1
Exhibit 10.14
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the 16th day of March, 1998,
by and between NEOPHARM, INC., a Delaware corporation (the "Company") and XXXXX
X. XXXXXX ("Executive").
WITNESSETH:
WHEREAS, the Company desires to employ the Executive, and the Executive
desires to accept such employment, upon the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the covenants and mutual agreements
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby
agree as follows:
1. Employment. Throughout the Term (as defined in Section 2 below), the
Company shall employ Executive as provided herein, and Executive hereby
accepts such employment. In accepting such employment, Executive states
that, to the best of his knowledge, he is not now, and by accepting such
employment, will not be, under any restrictions in the performance of the
duties contemplated under this Agreement as a result of the provisions of
any prior employment agreement or non-compete or similar agreement to
which Executive is or was a party.
2. Term of Employment. The term of Executive's employment by the Company
hereunder shall commence on March 16, 1998 (the "Effective Date") and
shall continue thereafter unless sooner terminated as a result of
Executive's death or in accordance with the provisions of Section 7 below
(the "Term").
3. Duties. Throughout the Term, and except as otherwise expressly provided
herein, Executive shall be employed by the Company as the President and
Chief Executive Officer ("CEO") of the Company. In such capacity,
Executive shall devote his full time to the performance of his duties as
President and CEO of the Company in accordance with the Company's By-laws,
this Agreement and the directions of the Company's Board of Directors. In
addition, the Company shall promptly appoint Executive to the Board and
thereafter nominate Executive as a nominee for election to the Board and
solicit proxies for his election for so long as this Agreement is in
effect. Without limiting the generality of the foregoing, throughout the
Term Executive shall faithfully perform his duties as President and CEO at
all times so as to promote the best interests of the Company.
4. Compensation.
(a) Salary. For any and all services performed by Executive
under this Agreement during the Term, in whatever capacity, the
Company shall pay to Executive an annual salary of Two Hundred Fifty
Thousand Dollars ($250,000) per year (the "Salary") less any and all
applicable federal, state and local payroll and withholding
2
taxes. The Salary shall be paid in the same increments as the
Company's normal payroll, but no less frequent than monthly and
prorated, however, for any period of less than a full month. The
Salary will be reviewed annually by the Compensation Committee of
the Board and a determination shall be made at that time as to the
appropriateness of an increase, if any, thereto.
(b) Bonus. In addition to the Salary, Executive shall be
eligible to receive from the Company an incentive compensation bonus
(the "Bonus") based on a percentage of his Salary. The Bonus, if
any, shall be determined based on the achievement by the Company of
certain specific strategic plans and goals (the "Performance Goals")
during the preceding calendar year (the "Measurement Period") as
shall be determined by the Board in consultation with the Executive.
The initial Performance Goals will be established by the Board
within ninety (90) days of Executive's employment hereunder.
Thereafter, the Performance Goals for each Measurement Period shall
be established as promptly as possible in each such Measurement
Period, with the expectation that the Performance Goals be in place
each year prior to distribution of the Company's annual proxy
materials. Following each Measurement Period, the Compensation
Committee of the Board shall review the Performance Goals for the
prior Measurement Period in light of the Company's actual
performance during such Measurement Period as reflected on the
Company's audited financial statements. Achievement of various
levels of the Performance Goals shall result in the following
payments as a percentage of Salary:
Level of Achievement Bonus as Percent of Salary
-------------------- --------------------------
Below Threshold 0%
Threshold Goal 20-50%
TargetGoal 50%
Stretch Goal 50-80%
Payment of each year's Bonus, if any, shall be made within
thirty (30) days after the Company's performance for the Measurement
Period is established on the basis of the Company's audited
financial statements. In addition, and at its sole discretion, the
Board may award additional compensation to Executive based on
Executive's contributions to the Company.
5. Benefits and Other Rights. In consideration for Executive's performance
under this Agreement, the Company shall provide to Executive the following
benefits:
(a) The Company will provide Executive with cash advances for or
reimbursement of all reasonable out-of-pocket business expenses
incurred by Executive in connection with his employment hereunder;
provided, Executive adheres to any and all reasonable policies
established by Company from time to time with respect to such
2
3
reimbursements or advances, including, but not limited to, a
requirement that Executive submit supporting evidence of any such
expenses to the Company.
(b) The Company will provide Executive with a monthly car
allowance in the amount of Seven Hundred and Fifty Dollars ($750.00)
subject to standard payroll withholding for taxes.
(c) The Company will provide Executive and his family with group
medical coverage under the terms of the Company's health insurance
plan, but subject to completion of normal waiting periods. During
any such waiting period, or in the event that at the date of this
Agreement the Company's group medical coverage is not yet in effect,
then, in either case, Company will pay, or reimburse Executive for,
the cost of COBRA coverage for Executive and his family under his
prior health plan.
