EXHIBIT 10.11
EXECUTIVE EMPLOYMENT AGREEMENT
This is an Executive Employment Agreement (the "Agreement"), effective as
of August 11, 2003, between Xxxxx Laboratories, Inc., a Texas corporation
(together with its successors and assigns, the "Company"), and Xxxxxxx X.
Xxxxxxxxx (the "Executive" or "you").
BACKGROUND
The Company wishes to secure the services of the Executive, and the
Executive is willing to accept employment with the Company, on the terms and
conditions set forth in this Agreement. Accordingly, in consideration of the
mutual covenants and agreements set forth below, the parties agree as follows:
1. EMPLOYMENT.
(a) General. The Company will employ the Executive, and the
Executive accepts employment with the Company, upon the terms and conditions set
forth in this Agreement.
(b) Term of Employment. Unless earlier terminated in accordance
with Section 4 below, the term of the employment of the Executive under this
Agreement will be for a period of five (5) years, ending on the fifth
anniversary of the commencement of employment (the "Term"); provided, such Term
shall automatically renew for successive one-year periods, unless either party
gives written notice to the other party that such Term shall not renew within
six (6) months prior to the scheduled expiration of the Term.
(c) Position; Reporting. The Executive shall serve as the
President and Chief Executive Officer of the Company, reporting directly to the
Board of Directors of the Company (the "Board").
(d) Duties and Responsibilities. The Executive will serve in an
executive capacity and shall perform such duties as are customarily associated
with the title of President and Chief Executive Officer in a company the nature
and size of the Company, consistent with the bylaws of the Company and as
required by the Board (provided that any duties and responsibilities required
pursuant to the bylaws of the Company or by the Board shall not be inconsistent
with your position as President and Chief Executive Officer of the Company).
During the Term, you will devote your reasonable best efforts and substantially
all of your business time and attention to the business of the Company, provided
that you may serve on the boards of a reasonable number of other business
entities, trade associations and/or civic or charitable organizations with the
prior written consent of the Company, engage in charitable activities and manage
your personal and family investments, as long as such activities do not, in the
opinion of the Board, interfere with the proper performance of your duties and
responsibilities for the Company. In all events, you shall be permitted to
continue to serve as a member of the board of directors of the entities
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on whose boards you are currently serving as set forth in the list of such
organizations attached hereto as Exhibit A.
(e) Board of Directors. The Company will use its best efforts to
cause you to be elected to the Board for so long as you hold the position of
President or Chief Executive Officer of the Company.
2. COMPENSATION AND BENEFITS.
(a) Base Salary. The Company will pay you for your services under
this Agreement a base salary of $31,250 per month, which annualizes to $375,000,
less applicable tax and other withholdings, subject to annual review for
increase by the Board. Such salary as in effect from time to time is referred to
in this Agreement as the Executive's "Base Salary." Executive's Base Salary
cannot be reduced by the Company without the Executive's prior written consent.
(b) Bonus Plan. In addition to your Base Salary, you will also be
eligible to receive an annual performance bonus (the "Performance Bonus"),
dependent on your own and the Company's performance. The target Performance
Bonus shall be equal to 100% of your Base Salary (the "Target Bonus") with the
potential of up to 150% of your Base Salary. The amount and award of such
Performance Bonus shall be determined by the Board in its sole discretion based
upon the achievement by you and the Company of objectives set each year by you
and the Board; provided that if you meet your annual performance objectives,
your annual Performance Bonus for that year shall be paid at no less than the
Target Bonus. Within thirty (30) days of the date hereof, you will be expected
to identify a set of mutually agreed to objectives, with achievement dates, that
will result in a more specific payout formula. Any Performance Bonus shall be
paid no later than ninety (90) days after the end of the applicable performance
period.
(c) Transaction Bonus. As we have discussed with you, it is our
intent that you will lead the Company in its efforts to capitalize on a number
of substantial opportunities, building the creation of stockholder value. In the
event that there is a Corporate Transaction (as defined in Section 3(b) below,
but which for these purposes shall include the sale, transfer or other
disposition of a substantial portion of the Company's assets, whether in one or
a series of transactions) during the Term or on or prior to the nine (9) month
anniversary of your termination date in the event your employment is terminated
without Cause (as defined in Section 4(a)(2)) or due to Disability (as defined
in Section 4(b)(2)) or you resign for Good Reason (as defined in Section
4(a)(3)), you will receive a transaction bonus equal to two percent (2.0%) of
the Total Transaction Price (the "Transaction Bonus"), payable upon consummation
of any such Corporate Transaction at the same time the Company or its
stockholders receive consideration in the transaction. In no event will the
Transaction Bonus(es) payable under this Section 2(c) and Section 4(c) exceed
$2,500,000 in the aggregate. For purposes of this Section 2(c), "Total
Transaction Price" shall mean the aggregate value of the cash and securities
received by the Company or its stockholders in such transaction(s), exclusive of
any assumption of debt.
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(d) Benefits. You will be entitled to participate in the Company's
benefit programs available to all members of the executive management team on a
basis no less favorable than the basis provided such team members, including but
not limited to group health insurance, life insurance, participation in the
Company's 401(k) plan and vacation programs. At a minimum, you shall be entitled
to four (4) weeks vacation per calendar year, subject to increase with the
approval of the Compensation Committee of the Board.
(e) Relocation Costs. The Company will provide you with
reimbursement for reasonable temporary living arrangements in the Dallas-Ft.
Worth area, including meals, lodging and transportation costs for you and your
spouse, not to exceed $4,500 per month, for a period of up to six (6) months
from the date hereof. Should you require longer temporary living arrangements,
the Company will be open to discussing it with you at that point in time. In
addition, should the Company maintain its principal offices in Fort Worth, Texas
or relocate its principal offices to a location which is more than a reasonable
commute from your current residence, the Company will provide you with
reimbursement for relocation benefits to be agreed to between you and the
Company in connection with your relocation from your current residence, provided
such relocation costs at a minimum shall include: (A) home sales assistance
pursuant to which the Company will reimburse you for your brokerage commission
up to 6% of the sales price of your current residence and all reasonable legal
and closing costs associated with such sale and (B) reimbursement for reasonable
expenses incurred by you in moving your household goods and, if necessary,
storing such goods for up to 12 months.
(f) Reimbursement of Legal Fees. The Company will reimburse you
for $25,000 of your legal fees incurred in negotiating and drafting this
Agreement and its related agreements.
3. STOCK OPTIONS AND EQUITY.
(a) Grant. On the date hereof, the Company will grant you options, with
a 10-year term, to acquire five percent (5%) of the Company's outstanding shares
of Common Stock on a Fully Diluted Basis (as defined in Section 3(f)(2)), which
represents 3,893,818 shares of the Company's common stock. The option agreement
evidencing such options shall be in form and substance reasonably satisfactory
to the Executive and his counsel. Such options shall have an exercise price
equal to the fair market value of a share of the Company's common stock, $0.01
par value (the "Common Stock"), as of the date of the option grant as determined
by the Board, which in no event shall be more than $0.14 per share. Except as
otherwise provided herein, such options will vest at the rate of 20% on the date
hereof, with the remainder vesting in equal monthly installments over the next
four years. Notwithstanding the foregoing, immediately prior to a Corporate
Transaction (as defined in Section 3(b) below or in the 1999 Long-Term Incentive
Plan or any successor thereto), all of your outstanding stock options, including
but not limited to the stock options granted pursuant to this Section 3(a),
shall be deemed fully vested and shall remain exercisable for the remainder of
their original terms without regard to your termination of employment
thereafter. Such stock options shall not be subject to repurchase by the
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Company upon termination of your employment nor, without your prior consent,
cash-out rights as set forth in the Company's 1999 Long-Term Incentive Plan.
Except as otherwise expressly provided in this Agreement, any stock option
grant, including but not limited to the stock option grant contemplated by this
Section 3(a), shall be granted subject to the terms and conditions set forth in
the Company's 1999 Long-Term Incentive Plan, as the same may be amended, a copy
of which is attached as Exhibit B hereto. In the event of a conflict between the
terms of this Agreement and the terms of the Company's 1999 Long-Term Incentive
Plan with respect to the stock option grant contemplated by this Section 3(a),
the terms most favorable to you shall govern.
(b) A "Corporate Transaction" shall mean (A) a merger or
consolidation as a result of which stockholders of the Company immediately after
consummation of the merger or consolidation hold less than 50% of the Voting
Securities of the surviving entity (whether such entity is the Company or
another entity), or (B) the consummation by the Company of the sale, transfer or
other disposition (including the liquidation) of a substantial portion of the
Company's assets whether in one or a series of transactions. For purposes of
this definition of "Corporate Transaction," "Voting Securities" shall mean the
capital stock of any class or classes having general voting power, in the
absence of specified contingencies, to elect the directors of the Company.
(c) Stockholders' Agreement. In consideration for and as a
material inducement to the Executive entering into this Agreement, certain
stockholders of the Company shall enter into a Stockholders' Agreement in the
form attached hereto as Exhibit C upon execution of this Agreement.
(d) Reservation, Registration and Listing of Underlying Shares.
The Company shall at all times reserve, out of its authorized and unissued
shares of Common Stock, a number of shares sufficient to provide for the
exercise in full of the Executive's stock options. Shares deliverable to the
Executive upon exercise of the stock options granted pursuant to Section 3(a),
when delivered to the Executive, shall be fully paid and non-assessable and
shall be free and clear of any and all liens, encumbrances, charges and other
third party rights. The Company agrees that all shares of Common Stock delivered
upon exercise of the stock options granted pursuant to Section 3(a) shall be
duly authorized and validly issued. The Company agrees that, subsequent to the
Company's initial underwritten registered public offering of Common Stock (an
"IPO") and the expiration of the 180 day holdback period described in Section
3(e) below, upon the written request of the Executive, it shall use its
commercially reasonable best efforts to ensure that all such shares of Common
Stock shall be (i) registered for sale, and for resale, by the Executive under
Federal and state securities laws and shall remain registered so long as the
shares of Common Stock underlying such option may not be freely sold in the
absence of such registration and (ii) listed, or otherwise qualified, for
trading in the United States on each national securities exchange or national
securities market system on which the Company's shares of Common Stock are then
listed or qualified. Notwithstanding the foregoing, the Company may postpone for
up to sixty (60) days the filing or effectiveness of a registration statement if
the Board determines in its good faith judgment that such registration should
not be made or continued because it could materially interfere with any material
financing,
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acquisition, corporate reorganization or merger or other material transaction
involving the Company or any of its subsidiaries.
(e) Holdback Agreement. The Executive shall not effect any sale or
distribution of any shares of capital stock or equity securities of the Company,
or any securities convertible into or exchangeable or exercisable for such stock
or securities, during the 180-day period beginning on the effective date of the
Company's IPO, unless the underwriters managing the registration otherwise
agree.
(f) Antidilution Protection; Participation Right.
(1) The Executive's stock options granted pursuant to this
Section 3(a) shall enjoy standard antidilution protection for stock
splits or stock dividends, and broad-based anti-dilution protection
for issuance of Common Stock or Common Stock equivalents at less
than $0.14 per share (determined on the basis of weighted average
price), other than issuances of Common Stock or Common Stock
equivalents issued upon conversion or exercise of any currently
outstanding securities or rights which are convertible into or
exercisable for shares of Company capital stock and included in the
calculation of the Executive's 5% stock option grant under Section
3(a) on a Fully Diluted Basis.
(2) During the term of this Agreement, the Executive shall, in
connection with any proposed issuance of additional Company equity
securities to non-employees exclusively for cash in a bona fide
transaction prior to an IPO (a "Triggering Issuance"), have the
right to irrevocably subscribe for and purchase from the Company for
cash, additional equity securities of the same kind, at the same per
share price and on such other terms and conditions identical in all
material respects as such equity securities are offered in the
Triggering Issuance. The Executive shall be permitted to purchase
his proportionate share of such securities (based on (i) the number
of shares of Common Stock owned by the Executive and shares of
Common Stock issuable to the Executive upon exercise or conversion
of any securities convertible into or exercisable for shares of the
Company's Common Stock, as if exercised and converted to the fullest
extent of their terms and as if then fully vested, relative to (ii)
the total number of shares of Common Stock on a Fully-Diluted
Basis). As used herein, "Fully-Diluted Basis" shall mean, at the
time of such determination, (a) all shares of Company capital stock
then outstanding, (b) all securities then outstanding which are
convertible into or exercisable for shares of Company capital stock,
as if exercised and converted to the fullest extent of their terms
and as if then fully vested, (c) all securities issuable pursuant to
contractual or other obligations of the Company then existing, and
(d) all shares of Company capital stock then reserved for issuance
to employees, consultants or directors of the Company.
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(g) Long-Term Incentive Plan Participation. You will be entitled to
participate in the Company's long-term incentive plans, including but not
limited to the Company's 1999 Long-Term Incentive Plan or any successor thereto,
on a basis no less favorable than the basis provided other members of the
executive management team.
4. TERMINATION.
(a) Severance Upon Termination Without Cause or For Good Reason.
(1) Although you and the Company have the right to terminate
your employment at will, in the event your employment is terminated
by the Company without Cause (as defined in Section 4(a)(2) or upon
a resignation by you for Good Reason (as defined in Section
4(a)(3)), you shall be entitled to: (A) an amount equal to two (2.0)
times your Base Salary and Target Bonus as then in effect (provided
in no event shall such Base Salary or Target Bonus be less than the
amount guaranteed in this Agreement), payable 50% following your
termination and 50% on the 13th month anniversary of the date of
your termination, in each case, net of the minimum applicable tax
withholdings, (B) continued exercisability of all stock options that
have vested as of the date of termination for the remainder of their
original terms and (C) continuation of your group health insurance
and life insurance benefits for you and your eligible dependents for
a period of twenty four (24) months from the termination date or
until you obtain comparable coverage from subsequent employment,
whichever occurs earlier; provided that to the extent that the
Company's plans do not permit continuation of such participation
throughout such period, the Company shall reimburse you under COBRA
continuation coverage for the portion of the premiums paid by the
Company immediately prior to your termination date and, if COBRA is
no longer available and you have not obtained comparable coverage
from subsequent employment, an amount, payable quarterly in advance,
which is sufficient for you to purchase equivalent benefits. The
Company's obligation to pay the severance amount described in this
Section 4(a)(1) is subject to, and the initial 50% payment will be
due upon, your execution of a release of claims in the form attached
hereto as Exhibit D and the expiration of the applicable revocation
period with respect to such release. Upon the eighth day after your
execution and delivery of such release to the Company (provided you
have not revoked such release), the Company shall pay the initial
50% payment and execute and deliver to you a release of claims
against you in the form of Exhibit D.
