes of this Letter Agreement, “Disability” shall mean your inability to perform your duties on account of a physical or mental illness for a period of sixty (60) consecutive days or ninety (90) days in any six (6) month period. Notwithstanding anything contained herein to the contrary, during any period of disability, the Company shall not be obligated to pay any compensation or other amounts to you.
(b) Termination for Cause/Resignation without Good Reason. The Company may terminate your employment at the Company at any time without advance notice for “Cause” and you may terminate your employment at the Company without “Good Reason” (as hereafter defined) upon thirty (30) days’ written notice from you to the Company in accordance with Section 7(e) below. For purposes of this Letter Agreement, the Company shall have Cause to terminate your employment upon your:
|(i)||commission of fraud, theft, embezzlement, self-dealing, misappropriation, gross negligence, malfeasance, or an act or acts constituting a felony under the laws of the United States or any state thereof;|
|(ii)||commission of willful or negligent acts or omissions which result in an assessment of a civil or criminal penalty against you, the Company, or its affiliates;|
520 Broad Street
Newark, NJ 07102
|(iii)||commission of acts or omissions constituting gross negligence or gross misconduct in the performance of any aspect of your lawful duties or responsibilities which have or may be expected to have an adverse effect on the Company or its affiliates;|
|(iv)||commission of any serious offense that results in or would reasonably be expected to result in financial harm, negative publicity or other material harm to the Company or its affiliates;|
|(v)||engaging in any act covered by Rule 506(d) of Regulation D under the Securities Act of 1933, as amended, and/or engaging in any act, or existence of any circumstances that would, in the reasonable judgment of the Company, be harmful to the Company’s ability to have its common stock be granted approval to list, or continue to be listed, on the NYSE, American, or Nasdaq exchanges;|
|(vi)||willful or continued failure to substantially perform your duties hereunder (other than any such failure resulting from your incapacity due to physical or mental illness or disability), after written notice has been delivered to you by the Company identifying the manner in which you have not substantially performed your duties;|
|(vii)||willful or continued failure to perform an act permitted by the Company’s rules, policies, or procedures, including without limitation, the Company’s Code of Business Conduct and Ethics that is within your material duties hereunder (other than by reason of physical or mental illness or disability) or directives of the Company’s Board of Directors, or material breach of the terms of this Letter Agreement, of the Non-Disclosure and Non-Competition Agreement attached hereto as Schedule A, or Company policy;|
|(viii)||breach of any fiduciary duty owed to the Company or its affiliates;|
|(ix)||misappropriation of the Company’s or its affiliates’ funds or property;|
|(x)||extended unexcused absence;|
|(xi)||failure to provide to the Company, within the first three (3) business days of employment, documentation that you are authorized to work in the United States, in accordance with applicable law; or|
|(xii)||knowing and intentional misrepresentation or concealment of material information regarding the Company from the Company’s Board and/or the Supervisor.|
520 Broad Street
Newark, NJ 07102
In the event that the Company terminates your employment for Cause or you resign from the Company without Good Reason: (i) you shall receive the Base Salary and benefits as generally eligible, in each case through the Date of Termination and (ii) the Company shall have the right to determine whether or not you will actively work for the Company during any notice period. You shall not be entitled to any other amounts or benefits from the Company other than as set forth in this Section 7(b).
(c) Termination without Cause. Your employment at the Company may be terminated by the Company without Cause upon five (5) business days’ written notice to you in accordance with Section 7(e) below. In the event of the your termination by the Company without Cause: (i) you shall receive the Base Salary and all eligible benefits, in each case through the Date of Termination, (ii) the Company shall have the right to determine whether or not you will actively work for the Company during the notice period, and (iii) provided that you execute and deliver a separation and release agreement in a form acceptable to the Company within twenty-one (21) days after the Date of Termination (unless applicable law requires a longer time period, in which case this date will be extended to the minimum time required by applicable law and such 21-day or extended period, as applicable, the “Release Execution Period”) and do not revoke such agreement, you will receive, as severance pay (A) if your Date of Termination is on or prior to the first anniversary of the Start Date and not within six months following a Change of Control, continuation of your Base Salary for three (3) months, (B) if your Date of Termination is after the first anniversary of the Start Date and not within six months following a Change of Control, continuation of your Base Salary for six (6) months, or (C) if your Date of Termination is within six months following a Change of Control, continuation of your Base Salary twelve (12) months, in each case payable, subject to Section 11 hereof, on a prorated basis in accordance with the Company’s regular payroll schedule. You shall not be entitled to any other amounts or benefits from the Company other than as set forth in this Section 7(c).
