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EXHIBIT 10.24
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of December 1, 2000 by and between, Xxxxxx Xxxxx, currently residing at
00000 Xxxxx Xxx Xxxxx Xxxxx Xxx, Xxxxxxxxxx 00000 (hereinafter referred to as
"Executive"), and NeoTherapeutics, Inc. (hereinafter referred to as
"Corporation").
WHEREAS:
A. The Corporation is a corporation organized under the laws of the
State of Delaware, and is engaged in the business of developing and
manufacturing pharmaceutical products and services; and
B. Executive is a person whose skills, experience and training are
required by the Corporation; and
C. Executive wishes to accept the employment offered by the Corporation
on the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto, intending to be legally bound, do
hereby agree as follows:
1. EMPLOYMENT
1.1 Position and Duties
The Corporation does hereby employ Executive and Executive hereby
accepts such employment as Senior Vice President of Finance, Chief
Financial Officer, Secretary and Treasurer of Corporation upon the
terms and provisions set forth in this Agreement. Executive shall
report to the Chief Executive Officer of the Corporation subject to the
directions of the Chief Executive Officer. Executive shall devote his
full working time and effort to the business and affairs of the
Corporation as necessary to faithfully discharge the duties and
responsibilities of his office.
Executive may participate in other business and act as a director
of any profit or nonprofit corporation, so long as such activity is not
competitive with the business of the Corporation in any material
respect and does not materially detract from the performance of his
duties as a full time executive of the Corporation.
2. TERM
This Agreement shall continue in full force and effective for a period
(the "Term") which shall commence as of December 1, 2000 (the "effective date")
and shall continue until December 31, 2002 unless sooner terminated as hereafter
provided. Thereafter, this Agreement will automatically renew for one (1) year
periods, unless either party gives to the other written notice at least ninety
(90) days prior to the commencement of the next year, of such party's intent not
to renew this Agreement.
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3. COMPENSATION
3.1 Base Salary
As compensation for the services to be performed by Executive
during the continuance of this Agreement, the Corporation shall pay
Executive a base salary of not less than $200,000 per year for each
year of his employment hereunder, payable in accordance with
Corporation practices in effect from time to time, but not less often
than monthly (the "Base Salary"). Base Salary shall be payable in
substantially equal installments and reduced on a pro rata basis for
any fraction of a year or month during which Executive is not so
employed.
3.2 Bonus
The Board of Directors of the Corporation may, at its sole
discretion, award bonuses of cash or stock from time to time. Any such
Bonus earned by Executive shall be paid at least annually within ninety
(90) days after the conclusion of the Corporation's fiscal year or,
upon mutual agreement of the parties, in another fashion.
3.3 Additional Benefits
Executive shall be entitled to all rights and benefits for which
Executive is otherwise entitled under any pension plan, profit sharing
plan, life, medical, dental, or benefit the Corporation may provide for
senior executives generally and for employees of the Corporation
generally from time to time in effect during the term of this Agreement
(collectively, "Additional Benefits"). Executive shall receive
participation in the Executive Medical Plan and shall commence such
participation immediately.
3.4 Stock Options
As an additional element of compensation to Executive in
consideration of the services to be rendered hereunder, Employer shall
grant to Executive options to acquire shares of Corporation's common
stock at the sole discretion of the Board of Directors as follows:
(A) The specific terms of stock options awarded to Executive
shall be as set forth in the separate option agreements. To the
extent that Corporation does not have available options in its
option plans to grant to Executive as contractually committed
hereinabove, Corporation agrees to amend its plans and/or adopt new
plans as promptly as possible to provide
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sufficient options for such option grants. Corporation shall use
its best efforts to prepare and submit for approval by its
directors and its stockholders at the 2001 Annual Meeting of
Stockholders a new option plan which would provide sufficient
options to allow Corporation to meet its contractual obligations to
Executive herein and to provide for potential grants of stock
options to other key employees.