(2) "Cause" shall mean any of the following: (A) your
conviction of any crime or offense involving monies or other
property, or your conviction of any felony offense for any crime of
moral turpitude, fraud or embezzlement, (B) your willful neglect or
willful misconduct relating to the performance of your duties for
the Company, resulting, in either case, in material economic harm to
the Company, (C) your willful violation of any
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material provision of your non-competition, non-solicitation or
confidentiality agreements with the Company, or (D) any act of moral
turpitude or willful misconduct by you which (1) is intended to
result in your personal enrichment or that of any immediate family
member at the financial expense of the Company or (2) is reasonably
expected to result in material economic injury to the Company.
Anything herein to the contrary notwithstanding, you shall not be
terminated for Cause within the meaning of clauses (B), (C) or (D)
of this Section 4(a)(2) unless (x) the Company has given you written
notice stating the basis for the termination within ninety (90) days
of the Company's knowledge of the events giving rise to such
"Cause," (y) you have an opportunity to be heard before the full
Board and (z) after such hearing, there is a vote of 2/3rds of the
directors (not including yourself) to terminate you for Cause.
(3) "Good Reason" shall mean the occurrence of any of the
following without your prior written consent: (A) a reduction in
your then current Base Salary or Target Bonus unless agreed to by
the parties as part of a broader austerity program applied ratably
to all executive officers, (B) a material diminution in your duties,
responsibilities, authorities, powers or functions, or the
assignment of duties to you that are inconsistent with your
position, so that, in the reasonable exercise of your discretion,
you are unable to carry out your duties hereunder as contemplated at
the time this Agreement was entered into (other than in connection
with your termination by the Company for Cause), (C) your removal as
Chief Executive Officer or President of the Company or as a member
of the Board, or the failure to elect or reelect you to any such
positions (other than in connection with your termination by the
Company for Cause), (D) a change in your reporting relationship such
that you no longer report directly to the Board (other than in
connection with your termination by the Company for Cause), (E) a
breach by the Company of any material provision of this Agreement,
including its Exhibits, or of any equity award or agreement between
you and the Company or any affiliate or (F) the failure of the
Company to obtain the assumption in writing of its obligations under
this Agreement in all material respects by any successor to all or
substantially all of its assets after any combination, merger,
consolidation, sale, liquidation or similar transaction. Anything
herein to the contrary notwithstanding, you shall not have "Good
Reason" to terminate your employment unless you have given the
Company written notice setting forth the act or acts that constitute
"Good Reason" within ninety (90) days of your knowledge of the
events giving rise to such "Good Reason" and the Company shall have
failed to cure the same within fifteen (15) days of your providing
such notice.
(b) Termination for Death or Disability.
(1) Upon your death or termination of your employment due to
your Disability (as defined in Section 4(b)(2)), you or your estate,
as the case
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may be, shall be entitled to: (A) continued exercisability of all
stock options that have vested as of the date of termination for one
year following your death or, upon Disability, for the remainder of
their original terms, (B) continuation of your group health
insurance and life insurance benefits for you (in the case of
Disability) and your eligible dependents for a period of twelve (12)
months from the termination date or until you obtain comparable
coverage from subsequent employment, whichever occurs earlier;
provided that to the extent that the Company's plans do not permit
continuation of such participation throughout such period, the
Company shall reimburse you (or your dependents in the case of your
death) under COBRA continuation coverage for the portion of the
premiums paid by the Company immediately prior to your termination
date, and (C) with respect to your Disability termination only, a
pro-rata Performance Bonus for the year of termination determined by
multiplying your Target Bonus by a fraction, the numerator of which
shall be the number of days you were employed in the applicable
performance period and the denominator of which shall be the number
of days in the applicable performance period.
(2) "Disability" shall mean your failure due to physical or
mental incapacity to render services contemplated by this Agreement
(including from a remote location) for three consecutive calendar
months, or for shorter periods aggregating 150 or more business days
in any twelve month period, as determined by a medical doctor
selected by you and the Company. If you and the Company cannot agree
on a medical doctor, you and the Company shall each select a medical
doctor and the two doctors shall select a third who shall be the
approved medical doctor for this purpose.
(c) Effect of Exercise of Redemption Rights. If the holders of at
least a majority of the outstanding shares of the Company's preferred stock
request redemption by the Company of such holders' shares of preferred stock,
you shall have the right to treat such exercise as an event giving rise to a
resignation by you for Good Reason and shall be entitled to the severance and
other entitlements set forth above in Section 4(a)(1). In addition, you shall be
entitled to a Transaction Bonus equal to two percent (2.0%) of the total
redemption price to be paid by the Company to its preferred stockholders in such
redemption, payable in a lump sum in cash prior to any payment by the Company
(including the execution of any promissory note) to or for the benefit of any
redeeming preferred stockholder. In no event will the Transaction Bonus(es)
payable under Section 2(c) and this Section 4(c) exceed $2,500,000 in the
aggregate.
(d) Provisions Applicable Upon Any Termination. In the event of any
termination of your employment, you shall be entitled to: (A) amounts earned or
due but unpaid through the date of termination, including Base Salary,
unreimbursed business expenses, any incentive awards due for any performance
period or performance measurement cycle that have been completed prior to the
date of termination and any amounts payable in lieu of accrued vacation, (B) any
compensation previously deferred by you and any accrued interest on earnings on
such deferred compensation to the extent not
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previously paid to you, (C) any other benefits, rights or entitlements,
including senior-level executive benefits, if any, in accordance with the
applicable plans, programs, policies, agreements or other arrangements of the
Company or any of its subsidiaries and (D) in the case of a voluntary
resignation (other than for Good Reason or upon Disability), continued
exercisability of all stock options that have vested as of the date of
termination for three (3) months following the date of termination. In addition,
in the event of any termination of your employment, you shall be under no
obligation to seek other employment and there shall be no offset against amounts
due to you on account of any remuneration or benefits provided by any subsequent
employment you may obtain or on account of any claims the Company or any of its
subsidiaries may have against you.
5. CONFIDENTIALITY AND NONCOMPETITION AGREEMENT. In consideration
for and as a material inducement to the parties entering into this Agreement,
the Company and the Executive agree to execute that certain Confidentiality and
Noncompetition Agreement in the form attached hereto as Exhibit E upon execution
of this Agreement.
6. INDEMNIFICATION; D&O LIABILITY INSURANCE.
(a) The Company agrees that if you are made a party to, are
threatened to be made a party to, receive any legal process in, or receive any
discovery request or request for information in connection with, any action,
suit or proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that you are or were a director, officer,
employee, consultant or agent of the Company, or are or were serving at the
request of, or on behalf of, the Company as a director, officer, member,
employee, consultant or agent of another corporation, limited liability
corporation, partnership, joint venture, trust or other entity, including
service with respect to employee benefit plans, you shall be indemnified and
held harmless by the Company to the fullest extent permitted or authorized by
the Company's articles of incorporation or by-laws or, if greater, by applicable
law, against any and all costs, expenses, liabilities and losses (including,
without limitation, attorneys' fees reasonably incurred, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid in settlement and any
reasonable costs and fees incurred in enforcing your rights to indemnification
or contribution) incurred or suffered by you in connection therewith, and such
indemnification shall continue as to you even though you have ceased to be a
director, officer, member, employee, consultant or agent of the Company or other
entity and shall inure to the benefit of your heirs, executors and
administrators. The Company shall reimburse you for all costs and expenses
(including, without limitation, reasonable attorneys' fees) incurred by you in
connection with any Proceeding within 20 business days after receipt by the
Company of a written request for such reimbursement and appropriate
documentation associated with these expenses. Such request shall include an
undertaking by you to repay the amount of such advance if it shall ultimately be
determined that you are not entitled to be indemnified against such costs and
expenses.
(b) Neither the failure of the Company (including its Board,
independent legal counsel or stockholders) to have made a determination prior to
the commencement of any Proceeding concerning payment of amounts claimed by you
under Section 6(a) that
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indemnification of you is proper because you have met the applicable standard of
conduct, nor a determination by the Company (including its Board, independent
legal counsel or stockholders) that you have not met such applicable standard of
conduct, shall create a presumption or inference that you have not met the
applicable standard of conduct.
(c) The Company agrees to continue and maintain a directors' and
officers' liability insurance policy or policies covering you at a level, and on
terms and conditions, no less favorable to you than the coverage the Company
provides directors and/or other similarly-situated executives until such time as
suits against you are no longer permitted by law.
(d) Nothing in this Section 6 shall be construed as reducing or
waiving any right to indemnification, or advancement of expenses, you would
otherwise have under the Company's articles of incorporation or by-laws or under
applicable law.
7. DISPUTE RESOLUTION. Any disputes or claims arising under or in
connection with this Agreement, your employment with the Company, or the
termination thereof, shall be resolved by binding arbitration, to be held in the
State in which the Company's headquarters is located at the time of such
hearing, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. Judgment upon the award rendered by the arbitrators may
be entered into any court having jurisdiction thereof. Each party shall bear its
own costs and expenses (including attorneys' fees) in arbitration, and shall
share equally the costs of arbitration.
8. REPRESENTATIONS AND WARRANTIES.
(a) By the Company. The Company represents and warrants that (i) the
execution, delivery and performance of this Agreement by the Company has been
fully and validly authorized by all necessary corporate action, (ii) the officer
signing this Agreement on behalf of the Company is duly authorized to do so,
(iii) the execution, delivery and performance of this Agreement does not violate
any applicable law, regulation, order, judgment or decree or any agreement, plan
or corporate governance document to which the Company is a party or by which it
is bound and (iv) upon execution and delivery of this Agreement by the parties,
it shall be a valid and binding obligation of the Company enforceable against it
in accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally.
(b) By Executive. The Executive represents and warrants that (i) the
execution, delivery and performance of this Agreement does not violate any
applicable law, regulation, order, judgment or decree or any agreement to which
the Executive is a party or by which he is bound and (ii) upon execution and
delivery of this Agreement by the parties, it shall be a valid and binding
obligation of Executive enforceable against him in accordance with its terms.
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9. MISCELLANEOUS.
(a) Notice. Any notice, request or other communication given in
connection with this Agreement shall be in writing and shall be deemed to have
been given (i) when personally delivered to the recipient or (ii) provided that
a written acknowledgement of receipt is obtained, three days after being sent by
prepaid certified or registered mail, or two days after being sent by a
nationally recognized overnight courier, to the address specified in this
Section 9(a) (or such other address as the recipient shall have specified by ten
(10) days' advance written notice given in accordance with this Section 9(a)).
Such communication shall be addressed to you at your home address and to the
Company at its corporate headquarters (unless such address is changed in
accordance with this Section 9(a)).
(b) Entire Agreement. This Agreement, together with the Exhibits
hereto which are incorporated herein by reference, constitutes the sole
agreement between the parties as to the subject matter hereof and supercedes all
prior agreements, understandings, discussions, negotiations, and undertakings,
whether written or oral, between the parties with respect thereto. This
Agreement may only be modified by a written document signed by you and a duly
authorized officer of the Company with Board approval. Any waiver by any person
of any provision of this Agreement shall be effective only if in writing and
signed by the person against whom enforcement of the wavier is sought. For any
waiver or modification to be effective, it must specifically refer to this
Agreement and to the terms and provisions being modified or waived. No waiver of
any provision of this Agreement shall be effective as to any other provision of
this Agreement except to the extent specifically provided in an effective
written waiver. In the event of any inconsistency between the terms of this
Agreement and the terms of any Company plan, policy, arrangement or other
agreement, the terms most favorable to you shall control.
(c) Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of, and shall be binding upon, each of the parties and
their heirs, representatives, successors and assigns. No rights or obligations
of the Company under this Agreement may be assigned or transferred by the
Company, without your prior written consent, except that such rights or
obligations may be assigned or transferred pursuant to the sale or transfer of a
substantial portion of the Company's assets, provided that the assignee or
transferee is the successor to a substantial portion of the assets of the
Company and assumes the liabilities, obligations and duties of the Company under
this Agreement, either contractually or as a matter of law. Your rights or
obligations may not be assigned or transferred by you, without the Company's
prior written consent, other than your rights to compensation and benefits,
which may be transferred by will or operation of law. You shall be entitled, to
the extent permitted under applicable law or the relevant plan or policy, to
select and change a beneficiary or beneficiaries to receive any compensation or
benefit hereunder following your death by giving the Company written notice
thereof. In the event of your death or a judicial determination of your
incompetence, references in this Agreement to you shall be deemed, where
appropriate, to refer to your beneficiary, estate or other legal representative.
11
(d) Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions or portions of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by law
and the invalid or unenforceable provisions or portions shall be reformed so as
to give maximum legal effect to the agreements of the parties contained herein;
provided, however, that such reformation shall be effective only if the overall
economic or legal substance of the transactions contemplated hereby would not
thereby be affected in any manner materially adverse to either party.
(e) Governing Law. This Agreement shall be governed in all respects
by the laws of the State of Texas, without regard to conflicts of law principles
to the extent that such principles would require the application of the laws of
another jurisdiction.
(f) Miscellaneous. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument. Signatures delivered by
facsimile shall be effective for all purposes. Upon the expiration of the Term
of this Agreement, the respective rights and obligations of the parties shall
survive such expiration to the extent necessary to carry out the intentions of
the parties as embodied in their respective rights and obligations under this
Agreement. This Agreement shall continue in effect until there are no further
rights or obligations of either party outstanding hereunder and shall not be
terminated by either party without the express prior written consent of the
other party.
(g) No Strict Construction. The parties to this Agreement have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement will be construed as if drafted jointly by the parties, and no
presumption or burden of proof will arise in favor or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
12
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
THE COMPANY:
XXXXX LABORATORIES, INC.
By: /s/ Xxxxx Xxxxxx
_________________________
Its: Chief Financial Officer
_________________________
THE EXECUTIVE:
/s/ Xxxxxxx X. Xxxxxxxxx
______________________________
Xxxxxxx X. Xxxxxxxxx
Exhibit A - List of entities on whose Boards Executive is currently serving
Exhibit B - 1999 Long-Term Incentive Plan
Exhibit C - Executive and Stockholders' Agreement
Exhibit D - Form of Mutual Release
Exhibit E - Confidentiality and Noncompetition Agreement
13
EXHIBIT A
Executive's Current Board Memberships
Private Volunteer Boards: Freedom House
Industry Boards: Consumer Healthcare Products Association (CHPA)
World Self Medication Industry (WSMI)
EXHIBIT B
XXXXX LABORATORIES, INC.
