Exhibit 10.27
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is made as of
December 21, 2001 between Xxxxxxx Xxxxx, Xx., Ph.D. (the "Executive"), and ISTA
Pharmaceuticals, Inc., a Delaware corporation (the "Company").
WHEREAS, the Company desires to employ Executive and Executive desires
to be employed by the Company, upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual covenants and obligations
contained herein, and intending to be legally bound, the parties agree as
follows:
1. EMPLOYMENT AND TERM. The Company hereby employs Executive, and
Executive hereby accepts employment with the Company at its offices in Irvine,
California, commencing on December 17, 2001 (the "Effective Date").
2. POSITION AND DUTIES.
(a) PRESIDENT AND CEO. Executive will hold the office of President
and Chief Executive Officer of the Company, reporting to the Board of Directors
of the Company (the "Board"), serving the Company faithfully and to the best of
his ability, whereby he shall devote his full work time, attention, skill and
efforts to the performance of his duties. Such duties shall be carried out
principally at the Company's headquarters in Irvine, California, and such other
locations upon which Executive and the Board may agree. Executive shall have
such duties and responsibilities as are normal for such position, and will work
in close cooperation with the Board who may from time to time set reasonable
specific performance objectives in conjunction with Executive.
(b) DIRECTOR. Executive will be elected to the Company's Board no
later than the first Board meeting or action by written consent following the
Effective Date.
3. COMPENSATION. The Company shall pay Executive, and Executive hereby
agrees to accept, as compensation for all services to be rendered to the Company
and for Executive's agreements concerning intellectual property covenants
described by Sections within this Agreement hereof and attachments to this
Agreement, the compensation set forth in this Section 3.
(a) SALARY. Beginning on the Effective Date, the Company shall pay
Executive a base salary at the annual rate of Three Hundred Seventy Thousand
Dollars ($370,000) (as the same may hereafter be adjusted by the Compensation
Committee, the "Salary"). The Salary shall be inclusive of all applicable
income, social security and other taxes and charges that are required by law to
be withheld by the Company and shall be paid and withheld in accordance with the
Company's normal payroll practices for its executive employees.
(b) STOCK OPTIONS.
(i) Executive will be granted a stock option to purchase the
greater of (i) 1,000,000 shares of the Company's Common Stock or (ii) 5% of the
current outstanding shares on a
"fully diluted" basis (the "Shares"). The exercise price for the Shares shall be
$2 per share or the fair market value of the Company's Common Stock at the time
of grant, which ever is less (the "Option"). The Option will have an early
exercise feature. Subject to the accelerated vesting provisions set forth
herein, the Option will vest as to 25% of the shares subject to the Option on
the one year anniversary of the Effective Date, and as to 1/48th of the shares
subject to the Option monthly thereafter, so that the Option will be fully
vested and exercisable on the fourth anniversary of the Effective Date.
(ii) For purposes of this Agreement, "fully diluted" shall mean
the aggregate number of shares of Common Stock outstanding on an as converted
basis plus the aggregate number of shares of Common Stock that could be obtained
through the exercise or conversion of rights, options, warrants and convertible
securities.
(c) REIMBURSEMENT OF EXPENSES. During the course of employment,
Executive shall be reimbursed for items of travel, food and lodging and
miscellaneous expenses reasonably incurred by him on behalf of the Company,
provided that such expenses are incurred, documented and submitted to the
Company, all in accordance with the reimbursement policies of the Company in
effect at the time the expenses were incurred.
(d) BONUS. Executive shall be eligible to receive an annual
performance bonus of up to 50% of his Salary upon the completion of performance
goals established by the Board.
(e) COMPANY BENEFITS. While employed by the Company, Executive shall
be entitled to receive the benefits of employment described in the Company's
Employee Handbook, when and as Executive becomes eligible for them. The
Company's Employee Handbook may be revised from time to time at the sole
discretion of the Company. Executive will be entitled to medical insurance for
Executive, Executive's spouse and minor children and four weeks paid vacation
per year. Additionally, the Company will pay for the costs of a long-term
disability insurance policy for the benefit of the executive with coverage and
premiums to be approved by the Board.
4. PROPRIETARY INFORMATION AND INVENTIONS AND AGREEMENT. Executive
agrees to enter into and be bound by the provisions of the Company's Proprietary
Information and Inventions Agreement (the "Proprietary Agreement"), attached
hereto as Exhibit A. Notwithstanding any termination of this Agreement or
Executive's employment by the Company, Executive agrees to continue to be bound
by the Proprietary Agreement. Executive agrees to comply with any and all
current and future Company policies governing employees generally, and to
execute and be bound by any future agreements required of executives, as a
condition of employment, by the Board.
