EX-10.1 2 b409372ex_10-1.txt EXHIBIT 10.1 EXHIBIT 10.1 EXECUTION COPY EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT (this "Agreement") dated as of September 2, 2005 (the "Effective Date"), between ENZON PHARMACEUTICALS, INC. (the "Company"), a Delaware corporation with offices in Bridgewater, New Jersey, and IVAN D. HORAK, M.D. (the "Executive"), a resident of New Jersey. BACKGROUND A. The Company is a biopharmaceutical company engaged in developing advanced therapeutics for life threatening diseases. B. The Executive has experience as an executive in the biopharmaceutical industry. C. 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. TERMS In consideration of the foregoing 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 (the "Term") shall commence on the Effective Date, and unless terminated at an earlier date in accordance with Section 9 hereof, and shall extend through the fourth anniversary of the Effective Date, subject to automatic renewal for an additional twenty-four (24) months, unless either party hereto receives written notice from the other party no later than ninety (90) days prior to the fourth anniversary of the Effective Date (a "first term notice of non-renewal") that such other party does not wish for the term hereof to continue beyond the fourth anniversary of the Effective Date, in which event the term hereof and the Executive's employment shall end at 5:00 PM on the fourth anniversary of the Effective Date. If neither party provides a first term notice of non-renewal prior to the fourth anniversary of the Effective Date, then the Term and the Executive's employment shall extend until 5:00 PM Eastern Time on the earlier of (a) the sixth (6th) anniversary of the Effective Date and (b) the date that is twelve (12) months following the date on which either party hereto receives written notice (an "extension term 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 notice period. For the purposes of this Agreement, a "first term notice of non-renewal" and an "extension term notice of non-renewal" shall be referred to collectively as a "notice of non-renewal." 3. Position and Duties. (a) Service with Company. During the Term, the Executive agrees to perform such employment duties for the Company in an executive and managerial capacity commensurate with the position of Executive Vice President and Chief Scientific Officer of the Company. As Executive Vice President and Chief Scientific Officer, the Executive shall have the authority, duties and responsibilities associated with this position, including, without limitation, the authority and duty generally to supervise and direct all research and development activities of the Company as well as such additional duties consistent with his position as assigned by the Chief Executive Officer, reporting to the Chief Executive Officer, and subject to the control and direction of the Chief Executive Officer of the Company, the Board of Directors of the Company (the "Board"), or any duly authorized Committee of the Board. For specificity, Executive's Position Description is attached hereto as Exhibit C. (b) Performance of Duties. (i) 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) The 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. It is the Company's intention that the Executive not breach any confidentiality agreement to which he is party, including, without limitation, any such agreement he may have with his former employer. The Executive will not render or perform services for any other corporation, firm, entity or person which are inconsistent with the provisions of this Agreement. (iii) 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. (c) The Executive's Representations and Warranties. The Executive represents and warrants to the Company that his entering into and performing this Agreement will not constitute a breach of any employment, consulting, non-competition or other agreement to which he is a party or any other obligation of the Executive. The Executive represents and warrants to the Company that he has not been debarred under the Generic Drug Enforcement Act of 1992 (Sections 306-308 of the Federal Food, Drug and Cosmetic Act) nor has the Executive received notice of action or threat of action of debarment. The Executive shall comply with the Company's material policies governing the conduct of senior executives, including, without limitation, its Substance Abuse Policy, during the Term. 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 Four Hundred Twenty-Five Thousand Dollars ($425,000) 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 the Executive during each fiscal year of the Company beginning after the Effective Date 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. 2 (b) Annual Bonus. The Executive shall be entitled to participate in the Company's bonus plan for management and any successor bonus plan covering management with respect to each fiscal year of the Company ending during the Term (the "Bonus Plan"). Under the Bonus Plan, the Executive shall be eligible to receive a performance-based cash bonus for each fiscal year ending during the Term in an amount, and based on objective 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 Chief Executive Officer and the Executive prior to, or within sixty (60) days after the commencement of, each fiscal year. Under the Bonus Plan for the Executive, (i) the minimum cash bonus shall be zero (0), (ii) the target cash bonus shall equal 50% of the Base Salary (the "Target Bonus"), and (iii) the maximum cash bonus shall equal 82.5% of Base Salary. In addition to the foregoing amounts, within five (5) days after Executive's first day of employment, the Company shall pay to Executive a bonus in cash in the amount of $100,000. (c) Participation in Benefit Plans; Indemnification. While he is employed by the Company, the 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 the 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, except as provided at Section 10 hereof, the Executive's participation in any such plan or program shall be subject to the provisions, rules and regulations applicable thereto. During the Executive's employment with the Company, and thereafter, the Company shall indemnify the 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, and cover him under a policy of directors and officers liability insurance, in a manner and to an extent that is not less favorable to the Executive as the indemnification protection, and liability insurance coverage, that is afforded by the Company to any other senior officer or director. A copy of the Company's Directors and Officers Liability Insurance policy will be provided to the Executive. (d) Expenses. The Company will pay or reimburse the 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. (e) Stock Options. Subject to the Executive commencing his employment hereunder as the Company's Executive Vice President and Chief Scientific Officer on the Effective Date, the Executive shall be granted options to purchase shares of common stock of the Company ("Common Stock") pursuant to the Company's 1987 Non-Qualified Stock Option Plan, as amended (the "Stock Plan") and the form of Non-Qualified Stock Option Certificate and Agreement attached hereto as Exhibit A (the "Option Agreement"). Such options (the "Option") will cover 200,000 (Two Hundred Thousand) shares of Common Stock at 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 Effective Date or, if the Nasdaq Stock Market is not open on the Effective Date, on the day next preceding the Effective Date on which the Nasdaq Stock Market is open. The Option shall vest and be exercisable as to 50,000 shares on each of the first four anniversaries of the Effective Date. Except as otherwise provided in Section 