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EXHIBIT 10.22
EMPLOYMENT AGREEMENT
This AGREEMENT is made and entered into as of the 5th day of January,
2001, by and between FIRST HORIZON PHARMACEUTICALS, INC., a Delaware corporation
(the Company") and Xxxxxxxxxxx Xxxxx ("Executive").
WITNESSETH:
WHEREAS, the Company desires to employ the Executive, and the Executive
desires to accept such employment, upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the covenants and mutual agreements
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby agree
as follows:
1. Employment. Throughout the Term (as defined in Section 2 below), the
Company shall employ Executive as provided herein, and Executive hereby
accepts such employment. In accepting such employment, Executive states
that, to the best of his knowledge, he is not now, and by accepting
such employment, will not be, under any restrictions in the performance
of the duties contemplated under this Agreement as a result of the
provisions of any prior employment agreement or non-compete or similar
agreement to which Executive is or was a party.
2. Term of Employment. Subject to approval of this Agreement by the
Company's Board of Directors, the term of Executive's employment by the
Company hereunder shall commence on January 5, 2001 (the "Effective
Date") and shall continue thereafter unless sooner terminated as a
result of Executive's death or in accordance with the provisions of
Section 7 below (the "Term").
3. Duties. Throughout the Term, and except as otherwise expressly provided
herein, Executive shall be employed by the Company as the Chief
Commercial Officer of the Company. In such capacity, Executive shall be
responsible for directing the Company's activities as they relate to
sales, marketing, trade relations and managed care. Executive shall
devote his full time to the performance of his duties as Chief
Commercial Officer of the Company in accordance with the Company's
By-laws, this Agreement and the directions of the Company's Board of
Directors. Without limiting the generality of the foregoing, throughout
the Term Executive shall faithfully perform his duties as Chief
Commercial Officer at all times so as to promote the best interests of
the Company. In addition, upon approval of this Agreement, the Board of
Directors shall elect Executive as an officer of the Company at its
first board meeting after the Effective Date.
4. Compensation.
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(a) Salary. For any and all services performed by Executive under
this Agreement during the Term, in whatever capacity, the
Company shall pay to Executive an annual salary of One Hundred
Fifty Thousand Dollars ($150,000.00) per year (the "Salary")
less any and all applicable federal, state and local payroll
and withholding taxes. The Salary shall be paid in the same
increments as the Company's normal payroll, but no less
frequent than bi-monthly and prorated, however, for any period
of less than a full month. The Salary will be reviewed
annually by the Compensation Committee of the Board and a
determination shall be made at that time as to the
appropriateness of an increase, if any, thereto.
(b) Bonus. In addition to the Salary, Executive shall be eligible
to receive from the Company an incentive compensation bonus
(the "Bonus") based on a percentage of his Salary. The Bonus,
if any, shall be determined based on the achievement by the
Company and/or Executive of certain specific strategic plans
and goals (the "Performance Goals") during the preceding
calendar year (the "Measurement Period") as shall be
determined by the Board in consultation with the Executive.
The initial Performance Goals will be established by the Board
within ninety (90) days of Executive's employment hereunder.
Thereafter, the Performance Goals for each Measurement Period
shall be established as promptly as possible in each such
Measurement Period. Following each Measurement Period, the
Compensation Committee of the Board shall review the
Performance Goals for the prior Measurement Period in light of
the Company's and/or Executive's actual performance during
such Measurement Period as reflected on the Company's audited
financial statements. Achievement of various levels of the
Performance Goals shall result in the following payments as a
percentage of Salary:
Level of Achievement Bonus as Percent of Salary
-------------------- --------------------------
Below Threshold 10%
Threshold Goal 15%
Target Goal 25%
Stretch Goal 50%
Payment of each year's Bonus, if any, shall be made
within thirty (30) days after the Company's and/or Executive's
performance for the Measurement Period is established by the
Compensation Committee on the basis of the Company's audited
financial statements. In addition, and at its sole discretion,
the Board may award additional compensation to Executive based
on Executive's contributions to the Company.
