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Exhibit 10.28
EMPLOYMENT AGREEMENT dated as of July 10, 2000, between Phil Skolnick (the
"Executive") and DOV Pharmaceutical, Inc., a New Jersey corporation (the
"Company").
WHEREAS, the Company and the Executive desire to enter into this
Employment Agreement to assure the Company of the continued advice regarding its
business plan and, once his employment commences, continued services of the
Executive and to set forth the duties and compensation of the Executive, all
upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the agreements and covenants contained
herein, the Executive and the Company hereby agree as follows:
ARTICLE I
EMPLOYMENT
Section 1.01. TERM. The initial term of this Employment Agreement shall
commence on the date the Executive reports for full-time duty, which shall be no
later than January 19, 2001, and, unless sooner terminated pursuant to Article
III hereof, shall terminate on the date that is three years thereafter (the
"Initial Employment Period"). Unless sooner terminated pursuant to Article III,
the parties may By written agreement renew this Employment Agreement for one
year (each such one-year period hereinafter referred to as a "Renewal Period";
the Initial Employment Period and all Renewal Periods hereinafter referred to as
the "Employment Period").
Section 1.02. POSITION. The Company shall employ the Executive and the
Executive shall serve as Vice-president for Research and Chief Scientific
Officer during the Employment Period.
Section 1.03. DUTIES. (a) Subject to the responsibility vested in the
Board of Directors of the Company (the "Board") under the General Corporation
Law of the State of New Jersey, the Executive shall have such responsibility and
authority as are customarily possessed and exercisable by the Vice-president for
Research and Chief Scientific Officer of a corporation. The Executive shall also
perform such other executive and administrative duties (not inconsistent with
the position of Vice-president for Research and Chief Scientific Officer) as the
Executive may reasonably be expected to be capable of performing on behalf of
the Company and any subsidiaries and affiliates of the Company as may from time
to time be authorized or directed by the Board.
(b) During the Employment Period, the Executive shall perform faithfully
the duties covered by Section 1.02(a) to the best of his ability and devote his
full business time and attention to the Company's business and not engage in any
other business activities except with the approval of the Board provided that he
may subject to Section 4.01 invest in companies not requiring his services and
may subject to Section 1.03(a) devote reasonable time to charitable and civic
affairs.
(c) The Company shall provide and pay for a standard errors and omissions
policy insuring the Executive against liability arising out of the performance
of his duties, and shall indemnify and hold the Executive harmless from
liability arising out of his services hereunder.
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ARTICLE II
COMPENSATION
Section 2.01. BASIC COMPENSATION. As compensation for the Executive's
services hereunder, the Company shall pay to the Executive an annual salary of
$250,000 (as adjusted, "Basic Compensation"), payable in bi-weekly or monthly
installments. The Basic Compensation may be increased in the discretion of the
Board to cover annual cost-of-living increases. The Basic Compensation shall be
secured for the Initial Employment Period by establishing within 15 days of the
initial term hereof an escrow account reasonably satisfactory to the Executive
of $750,000 from which payments of Basic Compensation and interest on the escrow
account may be withdrawn by the Company provided that the requirement to
maintain such escrow account shall not apply once the Company raises at least
$20 million in additional capital.
Section 2.02. INCENTIVE COMPENSATION. (a) In addition to Basic
Compensation, the Executive shall together with other executive staff be
considered at least annually for incentive compensation ("Incentive
Compensation") upon recommendation by the Compensation Committee. Its
recommendation shall among other factors considered relevant take into account
performance the Company, increase in value of the Company and the Executive's
contribution thereto. Incentive Compensation shall be determined in the
discretion of the Board upon such recommendation. The Company recognizes both
the tangible and intangible benefits gained by Company when the Executive is
invited to lecture at national and international meetings, publish such
presentations in scholarly journals and serve on editorial advisory boards, and
accordingly the foregoing, while not required of the Executive, shall be
considered in determining Incentive Compensation.
(b) Incentive Compensation shall be paid to the Executive within 30 days
after the Board's determination provided that the Company may determine to pay
out Incentive Compensation over a period not to exceed six months.
Section 2.03. OTHER BENEFITS. (a) During the Employment Period, the
Company shall provide the Executive and maintain on the Executive's behalf, or
reimburse the Executive for carrying comprehensive medical insurance, disability
insurance and life insurance of $250,000 on the life of the Executive. In
addition, the Executive shall have the right to participate in the Company's
other programs for the benefit of employees in accordance with their terms and
as the same may be amended from time to time.
