EMPLOYMENT AGREEMENT
This Employment Agreement ("AGREEMENT") is made by and between Xx. Xxxxx
X. Xxxxx ("XX. XXXXX") and Triangle Pharmaceuticals, Inc. ("TRIANGLE") as of
November 23, 1998 (the "Effective Date").
RECITALS
XX. XXXXX has been an employee of TRIANGLE since July 19, 1995. TRIANGLE
and XX. XXXXX wish to set forth in this AGREEMENT the terms and conditions under
which XX. XXXXX is to be employed by TRIANGLE from the date of execution
forward.
XX. XXXXX and TRIANGLE entered into an Employment Agreement, dated as of
October 26, 1996 (the "Original Employment Agreement"), which expired on the
second anniversary thereof and the parties wish to continue the employment
relationship substantially consistent with the terms set forth in the Original
Employment Agreement.
In consideration of XX. XXXXX'x agreement to continue providing services
to TRIANGLE, TRIANGLE's agreement to employ XX. XXXXX on the terms and
conditions set forth herein and the mutual agreements set forth herein, the
parties hereto agree as follows:
1. Term And Nature Of Employment
TRIANGLE hereby employs XX. XXXXX as Chief Executive Officer of
TRIANGLE for a two (2) year period commencing on the Effective Date of this
AGREEMENT and ending on the second anniversary of the Effective Date, unless
said period of employment (the "Employment Period") is terminated earlier in
accordance with the terms of this AGREEMENT or is extended pursuant to a written
amendment executed by both parties. XX. XXXXX hereby accepts such employment and
agrees to devote his full business time and attention, best efforts, energy and
skills to the business and affairs of TRIANGLE. XX. XXXXX agrees to perform such
other duties as may from time to time be assigned to him by the Board of
Directors of TRIANGLE and shall act at all times in accordance with the best
interests of TRIANGLE. XX. XXXXX agrees that he shall comply with all applicable
governmental laws, rules and regulations and with all of TRIANGLE's policies,
rules and/or regulations applicable to the employees of TRIANGLE. The employment
relationship between TRIANGLE and XX. XXXXX may be terminated by TRIANGLE or by
XX. XXXXX at any time, with or without cause, subject to the terms and
conditions contained in article 5 of this AGREEMENT and the obligations
described in articles 6 and 7 hereof.
2. Wage Compensation
2.1 Amount. XX. XXXXX shall be compensated on the basis of an
annualized salary of Two Hundred Thirty-Nine Thousand Dollars ($239,000.00),
less applicable withholding taxes. Increases in salary, if any, shall be made at
the sole discretion of the Board of Directors of TRIANGLE. Nothing in this
paragraph 2.1 shall be construed to limit TRIANGLE's right to terminate this
AGREEMENT in accordance with the terms hereof.
2.2 Payment. Salary payments will normally be made to XX. XXXXX
monthly or otherwise in accordance with TRIANGLE's pay period practices
applicable to executive officers.
3. Other Benefits
During the Employment Period, XX. XXXXX shall be entitled to receive
any other benefits which are provided to TRIANGLE's executive officers or other
full time employees, in accordance with TRIANGLE's policies and practices.
4. Former Employment
4.1 No Conflict. XX. XXXXX represents and warrants that the
execution and delivery by him of this AGREEMENT, his employment by TRIANGLE and
his performance of duties under this AGREEMENT will not conflict with and will
not be constrained by any prior employment or consulting agreement or
relationship, or any other contractual obligations.
4.2 No Use of Prior Confidential Information. XX. XXXXX will not
intentionally disclose to TRIANGLE or use on its behalf any confidential
information belonging to any of his former employers, but during his employment
by TRIANGLE he will use in the performance of his duties all information (but
only such information) which is generally known and used by persons with
training and experience comparable to his own or is common knowledge in the
industry or otherwise legally in the public domain.
5. Termination
5.1 Termination of AGREEMENT Due to Death. XX. XXXXX'x employment
and this AGREEMENT shall terminate upon XX. XXXXX'x death. In the event that XX.
XXXXX'x employment ends due to his death, TRIANGLE's obligations under this
AGREEMENT shall immediately cease and XX. XXXXX'x estate shall be entitled to no
severance benefits or any other benefits under this AGREEMENT, except that if
XX. XXXXX dies within two (2) years after the date of this AGREEMENT, any
options or stock of the Company then owned by XX. XXXXX shall automatically
accelerate and become fully vested. This provision shall not otherwise limit any
benefits available under TRIANGLE's benefit plans.
