EMPLOYMENT AGREEMENT WITH ALIMERA SCIENCES, INC.
Exhibit 10.5
WITH
ALIMERA SCIENCES, INC.
This is an Employment Agreement entered into between Alimera Sciences, Inc., a Delaware
corporation (the “Company”), and Xxxxx Xxxxxxx (“Executive”).
RECITALS:
WHEREAS, the Company is engaged in the business of developing, marketing and selling
ophthalmic pharmaceuticals in the United States and throughout the world;
WHEREAS, Company and Executive desire that Executive provide the Company employment services
upon the terms and conditions set forth below; and
WHEREAS, this Employment Agreement is entered into as a condition of the parties consummating
their obligations under the Series A Preferred Stock Purchase
Agreement (the “Purchase
Agreement”) dated as of June 29, 2004, by and among the Company and certain investors whose
names are set forth on the signature pages thereto;
NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, the
parties, intending to be legally bound, agree as follows:
AGREEMENT:
SECTION 1. TERM OF EMPLOYMENT
(a) Effective Date. Subject to the terms and conditions set forth in this Employment
Agreement, the Company agrees to employ Executive, and Executive agrees to be employed by
the Company for the three year period which starts on the First Tranche Closing Date (as
defined in the Purchase Agreement) (the “Effective Date”).
(b) Term. The term of this Employment Agreement is subject to automatic one year
extensions starting on the third anniversary of the Effective Date of this Employment
Agreement and on each subsequent anniversary date, unless Executive or the Company cancels the
automatic extension and terminates this Agreement and Executive’s employment hereunder at
least thirty (30) days prior to the anniversary date.
SECTION 2. DEFINITIONS
“Cause” means
(1) Executive’s gross negligence or willful misconduct with respect to the
business and affairs of the Company which causes material detriment to the Company,
including violation of any material policy of the Company made known to the Executive
in writing and not cured within thirty (30) days after notice to the Executive;
(2) Executive’s conviction of, or entering a guilty plea or plea of no contest
with respect to, a felony; or
(3) Executive engages in any material breach of the terms of this Employment
Agreement or fails to fulfill his responsibilities under this Employment Agreement and
such breach or failure, as the case may be, is not cured, or is not capable of being
cured, within thirty (30) days after written notice thereof is given to the Executive by the Company.
“Competing Business” means any business which develops, sells or markets ophthalmic
Pharmaceuticals.
“Disability” means a condition which renders Executive unable (as determined by the Board of
Directors of the Company in good faith after consultation with a physician mutually selected by
the Executive and the Board of Directors of the Company) to regularly perform his duties hereunder
by reason of illness or injury for a period of more than six consecutive months with or without
reasonable accommodation.
“Earned Bonus” means the bonus, determined based on the actual performance of the
Company for the full fiscal year in which Executive’s employment terminates, that Executive would
have earned for the year in which his employment terminates had he remained employed for the
entire year, prorated based on the ratio of the number of days during such year that Executive was
employed to 365. Such Earned Bonus will be determined and paid to Executive no later than sixty
(60) days following the delivery of the auditor’s report for the fiscal year in which Executive’s
employment terminates.
“Good Reason” means (i) a reduction of the Executive’s base salary from the amount stated in
Section 4(a) hereof by more than fifteen percent (15%), where such reduction is not matched
by reductions by the same percentages in the base salaries of all other members of senior
management of the Company; (ii) a material adverse change in Executive’s primary responsibilities
or title; (iii) a geographical relocation of the Company’s corporate headquarters, or the
Executive’s primary business location, to a location that is more than fifty (50) miles from the
present location of the Company’s corporate headquarters or the Employee’s primary business
location, as the case may be; (iv) any breach by the Company of this Employment Agreement which is
material and which is not cured, or is not capable of being cured, within thirty (30) days after
written notice thereof to the Company and the Board of Directors of the Company from Executive.
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“ISP” means the Alimera Sciences, Inc. 2004 Incentive Stock Plan, as amended from time to
time, and any successor to such plan.
“Restricted Period” means the twelve (12) month period beginning on and after the Executive’s
employment with the Company is terminated pursuant to the terms of this Agreement.
