EXHIBIT 10.12
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated April _______,
1998, between FLEMINGTON PHARMACEUTICAL CORPORATION, a New Jersey corporation
(the "Corporation"), 00 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 and Xxxxxx X.
Xxx, Ph.D., 000 Xxxx Xxxxxx, Xxxxxxxxxxxx, Xxx Xxxxxx 00000 (the "Executive").
W I T N E S S E T H
WHEREAS, the Corporation desires to employ Executive as the
Corporation's Vice President - Regulatory Affairs to engage in such activities
and to render such services under the terms and conditions hereof and has
authorized and approved the execution of this Agreement; and
WHEREAS, Executive desires to be employed by the Corporation under the
terms and conditions hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings herein contained, the parties agree as follows:
1. Employment, Duties and Acceptance.
1.1 Services. During employment hereunder, Executive shall be
Vice President - Regulatory Affairs of the Corporation, shall have the powers
and duties normally held by a corporate officer holding such a position and
shall report directly to the President of the Corporation. Executive shall
devote Executive's entire business time, attention, knowledge and skills
faithfully, diligently and to the best of Executive's ability in furtherance of
the business and activities of the Corporation (the "Services"). The principal
place of performance by Executive of services hereunder shall be at the
principal offices of the Corporation or such other place as the Board may
designate.
1.2 Acceptance. Executive hereby accepts such employment and
agrees to render the Services.
2. Term of Employment.
2.1 Term. The Executive's employment under this Agreement (the
"Term") shall begin as of the Effective Date (as hereinafter defined) and shall
continue for a term of three (3) years, unless sooner terminated pursuant to
Sections 5 or 9 of this Agreement. Notwithstanding anything to the contrary
contained herein, the provisions of this Agreement governing Protection of
Confidential Information shall continue in effect as specified in Section 10
hereof and survive the expiration or termination hereof.
2.2 Effective Date. The effective date of this Agreement (the
"Effective Date") shall be May 1, 1998.
3. Base Salary and Expense Reimbursement.
3.1 Base Salary. The Corporation shall pay Executive a salary
(the "Base Salary") at the rate of $125,000 per year. Payment shall be made
monthly, on the last day of each calendar month.
3.2 Expense Reimbursement. All travel and other expenses
reasonably incurred by Executive incidental to the rendering of Services to the
Corporation hereunder shall be paid by the Corporation or reimbursed to
Executive upon receipt and approval of expense reports on Corporation forms
supported by appropriate documentation. From time to time, Executive shall
submit, and obtain approval for, proposed expense budgets. All unbudgeted
expenses in excess of $1,000.00 (individually, or collectively if in connection
with a single, related subject or project within a given month) shall require
advance approval.
3.3 Bonuses. In addition, Executive shall be entitled to such
other cash bonuses and other compensation in the form of stock, stock options or
other property or rights as may from time to time be awarded by the Board in
connection with Executive's employment.
4. Stock Options.
In connection with this Agreement, the Corporation hereby grants the
Executive stock options (outside of the Corporation's stock option plans) to
purchase 100,000 shares of the Corporation's common stock, at an exercise price
equivalent to the market price of the Corporation's stock as of the Date on
which this Agreement is signed, (the "Nonplan Options"). The Nonplan Options
shall vest in, and become exercisable by, the Executive as follows: (a) 33,000
Options on April 30, 1999; (b) 33,000 Options on April 30, 2000; and (c) 34,000
Options on April 30, 2001. The Nonplan Options may be exercised by the Executive
at any time, following vesting, during the ten (10) years following the date of
grant, provided the Executive is an employee of the Corporation at the time of
exercise. Notwithstanding anything contained herein to the contrary, the terms
and conditions set forth in the Nonplan Options document shall control the terms
and conditions on which the Nonplan Options shall vest, continue in force and
may be exercised.
5. Severance.
5.1 Termination for Good Reason. If Executive's employment
hereunder shall be terminated for Good Reason (as defined in Section 9.4 hereof)
at any time prior to the end of the Term, Executive shall be entitled to receive
from the Corporation any unpaid accrued Base Salary earned through the date of
termination.
2
5.2 Executive's Termination without Good Reason. If the
Executive terminates employment without Good Reason (as defined in Section 9.4
hereof) at any time prior to the end of the Term, Executive shall be entitled to
receive from the Corporation payment of any unpaid accrued Base Salary earned
through the date of termination. All other obligations of the Corporation
hereunder shall terminate on the date of termination and the Executive's
termination without Good Reason shall act as a waiver of all claims to
compensation which might otherwise have accrued after the date of termination.
