EMPLOYMENT AGREEMENT
Exhibit 99.1
THIS
EMPLOYMENT AGREEMENT dated as of February 25, 2005 (as the same may be amended,
restated, supplemented or otherwise modified from time to time hereafter, this
“Agreement”), is entered into by and between Columbia
Laboratories, Inc., a
Delaware corporation having its corporate offices at 000 Xxxxxxxxxx Xxxxxxx,
Xxxxxxxxxx, Xxx Xxxxxx 00000 (the “Company”), and Xxxxxx X. Xxxxx
(“Executive”).
WITNESSETH:
WHEREAS,
Executive is currently employed as Senior Vice President and Chief Operating
Officer of the Company; and
WHEREAS,
the Company wishes to continue the employment of Executive on the terms and
conditions set forth in this Agreement; and
WHEREAS,
the Company and Executive desire to enter into this Agreement so the rights,
duties, benefits, and obligations of each regarding Executive’s employment for
and by the Company will be fully set forth under the terms and conditions stated
within this Agreement;
NOW
THEREFORE, in consideration of the mutual promises and undertakings hereunder,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
1. Term. The
term of this Agreement shall commence on the date hereof and continue through
March 31, 2007, unless this Agreement is earlier terminated in accordance with
Section 6 or 8 hereof. The term shall be automatically extended without further
action of either party for additional one-year periods, unless written notice of
either party’s intention not to extend has been given to the other party hereto
at least sixty (60) days prior to the expiration of the then effective term. In
the event the Company elects not to renew the Agreement, it shall pay Executive
severance equal to one (1) year’s Base Salary (defined below) at the end of the
term.
2. Title;
Duties.
(a) Executive
shall be the Senior Vice President and Chief Operating Officer of the Company.
Executive will perform duties
customarily associated with such position,
including, but not limited to, duties relating to the management of the
development, testing, registration, manufacturing, and licensing of
pharmaceutical products for the Company and its affiliates, and such
other duties commensurate with the job description as may be
assigned to him from time to time by the President of the Company (the “Company
President”) or his designee. Executive shall be
employed at the Company’s offices located in Livingston, New Jersey.
Executive
will report to the Company President.
(b) Executive
agrees to devote his
entire business time and attention to the performance of his duties under this
Agreement. He
shall perform his duties to the best of his ability and shall use his best
efforts to further the interests of the Company. Executive shall perform his
duties and will be required to travel as reasonably necessary to perform the
services required of him under this Agreement. Executive represents and warrants
to the Company that he is able to enter into this Agreement and that his ability
to enter into this Agreement and to fully perform his duties hereunder are not
limited to or restricted by any agreements or understandings between Executive
and any other person. For the purposes of this Agreement, the term “person”
means any natural person, corporation, partnership, limited liability
partnership, limited liability company, or any other entity of any
nature.
(c) Executive
will observe the reasonable rules, regulations, policies and/or procedures which
the Company may now or hereafter establish governing the conduct of its
business, except to the extent that any such rules, regulations, policies and/or
procedures may be inconsistent with the terms of this Agreement, in which case
the terms of this Agreement shall control.
3. Employment
Contract. The
Company and Executive acknowledge that the terms of his employment are set forth
in this Agreement. If Executive’s employment terminates for any reason,
Executive shall not be entitled to any payments, benefits, damages, award or
compensation other than as provided in this Agreement, or as may otherwise be
available in accordance with the Company’s established written plans and written
policies at the time of termination.
4. Compensation.
(a) Subject
to tax withholdings and deductions to cover Executive contributions to, and
payments under, applicable Executive benefit and welfare plans and programs, the
Company will pay Executive an annual base compensation of $300,000 per year to
be paid in accordance with the Company’s normal payroll practices during the
term of this Agreement (“Base Salary”). The Company’s Board of Directors (the
“Board”) or Compensation Committee of the Board (or any committee of the Board
that shall replace such committee) shall review annually Executive’s
compensation for increases during the term of this Agreement in
conjunction with the Company’s regular review of the salaries of other executive
level employees and in consultation with the Company President. At such
time, the Company will consider (without any obligation to implement) upward
adjustments to Executive’s compensation under this Agreement in a manner
consistent with the Company’s practices in effect from time to time.
