Exhibit 10.1
EMPLOYMENT AGREEMENT
AGREEMENT, dated this 8th day of August, 2000 between Nastech
Pharmaceutical Company Inc., a Delaware corporation (the "Company") with offices
at 00 Xxxxxx Xxxxx, Xxxxxxxxx, XX and Xxxxxx X. Xxxx, M.D., Ph.D. (the
"Executive").
W I T N E S S E T H :
WHEREAS, the Company and the Executive wish to enter into an employment
and compensation arrangement on the following terms and conditions;
1. Employment. Subject to the terms and conditions of this Agreement, the
Company agrees to employ the Executive as its President, Chief Executive Officer
and Chairman of the Board of Directors during the Employment Period (as defined
in Section 7) and to perform such acts and duties and furnish such services to
the Company and its affiliates and related parties as the Company's Board of
Directors shall from time to time direct. The Executive shall have general and
active charge of the business and affairs of the Company as its Chief Executive
Officer and, in such capacity, shall have responsibility for the day-to-day
operations of the Company, subject to the authority and control of the Board of
Directors of the Company. During the Employment Period, the Company shall
continue to take such actions as necessary to cause the Executive's nomination
as Chairman of the Board of Directors of the Company. The Executive hereby
accepts such employment and agrees to devote his full time and best efforts to
the duties provided herein.
2. Compensation. For services rendered to the Company during the term of
this Agreement, the Company shall compensate the Executive with an initial
salary, payable in weekly installments, of $300,000 per annum.
3. Incentive Compensation. The Executive shall also be entitled to annual
incentive compensation of up to fifty thousand ($50,000) dollars if the
Company's business objectives as set forth in the Company's annual business plan
are achieved. The nature and extent of such incentive compensation shall be
determined by the Compensation Committee no later than ninety (90) days
following the end of the Company's fiscal year.
4. Stock Options. As further compensation, Employee shall be issued
600,000 incentive and non-qualified stock options (subject to allowable
limitations set forth in the Internal Revenue Code of 1986, as amended,
hereinafter "stock options") upon the effective date of this Agreement, as
follows: 300,000 stock options shall be issued with an exercise price equal to
the fair market value of the Company's common stock as of the date of this
Agreement; 200,000 stock options shall be issued with an exercise price of
$12.00/share; and the remaining 100,000 stock options shall be issued with an
exercise price of $15.00/share. All of the options shall vest at the rate of
33.33% per full year of service, and shall not be vested for interim periods on
a pro-rata basis.
If the Executive's employment is terminated (i) by the Company for any
reason other than for Cause or (ii) by the Executive for Good Reason: (x) the
portion of the stock option which was exercisable at termination shall remain
exercisable for a period of 1 year after such date; and (y) with respect to that
portion, if any, of the stock option which was to become vested at the next
anniversary date of this
Agreement, but not yet exercisable at termination, such portion shall
immediately become exercisable and shall remain exercisable until the end of
such 1-year period. The stock option shall be memorialized in a separate written
stock option agreement attached hereto as Exhibit A.
The Common Stock to be issued upon the exercise of said options shall,
within 90 days of this Agreement, be registered under the Securities Act of 1933
pursuant to a Form S-8.
5. Benefits. During the Employment Period, the Company shall provide or
cause to be provided to the Executive such employee benefits as are provided to
other executive officers of the Company, including family medical and dental,
disability and life insurance, and participation in pension and retirement
plans, incentive compensation plans, stock option plans and other benefit plans.
6. Vacation. The Executive shall be entitled to annual vacations in
accordance with the Company's vacation policies in effect from time to time for
executive officers of the Company.
7. Term; Employment Period. The "Employment Period" shall commence on the
date of this Agreement and shall terminate three years thereafter, unless
extended by written agreement between the parties or unless earlier terminated
pursuant to Section 8. If the Executive shall remain in the full-time employ of
the Company beyond the Employment Period without any written agreement between
the parties, this Agreement shall be deemed to continue on a month to month
basis and either party shall have the right to terminate this Agreement at the
end of any ensuing calendar month on written notice of at least 30 days.
8. Termination.
(a) Executive's employment with the Company shall be "at will". Either the
Company or the Executive may terminate this Agreement and Executive's employment
at any time, with or without Cause or Good Reason (as such terms are defined
below), in its or his sole discretion, upon thirty (30) days' prior written
notice of termination.
