EXHIBIT 10.39
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of September 1, 1997, between XXXXXXX X.
XXXXXX, an individual ("Employee"), and MOLECULAR BIOSYSTEMS, INC., a
Delaware corporation ("the Company").
1. EMPLOYMENT. The Company hereby employs the Employee as its Vice
President, Marketing, to provide services at such times as shall be mutually
agreed upon between them. The Company shall be entitled to all of the
benefits and profits arising from or incident to the work, services and
advice rendered by the Employee relating to the work performed for the
Company. The Employee shall make all information available to the Company
that relates to the Company's business of which he has any knowledge and
shall not use any such information or the benefits of any such information
for his personal profit or that of any third party. The Employee agrees to
use his best efforts to promote the interests of the Company including, where
appropriate, the publication of articles in medical and scientific journals
and the participation in medical and scientific seminars and symposiums
relating to the business and affairs of the Company and/or his research
efforts performed for and on behalf of the Company. The Employee shall
perform the duties of employment in a manner satisfactory to the Company and
shall devote his full working time to such duties.
2. DISCLOSURES. I shall promptly disclose in writing to the
officials designated by the Company to receive such disclosures, complete
information concerning each and every invention, discovery, improvement,
device, design, apparatus, practice, process, method or product (hereinafter
referred to as "Inventions"), whether I consider them patentable or not,
made, developed, perfected, devised, conceived or reduced to practice by me,
either solely or in collaboration with others, during the period of my
employment by the Company, and up to and including a period of twelve (12)
months after termination of my employment, whether or not during regular
working hours, relating either directly or indirectly to the business,
products, practices or techniques of the Company or to the Company's actual
or demonstrably anticipated research or development, or resulting from any
work performed by me for the Company or with the equipment, supplies,
facilities or confidential information of the Company.
3. CONFIDENTIALITY. I recognize that my employment with the Company
will involve contact with information of substantial value to the Company,
which is not old and generally known in the trade and which gives the Company
an advantage over its competitors who do not know or use it, including but
not limited to techniques, designs, drawings, processes, inventions,
developments, equipment, prototypes, sales and customer information, and
business and financial information, relating to the business, products,
practices or techniques of the Company (hereinafter referred to as
"Confidential Information"). I shall at all times regard and preserve as
confidential such Confidential Information obtained by me from whatever
source and shall not, either during my
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employment or thereafter, publish or disclose any part of such Confidential
Information in any manner, or use the same except on behalf of the Company,
without the prior written consent of the Company. Further, I shall, during
my employment and thereafter, refrain from any acts or omissions that would
reduce the value of such Confidential Information to the Company.
4. ASSIGNMENT OF RIGHTS. I hereby agree that any Inventions made,
developed, perfected, devised, conceived or reduced to practice by me during
the period of my employment by the Company, and any other Inventions made,
developed, perfected, devised, conceived or reduced to practice by me during
said period of twelve (12) months after termination of my employment if based
upon the Confidential Information of the Company, relating either directly or
indirectly to the business, products, practices or techniques of the Company
or to the Company's actual or demonstrably anticipated research or
development, or resulting from any work performed by me for the Company or
with the equipment, supplies, facilities or Confidential Information of the
Company, are the sole property of the Company, and hereby assign and agree to
assign to the Company, its successors and assigns, all of my right, title and
interest in and to said Inventions, and any patent applications or Letters
Patent thereon.
NOTIFICATION
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This Agreement does not apply to an invention for which no equipment,
supplies, facility, or trade secret information of the Company was used and
which was developed entirely on my own time, and (a) which does not relate
(1) to the business of the Company or (2) to the Company's actual or
demonstrably anticipated research or development, or (b) which does not
result from any work performed by me for the Company, as defined and provided
by Section 2870 of the California Labor Code.
5. COVENANT OF COOPERATION. I shall, at any time during employment
or thereafter, upon request and without further compensation therefor, but at
no expense to me, do all lawful acts, including but not limited to the
execution of papers and oaths, the giving of testimony, and the obtaining of
evidence that in the opinion of the Company, its successors or assigns, may
be necessary or desirable for obtaining, sustaining, reissuing or enforcing
Letters Patent in the United States and throughout the world for said
Inventions, and for perfecting, recording or maintaining the title of the
Company, its successors and assigns, to said Inventions and to any patent
applications made and any Letters Patent granted for said Inventions in the
United States and throughout the world.
