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EMPLOYMENT AGREEMENT
AGREEMENT made as of the 16th day of November, 1998, by and
between Sheffield Pharmaceuticals, Inc., a Delaware corporation with its
principal offices at 000 Xxxxx Xxxxxxxxx Xxxx, Xxxxx 000, Xx. Xxxxx, Xxxxxxxx
00000-0000 (the "Corporation"), and Xxxxx X. Xxxxxxxx, who currently resides at
00000 Xxxxxxxxx Xxxxx, Xxxxxxxxxxxx, Xxxxxxxx 00000 ("Executive").
W I T N E S S E T H :
WHEREAS, the Corporation desires to employ and retain
Executive as its Vice President - Finance and Administration and Chief Financial
Officer, upon the terms and subject to the conditions of this Agreement; and
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT OF EXECUTIVE. The Corporation hereby employs
Executive as its Vice President - Finance and Administration and Chief Financial
Officer, to perform the duties and responsibilities traditionally incident to
such office, subject at all times to the control and direction of the Board of
Directors of the Corporation.
2. ACCEPTANCE OF EMPLOYMENT; OFFICES; TIME AND ATTENTION, ETC.
(a) Executive hereby accepts such employment and agrees that throughout the
period of his employment hereunder, except as hereinafter provided, he will
devote his full business and professional time in utilizing his business and
professional expertise, with proper attention, knowledge and skills faithfully,
diligently and to the best of his ability in furtherance of the business of the
Corporation and its subsidiaries and will perform the duties assigned to him
pursuant to Paragraph 1 hereof. As Vice President - Finance and Administration
and Chief Financial Officer, Executive shall also perform such specific duties
and shall exercise such specific authority related to the management of the
day-to-day operations of the Corporation and its subsidiaries as may be
reasonably assigned to Executive from time to time by the Board of Directors of
the Corporation that are consistent with Executive's financial and
administrative training and experience.
(b) Executive shall at all times be subject to, observe and
carry out such rules, regulations, policies, directions and restrictions as the
Board of Directors of the Corporation shall from time to time reasonably
establish. During the period of his employment hereunder, Executive shall not,
directly or indirectly, accept employment or compensation from, or perform
services of any nature for, any business enterprise other than the Corporation
and its subsidiaries. Notwithstanding the foregoing in this Paragraph 2,
Executive shall not be precluded from engaging in (i) recreational,
eleemosynary, educational and other activities, which activities do not
materially interfere with his duties hereunder and shall occur during vacations,
holidays and other periods
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outside of business hours and (ii) any other educational activities that have
been approved in advance by the Company's Chief Executive Officer.
3. TERM. Except as otherwise provided herein, the term of
Executive's employment hereunder shall commence on the date hereof and shall
continue to and including November 16, 2001. Unless terminated earlier in
accordance with the terms hereof, this Agreement shall automatically be extended
for one or more additional consecutive one year terms unless either party
notifies the other party in writing at least 90 days before the end of the then
current term (including the initial term) of its or his desire to terminate or
renegotiate the terms of this Agreement. The last day of the term of this
Agreement pursuant to this Paragraph 3 (including any early termination pursuant
to the terms hereof) is referred to herein as the "Termination Date."
4. COMPENSATION. (a) As compensation for his services
hereunder, the Corporation shall pay to Executive (i) a base annual salary at
the rate of $120,000, payable in equal installments in accordance with the
normal payroll practices of the Corporation and (ii) such incentive compensation
and bonuses, if any, as the Board of Directors of the Corporation in its
absolute discretion may determine to award Executive (it being understood that
this Agreement shall in no event be construed to require the payment to
Executive of any incentive compensation or bonuses). All compensation paid to
Executive shall be subject to withholding and other employment taxes imposed by
applicable law.
(b) During the period of Executive's employment hereunder,
Executive shall not be entitled to any additional compensation for rendering
employment services to subsidiaries of the Corporation or for serving in any
office of the Corporation or any of its subsidiaries to which he is elected or
appointed.