(b) Without limiting the foregoing Section 8(a), (i) the Executive may
terminate his employment with the Company at any time for Good Reason, or (ii)
the Company may terminate his employment at any time for Cause. "Good Reason"
shall mean a termination of employment as a result of (i) a substantial
diminution in the Executive's responsibilities, (ii) a reduction of the
Executive's base salary below $300,000, (iii) a demotion in the Executive's
title or status, or (iv) at any time prior to the third anniversary of the date
hereof, the Executive and a nominee selected by the Executive reasonably
acceptable to the Company (such nominee, at the option of the Executive, to be
changed prior to any annual or other meeting of the stockholders of the Company
at which directors are elected or due to the death or resignation of such
nominee) do not serve on the Board of Directors of the Company (unless due to
death or resignation, or, in the case of the nominee only, removal or lost
re-election as a result of the vote against such nominee of non-affiliates of
the Company and such vote represents the majority of votes cast). "Cause" shall
mean (i) the Executive's willful, repeated or neglectful failure to perform his
duties hereunder or to comply with any reasonable or proper direction given by
or on behalf of the Company's Board of Directors following thirty (30) days
written notice to such effect; (ii) the Executive being guilty of serious
misconduct on the Company's premises or elsewhere, whether during the
performance of his duties or not, which may cause damage to the reputation of
the Company or render it difficult for the Executive to satisfactorily continue
to perform his duties; (iii) the Executive being found guilty in a criminal
court of any offense of a nature likely to affect the reputation of the Company
or to prejudice its interests if the Executive were to continue to be employed
by the Company; (iv) the
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Executive's commission of any material act of fraud, theft or dishonesty, or any
intentional tort against the Company; or (v) the Executive's violation of any of
the material terms, covenants, representations or warranties contained in this
Agreement and such violation is not cured within thirty (30) days following
receipt of written notice from the Company of such violation.
(c) "Disability" shall mean total and permanent disability as defined in
Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.
(d) "Termination Date" shall mean (i) if this Agreement is terminated on
account of death, the date of death; (ii) if this Agreement is terminated for
Disability, the date that such Disability is established; (iii) if this
Agreement is terminated by the Company, the date on which a notice of
termination is given to the Executive; (iv) if the Agreement is terminated by
the Executive, the date the Executive ceases work; or (v) if this Agreement
expires by its terms, the last day of the term of this Agreement.
9. Severance.
(a) If (i) the Company terminates the employment of the Executive against
his will and without Cause, or (ii) the Executive terminates his employment for
Good Reason, then (A) Executive shall be entitled to receive salary, target
incentive compensation and vacation accrued through the Termination Date plus
the lesser of (x) 1 years' salary computed using the latest applicable salary
rate, or (y) the balance of the Executive's compensation hereunder to the end of
the term of this Agreement computed using the latest applicable salary rate, and
(B) notwithstanding the vesting period provided for in the Company's Stock
Option Plan and any related stock option agreements between the Company and the
Executive for all stock options granted Executive by the Company pursuant to
Section 4 hereof or otherwise, all of such options shall be fully vested and
exercisable upon such termination and shall remain exercisable for a period of
one year from the date of termination. The Company shall make such termination
payment within 30 days of such termination. Notwithstanding the foregoing, the
Company shall not be required to pay any severance pay for any period following
the Termination Date if the Executive materially violates the provisions of
Section 15, Section 16 or Section 17 of this Agreement and such violation is not
cured within thirty (30) days following receipt of written notice from the
Company of such violation.
(b) If (i) the Executive voluntarily terminates his employment other than
for Good Reason, (ii) the Executive's employment is terminated due to death or
Disability, or (iii) the Executive is terminated by the Company for Cause, then
the Executive shall be entitled to receive salary, accrued vacation and
reimbursement of expenses pursuant ot Section 10 hereof through the Termination
Date only.
(c) In addition to the provisions of Section 9(a) and 9(b) hereof, to the
extent COBRA shall be applicable to the Company or as provided by law, the
Executive shall be entitled to continuation of group health plan benefits for
the periods provided by law following the Termination Date if the Executive
makes the appropriate conversion and payments.
(d) The Executive acknowledges that, upon termination of his employment,
he is entitled to no other compensation, severance or other benefits other than
those specifically set forth in this Agreement.
