EXHIBIT 10.24
MANAGEMENT AGREEMENT
This Management Agreement (this "Agreement"), dated as of December 13,
2001, is entered into between Kos Pharmaceuticals, Inc., a Florida corporation
(the "Company"), and Xxxxxx X. Xxxx (the "Executive").
RECITALS
A. Executive is currently employed by the Company as President
and Chief Executive Officer of the Company pursuant to that
certain Employment Agreement, dated as of July 1, 1996, and is
an integral part of the Company's management.
B. The Board of Directors of the Company recognizes the Executive
as a key founding officer of the Company, and consequently has
approved the terms and conditions of the continued employment
of Executive as set forth herein and has authorized the
execution and delivery of this Agreement.
AGREEMENT
For and in consideration of the foregoing and of the mutual covenants
of the parties herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
1. EMPLOYMENT. The Company hereby employs Executive to serve in the capacities
described herein and Executive hereby accepts such employment and agrees to
perform the services described in this Agreement upon the terms and conditions
set forth in this Agreement. During the term of Executive's employment by the
Company under this Agreement, Executive agrees that, without the prior consent
of the Company, Executive will not accept employment with any other business,
whether or not competitive with the Company.
2. TERM. The term of Executive's employment pursuant to this Agreement shall
commence as of January 1, 2002, and shall continue until Executive's 65th
birthday, and thereafter upon the mutual consent of Executive and the Board of
Directors, unless earlier terminated in accordance with this Agreement.
3. DUTIES. Executive shall serve as the Chairman of the Board of Directors of
the Company, and in carrying out the duties of such position, until his
retirement from the Company, Executive shall be a senior executive officer and
employee of the Company. Executive will devote such time and effort to the
Company's affairs as is appropriate for Executive to carry out the duties of his
position and in such capacity Executive's principal duties shall consist of
chairing the activities of the Board of Directors, consulting with the Company's
Chief Executive Officer and Chairman Emeritus, and representing the Company as
reasonably requested by the Chief Executive Officer.
4. COMPENSATION.
(a) BOARD FEES. As an employee and officer of the Company, Executive
shall not be entitled to receive compensation, including fees or stock option
awards, payable to outside directors for service on the Board of Directors.
(b) BASE COMPENSATION. The Company shall pay Executive, and Executive
agrees to accept, base compensation at the rate of $300,000 per year (the "Base
Compensation") in accordance with the Company's regular payroll practices
commencing on January 1, 2002, and continuing until Executive's retirement from
the Company. The Base Compensation specified in this Section 4(a) may be
increased (but not decreased) at any time during the term of this Agreement in
the discretion of the Board of Directors.
(c) BONUS COMPENSATION. Until Executive's retirement from the Company,
the Company shall pay Executive an annual bonus (the "Bonus Compensation")
following the end of each year beginning with 2002. The amount of Executive's
Bonus Compensation shall be determined by the Board of Directors of the Company
based upon the performance of the Executive and the overall performance of the
Company, including the Company's financial performance, but in no event shall
the annual Bonus Compensation be an amount less than $150,000.
(d) STOCK OPTIONS. Executive shall be eligible to receive an annual
stock option award (the "Annual Stock Options") following each fiscal year of
the Company and at such other times as may be determined by the Board of
Directors in amounts, at such exercise prices, and on such terms as the Board of
Directors determines in its discretion to be appropriate, based upon the
performance of the Executive and the Company during such fiscal year.
5. FRINGE BENEFITS.
(a) AUTOMOBILE. During the term of Executive's employment under this
Agreement, the Company shall provide Executive with full use of an automobile,
appropriate for Executive's position and title, for Executive's business and
personal use, which automobile shall be replaced at least every three years. The
Company agrees to provide adequate insurance for the automobile and occupants
and to pay all maintenance and operating costs appropriate or necessary to
maintain such automobile in prime operating condition.
(b) OFFICE SPACE AND STAFF. During the term of Executive's employment
under this Agreement, the Company shall provide Executive office space and a
full-time secretary at the Company's office located in Miami, Florida.
(c) INSURANCE. The Company shall continue to provide Executive and his
spouse with health insurance coverage and benefits not less than as are provided
to Executive by the Company on the date of this Agreement. The Company shall
continue, at the Company's expense, to provide Executive with a life insurance
policy or policies having an aggregate death benefit not less than the amount of
the aggregate death benefit that is payable under the life insurance policies on
Executive paid for by the Company on the date of this Agreement.