(b) Subject
to tax withholdings, the Company will pay Executive the following amounts on the
Company’s normal payroll date for the period following the date on which each
event occurs: (i) $20,000 upon execution of this Agreement, (ii) $30,000 upon
FDA approval on or before December 31, 2005, of an NDA supplement providing for
a second manufacturing site for Striant® (testosterone buccal system), and (iii)
$50,000 upon completion on or before December 31, 2005, of subject enrollment in
the PROTERM™ study.
(c) In
addition to Base Salary, Executive also will be eligible to receive an annual
performance bonus as the Board or Compensation Committee of the Board (or any
committee of the Board that shall replace such committee) shall, in its sole
discretion, deem appropriate based
upon the parameters and criteria contained in the Company’s bonus plan and in
consultation with the Company President. He shall
be eligible for a Target Annual Bonus of 40% of his Base Salary as then in
effect. This bonus, if any, shall be paid to the Executive within seventy-five
(75) days of the end of each calendar year.
(d) Executive
also shall be eligible in the sole discretion of the Board or the Compensation
Committee of the Board (or any committee of the Board that shall replace such
committee) to participate in the Company’s stock option plan as is from time to
time in effect, subject to the terms and conditions of such plan. The
Executive shall receive a grant to purchase 175,000 common shares of the
Company’s stock with an exercise price equal to the average of the high and low
price of the Company’s Common Stock on February 25, 2005 on the stock exchange
on which the Company is listed as of that date, which options are to vest
ratably over four years. Stock options granted to Executive prior to the date
hereof shall not be affected by this Agreement in any manner.
5. Benefits.
(a)
Executive
and
Executive’s eligible dependents shall be
eligible for all employee benefit programs (including any
pension, 401K, group life insurance, group medical and dental, vision, and
short-term and long-term disability policies, plans, and programs)
generally available to other executive level employees of the Company during the
term of this Agreement, in
accordance with the terms of those benefit plans.
(b) Executive
shall be entitled to accrue paid time off (“PTO”) during the term of this
Agreement in accordance with the Company’s standard policy and in an amount
commensurate with other executive
level employees of the Company.
(c) In
accordance with the policies of the Company in effect from time to time,
Executive will be entitled to reimbursement for approved ordinary and necessary
business expenses incurred by him during the term of this Agreement commensurate
with other executive level employees of the Company.
6. Termination.
(a) Death.
Executive’s employment shall terminate immediately upon his death.
(b) Disability.
Executive’s employment shall terminate upon Executive having a “Disability.” For
purposes of this Agreement, “Disability” means a determination by Company in
accordance with applicable law that, as a result of a physical or mental
illness, Executive is unable to perform the essential functions of his job with
or without reasonable accommodation for a period of six (6) months.
(c) Termination
by Company for Cause. Upon
delivery of written notice of termination for “Cause” from Company to Executive,
Executive’s employment shall terminate. Termination for “Cause” shall mean
termination based on (i) Executive’s failure or refusal to perform, in any
material respect, his duties faithfully and diligently in accordance with this
Agreement; (ii) gross negligence, recklessness or malfeasance in the
performance of Executive’s duties; (iii) Executive committing any criminal
act; (iv) Executive committing any act of fraud or other material misconduct
resulting or intending to result directly or indirectly in gain or personal
enrichment at the expense of Company; (v) Executive willfully engaging in
any conduct relating to the business of Company that could reasonably be
expected to have a materially detrimental effect on the business or financial
condition of the Company; (vi) misconduct which materially discredits or
damages Company, or violates Company’s policies or procedures, after Company has
notified Executive of the actions Company deems to constitute non-compliance;
(vii) Executive materially breaches his obligations under Sections 9 and 10
below, relating to confidential information, non-solicitation and
non-competition.
Termination
for Cause pursuant to subsections (i), (ii), (iv), or (v) of this Paragraph (c)
of Section 6 shall not take effect unless and until the Company complies with
the provisions of this paragraph. Executive shall be given written notice by the
Company of its intention to terminate him for Cause, stating in detail the
particular act(s) or failure(s) to act that constitute the grounds on which the
proposed termination for Cause is based. That written notice shall be given to
Executive within ninety (90) days of the Company’s learning of such act(s) or
failure(s) to act. Executive shall then have thirty (30) days after receipt of
such written notice to cure such conduct, to the extent such cure is possible.
