EXHIBIT 10.10
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") dated as of July 27, 1998 by
and between Xxxxxxx X. Xxxxx ("Employee") and Xxxxxx Pharmaceuticals, Inc.
("Company"). In consideration of the mutual covenants contained in this
Agreement, the parties, intending to be legally bound, hereby agree as follows:
1. Employment. Company hereby agrees to employ Employee on the terms and
----------
conditions set forth below for a term commencing effective as of July 27, 1998,
and Employee accepts such employment. Subject to the provisions of paragraphs 5
through 7 below, there is no employment term and such employment shall be at
will. Nothing in this Agreement shall constitute a guaranteed term of
employment.
2. Position. Subject to the control and direction of Company's Board of
--------
Directors ("Board") and Company's President ("President"), Employee shall
perform all reasonable duties and services incident to his position as Chief
Financial Officer of Company, and such other reasonable duties and services of
an executive nature as may from time to time be assigned to him by the Board and
the President for the Company or any affiliated entity.
3. Loyalty. Employee agrees that during the period of his employment he
-------
will devote his full time and attention during regular business hours to the
business and affairs of Company and its affiliated companies and will not,
without the prior permission of the Board or President, engage in any other
business enterprise which requires the personal time or attention of Employee.
The foregoing shall not prevent the purchase, ownership or sale by Employee of
investments or securities of any business which is not competitive and does not
have any business relations with Company or any affiliate of Company or up to
two percent of the outstanding publicly traded stock of any company, provided
the time or attention devoted to such activities does not interfere with the
performance of his duties hereunder. Employee further agrees that during the
period of his employment he agrees to accept such directorships, executive
offices and committee memberships in Company and its affiliated companies to
which he may from time to time be elected and will perform and render the duties
and the services incidental thereto. The Company acknowledges that Employee is
winding up the affairs of his consulting firm and during the six months from the
date of this Agreement may devote limited time to such activities, provided that
such activities do not interfere with Employee's duties hereunder.
4. Compensation. For the full, prompt and faithful performance of all of
------------
the duties and services to be performed by Employee hereunder, Company agrees to
pay, and Employee agrees to accept, the amounts set forth below:
(a) Base Salary. Employee shall receive a salary in the gross amount of
-----------
$16,666 per month, subject to such increases as the President may, in its sole
discretion, from time to time determine ("Base Salary"). Employee's Base Salary
shall be payable (minus all lawful deductions) in accordance with Company's
policies regarding payment of salary to executive employees generally.
(b) Benefits. Employee shall also receive such other fringe benefits as
--------
are made available to Company's executives generally. In addition, Employee may
participate in any retirement, profit sharing, incentive, insurance, major
medical, health and hospitalization or similar benefits which may at any time be
available to Company's executives and employees. Employee's participation,
including eligibility and level of benefits, in all benefit programs shall be
controlled by plan documents, where applicable, or Company's policies, practices
and procedures where no plan documents exist.
(c) Expenses. Company agrees to reimburse Employee for all reasonable
--------
expenses incurred by him in providing services under this Agreement in
accordance with its policies and practices regarding expense reimbursement then
in effect.
(d) Vacation. Employee shall be entitled to such annual vacation as
--------
provided by the Company's vacation policy applicable to its executives
generally, which shall be taken at such time or times as shall be mutually
determined by Company and Employee.
(e) Bonus. Employee may receive a bonus, the amount of which is to be
-----
determined at the end of each calendar year during the Term in the sole
discretion of the President ("Bonus"), but such amount to be up to 30 percent of
Employee's Base Salary. Such Bonus shall be based upon Company's, Employee's,
and Employee's department's performance. Employee's Bonus, if any, shall be
payable (minus all lawful deductions) in accordance with Company's policies
regarding payment of bonuses to executive employees generally.
(f) Stock Options. Employee shall receive a stock option grant under the
-------------
Xxxxxx Pharmaceuticals, Inc. 1991 Stock Option Plan ("Plan") of 100,000 shares,
such grant to be made on the effective date of this Agreement, at a price equal
to the fair market value of Company's stock on the date of the grant. In
addition, if Employee is still employed by the Company on the date nine months
after the date of this Agreement, Employee shall receive an additional stock
option grant under the Plan of 50,000 shares, at a price equal to the fair
market value of Company's stock on the date of the grant. Such options shall be
subject to the Plan and an option agreement between the parties. Such options
shall vest ratably over a five-year period, subject to certain change-of-control
provisions contained in the option agreement(s). Employee may receive any such
additional stock option grants as are determined by the Compensation Committee
of the Board in accordance with its policies regarding stock option grants to
executive employees generally.