6. Additional Benefits.
During Executive's employment, the Corporation shall cause Executive to
be covered by all the Corporation's employee benefit plans, in effect from time
to time, for which Executive is eligible, including without limitation, any
retirement plan or group insurance. The Corporation does not presently have any
group life insurance or group long-term disability insurance program; however,
the Corporation is in the process of exploring the implementation of such
programs. Upon implementation, it is the Corporation's present expectation that
the Executive will be covered by group life insurance in an amount equal to at
least one year's Base Salary and group long-term disability insurance. In
addition, to facilitate Executive's travel on Corporation business, during
employment the Corporation shall furnish Executive, without cost to Executive,
but in accordance with any applicable IRS requirements and limitations, a
Corporation owned or leased, and Corporation insured, automobile chosen by the
Corporation. Notwithstanding the foregoing, Executive recognizes that each year
the Corporation must report to the IRS an amount of income to be charged to
Executive as taxable income representing the fair value of Executive's personal
use of such automobile. In addition, the Corporation shall pay or reimburse all
reasonable expenses of maintaining and operating such automobile.
7. Vacation.
Executive shall be entitled to such holidays as are in effect for all
of the Corporation's employees, and to sick leave in accordance with Corporation
policy as in effect from time to time. In addition, Executive shall be entitled
to four weeks vacation days (twenty business days) per year. It is not
anticipated that the Executive will use more than ten (10) vacation days during
the remainder of the 1998 calendar year. The timing of the taking of vacation is
left to the discretion of Executive, provided the same is not inconsistent with
the reasonable business requirements of the Corporation. Vacation days not used
by Executive during a given year may be accumulated and carried forward to
future years.
8. Indemnification.
As provided in the Corporation's By-Laws, and only to the extent
provided therein, the Corporation shall indemnify Executive and hold Executive
harmless against any and all expenses reasonably incurred by him in connection
with or arising out of (a) the defense of any action, suit or proceeding to
which Executive is a named party, or (b) any claim asserted or threatened
against Executive, provided, in either case, the matter has arisen because of or
3
in connection with Executive's being or having been an employee or officer of
the Corporation, whether or not he continues to be such at the time the expenses
indemnified against are incurred, except insofar as (a) such indemnification may
be prohibited by law, (b) the expenses were incurred in connection with a matter
where the Corporation is or was in an adversarial position to Executive and the
Corporation prevailed against Executive in such matter, or (c) the expenses were
incurred in connection with a matter arising out a material breach by Executive
of this Agreement or of Executive's obligations to the Corporation.
9. Termination.
9.1 Death. If Executive dies during the Term of this
Agreement, Executive's employment hereunder shall terminate upon his death and
all obligations of the Corporation hereunder shall terminate on such date,
except that Executive's estate or his designated beneficiary shall be entitled
to payment of any unpaid accrued Base Salary through the date of his death.
9.2 Disability. If Executive shall be unable to perform a
significant part of his duties and responsibilities in connection with the
conduct of the business and affairs of the Corporation and such inability lasts
for a period of at least 180 consecutive days by reason of Executive's physical
or mental disability, whether by reason of injury, illness or similar cause,
Executive shall be deemed disabled, and the Corporation any time thereafter may
terminate Executive's employment hereunder by reason of the disability. During
such 180 day period, the Base Salary and other benefits payable to Executive
hereunder shall not be suspended or diminished, except to the extent equivalent
to the extent of any Corporation-provided disability insurance in effect. Upon
delivery to Executive of notice to terminate, all obligations of the Corporation
hereunder shall terminate, except that Executive shall be entitled to payment of
any unpaid accrued Base Salary through the date of termination. The obligations
of Executive under Section 10 hereof shall continue notwithstanding termination
of Executive's employment pursuant to this Section 9.2.
9.3 Termination For Cause. The Corporation may at any time
during the Term, with 30 days prior written notice, terminate this Agreement and
discharge Executive for Cause, whereupon the Corporation's obligation to pay
compensation or other amounts payable hereunder to or for the benefit of
Executive shall terminate on the date of such discharge. As used herein the term
"Cause" shall be deemed to mean and include: (i) a material breach by Executive
of this Agreement including without limitation a breach by Executive of the
obligations set forth in Section 10 hereof; (ii) excessive absenteeism,
alcoholism or drug abuse; (iii) substantial neglect or inattention by Executive
of or to his duties hereunder; (iv) willful violation of specific and lawful
written or oral direction from the President or Board of Directors of the
Corporation provided such direction is not inconsistent with the Executive's
duties and responsibilities; or (v) fraud, criminal conduct or embezzlement. The
following shall be deemed a material breach for the purposes of Subsection (i)
hereof: (a) the Executive's conviction for, or a plea of nolo contendere to, a
felony or a crime involving moral turpitude (which, through lapse of time or
otherwise, is not subject to appeal); (b) willful misconduct as an employee of
the Corporation; or (c) willful or reckless disregard of his responsibilities
under this Agreement. The obligations of the Executive under Section 10 shall
continue notwithstanding termination of the Executive's employment pursuant to
this Section 9.3.