If Executive fails to cure such conduct on or before the end of the thirty (30)
day period, Executive shall be terminated for Cause. If Executive’s conduct is
not curable, no notice need be given by the Company before terminating Executive
for Cause.
(d) Resignation
for Good Reason.
Executive may terminate his employment with “Good Reason” (as defined below)
upon no fewer than thirty (30) days prior written notice to the Company
specifying the reason(s) for the termination. Upon receipt of Executive’s notice
of intent to terminate his employment for Good Reason, Company shall have a
right to cure the alleged breach or other conduct alleged by Executive to
constitute Good Reason within the thirty (30) day period. For purposes of this
Agreement, “Good Reason” means (i) Company materially breaches this
Agreement; (ii) Company assigns duties to Executive which are materially
inconsistent with his duties as set forth in Section 2 or which materially
impair his ability to perform the services contemplated hereunder; or
(iii) Company has, without Executive’s consent, relocated Executive’s
office more than 100 miles from its location at the commencement of this
Agreement.
(e) Resignation
Without Good Reason.
Executive may terminate his employment without Good Reason upon no fewer than
thirty (30) days prior written notice to the Company.
(f) Termination
by Company Without Cause.
Executive’s employment shall terminate thirty (30) days after written notice
delivered to Executive of Company’s termination of Executive’s employment for
reason other than Death, Disability or Cause.
7. Compensation
Upon Termination
(a) If
Executive’s employment is terminated by Company for Cause, by Death or
Disability, or if Executive resigns Without Good Reason, Executive shall be
entitled to receive:
(i) the Base
Salary through the date of termination;
(ii) reimbursement
for any previously unreimbursed business expenses properly incurred and
documented by Executive in accordance with Company policy prior to the date of
Executive’s termination; and
(iii) such
Employee Benefits, if any, as to which Executive may be entitled under the
employee benefit plans of the Company.
(b) If
Executive’s Employment is terminated by Company without Cause or by Executive
with Good Reason, Executive shall be entitled to:
(i) the Base
Salary through the date of termination;
(ii) reimbursement
for any previously unreimbursed business expenses properly incurred and
documented by Executive in accordance with Company policy prior to the date of
Executive’s termination;
(iii)
receive a
lump sum payment equal to (1) one times Executive’s Annual Base Salary at the
rate immediately in effect before Executive’s Termination Date; and (2) the
greater of (A) the cash bonus paid to Executive in the preceding year pursuant
to the
Company’s bonus plan or (B)
the Executive’s target bonus in effect at the time of the
termination.
(iv) for a
period of twelve (12) months following his Termination Date, continue to receive
the medical and dental coverage in effect on his Termination Date (or generally
comparable coverage) for himself and, where applicable, his spouse and
dependents, as the same may be changed from time to time for employees
generally, as if Executive had continued in employment during such period; or,
as an alternative, the Company may elect to pay Executive cash in lieu of such
coverage in an amount equal to Executive’s after-tax cost of continuing such
coverage, where such coverage may not be continued (or where such continuation
would adversely affect the tax status of the plan pursuant to which the coverage
is provided). The COBRA health care continuation coverage period under Section
4980B of the Code, shall run concurrently with the foregoing twelve (12) month
benefit period.
8. Change
in Control.
(a) In the
event of “Change in Control” of Company, as defined in the Executive Change in
Control Severance Agreement dated as of April 8, 2004 (the “Change in Control
Agreement”) between the Company and Executive attached hereto as Exhibit A and
incorporated
by reference as if fully set forth herein,
Executive shall be entitled to the benefits, if any, available to him pursuant
to the Change in Control Agreement.
9. Restrictive
Covenants.
(a) During
Executive’s employment and for a period of one (1) year following the
termination of Executive’s employment for any reason, Executive will not compete
directly with the Company anywhere in the world by rendering services or
providing assistance for himself or on behalf of any other person or entity, in
any line of business in which the Company is engaged or has made preparations to
engage, as of the termination date of Executive’s employment with the Company.
