EXHIBIT 10.47
STAR SCIENTIFIC, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is entered into
as of September 15, 2000, by and between STAR SCIENTIFIC, INC., a Delaware
corporation (the "Company"), and XXXXXXXXXXX X. XXXXXX ("Executive").
RECITALS
A. The Company is engaged in the research, development and
commercialization of smoking cessation products, reduced-risk smoking products
and smokeless tobacco products.
B. The Company wishes to employ Executive and to have the benefit of his
professional skills and services, and Executive agrees to change his status from
a Consultant to the Company's full-time Chief Financial Officer, in accordance
with the terms hereof.
AGREEMENT
NOW, THEREFORE, the parties hereto agree as follows:
1. Employment and Duties.
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(a) Position. The Company hereby employs Executive, and Executive hereby
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accepts employment with the Company, as its full-time Chief Financial Officer.
(b) Duties. Executive agrees to devote his best efforts to perform all
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duties assigned to him by the Company's Chairman, President and Chief Operating
Officer and/or Chief Executive Officer in a trustworthy, professional and
business-like and loyal manner.
(c) Reporting. Executive shall report to the Company's Chairman, President
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and Chief Operating Officer.
(d) Devotion of Time to Company's Business. During the Term of this
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Agreement (as such term is defined in Section 1(e) hereof), Executive agrees (i)
to devote the primary portion of his productive time, ability and attention to
the business of the Company during normal working hours, (ii) except as noted
below, not to engage in any other business duties or business pursuits, (iii)
not to render any services of a commercial or professional nature to any
individual, trust, partnership, company, corporation, business, organization,
group or other entity (each, a "Person"), whether directly or indirectly for
compensation or otherwise, without the prior written consent of the Board
of Directors ("Board"), and (iv) not to acquire, hold or retain, whether
directly or indirectly, more than a one percent (1%) interest in any business
competing with or similar in nature to the business of the Company or any of its
Affiliates (as such term is defined below); provided, however, that during the
initial six months of this Agreement, Executive shall be permitted to expend
reasonable amounts of time sufficient for Executive to complete outstanding
prior commitments, so long as Executive shall devote sufficient time to fulfill
his role as Chief Financial Officer. Subject to the foregoing, the making of
passive personal investments shall not be deemed a breach of this Agreement or
require the prior written consent of the Company if those activities do not
materially interfere with the services required of Executive under this
Agreement. For purposes of this Agreement, "Affiliates" shall mean any Person
that, directly or indirectly through one or more intermediaries, controls or is
controlled by, or is under the common control of, the Company.
(e) Term. Unless sooner terminated as provided in Section 4 hereof, the
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term of this Agreement shall be deemed to have commenced on September 15, 2000
and shall continue for a term of twenty-four (24) months through September 15,
2002 (the "Initial Term"), and shall be renewable for successive one (1) year
terms (each, a "Renewal Term") at the option of the Company. Notice of renewal,
if applicable, shall be given to Executive in writing at least thirty (30) days
prior to the end of the Initial Term or the applicable Renewal Term, as the case
may be. The Initial Term, together with any Renewal Terms shall be referred to
in this Agreement as the "Term of this Agreement." If the Company does not
provide notice of its intent to renew the Term of this Agreement in accordance
with this paragraph, the Agreement shall continue on a month-to-month basis
until either party notifies the other of the intent not to continue the
Agreement on a month-to-month basis. Notice of an intent not to continue the
Agreement on a month-to-month basis shall be effective if provided at least
fifteen (15) days prior to the completion of the then-current monthly term.
(f) Observance of Company Rules, Regulations and Policies. Executive shall
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duly, punctually and faithfully perform and observe any and all rules,
regulations and policies which the Company may now have or hereafter establish
governing the conduct of its business or its employees to the extent such rules,
regulations and policies are not in conflict with this Agreement. Executive
shall promptly provide written notice to the Board of Directors of any such
apparent conflict of which Executive becomes aware.
