EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This Agreement (this "AGREEMENT"), dated as of July 7, 2004 (sometimes
the "Effective Date"), by and between INNOVATIVE DRUG DELIVERY SYSTEMS, INC., a
Delaware corporation with principal executive offices at 000 Xxxx 00xx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 ( the "COMPANY"), and XXXXXX X. XXXX, M.D., residing
000 Xxxxxxx Xxxxxx, Xxxxxxxx Xxxx, XX 00000 (the "EXECUTIVE")
WITNESSETH:
WHEREAS, the Company desires to employ the Executive as Chief
Executive Officer and Chief Medical Officer of the Company, and the Executive
desires to serve the Company in those capacities, upon the terms and subject to
the conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto hereby agree as follows:
1. Employment.
(a) Services. The Executive will be employed by the Company,
starting September 7, 2004 initially as its Chief Medical Officer, and
eventually, subject to section 1(b) below, as its Chief Executive Officer. The
Executive will report to the Board of Directors of the Company (the "Board") and
shall perform such duties as are consistent with his position as Chief Medical
Officer and Chief Executive Officer (as applicable, the "Services"). The
Executive agrees to perform such duties faithfully, to devote all of his working
time, attention and energies to the business of the Company, and while he
remains employed by the Company, not to engage in any other business activity
that is in conflict with his duties and obligations to the Company. Subject to
the forgoing sentence, the Executive may continue to see patients, may continue
his professional activities, specifically attending professional meetings,
lecturing, serving on editorial boards, and serving on editorial boards of
professional organizations, to maintain his professional standing and thereby
enhance the reputation and standing of the Company. Notwithstanding the
foregoing or any other provision in this Agreement, the Executive agrees that he
will not spend more than 8 business hours per month on any activities, in the
aggregate, that are not directly related to the business of the Company.
(b) Probationary Period. The Executive shall be appointed Chief
Medical Officer of the Company upon the Effective Date. Prior to the date that
is the six (6) month anniversary of the Effective Date (the Probation
Termination Date), the Board shall determine, in its sole discretion, whether to
appoint the Executive Chief Executive Officer of the Company. If (i) the Board
does not appoint the Executive Chief Executive Officer of the Company by the
Probation Termination Date or (ii) the Board gives the Executive written notice
at any time prior to the Probation Termination Date that it will not appoint the
Executive Chief Executive Officer, then this Agreement will immediately
terminate in accordance with Section 9(e).
(c) Acceptance. Executive hereby accepts such employment and
agrees to render the Services.
2. Term.
The Executive's employment under this Agreement (the "Term") shall
commence as of the Effective Date and shall continue for a term of three (3)
years unless sooner terminated pursuant to Section 1 (b) or Section 9 of this
Agreement. Notwithstanding anything to the contrary contained herein, the
provisions of this Agreement governing protection of Confidential Information
shall continue in effect as specified in Section 6 hereof and survive the
expiration or termination hereof.
3. Best Efforts; Place of Performance.
(a) The Executive shall devote substantially all of his business
time, attention and energies to the business and affairs of the Company and
shall use his best efforts to advance the best interests of the Company and
shall not during the Term be actively engaged in any other business activity,
whether or not such business activity is pursued for gain, profit or other
pecuniary advantage, that will interfere with the performance by the Executive
of his duties hereunder or the Executive's availability to perform such duties
or that will adversely affect, or negatively reflect upon, the Company.
(b) The duties to be performed by the Executive hereunder shall
be performed primarily at the office of the Company, subject to reasonable
travel requirements on behalf of the Company, or such other place as the Board
may reasonably designate. It is understood that the Company may re-locate to the
Boston area at the option of the Executive, provided, however, the Executive has
been named Chief Executive Officer by the Board of Directors. If the Company
does not relocate to the Boston area, the Company, at its expense, shall provide
Executive with a fully furnished and equipped office in the Boston Metropolitan
area, with secretarial assistance, from which he will perform his Services,
provided (i) the costs and expenses of such move are reasonable and (ii) the
Executive has been appointed CEO in accordance with Sections 1(a) and 1(b).
