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EXHIBIT 10.25
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into by
and between SONUS PHARMACEUTICALS, INC., a Delaware corporation (the "Company"),
and XXXXXX X. XXXX, M.D., Ph.D., an individual (the "Executive") as of this 11TH
day of February, 1999.
WITNESSETH:
WHEREAS, Executive is the founder of the Company, and has served as its
Chief Executive Officer and a member of its Board of Directors since inception
in 1991; and
WHEREAS, Executive and the Company entered into an Employment Agreement
dated as of January 16, 1996 (the "Prior Employment Agreement") with a term
expiring January 16, 1999; and
WHEREAS, Executive and the Company desire to enter into this Employment
Agreement which will replace and supersede the Prior Employment Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the Company and the Executive,
intending to be legally bound, hereby agree as follows:
1. Employment. Executive shall serve as the Chairman of the Board and
Chief Executive Officer of the Company until such time as Executive's duties as
Chief Executive Officer are transitioned as provided below, at which time
Executive shall serve as Chairman of the Board and Chief Scientific Officer of
the Company on the terms and conditions set forth in this Agreement. Executive's
position as Chief Executive Officer shall be transitioned to the Company's
current President and Chief Operating Officer by June 30, 1999.
2. Term. The term of this Agreement shall commence on the date hereof
and shall continue until December 31, 2001, but shall be subject to earlier
termination as provided in Section 8 hereof. Thereafter, this Agreement may be
renewed should the parties so agree, upon such terms and conditions as the
parties may mutually agree. As set forth in Section 3.01 below, Executive shall
be a full-time employee until December 31, 1999. Commencing January 1, 2000 and
during the remaining term of this Agreement, Executive shall be a part-time
employee on the terms and conditions set forth in this Agreement.
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3. Position and Duties.
3.01 Service with the Company. During the Executive's full-time
employment under this Agreement, Executive agrees to devote his skills and
efforts to the performance of, and to perform diligently and on a timely basis,
such duties as shall be assigned to him from time to time by the Company's Board
of Directors; such duties, however, to be commensurate with the Executive's
position as Chairman and Chief Executive Officer or Chairman and Chief
Scientific Officer of the Company, as applicable. During the Executive's
part-time employment under this Agreement, Executive shall provide services to
the Company on an as available basis as reasonably requested by the Company
relating to scientific and intellectual property matters and such other matters
as may be reasonably requested by the Company.
3.02 No Conflicting Duties. During the Executive's full-time
employment hereunder, the Executive shall not serve as an officer, director,
employee, consultant or advisor to any other business; provided, however, that
Executive may serve as an advisor or a director of one or more corporations so
long as (i) such other corporation does not compete, directly or indirectly,
with the Company or any of its Affiliates (as defined in Section 12.07), (ii)
such service with such other corporations does not adversely affect Executive's
ability to perform his duties under this Agreement, and (iii) Executive obtains
the prior written consent of the Company's Board of Directors; and provided,
further, however, that Executive may be a member and executive officer of [*] so
long as (i) the LLC does not compete, directly or indirectly, with the Company
or any of its Affiliates, (ii) such ownership and activities do not adversely
affect Executive's ability to perform his duties under this Agreement, and (iii)
such ownership and activities and any inventions or developments created by
Executive shall be subject to the terms and provisions of Section 7 below.
During the Executive's part-time employment hereunder, there shall be no
restrictions on other activities of Executive; provided, however, that any
inventions or developments created by Executive during the term of Executive's
part-time employment shall be subject to the terms and provisions of Section 7
below. The Executive hereby confirms that except as otherwise disclosed above,
he is under no commitments (written or oral) that are inconsistent with his
obligations set forth in this Agreement, and agrees that during his employment
hereunder, he will not render or perform services, or enter into any contract to
do so, for any other corporation, firm, entity or person which are inconsistent
with the provisions of this Agreement.
4. Compensation.
4.01 Base Salary. During Executive's full-time employment
hereunder, as compensation for all services to be rendered by the Executive to
the Company or any of its Affiliates under this Agreement or otherwise, the
Company shall pay to the Executive a base annual salary of Three Hundred Eighty
Thousand Dollars ($380,000) (the "Annual Base Salary"). During Executive's
part-time employment hereunder, Executive shall be paid on a per diem basis at
the rate of $2,000 per day, less tax, social security and other withholdings.
