EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit 10.96
[Execution Version 10/30/2009]
This EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of October
30, 2009, 2009 (the “Effective Date”), by and between Cornerstone Therapeutics Inc., a
Delaware corporation (the “Company”), and Xxxxxx X. X. Xxxxxx (the “Executive”).
WHEREAS, the Company desires to employ the Executive and enter into this Agreement, which will
set forth the terms and conditions under which the Executive will serve the Company and its
affiliates; and
WHEREAS, the Executive wishes to be employed by the Company on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the premises and mutual agreements hereinafter contained,
the parties hereto agree as follows:
1. Term of Employment. The Company hereby agrees to employ the Executive, and the
Executive hereby accepts employment with the Company, upon the terms set forth in this Agreement,
for the period commencing on the Effective Date (the “Commencement Date”) and ending on the
one year anniversary of the Effective Date (the “Initial Term”) unless renewed or sooner
terminated in accordance with the provisions of this Section 1 or Section 4, respectively. Upon
each subsequent anniversary of the Commencement Date, the term of this Agreement shall
automatically extend for an additional year (such period, including the Initial Term and as it may
be extended, the “Employment Period”) unless (i) either the Company or the Executive gives
at least ninety (90) days notice of non-renewal prior to such anniversary or (ii) the Agreement is
terminated in accordance with the provisions of Section 4.
2. Title; Capacity. The Executive shall serve as Executive Vice President, General
Counsel and Secretary and in such other positions as the Company or its Board of Directors (the
“Board”) may determine from time to time. The Executive shall be based at the Company’s
office in Cary, North Carolina. The Executive shall be subject to the supervision of, and shall
have such authority as is delegated to him by, the President and Chief Executive Officer of the
Company or his designee.
The Executive hereby accepts such employment and agrees to undertake the duties and
responsibilities inherent in such position and such other duties and responsibilities as the
President and Chief Executive Officer or his designee shall from time to time reasonably assign to
him. The Executive agrees to devote his entire business time, attention and energies to the
business and interests of the Company during the Employment Period; provided,
however, that the Executive may serve as a consultant or a member of an advisory board or a
board of directors with the prior consent of the Board. The Company acknowledges that the
Executive currently is serving, and will continue to serve, on one board of directors and one
advisory board, which in
the aggregate may each require approximately ten hours per year of the Executive’s time. The
Executive agrees to abide by any rules, regulations, instructions, personnel practices and policies
of the Company that are applicable to him and any changes therein that may be adopted from time to
time by the Company.
3. Compensation and Benefits.
3.1. Salary. The Company shall pay the Executive a base salary for the year starting
October 31, 2009, 2009 in accordance with its regular payroll practices at an annualized rate of
$275,000, less lawful deductions. Such salary shall be subject to adjustment thereafter as
determined by the Board.
3.2. Annual Target Cash Bonus. The Executive shall be eligible to receive an annual
target cash bonus of up to thirty-five (35) percent of his then annual base salary (“Target
Cash Bonus”). The Board (or a committee thereof) shall determine the amount of the actual
award, if any, based on overall corporate performance and individual performance. Actual awards
may be greater than or less than the Executive’s Target Cash Bonus, depending in part upon the
extent to which actual performance exceeds or falls below the performance goals. Any bonus shall
be paid in a single lump sum, subject to lawful deductions, at such time as bonuses are regularly
paid to senior executives of the Company, but in any event such bonus shall be paid on or before
March 15 of the year following the year to which the bonus relates. Except as may be expressly
provided below, the Executive must be employed on the date that the bonus is paid to be eligible
for any Target Cash Bonus. Each cash bonus award that may become payable shall be paid solely from
the general assets of the Company. Notwithstanding the foregoing, the Executive shall not be
eligible for a Target Cash Bonus for 2009, but the Executive shall be eligible to receive a Target
Cash Bonus for 2010 of up to forty and eighty-three hundredths percent (40.83%) of his then annual
base salary.
3.3. Grant of Restricted Stock. The Executive will be granted, effective as of the
Effective Date, one hundred ten thousand (110,000) shares of restricted common stock. The grant
shall be on such terms and conditions as are described in Appendix A hereto.
3.4.
Fringe Benefits. The Executive shall be entitled to participate in all bonus and
benefit programs (excluding the Company’s Cash Bonus Program for Employees (Other than Executive
Officers)) that the Company establishes and makes available to its employees or executives, if any,
to the extent that the Executive’s position, tenure, salary, age, health and other qualifications
make him eligible to participate; provided, however, the Executive’s participation
is subject to the applicable terms, conditions and eligibility requirements of these plans as they
may exist from time to time. The Executive shall be entitled to accrue 1.67 vacation days per
month (four (4) weeks per year), and, if requested in writing by the President and Chief Executive
Officer, such vacation time shall be taken at such times as may be approved by the President and
Chief Executive Officer or his designee. Accrued but unused vacation at the end of each year will
not carry over past January 31 of the next year.
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3.5. Reimbursement of Expenses. The Company shall reimburse the Executive for all
reasonable travel, entertainment and other expenses incurred or paid by the Executive in connection
with, or related to, the performance of his duties, responsibilities or services under this
Agreement, in accordance with the Company’s expense reimbursement policy, including the Executive’s
presentation of documentation, expense statements, vouchers and/or such other supporting
information as the Company may request, provided, however, that the amount
available for such travel, entertainment and other expenses may be fixed in advance by the Board.
