Exhibit 10.23
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") shall be effective as of
December 1, 2001, by and between DISCOVERY LABORATORIES, INC., a Delaware
corporation (the "Company"), and ▇▇▇▇▇ ▇▇▇▇▇, PH.D. ("Executive").
WHEREAS, the Company and Executive desire that Executive be employed
by the Company and that the terms and conditions of such employment be defined.
NOW, THEREFORE, in consideration of the employment of Executive by
the Company, the Company and Executive agree as follows:
1. Terms of the Agreement. The Company shall employ Executive and
Executive shall accept employment for a period of three (3) years commencing on
December 1, 2001, (the "Commencement Date") and continuing until November 30,
2004, subject, however, to prior termination as hereinafter provided in Section
5 (such term is hereinafter referred to as the "Employment Period").
2. Executive's Duties and Obligations.
a. Duties. Executive shall serve as Senior Vice President,
Preclinical Development, reporting directly to the Chief Executive Officer of
the Company. Executive shall be responsible for all duties customarily
associated with his title.
b. Location of Employment. Executive's principal place of
business shall be at the Company's West Coast facility which is currently
contemplated to be proximate to the San Francisco, California area, provided,
that Executive acknowledges and agrees that the performance by Executive of his
duties may require travel from time to time including, without limitation,
travel to the Company's headquarters located in Doylestown, Pennsylvania, and
other appropriate domestic and overseas travel.
c. Relocation Reimbursement. Executive shall be entitled to
receive a payment of up to $15,000 to cover reimbursable costs which may include
such items as settlement charges, closing costs and moving of household goods.
Any and all reimbursements to be provided pursuant to this Section 2 (c) shall
be subject to documentation in accordance with reasonable policies of the
Company.
d. Proprietary Information and Inventions Agreement. Upon
execution of this Agreement, Executive shall execute the Company's standard form
of Intellectual Property and Confidential Information Agreement (the
"Confidentiality Agreement") a copy of which is attached to this Agreement as
Exhibit A. Executive shall comply at all times
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with the terms and conditions of the Confidentiality Agreement and all other
reasonable policies of the Company governing its confidential and proprietary
information.
3. Devotion of Time to Company's Business
a. Full-Time Efforts. During his employment with the Company,
Executive shall devote substantially all of his business time, attention and
efforts to the proper performance of his implicit and explicit duties and
obligations hereunder to the reasonable satisfaction of the Company.
b. No Other Employment. During his employment with the
Company, Executive shall not, except as otherwise provided herein, directly or
indirectly, render any services of a commercial or professional nature to any
other person or organization for compensation without the prior written consent
of either the Company's Chief Executive Officer, Executive Committee or Board of
Directors.
c. Non-Competition During Employment. During the Employment
Period and for the post-termination period set forth in Sections 3(c)(i) or
(ii), as applicable, Executive shall not, directly or indirectly, without the
prior written consent of the Company, either as an employee, employer,
consultant, agent, principal, partner, stockholder, corporate officer, director,
or in any other individual or representative capacity (X) compete with the
Company in the business of developing or commercializing pulmonary surfactants
and therapeutic compounds which form the basis of the Company's products or
products under active development, or (Y) directly or indirectly solicit or
induce any employee of the Company to leave the employ of the Company:
(i) six (6) months in the event Executive's employment with
the Company is terminated pursuant to the terms set forth in Section 5.b.;
or
(ii) twelve (12) months in all other cases.
d. In the event that Executive breaches any provisions of this
Section 3 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 injunctive relief to enforce the restrictions
contained herein. In the event that an actual proceeding is brought in equity to
enforce the provisions of this Section 3, Executive shall 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.
e. To the extent that the restrictions imposed by this Section
3 are interpreted by any court to be unreasonable in geographic and/or temporal
scope, such restrictions shall be deemed automatically reduced to the extent
necessary to coincide with the maximum geographic and/or temporal restrictions
deemed by such court not to be unreasonable.
