EMPLOYMENT AGREEMENT
Exhibit 10.6
THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of December 30, 2004 by
and among Biodel Inc., a Delaware corporation with an address at 0 Xxxx Xxxxxxx Xxxxxx, Xxxxxxx, XX
00000-0000 (“BIODEL”, “Employer” or the “Company”), and Xxxxxxx X. Xxxxxxx, Ph.D., an individual
residing 00 Xxx Xxxxx Xxxx, Xx. Xxxxx, Xxx Xxxx 00000 (“Employee”).
W I T N E S S E T H:
WHEREAS, Employer desires to secure the services of Employee as President and Chief Executive
Officer; and
WHEREAS, Employee desires to enter into the employ of Employer in accordance with the terms
and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and of the covenants and agreements of the
parties herein set forth, the parties hereto hereby covenant and agree as follows:
1. Position of Employment. Subject to the terms and conditions hereof, Employer
hereby agrees to employ the services of Employee as President and Chief Executive Officer and
Employee hereby accepts such employment and agrees to serve the Company in such capacity. Employee
shall have the duties, authority and responsibilities customarily associated with the offices of
President and Chief Executive Officer and shall report to the Company’s Board of Directors. During
the period that Employee is employed by Employer, Employee shall devote substantially all of his
business time and attention to
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the performance
of the duties described herein. Notwithstanding the foregoing, Employee shall be entitled to
serve on the Board of Directors of Vyteris, Inc. and the Boards of other Companies if approved by
the Company’s Board of Directors, to pursue charitable endeavors and to participate in professional
organizations, provided that such activities do not interfere in any material respect with the
performance by Employee of his duties hereunder. Employee shall at all time act in good faith in
the performance of his duties. Employee agrees to abide by the rules, regulations, instructions,
personnel practices and policies of the Company and any changes therein which may be adopted from
time to time by the Company applicable to employees generally, including, but not limited to, those
relating to the protection of the Company’s proprietary trade secrets and confidential information.
2. Contract Term. Unless terminated earlier pursuant to Section 4 below, the initial
term of Employee’s employment under this Agreement shall be for the period from the date of this
Agreement (the “Commencement Date”) to December 30, 2007 (the “Initial Termination Date”).
Following the Initial Termination Date, this Agreement shall be automatically renewed for
successive one-year terms (each, a “Renewal Term”) unless, at least three months prior to the
Initial Termination Date or the expiration of a Renewal Term, as applicable, Employee or BIODEL in
his or its respective sole discretion notifies the other party in writing of his or its intent to
terminate this Employment Agreement as of the Initial Termination Date or the expiration of a
Renewal Term, as applicable. The term of Employee’s employment hereunder, including any renewal
periods pursuant to the immediately preceding sentence, shall be hereafter referred to as the
“Contract Term.”
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3. Salary and Additional Benefits.
3.1 Employer shall pay to Employee and Employee agrees to accept as compensation for his
services to be rendered hereunder, an initial base salary of Two Hundred and Fifty Thousand Dollars
($250,000) (“Base Salary”) per year for the period commencing with the Commencement Date and ending
on the completion of the Contract Term, payable in equal installments on the 15th and last day of
each month.
3.2 During the term of this Agreement, Employee, as President and CEO, shall be entitled to
receive an annual year-end bonus in cash in an amount of not more than sixty percent (60%) of Base
Salary as determined by the Board of Directors. At the time the Board of Directors considers the
Employee’s bonus but not less than annually, the Board of Directors shall also consider an award to
the employee of stock or options to acquire stock under any stock award plan then in effect.
3.3 Employee shall be entitled to vacations, at such times as Employee shall reasonably
determine, of at least four weeks each year of employment hereunder.
3.4 In addition to the foregoing, Employee shall also(i) participate in and be entitled to
receive medical insurance and other benefits substantially equivalent to the normal benefits
provided by BIODEL to its employees generally and (ii) participate in various retirement, welfare,
fringe benefit and executive perquisite plans, programs and arrangements of the Company to the
extent the senior executives of the Company generally are eligible for participation under the
terms of such plans, programs and arrangements including, without limitation, plans, programs and
arrangements for the granting of options to purchase securities of the Company or other equity
based
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compensation. Employee acknowledges the right of Employer to change, amend, or terminate any of the
benefits referred to in this paragraph, at any time in a manner which does not discriminate between
Employee and other company employees who are eligible to participate in such benefits.