5. Benefits and Other Rights. In consideration for Executive's performance
under this Agreement, the Company shall provide to Executive the
following benefits:
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(a) The Company will provide Executive with cash advances for or
reimbursement of all reasonable out-of-pocket business
expenses incurred by Executive in connection with his
employment hereunder. Such reimbursement, however, is
conditioned upon Executive adhering to any and all reasonable
policies established by Company from time to time with respect
to such reimbursements or advances, including, but not limited
to, a requirement that Executive submit supporting evidence of
any such expenses to the Company.
(b) A company car, gasoline charge card and car maintenance plan
will be provided to Executive and paid for by the Company
during the term.
(c) The Company will provide Executive and his family with the
opportunity to receive group medical coverage under the terms
of the Company's health insurance plan, but subject to
completion of normal waiting periods. During any such waiting
period, the Company will pay, or reimburse Executive for, the
cost of COBRA coverage for Executive and his family under his
prior health plan.
(d) During the Term the Executive shall be entitled to ten (10)
days paid vacation, it being understood and agreed that unused
vacation shall not be carried over from one year to the next.
In addition, Executive shall be entitled to eight (8) paid
holidays and four (4) paid personal days off.
6. Options. As of the Effective Date, the Company will grant to the
Executive 60,000 options pursuant to the Company's 1997 Non Qualified
Stock Option Plan (the "Option Plan"). The options shall vest at the
rate of 15,000 options per year on each of the first four anniversaries
of the Effective Date with an exercise price equal to the average of
the high and low share price as of the date of grant. Such options
shall provide that upon a "Change of Control" (as herein defined) all
such options shall become fully vested and immediately exercisable. For
purposes of this Agreement, a Change of Control shall mean the
occurrence of any of the following events: (a) a merger, consolidation
or reorganization of the Company in which the Company does not survive
as an independent entity; (b) a sale of all or substantially all of
tile assets of the Company; (c) the first purchase of shares of common
stock of the Company pursuant to a tender or exchange offer for more
than a majority of the Company's outstanding shares of common stock by
any person other than Xxxx X. Xxxxxx or an entity affiliated with or
controlled by Xxxx X. Xxxxxx; or (d) any change of control of a nature
that would, in the opinion of the Board of Directors, be required to be
reported under the federal securities laws, provided that such a change
of control shall be deemed to have occurred if (i) any person, other
than Xxxx X. Xxxxxx or an entity affiliated with or controlled by Xxxx
X. Xxxxxx, is or becomes the beneficial owner, directly or indirectly,
of securities of the Company representing at least a majority of the
combined voting power of the Company's then outstanding securities; or
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the
Company
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cease for any reason to constitute a majority thereof unless the
election of any director, who was not a director at the beginning of
the period, was approved by a vote of at least 80% of the directors
then still in office who were directors at the beginning of the period.
7. Termination of the Term.
(a) The Company shall have the right to terminate the Term under
the following circumstances:
(i) Executive shall die; or
(ii) With or without Cause, effective upon written notice
to Executive by the Company.
(b) This Agreement may be terminated by the Executive at any time
upon sixty (60) days prior written notice to the Company.
(c) For purposes of this Agreement, "Cause" shall mean:
(i) Executive shall be convicted of the commission of a
felony or a crime involving dishonesty, fraud or
moral turpitude;
(ii) Executive has engaged in acts of fraud, embezzlement,
theft or other dishonest acts against the Company;
(iii) Executive commits an act which negatively impacts the
Company or its employees including, but not limited
to, engaging in competition with the Company,
disclosing confidential information or engaging in
sexual harassment, discrimination or other human
rights-type violations;
(iv) Executive's gross neglect or willful misconduct in
the discharge of his duties and responsibilities; or
(v) Executive's repeated refusal to follow the lawful
direction of the Board of Directors or supervising
officers.
8. Effect of Expiration or Termination of the Term. Promptly following the
termination of the Term, and except as otherwise expressly agreed to by
the Company in writing, Executive shall
(a) Immediately resign from any and all other positions or
committees which Executive holds or is a member of with the
Company or any subsidiary of the Company including, but not
limited to, as an officer and director of the Company or any
subsidiary of the Company.
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(b) provide the Company with all reasonable assistance necessary
to permit the Company to continue its business operations
without interruption and in a manner consistent with
reasonable business practices; provided, however, that such
transition period shall not exceed thirty (30) days after
termination nor require more than twenty (20) hours of
Executive's time per week and Executive shall be promptly
reimbursed for all out-of-pocket Expenses.