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4. Compensation and Benefits.
a. Base Compensation. During the Employment Period, the
Company shall pay to Executive (i) base annual compensation ("Base Salary") of
One Hundred Ninety Thousand Dollars ($190,000), payable in accordance with the
Company's regular payroll practices and less all required withholdings and (ii)
additional compensation, if any, and benefits as hereinafter set forth in this
Section 4. Base Salary shall be reviewed at least annually (the "Annual Review")
for the purposes of determining increases, if any, based on Executive's
performance, the performance of the Company, inflation, the then prevailing
salary scales for comparable positions and other relevant factors, provided that
any such increases in Base Salary shall be solely within the discretion of the
Company. It is the Company's intention that the first of any such Annual Reviews
shall occur on or about January 2003.
b. Bonuses. Executive shall (i) receive a one-time cash
signing bonus of $25,000 conditioned upon Executive being successfully employed
with the Company as provided hereunder on January 15, 2002 (the "Sign-on
Bonus"); (ii) be eligible for such year-end bonus, which may be paid in either
cash or equity, or both, as is awarded solely at the discretion of the
Compensation Committee of the Board of Directors of the Company after
consultation with the Company's Chief Executive Officer. Any such equity bonus
shall contain such rights and features as are typically afforded to other
Company employees of similar level in connection with comparable equity bonuses
awarded by the Company; and (iii) be entitled to a one-time cash bonus equal to
2% of the aggregate gross proceeds received by the Company as a result of any
collaborative arrangement or capital raising effort (a "Bonus Event") undertaken
by the Company with a principal purpose for drug delivery activities,
conditioned upon, among other customary terms and conditions, the following: (X)
the consummation of such Bonus Event must be directly and substantially
attributable to Executive's efforts and must occur during the Employment Period,
(Y) the gross proceeds received by the Company directly in connection therewith
must be in excess of $1,000,000, and (Z) the determination of aggregate gross
proceeds for purposes of calculating the amount of bonus to be paid to Executive
hereunder shall only include cash payments actually received by the Company at
closing or otherwise during the Employment Period that represent proceeds to the
Company for which the Company is not otherwise under obligation to pay back to
the payor (or an affiliate); provided, however, that any bonus payable pursuant
to this Section 4(b)(iii) shall be payable with respect to one and only one, if
any, Bonus Event.
Executive hereby acknowledges and agrees that the Sign-on
Bonus shall be subject to all customary and required tax and other withholdings
and deductions; provided, however, that the Company shall not withhold any
amount with respect to federal income taxes attributable to such Sign-on Bonus
unless otherwise notified in writing in advance by Executive and, further,
Executive hereby assumes all responsibility and liability, if any, that may
directly or indirectly arise out of such non-withholding of federal income
taxes.
c. Benefits. During the Employment Period, Executive shall be
entitled to participate in all employee benefit plans, programs and arrangements
made available generally to the Company's senior executives or to its employees
on substantially the same basis
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that such benefits are provided to such executives or employees (including,
without limitation profit-sharing, savings and other retirement plans (e.g., a
401(k) plan) or programs, medical, dental, hospitalization, vision, short-term
and long-term disability and life insurance plans or programs, accidental death
and dismemberment protection, travel accident insurance, and any other employee
welfare benefit plans or programs that may be sponsored by the Company from time
to time, including any plans or programs that supplement the above-listed types
of plans or programs, whether funded or unfounded); provided, however, that
nothing in this Agreement shall be construed to require the Company to establish
or maintain any such plans, programs or arrangements. Anything contained herein
to the contrary notwithstanding, throughout the Employment Period, Executive
shall be entitled to receive life insurance on behalf of Executive's named
beneficiaries in the amount of Executive's then current annual salary for the
term of this Agreement at no cost to the Executive, except the Company shall
have no liability whatsoever for any taxes (whether based on income or
otherwise) imposed upon or incurred by Executive in connection with any such
insurance.
d. Vacations. During the Employment Period, Executive shall be
entitled to 15 days paid vacation per year or such other greater number of days
as provided by the Company's policies and procedures then in effect with respect
to the Company's senior executives or employees, to be earned ratably throughout
the year, 5 days of which may be carried over from year to year (provided, that
in no event shall the aggregate number of such vacation days carried over to any
succeeding year exceed 10 days).