The Annual Base Salary shall be paid in installments in accordance with the
Company's normal payroll procedures and policies.
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[*] CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION
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4.02 Incentive Compensation; Option Grant. During Executive's
full-time employment hereunder, Executive shall be eligible to participate in
any management incentive or bonus compensation plan (hereinafter, "bonus plan")
that is approved by the Company's Board of Directors for the Company's executive
officers and Executive's participation therein shall be on terms substantially
comparable to those afforded to other executive officers of the Company,
provided that the Company's Board of Directors shall have the sole discretion to
determine the criteria upon which Executive's and the Company's performance will
be measured and on which the amount of Executive's bonus compensation shall be
based, and such criteria may also be tailored to reflect Executive's position
and responsibilities with the Company. Executive's participation in any such
bonus plan or plans shall be subject to the provisions, rules and regulations of
any such plan or plans and the provisions of this Agreement relating to
compensation payable to Executive in the event of termination of his employment;
provided that any such plan, if adopted, may provide for deferral of the receipt
of any bonus compensation that is awarded and may require Executive to remain in
the Company's employ for a specified period or periods of time as a condition to
receipt of any bonuses awarded under any such plan. Executive acknowledges and
agrees that adoption and implementation of any such bonus plans, and the terms
of his participation in any such plans, are not assured as this will require
affirmative action by the Board of Directors of the Company. Anything herein to
the contrary notwithstanding, Executive has elected during the term of this
Agreement to forego participation in the Company's annual bonus program for
executive officers in consideration of the grant of options to purchase shares
of Common Stock of the Company pursuant to the terms set forth on Schedule A
attached hereto and incorporated herein by this reference (the "Option").
Concurrently herewith, the Company and Executive shall enter into a nonqualified
option agreement for the Option which is consistent with the terms set forth on
Schedule A and the Company's 1999 Stock Incentive Plan.
4.03 Participation in Benefit Plans. The Executive shall be
entitled to participate in all employee benefit plans or programs (including
vacation time, sick leave and holidays) generally available to all employees of
the Company, to the extent that his position, title, tenure with the Company,
salary, age, health and other qualifications make him eligible to participate
therein. The Executive's participation in any such plans or programs shall be
subject to the provisions, rules and regulations thereof that are generally
applicable to all participants therein.
4.04 Expenses. In accordance with the Company's policies
established from time to time, the Company will pay or reimburse the Executive
for all reasonable and necessary out-of-pocket expenses incurred by him in the
performance of his duties under this Agreement, subject to the presentment of
appropriate vouchers and expense reports.
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5. Compensation upon the Termination of the Executive's Employment
by the Company.
5.01 Involuntary Terminations. In the event that the Executive
ceases to be employed by the Company by reason of the termination of Executive's
employment pursuant to Section 8.01, Section 8.02 or Section 8.03 below, then he
shall not be entitled to any compensation, nor shall the Company have any
obligation to pay any sum or have any liability to Executive whether as
compensation for his services or as a result or by reason of such termination of
employment, other than (i) any unpaid installment of his then current Annual
Base Salary which has accrued for services rendered by him through the date of
such termination, and (ii) only in the event of the termination of Executive's
employment pursuant to Section 8.01 or Section 8.02 hereof, any undistributed
bonus that had been awarded to Executive under any bonus plan for any years
prior to the year in which such termination occurred, provided that the payment
thereof is not contingent or conditional on Executive's continued employment
with the Company or the satisfaction of any other condition that is unsatisfied,
pursuant to the plan or plans under which such bonus or bonuses were awarded.
All payments required to be made by the Company to the Executive pursuant to
this Section 5.01 shall be paid in accordance with the Company's normal payroll
procedures and policies and shall be subject to the provisions of Section 12.03
hereof.
