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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as
of the 14th day of January, 1998 by and between Women First HealthCare, Inc., a
Delaware corporation (the "Company"), and Xxxxx X. Xxxx ("Executive").
WITNESSETH:
WHEREAS, the Company desires to employ Executive, and Executive
desires to be employed by the Company, on the terms and subject to the
conditions set forth herein; and
WHEREAS, capitalized terms used herein and not otherwise defined
are used herein as defined in that certain Stock Purchase Agreement, dated as of
January 8, 1998, by and between the Company and the Purchasers signatory
thereto.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:
1. Employment. The Company hereby employs Executive as President
and Chief Executive Officer, and Executive hereby accepts such employment, on
the terms and subject to the conditions hereinafter set forth.
2. Term. Subject to the provisions for termination hereinafter
provided, the term of this Agreement (the "Term") shall begin on the date hereof
and shall continue through the fifth anniversary of the date hereof.
3. Duties and Responsibilities. During the Term, Executive shall
serve as President and Chief Executive Officer of the Company and shall report
directly to the Chairman of the Board (the "Chairman") and the Board of
Directors (the "Board"). Executive agrees to perform such duties as are
consistent with his position subject to the direction of Chairman and the Board.
Executive shall be required to devote substantially all of his business time,
attention and effort to the Company's business and affairs and perform
diligently his duties hereunder, all subject to the direction of the Chairman
and the Board, together with such other duties as may be reasonably requested
from time to time by the Chairman or the Board. Subject to the terms of the
Non-Competition Agreement referred to in Section 7, this shall not preclude
Executive from serving on community and civic boards or the corporate boards on
which Executive currently serves, or participating in industry associations,
provided such activities do not unreasonably interfere with his duties to the
Company.
4. Support Services. Executive shall be entitled to all of the
administrative, operational and facility support customary for a similarly
situated executive. This support shall include, without limitation, a suitably
appointed private office and a secretary or administrative assistant.
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5. Compensation. Throughout the Term the Company shall pay or
provide, as the case may be, to Executive the compensation and other benefits
and rights set forth in this Section 5.
(a) The Company shall pay to Executive a minimum "Base
Salary," payable in accordance with the Company's usual pay practices (and in
any event no less frequently than monthly), of $350,000 per annum, which Base
Salary shall be subject to increase upon review annually by and at the sole
discretion of the Compensation Committee of the Board and as approved by the
Board.
(b) (i) Executive may be entitled to receive bonus
compensation (each, a "Quarterly Bonus") for each fiscal quarter, or part
thereof, that he is employed by the Company, of $25,000 for each fiscal quarter
during the Term, based upon the performance of Executive and the Company. The
amount of each such Quarterly Bonus, if any, shall be determined quarterly by
the Chairman in his sole discretion, and each such Quarterly Bonus, if any,
shall be paid promptly following such determination.
(ii) Executive shall participate in the Company's
Management Incentive Compensation Plan and shall be paid an annual bonus as
determined by the Compensation Committee of the Board and as approved by the
Board. The Management Incentive Compensation Plan shall incorporate the
milestones described in the Company's initial preferred stock financing into the
goals Executive will be expected to achieve.
(c) Executive shall be entitled to participate in all life
insurance, medical insurance, disability insurance, retirement and other benefit
plans of the Company generally available from time to time to employees of the
Company and for which Executive qualifies under the terms thereof.
Notwithstanding the foregoing, nothing contained herein shall obligate the
Company to continue any insurance and/or benefit plan which it now maintains or
hereafter establishes, except for the insurance policies referred to in the
following sentence. In addition, the Company will pay the annual premiums on
Executive's disability insurance policies currently in effect from New York Life
and Xxxx Xxxxxx and the $1 million whole life insurance policy from Connecticut
Mutual Life Insurance Company naming Executive's trust as the beneficiary.
(d) Executive shall be entitled to payment of or
reimbursement for reasonable business entertainment expenses and any and all
other business expenses reasonably incurred on behalf of or in the course of
performing duties for the Company, all in accordance with the expense
reimbursement policies established from time to time by the Company. In
addition, the Company shall, at Executive's option, lease an automobile for the
Company which will be available to Executive from time to time, or lease an
automobile for Executive's use and, in the event Executive elects to have the
Company lease an automobile for Executive's use, will reimburse Executive for
reasonable gas and maintenance expenses. Executive agrees to provide such
documentation of these expenses as may be reasonably required.
