EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, made as of September 26, 1996, by and
between MEDCO RESEARCH, INC. ("Medco"), a Delaware corporation with principal
offices at 85 X.X. Xxxxxxxxx Drive, Research Xxxxxxxx Xxxx, XX 00000, and XXXXX
XXXXXXX ("Xxxxxxx"), residing at 000 Xxxxxxx Xxxxxxxxxx, Xxxx, Xxxxx Xxxxxxxx
00000.
Xxxxxxx has been employed by Medco in various executive
capacities since July 18, 1988, and is currently its President and Chief
Operating Officer;
Xxxxxxx is presently an employee at will, and Medco and
Xxxxxxx desire to formalize their relationship as employer and employee pursuant
to a written employment agreement; and
From the date hereof through September 30, 1999, Xxxxxxx is
willing to serve as Medco's President and Chief Operating Officer, and Medco is
willing so to employ Xxxxxxx, upon the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereby agree as follows:
1. Term. Subject to earlier termination of this Agreement as
hereinafter provided, Medco hereby agrees to employ Xxxxxxx, and Xxxxxxx hereby
agrees to serve Medco, as hereinafter set forth in Section 2, for the period
commencing effective September 26, 1996 and terminating on September 30, 1999
(such period being herein referred to as the "Term").
2. Employment. Medco hereby employs Xxxxxxx to render
exclusive and full-time services to Medco as its President and Chief Operating
Officer, subject to the direction of Medco's Board of Directors, and in
connection therewith to perform such duties as he shall be reasonably directed
by the Board of Directors. Xxxxxxx hereby accepts such employment and agrees to
devote his best efforts and his full and exclusive time, skill, labor and
attention to the diligent and faithful performance of such services.
3. Compensation.
3.1 As full compensation for all of the services to
be rendered by Xxxxxxx under this Agreement and subject to the provisions of
Section 5 below, Medco shall pay Xxxxxxx during the Term an annual base salary
in an amount equal to Two Hundred Thirty Thousand ($230,000.00) Dollars, which
shall be subject to annual merit adjustments as determined by the Compensation
Committee of Medco's Board of Directors pursuant to the then prevailing terms
and conditions of Medco's Management Bonus Objectives program, payable in
accordance with Medco's prevailing payroll practices.
3.2 Blevins shall be eligible to receive incentive
compensation of (a) no less than a rate of 35% of his annual base salary set
forth above in Section 3.1 and (b) annual awards of stock options (in addition
to the options awarded to Xxxxxxx pursuant to Section 3.3 below), in each case
as determined by the Compensation Committee of Medco's Board of Directors
pursuant to the then prevailing terms and conditions of Medco's Management Bonus
Objectives program.
3.3 As an inducement to Xxxxxxx to enter into this
Agreement Medco agrees to grant to Xxxxxxx as of the date of the commencement of
the Term (the "Date of Grant") nonqualified stock options to purchase 120,000
shares of Medco's Common Stock at a price per share equal to the "fair market
value", as such term is defined in Medco's 1989 Stock Option Plan, as amended
(the "Plan"), of Medco's Common Stock on the Date of Grant, which shall vest and
become exercisable on the third anniversary of the Date of Grant provided
Xxxxxxx is employed as an executive officer of Medco on such Date; provided,
however, that the vesting of 50% of said 120,000 options shall accelerate to the
day immediately following the twentieth consecutive trading day on which the
closing price of Medco's Common Stock as reported in The Wall Street Journal
shall have exceeded $20 per share, and the vesting of the remaining 50% thereof
shall accelerate to the day immediately following the twentieth consecutive
trading day on which such closing price shall have exceeded $25 per share. Said
options shall be subject to the terms and conditions of the Plan and the Stock
Option Agreement under which the options are granted, the terms of each of which
are incorporated herein by reference.
3.4 Xxxxxxx' salary, bonus and other incentive
compensation shall be subject to deductions and withholdings as shall be
required by applicable law and regulations.
4. Benefits. In addition to the compensation described in
Section 3 hereof, during the Term Xxxxxxx, to the extent he is eligible, shall
have the right to participate in any and all group life, hospital, medical and
disability insurance plans, and in any severance, retirement, pension or death
benefit plans (hereinafter such plans are collectively referred to as the
"Company Benefit Plans") now or hereafter during the Term maintained by Medco
and offered by Medco to its executive officers generally. Medco does not
guarantee the adoption or continuation of any particular Company Benefit Plan
during the Term, and Xxxxxxx' participation in any Company Benefit Plan shall be
subject to the rules and regulations applicable thereto.
