Exhibit 10.2
Agreement
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THIS is an AGREEMENT, which is entered into as of this 3rd day of
April, 2002 (the "Effective Date"), and is made by and between Adolor
Corporation, a Delaware corporation (the "Company"), and ▇▇▇▇ ▇. ▇▇▇▇▇▇ (the
"Executive") (collectively, the "Parties").
WHEREAS, the Executive is an at-will employee who is Chief Executive
Officer of the Company; and
WHEREAS, the Board of Directors of the Company (the "Board") desires
to provide for (i) certain payments by the Company to the Executive in
recognition of and following his employment ceasing to be Chief Executive
Officer of the Company and (ii) a general release of the Company by the
Executive.
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants herein contained, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the Parties agree as
follows:
Section 1 Certain Definitions. As used in this Agreement, the terms set forth
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below shall have the following meanings:
(a) For purposes of this Agreement, the Company shall have "Cause" to
terminate the Executive's employment hereunder if (x) the Executive is convicted
of a felony or (y) the Executive engages in conduct that constitutes willful
gross neglect or willful gross misconduct in carrying out his duties under this
Agreement, resulting, in either case, in material harm to the Company,
monetarily or otherwise.
(b) "Disability" means any physical or mental ailment or incapacity as
determined by a licensed physician agreed to by the Company and the Executive
(or his legal representatives) (or, in the event that the Executive and the
Company cannot so agree, by a licensed physician agreed upon by two physicians,
one selected by the Executive (or his legal representatives) and the other
selected by the Company), which prevents the Executive from performing the
duties incident to the Executive's employment hereunder which ailment or
incapacity has continued for a period of either (i) ninety (90) consecutive days
or (ii) one hundred eighty (180) total days in any 12-month period, and which,
in each case, is expected to render the Executive incapable of performing the
Executive's duties hereunder, if any, for not less than one (1) year.
(c) "Transition Event" means an event whereby the Executive ceases to
be the Chief Executive Officer of the Company other than termination by
resignation or for Cause or death or Disability of the Executive.
Section 2 Effect of a Termination of Employment or Change in Employment Status;
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Life Insurance.
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(a) Certain Terminations. In the event that the Executive's employment
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termination is (i) for Cause or death at any time, (ii) by resignation, or
(iii) prior to a Transition Event, not a result of the Disability of the
Executive, the
Company shall have no further obligations to the Executive under this Agreement
other than, subject to the terms thereof, to pay or provide any benefits which
may be due to the Executive under the provisions of any benefit, bonus, equity
compensation or other incentive plan.
(b) Termination for Disability. In the event that the Executive's
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employment by the Company terminates because of the Executive's Disability,
the Company shall pay to the Executive or to the Executive's estate, if
applicable, (i) a lump sum termination payment in gross amount equal to
twenty-four (24) months of the Executive's base salary in effect immediately
prior to such Disability and (ii) within twenty (20) business days of such
Disability, subject to the terms thereof, any benefits which may be due to the
Executive under the provisions of any benefit, bonus, equity compensation or
other incentive plan of the Company.
(c) Effect of a Transition Event.
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(i) In the event that a Transition Event occurs, if (A) the
Executive executes a General Release substantially in the form attached hereto
as Exhibit A and (B) the Executive and the Board reach an agreement providing
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that the Executive shall serve as an employee of the Company for such period of
time and with such duties as are agreed upon and ratified by the Board, the
Company shall pay to the Executive following such Transition Event (w) in
twenty-four (24) monthly installments (or on the same schedule as the Company's
payroll, at the Company's option), a payment in gross amount equal to
twenty-four (24) months of the Executive's base salary immediately prior to such
Transition Event (which base salary in no event shall be less than three hundred
seventeen thousand two hundred dollars ($317,200.00) on an annual basis), less
all applicable withholdings and deductions; and (x) within twenty (20) business
days of such Transition Event, subject to the terms thereof, any benefits which
may be due to the Executive under the provisions of any benefit, bonus, equity
compensation or other incentive plan of the Company. In such event, any and all
options to purchase securities of the Company granted to the Executive and not
vested at the end of such twenty four (24) month period shall immediately vest.