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(e) Executive shall be entitled to such periods of
vacation and sick leave allowance each year as provided under the Company's
vacation and sick leave policy and as otherwise provided for executive officers,
but in no event shall Executive be entitled to less than four weeks of vacation.
(f) Executive shall be entitled to participate in any
equity or other employee benefit plan that is generally available to senior
executive officers, as distinguished from general management, of the Company.
Executive's participation in and benefits under any such plan shall be on the
terms and subject to the conditions specified in the governing document of the
particular plan.
(g) (i) Concurrently with the execution hereof, the
Company shall grant to Executive the right and option, pursuant to the Company's
Long Term Incentive Plan, to purchase up to 945,000 shares of the Company's
common stock, par value $0.01 per share at an exercise price of $0.51 per share
(taking into account the three for one stock split approved by the Board).
Subject to the provisions of Section 6, such options shall vest 25% upon grant
and 25% per year in equal daily installments over a three-year period,
commencing as of January 14, 1998.
(ii) Concurrently with the execution hereof, the
Company shall grant to Executive the right and option, pursuant to the Company's
Long Term Incentive Plan, to purchase up to an additional 375,000 shares of the
Company's common stock, par value $0.01 per share at an exercise price of $0.51
per share (taking into account the three for one stock split approved by the
Board). Subject to the provisions of Section 6, such options shall vest over a
four-year period, in equal daily installments commencing as of January 14, 1998.
(iii) Subject to the vesting provisions set forth in
paragraphs (i) and (ii) above, the options described in paragraphs (i) and (ii)
may be exercised at any time or from time to time during the ten year period
following the date hereof, subject to the terms and provisions contained in the
aforementioned Long Term Incentive Plan and related grant letter to be
authorized by the Board of Directors. Executive shall not have any of the rights
of a shareholder of the Company with respect to any non-exercised options.
6. Termination.
(a) Executive's employment under this Agreement and the
Term shall be terminated immediately on the death of Executive and may be
terminated by Executive for "Good Reason" (as defined below) or by the Company:
(i) at any time after the "Permanent Disability" (as
defined below) of Executive;
(ii) at any time for "Cause" (as defined below) by
action of the Board; or
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(iii) at any time without Cause by action of the Board.
For purposes hereof, "Cause" shall mean:
(A) A willful act by Executive which constitutes
misconduct or fraud and which is injurious to the Company;
provided, however, that no act, or failure to act, by
Executive shall be considered "willful" unless committed
without good faith and without a reasonable belief that the
act or omission was in the Company's best interest;
(B) Conviction of, or a plea of "guilty" or "no
contest" to, a felony; or
(C) Executive's breach of any provision of this
Agreement, which breach has not been cured (if it is of a
nature that can be cured) to the Board's reasonable
satisfaction within ten (10) days after the Company gives
written notice thereof to Executive.
For purposes hereof, Executive's "Permanent Disability" shall be
deemed to have occurred one day after one hundred fifty (150) days in the
aggregate during any consecutive twelve (12) month period, during which one
hundred fifty (150) days, Executive, by reason of his physical or mental
disability or illness, shall have been unable to discharge fully his duties
under this Agreement.
For purposes hereof, "Good Reason" shall mean (i) a termination
by Executive within ninety (90) days following the relocation of the office of
Executive more than fifty (50) miles from the San Diego, California metropolitan
area (unless such relocation is consented to by Executive), (ii) Executive has
been demoted or has incurred a material reduction in his authority or
responsibility as an employee of the Company, including (without limitation) a
reduction or elimination of his authority to approve expenditures or to hire,
promote, demote or terminate subordinates; (iii) Executive has incurred a
reduction in his total compensation (including benefits) as an employee of the
Company, other than pursuant to a Company-wide reduction of total compensation
(including benefits) for employees of the Company generally; (iv) Executive has
not received a contemporaneous increase in his total compensation (including
benefits) which is commensurate with increases in total compensation (including
benefits) received by a majority of executive-level employees of the Company
with duties and responsibilities substantially comparable to those of the
Executive; or (v) Executive has not received a bonus commensurate with bonuses
(if any) received by a majority of executive-level employees of the Company with
duties and responsibilities substantially comparable to those of Executive.
