EXHIBIT 10.19
SENSUS DRUG DEVELOPMENT CORPORATION
KEY EMPLOYEE AGREEMENT
FOR
CHAIRMAN OF THE BOARD
This Employment Agreement ("Agreement") is entered into as of the 15th day
of September, 1998, by and between Richard J. Hawkins ("Executive") and SENSUS
DRUG DEVELOPMENT CORPORATION, a Delaware corporation ("SENSUS" or the
"Company").
WHEREAS, the Company desires to continue to employ Executive to provide
personal services to the Company, and wishes to provide Executive with certain
compensation and benefits in return for his services; and
WHEREAS, Executive wishes to continue to be employed by the Company and
provide personal services to the Company in return for certain compensation and
benefits;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is hereby agreed by and between the parties hereto as
follows:
1. EMPLOYMENT BY THE COMPANY.
1.1 Subject to terms set forth herein, the Company agrees to continue
to employ Executive in the position of Chairman of the Board and Executive
hereby accepts continued employment effective as of the closing of the Company's
initial public offering (the "Employment Date"). During his employment with the
Company, Executive will devote his best efforts and such portion of his business
time and attention (except for vacation periods as set forth herein and
reasonable periods of illness or other incapacities permitted by the Company's
general employment policies) as may be reasonable, necessary and appropriate to
attend to the business of the Company.
1.2 Executive will continue to serve in an executive capacity and
shall perform such duties as are customarily associated with his then current
title, consistent with the by-laws of the Company and as required by the
Company's Board of Directors (the "Board").
1.3 The employment relationship between the parties shall also be
governed by the general employment policies and practices of the Company,
including those relating to protection of confidential information and
assignment of inventions, except that when the terms of this Agreement differ
from or are in conflict with the Company's general employment policies or
practices, this Agreement shall control.
2. COMPENSATION.
2.1 SALARY. Executive shall continue to receive for services to be
rendered hereunder an annualized base salary of $200,000 payable on a monthly
basis. Executive will be considered for annual increases in base salary in
accordance with Company policy and subject to
1.
review and approval by the Compensation Committee of the Company's Board of
Directors (the "Compensation Committee").
2.2 BONUS. The Company does not now have a bonus plan or pay bonuses
to executives generally. The Compensation Committee of the Company's Board of
Directors may in the future adopt such plans or policies with respect to the
payment of bonuses, if any, as it determines in its discretion to be
appropriate. In such event, Executive will be considered for eligibility to
receive bonuses in such amounts and subject to such terms as may be determined
solely by the Compensation Committee in its discretion. Payments of such
bonuses, if any, may be subject to the following criteria:
(a) COMPANY FINANCIAL GOALS. Attainment by the Company of its
planned financial objectives for the bonus year; and
(b) EXECUTIVE'S PERFORMANCE. Demonstrated performance by
Executive over and above that required to meet the ordinary expectations of his
job position, as determined by the Company's Compensation Committee in its sole
discretion.
Upon Executive's termination with Cause or resignation without Good Reason
from his employment with the Company, no prorated bonus for that bonus year can
be earned. Upon termination of Executive's employment by the Company without
Cause or resignation by the Executive with Good Reason, the Executive shall be
eligible for a prorated bonus for that bonus year.
2.3 STOCK OPTIONS. Executive and the Company each acknowledge that
Executive's outstanding stock options(s) (the "Options") shall remain in effect
and continue to vest during the period of Executive's employment with the
Company pursuant to the terms of the Options; provided, however, that (except as
otherwise provided by Section 6.3) upon Executive's termination with Cause or
resignation without Good Reason from his employment with the Company, the
Options shall cease vesting as of the termination or resignation date and be
exercisable thereafter only pursuant to the terms of the Options and the
Company's applicable stock option plans. Upon involuntary termination of
Executive's employment by the Company without Cause or resignation by the
Executive with Good Reason, all Options held by Executive shall have their
vesting accelerated in full so as to become one hundred percent (100%) vested
and immediately exercisable in full as of the date of such termination. Subject
to the Compensation Committee's approval, Executive will be considered for
additional grants of options to purchase shares of the Company, pursuant to the
terms and conditions set forth in the Company's stock option plans, copies of
which are available upon Executive's request, or any such plans generally
applicable to executives of the Company and adopted in the future.
