Exhibit 10.1
XXXXXX PHARMACEUTICALS, INC.
KEY EMPLOYEE AGREEMENT
This Key Employee Agreement ("Agreement") is entered into as of May 1, 2002
(the "Effective Date"), by and between Xxx Xxxxx ("Executive") and Xxxxxx
Pharmaceuticals, Inc. (the "Company"), a Nevada corporation.
WHEREAS, the Company and the Executive are parties to that certain Xxxxxx
Pharmaceuticals, Inc. Key Employee Agreement dated August 28, 2000, as amended
by that certain Amendment No. 1 to Xxxxxx Pharmaceuticals, Inc. Key Employee
Agreement dated November 15, 2000 (collectively the "Original Agreement"); and
WHEREAS, the Company and Executive wish to amend and restate the Original
Agreement in accordance with the terms of this Agreement; and
WHEREAS, the Company desires to employ Executive to provide personal
services to the Company, and wishes to provide Executive with certain
compensation and benefits in return for his services; and
WHEREAS, Executive wishes to be employed by the Company and provide
personal services to the Company in return for certain compensation and
benefits, including the benefits provided under this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is hereby agreed by and between the parties hereto as
follows:
1. EMPLOYMENT BY THE COMPANY. Company and Executive agree that upon
execution of this Agreement the Original Agreement shall be amended and restated
as set forth herein, effective as of the date hereof. Subject to terms set forth
herein, the Company agrees to employ Executive in the position of Senior Vice
President, Quality Assurance, or such other title selected by Company, and
Executive hereby accepts employment effective as of the Effective Date. In this
position, Executive shall perform such duties as are assigned from time to time
by the Chief Executive Officer ("CEO") of the Company or such other officer of
the Company or one of its subsidiaries that the CEO in his discretion may from
time to time designate (the "Designated Officer," who shall be a Senior Vice
President or higher level officer of the Company or one of its subsidiaries with
oversight responsibility for the Company's Quality organization, or an officer
of any successor to the Company by merger or other acquisition with oversight
responsibility of the Quality organization). Among other things, Executive will
be assigned duties within the Company's Quality organization, including quality
assurance, quality operations (including training and compliance with current
good manufacturing practices) quality investigations, and the Company's Quality
Improvement Plan, for all Company sites. During his employment with the Company,
Executive will devote his best efforts and substantially all of his business
time and attention (except for vacation periods as set forth herein and
reasonable periods of illness or other incapacity permitted by the Company's
general employment policies) to the business of the Company and the fulfillment
of his duties hereunder.
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Executive shall abide by the general employment policies and procedures of the
Company, except that wherever the terms of this Agreement may differ from or are
in conflict with the Company's general employment policies or procedures, this
Agreement shall control.
2. COMPENSATION.
2.1 Salary. For services to be rendered hereunder, Executive shall
receive a base salary as set forth in Section 1 of the Compensation and
Severance Terms Schedule, attached hereto as Exhibit A. Executive will be
considered annually for increases in base salary in accordance with Company
policy and subject to review and approval by the CEO and/or the Designated
Officer, as appropriate.
2.2 Bonus. Executive's eligibility to participate in any Company
bonus plan or program shall be at the sole discretion of the CEO. The amount of
Executive's bonus may be determined in part based on Executive's performance
with respect to certain goals established by the Company and attainment by the
Company of its planned financial objectives for the bonus period.
Notwithstanding the foregoing, no bonus is guaranteed to Executive. Any bonus is
subject to the approval of the CEO and/or the Designated Officer, as
appropriate. The Company retains the authority to review, grant, deny or revise
any bonus in its sole discretion. To be eligible to receive a bonus, Executive
must remain in employment with the Company as set forth in the applicable bonus
plan. The target level of such bonus is set forth in Section 2 of Exhibit A
attached hereto.
