EMPLOYMENT AGREEMENT
EXHIBIT
10.1
THIS
AGREEMENT ("Agreement"), dated May 31, 2005 and effective as of the 30th day
of
June, 2005 (the "Effective Date"), is made and entered into by and between
AtheroGenics,
Inc.,
a
Georgia corporation (hereinafter called the "Employer"), and Xxxxxx
X. Xxxxxx, Xx.,
a
resident of the State of Georgia (hereinafter the "Executive").
W
I T N E S S E T H :
WHEREAS,
the
Executive shall be employed by Employer effective June 30, 2005.
WHEREAS,
the
Employer and Executive mutually desire to enter into an employment contract
which will supersede any prior contracts;
NOW,
THEREFORE,
in
consideration of the premises and the mutual covenants and agreements herein
contained, the parties hereto agree as follows:
1. Period
of Employment.
In
exchange for the compensation, benefits and perquisites described in this
Agreement, and upon such other terms and conditions hereinafter set forth,
the
Employer agrees to employ the Executive for the "Period of Employment" (as
hereinafter defined). For purposes of this Agreement, the "Period of Employment"
shall commence as of the Effective Date of this Agreement and, unless earlier
terminated as provided in this Agreement, shall consist of an initial period
of
one (1) year (the "Initial Term"), and shall automatically be extended for
additional one (1) year terms (each additional one (1) year term called a
"Renewal Term") unless Employer or Executive shall notify the other not less
than 30 days prior to the expiration of either the Initial Term or any Renewal
Term that Executive's employment will end at the expiration of the then existing
Initial Term or Renewal Term.
2. Position
and Responsibilities.
During
the Period of Employment, the Executive agrees to serve as the Vice President
General Counsel of AtheroGenics, Inc. reporting directly to the President of
the
Employer (hereinafter the "President"), and to perform those functions and
duties customarily assigned to individuals serving in the position in which
the
Executive serves hereunder. Without limiting the foregoing, Executive shall
be a
member of Employer's management executive committee. In addition, Executive
shall keep the Board of Directors of Employer and the CEO of Employer fully
apprised of all material developments occurring under Executive's supervision
and responsibility.
Executive
shall be responsible for keeping senior management and Board of Directors of
Employer apprised of Employer’s progress in the legal arena. Executive is
expected to insure that legal activities are carried out with the highest
standards of excellence, integrity and commercial utility. Executive’s duties
shall include supervision of other employees in the Legal
Department.
Except
as
may otherwise be approved in advance by the President of Employer, the Executive
shall devote his full working time throughout the Period of Employment to the
services required of him hereunder. The Executive shall render his services
exclusively to the Employer during the Period of Employment, and shall use
his
best efforts, judgment and energy to improve and advance the business and
interests of the Employer in a manner consistent with the duties of his
position.
3. Compensation,
Benefits and Perquisites.
(a) Base
Salary
In
exchange for the performance of his duties and responsibilities hereunder and
all other services rendered by the Executive in any capacity to the Employer,
the Employer agrees to pay base salary ("Base Salary") to the Executive for
the
Initial Term equal to $250,000.00 per year. For any Renewal Term thereafter
during which this Agreement remains in effect, the Executive's Base Salary
for
each such Renewal Term shall be reviewed based upon an annual performance
appraisal and competitive market conditions and may be increased from time
to
time by the Employer (at the sole discretion of Employer). Base Salary shall
be
payable according to the customary payroll practices of the
Employer.
(b) Incentive
Compensation
In
addition to Base Salary, the Executive shall be eligible to receive such
incentive compensation ("Incentive Compensation") as shall be determined by
the
President and the Board of Directors of Employer (or a committee of the Board).
The amount of such Incentive Compensation to be earned in any year shall be
based upon certain strategic and financial goals which shall be determined
by
the Executive and the President of the Employer. Such strategic and financial
goals and target Incentive Compensation shall be set forth in the Employer's
annual budget during the term of this Agreement. On an annual basis, the target
Incentive Compensation shall be $62,500.00. Incentive Compensation earned
pursuant to this Agreement shall be payable no later than sixty (60) days
following the expiration of each calendar year.
(c) Equity
Compensation
The
Executive shall be eligible to participate in the Employer's Equity Ownership
Plans and receive such awards of stock and/or options thereunder as shall be
determined by the Board of Directors or a committee thereof.
(d) General
Benefits and Perquisites
During
the term of this Agreement, the Executive shall be entitled to participate,
in
accordance with the terms and conditions thereof, in all employee benefit plans
or perquisite programs generally available to all executive management personnel
of the Employer which may be in effect from time to time during the term of
this
Agreement; provided, however, that nothing contained herein shall require the
Employer to establish, or maintain, any such plan. These benefits are provided
in accordance with the provisions of each individual plan, which may be amended
from time to time at the sole discretion of the Employer.
