EMPLOYMENT AGREEMENT
Parties
This Employment Agreement ("Agreement") made as of January 1,
1998 is entered into by and between Algos Pharmaceutical Corporation, with its
principal business address at Collingwood Plaza, 0000 Xxxxxxx 00, Xxxx, Xxx
Xxxxxx 00000 (the "Company"), and XXXX X. XXXX, residing at 00 Xxxxx Xxxxxxx,
Xxxxxx, Xxx Xxxxxx 00000 ("Executive").
Recitals
A. The Company desires to continue to retain Executive to
provide the services hereinafter set forth.
B. Executive is willing to continue to provide such services to
the Company on the terms and conditions hereinafter set forth.
Terms of Agreement
The parties agree as follows:
1. Employment.
1.1 The Company hereby continues Executive's
employment, on a full-time basis (subject to the provisions of Section
6) in an executive capacity as the President and Chief Executive Officer of the
Company or in such other position as the Corporation may determine; provided,
however, that during the Employment Period (as defined below), the Executive
shall retain
at least one of the following job titles: President, Chairman of the Board or
Chief Executive Officer. The Executive shall perform such duties and services,
consistent with his positions, as may be assigned to him from time to time
by the Board of Directors of the Company or its designee. In furtherance
of the foregoing, the Executive hereby agrees to perform well and faithfully the
aforesaid duties and responsibilities and the other reasonable senior executive
duties and responsibilities assigned to him from time to time by the Board of
Directors of the Company or its designee. During the Employment Period, the
Company shall provide the Executive with an office, secretarial and other
support services comparable to those provided to other senior executive officers
of the Company at its headquarters.
1.2 Executive hereby accepts this employment on and
subject to the terms and conditions set forth in this Agreement, and shall use
his reasonable best efforts to promote the Company's interests.
2. Compensations Benefits.
2.1 Salary. During the Employment Period, as compensation
for Executive's performance of Executive's duties under this Agreement, the
Company shall pay Executive a Base Salary ("Base Salary") at the annual rate of
$300,000 during 1998. Thereafter, the Base Salary shall be subject to increase
at the option and in the sole discretion of the Board of Directors of the
Company; provided, however, that the Base Salary
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shall, at a minimum, be increased by eight percent (8%) per year. The Base
Salary shall be payable in installments pursuant to the Company's executive
payroll policies in force at the time of payment (but not less frequently
than monthly) for the month or shorter pay period then ended, subject to
applicable withholding for FICA, income taxes and other required payroll
deductions.
2.1.1 The Executive's Base Salary will be supplemented by
payment of performance bonuses based upon Executive's performance against
specific milestone achievements. Each such milestone achievement will state the
activities to be accomplished, their timing and projected budgets. Each
milestone achievement and corresponding bonus amount will be mutually agreed
upon and set forth in writing by Executive and the Company's Board of Directors
annually, or more frequently as deemed appropriate. Attainment of milestone
achievements will result in a performance bonus of up to 501% of Executive's
Bass Salary, depending upon the importance and number of the milestone
achievements attained.
2.2 Expenses. During the Employment Period, to the
extent such expenditures meet the requirements and the policies of the Company
for senior executives, the Company shall reimburse Executive promptly for all
reasonable travel, entertainment, parking, business meeting and similar
expenditures in pursuance and furtherance of the Company's business, upon
presentation of proper vouchers or receipts therefor.
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2.3 Vacation, Sabbatical, Etc. During the Employment
Period, Executive shall be entitled to four (4) weeks annual paid vacation at
such times as shall be agreed upon by Executive and the Company. In addition,
Executive shall be entitled to take an additional paid vacation (a "sabbatical")
of up to twelve (12) consecutive weeks, at such time as shall be agreed upon by
Executive and the Company no more than once every three (3) years. Executive
shall accrue two (2) weeks of sabbatical time for each full calendar year of
employment beginning January 1, 1992. Executive shall also be entitled to sick
leave in accordance with the Company's policies then in force, and 10 holidays
per year.