e. Reimbursement of Business Expenses. During the Employment
Period, Executive is authorized to incur reasonable expenses in carrying out his
duties and responsibilities under this Agreement and the Company shall reimburse
him for all such expenses, in accordance with reasonable policies of the
Company.
f. Stock Options. (i) The Company, subject to the approval of
the Board of Directors and the Company's shareholders, as appropriate, shall
grant to Executive, effective as of the Commencement Date, incentive stock
options to purchase 50,000 shares of Common Stock, $0.001 par value per share of
the Company, pursuant to the terms of the Notice of Grant attached hereto as
Exhibit B;
(ii) The Company subject to the approval of the Board of
Directors and the Company's shareholders, as appropriate, shall grant to
Executive incentive stock options to purchase 25,000 additional shares;
provided, however, that such grant shall first become effective as of the date
of completion of all requisite action by the Company's shareholder's and
authorized officers, as appropriate, with respect to the due and valid
authorization of such options: and
(iii) The options granted pursuant to this Section 4(f) shall
be in accordance with the terms and conditions of the Company's Amended and
Restated 1998 Stock Incentive Plan, as amended (the "Plan") including, without
limitation, the terms and conditions contained in Article II, Section III
thereof with respect to the acceleration of exercisability of such options in
certain change of control circumstances.
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5. Termination of Employment.
a. Termination for Good Cause. The Company may terminate
Executive's employment at any time for Good Cause, as such term is hereinafter
defined. For the purposes of this Agreement, "Good Cause" means gross
misconduct, gross neglect of duties, conviction of a felony involving moral
turpitude, material breach by Executive of this Agreement or the Confidentiality
Agreement or any act or omission involving fraud or embezzlement against the
Company, or appropriation of any property or proprietary information of the
Company by Executive resulting, in either case, in material economic harm to the
Company, which is not cured by Executive within fifteen (15) days after receipt
of written notice from the Company. If terminated for Good Cause in accordance
with the provisions of this Section 5 (a), Executive shall be entitled to any
unpaid amounts set forth in Section 5 (b) (1). The Executive shall not be
entitled to receive any other compensation or benefits from the Company
whatsoever (except as and to the extent the continuation of certain benefits is
required by law).
b. Termination without Good Cause. If Executive's employment
is terminated by the Company without Good Cause the following provisions shall
apply:
(1) Executive shall be entitled to any unpaid
compensation accrued through the last day of Executive's employment, a lump sum
payment in respect of all accrued but unused vacation days (provided, that in no
event shall the aggregate number of such accrued vacation days exceed 10 days)
at his Base Salary in effect on the date such vacation was earned, and payment
of any other amounts earned, accrued or owing to Executive but not yet paid; and
(2) Executive shall be entitled to receive severance
payments equal to his Base Salary in effect on the date of his termination,
payable on normal Company payroll dates, for a six (6) month period, subject to
setoff, for other employment or consulting income received by Executive; and
c. Death or Disability. This Agreement shall terminate if
Executive dies or is mentally or physically Disabled as herein defined. For the
purposes of this Agreement, "Disabled" shall mean a mental or physical condition
that renders Executive substantially incapable of performing his duties and
obligations under this Agreement, after taking into account provisions for
reasonable accommodation, as determined by a medical doctor (such doctor to be
mutually determined in good faith by the parties) for three (3) or more
consecutive months or for a total of six (6) months during any twelve (12)
consecutive months; provided, that during such period the Company shall give
Executive at least thirty (30) days' written notice that it considers the time
period for disability to be running. If this Agreement is terminated under this
Section 5.c., Executive, his heirs, legal representatives or his estate shall be
entitled to any unpaid amounts set forth in Section 5.b.1. through the last day
of Executive's employment but shall not be entitled to any severance benefits.
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d. Termination by Executive. If Executive, upon 30 days prior
notice to the Company, voluntarily resigns, Executive shall be entitled to any
unpaid amounts set forth in Section 5 (b) (1). through the last day of
Executive's employment but shall not be entitled to any severance benefits.
