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EXHIBIT 10.11
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, entered into as of the 29th day of July 1996, by
and between ENAMELON, INC., a Delaware corporation with its principal place of
business at 00 Xxxxxxx Xxxxxx, Xxxxxxx, Xxx Xxxx 00000 (the "Company"), and
XXXXX XXXX, residing at 000 Xxxxx Xxxxx Xxxxx, Xxxxxxxxxxx, Xxx Xxxxxx 00000
(the "Employee").
W I T N E S S E T H :
WHEREAS, the Company is desirous of employing the Employee upon the
terms and conditions contained herein; and
WHEREAS, the Employee is desirous of accepting employment with the
Company upon the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual premises contained
herein and for other good and valuable consideration, the parties hereto hereby
agree as follows:
1. Employment
The Company hereby employs the Employee and the Employee hereby accepts
employment upon the terms and conditions set forth herein.
2. Term
The term of this Agreement shall commence on the date hereof and shall
continue until terminated by the Company or the Employee in their sole
discretion, subject to the termination provisions of Sections 6 and 10 and the
other provisions of this Agreement.
3. Services To Be Rendered
(a) During the term of this Agreement, the Employee shall
serve the Company in an executive capacity and shall perform such duties as are
determined from time to time by the Company's Chairman or President. Unless
prevented by death or disability, the Employee shall devote his full business
time, allowing for vacations and national holidays, as set forth in Sections
5(e) and (f) hereof, and illnesses, exclusively to the business and affairs of
the Company, and shall use his best efforts, skill and abilities to promote the
Company's interests.
(b) The Employee shall serve as the Company's Vice President
and Chief Financial Officer and shall perform duties consistent with those of a
chief financial officer and such other duties as shall be designated from time
to time by the Board of Directors, Chairman or President of the Company. The
Employee will be one of the Company's principal operating officers and will
conduct and manage the Company's business in accordance with policies
established by the Company from time to time. The precise services of the
Employee may be extended or curtailed from time to time at the direction and in
the sole discretion of the
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Company's Chairman or President. As an officer of the Company, the Employee
shall be entitled to all rights of indemnification as may be provided to
officers by applicable Delaware law. Nothing herein shall be construed as
requiring the Company, or anybody else, to cause the election of the Employee as
a Director of the Company.
4. Compensation
For the services rendered hereunder, the Company shall pay and
the Employee shall accept the following compensation:
(a) From the commencement of the term hereof, the Employee
shall receive a base annual salary of $89,000 subject to increase from time to
time as determined by the Board of Directors.
(b) The Employee shall participate in an executive
compensation plan to be established by the Board of Directors of the Company.
The Employee shall be entitled to not less than 5% of any amounts allocated by
the Board of Directors each year during the term hereof to such plan for the
purpose of providing an incentive to key employees. In no event, however, shall
Employee receive more than two times his base salary, inclusive of any increases
described above. In addition, in the event the term hereof is not commensurate
with the fiscal year of the Company or the Employee is not employed hereunder
for a full fiscal year, any such amounts due Employee hereunder pursuant to the
terms of an executive compensation plan shall be pro-rated for any such fiscal
year during which the Employee was not employed for the full twelve month period
thereof.
(c) The Company will use its best efforts to procure (i) a
term life insurance policy designating the Employee as the insured in an amount
equal to not less than two times the Employee's base annual salary, inclusive of
any increases described above, the terms of which policy shall be consistent
with those of the other officers of the Company, and (ii) a disability insurance
policy designating the Employee as the insured and providing for disability
income to the Employee equal to 60% of the Employee's base annual salary,
inclusive of any increases described above. The beneficiary of such policies
shall be designated by the Employee. In the event the Company is unable to
procure either of such policies, nothing hereunder shall obligate the Company to
remit any payments which would have been used to pay the premiums for such
policy to Employee.
(d) The Employee's salary shall be payable subject to such
deductions as are then required by law and such further deductions as may be
agreed to by the Employee, in accordance with the Company's prevailing salary
payroll practices.
(e) The Employee shall be granted as of the date hereof
qualified options to purchase 25,000 shares of the Company's Common Stock in
accordance with the terms of the Company's Stock Option Plan at an exercise
price equal to the public offering price of the Company's Common Stock on the
effective date of the Registration Statement that is now on file
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with the Securities and Exchange Commission or, if the Registration Statement is
not declared effective by January 1, 1997, $8.00 per share. Options to purchase
12,500 shares shall become exercisable on the first anniversary hereof, and
options to purchase the remaining 12,500 shares shall become exercisable on the
second anniversary hereof; provided, however, that if the Employee's employment
is terminated before the second anniversary hereof by the Company without cause
or as a result of his death or disability, then such options shall become
exercisable ratably based upon the proportion that the number of full calendar
months for which the Employee was employed prior to termination bears to 24.