2. Compensation.
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(a) Base Salary. The Company shall pay to Executive during the first six
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months of this Agreement a base salary of $10,000 per month. At the end of the
six-month period, the parties will discuss an expansion of Executive's time
commitment, if possible, and consideration of an increase in salary commensurate
therewith. If a further
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agreement is not negotiated, Executive will continue to be paid $10,000 per
month during the remainder of this Agreement.
(a) Discretionary Bonus. In addition to the Base Salary, and assuming that
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this Agreement remains in effect, the Company's Compensation Committee as of
September 15, 2001 and September 15, 2002 will review Executive's performance
during each proceeding 12-month period and determine what, if any, bonus, in
addition to Executive's basic salary and options, should be awarded to
Executive. Such decision by the Compensation Committee shall be made within
sixty (60) days from September 15, 2001 and September 15, 2002, respectively.
(c) Stock Option.
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(i) Stock Option Grant. The parties acknowledge and agree that, as
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additional incentive to Executive, the Compensation Committee will recommend
and, upon Board approval, the Company will grant to Executive a Stock Option
(the "Option") to purchase up to fifty thousand (50,000) shares of Common Stock
of the Company at fair market value pursuant to the Company's standard form of
stock option agreement under its 1998 or 2000 Stock Option Plan (the "Plan").
(ii) Vesting. The Option shall vest on the following schedule (A)
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twenty-five thousand (25,000) shares shall become exercisable on September 15,
2001 and (B) twenty-five thousand (25,000) shares shall become exercisable on
September 15, 2002. However, if Executive dies or becomes disabled (as defined
in Section 4(b)) or if the Company is acquired by a Third Party and such Third
Party does not agree to continue this Agreement in effect through its initial
term (i.e., through September 15, 2002), then the Option shall vest and become
immediately exercisable by Consultant or his Estate at the time of such event.
(iii) Termination. To the extent not then fully vested, the Option shall
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immediately terminate upon the earlier of the effective date of termination of
this Agreement (A) by the Company for Cause (as such term is defined in Section
4(c) hereof) or (B) voluntarily by the Executive (as such term is defined in
Section 4(d) hereof).
(d) Housing. Company will at no expense to Executive make available to
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Executive an apartment or comparable housing in close proximity to the Company's
office in Xxxxxxx, Virginia, for use when Executive is working at the Company's
Xxxxxxx office. Such housing will be available to other persons working with the
Company when Executive is not working at the Company's Xxxxxxx office.
(e) Vacation. Executive shall be entitled to such annual vacation time
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with full pay as the Company may provide in its standard policies and practices
for any other management executives.
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(f) Directors and Officers Liability Insurance. Executive shall be
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entitled to participate in, and have the benefit of, directors and officers
liability insurance to the same extent such coverage is provided to the
Company's other management executives.
(g) Other Benefits. Executive shall participate in and have the benefits
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of all present and future vacation, holiday, paid leave, unpaid leave, life,
accident, disability, dental, vision and health insurance plans (including any
key man executive health and benefit programs), pension, profit-sharing and
savings plans and all other plans and benefits to the same extent such coverage
is provided to the Company's other management executives.
(h) Withholding. The parties shall comply with all applicable withholding
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requirements in connection with all compensation payable to Executive.
3. Expense Reimbursement.
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(a) General Business Expenses. The Company shall reimburse Executive for
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all business travel and other out-of-pocket expenses reasonably incurred by
Executive in the course of performing his duties under this Agreement. All
reimbursable expenses shall be appropriately documented and shall be in
reasonable detail and in a format and manner consistent with the Company's
expense reporting policy, as well as applicable federal and state tax record
keeping requirements.
(b) Professional Educational Expenses and Fees. In addition, the Company
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shall reimburse Executive for (i) all reasonable expenses incurred for
continuing education courses required to maintain Executive's professional
status, and (ii) all reasonable professional fees and dues associated with
Executive's professional status.
4. Termination and Rights on Termination. This Agreement shall terminate upon
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the occurrence of any of the following events:
(a) Death. Upon the death of Executive, in which event the Company shall,
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within thirty (30) days of receiving notice of such death, pay Executive's
estate all salary then due and payable and all accrued vacation pay and bonuses,
if any, in each case payable or accrued through the date of death. Executive's
estate shall not be entitled to any severance compensation.