2
(e) Additional
Disability Coverage
In
addition to the employee benefit plan coverage provided under Section 3(d)
above, during the term of this Agreement the Executive will be provided with
additional "Disability" (as hereinafter defined) benefits in an amount such
that
the total annual Disability benefit payable under this provision, together
with
payments under any short-term and/or long-term disability program or policy
maintained by the Employer and from workers compensation with respect to the
disabling condition, will be equal to 70% of the Executive's annualized Base
Salary immediately prior to the Disability. The Disability benefit provided
under this Section 3(e) will be paid from the date of the Disability until
the
earliest of (i) the cessation of the Disability; (ii) the Executive's
death; (iii) the Executive's attainment of age 65; (iv) the date when short-term
disability benefits terminate if long-term disability benefits do not
immediately commence thereafter pursuant to the terms of that policy; or (v)
the
date when long-term disability policy benefits terminate pursuant to the terms
of that policy.
For
purposes of this Agreement, the term "Disability" or "Disabled" has the same
meaning as provided in the long-term disability plan maintained by the Employer,
not taking into account any exclusion or waiting period under such plan. In
the
event of a dispute, the determination of Disability or Disabled shall be made
by
the Board of Directors or its designee. In the event that the Executive shall
dispute the determination of the Board of Directors or its designee as to the
Disability of the Executive, the Executive may appeal the determination to
a
panel of three doctors, one to be selected by the Executive at his expense,
one
to be selected by the Board of Directors or its designee at its expense, and
one
to be selected by the doctors chosen by the Executive and the Board of Directors
or its designee whose expense shall be shared equally between Executive and
Employer. The decision of the panel of doctors shall be final. Any termination
for Disability under this Agreement shall not affect the rights, if any, that
the Executive may otherwise have under the long-term disability plan the
Employer may have in effect at the date of such termination and in which the
Executive is then participating. Employer shall have the right to review any
determination of Disability no more frequently than bi-annually.
(f) Reimbursement
of Business Expenses
The
Employer will reimburse the Executive for all reasonable and necessary business
expenses (including, but not limited to, professional and service organization
dues, journal subscriptions and educational seminars, conferences, symposiums
and other meetings) and related travel expenses, incurred or expended in
connection with the performance of his duties and responsibilities as Executive
under this Agreement in accordance with the reimbursement policies of
Employer.
(g) Change
of
Control
In
the
event of a Change of Control, as defined in Section 4(g) hereof, 18 months
of
vesting for unvested stock options granted to the Executive pursuant to the
Employer's Equity Ownership Plans (or any other or successor plans) shall be
immediately accelerated.
3
4. Termination
of Agreement.
(a) General
Upon
termination of Executive for any reason, (i) the Employer shall pay the
Executive any Base Salary that was earned through the effective date of his
termination but which remained unpaid as of that date, and (ii) Executive shall
be entitled to any benefits that have been accrued and vested under any of
Employer's employee benefit plans in accordance with and to the extent provided
in such benefit plans. Except as otherwise provided in this Agreement, Executive
shall not be entitled to any other benefits or payments under this Agreement
in
the event of termination of Employment.
(b) Involuntary
Termination
Employer
recognizes that the Executive would incur substantial damage to personal and
professional reputation in the event of an Involuntary Termination.
Consequently, should such Involuntary Termination occur during the Period of
Employment, the Employer shall pay to the Executive, as liquidated damages,
an
amount (the "Severance Amount") equivalent to the sum of (i) one times
Executive's then current annualized Base Salary and (ii) a percentage of the
target Incentive Compensation otherwise stipulated for the benefit of Executive
pursuant to Section 3(b) of this Agreement for the calendar year in which the
Involuntary Termination occurs as follows:
|
Aggregate
Period of Employment
with
Employer
|
Percentage
of Target Incentive
Compensation
Payable
|
|
Under
one year
|
None
|
|
One
year up to two years
|
50%
|
|
Two
years and over
|
100%
|
One-half
of the Severance Amount shall be paid in a lump sum in cash within thirty (30)
days following the date of termination of employment and the remaining one-half
(½) of the Severance Amount shall be paid in installments over a twelve month
period commencing on the first day of the month following the month in which
such termination of employment occurs in the same manner and at the same time
that Base Salary would have been paid had this Agreement continued. Payment
of
the Severance Amount shall be contingent upon Executive signing (and not
revoking) a general release of all claims, in a form attached hereto as
Exhibit
A.