SECTION 3. TITLE, POWERS AND RESPONSIBILITIES
(a) Title. Executive shall be the Vice-President, Medical Affairs and Regulatory of
the Company.
(b) Powers and Responsibilities.
(1) Executive in fulfilling his responsibilities shall have such powers as are
normally and customarily associated with a Vice-President., Medical Affairs and
Regulatory in a company of similar size and operating in a similar industry, and such
other powers as authorized by the Board of Directors of the Company.
(2) Executive, as a condition to his employment under this Employment
Agreement, represents and warrants that he can assume and fulfill responsibilities
described in Section 3(b)(1) without any risk of violating any non-compete or
other restrictive covenant or other agreement to which he is a party.
(c) Reporting Relationship. Executive shall report to Xxx Xxxxx, Chief Executive Officer and President.
(d) Full Time Basis. Executive shall undertake to perform all his responsibilities and
exercise all his powers in good faith and on a full-time basis.
SECTION 4. COMPENSATION, BENEFITS, ETC.
(a) Annual Base Salary. Executive’s base salary shall be one hundred sixty thousand
dollars ($160,000) per year, which amount may be reviewed and increased at the discretion of
the Board of Directors of the Company or any committee of the Board of Directors of the
Company duly authorized to take such action. Executive’s base salary shall be payable in
accordance with the Company’s standard payroll practices and policies for executives and shall
be subject to such withholdings as required by law or as otherwise permissible under such
practices or policies.
(b) Annual Bonus. The Company shall pay an annual bonus to Executive no later
than sixty (60) days following the delivery of the auditor’s report for the applicable fiscal
year, in the amount, and subject to the terms and conditions, set forth in Schedule A attached
hereto.
(c) Employee Benefit Plans. Executive shall be eligible to participate, on terms no
less favorable to Executive than the terms for participation of any other executive of the
Company at the same level within the Company as Executive, in the
employee benefit plans,
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programs and policies maintained by the Company in accordance with the terms and conditions to
participate in such plans, programs and policies as in effect from time to time.
(d) Stock
Options. Executive shall receive stock options at the discretion of the
Board of Directors of the Company, subject to the terms and conditions set forth in the ISP
and any corresponding option certificate granted to Executive under the ISP. As of the Effective
Date, Executive shall be entitled to a grant of stock options as set forth on Schedule
B attached hereto.
(e) Vacation. Executive shall have the right to four weeks of vacation during each
successive one year period of his employment by the Company, which vacation time shall be
taken at such time or times in each such one year period so as not to materially and adversely
interfere with the performance of his responsibilities under this Employment Agreement.
Executive in addition shall have the right to the same time off work as other employees of the
Company.
(f) Expense Reimbursements. Executive shall have the right to
expense reimbursements in accordance with the Company’s standard policy on expense reimbursements.
(g) Indemnification. The Company shall, to the maximum extent permitted by
applicable law and the Company’s governing documents, indemnify Executive and hold
Executive harmless from and against any claim, loss or cause of action arising from or out of
Executive’s performance as an officer, director, manager or employee of the Company or in any
other capacity in which Executive serves at the request of the Board of Directors of the
Company. If any claim is asserted hereunder against Executive, the Company shall pay
Executive’s legal expenses (or cause such expenses to be paid) on a quarterly basis, provided
that Executive shall reimburse the Company, in a timely manner, for such amounts if Executive shall
be found by a final, non-appealable order of a court of competent jurisdiction not to be
entitled to indemnification. The indemnification obligations of the Company in this paragraph shall
survive any termination of this Agreement.
(h) Directors and Officers Liability Insurance. The Company shall maintain directors
and officers liability insurance coverage covering Executive in amounts customary for similarly
situated companies in the pharmaceutical industry and with insurers reasonably acceptable to
Executive. All policies for such coverage shall provide for insurance on an “occurrence” basis, or
if on a “claims-made” basis, with sufficient coverage for claims made after the date on which
Executive’s employment with the Company terminates.
SECTION
5. TERMINATION OF EMPLOYMENT
(a) General. The Board of Directors of the Company shall have the right to terminate
Executive’s employment at any time with or without Cause, and Executive shall have the right
to terminate his employment at any time with or without Good Reason.