10 hereof, once such options become exercisable, they shall remain exercisable until 5:00 PM Eastern Time on the tenth (10th) anniversary of the Effective Date. Except as otherwise provided in this Agreement, the Option Agreement, a copy of which the Executive has received and reviewed, shall govern the terms of the options granted hereunder. In addition, at the discretion of the Board of Directors (or its applicable committee), the Executive shall be entitled to receive further grants of stock options, subject to the terms of the Option Plan. 3 (f) Restricted Stock Units. Upon execution of this Agreement, the Executive shall be granted 50,000 (Fifty Thousand) restricted stock units, subject to the terms of the Restricted Stock Unit Award Agreement attached hereto as Exhibit B and the 2001 Incentive Stock Plan. The restricted stock units shall vest 15,000 shares on each of the third and fourth anniversaries of the Effective Date and 20,000 shares on the fifth anniversary of the Effective Date. The Executive acknowledges that he has received and reviewed a copy of the 2001 Incentive Stock Plan. At the discretion of the Board of Directors (or its applicable committee), the Executive shall be entitled to receive additional grants of restricted stock units, subject to the terms of the 2001 Incentive Stock Plan or such other equity compensation plans that may be adopted by the Company from time to time. Nothing contained herein shall be deemed to guarantee the Executive any additional grants of options, restricted stock, restricted stock units, other equity awards or securities of the Company. (g) Vacation. The 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 $7,500 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. The Company will pay Executive's professional fees incurred to negotiate and prepare this Agreement and related agreements, in an amount not to exceed $7,500. (i) Certain Legal Expenses. In the event of any legal proceedings, including without limitation arbitration, between the Company and Executive with respect to any dispute hereunder in which Executive prevails over the Company, the Company shall pay Executive's reasonable legal fees and expenses incurred in connection with such proceedings. (j) Employee Handbook. The Company's Employee Handbook will be provided to Executive. In the event the provisions of the Employee Handbook are inconsistent with the provisions of this Agreement, the provisions of this Agreement shall control. 5. Noncompetition and Confidentiality Covenant. (a) Noncompetition. The "Noncompete Period" shall be the Term plus the one (1) year period immediately following termination of the Executive's employment with the Company irrespective of the reason for, or circumstances surrounding, such termination. In consideration for the compensation payable to the Executive pursuant to this Agreement, including without limitation the stock options and Restricted Stock Units granted to the Executive hereunder, during the Noncompete Period, the 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 specific technology or specific area of business in which the Company becomes involved to a significant degree during the Term. 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. The 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 the 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 the Executive's employment pursuant to Section 9 hereof or otherwise. In the event the 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 the Executive's compliance with the terms of this Section 5(a). 4 (b) Confidentiality. (i) The 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 (collectively, "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 a specific order of a court or governmental agency. (ii) All Confidential Information, as well as any other records, designs, patents, business plans, financial statements, manuals, memoranda, lists, research and development plans and products, and other property delivered to or compiled by the 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 Confidential Information, as well as any other 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 the Executive shall be delivered promptly to the Company without request by it upon termination of the Executive's employment. 5 (c) Nonsolicitation of Employees. During the Noncompete Period, the 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. The 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 the 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 the Executive of any such covenants or agreements. (a) Geographic Extent of the 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 the Executive under Section 5 shall apply to any geographic area in which the Company (i) has engaged in business during the period of the Executive's employment with the Company or (ii) has otherwise established during the period of the Executive's employment with the Company its goodwill, business reputation or any customer or vendor relations. (b) Limitation of Covenant. Ownership by the Executive, as a passive investment, of less than five percent (5%) 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. The 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. 6 (d) Disclosure. The 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 one year after the termination of the Executive's employment with the Company. 8. Intellectual Property and Related Matters. (a) Disclosure and Assignment. The 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 the 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"). The Executive 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 the Executive's right, title and interest in and to any and all of the Developments. At the request of the Company, the 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 three (3) years after the end of 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 the Executive. Upon request and without further compensation therefor, but at no expense to the Executive, the 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 to Developments. (d) Records. The 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, the Executive will promptly surrender same to the Company. 7 (e) Copyrightable Material. All right, title and interest in all copyrightable material that the Executive shall conceive or originate, either individually or jointly with others, and which arise out of the performance of his duties under this Agreement or otherwise as an employee of the Company, 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 the Executive, the 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 the 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 the 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. The Executive's employment pursuant to this Agreement shall terminate prior to the expiration of the Term in the event that at any time: (i) the Executive dies, (ii) the 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 the Executive's employment for "Cause" and notifies the Executive in writing of such election, (iv) The Board elects to terminate the Executive's employment without "Cause" and notifies the Executive in writing of such election, or (v) The Executive elects to terminate his employment, without Good Reason and without liability, and notifies the Board in writing of such election. If the Executive's employment is terminated pursuant to clause (i), (ii) or (iii) of this Section 9(a), such termination shall be effective immediately. If the Executive's employment is terminated pursuant to subsection (iv) of this Section 9(a), such termination shall be effective 30 days after receipt of the notice of termination, and if pursuant to subsection (v) of this Section 9(a), such termination shall