4. Directorship. The Company shall use its best efforts to cause the
Executive to be elected as a member of its Board of Directors throughout the
Term and shall include him in the management slate for election as a director at
every stockholders meeting during the Term at which his term as a director would
otherwise expire. The Executive agrees to accept election, and to serve during
the Term, as director of the Company, without any compensation therefor other
than as specified in this Agreement.
5. Compensation. As full compensation for the performance by the
Executive of his duties under this Agreement, the Company shall pay the
Executive as follows:
(a) Base Salary. The Company shall pay Executive a salary (the
"Base Salary") equal to Three Hundred Fifty Thousand Dollars ($350,000.00) per
year. Payment shall be made in accordance with the Company's normal payroll
practices. The Base Salary shall be reviewed for adjustment annually by the
2
Board of Directors. In no event shall the amount of the Base Salary be reduced
below $350,000 during the Term without the consent of the Executive.
(b) Guaranteed Bonus. The Company shall pay the Executive a bonus
(the "Guaranteed Bonus") of Fifty Thousand ($50,000.00) Dollars within 30 days
following the first anniversary of the Effective Date, provided that the
Executive has not voluntarily terminated his employment for other than Good
Reason; the Company has not terminated his employment for Cause, as hereinafter
defined; or the Company has not terminated this Agreement pursuant to Section
1(b), prior to such anniversary date.
(c) Performance Bonus. The Executive shall be entitled to receive
additional bonus income (the "PERFORMANCE BONUS") in an amount equal to up to
$320,000.00 or 200,000 options, in whole or in part at the option of the Board,
based on the attainment by the Executive of certain financial, clinical
development and business milestones (the "Performance Objectives") as
established annually by mutual agreement of the Board of Directors and the
Executive prior to the start of each anniversary of this Agreement, including
the first anniversary, provided, however, that at least half of each Performance
Bonus, if any, shall payable in the form of cash unless otherwise agreed to by
the Executive. The Performance Objectives for the first year of this Agreement
are set forth in Schedule A attached hereto. The Company agrees that if the
Performance Objectives are achieved, the Performance Bonus shall be paid to the
Executive; provided, however, that if at least 50% of the Performance Objectives
are achieved, the Company shall pay Executive a pro-rated Performance Bonus. The
Board of Directors shall establish the Performance Objectives for each upcoming
year prior to each anniversary of this Agreement. Any cash portion of the
Performance Bonus shall be payable either as a lump-sum payment or in
installments as determined by the Board of Directors of the Company in its sole
discretion. Any Stock Options will be issued at the then current market price in
accordance with the Company's Omnibus Employee Stock Option Plan.
(d) Withholding. The Company shall withhold all applicable
federal, state and local taxes and social security and such other amounts as may
be required by law from all amounts payable to the Executive under this Section
5.
(e) Stock Options. As additional compensation for the Services to
be rendered by the Executive pursuant to this Agreement, the Company shall grant
the Executive stock options ("STOCK OPTIONS") to purchase 900,000 shares of
Common Stock of the Company representing five percent (5%) of the outstanding
Common Stock of the Company at a price per share equal to $2.00. The Stock
Options shall be governed by the Company's 2004 Stock Option Plan and shall
vest, if at all, in three equal parts upon each anniversary of this Agreement.
In connection with such grant, the Executive shall enter into the Company's
standard stock option agreement which will incorporate the foregoing vesting
schedule and the Stock Option related provisions contained in Section 10 below.
(f) Expenses. The Company shall reimburse the Executive for all
normal, usual and necessary expenses incurred by the Executive in furtherance of
the business and affairs of the Company, including reasonable travel and
entertainment, upon timely receipt by the Company of appropriate vouchers or
3
other proof of the Executive's expenditures and otherwise in accordance with any
expense reimbursement policy as may from time to time be adopted by the Company.
(g) Other Benefits. The Executive shall be entitled to all rights
and benefits for which he shall be eligible under any benefit or other plans
(including, without limitation, dental, medical, medical reimbursement and
hospital plans, disability insurance, pension plans, employee stock purchase
plans, profit sharing plans, bonus plans and other so-called "fringe" benefits)
as the Company shall make available to its senior executives from time to time.