(b) Disability. Upon the mental or physical Disability (as such term is
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defined below) of Executive, in which event the Company shall, within thirty
(30) days following the determination of Disability, pay Executive all salary
then due and payable and all accrued vacation pay and bonuses, if any, in each
case payable or accrued through the date of determination of Disability. For
purposes of this Agreement, "Disability" shall mean a physical or mental
condition, verified by a physician designated by the Company, which prevents
Executive from carrying out one or more of the material aspects of his assigned
duties for at least ninety (90) consecutive days, or for a total of ninety (90)
days
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in any six (6) month period. Executive shall not be entitled to any severance
compensation.
(c) Termination by the Company For Cause. The Company may terminate this
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Agreement at any time for Cause (as such term is defined below). In this event,
the Company shall, within thirty (30) days following such termination, pay
Executive all salary then due and payable through the date of termination.
Executive shall not be entitled to any severance compensation or any accrued
vacation pay or bonuses. For purposes of this Agreement, "Cause" shall mean:
(i) Any conduct which, in the sole judgment of the Board of Directors,
has diminished the professional reputation of the Executive or has adversely
affected his ability to serve as Chief Financial Officer of the Company. By way
of example, and not of limitation, the following types of conduct would be
"cause" for termination hereunder; engaging in competition with the Company,
inducing any employee or any significant customer, contractor, supplier,
representative or distributor of the Company to breach any contract with the
Company, or to cease doing business, or limit business activity, with the
Company, intentionally making an unauthorized disclosure of material
confidential information of the Company, committing an act of dishonesty, fraud,
embezzlement or theft, otherwise engaging in misconduct with respect to the
property, business or affairs of the Company, or deliberately disregarding the
rules, regulations and policies of the Company in such a manner as to cause
loss, damage or injury to, otherwise materially endanger, or, in the sole
judgment of the Board, adversely affect the property, reputation, operations or
employees of the Company;
(ii) Gross negligence by Executive in the performance of his duties
hereunder, dereliction or negligence in performing any of such duties, or
refusal to abide by or comply with the directives of the Board;
(iii) Conviction for a felony offense, a crime involving moral
turpitude, or any other offense which could reflect adversely upon the Company;
or
(iv) Abuse of alcohol or drugs (legal or illegal) that, in the sole
judgment of the Board of Directors, impairs Executive's ability to perform his
duties hereunder.
(d) Voluntary Termination by Executive. Thirty (30) days after delivery by
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Executive to the Company of a written notice terminating this Agreement for any
reason, in which event the Company shall, within thirty (30) days following the
effective date of termination, pay Executive all salary then due and payable
through the date of termination. Executive shall not be entitled to any
severance compensation or any accrued vacation pay or bonuses.
(e) Effect of Termination. All rights and obligations of the Company and
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Executive under this Agreement shall cease as of the effective date of
termination, except
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that the obligations of the Company under this Section 4 and Executive's
obligations under Sections 5 and 6 hereof shall survive such termination in
accordance with their respective terms.
5. Restriction on Competition.
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(a) Covenant Not to Compete. The parties acknowledge that the Company is
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placing Executive in a position of great trust, responsibility and authority by
virtue of this Agreement, and as a result, that Executive will be exposed to the
Company's most sensitive commercial and proprietary information. The parties
also recognize and acknowledge that by virtue of his position, Executive will
come to be identified closely with the Company in the business and industries in
which the Company operates. Executive further acknowledges that the Company's
interests in protecting its confidential information and its relationships are
both significant and difficult to quantify economically. Therefore, Executive
agrees that during the Term of this Agreement and for a period of twelve (12)
months from the termination of this Agreement, Executive shall not, without the
prior written consent of the Company, either directly or indirectly, for himself
or on behalf of or in conjunction with any other Person (i) own, manage,
operate, control, be employed by, participate in, render services to, or be
associated in any manner with the ownership, management, operation or control
of, any business similar to the type of business conducted by the Company or any
of its Affiliates (which are described in Recitals, section A above) within any
of the geographic territories in which the Company or any of its Affiliates
conducts business, (ii) solicit business of the same or similar type being
carried on by the Company or any of its Affiliates from any Person (as defined
in Section 1(d) above) known by Executive to be a customer of the Company or any
of its Affiliates, whether or not Executive had personal contact with such
Person during and by reason of Executive's employment with the Company, or (iii)
solicit any employee or contractor of the Company to terminate that relationship
or endeavor or attempt in any way to interfere with or induce a breach of any
contractual relationship that the Company or any of its Affiliates may have with
any employee, customer, contractor, supplier, representative or distributor.
