Employment Agreement
THIS
EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of September
1, 2007 and is effective as of August 22nd,
2007
(the “Effective Date”) by and between
Cornerstone Pharmaceuticals, Inc., a
New
York corporation, with an office located at 0 Xxxxxx Xxxxx Xxxxxxxx XX 00000
(the “Company”) and Xxxxxxxx X. Xxxxxx, Xx. an
individual with an address 00 Xxxxxxxxx Xxxx, Xxxxxxx, XX 00000 (“[EMPLOYEE]”).
WHEREAS,
the Company is in the business of researching,
developing and commercializing unique, value-added, cancer chemotherapies
for
the most difficult to treat cancers
(the
Company's Business); and
WHEREAS,
EMPLOYEE has had significant experience in the financial operations of
pharmaceutical and biotech companies; and
WHEREAS,
the Company desires to retain the services of EMPLOYEE; and
WHEREAS,
EMPLOYEE is willing to be employed by the Company.
NOW,
THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows:
EMPLOYEE
is hereby employed and engaged to serve the Company as the Chief Financial
Officer, and Vice President of the Company or such additional titles as the
Company shall specify from time to time, though no change is to be made to
title
and any related duties without the explicit written approval of the EMPLOYEE,
and EMPLOYEE does hereby accept, and EMPLOYEE hereby agrees to such engagement
and employment.
1.
Duties.
EMPLOYEE
shall be responsible for the overall financial and accounting needs of the
Company. In addition, EMPLOYEE’s duties shall be such duties and
responsibilities as the Company’s Board of Directors shall specify from time to
time, and shall entail those duties customarily performed by the Chief Financial
Officer of a similarly situated company EMPLOYEE shall diligently and faithfully
execute and perform such duties and responsibilities, subject to the general
supervision and control of the Company’s Board of Directors. EMPLOYEE shall be
responsible and report only to the Company’s Board of Directors, in its sole and
absolute discretion, shall determine EMPLOYEE’s duties and responsibilities and
may assign or reassign EMPLOYEE to such duties and responsibilities as it
deems
in the Company's best interest. EMPLOYEE shall devote his full-time attention,
energy, and skill during normal business hours to the business and affairs
of
the Company and shall not, during the Employment Term, as that term is defined
below, be actively engaged in any other business activity, except with the
prior
written consent of the Company’s Board of Directors.
Nothing
in this Agreement shall preclude EMPLOYEE from devoting reasonable periods
required for:
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(a)
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serving
as a director or member of a committee of any organization or corporation
involving no conflict of interest with the interests of the
Company;
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(b)
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serving
as a consultant in his area of expertise (in areas other than in
connection with the Company’s Business), to government, industrial, and
academic panels where it does not conflict with the interests of
the
Company; and
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(c)
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managing
his personal investments or engaging in any other non-competing
business;
provided
that such activities do not materially interfere with the regular
performance of his duties and responsibilities under this Agreement
as
determined by the Company.
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2.
Best Efforts of EMPLOYEE.
During
his employment hereunder, EMPLOYEE shall, subject to the direction and
supervision of the Company’s Board of Directors, devote his full business time,
best efforts, business judgment, skill, and knowledge to the advancement
of the
Company's interests and to the discharge of his duties and responsibilities
hereunder.
3.
Employment Term.
Unless
terminated pursuant to Section 12 of this Agreement, the term of this Agreement
shall commence as of the Effective Date of this Agreement and shall continue
for
a term of twenty nine (29) months (the “Initial Term”), and shall be
automatically renewed for successive two (2) year terms (the “Renewal Term”)
unless a party hereto notifies the other that it does not wish to renew the
Agreement at least 30 days prior to the expiration of the then current term
(the
terms “Initial Term” and “Renewal Term” are collectively hereinafter referred to
as the “Employment Term”).
5.
Compensation of EMPLOYEE.
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(a)
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Base
Compensation.
As
compensation for the services provided by EMPLOYEE under this Agreement,
the Company shall pay EMPLOYEE an annual salary of One Hundred
and Fifty
Thousand Dollars ($150,000) (the “Base Compensation”). The Base
Compensation shall be reviewed each year and may be increased in
the sole
discretion of the Company’s Board of Directors (or its Audit
Committee).Compensation Committee). The compensation of EMPLOYEE
under this Section shall be paid in accordance with the Company's
usual
payroll procedures. EMPLOYEE is also eligible to receive a bonus
per the
discretion of the Company’s Board of Directors.
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(b)
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IPO
Bonus.