(b) Termination by Board of Directors without Cause or by Executive for Good
Reason. If the Board of Directors terminates Executive’s employment without Cause or
Executive resigns for Good Reason, the Company shall pay Executive his earned but unpaid base
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salary plus 100% of his current total annual base salary (subject to such withholdings as required
by law) payable in twelve equal monthly installments during the twelve month period immediately
following such termination and, when actually determined, the Executive’s Earned Bonus for the
fiscal year of termination. This obligation shall remain in effect even if Executive accepts other
employment. In addition, the Company shall make any COBRA continuation coverage premium payments
(not only for Executive, but for Executive’s dependents), for the one year period following the
termination of Executive’s employment or, if earlier, until Executive is eligible to be covered
under another substantially equivalent medical insurance plan by a subsequent employer.
(c) Termination by the Board of Directors for Cause or by Executive without Good
Reason. If the Board of Directors of the Company terminates Executive’s employment for
Cause or Executive resigns without Good Reason, the Company’s only obligation to Executive under
this Employment Agreement shall be to pay Executive his earned but unpaid base salary, if any,
up to the date Executive’s employment terminates, and Executive shall have no right to any
Earned Bonus or any bonus payment whatsoever. The Company shall only be obligated to make
such payments and provide such benefits under any employee benefit plan, program or policy in
which Executive was a participant as are explicitly required to be paid to Executive by the
terms of any such benefit plan, program or policy following the date on which Executive’s
employment terminates.
(d) Termination for Disability. The Board of Directors of the Company shall have
the right to terminate Executive’s employment on or after the date Executive has a Disability,
and such a termination shall not be treated as a termination without Cause under this
Employment Agreement. If Executive’s employment is terminated on account of a Disability,
the Company shall:
(1) pay Executive his base salary through the end of the month in
which his employment terminates as soon as practicable after his employment
terminates,
(2) pay Executive his Earned Bonus for the fiscal year in which such
termination of employment occurs,
(3) pay or cause the payment of benefits to which Executive is entitled
under the terms of the disability plan of the Company covering the Executive at
the time of such Disability,
(4) make such payments and provide such benefits as otherwise called
for under the terms of the ISP and each other employee benefit plan, program
and policy in which Executive was a participant; provided no payments made under
Section 5(d)(1), Section 5(d)(2), or Section 5(d)(3) shall be
taken into account in computing any payments or benefits described in
this Section 5(d)(4), and
(5) make any COBRA continuation coverage premium payments (not
only for Executive, but also for Executive’s dependents), for the eighteen (18)
month period following the termination of Executive’s employment or, if earlier,
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until Executive is eligible to be covered under another substantially equivalent
medical insurance plan by a subsequent employer.
(e) Death. If Executive’s employment terminates as a result of his death,
the Company shall:
(1) pay Executive his base salary through the end of the month in
which his employment terminates as soon as practicable after his employment
terminates,
(2) pay Executive his Earned Bonus, when actually determined, for the
year in which Executive’s death occurs,
(3) make such payments and provide such benefits as otherwise called
for under the terms of the ISP and each other employee benefit plan, program
and policy in which Executive was a participant; provided no payments made under
Section 5(e)(1) or Section 5(e)(2) shall be taken into account in computing any
payments or benefits described in this Section 5(e)(3), and
(4) make any COBRA continuation coverage premium payments for
Executive’s dependents, for the one year period following
Executive’s death or,
if earlier, until such dependents are eligible to be covered under another substantially equivalent medical insurance plan.
SECTION 6. COVENANTS BY EXECUTIVE
(a) Company Property. Executive upon the termination of Executive’s employment
for any reason or, if earlier, upon the Company’s request shall promptly return all Company
Property which had been entrusted or made available to Executive by the Company, where the
term “Property” means all records, files, memoranda, reports, price lists, customer lists,
drawings, plans, sketches, keys, codes, computer hardware and software and other property of
any kind or description prepared, used or possessed by Executive during Executive’s
employment by the Company (and any duplicates of any such Property) together with any and all
information, ideas, concepts, discoveries, and inventions and the like conceived,
made, developed or acquired at any time by Executive individually or, with others during Executive’s
employment which relate to the Company or its products or services.