In addition, the Company shall reimburse Executive for the reasonable cost of a
computer upgrade (with related supplies) and a dedicated phone line for his home
office.
(h) Vacation. The Executive shall, during the Term, be entitled
to a vacation of four (4) weeks per annum, in addition to holidays observed by
the Company. The Executive shall not be entitled to carry any vacation forward
to the next year of employment and shall not receive any compensation for unused
vacation days.
6. Confidential Information and Inventions.
(a) The Executive recognizes and acknowledges that in the course
of his duties he is likely to receive confidential or proprietary information
owned by the Company, its affiliates or third parties with whom the Company or
any such affiliates has an obligation of confidentiality. Accordingly, during
and after the Term, the Executive agrees to keep confidential and not disclose
or make accessible to any other person or use for any other purpose other than
in connection with the fulfillment of his duties under this Agreement, any
Confidential and Proprietary Information (as defined below) owned by, or
received by or on behalf of, the Company or any of its affiliates. "Confidential
and Proprietary Information" shall include, but shall not be limited to,
confidential or proprietary scientific or technical information, data, formulas
and related concepts, business plans (both current and under development),
client lists, promotion and marketing programs, trade secrets, or any other
confidential or proprietary business information relating to development
programs, costs, revenues, marketing, investments, sales activities, promotions,
credit and financial data, manufacturing processes, financing methods, plans or
the business and affairs of the Company or of any affiliate or client of the
Company. The Executive expressly acknowledges the trade secret status of the
Confidential and Proprietary Information and that the Confidential and
Proprietary Information constitutes a protectable business interest of the
Company. The Executive agrees: (i) not to use any such Confidential and
Proprietary Information for himself or others; and (ii) not to take any Company
material or reproductions (including but not limited to writings,
correspondence, notes, drafts, records, invoices, technical and business
policies, computer programs or disks) thereof from the Company's offices at any
time during his employment by the Company, except as required in the execution
of the Executive's duties to the Company. The Executive agrees to return
immediately all Company material and reproductions (including but not limited,
to writings, correspondence, notes, drafts, records, invoices, technical and
business policies, computer programs or disks) thereof in his possession to the
Company upon request and in any event immediately upon termination of
employment.
(b) Except with prior written authorization by the Company, the
Executive agrees not to disclose or publish any of the Confidential and
Proprietary Information, or any confidential, scientific, technical or business
4
information of any other party to whom the Company or any of its affiliates owes
an obligation of confidence, at any time during or after his employment with the
Company.
(c) The Executive agrees that all inventions, discoveries,
improvements and patentable or copyrightable works initiated, conceived or made
by him, either alone or in conjunction with others, through the use of the
resources of the Company or directly related to the business of the Company (the
"Inventions") during the Term shall be the sole property of the Company to the
maximum extent permitted by applicable law and, to the extent permitted by law,
shall be "works made for hire" as that term is defined in the United States
Copyright Act (17 U.S.C.A., Section 101). The Company shall be the sole owner of
all patents, copyrights, trade secret rights, and other intellectual property or
other rights in the Inventions. The Executive hereby assigns to the Company all
right, title and interest he may have or acquire in all such Inventions;
provided, however, that the Board of Directors of the Company may in its sole
discretion agree to waive the Company's rights pursuant to this Section 6(c).
The Executive further agrees to assist the Company in every proper way (but at
the Company's expense) to obtain and from time to time enforce patents,
copyrights or other rights on such Inventions in any and all countries, and to
that end the Executive will execute all documents necessary:
(i) to apply for, obtain and vest in the name of the Company
alone (unless the Company otherwise directs) letters patent, copyrights or other
analogous protection in any country throughout the world and when so obtained or
vested to renew and restore the same; and
(ii) to defend any opposition proceedings in respect of such
applications and any opposition proceedings or petitions or applications for
revocation of such letters patent, copyright or other analogous protection.