6. Severance in Connection with Change of Control.
a. In the event that (i) Executive's employment is terminated
by Company without Good Cause or (ii) Executive resigns for Good Reason (as such
term is hereinafter defined); within twelve months of a Change of Control (as
such term is hereinafter defined), Executive shall be entitled to receive, in
addition to the payments set forth in Section 5 (b) (1). and in lieu of the
payments set forth in Section 5 (b) (2)., severance payments equal to his Base
Salary in effect on the date of his termination, payable on normal Company
payroll dates, for a twelve (12) month period, subject to setoff, for other
full-time employment or full-time consulting income received by Executive.
b. Good Reason. For purposes of this Agreement, "Good Reason"
shall mean Executive experiences (X) an involuntary reduction of $11,000 or
greater in his then current Base Salary or (Y) a failure of the Company to
provide the Executive with a position, authority or duties at least equivalent
to the position held by Executive on the day immediately preceding the date of
the Change of Control if such circumstance is not remedied within five business
days after written notice from Executive to the Company.
c. Change of Control. For purposes of this Agreement, a
"Change of Control" shall mean the occurrence of any of the following events:
(i) Any "person", as such term is currently used in
Section 13(d) or 14(d) of the Securities Exchange Act of 1934 (the "1934 Act"),
other than any employee benefit plan of the Company, becomes a "beneficial
owner" (as such term is currently used in Rule 13d-3 promulgated under the Act)
of 50% or more of the number of shares of the Company's voting stock;
(ii) The Board adopts any plan of liquidation providing
for the distribution of all or substantially all of the Company's assets;
(iii) All or substantially all of the assets or
business of the Company is disposed of pursuant to a sale, merger, consolidation
or other transaction, unless the shareholders of the Company immediately prior
to such transaction beneficially own (within the meaning of Rule 13d-3
promulgated under the 1934 Act), as a result of their ownership of stock in the
Company, at least 50% of the number of shares of voting stock or other voting
equity of the entity or entities that succeed to the business of the Company; or
(iv) The Company combines with another company and is
the surviving corporation but, immediately after the combination, the
shareholders of the Company immediately before such transaction beneficially own
(within the meaning of Rule 13d-3
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promulgated under the 1934 Act), as a result of their ownership of stock in the
Company immediately prior to such combination, less than 50% of the number of
shares of voting stock of the combined company.
7. Miscellaneous.
a. Governing Law. This Agreement shall be interpreted,
construed, governed and enforced according to the laws of the Commonwealth of
Pennsylvania as applied to agreements among Pennsylvania residents entered into
and to be performed entirely within Pennsylvania without regards to the
application of choice of law rules.
b. Amendments. No amendment or modification of the terms or
conditions of this Agreement shall be valid unless in writing and signed by the
parties hereto.
c. Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
construed, if possible, so as to be enforceable under applicable law, else, such
provision shall be excluded from this Agreement and the balance of the Agreement
shall be interpreted as if such provision were so excluded and shall be
enforceable in accordance with its terms.
d. Successors and Assigns. The rights and obligations of the
Company under this Agreement shall inure to the benefit of and shall be binding
upon the successors and assigns of the Company. Executive shall not be entitled
to assign any of his rights or obligations under this Agreement.
e. Notices. All notices required or permitted under this
Agreement shall be in writing and shall be deemed effective upon personal
delivery, on the date of scheduled delivery by a nationally recognized overnight
service or two (2) days after deposit in the United States Post Office, by
registered or certified mail, postage prepaid, addressed to the other party at
the address shown below such party's signature, or at such other address or
addresses as either party shall designate to the other in accordance with this
Section 7 (e).
f. Entire Agreement. This Agreement, including the exhibits
attached hereto, constitutes the entire agreement between the parties with
respect to the employment of Executive.
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IN WITNESS THEREOF, the parties have executed this Agreement as of
the date set forth above.
DISCOVERY LABORATORIES, INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Ph.D.
Its: President and CEO
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
EXECUTIVE, ▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇
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Address:
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▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