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EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of July
15, 1996 by and between Lung Rx, Inc., a Delaware corporation having its
principal offices at 0000 X Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000 (the "Company")
and Xxxxx X. Xxxx (the "Employee").
WHEREAS, the Company desires to obtain the services of the Employee, and
the Employee is willing to render such services to the Company, upon the terms
and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows.
1. Employment. Upon the other terms and conditions hereinafter
stated, the Company agrees to employ the Employee and the Employee agrees to
accept employment by the Company for the term set forth in Section 2 hereof and
in the position and with the duties and responsibilities set forth in Section 3
hereof.
2. Term. The employment of the Employee by the Company will commence
on the date hereof and end on the third anniversary of such date (the "Initial
Term"), and thereafter shall continue from year to year for additional one-year
terms (the "Additional Terms"), unless and until either party shall give notice
of such party's intent to terminate not less than 30 days prior to the end of
the then-current Initial Term or Additional Term, which termination shall be
effective at the expiration of said term, or until sooner terminated as
hereinafter set forth.
3. Position and Duties.
(a) The Employee shall serve as President reporting to Board of
Directors of the Company, with such duties and responsibilities as the Board of
Directors of the Company may from time to time determine and assign to the
Employee. The Employee shall use the Employee's best efforts and full business
time to perform the Employee's duties under this Agreement.
(b) The Employee may remain a resident of North Carolina if he
wishes to do so, based in a Company office to be established out of the
Company's initial capital contribution.
(c) The Employee shall have the authority to hire a Director of
Operations of his choosing, compensation and related employment terms to be
approved by the Company's Board of Directors.
4. Compensation and Related Matters.
(a) For services rendered under this Agreement, the Company
shall pay to the Employee an annual base salary of $150,000 (the "Base Salary"),
subject to increase, as determined by the Board of Directors of the Company, in
its sole discretion, on or before any anniversary date of this Agreement. The
Base Salary shall be payable semi-monthly or in such other installments as shall
be consistent with the Company's payroll procedures. The Company shall deduct
and withhold all necessary social security and withholding taxes and
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any other similar sums required by law or authorized by the Employee with
respect to payment of the Base Salary and all other amounts and benefits payable
under this Agreement.
(b) The Employee shall be entitled to participate in any group
life, disability and medical insurance or other benefit plan or arrangement
available generally to the employees of the Company as determined by the Board
of Directors.
5. Expenses. The Employee shall be reimbursed by the Company for
reasonable travel and other expenses, as approved from time to time by the Board
of Directors, which are incurred and accounted for in accordance with the
Company's normal practices.
6. Vacation. The Employee shall be entitled during the term of
employment hereunder to four weeks of vacation, or a pro rata amount thereof in
the event that the term of employment hereunder is less than one year, which
vacation shall be at such time or times and for such period or periods as shall
be mutually agreed upon by the Employee and the Board of Directors. The Employee
shall also be entitled to all public holidays observed by the Company.
7. Termination of Employment.
(a) The Employee's employment hereunder shall terminate upon
the Employee's death.
(b) The Company may terminate the Employee's employment
hereunder under the following circumstances:
(i) If, as a result of the Employee's incapacity due to
physical or mental illness, the Employee shall have been unable to perform all
of the Employee's duties hereunder by reason of illness, or physical or mental
disability or other similar capacity, which inability shall continue for more
than four (4) consecutive months, the Company may terminate the Employee's
employment hereunder.
(ii) The Company may terminate the Employee's employment
hereunder for "Cause." For purposes of this Agreement, the Company shall have
"Cause" to terminate the Employee's employment hereunder upon the (A) failure of
the Employee (other than for reasons described in Sections 7(a) and 7(b)(i)
hereof) to perform or observe any of the material terms or provisions of this
Agreement; (B) negligent or unsatisfactory performance of the Employee's duties
under this Agreement and the failure of the Employee, within 30 days after
receipt of notice from the Company setting forth in reasonable detail the nature
of the Employee's negligent or unsatisfactory performance, (i) to provide the
Company with a satisfactory explanation of the Employee's actions (or inaction)
and (ii) to correct to the satisfaction of the Company any identified
deficiencies; (C) misconduct or other similar action on the part of the Employee
that is materially damaging or detrimental to the Company; (D) conviction of the
Employee of a crime involving a felony, fraud, embezzlement or the like; or (E)
misappropriation of the Company funds or misuse of the Company's assets by
Employee.