5. STOCK OPTIONS. As additional compensation for his services
hereunder, the Corporation shall grant to Executive an option under the
Corporation's 1993 Stock Option Plan (the "Plan") to acquire a total of 120,000
shares of the Corporation's common stock at an exercise price per share no less
than the closing sale price of the Corporation's common stock as reported by the
American Stock Exchange on the date hereof, with the terms of such option to be
evidenced by an option letter agreement in the form annexed as Exhibit "A"
hereto.
6. ADDITIONAL BENEFITS; VACATION. (a) In addition to such base
salary, Executive shall receive and be entitled to participate, to the extent he
is eligible under the terms and conditions thereof, in any profit sharing,
pension, retirement, hospitalization, disability, medical service, insurance or
other employee benefit plan generally available to the executive officers of the
Corporation that may be in effect from time to time during the period of
Executive's employment hereunder. The Corporation agrees to cover Executive
under any directors' and officers' liability policy maintained by the
Corporation.
(b) Executive shall be entitled to three (3) weeks' paid
vacation in respect of each 12-month period during the term of his employment
hereunder, such vacation to be taken at times mutually agreeable to Executive
and the Board of Directors of the Corporation.
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(c) Executive shall be entitled to recognize as holidays all
days recognized as such by the Corporation.
7. REIMBURSEMENT OF EXPENSES. The Corporation shall reimburse
Executive in accordance with applicable policies of the Corporation for all
expenses reasonably incurred by him in connection with the performance of his
duties hereunder and the business of the Corporation, upon the submission to the
Corporation of appropriate receipts or vouchers.
8. RESTRICTIVE COVENANT. (a) In consideration of the
Corporation's entering into this Agreement, Executive agrees that during the
period of his employment hereunder and, in the event of termination of this
Agreement (i) by the Corporation upon Executive becoming Disabled (as that term
is defined in Paragraph 13 hereof), (ii) by the Corporation for Cause (as that
term is defined in Paragraph 14 hereof) or (iii) by Executive otherwise than for
Employer Breach (as that term is defined in Paragraph 15 hereof), for a further
period of six months thereafter, he will not (x) directly or indirectly own,
manage, operate, join, control, participate in, invest in, whether as an
officer, director, employee, partner, investor or otherwise, any business entity
that is engaged in a directly competitive business (as hereinafter defined) to
that of the Corporation or any of its subsidiaries within the United States of
America, (y) for himself or on behalf of any other person, partnership,
corporation or entity, call on any customer of the Corporation or any of its
subsidiaries for the purpose of soliciting away, diverting or taking away any
customer from the Corporation or its subsidiaries, or (z) solicit any person
then engaged as an employee, representative, agent, independent contractor or
otherwise by the Corporation or any of its subsidiaries, to terminate him or his
relationship with the Corporation or any of its subsidiaries. For purposes of
this Agreement, the term "directly competitive business" shall mean any business
that is then involved in the research, development, manufacturing or
commercialization in any way of any product, compound, device or method that is
or becomes a part of the Corporation's business or the business of any of its
subsidiaries during Executive's employment by the Corporation or any of its
subsidiaries. Nothing contained in this Agreement shall be deemed to prohibit
Executive from investing his funds in securities of an issuer if the securities
of such issuer are listed for trading on a national securities exchange or are
traded in the over-the-counter market and Executive's holdings therein represent
less than 10% of the total number of shares or principal amount of the
securities of such issuer outstanding.
(b) Executive acknowledges that the provisions of this
Paragraph 8 are reasonable and necessary for the protection of the Corporation,
and that each provision, and the period or periods of time, geographic areas and
types and scope of restrictions on the activities specified herein are, and are
intended to be, divisible. In the event that any provision of this Paragraph 8,
including any sentence, clause or part hereof, shall be deemed contrary to law
or invalid or unenforceable in any respect by a court of competent jurisdiction,
the remaining provisions shall not be affected, but shall, subject to the
discretion of such court, remain in full force and effect.
9. CONFIDENTIAL INFORMATION.
(a) Executive shall hold in a fiduciary capacity for
the benefit of the Corporation and its subsidiaries all confidential
information, knowledge and data relating to or
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concerned with its operations, sales, business and affairs, and he shall not, at
any time during his employment hereunder and for two years thereafter, use,
disclose or divulge any such information, knowledge or data to any person, firm
or corporation other than to the Corporation and its subsidiaries or their
respective designees or except as may otherwise be reasonably required or
desirable in connection with the business and affairs of the Corporation and its
subsidiaries.