Upon
Executive's becoming ineligible to participate in the group health plan(s)
sponsored by the Employer, Executive may elect continuation coverage
("Continuation Coverage") under such plan(s) as permitted by the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"). During such
COBRA coverage period, the Employer will pay the premiums for COBRA Continuation
Coverage (excluding any medical flexible spending account coverage) until the
first to occur of (i) the first anniversary of the Involuntary Termination,
or
(ii) the date on which the Executive commences employment with a new employer
and is eligible to
4
participate
in a subsequent employer's medical and healthcare employee benefits program
with
respect to the Employer's insured group health plan, provided however that
such
payments shall not exceed the amount paid by Employer for the medical and
healthcare coverage in effect for Executive and his dependents immediately
prior
to the COBRA coverage period. All other premiums shall be paid by
Executive.
If
the
Executive's employment terminates due to an Involuntary Termination, the
Employer shall accelerate the vesting of its stock options previously granted
to
Executive pursuant to the Employer's Equity Ownership Plan (or any other or
successor plans) as follows:
|
Aggregate
Period of
Employment
with Employer
|
Options
to Have Accelerated
Vesting
as of Date of
Involuntary
Termination
|
|
Under
one year
|
None
|
|
One
year up to two years
|
Options
otherwise vesting within 3 months following Involuntary
Termination
|
|
Two
years and over
|
Options
otherwise vesting within 6 months following Involuntary
Termination
|
If
the
Involuntary Termination or a Constructive Discharge occurs within 13 months
following a Change of Control, in lieu of the Severance Amount provided in
the
first paragraph of this Section 4(b) (but paid in the same manner as earlier
provided), the Severance Amount shall be the aggregate of (i) 2 times annualized
Base Salary and (ii) 100% of the target Incentive Compensation otherwise payable
to him for the year in which the Involuntary Termination or Constructive
Discharge occurs. In addition, vesting for all unvested stock options granted
pursuant to the Employer's Equity Ownership Plan (or any other or successor
plans) shall be immediately accelerated.
Except
as
provided under this Section 4(b), as of the effective date of an Involuntary
Termination, all other obligations of the Employer to Executive under this
Agreement shall cease.
Payment
of deferred compensation: In the event Executive makes a good
faith
determination that the payment schedules described herein would result in
Executive's incurring penalty taxes under Section 409A of the Internal Revenue
Code, Employer will agree with Executive to modify the payment schedules
so that such penalty taxes
are
minimized to the Executive.
5
(c) Voluntary
Resignation
Except
in
the case of a voluntary resignation which results from a Constructive Discharge,
if the Executive voluntarily resigns from the positions described in Section
2
during the period in which this Agreement is in effect, then the Employer shall
pay the Executive the benefits provided in Section 4(a) of this Agreement.
No
Incentive Compensation will be paid to the Executive following the date of
a
voluntary resignation. The respective terms and provisions of any other employee
benefit or perquisite program shall control in the case of a voluntary
resignation.
Unless
otherwise specifically stated in this Agreement, as of the effective date of
a
voluntary resignation, all obligations of the Employer to Executive under this
Agreement shall cease.
The
Executive must notify the Board of Directors in writing of his intent to
voluntarily terminate employment at least thirty (30) days prior to the
effective date of such voluntary resignation.
(d) Termination
for Cause
Notwithstanding
any other provision contained in this Agreement, the Employer has the right,
at
any time, to effect a "Termination for Cause" (as defined in Section 4(g)),
of
Executive's employment under this Agreement. Upon the date of such Termination
for Cause, the Employer shall pay the Executive the benefits provided in Section
4(a) of this Agreement. No Incentive Compensation will be paid to the Executive
following the date of a Termination for Cause. The respective terms and
provisions of any other employee benefit or perquisite program shall control
in
the case of a Termination for Cause.
Unless
otherwise specifically stated in this Agreement, as of the effective date of
a
Termination for Cause, all obligations of the Employer to Executive under this
Agreement shall cease.
(e) Disability
In
the
event the Executive becomes Disabled at any time during the term of this
Agreement, the Employer shall make payments to the Executive in amounts equal
solely to those specified in Section 3(e) and for the time period specified
in
Section 3(e). Such payments shall be paid in the same manner and at the same
time that Base Salary would have been paid had this Agreement continued.
Notwithstanding the foregoing, the Executive shall also be entitled to a pro
rata portion of his target Incentive Compensation otherwise stipulated for
the
benefit of Executive for the calendar year in which he became Disabled, provided
Executive is Disabled as of the end of such calendar year. Such pro rata portion
shall be determined by multiplying (i) the total target Incentive Compensation
that the Executive was projected to receive in respect of the year of his
Disability by (ii) the quotient of the number of days in such year prior to
his
Disability, divided by 365. Such pro rata Incentive Compensation will be payable
at the same
6
time
that
the full Incentive Compensation would have been payable to the Executive as
provided in Section 3(b) hereof.
Except
as
provided under this Section 4(e) and Section 3(e), as of the effective date
of
the Disability, all other obligations of the Employer to Executive under this
Agreement shall cease.