The term “compete” as used herein means that Executive engages in research,
development, design, consulting, manufacturing, marketing, promotion or sales
with respect to the Company’s business for a third party or for its or his own
interest.
(b) Executive
agrees that during the period stated in subsection (a) above, he will not
(i) directly solicit or encourage in any manner the resignation of any
employee of the Company or any of its subsidiaries; or (ii) directly or
indirectly solicit or divert customers, vendors, or business of the Company or
any of its subsidiaries (provided that
Executive may deal with any such customers or vendors in any manner which does
not violate the provisions of subsection (a) above); or (iii) attempt to
influence, directly or indirectly, any person or entity to cease, reduce, alter,
or rearrange any business relationship with the Company or any of its
subsidiaries.
(c) Executive
acknowledges and agrees that he considers the restrictions set forth in this
Section 9 to be reasonable both individually and in the aggregate and that the
duration, geographic scope, extent and application of these restrictions are no
greater than is necessary for the protection of the Company’s legitimate
interests. It is the desire and intent of Executive and the Company that the
provisions of this Section 9 shall be enforced to the fullest extent possible
under the laws and public policies of the State of New Jersey. The Company and
Executive further agree that if any particular provision or portion of this
Section 9 shall be adjudicated to be invalid or unenforceable, such adjudication
shall apply only with respect to the operation of such provision in the
particular jurisdiction in which such adjudication is made. The Company and
Executive further agree that in the event that any restriction herein shall be
found to be void or unenforceable but would be valid or enforceable if some part
or parts thereof were deleted or the period or area of application reduced, such
restriction shall apply with modification as may be necessary to make it valid
and Executive and the Company empower a court of competent jurisdiction to
modify, reduce or otherwise reform such provision(s) in such fashion as to carry
out the parties’ intent to grant the Company the maximum allowable protection
consistent with the applicable law and facts and the express exceptions
contained herein.
(d) Without
limiting the foregoing, Executive will not be deemed to be in competition with
the Company by reason of his employment by an enterprise (“Subsequent Employer”)
whose businesses include both (i) activities that involve the Company
Technology (“Covered Business”); and (ii) activities that do not involve
the Company Technology (“Excluded Business”) upon satisfaction of the following
conditions: (A) Executive delivers to the Subsequent Employer a copy of
this Agreement or an extract thereof setting forth fully and completely the
restrictions set forth in this Section 9; (B) the Subsequent Employer
executes and delivers to the Company a written agreement in which, as a
condition to Executive’s employment, the Subsequent Employer
(1) acknowledges receipt of such restriction, (2) agrees to employ
Executive only in the Excluded Business, (3) agrees to cause the executive
in charge of the Covered Business to acknowledge such restrictions in writing
and agree that Executive will not be permitted to participate in the Covered
Business, (4) agrees to establish reasonable internal policies and
procedures to prevent violation of such restrictions or disclosure by Executive
to personnel engaged in the Covered Business, and (5) agrees that the
Company shall be entitled to enforce such agreement directly against the
Subsequent employer; and (C) Executive and the Subsequent Employer perform
their obligations pursuant to this Agreement and such agreement.
10. Confidentiality.
The
Employee Proprietary Information and Inventions Agreement dated March 14, 2003,
between
the Company and Executive is attached hereto as Exhibit B and incorporated by
reference as if fully set forth herein.
11. Cooperation:
Executive agrees to cooperate on a reasonable basis in the truthful and honest
prosecution and/or defense of any claim in which the Company, its affiliates,
and/or its subsidiaries may have an interest (subject to reasonable limitations
concerning time and place), which may include without limitation making himself
available on a mutually agreed, reasonable basis to participate in any
proceeding involving the Company, its affiliates, and/or its subsidiaries,
allowing himself to be interviewed by representatives of the Company, its
affiliates, and/or its subsidiaries without asserting or claiming any privilege
against the Company, its affiliates, and/or its subsidiaries, appearing for
depositions and testimony without requiring a subpoena and without asserting or
claiming any privilege against the Company, its affiliates, and/or its
subsidiaries, and producing and/or providing any documents or names of other
persons with relevant information without asserting or claiming any privilege
against the Company, its affiliates, and/or its subsidiaries; provided that, if
such services are required after the end of any period during which he is
eligible for severance benefits, if any, the Company, its affiliates, and/or its
subsidiaries shall provide Executive with reasonable compensation for the time
actually expended in such endeavors and shall pay his reasonable expenses
incurred at the prior and specific request of the Company, its affiliates,
and/or its subsidiaries.