Such options shall remain exercisable for a period of five years after the date
hereof.
5. Benefits and Expenses
(a) The Employee shall participate in all fringe benefits such
as medical, disability, hospital and health insurance plans, profit sharing,
pension and stock option plans, other forms of incentive compensation plans,
life insurance and other plans, if any, which the Company may generally make
available to its executive employees, except that the Company shall pay 70% of
the cost of hospital and health insurance coverage maintained for him and his
family.
(b) In the event that the Employee's employment by the Company
is terminated for any reason, the Employee shall have the right to purchase from
the Company any insurance policies on his life owned by the Company for a price
equal to the cash surrender value of the policies at the date of such
termination, plus prepaid premiums, and to acquire any disability income
insurance policies maintained for him as provided in such policies. The right to
purchase shall be exercised by the Employee by written notice to the Company not
less than thirty (30) days after the date of such termination, and the purchase
price for such policies shall be paid by the Employee to the Company.
(c) During the term of this Agreement, the Company shall, upon
presentation of proper vouchers, reimburse the Employee for all reasonable
expenses incurred by him directly in connection with his performance of services
as an officer and employee of the Company.
(d) As a condition of his employment, the Employee shall
maintain an automobile. Accordingly, the Company shall lease a Nissan Maxima or
comparable automobile for use by the Employee in performing his duties
hereunder. In addition, the Company shall pay or reimburse the Employee for
tolls, parking, gasoline, maintenance, and other expenses with respect to the
operation of such automobile incurred in connection with the performance of his
duties hereunder, which shall be paid upon presentation of original invoices.
(e) The Employee shall be entitled to three (3) weeks of paid
vacation per calendar year, provided that the Employee shall not take more than
two consecutive weeks of vacation during any calendar year. Vacation
entitlements are non-cumulative and if the Employee fails to use any or all of
his three-week vacation allotment during a particular calendar year, such
vacation shall be deemed forfeited forever.
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(f) The Employee shall receive as paid days off all national
holidays, sick days, and personal days that the Company, pursuant to established
policy, recognizes and observes.
6. Disability and Death
(a) In the event of the permanent disability (as hereinafter
defined) of the Employee, the Company shall have the right thereafter to
terminate this Agreement with the Employee by sending written notice of such
termination to the Employee, and thereupon this Agreement shall terminate. For
purposes hereof, "permanent disability" shall mean the inability of the Employee
to perform his duties hereunder due to physical or mental illness, including
drug abuse and alcoholism, for a continuous period of three (3) months or for
six (6) months in any period of twelve (12) consecutive months. In addition, the
"permanent disability" of the Employee shall also have been deemed to have
occurred if the Employee shall have had appointed a guardian or conservator for
him or such appointment shall have been made by a court of competent
jurisdiction.
(b) The parties hereto hereby agree that if a disagreement
arises as to whether a condition of disability exists hereunder, the Employee
shall submit to a physical examination by a physician of his own choice and by a
physician of the Company's choice. If either physician so chosen does not agree
as to the determination of disability, the two physicians shall mutually select
a third qualified physician, whose determination shall be conclusive upon all
parties. Each party shall bear the expense of the physician selected by such
party and the expense of the third physician shall be borne equally by the
Employee and the Company. The Employee hereby consents to the examination
provided for herein and waives, if applicable, any privilege which exists
between any physician and the Employee as a result of such examination.
(c) This Agreement shall also terminate upon and as of the
date of death of the Employee at any time during the term of this Agreement.
(d) Notwithstanding anything contained herein to the contrary,
the Employee shall be compensated as set forth in this Agreement, through the
date of termination of this Agreement due to permanent disability or death,
provided, however, in the event of permanent disability any such compensation
shall be reduced by any amounts payable to Employee from or in respect of
disability insurance plans for which the Company has paid any portion of the
premiums therefore and which payments are received by the Employee for the
period of such incapacity or illness.