Upon the completion of an underwritten Initial Public Offering
of the
Company's shares, the Company shall increase the Base Compensation
of the
EMPLOYEE by $25,000.
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(c)
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Incentive
Stock and Stock Options.
EMPLOYEE shall also be eligible to receive shares of the Company’s
authorized common stock and options to purchase shares of the Company’s
authorized common stock in accordance with the terms of the 2005
Cornerstone Pharmaceuticals, Inc, Incentive Stock Plan
.
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5.
Benefits. EMPLOYEE
shall be entitled to participate in any and all Company benefit plans, from
time
to time, in effect for employees of the Company. Such participation shall
be
subject to the terms of the applicable plan documents and generally applicable
Company policies.
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6.
Vacation, Sick Leave and Holidays.
EMPLOYEE
shall be entitled to four (4) weeks of paid vacation, with such vacation
to be
scheduled and taken in accordance with the Company's standard vacation policies.
In addition, EMPLOYEE shall be entitled to such sick leave and holidays at
full
pay in accordance with the Company's policies established and in effect from
time to time.
7.
Business Expenses.
The
Company shall reimburse EMPLOYEE for all reasonable out-of-pocket business
expenses incurred in performing EMPLOYEE’s duties and responsibilities hereunder
in accordance with the Company's policies, provided EMPLOYEE promptly furnishes
to the Company adequate records of each such business expense.
8.
Location of EMPLOYEE's Activities. EMPLOYEE’s
principal place of business in the performance of his duties and obligations
under this Agreement shall be determined by the Board of Directors within
the Central New Jersey area. Notwithstanding
the preceding sentence, EMPLOYEE will engage in such travel and spend such
time
in other places as may be necessary or appropriate in furtherance of his
duties
hereunder.
9.
Confidentiality.
EMPLOYEE
recognizes that the Company has and will have business affairs, products,
future
plans, trade secrets, customer lists, and other vital, non-publicly disclosed
information (collectively "Confidential Information") that are valuable assets
of the Company. EMPLOYEE agrees that he shall not at any time or in any manner,
either directly or indirectly, divulge, disclose, or communicate, or use
in any
manner (except in performance of his services to the Company pursuant to
the
terms of this Agreement) any Confidential Information to any third party
without
the prior written consent of the Company’s Board of Directors. EMPLOYEE will
protect the Confidential Information and treat it as strictly
confidential.
10. Non-Competition.
EMPLOYEE
acknowledges that he has gained, and will gain extensive knowledge in the
business conducted by the Company and has had, and will have, extensive contacts
with customers of the Company. Accordingly, EMPLOYEE agrees that he shall
not
compete directly or indirectly with the Company, either during the Employment
Term or during the twelve
(12)
month
period immediately after the termination of EMPLOYEE’s employment under Section
11 and shall not, during such period, make public statements in derogation
of
the Company. For the purposes of this Section 11, competing directly or
indirectly with the Company shall mean engaging, directly or indirectly,
as
principal
owner,
officer, partner, consultant, advisor, or otherwise, either alone or in
association with others, in the operation of any entity engaged in the Company's
Business. Other than in the connection with a legal proceeding or a proceeding
of a regulatory body EMPLOYEE and Company shall not, for a 5 year period
after
the Employment Term, make public statements in derogation of the other.
11.
Termination.
Notwithstanding any other provisions hereof to the contrary, EMPLOYEE’s
employment hereunder shall terminate under the following
circumstances:
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(a)
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Voluntary
Termination by EMPLOYEE.
EMPLOYEE shall have the right to voluntarily terminate this Agreement
and
his employment hereunder at any time during the Employment Term.
