EXHIBIT 10.35
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made and entered into
as of December 1, 2000 by and between, Xx. Xxxxxx X. Xxxxxxxxx, currently
residing at 00000 Xxxxx Xxxxx Xxxxxx, Xxxx Xxxxx, 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 President 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, 2003 unless sooner terminated
as hereafter provided. Thereafter, this Agreement will automatically renew
for one (1) year periods, unless
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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.
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 $260,000 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
Executives 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 herein above, Corporation agrees to amend
its plans and/or adopt new plans as promptly as possible to
provide sufficient options for such option grants. Corporation
shall use its best
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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 this Corporation.
3.6.4 Automobile Expenses. During the term of this
Agreement, Corporation shall provide Executive with a monthly
vehicle allowance. In addition, Corporation shall pay or
reimburse Executive for reasonable and necessary costs of all
automobile insurance (liability or otherwise), fuel, lubricants
and automobile maintenance and repair incurred by Executive
hereunder.
3.6.5 Entertainment. Executive shall be expected to
entertain those with whom the Corporation conducts business both
at Executives' home and at public restaurants, theatres, etc. The
Corporation shall pay Executive for or promptly reimburse
Executive for the reasonable and necessary costs of such
entertainment.
3.6.6 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
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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.
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
Notwithstanding 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.
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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 the greater of two (2) years or the remaining term, as
set forth in paragraph 2 above, of this Agreement 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 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
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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 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,
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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.
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
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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:
RAJESH SHORTRIYA, M.D.
00000 XXXXX XXXXX XXXXXX
XXXX XXXXX, 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
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hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
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: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Its: CEO
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"EXECUTIVE"
By: /s/ Xxxxxx Xxxxxxxxx
--------------------------------------
Xxxxxx Xxxxxxxxx, M.D.
Title: President
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