EXHIBIT 10.42
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of June
16, 1998 by and between Discovery Laboratories, Inc., a Delaware corporation
(the "Company"), and Xxxxx Xxxxxxxx, Ph.D. (the "Executive").
WHEREAS, the Company and Executive desire that Executive be employed by
the Company and that the terms and conditions of such employment be defined;
NOW, THEREFORE, in consideration of the employment of Executive by the
Company, the Company and Executive agree as follows:
1. Term of the Agreement. The Company shall employ Executive and
Executive shall accept employment for a period of three (3) years commencing on
June 16, 1998 (the "Commencement Date") and continuing until June 15, 2001,
subject, however, to prior termination as hereinafter provided in Section 5 (the
"Employment Period").
2. Executive's Duties and Obligations.
a. Duties. Executive shall serve as Vice President for
Pharmaceutical Development. Executive shall be responsible for analytical
formulation, chemical development and manufacturing technology transfer.
b. Location of Employment. Executive's principal place of business
shall be at the Company's office to be located within thirty (30) miles of
Doylestown, Pennsylvania.
c. Proprietary Information and Inventions Agreement. Upon
commencement of employment with the Company, Executive shall execute the
Company's standard form of Intellectual Property and Confidential Information
Agreement (the "Confidentiality Agreement") a copy of which is attached to this
Agreement as Exhibit A.
3. Devotion of Time to Company's Business
a. Full-time Efforts. During his employment with the Company,
Executive shall devote substantially all of his business time, attention and
efforts to the high quality performance of his duties to the Company.
b. No Other Employment. During his employment with the Company,
Executive shall not, whether directly or indirectly, render any services of a
commercial or professional nature to any other person or organization, whether
for compensation or otherwise, without the prior written consent of the
Company's Executive Committee or Board of Directors.
c. Non-Competition During Employment. During the Employment Period
and for eighteen (18) months after its termination, Executive shall not,
directly or indirectly, either as an employee, employer, consultant, agent,
principal, partner, stockholder, corporate officer, director, or in any other
individual or representative capacity (i) compete with the Company in the
business of developing or commercializing pulmonary surfactants, Vitamin D
analogs or any other category of compounds which forms the basis of the
Company's products or products under development (a "Competing Business"), or
(ii) directly or indirectly solicit employees of the Company.
4. Compensation and Benefits.
a. Base Compensation. During the term of this Agreement, the Company
shall pay to Executive base annual compensation of One Hundred Forty Two
Thousand Dollars ($142,000), less all required withholdings.
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b. Relocation Payment. Executive shall receive a one-time payment of
Thirty Thousand dollars ($30,000) solely to cover any relocation expenses if and
only if Executive relocates to a location in or in proximity to Doylestown,
Pennsylvania within one year of the Commencement Date.
c. Bonuses.
(1) Incentive Bonus. Executive shall be eligible for incentive
bonuses in amounts to be determined by the Company's Compensation Committee
after consultation with the Company's Chief Executive Officer, to be paid in
either cash or equity, upon the achievement of each of the following milestones
(which bonuses shall be paid only once for each of the milestones): (a) the
successful completion of Phase II studies for any compound under development in
the Company's portfolio (each a "Portfolio Compound"); (b) the successful
completion of Phase III studies for any Portfolio Compound; and (c) receipt of
marketing approval in the United States for any Portfolio Compound.
(2) Additional Bonus. Executive shall be eligible for such
year-end bonus, which may be paid in either cash or equity, or both, as is
awarded at the discretion of the Compensation Committee of the Board of
Directors of the Company after consultation with the Company's Chief Executive
Officer.
d. Benefits. During his employment with the Company, the Company
shall provide reasonable medical and disability benefits to Executive. In
addition, the Company will provide to Executive term life insurance on behalf of
Executive's beneficiaries in the amount of Executive's annual salary for the
term of this Agreement.