10. Expenses. The Company shall pay or reimburse the Executive for all
expenses normally reimbursed by Company, reasonably incurred by him in
furtherance of his duties hereunder and authorized and approved by the Company
in compliance with such rules relating thereto as the Company
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may, from time to time, adopt and as may be required in order to permit such
payments as proper deductions to Company under the Internal Revenue Code of
1986, as amended, and the rule and regulations adopted pursuant thereto now or
hereafter in effect.
11. Facilities and Services. The Company shall furnish the Executive with
office space, secretarial, support staff and such other facilities and services
as shall be reasonably necessary for the performance of his duties under this
Agreement.
12. Mitigation Not Required. In the event this Agreement is terminated,
the Executive shall not be required to mitigate amounts payable pursuant hereto
by seeking other employment or otherwise. The Executive's acceptance of any such
other employment shall not diminish or impair the amounts payable to the
Executive pursuant hereto.
13. Place of Performance. The Executive shall perform his duties primarily
in Hauppauge, New York or locations within a reasonable proximity thereof,
except for reasonable travel as the performance of the Executive's duties may
require.
14. Insurance and Indemnity. During the Employment Period, if available at
reasonable costs, the Company shall maintain, at its expense, officers and
directors fiduciary liability insurance covering the Executive and all other
executive officers and directors in an amount of no less than $3,000,000. The
Company shall also indemnify the Executive, to the fullest extent permitted by
law, from any liability asserted against or incurred by the Executive by reason
of the fact that the Executive is or was an officer or director of the Company
or any affiliate or related party or is or was serving in any capacity at the
request of the Company for any other corporation, partnership, joint venture,
trust, employment benefit plan or other enterprise. This indemnity shall survive
termination of this Agreement.
15. Noncompetition.
(a) The Executive agrees that, except in accordance with his duties under
this Agreement on behalf of the Company, he will not during the term of this
Agreement: Participate in, be employed in any capacity by, serve as director,
consultant, agent or representative for, or have any interest, directly or
indirectly, in any enterprise which is engaged in the business of developing,
licensing, selling technology, products or services which are directly
competitive to any technology, products or services of the Company or any of its
subsidiaries during the term of the Executive's employment with the Company, or
which are directly competitive to any technology, products or services being
actively developed, with the bona fide intent to market same, by the Company or
any of its subsidiaries during the term of the Executive's employment with the
Company. In addition, the Executive agrees that for a period of one year after
the end of the term of this Agreement (unless this Agreement is terminated due
to a breach of the terms hereof by the Company in failing to pay to the
Executive all sums due him under the terms hereof, in which event the following
shall be inapplicable), the Executive shall observe the covenants set forth in
this Section 15 and shall not own, either directly or indirectly or through or
in conjunction with one or more members of his or his spouse's family or through
any trust or other contractual arrangement, a greater than five percent (5%)
interest in, or otherwise control either directly or indirectly, any
partnership, corporation, or other entity which is engaged in the business of
developing, licensing, selling technology, products or services which are
directly competitive to any to technology, products or services of the Company
or any of its subsidiaries during the term of the Executive's employment with
the Company, or which are directly competitive to any technology, products or
services being actively developed, with the bona fide intent to market same, by
the Company or any of its subsidiaries. Executive further agrees, for such one
year period following termination, to refrain from directly or
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indirectly soliciting Company's collaborative partners, consultants, certified
research organizations, principal vendors, licensees or employees except any
such solicitation (i) in connection with developing, licensing or selling
technology, products or services which are not directly competitive to any
technology, products or services (A) of the Company or any of its subsidiaries,
or (B) being actively developed, with the bona fide intent to market same, by
the Company or any of its subsidiaries, and (ii) which does not have a material
adverse effect on the Company.
(b) The Executive hereby agrees that damages and any other remedy
available at law would be inadequate to redress or remedy any loss or damage
suffered by the Company upon any breach of the terms of this Section 15 by the
Executive, and the Executive therefore agrees that the Company, in addition to
recovering on any claim for damages or obtaining any other remedy available at
law, also may enforce the terms of this Section 15 by injunction or specific
performance, and may obtain any other appropriate remedy available in equity.