Notwithstanding the foregoing, (i) the expenses eligible for reimbursement in any particular
taxable year may not affect the expenses eligible for reimbursement in any other taxable year, (ii)
such reimbursement must be made on or before the last day of the year following the year in which
the expense was incurred, and (iii) the right to reimbursement is not subject to liquidation or
exchange for another benefit. During the 90 (ninety) day period from the Effective Date,,or for
such longer period as may be approved by the President and Chief Executive Officer in his sole
discretion (the last day of either such period being referred to as the “ Benefit Date”), the
Company shall reimburse the Executive for reasonable expenses he incurs or pays for business travel
to and from New Hope, Pennsylvania and Cary, North Carolina and for temporary board, lodging, and
transportation in or around Cary, North Carolina.
3.6. Car Allowance. Commencing with the Benefit Date, the Executive will receive a
monthly car allowance in the amount of $850. Both a valid driver’s license, an acceptable motor
vehicle record and personal automobile insurance are required at all times to operate a personal
motor vehicle on Company business. The Company reserves the right to change or discontinue its
vehicle reimbursement program at any time.
3.7. Reimbursement of Moving Expenses. Provided that the Executive remains an
employee in good standing with the Company through the Benefit Date, the Company shall reimburse
the Executive for reasonable moving expenses, including expenses for temporary housing, incurred or
paid by the Executive for establishing a residence in, and relocating his principal residence from
New Hope, Pennsylvania to, Wake county or any county adjacent thereto, in North Carolina. The
terms and conditions, including the amount thereof, shall be in accordance with the Company’s
policies and practices applicable to the Company’s executive vice presidents. All such
reimbursement amounts shall be paid on or before March 15 of the year following the year in which
the expense was incurred. Upon the Executive’s request, the Executive may receive payment on or
after the Benefit Date of amounts due under this Section 3.7 in a single lump sum. In the event
that Executive’s employment with the Company is terminated at the end of the Initial Term under
Section 4.1 pursuant to Executive’s notice of non-renewal, at the election of the Company for Cause
(as defined in Section 20) during the Initial Term, or at the election of the Executive without
Good Reason (as defined in Section 20) during the Initial Term, then, within thirty (30) days after
any such termination, the Executive will repay all of the amounts received by him pursuant to this
Section 3.7.
4. Employment Termination. The employment of the Executive by the Company pursuant to
this Agreement shall terminate upon the occurrence of any of the following:
4.1. Expiration of the Employment Period in accordance with Section 1;
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4.2. At the election of the Company, for Cause, immediately upon written notice by the Company
to the Executive;
4.3. At the election of the Executive, for Good Reason, upon written notice by the Executive
to the Company;
4.4. At the election of the Company without Cause during a Change of Control Period (as
defined in Section 20) or at the election of the Executive for Good Reason during a Change of
Control Period;
4.5. Upon the death or Disability (as defined in Section 20) of the Executive;
4.6. At the election of the Executive, without Good Reason, by providing written notice to the
Company; and
4.7. At the election of the Company, without Cause, by providing written notice to the
Executive.
5. Effect of Termination.
5.1. Termination for Cause. In the event the Executive’s employment is terminated for
Cause pursuant to Section 4.2, the Company shall pay to the Executive the compensation and benefits
otherwise payable to him under Section 3 through the last day of his actual employment by the
Company.
5.2. Termination at the Election of the Executive Without Good Reason. In the event
the Executive elects to terminate his employment pursuant to Section 4.6, the Company shall pay the
Executive the compensation and benefits otherwise payable to him under Section 3 through the last
day of his actual employment by the Company.
5.3. Termination for Death or Disability. If the Executive’s employment is terminated
by death or because of Disability pursuant to Section 4.5, in addition to any disability or life
insurance benefits for which the Executive or the estate of the Executive may be eligible, the
Company shall pay to the estate of the Executive or to the Executive, as the case may be, the
compensation and benefits otherwise payable to him under Section 3 through the last day of his
actual employment by the Company. In addition, if the Executive’s employment terminates as a
result of his death, the Executive’s estate shall receive an amount equal to a pro rata payment of
the annual cash bonus for which he would have been eligible, less lawful deductions, within ten
(10) calendar days following the effective date of the Release required by Section 5.6, but not
later than ninety (90) days following termination of employment. Notwithstanding the foregoing, if
the ninetieth (90th) day following the Executive’s termination from employment occurs in the
calendar year following the year of the Executive’s termination, then the payment shall be made no
earlier than January 1 of such subsequent calendar year. No other benefits are payable upon the
Executive’s termination pursuant to Section 4.5.
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5.4.