3.5 Employer shall reimburse Employee for any ordinary, necessary and reasonable travel,
maintenance and entertainment expenses incurred by the Employee in the course of his duties under
this Agreement, in accordance with the Employer’s customary policies and practices in effect from
time to time, upon submission to the Employer of appropriate vouchers and receipts evidencing the
same.
3.6 The Company shall pay a mandatory bonus of $250,000 (payable to Xxxxxxx Ventures) upon (a)
stockholders equity of the Company exceeding $20mm, (b) if any class of securities of the Company
are registered under the Securities Act of 1933, (b) the Company enters into stategic partnership
with an initial advance, payment or investment of $5 mm, or (d) five years from the date of
execution. Such bonus shall be paid in any event, including, without limitation, whether or not
the employeed is then employed by the Company and whether or not the employee is then deceased.
4. Termination. The employment of the Employee by the Company pursuant to this
Agreement shall terminate upon the occurrence of any of the following:
4.1 Expiration of the Contract Term in accordance with Section 2;
4.2 At the election of the Company, for cause, upon written notice by the Company to the
Employee. For the purposes of this Section 4.2, cause for termination
shall be deemed to exist upon (a) a good faith finding by the Board of Directors of the
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Company of
(i) failure of the Employee to perform in any material respect his assigned duties for the Company
customarily associated with the Office of Chief Executive Officer, which failure continues for ten
(10) days subsequent to written notice from the Company to the Employee of such failure, or (ii)
dishonesty, gross negligence or misconduct not involving any exercise of business judgment in good
faith relating to the performance of his duties for the Company; (b) the conviction of the Employee
of, or the entry of a pleading of guilty or nolo contendere by the Employee to, any crime involving
moral turpitude or any felony; or (c) the material breach by the Employee of any terms of this
Agreement, which breach continues for ten (10) days subsequent to written notice from the Company
to the Employee of the breach;
4.3 Upon the death or, at the election of the Company, disability of the Employee. As used in
this Agreement, the term “disability” shall mean the inability of the Employee, due to a physical
or mental disability, for a period of 180 days, whether or not consecutive, during any 360-day
period to perform the services contemplated under this Agreement. A determination of disability
shall be made by a physician satisfactory to both the Employee and the Company; provided that if
the Employee and the Company do not agree on a physician, the Employee and the Company shall each
select a physician and these two together shall select a third physician, whose determination as to
disability shall be binding on all parties. Nothing herein shall be construed to violate any
Federal or State law including the Family and Medical Leave Act of 1993, 29 U.S.C.S. §2601 et
seq., and the Americans With Disabilities Act, 42 U.S.C.S. §12101 et seq.
4.4 The Company may terminate the employment of the Employee at any time without cause
immediately upon giving the Employee 30 days’ prior written
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notice of termination or payment in
lieu of notice. The Employee may terminate his employment at any time for good reason immediately
upon giving the Employer thirty (30) days prior written notice of termination. For the purpose of
this Section 4.4, good reason for termination shall exist upon (i) the material breach by the
Company of any terms of this Agreement which breach continues for ten (10) days subsequent to
written notice from the Employee to the Company of the breach or (ii) the assignment of the
Employee of any duties inconsistent in any material respect with the Employee’s positions with the
Company as set forth in this Agreement (including status, offices and titles), authority, duties
or responsibilities as contemplated by this Agreement or any action by the Company which results in
a material diminution in such positions, authority, duties or responsibilities, excluding for this
purpose any isolated, insubstantial and inadvertent action not taken in bad faith and which is
promptly remedied by the Company.
5. Effect of Termination.
5.1 Termination for Cause. In the event the Employee’s employment is terminated for
cause pursuant to Section 4.2, the Company shall pay to the Employee the compensation and benefits
which would otherwise be payable or accrued to him through the last day of his actual employment by
the Company.