(c) The Employee may terminate the Employee's employment
hereunder for "Good Reason." For purposes of this Agreement, the Employee shall
have "Good Reason" to terminate the Employee's employment hereunder upon the (i)
failure of the Company to perform or observe any of the material terms or
provisions of the Agreement, and the continued failure of the Company to cure
such default within fifteen (15) days after written notice of such default and
demand for performance has been given to the Company
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by the Employee, which notice and demand shall describe specifically the nature
of such alleged failure to perform or observe such material terms or provisions;
provided, however, that if cure is impossible within said fifteen (15) day
period, it shall be sufficient for the Company to commence such cure within said
fifteen (15) day period, and pursue such cure diligently to completion within
the shortest possible reasonable time; or (ii) assignment of duties materially
and adversely inconsistent with the Employee's position, duties,
responsibilities and status with the Company without the Employee's consent.
(d) Any termination of the Employee's employment by the Company
or by the Employee (other than pursuant to Section 7(a) hereof) shall be
communicated by written "Notice of Termination" to the other party hereto in
accordance with Section 10(c) hereof, which shall indicate the specific
termination provision in this Agreement relied upon, if any, and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Employee's employment under the provision so indicated.
(e) For purposes of this Agreement, the "Date of Termination"
shall mean (i) if the Employee's employment is terminated by the Employee's
death, the date of the Employee's death; (ii) if the Employee's employment is
terminated pursuant to Section 7(b)(i) hereof, thirty (30) days after the Notice
of Termination; provided, that the Employee shall not have returned to the
performance of the Employee's duties on a full-time basis during such thirty
(30) day period; (iii) if the Employee's employment is terminated pursuant to
Section 7(b)(ii) or 7(c) hereof, the date specified in the Notice of Termination
(which date, in the case of termination of Employee's employment solely pursuant
to clause (B) of Section 7(b)(ii) by reason of inadequate performance, shall not
be sooner than nine months from the date of the Notice of Termination); and (iv)
if the Employee's employment is terminated for any other reason, the date on
which the Notice of Termination is given.
8. Compensation Upon Termination.
(a) If the Employee's employment is terminated by the
Employee's death, the Company shall pay to the Employee's estate or as may be
directed by the legal representatives of such estate, the Employee's full Base
Salary through the Date of Termination at the rate in effect at the time of the
Employee's death and all other unpaid amounts, if any, to which the Employee is
entitled as of such date in connection with any fringe benefits or under any
incentive compensation plan or program of the Company pursuant to Section 4(c)
or 4(d) hereof, at the time such payments are due.
(b) During any period that the Employee fails to perform the
Employee's duties hereunder solely as a result of incapacity due to physical or
mental illness ("disability period"), the Employee shall continue to receive the
Employee's full base salary through the Date of Termination at the rate in
effect at the time the Notice of Termination is given and all other unpaid
amounts, if any, to which the Employee is entitled as of the Date of Termination
in connection with any fringe benefits or under any incentive compensation plan
or program of the Company pursuant to Section 4(c) or 4(d) hereof, at the time
such payments are due; provided that payments so made to the Employee during the
disability period shall be reduced by the sum of the amounts, if any, payable to
the Employee at or prior to the time of any such payment under disability
benefit plans of the Company and which amounts were not previously applied to
reduce any such payment.
(c) If the Employee shall terminate the Employee's employment
other than for Good Reason, or the Company terminates the Employee's employment
for Cause as provided in Section 7(b)(ii) hereof, the Company shall pay the
Employee the Employee's full Base Salary through the Date of Termination at the
rate in effect at the time the Notice of
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Termination is given, and the Company shall have no further obligations to the
to the Employee under this Agreement.
(d) If the Company shall terminate the Employee's employment
other than for Cause, or the Employee terminates the Employee's employment for
Good Reason as provided in Section 7(c) hereof, the Company shall pay the
Employee (i) the Employee's full Base Salary through the Date of Termination at
the rate in effect at the time the Notice of Termination is given and all other
unpaid amounts, if any, to which the Employee is entitled as of the Date of
Termination in connection with any fringe benefits or under any compensation
plan or program of the Company pursuant to Section 4(c) and 4(d) hereof, at the
time such payments are due; and (ii) the full Base Salary and any other amounts
that would have been payable to Employee under Sections 4(c) (but not Section
4(d)) hereof from the Date of Termination through the Expiration Date at the
such payments are due.
(e) The Employee shall not be required to mitigate amounts
payable pursuant to this Section 8 by seeking other employment or otherwise. If,
however, the Employee shall receive compensation from employment with any other
employer during the relevant period set forth in this Section 8, the payments to
be made under the provisions of this Section 8 shall be correspondingly reduced.