(b) The Executive shall be eligible to participate in the Company's stock
option program. As of the date of this Agreement the Executive shall receive
options to purchase 250,000 shares of the Company's common stock at a strike
price of $4.50, exercisable after they are vested and prior to ten years from
the date hereof, with half of the options vesting after 18 months of full-time
employment and the remainder vesting ratably quarterly over the remaining 18
months subject to his commencement of full-time employment on or prior to
January 19, 2001. The other terms of such options shall be governed by the
Company's standard stock option agreement to be entered into upon commencement
thereof, which may incorporate the terms established by the Company's stock
option
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plan if any adopted subsequent to the date hereof and prior to such commencement
provided that notwithstanding such stock option terms if any to be adopted to
the contrary the Executive's options to the extent not vested shall vest upon a
termination of employment or pursuant to Section 3.01(d), or Section 3.03 or
Section 3.04 but be exercisable during the post-employment period established by
such terms to be adopted..
(c) The Company shall pay to or on behalf of the Executive a monthly
automobile allowance of $675.
(d) The Executive shall be entitled to six weeks of paid vacation in each
calendar year. The Executive shall also be entitled to the same standard paid
holidays given by the Company to senior executives generally, all as determined
from time to time by the Board or appropriate committee thereof. Vacation time
shall cumulate and carry forward from year to year provided that the Executive
shall not be entitled to more than ten weeks of vacation in any one year without
the permission of the Compensation Committee and provided that the Executive
shall coordinate his vacation schedule with the Chief Executive Officer and
President.
(e) The Company shall reimburse the Executive for travel or other expenses
or disbursements reasonably incurred or made by him in connection with the
Company's business during the Employment Period upon receipt of reasonable
documentation thereof.
(f) The benefits set forth in this Section 2.03 shall be collectively
referred to as the "Benefits."
(g) The Company shall reimburse the Executive for expenses (excluding loss
if any upon resale of residence) in connection with relocation from Carmel,
Indiana, within 30 days after relocation. The Company shall also reimburse the
Executive for temporary housing expenses in the vicinity of the Company for up
to 60 days to a maximum of $5,000
ARTICLE III
TERMINATION OF EMPLOYMENT
Section 3.01. TERMINATION OF EMPLOYMENT BY COMPANY.
(a) Except as otherwise provided in this Article III and in Article IV,
upon the occurrence of any of the following events, this Agreement and the
rights and obligations of the parties hereunder shall terminate:
(i) "Disability" (as defined in Section 3.05) of the Executive;
(ii) conduct by the Executive constituting "Cause" (as defined in
Section 3.05); or
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(iii) failure of the Executive to commence full-time employment by
January 19, 2001.
(b) In the case of termination pursuant to Section 3.01(a)(i), the Company
shall be obligated to pay the Executive and the Executive shall be entitled to
receive, in complete and total satisfaction of the obligations of the Company
hereunder, an amount equal to Basic Compensation, Incentive Compensation and
Benefits for the period commencing on the date of termination and ending on the
date that is nine months after the date of termination. Basic Compensation,
Incentive Compensation and Benefits shall be paid in the manner and at the
intervals provided in Article II.
(c) In the case of termination pursuant to Section 3.01(a)(ii), the
Company shall be obligated to pay the Executive and the Executive shall be
entitled to receive, in complete and total satisfaction of the obligations of
the Company hereunder, an amount equal to Basic Compensation, Incentive
Compensation and Benefits through the date of such termination.
(d) In the case of termination of the Executive by the Company other than
pursuant to Section 3.01(a) or Section 3.02, the Company shall be obligated to
pay the Executive and the Executive shall be entitled to receive, in complete
and total satisfaction of the obligations of the Company hereunder, an amount
equal to Basic Compensation commencing on the date of termination and ending on
the date that is three years after commencement of employment hereunder. Basic
Compensation shall be paid at the intervals set forth in Article II.
Section 3.02. DEATH. In the event of the death of the Executive during the
Employment Period, the Employment Period shall terminate on the date of death
and the Executive's designated beneficiary or, if none, his estate shall be
entitled to receive, in complete and total satisfaction of the Company's
obligations hereunder, Basic Compensation, Incentive Compensation and Benefits
through such date of death and for a period of 90 days thereafter.