(d) During the Term the Executive shall be entitled to three (3)
weeks paid vacation, it being understood and agreed that unused
vacation shall not be carried over from one year to the next.
(e) As a one time benefit, the Company will reimburse, or pay
directly on Executive's behalf, the expenses, including, but not
limited to, realtor fees, associated with moving Executive's family
and household possessions from Naperville, Illinois to the northern
suburbs of the Chicago metropolitan area ("Moving Expenses");
provided, in each case, that Executive shall provide such
documentation of all Moving Expenses as the Company shall reasonably
request.
6. Options.
(a) The Company shall grant to Executive options pursuant to the
Company's 1995 Stock Plan (the "Option Plan"), as amended, to
purchase 400,000 shares of the Company's common stock at an option
exercise price of $4.75 per share of common stock (the "Options")
which was the fair market value (as determined under the Option
Plan) of the Company's common stock as of January 12, 1998, which
was the date of Executive's acceptance of employment with the
Company and which date shall be the date of grant of the Options for
purposes of the Option Plan (the "Date of Grant"). The Options
shall vest in equal installments of 100,000 Options per year on each
of the first four anniversaries of the Date of Grant. The Options
shall not be exercisable subsequent to the date ten (10) years after
the Date of Grant. In all other respects the Options shall be
governed by the terms and conditions of the Option Plan.
(b) In the event the Company shall elect to obtain additional
capital investment in the future, after the completion of any such
capital investment program by the Company, the Board will evaluate
the awarding of additional stock options to Executive based
3
4
on the success of such fundraising endeavors and Executive's
contributions to that success.
7. Termination of the Term.
(a) The Company shall have the right to terminate the Term,
effective upon delivery of written notice of termination to
Executive setting forth the basis of such termination, under the
following circumstances:
(i) Executive shall die; or
(ii) With or without cause, effective ninety (90) days
after delivery of written notice to Executive by the Company
or, in lieu of said ninety (90) day notice, upon payment to
Executive of three months compensation based on his then
current Salary.
(b) This Agreement may be terminated by the Executive at any time
upon ninety (90) days prior written notice to the Company.
8. Effect of Expiration or Termination of the Term. Promptly following
the termination of the Term, and except as provided in Section 7 or as
otherwise expressly agreed by the Company, Executive shall
(a) provide the Company with all reasonable assistance necessary
to permit the Company to continue its business operations without
interruption and in a manner consistent with reasonable business
practices; provided, however, that such transition period shall not
exceed thirty (30) days after termination nor require more than
forty (40) hours of Executive's time per week. In the event that
the Company shall request Executive to provide transitional
assistance after the effective date of termination, Executive shall
be paid at any hourly rate based on an 8 hour work day, a 2,080 hour
work year and his then current Salary, based upon time sheets
submitted by Executive specifying the services performed and the
amount of time expended;
(b) deliver to the Company possession of any and all property
owned or leased by the Company which may then be in Executive's
possession or under his control, including without limitation any
and all such keys, credit cards, automobiles, equipment, supplies,
books, records, files, computer equipment, computer software and
other such tangible and intangible property of any description
whatsoever. If, following the expiration or termination of the
Term, Executive shall receive any mail addressed to the Company,
then Executive shall immediately deliver such mail, unopened and in
its original envelope or package, to the Company; and
(c) Other than as provided in Section 7, upon a termination of
employment all other benefits and/or entitlements to participate in
programs or benefits, if any, will cease
4
5
as of the effective date medical insurance coverage at his own
expense as provided by applicable law or written Company policy.
9. Confidentiality. The Executive acknowledges that during the period of
his employment by the Company, and in his performance of services
hereunder, he will be placed in a relationship of trust and confidence
regarding the Company and its affairs. In the course of and due to that
relationship he will have contact with the Company's customers, suppliers,
affiliates, and distributors and their personnel. In the course of the
aforesaid relationship, he will have access to and will acquire
confidential information relating to the business and operations of the
Company, including, without limitation, information relating to processes,
plans and methods of operation of the Company. The Executive acknowledges
that any such information that is not a trade secret, nonetheless
constitutes confidential information as between himself and the Company,
that the disclosure thereof (or of any information which he knows relates
to confidential, trade, or other secret aspects of the Company's business)
would cause substantial loss to the goodwill of the Company, and will
continue to be made known to Executive only because of the position of
trust and confidence which he will continue to occupy hereunder. In view
of the foregoing, and in consideration of the covenants and premises of
this Agreement, the Executive agrees that he will not, at any time during
the term of his employment, and for a period of twelve months thereafter,
disclose to any person, firm or company any trade secrets or confidential
information or such ideas which he may have acquired or developed or may
acquire or develop relating to the Business of the Company while serving
the Company as an Executive.