7. Covenants and Restrictions
The Employee covenants that, except in carrying out his duties
hereunder, during the term of his employment and for a period of eighteen (18)
months following the date of termination of employment hereunder, irrespective
of the reasons for any such termination and unless such longer period of time is
specifically set forth herein:
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(a) The Employee will not, directly or indirectly, own any
interest in, participate or engage in, assist, render any services (including
advisory services) to, become associated with, work for, serve (in any capacity
whatsoever, including, without limitation, as an employee, consultant, advisor,
agent, independent contractor, officer or director) or otherwise become in any
way or manner connected with the ownership, management, operation, or control
of, any individual, business, firm, corporation, partnership or other entity
(collectively referred to herein as a "Person") that engages in, or assists
others in engaging in or conducting any business, which deals, directly or
indirectly, in products or services competitive with the Company's product line
or services, as described below, anywhere in the world (a "Competitor");
provided, however, that the Employee shall have the right to act as a director
of a corporation for the benefit of the Company with the consent of the
Company's Board of Directors; and provided, further, that Employee shall have
the right to own or acquire securities issued by any corporation whose
securities are listed with a national securities exchange or are traded in the
over-the-counter market, provided that the Employee at no time owns, directly or
indirectly, beneficially or otherwise, one (1%) percent or more of any class of
any such corporation's outstanding capital stock. For purposes hereof, "products
or services competitive with the Company's product line or services" shall mean
any products or services which have as their primary purpose or function or
which are marketed, promoted or sold as having the effect of repairing,
remineralizing, rebuilding, or desensitizing teeth or preventing or retarding
tooth decay and/or cavities.
(b) The Employee shall not sell any products or services to,
or solicit any sales of products or services from, any customer of the Company
on behalf of a Competitor. The term "customer" shall mean any Person (including
any Person who controls, is under common control with or has the ability to
control any such Person) to whom the Company has provided goods or services
within the twenty-four (24) month period prior to the termination of Employee's
employment hereunder or to whom the Employee had actively solicited business in
an attempt to develop such Person as a customer of the Company during the term
hereof, or any licensee of the Company who was a licensee of the Company at any
time during the twenty-four (24) month period prior to the termination of this
Agreement.
(c) The Employee hereby covenants and agrees that the Employee
will not at any time subsequent to the date hereof, reveal, divulge, or make
known to any Person any Confidential Information (as hereinafter defined) made
known to the Employee or of which Employee has become aware, regardless of
whether developed, prepared, devised or otherwise created in whole or in part by
the efforts of the Employee and except to the extent so authorized in writing by
the Company in order to carry out the terms of this Agreement or except as
required by law. For purposes of this Agreement, the term "Confidential
Information" shall mean (i) any technical, scientific or engineering information
relating to the Company's products and/or services, (ii) information relating to
any customer of the Company, including without limitation, the names, addresses,
telephone numbers and sales records of, or pertaining to any such customer, and
(iii) price lists, methods of operation and other information pertaining to the
Company and which the Company, in its sole discretion, regards as confidential
and in the nature of trade secrets. Notwithstanding anything contained herein to
the contrary, Confidential
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Information as used herein shall not include that which (i) was in the public
domain prior to receipt hereunder in the same context as the disclosure made
hereunder, (ii) the Employee can show was in his possession and in the same
context prior to his receipt, (iii) subsequently becomes known to the Employee
as a result of disclosure by third parties not in the course of this Agreement
and as a matter of right and without restriction on disclosure, or (iv)
subsequently comes into the public domain in the same context as the disclosure
by the Company through no fault of the Employee.
(d) The Employee further covenants and agrees that the
Employee will retain all of such Confidential Information in trust for the sole
benefit of the Company, and will not divulge or deliver or show any of such
Confidential Information to any unauthorized person and will not make use of or
in any manner seek to turn to account any of such Confidential Information in an
independent business however unrelated to the business of the Company. The
Employee further agrees that upon the termination of this Agreement or upon the
request of the Company, the Employee will either supply or return to the
Company, in accordance with the Company's request, all Confidential Information
in the Employee's possession, including, without limitation, all account lists,
records and data related to all customers of the Company.
(e) The Employee will not solicit, hire or seek to solicit or
hire any of the Company's personnel, irrespective of the capacities in which
such personnel are employed, including any agent, independent contractor, or
consultant to the Company, nor shall the Employee induce or attempt to induce
any of the Company's personnel to leave the employ of the Company to work for
the Employee or otherwise, or to terminate their relationship with the Company.