16. Assignment of Patents. Executive shall disclose fully to the Company
any and all discoveries he shall make and any and all ideas, concepts or
inventions which he shall conceive or make during his period of employment
related to the technology, products, or services of the Company, or during the
period of six months after his employment shall terminate, which are in whole or
in part the result of his work with the Company. Such disclosure is to be made
promptly after each discovery or conception, and the discovery, idea, concept or
invention will become and remain the property of the Company, whether or not
patent applications are filed thereon. Upon request and at the expense of the
Company, the Executive shall make application through the patent solicitors of
the Company for letters patent of the United States and any and all other
countries at the discretion of the Company on such discoveries, ideas and
inventions, and to assign all such applications to the Company, or at its order,
forthwith, without additional payment by the Company during his period of
employment and for reasonable compensation for time actually spent by the
Executive at such work at the request of the Company after the termination of
the employment. The Executive shall give the Company, its attorneys and
solicitors, all reasonable assistance in preparing and prosecuting such
applications and, on request of the Company, to execute all papers and do all
things that may be reasonably necessary to protect the right of the Company and
vest in it or its assigns the discoveries, ideas or inventions, applications and
letters patent herein contemplated. Said cooperation shall also include all
actions reasonably necessary to aid the Company in the defense of its rights in
the event of litigation.
17. Trade Secrets.
(a) In the course of the term of this Agreement, it is anticipated that
the Executive shall have access to secret or confidential technical, scientific
and commercial information, records, data, formulations, specifications,
systems, methods, plans, policies, inventions, material and other knowledge
("Confidential Material") owned by the Company and its subsidiaries. The
Executive recognizes and acknowledges that included within the Confidential
Material are the Company's confidential commercial information, technology,
formulations, STA-T (Systemic Transnasal Absorption Technology) and know-how,
methods of manufacture, chemical formulations, device designs, pending patent
applications, clinical data, pre-clinical data and any related materials, all as
they may exist from time to time, and that they are valuable special and unique
aspects of the Company's business. All such Confidential material shall be and
remain the property of the Company. Except as required by his duties to the
Company, the Executive shall not, directly or indirectly, either during the term
of his employment or at any time thereafter, disclose or disseminate to anyone
or make use of, for any purpose whatsoever, any Confidential Material. Upon
termination of his employment, the Executive shall promptly deliver to the
Company all Confidential Material (including all copies thereof, whether
prepared by the Executive or
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others) which are in the possession or under the control of the Executive. The
Executive shall not be deemed to have breached this Section 17 if the Executive
shall be specifically compelled by lawful order of any judicial, legislative, or
administrative authority or body to disclose any confidential material or else
face civil or criminal penalty or sanction.
(b) The Executive hereby agrees that damages and any other remedy
available at law would be inadequate to redress or remedy any loss or damage
suffered by the Company upon any breach of the terms of this Section 17 by the
Executive, and the Executive therefore agrees that the Company, in addition to
recovering on any claim for damages or obtaining any other remedy available at
law, also may enforce the terms of this Section 17 by injunction or specific
performance, and may obtain any other appropriate remedy available in equity.
18. Payment and Other Provisions After Change of Control
(a) In the event Executive's employment with the Company is terminated
following the occurence of a Change of Control either (x) by the Company for any
reason other than for Cause, death or Disability, or (y) by Executive for Good
Reason, and the date of such termination is (i) within one year following the
occurrence of such Change of Control , or (ii) prior to the date upon which all
options granted to the Executive pursuant to Section 4 hereof are fully
vested,then Executive shall be entitled to receive from the Company, in lieu of
the severance payment otherwise payable pursuant to Section 9(a), the following:
(i) Base Salary: The greater of (a) Executive's annual base salary as in
effect at the date of termination, or (b) the balance of Executive's base salary
compensation hereunder to the end of the term of this Agreement, shall be paid
on the date of termination;
(ii) Target Incentive Compensation: The amount of the Executive's target
incentive compensation under the applicable Executive Bonus Plan for the fiscal
year in which the date of termination occurs shall be paid on the date of
termination; and
(iii) Other Benefits: Notwithstanding the vesting period provided for in
the Company's Stock Option Plan and any related stock option agreements between
the Company and the Executive for all stock options ("options") granted
Executive by the Company pursuant to Section 4 hereof or otherwise, all of such
options shall be fully vested and exercisable upon a Change of Control and shall
remain exercisable for a period of one year from such Change of Control.