6. EXPENSES. Executive shall be reimbursed for his business-related expenses
incurred on behalf of the Company consistent with the practices applicable to
Executive on the date of this Agreement.
7. TERMINATION. The Board of Directors may terminate Executive's employment
under this Agreement at any time upon 30 days written notice to Executive.
8. RETIREMENT. Executive shall be deemed to have "retired" in the event that, at
any time, Executive's employment under this Agreement or his position as
Chairman of the Company's Board of Directors is terminated for any reason,
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including due to death or any disability of Executive. Upon Executive's
retirement, the Company shall pay to Executive the pro rata amount of the Bonus
Compensation payable to Executive for such year and thereafter provide the
following benefits:
(a) PENSION PLAN. Executive shall be entitled to participate in any
pension plan adopted by the Company after the date of this Agreement, provided
that in no event after the adoption of such plan by the Company will Executive
receive lesser benefits under such plan than are provided to Executive (and his
spouse) in this Section 8. In the absence of such pension plan, or in the event
that any such pension plan provides for lesser benefits than are provided in
this Section 8, the Company shall pay to Executive, commencing on the date that
he retires from employment with the Company, retirement payments (including
payments under any such pension plan) of not less than $400,000 per year, which
amount shall be subject to annual cost of living increases of 3% per year
beginning 2003 (the "Retirement Payments").
(b) INSURANCE. The Company shall continue to provide to Executive the
health and life insurance benefits that the Company is required to provide under
Section 5(c) of this Agreement.
(c) SPOUSAL BENEFIT. For so long as Executive's spouse shall survive
Executive, the Company shall pay to Executive's spouse one-half of the
Retirement Payments that would have been payable to Executive under Section 8(a)
if Executive were alive, and she shall continue to receive the health insurance
benefits that were made available to her under the Executive's health insurance
coverage.
9. DEATH. In the event of Executive's death, the Company shall pay to Executive
(or his spouse, heirs or personal representatives as appropriate) the Base
Compensation then owing to Executive, the pro rata amount of the Bonus
Compensation payable to Executive for such year, and, if Executive is survived
by his spouse, the on-going spousal benefits payable to Executive's Spouse under
Section 8(c).
10. CONFIDENTIAL INFORMATION AND INTELLECTUAL PROPERTY. Executive agrees that he
shall continue to be bound by the confidentiality and intellectual property
agreement that he has entered into with the Company.
11. NON-COMPETITION. For so long as Executive is receiving payments from the
Company under this Agreement, Executive covenants and agrees that he will not,
directly or indirectly, whether as principal, agent, trustee or through the
agency of any corporation, partnership, association or agent (other than as the
holder of not more than 10% of the total outstanding stock of any company the
securities of which are traded on a regular basis on recognized securities
exchanges) (i) work for (in any capacity, including without limitation director,
officer or employee) any other business or pharmaceutical company that competes
with the Company, or (ii) recruit, or otherwise influence or attempt to induce
employees of the Company to leave the employment of the Company. Executive
acknowledges that his services to be rendered hereunder are of a special and
unusual character that have a unique value to the Company and the conduct of its
business, the loss of which cannot adequately be compensated by damages in an
action at law.
Executive has carefully read and considered the provisions of this
Section 11 and agrees that the restrictions set forth in such sections are fair
and reasonable and are reasonably required for the protection of the interests
of the Company, its officers, directors, shareholders, and other employees, for
the protection of the business of the Company. Executive acknowledges that he is
qualified to engage in businesses other than those that are subject to this
Section 11. It is the belief of the parties, therefore, that the best protection
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that can be given to the Company that does not in any way infringe upon the
rights of Executive to engage in any unrelated businesses is to provide for the
restrictions described above. In view of the substantial harm which would result
from a breach by Executive of Section 11, the parties agree that the
restrictions contained therein shall be enforced to the maximum extent permitted
by law. In the event that any of said restrictions shall be held unenforceable
by any court of competent jurisdiction, the parties hereto agree that it is
their desire that such court shall substitute a reasonable judicially
enforceable limitation in place of any limitation deemed unenforceable and that
as so modified, the covenant shall be as fully enforceable as if it had been set
forth herein by the parties.
12. REMEDIES. The provisions of Section 11 of this Agreement shall survive the
termination of this Agreement as set forth therein, regardless of the
circumstances or reasons for such termination, and inure to the benefit of the
Company. The restrictions set forth in Sections Section 11 are considered to be
reasonable for the purposes of protecting the business of the Company. The
Company and Executive acknowledge that the Company would be irreparably harmed
and that monetary damages would not provide an adequate remedy to the Company if
the covenants contained in Section 11 were not complied with in accordance with
their terms. Accordingly, Executive agrees that the Company shall be entitled to
injunctive and other equitable relief to secure the enforcement of these
provisions, in addition to any other remedy which may be available to the
Company, and that the Company shall be entitled to receive from Executive
reimbursement for reasonable attorneys' fees and expenses incurred by the
Company in enforcing these provisions.
