EXHIBIT 10.8
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of the
first day of April, 2000, by and between Xxxxx X. Xxxxxx ("Employee"), and
MOLECULAR GERIATRICS CORPORATION, a Delaware corporation having its principal
place of business in Vernon Hills, Illinois (the "Company"). In consideration of
the mutual covenants and conditions set forth herein, the parties hereby agree
as follows:
1. EMPLOYMENT. The Company hereby employs Employee to serve as its
Chairman of the Board of Directors (Chairman) and Chief Executive Officer (CEO)
and Employee hereby accepts such employment. In his capacity as Chairman and
CEO, Employee shall be responsible for performing the duties of the Chairman and
CEO as outlined in the Corporate By-Laws, and agrees to perform such other
duties during the term hereof as the Board of Directors of the Company shall,
from time to time, reasonably direct. Employee agrees to utilize his skills and
to render services to the best of his ability during the term of this Agreement.
2. TERM. Unless earlier terminated pursuant to the provisions of
Paragraph 6 below, Employee's employment hereunder shall be for a period of
three (3) years commencing on April 1, 2000 and shall be extended automatically
for additional three (3) year periods, unless either the Company or the Employee
delivers written notice to the other of its or his election not to extend at
least ninety (90) days prior to the end of either the initial or any additional
term, as applicable. If the Company decides not to extend this Agreement within
the ninety (90) day period described in the immediately preceding sentence for
reasons other than "cause" (as defined in Paragraph 6a below), the Employee
shall receive a severance payment equal to the third year's Base Salary (as
defined in Paragraph 3 below) with respect to the initial or additional term
that was last completed, plus the amount of the bonus earned by the Employee in
such third year. Such severance payment shall be payable over a one (1) year
period in the same manner as the Employee had been paid under this Agreement in
such third year, with payments to begin within two (2) weeks of the end of the
current term of employment under this Agreement.
3. COMPENSATION.
a. BASE SALARY. For all services rendered by Employee under
this Agreement, Employee shall receive a salary at an annual rate of $225,000.00
as increased under Paragraphs 3b and 4c ("Base Salary"), or such higher annual
rate as the Board of Directors of the Company may from time to time establish in
its sole direction.
b. ANNUAL INCREASES. The Base Salary shall be increased at the
end of each year of service by a minimum amount equal to (i) a percentage equal
to the increase, if any, in the United States Department of Labor Consumer Price
Index for Chicago urban areas, all items, over the previous twelve months. If
the index specified in this paragraph is discontinued or not available, a
substitute index shall be selected by arbitration in the manner contemplated by
Paragraph 6e unless the parties mutually agree on a substitute index.
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c. AUTO AND CELLULAR PHONE ALLOWANCE. Employee is entitled to
a monthly non-accountable allowance of $1,000.00 to cover the use of his
automobile, cellular phone and other business related purposes.
d. STOCK OPTION PLANS. The Company has adopted stock option
and/or stock purchase plans for the benefit of certain Employees of the Company.
Employee shall be entitled to participate in such plans, consistent with the
terms of such plans, applicable law and Company Policy.
4. BENEFITS.
a. MEDICAL/HEALTH INSURANCE. The Company shall provide
Employee with Company paid medical and dental insurance which covers Employee,
his spouse and dependents, in accordance with such policies as shall be
maintained by the Company, which shall be comparable to that made available to
other senior executives of the Company.
b. VACATION/SICK LEAVE. Employee shall be entitled to vacation
and sick leave in accordance with Company policy, PROVIDED, Employee shall be
entitled annually to (i) a minimum of five (5) weeks of paid vacation, and (ii)
a minimum of three (3) days of paid sick leave for each ten (10) weeks of
consecutive employment. When Employee has completed ten (10) years of service
with the Company, such paid vacation will be increased to six (6) weeks.