(f) The Employee acknowledges that his breach or threatened
violation of any of the restrictive covenants contained in this Section 7 may
cause irreparable damage to the Company for which remedies at law would be
inadequate. The Employee further acknowledges that the restrictive covenants set
forth herein are essential terms and conditions of this Agreement. The Employee
therefore agrees that the Company shall be entitled to a decree or order by any
court of competent jurisdiction enjoining such threatened or actual violation of
any of such covenants. Such decree or order, to the extent appropriate, shall
specifically enforce the full performance of any such covenant by the Employee
and the Employee hereby consents to the jurisdiction of any such court of
competent jurisdiction. This remedy shall be in addition to all other remedies
available to the Company at law or equity. If any portion of this Section 7 is
adjudicated to be invalid or unenforceable, this Section 7 shall be deemed
amended to delete therefrom the portion so adjudicated, such deletion to apply
only with respect to the operation of this Section 7 in the jurisdiction in
which such adjudication is made.
8. Proprietary Property
(a) The parties hereto hereby agree that Proprietary Property
(as hereinafter defined) shall be the sole and exclusive property of the
Company, except as provided below. For purposes hereof, Proprietary Property
shall mean inventions, discoveries, improvements and
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ideas, whether patentable or not, made solely by the Employee or jointly with
others, which relate to the Company's business, including any of its products,
services, processes, technology, research, product development, marketing
programs, manufacturing operations, or engineering activities.
(b) The Employee shall promptly disclose to the Company in
writing all Proprietary Property, including those in the formative stages,
created during the term hereof, irrespective of whether created during normal
business hours. In addition, the Employee hereby agrees to promptly disclose to
the Company all Proprietary Property created subsequent to the date of
termination hereof, irrespective of the reasons for termination hereof, which
relate to or constitute an improvement on Proprietary Property or Confidential
Information, as defined herein.
(c) The Employee hereby agrees and acknowledges that the
Employee shall have no right, title or interest in or with respect to any
Proprietary Property, except as described below, and will during the term hereof
or at any time subsequent to the termination hereof, at the Company's request
and expense, execute any and all patent applications and assignments to the
Company and take any all action as required by the Company to perfect and
maintain the Company's rights and interests in and with respect to the
Proprietary Property.
(d) The Employee hereby agrees to maintain written records
concerning the Proprietary Property and agrees to make those records available
to the Company at all times.
(e) Notwithstanding anything contained herein to the contrary,
Proprietary Property shall not include inventions or discoveries with respect to
which all of the following conditions apply:
(i) no equipment, supplies, facilities or
Confidential Information of the Company was used in
its development;
(ii) it does not relate the Company's business and/or
any proposed or planned products or services of the
Company, including any research and development
activities; and
(iii) it does not result from any work performed by
the Employee for the Company.
(f) During or subsequent to the Employee's employment by
Company, the Employee will not, directly or indirectly, lecture upon, publish
articles concerning, use, disseminate, disclose, sell or offer for sale any
Proprietary Property without the Company's prior written permission.
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9. Prior Agreements
The Employee represents that he is not now under any written
agreement, nor has he previously, at any time, entered into any written
agreement with any person, firm or corporation, which would or could in any
manner preclude or prevent him from giving freely and the Company receiving the
exclusive benefit of his services.
10. Termination Provisions
(a) In addition to, and not in lieu of, the
termination provisions set forth in Section 6 of this Agreement, the employment
of the Employee hereunder may be terminated by the Company in the event that the
Employee (i) breaches this Agreement in any material respect or (ii) engages in
any act of dishonesty with respect to the Company, including any act of willful
misfeasance (the foregoing reasons for termination set forth under clauses (i)
and (ii) above are sometimes referred to hereinafter as termination for
"Cause"). Such termination of the Employee's employment hereunder shall be
effective immediately upon delivery of written notice to the Employee setting
forth the reason or reasons for such termination. Upon the termination of this
Agreement in accordance with this Section 10(a), the Company shall not be
obligated to make any further payments hereunder to the Employee.
(b) Notwithstanding any provisions in this Agreement
to the contrary, the Company may terminate the employment of the Employee
hereunder without Cause, but in such event the Company shall be obligated to pay
the Employee's base annual salary for a period of six (6) months after the
Company gives written notice of such termination (such period being referred to
herein as the "Remainder Term"), and the Company shall also continue for the
Remainder Term to permit the Employee to receive or participate in all fringe
benefits available to him pursuant to Section 5(a) above; provided, however,
that from time to time during the Remainder Term the Employee shall provide such
service to the Company as it shall reasonably request relating to the duties of
the Employee during the term of this Agreement; and provided, further, that
during the Remainder Term any amounts payable to the Employee pursuant to this
Section 10(b), and any fringe benefits which he receives or in which he
participates pursuant to this Section 10(b), shall be reduced by any payments or
fringe benefits the Employee shall receive during the Remainder Term from any
other source of employment which is unaffiliated with the Company.