6. PATENT ENFORCEMENT. The Company shall have the sole discretion
whether to obtain, maintain, modify or enforce any domestic or foreign patent
for said Inventions assigned to the Company pursuant to this Agreement. The
Company is free to enter into any licensing or assignment agreement with any
third party or to use whatever means it deems best to develop, promote or
market said Inventions assigned to the Company pursuant to this Agreement or
any domestic or foreign patent thereof.
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7. CLAIMS BY THIRD PARTY. As to any Inventions which were made,
developed, perfected, devised, conceived or reduced to practice by me during
the period of my employment by the Company, and up to and including a period
of twelve (12) months after termination of my employment, but which are
claimed for any reason to belong to an entity or person other than the
Company, I will promptly disclose the same in writing to the Company and
shall not disclose the same to others if the Company, within twenty (20) days
thereafter, shall claim ownership of such Inventions under the terms of this
Agreement. If the Company makes such a claim, I agree that any controversy
relating to such claim shall be settled and determined by binding arbitration
conducted in San Diego, California, in accordance with the rules of the
Judicial Arbitration and Mediation Services then existing. The cost of
arbitration shall be shared equally.
8. RECORD KEEPING. I shall keep complete, accurate and authentic
accounts, notes, data and records of any and all of said Inventions in the
manner and form requested by the Company. Such accounts, notes, data and
records, including all copies thereof, shall be the property of the Company,
and upon its request, I will promptly surrender the same to it, or if not
previously surrendered, I will promptly surrender the same to the Company at
the conclusion of my employment.
9. RECORDS PROPERTY OF COMPANY. I agree that all accounts, notes,
data sketches, drawings and other documents and records, and all material and
physical items of any kind, including all reproductions and copies thereof,
which relate in any way to the business, products, practices or techniques of
the Company or contain Confidential Information, made by me or that come into
my possession by reason of my employment are the property of the Company and
shall be promptly surrendered to the Company at the conclusion of my
employment.
10. INDUCEMENT. I agree that I shall not disclose to the Company or
induce the Company to use an invention or confidential information belonging
to any third party.
11. NO OTHER AGREEMENTS. I affirm that I have no agreement with any
other party that would preclude my compliance with my obligations under this
Agreement as set forth above.
12. CHANGE OF CONTROL.
a. DEFINITIONS. The following definitions shall apply with respect to
this "Change of Control" section only:
(1) AGREEMENT means the agreement governing Employee's employment by MBI
of which this Change of Control section forms a part and which may be
referred to as an Employment Agreement or an Invention and
Confidentiality Agreement or by some similar name.
(2) BASE SALARY means Employee's annual compensation, exclusive of
bonuses, stock options and other fringe benefits.
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(3) CHANGE OF CONTROL means an event or the last of a series of related
events by which:
(A) any person or group (as defined in Section 13(d) of the Exchange
Act) who, together with all affiliates and associates (as defined
in Rule 12b-2 under the Exchange Act) (an "Acquiring Person)
becomes the direct or indirect beneficial owner of 25% or more of
MBI's outstanding stock (or of 25% or more of MBI's outstanding
voting stock, if and when MBI has more than one class of stock
outstanding); OR
(B) Continuing Directors cease to comprise a majority of the Board of
Directors. A Continuing Director is any director who (while a
director) is not an Acquiring Person or an affiliate or associate
of an Acquiring Person or a representative thereof and who (A) is
a director as of the date that the Agreement (containing this
Change of Control section) is executed by both parties, or (B)
subsequently becomes a director and whose nomination for election
by MBI's stockholders (or whose election by the Board, in case of
a vacancy filled by the Board) was approved by a resolution of a
majority of the Continuing Directors or who is included as a
nominee in a proxy statement of MBI when a majority of the Board
consists of Continuing Directors.
(4) CONSTRUCTIVE TERMINATION means a termination of the Agreement by
Employee within 2 years after a Change of Control, during which 2-year
period any of the following events take place: (I) a material
reduction in the total annual compensation package paid to Employee
immediately prior to the Change of Control; (ii) a relocation (or
demand for relocation) of Employee's place of employment more than 30
miles from his current place of employment; or (iii) a significant
change in the nature or scope of Employee's job responsibilities or
the imposition of significant limitations on his autonomy in his
position as an employee of MBI, as compared to the nature, scope and
degree of autonomy prior to the Change of Control.