Section 3.03. TERMINATION OF EMPLOYMENT BY THE EXECUTIVE. (a) If during
the Employment Period there should occur any of the following events (each of
the following being an event giving the Executive the right to resign for "Good
Reason"): (i) a change in the title and/or responsibilities of the Executive,
such that the Executive is no longer functionally the Vice-President for
Research and Chief Scientific Officer of the Company and no longer has such
responsibilities and authorities as are customarily exercisable by the Vice
president for Research and Chief Scientific Officer of a corporation or (ii) a
failure by the Company to provide the Executive with Basic Compensation,
Incentive Compensation or Benefits, other than a failure that is not in bad
faith and is remedied by the Company within 15 days after receipt of notice
thereof given by the Executive, or (iii) a breach by the Company of any of the
material terms of this Agreement that is not remedied by the Company within 15
days of notice thereof by the Executive, the Executive may elect to terminate
his employment by notice to the Company (subject to Article IV). If the
Executive exercises such election, the Employment Period shall terminate
effective upon the later to occur of (x) receipt of such notice by the Company
and (y) expiration of the 15-day period referred to in Section 3.03(a)(ii) or
(iii).
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(b) If the Executive exercises his election to terminate pursuant to
Section 3.03(a), the Company shall be obligated to pay the Executive and the
Executive shall be entitled to receive, in complete and total satisfaction of
the obligations of the Company hereunder, an amount equal to Basic Compensation
for the period commencing on the date of such termination and ending on the date
that is three years after commencement of employment hereunder.
(c) If the Executive terminates this Employment Agreement for any reason
other than those contained in Section 3.02 and Section 3.03(a), the rights and
obligations of the parties hereunder shall terminate immediately (except as
otherwise provided in Article IV) and the Employment Period shall terminate
immediately except that the Executive shall be entitled to receive, in complete
and total satisfaction of the obligations of the Company hereunder, his Basic
Compensation, Incentive Compensation and Benefits through the date of such
termination.
Section 3.04. CHANGE OF CONTROL. In the event the Executive terminates his
employment within six months following a Change of Control (as defined in
Section 3.05), the Company shall be obligated to pay the Executive, and the
Executive shall be entitled to receive in complete and total satisfaction of the
obligations of the Company hereunder, an amount equal to the Executive's Basic
Compensation for the period commencing on the date of termination and ending on
the date that is three years after commencement of employment hereunder.
Section 3.05. DEFINITIONS OF CERTAIN TERMS. (a) "Disability" shall mean
any physical or mental condition of the Executive that renders the Executive
incapable of performing any substantial portion of the services contemplated
hereby (as confirmed by competent medical evidence) and that has continued for
at least 90 consecutive business days in any 12-month period or a total of six
months during any twelve month period.
(b) The following shall constitute conduct entitling the Company to
terminate the Executive's employment for "Cause": (i) the Executive's willful
refusal to perform or substantial disregard of the Executive's duties to the
Company that is not cured within ten days of written notice (specifying the
failure) thereof from the Board, (ii) the commission by the Executive of a
willful and material breach of Article IV or (iii) the conviction of any felony
by the Executive (or the equivalent thereof under the laws of any state). It
shall be presumed that any termination of the Executive by the Company is
without Cause, and such presumption may only be overcome by clear and convincing
evidence that the termination of the Executive's employment can properly be
construed as for Cause. If the issue of "Cause" is litigated in a proceeding in
any court or through any means of alternative dispute resolution and such issue
is resolved in the Executive's favor, then the Company shall reimburse the
Executive for all reasonable attorney's fees, costs and expenses incurred by the
Executive in such proceeding.
(c) "Change of Control" shall mean: (i) a merger or consolidation of the
Company with or into another corporation other than a transaction (A) in which
the Company is the surviving Corporation or (B) merging or consolidating the
Company with any corporation controlling, controlled by or under common control
with the Company (in which case the surviving corporation shall be deemed the
"Company" for purposes of this Agreement), (ii) the sale of all or substantially
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all the assets of the Company to any corporation or entity, other than a sale to
any corporation or entity controlling, controlled by or under common control
with the Company prior to such transaction (in which case the surviving
corporation shall be deemed the "Company" for purposes of this Agreement) or
(iii) a change in the Board such that at least two of Drs. Beer, Lippa and
Horovitz or their designees or replacements reasonably satisfactory to the
Executive fail to remain on the Board.
