EX-10.111
EMPLOYMENT AGREEMENT DATED 5/22/98
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement"), is made and entered into as of
this 22nd day of May, 1998, by and between Subsidiary No. 5, Inc. (the
"Company"), a North Carolina corporation whose mailing address for notice
purposes is 3151 Seventeenth Street Extension, Wilmington, North Carolina,
28412, Attention: Chief Executive Officer, Facsimile No.: (000) 000-0000, and
Xxxx Xxxx ("Employee"), an individual resident of North Carolina whose mailing
address is 000 Xxxxxxxx Xxx, Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000.
RECITALS
A. The Company is engaged in the development of compounds,
particularly those for genitourinary indications (the "Business").
B. Employee has extensive knowledge and a deep understanding of the
Business and has developed long-standing business relationships with customers,
suppliers and other business constituencies who are involved in the Business.
C. The Company desires to employ Employee and Employee desires to be
employed by the Company, all upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals, the
mutual covenants of the parties hereinafter set forth and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE 1
EMPLOYMENT AND DUTIES
1.1 Engagement of Employee. The Company agrees to employ Employee
and Employee agrees to accept such employment, all pursuant and subject to the
terms and conditions of this Agreement.
1.2. Duties and Powers. At all times during the Employment Period
(as defined herein), the Company agrees that Employee shall serve as Chief
Scientific Officer of the Company and will have such responsibilities, duties
and authority, and will render such services for and in connection with the
Company and its affiliates as are customary in such position and as the Board of
Directors of the Company (the "Board") shall from time to time reasonably
direct. Employee agrees to devote Employee's full business time and attention
exclusively to the Business of the Company except as otherwise permitted or
contracted for by the Company, and to use Employee's best efforts to faithfully
carry out Employee's duties and responsibilities hereunder. Employee
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agrees to comply with all personnel policies and procedures of the Company as
the same now exist or may be hereafter implemented by the Company from time to
time, including those policies contained in the Pharmaceutical Product
Development, Inc. ("PPD") employee manual or handbook which sets forth policies
and procedures generally for employees of PPD and its subsidiaries and
affiliates (the "Handbook") to the extent not inconsistent with this Agreement.
ARTICLE 2
TERM OF EMPLOYMENT
Unless sooner terminated as provided elsewhere in this Agreement,
Employee's employment under this Agreement shall be for a period of four (4)
years beginning on May 22, 1998 and ending on May 21, 2002 ("Initial Employment
Period"). This Agreement automatically shall renew for successive one-year
periods, unless either the Company or Employee provides written notice to the
other at least six (6) months prior to the termination of any such period
stating said party's desire to terminate this Agreement. The Initial Employment
Period and any extension or renewal thereof shall be referred to herein together
as the "Employment Period". Notwithstanding anything to the contrary contained
herein, the Employment Period is subject to termination pursuant to Article 4
hereof.
ARTICLE 3
COMPENSATION AND BENEFITS
3.1 Compensation. In consideration of Employee performing the duties
under this Agreement during the Employment Period, the Company will pay Employee
a base salary at a rate of $115,000 per annum (the "Base Salary"), payable in
accordance with the Company's regular payroll policy for salaried employees. The
Base Salary of Employee may be subject to increase annually during the
Employment Period by the Board of the Company. If the Employment Period is
terminated pursuant to Article 4 hereof, except as otherwise provided in Section
4.4 the Base Salary for any partial year will be prorated based on the number of
days elapsed in such year during which services were actually performed by
Employee.
3.2. Benefits. During the Employment Period, Employee shall be
eligible to participate in and/or receive benefits under such employee and
welfare benefit plans as may be established from time to time by PPD for its
subsidiaries, including any profit-sharing, stock purchase, bonus, pension,
disability, group-term life insurance, health insurance and flexible benefit
payroll deduction plans, subject in each instance to Employee meeting all
eligibility and qualification requirements of such plans. In addition, Employee
shall be entitled to participate in such additional benefits as made available
generally to Senior Vice Presidents of PPD Pharmaco, Inc. ("PPD Pharmaco"), a
wholly owned subsidiary of PPD and an affiliate of the Company. Employee shall
be entitled to roll over to the Pharmaceutical Product Development, Inc.
Retirement Savings Plan (the "PPD 401(k) Plan") all of Employee's vested account
balances in defined
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contribution plans sponsored by Xxx Xxxxx and Company ("Lilly") , provided,
however, that such defined contribution plans sponsored by Lilly permit such
rollover and the PPD 401(k) Plan permits acceptance of such rollover amounts.