(5) EXCHANGE ACT means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
(6) INVOLUNTARY TERMINATION shall be deemed to have taken place if
Employee dies or if the Employee has a physical or mental condition as
a result of injury, illness or disease which prevents Employee from
performing substantially all of his duties or from working on a
substantially full-time basis, for a period of 24 consecutive weeks or
28 weeks out of any 52-week period.
(7) SEVERANCE PAYMENTS is defined in subsection (b) below.
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(8) TERMINATION FOR CAUSE means a termination of the Agreement by MBI
because of any of the following conduct engaged in by Employee: (I)
the commission of a felony or a crime involving moral turpitude or the
commission of an act involving dishonesty or fraud with respect to MBI
or its affiliates, if any; (ii) conduct tending to bring MBI or its
affiliates, if any, into substantial public disgrace or disrepute; or
(iii) substantial and repeated failure to perform duties as reasonably
directed by the Board of Directors or President of MBI or its
affiliates, if any.
(9) TERMINATION WITHOUT CAUSE means any termination of the Agreement by
MBI, other than a Termination for Cause or an Involuntary Termination.
x. XXXXXXXXX PAYMENTS AND OTHER BENEFITS IN THE EVENT OF TERMINATION. In
the event of the termination of the Agreement a result of (i) a Termination
Without Cause within 2 years following a Change of Control or (ii) a
Constructive Termination, MBI shall provide the payments and other benefits
specified below to Employee, in lieu of any other payments or benefits which may
(or may not) be provided for elsewhere in the Agreement.
(1) MBI shall make the following payments to Employee (or to his estate):
(a) ACCRUED SALARY. MBI shall pay Employee's Base Salary through the
effective date of termination of the Agreement.
(b) SEVERANCE PAYMENTS. MBI shall pay an amount equal to 1.5 times
(A) the Base Salary in effect immediately prior to the Change of
Control and (B) the higher of (x) 100% of Employee's target bonus as
determined under MBI's incentive compensation plan or (y) an average
of the three most recent bonuses awarded to Employee (collectively,
referred to as "Severance Payments").
(c) MANNER OF PAYMENT. Severance Payments shall be paid over an
18-month period in approximately equal consecutive bi-weekly
installments, with the first payment to be made no later than 30 days
following the effective date of termination of the Agreement.
(d) ABSOLUTE RIGHT TO SEVERANCE PAYMENTS. Employee's right to
Severance Payments shall not be conditioned upon compliance with any
non-competition provisions which may (or may not) exist elsewhere in
the Agreement.
(2) MBI shall provide the following benefits to Employee:
(1) COBRA BENEFITS. During the period of time in which Severance
Payments are being paid to the employee, MBI shall provide COBRA
continuation coverage to Employee and dependents of Employee who are
insured at the time of termination under its medical, dental and
vision insurance plans and shall assume the cost of
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continuation coverage provided to Employee and covered dependent.
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(2) OUTPLACEMENT SERVICES. MBI will make available to Employee, upon
his request, outplacement services provided by a reputable
outplacement counselor selected by MBI for a period of 6 months
following his termination. MBI will assume the cost of all such
outplacement services.
c. ACCELERATION OF STOCK OPTIONS IN THE EVENT OF A CHANGE OF CONTROL. In
the event of a Change of Control (whether or not followed by termination of the
Agreement), all stock options under any MBI stock option plan which Employee
holds at the time of such Change of Control shall become fully "vested" (I.E.,
immediately exercisable).
d. LIMITATIONS. The Severance Payments shall be reduced as necessary so
that the present value, as determined in accordance with Section 280G(d)(4) of
the Internal Revenue Code, of the sum of (I) the Severance Payments and (ii) all
other payments, if any, that must be taken into account for purposes of the
computation under Section 280G(b)(2)(A)(ii) of the Internal Revenue Code in
respect of Employee does not exceed 2.99 times Employee's base amount, as "base
amount" is defined in Section 280G(b)(3) of the Internal Revenue Code.