5. OUTSIDE ACTIVITIES.
(a) OTHER EMPLOYMENT. Executive currently serves as the Chairman of
the Board of Directors of AdaptiveInfo and MDEdge, Inc., and as a director of
Ferex and Avera Pharma. Except with the prior written consent of the Board or as
set forth above, Executive will not serve on any other company's Board of
Directors or undertake or engage in any other employment, occupation or business
enterprise, other than ones in which Executive is a passive investor. Executive
may engage
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in civic and not-for-profit activities so long as such activities do not
materially interfere with the performance of his duties hereunder.
(b) PROFESSIONAL ACTIVITIES. Executive from time to time may
engage in certain professional activities including seminars, speaking
engagements, and authoring of publications so long as such activities do not
materially interfere with the performance of his duties hereunder. Whenever
possible, Executive's expenses should be reimbursed by the other party.
Executive may retain all honoraria or payments received from such activities
provided that the Company is not required to reimburse Executive for any
expenses incurred by such activities.
(c) CONFLICT OF INTEREST. While employed by the Company,
Executive shall not engage in any activity in competition with or against the
best interest of the Company and agrees to inform the Company of any potential
conflict of interest as required in the Proprietary Agreement. This shall
include assuming or maintaining any outside business relationship that might
inhibit or prejudice the exercise of sound ethical judgment or that might
otherwise adversely affect the Company such as: (i) employment or providing
services with another firm while in the employment of the Company if the firm is
a competitor, a supplier, or one that will likely become a competitor or
supplier in the future, (ii) holding a substantial financial interest in a firm
to which the Company makes sales, or that provides services, materials or
equipment to the Company, and (iii) the acceptance of gifts or favors from an
outside organization that are substantial enough to cause undue influence in
conducting business for the Company.
6. TERMINATION. Upon termination of Executive's employment hereunder,
Executive shall be entitled to such compensation and benefits as described in
this Section.
(a) INVOLUNTARY TERMINATION PRIOR TO A CHANGE OF CONTROL. If
Executive's employment with the Company terminates, prior to a "Change of
Control" (as defined herein), other than voluntarily or for "Cause" (as defined
herein), and Executive signs and does not revoke a standard release of claims
with the Company, then, subject to Section 9, Executive shall be entitled to
receive continuing payments of severance pay (less applicable withholding taxes)
at a rate equal to his Salary, as then in effect, for a period of nine (9)
months from the date of such termination, to be paid periodically in accordance
with the Company's normal payroll policies.
(b) VOLUNTARY TERMINATION; TERMINATION FOR CAUSE. If Executive's
employment with the Company terminates voluntarily by Executive or for Cause by
the Company, then (i) all vesting of the Option will terminate immediately and
all payments of compensation by the Company to Executive hereunder will
terminate immediately (except as to amounts already earned), and (ii) Executive
will only be eligible for severance benefits in accordance with the Company's
established policies as then in effect.
(c) TERMINATION FOR DEATH. This Agreement shall terminate
automatically upon Executive's death. If Executive's employment hereunder is
terminated on account of his death, the Company shall pay to Executive's estate,
as its sole right and remedy under this Agreement, all accrued and unpaid base
salary and expense reimbursements through the date of Executive's death and
Executive's estate shall also be entitled to receive any then accrued Company
stock pursuant to
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his written agreement relating thereto, insurance and other rights and benefits
to the extent, if at all, Executive was entitled to them under their respective
terms.
(d) DISABILITY. In the event that Executive, because of accident,
disability or physical or mental illness, is incapable of performing his usual
duties hereunder, the Company shall have the right to terminate Executive's
employment hereunder upon thirty (30) days prior written notice to Executive.
For purposes of this Section (d), Executive shall be deemed to have become
incapable of performing his usual duties hereunder if the Board shall reasonably
determine that Executive is, by reason of any medically-determinable physical or
mental impairment expected to result in death or to be of a duration of not less
than six (6) months, unable to perform consistently and materially his usual
duties for the Company with or without reasonable accommodation. If Executive's
employment hereunder is terminated pursuant to this section, the Company shall
pay to Executive, as his sole and exclusive right and remedy under this
Agreement all accrued and unpaid base salary and reimbursements through the date
of Executive's termination and Executive shall also be entitled to receive any
then accrued stock pursuant to his stock option agreement, insurance and other
rights and benefits to the extent, if at all, Executive was entitled to them
under their respective terms.
7. CHANGE OF CONTROL BENEFITS.
(a) VESTING ACCELERATION AFTER CHANGE OF CONTROL. If Executive's
employment with the Company terminates other than voluntarily or for Cause
following a Change of Control, all of the then unvested shares subject to the
Option shall immediately vest.
(b) SEVERANCE AFTER A CHANGE OF CONTROL. If Executive's employment
with the Company terminates, after a Change of Control, other than voluntarily
or for Cause, and Executive signs and does not revoke a standard release of
claims with the Company, then, subject to Section 9, Executive shall be entitled
to receive continuing payments of severance pay (less applicable withholding
taxes) at a rate equal to his Salary, as then in effect, for a period of
twenty-four months from the date of such termination, to be paid periodically in
accordance with the Company's normal payroll policies.