c. LIFE/DISABILITY INSURANCE. The Company shall provide, at
Company expense, term life insurance for the benefit of Employee in the amount
of $600,000 payable to the Executive's designees in accordance with a plan for
executive officers of the Company. The Company's benefit plan for executive
officers shall provide, at Employee's expense, disability insurance for the
benefit of Employee and his beneficiaries through a Company plan reasonable
acceptable to Employee. Employee's Base Salary shall be increased by the amount
of the annual premium for such coverage. The Company shall cause its records to
reflect that the premiums for the disability policy have been paid by the
Employee, including Form W-2 prepared by the Company. The above benefits are
subject to the same being available to the Company at reasonable cost and any
limitations resulting from Employee's physical condition.
d. EXPENSE REIMBURSEMENT. The Company shall pay or reimburse
Employee for all reasonable travel and other expenses incurred or paid by
Employee in connection with the performance of services under this Agreement
upon presentation of expense vouchers and such other supporting information as
the Company may from time to time reasonably request.
5. WARRANTIES AND INDEMNIFICATION. Employee represents to the Company
that Employee is free to enter into this Agreement and that Employee has no
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commitment, arrangement or understanding to, or with, any third party which
restrains or is in conflict with this Agreement; or which would operate to
prevent Employee from performing the services to the Company which Employee
hereby has agreed to provide. Employee agrees to indemnify and hold the Company
harmless from and against any and all liabilities or claims, including costs,
expenses and reasonable attorney's fees arising out of any acts by Employee
which, the foregoing representation or warranty to the contrary notwithstanding,
shall be in violation of or shall constitute a breach of any such commitment,
arrangement or understanding.
6. TERMINATION.
a. The Company may terminate Employee's employment hereunder
upon thirty (30) days' prior written notice to Employee for cause, and except as
provided below, the salary and benefits referred to in Paragraphs 3 and 4 above
shall cease upon the effective date of any such termination for just cause. As
used herein, with respect to termination by the Company, the term "cause" shall
mean (i) any material breach hereof by Employee which is not cured within thirty
(30) days following written notice of such breach given by the Company, provided
that no such prior notice and opportunity to cure need be given where such
breach, or similar breach, has been the subject of such a notice and cure period
on more than two prior occasions; or (ii) conviction of Employee for commitment
of a felony; or (iii) any act of Employee, which in the reasonable judgment of a
majority of the Board of Directors of the Company, constitutes dishonesty,
larceny, fraud, deceit or gross negligence by Employee in the performance of his
duties to the Company or willful misrepresentation to shareholders, directors or
officers of the Company.
b. The Company may, by action of a majority of the Board of
Directors, terminate Employee's employment at any time upon thirty (30) days'
prior written notice and without cause; provided, that prior to the effective
date of termination, the Company shall pay to Employee an amount equal to the
greater of (i) the total Base Salary otherwise payable through the expiration of
the term of this Agreement as set forth at Paragraph 2 above; or (ii) twelve
(12) months' Base Salary and bonus - both based on the prior year's Base Salary
plus bonus.
c. Employee may terminate his employment hereunder at any time
upon thirty (30) days' prior written notice to the Company for cause. The
amounts identified in Paragraph 6b shall be paid to Employee as of the effective
date of termination, together with the continuing benefits described therein, as
Employee's sole remedy. As used herein with respect to termination by Employee,
"cause" shall mean (i) any material breach hereof by the Company which is not
cured within thirty (30) days following written notice of such breach given by
Employee; (ii) repeated and consistent bad faith attempts to bring about
Employee's resignation through obstruction by the Company of operations and
programs of Employee in his capacity hereunder; (iii) the removal of Employee
from the position of Chief Executive Officer, or the appointment of another
person to perform the duties ordinarily associated with such position(s) without
the formal removal of Employee's title(s); or (iv) the transfer of Employee or
the relocation of the principal offices from which the activities of the Company
are conducted to an area more than fifty (50) miles outside the Village of
Xxxxxx Hills.