2.4 Other Benefits. Executive shall be entitled to
participate, at Executive's option and d eligible, in any Company plans
for the benefit of officers and key employees as from time to time
established, including profit sharing, pension plan, stock option plans
performance bonus plans, disability, medical and group life insurance. In
particular, Executive shall be entitled to the following Company paid benefits:
(i) Comprehensive family major medical, family dental,
disability (85% of Base Salary) and life insurance (2 times Base Salary). If the
Company shall not provide such coverage to Executive, he shall be reimbursed for
the cost of such coverage acquired by him elsewhere.
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(ii) Dues reimbursement for professional associations and
meetings.
3. Employment Period: Termination.
3.1 Employment Period. Executive's employment term
("Employment Period") and shall terminate on December 31, 2000 unless earlier
terminated pursuant to Section 3.2.
3.2 Termination.
3.2.1 Termination for Cause. The Company may, upon
the approval of a majority of the members of the Board of Directors of the
Company, discharge Executive and terminate the Employment Period for cause.
Discharge for cause shall be effective ten (10) days after Executive's receipt
of written notice of discharge or at such later date as may be specified in that
notice, provided such notice contains the specific reasons and the specific
events upon which discharge is predicated. If Executive is discharged for cause,
Executive shall only be entitled to Base Salary through the effective date of
the discharge or termination. As used in this paragraph, "cause" shall mean any
or all of the following:
i) Willful and grossly negligent action taken by
Executive which materially xxxxx, or can reasonably be expected to harm, the
Company;
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(ii) Commission of a fraud, misappropriation,
embezzlement, or criminal misconduct that would constitute a felony or adversely
affect the reputation of the Company or any of its affiliates (for purposes of
this Employment Agreement the term "affiliates" shall be deemed to include, but
not necessarily be limited to the corporation to which the Company assigns its
rights to the name, "Algos Pharmaceutical Corporation" or any variation
thereof); or
(iii) If Executive shall be in breach of, or in
default under, any material provision, term or covenant of this Agreement (other
than a breach or default described in clauses (i) and (ii)) and shall fail to
cure such breach or default within a reasonable time after written notice
describing such breach or default in particular by the Company; provided,
however, that the Company need not give such notice of, and Executive shall not
have such opportunity to cure, any material breach or default of any provision,
term or covenant of this Agreement N Executive had previously committed such
material breach or default and received notice thereof pursuant to this clause
(iii). The Employment Agreement shall only be terminable by the Company with
cause.
3.2.2 Involuntary Termination. If, during the
Employment Period, Executive becomes ill, disabled or otherwise incapacitated so
as to be unable regularly to perform his usual duties for a period in excess of
120 consecutive days
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or more than 150 days in any consecutive twelve month period
(,Such condition being hereinafter referred to as "Disability"), the Company
shall have the right, with the approval of a majority of the members of the
Board of Directors, to terminate Executive's employment on 30 days' written
notice to Executive (such termination, or Executive's death, being herein
referred to as "Involuntary Termination"). If the Executive dies during the
Employment Period, his employment hereunder shall be deemed to have ceased as of
the date of his death.
3.2.3 Voluntary Termination. Any termination of
the employment of the Executive hereunder effectuated by the Executive shall be
deemed to be a "Voluntary Termination." A Voluntary Termination shall be deemed
to be effective immediately upon such termination.
3.3 Effect of Termination of Employment.
3.3.1 Upon the termination of the Executive's
employment hereunder pursuant to a Voluntary Termination or a Termination for
Cause, neither the Executive nor his beneficiary or estate shall have any
further rights or claims against the Company under this Agreement except to
receive:
(i) the unpaid portion of the Base
Salary provided for in Section 2.1, computed on a pro rata basis to the date
of termination; and
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(ii) reimbursement for any expenses for
which the Executive shall not have theretofore bee n reimbursed as provided
in Section 2.2.