4
9.4 Termination by Executive. The Executive shall have the
right to terminate this Agreement for Good Reason, as hereinafter defined. Good
Reason shall mean any of the following: (i) the assignment to the Executive of
duties inconsistent with the Executive's position, duties, responsibilities,
titles or offices as described herein; (ii) any material reduction by the
Corporation of the Executive's duties and responsibilities; or (iii) any
reduction by the Corporation of the Executive's compensation or benefits payable
hereunder (it being understood that a reduction of benefits applicable to all
employees of the Corporation, including the Executive, shall not be deemed a
reduction of the Executive's compensation package for purposes of this
definition).
5
10. Confidentiality; Non-Competition.
10.1 Confidentiality. The Corporation and Executive
acknowledge that the services to be performed by Executive under this Agreement
are unique and extraordinary, and, as a result of Executive's employment
hereunder, Executive will be in possession of confidential information and trade
secrets relating to the business and affairs of both the Corporation and its
clients. Executive agrees that Executive will not, other than in the ordinary
course of business and subject to receipt of an appropriate Confidentiality
Agreement, during or after any term of employment, directly or indirectly use or
disclose to any person, firm or corporation any confidential information
regarding the clients, customers, business practices, products, research
programs of the Corporation or its clients acquired by Executive during
Executive's employment, unless Executive has obtained the Corporation's advance
written consent specifically authorizing Executive's disclosure or use thereof.
10.2 Non-Competition. Executive agrees that, for a period
beginning with the Effective Date of this Agreement and ending twelve months
after the date of termination of employment by the Company, Executive will not,
either individually or in conjunction with any person, firm, association,
syndicate, company or corporation, directly or indirectly (as principal, agent,
employee, director, officer, shareholder, partner, independent contractor,
individual proprietor, or as an investor who has made advances, loans or
contributions to capital, or in any other manner whatsoever) compete with
company in the business then conducted by the Corporation. Executive also agrees
that, during such period, Executive will not solicit or encourage any persons
who, during such period, were employees of Company to (i) terminate such
persons' employment with Company; or (ii) become affiliated with any person,
firm, association, syndicate, company or corporation which is in a business
similar to that of the Company and in which Executive, either directly or
indirectly, has an interest. If Company directs Executive to cease and desist a
proposed post-termination course of conduct, on the grounds that he is proposing
to compete with the Company's business, during this one-year post-termination
period, Company shall compensate Executive by paying him his base Salary during
the period he is prevented from pursuing such activity. Executive agrees that he
will use his best efforts to transfer all of the business previously conducted
by him under the name Medical Development Quality Associates to the Corporation.
10.3 Anti-Raiding. Executive agrees that during the term of
his employment hereunder, and, thereafter for a period of one (1) year,
Executive will not, as principal, agent, employee, employer, consultant,
director or partner of any person, firm, corporation or business entity other
that the Corporation, or in any individual or representative capacity
whatsoever, directly or indirectly, without the prior express written consent of
the Corporation approach, counsel or attempt to induce any person who is then in
the employ of the Corporation to leave the employ of the Corporation or employ
or attempt to employ any such person or persons who at any time during the
preceding six months was in the employ of the Corporation.
6
10.4 Injunction. Executive acknowledges and agrees that,
because of the special nature of his services, any breach or threatened breach
of any of the above provisions of this Section 10 hereof will cause the
Corporation irreparable injury and incalculable harm and, therefore, the
Corporation will have "no adequate remedies at law". Executive, therefore,
agrees in advance that Corporation shall be entitled to injunctive and other
equitable relief for such breach or threatened breach and that resort by the
Corporation to such injunctive or other equitable relief shall not be deemed to
waive or to limit in any respect any right or remedy which the Corporation may
have with respect to such breach or threatened breach. The Executive agrees that
in such action, if the Corporation makes a prima facie showing that Executive
has violated or apparently intends to violate any of the provisions of this
Section 10, the Corporation need not prove either damage or irreparable injury
in order to obtain injunctive relief. The Corporation and Executive agree that
any such action for injunctive or equitable relief shall be heard in a state or
federal court situated in New Jersey and each of the parties hereto agrees to
accept service of process by registered mail and to otherwise consent to the
jurisdiction of such courts.
