EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit 10.27
THIS EMPLOYMENT AGREEMENT (the “Agreement”), is effective as of 03/01/2006 (the “Effective
Date”) by and between Cornerstone BioPharma, Inc., a Delaware corporation (the “Company”), and
Xxxxx Xxxxxxx (the “Executive”), an individual residing in North Carolina.
WITNESSETH:
WHEREAS, the Company wishes to employ the Executive, and the Executive desires to accept
employment with the Company, upon the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises herein, and of other
good and valuable consideration, including the employment of the Executive by the Company and the
compensation to be received by the Executive from the Company from time to time, and specifically
the compensation to be received by the Executive pursuant to Section 4 hereof, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending legally to be bound,
hereby agree as follows:
1. Employment. The Company hereby employs the Executive and the Executive hereby
accepts employment as President/CEO of the Company upon the terms and conditions of this Agreement.
2. Duties. The Executive shall faithfully perform all duties of the Company related
to the position or positions held by the Executive, including but not limited to all duties set
forth in this Agreement and/or in the Bylaws of the Company related to the position or positions
held by the Executive and all additional duties that are prescribed from time to time by the Board
of Directors of the Company (the “Board”) or other designated officers of the Company. The
Executive shall devote the Executive’s full time and attention to the performance of the
Executive’s duties and responsibilities on behalf of the Company and in furtherance of its best
interests; provided, however, that the Executive, subject to the Executive’s obligations hereunder,
shall also be permitted to make personal investments, perform reasonable volunteer services and,
with the prior consent of the Company, serve on outside boards of directors for non-profit
corporations. The Executive shall comply with all Company policies, standards, rules and
regulations (the “Company Policies”) and all applicable government laws, rules and regulations that
are now or hereafter in effect. The Executive acknowledges receipt of copies of all written
Company Policies that are in effect as of the date of this Agreement.
3. Term. Unless earlier terminated as provided herein, the initial term of this
Agreement shall commence on the Effective Date and shall continue until 12/31/2006. Thereafter,
this Agreement shall automatically renew on a year-to-year basis on the same terms and conditions
set forth herein unless: (a) earlier terminated or amended as provided herein or (b) either party
gives written notice of non-renewal at least sixty (60) days prior to the end of the initial term
or any renewal term of this Agreement. The initial term of this Agreement and all renewals thereof
are referred to herein as the “Term.”
4. Compensation. During the Term, as compensation for the services rendered by the
Executive under this Agreement, the Executive shall have previously received or be entitled to
receive the following (all payments are subject to applicable withholdings):
(a) Base Salary. The Executive shall receive a monthly salary of $23,792.08 (equal to
an annual salary of $285,504.96) payable in accordance with the then-current standard payroll
policies of the Company or as otherwise agreed to by the parties. The Executive’s salary may be
increased from time to time by the Board.
(b) Bonuses. The Executive shall be eligible to participate in all bonus or profit
sharing plans adopted by the Board. The amount awarded to the Executive under any profit sharing or
bonus plan shall be in the discretion of the Board or any committee administering such plan, based
on its assessment of the Executive’s and the Company’s performance during the relevant period, but
it is the expectation of the Company that any such bonus would be in the range of 0% to 50% of the
Executive’s annual base salary.
(c) Options. On 01/17/2006, the Executive was granted an option to purchase up to
50,000 shares of the Common Stock of Cornerstone BioPharma Holdings, Inc., a Delaware corporation
and parent corporation of the Company (“Parent”), at an exercise price of $.10 per share. The terms
and conditions of such option, including vesting, are governed by a[n] [Nonstatutory] [Incentive]
Stock Option Agreement issued by the Company to the Executive under Parent’s Stock [Option]
[Incentive] Plan.
(d) Restricted Stock. On 04/30/2005, the Executive purchased 14,700,000 shares of the
Common Stock of Parent for $.01 per share. The terms and conditions for such purchase were set
forth in a Stock Purchase Agreement entered into between Parent and the Executive.
(e) Benefits. The Executive shall be entitled to receive those benefits provided from
time to time to other executive employees of the Company, in accordance with the terms and
conditions of the applicable plan documents; provided that, the Executive meets the eligibility
requirements thereof. All such benefits are subject to amendment or termination from time to time
by the Company without the consent of the Executive or any other employee of the Company.
(f) Vacation. The Executive shall be entitled to four (4) weeks paid vacation per
calendar year (with the vacation for any partial year being prorated) to be taken at such times as
may be approved by his/her supervisor. A maximum of five (5) vacation days earned in one calendar
year may be used in the next subsequent calendar year. Upon the termination of the Executive’s
employment with the Company, cash shall be paid in lieu of accrued but unused vacation.
(g) Business Expenses. The Company shall pay, or reimburse the Executive for, all
reasonable expenses incurred by the Executive directly related to conduct of the business of the
Company; provided that, the Executive complies with the Company’s policies for the reimbursement or
advancement of business expenses that are now or hereafter in effect.
