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Exhibit 10.19
SEVERANCE AGREEMENT
This Severance Agreement (the "Agreement") is dated November 3, 1999,
between InKine Pharmaceutical Company, Inc. (the "Company") and Xxxxx X.
Xxxxxxxx ("Xxxxxxxx").
Xxxxxxxx has been employed by the Company since 1995, and is currently
employed as President and Chief Operating Officer of the Company pursuant to the
terms of an Employment Agreement with the Company dated as of November 6, 1997
(the "Employment Agreement"). The Company and Xxxxxxxx have mutually agreed to
terminate the Employment Agreement and Xxxxxxxx'x employment with the Company on
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Xxxxxxxx,
intending to be legally bound, agree as follows:
1. Termination of Employment and Employment Agreement.
x. Xxxxxxxx hereby resigns as an employee of the Company, as
President of the Company, as a Director of the Company, and as an employee,
officer and director of each Affiliate (as defined below) of the Company. The
Company accepts such resignations, effective as of the date hereof. "Affiliate"
means any partially-owned or wholly-owned subsidiary of the Company and any
entity controlled by, controlling or under common control with the Company.
b. The Employment Agreement is terminated and of no further
force and effect from and after the date hereof.
2. Severance Payments and Benefits.
a. The Company shall pay Xxxxxxxx as a "Xxxxxxxxx Payment" the
aggregate sum of $256,667, subject to deductions required by law, which is
equivalent to fourteen months severance pay for the period November 1, 1999
through December 31, 2000 (the "Severance Period"). The Severance Payment shall
be made in equal semi-monthly installments of $9,166.67, in arrears, less
deductions as aforesaid, during the Severance Period.
b. The Company shall pay Xxxxxx X. Xxxxxxxx'x actual and
customary fee, but not in excess of $22,000, for providing Xxxxxxxx with
outplacement advisory and counseling services (the "Outplacement Payment"). Such
payments shall be made to Xxxxxxxx upon presentation of invoices to the Company.
x. Xxxxxxxx shall be paid the sum of $19,730.92, representing
unused vacation time, upon execution of this Severance Agreement.
x. Xxxxxxxx holds options to purchase a total of 1,871,182
shares of the Company's common stock (collectively, the "Options") of which a
portion are currently exercisable. A schedule of the Options is set forth on
Exhibit "A" hereto. The Options are exercisable at various times through June,
2000 and April, 2009. The Company agrees that, regardless of their stated
exercise and expiration dates, each of the Options is amended such that it shall
be immediately exercisable from and after the date hereof through the close of
business on June 30, 2003. Except as amended with respect to
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the date of its exercise and expiration, each of the Options shall remain in
full force and effect in accordance with its terms. Xxxxxxxx agrees that from
the date hereof through June 30, 2005 he will not on any day sell in the open
market that number of shares of the Company's common stock which is greater than
twenty percent (20%) of the average daily trading volume of such shares on the
principal exchange or market on which such shares are traded for the three
months immediately preceding the date of such sale. The Company agrees that so
long as it maintains an effective Registration Statement on Form S-8, and so
long as the shares underlying the Options can continue to be be included for
sale and resale in such Registration Statement, the Company will include such
underlying shares therein at no cost to Xxxxxxxx.
e. It is understood and agreed that the Severance Payment, the
Outplacement Payment and the changes to the terms of the Options will provide
Xxxxxxxx with compensation substantially in excess of that to which Xxxxxxxx
would otherwise be entitled under the existing policies of the Company.
3. No Further Obligations of the Company. The payments and other
consideration and benefits to Xxxxxxxx set forth in this Severance Agreement
shall be in lieu, and in complete discharge, of all obligations owed by the
Company to Xxxxxxxx. Without limiting the generality of the foregoing, Xxxxxxxx
shall have no right to receive any payments or benefits from or on behalf of the
Company on account of automobiles, health, disability or life insurance or other
items. Xxxxxxxx acknowledges he is not entitled to coverage under COBRA, as he
has not previously maintained health insurance through the Company. Nothing
herein shall affect Xxxxxxxx'x rights with respect to his interests in the
Company's 401(k) Plan.