2.3 Stock Options. Company has granted stock options to Executive
prior to the Effective Date. Subject to approval of the Board of Directors (the
"Board") of the Company or the Compensation Committee of the Board, as
appropriate, Executive may receive additional grants of stock options as may
from time to time be granted, pursuant to the terms and conditions set forth in
the applicable stock option agreement and plan documents, copies of which will
be made available upon Executive's request. For the purposes of this Agreement,
all stock options granted to Executive by the Company prior to the Effective
Date, or granted in the future shall be referred to hereinafter as the
"Options."
2.4 Paid Time Off. Executive shall be eligible to accrue paid time
off ("PTO") during the term of this Agreement, in accordance with the Company's
standard policy regarding PTO and in an amount commensurate with other employees
at a level similar to that of the Executive.
2.5 Standard Company Benefits. Executive shall be entitled to all
rights and benefits for which he is eligible under the terms and conditions of
the standard Company benefits plans (e.g., health and disability insurance,
401(k) retirement plan, etc.) and other benefits and incentives which may be in
effect from time to time and provided by the Company to employees at levels
similar to the Executive. For purposes of clarification, Executive shall have no
right to participate in benefit plans such as bonus or stock option plans at
levels of participation provided to employees at levels similar to the
Executive.
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3. PROPRIETARY INFORMATION AND INVENTIONS.
Executive agrees to execute and abide by the Employee Proprietary
Information and Inventions Agreement attached hereto as Exhibit C and made a
part hereof by this reference.
4. OUTSIDE ACTIVITIES.
4.1 Activities. Except with the prior written consent of the CEO or
the Board, as appropriate, Executive will not during his employment with the
Company undertake or engage in any other employment, occupation or business
enterprise, other than ones in which Executive is a passive investor. Executive
may engage in civic and not-for-profit activities so long as such activities do
not materially interfere with the performance of his duties hereunder. Executive
will not during his employment with the Company publicly or privately disparage
the Company or any of its subsidiaries, or their respective past or present
products, officers, directors, employees or agents.
4.2 Investments and Interests. During his employment by the Company,
Executive agrees not to acquire, assume or participate in, directly or
indirectly, any position, investment or interest known by him to be adverse to
or in conflict with the interest of the Company, its business or prospects,
financial or otherwise. By way of clarification, nothing contained in this
Agreement shall prevent Executive from holding, for investment purposes only, no
more than one percent (1%) of the capital stock of any publicly traded company.
4.3 Non-Competition. During his employment by the Company, except on
behalf of the Company, Executive will not directly or indirectly, whether as an
officer, director, stockholder, partner, proprietor, associate, representative,
consultant, or in any capacity whatsoever engage in, become financially
interested in, be employed by or have any business connection with any other
person, corporation, firm, partnership or other entity whatsoever known by him
to compete directly with the Company, anywhere in the world, in any line of
business engaged in (or planned to be engaged in) by the Company.
5. OTHER AGREEMENTS.
Executive represents and warrants that his employment by the Company
will not conflict with and will not be constrained by any prior agreement or
relationship with any third party. Executive represents and warrants that he
will not disclose to the Company or use on behalf of the Company any
confidential information governed by any agreement with any third party except
in accordance with an agreement between the Company and any such third party.
During Executive's employment by the Company, Executive may use, in the
performance of his duties, all information generally known and used by persons
with training and experience comparable to his own and all information which is
common knowledge in the industry or otherwise legally in the public domain.
6. TERMINATION OF EMPLOYMENT.
6.1 At-Will Employment. Executive's relationship with the Company is
at-will. The Company shall have the right to terminate Executive's employment
with the Company at any time with or without Cause and with or without notice.
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6.2 Termination by Company for Cause. If the Company terminates
Executive's employment at any time for Cause, Executive's salary shall cease on
the date of termination; and Executive will not be entitled to severance pay,
pay in lieu of notice or any other such compensation.
(a) Definition of "Cause." For purposes of this Agreement,
"Cause" shall mean (i) Executive's conviction of any felony; or, (ii)
Executive's gross misconduct, material violation of Company policy, or material
breach of Executive's duties to the Company, which Executive fails to correct
within thirty (30) days after Executive is given written notice by the CEO or
the Designated Officer.