3.3 Bonuses. During the Employment Period, the Employee shall be
eligible to receive bonuses as follows:
a. Annual Incentive Bonuses. Employee shall be eligible to
participate in the PPD Pharmaco, Inc. Employee Incentive Compensation Plan, or
its successor, in effect from time to time (the "Incentive Plan") in the same
manner as a Senior Vice President of PPD Pharmaco; provided, however, that
Employee's business unit performance, as described in the Incentive Plan, shall
be based on the performance of the Company. (Under the Incentive Plan as
currently in effect, Employee's "target" bonus is thirty percent (30%) of Base
Salary and, based on performance, can be as high as sixty percent (60%) of the
Base Salary.)
b. Milestone Bonuses. Unless otherwise expressly stated, all
capitalized terms used in this Section 3.3.b. and in Sections 3.3.c. and 4.4.d.
below shall have the same meaning ascribed to them in that certain Development
and License Agreement (the "Development Agreement") dated May 22, 1998 by and
between Lilly, PPD and the Company. If Lilly exercises its Commercialization
Option for a particular Licensed Product pursuant to Section 4.01 of the
Development Agreement, or if PPD exercises its Commercialization Option for a
particular Licensed Product pursuant to Section 4.02 of the Development
Agreement, Employee shall be entitled to a milestone bonus of $90,000 (the
"Milestone Bonus") for each Licensed Product for which Lilly or PPD exercises
its respective Commercialization Option; provided, however, that in no event
shall Employee receive a Milestone Bonus for more than three (3) Licensed
Products (the "Three Products") for which Lilly and/or PPD exercise their
respective Commercialization Options, and provided further that the Milestone
Bonus for each Licensed Product of the Three Products for which Lilly or PPD
exercises its respective Commercialization Option before May 22, 2000, if any,
shall be doubled. Each Milestone Bonus to which Employee is entitled shall be
paid within thirty (30) days after receipt by the Company of milestone payments
described in Section 4.01(d) or Section 4.02(a) of the Development Agreement,
whichever is applicable, which enable it to cover all licensing fees paid
pursuant to Section 7.01(a) of the Development Agreement and to pay the
Milestone Bonus.
c. Royalty Bonus. Employee shall be entitled to a royalty
bonus equal to one half of one percent (0.5%) of net royalty payments owed by
the Company to PPD (the "Royalty Bonus") with respect to each of the Three
Products, if any. Said Royalty Bonuses, if any, shall be paid at the same time
that the Company pays any royalties which it owes to Lilly and/or PPD under
Section 4.10 of the Development Agreement.
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3.4 Expenses. The Company will reimburse Employee, in accordance
with and subject to Employee's compliance with the Company's policy, for
Employee's necessary and reasonable out-of-pocket expenses incurred in the
course of performance of Employee's duties hereunder. All reimbursement of
expenses to Employee hereunder shall be conditioned upon presentation of
sufficient documentation evidencing such expenses.
3.5 Vacation and Leave. During each year of the Employment Term,
Employee shall be entitled to four weeks of paid vacation and such additional
number of days of "Paid Time Off" allotted for the position of a Senior Vice
President of PPD Pharmaco treated as having been employed on the date of this
Agreement, and such other leave as may be established from time to time by the
Company for the benefit of its employees, subject to Employee's compliance with
the guidelines set forth in the Handbook.
3.6 Stock Options. Employee shall be entitled to receive as of the
effective date of this Agreement (the "Grant Date") options to purchase 15,000
shares of PPD's common stock at a purchase price equal to $22.125, the NASDAQ
market close price on the Grant Date. Said share options are granted pursuant to
the terms of PPD's Equity Compensation Plan (the "Equity Plan") and are subject
to all of the terms and conditions of the Equity Plan as more specifically
evidenced by that certain Stock Award Agreement attached hereto as Exhibit 3.6
entered into between Employee and PPD concurrently with this Agreement. In
addition, Employee shall be entitled to consideration for annual stock option
grants at the same time and in accordance with the guidelines prescribed from
time to time by PPD's board of directors for Senior Vice Presidents of PPD
Pharmaco. (Under the current PPD stock option guidelines, the "target" annual
performance award for a Senior Vice Proesident of PPD Pharmaco is 5,000
options.)
3.7 Severance Agreement. PPD shall enter into a Severance Agreement
with Employee concurrently with the execution of this Agreement in the form set
forth in Exhibit 3.7.