(b) Trade Secrets. Executive agrees that Executive shall hold in a fiduciary capacity
for the benefit of the Company and its affiliates and shall not directly or indirectly use or
disclose any Trade Secret that Executive may have acquired during the term of Executive’s employment
by the Company or any of its predecessors for so long as such information remains a Trade
Secret, where the term “Trade Secret” means information, including, but not limited to,
technical or non-technical data, a formula, a pattern, a compilation, a program, a device, a method, a
technique, a drawing or a process that (1) derives economic value, actual or potential, from
not being generally known to, and not being generally readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure or use and (2) is the subject
of reasonable efforts by the Company and any of its affiliates to maintain its secrecy. This
Section 6(b) is intended to provide rights to the Company and its affiliates which are
in addition
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to, not in lieu of, those rights the Company and its affiliates have under the common law or
applicable statutes for the protection of trade secrets.
(c) Confidential Information. Executive while employed by the Company or its
affiliates and for the three (3) year period thereafter shall hold in a fiduciary capacity for
the benefit of the Company and its affiliates, and shall not directly or indirectly use or
disclose, any Confidential Information that Executive may have acquired (whether or not developed or
compiled by Executive and whether or not Executive is authorized to have access to such
information) during the term of, and in the course of, or as a result of Executive’s
employment by the Company or its predecessors without the prior written consent of the Board of Directors
of the Company unless and except to the extent that such disclosure is (i) made in the ordinary
course of Executive’s performance of his duties under this Employment Agreement or (ii)
required by any subpoena or other legal process (in which event Executive will give the
Company prompt notice of such subpoena or other legal process in order to permit the Company
to seek appropriate protective orders). For the purposes of this Employment Agreement, the
term “Confidential Information” means any secret, confidential or proprietary information
possessed by the Company or any of its affiliates, including, without limitation, trade
secrets, customer or supplier lists, details of client or consultant contracts, current and anticipated
customer requirements, pricing policies, price lists, market studies, business plans,
operational methods, marketing plans or strategies, product development techniques or flaws, computer
software programs (including object code and source code), data and documentation data, base
technologies, systems, structures and architectures, inventions and ideas, past current and
planned research and development, compilations, devices, methods, techniques, processes,
financial information and data, business acquisition plans and new personnel acquisition plans
(not otherwise included as a Trade Secret under this Employment Agreement) that has not
become generally available to the public, and the term “Confidential Information” may include,
but not be limited to, future business plans, licensing strategies, advertising campaigns,
information regarding customers or suppliers, executives and independent contractors and the
terms and conditions of this Employment Agreement. Notwithstanding the provisions of this
Section 6(c) to the contrary, Executive shall be permitted to furnish this Employment
Agreement to a subsequent employer or prospective employer.
(d) Non-solicitation of Customers or Employees.
(1) Executive (i) while employed by the Company or any of its affiliates shall not, on
Executive’s own behalf or on behalf of any person, firm, partnership, association,
corporation or business organization, entity or enterprise (other than the Company or one
of its affiliates), solicit business for a Competing Business from customers or suppliers
of the Company or any of its affiliates and (ii) during the Restricted Period shall not, on
Executive’s own behalf or on behalf of any person, firm, partnership, association,
corporation or business organization, entity or enterprise, solicit business for a
Competing Business from customers or suppliers of the Company or any of its affiliates with
whom Executive, in the case of both clauses (i) and (ii) above, had or made material
business contact with in the course of Executive’s employment by the Company within the
twenty-four (24) month period immediately preceding the beginning of the Restricted Period.
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(2) Executive (i) while employed by the Company or any of its affiliates shall not,
either directly or indirectly, call on, solicit or attempt to induce any other officer,
employee or independent contractor of the Company or any of its affiliates to terminate his
or her employment with such business and shall not assist any other person or entity in
such a solicitation (regardless of whether any such officer, employee or independent
contractor would commit a breach of contract by terminating his or her employment), and
(ii) during the Restricted Period, shall not, either directly or indirectly, call on,
solicit or attempt to induce any other officer, employee or independent contractor of such
business with whom Executive had contact, knowledge of, or association in the course of
Executive’s employment with the Company or any of its predecessors or affiliates, as the
case may be, during the twelve (12) month period immediately preceding the beginning of the
Restricted Period, to terminate his or her employment with the Company or any of its
affiliates and shall not assist any other person or entity in such a solicitation
(regardless of whether any such officer, employee or independent contractor would commit a
breach of contract by terminating his or her employment). Notwithstanding the foregoing,
nothing shall prohibit any person from contacting Executive about employment or other
engagement during the Restricted Period, provided that Executive does not solicit the
contact.
