Exhibit 10.15
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of December 1, 2002 between QMED, INC., a
Delaware corporation (the "Company"), and XXXXXXX X. XXX ("Executive").
WHEREAS, the Executive is a founder of the Company and has served as
its President and Chief Executive Officer since the Company's organization in
1983; and
WHEREAS, the Company's Board of Directors wishes to assure that the
Company will continue to have the services of the Executive available to it; and
WHEREAS, the Company's Board of Directors has determined, in light of
the importance of the Executive's continued services to the stability and
interests of the Company and its stockholders to reinforce and encourage the
Executive's continued attention and dedication to his duties.
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, it is agreed between the Company and the
Executive as follows:
1. EMPLOYMENT.
Subject to the terms and conditions hereof, Company hereby employs
Executive as its President and Chief Executive Officer during the term hereof,
as hereinafter described, and Executive hereby accepts such employment.
2. EFFECTIVE DATE.
This Agreement shall become effective as of December 1, 2002 (the
"Effective Date").
3. TERM OF EMPLOYMENT.
Unless earlier terminated pursuant to Section 8 hereof, the term of
employment under this Agreement shall be for a three-year period commencing on
the Effective Date and ending November 30, 2005. This Agreement shall be
automatically renewed for successive one (1) year periods, unless either party
shall notify the other in writing of its intention not to renew this Agreement
(a "Non-renewal Notice"), which notice shall be given at least 90 days prior to
the end of the then current term (the "Expiration Date"). The period from the
Commencement Date to the Expiration Date, including the Renewal Term, if any, is
referred to herein as the "Term."
4. DUTIES.
4.1 During the Term of his employment by Company, Executive shall serve
as President and Chief Executive Officer of Company. In Executive's capacity as
1
President and Chief Executive Officer of the Company, the Executive shall have
the customary powers responsibilities and authorities of presidents and chief
executive officers of corporations of the size, type and nature of the Company,
as it exists from time to time, including primary responsibility for the
day-to-day management of the Company's affairs and its operations, any duties
prescribed for such positions in the By-laws of Company as in effect from time
to time, and those responsibilities and duties as the Board of Directors may
from time to time direct Executive to undertake and to perform which are
consistent and appropriate to the capacities of senior corporate management held
by Executive. During the term of this Agreement, Executive may not be demoted
whereby he is no longer performing the duties commonly incident to the offices
of President and Chief Executive Officer and it is understood and agreed that
such office, President and Chief Executive Officer, shall be the most senior
officership of Company.
4.2 The Executive, if elected, shall serve as a member of the Board of
Directors of the Company. The Executive shall serve as the highest ranking
officer of each of the Company's wholly-owned subsidiaries.
4.3 Executive shall serve Company faithfully and to the best of his
ability and shall devote a substantial amount of his time, skill, efforts and
attention during business hours (unless prevented by illness or incapacitation)
to the business affairs of Company.
4.4 As long as the Board of Directors has not reasonably determined
that such activities interfere with his duties and responsibilities hereunder,
nothing in this Agreement shall preclude the Executive from engaging in
charitable and community affairs, from managing any passive investment made by
him in publicly-traded securities or other property. The Executive may serve as
a member of the boards of directors or as a trustee of any other corporation,
association or entity so long as in the reasonable judgment of the Executive and
the Board of Directors, such activities do not conflict or interfere with his
duties hereunder.
5. COMPENSATION.
5.1 Salary. Company shall pay Executive a base salary ("Base Salary")
as follows: $280,000 per year for the one-year period commencing on the
Effective Date. Executive's Base Salary will be reviewed no less frequently than
annually and may be increased, but not decreased by the Executive Evaluation and
Compensation Committee of the Company's Board of Directors (or similar committee
serving that function, the "Committee"). Once increased, such increased amount
shall constitute the Executive's Base Salary and shall not be decreased. Base
Salary shall be payable in accordance with the ordinary payroll practices of the
Company.
5.2 Bonuses.
(a) In addition to Base Salary, the Company shall pay the Executive a
bonus of up to 100% of Base Salary for each year of the Term( the "target
bonus"). The determination of what portion of the target bonus shall have been
earned by the Executive shall be made by the Committee at its first meeting in
2
each year of the Term at which audited financial statements of the Company are
available for the most recently completed fiscal year, taking into consideration
such factors as strategic business development, staff development, growth,
profitability, efficiency, stockholder value and such other goals as the
Committee deems to be appropriate measures of performance. The Committee shall
also comply with Section 5.2 (b), below.