5. Vacation. Xxxxxxx shall be entitled to vacation during each
full fiscal year of the Term, prorated for any partial fiscal year, pursuant to
Medco's existing policy.
6. Expenses. Medco shall reimburse Xxxxxxx for the reasonable
and necessary expenses actually incurred by him during the Term in the
performance of his services hereunder, upon presentation by Xxxxxxx of
appropriate documentation of such expenditures; provided, however, that the
maximum amount available for such expenses during any period may be fixed in
advance by Medco's Board of Directors.
7. Termination.
7.1 This Agreement shall terminate upon the death of
Xxxxxxx, in which event Medco shall pay Xxxxxxx' base salary through the last
day of the pay period in which occurred his death, plus any unpaid bonus awarded
to Xxxxxxx under Medco's MBO review program in respect of the fiscal year of
Medco immediately preceding the year of Xxxxxxx' death, to whomever Xxxxxxx has
previously designated or, in the event no such designation has been made, to his
estate.
7.2 Medco shall have the right, exercisable by
written notice to Xxxxxxx which shall be effective as of the giving of such
notice, to terminate this Agreement at any time for Cause. In the event of
termination of this Agreement for Cause, (a) Medco shall pay to Xxxxxxx his base
salary through the effective date of such termination and any unpaid bonus
awarded to Xxxxxxx under Medco's MBO review program in respect of the fiscal
year of Medco immediately preceding the year of such termination and (b) all
outstanding Medco stock options, whether or not vested, awarded to Xxxxxxx shall
terminate and be of no further force or effect and be forfeited by Xxxxxxx. The
term "Cause", as used herein, shall mean Xxxxxxx' (a) conviction of a felony,
(b) conviction of any lesser crime or offense involving the property of Medco or
any of its affiliates or subsidiaries, (c) continued failure to perform his
duties hereunder after written notice, (d) willful misconduct or gross
negligence in connection with the performance of his duties (e) breach of any of
the material terms of this Agreement, or (f) conduct which would make his
further employment by Medco prejudicial to its best interests which is continued
after written notice thereof, in the case of clauses (c), (d), (e) and (f) as
determined in good faith in the sole discretion of Medco's Board of Directors,
whose determination shall be final and binding on Xxxxxxx if made by the
affirmative vote of at least two-thirds of the number of directors then serving.
In the event of termination of this Agreement for Cause arising under clause (e)
above, Medco shall give Xxxxxxx at least 10 days after written notice of
termination to cure the specified breach, if the same is capable of being fully
cured.
7.3 Medco shall have the right, exercisable by
written notice to Xxxxxxx which shall be effective at the end of the pay period
in which such notice is given, to terminate this Agreement prior to the
expiration of the Term in the event of the incapacity of Xxxxxxx, in which event
Medco shall pay to Xxxxxxx his base salary through the effective date of such
termination plus any unpaid bonus awarded to Xxxxxxx under Medco's MBO review
program in respect of the fiscal year of Medco immediately preceding the year of
such termination. "Incapacity" shall mean Xxxxxxx' inability, regardless of the
medical or other reason therefor, to perform the duties and obligations of his
employment under this Agreement for any period of 90 consecutive days or for
shorter periods aggregating 90 days during any period of 12 consecutive months.
8. Covenants Not To Compete; Non-Solicitation;
Non-Disclosure.
8.1 Xxxxxxx hereby agrees that, during the Term, he
shall not participate or engage, directly or indirectly, and whether or not for
compensation, individually or as an officer, director, shareholder, trustee,
employee, consultant, advisor, partner, proprietor or otherwise, in any business
or enterprise, or have an interest in any other commercial duties or pursuits
whatsoever, except as Medco, acting through its Board of Directors, shall
permit. Provided Xxxxxxx'x capacity and ability to fulfill his duties and
obligations to Medco under this Agreement are not prejudiced, interfered with,
restricted or limited, nothing contained in this Section 8.1 shall be construed
to prohibit Xxxxxxx during the Term from (a) making or maintaining personal
investments which do not require more than his minimal personal services and (b)
rendering to a reasonably limited extent personal services to civic or
charitable organizations.
8.2 Xxxxxxx hereby agrees that, for a period of 36
months after the termination or expiration of this Agreement, he shall not,
directly or indirectly, individually or as an officer, director, shareholder,
trustee, employee, consultant, advisor, partner, proprietor or otherwise, and
whether or not for compensation, participate or engage in or provide any
services to, or have any direct or indirect interest in, any business or
enterprise which competes directly or indirectly with the business of Medco or
its subsidiaries or affiliates as then conducted or as proposed to be conducted.