(d) Resignation by You for Good Reason. Your employment at the Company may also be terminated by you for Good Reason if (x) you have given written notice to the Company of the existence of Good Reason no later than thirty (30) days after its initial existence, (y) the Company has not remedied such Good Reason in all material respects within thirty (30) days after its receipt of such written notice, and (z) you provide written notice of your resignation to the Company in accordance with Section 7(e) hereunder within seventy-five (75) days following the initial existence of such Good Reason. In the event of your termination of your employment for Good Reason: (i) you shall receive the Base Salary and all benefits as generally eligible, in each case through the Date of Termination, (ii) the Company shall have the right to determine whether or not you will actively work for the Company during any notice period, and (iii) provided that you execute and deliver a separation and release agreement in a form acceptable to the Company within the Release Execution Period (and do not revoke such agreement), you will receive, as severance pay (A) if your Date of Termination is on or prior to the first anniversary of the Start Date and not within six months following a Change of Control, continuation of your Base Salary for three (3) months, (B) if your Date of Termination is after the first anniversary of the Start Date and not within six months following a Change of Control, continuation of your Base Salary for six (6) months, or (C) if your Date of Termination is within six months following a Change of Control, continuation of your Base Salary for twelve (12) months, in each case payable, subject to Section 11 hereof, on a prorated basis in accordance with the Company’s regular payroll schedule. You shall not be entitled to any other amounts or benefits from the Company other than as set forth in this Section 7(d).
520 Broad Street
Newark, NJ 07102
As used herein, the term “Good Reason” shall mean the occurrence of either of the following, without your consent: (i) a material reduction of your authority or (ii) relocation of your principal place of employment more than fifty (50) miles outside of Newark, New Jersey. Your actions approving or ratifying any of the foregoing changes (that otherwise may be considered Good Reason) in writing will be considered consent for the purposes of this Good Reason definition.
(e) Notice of Termination. Your resignation or any termination of your employment by the Company shall be communicated from one party to the other party by written “Notice of Termination”. Such Notice of Termination shall specify the last day of the Term.
(f) Date of Termination. “Date of Termination” shall mean: (i) if your employment is terminated by your death, the date of your death, or (ii) if your Employment is terminated for any other reason, the date specified in the Notice of Termination as the last day of the Term.
(g) Transition. Regardless of the circumstances surrounding your resignation or termination of employment, you hereby agree that upon your resignation or termination of employment, you will return to the Company all Company property and will make every effort to facilitate the orderly transition of your duties and responsibilities.
|As a condition of your employment at the Company, you are obligated to sign and comply with the terms set forth in the Non-Disclosure and Non-Competition Agreement attached to this Letter Agreement as Schedule A (the “NDNC”).|
|9.||Governing Law and Agreements:|
|During the period of your employment at the Company, you will be required to abide by all policies of the Company, as established from time to time. The terms of your employment, as well as your post-employment obligations, will be governed by the terms of this Letter Agreement, the NDNC, and applicable law. It is agreed that the terms of this Letter Agreement (including any attachments hereto) constitute the entire understanding between you and the Company regarding the subject matter hereof and supersede any previous understanding or agreement (whether oral or written) between you and the Company, and/or the Company’s management.|
|The Company shall have the right to assign its rights and obligations under this Letter Agreement to any individual, entity, corporation, or partnership that succeeds to all or a portion of the relevant business or assets of the Company. This Letter Agreement is personal to you, and you may not assign your rights and obligations under this Letter Agreement to any third party.|
|By your signature below, you represent that you are not bound by any agreement, whether oral or written, with a third party, where such agreement would in any way limit your ability to perform your obligations under this Letter Agreement, and you agree that at no time during your employment with the Company will you undertake responsibilities or obligations that will present a conflict of interest with, or limit your ability to fulfil the duties of, your position at the Company.|
520 Broad Street
Newark, NJ 07102
|All notices and other communications under this Letter Agreement shall be in writing and shall be given by hand, by email, or by first class mail, certified or registered with return receipt requested, and shall be deemed to have been duly given three (3) days after mailing, twenty-four (24) hours after transmission of an email, or immediately upon hand delivery or explicit acknowledgement of receipt.|
|11.||Section 409A of the Internal Revenue Code of 1986 as amended:|
