EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of July 1, 1996, is entered into
between Kos Pharmaceuticals, Inc., a Florida corporation (the "Company"), and
Xxxxxx X. Xxxx (the "Executive").
RECITALS
Executive is currently employed by the Company as a senior executive
officer and is an integral part of its management. The Board of Directors of the
Company recognizes the Executive as a key founding officer of the Company, and
consequently has approved the terms and conditions of the continued employment
of Executive as set forth herein and has authorized the execution and delivery
of this Agreement.
AGREEMENT
For and in consideration of the foregoing and of the mutual covenants
of the parties herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
1. EMPLOYMENT. The Company hereby employs Executive to serve in the capacities
described herein and Executive hereby accepts such employment and agrees to
perform the services described herein upon the terms and conditions hereinafter
set forth.
2. TERM. The term of Executive's employment pursuant to this Agreement shall
commence as of the date hereof and shall terminate at the close of business on
June 30, 2002, subject to earlier termination in accordance with Section 9
hereof and the other terms, provisions, and conditions set forth herein.
3. DUTIES. Executive shall serve as and have the title of the President and
Chief Executive Officer of the Company. Executive agrees to devote substantially
his entire time, energy, and skills to such employment while so employed.
4. COMPENSATION.
(a) BASE COMPENSATION. The Company shall pay Executive, and
Executive agrees to accept, base compensation at the rate of not less than
$250,000 per year in equal, monthly installments commencing as of July, 1996,
through the term of this Agreement ("Base Compensation"). The Base Compensation
specified in this Section 4(a) may be increased at any time during the term of
this Agreement in the discretion of the Board of Directors and will be reviewed
no less frequently than during the first quarter of each calendar year beginning
in 1997. No increase in the Base Compensation pursuant to this Section 4(a)
shall at any time operate as a cancellation of this Agreement; any such increase
shall operate merely as an amendment hereof, without any further action by
Executive or the Company. If any such increase or increases shall be so
authorized, all of the terms, provisions and conditions of this Agreement shall
remain in effect as herein provided,
except that the Base Compensation set forth in this Section 4(a) shall be deemed
amended to set forth the higher amount of such Base Compensation to Executive.
(b) BONUS COMPENSATION. The Company shall pay Executive an
annual bonus ("Bonus Compensation") within 90 days following the end of the
calendar years ending December 31, 1996 and 1997 and following the end of each
fiscal year of the Company thereafter during the term of Executive's employment
under this Agreement. The amount of Executive's Bonus Compensation shall be
determined by the Board of Directors of the Company, after consideration of any
recommendations made by the Compensation Committee of the Board of Directors,
based upon Executive's performance and the performance of the Company during
such year. The Company recognizes that its operations will be in a developmental
stage at least through the end of the 1997 calendar year and the Company agrees
that during such period, for the purpose of determining Executive's Bonus
Compensation and Annual Stock Options, Executive's performance and the
performance of the Company shall be evaluated based upon the Company's
organizational development, the progress in the development of the Company's
products, and the development and implementation of the Company's sales and
marketing plans. After such period, Executive's performance and the performance
of the Company shall be evaluated based upon the overall performance of the
Company, including the Company's financial performance.
(c) STOCK OPTIONS. The Company shall grant Executive an annual
stock option award (the "Annual Stock Options") following each fiscal year of
the Company in amounts, at such exercise prices, and on such terms as the Board
of Directors determines, based upon the performance of the Executive and the
Company during such fiscal year.
5. FRINGE BENEFITS.
(a) GENERALLY. Executive shall be eligible for fringe benefits
pursuant to any insurance, pension or other employee fringe benefit plan
approved by the Board of Directors that now or hereafter may be made available
to employees of the Company and for which Executive will qualify according to
his eligibility under the provisions thereof; provided, however, that such
eligibility specifically does not apply to matters relating to Executive's
vacation, disability benefits, automobile allowance and compensation, which
matters shall be governed exclusively by the terms hereof.
(b) VACATION. During the term of this Agreement, Executive
shall be entitled to five (5) weeks paid vacation per calendar year and any
vacation time not taken during any calendar year shall be carried over into
subsequent calendar years; provided, however, that not more than five (5) weeks
cumulative unused vacation time may be carried over to any calendar year.
