EXHIBIT 10.42
EMPLOYMENT AGREEMENT dated as of September 10, 2003, between Xxxxxx Xxxxx
(the "Executive") and DOV Pharmaceutical, Inc., a Delaware corporation (the
"Company").
WHEREAS, the Company and the Executive desire to enter into this Agreement
to assure the Company of the continued services of the Executive and to set
forth the duties and compensation of the Executive, all upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the agreements and covenants contained
herein, the Executive and the Company hereby agree as follows:
ARTICLE I
Employment
Section 1.01. Term. The initial term of this Agreement shall commence on
the date the Executive commences consulting work for the company, which shall be
no later than September 10, 2003, and, unless sooner terminated pursuant to
Article III hereof, shall terminate on the date that is three years thereafter
(the "Initial Period"). Full-time duty shall commence no later than December 15,
2003. Unless sooner terminated pursuant to Article III, the parties may by
written agreement renew this Agreement for one year (each such one-year period
hereinafter referred to as a "Renewal Period"; the Initial Period and all
Renewal Periods hereinafter referred to as the "Employment Period").
Section 1.02. Position. The Company shall employ the Executive and the
Executive shall serve as Senior Vice-President, Drug Development during the
Period.
Section 1.03. Duties. (a) Subject to the responsibility vested in the
Board of Directors of the Company (the "Board") under the General Corporation
Law of Delaware, the Executive shall have such responsibility and authority as
are customarily possessed and exercisable by the Senior Vice-President, Drug
Development of a corporation. The Executive shall also perform such other
executive and administrative duties (not inconsistent with such position) as the
Executive may reasonably be expected to be capable of performing on behalf of
the Company and any subsidiaries and affiliates of the Company as may from time
to time be authorized or directed by the Board.
(b) During the Period once full-time duty commences, the Executive shall
perform faithfully the duties covered by Section 1.02(a) to the best of his
ability and devote his full business time and attention to the Company's
business and not engage in any other business activities except with the
approval of the Board provided that he may subject to Section 4.01 invest in
companies not requiring his services and may subject to Section 1.03(a) devote
reasonable time to charitable and civic affairs.
(c) The Company shall provide and pay for a standard errors and omissions
policy insuring the Executive against liability arising out of the performance
of his duties, and shall indemnify and hold the Executive harmless from
liability arising out of his services hereunder.
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ARTICLE II
Compensation
Section 2.01. Basic Compensation. As compensation for the Executive's
services hereunder, once full-time duty commences the Company shall pay to the
Executive an annual salary of $300,000 (as adjusted, "Basic Compensation"),
payable in bi-weekly or monthly installments. As a consultant pending full-time
duty the Executive shall be paid $1,000 per day.
Section 2.02. Incentive Compensation. (a) In addition to Basic
Compensation, the Executive shall together with other executive staff be
considered at least annually for incentive compensation ("Incentive
Compensation") upon recommendation by the Compensation Committee. Its
recommendation shall among other factors considered relevant take into account
performance the Company, increase in value of the Company and the Executive's
contribution thereto. Incentive Compensation shall be determined in the
discretion of the Board upon such recommendation. The Company recognizes both
the tangible and intangible benefits gained by Company when the Executive is
invited to lecture at national and international meetings, publish such
presentations in scholarly journals and serve on editorial advisory boards, and
accordingly the foregoing, while not required of the Executive, shall be
considered in determining Incentive Compensation.
(b) Incentive Compensation shall be paid to the Executive within 30 days
after the Board's determination provided that the Company may determine to pay
out Incentive Compensation over a period not to exceed six months.
Section 2.03. Other Benefits. (a) During the Period, the Company shall
provide the Executive and maintain on the Executive's behalf, or reimburse the
Executive for carrying comprehensive medical insurance, disability insurance and
life insurance of $250,000 on the life of the Executive. In addition, the
Executive shall have the right to participate in the Company's other programs
for the benefit of employees in accordance with their terms and as the same may
be amended from time to time.