6.3 Termination by Company Without Cause. If the Company terminates
Executive's employment at any time without Cause, Executive shall be entitled to
severance benefits as set forth in Section 4.1 of the Compensation and Severance
Terms Schedule, attached hereto as Exhibit A.
6.4 Executive's Voluntary Resignation. Executive may terminate his
employment with the Company at any time, with or without Good Reason, and with
or without notice. Except as provided in Section 6.5(a)(ii), in the event
Executive voluntarily terminates his employment other than for Good Reason, he
will not be entitled to severance pay, pay in lieu of notice or any other such
compensation.
6.5 Executive's Resignation for Good Reason. Executive may resign his
employment for Good Reason as defined herein. If Executive terminates his
employment for Good Reason, Executive shall be eligible for severance benefits
as set forth in Section 4.2 of Exhibit A, attached hereto.
(a) Definition of "Good Reason." For purposes of this Agreement,
"Good Reason" shall mean any one of the following events which occurs on or
after the Effective Date: (i) any reduction of the Executive's then existing
annual base salary, except to the extent the annual base salary of all other
executive officers of the Company is similarly reduced (provided such reduction
does not exceed fifteen percent (15%) of Executive's then existing annual base
salary); (ii) Executive's voluntary resignation at any time after December 31,
2003, so long as no Cause exists; (iii) any material breach by the Company of
its obligations under this Agreement; (iv) any failure by the Company to obtain
the assumption of this Agreement by any successor or assign of the Company; or
(v) any requirement that the Executive relocate to a work site that would
increase the Executive's one way commute distance by more than thirty five (35)
miles than the distance from his then principal residence to the Company's
Morristown, New Jersey offices.
6.6 Termination for Death or Disability. Executive's employment with
the Company will be terminated in the event of Executive's death, or any
illness, disability or other incapacity in such a manner that Executive is
physically rendered unable regularly to perform his duties hereunder for a
period in excess of one hundred eighty (180) consecutive days or more than one
hundred eighty (180) days in any consecutive twelve (12) month period. The
determination regarding whether Executive is physically unable regularly to
perform his duties shall be made by the Board. Executive's inability to be
physically present on the Company's
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premises shall not constitute a presumption that Executive is unable to perform
such duties. In the event that Executive's employment with the Company is
terminated for death or disability as described in this Section 6.6, Executive
or Executive's heirs, successors, and assigns shall not receive any compensation
or benefits other than payment of accrued salary and PTO and such other benefits
as expressly required in such event by applicable law or the terms of applicable
benefit plans.
6.7 Cessation. If Executive violates any provision of Section 8 of
this Agreement or the Employee Proprietary Information and Inventions Agreement
and Executive fails to correct such violation within ten (10) days after
Executive is given written notice by the CEO or the Designated Officer, then any
severance payments or other benefits being provided to Executive will cease
immediately, and Executive will not be entitled to any further compensation from
the Company.