(ii) In the event the condition set forth in subsection
2(c)(i)(A) hereof is fulfilled and the condition set forth in subsection
2(c)(i)(B) hereof is not fulfilled, the Company shall continue to employ and pay
to the Executive following such Transition Event (w) in eighteen (18) monthly
installments (or on the same schedule as the Company's payroll, at the Company's
option), a payment in gross amount equal to eighteen (18) months of the
Executive's base salary immediately prior to such Transition Event (which base
salary in no event shall be less than three hundred seventeen thousand two
hundred dollars ($317,200.00) on an annual basis, less all applicable
withholdings and deductions; and (x) within twenty (20) business days of such
Transition Event, subject to the terms thereof, any benefits which may be due to
the Executive under the provisions of any benefit, bonus, equity compensation or
other incentive plan of the Company. In such event, any and all options to
purchase securities of the Company granted to the Executive and not vested at
the end of such eighteen (18) month period shall immediately vest.
(iii) During the period that the Executive is
receiving payments under Sections 2(c)(i) or (ii), the Executive will continue
to receive medical and dental coverage on the same terms and conditions as are
applicable to active employees.
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(iv) In the event the conditions set forth in subsection
2(c)(i)(A) hereof is not fulfilled, the Company shall only be obligated to pay
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to the Executive, within twenty (20) business days of such Transition Event,
subject to the terms thereof, any benefits which may be due to the Executive
under the provisions of any benefit, bonus, equity compensation or other
incentive plan of the Company.
(d) During the period that the Executive is employed by the Company
and prior to a Transition Event, the Company shall maintain one or more life
insurance policies insuring the life of the Executive in the aggregate principal
amount of six hundred fifty thousand dollars ($650,000.00), with the beneficiary
or beneficiaries of such policy or policies being those persons who are
designated from time to time by the Executive. If required in connection with
such insurance policies, the Executive shall make himself available for one or
more physical examinations.
Section 3 Protection of Confidential Information; Non-competition;
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Non-solicitation.
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(a) Covenant. The Executive acknowledges that his employment by the
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Company brings him into close contact with many confidential affairs of the
Company, including, without limitation, information about costs, profits,
markets, sales, products, intellectual property, key personnel, pricing
policies, operational methods, technical processes, strategic plans and other
business affairs and methods and other information not readily available to the
public (collectively, "Confidential Information"). The Executive further
acknowledges that the services performed by him pursuant to his employment with
the Company are of a special, unique, unusual, extraordinary and intellectual
character. In recognition of the foregoing, the Executive covenants and agrees:
(i) The Executive shall use all reasonable efforts to protect the
Company's Confidential Information and shall keep secret all such Confidential
Information, including without limitation, the terms and provisions of this
Agreement, and shall not intentionally disclose such Confidential Information to
anyone outside of the Company except as required in the performance of his
duties, either during or after his employment by the Company, except with the
Company's written consent, provided that (A) the Executive shall have no such
obligation to the extent such Confidential Information is or becomes publicly
known other than as a result of the Executive's breach of his obligations
hereunder; (B) the Executive may, after giving prompt written notice to the
Company to the extent practicable under the circumstances, disclose such
Confidential Information to the extent required by applicable laws or
governmental regulations or judicial or regulatory proceedings; and (C) the
Executive may disclose the terms and provisions of this Agreement to his spouse
and legal, tax and financial advisors;
(ii) The Executive shall deliver promptly to the Company on
termination of his employment by the Company, or at any other time the Company
may so request, at the Company's expense, all documents containing Confidential
Information and all other property of the Company, which the Executive obtained
while employed by, or otherwise serving or acting on behalf of, the Company and
which he may then possess or have under his control other than publicly
available documents or documents related to the terms and conditions of the
Executive's employment; and
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(iii) For a period of one year following the date that the
Executive's employment by the Company terminates for any reason, the Executive
shall not, for any reason, solicit (or assist or encourage the solicitation of)
any employee of the Company to work for the Executive or for any entity of which
the Executive is an affiliate. For the purposes of this Section 3(a)(iii), the
term "solicit any employee" shall mean the Executive contacting or providing
information to others who may be reasonably expected to contact any employee of
the Company regarding such employee's interest in seeking employment with the
Executive or any affiliated entity, but shall not include general print
advertising for personnel or responding to an unsolicited request for a personal
recommendation for or evaluation of an employee of the Company.