(c) AUTOMOBILE. The Company shall provide Executive with full
use of an automobile, appropriate for Executive's position and title, for
Executive's business and personal use, which automobile shall be replaced at
least every three years. The Company agrees to provide adequate insurance for
the automobile and occupants and to pay all maintenance and operating costs
appropriate or necessary to maintain such automobile in prime operating
condition.
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6. EXPENSES. During the period of his employment, Executive shall be reimbursed
for his business-related expenses incurred on behalf of the Company in
accordance with the travel and entertainment expense policy of the Company as
adopted by the Board of Directors from time to time and in effect at the time
the expense was incurred, but Executive shall be entitled to not less than
first-class for air travel. Executive agrees to maintain such records and
documentation of all such expenses to be reimbursed by the Company hereunder as
the Company shall require and in such detail as the Company may reasonably
request.
7. TERMINATION. The term of Executive's employment under this Agreement may be
terminated prior to expiration of the term provided in Section 2 hereof in
accordance with the following paragraphs. Any termination of the Executive's
employment by the Company for Cause or otherwise shall be communicated by Notice
of Termination to the Executive given in accordance with Section 14 hereof. A
"Notice of Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated, and
(iii) if the termination date is other than the date of receipt of such notice,
specifies the termination date, which date shall not be more than sixty (60)
calendar days after the giving of such notice. The death or disability of
Executive shall in no event be deemed a termination of employment by Executive.
(a) MUTUAL. Executive's employment under this Agreement may be
terminated upon the mutual written agreement (which may include, if so agreed to
by the Board of Directors and Executive, severance payments and/or benefits) of
the Company and Executive.
(b) DEATH. In the event of the death of Executive, the
Company may terminate Executive's employment under this Agreement.
(c) DISABILITY. If, during Executive's employment under this
Agreement, Executive shall become disabled and unable to perform his duties as
required herein ("Disability") for a consecutive period of one hundred eighty
(180) days, then the Company may, upon sixty (60) days' written notice to
Executive, terminate Executive's employment under this Agreement.
(d) CAUSE. Executive's employment under this Agreement may be
terminated by the Company, with or without Cause as herein defined upon giving
Executive sixty (60) days written notice. For purposes of this Agreement, the
term "Cause" shall mean the termination of the Executive by the Board of
Directors of the Company as a result of the existence or occurrence of one or
more of the following conditions or events:
(i) An act or acts of fraud, misappropriation,
or embezzlement on the Executive's part that result in or are intended to result
in his personal enrichment at the expense of the Company or its subsidiaries or
affiliates.
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(ii) Conviction of a felony that (a) arises
in connection with the Company's business and (b) has a material adverse effect
on the Company's business.
(iii) The Executive's willful or intentional
failure to perform his duties as required under this Agreement; provided, that
the Company shall provide Executive with written notice of such failure and
Executive shall have thirty (30) days from the date Executive receives such
notice to remedy such failure to perform.
(e) CHANGE OF CONTROL. In the event of a "Change in Control"
(as defined in this Section 7(e)), Executive may elect, at any time during the
180-day period immediately following such Change in Control, to deliver 60 days'
written notice to the Company of his termination of employment hereunder.
Termination of Executive's employment under this Agreement pursuant to the
provisions of the preceding sentence shall be deemed a termination without Cause
for purposes of Section 9 hereof and shall not be deemed to be a voluntary
resignation or termination by Executive. For purposes of this Agreement, a
"Change in Control" shall be deemed to have occurred when:
(i) Xxxxxxx Xxxxxxx, his estate, his wife,
his lineal descendants, any trust created for the benefit of any one or more of
them during their lifetimes, or any corporation, partnership or other entity
owned fifty percent or more directly or indirectly by Xxxxxxx Xxxxxxx, or any
combination of the foregoing (x) ceases to be the largest shareholder of the
Company or (y) ceases to own at least thirty three percent or more of the stock
of the Company;
(ii) any person, including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended,
becomes the beneficial owner of twenty-five percent or more of the stock of the
Company;
(iii) the Company is merged into any other
company that is not controlled by Xxxxxxx Xxxxxxx or substantially all of its
assets are acquired by any other company that is not controlled by Xxxxxxx
Xxxxxxx; or
(iv) three or more directors nominated by
the Board of Directors to serve as a director, each having agreed to serve in
such capacity, fail to be elected in a contested election of directors.