Termination Without Cause or for Good Reason and not during a Change of Control Period. Provided that the Executive remains an employee in good standing
with the Company through the Benefit Date, if the Executive’s employment is terminated without
Cause pursuant to Section 4.7, or for Good Reason pursuant to Section 4.3, and such termination
does not occur during a Change of Control Period, the Company shall:
(i) pay the Executive a lump sum payment equal to one (1) times his annualized
base salary, less lawful deductions, payable within ten (10) calendar days following
the effective date of the Release required by Section 5.6 but not later than ninety
(90) days following termination of employment. Notwithstanding the foregoing, if
the ninetieth (90th) day following the Executive’s termination from
employment occurs in the calendar year following the year of the Executive’s
termination, then the payment shall be made no earlier than January 1 of such
subsequent calendar year;
(ii) pay on behalf of the Executive, in accordance with the Company’s regular
payroll practices, on a monthly basis an amount equal to (a) one hundred (100)
percent of the Executive’s monthly health and dental COBRA premiums for the
Executive and his dependents, if any, if the Executive properly elects to continue
health and dental insurance under COBRA and (b) pay to the Executive on the first
business day of each applicable month one hundred (100) percent of the cost of the
monthly premiums paid by the Company to the insurance companies for life insurance
and disability insurance for the Executive in the month preceding the Executive’s
termination of employment, such payments under subsections (a) and (b) to continue
until the earlier of (x) twelve (12) months after the termination of the Executive’s
employment and (y) the last day of the first month that the Executive is eligible
for other employer-sponsored health coverage. Notwithstanding the foregoing, to the
extent such payments are reimbursement to the Executive of medical expenses incurred
by the Executive as described in Reg. § 1.409A-1(b)(9)(v)(B), reimbursements may not
be made beyond the period of time during which the Executive would be entitled (or
would, but for such arrangement, be entitled) to COBRA continuation coverage under a
group health plan of the Company;
(iii) pay the Executive a lump sum payment in an amount equal to a pro rata
payment of the Target Cash Bonus for which he was eligible, less lawful deductions;
such payment shall be paid within ten (10) calendar days following the effective
date of the Release required by Section 5.6, but not later than ninety (90) days
following termination of employment. Notwithstanding the foregoing, if the
ninetieth (90th) day following the Executive’s termination from
employment occurs in the calendar year following the year of the Executive’s
termination, then the payment shall be made no earlier than January 1 of such
subsequent calendar year; and
(iv) accelerate vesting of all of the Executive’s outstanding unvested stock
options and restricted stock by one year.
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5.5. Termination Without Cause or for Good Reason during a Change of Control Period.
Provided that the Executive remains an employee in good standing with the Company through the
Benefit Date, if the Executive’s employment is terminated without Cause pursuant to Section 4.4, or
for Good Reason pursuant to Section 4.4, and such termination occurs during a Change of Control
Period, the Company shall:
(i) pay the Executive a lump sum payment equal to one (1) times his annualized
base salary, less lawful deductions, payable within ten (10) calendar days following
the effective date of the Release required by Section 5.6, but not later than ninety
(90) days following termination of employment. Notwithstanding the foregoing, if
the ninetieth (90th) day following the Executive’s termination from
employment occurs in the calendar year following the year of the Executive’s
termination, then the payment shall be made no earlier than January 1 of such
subsequent calendar year;
(ii) pay on behalf of the Executive, in accordance with the Company’s regular
payroll practices, on a monthly basis an amount equal to (a) one hundred (100)
percent of the Executive’s monthly health and dental COBRA premiums for the
Executive and his dependents, if any, if the Executive properly elects to continue
health and dental insurance under COBRA and (b) pay to the Executive on the first
business day of each applicable month one hundred (100) percent of the cost of the
monthly premiums paid by the Company to the insurance companies for life insurance
and disability insurance for the Executive in the month preceding the Executive’s
termination of employment, such payments under subsections (a) and (b) to continue
until the earlier of (x) twelve (12) months after the termination of the Executive’s
employment and (y) the last day of the first month that the Executive is eligible
for other employer-sponsored health coverage. Notwithstanding the foregoing, to the
extent such payments are reimbursement to the Executive of medical expenses incurred
by the Executive as described in Reg. § 1.409A-1(b)(9)(v)(B), reimbursements may not
be made beyond the period of time during which the Executive would be entitled (or
would, but for such arrangement, be entitled) to COBRA continuation coverage under a
group health plan of the Company;
(iii) pay the Executive a lump sum payment in an amount equal to a pro rata
payment of the Target Cash Bonus for which he was eligible, less lawful deductions;
such payment shall be paid ten (10) calendar days following the effective date of
the Release required by Section 5.6, but not later than ninety (90) days following
termination of employment. Notwithstanding the foregoing, if the ninetieth (90th)
day following the Executive’s termination from employment occurs in the calendar
year following the year of the Executive’s termination, then the payment shall be
made no earlier than January 1 of such subsequent calendar year; and
(iv) accelerate vesting of one hundred (100) percent of all of the Executive’s outstanding
unvested stock options and restricted stock.
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5.6 Conditions to Payment.
(i) Notwithstanding any provision of this Agreement to the contrary, the
Company’s obligation to provide the payments and benefits under Sections 5.2, 5.3,
5.4, and 5.5 is conditioned upon the Executive’s, or the Executive’s estate’s,
execution of a severance agreement and full release of all claims against the
Company and all affiliated persons and entities, drafted by and satisfactory to
counsel for the Company (the “Release”), and the Executive’s compliance with
Sections 7 and 8 of this Agreement. The Release shall include clauses covering
confidentiality, non-disparagement, cooperation, and non-admissions, among other
terms, all in a form acceptable to the Company. If the Executive chooses not to
execute such a release or fails to comply with those Sections, then the Company’s
obligation to compensate the Executive ceases on the effective termination date
except as to base salary up through the termination date. The Release shall be
provided to the Executive within thirty (30) days of the Executive’s separation from
service and the Executive must execute it within the time period specified in the
Release (which shall not be longer than forty-five (45) days from the date of
receipt). Such Release shall not be effective until any applicable revocation
period specified therein has expired.
(ii) Notwithstanding any provision of this Agreement to the contrary, the
Company’s obligation to provide the payments and benefits under Sections 5.4 and 5.5
shall not arise until the Benefit Date and is expressly conditioned upon the
Executive remaining an employee in good standing with the Company through the
Benefit Date.