(iv) For a period of one year following the date that the
Executive's employment by the Company terminates for any reason, the Executive
shall not employ, and shall not cause any entity of which the Executive controls
to employ, any person who was a full-time employee of the Company at the date of
such termination or within six (6) months prior thereto without the prior
consent of a majority of the Board.
(b) Non-Compete. The Executive expressly covenants and agrees that he
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will not directly or indirectly, without the prior written consent of a majority
of the Board, at any time while employed by the Company and for a period of one
year following the date that the Executive's employment by the Company
terminates for any reason, own, manage, operate, join, control, receive
compensation or benefits from, or participate in the ownership, management,
operation, or control of, or be employed or be otherwise connected in any manner
with, any business which directly or indirectly competes (as defined in the
following sentence) with the business of the Company or any of its subsidiaries
or affiliates, as conducted or planned by the Company or any subsidiary or
affiliate during the Executive's employment; provided, however, that the
foregoing shall not prohibit the Executive from acquiring, solely as an
investment and through market purchases, securities of any entity which are
registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934
and which are publicly traded, so long as the Executive is not part of any
control group of such entity and such securities, if converted, do not
constitute more than five percent (5%) of the outstanding voting power of that
entity. For purposes of this Section 3(b), "competes" means the development,
production, marketing or sale of any opioid analgesic or opioid antagonist or
other product or service discovered, developed, produced, marketed or sold by
the Company (or to Executive's knowledge was under development by the Company or
any of its subsidiaries or affiliates) during the Executive's employment for any
person other than the Company or its subsidiaries or affiliates or any person
other than the Company or its subsidiaries or affiliates.
(c) Assignment of Inventions.
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(i) Subject to Section 3(c)(ii) of this Agreement, the Executive
will use his best efforts to make prompt and full disclosure to the Company, and
will hold in trust for the sole benefit of the Company, and assign exclusively
to the Company all of the Executive's right, title, and interest in and to any
and all inventions, discoveries, designs, developments, improvements,
copyrightable material and trade secrets that the Executive solely or jointly
may conceive, develop, author, reduce to practice or otherwise produce during
his employment with the Company (collectively herein "Inventions"). The
Executive waives and quitclaims to the
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Company any and all claims of any nature whatsoever that the Executive had, now
has or hereafter may have for infringement of any patent application, patent, or
other intellectual property right relating to any Inventions.
(ii) Notwithstanding Section 3(c)(i) of this Agreement, the
Executive's obligation to assign shall not apply to any Invention about which he
can prove all of the following:
(A) the Invention was developed by the Executive without
materially interfering with the Executive's duties;
(B) no Confidential Information of the Company was used in
the development of the Invention;
(C) the Invention does not relate (y) directly to the
business of the Company or (z) to the actual or demonstrably anticipated
business, research or development of the Company; and
(D) the Invention does not result from any work performed by
the Executive for the Company.