1999 LONG-TERM INCENTIVE PLAN
ARTICLE 1. ESTABLISHMENT AND PURPOSE
1.1 ESTABLISHMENT. XXXXX LABORATORIES, INC., a Texas corporation, hereby
establishes the XXXXX LABORATORIES, INC. 1999 LONG-TERM INCENTIVE PLAN, as set
forth in this document.
1.2 PURPOSE. The purposes of the Plan are to attract able persons to
enter the employ of the Company, to encourage Employees to remain in the employ
of the Company and to provide motivation to Employees to put forth maximum
efforts toward the continued growth, profitability and success of the Company,
by providing incentives to such persons through the ownership and performance of
the Common Stock of AdamsLabs. A further purpose of the Plan is to provide a
means through which the Company may attract able persons to become directors,
consultants and independent contractors of the Company and to perform other
services beneficial to the Company and to provide such individuals with
incentive and reward opportunities. Toward these objectives, Awards may be
granted under the Plan to Employees and Consultants on the terms and subject to
the conditions set forth in the Plan.
1.3 EFFECTIVENESS. The Plan shall become effective as of July 21, 1999,
the date of its adoption by the Board, provided it is duly approved by the
holders of at least a majority of the shares of Common Stock present or
represented and entitled to vote at a meeting of the shareholders of AdamsLabs
duly held in accordance with applicable law within twelve months after the date
of adoption of the Plan by the Board. If the Plan is not so approved, the Plan
shall terminate and any Award granted hereunder shall be null and void.
ARTICLE 2. DEFINITIONS
2.1 ADAMSLABS. "AdamsLabs" means XXXXX LABORATORIES, INC., a Texas
corporation, and any successor thereto.
2.2 AFFILIATE. "Affiliate" means a "parent corporation" or a "subsidiary
corporation" of AdamsLabs, as those terms are defined in Section 424(e) and (f)
of the Code.
2.3 AWARD. "Award" means any Option or Restricted Stock granted under
the Plan to a Participant.
2.4 AWARD AGREEMENT. "Award Agreement" means a written agreement between
AdamsLabs and a Participant that sets forth the terms, conditions, restrictions
and/or limitations applicable to an Award.
2.5 BOARD. "Board" means the Board of Directors of AdamsLabs.
2.6 CODE. "Code" means the Internal Revenue Code of 1986, as amended
from time to time, including regulations thereunder and successor provisions and
regulations thereto.
2.7 COMMON STOCK. "Common Stock" means the Common Stock, $0.01 par value
per share, of AdamsLabs, or any stock or other securities of AdamsLabs hereafter
issued or issuable in substitution or exchange for the Common Stock.
2.8 COMPANY. "Company" means AdamsLabs and its Affiliates.
2.9 CONSULTANT. "Consultant" means (i) an individual duly elected or
chosen as a director of AdamsLabs who is not also an Employee or (ii) any other
individual who performs services for and is treated by AdamsLabs or an Affiliate
as an independent contractor for employment tax purposes.
2.10 EFFECTIVE DATE. "Effective Date" means the date an Award is
determined to be effective by the Board upon the grant of such Award.
2.11 EMPLOYEE. "Employee" means any person treated as an employee by
AdamsLabs or an Affiliate. "Employee" shall not include a Consultant.
2.12 FAIR MARKET VALUE. "Fair Market Value" means the fair market value
of the Common Stock as determined by the Board in good faith.
2.13 INCENTIVE STOCK OPTION. "Incentive Stock Option" means an Option
that is intended to meet the requirements of Section 422(b) of the Code.
2.14 NONQUALIFIED STOCK OPTION. "Nonqualified Stock Option" means an
Option that is not intended to meet the requirements of Section 422(b) of the
Code.
2.15 OPTION. "Option" means an option to purchase shares of Common Stock
granted to a Participant pursuant to Article 7, and includes both Incentive
Stock Options and Nonqualified Stock Options.
2.16 PARTICIPANT. "Participant" means any Employee or Consultant to whom
an Award has been granted under the Plan.
2.17 PLAN. "Plan" means this XXXXX LABORATORIES, INC. 1999 LONG-TERM
INCENTIVE PLAN.
2.18 RESTRICTED STOCK. "Restricted Stock" means an Award of shares of
Common Stock granted to a Participant pursuant to, and with such restrictions as
are imposed under, Article 8. Restricted Stock shall constitute issued and
outstanding shares of Common Stock for all corporate purposes.
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2.19 RETIREMENT. "Retirement" means the termination of an Employee's
employment with AdamsLabs or an Affiliate on or after the Employee's attainment
of age 65 and completion of at least 15 years of employment with AdamsLabs or an
Affiliate.
ARTICLE 3. PLAN ADMINISTRATION
3.1 RESPONSIBILITY OF ADMINISTRATOR. The Plan shall be administered by
the Board. The Board may delegate responsibility for administration of the Plan
to a committee appointed by and serving at the pleasure of the Board, under such
terms and conditions as the Board shall determine; provided, however, that one
member of any such committee shall be appointed by and serve at the pleasure of
S.Z. Investments, L.L.C. The Board shall have total and exclusive responsibility
to control, operate, manage and administer the Plan in accordance with its
terms. The Board shall have all the authority that may be necessary or helpful
to enable it to discharge its responsibilities with respect to the Plan. Without
limiting the generality of the preceding sentence, the Board shall have the
exclusive right to: (i) interpret the Plan and the Award Agreements executed
hereunder; (ii) determine eligibility for participation in the Plan; (iii)
decide all questions concerning eligibility for, and the amount of, Awards
payable under the Plan; (iv) construe any ambiguous provision of the Plan or any
Award Agreement; (v) prescribe the form of the Award Agreements embodying Awards
granted under the Plan; (vi) correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Award Agreement; (vii) issue
administrative guidelines as an aid to administer the Plan and make changes in
such guidelines as it from time to time deems proper; (viii) make regulations
for carrying out the Plan and make changes in such regulations as it from time
to time deems proper; (ix) to the extent permitted under the Plan, grant waivers
of Plan terms, conditions, restrictions and limitations; (x) accelerate the
exercise, vesting or payment of an Award when such action or actions would be in
the best interests of the Company; (xi) grant Awards in replacement of Awards
previously granted under the Plan or any other employee benefit plan of the
Company; and (xii) take any and all other actions it deems necessary or
advisable for the proper operation or administration of the Plan.
3.2 DISCRETIONARY AUTHORITY. The Board shall have full discretionary
authority in all matters related to the discharge of its responsibilities and
the exercise of its authority under the Plan, including, without limitation, its
construction of the terms of the Plan and its determination of eligibility for
participation and Awards under the Plan. The decisions of the Board and its
actions with respect to the Plan shall be final, conclusive and binding on all
persons having or claiming to have any right or interest in or under the Plan,
including Participants and their respective estates, beneficiaries and legal
representatives.
3.3 LIABILITY; INDEMNIFICATION. No member of the Board nor any person to
whom authority has been properly delegated, shall be personally liable for any
action, interpretation or determination made in good faith with respect to the
Plan or Awards granted hereunder, and each member of the Board (or delegatee of
the Board) shall be fully indemnified and protected by AdamsLabs with respect to
any liability he or she may incur with respect to any such action,
interpretation or determination, to the extent permitted by applicable law.
-3-
ARTICLE 4. ELIGIBILITY
All Employees and Consultants are eligible to participate in the Plan. The
Board shall select, from time to time, Participants from those Employees and
Consultants, who, in the opinion of the Board, can further the Plan's purposes.
In making this selection, the Board may give consideration to the functions and
responsibilities of the Participant, his or her past, present and potential
contributions to the growth and success of the Company and such other factors
deemed relevant by the Board. Once a Participant is so selected, the Board shall
determine the type and size of Award to be granted to the Participant and shall
establish in the related Award Agreement the terms, conditions, restrictions
and/or limitations applicable to the Award, in addition to those set forth in
the Plan and the administrative rules and regulations, if any, established by
the Board.
ARTICLE 5. FORM OF AWARDS
Awards may, at the Board's sole discretion, be granted under the Plan in
the form of Options pursuant to Article 7, Restricted Stock pursuant to Article
8, or a combination thereof. All Awards shall be subject to the terms,
conditions, restrictions and limitations of the Plan. The Board may, in its sole
judgment, subject any Award to such other terms, conditions, restrictions and/or
limitations (including, but not limited to, the time and conditions of exercise,
vesting or payment of an Award and restrictions on transferability of any shares
of Common Stock issued or delivered pursuant to an Award), provided they are not
inconsistent with the terms of the Plan. Awards under a particular Article of
the Plan need not be uniform, and Awards under two or more Articles of the Plan
may be combined into a single Award Agreement. Any combination of Awards may be
granted at one time and on more than one occasion to the same Participant.
ARTICLE 6. SHARES SUBJECT TO THE PLAN
6.1 AVAILABLE SHARES. The maximum number of shares of Common Stock that
shall be available for grant of Awards under the Plan shall not exceed 700,000,
subject to adjustment as provided in Sections 6.2 and 6.3. Shares of Common
Stock issued pursuant to the Plan may be shares of original issuance or treasury
shares or a combination of the foregoing, as the Board, in its discretion, shall
from time to time determine.
6.2 ADJUSTMENTS FOR RECAPITALIZATIONS AND REORGANIZATIONS.
(a) The shares with respect to which Awards may be granted under
the Plan are shares of Common Stock as presently constituted, but if, and
whenever, prior to the expiration or satisfaction of an Award theretofore
granted, AdamsLabs shall effect a subdivision or consolidation of shares
of Common Stock or the payment of a stock dividend on Common Stock without
receipt of consideration by AdamsLabs, the number of shares of Common
Stock with respect to which such Award may thereafter be exercised or
satisfied, as applicable, (i) in the event of an increase in the number of
outstanding shares shall be proportionately increased, and the exercise
price per share
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shall be proportionately reduced, and (ii) in the event of a reduction in
the number of outstanding shares shall be proportionately reduced, and the
exercise price per share shall be proportionately increased.
(b) If AdamsLabs recapitalizes or otherwise changes its capital
structure, thereafter upon any exercise or satisfaction, as applicable, of
an Award theretofore granted the Participant shall be entitled to (or
entitled to purchase, if applicable) under such Award, in lieu of the
number of shares of Common Stock then covered by such Award, the number
and class of shares of stock or other securities to which the Participant
would have been entitled pursuant to the terms of the recapitalization if,
immediately prior to such recapitalization, the Participant had been the
holder of record of the number of shares of Common Stock then covered by
such Award.
(c) In the event of changes in the outstanding Common Stock by
reason of recapitalizations, reorganizations, mergers, consolidations,
combinations, separations (including a spin-off or other distribution of
stock or property), exchanges or other relevant changes in capitalization
occurring after the date of grant of any Award and not otherwise provided
for by this Section 6.2, any outstanding Awards and any Award Agreements
evidencing such Awards shall be subject to adjustment by the Board at its
discretion as to the number, price and kind of shares or other
consideration subject to, and other terms of, such Awards to reflect such
changes in the outstanding Common Stock.
(d) In the event of any changes in the outstanding Common Stock
provided for in this Section 6.2, the aggregate number of shares available
for grant of Awards under the Plan may be equitably adjusted by the Board,
whose determination shall be conclusive. Any adjustment provided for in
this Section 6.2 shall be subject to any required stockholder action.
6.3 ADJUSTMENTS FOR AWARDS. The Board shall have full discretion to
determine the manner in which shares of Common Stock available for grant of
Awards under the Plan are counted. Without limiting the discretion of the Board
under this Section 6.3, the following rules shall apply for the purpose of
determining the number of shares of Common Stock available for grant of Awards
under the Plan unless otherwise determined by the Board in its discretion;
provided, however, that any exercise of discretion by the Board with respect to
the rules set forth below that is not consistent with the rule as set forth
below shall not be given effect without the consent of a member of the Board
designated by S.Z. Investments, L.L.C. for such purpose:
(a) OPTIONS AND RESTRICTED STOCK. The grant of Options and
Restricted Stock shall reduce the number of shares available for grant of
Awards under the Plan by the number of shares subject to such Award.
(b) TERMINATION. If any Award referred to in paragraph (a) above
is canceled or forfeited, or terminates, expires or lapses for any reason,
the shares then subject to such Award shall again be available for grant
of Awards under the Plan.
-5-
(c) PAYMENT OF EXERCISE PRICE AND WITHHOLDING TAXES. If previously
acquired shares of Common Stock are used to pay the exercise price of an
Award, or shares of Common Stock that would be acquired upon exercise of
an Award are withheld to pay the exercise price of such Award, the number
of shares available for grant of Awards under the Plan other than
Incentive Stock Options shall be increased by the number of shares
delivered or withheld as payment of such exercise price. If previously
acquired shares of Common Stock are used to pay withholding taxes payable
upon exercise, vesting or payment of an Award, or shares of Common Stock
that would be acquired upon exercise, vesting or payment of an Award are
withheld to pay withholding taxes payable upon exercise, vesting or
payment of such Award, the number of shares available for grant of Awards
under the Plan other than Incentive Stock Options shall be increased by
the number of shares delivered or withheld as payment of such withholding
taxes.
ARTICLE 7. OPTIONS
7.1 GENERAL. Awards may be granted to Employees and Consultants in the
form of Options. These Options may be Incentive Stock Options or Nonqualified
Stock Options, or a combination of both; provided, however, that (i) no
Incentive Stock Options shall be granted later than 10 years from the date of
adoption of the Plan by the Board and (ii) only Employees shall be eligible to
receive Incentive Stock Options.