(e) Non-competition Obligation. Without the prior written consent of the Company,
Executive, while employed by the Company or any of its affiliates and thereafter until the end of
the Restricted Period, will not engage in any of the activities described in Section
3(b)(1) hereof within the geographical area in which the Company or any of its affiliates is
actively engaged in developing, marketing and selling ophthalmic pharmaceuticals, for himself or
on behalf of any other person, partnership, corporation or other business entity which is in a
Competing Business for purposes of competing with the Company. Notwithstanding the preceding
sentence, Executive will not be prohibited from owning less than five (5%) percent of any publicly
traded corporation, whether or not such corporation is in a Competing Business.
(f) Reasonable and Continuing Obligations. Executive agrees that Executive’s
obligations under this Section 6 are obligations which will continue beyond the date
Executive’s employment terminates and that such obligations are reasonable, fair and equitable in
scope, terms and duration, are necessary to protect the Company’s legitimate business interests
and are a material inducement to the Company to enter into this Employment Agreement.
(g) Remedy for Breach. Executive agrees that the remedies at law of the Company for
any actual or threatened breach by Executive of the covenants in this Section 6 would be
inadequate and that the Company shall be entitled to specific performance of the covenants in this
Section 6, including entry of a temporary restraining order in state or federal court,
preliminary and permanent injunctive relief against activities in violation of this Section
6, or both, or other appropriate judicial remedy, writ or order, in addition to any damages and
legal expenses which the Company may be legally entitled to recover. The Company agrees, however,
to give Executive and, if known, Executive’s attorney reasonable advance notice of any legal
proceeding, including any application for a temporary restraining order, relating to an attempt to
enforce the covenants in this Section 6 against Executive. Executive acknowledges and
agrees that the covenants in this Section 6 shall be construed as agreements independent of
any other provision of this Employment Agreement or any other agreement between the
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Company and Executive, and that the existence of any claim or cause of action by Executive against
the Company, whether predicated upon this Employment Agreement or any other agreement, shall not
constitute a defense to the enforcement by the Company of such covenants.
(h) Termination of Restrictive Covenants. In addition to any other right or remedy
available to Executive, Executive shall no longer be bound by any of the restrictions set forth in
this Section 6 if the Company fails to pay or to provide Executive when due the amounts and
benefits due hereunder or under any agreement ancillary hereto, and Executive’s pursuit of such
remedy shall not relieve the Company from its obligations to pay and to provide such amounts and
benefits to Executive.
(i) Ownership of Inventions, Discoveries, Improvements, Etc.
(1) Executive shall promptly disclose and describe to the Company all
inventions, improvements, discoveries and technical developments, whether or not
patentable, made or conceived by Executive, either alone or with others, during such
time
as Executive is employed with the Company, and within one (1) year after the date upon
such employment terminates, and that (i) are based in whole or in part upon
Confidential
Information, or (ii) during such time as Executive is employed with the Company are
along the lines of, useful in or related to the business of the Company, or (iii)
result from,
or are suggested by, any work that may be done by Executive for or on behalf of the
Company (“Inventions”). Executive hereby assigns and agrees to assign to the Company
Executive’s entire right, title and interest in and to such Inventions, and agrees to
cooperate with the Company both during and after such time as Executive is employed
with the Company in the procurement and maintenance, at the Company’s expense and at
its direction, of patents, copyright registrations and/or protection of the Company’s
rights
in such Inventions. Executive shall keep and maintain adequate and current written
records of all such Inventions, which shall be and remain the property of the Company.