(b) No Breach for Activities Deemed Not Competitive. It is further agreed
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that, in the event that Executive shall cease to be employed by the Company and
enter into a business or pursue other activities that, at such time, are not in
competition with the Company or any of its Affiliates, Executive shall not be
chargeable with a violation of this Section 5 if the Company subsequently enters
the same (or a similar) competitive business or activity.
(c) Severability. The parties desire the provisions of this Section 5 to
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be enforceable to the greatest degree possible. Therefore, the covenants in this
Section 5 are severable and separate, and the unenforceability of any specific
covenant shall not affect the provisions of any other covenant. If any provision
of this Section 5 relating to the
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time period or geographic area of the restrictive covenants shall be declared by
a court of competent jurisdiction to exceed the maximum time period or
geographic area, as applicable, that such court deems reasonable and
enforceable, such time period or geographic area shall be deemed to be, and
thereafter shall become, the maximum time period or largest geographic area that
such court deems reasonable and enforceable and this Agreement shall
automatically be considered to have been amended and revised to reflect such
determination.
(d) Fair and Reasonable. Executive has carefully read and considered the
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provisions of this Section 5 and, having done so, agrees that the restrictive
covenants in this Section 5 impose a fair and reasonable restraint on Executive,
are reasonably required to protect the interests of the Company, its Affiliates
and their respective officers, directors, employees and stockholders and that
the provisions would not unduly restrict his ability to make an adequate living
following the termination of his employment with the Company. It is further
agreed that the Company and Executive intend that such covenants be construed
and enforced in accordance with the changing activities, business and locations
of the Company throughout the term of these covenants.
6. Confidential Information.
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(a) Confidential Information. Executive hereby agrees to hold in strict
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confidence and not to disclose to any third party any of the confidential and
proprietary business, financial, technical, economic, sales and/or other types
of proprietary business information relating to the Company or any of its
Affiliates (including all trade secrets) in whatever form, whether oral,
written, or electronic (collectively, the "Confidential Information"), to which
Executive has, or is given (or has had or been given), access during the course
of his employment with the Company. It is agreed that the Confidential
Information is confidential and proprietary to the Company because such
Confidential Information encompasses technical know-how, trade secrets, or
technical, financial, organizational, sales or other valuable aspects of the
business and trade of the Company or its Affiliates, including without
limitation, technologies, products, processes, plans, clients, personnel,
operations and business activities. This restriction shall not apply to any
Confidential Information that (a) becomes known generally to the public through
no fault of the Executive, (b) is required by applicable law, legal process, or
any order or mandate of a court or other governmental authority to be disclosed,
or (c) is reasonably believed by Executive, based upon the advice of legal
counsel, to be required to be disclosed in defense of a lawsuit or other legal
or administrative action brought against Executive; provided, however, that in
the case of clause (b) or (c), Executive shall give the Company reasonable
advance written notice of the Confidential Information intended to be disclosed
and the reasons and circumstances surrounding such disclosure, in order to
permit the Company to seek a protective order or other appropriate request for
confidential treatment of the applicable Confidential Information.
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(b) Return of Company Property. In the event of termination of Executive's
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employment with the Company for whatever reason or no reason, (a) Executive
agrees not to copy, make known, disclose or use, any of the Confidential
Information without the Company's prior written consent, and (b) Executive or
Executive's personal representative shall return to the Company (i) all
Confidential Information, (ii) all other records, designs, patents, patent
applications, business plans, financial statements, manuals, memoranda, lists,
correspondence, reports, records, charts, advertising materials and other data
or property delivered to or compiled by Executive by or on behalf of the Company
or its respective representatives, vendors or customers that pertain to the
business of the Company or any of its Affiliates, whether in paper, electronic
or other form, and (iii) all keys, credit cards, vehicles and other property of
the Company. Executive shall not retain or cause to be retained any copies of
the foregoing. Executive hereby agrees that all of the foregoing shall be and
remain the property of the Company and the applicable Affiliates and be subject
at all times to their discretion and control.