3.3.2 Upon the termination of the Executive's em
loyment hereunder pursuant to an Involuntary Termination, neither the Employee
nor his beneficiary or estate shall have any further rights or claims against
the Corporation under this Agreement except to receive:
(i) the unpaid portion of the Bas
Salary providedfor in Section 2.1, computed on a pro rata basis to the date of
termination;
(ii) reimbursement for any expenses for
which the Executive shall not have theretofore been reimbursed as provided in
Section 2.2
(iii) a termination payment in an amount
equal to six (6) months' Base Salary, payable in six (6) equal monthly
installments;
(iv) the continuation of the benefits
afforded pursuant to Section 2.4(i) for a period of six (6) months from the
effective date of termination; and
(v) in the event of an Involuntary
Termination by reason of the Executive's death, an additional death benefit
of $5,000.
4. Executive's Covenants.
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4.1 Executive agrees that he will not from and after the
date hereof through the second anniversary of the termination of the Employment
Period (for whatever reason), directly or indirectly, through any other person,
firm or corporation, solicit, raid, entice, induce or encourage any employee,
sales representative, agent or consultant of or for the Company or its
affiliates, to (i) cease his or her association with or leave the employ of the
Company or its affiliates, (ii) solicit customers or suppliers of the Company or
its affiliates for Executive's or any other person's or entity's benefit or
(iii) otherwise act in violation of that person's obligations to the Company or
its affiliates, and Executive shall not authorize or knowingly approve the
taking of such actions by any other person.
4.2 Executive acknowledges that, by reason of his employment with
the Company, he will obtain confidential or non-public proprietary knowledge or
information pertaining to the business and policies of the Company and its
affiliates. Executive agrees that during and after the term of this Agreement,
he shall not disclose, without the prior written consent of the Board of
Directors of the Company or the Chairman of the Board, any confidential or
non-public proprietary knowledge or information pertaining to the Company and
its affiliates ("Confidential Information"), including, but not limited to
information relating to management, financial condition, customer lists, sources
of supply, business methods
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and personnel policies, to any person, firm, corporation or other entity, for
any reason or purpose whatsoever. Confidential Information shall not include
information that: (a) was known to Executive prior to his first employment with
the Company or its affiliates, or (b) is public knowledge, or becomes public
knowledge other than by action (or omission) of (i) Executive or persons
obtaining access to such information directly or indirectly from Executive or
(11) other persons disclosing such information in breach of obligations to the
Company.
4.3 Executive acknowledges and agrees that all memoranda, notes,
reports, records and other documents made or compiled by Executive, or made
available to Executive prior to or during the term of this Agreement concerning
the Company's and its affiliates' business, shall be the Company's or its
affiliates' property and shall be delivered to the Company on the termination of
this Agreement or at any other time on request by the Board of Directors or
Chairman of the Board of the Company.
4.4 Executive agrees that he will not, from and after the date
hereof through the second anniversary of the termination of the Employment
Period (for whatever reason), (1) directly or indirectly engage in, represent in
any way, or be connected with, any business or activity (such business or
activity being hereinafter called a "Competing Business"), which engages in the
pain management field, within any state in which the Company or its affiliates
transact business, whether such engagement shall
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be as an officer, director, owner, employee, partner, affiliate or other
participant in any Competing Business; or (ii) assist others in engaging in any
Competing Business in the manner described in the foregoing clause (i). The
Executive acknowledges and understands that the foregoing restrictions may limit
his ability to earn a livelihood in a business similar to the business of the
Company, but he nevertheless believes that he has received and will receive
sufficient consideration and other benefits in connection with the Company's
issuance of certain stock to the Executive, as an employee of the Company and as
otherwise provided hereunder to clearly justify such restrictions which, in any
event (given his education, skills and ability), the Executive does not believe
would prevent him from earning a living.
