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EXHIBIT 10.18
14 May 1990
Dr. Anand Baichwal
3801 Cherry Hill Drive
Poughkeepsie, NY 12603
Re: Recognition and Incentive Agreement
Dear Dr. Baichwal,
In your work to date with our Company, you have made a substantial contribution
in being an inventor of our Directly Compressible Sustained Release System
(DCSR) which is covered under U.S. Patent Application No. 246,368, filed on
September 19, 1988 or other Applications stemming from Application 246,368 (the
Application). In recognition of this, and to give you incentive to continue to
contribute ideas, innovations and inventions to us, some of which are expected
to be covered by patent applications in the future (referred to generally as
"innovations") in the fields of excipient and sustained release technologies
(such fields being collectively referred to as "Fields of Interest"), we want to
establish an appropriate incentive framework for our ongoing relationship.
1. Incentive Compensation:
A subsidiary and/or division of Mendell will be established, Mendell Dynamics
(M.D.) to carry out all of our activities throughout the world relative to the
development and marketing of our sustained release technologies (the SR
Technologies). During the term of this Agreement, you will be entitled to
receive as Incentive Compensation one half of one percent (0.5%) of the net
sales of M.D., the sustained release technologies covered by the "Application"
in each of its fiscal years. For purposes of the foregoing, net sales shall mean
the aggregate selling price of all products sold by M.D., net of all discounts
and returns and all charges for freight, insurance, sales taxes, customs duties,
commissions and similar items. When due hereunder for any fiscal year, Incentive
Compensation shall be paid in cash to you within 120 days after the end of such
fiscal year.
2. Best Efforts, Inventions and Documentation:
During the term of this Agreement, you shall devote your best efforts to
assisting us in research and development for, and the implementation of, our
business in the Fields of Interest. During the course of your services to us
hereunder, you shall
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render to us such reports, oral or written, as our Company may request relative
to your activities on our behalf. During the term hereof while working for us,
all ideas, business concepts, discoveries, innovation, inventions and
improvements, together with any letters, memoranda or other documentation you
may conceive, develop, generate, implement or come in contact with, in the areas
of the Fields of Interest shall be our Company's property and you shall promptly
inform us of the same and make the same available to us and deliver to us all of
your documentation on the same upon our request. In the event any of your
services and activities heretofore rendered or rendered hereunder give rise to
an invention or idea in the Fields of Interest which may, in our Company's
judgment, be appropriately the subject of an application for patent, copyright,
trademark or trade name, you agree at our Company's request and expense to take
all such action, prepare and execute all such documents and take all such other
action as may in the opinion of our Company or its advisors be necessary or
desirable to secure property and other rights therein and to obtain the issuance
of any such patent, copyright, trademark or trade name in any jurisdiction on
behalf of our Company.
3. Confidentiality:
In connection with your previous ongoing work for us on matters relative to the
Fields of Interest, you confirm that you have been informed by us that it is our
Company's policy to maintain and safeguard as secret and confidential all
information relative to the Fields of Interest including but not limited to all
information relative to:
a) research, development, inventions, products, processes, designs and/or
concepts, including all hardware and software, used in connection with
our business or by you for us;
b) our customers, suppliers, employees and consultants;
c) our business generally including, but not limited to, our plans and our
marketing and financial affairs; and
d) all of the foregoing relative to all of our subsidiaries and affiliates
including the U.S. Company;
all such information, plus any and all of the foregoing relative to any
additional field which you and our Company agree to be the subject of our work
hereunder, being referred to herein as "Proprietary Information".
You further understand and acknowledge that such Proprietary Information is of
great importance to us. You also recognize that the services which have been and
will be performed by you are special and unique and also that by reason of your
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retention hereunder you have developed and will develop Proprietary Information
for our account and you have acquired and will acquire Proprietary Information
from us. You agree that you will not, directly or indirectly, (except where
authorized in writing by us) at any time during your retention hereunder or
after you cease to be retained by us hereunder divulge to any person, firm or
corporation or use, or cause or permit any of the same to use, any Proprietary
Information or any other information relative to the business or interests of
our Company which you know or should know is regarded as proprietary and
confidential and valuable by our Company (whether or not any of the foregoing
information is actually unique or novel or is actually known to others). You
agree that you will not in any way exploit, or permit the exploitation or use by
others, of any Proprietary Information, directly or indirectly, except in
connection with your work for us or otherwise as specifically authorized by us
in writing. You agree that upon termination of your services as provided herein
for any reason and upon our request you shall deliver up to us any and all
concepts, inventions, documents and writings which you may have in your
possession or under your control, including any notes, work papers, records,
memoranda, reports, data, drawings and the like, together with all other
materials relating to any Proprietary Information or the business of our Company
or to the work you have performed for us, all of which upon creation shall be
our exclusive property.