(g) Relocation Expenses. Company shall reimburse Employee for the
-------------------
reasonable costs which Employee incurs related to his relocation from the San
Francisco metropolitan area to the Corona, California metropolitan area, up to a
maximum amount of $60,000. Such reimburse will be in accordance with the
Company's expense reimbursement policy and practices.
(h) Loan. At Employee's request and if at such time Employee has not sold
----
his residence at 000 Xxxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxxxxxxx ("Birch Residence"),
Company will loan Employee up to $600,000 for the purpose of Employee's purchase
of a residence in the
Corona, California metropolitan area ("Loan"). The Loan will be evidenced by a
promissory note acceptable to the parties and shall be payable on the date one
year after the Loan is made. The Loan will be without interest so long as
Employee is not in default.
5. Termination for Death, Disability or Cause. Company may terminate this
------------------------------------------
Agreement and Employee's employment as follows:
(a) Death. In the event of the death of Employee, this Agreement shall
-----
terminate as of the date of death, and Company's sole obligation will be to pay
to the estate of Employee Employee's Base Salary then unpaid through his last
day worked.
(b) Disability. In the event that Employee shall, because of physical or
----------
mental illness or incapacity, be unable to perform the duties and services to be
performed by him under this Agreement for a consecutive period of three months
or such shorter periods aggregating three months in any 12-month period
("Disability"), Company shall not be obligated to pay to Employee any
compensation or benefits beyond the date of Disability or may, in its sole
discretion, terminate this Agreement without any further obligation other than
to pay Base Salary through the date of Disability.
(c) Termination for Cause. Company may terminate Employee's employment for
---------------------
Cause. In the event Company elects to terminate Employee's employment for
Cause, Company will pay Employee only him then current Base Salary then unpaid,
computed to the last day worked. "Cause" shall mean:
(i) willful or gross failure by Employee to substantially perform his
reasonable duties as assigned by Company;
(ii) willful misconduct by Employee which is materially injurious to
Company, monetarily or otherwise; or
(iii) The material violation of a federal or state law or regulation
applicable to the business of Company.
(d) Other Termination. In the event Company terminates Employee for
-----------------
reasons other than death, Disability or Cause, and such termination is not
related to a Change in Control (as defined below), Company will provide to
Employee severance pay by continuing his Base Salary as of his last day worked
for a period of 52 weeks, to be paid minus all lawful deductions.
6. Termination by Employee. Employee may voluntarily terminate this
-----------------------
Agreement and his employment as follows:
(a) Retirement. Termination of Employee's employment based on "Retirement"
----------
shall mean termination in accordance with Company's retirement policy, including
early retirement, generally applicable to its salaried employees.
(b) Resignation. In the event Employee resigns his employment other than
-----------
for "Good Reason" as defined below, Company shall only be responsible for paying
Employee Base Salary and fringe benefits through Employee's last day worked.
(c) Constructive Termination. Company will provide to Employee severance
------------------------
pay by continuing his Base Salary as of his last day worked for a period of 52
weeks, to be paid minus all lawful deductions, in the event that Employee
resigns his employment hereunder within 60 days following the occurrence of any
of the following events which occur without Employee's written consent:
(i) Any reduction by Company in Employee' Base Salary below the
amount set forth in Section 4(a) hereof;
(ii) The termination or modification of any bonus, benefit or
compensation plan or arrangement, stock ownership plan, stock purchase plan,
stock option plan, life insurance plan, medical, health, dental, accident and
disability plan in which Employee is participating, or the taking of any
action by Company which would adversely affect Employee's participation in or
materially reduce Employee's benefits under any of such plans; provided that
the termination, modification or action has a material affect on Employee's
overall compensation and does not effect participants in such plan generally;
or
(iii) Any material breach by Company of any provision of this
Agreement.
7. Termination Relating To A Change in Control. In the event that
-------------------------------------------
Employee's employment is terminated due to a Change in Control (as defined
below) or if Employee terminates his employment for Good Reason (as defined
below), Company shall pay Employee the Change in Control Payment (as defined
below).