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(b)
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Termination
by EMPLOYEE for GOOD REASON. EMPLOYEE
shall have the right to terminate this Agreement upon 30 days notice
to
Company for Good Reason, which shall not be affected by the EMPLOYEE's
incapacity due to physical or mental illness. The EMPLOYEE's continued
employment shall not constitute consent to, or a waiver of rights
with
respect to, any circumstance constituting Good Reason hereunder
though
EMPLOYEE shall provide notice to the Company within 60 days of
such
material adverse change constituting GOOD REASON. GOOD REASON shall
mean
the occurrence, without the EMPLOYEE's express written consent,
of any of
the following circumstances unless, in the case of paragraphs (i)
through
(iv), such circumstances are fully corrected prior to the Date
of
Termination specified in the Notice of Termination given in respect
thereof which shall be no less than twenty (20)
days:
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(i) the
assignment to the EMPLOYEE of any significant duties materially inconsistent
with the EMPLOYEE's status as a senior executive officer of the Company or
a
materially adverse alteration in the nature or status of the EMPLOYEE's
responsibilities;
(ii) the
relocation of the Company's principal executive offices to a location outside
the Metropolitan New York or New Jersey area or the Company's requiring the
EMPLOYEE to be based anywhere other than the Company's principal executive
offices, excluding required travel on the Company's business to an extent
materially consistent with the EMPLOYEE's present business travel obligations;
(iii) the
act
by the Company, without the EMPLOYEE's consent, to reduce by more than 10%
any
portion of the EMPLOYEE's current compensation except pursuant to an
across-the-board compensation deferral similarly affecting all senior executives
of the Company and all senior executives of any person in control of the
Company, or failure to pay to the EMPLOYEE any portion of an installment
of
deferred compensation under any deferred compensation program of the Company,
within seven (7) days of the date such compensation is due;
(iv) the
material breach by the Company of any material term of this
Agreement.
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(c)
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Voluntary
Termination by the Company. The
Company shall have the right to voluntarily terminate this Agreement
and
EMPLOYEE’s employment hereunder at any time during the Employment
Term.
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(d)
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Termination
for Cause.
The Company shall have the right to terminate this Agreement and
EMPLOYEE’s employment hereunder at any time for cause. As used in this
Agreement, "cause" shall mean refusal by EMPLOYEE to implement
or adhere
to lawful policies or directives of the Company’s Board of Directors, in
accordance with the terms and conditions of this Agreement, breach
of this
Agreement, EMPLOYEE’s conviction of a felony, other conduct of a criminal
nature as determined by governmental authorities that may have
a material
adverse impact on the Company's reputation, breach of fiduciary
duty or
the criminal misappropriation by EMPLOYEE of funds from or resources
of
the Company. Cause shall not be deemed to exist unless the Company
shall
have first given EMPLOYEE a written notice thereof specifying in
reasonable detail the facts and circumstances alleged to constitute
"cause" and thirty (30) days after such notice such conduct has,
or such
circumstances have, as the case may be, not entirely ceased and
not been
entirely remedied to the reasonable satisfaction of the
Company.
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(e)
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Termination
Upon Death or for Disability.
This Agreement and EMPLOYEE’s employment hereunder, shall automatically
terminate upon EMPLOYEE’s death or upon written notice to EMPLOYEE and
certification of EMPLOYEE’s disability by a qualified physician or a panel
of qualified physicians if EMPLOYEE will be disabled continuously
beyond a
period of twelve (12) months and will be unable to perform the
duties
contained in this Agreement.
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(f)
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Effect
of Termination.
In
the event that this Agreement and EMPLOYEE’s employment is voluntarily
terminated by EMPLOYEE pursuant to Section 11(a), or in the event
the
Company voluntarily terminates this Agreement pursuant to Section
11(d)
all obligations of the Company shall cease except for the obligations
of
both parties under Section 17. In the event that this Agreement
and
EMPLOYEE’s employment is terminated under Sections 11(a) through 11(e) all
duties, responsibilities and obligations of EMPLOYEE under this
Agreement
shall cease except for the restrictions and/or obligations of Sections
9,
10, 11 and 17.
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(i)Upon
such termination pursuant to Sections 11(b), Termination by EMPLOYEE for
GOOD
REASON or 11(c), Voluntary Termination by the Company, the Employee shall
receive all accrued Base Compensation through the date of termination plus
all
accrued vacation pay and bonuses, if any, plus twelve (12) months of the
annualized salary based on the EMPLOYEE’s
Base
Compensation including benefits such as health and other insurance benefits
made
available to Company employees or made available to the company by its
professional employer organization for terminated employees as the case may
be
(provided
that the
EMPLOYEE shall not be entitled to any benefits under this Section 11 (f)(i)
while the EMPLOYEE is a full-time employee of any other company providing
reasonably similar benefits) as severance compensation. In the event the
termination under section 11(b) occurs within twelve (12) months of a Change
of
Control (which shall mean any merger, consolidation, sale of assets or other
similar transaction or series of transactions involving the Company, which
excludes any transaction or transactions following which the Company or its
stockholders continue to own a majority of the combined voting power of the
outstanding securities of the corporation or other entity surviving or
succeeding to the business of the Company, then the severance compensation
shall
be increased to eighteen (18) months of Employee’s Base Compensation.