6. Vesting of Stock Upon a Change of Control. One hundred (100) percent of the
Executive’s outstanding unvested stock options and restricted stock will vest on a Change of
Control (as defined in Section 20).
7. Non-Compete.
(a) During the Executive’s employment with the Company and for a period of one year following
the cessation thereof, the Executive will not engage in any of the following on his own behalf or
in any capacity on another’s behalf:
(i) engage in any business activity (or assist others to engage in any business activity) that
directly competes with the Company; or
(ii) have any interest in any business that directly competes with the Company; or
(iii) be employed (or otherwise engaged) in (A) a management capacity, (B) other capacity
providing the same or similar services which the Executive provided to the Company, or (C) any
capacity connected with competitive business activities, by any person or
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entity that engages in the same, similar or otherwise competitive business as the Company.
The restrictions set forth in subparagraphs 7(a)(i)—(iii) shall apply in the following severable
geographic areas: (i) the Raleigh-Xxxx-Xxxxxx-Chapel Hill, NC metropolitan areas; (ii) any city,
metropolitan area, county, state (or similar political subdivisions in foreign countries) in which
the Company is located or does or, during the last twelve (12) months of the Executive’s employment
with the Company, did business; (iii) any city, metropolitan area, county, or state (or similar
political subdivisions in foreign countries) in which the Executive’s services were provided, or
for which the Executive had responsibility, or in which the Executive worked on Company projects,
during the last twelve (12) months of the Executive’s employment with the Company; or (iv) the
entire United States of America and its territories.
(b) During the Executive’s employment with the Company and for a period of one (1) year
following the cessation thereof (whether voluntary or involuntary and regardless of the reason for,
or party initiating, the termination), the Executive will not engage in any of the following on his
own behalf or in any capacity on another’s behalf, directly or indirectly:
(i) solicit, persuade, induce, encourage or attempt to solicit, persuade, induce or encourage
any person to leave his or her employment with the Company or to refrain from providing services to
the Company; or
(ii) induce or attempt to induce (including, without limitation, by soliciting business from),
or otherwise encourage or assist, any customer, client, or business relation of the Company with
which the Executive had contact on behalf of the Company (A) to cease doing business with the
Company or reduce the level of business it conducts with the Company, or (B) to purchase or promote
any prescription pharmaceutical product that competes directly with the Company’s products for the
treatment of any indication for which the Company has received United States Food and Drug
Administration (“FDA”) approval or for an indication which the Company’s products are being
developed or may be developed.
Upon cessation of the Executive’s employment with the Company, the Executive will sever all
marketing and sales relationships with customers of the Company and the Executive agrees that any
attempt to retain these customers for his own or another’s benefit will be a material breach of
this Agreement.
(c) The Executive agrees that, if requested by the Company in writing, he will give notice to
the Company of each new business activity he plans to undertake during the non-competition period,
at least ten (10) business days prior to beginning any such activity. The notice shall state the
name and address of the individual, corporation, association or other entity or organization
(“Entity”) for whom such activity is undertaken and the name of the Executive’s business
relationship or position with the entity. The Executive further agrees to provide the Company with
other pertinent information concerning such business activity as the Company may reasonably request
in order to determine the Executive’s continued compliance with his obligations under this
Agreement. The Executive agrees that, if requested by the Company in writing, he will provide a
copy of Sections 7 and 8 of this Agreement to all persons and Entities with whom he seeks to be
hired or do business before accepting employment or engagement with
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any of them.
(d) If any restriction set forth in this Section 7 is found by any court of competent
jurisdiction to be unenforceable because it extends for too long a period of time or over too great
a range of activities or in too broad a geographic area, it shall be interpreted to extend only
over the maximum period of time, range of activities or geographic area as to which it may be
enforceable.
(e) The Executive acknowledges that the restrictions contained in this Section are necessary
for the protection of the business and goodwill of the Company and in light of, among other things,
the highly competitive market in which the Company operates. The Executive agrees that any breach
of this Section will cause the Company substantial and irreparable damage and therefore, in the
event of any such breach, in addition to such other remedies which may be available, the Company
shall have the right to seek specific performance and injunctive relief without posting a bond.
(f) If the Executive violates the provisions of this Section 7, he shall continue to be held
by the restrictions set forth in this Section, until a period equal to the period of restriction
has expired without any violation.
8. Proprietary Information and Developments.
8.1. Proprietary Information.
(a) The Executive agrees that all information and know-how, whether or not in writing, of a
private, secret or confidential nature concerning the Company’s business or financial affairs
(collectively, “Proprietary Information”) is and shall be the exclusive property of the
Company. By way of illustration, but not limitation, Proprietary Information may include
inventions, products, processes, methods, techniques, formulas, compositions, compounds, projects,
developments, plans, research data, clinical data, financial data, personnel data, computer
programs, and customer and supplier lists. The Executive will disclose Proprietary Information
solely to employees, officers, and directors of the Company and only on a need-to-know basis and
will use the same solely for purposes of performing the Executive’s duties and responsibilities on
behalf of Company as described in Section 2 hereof, unless otherwise permitted by prior written
approval of an officer of the Company. Developments (defined in Section 8.2(a) below) shall
constitute Proprietary Information of Company for all purposes hereunder.
(b) The Executive agrees that all files, letters, memoranda, reports, records, data, sketches,
drawings, laboratory notebooks, program listings, or other written, photographic, or other tangible
material containing Proprietary Information, whether created by the Executive or others, which
shall come into his custody or possession, shall be and are the exclusive property of the Company
to be used by the Executive only in the performance of his duties for the Company.
