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EXHIBIT: 10:13
EMPLOYMENT AGREEMENT
AGREEMENT, dated this 2nd day of May, 2001 between Nastech
Pharmaceutical Company Inc., a Delaware corporation ("Employer") with offices at
00 Xxxxx Xxxxxx, Xxxxxxxxx, XX and Xxxxxx X. Xxxxx ("Employee").
W I T N E S S E T H :
WHEREAS, the Employee is currently employed as Chief Financial Officer
("CFO") for the Employer and the Employer and Employee wish to enter into an
employment and compensation arrangement on the following terms and conditions:
1. Employment. Subject to the terms and conditions of this Agreement, including
specifically Section 12, Employer agrees to employ Employee for a period
commencing from the effective date of this Agreement and ending December 31,
2003 to serve as the Chief Financial Officer ("CFO") with direct report to
Employer's Chief Executive Officer. Employee hereby accepts such employment and
agrees to devote his full time and best efforts to the duties provided herein.
In future periods, unless otherwise terminated by the Employer or Employee as
noted in this Agreement, parties agree to renegotiate in good faith Employee's
Employment Agreement at least four months prior to the Agreement's expiration
date.
2. Compensation. For services rendered to Employer, beginning January 1,
2001, Employer shall compensate Employee with a salary, payable in accordance
with Employer's standard payroll practices in effect, from time to time, of
$215,000 per annum, adjusted January 1, 2003 for a cost of living increase. .
The Employee shall also be entitled to annual incentive compensation of
up to forty (40%) of the applicable base salary if the Employer's objectives, as
set forth in a separate schedule and approved by the Compensation Committee of
the Employer no later than sixty (60) days following the end of the Employer's
fiscal year, are achieved. In 2001, the Employee's incentive compensation shall
be based upon activities as presented to, and approved by, the Compensation
Committee.
3. Stock Options. As further compensation, Employee's stock options
may be increased
(1)
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during the term of this Agreement, as determined by Employer in its sole
discretion.
4. Expenses. Employer shall pay or reimburse Employee for all expenses
normally reimbursed by Employer, reasonably incurred by him in furtherance of
his duties hereunder and authorized and approved by the Employer upon submission
by him of vouchers or an itemized list thereof prepared in compliance with such
rules relating thereto as the Employer may, from time to time, adopt and as may
be required in order to permit such payments as proper deductions to Employer
under the Internal Revenue Code of 1986, as amended, and the rule and
regulations adopted pursuant thereto now or hereafter in effect.
5. Benefits. The Employee shall be entitled to participate in or be
covered by any Health and/or Retirement and Executive Compensation plans adopted
by the Employer from time to time.
6. Insurance and Indemnity. The Employer shall use its best efforts to
maintain, at its expense, officers and directors fiduciary liability insurance
covering the Employee in an amount not less than $5 million. The Employer shall
also indemnity the Employee, to the fullest extent permitted by law, from any
liability asserted against or incurred by the Employee, including attorney's
costs, in his capacity as an officer of Employer. This indemnity shall survive
termination of the Agreement.
7. Noncompetition.
A. The Employee agrees that, except in accordance with his duties
under this Agreement on behalf of the Employer, he will not during the term of
this Agreement:
Participate in, be employed in any capacity by, serve as director,
consultant, agent or representative for, or have any material direct interest in
any enterprise (other than as a passive investor in a publicly traded company)
which is engaged in the business of distributing, selling or otherwise trading
in products which are competitive to any of the Employer's technology or
products distributed, sold or otherwise traded in by the Employer during the
term of the Employee's employment with the Employer, or which are competitive to
any products being actively developed, with the bona fide intent to market same,
by the Employer during the term of the Employee's employment with the Employer;
B. The Employee hereby agrees that damages and any other remedy
available at law would be inadequate to redress or remedy any loss or damage
suffered by the Employer upon any
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breach of the terms of this Section 7 by the Employee, and the Employee
therefore agrees that the Employer, in addition to recovering on any claim for
damages or obtaining any other remedy available at law, also may enforce the
terms of this Section 7 by injunction or specific performance, and may obtain
any other appropriate remedy available in equity.