(a) Termination for Good Reason. Termination by Employee of his employment
---------------------------
for "Good Reason" shall mean a termination by Employee, within twelve (12)
months after a Change in Control, based on the occurrence, without Employee's
express written consent, of any of the following events:
(i) Any reduction by Company in Employee's Base Salary as in effect
immediately prior to the Change in Control;
(ii) The failure by Company to continue in effect any bonus, benefit
or compensation plan or arrangement, stock ownership plan, stock purchase
plan, stock option plan, life insurance plan, medical, health, dental,
accident and disability plan in which Employee is participating at the time
of the Change in Control, or plans providing Employee with substantially
similar benefits (collectively, the "Benefit Plans"), or the taking of any
action by Company which would adversely affect Employee's participation in or
materially reduce Employee's benefits under any of such Benefit Plans;
provided, however, that the amendment, modification or termination of any
Benefit Plan as in effect at the time of a Change in Control on a basis which
does not discriminate against Employee, or a class of employees of which
Employee is a member (as opposed to all participants in such Benefit Plan),
shall not constitute "Good Reason" for the termination by Employee of his
employment pursuant to the terms of this paragraph 7(c);
(iii) Any material breach by Company of any provision of this
Agreement; or
(iv) The failure by Company to obtain the assumption of this Agreement
by any successor or assign of Company.
(b) Change in Control. For purposes of this Agreement, a "Change in
-----------------
Control" shall mean the occurrence of any of the following events:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the securities Exchange Act of
1934, as amended [the "Exchange Act"]) (collectively, a "person") of
Beneficial ownership (as such term is defined in Rule 13d-3 promulgated under
the Exchange Act), directly or indirectly, of twenty (20%) percent or more of
the then outstanding shares of common stock of Company (collectively, the
"Outstanding Common Stock"); provided, however, that the following shall not
constitute a Change of Control:
(A) Any acquisition directly from Company (excluding an acquisition
by virtue of the exercise of a conversion privilege);
(B) Any acquisition by an Underwriter (as such term is defined in
Section 2(11) of the Securities Act of 1933, as amended) for the purpose
of making a public offering;
(C) Any acquisition by Company; or
(D) Any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by Company or any corporation controlled by
Company;
(ii) The liquidation of all or substantially all of the assets of
Company; or
(iii) If within two (2) years of:
(A) The completion of a tender offer or exchange offer for the
voting stock of Company (other than a tender offer or exchange offer by
Company) or a proxy contest in connection with the election of members
of the Board;
(B) A merger, consolidation, transfer or sale of twenty percent
(20%) of the book value of the gross assets of Company measured at the
time of such merger, consolidation, transfer or sale in one (1) or more
transactions;
(C) The acquisition by any person, directly or indirectly, of the
Beneficial Ownership of securities of Company representing twenty
percent (20%) of the Outstanding Common Stock; or
(D) Any combination of the foregoing;
Xx. Xxxxx Xxxx is not a member of the Board and a majority of the Board shall
not consist of:
(I) Persons who were directors of Company on the date hereof;
or
(II) Persons who were elected or nominated for election as
directors with the approval of a majority of the persons referred
to in paragraph 7(e)(iii)(D)(I) above or persons theretofore
elected in accordance with this paragraph 7(e)(iii)(D)(II).
(c) Change in Control Payment. If Employee's employment shall be
-------------------------
terminated by Company (other than for Cause, Disability, Retirement or death)
due to a Change in Control or by Employee for Good Reason, then Employee shall
be entitled to a lump sum payment in a gross amount equal to Employee's Base
Salary for a period of 12 months (minus all lawful deductions).
(d) No Mitigation. Employee shall not be required to mitigate the amount
-------------
of any payment contemplated by this paragraph 7 (whether by seeking new
employment or in any other manner), nor shall any such payment be reduced by any
earnings that Employee may receive from any other source.
8. Inventions. Employee will, during the period of his employment,
----------
disclose to Company promptly and fully all Inventions made or conceived by him
(either solely or jointly with others) including but not limited to Inventions
which relate to the business of Company or Company's actual or anticipated
research or development, or result from any work performed by him for Company.
All Inventions and all records related to Inventions, whether or not patentable,
shall be and remain the sole and exclusive property of Company. "Inventions"
means all inventions, discoveries, processes, improvements, developments and
ideas, and all know-how related hereto. Employee hereby assigns and agrees to
assign to Company all his rights to Inventions and any patents, trademarks, or
copyrights which may be issued in respect to Inventions. Employee acknowledges
that all work shall be work made for hire. During and after his employment,
Employee will assist Company, without charge to Company but at its request and
expense, to obtain and retain rights in Inventions, and will execute all
appropriate documents at the request of Company.
Employee understands that this paragraph 8 shall not apply to any invention
for which no equipment, supplies, facilities, trade secret, or other
confidential information of Company was used and which was developed entirely on
his own time, and does not relate to the business of Company, its actual or
anticipated research, and does not result from any work performed by him for
Company.