(2) If a patent application, trademark registration or copyright registration is
filed by Executive or on Executive’s behalf, or a copyright notice indicating
Executive’s
authorship is used by Executive or on Executive’s behalf, within one (1) year after the
date on which Executive’s employment with the Company terminates, that describes or
identifies any Invention within the scope of Executive’s work for the Company or that
otherwise related to a portion of the Company’s business (or any division thereof) of
which Executive had knowledge such time as Executive was employed with the
Company, it is to be conclusively presumed that the Invention was conceived by
Executive during the such time as Executive was employed with the Company.
Executive agrees to notify the Company promptly of any such application or registration
and to assign to the Company Executive’s entire right, title and interest in such
Invention
and in such application or registration.
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SECTION 7. MISCELLANEOUS
(a) Notices. Notices and all other communications shall be in writing and shall be
deemed to have been duly given when personally delivered or when mailed by United States
registered or certified mail. Notices to the Company shall be sent to:
Alimera Sciences, Inc.
0000 Xxxxxxxx
Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: 678-990-5744
0000 Xxxxxxxx
Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: 678-990-5744
Notices and communications to Executive shall be sent to the address Executive most recently
provided to the Company.
(b) No Waiver. Except for the notice described in Section 7(a), no failure by
either
the Company or Executive at any time to give notice of any breach by the other of, or to
require
compliance with, any condition or provision of this Employment Agreement shall be deemed a
waiver of any provisions or conditions of this Employment Agreement.
(c) Georgia Law. This Employment Agreement shall be governed by the law of the
State of Georgia, without regard to its provisions relating to choice of law or conflicts of
law.
Any litigation that may be brought by either the Company or Executive involving the
enforcement of this Employment Agreement or any rights, duties, or obligations under this
Employment Agreement, shall be brought exclusively in a Georgia state court or United States
District Court in Georgia.
(d) Assignment. This Employment Agreement shall be binding upon and inure to the
benefit of the Company and any successor in interest to the Company. The Company may assign
this Employment Agreement to any affiliate or successor that acquires all or substantially all
of
the assets and business of the Company or a majority of the voting interests of the Company,
and
no such assignment shall be treated as a termination of Executive’s employment under this
Employment Agreement. Executive’s rights and obligations under this Employment Agreement
are personal and shall not be assigned or transferred.
(e) Other Agreements. This Employment Agreement replaces and merges any and all
previous agreements and understandings regarding all the terms and conditions of Executive’s
employment relationship with the Company, and this Employment Agreement constitutes the
entire agreement between the Company and Executive with respect to such terms and conditions.
(f) Amendment. No amendment to this Employment Agreement shall be effective
unless it is in writing and signed by the Company and by Executive.
(g) Invalidity. If any part of this Employment Agreement is held by a court of
competent jurisdiction to be invalid or otherwise unenforceable, the remaining part shall be
unaffected and shall continue in full force and effect, and the invalid or otherwise
unenforceable
part shall be deemed not to be part of this Employment Agreement.
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(h) Litigation. In the event that either party to this Employment Agreement institutes
litigation against the other party to enforce his or its respective rights under this Employment
Agreement, each party shall pay its own costs and expenses incurred in connection with such
litigation.
[The remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, the Company and Executive have executed this
Employment Agreement in multiple originals effective as of the Effective Date.
| ALIMERA SCIENCES, INC. | EXECUTIVE | |||||||||||
| By: | /s/ Xxx Xxxxx | /s/ Xxxxx X. Xxxxxxx | ||||||||||
Name:
|
Xxx Xxxxx | Name: | Xxxxx X. Xxxxxxx | |||||||||
Title:
|
President/CEO | |||||||||||
Date:
|
Date: | |||||||||||
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SCHEDULE A
BONUS PROGRAM
The Executive shall be eligible for an annual performance bonus of up to twenty percent (20%) of
the Executive’s base salary, which will be contingent upon Alimera achieving board approved
objectives for the period.
SCHEDULE B
OPTION GRANT AT EFFECTIVE DATE
Effective upon the execution of this Agreement, the Executive shall be entitled to a grant of
options to purchase thirty thousand three hundred sixty-seven (30,367) shares of common stock under
the Alimera Sciences, Inc. 2004 Stock Incentive Plan on the terms set forth in the Stock Option
Agreement.