10. Remedies.
(a) The covenants of Executive set forth in Section 9 are
separate and independent covenants for which valuable consideration
has been paid, the receipt, adequacy and sufficiency of which are
acknowledged by Executive, and have also been made by Executive to
induce the Company to enter into this Agreement. The aforesaid
covenants may be availed of, or relied upon, by the Company in any
court of competent jurisdiction, and shall form the basis of
injunctive relief and damages including expenses of litigation
(including, but not limited to, reasonable attorney's fees upon
trial and appeal) suffered by the Company arising out of any breach
of the aforesaid covenants by Executive. The covenants of Executive
set forth in this Section 10 are cumulative to each other and to all
other covenants of Executive in favor of the Company contained in
this Agreement and shall survive the termination of this Agreement
for the purposes intended.
(b) The covenants contained in Section 9 above shall be construed
as agreements which are independent of any other provision of this
Agreement, and the existence of any claim or cause of action by any
party hereto against any other party hereto, of whatever nature,
shall not constitute a defense to the enforcement of such covenants.
If any of such covenants shall be deemed unenforceable by virtue of
its scope in terms
5
6
of geographical area, length of time or otherwise, but may be made
enforceable by the imposition of limitations thereon, Executive
agrees that the same shall be enforceable to the fullest extent
permissible under the laws and public policies of the jurisdiction
in which enforcement is sought. The parties hereto hereby authorize
any court of competent jurisdiction to modify or reduce the scope of
such covenants to the extent necessary to make such covenants
enforceable.
11. Enforcement Costs. If any legal action or other proceeding is brought
for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any provisions of
this Agreement, the successful or prevailing party or parties shall be
entitled to recover reasonable attorney's fees, court costs and all
expenses even if not taxable as court costs (including, without
limitation, all such fees, costs and expenses incident to appeal and other
post-judgment proceedings), incurred in that action or proceeding, in
addition to any other relief to which such party or parties may be
entitled. Attorney's fees shall include, without limitation, paralegal
fees, investigative fees, administrative costs, sales and use taxes and
all other charges billed by the attorney to the prevailing party.
12. Notices. Any and all notices necessary or desirable to be served
hereunder shall be in writing and shall be
(a) personally delivered, or
(b) sent by certified mail, postage prepaid, return
receipt requested, or guaranteed overnight delivery by a
nationally recognized express delivery company, in each case
addressed to the intended recipient at the address set forth
below.
(c) For notices sent to the Company:
NeoPharm, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxx, Xxxxxx, Xxxxxx & Xxxxxxxxxx, P.C.
000 X. Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxxxxxx X. Xxxxxxx
6
7
(d) For notices sent to Executive:
Xxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Either party hereto may amend the addresses for notices to such party
hereunder by delivery of a written notice thereof served upon the other
party hereto as provided herein. Any notice sent by certified mail as
provided above shall be deemed delivered on the third (3rd) business day
next following the postmark date which it bears.
13. Entire Agreement. This Agreement sets forth the entire agreement of the
parties hereto with respect to the subject matter hereof, and all prior
negotiations, agreements and understandings are merged herein. This
Agreement may not be modified or revised except pursuant to a written
instrument signed by the party against whom enforcement is sought.
14. Severability. The invalidity or unenforceability of any provision hereof
shall not affect the enforceability of any other provision hereof, and
except as otherwise provided in Section 11 above, any such invalid
or unenforceable provision shall be severed from this Agreement.
15. Waiver. Failure to insist upon strict compliance with any of the terms
or conditions hereof shall not be deemed a waiver or such term or
condition, and the waiver or relinquishment of any right or
remedy hereunder at any one or more times shall not be deemed a
waiver or relinquishment of such right or remedy at any other time
or times.
16. Governing Law. This Agreement and the rights and obligations of
the parties hereto shall be governed by and construed in accordance
with the laws of the State of Illinois, without regard to its conflicts of
laws provisions. Each party hereto hereby (a) agrees that any litigation
which may be initiated with respect to this Agreement or to
enforce rights granted hereunder shall be initiated in a court located in
Xxxx County, Illinois and (b) consents to personal jurisdiction of such
courts for such purpose.
17. Benefit and Assignability. This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns. The
rights and obligations of Executive hereunder are personal to him,
and are not subject to voluntary or involuntary alienation, transfer,
delegation or assignment.
[SIGNATURE PAGE FOLLOWS]
7
8
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the day and year first above written.
NEOPHARM, INC.
By: ___________________________________
Its: __________________________________
EXECUTIVE:
________________________________________
XXXXX X. XXXXXX
8