|You and the Company hereby affirm that with respect to any and all payments and benefits under this Letter Agreement, the intent is that such payments and benefits either: (i) do not constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Internal Revenue Code (“Section 409A”), and therefore are exempt from Section 409A, (ii) are subject to a “substantial risk of forfeiture” and are exempt from Section 409A under the “short−term deferral rule” set forth in Treasury Regulation §1.409A−1(b)(4), or (iii) are in compliance with the terms of 409A. In any event, you and the Company further confirm that they intend to have all provisions of this Letter Agreement construed, interpreted and administered in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A. By way of example, and not limitation, solely for purposes of determining the time and form of payments, which are subject to Section 409A, due you under this Letter Agreement in connection with your termination of employment with the Company, you shall not be deemed to have incurred a termination of employment unless and until you shall incur a “separation from service” within the meaning of Section 409A. Each amount or installment to be paid or benefit to be provided under this Letter Agreement shall be construed as a separate and distinct payment for purposes of Section 409A. Without limiting the foregoing and notwithstanding anything contained herein to the contrary, to the extent required to avoid accelerated taxation and/or tax penalties under Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Letter Agreement or any other arrangement between you and the Company during the six (6) month period immediately following your separation from service shall instead be paid on the first business day after the date that is six (6) months following your separation from service (or, if earlier, your date of death). To the extent required to avoid accelerated taxation and/or tax penalties under Section 409A, amounts reimbursable to you under this Letter Agreement shall be paid to you on or before the last day of the year following the year in which the expense was incurred and the amount of expenses eligible for reimbursement (and in-kind benefits provided to you) during one year may not affect amounts reimbursable or provided in any subsequent year. The Company makes no representation that any or all of the payments described in this Letter Agreement will be exempt from or comply with Section 409A and makes no undertaking to preclude Section 409A from applying to any such payment. You understand and agree that you shall be solely responsible for the payment of any taxes, penalties, interest or other expenses incurred by you on account of non-compliance with Section 409A.|
520 Broad Street
Newark, NJ 07102
|In the event of a dispute between you and the Company arising out of or related to your employment with the Company (with the exception of disputes arising under the NDNC set forth in Schedule A and claims that pursuant to applicable law a party is prohibited from requiring another party to agree to submit to arbitration), you and the Company agree to exclusively settle such dispute by means of arbitration pursuant to the Federal Arbitration Act, administered by the American Arbitration Association (“AAA”), with such arbitration to take place in New Jersey or another mutually agreed upon location and to be conducted in accordance with the AAA’s Employment Arbitration Rules. In such arbitration, a single arbitrator, appointed by the mutual agreement of you and the Company: (i) shall not amend or modify the terms of this Letter Agreement or of any Company policy, and (ii) shall render a decision within ten (10) business days from the later of closing statements or submission of post-hearing briefs by the parties. The arbitration award shall be final and binding, and any state or federal court shall have jurisdiction to enter a judgment on such award. It is understood that this requirement to arbitrate disputes means that by signing below, you and the Company specifically waive any right either party may have to a trial by jury in a court of law with respect to all claims and demands arising out of or related to your employment with the Company, including, without limitation, any rights you may assert under any federal, state, or local laws or regulations applicable to your employment with the Company (with the exception of disputes arising under the NDNC set forth in Schedule A and claims that pursuant to applicable law a party is prohibited from requiring another party to agree to submit to arbitration). For the avoidance of doubt, the parties acknowledge and agree that the existence of a claim by a party that is not subject to arbitration pursuant to this paragraph shall not impair the enforceability of this paragraph with respect to any other claim brought by that party. Notwithstanding the foregoing, nothing in this paragraph shall be interpreted to mean that you cannot file a charge with the Equal Employment Opportunity Commission and/or the National Labor Relations Board or any comparable federal, state, or local governmental agency.|
The terms of this Letter Agreement are conditional upon your providing to the Company, within your first three (3) days of employment, a completed I-9 form accompanied by documentation that you are authorized to work in the United States, in accordance with applicable law. In addition, the Company reserves the right to conduct a background check, and your employment at the Company shall be conditional upon the results of such background check, in each case accordance with applicable law. If the Company determines not to have you commence employment based on the results of a background check (in accordance with all requirements of applicable law), your employment relationship with the Company shall be null and void, and the Company shall have no further obligations to you whatsoever.
We are excited to have you join us as a member of the Rafael team.
To accept this offer of employment and the terms and conditions hereof, please sign this Letter Agreement below and the attached Schedule A (and Exhibit A thereto) in the spaces provided and return all signed documents to David Polinsky at ***@***.
|Very truly yours,|
|/s/ Ameet Mallik|
|Chief Executive Officer|
|AGREED TO AND ACCEPTED BY:||/s/ Patrick Fabbio|