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d. If Employee terminates his employment without cause, such
termination shall be treated as a termination with cause by the Company, as
provided in Subparagraph 6a above (but without the necessity of any prior notice
by the Company).
e. Any dispute between the parties as to the meaning or
presence of "cause" for termination shall be resolved by binding arbitration
conducted before a single arbitrator in the Chicago, Illinois area under the
Commercial Arbitration Rules of the American Arbitration Association, provided
that the arbitrator shall be a person of extensive experience in the arbitration
of disputes under private employment agreements applicable to management
personnel in industries similar to the Company's industry.
f. This Employment Agreement shall be terminated by the death
of the Executive. In addition, this Employment Agreement may be terminated by
the Board of Directors of the Company if the Executive shall be rendered
incapable by illness or any other disability from complying with the terms,
conditions and provisions on his part to be kept, observed and performed for a
period in excess of one hundred twenty (120) days (whether or not consecutive)
during a twelve (12) month period during the Term of Employment ("Disability").
If this Employment Agreement is terminated by reason of Disability of the
Executive, the Company shall give written notice to that effect to the Executive
in the manner provided herein. In the event that the Executive receives
disability insurance benefits paid for by the Company during any period to
termination of this Employment Agreement pursuant to this Section 6f, the
Executive's salary shall be reduced by an amount equal to such disability
insurance benefits during such period.
g. In the event this Agreement is terminated by Employer
without cause, or by Employee with cause, all stock, warrants and options of
Employee in the Company shall immediately become vested. Stock options may be
exercised any time over the time period as originally set forth at their
issuance.
7. CONFIDENTIALITY.
a. Employee acknowledges that the Company's business and
future success depends on the preservation of the trade secrets and other
confidential information of the Company and its affiliates, suppliers and
customers (the "Secrets"). The Secrets include existing, to-be-developed or
acquired products, processes, techniques, methods, computer programs, know-how,
trade secrets, customers, suppliers, developments, patents, equipment, or
business information made, sold, used, developed or practiced by the Company in
its business or proprietary to the Company or its affiliates, suppliers or
customers. "Secrets" do not include any of the above information or medium
generally known to the industry or which comes to the attention of Employee
through sources other than the Company. It is anticipated that all Employees of
the Company, including Employee, will xxxx all items containing Secrets with
prominent confidentiality notices in accordance with policies to be adopted by
the Company. Employee agrees to protect and to preserve as confidential during
and after the term of his employment all of the Secrets at any time known to
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Employee or in his possession or control (whether wholly or partially developed
by Employee or provided to Employee, and whether embodied in a tangible medium
or merely remembered).
b. Employee shall neither use nor intentionally allow any
other person to use any of the Secrets in any way, except for the benefit of the
Company. All tangible items embodying or disclosing any portion of the Secrets
shall be and remain the property of the Company and shall be returned to the
Company upon the termination of Employee's employment. At such time, Employee
shall also assemble all tangible items of work in progress, notes, plans, and
other materials related in any way to Employee's employment, and will promptly
deliver such items to the Company. The failure to xxxx any item with
confidentiality notice(s) shall not, IPSO FACTO, cause such item to be excluded
from classification as a Secret for purposes of this Section 7.
c. Employee's covenants in this Paragraph shall supplement,
and shall not supplant, any other rights or remedies the Company may have under
applicable law for the protection of its properties and trade secrets.
8. INVENTIONS.
a. "Invention(s)" shall mean discoveries, designs, programs,
improvements, developments, new concepts, methods, agents, materials, and ideas,
whether patentable or not, and products, processes and know-how related to the
use of production thereof.
b. Employee agrees that any Invention which Employee has made
or may make during the term of this Agreement shall be treated as part of the
Company Secrets and shall be the sole and exclusive property of the Company,
whether or not (i) patent applications or copyright registrations are filed
thereon, (ii) the Invention is conceived or developed by Employee individually
or jointly with others. However, Employee has no obligation to assign to the
Company any Invention for which no Company Secrets and no equipment, supplies,
or facilities of the Company were used and which was developed entirely on
Employee's own time, unless:
(i) the Invention relates directly to the business of the
Company,
(ii) the Invention relates to actual or demonstrably anticipated
research or development work of the Company, or
(iii)the Invention directly results from any work performed by
Employee for the Company.