(f) Death
In
the
event of the death of Executive during the term of this Agreement, the heirs,
personal representatives or beneficiaries designated in writing by Executive,
as
required by applicable law, shall receive (i) the benefits and payments
described in Section 4(a) of this Agreement; (ii) a pro rata portion of the
target Incentive Compensation otherwise stipulated for the benefit of Executive
for the calendar year in which Executive dies (such pro rata portion determined
by multiplying (x) the total target Incentive Compensation that the Executive
was projected to receive in respect of the year of his death by (y) the quotient
of the number of days in such year prior to his death, divided by 365); and
(iii) accelerated vesting of stock options previously granted to Executive
that
otherwise would have vested within 12 months following Executive's death. Such
pro rata Incentive Compensation will be payable at the same time that the full
Incentive Compensation would have been payable to the Executive as provided
in
Section 3(b) hereof.
(g) Certain
Definitions
"Change
of Control"
shall be
deemed to have occurred if (i) a tender offer shall be made and consummated
for
the ownership of 50% or more of the outstanding voting securities of the
Employer, (ii) the Employer shall be merged or consolidated with another
corporation and as a result of such merger or consolidation less than 50% of
the
outstanding voting securities of the surviving or resulting corporation shall
be
owned in the aggregate by the former shareholders of the Employer, (iii) the
Employer shall sell all or substantially all of its assets to another
corporation which corporation is not wholly owned by the Employer, (iv) a
person, within the meaning of Section 3(a)(9) or of Section 13(d)(3) (as in
effect on the date hereof) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), or other legal entity shall acquire 50% or more of the
outstanding voting securities of the Employer (whether directly, indirectly,
beneficially or of record), or (v) individuals who, as of the date hereof,
together with those directors (x) for whose election proxies shall have been
solicited by the board and (y) who are then serving as directors appointed
by
the board to fill pre-existing vacancies on the board or vacancies caused by
death or resignation, but not by either removal or to fill newly created
directorships, constitute the Board of Directors of the Employer (the “Incumbent
Board”) cease to constitute at least a majority of the Board 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 Incumbent Board. For purposes hereof,
ownership of voting securities shall take into account and shall include
ownership as determined by applying the provisions of Rule 13d-3(d)(1)(i) (as
in
effect on the date hereof) pursuant to the Exchange Act.
7
"Constructive
Discharge"
means
the termination of the Executive's employment by the Executive on account of
(i)
any reduction in the Executive's then-current Base Salary without the consent
of
the Executive, (ii) any material reduction in the level or scope of the job
responsibility or status of the Executive occurring without the consent of
the
Executive (including not reporting directly to the Chief Executive Officer
of
the Company or its successor; not retaining “Officer” status, such as Chief
Medical Officer, Chief Financial Officer or Chief Scientific Officer of the
Company or its successor; or ceasing to have responsibility for a significant
department or function), or (iii) any relocation to any Employer location which
is more than 50 miles from its current location and to which the Executive
has
not agreed; provided, however, that no termination by Executive shall be
considered a Constructive Discharge unless Executive has first provided written
notice to the Chief Executive Officer of Employer of the factual circumstances
forming the basis for the claim of constructive discharge and of Executive’s
intent to treat those circumstances as a Constructive Discharge under this
Agreement, and has further provided the Employer with a period of at least
fifteen (15) days in which to cure such alleged breach.
"Involuntary
Termination"
means
the Executive's (i) involuntary separation from service with the Employer,
other
than as a result of his death, Disability, mandatory retirement pursuant to
a
retirement policy of Employer or Termination for Cause, or (ii) receipt of
notice of the Employer's intent not to extend the Period of Employment as
specified in Section 1. Involuntary Termination also means Executive's voluntary
resignation of employment within 90 days following events constituting a
Constructive Discharge. Any other type of voluntary termination of employment
shall not be deemed an Involuntary Termination.
"Termination
for Cause"
means
the termination of the Executive's employment as a result of conduct by the
Executive amounting to (i) fraud or dishonesty against the Employer,
(ii) willful misconduct, or repeated refusal to follow the reasonable
directions of the Board of Directors or chief executive officer of the Employer,
(iii) knowing violation of law in the course of performance of the duties of
Executive's employment with the Employer, (iv) any violation of the Employer’s
formal policies regarding nondiscrimination and equal employment opportunity,
sexual harassment and other forms of unlawful workplace harassment, or xxxxxxx
xxxxxxx of Employer’s securities (whether directly or indirectly),
(v) repeated and frequent absences from work without a reasonable excuse,
(vi) intoxication with alcohol or drugs while on the Employer's premises
during regular business hours, (vii) a conviction or plea of guilty
or
nolo contendere
to a
felony or other crime of moral turpitude in the course of his employment (e.g.,
fraud, theft, embezzlement and the like), (viii) gross negligence in the
performance of Executive’s duties; or (ix) a breach or violation of the terms of
this Agreement. With respect to (ii) above, Termination for Cause shall not
be
permitted until after the Executive has been given written notice of his alleged
actions described in clause (ii), listing in reasonable specificity such alleged
actions, and after the Executive shall have failed to improve such performance
within the time period (which shall have been a reasonable time period)
specified in such notice, such time period to be not less than 15 days.