7. CHANGE OF CONTROL.
7.1 Definition. For purposes of this Agreement, Change of Control
means the occurrence of any of the following:
(a) a sale of assets representing fifty percent (50%) or more of
the net book value and of the fair market value of the Company's consolidated
assets (in a single transaction or in a series of related transactions);
(b) a liquidation or dissolution of the Company;
(c) a merger or consolidation involving the Company or any
subsidiary of the Company after the completion of which: (i) in the case of a
merger (other than a triangular merger) or a consolidation involving the
Company, the shareholders of the Company immediately prior to the completion of
such merger or consolidation beneficially own (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or comparable successor rules), directly or indirectly, outstanding
voting securities representing less than sixty percent (60%) of the combined
voting power of the surviving entity in such merger or consolidation, and (ii)
in the case of a triangular merger involving the Company or a subsidiary of the
Company, the shareholders of the Company immediately prior to the completion of
such merger beneficially own (within the meaning of Rule 13d-3 promulgated under
the Exchange Act, or comparable successor rules), directly or indirectly,
outstanding voting securities representing less than sixty percent (60%) of the
combined voting power of the surviving entity in such merger and less than sixty
percent (60%) of the combined voting power of the parent of the surviving entity
in such merger;
(d) an acquisition by any person, entity or "group" (within the
meaning of Section 13(d) or 14(d) of the Exchange Act or any comparable
successor provisions), other than any employee benefit plan, or related trust,
sponsored or maintained by the Company or an affiliate of the Company and other
than in a merger or consolidation of the type referred to in clause "(c)" of
this sentence, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act, or comparable successor rules) of
outstanding voting
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securities of the Company representing more than thirty percent (30%) of the
combined voting power of the Company (in a single transaction or series of
related transactions); or
(e) in the event that the individuals who, as of the Effective
Date, are members of the Board (the "Incumbent Board"), cease for any reason to
constitute at least fifty percent (50%) of the Board. (If the election, or
nomination for election by the Company's shareholders, of any new member of the
Board is approved by a vote of at least fifty percent (50%) of the Incumbent
Board, such new member of the Board shall be considered as a member of the
Incumbent Board.)
7.2 Termination After a Change of Control. In the event Executive's
employment with the Company is terminated without Cause, or Executive resigns
for Good Reason, within ninety (90) days prior to or twenty-four (24) months
following a Change of Control (a "Change of Control Termination"), then
Executive shall be eligible for severance benefits as set forth in Section 4.3
of Exhibit A, attached hereto.
7.3 Parachute Payments. In the event that it shall be determined
under this Section 7.3 that any payment or benefit to Executive or for the
benefit of Executive or on Executive's behalf (whether paid or payable or
distributed or distributable) pursuant to the terms of this Agreement or any
other agreement, arrangement or plan with the Company or any Affiliate (as
defined below) (including, without limitation, the severance benefits as set
forth in Section 4.3 of Exhibit A, attached hereto) (individually, a "Payment"
and collectively, the "Payments") would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or
any successor provision thereto (the "Excise Tax"), then Executive shall be
entitled to receive from the Company one or more additional payments
(individually, a "Gross-Up Payment" and collectively, the "Gross-Up Payments")
in an aggregate amount such that the net amount of the Payments and the Gross-Up
Payments retained by Executive after the payment of all Excise Taxes (and any
interest and penalties imposed with respect to such Excise Taxes) on the
Payments and all federal, state and local income tax, employment taxes and
Excise Taxes (including any interest and penalties imposed with respect to such
taxes and Excise Taxes) on the Gross-Up Payments provided for in this Section
7.3, and taking into account any lost or reduced tax deductions on account of
the Gross-Up Payments, shall be equal to the Payments. For purposes of this
Section 7.3, an "Affiliate" shall mean any successor to all or substantially all
of the business and/or assets of the Company, any person acquiring ownership or
effective control of the Company or ownership of a substantial portion of the
assets of the Company's assets, or any other person whose relationship to the
Company, such successor or such person acquiring ownership or control is such as
to require attribution between the parties under Section 318(a) of the Code.
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(a) All determinations required to be made under this Section
7.3, including whether and when any Gross-Up Payment is required and the amount
of such Gross-Up Payment, and the assumptions to be utilized in arriving at such
determinations, shall be made by the Accountants (as defined below), which shall
provide Executive and the Company with detailed supporting calculations with
respect to such Gross-Up Payment within thirty (30) days of the receipt of
notice from Executive or the Company that Executive has received or will receive
a Payment. For the purposes of this Section 7.3, the "Accountants" shall mean
the Company's independent certified public accounting firm serving immediately
prior to the Change of Control (or other change in ownership or effective
control, or change in ownership of a substantial portion of the assets, of a
corporation, as defined in Section 280G of the Code) with respect to which such
determination is being made. In the event that the Accountants are also serving
as the accountants, auditors or consultants for the individual, entity or group
effecting the Change of Control (or other change in ownership or effective
control, or change in ownership of a substantial portion of the assets, of a
corporation, as defined in Section 280G of the Code), the Company shall appoint
another nationally recognized independent certified public accounting firm,
reasonably acceptable to Executive, to make the determinations required
hereunder (which accounting firm shall then be referred to as the "Accountants"
hereunder). All fees and expenses of the Accountants shall be borne solely by
the Company.
