EMPLOYMENT AGREEMENT
Exhibit 10.2
This Employment Agreement (the “Agreement”) is made as of this ___day of
___, 2007, by and between Zars Pharma, Inc., (the “Company”), and ___
(“Employee”) (collectively, the “Parties”).
Whereas, the Company wishes to continue to employ Employee and to assure itself of
the continued services of Employee on the terms set forth herein;
Whereas, Employee wishes to be so employed under the terms set forth herein; and
Whereas, the Parties intend that this Agreement shall supersede and replace any
similar agreements that presently exist or may have previously existed between the Parties
regarding the terms of Employee’s employment with the Company.
AGREEMENT
Now, Therefore, in consideration of the mutual promises and covenants contained
herein, it is hereby agreed by and between the Parties hereto as follows:
1. Employment. The Company will continue to employ Employee and Employee shall
continue to serve the Company in the capacity of ___.
2. At-Will Employment. It is understood and agreed by the Company and Employee that
this Agreement does not contain any promise or representation concerning the duration of Employee’s
employment with the Company. Employee specifically acknowledges that his employment with the
Company is at-will and may be altered or terminated by either Employee or the Company at any time,
with or without cause and/or with or without notice. The nature, terms or conditions of Employee’s
employment with the Company cannot be changed by any oral representation, custom, habit or
practice, or any other writing. In addition, that the rate of salary, any bonuses, paid time off,
other compensation, or vesting schedules are stated in units of years or months or weeks does not
alter the at-will nature of the employment, and does not mean and should not be interpreted to mean
that Employee is guaranteed employment to the end of any period of time or for any period of time.
In the event of conflict between this disclaimer and any other statement, oral or written, present
or future, concerning terms and conditions of employment, the at-will relationship confirmed by
this disclaimer shall control. This at-will status cannot be altered except in a writing signed by
Employee and approved by the Board of Directors of the Company (the “Board of Directors”).
3. Duties. Employee shall continue to render exclusive, full-time services to the
Company as its ___[and shall also continue to serve as a member of the Company’s Board
of Directors pursuant to the Company’s Bylaws]. Employee shall report to [the Board of Directors].
Employee shall perform services under this Agreement primarily at the Utah office of the Company,
and from time to time at such other locations as is necessary to perform the duties of
___under this Agreement. Subject to the terms of this Agreement, Employee’s
responsibilities, working conditions and duties may be changed,
added to or eliminated during his employment at the sole discretion of the Board of Directors.
During Employee’s employment with the Company he shall devote his best efforts and his full
business time, skill and attention to the performance of his duties on behalf of the Company.
4. Policies and Procedures. Employee agrees that he is subject to and will comply
with the policies and procedures of the Company as such policies and procedures may be modified,
added to or eliminated from time to time at the sole discretion of the Company, except to the
extent any such policy or procedure specifically conflicts with the express terms of this
Agreement. Employee further agrees and acknowledges that any written or oral policies and
procedures of the Company do not constitute contracts between the Company and Employee.
5. Base Salary. For all services rendered and to be rendered hereunder, the Company
agrees to pay to the Employee, and the Employee agrees to accept a salary of $___
per annum (“Base Salary”) which will be paid periodically in accordance with normal Company
payroll practices and shall be subject to such deductions or withholdings as the Company
is required to make pursuant to law, or by further agreement with the Employee. Employee’s salary
shall be subject to annual review by the [Board of Directors] [Compensation Committee].
6. [Stock Options. Employee shall be granted options to purchase ___shares
of Company common stock (“Option”) at the fair market value of the stock on the date of grant. The
Option shall be subject to the terms and conditions of the Company’s 2007 Equity Incentive Plan and
as set forth in the stock option grant notices and stock option agreements approved by the Board of
Directors and entered into by Employee.]