5. Indemnification.
The
Employer will indemnify the Executive to the fullest extent permitted by
applicable laws and regulations in accordance with the Bylaws and Amended and
Restated Articles of
8
Incorporation
of the Employer. The Employer shall insure and provide a defense to the
Executive against all costs, charges and expenses incurred in connection with
any action, suit or proceeding to which he may be made a party by reason of
his
good faith execution of his duties as described in Section 2. In the event
that
the Executive is found to be liable or culpable, in any action, suit or
proceeding involving sexual harassment, discrimination or fraud, the Executive
will be obliged to repay to the Employer any costs, charges or expenses incurred
by the Employer in connection therewith.
6. Consolidation,
Merger or Sale of Assets.
Nothing
in this Agreement shall preclude the Employer from consolidating or merging
into
or with, or transferring all or substantially all of its assets to another
organization which assumes this Agreement and all obligations and undertakings
of the Employer hereunder. Upon such a consolidation, merger or sale of assets,
the term "Employer" as used will mean the other organization, no termination
of
Executive's employment under this Agreement shall be deemed to have occurred
merely because of the consummation of a transaction described in this Section
6,
and this Agreement shall continue in full force and effect.
7. Assignment.
The
Employer, with the prior written approval of the Executive, shall have the
right
to assign this Agreement to an affiliate or subsidiary corporation, and all
covenants and agreements hereunder shall inure to the benefit of and be
enforceable by or against its successors and assigns.
This
Agreement provides
for the personal services of the Executive. The Executive shall not have the
right to assign or transfer any of the rights or benefits hereunder, nor shall
they be subject to voluntary or involuntary alienation.
8. Amendment,
Modification, Termination or Waiver.
The
parties hereby irrevocably agree that no attempted amendment, modification,
restatement, termination, discharge or change (collectively, "Amendment") of
this Agreement shall be valid and effective, unless the parties shall
unanimously agree in writing to such Amendment. No waiver of any provision
of
this Agreement shall be effective unless it is in writing and signed by the
party against whom it is asserted, and any such written waiver shall only be
applicable to the specific instance to which it relates and shall not be deemed
to be a continuing or future waiver.
9. Non-Competition.
(a) Noncompetition
The
parties acknowledge and agree that, because of Executive's access to the Trade
Secrets and Confidential Information (each as hereinafter defined) as well
as
his duties as described in Section 2, efforts by Executive to engage in directly
competitive activities would cause significant, irreparable harm to Employer.
The parties further agree that the relevant
9
competitive
market for the Restricted Activities (defined below) is nationwide, that
Executive will be actively working on behalf of Employer throughout the United
States of America, and that Employer would be directly and severely harmed
by
competitive activities anywhere in the United States of America. Therefore,
the
parties agree that, during his employment and the applicable Restricted Period,
except on behalf of the Employer, Executive shall not engage in the Restricted
Activities within the United States of America. For purposes of this Section,
the "Restricted Activities" shall mean activities substantially similar to
the
Executive's responsibilities described in Section 2 of this Agreement for any
company, entity or individual that engages in the research, development,
marketing or commercialization of pharmaceuticals or biopharmaceuticals that
use
an anti-inflammatory mechanism to treat or prevent atherosclerosis. For purposes
of this Section, the "Restricted Period" shall be one (1) year after termination
of employment.
(b) Nonsolicitation
of joint venture partners.
During
his employment and for one (1) year thereafter, Executive will not solicit
or
induce any company with whom (i) Employer had a joint venture relationship
or
similar partnering relationship during the last 24 months of Executive’s
employment and (ii) Executive had material contact within the last 24 months
of
Executive’s employment, for the purpose of establishing a similar joint venture
relationship on behalf of another entity with regard to the research,
development, marketing or commercialization of pharmaceuticals or
biopharmaceuticals that use an anti-inflammatory mechanism to treat or prevent
atherosclerosis.
(c) Nonsolicitation
of customers
During
his employment and for one (1) year thereafter, Executive will not solicit
or
induce any customer or actively sought prospective customer of Employer, with
whom Executive had material contact during the last 24 months of his employment,
for the purpose of providing products or services relating to pharmaceuticals
or
biopharmaceuticals used to treat or prevent atherosclerosis by an
anti-inflammatory mechanism.