(iii) Specific Remedy. The Parties agree that the restrictions
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outlined in Sections 3(a), (b) and (c) are reasonable and necessary protections
of the immediate interests of the Company and that the Company would not have
entered into this Agreement without receiving additional consideration offered
by the Executive in binding himself to these restrictions. In addition to such
other rights and remedies as the Company may have at equity or in law with
respect to any breach of this Agreement, if the Executive commits a material
breach of any of the provisions of Sections 3(a), 3(b) or 3(c), the Company
shall have the right and remedy to have such provisions specifically enforced by
any court having equity jurisdiction, it being acknowledged and agreed that any
such breach or threatened breach will cause irreparable injury to the Company
and that money damages will not provide an adequate remedy to the Company. In
the event that, notwithstanding the foregoing, a restriction or any portion
thereof, contained in Section 3(a), 3(b) or 3(c) is deemed to be unreasonable by
a court of competent jurisdiction, the Executive and the Company agree that such
restriction, or portion thereof, shall be modified in order to make it
reasonable and shall be enforceable accordingly.
Section 4 General Provisions.
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(a) Governing Law, Etc. This Agreement shall be governed by and
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construed and enforced in accordance with the laws of the State of Delaware,
without regard to conflicts of law principles.
(b) Captions. The section headings contained herein are for reference
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purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
(c) Notices. All notices hereunder shall be given in writing by
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personal delivery or by registered or certified mail addressed to the Company at
its principal place of
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business and to the Executive at his residence address as then listed in the
Company's records.
(d) Entire Agreement. This Agreement, together with the 1994 Equity
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Compensation Plan of the Company, the 10b5-1 trading plans of the Executive and
approved by the Company, and the Amended and Restated 1994 Equity Compensation
Plan of the Company, stock option grants and other plans and benefits referenced
herein, set 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, between the Parties.
(e) No Other Representation. No representation, promise or inducement
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has been made by either party that is not embodied in this Agreement, or in the
other documents referenced in Section 4(d) and neither party shall be bound by
or be liable for any alleged representation, promise or inducement not so set
forth.
(f) Assignability. Absent the prior written consent of the Company,
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and subject to the laws of descent and distribution, the Executive shall have no
right to exchange, convert, encumber or dispose of the rights of the Executive
to receive benefits and payments under this Agreement, which payments, benefits
and rights thereto are non-assignable and non-transferable. This Agreement shall
inure to the benefit of and shall be binding upon the Company and the Executive
and their respective heirs, executors, personal representatives and estate, and,
subject to the preceding sentence, their successors and assigns. Nothing in this
Section 4, however, shall prevent the Executive from making assignments or
transfers with respect to payments due him for purposes of personal estate
planning, subject to the approval of the Company, such approval not to be
unreasonably withheld. Subject to any assignment or transfer described in the
preceding sentence, any amounts payable to the Executive under this Agreement
that are not paid to him during his lifetime will be paid to his estate
following his death.
(g) Amendments; Waivers. This Agreement may be amended, modified,
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superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived only by written instrument executed by both of the Parties hereto, or
in the case of a waiver, by the party waiving compliance. The failure of either
party at any time or times to require performance of any provision hereof shall
in no manner affect such party's right at a later time to enforce the same. No
waiver by either party of the breach of any term or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or construed as, a further or continuing waiver of any such
breach, or a waiver of the breach of any other terms or covenant contained in
this Agreement.
(h) Beneficiaries. Whenever this Agreement provides for any payment to
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the Executive's estate, such payment may be made instead to such beneficiary or
beneficiaries as the Executive may designate in writing filed with the Company.
The Executive shall have the right to revoke any such designation and to
redesignate a beneficiary or beneficiaries by written notice to the Company (and
to any applicable insurance company) to such effect.
(i) No Conflict.
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(A) The Executive represents and warrants to the Company that
this
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Agreement is legal, valid and binding upon the Executive and the execution
of this Agreement and the performance of the Executive's obligations hereunder
does not and will not constitute a breach of, or conflict with the terms or
provisions of, any agreement or understanding to which the Executive is a party
(including, without limitation, any other employment or non-compete agreement).