(d) The Executive acknowledges that while performing the Services
under this Agreement the Executive may locate, identify and/or evaluate patented
or patentable inventions or other business opportunities (the "Third Party
Inventions") having commercial potential in the fields of pharmacy,
pharmaceutical, biotechnology, healthcare, technology and other fields which may
be of potential interest to the Company or one of its affiliates. The Executive
understands, acknowledges and agrees that all rights to, interests in or
opportunities regarding, all Third-Party Inventions identified by the Company,
any of its affiliates or either of the foregoing persons' officers, directors,
employees (including the Executive), agents or consultants during the Employment
Term shall be and remain the sole and exclusive property of the Company or such
affiliate and the Executive shall have no rights whatsoever to such Third-Party
Inventions and will not pursue for himself or for others any transaction
relating to the Third-Party Inventions which is not on behalf of the Company.
Notwithstanding the foregoing, if the Company, having been presented with the
opportunity by the Executive to pursue such Third Party Inventions chooses not
to do so, then Executive may pursue such Third Party Inventions himself without
accounting to the Company therefore, subject to Section 1(a) hereof.
(e) Executive agrees that he will promptly disclose to the
Company, or any persons designated by the Company, all improvements, Inventions
made or conceived or reduced to practice or learned by him, either alone or
jointly with others, during the Term.
5
(f) Executive has participated in the development of intellectual
property jointly created by the Tufts New England Medical Center and the
Neuropeptide Laboratory of the Polish Academy of Sciences, and will continue to
do so during the term of this Agreement subject to Section 1(a). Paragraph 6(c)
shall not be applicable to such work or such intellectual property provided,
however, the Executive does not use the resources of the Company to develop such
intellectual property.
(g) The provisions of this Section 6 shall survive any
termination of this Agreement.
7. Non-Competition, Non-Solicitation and Non-Disparagement.
(a) The Executive understands and recognizes that his services to
the Company are special and unique and that in the course of performing such
services the Executive will have access to and knowledge of Confidential and
Proprietary Information (as defined in Section 6) and the Executive agrees that,
during the Term and for a period of nine (9) months thereafter, he shall not in
any manner, directly or indirectly, on behalf of himself or any person, firm,
partnership, joint venture, corporation or other business entity ("PERSON"),
enter into or engage in any business which is engaged in any business directly
competitive with the business of the Company, either as an individual for his
own account, or as a partner, joint venturer, owner, executive, employee,
independent contractor, principal, agent, consultant, salesperson, officer,
director or shareholder of a Person in a business competitive with the Company
within the geographic area of the Company's business, which is deemed by the
parties hereto to be worldwide. The Executive acknowledges that, due to the
unique nature of the Company's business, the loss of any of its clients or
business flow or the improper use of its Confidential and Proprietary
Information could create significant instability and cause substantial damage to
the Company and its affiliates and therefore the Company has a strong legitimate
business interest in protecting the continuity of its business interests and the
restriction herein agreed to by the Executive narrowly and fairly serves such an
important and critical business interest of the Company. For purposes of this
Agreement, the Company shall be deemed to be actively engaged on the date hereof
in the development and commercialization of (a) drugs, including therapeutics
for the treatment of pain, (b) novel application drug delivery systems for the
treatment of pain, and (c) in the future in any other business in which it
actually devotes substantive resources to study, develop or pursue.
Notwithstanding the foregoing, nothing contained in this Section 7(a) shall be
deemed to prohibit the Executive from (i) acquiring or holding, solely for
investment, publicly traded securities of any corporation, some or all of the
activities of which are competitive with the business of the Company so long as
such securities do not, in the aggregate, constitute more than four percent (4%)
of any class or series of outstanding securities of such corporation, with the
exception of Accugesics [insert companies]. This Section 7(a) shall not be
enforceable by the Company against Executive if the Executive (i) is terminated
by the Company without Cause; (ii) terminates this Agreement for Good Reason; or
(iii) is terminated by the Company pursuant to Section 1(b).