8. Assignment of Patents. Employee shall disclose fully to the Employer
any and all discoveries of a scientific nature relating to Employer's business
he shall make and any and all ideas, concepts or inventions of a scientific
nature relating to Employer's business which he shall conceive or make during
his period of employment, or during the period of six months after his
employment shall terminate, which are in whole or in part the result of his work
with the Employer. Such disclosure is to be made promptly after each discovery
or conception, and the discovery, idea, concept or invention will become and
remain the property of the Employer, whether or not patent applications are
filed thereon. Upon request and at the expense of the Employer, the Employee
shall make application through the patent solicitors of the Employer for letters
patent of the United States and any and all other countries at the discretion of
the Employer on such discoveries, ideas and inventions, and to assign all such
applications to the Employer, or at its order, forthwith, without additional
payment by the Employer during his period of employment and for reasonable
compensation for time actually spent by the Employee at such work at the request
of the Employer after the termination of the employment. He is to give the
Employer, its attorneys and solicitors, all reasonable assistance in preparing
and prosecuting such applications and, on request of the Employer, to execute
all papers and do all things that may be reasonably necessary to protect the
right of the Employer and vest in it or its assigns the discoveries, ideas or
inventions, applications and letters patent herein contemplated. Said
cooperation shall also include all actions reasonably necessary to aid the
Employer in the defense of its rights in the event of litigation.
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9. Trade Secrets.
(a) In the course of the term of this Agreement, it is anticipated that
the Employee shall have access to secret or confidential technical and
commercial information, records, data, specifications, systems, formulas,
methods, plans, policies, inventions, material and other knowledge
("Confidential Material") owned by the Employer and its subsidiaries. The
Employee recognizes and acknowledges that included within the Confidential
Material are the Employer's confidential commercial information, technology,
methods of manufacture, clinical studies, pre-clinical data and related
materials, all as they may exist from time to time, and that they are valuable
special and unique aspects of the Employer's business. All such Confidential
material shall be and remain the property of the Employer. Except as required by
his duties to the Employer, the Employee shall not, directly or indirectly,
either during the term of his employment or at any time thereafter, disclose or
disseminate to anyone or make use of, for any purpose whatsoever, any
Confidential Material. Upon termination of his employment, the Employee shall
promptly deliver to the Employer all Confidential Material (including all copies
thereof) which are in the possession or under the control of the Employee. The
Employee shall not be deemed to have breached this Section 9 if the Employee
shall be specifically compelled by lawful order of any judicial, legislative, or
administrative authority or body to disclose any confidential material or else
face civil or criminal penalty or sanction.
(b) The Employee hereby agrees that damages and any other remedy
available at law would be inadequate to redress or remedy any loss or damage
suffered by the Employer upon any breach of the terms of this Section 9 by the
Employee, and the Employee therefore agrees that the Employer, in addition to
recovering on any claim for damages or obtaining any other remedy available at
law, also may enforce the terms of this Section 9 by injunction or specific
performance, and may obtain any other appropriate remedy available in equity.
10. Vacation. Employee shall be entitled to vacation (with a minimum of
three weeks vacation which shall not accrue or accumulate from year to year,
except as provided by Employer), sick days, personal days and holidays as shall
be governed by Employer's standard personnel policies, which shall be provided
to Employee.
11. Termination.
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(a) Employee's employment with Employer shall be at will. Either
Employer or the Employee may terminate this Agreement and Employee's employment
at any time, with or without Cause or Good Reason (as such terms are defined
below), in its or his sole discretion, upon thirty (30) days prior written
notice of termination.