(b) The Executive shall be eligible to participate in the Company's stock
option program. As of the date of this Agreement the Executive shall receive
options to purchase 285,000 shares of the Company's common stock at a strike
price equal to the closing price thereof on the date hereof, exercisable after
they are vested and prior to ten years from the date hereof, with half of the
options vesting after 18 months of full-time and the remainder vesting ratably
quarterly over the remaining 18 months. The other terms of such options shall be
governed by the Company's standard stock option agreement to be entered into
upon commencement thereof, which may incorporate the terms established by the
Company's stock option plan if any adopted subsequent to the date hereof and
prior to such commencement provided that notwithstanding such stock option terms
if any to be adopted to the contrary the Executive's options to the extent not
vested shall vest upon a termination of or pursuant to Section 3.01(d), or
Section 3.03 or Section 3.04 but be exercisable during the post-employment
period established by such terms to be adopted.
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(c) The Company shall pay to or on behalf of the Executive a monthly
automobile allowance of $1,000.
(d) The Executive shall be entitled to six weeks of paid vacation in each
calendar year. The Executive shall also be entitled to the same standard paid
holidays given by the Company to senior executives generally, all as determined
from time to time by the Board or appropriate committee thereof. Vacation time
shall cumulate and carry forward from year to year provided that the Executive
shall not be entitled to more than ten weeks of vacation in any one year without
the permission of the Compensation Committee and provided that the Executive
shall coordinate his vacation schedule with the Chief Executive Officer and
President.
(e) The Company shall reimburse the Executive for travel or other expenses
or disbursements reasonably incurred or made by him in connection with the
Company's business during the Period upon receipt of reasonable documentation
thereof.
(f) The benefits set forth in this Section 2.03 shall be collectively
referred to as the "Benefits."
(g) The Company shall reimburse the Executive for expenses (excluding loss
if any upon resale of residence) in connection with relocation from Plymouth,
MA, within 30 days after relocation. The Company shall also reimburse the
Executive for temporary housing expenses in the vicinity of the Company for up
to 60 days to a maximum of $5,000.
ARTICLE III
Termination of Employment
Section 3.01. Termination of Employment by Company.
(a) Except as otherwise provided in this Article III and in Article IV,
upon the occurrence of any of the following events, this Agreement and the
rights and obligations of the parties hereunder shall terminate: (i)
"Disability" (as defined in Section 3.05) of the Executive; or (ii) conduct by
the Executive constituting "Cause" (as defined in Section 3.05).
(b) In the case of termination pursuant to Section 3.01(a)(i), the Company
shall be obligated to pay the Executive and the Executive shall be entitled to
receive, in complete and total satisfaction of the obligations of the Company
hereunder, an amount equal to Basic Compensation, Incentive Compensation and
Benefits for the period commencing on the date of termination and ending on the
date that is nine months after the date of termination. Basic Compensation,
Incentive Compensation and Benefits shall be paid in the manner and at the
intervals provided in Article II.
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(c) In the case of termination pursuant to Section 3.01(a)(ii), the
Company shall be obligated to pay the Executive and the Executive shall be
entitled to receive, in complete and total satisfaction of the obligations of
the Company hereunder, an amount equal to Basic Compensation, Incentive
Compensation and Benefits through the date of such termination.
(d) In the case of termination of the Executive by the Company other than
pursuant to Section 3.01(a) or Section 3.02, the Company shall be obligated to
pay the Executive and the Executive shall be entitled to receive, in complete
and total satisfaction of the obligations of the Company hereunder, an amount
equal to Basic Compensation commencing on the date of termination and ending on
the date that is three years after the date hereof. Basic Compensation shall be
paid at the intervals set forth in Article II.
Section 3.02. Death. In the event of the death of the Executive during the
Period, the Period shall terminate on the date of death and the Executive's
designated beneficiary or, if none, his estate shall be entitled to receive, in
complete and total satisfaction of the Company's obligations hereunder, Basic
Compensation, Incentive Compensation and Benefits through such date of death and
for a period of 90 days thereafter.