(b) Notwithstanding anything to the contrary
contained herein, Executive's obligations under Paragraph 9(a) hereof shall not
apply to any information which:
(i) becomes rightfully known to Executive subsequent or prior
to his employment by the Corporation;
(ii) is or becomes available to the public other than as a
result of wrongful disclosure by Executive;
(iii) becomes available to Executive subsequent to his
employment by the Corporation on a nonconfidential basis from a source
other than the Corporation or its agents which source has a right to
disclose such information; or
(iv) results from research and development and/or commercial
operations at any time by or on behalf of any person, company or other
entity with which or with whom Executive shall become associated (in a
manner consistent with the terms of this Agreement) subsequent to his
employment by the Corporation or its agents totally independent from
any disclosure from the Corporation or its agents.
(c) Notwithstanding anything to the contrary
contained herein, in the event that Executive becomes legally compelled to
disclose any confidential information, Executive will provide the Corporation
with prompt notice so that the Corporation may seek a protective order or other
appropriate remedy. In the event that such protective order or other remedy is
not obtained, Executive shall furnish only such confidential information which
is legally required to be disclosed.
10. INTELLECTUAL PROPERTY. Any idea, invention, design,
written material, manual, system, procedure, improvement, development or
discovery conceived, developed, created or made by Executive alone or with
others, during the period of his employment hereunder and applicable to the
business of the Corporation or any of its subsidiaries, whether or not
patentable or registrable, shall become the sole and exclusive property of the
Corporation or such subsidiary. Executive shall disclose the same promptly and
completely to the Corporation and shall, during the period of his employment
hereunder and at any time and from time to time hereafter at no cost to
Executive (i) execute all documents reasonably requested by the Corporation for
vesting in the Corporation or any of its subsidiaries the entire right, title
and interest in and to the same, (ii) execute all documents reasonably requested
by the Corporation for filing and prosecuting such applications for patents,
trademarks, service marks and/or copyrights as the Corporation, in its sole
discretion, may desire to prosecute, and (iii) give the Corporation all
assistance it reasonably requires, including the giving of testimony in any
suit, action or proceeding, in order to obtain, maintain and protect the
Corporation's right therein and thereto.
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11. EQUITABLE RELIEF. The parties hereto acknowledge that
Executive's services are unique and that, in the event of a breach or a
threatened breach by Executive of any of his obligations under Paragraphs 8, 9
or 10 this Agreement, the Corporation shall not have an adequate remedy at law.
Accordingly, in the event of any such breach or threatened breach by Executive,
the Corporation shall be entitled to such equitable and injunctive relief as may
be available to restrain Executive and any business, firm, partnership,
individual, corporation or entity participating in such breach or threatened
breach from the violation of the provisions of Paragraph 8, 9 or 10 hereof.
Nothing herein shall be construed as prohibiting the Corporation from pursuing
any other remedies available at law or in equity for such breach or threatened
breach, including the recovery of damages and the immediate termination of the
employment of Executive hereunder, if and to the extent permitted hereunder.
12. TERMINATION OF AGREEMENT; TERMINATION OF EMPLOYMENT;
SEVERANCE; SURVIVAL. (a) This Agreement and Executive's employment hereunder
shall terminate upon the first to occur of the following: (i) Executive becoming
Disabled (as that term is defined in Paragraph 13 hereof); (ii) Executive's
death; (iii) termination of Executive's employment by the Corporation for Cause
or pursuant to subparagraph (b) of this Paragraph 12; (iv) termination of
Executive's employment for Employer Breach and (v) the termination of this
Agreement at the end of the term of this Agreement on the Termination Date
pursuant to Paragraph 3.
(b) Notwithstanding anything to the contrary
contained in this Agreement, in the event of the termination of the Employee's
employment by the Corporation for any reason (other than for Cause or by reason
of Employee becoming Disabled), Employee shall be paid a severance payment in an
amount equal to $5,000 multiplied by the number of full months that Employee has
been employed by the Corporation prior to such termination, with such amount not
to exceed $60,000, payable in six equal monthly installments, with the first
installment being payable on the date falling two weeks after the date of such
termination and each additional installment being paid every month after such
date until such severance is paid in full.