(b) $100,000 of the target bonus during the first year of the Term
shall be earned upon the achievement of executed agreements defining the
Company's participation in a Disease Management Demonstration Project with
Pacificare Health Systems, Inc. and Alere Medical, Inc. (the "Heartpartners
Project"). The Heartpartners Project portion of the bonus will be paid within 10
days of the execution of such agreements and award documents required by the
Center for Medicare & Medicaid Services to begin funding the Heartpartners
Project. Any portion of the target bonus not earned as result of the execution
of agreements related to the Healthpartners Project may nevertheless be awarded
by the Committee to the Executive following the end of the first year of the
Term
(c) Except as set forth in Section 5.2(b), above, annual bonuses will
be paid no later than 10 days after the first meeting of the Committee following
the close of each of the Company's fiscal years during the Term , at which
audited financial information for the Company's most recently completed fiscal
year is available to the Committee.
5.3 Compensation Plans and Programs. Executive shall be eligible to
participate in any compensation plan or program, annual or long term, maintained
by Company in which other senior executives of Company participate on terms
comparable to those applicable to such other senior executives.
5.4 Stock Option Awards. During the Term, Executive will have an annual
opportunity to be granted an option (the "Annual Option") for shares of the
Company's Common Stock, in an amount at a target level value of a percentage or
multiple of Base Salary, established by the Committee, based upon the
performance goals established by the Committee. The determination of the value
of the Annual Options to be granted will be made by the Committee using the
valuation method it employs in making annual option grants to the senior
executives of the Company.
6. BENEFITS
6.1 Benefit Programs. Executive shall be eligible to participate in all
Executive benefit programs of the Company from time to time in effect and
generally available to the Company's senior executives, including, but not
limited to health (which shall include an annual physical and shall cover the
Executive's dependents), life (with a minimum death benefit of $1,000,000),
dental and disability insurance (which policy currently guarantees up to 60% of
Executive's then current Base Salary upon Executive's occupational or functional
disability based upon insurer's examination and risk assessment).
3
6.2 Vacation. Executive may take up to four weeks of paid vacation each
year, the unused portion of which, at the option of the Executive, may be
carried over to the succeeding year, or in lieu thereof, the Company shall pay
the Executive a cash lump sum payment representing the amount of such unused
vacation.
6.3 Fringe Benefits. Executive shall be entitled to the perquisites and
other fringe benefits made available to senior executives of the Company.
6.4 Expenses. Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this Agreement, including,
without limitation, expenses for travel, cellular telephone (including access
charges and business calls) and similar items related to such duties and
responsibilities. Company will reimburse Executive for all such expenses upon
presentation by Executive of appropriately itemized accounts of such
expenditures.
6.5 Automobile. Company shall pay Executive for all reasonable expenses
(including, but not limited to, lease payments, liability insurance and fuel
costs), of up to $2,000 per month incurred in operating an automobile for
Executive's use in the performance of his duties hereunder and in the conduct of
Company's affairs, which automobile shall also be available to Executive and his
spouse for personal use.
7. INDEMNIFICATION.
Executive shall be indemnified by the Company against expenses,
including attorneys' fees, actually and necessarily incurred by him in
connection with the defense of any action, suit, investigation or proceeding or
similar legal activity, regardless of whether criminal, civil, administrative or
investigative in nature ("Claim"), to which he is made a party or is otherwise
subject to, by reason of his being or having been an officer, employee, director
or agent of Company, to the full extent permitted by applicable law and the
Certificate of Incorporation of Company. Such right of indemnification is in
addition to and not exclusive of any other rights to which Executive may be
entitled under Company's Certificate of Incorporation or By-laws, as in effect
from time to time, any agreement or otherwise.