Section 3.03. Termination of Employment by the Executive. (a) If during
the Period there should occur any of the following events (each of the following
being giving the Executive the right to resign for "Good Reason"): (i) a
material change in the title and/or responsibilities of the Executive, such that
the Executive is no longer functionally the Senior Vice-President, Drug
Development of the Company and no longer has substantially such responsibilities
and authority as exercisable by him initially or in substitution therefore with
his consent not unreasonably withheld or (ii) a failure by the Company to
provide the Executive with Basic Compensation, Incentive Compensation or
Benefits, other than a failure that is not in bad faith and is remedied by the
Company within 15 days after receipt of notice thereof given by the Executive,
or (iii) a breach by the Company of any of the material terms of this Agreement
that is not remedied by the Company within 15 days of notice thereof by the
Executive, the Executive may elect to terminate his by notice to the Company
(subject to Article IV). If the Executive exercises such election, the Period
shall terminate effective upon the later to occur of (x) receipt of such notice
by the Company and (y) expiration of the 15-day period referred to in Section
3.03(a)(ii) or (iii).
(b) If the Executive exercises his election to terminate pursuant to
Section 3.03(a), the Company shall be obligated to pay the Executive and the
Executive shall be entitled to receive, in complete and total satisfaction of
the obligations of the Company hereunder, an amount equal to Basic Compensation
for the period commencing on the date of such termination and ending on the date
that is three years after commencement of hereunder.
(c) If the Executive terminates this Agreement for any reason other than
those contained in Section 3.02 and Section 3.03(a), the rights and obligations
of the parties hereunder shall terminate immediately (except as otherwise
provided in Article IV) and the Period shall terminate immediately except that
the Executive shall be entitled to receive, in complete and total satisfaction
of the obligations of the Company hereunder, his Basic Compensation, Incentive
Compensation and Benefits through the date of such termination.
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Section 3.04. Change of Control. In the event the Executive terminates his
within six months following a Change of Control (as defined in Section 3.05),
the Company shall be obligated to pay the Executive, and the Executive shall be
entitled to receive in complete and total satisfaction of the obligations of the
Company hereunder, an amount equal to the Executive's Basic Compensation for the
period commencing on the date of termination and ending on the date that is
three years the date hereof.
Section 3.05. Definitions of Certain Terms. (a) "Disability" shall mean
any physical or mental condition of the Executive that renders the Executive
incapable of performing any substantial portion of the services contemplated
hereby (as confirmed by competent medical evidence) and that has continued for
at least 90 consecutive business days in any 12-month period or a total of six
months during any twelve month period.
(b) The following shall constitute conduct entitling the Company to
terminate the Executive's for "Cause": (i) the Executive's willful refusal to
perform or substantial disregard of the Executive's duties to the Company that
is not cured within ten days of written notice (specifying the failure) thereof
from the Board, (ii) the commission by the Executive of a willful and material
breach of Article IV, (iii) the conviction of any felony by the Executive (or
the equivalent thereof under the laws of any state), (iv) the commission of any
act constituting financial dishonesty against the Company (which act would be
chargeable as a crime under applicable law), (v) the Executive engaging in any
other act of dishonesty, fraud, intentional misrepresentation, moral turpitude,
illegality or harassment that, as determined in good faith by the Board, would:
(A) materially adversely affect the business or reputation of the Company with
its current or prospective customers, suppliers, lenders and/or other third
parties with whom it does or might do business; or (B) expose the Company to a
risk of civil or criminal legal damages, liabilities or penalties, (vi) the
repeated failure by the Executive to follow the directives of the Company's
chief executive officer or Board or (vii) any material misconduct by the
Executive in connection with the business affairs of the Company.
It shall be presumed that any termination of the Executive by the
Company is without Cause, and such presumption may only be overcome by clear and
convincing evidence that the termination of the Executive's can properly be
construed as for Cause. If the issue of "Cause" is litigated in a proceeding in
any court or through any means of alternative dispute resolution and such issue
is resolved in the Executive's favor, then the Company shall reimburse the
Executive for all reasonable attorney's fees, costs and expenses incurred by the
Executive in such proceeding.
(c) "Change of Control" shall mean: (i) a merger or consolidation of
the Company with or into another corporation other than a transaction (A) in
which the Company is the surviving Corporation or (B) merging or consolidating
the Company with any corporation controlling, controlled by or under common
control with the Company (in which case the surviving corporation shall be
deemed the "Company" for purposes of this Agreement) or (ii) the sale of all or
substantially all the assets of the Company to any corporation or entity, other
than a sale to any corporation or entity controlling, controlled by or under
common control with the Company prior to such transaction (in which case the
surviving corporation shall be deemed the "Company" for purposes of this
Agreement).