(c) Paragraphs 7, 8, 9, 10, 11, 12 and 26 of this
Agreement shall survive the termination of Executive's employment hereunder,
except in the case of termination pursuant to Paragraph 15.
13. DISABILITY. In the event that during the term of his
employment by the Corporation Executive shall become Disabled (as that term is
hereinafter defined) he shall continue to receive the full amount of the base
salary to which he was theretofore entitled for a period of six months after he
shall be deemed to have become Disabled (the "First Disability Payment Period").
If the First Disability Payment Period shall end prior to the Termination Date,
Executive thereafter shall be entitled to receive salary at an annual rate equal
to 80% of his then current base salary for a further period ending on the
earlier of (i) six months thereafter or (ii) the Termination Date (the "Second
Disability Payment Period"). Upon the expiration of the Second Disability
Payment Period, Executive shall not be entitled to receive any further payments
on account of his base salary until he shall cease to be Disabled and shall have
resumed his duties hereunder and provided that the Corporation shall not have
theretofore terminated this Agreement as hereinafter provided. The Corporation
may terminate Executive's employment hereunder at any time after Executive is
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Disabled, upon at least 10 days' prior written notice; PROVIDED, HOWEVER, that
such termination shall not relieve the Corporation from its obligation to make
the payments to Executive described above in this Paragraph 13. For the purposes
of this Agreement, Executive shall be deemed to have become Disabled when (x) by
reason of physical or mental incapacity, Executive is not able to perform his
duties hereunder for a period of 90 consecutive days or for 120 days in any
consecutive 180-day period and (y) Executive's physician or a physician
designated by the Corporation shall have determined that it is unlikely that
Executive will be able, by reason of physical or mental incapacity, to perform a
substantial portion of his duties hereunder for the following 120 days. In the
event that Executive shall dispute any determination of his disability pursuant
to clauses (x) or (y) above, the matter shall be resolved by the determination
of three physicians qualified to practice medicine in the United States of
America, one to be selected by each of the Corporation and Executive and the
third to be selected by the designated physicians. If Executive shall receive
benefits under any disability policy maintained by the Corporation, the
Corporation shall be entitled to deduct the amount equal to the benefits so
received from base salary that it otherwise would have been required to pay to
Executive as provided above.
14. TERMINATION FOR CAUSE. The Corporation may at any time
upon written notice to Executive terminate Executive's employment for Cause. For
purposes of this Agreement, the following shall constitute Cause: (i) the
willful and repeated failure of Executive to perform any material duties
hereunder or gross negligence of Executive in the performance of such duties,
and if such failure or gross negligence is susceptible to cure by Executive, the
failure to effect such cure within twenty (20) days after written notice of such
failure or gross negligence is given to Executive; (ii) except as permitted
hereunder, unexplained, willful and regular absences of Executive from the
Corporation; (iii) excessive use of alcohol or illegal drugs, interfering with
the performance of Executives duties hereunder; (iv) indictment for a crime of
theft, embezzlement, fraud, misappropriation of funds, other acts of dishonesty
or the violation of any law or ethical rule relating to Executive's employment;
(v) indicted for any other felony or other crime involving moral turpitude by
Executive; or (vi) the breach by Executive of any of the provisions of
paragraphs 8, 9 or 10 and if such breach is susceptible of cure by Executive,
the failure to effect such cure within twenty (20) days after written notice of
such breach is given to Executive. For purposes of this Agreement, an action
shall be considered "willful" if it is done intentionally, purposely or
knowingly, distinguished from an act done carelessly, thoughtlessly or
inadvertently. In any such event, Executive shall be entitled to receive his
base salary to and including the date of termination.
15. TERMINATION BY EMPLOYEE. Executive may upon written notice
to the Corporation terminate this Agreement (including paragraphs 8, 9, 10 and
11) in the event of the breach by the Corporation of any material provision of
this Agreement, and if such breach is susceptible of cure, the failure to effect
such cure within 20 days after written notice of such breach is given to the
Corporation (an "Employer Breach"). Executive's right to terminate this
Agreement under this Paragraph 15 shall be in addition to any other remedies
Executive may have under law or equity. Paragraphs 7 and 12(b) of this Agreement
shall survive the termination of this Agreement by Executive pursuant to this
Paragraph 15.