(b) During the Term and for a period of 12 months thereafter, the
Executive shall not, directly or indirectly, without the prior written consent
of the Company:
6
(i) solicit or induce any employee of the Company or any of
its affiliates to leave the employ of the Company or any such affiliate; or hire
for any purpose any employee of the Company or any affiliate or any employee who
has left the employment of the Company or any affiliate within one year of the
termination of such employee's employment with the Company or any such affiliate
or at any time in violation of such employee's non-competition agreement with
the Company or any such affiliate; or
(ii) solicit or accept employment or be retained by any
Person who, at any time during the term of this Agreement, was an agent, client
or customer of the Company or any of its affiliates where his position will be
related to the business of the Company or any such affiliate; or
(iii) solicit or accept the business of any agent, client or
customer of the Company or any of its affiliates with respect to products or
services which compete directly with the products or services provided or
supplied by the Company or any of its affiliates.
(iv) Notwithstanding the foregoing, Sections 7(b)(ii) and
7(b)(iii) shall not be enforceable by the Company against Executive if the
Executive (i) is terminated by the Company without Cause; (ii) terminates this
Agreement for Good Reason; or (iii) is terminated by the Company pursuant to
Section 1(b).
(c) The Company and the Executive each agree that both during the
Term and at all times thereafter, neither party shall directly or indirectly
disparage, whether or not true, the name or reputation of the other party or any
of its affiliates, including but not limited to, any officer, director, employee
or shareholder of the Company or any of its affiliates.
(d) In the event that the Executive breaches any provisions of
Section 6 or this Section 7 or there is a threatened breach, then, in addition
to any other rights which the Company may have, the Company shall be entitled,
without the posting of a bond or other security, to seek injunctive relief to
enforce the restrictions contained in such Sections, in addition to any other
remedies at law or in equity to which the Company may be entitled.
(e) Each of the rights and remedies enumerated in Section 7(d)
shall be independent of the others and shall be in addition to and not in lieu
of any other rights and remedies available to the Company at law or in equity.
If any of the covenants contained in this Section 7, or any part of any of them,
is hereafter construed or adjudicated to be invalid or unenforceable, the same
shall not affect the remainder of the covenant or covenants or rights or
remedies which shall be given full effect without regard to the invalid
portions. If any of the covenants contained in this Section 7 is held to be
invalid or unenforceable because of the duration of such provision or the area
covered thereby, the parties agree that the court making such determination
shall have the power to reduce the duration and/or area of such provision and in
its reduced form such provision shall then be enforceable.
(f) In the event that an actual proceeding is brought in equity
to enforce the provisions of Section 6 or this Section 7, the Executive shall
7
not urge as a defense that there is an adequate remedy at law nor shall the
Company be prevented from seeking any other remedies which may be available.
(g) The provisions of this Section 7 shall survive any
termination of this Agreement.
8. Representations and Warranties by the Executive.
The Executive hereby represents and warrants to the Company as
follows:
(i) Neither the execution or delivery of this Agreement nor
the performance by the Executive of his duties and other obligations hereunder
violate or will violate any statute, law, determination or award, or conflict
with or constitute a default or breach of any covenant or obligation under
(whether immediately, upon the giving of notice or lapse of time or both) any
prior employment agreement, contract, or other instrument to which the Executive
is a party or by which he is bound.
(ii) The Executive has the full right, power and legal
capacity to enter and deliver this Agreement and to perform his duties and other
obligations hereunder. This Agreement constitutes the legal, valid and binding
obligation of the Executive enforceable against him in accordance with its
terms. No approvals or consents of any persons or entities are required for the
Executive to execute and deliver this Agreement or perform his duties and other
obligations hereunder.