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e. Stock Options. The Board of Directors of the Company has granted
to Executive, on the date hereof, incentive stock options to purchase: (i)
39,638 shares of Common Stock, $0.001 par value of the Company (the "Common
Stock"), pursuant to the terms of the Notice of Grant attached hereto as Exhibit
B, (ii) 20,493 shares of Common Stock, subject to acceleration at such time as
the market capitalization of the Company exceeds $75 million, pursuant to the
terms of the Notice of Grant attached hereto as Exhibit C, and (iii) 18,400
shares of Common Stock, subject to acceleration upon consummation of a corporate
partnering deal having a total Value (as hereinafter defined) of at least $20
million, pursuant to the terms of the Notice of Grant attached hereto as Exhibit
D. For purposes of this Agreement, "Value" shall mean the total payments,
including without limitation, contingent payments prior to or at receipt of
marketing approval for the Portfolio Compound involved in the relevant
agreement, to be paid to Discovery from corporate partnering transactions of
from any other transactions for the development, clinical testing, regulatory
approval, manufacturing and/or marketing of a Portfolio Compound, including
without limitation upfront fees, milestone payments, research and development
and other contractual commitments.
5. Termination of Employment.
a. Termination for Good Cause. The Company may terminate Executive's
employment at any time for "Good Cause," as herein defined. For the purposes of
this Agreement, "Good Cause" includes, but is not limited to, gross misconduct,
gross neglect of duties, acts involving moral turpitude, material breach by
Executive of this Agreement or the Confidentiality Agreement or any act or
omission involving fraud, embezzlement, or misappropriation of any property or
proprietary information of the Company by Executive which is not cured by
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Executive within fifteen (15) days after receipt of written notice from the
Company.
b. Termination without Good Cause. If Executive's employment is
terminated by the Company without Good Cause, the following provisions shall
apply:
(1) Executive shall be entitled to any unpaid compensation
accrued through the last day of Executive's employment;
(2) Executive shall be entitled to receive severance payments
equal to his base compensation, payable on normal Company payroll dates, for a
six (6) month period, subject to setoff for other employment or consulting
income received by Executive.
c. Death or Disability. This Agreement shall terminate if Executive
dies or is mentally or physically "Disabled" as herein defined. For the purposes
of this Agreement, "Disabled" shall mean a mental or physical condition that
renders Executive incapable of performing his duties and obligations under this
Agreement for three (3) or more consecutive months or for a total of six (6)
months during any twelve (12) consecutive months; provided, that during such
period the Company shall give Executive at least thirty (30) days' written
notice that it considers the time period for disability to be running. If this
Agreement is terminated under this Section 5.c., Executive or his estate shall
be entitled to any unpaid compensation accrued through the last day of
Executive's employment but shall not be entitled to any severance benefits.
6. Miscellaneous.
a. Governing Law. This Agreement shall be interpreted, construed,
governed and enforced according to the laws of the Commonwealth of Pennsylvania
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as applied to agreements among Pennsylvania residents entered into and to be
performed entirely within Pennsylvania without regards to the application of
choice of law rules.
b. Amendments. No amendment or modification of the terms or
conditions of this Agreement shall be valid unless in writing and signed by the
parties hereto.
c. Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be
construed, if possible, so as to be enforceable under applicable law, else, such
provision shall be excluded from this Agreement and the balance of the Agreement
shall be interpreted as if such provision were so excluded and shall be
enforceable in accordance with its terms.
d. Successors and Assigns. The rights and obligations of the Company
under this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company. Executive shall not be entitled to assign
any of his rights or obligations under this Agreement.
e. Notices. All notices required or permitted under this Agreement
shall be in writing and shall be deemed effective upon personal delivery, on the
date of scheduled delivery by a nationally recognized overnight service or two
(2) days after deposit in the United States Post Office, by registered or
certified mail, postage prepaid, addressed to the other party at the address
shown below such party's signature, or at such other address or addresses as
either party shall designate to the other in accordance with this Section 6.e.
f. Entire Agreement. This Agreement, including the exhibits attached
hereto, constitutes the entire agreement between the parties with respect to the
employment of Executive. Executive hereby agrees that the Employment Agreement
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by and between Executive and Acute Therapeutics, Inc., dated November 1, 1996,
shall be of no further force or effect and that he shall have no further rights
under said agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
DISCOVERY LABORATORIES, INC.
/s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
By: Xxxxxxx Xxxxxxxx, Ph.D.
Its: President
Address: 0000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
EXECUTIVE:
/s/ Xxxxx Xxxxxxxx
-------------------------------------
Xxxxx Xxxxxxxx, Ph.D.
Address: 00 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
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