7. [Bonus. Employee may be eligible to receive an annual performance bonus
of up to ___of his Base Salary subject to employment taxes, withholding and deductions (“Bonus”)
based upon Employee’s achievements of certain milestones and performance objectives established by
the Company (“Variable Incentive Bonus Plan”). Except as expressly provided otherwise herein,
Employee must remain employed with the Company throughout the applicable bonus year in order to be
eligible for any Bonus. The Board of Directors, in its sole discretion, shall determine the extent
to which Employee has achieved the performance targets upon which Employee’s Bonus is based, and
the amount of Bonus to be paid to Employee, if any. Bonuses are not earned until they are approved
in writing by the Board of Directors.]
8. Other Benefits. While employed by the Company as provided herein:
(a) Employee Benefits. The Employee shall be entitled to all benefits to which other
executive officers of the Company are entitled, on terms comparable thereto, including, without
limitation, participation in pension and profit sharing plans, 401(k) plan, group insurance
policies and plans, medical, health, vision, and disability insurance policies and plans, and the
like, which may be maintained by the Company for the benefit of its executives. The Company
reserves the right to alter and amend the benefits received by Employee from time to time at the
Company’s discretion.
(b) Expense Reimbursement. The Employee shall receive, against presentation of proper
receipts and vouchers, reimbursement for direct and reasonable out-of-
2
pocket expenses incurred by him in connection with the performance of his duties hereunder,
according to the policies of the Company.
(c) Vacation. Employee will be entitled to fifteen vacation days, which will accrue
in monthly increments. Employee will not be allowed to carry over any accrued vacation days to the
next year.
9. Confidential Information, Rights and Duties.
(a) Proprietary Information. Employee reaffirms and agrees to execute and abide by the
Company’s Proprietary Information and Inventions Agreement (the “Proprietary Information
Agreement”), attached hereto as Exhibit A.
(b) Exclusive Property. Employee agrees that all Company-related business procured by the
Employee, and all Company-related business opportunities and plans made known to Employee while
employed by the Company, are and shall remain the permanent and exclusive property of the Company.
10. Non-Competition and Non-Solicitation. Employee acknowledges that Employee will
be a member of executive and management personnel at the Company. Employee further acknowledge
that during Employee’s employment at the Company, Employee will be privy to extremely sensitive,
confidential and valuable commercial information, which constitutes trade secrets belonging to the
Company, the disclosure of which information and secrets would greatly harm the Company.
(a) Definitions.
(i) Conflicting Product or Service. As used in this Agreement a “Conflicting Product or
Service” means any research, development or commercialization involving transdermal drug delivery
technologies for pain management in which the Company is actively engaged on the date of
termination or in which during the twelve (12) months immediately preceding the date of termination
the Company actively contemplated engaging (as evidenced by inclusion in a written business plan or
proposal).
(ii) Conflicting Organization. As used in this Agreement, a “Conflicting Organization” means
any person or organization that is engaged in or is about to become engaged in the design,
research, development, production, marketing, distribution, leasing, licensing, selling, or
servicing of a Conflicting Product or Service.
(b) Covenant Not to Compete. As a reasonable measure to protect the Company from the harm of
such disclosure and use of its information and trade secrets against it, Employee agrees to the
following as part of this Agreement: During Employee’s employment with the Company and for a
period of ___(___) months following the separation of Employee’s employment with the
Company, for any reason, Employee agree that Employee shall not, individually or together with
others, directly or indirectly, whether as an owner, consultant, partner, joint venturer,
stockholder, broker, agent, financial agent, principal, trustee, licensor or in any other capacity
whatsoever: (i) own, manage, operate, join, control, finance or
3
participate in the ownership, management, operation, control or financing of, or be connected
as an officer, director, Employee, partner, principal, agent, representative, consultant, licensor,
licensee or otherwise with, any business or enterprise which is a Conflicting Organization; or (ii)
sell or assist in the design, development, manufacture, licensing, sale, marketing or support of
any Conflicting Product or Service, or engage in any other manner, in any Conflicting Organization.