8. DEATH AND DISABILITY. In the event of the termination of Executive's
employment under this Agreement by reason of the Executive's death or
Disability, the Company shall pay Executive (or his heirs and/or personal
representatives): (i) Executive's Base Compensation, unused vacation
entitlement, and other benefits until June 30, 2002; and (ii) Executive's Bonus
Compensation payable under Section 4 and Executive's Annual Stock Options for
the fiscal year in which Executive's termination occurred, as if Executive had
been employed by the Company for the full fiscal year, provided that the Company
shall pay Executive's Bonus Compensation through the end of the
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Company's 1997 calendar year regardless of whether Executive is terminated for
death or Disability prior to such year.
9. SEVERANCE. In the event of the termination of Executive's employment under
this Agreement for any reason other than Executive's death or disability, the
Company shall provide the payments and benefits to Executive as indicated below:
(a) WITH CAUSE OR VOLUNTARY RESIGNATION. If Executive is
terminated for Cause (as defined in Section 7(d) of this Agreement), or if
Executive voluntarily terminates his employment by the Company, the Company
shall pay Executive, within five (5) business days after the date of
termination, Executive's Base Compensation, unused vacation entitlement and all
expenses in connection with Executive's use of the automobile under Section 5(c)
hereof through such date of termination, and the Company shall have no further
obligation to provide compensation or benefits to Executive under this
Agreement; except that, to the extent that the Company's insurance, stock option
and other benefit plans provide certain rights and benefits after an employee's
termination, Executive may continue to receive such rights and benefits in
accordance with the terms of such plans.
(b) WITHOUT CAUSE OR DUE TO CHANGE OF CONTROL. If terminated
by the Company without Cause or by the Executive as a result of a Change of
Control, Executive shall receive the Base Compensation, Bonus Compensation,
Annual Stock Options, and the other benefits under this Agreement until the
later to occur of (x) the date thirty-six (36) months from the date of such
termination and (y) June 30, 2002.
10. CONFIDENTIAL INFORMATION. Executive recognizes and acknowledges that he will
have access to certain confidential information of the Company and of
corporations with whom the Company does business, and that such information
constitutes valuable, special and unique property of the Company and such other
corporations. During the term of this Agreement and for a period of five (5)
years immediately following the date of termination of this Agreement, Executive
agrees not to disclose or use any confidential information, including without
limitation, information regarding research, developments, product designs or
specifications, manufacturing processes, "know-how," prices, suppliers,
customers, costs or any knowledge or information with respect to confidential or
trade secrets of the Company, it being understood that such confidential
information does not include information that is publicly available unless such
information became publicly available as a result of a breach of this Agreement.
Executive acknowledges and agrees that all notes, records, reports, sketches,
plans, unpublished memoranda or other documents belonging to the Company, but
held by Executive, concerning any information relating to the Company's
business, whether confidential or not, are the property of the Company and will
be promptly delivered to it upon Executive's leaving the employ of the Company.
Executive also agrees to execute such confidentiality agreements that the Board
may adopt, and may modify from time to time, as a standard form to be executed
by all employees of the Company, to the extent such standard forms are not
materially more restrictive than the provisions of this Agreement.
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11. INTELLECTUAL PROPERTY. Executive acknowledges and agrees that all
discoveries, inventions, designs, improvements, formulas, formulations, ideas,
devices, writings, publications, study protocols, study results, computer data
or programs, or other intellectual property, whether or not subject to patent or
copyright laws, which Executive shall conceive solely or jointly with others, in
the course or scope of his employment with the Company or in any way related to
the Company's business, whether during or after working hours, or with the use
of the Company's equipment, materials or facilities (collectively referred to
herein as "Intellectual Property") , shall be the sole and exclusive property of
the Company without further compensation to Executive. As used in this Section
11 and the following Section 12, it is understood that the Company's principal
"business" is developing pharmaceutical products for commercial sale, including
also medical devices and/or other drug delivery methods or technologies for
administering said pharmaceutical products. For purposes of this Agreement, any
Intellectual Property, based upon the Company's secret or confidential
information, developed within six (6) months after the termination of
Executive's employment, shall be presumed to be the property of the Company.