(c) In the event of a "change of control" (as
hereinafter defined) of the Company during the term of the Employee's employment
hereunder, the Employee may terminate his employment with the Company by giving
thirty (30) days' notice thereof within six months after the occurrence of such
change of control. If the Employee terminates his employment under this Section
10(c) or is terminated without cause within six (6) months after a change of
control, the Company shall pay the Employee an amount equal to his then annual
base salary pursuant to Section 4 above plus a ratable portion of the amount
paid to him under Section 4(b) with respect to the preceding calendar year, if
any, based upon the proportion that
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the number of full calendar months that he was employed during the year of
termination bears to 12. The Employee shall have the option to have such payment
made in a lump sum payable on the date of termination or in three equal
installments payable upon termination and two months and four months after
termination. The Company shall also continue for such period to permit the
Employee to receive or participate in all fringe benefits available to him
pursuant to Section 5(a) above for a period of one year after the termination of
his employment. A "change of control" shall be deemed to occur when any Person
or group of Persons directly or indirectly (through a subsidiary or otherwise),
(A) acquires or is granted the right to acquire, directly or through a merger or
similar transaction, a majority of Company's outstanding voting securities, or
(B) acquires all or substantially all of the Company's assets.
11. Miscellaneous
(a) This Agreement shall inure to the benefit of and
be binding upon the Company, its successors and assigns, and upon the Employee,
his heirs, executors, administrators, legatees and legal representatives.
(b) Should any part of this Agreement, for any reason
whatsoever, be declared invalid, illegal, or incapable of being enforced in
whole or in part, such decision shall not affect the validity of any remaining
portion, which remaining portion shall remain in full force and effect as if
this Agreement had been executed with the invalid portion thereof eliminated,
and it is hereby declared the intention of the parties hereto that they would
have executed the remaining portion of this Agreement without including therein
any portion which may for any reason be declared invalid.
(c) This Agreement shall be construed and enforced in
accordance with the laws of the State of New York applicable to agreements made
and to be performed in such State without application of the principles of
conflicts of laws of such State.
(d) This Agreement and all rights hereunder are
personal to the Employee and shall not be assignable, and any purported
assignment in violation thereof shall be null and void. Any person, firm or
corporation succeeding to the business of the Company by merger, consolidation,
purchase of assets or otherwise, shall assume by contract or operation of law
the obligations of the Company hereunder; provided, however, that the Company
shall, notwithstanding such assumption and/or assignment, remain liable and
responsible for the fulfillment of the terms and conditions of the Agreement on
the part of the Company.
(e) This Agreement constitutes the entire agreement
between the parties hereto with respect to the terms and conditions of the
Employee's employment by the Company, as distinguished from any other
contractual arrangements between the parties pertaining to or arising out of
their relationship, and this Agreement supersedes and renders null and void any
and all other prior oral or written agreements, understandings, or commitments
pertaining to the Employee's employment by the Company. This Agreement may only
be amended upon the written agreement of both parties hereto.
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(f) Any notice, statement, report, request or demand
required or permitted to be given by this Agreement shall be in writing, and
shall be sufficient if delivered in person or if addressed and sent by certified
mail, return receipt requested, postage prepaid, to the parties at the addresses
set forth above, or at such other place that either party may designate by
notice in the foregoing manner to the other. If mailed as aforesaid, any such
notice shall be deemed given three (3) days after being so mailed.
(g) The failure of either party to insist upon the
strict performance of any of the terms, conditions and provisions of this
Agreement shall not be construed as a waiver or relinquishment of future
compliance therewith, and said terms, conditions and provisions shall remain in
full force and effect. No waiver of any term or any condition of this Agreement
on the part of either party shall be effective for any purpose whatsoever unless
such waiver is in writing and signed by such party.
(h) The provisions of Sections 6, 7, 8, 10 and 11 of
this Agreement shall survive any termination of this Agreement
(i) The headings of the paragraphs herein are
inserted for convenience and shall not affect any interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first written above.
ENAMELON, INC.
By: /s/ Xx. Xxxxxx X. Xxx
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Xxxxxx X. Xxx, D.D.S.
Chief Executive Officer
By: /s/ Xxxxx Xxxx
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Xxxxx Xxxx
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