5.02 Termination Without Cause or For Good Reason. In the event
that the Executive ceases to be employed by the Company during Executive's
full-time employment hereunder by reason of the termination of Executive's
employment by the Company without Cause pursuant to Section 8.04 below in
circumstances that are not encompassed by the Change in Control Agreement dated
September 15, 1998 between the Company and Executive (the "Change in Control
Agreement"), or by reason of Executive's termination of his employment for Good
Reason pursuant to Section 8.05 in circumstances that are not encompassed by the
Change in Control Agreement, Executive shall not be entitled to any
compensation, nor shall the Company have any obligation to pay any sum or have
any liability to Executive whether as compensation for his services or as a
result or by reason of such termination of employment, other than:
(a) Any unpaid installment of his then current Annual Base Salary
which has accrued for services rendered by Executive through the date of
such termination;
(b) Executive confirms that it is not expected that he will
participate in any bonus program as referenced in Section 4.02 above.
However, in the event Executive should participate in any bonus program
of the Company, any undistributed bonus that had been awarded to
Executive under any bonus plan in which Executive participates for any
years prior to the year in which such termination occurred, provided the
payment thereof is not contingent or conditional on the satisfaction of
any condition which has not been satisfied other than a condition
requiring his continued employment with the Company to a date beyond the
date of such termination of employment;
(c) Executive confirms that it is not expected that he will
participate in any bonus program as referenced in Section 4.02 above.
However, in the event Executive should participate in any bonus program
of the Company, if bonuses are paid to other
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executive officers of the Company for services rendered in the calendar
year in which such termination of Executive's employment occurred under
any bonus plan for such year in which Executive was a participant at the
time of such termination of his employment, then, on the date such
bonuses for such year are paid to other executive officers, Executive
shall receive a pro-rated bonus in an amount which bears the same ratio
to the bonus he would otherwise have received for the year in which such
termination occurred, as the number of full calendar months he was
employed hereunder in such year bears to 12, but only if the payment of
a bonus for such year was not contingent or conditional on the
satisfaction of any condition in such plan which has not been satisfied
other than a condition requiring Executive's continued employment with
the Company beyond the date of such termination of employment; and
(d) A severance payment in the form of continuation of
Executive's then Annual Base Salary for a period equal to the greater of
(i) the remainder of the initial one year Term of this Agreement, or
(ii) twelve (12) consecutive months after the date of Executive's
termination.
In the event that Executive ceases to be employed by the Company during
Executive's part-time employment hereunder by reason of the termination of
Executive's employment by the Company without Cause pursuant to Section 8.04
below in circumstances that are not encompassed by the Change in Control
Agreement, or by reason of Executive's termination of his employment for Good
Reason pursuant to Section 8.05 in circumstances that are not encompassed by the
Change in Control Agreement, Executive should not be entitled to any
compensation, nor shall the Company have any obligation to pay any sum or have
any liability to Executive whether as compensation for his services or as a
result or by reason of such termination of employment.
All payments to be made to Executive under this Section 5 shall be paid net of
withholdings made in accordance with the Company's normal payroll procedures and
policies. In the event Executive's employment is terminated in circumstances
which are encompassed by the Change in Control Agreement, the terms of the
Change in Control Agreement shall supersede the terms and provisions of this
Agreement.
6. Confidential Information. Executive will hold in strict
confidence and not disclose to any person or entity, without the express prior
written authorization of the Board of Directors of the Company, any financial
statements or other financial information or data (historical or prospective) of
or relating to the Company or any Affiliate that has not been publicly disclosed
by the Company, any manufacturing or marketing data or any information relating
to any technique, process, formula, developmental or experimental work, work in
progress, business methods, trade secrets, any information relating to customers
or clients of the Company or any of its Affiliates (including, without
limitation, any customer or client list or lists of customer or client sources),
acquisition candidates or prospects, or any business or marketing plans, or any
other secret, proprietary or confidential information of or relating to the
Company or any of its Affiliates or any of their products, services, customers,
clients, sales or other business activities or affairs. Executive further agrees
that he will not make use of or disclose to any third party any of the above at
any time after termination of his employment. Upon termination of his full-time
employment, Executive shall deliver to the Company all documents, records,
notebooks, workpapers and all
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similar repositories containing any confidential information concerning the
Company or any Affiliate, whether prepared by Executive, the Company or anyone
else. The foregoing restrictions shall not apply to (i) information which is or
becomes, other than as a result of a breach of this Agreement, generally
available to the public or (ii) the disclosure of information required pursuant
to a subpoena or other legal process; provided that the Executive shall notify
the Company, in writing, of the receipt of any such subpoena or other legal
process requiring such disclosure immediately after receipt thereof and the
Company shall have a reasonable opportunity to quash such subpoena or other
legal process prior to any disclosure by the Executive.