4. Conditions of Payments and Option Adjustments. The Company has
agreed to provide to Xxxxxxxx the xxxxxxxxx payments and benefits set forth in
Section 2(a) -(d) hereof contingent upon Xxxxxxxx'x honoring the release of
claims and covenant not to xxx in favor of the Company and its Affiliates set
forth in Section 12 below, and Xxxxxxxx'x continued compliance with the other
provisions of this Agreement.
5. Non-Disclosure. Xxxxxxxx hereby agrees that he shall not, at any
time hereafter, disclose or use for any purpose confidential information of the
Company (or any of its Affiliates), except as required by applicable law or
legal process; provided, however, that confidential information shall not
include any information known generally to the public or ascertainable from
public or published sources (other than as a result of unauthorized disclosure
by Xxxxxxxx) or any information of a type not otherwise considered confidential
by persons engaged in the same business or a business similar to that conducted
by the Company. Xxxxxxxx acknowledges and agrees that the Company will suffer
irreparable injury in the event of any material breach of this Section 5, that
damages resulting from such injury will be incapable of being precisely
measured, and that the Company will not have an adequate remedy at law to
redress the harm which such violation shall cause. Therefore, Xxxxxxxx agrees
that the Company shall have the rights and remedies of specific performance and
injunctive relief, in addition to any other rights or remedies that may be
available at law or in equity or under this Agreement, in respect of any
failure, or threatened failure, on the part of Xxxxxxxx to comply with the
provisions of this Section 5, including, but not limited to, temporary
restraining orders and temporary injunctions to restrain any violation or
threatened violation of this Section 5 by Xxxxxxxx.
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6. Certain Representations of Xxxxxxxx and the Company.
a. As an inducement to the Company to enter into and perform
this Severance Agreement, Xxxxxxxx represents and warrants to the Company the
following.
(i) All records, files, documents and equipment, all
information relating to employees (other than himself), technology,
Company licensees, licensors and suppliers, and any other materials
that in any way relate to the business of the Company and its
Affiliates which Xxxxxxxx has accumulated during his employment by the
Company, other than information and documents publicly known or
disseminated, are the property of the Company, including all duplicates
and copies of any of the foregoing. All such property, including all
files, letters, memoranda, reports, records, computer programs,
listings or other written, photographic or other tangible material
concerning the business or the financial affairs of the Company or any
Affiliate has been returned to the sole possession of the Company.
Xxxxxxxx has not retained duplicates of any of the foregoing. Nothing
contained herein shall be construed to limit Xxxxxxxx' ability to use
"know-how" which is personal to him, provided the information or
documents used by him are publicly known or disseminated, or
confidential to Xxxxxxxx or a third-party,
(ii) Xxxxxxxx has disclosed promptly in writing to
the Company all inventions, ideas, discoveries, and improvements,
whether or not patentable, conceived by Xxxxxxxx during the period of
Xxxxxxxx'x employment with the Company, whether alone or with others,
and whether or not during regular business hours, or on the Company's
premises or with the aid of Company materials, which pertain in any way
to Xxxxxxxx'x work with the Company or to any business activity which
is or at the time of such conception may be carried on by the Company
or an Affiliate. All such inventions, ideas, discoveries, and
improvements are the property of the Company, to which Xxxxxxxx hereby
assigns and transfers forever all Xxxxxxxx'x rights, titles and
interests. Xxxxxxxx, upon reasonable request by the Company and at the
Company's sole expense, will prepare and execute applications for
patents for such inventions, ideas, discoveries, and improvements, both
in the United States and in foreign countries, and will do everything
necessary to ensure the issuance of such patents.
b. As an inducement to Xxxxxxxx to enter into and perform this
Severance Agreement, the Company represents and warrants to Xxxxxxxx the
following.
(i) This Severance Agreement has been duly authorized
by all necessary corporate action on the part of the Company. Without
limiting the generality of the foregoing, no further corporate action
need be taken to effect the change in the terms of the Options set
forth herein.
(ii) The Company has reserved, and at all times will
reserve a sufficient number of unissued shares of its common stock to
be issued to Xxxxxxxx upon exercise of the Options.
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(iii) The persons executing this Severance Agreement
on behalf of the Company are duly authorized to do so.