9. Termination. The Executive's employment hereunder shall be
terminated upon the Executive's death and may be terminated as follows:
(a) The Executive's employment hereunder may be terminated by the
Board of Directors of the Company for Cause. Any of the following actions by the
Executive shall constitute "Cause":
(i) The willful failure, disregard or refusal by the
Executive to perform his duties hereunder;
(ii) Any willful, intentional grossly negligent act by the
Executive having the effect of injuring, in a material way (whether financial or
otherwise and as determined in good-faith by a majority of the Board of
Directors of the Company), the business or reputation of the Company or any of
its affiliates, including but not limited to, any officer, director, executive
or shareholder of the Company or any of its affiliates;
(iii) Willful misconduct by the Executive in respect of the
duties or obligations of the Executive under this Agreement, including
insubordination with respect to the lawful directions received by the Executive
from the Board of Directors of the Company;
(iv) The Executive's conviction of any felony or a
misdemeanor involving moral turpitude (including entry of a nolo contendere
plea);
8
(v) The determination by the Company, after a reasonable and
good-faith investigation by the Company following a written allegation by
another employee of the Company, that the Executive engaged in some form of
harassment prohibited by law (including, without limitation, age, sex or race
discrimination), unless the Executive's actions were specifically directed by
the Board of Directors of the Company;
(vi) Any misappropriation or embezzlement of the property of
the Company or its affiliates (whether or not a misdemeanor or felony);
(vii) Breach by the Executive of any of the provisions of
Sections 6, 7 or 8 of this Agreement; and
(viii) A material breach by the Executive of any provision
of this Agreement other than those contained in Sections 6, 7 or 8 which is not
cured by the Executive within thirty (30) days after written notice thereof is
given to the Executive by the Company.
(b) The Executive's employment hereunder may be terminated by the
Board of Directors of the Company due to the Executive's Disability. For
purposes of this Agreement, a termination for "DISABILITY" shall occur (i) when
the Board of Directors of the Company has provided a written termination notice
to the Executive supported by a written statement from a reputable independent
physician to the effect that the Executive shall have become so physically or
mentally incapacitated as to be unable to resume, within the ensuing twelve (12)
months, his employment hereunder by reason of physical or mental illness or
injury, or (ii) upon rendering of a written termination notice by the Board of
Directors of the Company after the Executive has been unable to substantially
perform his duties hereunder for 90 or more consecutive days, or more than 120
days in any consecutive twelve month period, by reason of any physical or mental
illness or injury. For purposes of this Section 9(b), the Executive agrees to
make himself available and to cooperate in any reasonable examination by a
reputable independent physician retained by the Company.
(c) The Executive's employment hereunder may be terminated by the
Board of Directors of the Company (or its successor) upon the occurrence of a
Change of Control. For purposes of this Agreement, "CHANGE OF CONTROL" means (i)
the acquisition, directly or indirectly, following the date hereof by any person
(as such term is defined in Section 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended), in one transaction or a series of related
transactions, of securities of the Company representing in excess of fifty
percent (50%) or more of the combined voting power of the Company's then
outstanding securities if such person or his or its affiliate(s) do not own in
excess of 50% of such voting power on the date of this Agreement, or (ii) the
future disposition by the Company (whether direct or indirect, by sale of assets
or stock, merger, consolidation or otherwise) of all or substantially all of its
business and/or assets in one transaction or series of related transactions
(other than a merger effected exclusively for the purpose of changing the
domicile of the Company).
(d) The Executive's employment hereunder may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "GOOD REASON" shall
mean (i) any material breach of this Agreement that is not cured by the Company
within 30 days after receipt of written notice by Executive to the Company of
such material breach; (ii) any diminution or adverse (to the Executive) change
9
in the duties, responsibilities, rights, privileges or the reporting
relationships, which were applicable to and enjoyed by the Executive at the
commencement of the Term, without the consent of the Executive, except as a
result of the termination of the Executive's employment by the Company, (iii)
any requirement from the Board of Directors of the Company that Executive must
relocate his office from the Metropolitan Boston area, or (iv) the failure to
nominate Executive to, or his removal from, the Board of Directors of the
Company.
(e) Notwithstanding anything in the Agreement, the Executive's
employment shall be terminated by the Company on or prior to (as applicable) the
Probation Termination Date if (i) the Board does not appoint the Executive
President and Chief Executive Officer of the Company by the Probation
Termination Date or (ii) the Board gives the Executive written notice at any
time prior to the Probation Termination Date that it will not appoint the
Executive President and Chief Executive Officer.
(f) The Executive's employment may be terminated by the Company
or by the Executive without Cause at any time.
10. Compensation upon Termination.
(a) If the Executive's employment is terminated as a result of
his death or Disability, the Company shall pay to the Executive or to the
Executive's estate, as applicable, his Base Salary and any accrued but unpaid
Bonus and expense reimbursement amounts through the date of his Death or
Disability occurs. All Stock Options that are scheduled to vest by the end of
the calendar year in which such termination occurs shall be accelerated and
shall be vested as of the date of his Disability or Death. All Stock Options
that have not vested (or been deemed pursuant to the immediately preceding
sentence to have vested) as of the date of his Disability or Death shall be
deemed to have expired as of such date.