10.5 No Indemnification. The provisions of Section 8, above,
do not apply to any expenses incurred by Executive in defending against any
claim made pursuant to this Section 10.
10.6 Severability. If any provision contained within this
Section 10 is found to be unenforceable by reason of the extent, duration or
scope thereof, or otherwise, then such restriction shall be enforced to the
maximum extent permitted by law, and Executive agrees that such extent, duration
or scope may be modified in any proceeding brought to enforce such restriction.
11. Arbitration.
Except with respect to any proceeding brought under Section 10 hereof,
any controversy, claim, or dispute between the parties, directly or indirectly,
concerning this Employment Agreement or the breach hereof, or the subject matter
hereof, including questions concerning the scope and applicability of this
arbitration clause, shall be finally settled by arbitration in the State of New
Jersey pursuant to the rules then applying of the American Arbitration
Association. The arbitrators shall consist of one representative selected by the
Corporation, one representative selected by the Executive and one representative
selected by the first two arbitrators. The parties agree to expedite the
arbitration proceeding in every way, so that the arbitration proceeding shall be
begun within thirty (30) days after request therefore is made, and shall
continue thereafter, without interruption, and that the decision of the
arbitrators shall be handed down within thirty (30) days after the hearings in
the arbitration proceedings are closed. The arbitrators shall have the right and
authority to assess the cost of the arbitration proceedings and to determine how
their decision or determination as to each issue or matter in dispute may be
implemented or enforced. The decision in writing of any two of the arbitrators
shall be binding and conclusive on all of the parties to this Agreement. Should
either the Corporation or the Executive fail to appoint an arbitrator as
required by this Section 11 within thirty (30) days after receiving written
notice from the other party to do so, the arbitrator appointed by the other
party shall act for all of the parties and his decision in writing shall be
binding and conclusive on all of the parties to this Employment Agreement. Any
decision or award of the arbitrators shall be final and conclusive on the
7
parties to this Agreement; judgment upon such decision or award may be entered
in any competent Federal or state court located in the United States of America;
and the application may be made to such court for confirmation of such decision
or award for any order of enforcement and for any other legal remedies that may
be necessary to effectuate such decision or award.
12. Notices.
All notices, requests, consents and other communications required or
permitted to be given hereunder, shall be in writing and shall be deemed to have
been duly given if delivered personally or sent by prepaid telegram, telecopy or
mailed first-class, postage prepaid, by registered or certified mail (notices
sent by telegram or mailed shall be deemed to have been given on the date sent),
to the parties at their respective addresses hereinabove set forth or to such
other address as either party shall designate by notice in writing to the other
in accordance herewith. Copies of all notices shall be sent to Xxxxxx X. Xxxxxx,
Esq., 00 Xxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000.
13. General.
13.1 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the local laws of the State of New
Jersey applicable to agreements made and to be performed entirely in New Jersey.
13.2 Captions. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
13.3 Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties relating to the subject matter
hereof, and supersedes all prior agreements, arrangements and understandings,
written or oral, relating to the subject matter hereof. No representation,
promise or inducement has been made by either party that is not embodied in this
Agreement, and neither party shall be bound by or liable for any alleged
representation, promise or inducement not so set forth.
13.4 Severability. If any of the provisions of this Agreement shall
be unlawful, void, or for any reason, unenforceable, such provision shall be
deemed severable from, and shall in no way affect the validity or enforceability
of, the remaining portions of this Agreement.
13.5 Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement by any other party shall not operate or be construed
as a waiver of any subsequent breach of the same provision or any other
provision hereof.
13.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same Agreement.
8
13.7 Assignability. This Agreement, and Executive's rights and
obligations hereunder, may not be assigned by Executive. The Corporation,
however, may assign its rights, together with its obligations, hereunder to any
of its successors or assigns, whether by merger, consolidation or acquisition of
all or substantially all of its business or assets.
13.8 Amendment. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived, only by a written instrument executed by both of the parties hereto,
or in the case of a waiver, by the party waiving compliance. No superseding
instrument, amendment, modification, cancellation, renewal or extension hereof
shall require the consent or approval of any person other than the parties
hereto. The failure of either party at any time or times to require performance
of any provision hereof shall in no matter affect the right at a later time to
enforce the same. No waiver by either party of the breach of any term or
covenant contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such breach, or a waiver of the breach of any other
term or covenant contained in this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ATTEST: FLEMINGTON PHARMACEUTICAL
CORPORATION.
By:___________________________ By:_______________________________
Xxxxxx X. Xxxxxx, Secretary Xxxxx X. Xxxxxx III, Ph.D.
President
WITNESS:
______________________________ __________________________________
Xxxxxx X. Xxx, Ph.D.
9