(b) Without limiting the foregoing Section 12(a), (i) the Employee may
terminate his employment with the Employer at any time for Good Reason, or (ii)
the Employer may terminate his employment at any time for Cause. Good Reason
shall mean death, Disability (as defined below) or a termination of employment
as a result of a substantial diminution in the Employee's responsibilities, or a
reduction in base salary or a demotion in title as CFO or demotion in position
as CFO of a publicly held company, or a change in reporting position to someone
other than the Chief Executive Officer ("CEO"). Cause shall mean (i) the
Employee's willful, repeated or neglectful failure to perform his duties
hereunder or to comply with any reasonable or proper direction given by or on
behalf of the Employer's Chief Executive Officer and approved by the Board of
Directors following five (5) days written notice to such effect, other than any
Employee's refusal to execute any document or statement that contains erroneous
or misleading financial information; (ii) the Employee being guilty of serious
misconduct on the Company's premises or elsewhere, whether during the
performance of his duties or not, which may cause damage to the reputation of
the Employer or render it difficult for the Employee to satisfactorily continue
to perform his duties; (iii) the Employee being found guilty in a criminal court
of any offense of a nature likely to affect the reputation of the Employer or to
prejudice its interests if the Employee were to continue to be employed by the
Employer; (iv) the Employee's commission of any act of fraud, theft or
dishonesty, or any intentional tort against the Company; or (v) the Employee's
violation of any of the material terms, covenants, representations or warranties
contained in this Agreement.
(c) "Disability" shall mean that the Employee, in the good faith
determination of the Board of Directors of the Employer, is unable to render
services of the character contemplated hereby and that such inability (i) may be
expected to be permanent, or (ii) may be expected to continue for a period of at
least three (3) consecutive months (or for shorter periods totaling more than
six (6) months during any period of twelve consecutive months). Termination
resulting from Disability may only be effected after at least thirty (30) days
written notice by the Employer of its intention to terminate the Employee's
employment.
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(d) "Termination Date" shall mean (i) if this Agreement is terminated on
account of death, the date of death; (ii) if this Agreement is terminated for
Disability, the date established by the Company pursuant to Section 11(c)
hereof; (iii) if this Agreement is terminated by the Employer, the date on which
a notice of termination is given to the Employee; (iv) if the Agreement is
terminated by the Employee, the date the Employee ceases work.
12. Severance.
(a) If (i) the Employer terminates the employment of the Employee
against his will and without Cause, or (ii) the Employee terminates his
employment for Good Reason, the Employee shall be entitled to receive salary,
incentive compensation and vacation accrued through the Termination Date plus
nine month's salary payable in one lump-sum at the Termination Date and all
stock options shall become exercisable and shall remain exercisable for a period
of two years after such Termination Date. Notwithstanding the foregoing, the
Employer shall not be required to pay any severance pay for any period following
the Termination Date if the Employer violates the provisions of Section 8,
Section 9 or Section 10 of this Agreement. In such event, the Employer shall
provide written notice to the Employee detailing such violation.
(b) If (i) the Employee voluntarily terminates his employment other than
for Good Reason, or (ii) the Employee is terminated by the Employer for Cause,
then the Employee shall be entitled to receive salary, incentive compensation
and accrued vacation through the Termination Date plus all stock options that
are exercisable shall remain exercisable for a period of one year after such
Termination Date.
(c) In addition to the provisions of Section 12(a) and 12(b) hereof, to
the extent COBRA shall be applicable to the Employer or as provided by law, the
Employee shall be entitled to continuation of group health plan benefits for a
period of one (1) year following the Termination Date if the Employee makes the
appropriate conversion and payments.
(d) The Employee acknowledges that, upon termination of his employment,
he is entitled to no other compensation, severance or other benefits other than
those specifically set forth in this Agreement or the Stock Option Agreement.
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13. Payment and Other Provisions After Change of Control
(a) In the event Employee's employment with the Employer is terminated
following the occurrence of a Change of Control (other than as a consequence of
death or disability) either (x) by the Employer for any reason other than for
Cause, or (y) by Employee for Good Reason, then Employee shall be entitled to
receive from the Employer, in lieu of the severance payment otherwise payable
pursuant to Section 12, the following:
(i) Base Salary: Employee's annual base salary as in effect at
the date of termination shall be paid on the date of termination;
(ii) Incentive Compensation: The amount of the Employee's
target incentive compensation under the applicable Incentive Compensation Plan
for the fiscal year in which the date of termination occurs, shall be paid on
the date of termination; and
(iii) Other Benefits: Notwithstanding the vesting period provided
for in the Employer's Stock Option Plan and any related stock option agreements
between the Employer and the Employee for stock options ("options") granted
Employee by the Employer all of options shall be fully vested and exercisable
for a period of two years from the Termination Date.
