EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated as of November
6, 1997, between INKINE PHARMACEUTICAL COMPANY, INC., a New York corporation
("Employer"), and XXXXXXX X. XXXXX ("Employee").
Background. Employer and Employee mutually agree to the
employment of Employee as Chairman and Chief Executive Officer of Employer
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto,
intending to be legally bound hereby, agree as follows:
1. Employment. Employer hereby employs Employee, and Employee hereby
accepts such employment and agrees to perform his duties and responsibilities
hereunder, in accordance with the terms and conditions hereinafter set forth.
1.1 Employment Term. The employment term of this Agreement
shall be for a period of three years and may be renewed in accordance with
Section 1.2. The term "Employment Term" shall refer to the initial Employment
Term, which shall commence on the date hereof and shall continue until and end
on the third anniversary date of this Agreement (unless terminated prior
thereto in accordance with Section 7 hereof) and, to the extent this Agreement
is renewed pursuant to Section 1.2, to the last day of any successive one year
period.
1.2 Renewal. This Agreement shall be automatically renewed
for successive one year terms at the expiration of the initial Employment
Term, and any subsequent Employment Term, unless written notice to the
contrary is provided by either the Employer or the Employee at least ninety
days prior to the expiration of such Employment Term.
1.3 Duties and Responsibilities.
(a) During the Employment Term, Employee shall
serve as Chairman and Chief Executive Officer of Employer and shall perform
all duties and accept all responsibilities incidental to such position or as
may be assigned to him by Employer's Board of Directors, and he shall report
to and cooperate fully with the Board of Directors. Employee shall operate
primarily out of Employer's executive office, currently situated in New York,
NY, but to be relocated to the Philadelphia, Pennsylvania vicinity promptly
after the date hereof.
(b) Employee represents and covenants to Employer
that he is not subject to any agreement, covenant, understanding or
restriction which would prohibit Employee from executing this Agreement and
performing his duties and responsibilities hereunder, or would in any manner,
directly or indirectly, limit or affect the duties and responsibilities which
may now or in the future be assigned to Employee by Employer.
1.4 Extent of Service; Noncompetition. During the Employment
Term, Employee agrees to use his best efforts to carry out his duties and
responsibilities under Section 1.3 hereof and to devote his full time,
attention and energy thereto. The foregoing shall not be construed as
preventing Employee from (a) serving as a consultant or director for one or
more other business enterprises, (b) engaging in charitable or civic
activities, (c) teaching, or (d) making investments in other businesses or
enterprises; provided that such activities in the aggregate shall not prevent
him from discharging his duties and responsibilities to Employer. During the
Employment Term, Employee may serve as a director of, but may not serve as a
consultant to, a business enterprise that is engaged in the development or
commercialization of technology which is directly competitive with the
technology then being developed or commercialized by Employer. Nothing
contained herein shall be construed to limit or otherwise modify Employee's
fiduciary and other obligations under applicable state corporation laws or
state and federal securities laws.
1.5 Base Salary. For the services rendered by Employee
hereunder, Employer shall pay Employee an annual salary at the rate of
$225,000 for the initial year of the Employment Term, less withholding
required by law or agreed to by Employee, payable in installments at such
times as Employer customarily pays its other executive officers. The annual
base salary shall be increased by the Board of Directors in its sole
discretion, provided that such annual increase shall be no less than an amount
which reflects the percentage increase (if any) in the Consumer Price Index
published by the United States Department of Labor for the Philadelphia SMSA
for the period since the prior base salary was determined.
1.6 Bonus and Other Benefits. During the Employment Term,
Employee shall be entitled to certain benefits and shall be eligible for
certain bonus compensation, as follows:
(a) Employee shall be paid an annual bonus which
shall be determined by Employer's Board of Directors or an appropriate
committee of such Board, provided that Employee's bonus for the initial year
of the Employment Term shall be no less than $56,250.