be effective 15 days after receipt of such notice. (b) "Cause" Defined. "Cause" shall mean (i) the willful engaging by the Executive in illegal conduct or gross misconduct that is demonstrably and materially injurious to the Company, (ii) the Executive's willful refusal to perform his duties hereunder (other than any such failure resulting from illness or incapacity) which refusal is demonstrably and materially injurious to the Company, but only after the Executive has first received written notice of such alleged refusal, and such refusal shall have continued for fifteen (15) days after such notice without cure by the Executive, or (iii) the Executive's material breach of his obligations under this Agreement which breach is demonstrably and materially injurious to the Company, but only after the Executive has first received written notice of such alleged breach and has failed to cure such breach within fifteen (15) days after such notice; provided, however, that if the breach is not one that can be reasonably cured, then the foregoing requirement in this Clause (iii) for notice and opportunity to cure shall not apply. For purposes of this Section 9(b), no act or failure to act on the Executive's part shall be deemed "willful" unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive's action or omission was in the best interests of the Company. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause unless and until the Company delivers to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the Board (not including the Executive, if he is then on the Board) at a meeting of the Board called and held for such purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive engaged in conduct set forth above and specifying the particulars thereof in reasonable detail. 8 (c) Termination by the Executive for Good Reason. The Executive's employment pursuant to this Agreement may be terminated by the Executive prior to the expiration of the Term in the event the Executive has "Good Reason" to terminate his employment, which shall mean the following: (i) Any material adverse change in the Executive's status or position, including, without limitation, any material diminution in the Executive's position, duties, responsibilities or authority, as set forth in Executive's Position Description, or the assignment to the Executive of any duties or responsibilities that are inconsistent with the Executive's status or position as of the Effective Date; or (ii) A reduction in the Executive's annual Base Salary as the same may be increased from time to time or failure to pay same; or (iii) A reduction in the Target Bonus which could be paid to the Executive under the Bonus Plan below 50% of the Executive's Base Salary or a failure to pay when due any bonus earned for a completed performance period in accordance with the applicable bonus plan ("Earned Bonus"), provided however, that the Company's failure to actually award any bonus to the Executive, or the Company's actually awarding a bonus to the Executive which is less than the Target Bonus in each case in accordance with the applicable bonus plan, shall not constitute Good Reason; or (iv) The breach by the Company of any of its material obligations under this Agreement; or (v) The relocation of the Company's principal executive offices to a location that increases the Executive's commuting distance by more than thirty-five (35) miles or the Company requiring the Executive to be based anywhere other than the Company's principal executive offices, except for required travel substantially consistent with the Executive's business obligations; or (vi) The Company provides the Executive a notice of non-renewal of the Term under Section 2(b) hereof. 9 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 the 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, but a majority of the Outstanding Company Voting Securities is then 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). Transactions in which the Executive is part of the acquiring group do not constitute a Change of Control. 10 (e) "Disabled" Defined. As used in this Agreement, the term "disabled" means any mental or physical condition that renders the 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, the 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 or Upon the Company's Notice of Non-Renewal. In the event the Company terminates the Executive's employment as the Company's Executive Vice President and Chief Scientific Officer without Cause pursuant to Section 9(a)(iv) hereof, the Executive terminates his employment for Good Reason pursuant to Section 9(c) hereof, or the Company fails to renew the Term upon the expiration thereof under Section 2(a) or the Company provides a notice of non-renewal under Section 2 hereof, then (i) the Executive shall receive lump sum cash payment within ten (10) days after the date of termination of employment in an amount equal to one (1) year of his annual Base Salary at the time of such termination; (ii) the Executive shall receive a lump sum cash payment within ten (10) days after the date of termination of employment in an amount equal to the Target Bonus (based on the Base Salary at the time of such termination) which would have been payable in the fiscal year which commences immediately following the date of termination; (iii) if the Executive, and any spouse and/or dependents ("Family Members") has medical and dental coverage on the date of such termination under a group health plan sponsored by the Company, the Company will reimburse the Executive 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 the Executive and his Family Members for a period of up to eighteen (18) months commencing on the date of such termination; provided, that the Company shall have no obligation to reimburse the Executive for the premium cost of COBRA coverage as of the date the Executive and his Family Members become eligible to obtain comparable benefits from a subsequent employer; (iv) the Executive shall receive a lump sum cash payment within ten (10) days after the date of termination of employment in an amount equal to ("Accrued Obligations"): (1) any unpaid Base Salary through the date of termination, (2) any unpaid Earned Bonus for a performance period ending prior to the date of termination, (3) accrued and unpaid vacation and (4) incurred and unreimbursed business expenses; 11 (v) the Executive shall receive a lump sum cash payment within ten (10) days after the date of termination of employment in an amount equal to a pro rata amount of the Target Bonus (based on the Base Salary at the time of such termination) for the fiscal year during which termination occurs; (vi) all options granted to the Executive pursuant to Section 4(e) hereof that have not vested at the time of such termination shall vest immediately upon termination; (vii) all options granted to the Executive pursuant to Section 4(e) hereof that have vested or become vested at the time or as a result of such termination will remain exercisable until their expiration dates; (viii) all shares of restricted stock granted to the Executive pursuant to Section 4(f) hereof that have not vested at the time of such termination shall vest immediately upon such termination; and (ix) the 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 the Executive's termination. (b) Termination For Cause. In the event the Company terminates the Executive's employment as the Company's Executive Vice President and Chief Scientific Officer for Cause pursuant to Section 9(a)(iii) hereof, (i) the Executive shall be entitled to receive payment of his Accrued Obligations, (ii) the Executive shall continue to be entitled to any deferred compensation and other unpaid amounts and benefits earned and vested prior to the