7.2 TERMS AND CONDITIONS OF OPTIONS. An Option shall be exercisable in
whole or in such installments and at such times as may be determined by the
Board; provided, however, that except as provided in Article 9 of this Plan, no
Option shall be exercisable sooner than one year from the Effective Date of the
Option and the Option shall first become exercisable with respect to no more
than 20% of the number of shares covered by the Option on the date which is one
year from the Effective Date of the Option with no more than an additional 20%
first becoming exercisable on each subsequent anniversary thereof until such
Option is exercisable in full. Notwithstanding the preceding sentence, the Board
may grant an Option that is exercisable in full immediately upon grant provided
that the shares purchased upon exercise of any such Option shall be Restricted
Stock, the Restriction Period for which shall begin on the Effective Date of the
Option and, except as provided in Article 9 of this Plan, shall end no sooner
than (i) one year with respect to 20% of the shares covered by the Option, (ii)
two years with respect to an additional 20% of the shares covered by the Option,
(iii) three years with respect to an additional 20% of the shares covered by the
Option, (iv) four years with respect to an additional 20% of the shares covered
by the Option, and (v) five years with respect to the remainder of shares
covered by the Option. The preceding provisions to the contrary notwithstanding,
solely for purposes of determining the percentage of shares exercisable pursuant
to an Option and the Restriction Period with respect to Restricted Stock
purchased upon exercise of an Option, the Effective Date of an Option granted to
an Employee in substitution for the cancellation of all phantom share units
previously granted to such Employee under a phantom stock plan of AdamsLabs in
effect prior to the date of adoption of this Plan shall be the original
effective date of the grant of such phantom share units. Any Restricted Stock
purchased pursuant to the
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exercise of an Option as provided in the preceding provisions of this Section
shall be subject to the terms of Article 8 of this Plan and such other
provisions of this Plan that are applicable to Restricted Stock, and the Award
Agreement for such Option shall provide that in the event of the Participant's
termination of employment or termination of services as a Consultant during the
Restriction Period for any reason, all shares with respect to which the
Restriction Period has not ended shall be forfeited to AdamsLabs and AdamsLabs
shall pay to the Participant an amount equal to the lesser of the price paid by
the Participant upon exercise of the shares so forfeited or the Fair Market
Value of the shares on the date of forfeiture; provided, however, that for this
purpose, the "price paid by the Participant upon exercise" of a Nonqualified
Stock Option that is exercised solely by means of the withholding of shares
which otherwise would be acquired on exercise shall be zero. The price at which
a share of Common Stock may be purchased upon exercise of an Option shall be
determined by the Board, but such exercise price shall not be less than 100% of
the Fair Market Value of a share of Common Stock on the Effective Date of the
Option's grant. Except as otherwise provided in Section 7.3, the term of each
Option shall be as specified by the Board; provided, however, that, unless
otherwise designated by the Board, no Options shall be exercisable later than 10
years from the Effective Date of the Option's grant.
7.3 RESTRICTIONS RELATING TO INCENTIVE STOCK OPTIONS. Options granted in
the form of Incentive Stock Options shall, in addition to being subject to the
terms and conditions of Section 7.2, comply with Section 422(b) of the Code.
Accordingly, to the extent that the aggregate Fair Market Value (determined at
the time the respective Incentive Stock Option is granted) of Common Stock with
respect to which Incentive Stock Options are exercisable for the first time by
an individual during any calendar year under all incentive stock option plans of
AdamsLabs and its Affiliates exceeds $100,000, such excess Incentive Stock
Options shall be treated as options which do not constitute Incentive Stock
Options. The Board shall determine, in accordance with applicable provisions of
the Code, which of an optionee's Incentive Stock Options will not constitute
Incentive Stock Options because of such limitation and shall notify the optionee
of such determination as soon as practicable after such determination. No
Incentive Stock Option shall be granted to an Employee under the Plan if, at the
time such Option is granted, such Employee owns stock possessing more than 10%
of the total combined voting power of all classes of stock of AdamsLabs or an
Affiliate, within the meaning of Section 422(b)(6) of the Code, unless (i) on
the Effective Date of grant of such Option, the exercise price of such Option is
at least 110% of the Fair Market Value of the Common Stock subject to the Option
and (ii) such Option by its terms is not exercisable after the expiration of
five years from the Effective Date of the Option's grant.
7.4 ADDITIONAL TERMS AND CONDITIONS. The Board may subject any Award of
an Option to such other terms, conditions, restrictions and/or limitations as it
determines are necessary or appropriate, provided they are not inconsistent with
the Plan.
7.5 EXERCISE OF OPTIONS. Subject to the terms and conditions of the
Plan, Options shall be exercised by the delivery of a written notice of exercise
to AdamsLabs, setting forth the number of shares of Common Stock with respect to
which the Option is to be exercised, accompanied by full payment for such
shares.
-7-
Upon exercise of an Option, the exercise price of the Option shall be
payable to AdamsLabs in full either: (i) in cash or an equivalent acceptable to
the Board or (ii) in the discretion of the Board and in accordance with any
applicable administrative guidelines established by the Board, by (a) tendering
previously acquired nonforfeitable, unrestricted shares of Common Stock having
an aggregate Fair Market Value at the time of exercise equal to the total
exercise price (including an actual or deemed multiple series of exchanges of
such shares), (b) with respect to Nonqualified Stock Options only, withholding
shares which otherwise would be acquired on exercise having an aggregate Fair
Market Value at the time of exercise equal to the total exercise price or (c) a
combination of the forms of payment specified in clauses (i), (ii)(a) or (ii)(b)
above.
In addition, the Board, in its sole and absolute discretion, may approve
the extension of a loan to an optionee who is an Employee to assist the optionee
in paying the exercise price of an Option; provided, however, that no such loan
shall be for an amount greater than the excess of the (i) the exercise price of
the shares of Common Stock issuable upon exercise of the Option over (ii) the
par value of such shares of Common Stock. Any such loan will be made on such
terms and conditions as the Board shall deem to be appropriate.
In addition, any grant of a Nonqualified Stock Option under the Plan may
provide that payment of the exercise price of the Nonqualified Stock Option may
also be made in whole or in part in the form of shares of Restricted Stock or
other shares of Common Stock that are subject to risk of forfeiture or
restrictions on transfer. Unless otherwise determined by the Board at the time
of grant of such Nonqualified Stock Option, whenever the exercise price of such
Nonqualified Stock Option is paid in whole or in part by means of the form of
consideration specified in the immediately preceding sentence, the shares of
Common Stock received by the Participant upon the exercise of such Option shall
be subject to the same risk of forfeiture and restrictions on transfer as those
that applied to the consideration surrendered by the Participant. However, the
risk of forfeiture and restrictions on transfer shall apply only to the same
number of shares of Common Stock received by the Participant upon exercise as
applied to the forfeitable or restricted Common Stock surrendered by the
Participant in payment of the exercise price.
As soon as reasonably practicable after receipt of written notification of
exercise of an Option and full payment of the exercise price and any required
withholding taxes, AdamsLabs shall deliver to the Participant, in the
Participant's name, a stock certificate or certificates in an appropriate amount
based upon the number of shares of Common Stock purchased under the Option.
7.6 TERMINATION OF SERVICE. Each Award Agreement embodying the Award of
an Option shall set forth the extent to which the Participant shall have the
right to exercise the Option following termination of the Participant's
employment or service with the Company. Such provisions shall be determined in
the sole discretion of the Board, need not be uniform among all Options granted
under the Plan and may reflect distinctions based on the reasons for termination
of employment or service. Subject to Sections 7.2 and 7.3 and Article 9, in the
event that an Employee's Award Agreement embodying the Award of an Option does
not set forth such
-8-
termination provisions, the following termination provisions shall apply with
respect to such Award:
(a) RETIREMENT, DEATH OR DISABILITY. If the employment of a
Participant shall terminate by reason of Retirement, death or permanent
and total disability (within the meaning of Section 22(e)(3) of the Code),
outstanding Options held by the Participant may be exercised, to the
extent then vested, no more than one year from the date of such
termination of employment, unless the Options, by their terms, expire
earlier.
(b) INVOLUNTARY TERMINATION. If the employment of a Participant is
involuntarily terminated by the Company for any reason (other than for
cause as described in paragraph (d) below), outstanding Options held by
the Participant may be exercised, to the extent then vested, no more than
three months from the date of such termination of employment, unless the
Options, by their terms, expire earlier.
(c) VOLUNTARY TERMINATION. If the employment of a Participant
terminates due to the Participant's voluntary resignation for any reason
(other than the reasons set forth in paragraph (a) above), outstanding
Options held by the Participant may be exercised, to the extent then
vested, no more than thirty days from the date of such termination of
employment, unless the Options, by their terms, expire earlier.
(d) TERMINATION FOR CAUSE. Notwithstanding paragraphs (a), (b) and
(c) above, if the employment of a Participant shall be terminated for
cause, all outstanding Options held by the Participant shall immediately
be forfeited to the Company and no additional exercise period shall be
allowed, regardless of the vested status of the Options. For this purpose,
termination for "cause" shall mean termination by reason of such
Participant's fraud, dishonesty or performance of other acts detrimental
to the Company, as determined by the Board in good faith.
7.7 MAXIMUM OPTION GRANTS. Notwithstanding any provision contained in
the Plan to the contrary, the maximum number of shares of Common Stock for which
Options may be granted under the Plan to any one Employee during a calendar year
is 100,000.
ARTICLE 8. RESTRICTED STOCK
8.1 GENERAL. Awards may be granted to Employees and Consultants in the
form of Restricted Stock. Restricted Stock shall be awarded in such numbers and
at such times as the Board shall determine.
8.2 RESTRICTION PERIOD. At the time an Award of Restricted Stock is
granted, the Board shall establish a period of time (the "Restriction Period")
applicable to such Restricted Stock; provided, however, that except as provided
in Article 9 of this Plan, the Restriction Period with respect to any Award of
Restricted Stock shall be at least (i) one year with respect to 20% of the
shares awarded, (ii) two years with respect to an additional 20% of the shares
awarded, (iii)
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three years with respect to an additional 20% of the shares awarded, (iv) four
years with respect to an additional 20% of the shares awarded and (v) five years
with respect to the remainder of shares awarded. Subject to the preceding
sentence, each Award of Restricted Stock may have a different Restriction
Period, in the discretion of the Board. The Restriction Period applicable to a
particular Award of Restricted Stock shall not be changed except as permitted by
Section 6.2, Section 8.3 or Article 9.
8.3 OTHER TERMS AND CONDITIONS. Restricted Stock awarded to a
Participant under the Plan shall be represented by a stock certificate
registered in the name of the Participant or, at the option of AdamsLabs, in the
name of a nominee of AdamsLabs. Subject to the terms and conditions of the Award
Agreement, a Participant to whom Restricted Stock has been awarded shall have
the right to receive dividends thereon during the Restriction Period, to vote
the Restricted Stock and to enjoy all other stockholder rights with respect
thereto, except that (i) the Participant shall not be entitled to possession of
the stock certificate representing the Restricted Stock until the Restriction
Period shall have expired, (ii) AdamsLabs shall retain custody of the Restricted
Stock during the Restriction Period, (iii) the Participant may not sell,
transfer, pledge, exchange, hypothecate or otherwise dispose of the Restricted
Stock during the Restriction Period and (iv) a breach of the terms and
conditions established by the Board pursuant to the Award of the Restricted
Stock shall cause a forfeiture of the Restricted Stock. At the time of an Award
of Restricted Stock, the Board may, in its sole discretion, prescribe additional
terms, conditions, restrictions and/or limitations applicable to the Restricted
Stock, including, but not limited to, rules pertaining to the termination of
employment or service (by reason of death, permanent and total disability, or
otherwise) of a Participant prior to expiration of the Restriction Period.
8.4 PAYMENT FOR RESTRICTED STOCK. A Participant shall not be required to
make any payment for Restricted Stock awarded to the Participant, except to the
extent otherwise required by the Board or by applicable law.
8.5 MISCELLANEOUS. Nothing in this Article 8 shall prohibit the exchange
of shares of Restricted Stock issued under the Plan pursuant to a plan of
reorganization for stock or securities of AdamsLabs or another corporation a
party to the reorganization, but the stock or securities so received for shares
of Restricted Stock shall, except as provided in Section 6.2 or Article 9,
become subject to the restrictions applicable to the Award of such Restricted
Stock. Any shares of stock received as a result of a stock split or stock
dividend with respect to shares of Restricted Stock shall also become subject to
the restrictions applicable to the Award of such Restricted Stock.
ARTICLE 9. CORPORATE TRANSACTION
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Notwithstanding anything contained in the Plan to the contrary, in the
event of a Corporate Transaction (as defined below), unless otherwise provided
in the related Award Agreement: (i) each Option then outstanding shall become
exercisable in full; (ii) all restrictions (other than restrictions imposed by
law) and conditions of all Restricted Stock then outstanding shall be deemed
satisfied; and (iii) AdamsLabs shall have the right, but shall not be obligated,
to cancel any and all Options outstanding at the time of such Corporate
Transaction by payment for each share of Common Stock that may be purchased
pursuant to the Option at the time of the cancellation of an amount in cash
equal to the excess, if any, of the Fair Market Value of the Common Stock as
determined by the Board based upon the consideration being paid for a share of
Common Stock in the Corporate Transaction, over the purchase price set forth in
the Option.
A "Corporate Transaction" shall include any of the following transactions
with respect to which AdamsLabs is a party:
(a) a merger or consolidation in which AdamsLabs is not the
surviving entity, except for (i) a transaction the principal purpose of
which is to change the state of AdamsLabs's incorporation, or (ii) a
transaction in which AdamsLabs's shareholders immediately prior to such
merger or consolidation hold (by virtue of securities received in exchange
for their shares in AdamsLabs) securities of the surviving entity
representing more than fifty percent (50%) of the total voting power of
such entity immediately after such transaction;
(b) the sale, transfer or other disposition of all or
substantially all of the assets of AdamsLabs unless AdamsLabs's
shareholders immediately prior to such sale, transfer or other disposition
hold (by virtue of securities received in exchange for their shares in
AdamsLabs) securities of the purchaser or other transferee representing
more than fifty percent (50%) of the total voting power of such entity
immediately after such transaction; or
(c) any reverse merger in which AdamsLabs is the surviving entity
but in which AdamsLabs's shareholders immediately prior to such merger do
not hold (by virtue of their shares in AdamsLabs held immediately prior to
such transaction) securities of AdamsLabs representing more than fifty
percent (50%) of the total voting power of AdamsLabs immediately after
such transaction.
Notwithstanding the foregoing, a "Corporate Transaction" shall not include a
transaction or series of transactions involving an internal reorganization of
AdamsLabs pursuant to which certain assets of AdamsLabs are transferred, leased
or otherwise contributed to entities which are directly or indirectly wholly
owned by AdamsLabs.