9. Non-Solicitation. Employee agrees that during the Term of his
----------------
employment under this Agreement, and for a period commencing on the termination
of his employment for any reason and ending one (1) year after the termination
of his employment with Company, he will not, directly or indirectly:
(i) Employ, hire, engage or be associated with any employee or other
person then or during any part of the preceding twelve (12) months connected
with Company or any of its affiliates;
(ii) Induce any person connected with or employed by Company or any of
its affiliates to leave the employ of such entities; or
(iii) Solicit the employment of any such person on his own behalf or on
behalf of any other business enterprise.
The provisions of this paragraph 9 shall survive the termination or
expiration of this Agreement.
10. Confidential Information. Employee recognizes and acknowledges that
------------------------
various kinds of confidential and proprietary information and trade secrets,
including but not limited to product specifications and lists of Company's
customers and vendors, as they may exist from time to time, are valuable,
special and unique assets of Company's business. Employee will not, during or
after his employment, except in accordance with his employment by Company,
disclose or cause or permit to be disclosed any confidential or proprietary
information or trade secrets of Company to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever without the
prior written consent of Company or as otherwise be required by law or legal
process. The provisions of this paragraph 10 shall survive the termination of
this Agreement.
11. Remedies. In the event that Employee shall violate any provision of
--------
paragraphs 9 and 10 above, then Employee hereby agrees that Company shall be
entitled to a temporary or permanent injunction against him by any court of
competent jurisdiction prohibiting him from violating such provision. In any
proceeding for an injunction and upon any motion for a temporary or permanent
injunction, Employee agrees that his ability to answer in damages shall not be a
bar or interposed as a defense to the granting of such temporary or permanent
injunction against Employee. Employee further agrees that Company will not have
an adequate remedy at law in the event of any breach by Employee hereunder and
that Company will suffer irreparable damage and injury if Employee breaches any
of the provisions of paragraphs 8 through 10 above. The provisions of this
paragraph 11 shall survive the termination or expiration of this Agreement.
12. Notices. Notices and all other communications contemplated by this
-------
Agreement shall be in writing and shall be deemed to have been duly given when
received at the address specified herein. In the case of Employee, notices
shall be delivered to him personally or at the home address which he has most
recently communicated to Company in writing. In the case of Company, notices
shall be delivered to its corporate headquarters, and all notices shall be
directed to the attention of its President.
13. Modification and Waiver. No provision of this Agreement shall be
-----------------------
modified, waived or discharged unless the modification, waiver or discharge is
agreed to in writing and signed by Employee and by an authorized officer of
Company (other than Employee). No waiver by either party of any breach of, or
of compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of the
same condition or provision at another time.
14. Complete Agreement. This Agreement supersedes all previous agreements
------------------
between Company and Employee. No agreements, representations or understandings
(whether oral or written and whether expressed or implied) which are not
expressly set forth in this
Agreement have been made or entered into by either party with respect to the
subject matter hereof.
15. No Assignment. No right, benefit or interest hereunder, shall be
-------------
subject to anticipation, alienation, sale, assignment, encumbrance, charge,
pledge, hypothecation, or set-off in respect of any claim, debt or obligation,
or to execution, attachment, levy or similar process, or assignment by operation
of law. Any attempt, voluntary or involuntary, to effect any action specified
in the immediately preceding sentence shall, to the full extent permitted by
law, be null, void and of no effect.
16. Governing Law. This Agreement shall be governed by, and construed and
-------------
enforced in accordance with and subject to, the laws of the State of California
applicable to Agreements made and to be performed entirely within such State, as
to all matters governed by state law or, if controlling, by applicable federal
law.
17. Severability. The invalidity or unenforceability of any provision or
------------
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.
18. Arbitration. Except as otherwise provided above, any dispute or
-----------
controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration in Orange County, California. Selection of the
arbitrator and conduct of the arbitration shall be in accordance with the
commercial arbitration rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction. Punitive damages shall not be awarded. Each party shall bear its
own costs and legal fees in any arbitration. The cost of the arbitrator and
related expenses shall be shared equally by the parties.
19. Withholding. All payments made pursuant to this Agreement will be
-----------
subject to withholding of applicable taxes, unless specifically set forth herein
to the contrary.
20. Counterparts. This Agreement may be executed in one (1) or more
------------
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one (1) and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of Company by its duly authorized officer, as of the day and year first
above written.
XXXXXX LABORATORIES, INC.
By: /s/ XXXXXXX X. XXXXX
--------------------
Xxxxxxx X. Xxxxx
Title: ___________________________