Executive's termination, (iii) all options to acquire shares in the Company held by the Executive which have vested prior to the date of the Executive's termination of employment shall remain exercisable after such termination in accordance with the terms of the relevant plans and granting instruments, (iv) all options granted to the Executive that have not vested prior to the date of the Executive's termination of employment will terminate as of the date of such termination and will be of no further force and effect; and (v) all shares of restricted stock awarded to the Executive that have not vested prior to the date of the Executive's termination of employment shall be forfeited. (c) Death. In the event the Executive's employment with the Company is terminated as a result of the Executive's death, (i) the Executive's estate or the Executive's duly designated beneficiaries shall be entitled to payment of his Accrued Obligations; (ii) the Executive's estate or the 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) all options to acquire shares in the Company held by the Executive which have not vested at the time of the Executive's death will continue to vest in accordance with their terms and shall remain exercisable (together with any options which had previously vested), until the earlier of (A) one year from the date of death and (B) the end of the remaining exercise term of such options; (iv) all shares of restricted stock awarded to the Executive shall fully vest; and (v) the Executive's estate or the 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 the Executive's death. If the 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 Members for the total applicable premium cost for medical and dental coverage under COBRA for such Family Members for a period of up to twenty-four (24) 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. 12 (d) Disability. Upon termination of the Executive's employment as the Company's Executive Vice President and Chief Scientific Officer on account of the Executive's disability pursuant to Section 9(a)(ii) hereof, (i) the Executive shall be entitled to payment of his Base Salary through the commencement of long term disability payments to the Executive under any plan provided or paid for by the Company and other Accrued Obligations, (ii) the 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) the Executive shall be entitled to all compensation and benefits to which the Executive is entitled pursuant to the Company's disability policies in effect as of the date of the Executive's termination, (iv) all options to acquire shares of the Company held by the Executive which have not vested at the date of termination of employment will continue to vest in accordance with their terms, and shall remain exercisable (together with any options which had previously vested), until the earlier of (A) one year from the date of such termination of the Executive's employment and (B) the end of the remaining exercise term of such options, (v) all shares of restricted stock awarded to the Executive shall fully vest; and (vi) the Executive shall continue to be entitled to any deferred compensation and other unpaid amounts and benefits earned and vested prior to the Executive's termination. If the 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 the Executive for the total applicable premium cost for medical and dental coverage under COBRA for the 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 the 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 Without Good Reason or upon the Executive's Notice of Non-Renewal. In the event the Executive voluntarily terminates his employment with the Company without Good Reason, or the Executive's employment terminates following the Executive having provided the Company with a notice of non-renewal of the Term under Section 2 hereof, (i) the Executive shall be entitled to receive payment of his Accrued Obligations, (ii) the Executive shall continue to be entitled to any deferred compensation and other unpaid amounts and benefits earned and vested prior to the Executive's termination, (iii) all options to acquire shares of the Company held by the Executive which have vested prior to the date of such termination shall remain exercisable after such termination in accordance with the terms of the relevant plans and granting instruments, (iv) all options to acquire shares of the Company held by the Executive which have not vested prior to the date of such termination will terminate as of the date of such termination and will be of no further force and effect, and (v) all shares of restricted stock awarded to the Executive that have not vested prior to the date of the Executive's termination of employment shall be forfeited. 13 (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 Executive Vice President and Chief Scientific 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 one (1) year following a Change in Control, in lieu of the provisions of Section 10(a) or 10(e) above, (i) Executive shall receive a lump sum cash payment within ten (10) days after the date of termination of employment in an amount equal to his Accrued Obligations plus an amount equal to the pro rated portion of the Target Bonus (based on the Base Salary at the time of such termination) which would have been payable to Executive for the fiscal year during which such termination occurs; (ii) Executive shall receive a lump sum cash payment within ten (10) days after the date of termination in an amount equal to two (2) times the sum of the following: (1) his Base Salary at the time of such termination and (2) the Target Bonus (based on the Base Salary at the time of such termination) for the fiscal year in which such termination occurs; (iii) 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 and will continue to pay Executive an amount equal to such COBRA reimbursement during the six (6) month period following such initial eighteen (18) month period after such termination; provided, that the Company shall have no obligation to reimburse Executive for the premium cost of COBRA coverage as of the date Executive and his Family Members become eligible to obtain comparable benefits from a subsequent employer; (iv) Executive shall continue to be entitled to any deferred compensation and other unpaid amounts and benefits earned and vested prior to Executive's termination. (g) Except as otherwise specifically provided under Section 10, all payments made to the Executive under any of the subsections of this Section 10 that are based upon the Executive's salary or bonus shall be made at times and in a manner that is in accordance with the Company's standard payroll practices for senior management. (h) Notwithstanding anything else herein to the contrary, the Executive shall not be entitled to realize or receive any termination related benefits provided for in this Section 10, including, without limitation, all post-termination payments and the acceleration of option or restricted stock or restricted stock unit vesting schedules unless the Executive shall have executed and delivered to the Company a full release (reasonably satisfactory to the Company's counsel) of all claims against the Company and its affiliates, successors and assigns. (i) Nothing in this Agreement or in any other plan, award or agreement of the Company applicable to the Executive shall result in the reduction or limitation of (i) any payments under Section 10(f) and/or (ii) the accelerated vesting of options to acquire common stock and/or (iii) shares of restricted stock and/or restricted stock units under Section 11 or (iv) any other payments or benefits (the "Total Payments") that may be deemed to be contingent upon a change in ownership or control pursuant to Section 280G of the Internal Revenue Code ("Code"), regardless of whether the Total Payments would be subject to the excise tax imposed by Section 4999 of the Code. If the Executive does become liable for any excise tax under Section 4999 of the Code, such liability shall not entitle the Executive to any additional payments from the Company to reimburse the Executive for such tax liability. The Company shall be entitled to withhold from payments due to the Executive an amount equal to the actual amount of any excise tax under Section 4999 of the Code to which the Executive is subject, as determined by the Company's independent auditors. 