(d) Nonsolicitation
of employees
During
his employment and for one (1) year thereafter, Executive will not solicit
or
hire any employee of Employer who was employed by Employer at any time during
the three (3) month period prior to the date of Executive's termination, and
will not solicit, encourage, or induce any such employee to leave the employ
of
Employer.
(e) Nondisparagement.
During
his employment and for three (3) years thereafter, Executive will refrain from
making derogatory or disparaging statements to any person or entity regarding
the Company, its management, its products or its services. This provision shall
not prohibit Executive from responding truthfully to a subpoena or an inquiry
from a governmental agency or as otherwise required by law.
10
(f) Reasonableness
of covenants
Executive
acknowledges and agrees that the covenants in this section are reasonably
limited and are necessary to protect the legitimate business interests of
Employer. Executive further acknowledges and agrees that he is capable of
finding adequate employment and making a living without violating these
covenants.
(g) Remedies
Executive
acknowledges and agrees that, in the event of a breach of the above covenants,
the harm to Employer would be immediate, significant, and irreparable. Executive
agrees that, in addition to and without waiving any other remedies to which
Employer may be entitled (including recovery of damages), Employer shall be
entitled to obtain an injunction to prevent actual or threatened violation
of
these covenants, and shall not be required to post a bond or other security
in
order to obtain preliminary or permanent injunctive relief.
10. Intellectual
Property.
(a) For
purposes of this Agreement, the following definitions apply:
(i) "Trade
Secret" means any scientific, technical or non-technical data or information
of
Employer, without regard to form, including but not limited to, formulas,
techniques, processes, procedures, improvements, know-how, patterns,
compilations, programs, computer software, devices, methods, techniques,
drawings, processes, financial data, financial plans, product or website plans,
market feasibility studies, designs and design concepts, documents and manuals
related to product plans, designs and design concepts, or lists (whether in
written form or otherwise) of actual or potential customers or suppliers, which
(i) derive economic value, actual or potential, from not being generally known
to and not being readily ascertainable by proper means by other persons who
can
obtain economic value from its disclosure or use and (ii) are the subject of
efforts that are reasonable under the circumstances to maintain its secrecy.
Trade Secrets also include any information described in this Section 10(a)(i)
which Employer obtains from another party and which Employer treats as
proprietary or designates as trade secrets, whether or not owned or developed
by
Employer.
(ii) "Confidential
Information" means any data or information, without regard to form, other than
Trade Secrets, that is of value to Employer and is not generally known to
competitors of Employer, including without limitation, lists of any information
about Employer's employees, sales and marketing techniques and information,
price lists, pricing policies, Employer's business methods, training and
operations materials, and contracts, records and contractual relations with
Employer's customers and suppliers. Confidential Information also includes
any
information described in this Section 10(a)(ii) which Employer obtains from
another party and which Employer treats as proprietary or designates as
confidential information, whether or not owned or developed by
Employer.
11
(iii) Failure
to xxxx any of the Trade Secrets or Confidential Information as confidential
shall not affect its status as Trade Secrets or Confidential Information under
this Agreement.
(b) Executive
recognizes and acknowledges that Employer is engaged in the business of
research, development, marketing and commercialization of pharmaceuticals and
biopharmaceuticals used to treat or prevent specific medical conditions, which
activities involve the use of skilled experts and the expenditure of substantial
amounts of time and money. As a result of such investments of skill, time and
money, Employer has developed certain Confidential Information and Trade Secrets
which give Employer significant advantages over its competitors. Due to the
nature of Executive's employment with Employer, Executive understands that
he
has had, and may have in the future, frequent direct and indirect contact with
various suppliers, sources and customers of Employer and may be presented with,
have access to, and/or participate in the development of both Confidential
Information and Trade Secrets. These Trade Secrets and Confidential Information
constitute valuable, special and unique assets of Employer and any disclosure
thereof contrary to the terms of this Agreement would cause substantial loss
of
competitive advantage and other serious injury to Employer.
(c) For
the
reasons recited in Section 10(b) above, Executive covenants and agrees
that:
(i) During
Executive's employment with Employer and after the termination thereof, whether
such termination is at Executive's instance or Employer's, Executive will not,
except as expressly authorized or directed by Employer, use, copy, or disclose,
or permit any unauthorized person access to, any Trade Secrets belonging to
Employer or any third party; and
(ii) During
Executive's employment with Employer and for a period of five (5) years after
termination, whether such termination is at Executive's instance or Employer's,
Executive will not use, copy, or disclose, or permit any unauthorized person
access to, any Confidential Information belonging to Employer or any third
party.