ARTICLE 10. AMENDMENT AND TERMINATION
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The Board may at any time suspend, terminate, amend or modify the Plan, in
whole or in part; provided, however, that no amendment or modification of the
Plan shall become effective without the approval of such amendment or
modification by the stockholders of AdamsLabs if such amendment or modification
(i) increases the maximum number of shares subject to the Plan or (ii) changes
the designation or class of persons eligible to receive Awards under the Plan.
Upon termination of the Plan, the terms and provisions of the Plan shall,
notwithstanding such termination, continue to apply to Awards granted prior to
such termination. No suspension, termination, amendment or modification of the
Plan shall adversely affect in any material way any Award previously granted
under the Plan, without the consent of the Participant holding such Award.
The Board may amend the terms of any outstanding Award granted pursuant to
this Plan, but any amendment that would adversely affect the Participant's
rights under an outstanding Award shall not be made without the written consent
of the Participant. The Board may, with a Participant's written consent, cancel
any outstanding Award or accept any outstanding Award in exchange for a new
Award.
ARTICLE 11. MISCELLANEOUS
11.1 AWARD AGREEMENTS. After the Board grants an Award under the Plan to
a Participant, AdamsLabs and the Participant shall enter into an Award Agreement
setting forth the terms, conditions, restrictions and/or limitations applicable
to the Award and such other matters as the Board may determine to be
appropriate. The terms and provisions of the respective Award Agreements need
not be identical. In the event of any conflict between an Award Agreement and
the Plan, the terms of the Plan shall govern.
11.2 ADDITIONAL CONDITIONS. Notwithstanding anything in the Plan to the
contrary: (i) AdamsLabs may, if it shall determine it necessary or desirable for
any reason, at the time of grant of any Award or the issuance of any shares of
Common Stock pursuant to any Award, require the recipient of the Award or such
shares of Common Stock, as a condition to the receipt thereof, to deliver to
AdamsLabs a written representation of present intention to acquire the Award or
such shares of Common Stock for his or her own account for investment and not
for distribution; and (ii) if at any time AdamsLabs further determines, in its
sole discretion, that the listing, registration or qualification (or any
updating of any such document) of any Award or shares of Common Stock issuable
pursuant thereto is necessary on any securities exchange or market or under any
federal or state securities or blue sky laws, or that the consent or approval of
any governmental or regulatory body is necessary or desirable as a condition of,
or in connection with, the grant of any Award, the issuance of shares of Common
Stock pursuant thereto or the removal of any restrictions imposed on such
shares, such Award shall not be awarded or such shares of Common Stock shall not
be issued or such restrictions shall not be removed, as the case may be, in
whole or in part, unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to AdamsLabs.
-12-
11.3 LEGEND ON STOCK CERTIFICATES. Each certificate representing shares
of Common Stock issued pursuant to an Award shall bear a legend in substantially
the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO
THE TERMS OF THE 1999 LONG-TERM INCENTIVE PLAN OF XXXXX LABORATORIES, INC.
("ADAMSLABS") AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR
OTHERWISE ENCUMBERED OR DISPOSED OF EXCEPT AS SET FORTH IN THE TERMS OF AN
AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER HEREOF AND ADAMSLABS.
A COPY OF SUCH PLAN AND AGREEMENT ARE ON FILE AT THE PRINCIPAL EXECUTIVE
OFFICES OF ADAMSLABS.
11.4 RESTRICTIONS ON TRANSFER. The Common Stock acquired pursuant to any
and all Awards shall be subject to a right of first refusal in favor of
AdamsLabs, its successors and designees, and such other restrictions and
agreements regarding sale, assignment, encumbrances or other transfer as the
Board shall deem advisable and shall set forth in the Award Agreement. In
addition, AdamsLabs shall have the right to repurchase the shares of Common
Stock acquired pursuant to any and all Awards at any time on or after an
Employee's termination of employment for any reason or the termination of
services of a Consultant. The price to be paid by AdamsLabs, its successors or
designees for the repurchase of Common Stock acquired pursuant to an Award shall
be the Fair Market Value of the Common Stock; provided, however, that in the
event of a repurchase of Common Stock with respect to a Participant following
such Participant's termination of employment for cause as described in Section
7.3(d), the price to be paid by AdamsLabs, its successors or designees for the
repurchase of Common Stock acquired pursuant to an Award shall be the lesser of
the Fair Market Value of the Common Stock or the price paid for the shares, if
any. The preceding provisions of this Section 11.4 to the contrary
notwithstanding, unless otherwise provided in the related Award Agreement, the
rights of AdamsLabs, its successors and designees to a right of first refusal
for or right to repurchase Common Stock pursuant to this Section or an Award
Agreement and such other restrictions and agreements regarding sale, assignment,
encumbrances or other transfer of Common Stock as may be set forth in an Award
Agreement, shall terminate upon the closing of the first underwritten public
offering of the common stock of AdamsLabs that is pursuant to a registration
statement filed with, and declared effective by, the Securities and Exchange
Commission under the Securities Act of 1933, as amended, covering the offer and
sale of any common stock to the public for AdamsLabs' account; provided,
however, that nothing in this Section is intended to or shall shorten the
Restriction Period with respect to Restricted Stock or accelerate the
exercisability or vesting of any Award prior to time provided for such exercise
or vesting pursuant to the terms of this Plan and the related Award Agreement.
11.5 NONASSIGNABILITY. No Award granted under the Plan may be sold,
transferred, pledged, exchanged, hypothecated or otherwise disposed of, other
than by will or pursuant to the applicable laws of descent and distribution.
Further, no such Award shall be subject to execution, attachment or similar
process. Any attempted sale, transfer, pledge, exchange,
-13-
hypothecation or other disposition of an Award not specifically permitted by the
Plan or the Award Agreement shall be null and void and without effect. All
Awards granted to a Participant under the Plan shall be exercisable during his
or her lifetime only by such Participant or, in the event of the Participant's
legal incapacity, by his or her guardian or legal representative.
11.6 WITHHOLDING TAXES. The Company shall be entitled to deduct from any
payment made under the Plan, regardless of the form of such payment, the amount
of all applicable income and employment taxes required by law to be withheld
with respect to such payment, may require the Participant to pay to the Company
such withholding taxes prior to and as a condition of the making of any payment
or the issuance or delivery of any shares of Common Stock under the Plan and
shall be entitled to deduct from any other compensation payable to the
Participant any withholding obligations with respect to Awards under the Plan.
In accordance with any applicable administrative guidelines it establishes, the
Board may allow a Participant to pay the amount of taxes required by law to be
withheld from or with respect to an Award by (i) withholding shares of Common
Stock from any payment of Common Stock due as a result of such Award or (ii)
permitting the Participant to deliver to the Company previously acquired shares
of Common Stock, in each case having a Fair Market Value equal to the amount of
such required withholding taxes. No payment shall be made and no shares of
Common Stock shall be issued pursuant to any Award unless and until the
applicable tax withholding obligations have been satisfied.
11.7 NO FRACTIONAL SHARES. No fractional shares of Common Stock shall be
issued or delivered pursuant to the Plan or any Award granted hereunder, and no
payment or other adjustment shall be made in respect of any such fractional
share.
11.8 NOTICES. All notices required or permitted to be given or made under
the Plan or any Award Agreement shall be in writing and shall be deemed to have
been duly given or made if (i) delivered personally, (ii) transmitted by first
class registered or certified United States mail, postage prepaid, return
receipt requested, (iii) sent by prepaid overnight courier service or (iv) sent
by telecopy or facsimile transmission, answer back requested, to the person who
is to receive it at the address that such person has theretofore specified by
written notice delivered in accordance herewith. Such notices shall be effective
(i) if delivered personally or sent by courier service, upon actual receipt by
the intended recipient, (ii) if mailed, upon the earlier of five days after
deposit in the mail or the date of delivery as shown by the return receipt
therefor or (iii) if sent by telecopy or facsimile transmission, when the answer
back is received. AdamsLabs or a Participant may change, at any time and from
time to time, by written notice to the other, the address that it or such
Participant had theretofore specified for receiving notices. Until such address
is changed in accordance herewith, notices hereunder or under an Award Agreement
shall be delivered or sent (i) to a Participant at his or her address as set
forth in the records of the Company or (ii) to AdamsLabs at the principal
executive offices of AdamsLabs clearly marked "Attention: LTIP Administration".
11.9 BINDING EFFECT. The obligations of AdamsLabs under the Plan shall be
binding upon any successor corporation or organization resulting from the
merger, consolidation or other
-14-
reorganization of AdamsLabs, or upon any successor corporation or organization
succeeding to all or substantially all of the assets and business of AdamsLabs.
The terms and conditions of the Plan shall be binding upon each Participant and
his or her heirs, legatees, distributees and legal representatives.
11.10 SEVERABILITY. If any provision of the Plan or any Award Agreement is
held to be illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining provisions of the Plan or such agreement, as the case
may be, but such provision shall be fully severable and the Plan or such
agreement, as the case may be, shall be construed and enforced as if the illegal
or invalid provision had never been included herein or therein.
11.11 NO RESTRICTION OF CORPORATE ACTION. Nothing contained in the Plan
shall be construed to prevent AdamsLabs or any Affiliate from taking any
corporate action (including any corporate action to suspend, terminate, amend or
modify the Plan) that is deemed by AdamsLabs or such Affiliate to be appropriate
or in its best interest, whether or not such action would have an adverse effect
on the Plan or any Awards made or to be made under the Plan. No Participant or
other person shall have any claim against AdamsLabs or any Affiliate as a result
of such action.
11.12 GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the internal laws (and not the principles relating to conflicts
of laws) of the State of Texas, except as superseded by applicable federal law.
11.13 NO RIGHT, TITLE OR INTEREST IN COMPANY ASSETS. No Participant shall
have any rights as a stockholder of AdamsLabs as a result of participation in
the Plan until the date of issuance of a stock certificate in his or her name
and, in the case of Restricted Stock, unless and until such rights are granted
to the Participant under the Plan. To the extent any person acquires a right to
receive payments from the Company under the Plan, such rights shall be no
greater than the rights of an unsecured creditor of the Company, and such person
shall not have any rights in or against any specific assets of the Company. All
of the Awards granted under the Plan shall be unfunded.
11.14 RISK OF PARTICIPATION. Nothing contained in the Plan shall be
construed either as a guarantee by AdamsLabs or its Affiliates, or their
respective stockholders, directors, officers or employees, of the value of any
assets of the Plan or as an agreement by AdamsLabs or its Affiliates, or their
respective stockholders, directors, officers or employees, to indemnify anyone
for any losses, damages, costs or expenses resulting from participation in the
Plan.
11.15 NO GUARANTEE OF TAX CONSEQUENCES. No person connected with the Plan
in any capacity, including, but not limited to, AdamsLabs and the Affiliates and
their respective directors, officers, agents and employees, makes any
representation, commitment or guarantee that any tax treatment, including, but
not limited to, Federal, state and local income, estate and gift tax treatment,
will be applicable with respect to any Awards or payments thereunder made to
-15-
or for the benefit of a Participant under the Plan or that such tax treatment
will apply to or be available to a Participant on account of participation in
the Plan.
11.16 OTHER BENEFITS. No Award granted under the Plan shall be considered
compensation for purposes of computing benefits or contributions under any
retirement plan of AdamsLabs or any Affiliate, nor affect any benefits or
compensation under any other benefit or compensation plan of AdamsLabs or any
Affiliate now or subsequently in effect.
11.17 CONTINUED EMPLOYMENT. Nothing contained in the Plan or in any Award
Agreement shall confer upon any Participant the right to continue in the employ
of the Company, or interfere in any way with the rights of the Company to
terminate his or her employment at any time, with or without cause.
11.18 NO MODIFICATION OF OTHER AGREEMENTS. Notwithstanding anything to the
contrary contained herein, the approval of this Plan by the Board and by
AdamsLabs' shareholders shall not be construed as an amendment, modification or
waiver by any such shareholder (or by any person or entity who has designated
any such approving Board member to serve in such capacity) of or under any
provision of any other agreement or instrument, including, without limitation,
any stock purchase agreement or shareholders agreement.
11.19 MISCELLANEOUS. Headings are given to the articles and sections of
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction of the Plan or
any provisions hereof. The use of the masculine gender shall also include within
its meaning the feminine. Wherever the context of the Plan dictates, the use of
the singular shall also include within its meaning the plural, and vice versa.
IN WITNESS WHEREOF, this Plan has been executed as of this 16th day of
September, 1999 to be effective as of July 21, 1999.
XXXXX LABORATORIES, INC.
By /s/ Xxxx X. Xxxxx, Xx.
____________________________________
Title: President
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AMENDMENT NO. 1 TO THE
XXXXX LABORATORIES, INC.
1999 LONG-TERM INCENTIVE PLAN
Pursuant to the provisions of Article 10 thereof, the Xxxxx Laboratories,
Inc. 1999 Long-Term Incentive Plan (the "Plan") is hereby amended in the
following respects only:
FIRST: Section 7.2 of the Plan is hereby amended by restatement in its
entirety to read as follows:
7.2 TERMS AND CONDITIONS OF OPTIONS. An Option shall be exercisable
in whole or in such installments and at such times as may be determined by
the Board; provided, however, that except as provided in Article 9 of this
Plan, no Option granted to an Employee shall be exercisable sooner than one
year from the Effective Date of the Option and the Option shall first
become exercisable with respect to no more than 20% of the number of shares
covered by the Option on the date which is one year from the Effective Date
of the Option with no more than an additional 20% first becoming
exercisable on each subsequent anniversary thereof until such Option is
exercisable in full. Notwithstanding the preceding sentence, the Board may
grant an Option to an Employee that is exercisable in full immediately upon
grant provided that the shares purchased upon exercise of any such Option
shall be Restricted Stock, the Restriction Period for which shall begin on
the Effective Date of the Option and, except as provided in Article 9 of
this Plan, shall end no sooner than (i) one year with respect to 20% of the
shares covered by the Option, (ii) two years with respect to an additional
20% of the shares covered by the Option, (iii) three years with respect to
an additional 20% of the shares covered by the Option, (iv) four years with
respect to an additional 20% of the shares covered by the Option, and (v)
five years with respect to the remainder of shares covered by the Option.
