EXHIBIT 10.13
EMPLOYMENT AGREEMENT
Agreement made as of October 12, 1996 (the "Effective Date"), between Cell
Pathways, Inc. with its principal office at 0000 Xx. Xxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxx, XX 00000 (the "Company") and Xxxxxx X. Xxxxxxxxxx whose principal
address is 00 Xxxx Xxxxxxx Xxxxx, Xxxxxxxx, XX 00000 (the "Executive").
Witnesseth
Whereas, the Company desires to induce the Executive to join the Company as
its Chief Executive Officer and as a member of the Board of Directors, subject
to the terms herein provided; and
Whereas, Executive desires to accept such employment with the Company upon
and subject to the terms herein provided.
Now, Therefore, in consideration of the premises and the mutual agreements
and undertakings herein set forth, the parties hereto covenant and agree as
follows:
Section 1. Compensation. The Company will pay Executive for his services
during the term of his employment hereunder at an initial annual rate of One
Hundred Seventy Five Thousand Dollars ($175,000) payable in accordance with
normal Company practice, but in any event not less often than monthly, subject
only to such payroll and withholding deductions as are required by law. The
Company and Executive may mutually agree from time to time to change such annual
rate of compensation. Executive shall be eligible to receive a bonus not to
exceed Twenty Five Thousand Dollars ($25,000) for the calendar year 1996 and
Thirty Five Thousand Dollars ($35,000) for each subsequent calendar year. Such
bonus shall be granted upon the successful completion of objectives to be
mutually agreed upon between the Executive and the Company's Board of Directors
and will be payable with 30 days of the end of each calendar year.
Section 2. Term. This Agreement shall continue until December 31, 1997 but
shall automatically renew for additional one year terms unless either party
provides notice to the other of its intention not to renew prior to 4 months
before the end of the each term.
Section 3. Office and Duties. Executive shall have the usual duties of
Chief Executive Officer and will report to the Company's Board of Directors.
Executive covenants and agrees that during the term of this agreement he will
devote all of his working time, attention and efforts to the performance of his
duties hereunder and will not engage in any other employment or business
activities without the approval of the Company's Board of Directors.
Section 4. Expenses. Executive shall be entitled to reimbursement for
business expenses incurred by him in connection with the performance of his
duties hereunder upon receipt of vouchers therefore in accordance with such
procedures as the Company has heretofore or may hereafter establish.
1.
Section 5. Relocation Expenses. Executive shall be entitled to
reimbursement for actual out-of-pocket expenses in connection with the
relocation of the Executive and his family provided that such expenses shall not
exceed $25,000.
Section 6. Vacation During Employment. Executive shall be entitled to such
reasonable vacation as may be allowed by the Company in accordance with general
practices the Company has heretofore or may hereafter establish, but in any
event not less than three (3) weeks during each twelve (12) month period. Unused
vacation will accrue to the benefit of the Executive but in no case shall exceed
Eight (8) weeks.
Section 7. Additional Benefits. To the extent he is otherwise eligible,
Executive and his qualified dependents shall be entitled to participate in all
group insurance programs, retirement plans, profit sharing plans or other fringe
benefit plans which the Company in its sole and absolute discretion makes
available generally to its employees, provided, however, nothing herein shall
require the Company to establish or maintain any such program or plan.
Section 8. Equity Ownership. Upon the execution of this agreement, the
Executive shall be granted options to purchase 175,000 shares of common stock at
$.50 per share. The options will be subject to a 48 month vesting schedule with
25% of such options one year from the Effective Date and the remaining 75%
vesting monthly during the next 36 months. Notwithstanding the foregoing, any
unvested options shall become fully vested in the event the Company receives at
least $10.00 per share as the result of 1) a merger or consolidation of the
Company, or 2) the sale of all substantially all of the assets of the Company.
Section 9. Severance Pay. In the event that the employment of the
Executive is terminated by the Company pursuant to Section 10(c), the Company
shall continue to pay Executive compensation in accordance with the provisions
of Section 1 at the then established annual rate for a period of six(6) months
from the effective date of such termination.
Section 10. Termination of Employment. Notwithstanding any other provision
of this Agreement:
(a) Death. Executive's employment shall terminate immediately in
the event of Executive death during the term of his employment, in which event
this Agreement shall terminate without further obligation to the Executive's
legal representative under this Agreement other than those obligations accrued
hereunder as of the date of his death.
(b) Disability. The Company may terminate this Agreement after
having established the Executive's Disability, by giving the Executive written
notice of its intention to terminate his employment. For purposes of this
Agreement, the term "Disability" shall mean an injury or illness which prevents
the Executive from substantially performing the duties and responsibilities of
Chief Executive Officer for a period of 120 days.
(c) Involuntary Termination. Upon 90 days notice and with the
majority vote of the Board of Directors (excluding the Executive), the Company
may terminate the Executive's Employment at any time during the term of this
Agreement. In the event that the
2.
Employment of the Executive is terminated by the Company, the Company shall
continue to pay Executive compensation in accordance with the provisions of
Section 9. In addition, if the number of vested shares owned by the Executive at
the time of termination is less than 87,500, additional shares shall immediately
vest such that the Executive's total number of vested shares at the time of
termination shall not be less than 87,500. Any remaining unvested shares shall
be canceled.
(d) Voluntary Termination. The Executive may voluntarily terminate
his employment at any time, in which event he shall receive no severance pay
other than accrued salary, vacation and any other such compensation, if any,
which applicable generally requires to be paid to terminating employees. In
addition, the vesting of stock options shall cease as of the date of
termination.
(e) For Cause. The Company may terminate the Executive for Cause.
If terminated for Cause, the Company shall pay Executive his base salary through
the date of termination. In addition, the vesting of stock options shall cease
as of the date of termination and the Company shall have no further obligations
to the Executive. The term "Cause" shall mean 1) acts of dishonesty which
materially harm the Company, 2) repeated violations of Company policies, or 3)
failure to perform his duties following a written warning from the Board of
Directors.
Section 11. Confidentiality and Non-Competition Agreement. Concurrently
with the execution hereof, Executive shall execute and deliver a Non-
Competition, Confidentiality, and Invention Assignment Agreement.
Section 12. No Conflict. Executive represents and warrants to the Company
that he is not now under any obligations to any person, firm or corporation, and
has no other interest which is inconsistent or in conflict with this Agreement,
or which would prevent, limit or impair, in any way, the performance by him of
any of the covenants or his duties in his said employment. The Effective Date of
this Agreement shall, if necessary, be deemed the first date following
termination of the Executive's current employment.
Section 13. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the law (other than the law governing
conflict of law questions) of the State of Pennsylvania.
Section 14. Termination of Prior Agreement. This Agreement shall replace
any and all prior employment Agreements between the Executive and the Company.
Section 15. Approval by the Board of Directors. This Agreement must be
approved by the Board of Directors of the Company prior to its becoming
effective.
3.
In Witness Whereof, the parties have executed or caused to be executed this
Agreement as of the date first above written.
Executive Cell Pathways, Inc.
/s/ Xxxxxx X. Xxxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxxxxxx Xxxxxxx X. Xxxxxx, Chairman
of the Board of Directors
4.