5.2 Involuntary Termination for Cause. Notwithstanding anything to
the contrary herein, XX. XXXXX'x employment and this AGREEMENT may be terminated
by TRIANGLE upon written notification upon the occurrence of any of the
following:
a. XX. XXXXX being formally charged with the commission of a
felony, or being convicted of a misdemeanor involving moral turpitude.
b. XX. XXXXX'x demonstrable fraud or dishonesty.
c. XX. XXXXX'x use of illegal drugs or any illegal substance,
or his use of alcohol in any manner that materially interferes with the
performance of his duties under this AGREEMENT.
-2-
d. XX. XXXXX'x intentional, reckless or grossly negligent
conduct detrimental to the best interests of TRIANGLE, including, without
limitation, any misappropriation or unauthorized use of TRIANGLE's property or
improper disclosure of confidential information.
e. XX. XXXXX'x failure to perform material duties under this
AGREEMENT if such failure has continued for 20 days after XX. XXXXX has been
notified in writing by TRIANGLE of the nature of XX. XXXXX'x failure to perform.
f. XX. XXXXX'x chronic absence from work for reasons other
than illness.
g. XX. XXXXX'x violation of TRIANGLE's policy prohibiting
sexual harassment.
h. XX. XXXXX'x violation of TRIANGLE's policy prohibiting
unlawful discrimination.
In the event that XX. XXXXX'x employment is terminated with cause by
TRIANGLE pursuant to this paragraph 5.2 of this AGREEMENT within two (2) years
after the Effective Date, TRIANGLE will continue to pay salary payments to XX.
XXXXX (based upon his then-current salary) for a period of two (2) years
following termination. In the event that XX. XXXXX'x employment is terminated
with cause by TRIANGLE for any of the reasons enumerated in this paragraph 5.2,
XX. XXXXX shall have certain obligations to refrain from disclosing TRIANGLE's
confidential or proprietary information, as more fully described in article 6
below. In the event that XX. XXXXX'x employment is terminated with cause by
TRIANGLE for any of the reasons enumerated in this paragraph 5.2 within two (2)
years after the Effective Date, XX. XXXXX shall have certain obligations to
refrain from engaging in competitive activities, as more fully described in
article 7, below. XX. XXXXX acknowledges and agrees that the continuing salary
payments described in this paragraph 5.2, shall constitute good and sufficient
consideration for his agreement to abide by the terms of articles 6 and 7
hereof.
Termination of XX. XXXXX pursuant to this section 5.2 shall be in
addition to and without prejudice to any other right or remedy to which TRIANGLE
may be entitled at law, in equity, or under this AGREEMENT.
5.3 Involuntary Termination For Other Than Cause. TRIANGLE may
terminate XX. XXXXX'x employment and this AGREEMENT at any time for any reason
upon written notification to XX. XXXXX. If TRIANGLE so terminates pursuant to
this paragraph 5.3 (i.e., none of the matters specified in paragraph 5.2 has
occurred) within two (2) years after the Effective Date, TRIANGLE will continue
to pay salary payments to XX. XXXXX (based upon his then-current salary) for a
period of two (2) years following termination. If TRIANGLE terminates XX.
XXXXX'x employment pursuant to this paragraph 5.3 within two (2) years after the
Effective Date, it will also accelerate XX. XXXXX'x vesting in any unvested
stock and/or options previously granted to him and any group health benefits
provided to XX. XXXXX during his employment pursuant to this AGREEMENT will be
continued, if permitted by law, by
-3-
TRIANGLE at its expense for a period of two (2) years following termination.
Except as described in this paragraph 5.3, TRIANGLE shall have no other
obligations to XX. XXXXX in the event that XX. XXXXX'x employment is terminated
pursuant to this paragraph 5.3. In the event that XX. XXXXX'x employment is
terminated by TRIANGLE pursuant to this paragraph 5.3, XX. XXXXX shall have
certain obligations to refrain from disclosing TRIANGLE's confidential or
proprietary information, as more fully described in article 6 below. In the
event that XX. XXXXX'x employment is terminated by TRIANGLE pursuant to this
paragraph 5.3 within two (2) years after the Effective Date, XX. XXXXX shall
have certain obligations to refrain from engaging in competitive activities, as
more fully described in article 7 below. XX. XXXXX acknowledges and agrees that
the continuing salary payments and other benefits described in this paragraph
5.3 shall constitute good and sufficient consideration for his agreement to
abide by the terms of articles 6 and 7 hereof.