(b) For the purposes of determining whether any of the Payments
will be subject to the Excise Tax and the amount of such Excise Tax, such
Payments will be treated as "parachute payments" within the meaning of section
280G of the Code, and all "parachute payments" in excess of the "base amount"
(as defined under Section 280G(b)(3) of the Code) of Executive shall be treated
as subject to the Excise Tax, unless and except to the extent that, in the
opinion of the Accountants, such Payments (in whole or in part) either do not
constitute "parachute payments" or represent reasonable compensation for
services actually rendered (within the meaning of section 280G(b)(4) of the
Code) in excess of the "base amount," or such "parachute payments" are otherwise
not subject to such Excise Tax.
(c) For purposes of determining the amount of the Gross-Up
Payment, Executive shall be deemed to pay federal income taxes at the highest
applicable marginal rate of federal income taxation for the calendar year in
which the Gross-Up Payment is to be made and to pay any applicable state and
local income taxes at the highest applicable marginal rate of taxation for the
calendar year in which the Gross-Up Payment is to be made, net of the maximum
reduction in federal income taxes which could be obtained from the deduction of
such state or local taxes if paid in such year (determined without regard to
limitations on deductions based upon the amount of Executive's adjusted gross
income); and to have otherwise allowable deductions for federal, state and local
income tax purposes at least equal to those disallowed because of the inclusion
of the Gross-Up Payment in Executive's adjusted gross income.
(d) Any determination by the Accountants shall be binding upon
the Company and Executive. As a result of uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accountants hereunder, it is possible that the Gross-Up Payment made will have
been an amount less than the Company should have paid pursuant to this Section
7.3 (the "Underpayment"). In the event that the Company exhausts its
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remedies pursuant to Section 7.3(f) and Executive is required to make a payment
of any Excise Tax, the Underpayment shall be promptly paid by the Company to or
for Executive's benefit.
(e) Executive shall notify the Company in writing of any claim
by the Internal Revenue Service or other taxing authority that, if successful,
would require the payment by the Company of a Gross-Up Payment. Such
notification shall be given as soon as practicable after Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. Executive shall
not pay such claim prior to the expiration of the 30-day period following the
date on which Executive gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes, interest and/or penalties with
respect to such claim is due). If the Company notifies Executive in writing
prior to the expiration of such period that the Company desires to contest such
claim, Executive shall: (i) give the Company any information reasonably
requested by the Company relating to such claim; (ii) take such action in
connection with contesting such claim as the Company shall reasonably request in
writing from time to time, including, without limitation, engaging legal
representation with respect to such claim by an attorney selected by the Company
and reasonably acceptable to Executive; (iii) cooperate with the Company in good
faith in order to effectively contest such claim; and (iv) permit the Company to
participate in any proceedings relating to such claims; provided, however, that
the Company shall bear and pay directly all costs and expenses, including
attorneys' fees (including additional interest and penalties) incurred in
connection with such contest and shall indemnify Executive for and hold
Executive harmless from, on an after-tax basis, any Excise Tax or income,
employment or other taxes (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of all related
costs and expenses.
(f) Without limiting the foregoing provisions of this Section
7.3, the Company shall control all proceedings taken in connection with such
contest and, at the Company's sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the Internal
Revenue Service or other taxing authority in respect of such claim and may, at
the Company's sole option, either direct Executive to pay the amount claimed and
xxx for a refund or contest the claim in any permissible manner, and Executive
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
directs Executive to pay such claim and xxx for a refund, the Company shall
advance the amount of such payment to Executive, on an interest-free basis, and
shall indemnify Executive for and hold Executive harmless from, on an after-tax
basis, any Excise Tax or income, employment or other taxes (including interest
or penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance (including as a
result of any forgiveness by the Company of such advance); provided, further,
that any extension of the statute of limitations relating to the payment of
taxes, interest and penalties for the taxable year of Executive with respect to
which such contested amount is claimed to be due shall be limited solely to such
contested amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority.