4.5 The Executive shall promptly disclose, grant and assign to
the Company for its sole use and benefit any and all inventions, improvements,
technical information and suggestions relating in any way to the business of the
Company, which he may develop or acquire during the Employment Period (whether
or not during usual working hours), together with all patent applications,
letters patent, copyrights and reissues thereof that may at any time be granted
for or upon any such invention, improvement or technical information.
In connection therewith:
(i) The Executive shall without charge, but at the
expense of the Company, promptly at all times hereafter
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execute and deliver such applications, assignments, descriptions and other
instruments as may be reasonably necessary or proper in the reasonable opinion
of the Company to vest title to any such inventions, improvements, technical
information, patent applications, patents, copyrights or reissues thereof in the
Company and to enable it to obtain and maintain the entire right and title
thereto throughout the world; and
(ii) The Executive shall render to the Company at its
expense (including a reasonable payment for the time involved in case he is not
then in its employ) all such assistance as it may reasonably require in the
prosecution of applications for said patents, copyrights or reissues thereof, in
the prosecution or defense of interferences which may be declared involving any
said applications, patents or copyrights and in any litigation in which the
Company may be involved relating to any such patents, inventions, improvements
or technical information.
4.6 The provisions of this paragraph 4 shall survive the
termination or expiration of this Agreement irrespective of the reason therefor.
4.7 Executive acknowledges that the services to be rendered by
him are of a special, unique and extraordinary character and, in connection with
such services, he will have access to Confidential Information vital to the
Company's business. By reason of this, Executive consents and agrees that if
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he violates any of the provisions of this Agreement with respect to the
diversion of the Company's or its affiliates' employees or confidentiality, the
Company or its affiliates would sustain irreparable harm and, therefore, in
addition to any other remedies which the Company may have under this Agreement
or otherwise, the Company shall be entitled to apply to any court of competent
jurisdiction for an injunction restraining Executive from committing or
continuing any such violation of this Agreement, and Executive shall not object
to any such application.
5. Indemnification. The Company will indemnify and hold harmless
Executive to the full extent permitted by law from and against any and all
losses, claims, damages or liabilities related to or arising out of the services
performed by Executive under this Agreement in the capacity of (and his status
as) a, director and/or officer of the Company or in the capacity of (and his
status as) a director, officer or otherwise of the Company's affiliates, to the
extent that those companies do not indemnify Executive, and will promptly
reimburse Executive for any legal or other expenses reasonably incurred by him
in connection with (i) investigating or defending any such loss, claim, damage
or liability or (ii) any litigation or investigation related to or arising out
of such service or status (in either case whether or not in connection with
pending or threatened litigation to which Executive is a party); provided,
however that (i) the Company shall not be liable to anyone for any such losses,
claims,
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damages or liabilities which result from the gross negligence or willful
misconduct of Executive and (ii) Executive shall obtain the prior approval of
the Company (such approval not to be unreasonably withheld) of any counsel
selected by Executive in connection with any investigation, litigation or
defense pursuant to this Section 5. Such indemnity by the Company shall survive
the termination of this Agreement notwithstanding anything contained herein to
the contrary. The Company agrees to use its best efforts to obtain a Directors'
and Officers' Liability Insurance policy.
6. Conflicting Duties. The Company acknowledges that during his
tenure pursuant to this Employment Agreement, Executive will serve as president
and chief executive officer of Algos Pharmaceutical Corporation (hereinafter
referred to as "APC"). Executive agrees to allocate his time and energies
between his duties on behalf of the Company and APC so as not substantially to
interfere with the operations of the Company.
7. Renewal. This Employment Agreement shall be automatically
renewed for additional twelve (12) month terms unless either the Executive or
the Company shall notify the other in writing at least sixty (60) days before
expiration of the then current 12-month term that it does not wish to renew the
Employment Agreement.