(b) Employee shall be entitled to all normal and
usual benefits provided by Employer to its executive employees, including, but
not limited to, participation in profit sharing, disability, health,
hospitalization and retirement plans and such other benefits as the Board of
Directors of Employer may from time to time determine based upon the benefits
paid to other executive officers of Employer. Employee shall also be entitled
to such executive benefits, including executive disability and life insurance
as shall be approved by Employer's Board of Directors or an appropriate
committee of the Board.
(c) Employee shall be eligible to receive such
stock options or other forms of stock grants as shall be determined by
Employer's Board or Directors or an appropriate committee of such Board.
(d) Employee shall be entitled to paid vacation
time during the Employment Term in accordance with Employer's then existing
vacation policy for its executive employees.
1.7 Severance Compensation.
(a) If Employer terminates this Agreement, other
than for "cause" pursuant to Section 7.3 hereof: (i) during the first year of
the Employment Term, Employer shall pay to Employee an amount equal to 100% of
Employee's base annual salary, (ii) during the second year of the Employment
Term, Employer shall pay to Employee an amount equal to 150% of Employee's
base annual salary in effect at the date of such termination, and (iii) during
the third year of the Employment Term, Employer shall pay to Employee an
amount equal to 200% Employee's base annual salary in effect at the date of
such termination.
(b) Such severance compensation shall be payable
in full within thirty days after the date of termination of this Agreement
other than for "cause" pursuant to Section 7 hereof.
(c) Notwithstanding their terms, any options,
warrants or other rights to purchase shares of the Company's capital stock
held by Employee shall become immediately exercisable in full in the event
Employer terminates this Agreement other than for "cause" pursuant to Section
7 hereof. Such options, warrants or other rights shall be exercisable for the
balance of the term set forth in such option, warrant or right, and otherwise
in accordance with the term(s) thereof.
1.8 Expenses. Employee shall be reimbursed for the
reasonable business expenses incurred by him in connection with his
performance of services hereunder during the Employment Term upon presentation
of an itemized account and written proof of such expenses.
2. Certain Rights of Employer. Reference is made to that certain
Common Stock Purchase Option of even date issued by Employer to Employee which
entitles Employee to purchase up to 1,200,000 shares of Employer's Common
Stock (the "Purchase Option"), and to that certain Common Stock Purchase
Option of even date issued by Employer to Employee which entitles Employee to
purchase up to ______________ shares of Employer's Common Stock (the
"Option"). Shares of Employer's Common Stock issuable on exercise of the
Purchase Option and the Option are hereinafter referred to as "shares."
2.1 Repurchase of Rights Pursuant to Purchase Option and
Option. In the event Employee's employment is terminated during the Employment
Term either (i) voluntarily by Employee, or (ii) by Employer for "cause" as
defined in Section 7 below (either such event is hereinafter referred to as a
"Termination Event"), then Employer shall have the right to purchase from
Employee for the aggregate sum of $100.00 certain of Employee's rights to
purchase shares pursuant to both the Purchase Option and the Option, as
follows. If the Termination Event occurs during the first month of the
Employment Term, Employer may acquire from Employee the right to purchase up
to 900,000 shares pursuant to the Purchase Option and up to [100% of total]
shares pursuant to the Option; if the Termination Event occurs during the
second month of the Employment Term, Employer may acquire from Employee the
right to purchase up to 875,000 shares pursuant to the Purchase Option and up
to [35/36 of total] shares pursuant to the Option, etc., such that the number
of shares subject to the Purchase Option that Employer may acquire the right
to purchase shall be reduced by 25,000 during each month during the Employment
Term and the number of shares subject to the Option that Employer may acquire
the right to purchase shall be reduced by [1/36 of total] during each month
during the Employment Term
2.2 Repurchase of Shares. It is possible that Employee may
exercise either or both the Purchase Option and the Option to such an extent
that upon a Termination Event the number of shares as to which Employer has
the right to purchase is greater than Employee's unexercised rights under
either or both the Purchase Option and the Option (such excess number of
shares is referred to as "Option Shares"). In such event, Employer shall have
the right to purchase from Employee and the Employee shall be obligated to
sell to Employer, for a purchase price equal to the exercise price paid by
Employee to Employer to acquire the Option Shares, a number of shares of the
Company's Common Stock equal to the Option Shares.