(ii)In
the event this Agreement is terminated upon the death or disability of EMPLOYEE
pursuant to Section 11(e),
EMPLOYEE
shall be entitled to all compensation and
benefits pursuant
to Section 5 of this
Agreement
for the
period between the effective termination date to the end of the Employment
Term
(up to a maximum of twelve
(12)
months
pay) pursuant to Section 4. Payment will be made to EMPLOYEE or EMPLOYEE’s
appointed trustee.
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12.
Resignation as Officer.
In the
event that EMPLOYEE’s employment with the Company is terminated for any reason
whatsoever, EMPLOYEE agrees to immediately resign as an officer and/or director
of the Company and any related entities. For the purposes of this Section
13,
the term the "Company" shall be deemed to include subsidiaries, parents,
and
affiliates of the Company.
00.Xx
Mitigation. The
Company agrees that, if the EMPLOYEE's employment is terminated during the
term
of this Agreement, the EMPLOYEE is not required to seek other employment
or to
attempt in any way to reduce any amounts payable and benefits due to the
EMPLOYEE by the Company under this Agreement. However benefits payable by
the
Company on behalf of the EMPLOYEE shall be replaced by the benefit plan earned
by the EMPLOYEE if EMPLOYEE has accepted a full time employment with another
company.
14.
Governing Law, Jurisdiction and Venue.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of Incorporation of the Company without giving effect to any applicable
conflicts of law provisions.
15.
Business Opportunities.
During
the Employment Term EMPLOYEE agrees to bring to the attention of the Company’s
Board of Directors all written business proposals that come to EMPLOYEE’s
attention and all business or investment opportunities of whatever nature
that
are created or devised by EMPLOYEE and that relate to areas in which the
Company
conducts business and might reasonably be expected to be of interest to the
Company or any of its subsidiaries.
16.
Employee’s Representations and Warranties.
EMPLOYEE
hereby represents and warrants that he is not under any contractual obligation
to any other company, entity or individual that would prohibit or impede
EMPLOYEE from performing his duties and responsibilities under this Agreement
and that he is free to enter into and perform the duties and responsibilities
required by this Agreement. EMPLOYEE hereby agrees to indemnify and hold
the
Company and its officers, directors, employees, shareholders and agents harmless
in connection with the representations and warranties made by EMPLOYEE in
this
Section 16.
17.
Indemnification.
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(a)
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The
Company agrees that if EMPLOYEE is made a party, or is at any time
threatened to be made a party, to any action, suit or proceeding,
whether
civil, criminal, administrative or investigative (a "Proceeding"),
by
reason of the fact that he is or was a director, officer or employee
of
the Company or is or was serving at the request of the Company
as a
director, officer, member, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, including
service
with respect to employee benefit plans, whether or not the basis
of such
Proceeding is EMPLOYEE’s alleged action in an official capacity while
serving as a director, officer, member, employee or agent, EMPLOYEE
shall
be indemnified and held harmless by the Company to the fullest
extent
permitted or authorized by the Company's certificate of incorporation
or
bylaws or, if greater, by the laws of the State of New York, or
the
Company’s State of Incorporation (whichever is broader), against all cost,
expense, liability and loss (including, without limitation, attorney's
fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid
or to be paid in settlement) reasonably incurred or suffered by
EMPLOYEE
in connection therewith, and such indemnification shall continue
as to
EMPLOYEE even if he has ceased to be a director, member, employee
or agent
of the Company or other entity and shall inure to the benefit of
EMPLOYEE’s heirs, executors and administrators. The Company shall advance
to EMPLOYEE or to his heirs, executors and administrators to the
extent
permitted by law all reasonable costs and expenses which may be
reasonably
incurred by him in connection with a Proceeding within 20 days
after
receipt by the Company of a written request, with appropriate
documentation, for such advance. Such request shall include an
undertaking
by EMPLOYEE or EMPLOYEE’s heirs, executors and administrators to repay the
amount of such advance if it shall ultimately be determined that
EMPLOYEE
or his heirs, executors and administrators is not entitled to be
indemnified against such costs and
expenses.
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(b)
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Neither
the failure of the Company (including its Board of Directors, independent
legal counsel or stockholders) to have made a determination prior
to the
commencement of any proceeding concerning payment of amounts claimed
by
EMPLOYEE that indemnification of EMPLOYEE is proper because he
has met the
applicable standard of conduct, nor a determination by the Company
(including its board of directors, independent legal counsel or
stockholders) that EMPLOYEE has not met such applicable standard
of
conduct, shall create a presumption that EMPLOYEE has not met the
applicable standard of conduct.