(B) Executive shall be considered for additional grants of
options, SAR's, phantom stock rights and any similar option or
securities compensation when and as such grants are considered for
other executives or employees of the Corporation, but any grant is
wholly at the discretion of the Board.
(C) For all purposes of this Agreement, a "change of control"
shall mean and shall be deemed to have occurred if:
(1) There shall be consummated (x) any consolidation or
merger of the Corporation with another corporation or entity
and as a result of such consolidation or merger, a majority of
the outstanding voting securities of the surviving or resulting
corporation or entity shall be owned in the aggregate by
persons who were not stockholders of the Corporation prior to
the merger or consolidation (excluding the affiliates of the
acquiror who acquired their shares within one hundred eighty
(180) days prior to such merger or transfer (or in one
transaction or a series of related transactions) of all, or
substantially all, of the assets of the Corporation, or
(2) The stockholders of the Corporation shall have approved
any plan or proposal for the liquidation or dissolution of the
Corporation; or
(3) Any "person" (as such term is used in the Sections
13(d) and 14 (d) (2) of the Securities Exchange Act of 1934),
shall have become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of forty percent (40%) or
more of the Corporation's outstanding common stock, without the
prior approval of the Board, or
(4) During any period of two (2) consecutive years,
individuals who at the beginning of such period constituted the
entire Board of Directors shall have ceased for any reason to
constitute a majority thereof unless the election, or the
nomination for election by the Corporation's stockholders, of
each new Director was approved by vote of the Directors then
still in office who were Directors at the beginning of the
period.
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(D) Retirement of Executive
Any options held by Executive will become fully vested at
the time that Executive terminates employment due to his
retirement. Retirement is defined as the voluntary termination
of employment by the Executive as a result of the Executive
having reached the retirement age as established by the
Corporation or age 65, whichever occurs first or, subsequent to
thereto, voluntarily terminates his employment.
3.5 Periodic Review
The Corporation shall review Executive's Base Salary bonus, Stock
Options, and Additional Benefits then being provided to Executive not
less frequently than every twelve (12) months. Following such review,
the Corporation may, in its discretion, increase the Base Salary, award
a Bonus, grant Stock Options and Additional Benefits.
3.6 Reimbursements
3.6.1 General. Subject to approval of his/her superior, Executives
shall be promptly reimbursed by the Corporation for amounts actually
expended by Executive in the course of performing duties for the
Corporation where Executive tenders receipts or other documentation
reasonably substantiating the amounts as required by the Corporation.
As a condition of employment hereunder, Executive shall entertain
business prospects, provide and maintain an appropriate automobile,
maintain and improve Executive's professional skills by participating
in continuing education courses and seminars, and maintain memberships
in civic groups and professional societies and Corporation agrees to
reimburse Executive therefore consistent with criteria under the
Internal Revenue Code, subject to approval by their superior.
3.6.2 Business Expenses. During the term of this Agreement to the
extent that such expenditures satisfy the criteria under the Internal
Revenue Code for deductibility by the Corporation (whether or not fully
deductible by the Corporation) for federal income tax purposes as
ordinary and necessary business expenses, Corporation agrees to and
shall reimburse Executive promptly for all reasonable business
expenditures including travel, entertainment, parking, business
meetings, professional dues and the costs of and dues associated with
maintaining club memberships and expenses of education, made or
substantiated in accordance with policies, practices and procedures
established from time to time by the Corporation generally with respect
to other senior executives/managers and other employees of the
Corporation and incurred in the pursuit and furtherance of the
Corporation's business and good will.
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3.6.3 Travel. In connection with any travel by Executive in the
performance of his duties hereunder, Corporation shall advance to
Executive an amount equivalent to the reasonable and necessary expenses
of such travel and appropriate to Executive's position in Corporation
pursuant to the policies and procedures established for this purpose by
the Corporation.
3.6.4 Entertainment. Executive shall be expected to entertain those
with whom the Corporation conducts business both at Executives' home
and at public restaurants, etc. The Corporation shall pay Executive for
or promptly reimburse Executive for the reasonable and necessary costs
of such entertainment.