Notwithstanding the foregoing, the parties agree that Employee’s acceptance of employment with an
organization that derives not more than 5% of its revenue from a Conflicting Product or Service
shall not be considered a violation of this paragraph provided that Employee is not employed in an
executive capacity within the business unit, division, group or otherwise that has responsibility
over the development, production, marketing or sale of such Conflicting Product or Service. (By way
of example only, Employee may accept employment with Roche Pharmaceuticals so long as in Employee’s
position Employee would not have any executive responsibility for the research, development,
production, marketing or sale of products or services related to the Conflicting Product or
Service). The parties also agree that owning less than 1% of the outstanding voting stock of a
publicly traded company shall not constitute a violation of this paragraph. Employee further
agrees and acknowledges that because of the nature and type of business that the Company engages
in, the geographic scope of the covenant not to compete shall include all counties, cities, and
states of the United States and any other Country, territory or region in which the Company
conducts business or in which the Company actively contemplated in conducting business (as
evidenced by inclusion in a written business plan or proposal) at the time of termination and that
such a geographic scope is reasonable. Nothing in this paragraph should be construed to narrow the
obligations of Employee imposed by any other provision herein, any other agreement, law or other
source.
(c) Nonsolicitation Covenant. As a reasonable measure to protect the Company from the harm of
such disclosure and use of its information and trade secrets against it, the parties agree to the
following as part of this Agreement: Employee acknowledges and agrees that information regarding
employees of the Company is Confidential Information, including without limitation, the names of
the Company employees; information regarding the skills and knowledge of employees of the Company;
information regarding any past, present, or intended compensation, benefits, policies and
incentives for employees of the Company; and information regarding the management and reporting
structure of the Company. During the period of Employee’s employment by the Company and for a
period of ___(___) months following the separation, resignation, or termination of
Employee’s employment with the Company for any reason, Employee agrees that Employee will not,
individually or with others, directly or indirectly (including without limitation, individually or
through any business, venture, proprietorship, partnership, or corporation in which they control or
own more than a five (5) percent interest, through any agents, through any contractors, through
recruiters, by their successors, by their employees, or by their assigns) hire, solicit, or induce
any employee of the Company to leave the Company. Employee further agrees that during the period
Employee is employed by the Company and for a period of ___(___) months following the
separation, resignation, or termination of Employee’s employment with the Company for any reason,
Employee will not, either directly or indirectly, solicit or attempt to solicit any customer,
partner, client, supplier, investor, vendor, consultant or independent contractor of the Company to
terminate, reduce or negatively alter his, her or its relationship with the Company. The
geographic scope of the covenants in this paragraph 10 shall include any city, county, or state of
4
the United States and any such other city, territory, country, or jurisdiction in which the
Company does business or in which the Company actively contemplated in conducting business (as
evidenced by inclusion in a written business plan or proposal) at the time of termination. Nothing
in this paragraph 10 should be construed to narrow the obligations of Employee imposed by any other
provision herein, any other agreement, law or other source.
(d) Reasonable. Employee agrees and acknowledges that the time limitation and the geographic
scope on the restrictions in this paragraph and its subparts are reasonable. Employee also
acknowledges and agrees that the limitation in this paragraph and its subparts is reasonably
necessary for the protection of the Company, that through this Agreement Employee shall receive
adequate consideration for any loss of opportunity associated with the provisions herein, and that
these provisions provide a reasonable way of protecting the Company’s business value which was
imparted to Employee. In the event that any term, word, clause, phrase, provision, restriction, or
section of this paragraph of this Agreement is more restrictive than permitted by the law of the
jurisdiction in which the Company seeks enforcement thereof, the provisions of this Agreement shall
be limited only to the extent that a judicial determination finds the same to be unreasonable or
otherwise unenforceable. Moreover, notwithstanding any judicial determination that any term, word,
clause, phrase, provision, restriction, or section of this Agreement is not specifically
enforceable, the parties intend that the Company shall nonetheless be entitled to recover monetary
damages as a result of any breach hereof.