13. NOTICES. Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if sent by registered mail to the
addresses below or to such other address as either party shall designate by
written notice to the other:
IF TO THE EXECUTIVE: To the address set forth below his signature on
the signature page hereof.
IF TO THE COMPANY:
Kos Pharmaceuticals, Inc.
0000 Xxxxxxxx Xxx Xxxxx
00xx Xxxxx
Xxxxx, XX 00000
Attention: President
14. ENTIRE AGREEMENT; MODIFICATION.
(a) This Agreement contains the entire agreement of the Company and
Executive, and the Company and Executive hereby acknowledge and agree that this
Agreement supersedes any prior statements, writings, promises, understandings or
commitments, including, without limitation, the agreements and obligations
relating to Executive's employment by the Company set forth in the Employment
Agreement, dated July 1, 1996 (the "Old Agreement"), except for the compensation
(including bonus and other compensation) payable to Executive through or with
respect to the year ending December 31, 2001. Subject to the foregoing sentence,
the parties hereto agree that effective as of January 1, 2002, the Old Agreement
is terminated and canceled in its entirety, and shall be of no further force and
effect.
(b) No future oral statements, promises or commitments with respect to
the subject matter hereof, or other purported modification hereof, shall be
binding upon the parties hereto unless the same is reduced to writing and signed
by each party hereto.
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15. ASSIGNMENT. The rights and obligations of the Company under this Agreement
shall inure to the benefit of and shall be binding upon the successors and
assigns of the Company. The Executive may not assign his rights and obligations
under this Agreement.
16. FULL SETTLEMENT. The Executive shall not be obligated to seek other
employment by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement. The amounts payable to Executive under
this Agreement shall not be reduced by any compensation payable to Executive
from employment by another employer after the date of Executive's termination
provided such employment does not violate the terms of Section 11 hereof. The
Company agrees to pay all legal fees and expenses which the Executive may
reasonably incur as a result of any contest by the Executive or the Company or
others of the validity or enforceability of, or liability under any provision of
this Agreement or any guarantee of performance thereof, in each case plus
interest, provided that the Executive is the prevailing party in any such
contest. If the Executive is not the prevailing party each party shall pay its
own legal fees and expenses except that if such contest is the result of a
claimed breach of Section 11, and the Company shall be the prevailing party, the
Executive shall pay the reasonable legal fees and expenses of the Company. The
determination of the prevailing party in any contest shall be made by the
tribunal which shall resolve such contest, or by the parties if such contest is
settled without resort to any such tribunal.
17. MISCELLANEOUS.
(a) This agreement shall be subject to and governed by the laws of the
State of Florida, without regard to the conflicts of laws principles thereof.
(b) The section headings contained herein are for reference purposes
only and shall not in any way affect the meaning or the interpretation of this
Agreement.
(c) The failure of any party to enforce any provision of this Agreement
shall in no manner affect the right to enforce the same, and the waiver by any
party of any breach of any provision of this Agreement shall not be construed to
be a waiver by such party of any succeeding breach of such provision or a waiver
by such party of any breach of any other provision.
(d) All written notices required in this Agreement shall be sent
postage prepaid by certified or registered mail, return receipt requested.
(e) In the event any one or more of the provisions of this Agreement
shall for any reason be held invalid, illegal or unenforceable, the remaining
provisions of this Agreement shall be unimpaired, and the invalid, illegal or
unenforceable provision shall be replaced by a mutually acceptable valid, and
enforceable provision which comes closest to the intent of the parties.
(f) This Agreement may be executed in any number of counterparts, each
of which shall constitute an original and all of which together shall constitute
one and the same instrument.
REMAINDER OF PAGE LEFT BLANK INTENTIONALLY
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NOW THEREFORE, the parties have executed this Management Agreement as
of the day and year first above written.
KOS PHARMACEUTICALS, INC.
By: /s/ XXXXXX XXXXX
-------------------------------------------------
Name: Xxxxxx Xxxxx
Title: President and Chief Operating Officer
EXECUTIVE
/s/ XXXXXX X. XXXX
-----------------------------------------------------
Xxxxxx X. Xxxx
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