(c) deliver to the Company possession of any and all property
owned or leased by the Company which may then be in
Executive's possession or under his control, including,
without limitation, any and all such keys, credit cards,
automobiles, equipment, supplies, books, records, files,
computer equipment, computer software and other such tangible
and intangible property of any description whatsoever. If,
following the expiration or termination of the Term, Executive
shall receive any mail addressed to the Company, then
Executive shall immediately deliver such mail, unopened and in
its original envelope or package, to the Company; and
(d) Other than as provided in this Section 8, upon a termination
of employment all other benefits and/or entitlements to
participate in programs or benefits, if any, will cease as of
the effective date except medical insurance coverage that may
be continued at Executive's own expense as provided by
applicable law or written Company policy.
(e) Upon termination of Executive pursuant to ss. 7(a)(i) or ss.
7(a)(ii) without Cause, the Company shall (i) provide
Executive with Salary continuance, subject to ss. 8(g), for
nine (9) months (a "Salary Continuance"), plus (ii) a lump sum
payment equal to seventy-five (75)% percent of the Bonus, if
any, paid to Executive for the immediately preceding calendar
year, plus (iii) provide nine (9) months of COBRA coverage for
Executive which shall be substantially equivalent to that
provided by the Company prior to termination, plus (iv)
provide nine (9) months of car allowance at seven hundred
fifty dollars ($750.00) per month, subject to return of
existing company vehicle at time of termination, plus (v) all
of Executive's then unvested options previously issued
pursuant to the Company Option Plan shall immediately vest and
be exercisable as herein provided.
(f) Upon termination of Executive pursuant to ss.7(a)(ii) with
Cause or ss.7(b), the Company shall pay Executive or
Executive's estate all Salary accrued but unpaid as of the
date of such termination.
(g) In the event that Executive shall be entitled to receive a
Salary Continuance and COBRA benefit pursuant to ss. 8(e),
such Salary Continuance and COBRA benefit shall continue only
until such time as Executive shall have accepted another full
time position. In addition, in the event that Executive shall
perform consulting or other services for which
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he shall receive compensation, all compensation shall be
reported to the Company and shall be offset against any
remaining Salary Continuance payments, Failure of Executive to
promptly report the receipt of any compensation from a third
party or the acceptance of a new position shall entitle the
Company to terminate all remaining Salary Continuance and
COBRA benefits and to seek restitution for any payments made
to Executive subsequent to such job acceptance or compensation
receipt;
(h) Upon the expiration or termination of this Agreement for any
reason, Executive, or Executive's estate, will have a period
of 90 days from the date of such expiration or termination in
which to exercise any vested option.
(i) Any dollar amounts which are to be paid at the time of
termination under this Section 8, other than Salary
Continuance, the car allowance and COBRA payments, shall be
paid within thirty (30) days after the date of termination.
Any Salary Continuance or COBRA payments shall be made in
accordance with the usual payroll practices which were
applicable prior to termination. Any and all payments made
pursuant to this Agreement shall be net of any and all
applicable federal, state and local payroll and withholding
taxes.
9. Restrictive Covenants for Executive. Executive hereby covenants and
agrees with the Company that for so long as Executive is employed by
the Company and for a period (the "Restricted Period") of thirty-six
(36) months thereafter, Executive shall not, without the prior written
consent of the Company, which consent shall be within the sole and
exclusive discretion of the Company, either directly or indirectly, on
his own account or as an executive, consultant, agent, partner, joint
venturer, owner, officer, director or shareholder of any other person,
firm, corporation, partnership, limited liability company or other
entity, or in any other capacity, in any way:
(a) Carry on, be engaged in or have any financial interest in any
business which is in competition with the business of the
Company. For purposes of this Section 9, a business shall be
deemed to be in competition with the Company if it involves
research and development work involving products, including,
but not limited to, generic drug products, which were, at the
time of termination, being marketed by the Company or which at
such time were under study by the Company and expected to be
marketed within six (6) months of the date of termination.