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ARTICLE IV
Non-Competition; Confidential Information
Section 4.01 Non-Competition. (a) Subject to Sections 4.01(b) and 4.01(c),
the Executive shall not engage in any activities, whether as employer,
proprietor, partner, stockholder (other than as the holder of less than 5% of
the stock of a corporation listed on a national securities exchange or in the
National Association of Securities Dealers, Inc. Automated Quotation System
(such a corporation being hereinafter referred to as a "Public Corporation")),
director, employee, consultant or otherwise, of any company with substantially
the same business as or that competes directly with the Company in the United
States during the following periods: (i) the Employment Period and (ii) during
any period after the termination of this Agreement pursuant to Article 3 for
which the Executive is being or has been paid Basic Compensation.
(b) The Executive shall not be deemed to be in breach of this Agreement by
reason of services performed for a subsidiary or affiliate of the Company.
(c) Notwithstanding anything to the contrary contained herein, if the
Company finds that the Executive has violated any covenants contained in Section
4.01, 4.02 or 4.03, the Company shall be obligated to pay any amounts due to the
Executive ("Escrow Amount") to Xxxxxxx Procter LLC, as escrow agent ("Escrow
Agent") at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. Escrow Agent shall
hold the Escrow Amount in escrow until a court or agency legally empowered to
enforce the covenants contained in Section 4.01, 4.02 and 4.03 reaches a final
determination whether the Executive has violated any such covenants or until
mutually instructed by the parties. Escrow Agent shall disburse the Escrow
Amount in accordance with such court or agency's final determination or pursuant
to such party instructions.
Section 4.02 Non-Interference. During the Period and the period of
non-competition as determined pursuant to Section 4.01(a), the Executive:
(a) shall not publicly disparage any of the products, services or actions
of the Company or any of the Company's subsidiaries or affiliates; and
(b) shall not, whether for his own account or for the account of any other
individual, partnership, firm, corporation or other business organization,
solicit, endeavor to entice away from the Company, or otherwise interfere with
the relationship of the Company with any person or entity who is, an employee,
customer or client of the Company.
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Section 4.03. Trade Secrets. The Executive shall not, at any time during
the Period or thereafter, use (except for the sole benefit of the Company, the
Company's subsidiaries and affiliates) or, without the written consent of the
Board, divulge to any person (other than, during the Period, an executive of the
Company or any of the Company's subsidiaries or other person to whom disclosure
is reasonably necessary or appropriate or legally required in connection with
the Executive's duties hereunder) any trade secrets or other confidential
information of the Company or any of its subsidiaries or affiliates, except to
the extent that (a) such information becomes a matter of public record, or is
published in a newspaper, magazine or other periodical available to the general
public, in each case, through no violation of this Agreement by the Executive or
(b) such disclosure is required by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demand or similar
process provided that the Executive shall immediately notify the Company of the
existence, terms and circumstances surrounding such a request so that it may
seek an appropriate protective order. When the Executive ceases to be employed
by the Company, the Executive shall surrender to the Company all records and
documents in any form obtained by him or entrusted to him during the course of
his hereunder (together with all copies thereof) that pertain to the business of
the Company or its subsidiaries or affiliates or that were paid for by the
Company or any of the Company's subsidiaries or affiliates provided that the
Executive may retain copies of such documents as may be necessary for the
Executive's personal records for federal income tax purposes or, with the
approval of the Board, for other purposes relating to the Executive's legal
affairs, which approval shall not be unreasonably withheld.
Section 4.04. Survival of Terms. The covenants contained in Sections 4.01,
4.02 and 4.03 shall survive the conclusion of the Executive's by the Company in
accordance with their respective terms.
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ARTICLE V
Miscellaneous
Section 5.01. Services as Officer or Director. During the Period, the
Executive shall, if elected or appointed, serve as an officer and director of
all current and future subsidiaries and affiliates of the Company without any
additional compensation for such services provided that the Executive shall be
provided with reasonable and customary directors' and officers' liability
insurance if any such corporation is or becomes publicly held and further
provided that the Company shall cause any such subsidiary and affiliate to save
the Executive harmless from any and all liability arising out of the performance
of the Executive's duties as director and officer.