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(h) Automobile. The Executive shall have full use of that vehicle the Executive is
currently using, whether for business or personal uses. The Company shall pay, or reimburse the
Executive for, the lease of financing payments, automobile insurance, taxes and title fees
associated with such vehicle. Upon termination of employment with the Company, the Company shall
pay, or reimburse the Executive for the balance of the remaining lease payments, and will assign
and transfer title and other appropriate evidence of ownership of the vehicle to the Executive in
exchange for $100.00 paid by the Executive.
5. Termination. This Agreement and the Executive’s employment by the Company shall or
may be terminated, as the case may be, as follows:
(a) Termination upon Expiration of the Term. This Agreement and the Executive’s
employment by the Company shall terminate upon the expiration of the Term.
(b) Termination by the Executive. The Executive may terminate this Agreement and his
employment by the Company thirty (30) days after notice to the Company.
(c) Termination by the Company. The Company may terminate this Agreement and the
Executive’s employment by the Company upon notice to the Executive (or his personal
representative):
(i) at any time and for any reason;
(ii) upon the death of the Executive, in which case this Agreement shall terminate
immediately; provided that, such termination shall not prejudice any benefits payable to the
Executive’s spouse or beneficiaries which are fully vested as of the date of death;
(iii) if the Executive is permanently disabled (as defined herein), in which case this
Agreement shall terminate immediately; provided that, such termination shall not prejudice any
benefits payable to the Executive, the Executive’s spouse or beneficiaries which are fully vested
as of the date of the termination of this Agreement. For purposes of this Agreement, the Executive
shall be considered permanently disabled when a qualified medical doctor mutually acceptable to the
Company and the Executive or the Executive’s personal representative shall have certified in
writing that: (a) the Executive is unable, because of a medically determinable physical or mental
disability, to perform substantially all of the Executive’s duties, with or without a reasonable
accommodation, for more than one hundred and eighty (180) calendar days measured from the last full
day of work; or (b) by reason of mental or physical disability, it is unlikely that the Executive
will be able, within one hundred and eighty (180) calendar days, to resume substantially all
business duties and responsibilities in which the Executive was previously engaged and otherwise
discharge the Executive’s duties under this Agreement;
(iv) upon the liquidation, dissolution or discontinuance of business by the Company in any
manner or the filing of any petition by or against the Company under any federal or state
bankruptcy or insolvency laws, which petition shall not be dismissed within sixty (60) days after
filing; provided that, such termination shall not prejudice the Executive’s rights as a stockholder
or a creditor of the Company; or
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(v) “for cause” (as defined herein). “For cause” shall be determined by the Board by a
majority vote without the participation of the Executive in such vote and shall mean:
(1) Any material breach of the terms of this Agreement by the Executive, or the failure of the
Executive to diligently and properly perform the Executive’s duties for the Company or the
Executive’s failure to achieve the objectives specified by the Board;
(2) The Executive’s misappropriation or unauthorized use of the Company’s tangible or
intangible property, or breach of the Proprietary Information Agreement (as defined herein);
(3) Any material failure to comply with the Company Policies or any other policies and/or
directives of the Board;
(4) The Executive’s use of illegal drugs or any illegal substance, or the Executive’s use of
alcohol in any manner that materially interferes with the performance of the Executive’s duties
under this Agreement;
(5) Any dishonest or illegal action (including, without limitation, embezzlement) or any other
action whether or not dishonest or illegal by the Executive which is materially detrimental to the
interest and well-being of the Company, including, without limitation, harm to its reputation;
(6) The Executive’s failure to fully disclose any material conflict of interest the Executive
may have with the Company in a transaction between the Company and any third party which is
materially detrimental to the interest and well-being of the Company;
(7) Any adverse action or omission by the Executive which would be required to be disclosed
pursuant to public securities laws or which would limit the ability of the Company or any entity
affiliated with the Company to sell securities under any Federal or state law or which would
disqualify the Company or any affiliated entity from any exemption otherwise available to it; or
(8) The Executive’s violation of the Company’s Policies prohibiting harassment, unlawful
discrimination, retaliation or workplace violence.
(d) Obligations of the Company Upon Termination.
(i) Upon the termination of this Agreement: (A) pursuant to the expiration of the Term; (B) by
the Executive pursuant to paragraph 5(b); or (C) by the Company pursuant to paragraph 5(c)(ii),
(iii), (iv), or (v), the Company shall have no further obligations hereunder other than the payment
of all compensation and other benefits payable to the Executive through the date of such
termination.