8.3 Xxxxxxx hereby agrees that, during the Term and
during a period of 36 months after the termination or expiration of this
Agreement, he will not either directly or indirectly for himself or any third
party, (a) solicit, induce or recruit, or cause the soliciting, inducement or
recruitment of, any person in the employ of Medco, its subsidiaries or
affiliates, or cause any person in such employ to terminate his employment, for
the purpose of joining, associating or becoming employed by or providing any
services to (1) any business or enterprises which competes directly or
indirectly with the business of Medco or its subsidiaries or affiliates as then
conducted or as proposed to be conducted or (2) any business or enterprise in
which Xxxxxxx is an officer, director, shareholder, trustee, employee,
consultant, advisor, partner, proprietor or otherwise, or directly or indirectly
has any interest or to which he provides any services or (b) interfere with or
harm the contractual or business relationships with any licensor, licensee or
independent contractor of Medco or its subsidiaries or affiliates.
8.4 Except in the course of performing his duties
hereunder during the Term, or thereafter with the express written consent of
Medco acting through its Board of Directors, Xxxxxxx will not, at any time
during the Term or after the expiration or termination of this Agreement,
publish, disclose or otherwise reveal any Confidential Information (as such term
is defined below) known by Xxxxxxx on the date hereof, or acquired by him
thereafter as a consequence of or through his employment by Medco under this
Agreement, all of which Information (a) he shall maintain in the strictest
confidence and keep secret using at least the same degree of care as he uses for
his personal confidential information, (b) retain in trust in a fiduciary
capacity for the sole and absolute benefit of Medco, its successors and assigns,
and (c) refrain from using or allowing to be used for his own benefit or for the
benefit of any third party. The term "Confidential Information" as used herein
shall mean all material information and knowledge of Medco not generally known
or available to the public, including, without limitation, its research
projects, data, protocols, designs and developments, processes, formulae,
financial and personnel data, strategic and operating plans, projections, "know
how," products, licenses and other contract rights, intellectual property and
other business affairs; provided, however, that in the event disclosure of
Confidential Information is requested (i) by governmental agencies under color
of law or applicable regulation, (ii) pursuant to subpoena or other compulsory
process, or (iii) otherwise as may be required by law, Xxxxxxx will to the
extent lawfully possible give Medco at least five (5) days prior written notice
before his disclosure and will provide Medco with copies of any responsive
materials.
8.5 Xxxxxxx hereby agrees that all keys to Medco's
offices, Medco's credit cards, memoranda, notes, reports, manuals, business
records, papers and documents (and all copies thereof) relating to the business
or affairs of Medco or any of its subsidiaries or affiliates are and shall
remain the property of Medco. Xxxxxxx agrees that he will deliver and surrender
to Medco promptly upon the termination of his employment by Medco, or at any
time Medco may so request, all of such items which then shall be in his
possession or under his control.
9. Remedies.
9.1 If Xxxxxxx commits a breach, or threatens to
commit a breach, of any of the provisions of Section 8 hereof, Medco shall have
the following rights and remedies:
(a) The right and remedy to have the provisions of
this Agreement specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to Medco and that money damages will not provide an
adequate remedy to Medco, and in connection therewith to obtain, without notice
to Xxxxxxx and without the need to post any bond, a temporary restraining order,
an injunction and any other equitable relief.
(b) The right and remedy to require Xxxxxxx to
account for any pay over to Medco all compensation, profits, monies, accruals,
increments or other benefits (collectively "Benefits") derived or received by
him as the result of any transactions constituting a breach of any of the
provisions of Section 8, and Xxxxxxx hereby agrees to account for and pay over
such Benefits to Medco. Each of the foregoing rights and remedies shall be
independent of the other and shall be severally enforceable, and all of such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to Medco under law or in equity.
9.2 If any one, or any part, of the covenants
contained in Section 8 is construed to be invalid or unenforceable, the same
shall not affect the remainder of the covenant or covenants, which shall be
given full effect without regard to the invalid portions.
9.3 If any one, or any part, of the covenants
contained Section 8 is held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or area of
such provision and, in its reduced form, said provision shall then be
enforceable.