9. Obligation of Confidentiality and Non-Competition. Employee agrees
that Employee has a fiduciary duty to Lung Rx and that Employee shall hold in
confidence and shall not, except in the course of performing Employee's
employment obligations or pursuant to written authorization from Lung Rx, at any
time during or for three years after termination of Employee's relationship with
Lung Rx (a) directly or indirectly reveal, report, publish, disclose or transfer
the Confidential Information or any part thereof to any person or entity; (b)
use any of the Confidential Information or any part thereof for any purpose
other than for the benefit of Lung Rx; (c) assist any person or entity other
than Lung Rx to secure any benefit from the Confidential Information or any part
thereof or (d) solicit (on Employee's behalf or on behalf of any third party)
any employee of Lung Rx for the purpose of providing services or products which
Employee is prohibited from providing hereunder.
Furthermore, Employee agrees that all Confidential Information, as
defined below, shall belong exclusively and without any additional compensation
to Lung Rx. For the purposes of this Agreement, "Confidential Information" shall
mean each of the following: (a) any information or material proprietary to Lung
Rx or designated as confidential either orally or in writing by Lung Rx; and (b)
any information not generally known by non-Lung Rx personnel; and (c) any
information which Employee should know Lung Rx would not care to have revealed
to others or used in competition with Lung Rx; and (d) any information which
Employee made or makes, conceived or conceives, developed or develops or
obtained or obtains knowledge or access through or as a result of Employee's
relationship with Lung Rx (including information received, originated,
discovered or developed in whole or in part by Employee) from the initial date
of Employee's employment with Lung Rx.
Furthermore, Employee agrees (1) not to accept employment, consultancy or
other business relationships with a business which competes with Lung Rx's
business for twelve months following Employee's last receipt of compensation
from Lung Rx, and (2) to the issuance of a Court Order restraining alleged
violation of this section, and to waive any bond requirement that may arise, in
addition to all other remedies available to Lung Rx..
10. Miscellaneous.
(a) Entire Agreement. This Agreement contains the entire
agreement between the parties hereto relating to the subject matter hereof, and
this Agreement
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supersedes all prior understandings and agreements, whether oral or written,
relating to the employment of the Employee by the Company.
(b) Assignment. This Agreement shall not be assignable or
otherwise transferable by either party hereto, but any amounts owing to Employee
upon the Employee's death shall inure to the benefit of the Employee's heirs,
legatees, legal representatives, executor or administrator. Notwithstanding the
foregoing, this Agreement applies with the prior written consent of the
Employee, which consent shall not be unreasonably withheld. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and any
such respective heirs, legatees, executors, administrators, representatives,
successors and assigns.
(c) Notices. All notices, demands, requests or other
communications which may be, or are required to be given, served or sent by any
party to any party pursuant to this Agreement shall be in writing and shall be
mailed by first class, registered or certified mail, return receipt requested,
postage prepaid, or transmitted by hand delivery, telegram or telex and
addressed as follows:
If to the Employee: Xxxxx X. Xxxx
000 X. Xxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxx Xxxxxxxx
If to the Company: Lung Rx, Inc.
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
(d) Amendment; Waiver. This Agreement shall not be amended,
altered, modified or discharged except by an instrument in writing duly executed
by the Employee and the Company. Neither the waiver by the parties hereto of a
breach of, or default under, any of the provisions of this Agreement, nor the
failure of either of the parties, on one or more occasions, to enforce any of
the provisions of this Agreement or to exercise any right or privilege
hereunder, shall thereafter be construed as a waiver of any such provisions,
rights or privileges hereunder.
(e) Severability. The invalidity or unenforceabilty of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement, which shall remain in
full force and effect.
(f) Applicable Law. This Agreement and the rights and
obligations of the parties under this Agreement shall be construed, interpreted
and enforced in accordance with the laws of the District of Columbia, exclusive
of the choice-of-laws rules thereunder.
(g) Survival. It is the express intention and agreement of the
parties hereto that the Special Terms of Conditions of Employment Agreement
referred to in Section 9 hereof shall survive the termination of employment of
the Employee. In addition, all obligations of the Company to make payments
hereunder shall survive any termination of this Agreement on the terms and
conditions set forth.
(h) Execution. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required; and it shall not be
necessary that the signatures of, or on behalf of, each party, or that the
signatures of all persons required to bind any party, appear on each
counterpart; but it shall be sufficient that the signature of, or on behalf of,
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each party, or that the signatures of the persons required to bind any party,
appear on one or more of the counterparts. All counterparts shall collectively
constitute a single agreement. It shall not be necessary in making proof of this
Agreement to produce or account for more than a number of counterparts
containing the respective signatures of, or on behalf of, all of the parties
hereto.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or
have caused this Agreement to be duly executed on their behalf, as of the date
first above written.
LUNG RX, INC.
/s/ Xxxxx X. Xxxx /s/ Xxxxxxx Xxxxxxxxx
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Xxxxx X. Xxxx By: Xxxxxxx Xxxxxxxxx
/s/ Xxxx X. Xxxxxx
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Witness
Printed: Xxxx X. Xxxxxx
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