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(ii) Upon termination of this Agreement: by the Company pursuant to paragraph 5(c)(i) and
provided the Executive executes and does not revoke a Release and Settlement Agreement in the form
acceptable to the Company: (1) the Company shall pay the Executive an amount equal to 12 months
base salary (less all applicable deductions) payable in a lump sum thirty (30) days after the
termination of Executive’s employment with the Company; (2) the Executive shall to be entitled to
receive all Company benefits to which the Executive was entitled as of the date of termination,
subject to the terms of all applicable benefit plans and to the extent such benefits can be
provided to a non-employee (or to the extent such benefits cannot be provided to non-employees,
then the Company shall pay to Executive on the first business day of each month during the
applicable period the amount that the Company was paying the applicable third party for such
benefits immediately prior to the termination of Executive’s employment with the Company), at the
same average level and on the same terms and conditions which applied immediately prior to the date
of the Executive’s termination, for the shorter of: (i) ___months following the date of such
termination or (ii) until the Executive obtains reasonably comparable coverage from another
employer. Notwithstanding the foregoing, if and to the extent required in order to avoid the
imposition on Executive of any excise tax under Section 409A (“Code Section 409A”) of the Internal
Revenue Code of 1986, as amended (the “Code"), the payment of any severance or other payments under
this Section 5 shall not commence until, and shall be made on, the first business day after the
date that is six (6) months following the date of Executive’s termination of employment, and in
such event the initial payment shall include a catch-up amount covering amounts that would
otherwise have been paid during the six-month period following Executive’s termination date.
6. Proprietary Information Agreement. The terms of the Proprietary Information,
Inventions, Non-Competition and Non-Solicitation Agreement by and between the Company and the
Executive, dated 03/01/2006 (the “Proprietary Information Agreement”), are hereby incorporated by
reference and are a material part of this Agreement.
7. Representations and Warranties.
(a) The Executive represents and warrants to the Company that the Executive’s performance of
this Agreement and as an employee of the Company does not and will not breach any noncompetition
agreement or any agreement to keep in confidence proprietary information acquired by the Executive
in confidence or in trust prior to the Executive’s employment by the Company. The Executive
represents and warrants to the Company that the Executive has not entered into, and agrees not to
enter into, any agreement that conflicts with or violates this Agreement.
(b) The Executive represents and warrants to the Company that the Executive has not brought
and shall not bring with the Executive to the Company, or use in the performance of the Executive’s
responsibilities for the Company, any materials or documents of a former employer which are not
generally available to the public or which did not belong to the Executive prior to the Executive’s
employment with the Company, unless the Executive has obtained written authorization from the
former employer or other owner for their possession and use and provided the Company with a copy
thereof.
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8. Indemnification by the Executive. The Executive shall indemnify and hold harmless
the Company, its directors, officers, stockholders, agents, and employees against all claims,
costs, expenses, liabilities, and lost profits, including amounts paid in settlement, incurred by
any of them as a result of the breach by the Executive of any provision of this Agreement.
9. Notices. All notices, requests, consents, approvals, and other communications to,
upon, and between the parties shall be in writing and shall be deemed to have been given,
delivered, made, and received when: (a) personally delivered; (b) deposited for next day delivery
by Federal Express, or other similar overnight courier services; (c) transmitted via telefacsimile
or other similar device to the attention of the Company President or Chief Executive Officer with
receipt acknowledged; or (d) three (3) days after being sent or mailed by certified mail, postage
prepaid and return receipt requested, addressed to the Company at 0000 Xxxxxxx Xxxxxxx, Xxxx, Xxxxx
Xxxxxxxx 00000, and to the Executive at 000 Xxxxxxxxxxxx Xxxxx, Xxxxxxxxxxx, XX 00000.
10. Effect. This Agreement shall be binding on and inure to the respective benefit of
the Company and its successors and assigns and the Executive and his personal representatives.
11. Entire Agreement. This Agreement constitutes the entire agreement between the
parties with respect to the matters set forth herein and supercedes all prior agreements and
understandings between the parties with respect to the same. To the extent any conflict exists or
arises between this agreement and any other Company policy or procedure, this agreement shall take
precedence and govern.
12. Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision.
13. Amendment and Waiver. No provision of this Agreement, including the provisions of
this Paragraph, may be amended, modified, deleted, or waived in any manner except by a written
agreement executed by the parties.
14. No Assignment. Neither this Agreement nor any interest herein may be assigned by
either party without the consent of the other party.
15. Construction. This Agreement shall be construed and enforced in accordance with
the laws of the State of North Carolina, other than its rules with respect to choice of law.
16. Consent to Jurisdiction and Venue. Each of the parties agrees that any suit,
action, or proceeding arising out of this Agreement may be instituted against it in the District
Court of Wake County, North Carolina or in the United States District Court for the Eastern
District of North Carolina (assuming that such court has subject matter jurisdiction over such
suit, action or proceeding). Each of the parties hereby waives any objection that it may have to
the venue of any such suit, action, or proceeding, and each of the parties hereby irrevocably
consents to the personal jurisdiction of any such court in any such suit, action, or proceeding.
17. Counterparts. This Agreement may be executed in more than one counterpart, each
of which shall be deemed an original, and all of which shall be deemed a single agreement.
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18. Headings. The headings herein are for convenience only and shall not affect the
interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the day and year
first above written.
| Cornerstone BioPharma, Inc. |
||||
| By: | /s/ Xxxxx X. Xxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxx | |||
| Title: | CEO | |||
| Executive |
||||
| /s/ Xxxxx X. Xxxxxxx | ||||
| (Signature) | ||||
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