2.3 Exercise of Employer's Rights. Employer may exercise its
rights pursuant to this Section 2 by notifying Employee of its election to do
so within five business days after the date of the Termination Event, and
tendering to Employee payment in full for the rights and shares (if any) being
purchased hereunder. Upon notice and tender of payment as aforesaid, those
rights pursuant to the Purchase Option and the Option which have been
purchased by Employer shall automatically be deemed void and of no further
effect. In the event Employer has notified Employee of its intention to
purchase shares of Employer's Common Stock from Employee pursuant to Section
2.3 above, Employee shall deliver to Employer certificates representing such
shares, duly endorsed for transfer with all transfer taxes paid, within five
business days after receipt by Employee of notice and tender as aforesaid.
3. Developments. Employee will disclose promptly in writing to
Employer all inventions, ideas, discoveries, and improvements, whether or not
patentable, conceived by Employee during the period of Employee's employment
with Employer, or a parent or subsidiary thereof, whether alone or with
others, and whether or not during regular business hours, or on Employer
premises or with the aid of Employer materials, which pertain in any way to
Employee's work with Employer or to any business activity which is or at the
time of such conception may be carried on by Employer or a parent or
subsidiary thereof. All such inventions, ideas, discoveries, and improvements
are the property of Employer to which Employee hereby assigns and transfers
forever all Employee's rights, titles and interests. Employee, upon request by
Employer and at Employer's sole expense, will prepare and execute applications
for patents for such inventions, ideas, discoveries, and improvements, both in
the United States and in foreign countries, and will do everything necessary
to ensure the issuance of such patents, irrespective of whether required to be
done during or after the termination of Employee's period of employment with
Employer.
4. Confidentiality. The Employee agrees that he will not at any time,
either during or subsequent to the Employment Term, unless given express
consent in writing by the Employer, either directly or indirectly use or
communicate to any person or entity any confidential information of any kind
concerning matters affecting or relating to the names, addresses, buying
habits or practices of any of Employer's clients or customers; Employer's
marketing methods, programs, formulas, patterns, compilations, devices,
methods, techniques or processes and related data; the amount of compensation
paid by Employer to employees and independent contractors and other terms of
their employment or contractual relationships; other information concerning
Employer's manner of operations. (The foregoing shall not be deemed to
prohibit the disclosure of information which (i) is, at the time of
disclosure, in the public domain other than as a result of Employee's breach
of this Agreement, or (ii) can be demonstrated by Employee to be known by
Employee on the date of his commencement of employment.) The Employee agrees
that the above information and items are important, material and confidential
trade secrets and that they affect the successful conduct of the Employer's
business and its good will. The Employee agrees that all business procured by
the Employee while employed by the Employer is and shall remain the permanent
and exclusive property of the Employer. Employee further agrees that
Employer's relationship with each of its employees and independent contractors
is a significant and valuable asset of the Employer. Any interference with the
Employer's business, property, confidential information, trade secrets,
clients, customers, employees or independent contractors by the Employee or
any of Employee's agents during or after the term of this Agreement shall be
deemed a material breach of this Agreement.
5. Nonsolicitation. Employee agrees that for the one-year period
following termination of employment (whether with or without cause) he will
not directly or indirectly solicit the employment of any employee of the
Employer and will not attempt to persuade any employee to leave the employment
of the Employer.