(B) The Company represents and warrants to the Executive that
this Agreement is legal, valid and binding upon the Company, the Company has the
requisite corporate authority to execute and deliver this Agreement and the
Company is not a party to any agreement or understanding which would prevent the
fulfillment by the Company of the terms of this Agreement.
(j) Arbitration.
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(A) Except with respect to any dispute or controversy arising out
of Section 3, the Executive and the Company agree that any dispute or
controversy arising out of, relating to, or in connection with this Agreement,
or the interpretation, validity, construction, performance, breach, or
termination thereof, shall be settled by final and binding arbitration to be
held in Philadelphia, Pennsylvania in accordance with the National Rules for the
Resolution of Employment Disputes then in effect by the American Arbitration
Association (the "Rules"). The arbitrator may grant injunctions or other relief
in such dispute or controversy. The decision of the arbitrator shall be in
writing, final, conclusive and binding on the parties to the arbitration.
Judgment may be entered on the arbitrator's decision in any court having
jurisdiction.
(B) The arbitrator(s) shall apply Delaware law to the merits of
any dispute or claim, without reference to rules of conflicts of law. The
arbitration proceedings shall be governed by federal arbitration law and by the
Rules, without reference to state arbitration law. The Parties hereby consent to
the personal jurisdiction of the state and federal courts located in the Eastern
District of Pennsylvania for any action or proceeding arising from or relating
to this Agreement or relating to any arbitration in which the Parties are
participants.
(C) THE EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH
DISCUSSES ARBITRATION. THE EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT,
THE EXECUTIVE AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN
CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION,
PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, AND THAT THIS
ARBITRATION CLAUSE CONSTITUTES A WAIVER OF THE EXECUTIVE'S RIGHT TO A JURY TRIAL
AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE
EMPLOYER/EXECUTIVE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, DISCRIMINATION
CLAIMS.
(k) Expenses.
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(A) In the event that the Executive is the prevailing party in
any contest or proceeding under Section 3(c)(iii) or 4(j), the Company agrees to
pay promptly, to the full extent permitted by law, all legal fees, costs and
expenses, including costs of arbitration and all
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arbitrator's fees that the Executive incurs as a result of any contest by the
Company, the Executive or others of the validity or enforceability of, or
liability under, any provisions of this agreement or any guarantee of
performance of this Agreement (including as a result of any contest by the
Executive about the amount of any payment pursuant to this Agreement).
(B) If the Company is determined by final and binding arbitration
award or by any court of competent jurisdiction in a judgment that is final and
nonappealable to have failed to pay the Executive or his estate any amounts that
were properly due and owing to him or his estate under this Agreement then there
shall be added to such amounts an amount equal to interest at the rate of ten
percent (10%) per annum compounded annually on any amounts so owing from the
date such amounts were due less the amount, if any, of any pre- or post-judgment
interest included in such judgment.
(l) Fees. All fees and expenses incurred by each of the Parties and
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the Company in connection with the negotiation, execution and delivery of this
Agreement, including, without limitation, all reasonable accounting, legal and
financial advisory fees and expenses, shall be the obligation of each such
Party.
(m) Assumption by Successors. The Company shall require any successor
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(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company to
assume expressly, adopt and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform
this Agreement if no such succession had taken place.
(n) Withholding. All payments required to be paid by the Company to
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the Executive under this Agreement will be paid in accordance with
the payroll practices of the Company and its affiliates with regard to employees
performing services principally in the United States or the terms of its
benefits and incentive plans, and will be subject to withholding taxes, social
security and other payroll deductions in accordance with the Company's policies
applicable to employees at the Executive's level and the terms of any applicable
benefit and incentive plan.
(o) Severability. The invalidity or unenforceability of any provision
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of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
(p) Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed to be an original but
all of which together shall constitute one and the same instrument.
(q) Publication Rights. Subject to the prior review by the Company,
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the Executive may use his personal notes and recollections collected during
his employment at the Company to write a book so long as any disclosures
therein are consistent with the terms of this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first set forth above. By signing below, the Executive acknowledges
that he has carefully
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read and completely understood the terms of this Agreement and is signing it
knowingly, voluntarily and without duress, coercion or undue influence.
