EXHIBIT 10.45
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of October 22, 2001 by and between, Xx. Xxxxx Xxxxx, currently residing
at 00 Xxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxx 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 Vice President
Oncology Division of the Corporation upon the terms and
provisions set forth in this Agreement. Executive shall report
to the President and Chief Operating Officer of the
Corporation subject to the directions of the President and
Chief Operating 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 October 22, 2001 (the
"effective date") and shall continue until July 1, 2003 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.
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 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 2002 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 age 65, 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 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.
3.7 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.
6. TERMINATION OF EMPLOYMENT
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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.
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
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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
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
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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, 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
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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
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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.
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:
XXXXX XXXXX, M.D.
00 XXXXXXXXX XXXXX
XXXXXX, 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
-----------------------------------
Xxxxx X. Xxxxxx, Ph.D.
Its: Chief Executive Officer
"EXECUTIVE"
By: /s/ XXXXX XXXXX
-----------------------------------
Xxxxx Xxxxx, M.D.
Title: Vice President Oncology Division
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