14 (j) If and when during the Term, the Company shall adopt (or amend) a severance plan generally applicable to its executive officers (other than the Chief Executive Officer), which provides for payments and benefits upon certain events of termination of employment in connection with a change in control of the Company at levels that are greater than those provided herein under Section 10(f) or 10(i) (or provide in connection with a change in control of the Company, for lump sum or otherwise more accelerated payments than those provided for under Section 10(f)), then promptly following adoption (or amendment) of such a plan, the Company and Executive agree to negotiate in good faith an amendment to the provisions of Sections 10(f) or 10(i) to provide Executive with comparable payments and benefits upon certain events of termination or otherwise in connection with a change of control of the Company to those provided to other senior executive officers covered by such plan with the same line of reporting to the Chief Executive Officer as Executive. Notwithstanding the foregoing, it is understood that the Company may enter into individual contractual arrangements with other executives for benefits, and nothing herein shall require the Company to provide the same benefits or level of benefits to the Executive. 11. Effect of Change of Control. In the event of a Change of Control, in addition to any other consequences provided for in this Agreement: (a) all shares of restricted stock and restricted stock units awarded to the Executive shall fully vest immediately prior to the Change of Control; and (b) all options to acquire shares of common stock of the Company held by the Executive shall become fully vested immediately prior to the effective date of the Change of Control. The Executive shall have a reasonable opportunity to exercise all or any portion of such options prior to the effective date of the Change of Control, and any options not exercised prior to the effective date of the Change of Control shall terminate as of the effective date of the Change of Control and will be of no further force or effect. To the extent that this Section 11 is inconsistent with the provisions of the relevant plan and granting instruments under which such options were issued, the Company and the Executive agree that such inconsistent provisions are hereby superceded and the provisions of this Section 11 shall govern. 12. 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. 15 (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 the Executive shall constitute a waiver of any other right or breach by the 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: Ivan D. Horak, M.D. 685 ROUTE 202/206 BRIDGEWATER, NJ 08807 16 Address for the Company: Enzon Pharmaceuticals, Inc. 685 Route 202/206 Bridgewater, New Jersey 08807 Attn: EVP of Human Resources 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) 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. (l) 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. (m) Survival. The provisions of Section 4(c), 4(i) and Section 10 shall survive the termination of the Executive's employment and the termination of the Agreement. (m) Counterparts. This agreement may be executed in separate counterparts, all of which taken together shall constitute one and the same agreement. Signatures on following page 17 IN WITNESS WHEREOF, the parties hereto have executed, or caused to be executed by a duly authorized representative, this Employment Agreement as of the Effective Date. ENZON PHARMACEUTICALS, INC. By: /s/ Jeffrey H. Buchalter ----------------------------------------------------------- Name: Jeffrey H. Buchalter Title: Chairman & Chief Executive Officer /s/ Ivan D. Horak, M.D. ----------------------------------------------------------- IVAN D. HORAK, M.D. 18 Exhibit A ENZON PHARMACEUTICALS, INC. NON-QUALIFIED STOCK OPTION CERTIFICATE & AGREEMENT Grant Date: Certificate No.:
------------------------------------------------------------------------------------------------- SUMMARY GRANT INFORMATION --------------------------------------------- --------------------------------------------------- EMPLOYEE: --------------------------------------------- --------------------------------------------------- NUMBER OF SHARES: --------------------------------------------- --------------------------------------------------- EXERCISE PRICE: --------------------------------------------- --------------------------------------------------- 1987 Non-Qualified Stock Option Plan, as amended PLAN: (the "Plan") --------------------------------------------- --------------------------------------------------- OPTION ___________________ (subject to earlier TERMINATION DATE: termination, as set forth in the Plan) --------------------------------------------- --------------------------------------------------- ------------------------------------------------------------------------------------------------- VESTING INFORMATION --------------------------------------------- --------------------------------------------------- Number of Shares at to which the Option Becomes Date Exercisable --------------------------------------------- --------------------------------------------------- --------------------------------------------- --------------------------------------------------- --------------------------------------------- --------------------------------------------------- --------------------------------------------- --------------------------------------------------- --------------------------------------------- ---------------------------------------------------
In accordance with the terms and conditions of the Plan and the mutual promises and undertakings contained in the attached pages, intending to be legally bound, the parties hereto agree to the provisions set forth in the Option Terms attached hereto. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date set forth above. ENZON PHARMACEUTICALS, INC. EMPLOYEE By:/s/ Paul Davit /s/ Ivan D. Horak, M.D. ------------------------------------------- ---------------------------- Paul Davit Signature Executive Vice President, Human Resources 9/2/05 ---------------------------- Date 1987 Non-Qualified Stock Option Plan Option Terms 1. Grant of Option. The Company hereby grants Employee the right and option (the "Option") to purchase all or any part of an aggregate of the number of shares of the Company's common stock, par value $0.01 per share (the "Common Stock") set forth above, at the price per share set forth above (the "Exercise Price") on the terms and conditions set forth in this Agreement and in the Plan. It is understood and agreed that the Exercise Price is the per share Fair Market Value (as defined in the Plan) of such shares on the date of this Agreement. The Option is not intended to be an Incentive Stock Option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). The Option is issued pursuant to the Plan and is subject to its terms. A copy of the Plan has been furnished to Employee. Employee hereby confirms he/she has received and thoroughly read the Plan. The Company invites and encourages Employee to contact any member of the Company's Human Resources Department with any questions he/she may have regarding the Plan or this Agreement. 