12. Remedies.
Executive acknowledges and agrees that the Company’s remedy at law for a breach
or threatened breach of the provisions of this Agreement would be inadequate
and, in recognition of this fact, in the event of a breach or threatened breach
by Executive of any provision of this Agreement, it is agreed that, in addition
to any available remedy at law, the Company shall be entitled to, without
posting any bond, specific performance, temporary restraining order, temporary
or permanent injunction, or any other equitable relief or remedy which may then
be available; provided, however, nothing herein shall be deemed to relieve the
Company of its burden to prove grounds warranting such relief nor preclude
Executive from contesting such grounds or facts in support thereof. Nothing
herein contained shall be construed as prohibiting the Company from pursuing any
other remedies available to it for such breach or threatened breach
hereof.
13. Applicable
Laws and Consent to Jurisdiction. The
validity, construction, interpretation, and enforceability of this Agreement
shall be determined and governed by the laws of the State of New Jersey without
giving effect to the principles of conflicts of law. For the purpose of
litigating any dispute that arises under this Agreement, the parties hereby
consent to exclusive jurisdiction of, and agree that such litigation shall be
conducted in, any state or federal court located in the State of New
Jersey.
14. Severability. The
provisions of this Agreement are severable and if any one or more provisions are
determined to be illegal or otherwise unenforceable, in whole or in part, the
remaining provisions shall nevertheless be binding and enforceable. The Parties
agree that the covenants set forth herein are reasonable. Without
limiting the foregoing, it is the intent of the parties that the covenants set
forth herein be enforced to the maximum degree permitted by applicable law. As
such, the
parties ask that if any court of competent jurisdiction were to consider any
provision of this Agreement to be overly broad based on the circumstances at the
time enforcement is requested, that such court “blue pencil” the provision and
enforce the provision to the full extent that such court deems it to be
reasonable in scope.
15. Indemnification. The
Indemnification Agreement dated April 8, 2004, between
the Company and Executive is attached hereto as Exhibit C and incorporated by
reference as if fully set forth herein.
16.
Miscellaneous; Waiver. Executive
further agrees that this Agreement, together with the Exhibits incorporated by
reference as if fully set forth herein, sets forth the entire employment
agreement between the Company and Executive, supersedes any and all prior
agreements between the Company and Executive, and shall not be amended or added
to except in writing signed by the Company and Executive. Executive understands
that he may not assign his duties and obligations under this Agreement to any
other party and that the Company may, at any time and without further action by
or the consent of Executive, assign this Agreement to any of its affiliated
companies.
17. Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original and all of which taken together shall constitute one and the
same agreement.
18. Successors
and Assigns. This
Agreement shall be binding on the successors and heirs of Executive and shall
inure to the benefit of the successors and assigns of the Company.
19. Notices. Any
notice required or permitted hereunder shall be in writing and shall be
sufficiently given if personally delivered or if sent by registered or certified
mail, postage prepaid, with return receipt requested, addressed: (a) in the case
of the Company, to Columbia Laboratories, Inc., 000 Xxxxxxxxxx Xxxxxxx,
Xxxxxxxxxx, Xxx Xxxxxx 00000, attn.: General Counsel, and (b) in the case of
Executive, to Executive's last known address as reflected in the Company's
records, or to such other address as Executive shall designate by written notice
to the Company. Any notice given hereunder shall be deemed given at the time of
receipt thereof by the person to whom such notice is given.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
set forth above.
| EXECUTIVE | COLUMBIA LABORATORIES, INC. | ||
| /S/ Xxxxxx X. Xxxxx | /S/ Xxxx Xxxxxxxxx | ||
|
Xxxxxx X. Xxxxx |
G.
Xxxxxxxxx Xxxxxxxxx, President
&
Chief Executive Officer |