6. Equitable Relief.
(a) Employee acknowledges that the restrictions contained in
Sections 4 and 5 hereof are reasonable and necessary to protect the legitimate
interests of Employer and that any violation of such restrictions would result
in irreparable injury to Employer. If the period of time or other restrictions
specified in Sections 4 and 5 should be adjudged unreasonable at any
proceeding, then the period of time or such other restrictions shall be
reduced by the elimination or reduction of such portion thereof so that such
restrictions may be enforced in a manner adjudged to be reasonable. Employee
acknowledges that Employer shall be entitled to preliminary and permanent
injunctive relief for a violation of any such restrictions without having to
prove actual damages or to post a bond; Employer shall also be entitled to an
equitable accounting of all earnings, profits and other benefits arising from
such violation, which rights shall be cumulative and in addition to any other
rights or remedies to which Employer may be entitled in law or equity. In the
event of a violation, the period referred to in Section 5 hereof shall be
extended by a period of time equal to that period beginning with the
commencement of any such violation and ending when such violation shall have
been finally terminated in good faith.
(b) Employee agrees that until the expiration of the
covenants contained in Sections 4 and 5 of this Agreement, he will provide,
and that Employer may similarly provide, a copy of the covenants contained in
such Sections to any business or enterprise (i) which he may directly or
indirectly own, manage, operate, finance, join, control or participate in the
ownership, management, operation, financing, control or control of, or (ii)
with which he may be connected with as an officer, director, employee,
partner, principal, agent, representative, consultant or otherwise, or in
connection with which he may use or permit his name to be used.
7. Termination. This Agreement shall terminate prior to the
expiration of the term set forth in Section 1.1 above upon the occurrence of
any one of the following events:
7.1 Disability. In the event that Employee is unable fully
to perform his duties and responsibilities hereunder to the full extent
required by the Board of Directors of the Employer by reason of illness,
injury or incapacity for six consecutive months, during which time he shall
continue to be compensated as provided in Section 1.5 hereof (less any
payments due Employee under disability benefit programs, including Social
Security disability, workers' compensation and disability retirement
benefits), this Agreement may be terminated by Employer, and Employer shall
have no further liability or obligation to Employee for compensation
hereunder; provided, however, that Employee will be entitled to receive the
payments prescribed under any disability benefit plan which may be in effect
for employees of Employer and in which he participated. Employee agrees, in
the event of any dispute under this Section 7.1, to submit to a physical
examination by a licensed physician mutually agreed on by Employee and the
Board of Directors of Employer.
7.2 Death. In the event that Employee dies during the
Employment Term, Employer shall pay to his executors, legal representatives or
administrators an amount equal to the installment of his salary set forth in
Section 1.5 hereof for the month in which he dies, and thereafter Employer
shall have no further liability or obligation hereunder to his executors,
legal representatives, administrators, heirs or assigns or any other person
claiming under or through him; provided, however, that Employee's estate or
designated beneficiaries shall be entitled to receive the payments prescribed
for such recipients under any death benefit plan which may be in effect for
employees of the Employer and in which Employee participated.
7.3 Cause. Notwithstanding any other provision hereof,
Employer may terminate this Agreement at any time for "cause." For purposes of
this Agreement, "cause" shall mean a material violation of a written directive
of the Company's Board of Directors, conviction of a crime involving moral
turpitude, willful misconduct which has a material adverse effect on the
Company as determined by a majority of the Company's Board of Directors
including each independent Director.
8. Survival. Notwithstanding the termination of this Agreement by
reason of Employee's disability under Section 7.1 or for cause under Section
7.3, his obligations under Sections 4 and 5 hereof shall survive and remain in
full force and effect for the periods therein provided, and the provisions for
equitable relief against Employee in Section 6 hereof shall continue in force.
9. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the Commonwealth of Pennsylvania.
10. Disputes and Arbitration. Any disputes arising hereunder,
including disputes arising from or relating to termination, shall be resolved
by binding arbitration. Notice of the demand for arbitration by either party
shall be given in writing to the other party to this Agreement. Upon such
demand, the dispute shall be settled by arbitration before a single arbitrator
pursuant to the rules of the American Arbitration Association (the "AAA").