8. DEFINITIONS.
(a) CAUSE. For purposes of this Agreement, "cause" shall mean: (i)
any breach by Executive concerning confidential or proprietary information or
conflict of interest as detailed by Sections within this Agreement or in the
Proprietary Agreement, (ii) gross breach of fiduciary duty, (iii) material
dishonesty, misrepresentation or theft, (iv) conviction of a crime involving
moral turpitude, or (v) breach of any other material obligations under this
Agreement, which breach has not been cured within thirty (30) days of written
notice by the Company to Executive.
(b) CHANGE OF CONTROL. For purposes of this Agreement, "Change of
Control" shall mean: (i) the date of the consummation of a merger or
consolidation of the Company with any other corporation that has been approved
by the stockholders of the Company, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than fifty
percent (50%) of the total voting power
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represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the stockholders
of the Company approve a plan of complete liquidation of the Company, or (ii)
the date of the consummation of the sale or disposition by the Company of all or
substantially all the Company's assets.
9. CONDITIONAL NATURE OF SEVERANCE PAYMENTS.
(a) NONCOMPETE. Executive acknowledges that the nature of the
Company's business is such that if Executive were to become employed by, or
substantially involved in, the business of a competitor of the Company during
the nine months following the termination of Executive's employment with the
Company, it would be very difficult for Executive not to rely on or use the
Company's trade secrets and confidential information. Thus, to avoid the
inevitable disclosure of the Company's trade secrets and confidential
information, Executive agrees and acknowledges that Executive's right to receive
the severance payments set forth in Sections 6 and 7 (to the extent Executive is
otherwise entitled to such payments) shall be conditioned upon Executive not
directly or indirectly engaging in (whether as an employee, consultant, agent,
proprietor, principal, partner, stockholder, corporate officer, director or
otherwise), nor having any ownership interest in or participating in the
financing, operation, management or control of, any person, firm, corporation or
business that competes with Company or is a customer of the Company. Upon any
breach of this section, all severance payments pursuant to this Agreement shall
immediately cease.
(b) NON-SOLICITATION. Until the date twelve months after the
termination of Executive's employment with the Company for any reason, Executive
agrees not to either directly or indirectly soliciting, inducing, attempting to
hire, recruiting, encouraging, taking away, hiring any employee of the Company
or causing an employee to leave his or her employment either for Executive or
for any other entity or person.
10. MISCELLANEOUS.
(a) SURVIVAL OF PROVISIONS. The provisions of this Agreement set
forth by Sections within this Agreement hereof shall survive the termination of
Executive's employment hereunder.
(b) SUCCESSOR AND ASSIGNS. This Agreement shall insure to the benefit
of and be binding upon the Company and Executive and their respective
successors, executors, administrators, heirs, and or assigns; provided that
neither party shall make any assignments of the Agreement or any interest
herein, by operation of law or otherwise, without the prior written consent of
the other party, except that the Company may assign its rights and obligations
under this Agreement to a successor or affiliate of the Company without such
consent.
(c) NOTICES. Any notice hereunder by either party shall be given by
personal delivery or by sending such notice by certified mail, or telecopied to
the other party at its address set forth below or at such other address
designated by notice in the manner provided in this section. Such notice shall
be deemed to have been received upon the date of actual delivery if personally
delivered or, in the case of mailing in two business days after deposit with the
US mail, or in the case of facsimile transmission, during the business day when
confirmed by the facsimile machine report or the next business day if received
after normal business hours by the recipient.
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(i) If to the Company, to:
Chairman of the Board
ISTA Pharmaceuticals
00000 Xxxxx Xxxx., Xxxx. 000
Xxxxxx, XX 00000
(ii) If to Executive, to:
Xxxxxxx Xxxxx, Xx., Ph.D.
0000 Xxxxxxx Xxxxx
Xxxxxx xxx Xxx, XX 00000
(d) ENTIRE AGREEMENT; ATTACHMENTS. This Agreement and the Proprietary
Agreement contain the entire agreement and understanding of the parties hereto
relating to the subject matter hereof and supersedes all prior and
contemporaneous discussions, agreements and understandings of every nature
between the parties hereto relating to the employment of Executive with the
Company. This Agreement may not be changed or modified, except by an agreement
in writing signed by each of the parties hereto.
(e) WAIVER. The waiver of the breach of any term or provision of this
Agreement shall not operate as or be construed to be a waiver of any other or
subsequent breach of this Agreement.
(f) GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with laws of California.
(g) SEVERABILITY. Whenever possible, each provision of the Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal, or
unenforceable, in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as closely as possible to
conform to the intentions of the parties.
(h) SECTION HEADINGS. The section headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation.
IN WITNESS WHEREOF, parties have caused this Executive Employment
Agreement to be executed the day and year first written above.
ISTA PHARMACEUTICALS, INC.
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Xxxxxx X. XxXxxx, Ph.D.
Chairman of the Board
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EXECUTIVE
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Xxxxxxx Xxxxx, Xx., Ph.D.
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