(e) Legal and Equitable Remedies. In view of the nature of the rights in goodwill, Employee’s
relations, trade secrets, and business reputation and prospects of the Company to be protected
under this paragraph, Employee understands and agrees that the Company could not be reasonably or
adequately compensated in damages in an action at law for Employee’s breach of Employee’s
obligations (whether individually or together) hereunder. Accordingly, Employee specifically
agrees that the Company may be entitled to temporary and permanent injunctive relief, specific
performance, and other equitable relief to enforce the provisions of this Agreement and that such
relief may be granted without bond. Employee acknowledges and agrees that the provisions in this
paragraph and its subparts are essential and material to this Agreement, and that upon breach of
this paragraph by Employee, the Company is entitled to withhold providing payments or
consideration, to equitable relief, to prevent continued breach, to recover damages and to seek any
other remedies available to the Company. This provision with respect to injunctive relief shall
not, however, diminish the right of the Company to claim and recover damages or other remedies in
addition to equitable relief.
11. Termination. Employee and the Company each acknowledge that either party has the
right to terminate Employee’s employment with the Company at any time for any reason whatsoever,
with or with out cause or advance notice pursuant to the following:
(a) Termination by Death or Disability. Subject to applicable state or federal law, in the
event that Employee shall die during his employment hereunder or become permanently disabled, as
evidenced by notice to the Company and Employee’s inability to carry out his job responsibilities
for a continuous period of more than six months, Employee’s employment and the Company’s obligation
to make payments hereunder shall terminate on the date of his death, or the date upon which, in the
sole determination of the Board of Directors,
5
Employee has become permanently disabled, except the Company shall pay Employee any salary
earned but unpaid prior to termination, any benefits accrued prior to termination, all accrued but
unused vacation, and any business expenses that were incurred but not reimbursed as of the date of
termination. Vesting of all options shall cease on the date of such termination.
(b) Voluntary Resignation by Employee. In the event that Employee voluntarily terminates his
employment with the Company, the Company’s obligation to make payments hereunder shall cease upon
such termination, except the Company shall pay Employee any salary earned but unpaid prior to
termination, any benefits accrued prior to termination, all accrued but unused vacation, and any
business expenses that were incurred but not reimbursed as of the date of termination. Vesting of
all options shall cease on the date of such termination.
(c) Termination for Cause. In the event that Employee is terminated by the Company for Cause
(as defined below), the Company’s obligation to make payments hereunder shall cease upon the date
of receipt by Employee of written notice of such termination (the “Termination Date”), except the
Company shall pay Employee any salary earned but unpaid prior to the Termination Date, any benefits
accrued prior to termination, all accrued but unused vacation and any business expenses that were
incurred but not reimbursed as of the date of termination. Vesting of all options shall cease on
the Termination Date.
(d) Termination by the Company without Cause or for Good Reason (Absent Change in Control).
In the event Employee’s employment is terminated without Cause (as defined herein) or Employee
resigns for Good Reason (as defined herein) absent a Change in Control (as defined herein) the
Company’s obligation to make payments hereunder shall cease upon such termination, except the
Company shall pay Employee any salary earned but unpaid prior to termination, any benefits accrued
prior to termination, all accrued but unused vacation, and any business expenses that were incurred
but not reimbursed as of the date of termination. Vesting of all options shall cease on the date
of such termination.