2. Expiration. The Option shall terminate at the close of business on the termination date set forth above or earlier as is prescribed in the Plan. Employee shall not have any of the rights of a stockholder with respect to the shares subject to the Option until such shares shall be issued to Employee upon the proper exercise of the Option. 3. Vesting of Option Rights. Except as otherwise provided in the Plan, the Option shall become exercisable in portions in accordance with the schedule set forth above, provided the Employee is employed by the Company on the vesting date in question. 4. Exercise of Option after Termination of Employment. Except as otherwise set forth in the Plan, the Option shall terminate and may no longer be exercised if Employee ceases to be employed by the Company or its subsidiaries. 5. Transfer and Assignment. This Option may not be transferred except in accordance with the terms of the Plan. The terms of this Option shall be binding upon the executors, administrators, heirs, successors, and assigns of the Employee. 6. Method of Exercise of Option. The Option may be exercised in whole or in part from time to time by Employee or other proper party in accordance with the terms of the Plan by serving written notice of exercise on the Company at its principal office within the period during which the Option is exercisable as provided in this Agreement. The notice shall state the number of shares as to which the Option is being exercised and shall be accompanied by payment in full of the Exercise Price for all shares designated in the notice. Payment of the Exercise Price shall be made in cash (including bank check, personal check or money order payable to the Company), or otherwise in accordance with the Plan. This Option shall be exercised only for 100 shares of Common Stock or a multiple thereof or for the full number of shares for which the Option is then exercisable. 7. Forfeiture of Option and Option Gain Resulting From Certain Activities. 2 of 4 (a) IF, AT ANY TIME THAT (I) IS WITHIN TWO (2) YEARS AFTER THE DATE THAT EMPLOYEE HAS EXERCISED THE OPTION OR (II) IS WITHIN TWO (2) YEARS AFTER THE DATE OF THE TERMINATION OF EMPLOYEE'S EMPLOYMENT WITH THE COMPANY FOR ANY REASON WHATSOEVER WHILE AN OPTION AGREEMENT UNDER THE PLAN IS IN EFFECT, WHICHEVER IS LONGER, EMPLOYEE ENGAGES IN ANY FORFEITURE ACTIVITY (AS DEFINED BELOW) THEN (I) THE OPTION SHALL IMMEDIATELY TERMINATE EFFECTIVE AS OF THE DATE ANY SUCH ACTIVITY FIRST OCCURRED, AND (II) ANY GAIN RECEIVED BY EMPLOYEE PURSUANT TO THE EXERCISE OF THE OPTION GRANTED HEREUNDER MUST BE PAID TO THE COMPANY WITHIN 30 DAYS OF DEMAND BY THE COMPANY. FOR PURPOSES HEREOF, THE GAIN ON ANY EXERCISE OF THE OPTION SHALL BE DETERMINED BY MULTIPLYING THE NUMBER OF SHARES PURCHASED PURSUANT TO THE OPTION TIMES THE EXCESS OF THE FAIR MARKET VALUE OF A SHARE OF THE COMPANY'S COMMON STOCK ON THE DATE OF EXERCISE (WITHOUT REGARD TO ANY SUBSEQUENT INCREASE OR DECREASE IN THE FAIR MARKET VALUE) OVER THE EXERCISE PRICE. (b) AS USED HEREIN, EMPLOYEE SHALL BE DEEMED TO HAVE ENGAGED IN A FORFEITURE ACTIVITY IF EMPLOYEE (I) BREACHES ANY NON-COMPETE OR NON-DISCLOSURE AGREEMENT BETWEEN THE COMPANY AND THE EMPLOYEE OR (II) FAILS TO HOLD IN A FIDUCIARY CAPACITY FOR THE BENEFIT OF THE COMPANY ALL CONFIDENTIAL, PROPRIETARY OR TRADE SECRET INFORMATION, KNOWLEDGE AND DATA, INCLUDING RESEARCH AND DEVELOPMENT INFORMATION, FINANCIAL INFORMATION, SALES OR MARKETING INFORMATION, TECHNICAL INFORMATION CUSTOMER LISTS AND INFORMATION, BUSINESS PLANS AND BUSINESS STRATEGY ("CONFIDENTIAL DATA") RELATING IN ANY WAY TO THE BUSINESS OF THE COMPANY FOR SO LONG AS SUCH CONFIDENTIAL DATA REMAINS CONFIDENTIAL. (c) IF ANY COURT OF COMPETENT JURISDICTION SHALL DETERMINE THAT THE FOREGOING FORFEITURE PROVISION IS INVALID IN ANY RESPECT, THE COURT SO HOLDING MAY LIMIT SUCH COVENANT EITHER OR BOTH IN TIME, IN AREA OR IN ANY OTHER MANNER WHICH THE COURT DETERMINES SUCH THAT THE COVENANT SHALL BE ENFORCEABLE AGAINST EMPLOYEE. EMPLOYEE ACKNOWLEDGES THAT THE REMEDY OF LAW FOR ANY BREACH OF THE COVENANT NOT TO COMPETE REFERENCED ABOVE WILL BE INADEQUATE TO PROTECT THE COMPANY'S INTERESTS AND COMPENSATE FOR THE HARM FLOWING FROM SUCH BREACH, AND THAT THE COMPANY SHALL BE ENTITLED, IN ADDITION TO ANY REMEDY OF LAW, TO PRELIMINARY AND PERMANENT INJUNCTIVE RELIEF. 8. Miscellaneous. (a) In the event that any provision of this Agreement conflicts with or is inconsistent in any respect with the terms of the Plan, the terms of the Plan shall control. (b) Neither the Plan nor this Agreement shall (i) be deemed to give any individual a right to remain an employee of the Company, (ii) restrict the right of the Company to discharge any employee, with or without cause, or (iii) be deemed to be a written contract of employment. (c) The exercise of all or any parts of the Option shall only be effective at such time that the sale of shares of Common Stock pursuant to such exercise will not violate any state or federal securities or other laws. This Option may not be exercised if the issuance of shares of Common Stock of the Company upon such exercise would constitute a violation of any applicable Federal or state securities or other law or valid regulation. The Employee, as a condition to his or her exercise of this Option, shall represent to the Company that the shares of Common Stock of the Company that he or she acquires under this Option are being acquired by him or her for investment and not with a view to distribution or resale, unless counsel for the Company is then of the opinion that such a representation is not required under the Securities Act of 1933, as amended (the "Act") or any other applicable law, regulation, or rule of any governmental agency and shall, if the shares of Common Stock underlying this Option are not registered under the Act, acknowledge that the certificate evidencing such shares may be stamped with a restrictive legend and such shares will be "restricted securities" as defined in Rule 144 promulgated under the Act. 3 of 4 (d) The Company shall at all times during the term of the Option reserve and keep available such number of shares of the Company's Common Stock as will be sufficient to satisfy the requirements of this agreement. (e) In order to provide the Company with the opportunity to claim the benefit of any income tax deduction which may be available to it upon the exercise of the Option and in order to comply with all applicable federal or state income tax laws or regulations, the Company may take such action as it deems appropriate to insure that, if necessary, all applicable federal or state payroll, withholding, income or other taxes are withheld or collected from Employee. (f) The Company, in its sole and absolute discretion, may allow Employee to satisfy Employee's federal and state income tax withholding obligations upon exercise of the Option by (i) having the Company withhold a portion of the shares of Common Stock otherwise to be delivered upon exercise of the Option having a Fair Market Value equal to the amount of federal and state income tax required to be withheld upon such exercise, in accordance with such rules as the Company may from time to time establish, or (ii) delivering to the Company shares of its Common Stock other than the shares issuable upon exercise of the Option with a Fair Market Value equal to such taxes, in accordance with such rules. 