Executive agrees to promptly notify the Company and fully disclose the nature of
such Intellectual Property. Executive shall take such steps as are deemed
necessary to maintain complete and current records thereof, and Executive shall
assign to the Company or its designees, the entire right, title and interest in
said Intellectual Property. Further, Executive shall, at the Company's request
and expense (including reasonable compensation if Executive is no longer
employed under this Agreement), make necessary application for domestic or
foreign patents and assist in securing, defending or enforcing any such title
and right thereto.
12. NON-COMPETITION. Executive acknowledges that his services to be rendered
hereunder are of a special and unusual character that have a unique value to the
Company and the conduct of its business, the loss of which cannot adequately be
compensated by damages in an action at law. In view of the unique value to the
Company of the services of Executive for which the Company has contracted
hereunder, and because of the confidential information to be obtained by or
disclosed to Executive as herein above set forth, and as a material inducement
to the Company to enter into this Agreement and to pay and make available to
Executive the compensation and other benefits referred to herein, Executive
covenants and agrees that Executive will not, directly or indirectly, whether as
principal, agent, trustee or through the agency of any corporation, partnership,
association or agent (other than as the holder of not more than 10% of the total
outstanding stock of any company the securities of which are traded on a regular
basis on recognized securities exchanges):
(a) while employed under this Agreement and for any period
during which Executive is receiving payments from the Company (pursuant to
Section 8 hereof) following a termination as a result of Employee's Disability,
(i) work for (in any capacity, including without limitation director, officer or
employee) any other business or pharmaceutical company that competes with the
Company or (ii) recruit, or otherwise influence or attempt to induce employees
of the Company to leave the employment of the Company; and
(b) for the two-year period immediately following the
termination of this Agreement due to the expiration of the term of this
Agreement, termination of Executive for Cause, or Executive's voluntary
resignation; and for the two year period immediately following the last date
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on which Employee shall receive payments from the Company pursuant to Section 8
hereof following a termination of employment as a result of Employee's
Disability, work for a company or business (in any capacity, including without
limitation as director, officer, or employee) that is in the business of
developing any products or projects which, as of the date of such termination,
the Company sells or which were undergoing research and development or
feasibility consideration by the Company; provided that for purposes of this
Section 12 (b), products or projects under "feasibility consideration" will
consist of potential products or projects known and identified in writing at the
time of termination but not yet in active development or specifically scheduled
to enter active development at the time of termination that have either
undergone active formulation efforts and/or in vivo study within three months
prior to termination or do undergo active formulation efforts and/or in vivo
study within the six months following such termination.
Executive has carefully read and considered the provisions of Sections
10, 11, and 12 hereof and agrees that the restrictions set forth in such
sections are fair and reasonable and are reasonably required for the protection
of the interests of the Company, its officers, directors, shareholders, and
other employees, for the protection of the business of the Company, and to
ensure that Executive devotes his full-time and efforts to the business of the
Company. Executive acknowledges that he is qualified to engage in businesses
other than those that are subject to this Section 12. It is the belief of the
parties, therefore, that the best protection that can be given to the Company
that does not in any way infringe upon the rights of Executive to engage in any
unrelated businesses is to provide for the restrictions described above. In view
of the substantial harm which would result from a breach by Executive of
Sections 10, 11 and 12, the parties agree that the restrictions contained
therein shall be enforced to the maximum extent permitted by law. In the event
that any of said restrictions shall be held unenforceable by any court of
competent jurisdiction, the parties hereto agree that it is their desire that
such court shall substitute a reasonable judicially enforceable limitation in
place of any limitation deemed unenforceable and that as so modified, the
covenant shall be as fully enforceable as if it had been set forth herein by the
parties.