3.6.5 Credit Cards. To Assist Executive in the performance of his
duties, Corporation shall provide Executive with a Corporation credit
card or cards for use in paying for any and all reimbursable expenses.
3.7 Deductions
There shall be deducted from Executive's gross compensation
appropriate amounts for standard employee deductions (e.g., income tax
withholding, social security and state disability insurance) and any
other amounts authorized for deduction by Executive.
4. VACATION
Executive shall be entitled to not less than four weeks per year of
paid vacation for each twelve (12) month period of employment which shall accrue
on a pro rata basis from the date employment commences under this Agreement.
Subject to the foregoing minimum vacation, Executive shall be entitled to paid
vacation, holidays and leave time in accordance with the plans, policies,
programs and practices in effect generally with respect to other senior
employees of the Corporation. Executive shall not forfeit or cease to accrue any
paid vacation, if he is unable to or does not use it, in any year or period of
years during the term hereof, or any extensions thereof.
5. INDEMNIFICATION
The Corporation shall, to the maximum extent permitted by law,
indemnify and hold Executive harmless from and against any expenses, including
reasonable attorney's fees, judgements, fines, settlements and other amounts
actually and reasonably incurred in connection with any proceeding arising out
of, or related to, Executive's employment by the Corporation. The Corporation
shall advance to Executive any expenses, including reasonable attorneys' fees
and costs of settlement, reasonably incurred in defending any such proceeding to
the maximum extent permitted by law. The Corporation will include Executive
under all directors' and officers' liability insurance policies and will use its
best efforts to maintain existing coverage levels, assuming continuation of
insurance availability at commercially reasonable rates.
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6. TERMINATION OF EMPLOYMENT
Employment shall terminate upon the occurrence of any of the following
events:
6.1 Expiration of Term
Upon at least ninety (90) days prior written notice by Corporation
to Executive terminating this Agreement prior to the expiration of the
original term or an extended term as specified in Section 2; upon such
termination, Executive shall be entitled to the compensation provided
in paragraph 6.4 payable as provided therein.
6.2 Mutual Agreement
Whenever the Corporation and Executive mutually agree in writing to
termination;
6.3 Termination for Cause
At any time for cause. For purposes of this Agreement,"cause" shall
be defined as any of the following, provided however, that the board of
directors of the Corporation by a duly adopted resolution has
determined the presence of such cause in good faith: (i) Executive's
material breach of any of his duties and responsibilities under this
Agreement (other than as a result of incapacity due to disability);
(ii) Executive's conviction by, or entry of a plea of guilty in, a
court of competent jurisdiction for a felony; or, (iii) Executive's
commission of an act of fraud or willful misconduct or gross negligence
in the performance of his duties.
Not withstanding the foregoing, Executive shall not be terminated
for "cause pursuant to the clauses above, unless and until Executive
has received notice of the proposed termination for cause including
details on the bases for such termination and has had an opportunity to
be heard before at least a majority of members of the board of
directors of the Corporation. Executive shall be deemed to have had
such an opportunity if written or telephonic notice is given at least
ten (10) days in advance of a meeting.
6.4 Termination without Cause
Without cause. Notwithstanding any other provision of this section,
the Corporation shall have the right to terminate Executive's
employment with the Corporation without cause at any time, but any such
termination shall be without prejudice to Executive's rights to receive
Base Salary and Additional Benefits provided; under this Agreement for
two (2) years and, except as provided in the proviso below, Executive
shall be vested in all options granted to him, and shall have one (1)
month for each month of Executive's tenure, with a minimum of six (6)
months and a maximum of one (1) year, to exercise all vested options;
provided, further, if the Board determines that Executive's employment
is being terminated for the reason that the shared expectations of
Executive and the Board are not being met; in the Board's judgement,
then Executive's vesting as shall occur during a period following the
date of termination of Executive's
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employment equal to the number of months of Executive's tenure with the
Corporation, with a minimum of six (6) months and a maximum of one (1)
year, with the right to exercise for the same period plus thirty (30)
days. The continued vesting and exercise rights relative to all options
granted to Executive shall be subject to the same limitations as set
forth in the immediately preceding sentence. If Executive is terminated
without cause, Executive may elect to receive a lump sum payment
representing the aggregate cash compensation (including salary, bonus,
auto allowance and any other cash or equivalent compensation, other
than continued vacation accrual). Such lump sum payment shall be made
not later than ten (10) days after Executive makes such election. In
the event of such lump sum election, all insurance and other noncash
benefits shall cease.