4 of 4 Exhibit B RESTRICTED STOCK UNIT AWARD AGREEMENT THIS AGREEMENT, dated as of September 2, 2005, is between Enzon Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and Ivan D. Horak, M.D., an individual resident of the State of New Jersey ("Employee"). RECITALS A. The Company wishes to grant to Employee, effective as of the date of this Agreement, an award of restricted stock units of the Company's common stock, par value $.01 per share (the "Common Stock"), on the terms and subject to the conditions set forth in this Agreement and the Company's 2001 Incentive Stock Plan, as a amended on November 12, 2003 and December 2, 2003. B. Employee desires to accept such grant. NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto hereby agree as follows: 1. Definitions. As used in this Agreement, the following terms have the meanings set forth below: "Acquiring Person" shall mean any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) who or which, together with all Affiliates and Associates of such person, is the "beneficial owner" (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing 35% or more of the combined voting power of the Company's then outstanding securities, but shall not include the Company, or any subsidiary of the Company. "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act. "Award" has the meaning ascribed to such term in Section 2 hereof. "Board" means the Board of Directors of the Company. A "Change in Control" shall mean: (a) the public announcement (which, for purposes of this definition, shall include, without limitation, a report filed pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") that any person, entity or "group", within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, other than the Company or any of its subsidiaries, has become the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of the combined voting power of the Company's then outstanding voting securities in a transaction or series of transactions; or (b) the "Continuing Directors" (as defined below) cease to constitute a majority of the Company's Board of Directors; or (c) the shareholders of the Company approve: (i) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation; or (ii) any consolidation or merger 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 then outstanding voting securities of the Company (the "Outstanding Company Voting Securities") is owned by a Person or Persons (as defined in Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) who were not "beneficial owners" of a majority of the Outstanding Company Voting Securities immediately prior to such merger or consolidation; other than a merger of the Company in which shareholders of the Company immediately prior to the merger have the same proportionate ownership of stock of the surviving corporation immediately after the merger; or (d) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company; or (e) any plan of liquidation or dissolution of the Company; or (f) the majority of the Continuing Directors determine in their sole and absolute discretion that there has been a change in control of the Company. "Code" means the Internal Revenue Code of 1986, as amended. "Common Stock" has the meaning specified in Recital A hereof. "Person" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. "Continuing Director" shall mean any person who is a member of the Board of Directors of the Company, who, while such a person is a member of the Board of Directors, is not an Acquiring Person (as hereinafter defined) or an Affiliate or Associate (as hereinafter defined) of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, and who (A) was a member of the Board of Directors on the date of this Agreement or (B) subsequently becomes a member of the Board of Directors, if such person's initial nomination for election or initial election to the Board of Directors is recommended or approved by a majority of the Continuing Directors. "Plan" means the Company's 2001 Stock Incentive Plan, as amended from time to time. 2 "Restricted Stock Units" means the right to receive Vested Shares upon their vesting in accordance with Section 3 below. "Shares" means, collectively, the shares of Common Stock subject to the Award, whether or not such shares are Vested Shares. "Vested Shares" means the Shares with respect to which the Restricted Stock Units have vested at any particular time. 2. Award. The Company, effective as of the date of this Agreement, hereby grants to Employee _______________ Restricted Stock Units (the "Award") representing the right to receive ____________ Vested Shares, subject to the terms and conditions set forth herein and in the Plan. 3. Vesting. (a) Subject to the terms and conditions of this Agreement, the Restricted Stock Units awarded hereunder to Employee shall vest and become the right to receive Vested Shares in accordance with the following schedule: On Each of the Percentage or Number of Following Dates Shares that Vest --------------------------------- ------------------------------- ________ __, 200_ __% ________ __, 200_ __% ________ __, 200_ __% ________ __, 200_ __% (b) Notwithstanding the vesting provisions contained in Section 3(a) above, but subject to the other terms and conditions set forth herein, if Employee has been continuously employed by the Company until the date of a Change In Control of the Company, all of the Restricted Stock Units shall immediately vest on the date of such Change In Control. (c) In the event of the disability (within the meaning of Section 22(e)(3) of the Code) or death of Employee, if Employee has been continuously employed by the Company until the date of such disability or death, Employee or his estate shall become immediately vested, as of the date of such disability or death, in all of the Restricted Stock Units subject to the Award. (d) Except as provided in Section 3(c) and any effective employment agreements that Employee might have with the Company, if Employee ceases to be an employee for any reason prior to the vesting of the Restricted Stock Units pursuant to Sections 3(a) or 3(b) hereof, Employee's rights to all of the Restricted Stock Units (and the Shares subject to the Award) not vested on the date that Employee ceases to be an employee shall be immediately and irrevocably forfeited and the Employee will retain no rights with respect to the forfeited units. 3 4. Additional Restriction on Transfer of Restricted Stock Units. The Restricted Stock Units cannot be sold, assigned, transferred, gifted, pledged, hypothecated, or in any manner encumbered or disposed of at any time prior to delivery of the Shares underlying the Restricted Stock Units after the Restricted Stock Units have vested pursuant to Section 3 above. 5. Issuance and Custody of Certificate; Representations of Employee. (a) Subject to the restrictions in this Section 5, upon vesting of the Restricted Stock Units and following payment of any applicable withholding taxes pursuant to section 8 of this Agreement, the Company shall promptly cause to be issued and delivered to Employee a certificate or certificates evidencing such Vested Shares, free of any restrictive legends and registered in the name of Employee or in the name of Employee's legal representatives, beneficiaries or heirs, as the case may be, and shall cause such certificate or certificates to be delivered to Employee or Employee's legal representatives, beneficiaries or heirs. (b) The issuance of any Common Stock in accordance with this Award shall only be effective at such time that the sale or issuance of Common Stock pursuant to this Agreement will not violate any state or federal securities or other laws. (c) At any time after the vesting of the Restricted Stock Units and prior to the issuance of the Vested Shares, if the issuance of the Vested Shares to the Employee is prohibited due to limitations under this Section 5, the Company shall use its reasonable best efforts to remove such limitations, unless such limitations relate solely to Employee's personal situation. If such limitations relate solely to Employee's personal situation, the Company will use its reasonable best efforts to cooperate with the Employee in resolving such limitation. 