(b) If the Executive's employment is terminated by the Board of
Directors of the Company for Cause, then the Company shall pay to the Executive
his Base Salary and expense reimbursement through the date of his termination
and the Executive shall have no further entitlement to any other compensation or
benefits from the Company. All Stock Options that have not vested as of the date
of termination shall be deemed to have expired as of such date. Any Stock
Options that have vested as of the date of the Executive's termination for Cause
shall remain exercisable for a period of 90 days following the date of such
termination.
(c) If the Executive's employment is terminated by the Company
(or its successor) upon the occurrence of a Change of Control or within six (6)
months thereafter, the Company (or its successor, as applicable) shall (i)
continue to pay to the Executive his Base Salary for a period of six (6) months
following such termination, and (ii) pay the Executive any accrued and unpaid
Bonus, and (iii) pay expense reimbursement amounts through the date of
termination. All Stock Options that have not vested as of the date of such
termination shall be accelerated and deemed to have vested as of such
termination date.
(d) If the Executive's employment is terminated by the Company
pursuant to Section 9(e), then (i) the Company shall pay to the Executive his
10
Base Salary for a period of six (6) months from the date of such termination and
expense reimbursement through the date of termination and (ii) all of the Stock
Options shall immediately expire and be deemed null and void. The Executive
shall have no further entitlement to any other compensation or benefits from the
Company.
(e) If the Executive's employment is terminated by the Company
without Cause, or by the Executive for Good Reason, then the Company shall (i)
continue to pay to the Executive his Base Salary for a period of twelve (12)
months from the date of such termination, and (ii) pay the Executive the Bonus
he would have earned had he been employed for six (6) months from the date which
such termination occurs, and (iii) pay the Executive any expense reimbursement
amounts owed through the date of termination. All Stock Options that are
scheduled to vest in the contract year of the date of such termination shall be
accelerated and deemed to have vested as of the termination date. All Stock
Options that have not vested (or deemed to have vested pursuant to the preceding
sentence) shall be deemed expired, null and void. Any Stock Options that have
vested as of the date of the Executive's termination shall remain exercisable
for a period as outlined in the company's Omnibus Stock Option program.
(f) This Agreement sets forth the only obligations of the Company
with respect to the termination of the Executive's employment with the Company,
and the Executive acknowledges that, upon the termination of his employment, he
shall not be entitled to any payments or benefits which are not explicitly
provided for herein.
(g) Upon termination of the Executive's employment hereunder for
any reason, the Executive shall be deemed to have resigned as director of the
Company, effective as of the date of such termination.
(h) The provisions of this Section 10 shall survive any
termination of this Agreement.
11. Miscellaneous.
(a) This Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York, without
giving effect to its principles of conflicts of laws.
(b) Any dispute arising out of, or relating to, this Agreement or
the breach thereof (other than Sections 6 or 7 hereof), or regarding the
interpretation thereof, shall be finally settled by arbitration conducted in New
York City in accordance with the rules of the American Arbitration Association
then in effect before a single arbitrator appointed in accordance with such
rules. Judgment upon any award rendered therein may be entered and enforcement
obtained thereon in any court having jurisdiction. The arbitrator shall have
authority to grant any form of appropriate relief, whether legal or equitable in
nature, including specific performance. For the purpose of any judicial
proceeding to enforce such award or incidental to such arbitration or to compel
arbitration and for purposes of Sections 6 and 7 hereof, the parties hereby
submit to the non-exclusive jurisdiction of the Supreme Court of the State of
New York, New York County, or the United States District Court for the Southern
District of New York, and agree that service of process in such arbitration or
11
court proceedings shall be satisfactorily made upon it if sent by registered
mail addressed to it at the address referred to in paragraph (g) below. Each
party shall be responsible for its/his own attorney's fees in such arbitration,
and all of the costs and expenses incurred with respect to the arbitration
proceeding (except for the filing fee, which shall be borne solely by the party
commencing the arbitration) shall be divided equally between the parties.