8. TERMINATION OF EMPLOYMENT.
8.1 Termination Without Cause or for Good Reason.
(a) Company may terminate Executive's employment at any time for
any reason. If Executive's employment is terminated by the
Company other than (i) for Cause (as defined in Section 8.4
hereof), or (ii) as a result of Executive's death or Permanent
Disability (as defined in Section 8.2 hereof), or (iii) if the
Term expires following the giving of a Non-renewal Notice; or
if Executive terminates his employment for Good Reason (as
defined in Section 8.1 (b) hereof) prior to the Expiration
Date; Executive shall receive or commence receiving as soon as
practicable in accordance with the terms of this Agreement:
4
(i) such payments under applicable plans or programs,
including but not limited to those referred to in
Section 5.3 hereof, to which he is entitled pursuant
to the terms of such plans or programs through the
date of termination;
(ii) any earned but unpaid bonus which amount shall be
paid in a cash lump sum within thirty (30) days of
the date of termination;
(iii) a severance payment (the "Severance Payment"), which
amount shall be paid in a cash lump sum within thirty
(30) days of the date of termination, in the amount
of the greater of (a) $2,500,000; or (b) the
aggregate amount of the Executive's Base Salary for
the then remaining term of this Agreement;
(iv) immediate vesting of all unvested stock options and
the extension of the exercise period of such options
to the later of the longest period permitted by the
Company's stock option plans or ten years following
the Termination Date;
(v) payment in respect of accrued but unused vacation
days (the "Vacation Payment") and compensation earned
but not yet paid (the "Compensation Payment") which
amount shall be paid in a cash lump sum within thirty
(30) days of the date of termination; and
(vi) continued coverage, at the Company's expense for a
period of 24 months from the date of termination
under all executive health, dental, disability and
life insurance plans in which the Executive
participates as of the date of termination in
accordance with the respective terms thereof.
(b) For purposes of this Agreement, "Good Reason" shall mean any
of the following (unless done with Executive's express prior
written consent):
(i) Any material breach by Company of any provision of
this Agreement, including, without limitation, any
material reduction by Company of Executive's duties
or responsibilities (except in connection with the
termination of Executive's employment for Cause, as a
result of Permanent Disability, as a result of
Executive's death or by Executive other than for Good
Reason);
(ii) Any reduction by the Company in Executive's Base
Salary;
5
(iii) The failure by the Company to obtain the specific
assumption of this Agreement by any successor or
assign of Company as provided for in Section 11
hereof;
(iv) Moving the principal executive offices of Company to
a location which is more than 50 miles from its
present location; or
(v) Upon a Change of Control of Company (as such term is
hereinafter defined).
8.2 Permanent Disability. If Executive becomes totally and permanently
disabled (as defined in the Company's disability benefit plan applicable to
senior executive officers as in effect on the date thereof) ("Permanent
Disability"), Company or Executive may terminate Executive's employment on
written notice thereof, and Executive shall receive or commence receiving, as
soon as practicable:
(i) amounts payable pursuant to the terms of the
disability insurance policy or similar arrangement
which Company maintains during the term hereof;
(ii) the Vacation Payment and the Compensation Payment
which shall be paid to Executive as a cash lump sum
within 30 days of such termination;
(iii) such payments under applicable plans or programs,
including but not limited to those referred to in
Section 5.3 hereof, to which he is entitled pursuant
to the terms of such plans or programs through the
date of termination; and
(iv) immediate vesting of all unvested stock options.
8.3 Death. In the event of Executive's death during the term of his
employment hereunder, Executive's estate or designated beneficiaries shall
receive or commence receiving, as soon as practicable in accordance with the
terms of this Agreement:
(i) compensation equal to one year's Base Salary which
shall be paid within 30 days of such termination;
(ii) any death benefits provided under the Executive
benefit programs, plans and practices referred to in
Sections 5.3 and 6.1 hereof, in accordance with their
respective terms;
(iii) the Vacation Payment and the Compensation Payment
which shall be paid to Executive as a cash lump sum
within 30 days of such termination; and
6
(iv) such other payments under applicable plans or
programs, including but not limited to those referred
to in Section 5.3 hereof, to which Executive's estate
or designated beneficiaries are entitled pursuant to
the terms of such plans or programs.
8.4 Voluntary Termination by Executive: Discharge for Cause. The
Company shall have the right to terminate the employment of Executive for Cause
(as hereinafter defined). In the event that Executive's employment is terminated
by Company for Cause, as hereinafter defined, or by Executive other than for
Good Reason or other than as a result of the Executive's Permanent Disability or
death, prior to the Termination Date, Executive shall be entitled only to
receive, as a cash lump sum within 30 days of such termination (i) the
Compensation Payment and the Vacation Payment; and (ii) earned but unpaid Bonus
attributable to a calendar year prior to the calendar year in which such
termination occurs. As used herein, the term "Cause" shall be limited to (i)
willful malfeasance, willful misconduct or gross negligence by Executive in
connection with his employment in a matter of material importance to the conduct
of the Company's affairs which has a material adverse affect on the business of
the Company, (ii) continuing refusal by Executive to perform his duties
hereunder which continues for thirty (30) days after notice of any such refusal
to perform such duties or direction is given to Executive by the Board of
Directors, (iii) any material breach of this Agreement by Executive, which
continues for thirty (30) days after notice of any such material breach is given
to Executive by the Board of Directors, or (iv) the conviction of Executive for
commission of a felony. For purposes of this subsection, no act or failure to
act on the Executive's part shall be considered "willful" unless done, or
omitted to be done, by the Executive not in good faith and without reasonable
belief that his action or omission was in the best interest of the Company.