Section 5.02. Conflicts. Recognizing that the Executive has obligations to
Parexel International Corporation or an affiliate regarding its trade secrets
and confidential information, the Executive hereby warrants and represents that
he is not under any legal or contractual obligation that would conflict in any
manner with the obligations and duties he is undertaking herein, and that his
execution of this Agreement shall not breach any agreement to which he is now a
party or conflict with obligations to which he is bound. The Executive further
agrees to reimburse and hold the Company harmless for any costs, damages or fees
sustained or expended by the Company as a result of this untruth of the
representations or breach of warranties contained in this Section 5.03.
Section 5.03. Right to Change Business. This Agreement and any rights or
privileges granted to the Executive hereunder shall not prevent the Company or
any of the Company's subsidiaries from exercising its corporate powers to modify
the business operations or activities of such entity.
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Section 5.04. Notices. Any notice or request required or permitted to be
given under this Agreement shall be sufficient if in writing and delivered
personally or sent by registered mail, return receipt requested, to the
addresses set forth below or to any other address designated by either party by
notice similarly given. Such notice shall be deemed to have been given upon the
personal delivery thereof or three days after the date of such mailing thereof,
as the case may be.
If to the Executive, to:
x/x XXX Pharmaceutical, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
If to the Company, to:
DOV Pharmaceutical, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
With a copy to:
Xxxxxxx, Procter & Xxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxxx, Esq.
Section 5.05. Assignment and Succession. The Executive acknowledges that
the services to be rendered by him hereunder are unique and personal.
Accordingly, the Executive may not assign any of his rights or delegate any of
his duties or obligations under this Agreement. The rights and obligations of
the Company under this Agreement shall inure to the benefit of and be binding
upon its successors and assigns.
Section 5.06. Headings. The headings contained in this Agreement are for
convenience of reference only and shall not define or limit the provisions
hereof.
Section 5.07. Applicable Law. This Agreement shall be interpreted in
accordance with the laws of the State of New Jersey, without regard to conflict
of law rules. Each party hereby irrevocably consents and submits to the in
personam jurisdiction of any court of general jurisdiction in the State of New
Jersey, which shall serve as the sole and exclusive forum in any suit, action or
proceeding arising out of or in connection with this Agreement.
Section 5.08. Withholding Taxes. The Company may withhold from any amounts
payable under this Agreement such federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulations.
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Section 5.9. Entire Agreement; Amendments. This Agreement contains the
entire understanding of the parties hereto with regard to the subject matter
contained herein, and supersedes all prior agreements or understandings between
the parties hereto or any related parties. This Agreement may be amended only
pursuant to a writing signed by both parties hereto.
Section 5.10. Waivers. Any term or provisions of this Agreement may be
waived, or the time for its performance may be extended, by the party or parties
entitled to the benefits thereof but only to the extent evidenced by a writing
executed by such party. The failure of any party hereto to enforce at any time
any provision of this Agreement shall not be construed to be a waiver of such
provision, nor in any way to affect the validity of this Agreement or any part
hereof or the right of any party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to constitute
a waiver of any other or subsequent breach.
Section 5.11. Partial Invalidity. Each provision hereof shall be
interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall for any
reason be held to be unenforceable in any respect, such unenforceability shall
not affect any other provisions of this Agreement, and this Agreement shall be
construed as if such unenforceable provision or provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause the remaining terms hereof to be
unreasonable.
Section 5.12. Execution of Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be considered an original
instrument, but all of which shall be considered one and the same agreement, and
shall become binding when one or more counterparts have been signed by each of
the parties and delivered to the other.
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IN WITNESS WHEREOF the Company has caused this Agreement to be signed by
its duly authorized officer and the Executive has signed this Agreement as of
the day and year first above written.
DOV Pharmaceutical, Inc.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Xxxxxx X. Xxxxx
Chief Executive Officer
/s/Xxxxxx Xxxxx
-------------------------------
Xxxxxx Xxxxx
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