Discovery shall be permitted prior to arbitration and Pennsylvania law shall
be applied. The arbitrator shall be selected by the joint agreement of the
parties, but if the parties do not so agree within twenty days after the date
of the notice referred to above, the selection shall be made pursuant to the
rules of, and from the panels of arbitrators maintained by the AAA. Any award
rendered by the arbitrator shall be conclusive and binding upon the parties
hereto; provided, however, that any such award shall be accompanied by written
opinion of the arbitrator giving the reasons for the award. Each party shall
pay its own expenses of arbitration and the expenses of the arbitrator shall
be equally shared by the parties. Nothing herein shall prevent the parties
from settling any dispute by mutual agreement at any time.
11. Notices. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be deemed to have been given when hand delivered or
mailed by registered or certified mail, as follows (provided that notice of
change of address shall be deemed given only when received):
If to Employer, to:
Inkine Pharmaceutical Company, Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: President
If to Employee, to:
Xxxxxxx X. Xxxxx, M.D., Ph.D.
000 Xxxxxxx Xxxxxx
Xxxx Xxxxxx, XX 00000
or to such other names or addresses as Employer or Employee, as the case may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.
12. Contents of Agreement; Amendment and Assignment.
(a) This Agreement supersedes all prior agreements and sets
forth the entire understanding among the parties hereto with respect to the
subject matter hereof and cannot be changed, modified, extended or terminated
except upon written amendment approved by the Board of Directors of Employer
and executed on its behalf by a duly authorized officer. Without limitation,
nothing in this Agreement shall be construed as giving Employee any right to
be retained in the employ of Employer beyond the expiration of the Employment
Term, and Employee specifically acknowledges that, unless this Agreement is
renewed in accordance with Section 1.2 hereof, he shall be an employee-at-will
of Employer thereafter, and thus subject to discharge by Employer with or
without cause and without compensation of any nature.
(b) Employee acknowledges that from time to time, Employer
may establish, maintain and distribute employee manuals or handbooks or
personnel policy manuals, and officers or other representatives of Employer
may make written or oral statements relating to personnel policies and
procedures. Such manuals, handbooks and statements are intended only for
general guidance. No policies, procedures or statements of any nature by or on
behalf of Employer (whether written or oral, and whether or not contained in
any employee manual or handbook or personnel policy manual), and no acts or
practices of any nature, shall be construed to modify this Agreement or to
create express or implied obligations of any nature to Employee.
(c) All of the terms and provisions of this Agreement shall
be binding upon and inure to the benefit of and be enforceable by the
respective heirs, executors, administrators, legal representatives, successors
and assigns of the parties hereto, except that the duties and responsibilities
of Employee hereunder are of a personal nature and shall not be assignable or
delegatable in whole or in part by Employee.
13. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect any other provision or application of this Agreement which can be
given effect without the invalid or unenforceable provision or application and
shall not invalidate or render unenforceable such provision or application in
any other jurisdiction.
14. Remedies Cumulative; No Waiver. No remedy conferred upon Employer
by this Agreement is intended to be exclusive of any other remedy, and each
and every such remedy shall be cumulative and shall be in addition to any
other remedy given hereunder or now or hereafter existing at law or in equity.
No delay or omission by Employer in exercising any right, remedy or power
hereunder or existing at law or in equity shall be construed as a waiver
thereof, and any such right, remedy or power may be exercised by Employer from
time to time and as often as may be deemed expedient or necessary by Employer
in its sole discretion.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above
written.
Attest: INKINE PHARMACEUTICAL COMPANY, INC
/s/ Secretary By: /s/ Xxxxx X. Xxxxxxxx
------------------------------ ----------------------------------------
Secretary
/s/ Xxxxxxx X. Xxxxx
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XXXXXXX X. XXXXX