6.5 Death/Disability
The death or disability of Executive. For the purposes of this
Agreement, disability shall mean the absence of Executive performing
Executive's duties with the Corporation on a full time basis for a
period of six (6) consecutive months, as a result of incapacity due to
mental or physical illness which is determined to be total and
permanent by a physician selected by the Corporation or its insurers
and reasonably acceptable to Executive or Executive's legal
representative. If Executive shall become disabled, Executive's
employment may be terminated; by written notice to Executive. In the
event of the death of Executive, all compensation hereunder shall be
paid based on value at time of death.
6.6 By Executive Without Cause
By Executive at any time upon ninety (90) days' notice to
Corporation. Executive shall not be entitled to any severance in the
event of such a termination.
7. CHANGE OF CONTROL
If there should occur a "change of control" of the Corporation (or any
successor), as defined in paragraph 3.4 (C) hereof, and Executive's employment
is terminated (other than by Executive) or Executive is adversely affected in
terms of overall compensation, benefits, title, authority, reports reporting
relationships, location of employment or similar matters, then Executive,
without limitation on any other rights hereunder, may, within six (6) months
after receiving notice of such event, elect to resign from full time service to
the Corporation. In the event of such election by Executive, Executive shall be
provided with senior executive outplacement services at an outplacement or
executive search firm of Executive's selection (and reasonably acceptable to
Corporation), and the cash compensation and all benefits to which Executive is
entitled hereunder shall be discontinued twenty-four (24) months after the date
of election (or earlier, if a lump sum payment of cash compensation is
specified). Executive, at his election, shall have the right to request and, if
requested, shall be paid the full cash value of all amounts of cash compensation
due for the 24-month period (including salary, approved bonus, auto allowance,
and any other cash or equivalent compensation) in a lump sum, such lump
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sum payment shall be made not later than ten (10) days after Executive gives
notice to the Corporation of his lump sum election. In the event of such
election, all insurance and noncash benefits shall cease. All options granted to
Executive shall vest to the extent provided in paragraph 6.4 above. In addition,
if an acquirer of 100% of the Corporation stock is itself a publicly held
company, the Corporation shall make reasonable efforts to negotiate that
Executive shall have the right, but not the obligation, to convert all his
Corporation vested options into options on the acquirer's stock and shall have
two (2) years to exercise those options, but Corporation shall have no
obligation to Executive if it fails to secure such rights or concludes that
pursuing such rights would materially prejudice the interest of the stockholders
of the Corporation.
8. BREAKUP AND DISPOSITION OF CORPORATION ASSETS
If within the first year of Executive's employment, the Board
determines to maximize stockholder value through disposition of a significant
amount of assets or business units of the Corporation, Executive shall assist
Corporation through such disposition and shall thereafter be entitled to
terminate this Agreement within six (6) months of such event (completion of such
disposition) and receive all benefits provided under section 6.4 hereof. As used
herein, the term "significant amount of assets or business units of the
Corporation" shall mean either fifty percent (50%) or more of the gross revenues
of Corporation or, in the absence of gross revenues, 50% of the gross assets of
the Corporation including intellectual properties, as determined by an
independent appraisal, or fifty percent (50%) or more of the operating income by
excluding losses from business units of the Corporation which are operating at a
loss.)