6. Rights as Shareholder. Prior to the Restricted Stock Units vesting and Employee receiving his shares of Common Stock underlying the Restricted Stock Units pursuant to Section 5 above, Employee shall not have ownership or rights of ownership of any Common Stock underlying the Restricted Stock Units awarded hereunder. Employee shall not be entitled to receive dividend equivalents on the Restricted Stock Units awarded. 7. Distributions and Adjustments. In accordance with Section 4(C) of the Plan, the Award shall be subject to adjustment in the event that any distribution, recapitalization, reorganization, merger or other event covered by Section 4(C) of the Plan shall occur. 8. Taxes. In order to provide the Company with the opportunity to claim the benefit of any income tax deduction which may be available to it in connection with this restricted stock unit award, and in order to comply with all applicable federal or state tax laws or regulations, the Company may take such action as it deems appropriate to insure that, if necessary, all applicable federal or state income and social security taxes are withheld or collected from Employee. 9. Employee's Employment. Nothing in this Agreement shall confer upon Employee any right to continue in the employ of the Company or any of its subsidiaries or interfere with the right of the Company or its subsidiaries, as the case may be, to terminate Employee's employment or to increase or decrease Employee's compensation at any time. 4 10. Notices. All notices, claims, certificates, requests, demands, and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally recognized overnight courier, by facsimile or by registered or certified mail, return receipt requested and postage prepaid, addressed as follows: (a) If to the Company, to it at: Enzon Pharmaceuticals, Inc. 685 Route 202/206 Bridgewater, New Jersey 08807 Attn: General Counsel (b) If to Employee, to him at such Employee's address as most recently supplied to the Company and set forth in the Company's records; or (c) to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith. Any such notice or communication shall be deemed to have been received (i) in the case of personal delivery, on the date of such delivery (or if such date is not a business day, on the next business day), (ii) in the case of nationally-recognized overnight courier, on the next business day after the date sent, (iii) in the case of facsimile transmission, when received (or if not sent on a business day, on the next business day after the date sent), and (iv) in the case of mailing, on the third business day following the date on which the piece of mail containing such communication is posted. 11. Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement must be in writing and shall not operate or be construed as a waiver of any other or subsequent breach. 12. Undertaking. Both parties hereby agree to take whatever additional actions and execute whatever additional documents either party may in their reasonable judgment deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on the other party under the provisions of this Agreement. 13. Plan Provisions Control. The Award is made subject to the terms and provisions of the Plan. In the event that any provision of the Agreement conflicts with or is inconsistent in any respect with the terms of the Plan, the terms of the Plan shall control. 14. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware (without giving effect to principles of conflicts of laws). 15. Counterparts. This Agreement may be executed in one or more counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts together shall constitute but one agreement. 5 16. Entire Agreement. This Agreement (and the other writings incorporated by reference herein, including the Plan) constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior or contemporaneous written or oral negotiations, commitments, representations, and agreements with respect thereto. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the day and year first above written. ENZON PHARMACEUTICALS, INC. By: /s/ Paul Davit ------------------------------- Name: Paul Davit Title: Executive Vice President, Human Resources EMPLOYEE /s/ Ivan D. Horak, M.D. ------------------------------- Name: Ivan D. Horak, M.D. 6 [ENZON LOGO] Exhibit C POSITION DESCRIPTION TITLE: EXECUTIVE VICE PRESIDENT & CHIEF SCIENTIFIC OFFICER REPORTS TO: CHAIRMAN & CEO DEPARTMENT: RESEARCH & DEVELOPMENT LOCATION: PISCATAWAY, NJ ================================================================================ POSITION OVERVIEW: The Executive Vice President & Chief Scientific Officer ("CSO") has the key responsibility for the conversion of scientific knowledge, technology platform research or partnering opportunities into commercially attractive and proprietary products and fuel the growth of Enzon in the marketplace, in a sustainable fashion, with the resources available. The CSO will seek to optimize the overall effectiveness and efficiency of the R&D organization in order to achieve these goals. The CSO is critically involved in assembling, maintaining and growing top talent, and provides an environment in which individuals with diverse backgrounds and expertise are challenged and excel to a high level of performance. He will also seek to minimize organizational disconnects, e.g., at interfaces to Technical Operations or Marketing. As an Executive Officer the CSO is a key member of corporate management and contributes to all aspects of business success, including superior growth, superior financial performance, shareholder value creation and sustainability of the business. ================================================================================ MAJOR POSITION ACTIVITIES & RESPONSIBILITIES: o Defining the R&D strategy and overseeing its implementation o Defining the technologies, in-house activities and collaborations that provide the basis for successful discoveries o Securing, expanding and defending intellectual property o Building, advancing and maintaining a high value, proprietary pipeline of projects according to the strategic output goal, and contribute to licensing/partnering activities o Directing the resources to the most promising projects and maximizing R&D productivity based on metrics o Building, leading and maintaining an organization and senior team that is capable of implementing the R&D strategy o Full responsibility for R&D budget, including all staffing o Foster a culture (as defined in the R&D strategy) consistent with the overall corporate culture that is driven by People who are Passionate about what they do, strive for their Performance to exceed expectations, take Pride in a job well done, and firmly believe that Promises that are made must be delivered. ================================================================================ BACKGROUND QUALIFICATIONS: o MD and/or PhD o Solid experience and proven track record in leading an integrated pharmaceutical R&D effort on a significant scale (>$30M budget) o Ability to lead in networked structures such as CRO relations or partnerships/alliances o Proven track record of achievement in successfully discovering and developing commercially attractive projects through all stages of development to launch o Thorough familiarity with therapeutic fields of interest to Enzon (now and/or in the future) o Thorough familiarity with and a network within the medical, scientific and regulatory communities, preferably on a global scale o Proven ability to work successfully in a culturally diverse environment 1