5.2 Termination for Death or Disability. If the Employee’s employment is terminated
by death or because of disability pursuant to Section 4.3, the Company shall pay to the estate of
the Employee or to the Employee, as the case may be, the compensation and benefits which would
otherwise be payable or accrued to the
Employee through the date of his termination and an additional six months because of
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death or
disability. The Company will continue health benefits for one year after the date of termination.
5.3 Termination Without Cause. If the Employee’s employment is terminated (a) at the
election of the Company pursuant to Section 4.4 without cause, or (b) at the election of the
Employee pursuant to Section 4.4 for good reason, and in consideration of the post-termination
non-compete and non-solicitation agreement set forth in Section 6, the Company shall pay to the
Employee the compensation and benefits payable or accrued to him under Section 4 (including the
provision of medical insurance, disability and life insurance), at the times provided in Section 4,
through the longer of (x) two (2) years following the termination date or (y) the balance of the
term of this Agreement.
6. Non-Compete and Non-Solicitation.
6.1 The Employee recognizes that his willingness to enter into the restrictive covenants
contained in this Section 6 are a critical condition precedent to the willingness of BIODEL to
enter into and perform under this Agreement. The Employee also acknowledges that the restrictions
contained in this Section 6 will not materially or unreasonably interfere with the Employee’s
ability to earn a living. The Employee acknowledges that the restrictions contained in this
Section 6 are necessary to protect the legitimate interests of BIODEL and to ensure that Employee
will not reveal or use BIODEL’s confidential, proprietary or trade secret information or unfairly
compete with BIODEL after his termination.
6.2 During the Contract Term and, in the event the Employee’s employment is terminated for
cause pursuant to Section 4.2, through the day immediately
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prior to the first anniversary of the
termination date, or, if the Employee’s employment is terminated (a) at the election of the Company
pursuant to Section 4.4 without cause, or (b) at the election of the Employee pursuant to Section
4.4 for good reason, for so long as the Company shall pay to the Employee the compensation and
benefits payable or accrued to him under Section 4 (including the provision of medical insurance,
disability and life insurance), at the times provided in Section 4, the Employee will not directly
or indirectly:
(a) as an individual proprietor, partner, stockholder, officer, employee, consultant,
director, joint venturer, investor, agent, distributor, dealer, representative, lender, or in any
other capacity whatsoever (other than as the holder of outstanding stock or equity of another
entity), engage in the business of delivering insulin by the oral, sublingual or injectable route
of administration; or
(b) recruit, solicit or induce, or attempt to induce, any employee or employees of the Company
to terminate their employment with, or otherwise cease their relationship with, the Company, or
hire any such employee; or
(c) knowingly solicit, divert, limit or take away, or attempt to divert or to take away, the
business or patronage of any of the clients, customers, dealers, distributors, representatives or
accounts, or prospective clients, customers, dealers, distributors, representatives or accounts, of
the Company which were contacted, solicited or served by employees of the Company while the
Employee was employed by the Company.
6.3. In the event that any court of competent jurisdiction determines that the duration or the
geographic scope, or both, of the non-
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competition and non-solicitation provisions set forth in this
Section 6 are unreasonable and that such provisions are to that extent unenforceable, the parties
hereto agree that the provisions shall remain in full force and effect for the greatest time period
and in the greatest area that would not render them unenforceable.
6.4 The restrictions contained in this Section 6 are necessary for the protection of the
Company’s legitimate interests, confidential, proprietary or trade secret information, or goodwill;
or to protect the Company from the misuse or disclosure of its confidential, proprietary or trade
secret information; or to protect the Company from unfair competition. The Employee agrees that any
breach of this Section 6 will cause the Company substantial and irreparable damage and therefore,
in the event of any such breach, in addition to such other remedies which may be available, the
Company shall have the right to seek specific performance and injunctive relief.
6.5 The Employee agrees that the duration and geographic restrictions imposed in this
Agreement are fair and reasonable and are reasonably required for the protection of the Company.
To the extent any portion of this Agreement, or any portion of any provision of this Agreement, is
held to be invalid or unenforceable, it shall be revised to reflect most nearly the parties’ intent
and the remainder of the provision or provisions of this Agreement shall be unaffected and shall
continue in full force and effect.
6.6 For purposes of this Section 6 and Section 7, the “Company” refers to the Company and any
of its affiliates.