ARTICLE IV
NON-COMPETITION; CONFIDENTIAL INFORMATION
Section 4.01 NON-COMPETITION. (a) Subject to Sections 4.01(b) and 4.01(c),
the Executive shall not engage in any activities, whether as employer,
proprietor, partner, stockholder (other than as the holder of less than 5% of
the stock of a corporation listed on a national securities exchange or in the
National Association of Securities Dealers, Inc. Automated Quotation System
(such a corporation being hereinafter referred to as a "Public Corporation")),
director, employee, consultant or otherwise, of any company with substantially
the same business as or that competes directly with the Company in the United
States during the following periods:
(i) the Employment Period; and
(ii) during any period after the termination of this Agreement
pursuant to Article 3 for which the Executive is being or has been paid Basic
Compensation.
(b) The Executive shall not be deemed to be in breach of this Agreement by
reason of services performed for a subsidiary or affiliate of the Company.
(c) Notwithstanding anything to the contrary contained herein, if the
Company finds that the Executive has violated any covenants contained in Section
4.01, 4.02 or 4.03, the Company shall be obligated to pay any amounts due to the
Executive ("Escrow Amount") to Goodwin, Procter & Hoar, as escrow agent ("Escrow
Agent") at 599 Lexington Avenue, New York, New York 10022. Escrow Agent shall
hold the Escrow Amount in escrow until a court or agency legally empowered to
enforce the covenants contained in Section 4.01, 4.02 and 4.03 reaches a final
determination whether the Executive has violated any such covenants or until
mutually instructed by the parties. Escrow Agent shall disburse the Escrow
Amount in accordance with such court or agency's final determination or pursuant
to such party instructions.
Section 4.02 NON-INTERFERENCE. During the Employment Period and the period
of non-competition as determined pursuant to Section 4.01(a), the Executive:
(a) shall not publicly disparage any of the products, services or actions
of the Company or any of the Company's subsidiaries or affiliates; and
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(b) shall not, whether for his own account or for the account of any other
individual, partnership, firm, corporation or other business organization,
solicit, endeavor to entice away from the Company, or otherwise interfere with
the relationship of the Company with any person or entity who is, or was within
the then most recent 12-month period, a customer or client of the Company.
Section 4.03. TRADE SECRETS. The Executive shall not, at any time during
the Employment Period or thereafter, use (except for the sole benefit of the
Company, the Company's subsidiaries and affiliates) or, without the written
consent of the Board, divulge to any person (other than, during the Employment
Period, an executive of the Company or any of the Company's subsidiaries or
other person to whom disclosure is reasonably necessary or appropriate or
legally required in connection with the Executive's duties hereunder) any trade
secrets or other confidential information of the Company or any of its
subsidiaries or affiliates, except to the extent that (a) such information
becomes a matter of public record, or is published in a newspaper, magazine or
other periodical available to the general public, in each case, through no
violation of this Agreement by the Executive or (b) such disclosure is required
by oral questions, interrogatories, requests for information or documents,
subpoena, civil investigative demand or similar process provided that the
Executive shall immediately notify the Company of the existence, terms and
circumstances surrounding such a request so that they may seek an appropriate
protective order. When the Executive ceases to be employed by the Company, the
Executive shall surrender to the Company all records and documents in any form
obtained by him or entrusted to him during the course of his employment
hereunder (together with all copies thereof) that pertain to the business of the
Company or its subsidiaries or affiliates or that were paid for by the Company
or any of the Company's subsidiaries or affiliates provided that the Executive
may retain copies of such documents as may be necessary for the Executive's
personal records for federal income tax purposes or, with the approval of the
Board, for other purposes relating to the Executive's legal affairs, which
approval shall not be unreasonably withheld.
Section 4.04. SURVIVAL OF TERMS. The covenants contained in Sections 4.01,
4.02 and 4.03 shall survive the conclusion of the Executive's employment by the
Company in accordance with their respective terms.
ARTICLE V
MISCELLANEOUS
Section 5.01. SERVICES AS OFFICER OR DIRECTOR. During the Employment
Period, the Executive shall, if elected or appointed, serve as a director of the
Company and as an officer and director of all current and future subsidiaries
and affiliates of the Company without any additional compensation for such
services provided that the Executive shall be provided with reasonable and
customary directors' and officers' liability insurance if any such corporation
is or becomes publicly held and further provided that the Company shall cause
any such subsidiary and affiliate to save the Executive harmless from any and
all liability arising out of the performance of the Executive's duties as
director and officer.
