EXHIBIT 10.41
EMPLOYMENT AGREEMENT
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This Employment Agreement (the "Agreement") is entered into as of June
16, 1998 by and between Discovery Laboratories, Inc., a Delaware corporation
(the "Company"), and Xxxxxx Xxxxxxxx, Ph.D. (the "Executive").
WHEREAS, the Company and Executive desire that Executive be employed by
the Company and that the terms and conditions of such employment be defined;
NOW, THEREFORE, in consideration of the employment of Executive by the
Company, the Company and Executive agree as follows:
1. Term of the Agreement. The Company shall employ Executive and
Executive shall accept employment for a period of four (4) years commencing on
June 16, 1998 (the "Commencement Date") and continuing until June 15, 2002,
subject, however, to prior termination as hereinafter provided in Section 5 (the
"Employment Period").
2. Executive's Duties and Obligations.
a. Duties. Executive shall serve as President and Chief Executive
Officer of the Company. Executive shall be responsible for overall management of
the Company and all operating managers of the Company shall report to Executive.
Executive shall at all times report to, and shall be subject to the policies
established by, the Company's Board of Directors (the "Board") or any Executive
Committee thereof. The Company agrees that, at all times during the Employment
Period, it will nominate Executive for election to the Board of Directors of the
Company. Executive shall immediately resign from any Board position held by him
at the expiration or termination of the Employment Period.
b. Location of Employment. Executive's principal place of business
shall be at the Company's office to be located within thirty (30) miles of
Doylestown, Pennsylvania. Such office shall serve as the company's principal
executive office.
c. Proprietary Information and Inventions Agreement. Upon
commencement of employment with the Company, Executive shall execute the
Company's standard form of Intellectual Property and Confidential Information
Agreement (the "Confidentiality Agreement") a copy of which is attached to this
Agreement as Exhibit A.
3. Devotion of Time to Company's Business
a. Full-time Efforts. During his employment with the Company,
Executive shall devote substantially all of his business time, attention and
efforts to the high quality performance of his duties to the Company.
b. No Other Employment. During his employment with the Company,
Executive shall not, whether directly or indirectly, render any services of a
commercial or professional nature to any other person or organization, whether
for compensation or otherwise, without the prior written consent of the
Company's Executive Committee or Board of Directors. Notwithstanding the
foregoing provisions of this Section 3.b., Executive may perform services in
connection with charitable or civic activities to the extent such participation
does not materially interfere with the performance of Executive's duties for the
Company.
c. Non-Competition During the Employment Period and for eighteen
(18) months after its termination, Executive shall not, directly or indirectly,
either as an employee, employer, consultant, agent, principal, partner,
stockholder, corporate officer, director, or in any other individual or
representative capacity compete with the Company business of developing or
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commercializing pulmonary surfactants, Vitamin D analogs or any other category
of compounds which forms the basis of the Company's products or products under
development (a "Competing Business"), or (ii) directly or indirectly solicit
employees of the Company. Notwithstanding the provisions of this Section 3.c.,
nothing herein shall prohibit Executive from (i) holding less than one percent
(1%) of he outstanding capital stock of a publicly held corporation engaged in a
Competing Business; (ii) serving on one or more Boards of Directors of
for-profit or non-profit corporations so long as, in the aggregate, such
commitments do not interfere with the performance of Executive's duties for the
Company and such corporations are not engaged in any Competing Business; or
(iii) after his employment with the Company terminates for any reason, being
employed by a multi-division corporation that engages in a Competing Business so
long as Executive works in division of such corporation which is not primarily
engaged in a Competing Business and Executive has no responsibilities for the
direct supervision of, and will not in the ordinary course of discharging his
responsibilities become involved in the analysis of proprietary data or
marketing strategies relating to, any Competing Business.
4. Compensation and Benefits.
a. Initial Bonus. The Company shall pay to Executive an initial
sign-on bonus of of One Hundred Thousand Dollars ($100,000) upon the execution
of this Agreement.
b. Base Compensation. During the first year of the Employment
Period, the Company shall pay to Executive, payable in accordance with the
Company's standard payroll policy, base annual compensation of Two Hundred
Thirty Six Thousand Two Hundred Fifty Dollars ($236,250), less all required
withholdings. Such base salary shall be increased annually during the Employment
Period by a minimum of five percent (5%) per year.
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c. Bonuses. During the Employment Period, Executive shall be
entitled to a minimum year-end bonus equal to twenty percent (20%) of his base
compensation for each year end and, at the discretion of the Compensation
Committee of the Board of Directors of the Company, any additional bonus that
may be awarded him.
d. Benefits. During the Employment Period, Executive will be
entitled to all such family health and medical benefits and disability insurance
as are provided to officers of the Company generally. In addition, the Company
will provide to Executive (i) term life insurance on behalf of Executive's
beneficiaries in the amount of Two Million Dollars ($2,000,000) for the term of
this Agreement, and (ii) long-term disability insurance, subject to a combined
premium cap of Fifteen Thousand Dollars ($15,000) per year.
e. Incentive Bonus. Executive shall be eligible for incentive
bonuses as follows:
(i) Fifty Thousand Dollars ($50,000) upon the execution of each
partnering or similar arrangement involving Surfaxin having a Value (as
hereinafter defined) to the Company in excess of Ten Million Dollars
($10,000,000). For purposes of this Agreement, "Value" shall mean the total
payments, including without limitation, contingent payment prior to or at
receipt of marketing approval for the compound under development in the
Company's portfolio (each a "Portfolio Compound") involving in the relevant
agreement, to be paid to Discovery from corporate partnering transactions or
from any other transactions for the development, clinical testing, regulatory
approval, manufacturing and/or marketing of a Portfolio Compound, including
without limitation upfront fees, milestones payments, research and development
and other contractual commitments.
