The opinion of the court was delivered by: DuBOIS, J.
This is a bankruptcy appeal. Debtor-in-possession TenX Biopharma, Inc. ("TenX") appeals from a decision of the United States Bankruptcy Court for the Eastern District of Pennsylvania allowing the severance claim of TenX's former Chief Operating Officer ("COO"), Chia Chia Sun. TenX contends that the Bankruptcy Court interpreted Sun's employment agreement erroneously. For the following reasons, the Court affirms the ruling of the Bankruptcy Court.
TenX is a pharmaceutical company that developed zanolimumab, "an investigational, late-stage monoclonal antibody cancer therapy targeting T-cell lymphomas." (TenX BioPharma grants Emergent BioSolutions rights to zanolimumab, News-Medical (June 6, 2011), http://www.news-medical.net/news/20110606/TenX-BioPharma-grants-Emergent-BioSolutions-rights-to-zanolimumab.aspx (last accessed August 10, 2012).) TenX hired Sun as its Chief Corporate Officer ("CCO") on February 1, 2010, although her title later changed to COO. (Feb. 21, 2012, Hr'g Tr. ("2/21/12 Tr."), TenX Br. App. ("App.") Ex. D, at 25--26.) When she was hired, Sun executed an employment agreement ("Agreement") dated February 1, 2010.*fn1
(Agreement, App. Ex. C.) The Agreement was for a one-year term to end on February 1, 2011, with a possible extension if Sun and TenX agreed. (Agreement ¶¶ 3--4.) Sun was to receive an annual salary of $250,000 to be paid monthly. (Id. ¶ 5.) The Agreement remained in effect notwithstanding Sun's change in title from CCO to COO. (2/21/12 Tr. 28.)
A. The Employment Agreement
The Agreement is governed by Delaware law. (Agreement ¶ 12.) The issue in this appeal involves paragraph six of the Agreement, which is titled "Termination of Employment." The prefatory clause to that paragraph states, in relevant part, that "Employee's employment shall be terminated and Employee shall have a Separation from Service upon the occurrence of any one or more of the following events." (Id. ¶ 6.) Paragraph six contains five subsections titled as follows: Termination Without Cause, Resignation by Employee, Termination for Cause, Termination Upon Death, and Termination Upon Disability. This appeal implicates the subsections for Termination Without Cause and Resignation by Employee.
The Termination Without Cause subsection states, in relevant part:
(a) Termination Without Cause. Company's provision of written notice terminating employment hereunder without cause for any lawful reason or for no reason. Upon such Termination of Employment, Employee shall have a Separation from Service on the date of Company's provision of such written notice and Company's sole obligation shall be:
(i) to continue paying Employee, at a rate equal to Employee's Salary at the time of termination and at the same time and in the same manner as Employee would have received such Salary if termination had not taken place, for a period of one (1) year, provided if the Employee accepts full time employment subsequent to such termination the period will end upon such acceptance, provided in any event such period will not be reduced to less than six (6) months. . . .
Provided, however, that (A) Company shall not be obligated to make any payment under this Paragraph 6(a) until Employee shall have delivered to Company a release of all claims in form and substance reasonably satisfactory to Company and the release shall have become effective and irrevocable under all applicable laws (hereinafter the "Release") and (B) provided further that with respect to each payment under this Paragraph 6(a), Employee shall forfeit such payment, and Company shall have no obligation to make such payment to Employee, even if such Release is thereafter delivered by Employee to Company, if Employee shall fail to deliver the Release to Company on or before the last day of the taxable year of Employee in which Company would have been obligated to make such payment to Employee under this Paragraph 6(a) if Employee had delivered such release to Company during such taxable year.
The Resignation by Employee subsection states, in relevant part:
Employee's employment shall be terminated and Employee shall have a Separation from Service on the 30th day following Employee's provision of written notification to Company of Employee's intention to resign employment for any lawful reason or for no reason. Upon any such termination pursuant to this Paragraph 6(b), Company shall have no further obligations to Employee (including severance or otherwise) hereunder except to pay Employee's regular salary and benefits up to the date of termination. Notwithstanding the foregoing, Company may, in its sole discretion, make such resignation effective earlier than any notice date and in such event Company shall have no further obligations to Employee (including severance or otherwise) hereunder except (i) to pay Employee's regular salary and benefits up to any such earlier effective date of termination and Separation from Service, and (ii) to pay Employee's then current Salary at the time of such termination and Separation from Service, at the same time and in the same manner as Employee would have received such Salary if such termination had not taken place, for any period of time from any such earlier effective date up to the date on which such termination and Separation from Service would have taken place if Company had not exercised its sole discretion hereunder to make such resignation effective earlier than any notice date. (Id. ¶ 6(b).)
The Agreement further states that it "may be modified only by written agreement signed by Employee and Company." (Id. ¶ 14.)
B. The Events of August 2010
On August 9, 2010, Sun and six other TenX employees sent a letter with the subject heading "Collective Notice of Resignation" to TenX's Interim Chief Executive Officer, Moishe Bodner; TenX's President, Asher Nathan; and TenX's Chief Financial Officer, Robert Harrow. (Resignation Letter, App. Ex. E, at 1.) In the Resignation Letter, the employees stated, "Please be advised that the undersigned TenX management is, per employment agreement, submitting a two-week notification of their intent to resign from [TenX]." (Id.) The employees wrote that they believed that TenX "lack[ed] a clear comprehensive financial and business plan to move forward . . . as well as a viable strategy to bring zanolimumab to market and the patients who need it." (Id.) The employees advised TenX that, "[d]uring the two-week 'notification' period," they would "notify investigators and the necessary regulatory authorities of [their] intent to protect patients in the study and to maintain control of the drug supply" and "notify advisors, contracted vendors, and other necessary business contacts of [their] decision to leave TenX." (Id.) The Resignation Letter also stated: "Please be aware that we are willing to collectively rescind our intent to resign should a viable and immediate business solution [sic] that addresses, directly, our reasons to resign." (Id.)
TenX personnel exchanged a number of e-mails around the date of the Resignation Letter. Sun sent an e-mail-to whom is unclear-on August 10, 2010, at 8:50 p.m., stating, "We'll schedule a call at 1 pm tomorrow . . . to discuss the shut down process." (E-mail from Sun dated Aug. 10, 2010, App. Ex. G.) Sun's e-mail further listed tasks for the "shut down process" such as "Notify FDA that all activities are stopped." (Id.) On August 10, 2010, at 9:13 p.m., Bodner sent an e-mail to Sun that was copied to a number of other individuals, including all of the signatories to the Resignation Letter. (E-mail from Bodner to Sun dated Aug. 10, 2010, App. Ex. G.) In the e-mail, Bodner asked the recipients to "take note that all drugs and data are the property of TenX" and stated, inter alia, that "Noone [sic] has any authority to do anything [Sun] mentions in her e-mail and all actions needed as well as notifications will be taken by the Company as decided by it's [sic] Board of Directors." (Id.)
Bodner sent an e-mail to Sun and "Jim"-presumably, Jim Meyer-on August 11, 2010 ("Bodner E-mail"). The Bodner E-mail stated, in its entirety:
Chia Chia and Jim, You are both terminated effective immediately. From now do not represent yourselves as having anything to do with TenX. Any such representation will be considered fraudulent and the Company will pursue all legal remedies.
P.S. TenX will be investigating the compassionate use sale to Germany as well as the ...