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7. Confidential Information
7.1. By executing this Agreement, the Employee recognizes and agrees that he is employed in a
position with the Company in which he will have access to certain confidential and proprietary
information concerning the business of the Company which is of great value to the Company and
which, if used in competition with the Company, would render great and irreparable harm to the
Company. Such information includes, but is not limited to, information relating to business
operations; services; network; systems; strategic business plans; marketing plans; long-range
goals; assets and liabilities; technical and engineering methods, processes, and/or know-how;
research and development activities; products; computer software and programs; marketing data;
pricing; product designs; discoveries; inventions; budgets; projections; customers and suppliers;
development plans, strategies and forecasts; new products and services; and financial statements.
This information is provided to the Employee solely for use in the course of his employment with,
and for the benefit of, the Company.
7.2. To ensure that such confidential information provided to the Employee is maintained in
confidence by him and not used by him to unfairly compete with the Company, the Employee shall not,
during the course of the Employee’s employment and at any time within two (2) years thereafter
following the termination of his employment (regardless of whether the Employee’s termination is
voluntary or involuntary, or with or without cause), divulge, furnish or make accessible to anyone,
or use in any way other than in furtherance of the interests of the Company: (i) any confidential,
proprietary or secret knowledge or information which the Employee has acquired or become acquainted
with, or will acquire or become acquainted with, during
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the course of the Employee’s employment with the Company; (ii) any confidential or proprietary
information concerning the Company’s customers, including but not limited to, information
concerning a customers need, practice or preferences; (iii) any confidential, proprietary or trade
secret research and development activities of the Company; and (iv) any other confidential,
proprietary or trade secret information relating to the business of the Company. The Employee
agrees that this restriction applies to all such information regardless of whether such information
was developed by him. This restriction shall not apply to information (i) which is or becomes
public knowledge through no fault of the Employee, (ii) is known to the Employee at the time of its
disclosure as shown by his prior written records, or (iii) is disclosed to the Employee by a third
party who is under no confidential obligation to the Company. The Employee further agrees that
upon request by the Company, or upon the termination of the Employee’s employment, the Employee
will immediately return to the Company any and all such information in the Employee’s possession or
under the Employee’s control.
8. Representations and Warranties of the Employee. The Employee represents and
warrants to the Company as follows:
8.1. All facts concerning the Employee’s background, education, experience and employment
history as described to the Company in writing are true and correct;
8.2 The Employee’s execution of this Agreement and employment with the Company does not and
will not conflict with any obligations that the Employee has to any current or former employer, any
other individual, corporation, partnership,
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association, trust or any other entity or organization, including any instrumentality of
government;
8.3 All files, records, compilations, reports, studies, manuals, memoranda, notebooks,
documents, financial reports and statements, correspondence, and other confidential information
whether prepared by the Employee or otherwise coming into the possession of the Employee, and all
copies thereof, are, and shall remain, the exclusive property of the Company, and shall be
delivered to the Company as soon as reasonably practicable and at the expense of the Company in the
event of the Employee’s termination or at any other time if requested by the Company.
8.4the
8.5 The Employee acknowledges that the Company may, and contemplates, purchasing “key
man life insurance” on Employee with the Company as sole benificiary.
8.6 The Employee confirms that all IP created or owned by Xxxxxxx Ventures, since it’s inception in
April, 2003 belongs to the Comapany.
8.7 Representations and Warranties of the Company. thethethethe
9.
Indemnification. Employer shall indemnify Employee and hold him harmless against any and
all claims and liabilities asserted against Employee which arise in connection with the performance
of Employee’s duties and responsibilities while acting in Employee’s capacity as an employee of
Employer, except Employer shall not be
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obligated
to indemnify or hold Employee harmless against any claim or liability which arises out of
Employee’s bad faith or intentional misconduct.