5.4 Resignation. XX. XXXXX may terminate his employment and this
AGREEMENT at any time for any reason upon written notification to TRIANGLE. If
XX. XXXXX resigns from his employment for any reason within two (2) years after
the Effective Date, except as provided to the contrary below, TRIANGLE will
continue to pay salary payments to XX. XXXXX (based upon his then-current
salary) for a period of two (2) years following termination. If XX. XXXXX
resigns from his employment pursuant to this paragraph 5.4 within two (2) years
after the Effective Date, except as provided to the contrary below, any group
health benefits provided to XX. XXXXX during his employment pursuant to this
AGREEMENT will be continued, if permitted by law, by TRIANGLE at its expense for
a period of two (2) years following termination. Notwithstanding the foregoing,
if XX. XXXXX terminates his employment and does not at the time of termination
intend to engage in competitive activities of the type prohibited by article 7,
then TRIANGLE shall not be obligated to make the salary payments and provide
group health benefits to XX. XXXXX pursuant to the preceding two (2) sentences;
provided, however, that if XX. XXXXX, within two (2) years after his termination
of employment under this paragraph 5.4 decides he would like to engage in
competitive activities that are prohibited by paragraph 7, then TRIANGLE shall
make the salary payments and provide group health benefits to XX. XXXXX for the
period of time between the date XX. XXXXX decides he would like to so compete
and the expiration of the two (2) year period after XX. XXXXX'x termination of
his employment under this paragraph 5.4 (but, notwithstanding XX. XXXXX'x desire
to compete, in no event shall XX. XXXXX be permitted to engage in the
competitive activities described in paragraph 7 for the period of time described
in paragraph 7). Except as described in this paragraph 5.4, TRIANGLE shall have
no other obligations to XX. XXXXX in the event that XX. XXXXX resigns from his
employment for any reason pursuant to this paragraph 5.4. In the event that XX.
XXXXX resigns from his employment with TRIANGLE pursuant to this paragraph 5.4,
XX. XXXXX shall have certain obligations to refrain from disclosing TRIANGLE's
confidential or proprietary information, as more fully described in article 6
hereof. In the event that XX. XXXXX resigns from his employment with TRIANGLE
pursuant to this paragraph 5.4, XX. XXXXX shall have certain obligations to
refrain from engaging in competitive activities, as more fully described in
article 7 hereof. XX. XXXXX acknowledges and agrees that the continuing salary
payments and other benefits described in this paragraph 5.4 shall constitute
good and sufficient consideration for his agreement to abide by the terms of
articles 6 and 7 hereof.
-4-
6. Confidentiality
XX. XXXXX acknowledges that he is bound by the terms of that certain
Employee Proprietary Information and Inventions Agreement between TRIANGLE and
XX. XXXXX dated September 7, 1995 (the "Confidentiality Agreement").
7. Non-Competition
XX. XXXXX agrees and promises that if his employment is terminated
pursuant to paragraph 5.2, 5.3 or 5.4 hereof within two (2) years after the
Effective Date, then, for the period of time described below, he will not be
engaged in any other business or as a consultant to or general partner,
employee, officer or director of any partnership, firm, corporation, or other
entity, or as an agent for any person, or otherwise, if: (1) such other
business, partnership, firm, corporation, entity or person is engaged in
for-profit activity in the pharmaceutical industry within the United States and
competes with TRIANGLE in the field of viral diseases; and (2) XX. XXXXX either
(a) is the President, Chief Executive Officer or Chairman of such other
business, partnership, firm, corporation, entity or person; or (b) participates
in or directs the development of drugs for the treatment of viral diseases for
such other business, partnership, firm, corporation, entity or person. This
agreement to refrain from engaging in competitive activities shall continue for
the period during which TRIANGLE is required by the terms of paragraphs 5.2, 5.3
or 5.4 of this AGREEMENT to make salary payments to XX. XXXXX following his
termination (i.e., two (2) years in the case of termination under paragraph 5.2,
5.3 or 5.4). This agreement to refrain from engaging in competitive activities
shall be binding upon XX. XXXXX even if XX. XXXXX is not compensated for the
activities described in this article 7.
8. Termination Upon Merger
Notwithstanding anything to the contrary in this Agreement, this
Agreement shall automatically terminate upon a "Merger." A "Merger" shall
consist of the consolidation or merger of TRIANGLE into or with any other entity
or entities that results in the exchange of shares representing 50% or more of
the outstanding shares of voting capital stock of TRIANGLE for securities or
other consideration issued or paid or caused to be issued or paid by any such
entity or affiliate thereof, or the sale or transfer by TRIANGLE or all or
substantially all of its assets. Upon termination of this Agreement, all of the
obligations of TRIANGLE and XX. XXXXX under this Agreement, including without
limitation, Sections 5 and 7, shall terminate; provided, however, that XX.
XXXXX'x obligations under the Confidentiality Agreement shall continue pursuant
to the terms of the Confidentiality Agreement.
9. General Provisions
9.1 Governing Law. This AGREEMENT and the rights of the parties
thereunder shall be governed by and interpreted under North Carolina law without
regard to principles of conflicts of law.
9.2 Assignment. XX. XXXXX may not delegate, assign, pledge or
encumber his rights or obligations under this AGREEMENT or any part thereof.