(c) The Executive agrees that his obligations set forth in paragraphs (a) and
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(b) above also extend to such types of information, know-how, records and tangible property of
customers of the Company or suppliers to the Company or other third parties who may have disclosed
or entrusted the same to the Company or to the Executive in the course of the Company’s business.
8.2. Developments.
(a) The Executive will make full and prompt disclosure to the Company of all inventions,
discoveries, processes, methods, developments, software, and works of authorship, whether or not
patentable or copyrightable, which are created, made, conceived or reduced to practice by the
Executive or under his direction or jointly with others during his employment by the Company,
whether or not during normal working hours or on the premises of the Company (all of which, along
with all improvements, modifications, and derivative works thereof and thereto and all proprietary
know-how and other information associated therewith, are collectively referred to in this Agreement
as “Developments”).
(b) The Executive agrees to irrevocably and unconditionally assign, and does hereby
irrevocably and unconditionally assign, to the Company (or any person or entity designated by the
Company) and to forever waive and never assert any and all of his right, title and interest in and
to all Developments and all related patents, patent applications, copyrights, copyright
registration applications, and other intellectual property rights and moral rights associated
therewith. The rights assigned to Company herein shall include, without limitation, the rights (i)
to bring claims and causes of action for damages and other relief by reason of all past and future
infringements, misappropriations, or other violations of any and all rights under such
Developments; (ii) to collect and enjoy damages, benefits, and other remedies resulting therefrom;
and (iii) to charge and collect royalties or other payments arising out of or relating to the grant
of licenses or similar rights under any such Developments.
(c) The Executive agrees to cooperate fully with the Company, both during and after his
employment with the Company, with respect to the prosecution, procurement, maintenance, enforcement
and/or defense of patents, trademarks, copyrights, trade secrets and other means for protection of
the Developments (both in the United States and foreign countries). The Executive shall sign all
papers, including, without limitation, copyright registration applications, patent applications,
declarations, oaths, formal assignments, assignment of priority rights, and powers of attorney,
which the Company may deem necessary or desirable in order to protect its rights and interests in
any Development. The Executive shall further execute and deliver all such instruments and take all
other actions as in the opinion of the Company and its counsel shall be appropriate to vest in the
Company (or in such person as the Company may specify) all right, title and interest in said
Developments and any patents, trademarks, copyrights, trade secrets and other intellectual property
rights associated therewith.
(d) Whenever requested to do so by the Company, both during and after his employment with the
Company, and at the expense of the Company, the Executive shall cooperate fully and assist the
Company in the defense or prosecution of any claims or actions now in existence or which may be
brought in the future in connection with (i) any litigation commenced by the Company against third
parties, (ii) any litigation commenced by a third party
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against the Company and (iii) any administrative hearing or administrative proceeding
involving the Company. The Executive’s full cooperation in connection with any claims, actions or
administrative proceedings shall include, but not be limited to, his being available to meet with
the Company’s counsel to prepare for trial, discovery or an administrative hearing and to act as a
witness when requested by the Company at reasonable times designated by the Company.
(e) The Executive hereby irrevocably appoints the Company to be his attorney in fact and, in
his name and on his behalf, to execute all such instruments and take all other actions and
generally to use his name for the purpose of providing to the Company the full benefit of the
provisions of this Section 8.
(f) The Executive hereby waives and quitclaims to the Company any and all claims, of any
nature, which the Executive now or may hereafter have for infringement, misappropriation, or other
violation of any Development assigned hereunder to the Company.
(g) The Executive acknowledges and agrees that all original works of authorship which are
created by the Executive (solely or jointly with others) within the scope of the Executive’s
employment and which are protectable by copyright are “works made for hire,” as that term is
defined in the United States Copyright Act (17 U.S.C. Section 101).
(h) The Executive represents and warrants that to the extent applicable, the Executive has
provided to the Company a list entitled “List of Inventions,” that a true and complete list of all
inventions, discoveries, methods, processes, developments, software, and works of authorship,
whether or not patentable or copyrightable, which were created, made, conceived or reduced to
practice by the Executive, whether solely or jointly with others, prior to his employment by the
Company (collectively, “Inventions”). Any improvements to or derivative works of any such
Inventions, whether or not patentable or copyrightable and whether or not reduced to practice,
conceived or created after commencement of the Executive’s employment by the Company shall
constitute Developments for all purposes hereunder to the extent arising out of or relating to any
use of or other reliance on any Proprietary Information by or on behalf of the Executive.
8.3. Other Agreements. Other than as previously disclosed to the Company by the
Executive in writing, the Executive hereby represents that he is not bound by the terms of any
agreement with any previous employer or other party to refrain from using or disclosing any trade
secret or confidential or proprietary information in the course of his employment with the Company
or to refrain from competing, directly or indirectly, with the business of such previous employer
or any other party. The Executive further represents that his performance of all the terms of this
Agreement and as an executive officer of the Company does not and will not breach any agreement to
keep in confidence proprietary information, knowledge or data acquired by him in confidence or in
trust prior to his employment with the Company.
9. Other Severance Arrangements. The benefits under this Agreement will be provided
in lieu of benefits under any severance plan of the Company or under the Executive’s offer letter.