9.4 The parties hereto intend to and hereby confer
jurisdiction to enforce the covenants contained in Section 8 upon the courts of
any state within the geographical scope of such covenants. In the event that the
courts of any one or more of such states shall hold such covenants wholly
unenforceable by reason of the breadth of such scope or otherwise, it is the
intention of the parties hereto that such determination not bar or in any way
affect in the courts of any other states within the geographical scope of such
covenants Medco's right to the relief provided in this Section 9 for breaches of
such covenants in such other states, the above covenants as they relate to each
state being, for this purpose, severable into diverse and independent covenants.
9.5 In the event that any action, suit or other
proceeding in law or in equity is brought to enforce any one, or any part, of
the covenants contained in Section 8 or to obtain money damages for the breach
thereof, and such action results in the award of a judgment for money damages or
in the granting of any injunction in favor of Medco, all expenses (including
reasonable attorneys' fees) of Medco in such action, suit or other proceeding
shall (on demand of Medco) be paid by Xxxxxxx.
10. Inventions and Patents.
10.1 Xxxxxxx hereby agrees that all processes, technologies
and inventions ("Inventions), including without limitation new contributions,
improvements, ideas and discoveries, whether patentable or not, conceived,
developed, invented or made by him while he was employed by Medco prior to the
Term or during the Term shall belong to Medco, provided that such Inventions
grew out of Xxxxxxx work with Medco or any of its subsidiaries or affiliates,
are related in any manner to the business (commercial or experimental) of Medco
or any of its subsidiaries or affiliates or are conceived or made on Medco's
time or with the use of Medco's facilities or materials. Xxxxxxx hereby agrees
to: (a) promptly disclose each such Invention to Medco, (b) assign to Medco,
without additional compensation, all patent and other rights to each such
Invention for the United States and foreign countries, (c) give testimony in
support of his inventorship and (d) sign all papers necessary to carry out the
foregoing.
10.2 If any Invention is described in a patent application or
is disclosed to third parties, directly or indirectly, by Xxxxxxx within two
years after the termination of his employment by Medco, Xxxxxxx hereby agrees
that the Invention shall be deemed conceived or made during the period Xxxxxxx
was employed by Medco and shall belong to Medco.
10.3 Xxxxxxx agrees that he will not claim any individual
right, title or interest in or to any Invention based on it having been made or
acquired by him prior to the date of this Agreement, except for Inventions, if
any, disclosed to Medco in writing prior to the date hereof.
11. Notices.
11.1 All notices and consents required or desired to
be given pursuant hereto shall be in writing and shall be deemed properly given
if delivered to the addressee, in person, or if mailed, by registered or
certified mail, return receipt requested, to Xxxxxxx at the address set forth at
the head of this Agreement and to Medco, to the attention of the Chairman of the
Board of Directors, at its address set forth at the head of this Agreement.
11.2 Any address specified above may be changed by
notice given, as herein provided, by the party hereto whose address is being
changed to the other party hereto.
11.3 Notices delivered in person shall be deemed
given on the date of delivery; and notices mailed shall be deemed given three
days after the date of mailing.
12. Amendment; Waiver. This Agreement may not be amended or
modified in any manner, except by an instrument in writing signed by both
parties hereto and approved by the Board of Directors of Medco acting by
majority vote. The failure of either party hereto to enforce at any time any of
the provisions of this Agreement shall in no way be construed to be a waiver of
any such provision or any other provision, or of the right of such party
thereafter to enforce each and every such provision or other provision in the
event of a subsequent breach.
13. Agreement Binding Upon Successors. This Agreement is an
agreement for the personal services of Xxxxxxx and it shall inure to the benefit
of, and shall be binding upon Medco, its successors and assigns, and upon
Xxxxxxx, his heirs, executors, administrators and legal representatives, and
therefore the obligations of Xxxxxxx hereunder may not be assigned.
14. Choice of Law. It is the intention of the parties that the
internal laws of North Carolina shall govern the validity of this Agreement, the
construction of its terms and the interpretation of the rights and duties for
the parties.
15. Section Headings. Section heading contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
16. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17. Indemnification. Medco agrees to indemnify Xxxxxxx for his
actions on behalf of Medco in accordance with Medco's standard Indemnification
Agreement for officers and directors.
18. Entire Agreement. This Agreement (i) constitutes the
entire agreement and supersedes all other prior agreements and understandings,
both written and oral, between the parties with respect to the subject matter
hereof, and (ii) is not intended to and shall not confer upon any person other
than the parties hereto any rights or remedies hereunder or otherwise with
respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
MEDCO RESEARCH, INC. ACCEPTED AND AGREED TO:
By:
Xxxxxxx X. Xxxxxxxx Xxxxx X. Xxxxxxx, Pharm.D.
Chairman of the Board President and COO