-5-
9.3 Notice. Any notice required or permitted to be given under this
AGREEMENT shall be sufficient if it is in writing and is sent by registered or
certified mail, postage prepaid, or personally delivered, to the following
addresses, or to such other addresses as either party shall specify by giving
notice under this section:
TO TRIANGLE: Triangle Pharmaceuticals, Inc.
0 Xxxxxxxxxx Xxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: General Counsel
TO XX. XXXXX: Xx. Xxxxx X. Xxxxx
9.4 Amendment. This AGREEMENT may be waived, amended or supplemented
only by a writing signed by both of the parties hereto. To be valid, TRIANGLE's
signature must be by a person specially authorized by TRIANGLE's Board of
Directors to sign such particular document.
9.5 Waiver. No waiver of any provision of this AGREEMENT shall be
binding unless and until set forth expressly in writing and signed by the
waiving party. To be valid, TRIANGLE's signature must be by a person specially
authorized by TRIANGLE's Board of Directors to sign such particular document.
The waiver by either party of a breach of any provision of this AGREEMENT shall
not operate or be construed as a waiver of any preceding or succeeding breach of
the same or any other term or provision, or a waiver of any contemporaneous
breach of any other term or provision, or a continuing waiver of the same or any
other term or provision. No failure or delay by a party in exercising any right,
power, or privilege hereunder or other conduct by a party shall operate as a
waiver thereof, in the particular case or in any past or future case, and no
single or partial exercise thereof shall preclude the full exercise or further
exercise of any right, power or privilege. No action taken pursuant to this
AGREEMENT shall be deemed to constitute a waiver by the party taking such action
of compliance with any representations, warranties, covenants or agreements
contained herein.
9.6 Severability. All provisions contained herein are severable and
in the event that any of them shall be held to be to any extent invalid or
otherwise unenforceable by any court of competent jurisdiction, such provision
shall be construed as if it were written so as to effectuate to the greatest
possible extent the parties' expressed intent; and in every case the remainder
of this AGREEMENT shall not be affected thereby and shall remain valid and
enforceable, as if such affected provision were not contained herein.
9.7 Headings. Article and section headings are inserted herein for
convenience of reference only and in no way are to be construed to define, limit
or affect the construction or interpretation of the terms of this AGREEMENT.
9.8 Drafting Party. The provisions of this AGREEMENT have been
prepared, examined, negotiated and revised by each party hereto, and no
implication shall be drawn and no
-6-
provision shall be construed against either party by virtue of the purported
identity of the drafter of this AGREEMENT, or any portion thereof.
9.9 Arbitration. The parties agree that any and all disputes that
they have with one another which arise out of XX. XXXXX'x employment or under
the terms of this AGREEMENT shall be resolved through final and binding
arbitration, as specified herein. This shall include, without limitation,
disputes relating to this AGREEMENT, XX. XXXXX'x employment by TRIANGLE or the
termination thereof, claims for breach of contract or breach of the covenant of
good faith and fair dealing, and any claims of discrimination or other claims
under any federal, state or local law or regulation now in existence or
hereinafter enacted and as amended from time to time concerning in any way the
subject of XX. XXXXX'x employment with TRIANGLE or its termination. The only
claims not covered by this paragraph 9.9 are claims for benefits under the
workers' compensation laws or claims for unemployment insurance benefits, which
will be resolved pursuant to those laws. Binding arbitration will be conducted
in Durham, North Carolina, in accordance with the rules and regulations of the
American Arbitration Association. Each party will bear one half of the cost of
the arbitration filing and hearing fees, and the cost of the arbitrator. Each
party will bear its own attorneys' fees, unless otherwise decided by the
arbitrator. XX. XXXXX understands and agrees that the arbitration shall be
instead of any civil litigation and that the arbitrator's decision shall be
final and binding to the fullest extent permitted by law and enforceable by any
court having jurisdiction thereof.
10. Entire Agreement
Except for the Confidentiality Agreement, this AGREEMENT constitutes
the entire agreement between the parties pertaining to the subject matter hereof
and completely supersedes all prior or contemporaneous agreements,
understandings, arrangements, commitments, negotiations and discussions of the
parties, whether oral or written. The parties specifically acknowledge and agree
that, except for the Confidentiality Agreement, all prior agreements and
understandings between XX. XXXXX and TRIANGLE that pertained to XX. XXXXX'x
employment with TRIANGLE are completely superseded. Each party acknowledges,
represents and warrants that this AGREEMENT is fully integrated and not in need
of parol evidence in order to reflect the intentions of the parties.
This AGREEMENT is executed as of this 23rd day of November, 1998.
TRIANGLE PHARMACEUTICALS, INC.
/s/ Xxxxx X. Xxxxx By: /s/ X. Xxxxx Xxxxx
-------------------------- ------------------------
Xx. Xxxxx X. Xxxxx X. Xxxxx Xxxxx, President and
Chief Operating Officer
-7-