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Section 5.02. CONFLICTS. Recognizing that the Executive has obligations to
Eli Lilly and Company regarding its trade secrets and confidential information,
the Executive hereby warrants and represents that he is not under any legal or
contractual obligation that would conflict in any manner with the obligations
and duties he is undertaking herein, and that his execution of this Agreement
shall not breach any agreement to which he is now a party or conflict with
obligations to which he is bound. The Executive further agrees to reimburse and
hold the Company harmless for any costs, damages or fees sustained or expended
by the Company as a result of this untruth of the representations or breach of
warranties contained in this Section 5.03.
Section 5.03. RIGHT TO CHANGE BUSINESS. This Employment Agreement and any
rights or privileges granted to the Executive hereunder shall not prevent the
Company or any of the Company's subsidiaries from exercising its corporate
powers to modify the business operations or activities of such entity.
Section 5.04. NOTICES. Any notice or request required or permitted to be
given under this Employment Agreement shall be sufficient if in writing and
delivered personally or sent by registered mail, return receipt requested, to
the addresses set forth below or to any other address designated by either party
by notice similarly given. Such notice shall be deemed to have been given upon
the personal delivery thereof or three days after the date of such mailing
thereof, as the case may be.
If to the Executive, to:
c/o DOV Pharmaceutical, Inc.
633 Hackensack Avenue
Hackensack, New Jersey 07601
If to the Company, to:
DOV Pharmaceutical, Inc.
433 Hackensack Avenue
Hackensack, New Jersey 07601
With a copy to:
Goodwin, Procter & Hoar LLP
599 Lexington Avenue
New York, New York 10022
Attention: Robert Horton, Esq.
Section 5.05. ASSIGNMENT AND SUCCESSION. The Executive acknowledges that
the services to be rendered by him hereunder are unique and personal.
Accordingly, the Executive may not assign
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any of his rights or delegate any of his duties or obligations under this
Agreement. The rights and obligations of the Company under this Agreement shall
inure to the benefit of and be binding upon its successors and assigns.
Section 5.06. HEADINGS. The headings contained in this Agreement are for
convenience of reference only and shall not define or limit the provisions
hereof.
Section 5.07. APPLICABLE LAW. This Agreement shall be interpreted in
accordance with the laws of the State of New Jersey, without regard to conflict
of law rules. Each party hereby irrevocably consents and submits to the IN
PERSONAM jurisdiction of any court of general jurisdiction in the State of New
Jersey, which shall serve as the sole and exclusive forum in any suit, action or
proceeding arising out of or in connection with this Agreement.
Section 5.08. WITHHOLDING TAXES. The Company may withhold from any amounts
payable under this Agreement such federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulations.
Section 5.9. ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the
entire understanding of the parties hereto with regard to the subject matter
contained herein, and supersedes all prior agreements or understandings between
the parties hereto or any related parties. This Agreement may be amended only
pursuant to a writing signed by both parties hereto.
Section 5.10. WAIVERS. Any term or provisions of this Agreement may be
waived, or the time for its performance may be extended, by the party or parties
entitled to the benefits thereof but only to the extent evidenced by a writing
executed by such party. The failure of any party hereto to enforce at any time
any provision of this Agreement shall not be construed to be a waiver of such
provision, nor in any way to affect the validity of this Agreement or any part
hereof or the right of any party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to constitute
a waiver of any other or subsequent breach.
Section 5.11. PARTIAL INVALIDITY. Each provision hereof shall be
interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall for any
reason be held to be unenforceable in any respect, such unenforceability shall
not affect any other provisions of this Agreement, and this Employment Agreement
shall be construed as if such unenforceable provision or provisions had never
been contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause the remaining terms hereof to be
unreasonable.
Section 5.12. EXECUTION OF COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall be considered an original
instrument, but all of which shall be considered one and the same agreement, and
shall become binding when one or more counterparts have been signed by each of
the parties and delivered to the other.
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IN WITNESS WHEREOF the Company has caused this Agreement to be signed by
its duly authorized officer and the Executive has signed this Agreement as of
the day and year first above written.
DOV Pharmaceutical, Inc.
By: /s/ Arnold Lippa
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Arnold Lippa
CEO
/s/ Phil Skolnick
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Phil Skolnick
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