The Executive acknowledges and agrees that the acceleration of vesting of stock options and
restricted stock under this Agreement is in lieu of any acceleration of vesting of
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stock options and restricted stock upon a change of control under the Company’s current and
any future stock option plans, including, but not limited to, the Company’s 2000 Equity Incentive
Plan, 2003 Stock Incentive Plan, 2004 Stock Incentive Plan, the Cornerstone BioPharma Holdings,
Inc. 2005 Stock Option Plan, and the Cornerstone BioPharma Holdings, Inc. 2005 Stock Incentive
Plan, each as amended from time to time.
10. Mitigation. The Executive has no obligation to mitigate amounts payable under
this Agreement by seeking other employment.
11. Notices. All notices required or permitted under this Agreement shall be in
writing and shall be deemed effective upon personal delivery or upon deposit in the United States
Post Office, by registered or certified mail, postage prepaid, addressed to the other party at the
address shown above, or at such other address or addresses as either party shall designate to the
other in accordance with this Section 11.
12. Pronouns. Whenever the context may require, any pronouns used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the singular forms of
nouns and pronouns shall include the plural, and vice versa.
13. Entire Agreement. This Agreement constitutes the entire understanding between the
parties hereto with respect to the subject matter hereof, and this Agreement supersedes and renders
null and void any and all prior oral or written agreements, understandings or commitments
pertaining to the subject matter hereof. To the extent this Agreement is inconsistent or conflicts
with any other agreement entered into between the Executive and the Company, including any option
or restricted stock award agreements, this Agreement shall control.
14. Amendment. This Agreement may be amended or modified only by a written instrument
executed by both the Company and the Executive.
15. Governing Law. This Agreement shall be interpreted and enforced in accordance
with the laws of the State of North Carolina without regard to conflict of laws provisions. Any
action, suit, or other legal proceeding which is commenced to resolve any matter arising under or
relating to any provision of this Agreement shall be commenced only in a court of the State of
North Carolina (or, if appropriate, a federal court located within the State of North Carolina),
and the Company and the Executive each consents to the jurisdiction of such a court.
16. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of both parties and their respective successors and assigns, including any corporation with
which or into which the Company may be merged or which may succeed to its assets or business,
provided, however, that the obligations of the Executive are personal and shall not be assigned by
the Executive.
17. Dispute Resolution. Any claim or controversy arising out of or relating to this
Agreement, or any breach thereof, or otherwise arising out of or relating to the Executive’s
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employment, compensation and benefits with the Company or the termination thereof, including
any claim for discrimination under any local, state or federal employment discrimination law,
except as specifically excluded herein, shall be brought in any court having jurisdiction thereof.
Both the Company and the Executive expressly waive any right that any party either has or may have
to a jury trial of any dispute arising out of or in any way related to the Executive’s employment
with or termination from the Company. The Executive expressly acknowledges and agrees that he
hereby waives any right to claim or recover punitive damages.
18. Acknowledgment. THE EXECUTIVE ACKNOWLEDGES THAT HE HAS HAD A REASONABLE PERIOD
SUFFICIENT TO STUDY, UNDERSTAND AND CONSIDER THIS AGREEMENT, THAT HE HAS HAD AN OPPORTUNITY TO
CONSULT WITH LEGAL COUNSEL OF HIS CHOICE, THAT HE HAS READ THIS AGREEMENT AND UNDERSTANDS ALL OF
ITS TERMS, THAT HE IS ENTERING INTO AND SIGNING THIS AGREEMENT KNOWINGLY AND VOLUNTARILY, AND THAT
IN DOING SO HE IS NOT RELYING UPON ANY STATEMENTS OR REPRESENTATIONS BY THE COMPANY OR ITS AGENTS.
19. Miscellaneous.
19.1. No delay or omission by the Company in exercising any right under this Agreement shall
operate as a waiver of that or any other right. A waiver or consent given by the Company on any
one occasion shall be effective only in that instance and shall not be construed as a bar or waiver
of any right on any other occasion.
19.2. The captions of the sections of this Agreement are for convenience of reference only and
in no way define, limit or affect the scope or substance of any section of this Agreement.
19.3. In case any provision of this Agreement shall be invalid, illegal or otherwise
unenforceable, the validity, legality and enforceability of the remaining provisions shall in no
way be affected or impaired thereby.
19.4. Nothing in this Agreement should be construed to create a trust or to establish or
evidence the Executive’s claim of any right to payment other than as an unsecured general creditor
with respect to any payment to which the Executive may be entitled.
19.5. The provisions of Sections 7 and 8 shall survive the termination of this Agreement.
19.6. Upon termination of the Executive’s employment by the Company for any reason whatsoever
whether voluntarily or involuntarily, or at any other time upon the Company’s request, the
Executive agrees to promptly return to the possession of the Company any materials or copies
thereof, in hard copy or electronically, containing and/or pertaining to Proprietary Information
relating to the Company or any of its subsidiaries or affiliates and shall not take any material or
copies thereof from the possession of the Company, or destroy any such materials. In
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addition, the Executive shall also return to the Company all Company property and equipment in
the Executive’s possession or control, including but not limited to, all documents, product
samples, tapes, notes, computer files, equipment, phone, facsimile, printer, computer, physician
lists, employee lists, lab notebooks, files, computer equipment, security badges, telephone calling
cards, credit cards, and other information or materials (and all copies) which contain
confidential, proprietary or non-public information of the Company. The Executive further agrees
to leave intact all electronic Company documents on the Company’s servers or computers, including
those which the Executive developed or helped develop during the Executive’s employment. The
Executive further agrees to promptly return or make available to the Company or its agents any
motor vehicle provided to the Executive by the Company.