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(g) The Gross-Up Payments provided for in this Section 7.3 shall
be paid to Executive not later than the date upon which the severance benefits
payable to Executive under Section 4.3 of Exhibit A, attached hereto, are due;
provided, however, that if the amounts of such Gross-Up Payments cannot be
finally determined by the Accountants on or before such day, the Company shall
pay to Executive on such day an estimate, as determined in good faith by the
Company, of the minimum amount of such Gross-Up Payments and shall pay the
remainder of such Gross-Up Payments (together with interest at the rate provided
in Section 1274(b)(2)(B) of the Code) not later than 30 days after the amount
thereof can be determined by the Accountants. In the event that the amount of
the estimated payments exceeds the amount subsequently determined by the
Accountants to have been due to the Executive, such excess shall constitute a
loan by the Company to Executive, payable not later than 30 days after such
determination and demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code).
8. NONSOLICITATION. While employed by the Company, and for one (1) year
following the termination of Executive's employment with the Company, Executive
agrees not to solicit, attempt to solicit, induce, or otherwise cause any
employee or independent contractor of the Company to terminate his or her
employment or contractual relationship in order to become an employee or
independent contractor to or for Executive or any other person or entity.
9. RELEASE. In exchange for the severance compensation and benefits
provided under this Agreement to which Executive would not otherwise be
entitled, Executive shall enter into and execute a release substantially in the
form attached hereto as Exhibit B (the "Release") upon Executive's termination
of employment. Unless the Release is executed by Executive and delivered to the
Company within twenty-one (21) days (forty-five (45) days in the event of a
group termination) after the termination of Executive's employment with the
Company, Executive shall not receive any severance benefits provided under this
Agreement, acceleration, if any, of Executive's Options as provided in this
Agreement shall not apply and Executive's Options in such event may be exercised
following the date of Executive's termination only to the extent provided under
their original terms in accordance with the applicable stock option plan and
option agreements.
10. GENERAL PROVISIONS.
10.1 Notices. Any notices provided hereunder must be in writing and
shall be deemed effective upon personal delivery (including, personal delivery
by facsimile transmission) or the third day after mailing by first class mail,
to the Company at its primary office location and to Executive at his address as
listed on the Company payroll (which address may be changed by written notice).
10.2 Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity or unenforceability will not affect any other
provision or any other jurisdiction, and such invalid or unenforceable provision
shall be
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reformed, construed and enforced in such jurisdiction so as to render it valid
and enforceable consistent with the intent of the parties insofar as possible.
10.3 Waiver. If either party should waive any breach of any provisions
of this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
10.4 Entire Agreement. This Agreement, together with the Employee
Proprietary Information and Inventions Agreement, constitute the final,
complete, and exclusive embodiment of the entire agreement between Executive and
the Company regarding the subject matter hereof and supersede any prior
agreement, promise, representation, or statement, written or otherwise, between
Executive and the Company with regard to this subject matter. This Agreement is
entered into without reliance on any promise, representation, statement or
agreement other than those expressly contained or incorporated herein, and it
cannot be modified or amended except in a writing signed by Executive and a duly
authorized officer of the Company.
10.5 Counterparts. This Agreement may be executed in separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
Agreement.
10.6 Headings. The headings of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.
10.7 Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive, the Company and their
respective successors, assigns, heirs, executors and administrators, except that
Executive may not assign any of his duties hereunder and he may not assign any
of his rights hereunder without the written consent of the Company, which shall
not be withheld unreasonably.