(iv) The shares underlying the Options are currently
subject to an effective Registration Statement on Form S-8.
7. Business Goodwill. At all times following the date hereof, Xxxxxxxx
shall make no comments or take any other actions, direct or indirect, that will
disparage the Company or its officers and directors in such capacity or
disparage its or their business reputation or goodwill. At all times following
the date hereof, the Board of Directors of the Company will take reasonable
efforts to instruct its members and each officer of the Company not to make
comments or take any other actions, direct or indirect, that will disparage
Xxxxxxxx or his business reputation or goodwill. For a period of three(3) years
from the date hereof, Xxxxxxxx agrees to provide reasonable assistance to the
Company with respect to all reasonable requests to testify in connection with
any legal proceeding or matter relating to the Company, including but not
limited to any federal, state or local audit, proceeding or investigation, other
than proceedings relating to the enforcement of this Severance Agreement or
other proceedings in which Xxxxxxxx is a named party whose interests are adverse
to those of the Company.
8. Non-Solicitation of Employees. During the Severance Period and for a
period of one (1) year thereafter, Xxxxxxxx shall not directly or indirectly:
(i) attempt to hire any employee of the Company or any of its Affiliates; (ii)
assist in such hiring by any other person; (iii) encourage any such employee to
terminate his employment with the Company or any of its Affiliates; (iv)
encourage any customer of the Company or any of its Affiliates to terminate its
relationship with the Company or such Affiliate; or (v) encourage any supplier
of the Company or any of its Affiliates to terminate its relationship with the
Company or such Affiliate. None of the foregoing shall be deemed to prohibit
Xxxxxxxx from responding to an unsolicited request to Xxxxxxxx to provide a
recommendation on behalf of any person.
9. Covenant Not to Compete. During the Severance Period, and for a
period of ten (10) months years thereafter, Xxxxxxxx may not, as an owner,
officer, director, employee, agent of, or adviser or consultant to a business
enterprise anywhere in the world, engage in the development or commercialization
of a purgative or laxative, TNF or IL-6 as related to inflammatory bowel
disease, drugs or devices used to treat ITP, or thrombospondin technology
(collectively, the "Competitive Technologies"). Each of the Competitive
Technologies is competitive with the technology and products which are being
developed or commercialized by the Company at this time. Notwithstanding the
foregoing, Xxxxxxxx may serve as an owner, officer, director, employee, agent
of, or adviser or consultant to a business entity engaged in Competitive
Technologies if Xxxxxxxx does not participate in any manner with the entity's
activities in Competitive Technology, and if Xxxxxxxx is effectively screened
from such participation. The Company shall have the right to be provided
reasonable assurance or evidence of such screening. Xxxxxxxx acknowledges that
the scope and term of the foregoing restriction is reasonable in light of
Xxxxxxxx'x prior roles at the Company, and will not unduly limit his ability to
obtain employment in one or more areas of his expertise.
10. Consulting Agreement. The Company and Xxxxxxxx may, after the date
hereof, elect to enter into a Consulting Agreement which provides for Xxxxxxxx
to consult with the Company for the purpose of negotiating the terms of a
chemical supply agreement with a third-party supplier.
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11. Release by Company. The Company, for itself, its wholly owned
subsidiaries and those Affiliates it controls, does hereby release and forever
discharge Xxxxxxxx, his heirs, successors and assigns, of and from all manner of
action and actions, causes of action, suits, debts, dues, accounts, covenants,
contracts, agreements, judgments, claims and demands whatsoever, in law or
equity, which the Company or its Affiliates ever had, now has or which its
successors or assigns, or any of them, has or hereafter can, shall or may have,
for or by reason of any cause, matter or thing whatsoever up to and including
the date of execution hereof, except for any claim or right under this Severance
Agreement. The Company agrees that it shall not file a lawsuit against Xxxxxxxx
to assert any such claims.