(iii) Upon
request of Employer and in any event upon the termination of Executive's
employment with Employer, Executive will deliver to Employer all memoranda,
notes, records, tapes, documentation, disks, manuals, files or other documents,
and all copies thereof, concerning or containing Confidential Information or
Trade Secrets in his possession, whether made or compiled by Executive or
furnished to Executive by Employer.
(iv) All
inventions, discoveries, developments, designs, Trade Secrets, trademarks,
copyrightable subject matter and other proprietary information or work product,
whether or not patentable (collectively, "Inventions"), which Executive has
made
or conceived, or may make or conceive, either solely or jointly with others,
while providing services to Employer or relating to any of Employer's actual
or
anticipated business known to Executive while employed by Employer, or suggested
by or resulting from any task assigned to Executive or work performed by
Executive for or on behalf of Employer, shall be the exclusive property of
Employer. During Executive's employment and thereafter, Executive will promptly
disclose any
12
(d) Executive
acknowledges that Employer does not wish to incorporate any unlicensed
or
unauthorized materials into its products or technology. Therefore, Executive
agrees that Executive will not knowingly disclose to Employer, knowingly
use in
Employer's business, or knowingly cause Employer to use, any information
or
material which is confidential to any third party unless Employer has a
written
agreement with such third party or Employer otherwise has the right to
receive
and use such information. Executive will not knowingly incorporate into
Executive's work any material which is subject to the copyrights or patent
of
any third party unless Employer has a written agreement with such third
party or
otherwise has the right to receive and use such material.
(e) Executive
represents that there are no other contracts to assign inventions that are
now
in existence between Executive and any other person or entity. Executive further
represents that there are no contracts or other restrictions which would
restrict or impair Executive’s performance under this Agreement. As a matter of
record, Executive attaches as Exhibit B a brief description of all Inventions
made or conceived by Executive prior to Executive’s employment with the Employer
which Executive desires to be excluded from this Agreement.
11. Litigation
Assistance.
Following
the termination of Executive's employment for whatever reason, Executive agrees
to assist the Employer (upon the Employer's request) with regard to threatened
or actual litigation concerning the Employer where Executive has knowledge
of
the facts relating to such threatened or actual litigation. Executive's
assistance in such matter may include, but not be limited to, meeting with
the
Employer's attorneys and other professional advisors; providing truthful
testimony at a deposition, hearing and/or trial; and providing witness
statements or affidavits. Employer agrees to provide Executive with reasonable
notice of the need for such assistance and to use reasonable efforts to
accommodate Executive's schedule and minimize the burdens on Executive. Employer
shall reimburse Executive's reasonable out-of-pocket expenses associated with
such assistance and shall pay to Executive the sum of $150 per hour for
Executive's time devoted to these obligations.
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12. Dispute
Resolution.
Any
controversy or claim arising out of or relating to the interpretation or
application of this Agreement, or any breach hereof, shall be settled by
arbitration in the Xxxxxx County, Georgia area in accordance with the rules
of
the American Arbitration Association ("AAA") then in effect, and judgment upon
the award rendered by the arbitrator(s) shall be final and binding on the
parties hereto and may be entered in any court having jurisdiction
thereof.
All
arbitrations pursuant to this Agreement shall be determined by a single
arbitrator selected from a panel proposed by the AAA pursuant to the
then-current arbitrator selection procedures of the AAA. Each party will bear
equally the costs and expenses of arbitration, and each party will bear the
costs and expenses of its own counsel, technical advisors and expert witnesses,
unless the decision of the arbitrator otherwise directs.
Any
arbitration award rendered in accordance with this Section 12 will be satisfied
promptly and without the need for the prevailing party to seek enforcement,
which may be sought in any court having competent jurisdiction. In the event
resort to enforcement proceedings are required for any award or decision, the
party which has not complied with the arbitral award or decision will be
responsible for both parties' reasonable attorneys' fees and all costs in the
enforcement proceeding. The decision of the arbitrators shall be tendered within
sixty (60) days of final submission of the parties in writing or any hearing
before the arbitrators and shall include their individual votes.
Notwithstanding
the foregoing, in the event of a breach or threatened breach of sections 9
or
10, Employer shall be permitted to seek temporary injunctive relief in a court
of competent jurisdiction. Any damages claims arising out of an alleged breach
of sections 9 or 10 shall be resolved by arbitration in accordance with this
Section 12.
The
parties hereto expressly agree to this arbitration provision:
Initials:
________ Initials:
________
13. Amendment
of Equity Ownership Agreements.
The
various Equity Ownership Agreements entered into with respect to stock option
grants made by the Employer to Executive on or before December 31, 2003 (the
"Equity Ownership Agreements"), are hereby amended to reflect the accelerated
option vesting and other option-related provisions of this Agreement. Except
as
modified herein, the terms of the Equity Ownership Agreements shall remain
in
full force and effect.
14. Entire
Agreement.