9. BUSINESS DISCLOSURES AND SOLICITATION OF EMPLOYEES
Executive agrees during the term of his employment by the Corporation
and thereafter that he will not disclose, other than to an authorized employee,
officer, director or agent of the Corporation, any information relating to the
Corporation's business, trade, practices, trade secrets or know-how or
proprietary information without the Corporation's prior express written consent.
Following termination of Executive's employment, Executive shall be permitted to
continue in his usual occupation and shall not be prohibited from competing with
the Corporation except during the two (2) year severance period and in the
specific industry market segments in which the Corporation competes and which
represent twenty percent (20%) or more of its revenues. Executive agrees that
for a period of one (1) year following the termination of Executive's employment
with the Corporation for any reason, Executive shall not directly or indirectly
solicit, induce, recruit or encourage any of the Corporation's employees to
leave their employment or take away such employees to leave their employment or
take away such employees or attempts to solicit, induce, recruit, encourage or
take away employees of the Corporation.
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10. MISCELLANEOUS
10.1 Arbitration
Any dispute, controversy or claim arising out of or in respect of
this Agreement (or its validity, interpretation or enforcement), the
employment relationship or the subject matter hereof shall, at the
request of either party, be settled by binding arbitration in Orange
County, California in accordance with the Commercial Arbitration Rules
of the American Arbitration Association and judgement upon the award
rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. The parties shall have rights to discovery as
provided in section 1283.05 of the California Code of Civil Procedure.
The prevailing party in any such matter shall recover all of its costs
and expenses, including reasonable attorney's fees.
10.2 No Third-Party Beneficiaries
This Agreement shall not confer any rights or remedies upon any
person other than the parties and their respective successors and
permitted assigns.
10.3 Entire Agreement
This Agreement (including the documents referred to herein)
constitutes the entire agreement between the parties and supersedes any
prior understandings, agreements, or representations between the
parties, written or oral, to the extent they have related in any way to
the subject matter hereof.
10.4 Succession and Assignment
This Agreement shall be binding upon and inure to the benefit of
the parties named herein and their respective successors and permitted
assigns. No party may assign either the Agreement or any of his or its
rights, interests, or obligations hereunder without the prior written
approval of the Corporation and Executive; provided, however, that the
Corporation may (i) assign any or all of its rights and interests
hereunder to one or more of its affiliates and (ii) designate one or
more of its affiliates to perform its obligations hereunder (in any or
all of which cases the Corporation nonetheless shall remain responsible
for the performance of all of its obligations hereunder).
10.5 Counterparts
This Agreement may be executed in one or more Counterparts, each
of which shall be deemed an original but all of which together will
constitute one and the same instrument.
10.6 Headings
The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or
interpretation of this agreement.
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10.7 Notices
All notices, requests, demands, claims, and other communications
required or permitted hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall be
deemed duly given if (and then two business days after) it is sent by
registered or certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth below:
If to Corporation
NEOTHERAPEUTICS, INC.
000 XXXXXXXXXX XXXXX
XXXXXX, XX 00000
If to Executive:
XXXXXX XXXXX
00000 XXXXXXXX XXXXX
XXXXX XXX, XX 00000
Any party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set
forth above using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail,
or electronic mail), but no such notice, request, demand, claim, or
other communication shall be deemed to have been duly given unless and
until it actually is received by the intended recipient. Any party may
change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving notice in
the manner herein set forth.
10.8 Governing Law
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of California without giving
effect to any choice or conflict of law provision or rule (whether of
the State of California or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
California.
10.9 Amendments and Waivers
No amendment of any provision of this Agreement shall be valid
unless the same shall be in writing and signed by Corporation and the
Executive. No waiver by any party of any default, misrepresentation, or
breach of warranty or convenant hereunder, whether intentional or not,
shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or convenant hereunder or
affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
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10.10 Severability
Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof
or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
IN WITNESS THEREOF, the parties hereto have executed this Agreement as
of the date first above written.
"CORPORATION"
By:
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Its:
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"EXECUTIVE"
By:
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Xxxxxx Xxxxx
Title: Senior VP Finance, CFO,
Secretary and Treasurer
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