(b) Termination by Death. If Executive's employment is
terminated by death, Executive's estate shall be entitled to receive (i)
compensation equal to what would have been his Base Salary under Section 5(a)
for one (1) year, payable at such times as his Base Salary would have been paid
if his employment had not been terminated, (ii) the Quarterly Bonus applicable
to the calendar quarter in which such termination occurs and each of the three
calendar quarters following such quarter (each of which shall be in the amount
of $25,000) and the full
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prior year's bonus under the Company's Management Incentive Compensation Plan
(or $150,000 if Executive's death occurs during 1998, so long as the initial
milestone in the Company's initial preferred stock financing is met in 1998, and
(iii) life insurance benefits pursuant to any life insurance purchased by the
Company for the benefit of Executive and the life insurance policy referred to
in Section 5(c) above. If Executive's employment is terminated by death, the
provisions of the Company's Long Term Incentive Plan regarding the
exercisability of options upon the death of the optionee shall apply.
(c) Termination for Cause. If Executive's employment is
terminated by the Company for Cause, the Company shall not have any other or
further obligations to Executive under this Agreement except (i) as to that
portion of any unpaid Base Salary, any bonus earned but not paid and other
benefits accrued and earned under this Agreement through the date of such
termination, (ii) as may be provided in accordance with the terms of retirement
and other benefit plans pursuant to Section 5(c), and (iii) as to benefits, if
any, provided by any insurance policies in accordance with their terms. In
addition, if Executive's employment is terminated by the Company for Cause,
Executive shall immediately forfeit any unvested stock rights and stock options
and other such unvested incentives or awards previously granted to him by the
Company, including, without limitation, the stock options to be granted to
Executive pursuant to Section 5(g) (to the extent then unvested). Executive
shall have one year from termination to exercise any vested stock options or
other stock rights. The foregoing shall be in addition to, and not in lieu of,
any and all other rights and remedies which may be available to the Company
under the circumstances, whether at law or in equity.
(d) Termination without Cause or for Good Reason. If
Executive's employment is terminated by the Company without Cause or by
Executive for Good Reason, Executive shall be entitled to receive (i) severance
compensation equal to what would have been his Base Salary under Section 5(a),
payable at such times as his Base Salary would have been paid if his employment
had not been terminated, for the longer of fifteen (15) months or the remainder
of what would have been the Term, (ii) the Quarterly Bonus for the remainder of
what would have been the Term and an annual bonus for the remainder of what
would have been the Term in an amount equal to the average of the prior annual
bonuses paid hereunder (disregarding any year when no bonus was paid and
providing for a $150,000 annual bonus if termination occurs in 1998 so long as
the initial milestone described in the Company's initial preferred stock
financing is met in 1998), (iii) other benefits accrued by him hereunder up to
and including the date of such termination, payable within ninety (90) days
after the date of such termination, and (iv) the benefits set forth in Section
5(c) for the longer of fifteen (15) months or the remainder of what would have
been the Term. In the event Executive's employment is terminated by the Company
without cause or by Executive for Good Reason, Executive's stock options and
other stock rights shall become immediately vested and exercisable in full and
shall be exercisable for one year from termination.
(e) Termination for Permanent Disability. If Executive's
employment is terminated by the Company for Permanent Disability, Executive
shall be entitled to receive (i) severance compensation equal to what would have
been his Base Salary under Section 5(a) for fifteen (15) months, payable at such
times as his Base Salary would have been paid if his employment had not been
terminated, (ii) the Quarterly Bonus applicable to the calendar quarter
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in which such termination occurs and each of the four calendar quarters
following such quarter (each of which shall be in the amount of $25,000) and one
year's annual bonus calculated in the same manner as paragraph (d) above. In
addition, for a period of fifteen (15) months following the date of such
termination, the Company shall continue to pay to Executive all medical benefits
pursuant to any plans and programs in which Executive was entitled to
participate immediately prior to the date of termination as if Executive were
still employed pursuant hereto. If Executive's employment is terminated by the
Company for Permanent Disability, the provisions of the Company's Long Term
Incentive Plan regarding the exercisability of options upon the disability of
the optionee shall apply, except that stock options and other stock rights
granted to Executive shall have their vesting accelerated fifteen (15) months
and shall be exercisable for one year from termination.