12. Change In Control Benefits.
(a) Change in Control Termination. If (i) Employee is involuntarily terminated by the Company
(or its successor entity) other than for Cause or (ii) Employee voluntarily terminates his
employment with the Company (or its successor entity) for Good Reason (either constituting a
“Change in Control Termination”) within the thirteen (13) months following a Change in Control or
the one (1) month immediately preceding a Change in Control and in each case Employee signs a
Release in a form acceptable to the Company and written acknowledgment of Employee’s continuing
obligations under the Proprietary Information Agreement, Employee shall be entitled to the
equivalent of ___(___) months of his Base Salary as in effect immediately prior to the
Change in Control Termination Date. Employee shall also be eligible to receive a portion of
Employee’s annual bonus pro-rated for time and performance as determined in the sole discretion of
the CEO or the Compensation Committee of the Board of Directors. The foregoing payments shall be
payable, subject to employment tax withholdings and deductions, not later than the first regularly
scheduled pay date following the Effective Date of the Release. In addition, provided that
Employee is eligible for and timely elects continuation of his health insurance pursuant to COBRA,
for a period of
6
___(___) months following a Change in Control Termination, the Company shall also
reimburse Employee for the cost of COBRA premiums to be paid in order for Employee to maintain
medical insurance coverage that is substantially equivalent to that which Employee received
immediately prior to the termination provided, however, that the Company’s obligation to pay
Employee’s COBRA premiums will cease immediately in the event Employee becomes eligible for group
health insurance during the ___(___) month period, and Employee hereby agrees to
promptly notify the Company if he becomes eligible to be covered by group health insurance in such
event (the salary continuation, bonus and COBRA reimbursement are collectively referred to as the
“Change in Control Severance Benefits”). In addition, the Company will vest all of the Employee’s
options to purchase shares of the Company’s common stock and such vesting shall occur upon the
occurrence of the Change in Control in the case of any Change in Control Termination occurring
prior to the Change in Control or upon termination in the case of any Change in Control Termination
occurring after the Change in Control. All other terms and conditions set forth in the options,
the 2007 Equity Incentive Plan, and the applicable stock option agreements shall remain in full
force and effect.
(b) Definition of Change in Control. For purposes of this Agreement, “Change in
Control” of the Company has the same definition as set forth in the Company’s 2007 Equity Incentive
Plan
(c) Definition of Cause. For purposes of this Agreement, “Cause” means the Employee’s (i)
conviction of a felony or any crime involving moral turpitude or dishonesty; (ii) participation in
a fraud or act of dishonesty against the Company; (iii) willful breach of duties to the Company or
failure to follow lawful directions of the Company’s Chief Executive Officer or Board of Directors,
in either case if such breach or failure has not been cured within thirty (30) days after written
notice from the Company’s Chief Executive Officer or Board of Directors of such event; or (iv)
material breach of the Company’s Proprietary Information Agreement.
(d) Definition of Good Reason. For purposes of this Agreement, “Good Reason” means
that one or more of the following is undertaken without Employee’s express written consent and is
not remedied within thirty (30) days after written notice from Employee of such event: (i) the
principal place of the performance of Employee’s responsibilities and duties is changed to a
location outside of a thirty (30) mile radius from the Company’s place of business immediately
prior to the Change in Control; or (ii) there is a material reduction in Employee’s
responsibilities, duties, or base pay, or a material reduction in the amount of the maximum bonus
opportunity specified in Section 7 (which reduction, for purposes of this Section 12(d), shall be
considered a material breach of the Employment Agreement, provided that a reduction in the actual
Bonus paid to Employee in any given year as compared to the previous year shall not, by itself,
constitute Good Reason), but in each case excluding a change or reduction affecting all similarly
situated Company employees. Notwithstanding the foregoing, for purposes of determining whether
“Good Reason” exists in connection with a Change in Control, any such reduction specified in the
preceding sentence shall be measured by reference to the Employee’s principal place of business,
responsibilities, duties, base pay or target bonus, as applicable, as in effect immediately prior
to the consummation of the Change in Control or the Employee’s resignation within one month prior
to such Change in Control, whichever occurs first.
7
13. Code Section 409A Compliance. Change in Control Severance Benefits
pursuant to Section 12 above, (A) to the extent such payments are made from the date of termination
of Employee’s employment through March 15 of the calendar year following such termination, are
intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury
Regulations and thus payable pursuant to the “short-term deferral” rule set forth in Section
1.409A-1(b)(4) of the Treasury Regulations; (B) to the extent such payments are made following said
March 15, are intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of
the Treasury Regulations made upon an involuntary separation from service and payable pursuant to
Section 1.409A-1(b)(9)(iii) of the Treasury Regulations, to the maximum extent permitted by said
provision, and (C) to the extent of the excess (if any) of such payments over the amounts specified
in clauses (A) and (B) of this Section 13, shall (unless otherwise exempt under Treasury
Regulations) be considered separate payments subject to the distribution requirements of Section
409A(a)(2)(A) of the Internal Revenue Code of 1986, as amended (the “Code”), including, without
limitation, the requirement of Section 409A(a)(2)(B)(i) of the Code that payments be delayed until
6 months after Employee’s separation from service if Employee is a “specified employee” within the
meaning of the aforesaid section of the Code at the time of such separation from service.