7. Corporate Opportunities.
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(a) Duty to Notify. During the Term of this Agreement, in the event that
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Executive shall become aware of any business opportunity related to the business
of the Company, Executive shall promptly notify the Board of Directors of such
opportunity. Executive shall not appropriate for himself or for any other Person
(as herein defined) other than the Company (or any Affiliate) any such
opportunity unless, as to any particular opportunity, the Board of Directors
fails to take appropriate action within thirty (30) days. Executive's duty to
notify the Board of Directors and to refrain from appropriating all such
opportunities for thirty (30) days shall neither be limited by, nor shall such
duty limit, the application of the general laws relating to the fiduciary duties
of an agent or employee.
(b) Failure to Notify. In the event that Executive fails to notify the
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Board of Directors or so appropriates any such opportunity without the express
written consent of the Board of Directors, Executive shall be deemed to have
violated the provisions of this Section notwithstanding the following:
(i) The capacity in which Executive shall have acquired such
opportunity; or
(ii) The probable success in the hands of the Company of such
opportunity.
8. No Prior Agreements. Executive hereby represents and warrants to the
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Company that the execution of this Agreement by Executive, his employment by the
Company, and the performance of his duties hereunder will not violate or be a
breach of any agreement with a former employer, client or any other Person.
Further, Executive agrees to indemnify and hold harmless the Company and its
officers, directors and
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representatives for any claim, including, but not limited to, reasonable
attorneys' fees and expenses of investigation, of any such third party that such
third party may now have or may hereafter come to have against the Company or
such other persons, based upon or arising out of any noncompetition agreement,
invention, secrecy or other agreement between Executive and such third party
that was in existence as of the effective date of this Agreement. To the extent
that Executive had any oral or written employment agreement, consulting
agreement or understanding with the Company, this Agreement shall automatically
supersede such agreement or understanding, and upon execution of this Agreement
by Executive and the Company, such prior agreement or understanding
automatically shall be deemed to have been terminated and shall be null and
void.
9. Representation. Executive acknowledges that he (a) has reviewed this
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Agreement in its entirety, and/or (b) has had an opportunity to obtain the
advice of separate legal counsel prior to executing this Agreement, and (c)
fully understands all provisions of this Agreement.
10. Assignment; Binding Effect. Executive understands that he has been
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selected for employment by the Company on the basis of his personal and
professional qualifications, experience and skills. Executive agrees, therefore,
that he cannot assign or delegate all or any portion of his performance under
this Agreement. This Agreement may not be assigned or transferred by the Company
without the prior written consent of Executive. Subject to the preceding two
sentences, this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the parties hereto and their respective heirs, legal
representatives, successors, and assigns. Notwithstanding the foregoing, if
Executive accepts employment with an Affiliate, unless Executive and his new
employer agree otherwise in writing, this Agreement shall automatically be
deemed to have been assigned to such new employer (which shall thereafter be an
additional or substitute beneficiary of the covenants contained herein, as
appropriate), with the consent of Executive, such assignment shall be considered
a condition of employment by such new employer, and references to the "Company"
in this Agreement shall be deemed to refer to such new employer.
11. Complete Agreement; Waiver; Amendment. This Agreement is not a promise of
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future employment. Executive has no oral representations, understandings or
agreements with the Company or any of its officers, directors or representatives
covering the same subject matter as this Agreement. This Agreement is the final,
complete and exclusive statement and expression of the agreement between the
Company and Executive with respect to the subject matter hereof and thereof, and
cannot be varied, contradicted, or supplemented by evidence of any prior or
contemporaneous oral or written agreements. This Agreement may not be later
modified except by a further writing signed by a duly authorized officer of the
Company and Executive, and no term of this Agreement may be waived except by a
writing signed by the party waiving the benefit of such term.
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