10. Property Rights. With respect to information, inventions and discoveries
developed, made or conceived of by Employee, either alone or with others, at any time during
Employee’s employment by the Company and whether or not within working hours, arising out of such
employment or pertinent to any field of business or research in which, during such employment, the
Company is engaged or (if such is known to or ascertainable by Employee) is considering engaging,
Employee agrees:
10.1 that all such information, inventions and discoveries, whether or not patented or
patentable, shall be and remain the exclusive property of the Company;
10.2 to disclose promptly to an authorized representative of the Company all such information
in Employee’s possession as to possible applications and uses thereof;
10.3 not to file any patent application relating to any such invention or discovery except
with the prior written consent of an authorized officer of the Company;
10.4 that Employee hereby waives and releases any and all rights Employee may have in and to
such information, inventions and discoveries and hereby assigns to the Company and/or its nominees
all of Employee’s right, title and interest in them, and all Employee’s right, title and interest
in any patent, patent application, copyright or other property right based thereon. Employee hereby
irrevocably designates and appoints the Company and each of its duly authorized officers and agents
as Employee’s agent and attorney-in-fact to act for Employee and in Employee’s behalf and stead to
execute and file any document and to do all other lawfully permitted acts to
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further the prosecution, issuance and enforcement of any such patent, patent application, copyright
or other property right with the same force and effect as if executed and delivered by Employee;
and
10.5 at the request of the Company and without expense to Employee, to execute such documents
and perform such other acts as the Company deems necessary or appropriate for the Company to obtain
patents on such inventions in a jurisdiction or jurisdictions designated by the Company, and to
assign to the Company or its designee such inventions and any patent applications and patents
relating thereto.
11. Notices. All notices required or permitted under this Agreement shall be in
writing and shall be deemed effective upon personal delivery or upon deposit in the United States
Post Office, by registered or certified mail, postage prepaid, addressed to the other party at the
address shown above, or at such other address or addresses as either party shall designate to the
other in accordance with this Section 10.
12. Governing Law. This Agreement shall be construed, interpreted and enforced in
accordance with the internal laws (and not the law of conflicts) of the State of New York.
13. Jurisdiction. Except as otherwise provided for herein, each of the parties (a)
submits to the exclusive jurisdiction of any state court sitting in New York County, New York or
federal court sitting in the Southern District of New York in any action or proceeding arising out
of or relating to this Agreement, (b) agrees that all claims in respect of the action or proceeding
may be heard and determined in any such court and (c) agrees not to bring any action or proceeding
arising out of or relating to this Agreement in any other court. Each of the parties waives any
defense of inconvenient
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forum to the
maintenance of any action or proceeding so brought and waives any bond, surety or other security
that might be required of any other party with respect thereto. Any party may make service on
another party by sending or delivering a copy of the process to the party to be served at the
address and in the manner provided for giving of notices in Section 13. Nothing in this Section 13,
however, shall affect the right of any party to serve legal process in any other manner permitted
by law.
14. Survival. The provisions of Sections 6, 7, 8, 9, 10, 11, 12 and 13 shall survive
the termination of this Agreement.
15. Pronouns. Whenever the context may require, any pronouns used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the singular forms of
nouns and pronouns shall include the plural, and vice versa.
16. Entire Agreement. This Agreement constitutes the entire agreement between the
parties and supersedes all prior agreements and understandings, whether written or oral, relating
to the subject matter of this Agreement.
17. Amendment. This Agreement may be amended or modified only by a written
instrument executed by all of the parties hereto.
18. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of all of the parties hereto and their respective successors and assigns, including any
corporation with which or into which the Company may be merged or which may succeed to its assets
or business; provided, however, that the obligations of the Employee are personal and shall not be
assigned by him.
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19. Miscellaneous.
19.1 No delay or omission by either party in exercising any right under this Agreement shall
operate as a waiver of that or any other right. A waiver or consent given by the Company on any one
occasion shall be effective only in that instance and shall not be construed as a bar or waiver of
any right on any other occasion.
19.2 The captions of the sections of this Agreement are for convenience of reference only and
in no way define, limit or affect the scope or substance of any section of this Agreement.
19.3 In case any provision of this Agreement shall be invalid, illegal or otherwise
unenforceable, the validity, legality and enforceability of the remaining provisions shall in no
way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first
written above.
| BIODEL INC. | ||||||
| By: | /s/ Xxxxx Xxxxxxx | |||||
| Name: Xxxxx Xxxxxxx | ||||||
| Title: Director | ||||||
| /s/ Xxxxxxx Xxxxxxx | ||||||
| Xxxxxxx Xxxxxxx | ||||||
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