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(c)
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The
Company agrees to continue and maintain appropriate
directors' and officers' liability insurance policy covering EMPLOYEE
to
the extent the Company provides such coverage for its other executive
officers.
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(d)
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Promptly
after receipt by EMPLOYEE of notice of any claim or the commencement
of
any action or proceeding with respect to which EMPLOYEE is entitled
to
indemnity hereunder, EMPLOYEE shall notify the Company in writing
of such
claim or the commencement of such action or proceeding, and the
Company
shall (i) assume the defense of such action or proceeding, (ii)
employ
counsel reasonably satisfactory to EMPLOYEE, and (iii) pay the
reasonable
fees and expenses of such counsel. Notwithstanding the preceding
sentence,
EMPLOYEE shall be entitled to employ counsel separate from counsel
for the
Company and from any other party in such action if EMPLOYEE reasonably
determines that a conflict of interest exists which makes representation
by counsel chosen by the Company not advisable. In such event,
the
reasonable fees and disbursements of such separate counsel for
EMPLOYEE
shall be paid by the Company to the extent permitted by
law.
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(e)
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After
the termination of this Agreement and upon the request of EMPLOYEE,
the
Company agrees to reimburse EMPLOYEE for all reasonable travel,
legal and
other out-of-pocket expenses related to assisting the Company to
prepare
for or defend against any action, suit, proceeding or claim brought
or
threatened to be brought against the Company or to prepare for
or
institute any action, suit, proceeding or claim to be brought or
threatened to be brought against a third party arising out of or
based
upon the transactions contemplated herein and in providing evidence,
producing documents or otherwise participating in any such action,
suit,
proceeding or claim. In the event EMPLOYEE is required to appear
after
termination of this Agreement at a judicial or regulatory hearing
in
connection with EMPLOYEE's employment hereunder, or EMPLOYEE's
role in
connection therewith, the Company agrees to pay EMPLOYEE a reasonable
sum,
to be mutually agreed upon by EMPLOYEE and the Company, per diem
for each
day of his appearance and each day of preparation
therefor.
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18.
Notices.
All
demands, notices, and other communications to be given hereunder, if any,
shall
be in writing and shall be sufficient for all purposes if personally delivered,
sent by facsimile or sent by United States mail to the address below or such
other address or addresses as such party may hereafter designate in writing
to
the other party as herein provided.
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Company:
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EMPLOYEE:
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Cornerstone
Pharmaceuticals, Inc.
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Xxxxxxxx
X. Xxxxxx Xx.
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00
Xxxxxxxxx Xxxx
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Attn:
General Counsel
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Xxxxxxx,
XX 00000
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0
Xxxxxx Xxxxx Xxxxxxxx XX 00000
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19.
Entire Agreement.
This
Agreement contains the entire agreement of the parties and there are no other
promises or conditions in any other agreement, whether oral or written. This
Agreement supersedes any prior written or oral agreements between the parties.
This Agreement may be modified or amended, if the amendment is made in writing
and is signed by both parties. This Agreement is for the unique personal
services of EMPLOYEE and is not assignable or delegable, in whole or in part,
by
EMPLOYEE. This Agreement may be assigned or delegated, in whole or in part,
by
the Company and, in such case, shall be assumed by and become binding upon
the
person, firm, company, corporation or business organization or entity to
which
this Agreement is assigned. The headings contained in this Agreement are
for
reference only and shall not in any way affect the meaning or interpretation
of
this Agreement. If any provision of this Agreement shall be held to be invalid
or unenforceable for any reason, the remaining provisions shall continue
to be
valid and enforceable and any such provision that is held to be invalid or
unenforceable shall be substituted by a valid or enforceable provision that
is
as similar in its intent as to the invalid or unenforceable provision. The
failure of either party to enforce any provision of this Agreement shall
not be
construed as a waiver or limitation of that party's right to subsequently
enforce and compel strict compliance with every provision of this Agreement.
This Agreement may be executed in two or more counterparts, each of which
shall
be deemed an original, but all of which together shall constitute one and
the
same instrument and, in pleading or proving any provision of this Agreement,
it
shall not be necessary to produce more than one of such counterparts.
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IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year
first above written.
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CORNERSTONE
PHARMACEUTICALS, INC.:
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EMPLOYEE:
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By:
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/s/
Xxxxxx Xxxxxxxxx
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By:
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/s/
Xxxxxxxx X. Xxxxxx, Xx.
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Name:
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Xxxxxx
Xxxxxxxxx
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EMPLOYEE
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Title:
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President
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