10.8 Attorneys' Fees. If either party hereto brings any action to
enforce his or its rights hereunder, the prevailing party in any such action
shall be entitled to recover his or its reasonable attorneys' fees and costs
incurred in connection with such action.
10.9 Arbitration. To provide a mechanism for rapid and economical
dispute resolution, Executive and the Company agree that any and all disputes,
claims, or causes of action, in law or equity, arising from or relating to this
Agreement (including the Release) or its enforcement, performance, breach, or
interpretation, will be resolved, to the fullest extent permitted by law, by
final, binding, and confidential arbitration held in Orange County, California
and conducted by Judicial Arbitration & Mediation Services/Endispute ("JAMS"),
under its then-existing Rules and Procedures. Nothing in this Section 10.9 or in
this Agreement is intended to prevent either Executive or the Company from
obtaining injunctive relief in court to prevent irreparable harm pending the
conclusion of any such arbitration.
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10.10 Remedies. Executive's duties under Section 8 and the Employee
Proprietary Information and Inventions Agreement shall survive termination of
Executive's employment with the Company. Executive acknowledges that a remedy at
law for any breach or threatened breach by Executive of the provisions of these
sections and the Employee Proprietary Information and Inventions Agreement would
be inadequate, and that such a breach would cause irreparable harm to the
Company; and Executive therefore agrees that the Company shall be entitled to
injunctive relief in case of any such breach or threatened breach.
10.11 Governing Law. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the law of the
State of California as applied to contracts made and to be performed entirely
within California.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the Effective Date above written.
XXXXXX PHARMACEUTICALS, INC.
By: /s/Xxxxx Xxxx
----------------------------
Name: Xxxxx Xxxx
Title: Chief Executive Officer
EXECUTIVE:
/s/Xxx Xxxxx May 2, 2002
---------------------------------
Name: Xxx Xxxxx
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EXHIBIT A
COMPENSATION AND SEVERANCE TERMS SCHEDULE
1. BASE SALARY
For services to be rendered under this Agreement, Executive shall receive a
base salary at an annualized rate of $313,500, payable in accordance with the
Company's standard payroll practices, and subject to increases as set forth in
the Agreement.
2. BONUS
Executive's annual bonus, if granted, shall be at a target level to be
determined by the CEO and/or Designated Officer.
3. STOCK OPTIONS
As of the Effective Date, Executive has outstanding option(s) to purchase
the number of shares of Company common stock as indicated on Attachment A to
this Exhibit A.
4. SEVERANCE BENEFITS
4.1 Termination By Company without Cause. If the Company terminates
Executive's employment at any time without Cause, the Company shall provide to
Executive, within thirty (30) days after the Effective Date of the Release
attached hereto as Exhibit B (as "Effective Date" is defined in the Release), as
the only severance compensation and benefits all of the following:
(a) A lump sum severance payment, subject to standard withholdings or
deductions, in an amount equal to the sum of: (i) twenty-four (24) months of
Executive's then base salary; and (ii) two times Executive's target bonus to be
earned for the year in which termination occurs or two times the bonus amount
paid to the Executive in the prior year, whichever is greater. For purposes of
this section 4.1(a), Executive's target bonus shall be thirty percent (30%) of
Executive's annual base salary.
(b) Continued group health insurance benefits (e.g., medical, dental,
vision, etc.) for Executive and Executive's eligible dependents for a period of
up to eighteen (18) months under COBRA, and if Executive is not covered under
the Company's group health insurance plan at the end of eighteen (18) months,
the Company shall use its best efforts to provide Executive and Executive's
eligible dependents with comparable health insurance coverage for an additional
period of up six (6) months, but the Company shall not be obligated to pay more
than one hundred fifty percent (150%) of the cost of COBRA coverage for such
comparable coverage; provided, however, that in any event the Company's
obligation to provide any health benefits pursuant to this sentence ends when
Executive becomes eligible for health insurance with a new
1
employer (and Executive agrees to promptly notify the Company in writing of any
such event of eligibility).