Termination of Executive pursuant to this Section 8.4 shall be made by delivery
to Executive of a copy of a resolution duly adopted by the affirmative vote of
all of the members of the Board of Directors called and held for such purpose
(after 30 days prior written notice to Executive and reasonable opportunity for
Executive to be heard before the Board of Directors prior to such vote), finding
that in the good faith business judgment of such Board of Directors, Executive
was guilty of conduct set forth in any of clauses (i) through (iv) above and
specifying the particulars thereof.
8.5. Late Payments. Any amounts due hereunder to Executive which remain
unpaid after their due date, shall bear interest from the due date until paid at
a rate of the prime rate (in effect on the date thereof for First Union Bank,
N.A.).
9. RESTRICTIVE COVENANTS.
9.1 Confidentiality. Executive recognizes that, by reason of his
employment hereunder, he may acquire confidential information and trade secrets
concerning the operation of Company, the use or disclosure of which could cause
Company substantial loss and damages which could not be readily calculated and
for which no remedy at law would be adequate. Accordingly, Executive covenants
and agrees with Company that he will not, either during the term of his
employment hereunder and for a period of one (1) year after the expiration or
termination of this Agreement, disclose, furnish or make accessible to any
person, firm or corporation (except (i) in the ordinary course of business in
performance of Executive's obligations to Company hereunder or (ii) when
7
required to do so by law or (iii) with the prior written consent of Company
pursuant to authority granted by a resolution of the Board of Directors) any
confidential information that Executive has learned or may learn by reason of
his association with Company. As used herein, the term "confidential
information" shall include, without limitation, information not previously known
or disclosed to the public or to the trade by Company with respect to the
business or affairs of Company, including, without limitation, information
relating to business opportunities, customer lists, price lists, trade secrets,
systems, techniques, procedures, methods, inventions, facilities, financial
information, business plans or prospects.
9.2 Non-Competition. During the period of his employment hereunder and
for one year thereafter, Executive agrees that, without the prior written
consent of Company, (A) he will not, directly or indirectly, either as
principal, manager, agent, consultant, officer, stockholder, partner, investor,
lender or Executive or in any other capacity, carry on, be engaged in or have
any financial interest in, any business which is directly in competition with
the business of Company and/or its subsidiaries and (B) he shall not, on his own
behalf or on behalf of any person, firm or company, directly or indirectly,
solicit or offer employment to any person who has been employed by Company at
any time during the 12 months immediately preceding such solicitation.
10. INJUNCTIVE RELIEF.
Without intending to limit the remedies available to Company, Executive
acknowledges that a breach of the covenants contained in Section 9 of this
Agreement may result in material irreparable injury to Company for which there
is no adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely and that, in the event of such a breach or threat
thereof, Company shall be entitled to obtain a temporary restraining order
and/or a preliminary or permanent injunction restraining Executive from engaging
in activities prohibited by such Section or such other relief as may be required
to specifically enforce any of the covenants in such Section.
11. ASSIGNMENT.
This contract shall be binding upon and inure to the benefit of the
heirs and representatives of Executive and the assigns and successors of
Company, but neither this Agreement nor any rights or obligations hereunder
shall be assignable or otherwise subject to hypothecation by Executive (except
by will or by operation of the laws of intestate succession) or by Company,
except that Company may assign this Agreement to any successor (whether by
merger, purchase or otherwise) to all or substantially all of the stock, assets
or businesses of Company, if such successor expressly agrees to assume the
obligations of Company hereunder.