(b) For purposes of this Agreement, the term "Change in Control"
shall mean:
(i) The acquisition, other than from the Employer, by any individual,
entity or group (within the meaning of Rule 13d-3 promulgated under
the Exchange Act or any successor provision) of 50% or more of either
(a) the then outstanding shares of Common Stock of the Employer or
(b) the combined voting power of the then outstanding voting
securities of the Employer entitled to vote generally in the election
of directors (the "Voting Securities").
(ii) Individuals who, as of the Effective Date of this Agreement,
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board.
(iii) Approval by the Shareholders of the Employer of a reorganization,
merger or consolidation (a "Business Combination"), in each case,
with respect to which all or substantially all holders of the
outstanding Common Stock or Voting Securities immediately prior to
such Business Combination do not, following such Business
Combination, beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock or the
combined voting power of the then Voting Securities entitled to vote
generally in the election of directors, as the case may be, of the
Employer resulting from the Business Combination, or
(iv) (a) a complete liquidation or dissolution of the Employer or (b) a
sale or other disposition of all or substantially all of the assets
of the Employer with respect to which, following such sale or
disposition, more than 60% of, respectively, the then outstanding
Common Shares or Voting Securities is then owned beneficially,
directly or indirectly,
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by all or substantially all of the equity holders, respectively, of
the Common Shares or Voting Securities immediately prior to such
sale or disposition in substantially the same proportion as
their ownership of the Common Shares or Voting Securities, as
the case may be, immediately prior to such sale or disposition.
(c) In the event that involuntary termination of Employee as CFO
occurs subsequent to change in senior management or the appointment of a new
Chairman of the Board of Directors, the Company would (i) continue to pay base
salary and health benefits for the remaining term of this Agreement, provided
the Employee remains unemployed in the official capacity as a CFO, and such
payments would not be less than six months salary and benefits, and (ii) all
stock options currently outstanding would become vested and exercisable through
December 31, 2003.
14. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by registered or
certified mail, return receipt requested to his residence in the case of the
Employee, or to its principal office in the case of the Employer, or to such
other addresses as they may respectively designate in writing.
15. Entire Agreement; Waiver. This Agreement contains the entire
understanding of the parties and may not be changed orally but only by an
agreement in writing, signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought. Waiver of or failure to
exercise any rights provided by this Agreement in any respect shall not be
deemed a waiver of any further or future rights.
16. Assignment. Employee's rights hereunder are personal to and shall
not be transferable nor assignable by the Employee. This Agreement shall bind
and inure to the benefit of the Employee and the Employer and their respective
legal representatives, successors and assigns.
17. Arbitration. Any and all claims, disputes, or controversies arising
out of or related to this Agreement, or the breach thereof, shall be resolved
exclusively by arbitration in Suffolk County, New York, in accordance with the
rules of the American Arbitration Association then in existence. The
determination or award rendered therein shall be binding and conclusive upon the
parties, and judgment may be entered thereon in accordance with applicable law
in any court having jurisdiction. No party shall be entitled to seek or be
awarded punitive damages.
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18. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
19. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together will constitute
one and the same instrument.
IN WITNESS WHEREOF, NASTECH PHARMACEUTICAL COMPANY INC. has caused this
instrument to be signed by a duly authorized officer and the Employee has
hereunto set his hand the day and year first above written.
NASTECH PHARMACEUTICAL COMPANY INC.
By /s/ Xxxxxx X. Xxxx
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XXXXXX X. XXXX
/s/ Xxxxxx X. Xxxxx
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XXXXXX X. XXXXX
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