(c) Outplacement services for one year with a nationally recognized
service selected by the Company.
4.2 Executive's Resignation for Good Reason. If Executive terminates his
employment with the Company for Good Reason, the Company shall provide to
Executive, within thirty (30) days after the Effective Date of the Release
attached hereto as Exhibit B (as "Effective Date" is defined in the Release), as
the only severance compensation and benefits, the same severance compensation
and benefits provided in Section 4.1(a) hereof.
4.3 Change of Control Termination. In the event of a Change of Control
Termination, the Company shall provide to Executive, within thirty (30) days
after the Effective Date of the Release attached hereto as Exhibit B (as
"Effective Date" is defined in the Release), as the only severance compensation
and benefits, (a) the same severance compensation and benefits provided in
Section 4.1 hereof and, (b) any unvested Options held by Executive shall have
their vesting accelerated in full so as to become one hundred percent (100%)
vested and immediately exercisable in full as of the date of such termination.
2
EXHIBIT B
RELEASE AGREEMENT
I understand that my position with Xxxxxx Pharmaceuticals, Inc. (the "Company")
terminated effective _______________ (the "Separation Date"). The Company has
agreed that if I choose to sign this Release, the Company will, within thirty
(30) days after the Effective Date of this Release, pay me certain severance
benefits (minus the standard withholdings and deductions) pursuant to the terms
of the Key Employee Agreement (the "Agreement") entered into as of
______________________, between myself and the Company, and any agreements
incorporated therein by reference. I understand that I am not entitled to such
severance benefits unless I sign this Release. I further understand that,
regardless of whether I sign this Release, the Company will pay me all of my
accrued salary and paid time off through the Separation Date, to which I am
entitled by law.
In consideration for the severance benefits I am receiving under the Agreement,
I hereby release the Company and its officers, directors, agents, attorneys,
employees, shareholders, parents, subsidiaries, and affiliates from any and all
claims, liabilities, demands, causes of action, attorneys' fees, damages, or
obligations of every kind and nature, whether they are now known or unknown,
arising at any time prior to the date I sign this Release. This general release
includes, but is not limited to: all federal and state statutory and common law
claims, claims related to my employment or the termination of my employment or
related to breach of contract, tort, wrongful termination, discrimination,
harassment, defamation, fraud, wages or benefits, claims for any form of equity
or compensation, or claims under the New Jersey Law Against Discrimination, the
New Jersey Family Leave Act, or the Conscientious Employee Protection Act.
Notwithstanding the release in the preceding sentence, I am not releasing any
right of indemnification I may have for any liabilities and costs of defense
(including without limitation reasonable attorneys' fees) arising from my
actions within the course and scope of my employment with the Company.
In releasing claims unknown to me at present, I am waiving all rights and
benefits under Section 1542 of the California Civil Code, and any law or legal
principle of similar effect in any jurisdiction: "A general release does not
extend to claims which the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor."
If I am forty (40) years of age or older as of the Separation Date, I
acknowledge that I am knowingly and voluntarily waiving and releasing any rights
I may have under the federal Age Discrimination in Employment Act of 1967, as
amended ("ADEA"). I also acknowledge that the consideration given for the waiver
in the above paragraph is in addition to anything of value to which I was
already entitled. I have been advised by this writing, as required by the ADEA
that: (a) my waiver and release do not apply to any claims that may arise after
my signing of this Release; (b) I should consult with an attorney prior to
executing this Release; (c) I have twenty-one (21) days (forty-five (45) days in
the event of a group termination) within which to consider this Release
(although I may choose to voluntarily execute this Release earlier); (d) I have
seven (7) days following the execution of this release to revoke the Release;
and (e) this Release will not be effective until the eighth day after this
Release has been signed both by me and by the Company ("Effective Date").
Agreed:
-------------------------------- -------------------------------------
Date [Employee]
-------------------------------- -------------------------------------
Date XXXXXX PHARMACEUTICALS, INC.
EXHIBIT C
EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