c. Whenever requested by the Company, Employee agrees to
assist and cooperate with the Company, at the Company's expense, in the
obtaining, maintaining and enforcing of the United States and foreign patents
and copyright registrations for any Invention which is to be the property of the
Company as provided above. This assistance and cooperation shall include, but is
not limited to:
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(i) making application for United States and foreign
patents or copyright registrations on any Invention if
so requested by the Company;
(ii) assigning all of Employee's right, title and interest
in and to such Invention and any patent applications or
copyright registrations thereon to the Company or its
designees; and
(iii)executing all documents and rendering all assistance as
may be reasonably necessary to protect the rights of
the Company or its designee and to vest in the Company
or its designees, all rights to any such Invention,
patent application, patent, copyright, or copyright
registration.
d. Attached hereto as Exhibit ____ is a list of all issued
patents, pending patent applications, registered copyrights, and other
inventions which Employee has owned or has developed prior to being retained by
the Company. Any copyright, patent, pending application, or prospective patent
application thus listed and not otherwise expressly assigned in writing by
Employee to the Company will be excluded from the terms of this Agreement.
9. PROPERTY. Upon termination of the Term of Employment or termination
pursuant to Section 6 hereof, the Executive or his personal representative shall
promptly deliver to the Company all books, memoranda, plans, records and written
data of every kind relating to the business and affairs of the Company and all
other property owned by the Company which is then in the Executive's possession.
10. INSURANCE. The Company shall have the right, at its own cost and
expense, to apply for and to secure in its own name, or otherwise, life, health
or accident insurance or any or all of them covering the Executive, and the
Executive agrees to submit to usual and customary medical examinations and
otherwise to cooperate with the Company in connection with the procurement of
any such insurance, and any claims thereunder.
11. COVENANT NOT TO COMPETE.
a. APPLICABILITY. This Paragraph 11 shall apply following the
termination of Employee's employment only in the event such termination is (i)
by Employer for cause as defined in Paragraph 6a above, or (ii) by Employee
without cause as defined in Paragraph 6c above.
b. COVENANT. For a period beginning on the date of the
Agreement and ending one year following the date of termination of Employee's
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employment, Employee hereby agrees that he will not, directly or indirectly,
enter into the employment, or render services to or acquire an interest
whatsoever in (whether for his own account as an individual proprietor, or as a
partner, associate, shareholder, officer, director, employee, trustee or
otherwise), any person or entity engaged in any operations in competition in any
area of the world with any aspect of the business of the Company as presently
conducted and as said business may evolve in the ordinary course of business
between the date of this Agreement and the termination of Employee's employment
hereunder (including products under active development at such time); PROVIDED,
HOWEVER, that nothing herein shall prevent the purchase or ownership by Employee
of shares of stock by way of investment in any corporation or prevent the
employment of or the rendering of services by Employee for up to 10% of his
time, including being on boards of directors of companies, where he does not
contribute to the development or sale of products which compete with products of
the Company with whose development or sale the Employee was directly involved.
Without limiting the foregoing, Employee agrees that he will not call on or
otherwise solicit business from any of the customers or potential customers of
the Company which, at the time of termination of his employment, were listed (or
ought to have been listed) in the Company's records, as to any product that
competes with any product provided or marketed by or actually under development
by the Company at the time of Employee's termination. Employee agrees that he
will, during the term of his employment with the Company, promptly and fully
disclose to the Company any business opportunity coming to Employee's attention,
or conceived or developed in whole or in part by Employee, which relates to the
Company's business or demonstrably anticipated business. Employee will not at
any time exploit such business opportunities for his own gain or that of any
person or entity other than the Company.