The preceding provisions to the contrary notwithstanding, solely for
purposes of determining the percentage of shares exercisable pursuant to an
Option and Restriction Period with respect to Restricted Stock purchased
upon exercise of an Option, the Effective Date of an Option granted to an
Employee in substitution for the cancellation of all phantom share units
previously granted to such Employee under a phantom stock plan of AdamsLabs
in effect prior to the date of adoption of this Plan shall be the original
effective date of the grant of such phantom share units. Any Restricted
Stock purchased pursuant to the exercise of an Option as provided in the
preceding provisions of this Section shall be subject to the terms of
Article 8 of this Plan and such other provisions of this Plan that are
applicable to Restricted Stock, and the Award Agreement for such Option
shall provide that in the event of the Participant's termination of
employment during the Restriction Period for any reason, all shares with
respect to which the Restriction Period has not ended shall be forfeited to
AdamsLabs and AdamsLabs shall pay to the Participant an amount equal to the
lesser of the price paid by the Participant upon exercise of the shares so
forfeited or the Fair Market Value of the shares on the date of forfeiture;
provided, however, that for this purpose, the "price paid by the
Participant upon exercise" of a Nonqualified Stock Option that is exercised
solely by means of the withholding of shares which otherwise would be
acquired on exercise shall be zero. The price at which a share of Common
Stock may be purchased upon exercise of an Option shall be determined by
the Board, but such exercise price shall not be less than 100% of the Fair
Market Value of a share of Common Stock on the Effective Date of the
Option's grant. Except as otherwise provided in Section 7.3, the term of
each Option shall be as specified by the Board; provided, however, that,
unless otherwise designated by the Board, no Options shall be exercisable
later than 10 years from the Effective Date of the Option's grant.
SECOND: Section 8.2 of the Plan is hereby amended by restatement in its
entirety to read as follows:
8.2 RESTRICTION PERIOD. At the time an Award of Restricted stock is
granted, the Board shall establish a period of time (the "Restriction
Period") applicable to such Restricted Stock; provided, however, that
except as provided in Article 9 of this Plan, the Restriction Period with
respect to any Award of Restricted Stock made to an Employee shall be at
least (i) one year with respect to 20% of the shares awarded, (ii) two
years with respect to an additional 20% of the shares awarded, (iii) three
years with respect to an additional 20% of the shares awarded, (iv) four
years with respect to an additional 20% of the shares awarded and (v) five
years with respect to the remainder of shares awarded Subject to the
preceding sentence, each Award of Restricted Stock may have a different
Restriction Period, in the discretion of the Board. The Restriction Period
applicable to a particular Award of Restricted Stock shall not be changed
except as permitted by Section 6.2, Section 8.3 or Article 9.
IN WITNESS WHEREOF, this Amendment has been executed this 19th day of
November, 1999 to be effective as of the date of the Plan's original adoption.
XXXXX LABORATORIES, INC.
By /s/ Xxxx X. Xxxxx, Xx.
___________________________________
Title: CEO
-2-
AMENDMENT NO. 2 TO THE
XXXXX LABORATORIES, INC.
1999 LONG-TERM INCENTIVE PLAN
Pursuant to the provisions of Article 10 thereof, the Xxxxx Laboratories,
Inc. 1999 Long-Term Incentive Plan (the "Plan") is hereby amended in the
following respects only:
FIRST: Section 6.1 of the Plan is hereby amended by replacing "700,000"
with "8,177,018".
SECOND: Section 7.2 of the Plan is hereby amended by restatement in its
entirety to read as follows:
7.2 TERMS AND CONDITIONS OF OPTIONS. An Option shall be exercisable
in whole or in such installments and at such times as may be determined by
the Board in its discretion.
THIRD: Section 7.7 of the Plan is hereby amended by deleting such section
in its entirety and inserting in lieu thereof the word "Reserved".
FOURTH: Section 11.1 of the Plan is hereby amended by replacing the last
sentence of such Section in its entirety with the following:
Unless the Award Agreement provides otherwise, in the event of any
conflict between an Award Agreement and the Plan, the terms of the Plan
shall govern.
FIFTH: Section 11.11 of the Plan is hereby amended by inserting the phrase
"Except as otherwise provided in Article 10 hereof," at the beginning of the
first sentence of such Section.
Except as amended by this Amendment No. 2, the Plan shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
XXXXX LABORATORIES, INC.
By: /s/ Xxxxx Xxxxxx
____________________________
Name: Xxxxx Xxxxxx
__________________________
Title: Chief Financial Officer
_________________________
AMENDMENT NO. 3 TO THE
XXXXX LABORATORIES, INC.
1999 LONG-TERM INCENTIVE PLAN
Pursuant to the provisions of Article 10 thereof, the Xxxxx Laboratories,
Inc. 1999 Long-Term Incentive Plan (the "Plan") is hereby amended by replacing
"8,177,018" with "8,994,720" in Section 6.1 of the Plan.
Except as amended by this Amendment No. 3, the Plan shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
XXXXX LABORATORIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
____________________________
Name: Xxxxxx X. Xxxxxxxxx
_________________________
Title: Vice President &
__________________________
General Counsel
__________________________
AMENDMENT NO. 4 TO THE
XXXXX LABORATORIES, INC.
1999 LONG-TERM INCENTIVE PLAN
Pursuant to the provisions of Article 10 thereof, the Xxxxx Laboratories,
Inc. 1999 Long-Term Incentive Plan (the "Plan") is hereby amended by replacing
"8,994,720" with "9,300,000" in Section 6.1 of the Plan, effective as of April
1, 2004.
Except as amended by this Amendment No. 4, the Plan shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
XXXXX LABORATORIES, INC.
By: /s/ Xxxxx Xxxxxx
____________________________
Name: Xxxxx X. Xxxxxx
Title: Chief Financial Officer
AMENDMENT NO. 5 TO THE
XXXXX LABORATORIES, INC.
1999 LONG-TERM INCENTIVE PLAN
Pursuant to the provisions of Article 10 thereof, the Xxxxx Laboratories,
Inc. 1999 Long-Term Incentive Plan (the "Plan") is hereby amended by replacing
"9,300,000" with "11,500,000" in Section 6.1 of the Plan, effective as of
October 20, 2004.
Except as amended by this Amendment No. 5, the Plan shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
XXXXX LABORATORIES, INC.
By: /s/ Xxxxx Xxxxxx
____________________________
Name: Xxxxx X. Xxxxxx
Title: Chief Financial Officer
EXHIBIT C
XXXXX LABORATORIES, INC.
EXECUTIVE AND STOCKHOLDERS' AGREEMENT
THIS EXECUTIVE AND STOCKHOLDERS' AGREEMENT (this "AGREEMENT") is
made as of August 11, 2003, by and among Xxxxx Laboratories, Inc., a Texas
corporation (the "COMPANY"), Xxxxxxx X. Xxxxxxxxx (the "EXECUTIVE") and EGI-Fund
(02-04) Investors, L.L.C., EGI-Fund (00) Investors, L.L.C., EGI-Fund (99)
Investors, L.L.C., EGI-Fund (01) Investors, L.L.C. (collectively, "EGI"),
Perseus-Xxxxx Biopharmaceutical Fund, LP ("PERSEUS-XXXXX"), Xxxxxx-Xxxxxxxxx
Capital Focus III, L.P., TD Origen Capital Fund, L.P. and TD Lighthouse Capital
Fund, L.P. (collectively, "TD" and, together with EGI and Perseus-Xxxxx, the
"STOCKHOLDERS"). Except as otherwise specified herein, capitalized terms used
herein are defined in paragraph 9 hereof.
The Company and the Executive are, simultaneously herewith, entering
into an Executive Employment Agreement. As a material inducement to the
Executive entering into such agreement, the Company, the Stockholders and the
Executive have agreed to enter into this Agreement with the Executive for the
purposes, among others, of limiting the manner and terms by which the Shares may
be transferred.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. Restrictions on Transfer of Shares.
(a) Transfer of Shares. Neither the Executive nor any
Stockholder shall sell, transfer, assign, pledge (other than a pledge made in
connection with a commercial loan by an institutional stockholder) or otherwise
dispose of (whether with or without consideration and whether voluntarily or
involuntarily or by operation of law) any interest in such holder's Shares (a
"TRANSFER"), except pursuant to the provisions of this Section 1 or pursuant to
a Public Sale or a transfer to an Affiliate, stockholder, member or partner of
such Stockholder; provided that in no event shall any Transfer of Shares
pursuant to this Section 1 be made for any consideration other than cash payable
upon consummation of such Transfer and no Shares may be pledged (except for a
pledge of Shares (i) by a transferee to secure indebtedness to the transferor
thereof hereunder, (ii) to the Company or its Subsidiaries to secure payment of
any notes made by any Stockholder to the Company or its Subsidiaries, or (iii)
in an amount not exceeding 25% of the Shares owned by such holder; provided
that, in each case, any such pledge (or a pledge made in connection with a
commercial loan by an institutional investor) is made expressly subject to the
terms, restrictions and conditions contained in this Agreement).
1
(b) Tag-Along Rights. At least 30 days prior to any Transfer
of Shares (other than a Public Sale, a transfer to an Affiliate, stockholder,
member or partner of such Stockholder, or to another stockholder of the
Company), the Stockholder making such transfer (the "TRANSFERRING STOCKHOLDER")
shall deliver a written notice (the "SALE NOTICE") to the Executive, specifying
in reasonable detail the identity of the prospective transferee(s), the number
of shares to be transferred and the terms and conditions of the Transfer. The
Executive may elect to participate in the contemplated Transfer at the same
price per share and on the same terms by delivering written notice to the
Transferring Stockholder within 30 days after delivery of the Sale Notice. If
any other stockholders have elected to participate in such Transfer (including
stockholders exercising their rights under the Stockholders' Agreement), the
Transferring Stockholder, the Executive and such other stockholders shall be
entitled to sell in the contemplated Transfer, at the same price and on the same
terms, a number of Shares of the same class of Shares being transferred equal to
the product of (i) the quotient determined by dividing the percentage of Shares
of such class owned by such Person by the aggregate percentage of Shares of such
class owned by the Transferring Stockholder, the Executive and the other
stockholders participating in such sale and (ii) the number of Shares of such
class to be sold in the contemplated Transfer.
For example, if the Sale Notice contemplated a sale of 100 Shares by the
Transferring Stockholder, and if the Transferring Stockholder at such time
owns 30% of all Shares, if the Executive elects to participate and owns 5%
of all Shares and if one other stockholder elects to participate and owns
15% of all Shares, the Transferring Stockholder would be entitled to sell
60 shares ((30% / 50%) x 100 shares), the Executive would be entitled to
sell 10 shares ((5% / 50%) x 100 and the other stockholder would be
entitled to sell 30 shares ((15% / 50%) x 100 shares).
Each Transferring Stockholder shall use best efforts to obtain the agreement of
the prospective transferee(s) to the participation of the Executive in any
contemplated Transfer, and no Transferring Stockholder shall transfer any of its
Shares to any prospective transferee if such prospective transferee(s) declines
to allow the participation of the Executive. If the Executive exercises his
right to transfer Shares pursuant to this Section 1(b), the Executive shall pay
his pro rata share (based on the number of Shares to be sold) of the expenses
incurred by the Stockholders in connection with such transfer and shall be
obligated to join on a pro rata basis (based on the number of Shares to be sold)
in any indemnification or other obligations that the Transferring Stockholder
agrees to provide in connection with such transfer (other than any such
obligations that relate specifically to a particular stockholder such as
indemnification with respect to an amount in excess of the net cash proceeds
paid to such holder in connection with such Transfer).
(c) Drag Along Rights. If at any time the Stockholders propose to
sell all of the Shares held by them, the Stockholders may give written notice
(the "WRITTEN NOTICE") thereof to the Executive. The Written Notice shall
specify the buyer or buyers and the time, date, place, sale price for the
Company, liquidation analysis (as defined below) and payment terms at and upon
which such sale shall take place. Upon the giving of the Written Notice, the
Executive shall be obligated to sell to the buyer or buyers
2
specified in the Written Notice all shares of capital stock owned or controlled
by him (including convertible securities, options, and other rights to acquire
shares) at the price per share determined as set forth in the liquidation
analysis and otherwise on the same terms as those upon which the Stockholders
are selling their shares to such buyer or buyers. Upon the receipt of the
Written Notice, the Executive shall cause to be surrendered to the Corporation,
for delivery to the buyer or buyers upon the closing of such sale by the
Stockholders against receipt of appropriate payment therefor, a certificate or
certificates evidencing ownership of Executive's shares of capital stock, duly
endorsed in blank with all requisite transfer stamps affixed, if any. For
purposes of this Section 1(c), the "LIQUIDATION ANALYSIS" shall be a
determination of the price per share payable to each stockholder if the
Corporation was sold for the aggregate purchase price proposed by the buyer or
buyers and the proceeds from such sale were utilized to pay (x) all creditors of
the Corporation, including trade payables and the costs of the sale and (y)
thereafter, the remaining proceeds were distributed to the stockholders of the
Corporation as described in the Amended and Restated Certificate of
Incorporation. For purposes of the liquidation analysis, (i) if a holder of
Preferred Stock would receive more consideration by converting his or its shares
of Preferred Stock into shares of Common Stock, then such holder will be
presumed to have converted such shares and (ii) if a holder holds a right to
acquire shares of capital stock which are then exercisable and if such holder
would receive more consideration upon exercise of such right than the exercise
price, then such holder will be presumed to have exercised such right and paid
such exercise price.
(d) Permitted Transfers. The restrictions set forth in this
Section 1 shall not apply with respect to any Transfer of Shares by the
Executive or any Stockholder (i) in the case of the Executive, (a) pursuant to
applicable laws of descent and distribution or by will, or (b) among the
Executive's Family Group or (ii) in the case of a Stockholder, among its
partners, directors, officers, stockholders, members or Affiliates (collectively
referred to herein as "PERMITTED TRANSFEREES"); provided that the restrictions
contained in this Section 1 shall continue to be applicable to the Shares after
any such Transfer and provided further that the transferees of such Shares shall
have agreed in writing to be bound by the provisions of this Agreement affecting
the Shares so transferred. "FAMILY GROUP" means the Person's spouse and
descendants (whether natural or adopted) and any trust solely for the benefit of
the Person and/or the Person's spouse and/or descendants, provided such Person
retains the possession, directly or indirectly, of the power to direct the
disposition and voting of such Shares. Notwithstanding the foregoing, the
restrictions set forth in this Section 1 shall not apply to any Transfer by EGI
to (x) any member of the Family Group of Mr. Xxx Xxxx, (y) any trust established
for the benefit of Xx. Xxxx or members of his Family Group, or (z) any friends
and/or associates of Xx. Xxxx or EGI, provided that Xx. Xxxx, his Family Group,
EGI, and/or their respective trusts or Affiliates retain possession, directly or
indirectly, of the power to direct the disposition and voting of such Shares, it
being agreed and understood that each such transferee is a "PERMITTED
TRANSFEREE" hereunder.