16. INSURANCE POLICIES. The Corporation shall have the right
from time to time to purchase, increase, modify or terminate insurance policies
on the life of Executive for the benefit
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of the Corporation, in such amounts as the Corporation shall determine in its
sole discretion. In connection therewith, Executive shall, at such time or times
and at such place or places as the Corporation may reasonably direct, submit
himself to such physical examinations and execute and deliver such documents as
the Corporation may reasonably deem necessary or desirable; PROVIDED that such
examinations shall be performed by, and that such documents shall be delivered
only to, qualified physicians and/or medical representatives of licensed
insurance companies. At Executive's written request upon the termination of
Executive's employment under this Agreement (other than for Cause or as result
of Executive's death), the Corporation shall assign to Executive the
Corporation's interest in such life insurance policies (to the extent such
policies are so assignable by their terms), whereupon Executive shall assume all
obligations of the Corporation in respect thereof. Notwithstanding anything to
the contrary contained herein, the Company shall have no right to terminate this
Agreement solely by reason of the Company's inability to obtain insurance
policies on the life of Executive under this paragraph.
17. ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes
the entire agreement of the parties hereto, and any prior agreement between the
Corporation and Executive is hereby superseded and terminated effective
immediately and shall be without further force or effect. No amendment or
modification herself shall be valid or binding unless made in writing and signed
by the party against whom enforcement thereof is sought.
18. NOTICES. Any notice required, permitted or desired to be
given pursuant to any of the provisions of this Agreement shall be delivered in
person or sent by responsible overnight delivery service or sent by certified
mail, return receipt requested, postage and fees prepaid, if to the Corporation,
at its address set forth above to the attention of the Corporation's Chief
Executive Officer and, if to Executive, at his address set forth above. Either
of the parties hereto may at any time and from time to time change the address
to which notice shall be sent hereunder by notice to the other party given under
this Paragraph 18. Notices shall be deemed effective upon receipt.
19. NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement, nor
the right to receive any payments hereunder, may be assigned by either party
without the other party's prior written consent. This Agreement shall be binding
upon Executive, his heirs, executors and administrators and upon the
Corporation, its successors and assigns.
20. WAIVERS. No course of dealing nor any delay on the part of
either party in exercising any rights hereunder shall operate as a waiver of any
such rights. No waiver of any default or breach of this Agreement shall be
deemed a continuing waiver or a waiver of any other breach or default.
21. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, except that body
of law relating to choice of laws.
22. INVALIDITY. If any clause, paragraph, section or part of
this Agreement shall be held or declared to be void, invalid or illegal, for any
reason, by any court of competent jurisdiction, such provision shall be
ineffective but shall not in any way invalidate or affect any other clause,
paragraph, section or part of this Agreement.
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23. FURTHER ASSURANCES. Each of the parties shall execute such
documents and take such other actions as may be reasonably requested by the
other party to carry out the provisions and purposes of this Agreement in
accordance with its terms.
24. HEADINGS. The headings contained in this Agreement have
been inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement.
25. PUBLICITY. The Corporation and Executive agree that they
will not make any press releases or other announcements prior to or at the time
of execution of this Agreement with respect to the terms contemplated hereby,
except as required by applicable law, without the prior approval of the other
party, which approval will not be unreasonably withheld.
26. ARBITRATION. Any disputes arising under this Agreement
shall be submitted to and determined by arbitration in St. Louis, Missouri. Such
arbitration shall be conducted in accordance with the rules of the American
Arbitration Association. Any award or decision of the arbitration shall be
conclusive in the absence of fraud and judgment thereon may be entered in any
court having jurisdiction thereof. The costs of such arbitration shall be paid
by the non-prevailing party to the extent directed by the arbitrator(s).
THIS AGREEMENT CONTAINS BINDING ARBITRATION PROVISIONS WHICH MAY
BE ENFORCED BY THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
SHEFFIELD PHARMACEUTICALS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
President & Chief Executive Officer
/s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
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