12. Release by Xxxxxxxx.
x. Xxxxxxxx does hereby release and forever discharge the
Company, its successors and assigns, and all its Affiliates, and each of their
directors, officers, employees and agents of and from all manner of action and
actions, causes of action, suits, debts, dues, accounts, covenants, contracts,
agreements, judgments, claims, and demands whatsoever, in law or equity,
including, without limitation, claims for any alleged violation of the
Employment Agreement, the Civil Rights Act of 1964s and 1991, the Equal Pay Act
of 1963, the Age Discrimination in Employment Act of 1967, the Rehabilitation
Act of 1973, the Older Workers Benefit Protection Act of 1990, the Americans
with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the
Pennsylvania Human Relations Act and any other federal or state law, regulation
or ordinance, or public policy, contract or tort law having any bearing
whatsoever on the terms and conditions of employment or retirement of employment
which Xxxxxxxx ever had, now has, or which his heirs, successors or assigns, or
any of them, has or hereafter can, shall or may have, for or by reason of any
cause, matter or thing whatsoever, up to and including the date hereof, except
for any claim or right under this Severance Agreement. Xxxxxxxx agrees that he
shall not file a lawsuit against the Company or any of its Affiliates to assert
any such claims. Nothing in the foregoing release, however, shall affect or
interfere with Xxxxxxxx' rights, if any, to be provided a defense, contribution
and/or indemnification under any applicable federal or state law, insurance
policy, or the by-laws of the Company or any of its Affiliates.
x. Xxxxxxxx acknowledges that in arriving at his decision to
agree to the foregoing general release, he has not relied on any
representations, promises or agreements of any kind, including oral statements
by representatives of the Company, except as set forth in this Severance
Agreement.
x. Xxxxxxxx acknowledges that he has carefully read and fully
understands the provisions of the foregoing Severance Agreement, including in
particular the general release he has granted the Company in Section 12(a), that
he has had twenty-one (21) days from the date he received a copy of this
Severance Agreement in which to consider entering into this Severance Agreement
that if he signs and returns this Severance Agreement before the end of that
twenty-one (21) day period then he will have voluntarily waived his right to
consider the Severance Agreement for the full twenty-one (21) days. Xxxxxxxx
acknowledges that he has executed this Severance Agreement voluntarily, with
advice of counsel of his choice and with full knowledge of its significance,
meaning and binding effect, including in particular the general release in
Section 12(a).
x. Xxxxxxxx acknowledges that he may revoke this Severance
Agreement within seven (7) days of his execution of this document by submitting
a written notice of such revocation to the Company. Xxxxxxxx also understands
that this Agreement shall not become effective or enforceable until the
expiration of that seven (7) day period. If Xxxxxxxx revokes this Severance
Agreement as
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aforesaid, the Employment Agreement shall not be terminated, Xxxxxxxx will have
ceased to be a Director of the Company, and Xxxxxxxx shall promptly return to
the Company all amounts paid to him hereunder.
13. Miscellaneous.
a. Complete Agreement. This Severance Agreement supersedes all
prior agreements and sets forth the entire understanding between the parties
hereto with respect to the subject matter hereof and cannot be changed,
modified, extended or terminated except upon written amendment approved by the
Board of Directors of the Company and executed on its behalf by a duly
authorized officer, and executed by Xxxxxxxx.
b. Waiver. The failure at any time to enforce any of the
provisions of this Severance Agreement shall in no way be construed as a waiver
of such provisions and shall not affect the right of either party thereafter to
enforce each and every provision hereof in accordance with its terms.
c. Governing Law; Jurisdiction. This Severance Agreement and
performance under it, and all proceedings that may ensue from its breach, shall
be construed in accordance with and under the laws of the Commonwealth of
Pennsylvania.
d. Severability. Whenever possible, each provision of this
Severance Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Severance Agreement
shall be held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Severance Agreement; provided, however, that the
invalidity of the release contained in Section 12(a) determined as a result of
litigation between Xxxxxxxx and the Company, shall nullify the Company's
obligation to provide, and the Company shall be entitled to a return of, any and
all payments made and benefits provided pursuant to this Severance Agreement.
e. Binding Effect; Assignment. The rights and obligations of
the parties under this Severance Agreement shall be binding upon and inure to
the benefit of their respective successors, assigns, executors, administrators
and heirs, provided, however, that neither the Company nor Xxxxxxxx may assign
any duties under this Severance Agreement without the prior written consent of
the other.
f. Notices. All notices and other communications under this
Severance Agreement shall be in writing and shall be given in person or by
telecopy or, overnight delivery service (e.g., Federal Express), and shall be
deemed to have been duly given when delivered personally or by overnight
delivery, or one day after transmission of a telecopy, as the case may be, to
the respective persons named below:
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If to the Company: InKine Pharmaceutical Company, Inc.