3.8 Working Facilities. The Company shall furnish Employee with such
office space, equipment, technical, secretarial and clerical assistance and such
other facilities, services and supplies as shall be reasonably necessary to
enable Employee to perform the duties required of Employee hereunder in an
efficient and professional manner.
ARTICLE 4
TERMINATION OF EMPLOYMENT
4.1 Basis for Termination. Notwithstanding any other provision in
this Agreement to the contrary, the Employment Period and Employee's employment
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hereunder shall terminate, effective on the date indicated, only upon the
happening of any of the following events:
a. Termination for "Cause" (as hereinafter defined), effective
immediately upon giving written notice of termination to Employee.
b. Death of Employee, effective immediately on the date of
death without any notice.
c. Disability (as hereinafter defined) of Employee, effective
immediately upon giving written notice of Disability to Employee.
4.2 Termination for "Cause". For purposes of this Agreement, the
term "Cause" shall mean (i) any material breach by Employee of this Agreement,
after an opportunity to be heard thereon at a meeting of the Board of the
Company, that is not cured within thirty (30) days of the Company's written
notice to Employee specifying such breach, provided, however, Employee shall
have no right to cure any breach which is not capable of being cured within
thirty (30) days of such notice; (ii) conduct by Employee constituting gross
neglect, willful misconduct, fraud or dishonesty affecting the Company's
business or reputation; or (iii) any misappropriation of the Company's property
or any misappropriation of any corporate or business opportunity of the Company.
4.3 Disability of Employee. Employee shall be deemed to have a
"Disability" for purposes of this Agreement if Employee, by reason of physical
or mental illness, incapacity or injury, is unable to perform the essential
functions of Employee's position for a total period of sixty (60) days during
any twelve-month period. The Board of the Company shall determine, according to
the facts then available, whether and when the Disability of Employee has
occurred. Such determination will take into consideration the expert medical
opinion of a physician chosen by the Company after such physician has completed
an examination of Employee. Employee agrees to be available for such examination
upon the reasonable request of the Company.
4.4 Compensation After Termination During Employment Period. If the
Company shall terminate Employee's employment during the Employment Period
pursuant to Section 4.1 hereof, the Company shall have no further obligations
hereunder or otherwise with respect to Employee's employment from and after the
termination or expiration date, except that the Company shall pay Employee's
Base Salary accrued through the date of termination or expiration and shall
provide such benefits as are required by applicable law. If the Company shall
terminate Employee's employment during the Employment Period other than pursuant
to Section 4.1 hereof, the Company shall have the following obligations to
Employee, which shall be Employee's sole and exclusive remedy in the event of
such termination:
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a. The Company shall continue to pay Employee his Base Salary
established pursuant to Section 3.1 hereof in accordance with the Company's
regular payroll policy for salaried employees, for a period equal to the lesser
of (i) eighteen (18) months or (ii) the remainder of the Employment Period.
b. For a period equal to the lesser of (i) eighteen (18)
months or (ii) the remainder of the Employment Period, Employee shall continue
to be eligible for bonuses under the Incentive Plan as described in Section
3.3.a. above.
c. All unvested PPD stock options, if any, awarded to Employee
on the Grant Date shall become fully vested on the date of Employee's
termination of employment.
d. If within six (6) months after Employee's termination of
employment hereunder either Lilly or PPD exercises its respective
Commercialization Option with respect to a Licensed Product to which Employee
would be entitled to Milestone and Royalty Bonuses under Sections 3.3.b. and
3.3.c. of this Agreement, said bonuses shall be paid to Employee in the manner
described in said sections.
e. For a period of one year after Employee's termination of
employment, the Company shall continue to pay for and provide existing employee
welfare benefits which Employee is receiving as of the date of termination of
employment, including life insurance, health, medical, dental, vision and
wellness, accidental death and dismemberment and disability benefits; provided,
however, that the Company's obligations under this section shall terminate from
the date that Employee first becomes eligible after termination of employment
with the Company for similar coverage under another employer's plan.
From and after such termination or expiration date, the Company shall continue
to have all other rights available hereunder, including without limitation, all
rights at law, in equity or under the Propriety Information and Invention
Agreement described in Article 5 hereof.
4.5 Return of Property of Company. Employee agrees that, upon the
termination of Employee's employment, Employee will surrender to the Company all
memoranda, notes, reports, lists, books, records and similar items (and all
copies thereof) in Employee's possession, which contain information regarding
the Company's Business, and also will return to the Company all other property
of the Company which has come into Employee's possession while an employee of
the Company.