8
12. CHANGE IN CONTROL.
12.1 Definition. For purposes of this Agreement, a "Change in Control"
shall be deemed to have occurred if (i) there shall be consummated (A) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the Company's
Common Stock would be converted into cash, securities or other property, other
than a merger of the Company in which the holders of the Company's Common Stock
immediately prior to the merger have substantially the same proportionate
ownership of common stock of the surviving corporation immediately after the
merger, or (B) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all or substantially all the assets of
the Company, or (ii) the stockholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company, or (iii) any person
(as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934 (the "Exchange Act")), other than the Company or any Executive
benefit plan sponsored by the Company, or such person, who, on the Effective
Date hereof, is a 20% or more beneficial owner, shall become the beneficial
owner (within the meaning of Rule 13d-3 under the Exchange Act) of securities of
the Company representing 20% or more of the combined voting power of the
Company's then outstanding securities ordinarily (and apart from rights accruing
in special circumstances) having the right to vote in the election of directors,
as a result of a tender or exchange offer, open market purchases, privately
negotiated purchases or otherwise, or (iv) at any time during a period of two
consecutive years, individuals who at the beginning of such period, constituted
the Board of Directors of the Company shall cease for any reason to constitute
at least a majority thereof, unless the election or the nomination for election
by the Company's stockholders of each new director during such two-year period
was approved by a vote of at least two-thirds of the directors then still in
office, who were directors at the beginning of such two-year period.
12.2 Rights and Obligations. If a Change in Control of the Company
shall have occurred while the Executive is an Executive of the Company, the
Executive shall be entitled to the compensation provided in Section 8.1 of this
Agreement upon the subsequent termination of the Executive's employment with the
Company by either the Company, or the Executive, for any reason, within two
years of the date upon which the Change in Control shall have occurred, unless
such termination is a result of (i) the Executive's death; (ii) the Executive's
Disability; (iii) the Executive's Retirement; or (iv) the Executive's
termination for Cause, and except that the Severance Payment shall equal five
(5) times Executive's Base Salary and shall be payable in a cash lump sum no
later than thirty (30) days after such termination of employment, and the
continuation of benefits shall be for a period of five years (collectively the
"Termination Amount"). If Executive elects not to terminate and, subsequent to
such Change in Control, Executive's employment is terminated by Company other
than for Cause, or if Executive terminates this Agreement for Good Reason,
Executive shall be entitled to receive the Termination Amount.
9
13. NOTICES.
Any notice required or permitted to be given under this Agreement shall
be in writing and shall be deemed sufficiently given if delivered in person, or
mailed by certified first class mail, postage prepaid, or sent by a reputable
overnight courier service, addressed to the party to be notified at the
address(es) specified below (or such other address as may be specified by notice
in this manner):
Notice to Company:
QMed, Inc.
00 Xxxxxxxxxxx Xxx
Xxxxxxxxx, XX 00000
Attention: Board of Directors
Notice to Executive:
Xxxxxxx X. Xxx
00 Xxx Xxxxx Xxxxxx
Xxxxx Xxxxxxxx, XX 00000
Notices shall be deemed given as of the date delivered or the date
entrusted to the United States postal service or courier service, provided that
delivery to the recipient actually occurs.
14. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be an original and all of which shall constitute but one and the
same instrument.
15. HEADINGS.
The headings in this Agreement are for convenience only and in no way
define, limit, or describe the scope or intent of any provision of this
Agreement.
16. WAIVER.
The waiver by either party of noncompliance by the other party of any
term or provision of this Agreement shall not be construed as a waiver of any
other non-compliance.
10
17. ARBITRATION.
In the event a dispute arises under any term or provision hereof, such
dispute shall be settled by arbitration in the county in the State of New Jersey
selected by the Executive, by and in accordance with the rules then existing of
the American Arbitration Association. The reasonable legal fees of the Executive
in connection with a matter subject to arbitration hereunder shall be paid by
the Company.
18. SEVERABILITY.
If any one or more of the provisions contained in this Agreement shall
be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other
provisions hereof.
19. MITIGATION OF DAMAGES.
Executive shall not be required to mitigate damages or the amount of
any payment provided for under this Agreement by seeking other employment or
otherwise after the termination of his employment hereunder.
20. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW JERSEY WITHOUT REGARD TO ITS CONFLICTS OF LAWS
RULES OR PRINCIPLES.
[SIGNATURE PAGE FOLLOWS]
11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
QMED, INC.
By: /s/ Xxxx Xxxxxx
-------------------------------------
Xxxx Xxxxxx, Executive Vice President
EXECUTIVE
/s/ Xxxxxxx X. Xxx
-------------------------------------
Xxxxxxx X. Xxx
12