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attn: Chairman
If to Xxxxxxxx: Xxxxx X. Xxxxxxxx, Ph.D.
000 Xxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
g. Advice of Counsel. Xxxxxxxx acknowledges that he has been
advised by the Company to consult with legal counsel of his own choosing with
respect to the subject matter and the terms of this Severance Agreement, that he
has done so and that this Agreement is the product of negotiations between the
Company and Xxxxxxxx.
h. Confidentiality. Xxxxxxxx and the Company agree to keep
confidential the existence of this Agreement and the terms unless otherwise
required by law, rule or regulation. Notwithstanding the foregoing, Xxxxxxxx may
disclose the terms of this Agreement to his financial advisers and family
members, subject to such persons' agreeing to maintain the confidentiality
hereof in accordance with the first sentence of this Section 12(h).
IN WITNESS WHEREOF, the undersigned have executed this Severance
Agreement as of the date first above written.
Attest: INKINE PHARMACEUTICAL COMPANY, INC
/s/ Xxxxxx X. Apple By: /s/ Xxxxxxx X. Xxxxx
--------------------------- -------------------------------
Secretary President
/s/ Xxxxx X. Xxxxxxxx
-------------------------------
XXXXX X. XXXXXXXX
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Schedule A - agreement
OPTION TOTAL 1,871,182 Today's date 02-Nov-99
XXXXX XXXXX VEST GRANT NUMBER EXERCISE
NUMBER DATE DATE VESTED PRICE
------ ----- ---- ------ -----
1 09-Jun-95 01-Jan-95 100,000 50,000 $1.13
1 09-Jun-96 25,000 $1.13
1 09-Jun-97 25,000 $1.13
2 15-Jun-96 15-Jun-97 60,000 20,000 $0.88
2 15-Jun-98 20,000 $0.88
2 15-Jun-99 20,000 $0.88
3 10-Dec-96 10-Dec-96 40,000 40,000 $0.50
4 03-Jan-97 06-Nov-97 500,000 500,000 $0.61
4 06-Dec-97 1,071,182 29,755 $1.00
4 06-Jan-98 29,755 $1.00
4 06-Feb-98 29,755 $1.00
4 06-Mar-98 29,755 $1.00
4 06-Apr-98 29,755 $1.00
4 06-May-98 29,755 $1.00
4 06-Jun-98 29,755 $1.00
4 06-Jul-98 29,755 $1.00
4 06-Aug-98 29,755 $1.00
4 06-Sep-98 29,755 $1.00
4 06-Oct-98 29,755 $1.00
4 06-Nov-98 29,755 $1.00
4 06-Dec-98 29,755 $1.00
4 06-Jan-99 29,755 $1.00
4 06-Feb-99 29,755 $1.00
4 06-Mar-99 29,755 $1.00
4 06-Apr-99 29,755 $1.00
4 06-May-99 29,755 $1.00
4 06-Jun-99 29,755 $1.00
4 06-Jul-99 29,755 $1.00
4 06-Aug-99 29,755 $1.00
4 06-Sep-99 29,755 $1.00
4 06-Oct-99 29,755 $1.00
4 06-Nov-99 29,755 $1.00
4 06-Dec-99 29,755 $1.00
4 06-Jan-00 29,755 $1.00
4 06-Feb-00 29,755 $1.00
4 06-Mar-00 29,755 $1.00
4 06-Apr-00 29,755 $1.00
4 06-May-00 29,755 $1.00
4 06-Jun-00 29,755 $1.00
4 06-Jul-00 29,755 $1.00
4 06-Aug-00 29,755 $1.00
4 06-Sep-00 29,755 $1.00
4 06-Oct-00 29,755 $1.00
4 06-Nov-00 29,755 $1.00
5 13-Apr-99 100,000 $1.38