7. Covenants Against Actions Damaging the Company. The Executive
agrees that, during the term of this Agreement or at any time thereafter, he
will not (i) make any claim that the Executive has any right, interest or title,
of any kind or nature whatsoever, in or to any products, methods, practices,
processes, discoveries, ideas, improvements, devices, creations, business plans
or systems, or, subject to applicable labor laws, inventions relating to the
business of the Company or any Affiliate, used, developed or discovered by the
Company, any Affiliate or by Executive while employed by the Company or any
Affiliate thereof on a full-time or part-time basis, or (ii) disclose any of
such matters to any third party; provided, however, that this Section shall not
apply to such matters which Executive has developed that (a) do not relate to
the business of the Company or any Affiliate or their actual or demonstrably
anticipated research and development, (b) did not result from any work performed
by Executive for the Company or any Affiliate, and (c) were developed by
Executive entirely on his own time or prior to his employment by the Company
without using any of the Company's employees, equipment, facilities, supplies,
or trade secrets. Executive agrees that during the term of this Agreement, he
shall promptly disclose to the Company any invention developed or discovered by
Executive for the purpose of determining Executive's and the Company's
respective rights in any such invention. Executive further agrees that during
the term of this Agreement and for a period of one (1) year following the
termination of his employment with the Company, whether for himself or on behalf
of or in conjunction with any third party, he shall not hire any employee of the
Company or any Affiliate or induce or entice any employee of the Company or any
Affiliate to leave his employment with the Company or any Affiliate.
8. Termination Prior to Expiration of the Term.
8.01 Disability. Executive's employment shall terminate
immediately, without notice, upon the Executive's becoming totally disabled. For
purposes of this Agreement, the term "totally disabled" or "total disability"
means an inability of Executive, due to a physical or mental illness, injury or
impairment, to perform the essential functions of his positions with or without
reasonable accommodation, for a period of 180 or more consecutive days, as
determined by the Company's Board of Directors.
8.02 Death of Executive. Executive's employment shall terminate
immediately, without notice, upon the death of Executive.
8.03 Termination for Cause. The Company may terminate Executive's
employment at any time for "Cause" (as hereinafter defined) immediately upon
written notice to Executive. As used herein, the term "Cause" shall mean
Executive (i) commits a material breach
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of his duty of loyalty to the Company; (ii) commits an act or fails to act,
where such act or failure to act constitutes intentional misconduct, a reckless
disregard of the consequences of such act or failure to act, or gross
carelessness; (iii) commits a felony, or a misdemeanor involving moral
turpitude, or subjects the Company or any Affiliate to civil liabilities or
civil or criminal penalties or fines; (iv) commits a material breach of any of
his covenants contained in Section 6, 7, or 9 hereof; or (vi) has refused or
failed to perform any of his material duties to the satisfaction of the Board of
Directors of the Company and such refusal or failure has continued after
Executive has received at least one (1) written warning specifically advising
the Executive of such failure or refusal and the remedial actions which are
necessary to be taken by him and he has been given a reasonable time period
after such warning to take such remedial actions.
8.04 Termination Without Cause. The Company also may terminate
Executive's employment in the absence of the occurrence of an event or
circumstance constituting Cause (as defined in Section 8.03 above), for any
reason or no reason, at any time effective upon written notice to Executive.
8.05 Termination by Executive for Good Reason. A breach by the
Company of any of its material obligations to Executive under this Agreement
which continues unremedied for thirty (30) days following receipt of a written
notice thereof from Executive that specifies in detail the nature of such breach
shall entitle Executive to terminate this Agreement and his employment with the
Company "for Good Reason." In the event of a termination of Executive's
employment hereunder by Executive for Good Reason, as hereinabove defined, the
Company's sole liability and obligation to Executive by reason thereof shall be
as set forth in Section 5.02 of this Agreement.