(e) Sales to Competitors. Except as provided in Section 1(c),
the Executive and each Stockholder hereby agrees not to knowingly Transfer (and
agrees to use reasonable diligence to avoid the Transfer of) Shares to any
Person (other than
3
another stockholder) whose primary business is competitive with that of the
Company in geographic areas where the Company or Company Subsidiaries sell or
are actively planning to sell its products.
(f) Termination of Restrictions. Notwithstanding anything to
the contrary set forth in this Agreement, the restrictions set forth in this
Section 1 shall continue with respect to each Share until the earlier of (i) the
date on which such Share has been transferred in a Public Sale, and (ii) the
consummation of a Qualified Public Offering.
2. Legend. Each certificate evidencing Shares and each certificate
issued in exchange for or upon the transfer of any Shares (if such shares remain
Shares after such transfer) shall be stamped or otherwise imprinted with a
legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED ON OR AS OF __________, ________ AND ARE SUBJECT TO (I) AN
EXECUTIVE AND STOCKHOLDERS' AGREEMENT DATED AS OF AUGUST 11, 2003
AMONG THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND CERTAIN OF
THE COMPANY'S STOCKHOLDERS, AS AMENDED AND MODIFIED FROM TIME TO
TIME, AND THE COMPANY RESERVES THE RIGHT TO REFUSE TO REGISTER THE
TRANSFER OF SUCH SECURITIES UNTIL THE TERMS AND CONDITIONS THEREOF
HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH
AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE
HOLDER HEREOF UPON WRITTEN REQUEST."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM
REGISTRATION THEREUNDER."
The Company shall imprint such legend on certificates evidencing Shares
outstanding as of the date hereof, and the Executive and the Stockholders shall
cooperate with the Company in connection therewith. The legend set forth above
shall be removed from certificates evidencing any shares which cease to be
Shares in accordance with the definition thereof in Section 4 hereof.
4
3. Transfer. Prior to Transferring any Shares (other than in a
Public Sale) to any Person (including members of a Family Group and other
Permitted Transferees), the transferring holders of Shares shall cause the
prospective transferee to be bound by this Agreement and to execute and deliver
to the Company and the other holders of Shares a counterpart of this Agreement.
4. Definitions.
"AFFILIATE" means any other Person, directly or indirectly
controlling, controlled by or under common control with such Person and any
partner of a Person which is a partnership.
"COMMON STOCK" means the Company's Common Stock, par value $0.01 per
share.
"PERSON" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity of any
department, agency or political subdivision thereof.
"PREFERRED STOCK" means, collectively, the Series A Preferred, the
Series B Preferred and the Series C Preferred Stock, each $0.01 par value per
share, of the Company.
"PUBLIC SALE" means any sale of Shares to the public pursuant to an
offering registered under the Securities Act or to the public through a broker,
dealer or market maker pursuant to the provisions of Rule 144 adopted under the
Securities Act.
"QUALIFIED PUBLIC OFFERING" means a public offering described in
Section 6H of the Company's Amended and Restated Articles of Incorporation.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
"SHARES" means (i) any Common Stock and any Preferred Stock
purchased or otherwise now held or subsequently acquired by the Executive or any
Stockholder, (ii) any Common Stock issued or issuable directly or indirectly
upon conversion of any series of Preferred Stock or any warrants issued by the
Company or the exercise of any stock options issued by the Company, and (iii)
any Common Stock issued with respect to the securities referred to in clauses
(i) and (ii) above by way of stock dividend or stock split or in connection with
a combination of shares, recapitalization, merger, consolidation or other
reorganization and in each such case, any such securities held in trust in
accordance with Section 4 of the Company's Amended and Restated Articles of
Incorporation. For purposes of this Agreement, any Person who holds any share of
Preferred Stock or warrants issued by the Company or any stock options to
acquire shares of Common Stock shall be deemed to be the holder of the Shares
issuable upon conversion of such Preferred Stock or warrants or exercise of such
options, whether in connection with the transfer thereof or otherwise and
regardless of any restriction or
5
limitation on the conversion or exercise thereof. As to any particular Shares,
such shares shall cease to be Shares when they have been (x) effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them or (y) distributed to the public through a
broker, dealer or market maker pursuant to Rule 144 under the Securities Act (or
any similar provision then in force).
"STOCKHOLDERS' AGREEMENT" means the Third Amended and Restated
Stockholders Agreement dated as of May 16, 2003, among the Company and certain
stockholders of the Company, as the same may be amended from time to time.
"SUBSIDIARY" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the limited liability company, partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control the managing director or general partners
of such limited liability company, partnership, association or other business
entity.
5. Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Shares in violation of any provision of this Agreement shall be
void, and the Company shall not record such Transfer on its books or treat any
purported transferee of such Shares as the owner of such shares for any purpose.
6. Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against any party hereto unless such modification, amendment or waiver
is approved in writing by such party. The failure of any party to enforce any of
the provisions of this Agreement shall in no way be construed as a waiver of
such provisions and shall not affect the right of such party thereafter to
enforce each and every provision of this Agreement in accordance with its terms.
7. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this
6
Agreement shall be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision had never been contained
herein.
8. Entire Agreement. Except as otherwise expressly set forth herein,
this Agreement embodies the complete agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
9. Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Executive and the Stockholders
and any subsequent holders of Shares and the respective successors and assigns
of each of them, so long as they hold Shares.
10. Counterparts. This Agreement may be executed in multiple
counterparts (any one of which may be by facsimile), each of which shall be an
original and all of which taken together shall constitute one and the same
agreement.
11. Remedies. The parties shall be entitled to enforce their rights
under this Agreement specifically, to recover damages by reason of any breach of
any provision of this Agreement and to exercise all other rights existing in
their favor. The parties hereto agree and acknowledge that money damages would
not be an adequate remedy for any breach of the provisions of this Agreement and
that any party hereto may in its sole discretion apply to any court of law or
equity of competent jurisdiction for specific performance and/or injunctive
relief (without posting a bond or other security) in order to enforce or prevent
any violation of the provisions of this Agreement.
12. Notices. Any notice, request or other communication given in
connection with this Agreement shall be in writing and shall be deemed to have
been given (i) when personally delivered to the recipient or (ii) provided that
a written acknowledgement of receipt is obtained, three days after being sent by
prepaid certified or registered mail, or two days after being sent by a
nationally recognized overnight courier, to the address specified in this
Section 12 (or such other address as the recipient shall have specified by ten
(10) days' advance written notice given in accordance with this Section 12).
Such communication shall be addressed to the Executive at the Executive's home
address; to the Company at its corporate headquarters; and to the Stockholders
at the addresses set forth below (unless such address is changed in accordance
with this Section 12):
EGI-Fund (99) Investors, L.L.C.
EGI-Fund (00) Investors, L.L.C.
EGI-Fund (01) Investors, L.L.C.
EGI-Fund (02-04) Investors, L.L.C.
c/o Equity Group Investments, L.L.C.
Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
7
Attention: President and
Attention: General Counsel
Facsimile: (000) 000-0000
Perseus-Xxxxx Biopharmaceutical Fund, L.P.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxx
Attention: Xxxxxx X. Xxxxxx
With a copy to:
Perseus-Xxxxx Biopharmaceutical Fund, L.P.
c/x Xxxxx Fund Management LLC
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Xx., Esq.
and
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxx-Xxxxxxxxx Capital Focus III, L.P.
TD Origen Capital Fund, L.P.
TD Lighthouse Capital Fund, L.P.
c/o Xxxxxx-Xxxxxxxxx & Co., Inc.
Two Xxxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
With a copy to:
Law Offices of Xxxxxx X. Xxxxxx
Two Xxxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
13. Governing Law. This Agreement shall be governed in all respects
by the laws of the State of Texas, without regard to conflicts of law principles
to the extent that such principles would require the application of the laws of
another jurisdiction. This Agreement may be executed in one or more
8
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument. Signatures delivered by
facsimile shall be effective for all purposes.
14. Business Days. If any time period for giving notice or taking
action hereunder expires on a day which is a Saturday, Sunday or legal holiday
in the state in which the company's chief executive office is located, the time
period shall automatically be extended to the business day immediately following
such Saturday, Sunday or legal holiday.
9
IN WITNESS WHEREOF, the parties hereto have executed this
Stockholders Agreement on the day and year first above written.
XXXXX LABORATORIES, INC.
By:
------------------------------------
Its:
------------------------------------
STOCKHOLDERS:
EGI-FUND (02-04) INVESTORS, L.L.C.,
By: EGI Managing Member (02-04), L.L.C.,
its Managing Member
By: SZ Investments, L.L.C.,
its Managing Member
By: Xxxx General Partnership, Inc.,
its Managing Member
By:
------------------------------
Its:
------------------------------
EGI-FUND (00) INVESTORS, L.L.C.,
By: SZ Investments, L.L.C.,
its Managing Member
By: Xxxx General Partnership, Inc.,
its Managing Member
By:
------------------------------
Its:
------------------------------
EGI-FUND (99) INVESTORS, L.L.C.,
By: SZ Investments, L.L.C.,
its Managing Member
By: Xxxx General Partnership, Inc.,
its Managing Member
By:
------------------------------
Its:
------------------------------
EGI-FUND (01) INVESTORS, L.L.C.,
By: EGI Managing Member (01), L.L.C.,
its Managing Member
By: Xxxx General Partnership, Inc.,
its Managing Member
By:
------------------------------
Name:
-------------------------
Title:
------------------------
PERSEUS-XXXXX BIOPHARMACEUTICAL FUND, LP
By: Perseus-Xxxxx Partners, LLC
Its: General Partner
By: SFM Participation, L.P.
Its: Managing Member
By: SFM AH, LLC
Its: General Partner
By: Xxxxx Private Funds
Management LLC
Its: Managing Member
By:
---------------------------------
Title: Attorney-in-Fact
XXXXXX-XXXXXXXXX CAPITAL FOCUS III, L.P.
By: Xxxxxx-Xxxxxxxxx Partners III, L.L.C.
Its General Partner
By:
--------------------------------------------
Name:
Title:
TD ORIGEN CAPITAL FUND, L.P.
By: TD II Regional Partners, Inc.
Its General Partner
By:
--------------------------------------------
Name:
Title:
TD LIGHTHOUSE CAPITAL FUND, L.P.
By: TD II Regional Partners, Inc.
Its General Partner
By:
--------------------------------------------
Name:
Title:
EXECUTIVE:
------------------------------------------------
Xxxxxxx X. Xxxxxxxxx
EXHIBIT D
MUTUAL RELEASE
THIS MUTUAL RELEASE (the "Release") is entered into between Xxxxxxx X.
Xxxxxxxxx (the "Executive") and Xxxxx Laboratories, Inc., a Texas corporation
(together with its successors and assigns, the "Company").
WHEREAS, the Executive and the Company entered into an employment
agreement dated as of August 11, 2003 (the "Employment Agreement");
WHEREAS, the Executive's employment has been terminated by the Company
without Cause or by the Executive for Good Reason (as each term is defined in
the Employment Agreement) and as such the Executive is due certain payments and
entitlements pursuant to the Employment Agreement subject to the Executive's
executing this Release; and
WHEREAS, upon the Executive's execution and delivery of this Release, the
Company has agreed pursuant to the Employment Agreement to execute and deliver
this Release to the Executive in accordance herewith.
NOW, THEREFORE, in consideration of the payments set forth in the
Employment Agreement and other good and valuable consideration, including, but
not limited to, the Company's agreement to execute this Release in accordance
herewith, the Executive and the Company agree as follows:
1. The Executive, on behalf of himself and his dependents, heirs,
administrators, agents, executors, successors and assigns (the "Executive
Releases"), hereby irrevocably and unconditionally releases, waives, and forever
discharges the Company and its affiliated companies and their past and present
parents, subsidiaries, affiliated corporations, partnerships, joint ventures,
and their successors and assigns (the "Company Affiliated Parties") and all of
the Company Affiliated Parties' past and present directors, officers, employees,
agents and their representatives, successors and assigns (but as to any such
individual, agent or representative, only in connection with, or in relationship
to, his or its capacity as a director, officer, employee, agent, representative,
successor or assign of any Company Affiliated Party and not in connection with,
or in relationship to, his or its personal capacity unrelated to any Company
Affiliated Party) (collectively, the "Company Releasees"), from any and all
actions, claims, demands, obligations, liabilities and causes of action of any
kind or description whatsoever, in law, equity or otherwise, whether known or
unknown, whether past or present, that any Executive Releasee had, may have had
or now has against the Company or any other Company Releasee, as of the date of
the execution of this Release by the Executive, arising out of or relating to
the Executive's employment relationship, or the termination of that
relationship, with the Company or any affiliate, including, but not limited to,
any action, claim, demand, obligation, liability or cause of action arising
under any Federal, state, or local employment law or ordinance (including, but
not limited to, Title VII of the Civil Rights Act of 1964, the Civil Rights Acts
of 1866, 1871, 1964 and 1991, the Equal Pay Act, the Americans with Disabilities
Act of 1990, the National Labor Relations Act, the Fair Labor Standards Act of
1938, the Workers Adjustment and Retraining Notification Act, the Employee
Retirement Income Security
1
Act of 1974, as amended (other than any claim for vested benefits), the Family
and Medical Leave Act of 1993, the Age Discrimination in Employment Act of
1967, as amended, the Older Workers' Benefit Protection Act of 1990 and the
Consolidated Omnibus Budget Reconciliation Act of 1985), tort, contract or any
alleged violation of any other legal obligation. Anything to the contrary
notwithstanding in this Release or the Employment Agreement, nothing herein
shall release any Company Releasee from any claims or damages based on (i) any
right or claim that arises after the date the Executive executes this Release,
(ii) any right the Executive may have to payments, benefits or entitlements
under the Employment Agreement or any applicable plan, policy, program or
arrangement of, or other agreement with, the Company or any affiliate, (iii)
the Executive's eligibility for indemnification in accordance with applicable
laws or the articles of incorporation or by-laws of the Company, or under any
applicable insurance policy with respect to any liability the Executive incurs
or has incurred as a director, officer or employee of the Company or (iv) any
right the Executive may have to obtain contribution as permitted by law in
the event of entry of judgment against the Executive as a result of any act or
failure to act for which the Executive and any Company Releasee are jointly
liable.