14. Miscellaneous.
(a) Taxes. Employee agrees to be responsible for the payment of any taxes due on any and all
compensation, stock option, or benefit provided by the Company pursuant to this Agreement.
Employee agrees to indemnify the Company and hold the Company harmless from any and all claims or
penalties asserted against the Company for any failure to pay taxes due on any compensation, stock
option, or benefit provided by the Company pursuant to this Agreement. Employee expressly
acknowledges that the Company has not made, nor herein makes, any representation about the tax
consequences of any consideration provided by the Company to Employee pursuant to this Agreement.
(b) Modification/Waiver. This Agreement may not be amended, modified, superseded, canceled,
renewed or expanded, or any terms or covenants hereof waived, except by a writing executed by each
of the parties hereto or, in the case of a waiver, by the party waiving compliance. Failure of any
party at any time or times to require performance of any provision hereof shall in no manner affect
his or its right at a later time to enforce the same. No waiver by a party of a breach of any term
or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more
instances shall be deemed to be or construed as a further or continuing waiver of agreement
contained in the Agreement.
(c) Successors and Assigns. This Agreement shall be binding upon and shall inure to the
benefit of any successor or assignee of the business of the Company. This Agreement shall not be
assignable by the Employee.
(d) Notices. All notices given hereunder shall be given by certified mail, addressed, or
delivered by hand, to the other party at his or its address as set forth herein, or at any other
address hereafter furnished by notice given in like manner. Employee promptly shall
8
notify Company of any change in Employee’s address. Each notice shall be dated the date of
its mailing or delivery and shall be deemed given, delivered or completed on such date.
(e) Governing Law; Personal Jurisdiction and Venue. This Agreement and all disputes relating
to this Agreement shall be governed in all respects by the laws of the State of Utah as such laws
are applied to agreements between Utah residents entered into and performed entirely in Utah. The
Parties acknowledge that this Agreement constitutes the minimum contacts to establish personal
jurisdiction in Utah and agree to Utah court’s exercise of personal jurisdiction.
(f) Entire Agreement. This Agreement together with the exhibits attached hereto, set forth
the entire agreement and understanding of the parties hereto with regard to the employment of the
Employee by the Company and supersede any and all prior agreements, arrangements and
understandings, written or oral, pertaining to the subject matter hereof. No representation,
promise or inducement relating to the subject matter hereof has been made to a party that is not
embodied in these Agreements, and no party shall be bound by or liable for any alleged
representation, promise or inducement not so set forth.
In Witness Whereof, the parties have each duly executed this Employment Agreement as
of the day and year first above written.
| Zars Pharma, Inc. |
||||
| By: | ||||
| Its: | ||||
9
| Name | Title | Paragraph 5 | Paragraph 6 | Paragraph 7 | Paragraphs | Paragraph 12(a) | ||||||||||||||||||||
| 10(b) and | ||||||||||||||||||||||||||
| 10(c) | ||||||||||||||||||||||||||
Xxxxxx Xxxxxxx
|
President and Chief Executive Officer | $ | 300,000 | 0 | 25 | % | 12 months | 24 months | ||||||||||||||||||
Xxxxxxx X. Xxxxx
|
Chief Financial Officer | $ | 230,000 | 0 | 20 | % | 6 months | 12 months | ||||||||||||||||||
Dr. Xxx Xxxxx
|
Chief Scientific Officer | $ | 225,000 | 0 | 20 | % | 6 months | 12 months | ||||||||||||||||||
Xxxxxx X. Marriott, Ph.D. |
Senior Vice President, Clinical Development and Regulatory Affairs | $ | 250,000 | 0 | 20 | % | 6 months | 12 months | ||||||||||||||||||