9. Non-Competition. Executive agrees that during his employment by
the Company (whether under this Agreement or otherwise), or by any Affiliate,
and for a period of two (2) years after the date on which his employment
terminates for any reason, he will not engage or participate (whether as
employee, employer, consultant, agent, principal, partner, stockholder, lender,
corporate officer, director or other representative capacity) in any business
that competes with the business of the Company either directly or indirectly
through its marketing partners in any city or county within the United States in
which the Company is then engaging and continues to engage in its business. In
the event any court shall refuse to enforce any portion of the covenant in this
Section 9, then such unenforceable portion shall be deemed eliminated and
severed from said covenant for the purpose of said court's proceedings to the
extent necessary to permit the remaining portions of this covenant to be
enforced.
10. Assignment. This Agreement shall not be assignable, in whole or
in part, by either party without the written consent of the other party, except
that the Company may, without the consent of the Executive, assign its rights
and obligations under this Agreement to an Affiliate; or to any unaffiliated
corporation, firm or other business entity (i) with or into which the Company
may merge or consolidate, or (ii) to which the Company may sell or transfer all
or substantially all of its assets. After any such assignment by the Company,
the Company shall be discharged from all further liability hereunder and such
assignee shall thereafter be deemed to be the Company for the purposes of all
provisions of this Agreement including this Section 10.
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11. Notices. Any notice or other communication regarding this
Agreement required to be given pursuant to the terms hereof shall be in writing
and shall be deemed to be received by the party to whom its is addressed on the
actual date of delivery if personally delivered to such party or, if sent by
postage prepaid certified mail, return receipt requested, shall be deemed
received two business days following its deposit in the United States Mails. For
purposes hereof, a notice personally delivered to the Company shall not be
deemed delivered unless it has been personally delivered to the President and
Chief Operating Officer of the Company. The addresses of the parties hereto for
purposes of mailing notices hereunder are as follows:
The Company: Sonus Pharmaceuticals, Inc.
00000 00xx Xxxxxx X.X., Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Board of Directors and President
and Chief Operating Officer
The Executive: Xxxxxx X. Xxxx, M.D., Ph.D.
00000 00xx Xxxxxx X.X., Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
12. Miscellaneous.
12.01 Governing Law. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of
Washington.
12.02 Prior Agreements. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof and supersedes
the Prior Employment Agreement and all prior agreements and understanding with
respect to such subject matter, and the parties hereto have made no agreements,
representations or warranties relating to the subject matter of this Agreement
which are not set forth herein.
12.03 Withholding Taxes. The Company may withhold from any salary
and benefits payable under this Agreement, including from any severance payment,
all federal, state, city or other taxes or amounts as shall be required to be
withheld pursuant to any law or governmental regulation or ruling.
12.04 Amendments. No amendment or modification of this Agreement
shall be deemed effective unless made in writing signed by the parties hereto.
12.05 No Waiver. No term or condition of this Agreement shall be
deemed to have been waived nor shall there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any written
waiver shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
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12.06 Severability. To the extent any provision of this Agreement
shall be invalid or unenforceable, it shall be considered deleted herefrom and
the remainder of such provision and of this Agreement shall be unaffected and
shall continue in full force and effect. In furtherance and not in limitation of
the foregoing, should the duration or geographical extent of, or business
activities covered by any provision of this Agreement be in excess of that which
is valid and enforceable under applicable law, then such provision shall be
construed to cover only the maximum duration, extent or activities which may
validly and enforceably covered under applicable law. The Executive acknowledges
the uncertainty of the law in this respect and expressly stipulates that this
Agreement shall be given the construction which renders its provisions valid and
enforceable to the maximum extent (not exceeding its express terms) possible
under applicable law.
12.07 Definitions. As used in this Agreement, the term
"Affiliate" (when used with reference to the Company) means any corporation,
partnership, joint venture, association or other business entity as to which the
Company has the right or power, either directly or indirectly through its
control of any other person or entity, either to select a majority of the
directors, managers or trustees thereof or to veto any major business decisions
of such other corporation, partnership, joint venture, association or other
business entity.
12.08 Counterpart Execution. This Agreement may be executed by
facsimile and in counterparts, each of which shall be deemed an original and all
of which when taken together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year set forth above.
SONUS PHARMACEUTICALS, INC.
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx, President and
Chief Operating Officer
/s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx, M.D., Ph.D.
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