2. The Company, on behalf of itself and any other Company Releasee,
hereby irrevocably and unconditionally releases, waives and forever discharges
the Executive and any other Executive Releasee, from any and all actions,
claims, demands, obligations, liabilities and causes of action of any kind or
description whatsoever, in law, equity or otherwise, whether known or unknown,
whether past or present, that any Company Releasee had, may have had or now has
against the Executive or any other Executive Releasee, as of the date of the
execution of this Release by the Company, arising out of or relating to the
Executive's employment relationship, or the termination of that relationship,
with the Company or any affiliate, including, but not limited to, any action,
claim, demand, obligation, liability or cause of action arising under any
Federal, state, or local employment law or ordinance, tort, contract, or alleged
violation of any other legal obligation. Anything to the contrary
notwithstanding in this Release or the Employment Agreement, nothing herein
shall release any Executive Releasee from any claims or damages based on (i) any
act or omission by the Executive constituting fraud or dishonesty relating to
the business of the Company, (ii) any right or claim that arises after the date
on which the Company executes this Release of (iii) any right the Company may
have to obtain contribution as permitted by law in the event of entry of
judgment against the Company as a result of any act or failure to act for which
the Executive and the Company are jointly liable.
3. The Executive represents that as of the date he has executed
this Release he has not assigned to any other party, and agrees not to assign,
any claim released by the Executive herein. In addition, the Executive promises
never to file a lawsuit or an arbitration claim against the Company or any
other Company Releasee asserting any claim released by any Executive Releasee
herein and, to the extent that the Executive has commenced such a proceeding
prior to the execution of this Release by the Executive, the Executive agrees
to withdraw such proceeding with prejudice on or before the date on which the
Executive executes this Release.
4. The Company represents that as of the date it has executed this
Release it has not assigned to any other party, and agrees not to assign, any
claim released by the Company herein. In addition, the Company promises never
to file a lawsuit or an arbitration claim against the Executive or any other
Executive Releasee asserting any claim released by any Company
Release herein and, to the extent that the Company has commenced such a
proceeding prior to the execution of this Release by the Company, the Company
agrees to withdraw such proceeding with prejudice on or before the date on
which the Company executes this Release.
5. The Executive acknowledges that he has been provided a period of
at least 21 calendar days in which to consider and execute this Release. The
Executive further acknowledges and understands that he has seven calendar days
from the date on which he executes this Release to revoke his agreement by
delivering to the Company written notification (in accordance with Section 9(a)
of the Employment Agreement) of his intention to revoke this Release. This
Release becomes effective when signed by the Executive unless revoked in writing
by the Executive in accordance with this seven-day provision. To the extent that
the Executive has not otherwise done so, the Executive is advised to consult
with an attorney prior to executing this Release.
6. Upon the Executive's execution and delivery of this Release to
the Company in accordance with Section 4(a)(1) of the Employment Agreement and
provided that the Executive has not revoked this Release pursuant to Paragraph 5
hereof during the seven-day revocation period set forth therein, the Company
agrees immediately following the end of such seven-day revocation period to
execute an original of this Release and to deliver such executed Release to the
Executive in accordance with Section 4(a)(1) of the Employment Agreement.
7. This Release may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
8. This Release shall be governed by and construed and interpreted
in accordance with the laws of the State of Texas without reference to
principles of conflicts of law.
IN WITNESS WHEREOF, the Executive and the Company have executed this
Release each of the date indicated below
_____________________________
Xxxxxxx X. Xxxxxxxxx
Date:________________________
XXXXX LABORATORIES, INC
_____________________________
By:
Its:
Date:________________________
3
EXHIBIT E
CONFIDENTIALITY AND NONCOMPETITION AGREEMENT
This Confidentiality and Noncompetition Agreement is entered into as
of August 11, 2003 between Xxxxx Laboratories, Inc., a Texas corporation
(together with its successors and assigns, "Employer") and Xxxxxxx X. Xxxxxxxxx
("Executive").
BACKGROUND
Executive agrees and accepts that Employer is engaged in a highly
competitive industry, and must protect its proprietary and confidential
information and trade secrets against unauthorized use or disclosure, which
would irreparably harm Employer's interests. Executive recognizes that the
disclosure by Employer of certain of Employer's confidential information will be
necessary and useful to Executive's performance of job duties for Employer. As a
result, Executive will have access to Confidential Information which could be
used by Employer's competitors in a manner that would irreparably harm
Employer's competitive position in the marketplace.
Executive also recognizes and acknowledges that it would be
virtually impossible for Executive to ignore all knowledge of Employer's
confidential information if Executive were to engage in competition with
Employer. It is, therefore, reasonable and proper for Employer to protect
against the intentional or inadvertent use of such specialized knowledge in
competition with Employer.
Accordingly, Executive agrees that the prohibitions against
Executive from competing with Employer or soliciting employees of Employer
during the employment relationship as set forth in this Agreement and for a
reasonable period of time thereafter within a reasonable geographic area is
appropriate and necessary for the protection of Employer's proprietary and
confidential information, trade secrets, good will, and other legitimate
business interests. Executive therefore agrees with the Employer as follows:
1. CONFIDENTIALITY.
(a) By executing this Agreement, Employer promises to provide some
or all of its Confidential Information to Executive without regard to the
duration of Executive's employment, including specialized training concerning
some of all of the following: Executive's use of Employer's confidential
databases, Employer's unique sales and business methods, Employer's confidential
product information and Employer's confidential pricing and profit margin
information.
(b) Executive hereby agrees that, other than in the ordinary course
of performing his duties for the Company, he shall not divulge to any person or
entity other than Employer, its employees and persons connected with Employer,
without Employer's express prior written
Page 1 of 1
Initial _____ - ______
authorization, any information obtained by Executive during the course of his
employment with the Company and known by him to constitute trade secrets or
proprietary information belonging to Employer, or other confidential
information, including without limitation, confidential financial information,
operating budgets, strategic plans, or research methods, projects or plans of
Employer, commercial, scientific or technical information, market research and
marketing strategies, information related to Employer's products and proposed
products, clinical trials, and applications and communications with the United
States Food and Drug Administration, obtained by Executive in the course of his
employment by Employer ("Confidential Information"). Except as otherwise
provided herein, Executive hereby agrees that he shall not, directly or
indirectly, use any Confidential Information for Executive's own benefit or for
the benefit of any third party to the detriment of Employer. Anything herein to
the contrary notwithstanding, the provisions of this paragraph shall not apply
(i) when disclosure is required by law, (ii) when disclosure is required by any
order of any court, arbitrator, mediator or administrative or legislative body
(including any committee thereof) with actual or apparent jurisdiction to order
Executive to disclose or make accessible any information, provided that
Executive shall first have given notice to Company and, to the extent permitted
by law, shall cooperate with Employer, at Employer's sole expense, in order to
permit Employer to obtain a protective order requiring that the Confidential
Information so disclosed be used only for the purposes for which the order was
issued; (iii) with respect to any other litigation, arbitration or mediation
involving this Agreement, the Employment Agreement or any other agreement
between Executive and Employer, including, but not limited to, the enforcement
of such agreements, or (iv) as to Confidential Information that becomes
generally known to the public or within the relevant trade or industry other
than due to Executive's violation of this paragraph.
2. RETURN OF CONFIDENTIAL INFORMATION AND OTHER COMPANY PROPERTY.
Executive agrees that, upon termination of Executive's employment, Executive
will return to Employer all property of Employer of any nature, including
without limitation all property pertaining to Employer's Confidential
Information, within his possession or under his control. Anything to the
contrary notwithstanding, Executive shall be entitled to retain (but not for use
in violation of Section 1 hereof): (i) papers and other materials of a personal
nature, including, but not limited to, photographs, correspondence, personal
diaries, calendars and Rolodexes, personal files and phone books, (ii)
information showing his compensation or relating to reimbursement of expenses,
(iii) information that he reasonably believes may be needed for tax purposes,
(iv) copies of plans, programs and agreements relating to his employment, or
termination thereof, with the Company and (v) minutes, presentation materials
and personal notes from any meeting of the Board, or any committee thereof,
while he was a member of the Board.
3. NON-DISPARAGEMENT. Executive agrees not to knowingly make any
public statement, whether oral or written, that would disparage Employer, any of
its investors or its executive officers. Employer agrees that it shall not, and
it shall cause each executive officer and director of Employer not to, knowingly
make any public statement, whether oral or written, that would disparage
Executive. Notwithstanding the foregoing, nothing in this paragraph shall
prevent
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any person from (i) responding publicly to incorrect or disparaging public
statements to the extent reasonably necessary to correct or refute such public
statement or (ii) making any truthful statement to the extent (x) necessary with
respect to any litigation, arbitration or mediation involving this Agreement or
any other agreement between Executive and Employer, including, but not limited
to, the enforcement of such agreements, or (y) required by law or by any court,
arbitrator, mediator or administrative or legislative body (including any
committee thereof) with actual or apparent jurisdiction to order such person to
disclose or make accessible such information.
4. NONCOMPETE AGREEMENT. Ancillary to the confidentiality agreement
set forth in paragraph 1 above, and in order to aid in the enforcement of
paragraph 1, Executive agrees that:
(a) at all times while an employee of Employer or Employer's
successor in interest, Executive will not, anywhere that Employer engages or
actively proposes to engage in business, directly or indirectly, maintain any
ownership in, serve as an officer, director, independent consultant, independent
contractor, or as an employee, for any business which is directly and materially
competitive with the business of the Employer; and
(b) for a period of twenty-four (24) months following the
termination of Executive's employment with Employer or Employer's successor in
interest, Executive will not, anywhere that Employer engages or actively
proposes to engage in a Respiratory Pharmaceutical Business (as defined below)
on the date of termination of Executive's employment:
(i) directly or indirectly, maintain any ownership interest in,
serve as an officer, director, independent consultant, independent
contractor, or as an employee, for any specialty pharmaceutical business
if (x) a substantial portion of the products or activities of such
business are the manufacture or sale of products which are directly and
materially competitive with the products of the Employer as such products
exist both on the date of termination of Executive's employment and on the
date of the alleged competitive activity, including products in
development or under active consideration by the Employer (collectively
"Respiratory Pharmaceutical Business") and (y) as such officer, director,
independent consultant, independent contractor or employee, Executive
provides material services with respect to, or has direct day-to-day
supervisory or management responsibilities with respect to, such
business's Respiratory Pharmaceutical Business; and
(ii) serve as an officer, director, independent consultant,
independent contractor, or as an employee, for any pharmaceutical business
if (x) such business engages, among other things, in the Respiratory
Pharmaceutical Business and (y) as such officer, director, independent
consultant, independent contractor or employee, Executive provides
material services with respect to, or has direct day-to-day supervisory or
management responsibilities with respect to, such business's Respiratory
Pharmaceutical Business.
provided, however, that anything herein to the contrary notwithstanding, but
always subject to the terms of Section 1, 3 and 5 hereof, Executive shall not be
prevented from (i) serving as a member of
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the board of directors of any entity on which he was serving prior to the
termination of Executive's employment nor (ii) owning not more than two percent
(2%) of any private or public entity.
5. NON-SOLICITATION OF EMPLOYEES. Executive agrees that at all times
while an employee of Employer or Employer's successors in interest, and for a
period of twenty-four (24) months thereafter, Executive will not, directly or
indirectly, other than in the ordinary course of performing his duties for the
Employer, knowingly solicit, entice, or otherwise induce any employee of
Employer to leave the employment of Employer. Anything herein to the contrary
notwithstanding, it shall not be a violation of this paragraph 5 for Executive
to provide a personal reference for any employee of the Employer setting forth
his personal views about such employee. The Employer acknowledges that its
employees may be hired by entities with which Executive is affiliated and that
that event will not constitute a violation of this paragraph 5 if Executive was
not involved in hiring or identifying the Employer's employee as a potential
recruit or did not assist in the recruitment of the Employer's employee.
6. AGREEMENT TO REFORMATION. In the event that any provisions of
this Agreement are ever deemed by a court of law to exceed the limits permitted
by any applicable law, Executive agrees that the provisions shall be, and are,
reformed to the maximum limitations permitted by any applicable law; provided
that in no event shall such provisions be reformed to be broader than as set
forth in this Agreement. Executive expressly agrees that the restrictions set
forth in this Agreement are reasonable and enforceable by Employer and do not
impose a greater restraint than necessary to protect Employer's goodwill and
business interests.
7. REMEDIES. Executive agrees that Employer will be entitled to seek
injunctive relief to enjoin and prohibit any violation of the terms and
provision of this Agreement in addition to any other remedies to which Employer
may be entitled. Employer agrees that Executive will be entitled to seek
injunctive relief to enjoin and prohibit any violation of the terms and
provision of this Agreement in addition to any other remedies to which Executive
may be entitled.
8. NOT AN EMPLOYMENT CONTRACT. Executive agrees that this Agreement
shall not be construed to limit the ability of either party to terminate the
employment relationship at will.
9. MUTUAL UNDERSTANDING. Executive has read foregoing Agreement,
fully understands the contents thereof, has had the opportunity to obtain
independent legal advice regarding the Agreement's legal effect, and is under no
duress regarding its execution.
10. TEXAS LAW. This Agreement shall be construed, enforced and
governed by and in accordance with the laws of the State of Texas, without
regard to principles of conflicts of law.
11. ENTIRE AGREEMENT. This Agreement contains the entire agreement
of the parties hereto with respect to the subject matter hereof and supersedes
all prior or contemporaneous
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agreements concerning the subject matter hereof whether written or oral. No
change or modification of this Agreement shall be valid unless it is in writing
and executed by or on behalf of Employer and Executive.
12. SEVERABILITY. If any provision of this Agreement shall be
determined to be invalid or unenforceable, the remaining provisions of this
Agreement shall not be affected thereby, shall remain in full force and effect
and shall be enforceable to the fullest extent permitted by applicable law.
13. ASSIGNABILITY. Executive agrees that Employer may assign this
Agreement in accordance with Section 9(c) of the employment agreement between
the parties dated as of August 11, 2003.
14. HEADINGS. The headings appearing in this Agreement are inserted
only for convenience of reference and in no way shall be construed to define,
limit or describe the scope or intent of any provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
EMPLOYER:
XXXXX LABORATORIES, INC.
By:__________________________________
Its:_________________________________
EXECUTIVE:
_____________________________________
XXXXXXX X. XXXXXXXXX
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