This
Agreement sets forth all the promises, covenants, agreements, conditions and
understandings between the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements or conditions expressed or implied, oral or written, except as
herein contained. This
Agreement
14
15. Change
in Taxation.
If
subsequent to the effective date of this Agreement, there occurs a change in
the
tax laws, regulations or administrative interpretations which would materially
impact the taxation of the benefits hereunder, either party to this Agreement
may propose an amendment. Any such proposed amendment shall be subject to
Section 8.
16. Provisions
Severable.
This
Agreement is intended to be performed in accordance with, and only to the extent
permitted by, all applicable laws, ordinances, rules, and regulations of the
jurisdiction in which the parties do business. If any provision of this
Agreement, or the application thereof to any person or circumstance shall,
for
any reason or to any extent, be invalid or unenforceable, the remainder of
this
Agreement and the application of such provision to other persons or
circumstances shall not be affected thereby, but rather shall be enforced to
the
greatest extent permitted by law.
17. Withholding.
The
Employer shall have the right to withhold from any and all payments required
to
be made to the Executive pursuant to this Agreement all federal, state, local,
and/or other taxes which the Employer determines are required to be withheld
in
accordance with applicable statutes or regulations.
18. Governing
Law.
This
Agreement shall be construed in accordance with the laws of the State of Georgia
and the venue of any dispute or litigation shall be Xxxxxx County,
Georgia.
19. ERISA
Rules.
Notwithstanding
anything to the contrary contained in this Agreement, all benefits provided
hereunder will be subject to applicable rules and regulations promulgated under
the Employee Retirement Income Security Act of 1974, as amended.
IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement effective as of the day and year
first above written.
15
ATHEROGENICS,
INC.
By:
Title:
Date:
EXECUTIVE:
Xxxxxx
X.
Xxxxxx, Xx.
Date:
[NOTE:
The parties must initial paragraph 12 in addition to signing on this
page.]
16
EXHIBIT
A
FORM
OF GENERAL RELEASE
For
and
in consideration of the severance payments provided to _______________
(“Executive”) pursuant to the Employment Agreement between AtheroGenics, Inc.
(“Employer”) and Executive, effective as of ________________, 200__, which is
expressly incorporated by reference herein, along with other consideration,
the
receipt and sufficiency of which are hereby acknowledged, Executive does hereby
release, acquit, and forever discharge Employer (or any affiliate, officer,
director or employee of Employer) from, and does hereby covenant and agree
never
to institute or cause to be instituted any suit or other form of action or
proceeding of any kind or nature whatsoever against Employer (or any affiliate,
officer, director, or employee of Employer) based upon, any and all claims,
demands, indebtedness, agreements, promises, causes of action, obligations,
damages, or liabilities of any nature whatsoever, in law or in equity, whether
or not known, suspected or claimed, that Executive ever had, has claimed to
have, now has, or may hereafter have or claim to have against Employer by reason
of any act, event, occurrence, or thing occurring on or before the date of
this
General Release.
The
claims released herein specifically include, but are not limited to, any claims
arising in tort or contract, any claim based on wrongful discharge, any claim
based on breach of contract, any claim based on sexual harassment or any other
form of workplace harassment, and any claim arising under federal, state or
local law prohibiting race, sex, age, religion, national origin, handicap,
disability or other forms of discrimination, or retaliation, including but
not
limited to Title VII of the Civil Rights Act of 1964, as amended; 42 U.S.C.
§
1981; the Age Discrimination in Employment Act; the Older Workers Benefit
Protection Act; the Pregnancy Discrimination Act; the Americans with
Disabilities Act; the Family and Medical Leave Act; and the Employee Retirement
Income Security Act, each as amended.
Executive
acknowledges that he has been advised to consult with an attorney of his choice
regarding the form and content of this General Release, and that he enters
into
this General Release voluntarily and of his own free will. Executive further
acknowledges that he has been provided with a period of at least twenty-one
(21)
days within which to consider the terms of this General Release. Executive
understands that he may revoke this General Release within seven (7) days after
signing it, by delivering written notice of revocation to the Chief
17
This
General Release and the releases and covenants contained herein shall be binding
upon Executive, his heirs, executors, administrators, assigns, agents, attorneys
in fact, attorneys at law, and representatives. This General Release and the
releases and covenants contained herein shall inure to the benefit of Employer
and each of its predecessors, successors, and assigns, and to each of its and
their past and present employees, agents, attorneys in fact, attorneys at law,
representatives, officers, directors, shareholders, partners, joint venturers,
and all of said individuals’ heirs, executors, administrators and
assigns.
Witness
the execution of this General Release on the ____ day of ________,
200__.
__________________________________
Executive
18
EXHIBIT
B
LIST
OF PRIOR INVENTIONS
19