13. EXCLUSIVITY. I shall not, while employed by the Company engage in any
other employment or business venture for my account or on behalf of others that
relates, directly or indirectly, to the business and affairs of the Company
without the prior written consent of the Company.
14. ADDITIONAL PAYMENTS. Employee shall receive each month through March,
1998, an amount equal to Dupont's COBRA family coverage premium (grossed-up). In
addition, Employee shall receive a $20,000 cash bonus, minus applicable payroll
taxes, on April 1, in the years 1999, 2000 and 2001. Employee must be employed
with the Company on each of those dates to receive these bonus payments.
15. EXPENSES. The Company shall pay or reimburse the Employee for
expenses incurred by him on behalf of the Company with its approval. Such
reimbursement shall be made upon presentation by the Employee to the Company of
itemized accounts or receipts satisfactory to the Company. The Employee's
obligations with respect to his performance hereunder are unconditional and are
not dependent upon such reimbursement. The Company reserves the right to charge
back to the Employee any expense reimbursement found to be non-tax deductible by
the Company or found to have been falsely or improperly claimed by him.
16. PROHIBITION AGAINST ASSIGNMENT. I agree that this Agreement and the
rights, interests and benefits hereunder shall not be assigned, transferred,
pledged or hypothecated in any way by me or any executor, administrator, heir,
legatee, distributee or any other person claiming under me by virtue of this
Agreement and shall not be subject to execution, attachment or similar process.
Any attempt to assign, transfer, pledge or hypothecate or otherwise dispose of
this Agreement or of such rights, interests and benefits contrary to the
foregoing provisions, or the levy of any attachment or similar process thereon
shall be null and void and without effect and shall
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relieve the Company of any and all liability hereunder.
17. NOTICE. Any and all notices, designations, consents, offers,
acceptances or any other communication provided for herein shall be given in
writing by registered or certified mail, return receipt requested, which shall
be addressed, in the case of the Company, to its office in San Diego,
California, and in my case to my last known place of residence as reflected on
the Company's records.
18. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between me and the Company and contains all of the agreements between us with
respect to the subject matter hereof.
19. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of me and the Company and our respective heirs, legal
representatives, executors, administrators, and successors.
20. GOVERNING LAW. This Agreement shall be subject to and governed by
the laws of the State of California.
21. AMENDMENT OF AGREEMENT. No change or modification of this Agreement
shall be valid unless the same be in writing and signed by me and the Company.
No waiver of any provision of this Agreement shall be valid unless in writing
and signed by the person or party to be charged.
22. SEVERABILITY. If any portion or portions of this Agreement shall be,
for any reason, deemed to be invalid or unenforceable, the remaining portion or
portions shall nevertheless be valid, enforceable and carried into effect,
unless to do so would clearly violate the present legal and valid intention of
the parties hereto.
23. BREACH. In the event of any controversy, claim, or dispute between
the parties hereto, arising out of or relating to this Agreement or breach
thereof, the prevailing party shall be entitled to recover from the losing
party, reasonable expenses, attorney's fees and costs.
24. HEADINGS. The headings of this Agreement are inserted for
convenience only and are not to be considered in construction of the provisions
hereof.
25. WAIVER OR BREACH. The waiver by either of the parties hereto of any
breach of any provision hereof shall not be construed to be a waiver of any
succeeding breach of that provision or a waiver of any other provision of this
Agreement.
26. PRIOR AGREEMENTS. This Agreement supersedes any and all prior
agreements between the Company and Employee with respect to the subject matter
hereof, including, but not limited to all Employment Agreements and/or Invention
and Confidentiality Agreements or any amendment thereto.
27. GENERIC DRUG ENFORCEMENT ACT CERTIFICATION. The undersigned,
certifies that he or
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she (1) has never been charged with or convicted of a federal felony for
conduct relating to the development, approval, or regulation of any drug
product or device regulated by the United States Food and Drug
Administration, and (2) has never been debarred or subject to a debarment
proceeding under the Generic Drug Enforcement Act of 1992.
WHEREAS, the parties have executed this Agreement as of the date first
above written.
MOLECULAR BIOSYSTEMS, INC.
By: /s/ Xxxxx Xxxxxxxxxx
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Xxxxx Xxxxxxxxxx
Chief Executive Officer
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Xxxxxxx X. Xxxxxx
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