20. Definitions.
20.1. For purposes of this Agreement, “beneficially ownership” shall have the meaning
set forth in Rule 13d-3 promulgated under the Exchange Act, and “beneficially own(s)” and
“beneficially owned” shall have a correlative meanings.
20.2. For the purposes of this Agreement, “Cause” for termination shall be deemed to
exist upon (a) the Executive’s use of alcohol or narcotics which proximately results in the willful
material breach or habitual willful neglect of the Executive’s duties under this Agreement; (b) the
Executive’s criminal conviction of fraud, embezzlement, misappropriation of assets, or the
Executive’s conviction of any felony or other crime that brings embarrassment to the Company, but
in no event traffic or similar violations; (c) any act of the Executive constituting willful
misconduct which is materially detrimental to the Company’s best interests, including but not
limited to misappropriation of, or intentional damage to, the funds, property or business of the
Company; (d) the Executive’s material violation of the Company’s policies, including but not
limited to violations of the Company’s policies prohibiting harassment or discrimination; or (e)
the Executive’s willful Material Breach (as defined below) of this Agreement, if such willful
Material Breach is not cured by the Executive within thirty (30) days after the Company’s written
notice thereof specifying the nature of such willful Material Breach. “Material Breach”
shall mean (x) the substantial and continual willful nonperformance of the Executive’s material
duties under this Agreement resulting from the Executive’s gross negligence or willful misconduct
which the Board reasonably determines has resulted in material injury to the Company or (y) the
breach of Section 7 or Section 8 of this Agreement.
20.3. For purposes of this Agreement, a “Change of Control” shall mean:
(a) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Exchange Act (as defined below)) (a “Person”) of beneficial ownership of
any capital stock of the Company if prior to such acquisition such Person did not, and after such
acquisition such Person does, beneficially own fifty percent (50%) or more of the combined voting
power of the then-outstanding securities of the Company entitled to vote generally in the election
of directors (the “Outstanding Company Voting Securities”); or
(b) such time as the Continuing Directors (as defined below) do not constitute a majority of
the Board (or, if applicable, the Board of Directors of a successor
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corporation to the Company), where the term “Continuing Director” means at any date a
member of the Board (x) who was a member of the Board on the date of the initial adoption of the
Employment Agreement by the Board or (y) who was nominated or elected subsequent to such date by at
least a majority of the directors who were Continuing Directors at the time of such nomination or
election or whose election to the Board was recommended or endorsed by at least a majority of the
directors who were Continuing Directors at the time of such nomination or election; provided,
however, that there shall be excluded from this clause (y) any individual whose initial assumption
of office occurred as a result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened solicitation of proxies or consents,
by or on behalf of a person other than the Board; or
(c) the consummation of a merger, consolidation, reorganization, recapitalization or share
exchange involving the Company or a sale or other disposition of all or substantially all of the
assets of the Company (a “Business Combination”), unless, immediately following such
Business Combination, each of the following two conditions is satisfied: (x) all or substantially
all of the individuals and entities who were the beneficial owners of the Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially own, directly or
indirectly, more than fifty percent (50%) of the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors, respectively, of the resulting
or acquiring corporation in such Business Combination (which shall include, without limitation, a
corporation which as a result of such transaction owns the Company or substantially all of the
Company’s assets either directly or through one or more subsidiaries) (such resulting or acquiring
corporation is referred to herein as the “Acquiring Corporation”) in substantially the same
proportions as their ownership of the Outstanding Company Voting Securities immediately prior to
such Business Combination and (y) no Person (excluding any executive benefit plan (or related
trust) maintained or sponsored by the Company or by the Acquiring Corporation) beneficially owns,
directly or indirectly, 50% or more of the combined voting power of the then-outstanding securities
of such corporation entitled to vote generally in the election of directors (except to the extent
that such ownership existed prior to the Business Combination); or
(d) the liquidation or dissolution of the Company.
20.4. For purposes of this Agreement, a “Change of Control Period” shall consist of
the period from three (3) months before until three (3) months after the date on which a Change of
Control occurs.
20.5. As used in this Agreement, the term “Disability” means, with respect to the
Executive, that the Executive is unable to perform the essential functions of his position with a
reasonable accommodation if necessary by reason of any medically determinable physical or mental
impairment. A determination of Disability shall be agreed upon by a physician satisfactory to the
Executive and a physician selected by the Company, provided that if these
physicians do not agree, the Executive and the Company shall each select a physician and these two
together shall select a third physician, whose determination as to Disability shall be binding on
all parties.
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20.6. As used in this Agreement, the term “Exchange Act” shall mean the Securities
Exchange Act of 1934, as amended.
20.7. For purposes of this Agreement, “Good Reason” shall be deemed to exist upon (a)
any material reduction in the annual base compensation payable to the Executive (but exclusive of
any Target Cash Bonus, annual equity award or other similar cash bonus or equity plans for this
purpose); (b) the relocation of the place of business at which the Executive is principally located
to a location that is greater than thirty (30) miles from its current location; (c) the failure of
the Company to comply with a material term of this Agreement; or (d) a material reduction in the
Executive’s level of responsibility to that which is not consistent with the position held by the
Executive, as defined in Section 2 herein, so long as notice of the Good Reason condition is given
within thirty (30) days of the condition’s initial existence, the Company is given thirty (30) days
to remedy the condition, and the termination from employment occurs within ninety (90) days
following the initial existence of one or more Good Reason conditions. By way of clarification,
any change in ownership of the outstanding capital stock of the Company, including but not limited
to, the fact that the Company is no longer registered pursuant to Section 12 of the Securities Act
of 1933, as amended, shall not constitute a “Good Reason” within the context of this Agreement.