ARTICLE 5
RESTRICTIVE COVENANTS
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Concurrent with the execution of this Agreement, Employee shall
enter into a Proprietary Information and Invention Agreement in the form set
forth in Exhibit 5 attached hereto.
ARTICLE 6
MISCELLANEOUS
6.1 Withholding Taxes. All amounts payable under this Agreement,
whether such payment is to be made in cash or other property, shall be subject
to withholding for Federal, state and local income taxes, employment and payroll
taxes, and other legally required withholding taxes and contributions to the
extent appropriate in the determination of the Company, and Employee agrees to
report all such amounts as ordinary income on Employee's personal income returns
and for all other purposes.
6.2 Assignment. No party hereto may assign or delegate any of its
rights or obligations hereunder without the prior written consent of the other
party hereto; provided, however, that the Company shall have the right to assign
all or any part of its rights and obligations under this Agreement (i) to any
affiliate of the Company to which the Business of the Company is assigned at any
time, any other affiliate or subsidiary of the Company, or any surviving entity
following any merger or consolidation of any of those entities with any entity
other than the Company, or (ii) in connection with the sale of the Business by
the Company.
6.3 Binding Effect. Except as otherwise expressly provided herein,
all covenants and agreements contained in this Agreement by or on behalf of any
of the parties hereto shall be binding upon and inure to the benefit of the
respective legal representatives, heirs, successors and permitted assigns of the
parties hereto whether so expressed or not.
6.4 Entire Agreement. Except as otherwise expressly set forth
herein, this Agreement and all other agreements entered into by the parties
hereto on the date hereof set forth the entire understanding of the parties, and
supersede and preempt all prior oral or written understandings and agreements
with respect to the subject matter hereof.
6.5 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 prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
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6.6 Amendment; Modification. No amendment or modification of this
Agreement and no waiver by any party of the breach of any covenant contained
herein shall be binding unless executed in writing by the party against whom
enforcement of such amendment, modification or waiver is sought. No waiver shall
be deemed a continuing waiver or a waiver in respect of any subsequent breach or
default, either of a similar or different nature, unless expressly so stated in
writing.
6.7 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of North Carolina, without
giving effect to provisions thereof regarding conflict of laws.
6.8 Arbitration. Any dispute, controversy or claim arising out of or
relating to this Agreement, including but not limited to any breach, or as to
its existence, validity, interpretation, performance or non-performance, or
damages, including claims in tort, shall be decided by a single neutral
arbitrator agreed upon by the parties hereto in Wilmington, North Carolina in
binding arbitration pursuant to the commercial Arbitration Rules of the American
Arbitration Association then in effect. The parties to any such arbitration
shall be limited to the parties to this Agreement or any successor thereof. The
arbitration shall be conducted in accordance with the procedural laws of the
United States Federal Arbitration Act, as amended. The written decision of the
arbitrator shall be final and binding, and may be entered and enforced in any
court of competent jurisdiction and each party specifically acknowledges and
agrees to waive any right to a jury trial in any such forum. Each party to the
arbitration shall pay its fees and expenses, unless otherwise determined by the
arbitrator.
6.9 Notices. All notices, demands or other communications to be
given or delivered hereunder or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been properly served if (a)
delivered personally, (b) delivered by a recognized overnight courier service,
(c) sent by certified mail, return receipt requested and first class postage
prepaid, or (d) sent by facsimile transmission followed by a confirmation copy
delivered by a recognized overnight courier service the next day. Such notices,
demands and other communications shall be sent to the address first set forth
above, or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party. Date
of service of such notice shall be (i) the date such notice is personally
delivered or sent by facsimile transmission (with issuance by the transmitting
machine of a confirmation of successful transmission), (ii) the date of receipt
if sent by certified mail, or (iii) the date of receipt if sent by overnight
courier.
6.10 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same Agreement.
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6.11 Descriptive Heading; Interpretation. The descriptive headings
in this Agreement are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
COMPANY: SUBSIDIARY NO. 5, INC.
By: /s/ Xxxx Xxxxxxxx
-------------------------
Its: Chief Executive Officer
-------------------------
EMPLOYEE /s/ Xxxx Xxxx (SEAL)
-------------------------------
Name: Xxxx Xxxx
PPD: Pharmaceutical Product
Development, Inc.
By: /s/Xxxx Xxxxxxxx
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Its: Chief Executive Officer
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Pharmaceutical Product Development, Inc. has executed this Agreement
to acknowledge its binding obligations under Sections 3.2, 3.3, 3.6, 3.7, 4.4.c.
and 4.4.e.
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