Nothing in this Section 9 shall be construed so as to preclude
Executive from investing in any publicly held company,
provided Executive's beneficial ownership of any class of such
company's securities does not exceed 5% of the outstanding
securities of such class,
(b) solicit any current supplier, customer or client of the
Company or any affiliate of the Company or anyone who was a
supplier, customer or client
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at any time during the twelve (12) month period immediately
preceding termination, excluding customers such as
wholesalers, managed care agencies, shippers, commercial and
investment banks, IR/PR agencies, scientific and computer
consultants, lawyers and manufacturers; as long as
manufacturers have extra capacity, provided, however, that
where minimum alternative allocation sources would not be
available, requests for exceptions to this restriction will be
determined by the Company on a case by case basis; or
(c) solicit, employ or engage any person who was an employee of
the Company or any affiliate of the Company at any time during
the twelve (12) month period immediately preceding
termination.
10. Confidentiality, The Executive acknowledges that during the period of
his employment by the Company, and in his performance of services
hereunder, he will be placed in a relationship of trust and confidence
regarding the Company and its affairs. In the course of and due to that
relationship he will have contact with the Company's customers,
suppliers, affiliates, and distributors and their personnel. In the
course of the aforesaid relationship, he will have access to and will
acquire confidential information relating to the business and
operations of the Company, including, without limitation, information
relating to processes, plans and methods of operation of the Company.
The Executive acknowledges that any such information that is not a
trade secret, nonetheless constitutes confidential information as
between himself and the Company, that the disclosure thereof (or of any
information which he knows relates to confidential, trade, or other
secret aspects of the Company's business) would cause substantial loss
to the goodwill of the Company, and will continue to be made known to
Executive only because of the position of trust and confidence which he
will continue to occupy hereunder. In view of the foregoing, and in
consideration of the covenants and premises of this Agreement, the
Executive agrees that he will not, at any time during the term of his
employment, and for a period of twelve (12) months thereafter, disclose
to any person, firm or company any trade secrets or confidential
information or such ideas which he may have acquired or developed or
may acquire or develop relating to the business of the Company while
serving the Company.
11. Remedies.
(a) The covenants of Executive set forth in Sections 9 and 10 are
separate and independent covenants for which valuable
consideration has been paid, the receipt, adequacy and
sufficiency of which are acknowledged by Executive, and have
also been made by Executive to induce the Company to enter
into this Agreement. Each of the aforesaid covenants may be
availed of, or relied upon, by the Company in any court of
competent jurisdiction, and shall form the basis of injunctive
relief and
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damages including expenses of litigation (including, but not
limited to, reasonable attorney's fees upon trial and appeal)
suffered by the Company arising out of any breach of the
aforesaid covenants by Executive. The covenants of Executive
set forth in this Section 11 are cumulative to each other and
to all other covenants of Executive in favor of the Company
contained in this Agreement and shall survive the termination
of this Agreement for the purposes intended.
(b) Each of the covenants contained in Sections 9 and 10 above
shall be construed as agreements which are independent of any
other provision of this Agreement, and the existence of any
claim or cause of action by any party hereto against any other
party hereto, of whatever nature, shall not constitute a
defense to the enforcement of such covenants. If any of such
covenants shall be deemed unenforceable by virtue of its scope
in terms of geographical area, length of time or otherwise,
but may be made enforceable by the imposition of limitations
thereon, Executive agrees that the same shall be enforceable
to the fullest extent permissible under the laws and public
policies of the jurisdiction in which enforcement is sought.
The parties hereto hereby authorize any court of competent
jurisdiction to modify or reduce the scope of such covenants
to the extent necessary to make such covenants enforceable.
(c) In the event that Executive believes that the Company is in
violation of a material obligation owed to Executive under
this Agreement, and the Executive has given notice of such
violation to the Company requesting that the Company cure such
violation, and within twenty (20) business days the Company
has not undertaken steps to cure such violation or to provide
information to Executive demonstrating that the Company is not
in violation of the Agreement, and as a result of such failure
to cure or dispute such violation, the Executive terminates
the Agreement in accordance with Section 7(b), Executive shall
not be barred from seeking employment with a competitor
notwithstanding the restriction of Section 8(a); provided,
however, that all other restrictions contained in this
Agreement, including, but not limited to, the covenants in
Section 8(b) and in Section 9, shall remain in full force and
effect.