13. REMEDIES. The provisions of sections 10, 11 and 12 of this Agreement shall
survive the termination of this Agreement as set forth therein, regardless of
the circumstances or reasons for such termination, and inure to the benefit of
the Company. The restrictions set forth in Sections 10, 11 and 12 are considered
to be reasonable for the purposes of protecting the business of the Company. The
Company and Executive acknowledge that the Company would be irreparably harmed
and that monetary damages would not provide an adequate remedy to the Company if
the covenants contained in Sections 10, 11 and 12 were not complied with in
accordance with their terms. Accordingly, Executive agrees that the Company
shall be entitled to injunctive and other equitable relief to secure the
enforcement of these provisions, in addition to any other remedy which may be
available to the Company, and that the Company shall be entitled to receive from
Executive reimbursement for reasonable attorneys' fees and expenses incurred by
the Company in enforcing these provisions.
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14. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by registered mail to
the addresses below or to such other address as either party shall designate by
written notice to the other:
IF TO THE EXECUTIVE: To the address set forth below his signature on
the signature page hereof.
IF TO THE COMPANY:
Kos Pharmaceuticals, Inc.
0000 X. Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxx, XX 00000
Attention: Chairman of the Board
15. ENTIRE AGREEMENT; MODIFICATION.
(a) This Agreement contains the entire agreement of the
Company and Executive, and the Company and Executive hereby acknowledge and
agree that this Agreement supersedes any prior statements, writings, promises,
understandings or commitments, including, without limitation, the agreements and
obligations relating to Executive's employment by the Company set forth in the
Letter Agreement dated June 8, 1988 (the "Old Agreement") between Executive and
Xxxxxxx Xxxxxxx, Jr. (on behalf of the Company). The parties hereto agree (i)
that the Old Agreement is hereby terminated and canceled in its entirety, and
shall be of no further force and effect, except as the Old Agreement relates to
the grant of Stock Options to the Executive.
(b) No future oral statements, promises or commitments with
respect to the subject matter hereof, or other purported modification hereof,
shall be binding upon the parties hereto unless the same is reduced to writing
and signed by each party hereto.
16. ASSIGNMENT. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company. The Executive may not assign his rights and
obligations under this Agreement.
17. FULL SETTLEMENT. The Executive shall not be obligated to seek other
employment by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement. The amounts payable to Executive under
this Agreement shall not be reduced by any compensation payable to Executive
from employment by another employer after the date of Executive's termination
provided such employment does not violate the terms of Section 12 hereof. The
Company agrees to pay all legal fees and expenses which the Executive may
reasonably incur as a result of any contest by the Executive or the Company or
others of the validity or enforceability of, or liability under any provision of
this Agreement or any guarantee of performance thereof, in each case plus
interest, provided that the Executive is the prevailing party in any such
contest. If the Executive is not the prevailing party each party shall pay its
own legal fees and expenses except that
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if such contest is the result of a claimed breach of Section 10, 11 or 12, and
the Company shall be the prevailing party, the Executive shall pay the
reasonable legal fees and expenses of the Company. The determination of the
prevailing party in any contest shall be made by the tribunal which shall
resolve such contest, or by the parties if such contest is settled without
resort to any such tribunal.
18. MISCELLANEOUS.
(a) This agreement shall be subject to and governed by the
laws of the State of Florida, without regard to the conflicts of laws principles
thereof.
(b) The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or the interpretation
of this Agreement.
(c) The failure of any party to enforce any provision of this
Agreement shall in no manner affect the right to enforce the same, and the
waiver by any party of any breach of any provision of this Agreement shall not
be construed to be a waiver by such party of any succeeding breach of such
provision or a waiver by such party of any breach of any other provision.
(d) All written notices required in this Agreement shall be
sent postage prepaid by certified or registered mail, return receipt requested.
(e) In the event any one or more of the provisions of this
Agreement shall for any reason be held invalid, illegal or unenforceable, the
remaining provisions of this Agreement shall be unimpaired, and the invalid,
illegal or unenforceable provision shall be replaced by a mutually acceptable
valid, and enforceable provision which comes closest to the intent of the
parties.
(f) This Agreement may be executed in any number of
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
REMAINDER OF PAGE LEFT BLANK INTENTIONALLY
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the day and year first above written.
KOS PHARMACEUTICALS, INC.
By: /s/ XXXXXXX XXXXXXX
---------------------------------------
Its: Chairman
EXECUTIVE
/s/ XXXXXX X. XXXX
----------------------------------------
Xxxxxx X. Xxxx
000 Xxxxxxxxx Xxxxxxxxx
Xxxxx Xxxxxx, Xxxxxxx 00000
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