12. REMEDIES. Employee acknowledges that damages for breach of his
covenants under Paragraphs 7, 8, 9, 10 and 11 above will be difficult to
determine and inadequate to remedy the harm which may be caused thereby, and
therefore agrees that the Company may petition or seek to enjoin a putative
violation by temporary or permanent injunction. Any available injunctive relief
shall be in addition to, and not in place of, any other remedies available at
law or equity. Employee believes that the provisions of this Agreement are
reasonable and that Employee is capable of gainful employment without breaching
this Agreement. However, should any court or tribunal decline to enforce any
provision of Paragraphs 7 or 11 of this Agreement as written, the parties hereby
agree that this Agreement shall, to the extent applicable to that circumstance
before such court, be deemed to be modified to restrict Employee's competition
with the Company to the maximum extent to time, scope and geography which the
court shall find enforceable, and such provisions shall be so enforced.
13. ENTIRE AGREEMENT: MODIFICATION. The provisions contained herein
constitute the entire Agreement between the parties with respect to the subject
matter hereof and any waiver, alteration or modification of any provisions of
this Agreement, or the replacement of this Agreement, shall not be valid unless
in writing and signed by all the parties signing hereunder.
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14. GOVERNING Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Illinois.
15. AGREEMENT NOT ASSIGNABLE. Employee may not assign any of his rights
or delegate any of his duties hereunder. Subject to Paragraph 6c, the Company
may assign this Agreement to any of its Affiliates at any time owned by, owning
or under common ownership of the Company. In the event of such an assignment by
the Company, such affiliates shall be deemed substituted for the Company at each
place where "the Company" appears herein; provided, however, the Company shall
not be released from its obligations hereunder. Furthermore, the assignment of
this Agreement by the Company shall not enlarge the business activities
considered to be conducted by the Company for purposes of Paragraphs 7, 8 and 11
hereof. Subject to the foregoing, this Agreement shall bind parties and their
respective heirs, successors, assigns and personal representatives.
16. CHANGE IN OWNERSHIP. Upon (a) the sale or transfer of all or
substantially all of the assets of the Company or of more than fifty percent
(50%) of the outstanding stock of any voting class of the Company's stock to any
single person or entity (in any one or more of a series of related
transactions), or (b) the merger of the Company with or into any other entity
(except a wholly-owned subsidiary or a parent owning all of the outstanding
stock of the Company), then all stock and options of Employee in the Company
shall immediately become vested.
17. ATTORNEY'S FEES. In any action to enforce its rights hereunder, the
prevailing party shall be reimbursed by the other for its costs of enforcement,
including with limitation, reasonable attorney's fees.
18. JURISDICTION AND VENUE. The parties each irrevocably consent and
submit to the personal jurisdiction of the State and Federal courts sitting in
Chicago, Illinois and agrees that any action, suit or proceeding in connection
with this Agreement shall be brought in such courts to the exclusion of all
other courts, other than actions to enforce judgments or orders entered in such
courts sitting in Lake County, Illinois.
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19. NOTICES. All notices required or permitted hereunder shall be given
in writing and delivered in person, transmitted by facsimile, or sent by
registered or certified mail, postage prepaid, or reliable courier service to
the parties at the respective addresses set forth on the signature page hereof,
or such other address as a party may specify by notice for all subsequent
notices to it hereunder. Notices will be effective upon the earlier of receipt
or the second business day after mailing.
20. NO WAIVER. No waiver or modification of any of the terms or
provisions hereof shall be valid unless in writing signed by the party against
which the enforcement of such waiver or modification is sought, not shall any
waiver or failure to enforce any right hereunder be deemed to be a waiver of the
same or any other right in any other instance.
AGREED:
/s/ Xxxxx X. Xxxxxx
___________________________
Xxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
/s/ Xxxx X. XxXxxxxxxxx
__________________________
Xxxx X. XxXxxxxxxxx, President
& COO
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