ADOLOR CORPORATION
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Director
/s/ ▇▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Director
THE EXECUTIVE
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
9
Exhibit A
General Release
NOTICE: This is a very important document, and the Executive should thoroughly
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review and understand the terms and effect of this document before signing it.
By signing this General Release the Executive will be releasing the Company from
all liability to him. Therefore, the Executive should consult with an attorney
before signing the General Release. The Executive has twenty-one (21) days from
the date of the distribution of these materials to consider this document. If
the Executive has not returned a signed copy of the General Release by that
time, the Company will assume that the Executive has elected not to sign the
General Release. If the Executive chooses to sign the General Release, the
Executive will have an additional seven (7) days following the date of his
signature to revoke the agreement, and the agreement shall not become effective
or enforceable until the revocation period has expired. Any revocation must be
in writing and must be received by the Company within the seven (7) day
revocation period.
1. In consideration of the benefits to which the Executive would not
otherwise be entitled offered to the Executive by the Company under the
Agreement dated as of April 3, 2002 (the "Agreement"), the Executive, on behalf
of the Executive, and his heirs, executors and assigns, hereby releases and
discharges Adolor Corporation, and its affiliates, parents, subsidiaries,
successors, and predecessors, and all of their employees, agents, officers and
directors (for purposes of this General Release, hereinafter collectively
referred to as "the Company") from any and all claims and/or causes of action,
known or unknown, which the Executive may have or could claim to have against
the Company up to and including the date of the Executive signing this General
Release. This General Release includes, but is not limited to, all claims
arising from or during the Executive's employment or as a result of the
termination of the Executive's employment, and all claims arising under federal,
state or local laws prohibiting employment discrimination based upon age, race,
sex, religion, handicap, national origin or any other protected characteristic,
including, but not limited to, any and all claims arising under the Age
Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964,
and/or claims growing out of any legal restrictions, expressed or implied, on
the Company's right to control or terminate the employment of its employees.
This General Release does not include or affect the Executive's ability to apply
for unemployment compensation benefits or the Executive's vested rights, if any,
in the Amended and Restated 1994 Equity Compensation Plan of the Company.
Nothing in this Release is intended to waive any rights that the Executive may
have under any insurance policies or bylaws, policies or practices of the
Company.
2. The Executive represents and warrants that he has not filed any
complaints against the Company with any state or federal court. The Executive
further agrees and covenants not to institute or join any lawsuit (either
individually, with others, or as part of a class), in any forum, pleading,
raising or asserting any claim(s) barred or released by the Agreement. If the
Executive does so and such claim(s) is found to be barred or released, in whole
or in part, by the
Agreement, the Executive shall reimburse the Company for all costs and
reasonable attorneys' fees (and/or applicable portion thereof) incurred by the
Company in defending against any such released claim(s). The only exception to
the foregoing provision regarding the reimbursement of costs and attorneys' fees
is to the extent the provision relates to claims under the Age Discrimination in
Employment Act in which the Executive is contesting the validity of the
Agreement.
3. The Executive will refrain from making any statements which are
disparaging of the Company, its subsidiaries, directors, officers, agents,
employees and successors; or from doing any act or making any statement which
will be damaging to the business or reputation of the Company.
4. The Company will refrain from making any statements which are
disparaging of the Executive, or from doing any act or making any statement
which will be damaging to the business or reputation of the Executive.
By signing below, the Executive agrees to be legally bound by the terms of
this General Release and acknowledges that he has carefully read and completely
understands the terms of this General Release and is signing it knowingly,
voluntarily and without duress, coercion, or undue influence.
Acknowledged and agreed to
-------------------------------- ADOLOR CORPORATION
▇▇▇▇ ▇. ▇▇▇▇▇▇
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Date Name:
Title
Witnessed by:
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Name:
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Date
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