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(ii) In amounts to be determined by the Company's Compensation
Committee, to be paid in either cash or equity, upon the achievement of each of
the following milestones (which bonuses shall be paid only once of each of the
milestones): (a) the successful completion of Phase II studies for any Portfolio
Compound; (b) the successful completion of Phase III studies of any Portfolio
compound; and (c) receipt of marketing approval in the United States for any
Portfolio Compound.
f. Stock Options. The Board of Directors of the Company has granted
to Executive, on the date hereof, incentive stock options to purchase: (i)
115,090 shares of Common Stock, $0.001 par value of the Company (the "Common
Stock"), pursuant to the terms of the Notice of Grant attached hereto as Exhibit
B, (ii) 59,500 shares of Common Stock, subject to acceleration at such time as
the market capitalization of the Company exceeds $75 million, pursuant to the
terms of the Notice of Grant attached hereto as Exhibit C, and (iii) 54,240
shares of Common Stock, subject to acceleration upon consummation of a corporate
partnering deal having a total Value of at least $20 million, pursuant to the
terms of the Notice of Grant attached hereto as Exhibit D.
5. Termination of Employment.
a. Termination for Cause. The Company may terminate Executive's
employment at any time for "Cause," as herein defined. For the purposes of this
Agreement, "Cause" shall mean (i) breach of nay contractual obligations relating
to noncompetition, assignment of inventions, protection of intellectual property
or confidentiality, (ii) gross negligence or willful misconduct relating the
performance of employment responsibility or (iii) the commission of any felony
or any other crime involving moral turpitude.
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b. Termination without Cause. If Executive's employment is
terminated by the Company without Cause, the following provisions shall apply:
(i) Executive shall be entitled to any unpaid compensation
accrued through the last day of Executive's employment; (ii) Executive shall be
entitled to receive severance payments equal to his base compensation for a
eighteen (18) month period, not subject to setoff by the Company, but subject to
the execution by the Executive of a Release, substantially in the form attached
hereto as Exhibit E, with respect to all employment-related matters. Such
severance shall be payable in six (6) equal installments, with the first
installments payable on the date of receipt of the foregoing release and the
subsequent installments payable at three (3) month intervals thereafter.
c. Death or Disability. This Agreement shall terminate if Executive
dies or is mentally or physically "Disabled" as herein defined. For the purposes
of this Agreement, "Disabled" shall mean a mental or physical condition that
renders Executive incapable of performing his duties and obligations under this
Agreement for three (3) or more consecutive months or for a total of six (6)
months during any twelve (12) consecutive months; provided, that during such
period the Company shall give Executive at least thirty (30) days' written
notice that it considers the time period for disability to be running. If this
Agreement is terminated under this Section 5.c., Executive or his estate shall
be entitled to any unpaid compensation accrued through the last day of
Executive's employment but shall not be entitled to any severance benefits.
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d. Lock-up Period. Executive shall not directly or indirectly, sell,
offer, contract to sell, transfer the economic risk of ownership, make any short
sale, pledge or otherwise dispose of any shares of Common Stock issued upon the
exercise of options, or any securities convertible into or exchangeable or
exercisable for such options, granted to Executive for one-year lock-up period
following any termination of Executive's employment by (i) the Company for Cause
or (ii) Executive to the extent such termination constitutes a breach of this
Agreement.
6. Miscellaneous.
a. Governing Law. This Agreement shall be interpreted, construed,
governed and enforced according to the laws of the Commonwealth of Pennsylvania
as applied to agreements among Pennsylvania residents entered into and to be
performed entirely within Pennsylvania without regards to the application of
choice of law rules.
b. Amendments. No amendment or modification of the terms or
conditions of this Agreement shall be valid unless in writing and signed by the
parties hereto.
c. Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be
construed, if possible, so as to be enforceable under applicable law, else, such
provision shall be excluded from this Agreement and the balance of the Agreement
shall be interpreted as if such provision were so excluded and shall be
enforceable in accordance with its terms.
d. Successors and Assigns. The rights and obligations of the Company
under this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company. Executive shall not be entitled to assign
any of his rights or obligations under this Agreement.
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e. Notices. All notices required or permitted under this Agreement
shall be in writing and shall be deemed effective upon personal delivery, on the
date of scheduled delivery by a nationally recognized overnight service or two
(2) days after deposit in the United States Post Office, by registered or
certified mail, postage prepaid, addressed to the other party at the address
shown below such party's signature, or at such other address or addresses as
either party shall designate to the other in accordance with this Section 6.e.
f. Entire Agreement. This Agreement, including the exhibits attached
hereto, constitutes the entire agreement between the parties with respect to the
employment of Executive. The Employment Agreement by and between Executive and
Acute Therapeutics, Inc., dated October 1, 1996, is hereby terminated and shall
be of no further force or effect and that he shall have no further rights under
said agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
DISCOVERY LABORATORIES, INC.
/s/ Xxxxx Xxxxxx
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By: Xxxxx X. Xxxxxx
Its: Director (on behalf of
the Board of Directors)
Address: 000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
EXECUTIVE:
/s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx, Ph.D.
Address: 0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
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ACUTE THERAPEUTICS, INC. (for
Purposes of Section 6.f. only)
/s/ Xxxxxx X. Xxxxxxxx
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By: Xxxxxx X. Xxxxxxxx, Ph.D.
Its: President and Chief Executive Officer
Address: 0000 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
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