4. Non Competition:
You agree that during your term of employment with our Company hereunder, during
the term of any subsequent consulting relationship with our Company and for a
two-year period after the end of your employment with us or a subsequent
consulting relationship with us, as the case may be, you shall not, without our
prior written consent, directly or indirectly do any of the following:
(i) Engage in, be employed by or finance any business activity that is
competitive with the business which is being conducted by the
Company or any of its affiliates or subsidiaries or with any
business for which substantial planning is made by the Company or
any affiliate or subsidiary;
(ii) Direct, disrupt or otherwise interfere with any business
relationship of the Company or any affiliate or subsidiary with any
of the clients, customers or business contacts of the Company or any
affiliate or subsidiary;
(iii) Solicit for employment for his own or another's benefit (as
employee, partner, independent contractor or otherwise) any person
who has been employed by the Company or any of its affiliates or
subsidiaries within the two-year period prior to the date in
question.
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5. Termination:
This Agreement shall continue for the length of your employment with our Company
and, thereafter if so determined by our Company in its sole discretion, for any
additional period during which you are affiliated with the Company as a
consultant. This Agreement shall terminate at the end of your employment with
our Company or at the end of your consulting for the Company thereafter, as the
case may be. The terms of Paragraphs 2, 3, 4 and 6 of this Agreement, insofar as
is necessary to carry out the provisions hereof, shall survive and have full
force and effect after any such termination. Should this Agreement be terminated
as a result of termination of employment or of a consulting relationship with
the Company, as the case may be, during any fiscal year of M.D. for any reason
other than for cause, you shall be entitled to receive your Incentive
Compensation in respect of such year as provided in Section 1 hereof, but not in
respect of any additional year or period.
After termination of this Agreement other than for cause, you shall continue to
receive a royalty for each fiscal year beginning after such termination in the
amount of 0.5% of the net sales of products stemming from the "Application" and
sold by M.D., in each jurisdiction where the same are covered by an unexpired
patent issued pursuant to the Application.
6. Miscellaneous:
Any reference to our Company, unless the context otherwise requires, shall be
deemed to include our Company's subsidiaries and affiliated companies. This
Agreement may be amended only by written instrument, signed by both parties
hereto. This Agreement shall be construed, interpreted and governed in all
respects by the laws of the State of New York. The parties agree that in actions
hereunder judgments at law may not provide adequate relief and that equitable
relief including injunctions and decrees for specific performance may be
required. The parties agree to accept service of process by mail and to submit
in all respects to the venue and jurisdiction of all courts, both federal and
state, in the State of New York relative to all actions hereunder. The parties
agree that all judgments obtained in such courts, including all decrees for
injunctions and specific performance, in actions hereunder shall be fully
enforceable in such courts and in all other courts in the United States and
elsewhere having jurisdiction for this purpose. This Agreement constitutes the
entire Agreement between the parties as to the subject matter hereof and
entirely supersedes and replaces all prior agreements, written or oral,
regarding the subject matter hereof.
Please confirm that the foregoing correctly sets forth our agreement with
respect to the matters covered by signing the enclosed copy of this Agreement
and returning the same to us.
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Very truly yours,
Edward Mendell Co., Inc.
(the Company)
By: /s/ John F. Blanco
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President
Confirmed and agreed to
as above written:
/s/ Anand Baichwal
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Anand Baichwal
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AMENDMENT TO RECOGNITION AND INCENTIVE AGREEMENT
This Agreement (the "Agreement"), made this 22nd day of October, 1997, is
entered into by Penwest Pharmaceuticals Co. (formerly Edward Mendell Co., Inc.),
a Washington corporation with its principal place of business at 2981 Route 22,
Patterson, NY 12563 (the "Company"), and Dr. Anand Baichwal, residing at 5
Kendall Drive, Wappingers Falls, NY 12590 ("Baichwal").