12. Enforcement Costs. If any legal action or other proceeding is brought
for the enforcement of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with any
provisions of this Agreement, the successful or prevailing party or
parties shall be entitled to recover reasonable attorney's fees, court
costs and all expenses even if not taxable as court costs (including,
without limitation, all such fees, costs and expenses incident to
appeal and other postjudgment proceedings), incurred in that action or
proceeding, in addition to any other relief to which such party or
parties may be entitled. Attorneys fees shall include, without
limitation, paralegal fees,
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investigative fees, administrative costs, sales and use taxes and all
other charges billed by the attorney to the prevailing party.
13. Notices. Any and all notices necessary or desirable to be served
hereunder shall be in writing and shall be
(a) personally delivered, or
(b) sent by certified mail, postage prepaid, return receipt
requested, or guaranteed overnight delivery by a nationally
recognized express delivery company, in each case addressed to
the intended recipient at the address set forth below.
(c) For notices sent to the Company:
First Horizon Pharmaceuticals, Inc.
000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(d) For notices sent to Executive:
Xxxxxxxxxxx Xxxxx
0000 Xxxxxxxxx Xx.
Xxxxxxxx, XX 00000
Either party hereto may amend the addresses for notices to such party
hereunder by delivery of a written notice thereof served upon the other party
hereto as provided herein. Any notice sent by certified mail as provided above
shall be deemed delivered on the third (3rd) business day next following the
postmark date which it bears.
14. Entire Agreement. This Agreement sets forth the entire agreement of the
parties hereto with respect to the subject matter hereof, and all prior
negotiations, agreements and understandings are merged herein. This
Agreement may not be modified or revised except pursuant to a written
instrument signed by the party against whom enforcement is sought.
15. Severability. The invalidity or unenforceability of any provision
hereof shall not affect the enforceability of any other provision
hereof, and except as otherwise provided in Section 11 above, any such
invalid or unenforceable provision shall be severed from this
Agreement.
16. Waiver. Failure to insist upon strict compliance with any of the terms
or conditions hereof shall not be deemed a waiver of such term or
condition, and the waiver or relinquishment of any right or remedy
hereunder at any one or
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more times shall not be deemed a waiver or relinquishment of such right
or remedy at any other time or times.
17. Arbitration. Any claims, disputes or controversies arising out of or
relating to this Agreement between the parties (other than those
arising under Section 11) shall be submitted to arbitration by the
parties. The arbitration shall be conducted in Atlanta, Georgia in
accordance with the rules of the American Arbitration Association then
in existence and the following provisions: Either party may serve upon
the other party by guaranteed overnight delivery by a nationally
recognized express delivery service, written demand that the dispute,
specifying in detail its nature, be submitted to arbitration. Within
seven business days after the service of such demand, each of the
parties shall appoint an arbitrator and serve written notice by
guaranteed overnight delivery by a nationally recognized express
delivery service, of such appointment upon the other party. The two
arbitrators appointed shall appoint a third arbitrator. The decision of
two arbitrators in writing under oath shall be final and binding upon
the parties. The arbitrators shall decide who is to pay the expenses of
the arbitration. If the two arbitrators appointed fail to agree upon a
third arbitrator within ten days after their appointment, then an
application may be made by either party, upon notice to the other
party, to any court of competent jurisdiction for the appointment of a
third arbitrator, and any such appointment shall be binding upon both
parties.
18. Governing Law. This Agreement and the rights and obligations of the
parties hereto shall be governed by and construed in accordance with
the law of the State of Georgia, without regard to its conflicts of
laws provisions. Each party hereto hereby (a) agrees that any
litigation which may be initiated with respect to this Agreement or to
enforce rights granted hereunder shall be initiated in a court located
in Xxxxxx County, Georgia and (b) consents to personal jurisdiction of
such courts for such purpose.
19. Benefit and Assignability. This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns. The
rights and obligations of Executive hereunder are personal to him, and
are not subject to voluntary or involuntary alienation, transfer,
delegation or assignment.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the day and year first above written.
EXECUTIVE:
/s/Xxxxxxxxxxx Xxxxx
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Xxxxxxxxxxx Xxxxx
and
FIRST HORIZON PHARMACEUTICALS, INC.
Accepted By
By: /s/ Xxxxxxxx X. Xxxx
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Its: Chairman and CEO
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