EXHIBIT 10.40
RESTATED EMPLOYMENT AGREEMENT dated as of January 9, 2004, between Xxxx
Xxxxxxxx (the "Executive") and DOV Pharmaceutical, Inc., a Delaware corporation
(the "Company").
WHEREAS, the Company and the Executive desire to enter into this
Employment 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 Employment Agreement shall
commence on expiration of his previous employment contract (January 19, 2004),
and, unless sooner terminated pursuant to Article III hereof, shall terminate on
the date that is three years thereafter (the "Employment Period"). 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 Employment 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 for Research and Chief Scientific
Officer during the Employment 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 the State of Delaware, the Executive shall have such responsibility and
authority as are customarily possessed and exercisable by the Vice-President for
Research and Chief Scientific Officer of a corporation. The Executive shall also
perform such other executive and administrative duties (not inconsistent with
the position of Vice-President for Research and Chief Scientific Officer) 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 Employment Period, 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 directors and
officers insurance 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.
ARTICLE II
Compensation
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Section 2.01. Basic Compensation. As compensation for the Executive's
services hereunder, the Company shall pay to the Executive an annual salary of
$300,000 (as adjusted, "Basic Compensation"), payable in bi-weekly or monthly
installments. The Basic Compensation may be increased in the discretion of the
Board.
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 Employment 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 $300,00 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 further in the Company's
stock option program. The terms of existing options held by the Executive shall
be governed by the existing stock option agreement with the Company, and the
terms of any additional options (including the 100,000 options referred to
below) shall be governed by the Company's standard stock option agreement in use
at the time of grant, which for all options held by or issued to the Executive
may incorporate the terms established by the Company's stock option plan if any
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adopted subsequent to the date of grant 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 employment 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. The Executive is
granted options to purchase 100,000 shares of the Company's common stock at a
strike price determined by the closing price on the date hereof, vesting half in
18 months of full time employment and the balance vesting ratably quarterly over
the remaining 18 months of full time employment. The other terms of such options
shall be governed by the Company's standard stock option agreement to be entered
into, which will incorporate the terms established by the Company's stock option
plan as the same may be amended from time to time provided that, notwithstanding
such stock option terms if any to the contrary, the Executive's options to the
extent not vested shall accelerate and vest fully upon a termination of
employment pursuant to Section 3.01(d) and accelerate and vest ratably upon a
termination pursuant to Section 3.04, but be exercisable during the
post-employment period established by such terms to be adopted, such ratable
accelerated vesting of such 100,000 options to extend to 25,000 options for a
termination pursuant to Section 3.04 during the first year after the date
hereof, to 62,5000 options to the extent not vested for such a termination
during the second year and to 100,000 options to the extent not vested for such
a termination during the third year.
(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 Employment 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."
ARTICLE III
Termination of Employment
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Section 3.01. Termination of Employment by Company
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(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:
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(i) "Disability" (as defined in Section 3.05(a)) of the Executive; or
(ii) conduct by the Executive constituting "Cause" (as defined in
Section 3.05(b)); or
(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.
(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 Employment Period, the Employment 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 Employment Period there should occur any of the following events (each of
the following being an event giving the Executive the right to resign for "Good
Reason"): (i) a change in the title and/or responsibilities of the Executive,
such that the Executive is no longer functionally the Senior Vice-President for
Research and Chief Scientific Officer of the Company and no longer has such
responsibilities and authorities as are customarily exercisable by the Senior
Vice president for Research and Chief Scientific Officer of a corporation 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 a material
term 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
employment by notice to the
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Company (subject to Article IV). If the Executive exercises such election, the
Employment 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 the date hereof.
(c) If the Executive terminates this Employment Agreement for any
reason other than those contained in Section 3.03(a), or this Agreement
terminates pursuant to Section 3.02, the rights and obligations of the parties
hereunder shall terminate immediately (except as otherwise provided in Article
IV) and the Employment 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.
Section 3.04. Change of Control. In the event the Executive terminates
his employment 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 after 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 12-month period.
(b) The following shall constitute conduct entitling the
Company to terminate the Executive's employment 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 or (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`s 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,
supplies, 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 damage,
liabilities or penalties, (vi) the repeated failure by the Executive to follow
the
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directives of the Company's chief executive officer or Board or (v ii) 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 employment 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, 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), (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) or (iii) a change in the Board such that at least two of Drs. Beer,
Xxxxx and Xxxxxxxx or their designees or replacements reasonably satisfactory to
the Executive fail to remain on the Board.
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
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Procter LLP, 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 Employment 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, or was within
the then most recent 12-month period, a customer or client of the Company.
Section 4.03. Trade Secrets. The Executive shall not, at any time
during the Employment 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 Employment
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 employment
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 termination of the Executive's employment.
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ARTICLE V
Miscellaneous
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Section 5.01. Services as Officer or Director. During the Employment
Period, the Executive shall, if elected or appointed, serve as a director of the
Company and 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 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. 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.
Section 5.03. Notices. Any notice or request required or permitted to
be given under this Employment 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
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With a copy to:
Xxxxxxx Procter 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.
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 including the employment
agreement dated as of July 10, 2000, 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 is for any reason
held to be unenforceable in any respect, such
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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.
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:
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Xxxxxx Xxxxx
CEO
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Xxxx Xxxxxxxx