(b) For purposes of this Agreement, the term "Change of Control" shall
mean:
(i) The acquisition by any individual, entity or group (within the meaning
of Rule 13d-3 promulgated under the Exchange Act or any successor provision)
(any of the foregoing described in this Paragraph 18.b.i hereafter a "Person")
of 50% or more of either (a) the then outstanding shares of Capital Stock of the
Company (the"Outstanding Capital Stock") or (b) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the" Voting Securities"), provided, however, that any
acquisition by (x) the Company or any of its subsidiaries, or any employee
benefit plan (or related trust) sponsored or maintained by the Company or any of
its subsidiaries or (y) any Person that is eligible, pursuant to Rule 13d-1(b)
under the Exchange Act, to file a statement on Schedule 13G with respect to its
beneficial ownership of Voting Securities, whether or not such Person shall have
filed a statement on Schedule 13G, unless such Person shall have filed a
statement on Schedule 13D with respect to beneficial ownership of 50% or more of
the Voting
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Securities or (z) any corporation with respect to which, following such
acquisition, more than 60% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Capital Stock and Voting Securities
immediately prior to such acquisition in substantially the same proportion as
their ownership, immediately prior to such acquisition, of the Outstanding
Capital Stock and Voting Securities, as the case may be, shall not constitute a
Change of Control; or
(ii) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board, provided that any individual becoming a director subsequent to the date
hereof whose election or nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the Company (as
such terms are used in Rule 14a-11 of Regulation 14A, or any successor section,
promulgated under the Exchange Act); or
(iii) Approval by the shareholders of the Company of a reorganization,
merger or consolidation (a "Business Combination"), in each case, with respect
to which all or substantially all holders of the Outstanding Capital Stock and
Voting Securities immediately prior to such Business Combination do not,
following such Business Combination, beneficially own, directly or indirectly,
more than 60% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the
corporation resulting from the Business Combination; or
(iv) (a) a complete liquidation or dissolution of the Company or (b) a
sale or other disposition of all or substantially all of the assets of the
Company other than to a corporation with respect to which, following such sale
or disposition, more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors is then owned
beneficially, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Capital Stock and Voting Securities immediately prior to such sale
or disposition in substantially the same proportion as their ownership of the
Outstanding Capital Stock and Voting Securities, as the case may be, immediately
prior to such sale or disposition.
19. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by registered or
certified mail, return receipt requested to his residence in the case of the
Executive, or to its principal office in the case of the Company, or to such
other addresses as they may respectively designate in writing.
20. Entire Agreement; Waiver. This Agreement contains the entire
understanding of the parties and may not be changed orally but only by an
agreement in writing, signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought. Waiver of or failure to
exercise any rights provided by this Agreement in any respect shall not be
deemed a waiver of any further or future rights.
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21. Binding Effect; Assignment. The rights and obligations of this
Agreement shall bind and inure to the benefit of any successor of the Company by
reorganization, merger or consolidation, or any assignee of all or substantially
all of the Company's business or properties. The Executive's rights hereunder
are personal to and shall not be transferable nor assignable by the Executive.
22. Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
23. Governing Law; Arbitration. This Agreement shall be construed in
accordance with and governed for all purposes by the laws and public policy of
the State of New York applicable to contracts executed and to be wholly
performed within such state. Any dispute or controversy arising out of or
relating to this Agreement shall be settled by arbitration in accordance with
the rules of the American Arbitration Association and judgment upon the award
may be entered in any court having jurisdiction thereover. The arbitration shall
be held in Suffolk County, New York or in such other place as the parties hereto
may agree.
24. Further Assurances. Each of the parties agrees to execute,
acknowledge, deliver and perform, and cause to be executed, acknowledged,
delivered and performed, at any time and from time to time, all such further
acts, deeds, assignments, transfers, conveyances, powers of attorney and/or
assurances as may be necessary or proper to carry out the provisions or intent
of this Agreement.
25. Severability. The parties agree that if any one or more of the terms,
provisions, covenants or restrictions of this Agreement shall be determined by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
26. Counterparts. This Agreement maybe executed in several counterparts,
each of which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement.
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IN WITNESS WHEREOF, NASTECH PHARMACEUTICAL COMPANY INC. has caused this
instrument to be signed by a duly authorized officer and the Executive has
hereunto set his hand the day and year first above written.
Company: NASTECH PHARMACEUTICAL COMPANY INC.
By: /s/ Xxxxxx Xxxxx
--------------------------------
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer
Executive: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx, M.D., Ph.D
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Exhibits Omitted
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