7. Confidential Information: Non-Competition.
Executive acknowledges the Company's reliance on and
expectation of Executive's continued commitment to performance of his duties and
responsibilities during the Term. In light of such reliance and expectation on
the part of the Company, and for other good reasons, Executive and the Company
are entering into a Non-Competition Agreement and the Company's standard
employee confidentiality agreement, each dated the date hereof. Executive agrees
to perform each and every obligation of Executive therein contained.
8. Miscellaneous.
(a) Executive represents and warrants that he is not a
party to any agreement, contract or understanding, whether employment or
otherwise, which would restrict or prohibit him from undertaking or performing
employment in accordance with the terms and conditions of this Agreement.
(b) The provisions of this Agreement are severable and if
any one or more provisions may be determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions and any partially
unenforceable provision to the extent enforceable in any jurisdiction
nevertheless shall be binding and enforceable.
(c) The rights and obligations of the company under this
Agreement shall inure to the benefit of, and shall be binding on, the Company
and its successors and assigns, and the rights and obligations (other than
obligations to perform services) of Executive under this Agreement shall inure
to the benefit of, and shall be binding upon, Executive and his heirs, personal
representatives and assigns.
(d) All notices and other communications required or
permitted under this Agreement shall be in writing, and shall be deemed properly
given if delivered personally, mailed by registered or certified mail in the
United States mail, postage prepaid, return receipt requests, sent by facsimile,
or sent by Express Mail, Federal Express or other nationally recognized express
delivery service, as follows:
If to the Company or the Board:
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Women First HealthCare, Inc.
0 Xxxxxxxxxxx Xxxxx
Xxxx Xxxxxxxxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxx
With a copy to:
Xxxxxx & Xxxxxxx
000 X Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx
If to Executive:
Xxxxx X. Xxxx
Post Office Box 8925
16596 Xxx Xxxx Xxxx
Xxxxxx Xxxxx Xx, Xxxxxxxxxx 00000
Notice given by hand, certified or registered mail, or by
Express Mail, Federal Express or other such express delivery service, shall be
effective upon actual receipt. Notice given by facsimile transmission shall be
effective upon actual receipt if received during the recipient's normal business
hours, or at the beginning of the recipient's next business day after receipt if
not received during the recipient's normal business hours. All notices by
facsimile transmission shall be confirmed promptly after transmission in writing
by certified mail or personal delivery.
Any party may change any address to which notice is to be given
to it by giving notice as provided above of such change of address.
(e) The failure of either party to enforce any provisions
of this Agreement shall not in any way be construed as a waiver of any such
provision or provisions as to any future violations thereof, nor prevent that
party thereafter from enforcing each and every other provision of this
Agreement. The rights granted the parties herein are cumulative and the waiver
of any single remedy shall not constitute a waiver of such party's right to
assert all other legal remedies available to it under the circumstances.
(f) This Agreement supersedes all prior or contemporaneous
agreements and understandings between the parties and may not be modified or
terminated orally. No modification or attempted waiver shall be valid unless in
writing and signed by the party against whom the same is sought to be enforced.
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(g) This Agreement shall be governed by, and construed in
accordance with the provisions of the law of California, without regard to the
conflict of laws principles thereof.
(h) All payments required to be made by the Company
hereunder to Executive shall be subject to the withholding of such amounts
relating to taxes and other government assessments as the Company may reasonably
determine it should withhold pursuant to any applicable law, rule or regulation.
(i) Captions and section headings used herein are for
convenience and are not a party of this Agreement and shall not be used in
construing it.
(j) This Agreement may be executed in counterparts, each
of which shall constitute an original and all of which shall constitute one and
the same instrument.
(k) Except as otherwise provided in this Agreement, any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, shall be settled by arbitration in San Diego in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. Discovery
shall be permitted to the same extent as in a proceeding under the Federal Rules
of Civil Procedure, including (without limitation) such discovery as is
specifically authorized by section 1283.05 of the California Code of Civil
Procedure, without need of prior leave of the arbitrator under section
1283.05(e) of such Code. Judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. All fees and expenses of the
arbitrator and such Association shall be paid as determined by the arbitrator.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date and year first set forth above.
WOMEN FIRST HEALTHCARE, INC.
By: /S/ XXXXXX X. XXXXXX
______________________________
Name:
Chairman
/S/ XXXXX X. XXXX
______________________________
Xxxxx X. Xxxx
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