Judgment on the arbitration award may be entered by any court of competent
jurisdiction.
(c) This Agreement shall be binding upon and inure to the benefit
of the parties hereto, and their respective heirs, legal representatives,
successors and assigns.
(d) This Agreement, and the Executive's rights and obligations
hereunder, may not be assigned by the Executive. The Company may assign its
rights, together with its obligations, hereunder in connection with any sale,
transfer or other disposition of all or substantially all of its business or
assets or other Change of Control.
(e) This Agreement cannot be amended orally, or by any course of
conduct or dealing, but only by a written agreement signed by the parties
hereto.
(f) The failure of either party to insist upon the strict
performance of any of the terms, conditions and provisions of this Agreement
shall not be construed as a waiver or relinquishment of future compliance
therewith, and such terms, conditions and provisions shall remain in full force
and effect. No waiver of any term or condition of this Agreement on the part of
either party shall be effective for any purpose whatsoever unless such waiver is
in writing and signed by such party.
(g) All notices, requests, consents and other communications,
required or permitted to be given hereunder, shall be in writing and shall be
delivered personally or by an overnight courier service or sent by registered or
certified mail, postage prepaid, return receipt requested, to the parties at the
addresses set forth on the first page of this Agreement, and shall be deemed
given when so delivered personally or by overnight courier, or, if mailed, five
days after the date of deposit in the United States mails. Either party may
designate another address, for receipt of notices hereunder by giving notice to
the other party in accordance with this paragraph (g).
(h) This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, relating to the subject matter hereof. No representation, promise or
inducement has been made by either party that is not embodied in this Agreement,
and neither party shall be bound by or liable for any alleged representation,
promise or inducement not so set forth.
(i) As used in this Agreement, "affiliate" of a specified Person
shall mean and include any Person controlling, controlled by or under common
control with the specified Person.
(j) The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
12
(k) This Agreement may be executed in any number of counterparts, each of which
shall constitute an original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
INNOVATIVE DRUG DELIVERY SYSTEMS, INC.
By:
-----------------------------------
Name:
Title:
EXECUTIVE
By:
-------------------------------------
Name: Xxxxxx X. Xxxx
Title:
13
"SCHEDULE A"
PERFORMANCE OBJECTIVES FOR 2004 FOR XXXXXX X. XXXX, MD
The performance objectives below for cash or stock bonus are to be approved by
the compensation committee and ultimately subject to approval by the Board of
Directors and are intended to provide cash or stock option incentives pursuant
to the terms of this Employment Agreement.
---------------------------------------- -------------------------- -------------------------- --------------------------
OBJECTIVE STOCK OPTIONS AVAILABLE BONUS AMOUNT AVAILABLE BONUS AMOUNT RECOMMENDED
---------------------------------------- -------------------------- -------------------------- --------------------------
o Enroll last patient in 12,500 $25,000
Ketamine Phase III Pivotal Trial
o File Ketamine NDA 7,500 $15,000
o File Ketamine MAA 7,500 $15,000
---------------------------------------- -------------------------- -------------------------- --------------------------
o File Morphine MAA in Europe 7,500 $15,000
with the EMEA
o Enrollment of first patient 5,000 $10,000
in US. Phase 3 pivotal trial for
Morphine
---------------------------------------- -------------------------- -------------------------- --------------------------
o File Diclofenac AMA 7,500 $15,000
o Enrollment of last patient in 12,500 $25,000
pivotal Xxxxxxxxxx Xxxxx 0
clinical trial in the United
Kingdom
---------------------------------------- -------------------------- -------------------------- --------------------------
o Complete Initial Public 37,500 $75,000
Offering
o Achievement of major 25,000 $50,000
financing or strategic
partnership in excess of $10 MM
---------------------------------------- -------------------------- -------------------------- --------------------------
In-licensing or acquisition of major 12,500 $25,000
new product pipeline
---------------------------------------- -------------------------- -------------------------- --------------------------
Other board objectives and assessment 75,000 $50,000
of performance
---------------------------------------- -------------------------- -------------------------- --------------------------
14