The Company and Baichwal are parties to a Recognition and Incentive
Agreement dated May 14, 1990, (the "Baichwal Agreement"). The Company and
Baichwal desire to amend the terms of the Baichwal Agreement as set forth below.
In consideration of these premises, the mutual covenants and promises contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are acknowledged, the parties hereto agree as follows:
I. Amendments to Baichwal Agreement
1. Incentive Compensation. The Baichwal Agreement is hereby
amended by deleting Section 1 in its entirety and inserting the following in
lieu thereof:
"1. Incentive Compensation:
Subject to the provisions of Section 5 of this Agreement,
during the term of this Agreement and thereafter, the Company shall
pay to Baichwal on an annual basis in arrears (i) one-half of one
percent (0.5%) of Net Sales of Material, (ii) one-half of one
percent (0.5%) of any royalties actually received by the Company
under any licenses, collaborations or other exploitation agreements
with third parties to which the Company is a party with respect to
the sale, license, use or exploitation by such third parties of
products based on or incorporating the Material, and (iii) one-half
of one percent (0.5%) of any payments made in lieu of any Net Sales
of Material or royalties contemplated by clauses (i) and (ii) above
and actually received by the Company (including payments received
for limiting, reducing or restricting the exploitation of the
Material). In no event shall Baichwal be entitled to any payments
pursuant to this Section 1 with respect of any payments received by
the Company which are characterized by the Company in good faith as
milestone payments. When due hereunder for any fiscal year,
Incentive Compensation shall be paid in cash to you within 120 days
after the end of such fiscal year.
For purposes of this Section 1, "Net Sales" shall mean gross
revenues actually received by the Company from or on account of
sales of Material, less (a) credits or allowances granted on account
of price
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adjustment, rejection or return of items previously sold for which
payment has been received by the Company, whether during the
specific period or not, rebates and discounts, (b) excises, sales
taxes, duties or other similar taxes imposed upon and paid by the
Company with respect to such sales (excluding income, gain, profit,
or other similar taxes levied with respect to sales or gross
receipts) and (c) separately itemized insurance and transportation
costs incurred by the Company in shipping products to independent
third parties and not reimbursed to the Company."
2. M.D. the Baichwal Agreement is hereby amended to provide that
all referenced to "M.D." in the Baichwal Agreement shall be changed to
refer to the Company.
3. Post-Termination Royalties. The Baichwal Agreement is hereby
amended by deleting the second paragraph of Section 5 in its entirety
and inserting the following in lieu thereof:
"After termination of this Agreement other than for cause, you
shall continue to be entitled to receive the incentive compensation
contemplated by Section 1 of this Agreement, provided that such
compensation shall only be due to you with respect to (i) Net Sales
of Material in any jurisdiction in which the Material sold is
covered by an unexpired patent issued pursuant to the Application,
(ii) royalties actually received by the Company with respect to the
sale, license, use, or exploitation by third parties of products
based on or incorporating the Material in any jurisdiction in which
the Material is covered by an unexpired patent issued pursuant to
the Application and (iii) payments made in lieu of such Net Sales or
Royalties and actually received by the Company."
4. Definitions
A. "Material" shall mean TIMERx material and any other
material based upon or referable to the sustained release technologies covered
by the Application.
B. For purposes of Section 1 and Section 5 of the Baichwal
Agreement, the term "Company" shall mean the Company and its direct and indirect
subsidiaries, its direct and indirect parents and its direct and indirect
affiliates, and its and their successors and assigns.
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II. Miscellaneous Provisions
1. The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit, or affect the scope
or substance of any section of this Agreement.
2. This Agreement shall be construed, interpreted, and enforced in
accordance with the laws of the State of New York, without giving effect to
conflict of laws provisions.
3. This Agreement constitutes the entire agreement between the
parties relating to the subject matter hereof and supersedes all prior
agreements and understandings, whether written or oral, relating to the
amendment or modification of the Baichwal Agreement.
4. In all respects other than as specifically provided in this
Agreement, the Baichwal Agreement is hereby ratified and affirmed.
5. This Agreement and the Baichwal Agreement shall be binding upon
and shall inure to the benefit of the Company and its successors and assigns and
Baichwal and his heirs and legal representatives.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
PENWEST PHARMACEUTICALS CO.
By: /s/ John V. Talley, Jr.
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Title: President
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/s/ Anand Baichwal
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Dr. Anand Baichwal