8. Miscellaneous.
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8.1 Notices. Any notice or communication given by
either party hereto to the other party shall be in writing and shall be deemed
duly given (i) when personally delivered, or (ii) when five days have elapsed
after its transmittal, by registered or certified mail, return receipt
requested, postage prepaid, or (iii) if transmitted by telecopy, when sent, or
(iv) if transmitted by telex (or equivalent service), when the sender's
receiving apparatus has printed the answerback of the addressee on a copy of the
telex message. Notices shall be addressed as follows:
If to the Company:
Algos Pharmaceutical Corporation
Collingwood Plaza
0000 Xxxxxxx 00
Xxxx, Xxx Xxxxxx 00000
Telecopier No.: 000-000-0000
Attention: Chairman of the Board
If to Executive:
Xx. Xxxx X. Xxxx
00 Xxxxx Xxxxxxx
Xxxxxx, Xxx Xxxxxx 00000
With copies in each case to:
Kleinberg, Kaplan, Xxxxx
& Xxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: 212-986-8866
Attention: Xxxxx X. Xxxxxx, Esq.
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: 000-000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
Any person entitled to receive notice (or a copy of thereof) may designate in
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writing, by notice to the others, such other address to which notices to such
person shall thereafter be sent.
8.2 Entire Agreement; Amendment; Waiver. This Agreement contains
the entire understanding of the parties covering its subject matter and
supersedes all prior agreements between the parties. This Agreement may be
amended or waived only by a writing signed by both parties. The waiver by either
party of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any other breach of that provision nor as a waiver of
any breach of another provision.
8.3 Headings. The headings of the paragraphs of this Agreement
are inserted for convenience only and shall not be considered a part of or be
referred to in interpreting this Agreement.
8.4 Governing Law; Interpretation; Service of Process. This
Agreement shall be construed in accordance with and governed for all purposes by
the laws and public policies of the State of New Jersey applicable to contracts
executed and to be wholly performed in that State. Service of process in any
dispute shall be effective (a) upon the Company, if service is made on any
officer of the Company; (b) upon Executive, If service is made to Executive's
residence last known to the Company with an information copy to Executive at any
other residence, or care of a subsequent employer, of which the Company
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may be aware.
8.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original, but all of which
together shall constitute one and the same instrument.
8.6 Assignment. Assignment of the rights and obligations of this
Agreement shall bind and enure to the benefit of any successor of the Company by
reorganization, merger or consolidation, or any assignee of all or substantially
all of the Company's business and properties, provided that the successor shall
assume the obligations of the Company under this Agreement. Executive's rights
or obligations under this Agreement may not be assigned by Executive.
8.7 Further Assurances. Each of the parties agrees to execute,
acknowledge, deliver and perform, and/or cause to be executed, acknowledged,
delivered and performed, at any time and/or from time to time, as the case may
be, all such further acts, deeds, assignments, transfers, conveyances,
powers-of-attorney and/or assurances as may be necessary and/or proper to carry
out the provisions and/or intent of this Agreement.
8.8 Severability. If any one or more of the terms, provisions,
covenants or restrictions of this Agreement shall be determined by a court of
competent jurisdiction to be invalid,
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void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, unless the parties hereto would
not have entered into this Agreement without said invalid, void or unenforceable
term, provision, covenant or restriction. If, moreover, any one or more of the
provisions contained in this Agreement shall for any reason be determined by a
court of competent jurisdiction to be excessively broad as to duration,
geographical scope, activity or subject, it shall be construed by limiting or
reducing it, so as to be enforceable to the extent compatible with then
applicable law.
Execution
The parties have duly executed this Agreement as of the date
first above written whereupon this Agreement enters into full force and effect
in accordance with its terms.
ALGOS PHARMACEUTICAL
CORPORATION
ATTEST: a Delaware Corporation
By: By:
------------------------- ---------------------------
Xxxxx X. Xxxxxx Xxxxx X. Xxxxxx, member
Assistant Secretary of the Board
---------------------------
Xxxx X. Xxxx
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