20.8. For purposes of this Agreement, “pro rata payment” shall be deemed to mean the
calculation of a payment by the Company based on the proportion of the calendar year completed,
based on the nearest whole number of months of the Executive’s employment (for illustrative
purposes only, if the Executive was terminated without Cause by the Company on April
13th of a given year, the Executive would be entitled to 1/4 of his Target Cash Bonus
for such year under Section 5.4(iii)).
21. Non-Disparagement. The Executive understands and agrees that as a condition to
him of the monetary consideration provided in connection with this Agreement, during the term of
the Agreement and after the termination of his employment with the Company for any reason, he shall
not make any false, disparaging or derogatory statements in public or private to any person or
media outlet regarding the Company or any of its directors, officers, employees, agents, or
representatives or the Company’s business affairs and financial condition. Nothing in this Section
shall prohibit the Executive from communicating or testifying truthfully (i) to the extent required
or protected by law, (ii) to any federal, state, or local governmental agency, or (iii) in response
to a subpoena to testify issued by a court of competent jurisdiction.
22. Section 409A.
22.1. Parties’ Intent. The parties intend that the provisions of this Agreement
comply with the provisions of Section 409A and all provisions of this Agreement shall be construed
in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A.
If any provision of this Agreement (or of any award of compensation, including equity compensation
or benefits) would cause the Executive to incur any additional tax or interest under Section 409A,
the Company shall, upon the specific request of the Executive, use its reasonable business efforts
to in good faith reform such provision to comply with Section 409A; provided, that to the maximum
extent practicable, the original intent and economic benefit
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to the Executive and the Company of the applicable provision shall be maintained, and the
Company shall have no obligation to make any changes that could create any additional economic cost
or loss of benefit to the Company. The Company shall timely use its reasonable business efforts to
amend any plan or program in which the Executive participates to bring it in compliance with
Section 409A. Notwithstanding the foregoing, the Company shall have no liability with regard to
any failure to comply with Section 409A so long as it has acted in good faith with regard to
compliance therewith.
22.2. Separation from Service. A termination of employment shall not be deemed to
have occurred for purposes of any provision of this Agreement providing for the payment of any
amounts or benefits upon or following a termination of employment unless such termination also
constitutes a “Separation from Service” within the meaning of Section 409A and, for purposes of any
such provision of this Agreement, references to a “termination,” “termination of employment,”
“separation from service” or like terms shall mean Separation from Service.
22.3. Separate Payments. Each installment payment required under this Agreement shall
be considered a separate payment for purposes of Section 409A.
22.4. Delayed Distribution to Key Employees. If the Company determines in accordance
with Sections 409A and 416(i) of the Code and the regulations promulgated thereunder, in the
Company’s sole discretion, that the Executive is a Key Employee of the Company on the date the
Executive’s employment with the Company terminates and that a delay in benefits provided under this
Agreement is necessary to comply with Code Section 409A(A)(2)(B)(i), then any severance payments
and any continuation of benefits or reimbursement of benefit costs provided by this Agreement, and
not otherwise exempt from Section 409A, shall be delayed for a period of six (6) months following
the date of termination of the Executive’s employment (the “409A Delay Period”). In such
event, any severance payments and the cost of any continuation of benefits provided under this
Agreement that would otherwise be due and payable to the Executive during the 409A Delay Period
shall be paid to the Executive in a lump sum cash amount in the month following the end of the 409A
Delay Period. For purposes of this Agreement, “Key Employee” shall mean an employee who,
on an Identification Date (“Identification Date” shall mean each December 31) is a key
employee as defined in Section 416(i) of the Code without regard to paragraph (5) thereof. If the
Executive is identified as a Key Employee on an Identification Date, then the Executive shall be
considered a Key Employee for purposes of this Agreement during the period beginning on the first
April 1 following the Identification Date and ending on the following March 31.
23. Parachutes. If all, or any portion, of the payments provided under this
Agreement, either alone or together with other payments and benefits which the Executive receives
or is entitled to receive from the Company or an affiliate, would constitute an excess “parachute
payment” within the meaning of Section 280G of the Code, the payments and benefits provided under
this Agreement shall be reduced to the extent necessary so that no portion thereof shall fail to be
tax-deductible under Section 280G of the Code.
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SIGNATURE PAGE TO EXECUTIVE EMPLOYMENT AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set
forth above.
| CORNERSTONE THERAPEUTICS INC. |
||||
| By: | /s/ Xxxxx X. Xxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxx | |||
| Title: | President and Chief Executive Officer | |||
| EXECUTIVE |
||||
| /s/ Xxxxxx K. W. Xxxxxx | ||||
| Xxxxxx X. X. Xxxxxx | ||||
Appendix A
Shares of restricted stock awarded pursuant to section 3.3 will vest over 4 years as follows:
| - | 25% of the total award will vest on the first anniversary of the Effective Date; | |
| - | A further 6.3% of the total award will vest on a day to be randomly determined in each of the next 11 calendar quarters (provided that in no event shall the days so chosen in two consecutive calendar quarters be less than 60 days apart from each other) following the first anniversary of the award; and | |
| - | The remainder of the total award will vest on the fourth anniversary of the Effective Date. |