2.4 STANDARD COMPANY BENEFITS. Executive shall continue to be
entitled to all rights and benefits for which he is eligible under the terms and
conditions of the standard Company benefits and compensation practices which may
be in effect from time to time and provided by the Company to its executive
employees generally.
2.
3. PROPRIETARY INFORMATION OBLIGATIONS.
3.1 AGREEMENT. Both during and after Executive's employment,
Executive will continue to refrain from any use or disclosure of the Company's
proprietary or confidential information or materials pursuant to his Proprietary
Information and Inventions Agreement executed by him on September 15, 1998.
Executive's Proprietary Information and Inventions Agreement is hereby
incorporated into this Agreement and a copy is attached hereto as Exhibit A.
3.2 REMEDIES. Executive's duties under the Proprietary Information
and Inventions Agreement shall survive termination of his employment with the
Company. Executive acknowledges that a remedy at law for any breach or
threatened breach by him of the provisions of the Proprietary Information and
Inventions Agreement would be inadequate, and he therefore agrees that the
Company shall be entitled to injunctive relief in case of any such breach or
threatened breach.
4. OUTSIDE ACTIVITIES.
4.1 Except with the prior written consent of the Company's Board of
Directors, which consent shall not be unreasonably withheld, Executive will not
during his employment with the Company undertake or engage in any other
employment, occupation or business enterprise, other than: (a) ones in which
Executive is a passive investor; (b) civic and not-for-profit activities so long
as such activities do not materially interfere with the performance of his
duties hereunder; and (c) Executive's service as a member of the Board of
Directors of Covance Biotechnology Services, Inc., and as the Chairman of
Recombinant Generics, Inc. and Innovations in Drug Development (id2), as a
General Partner of id2-I, L.P. and as an outside director on the boards of other
companies, provided, however, that Executive shall not spend more than fifteen
(15) hours during business days on the activities described in this clause (c)
during any thirty (30) day period.
4.2 Except as permitted by Section 4.3, during his employment with
the Company, Executive agrees not to acquire, assume or participate in, directly
or indirectly, any position, investment or interest known by him to be adverse
or antagonistic to the Company, its business or prospects, financial or
otherwise.
4.3 During his employment with the Company, except on behalf of the
Company, Executive will not directly or indirectly, whether as an officer,
director, stockholder, partner, proprietor, associate, representative,
consultant, or in any capacity whatsoever engage in, become financially
interested in, be employed by or have any business connection with any other
person, corporation, firm, partnership or other entity whatsoever which were
known by him to compete directly with the Company, throughout the world, in any
line of business engaged in (or planned to be engaged in) by the Company;
provided, however, that anything above to the contrary notwithstanding, he may
own, as a passive investor, securities of any competitor corporation, so long as
his direct holdings in any one such corporation shall not in the aggregate
constitute more than 1% of the voting stock of such corporation.
3.
5. TERMINATION OF EMPLOYMENT.
5.1 TERMINATION WITH OR WITHOUT CAUSE.
(a) Executive's relationship with the Company is at-will. The
Company shall have the right to terminate Executive's employment with the
Company at any time with or without Cause and with or without notice, provided
that Executive may be removed from his position as a member of the Company's
Board of Directors only in the manner provided by the Company's by-laws and
applicable law.
(b) For purposes of this Agreement, "Cause" will exist if
Executive has committed or there has occurred one or more of the following: (i)
indictment or conviction of any felony or of any crime involving dishonesty or
moral turpitude; (ii) participation in any material fraud or act of dishonesty
against the Company; (iii) significant material breach of Executive's duties to
the Company; (iv) intentional material damage to any property of the Company; or
(v) material breach of this Agreement or of Executive's Proprietary Information
and Inventions Agreement attached hereto as Exhibit A. If the Company determines
"Cause" based upon clause (iii) or (v) above, the Company shall give Executive
reasonable notice of such significant material breach and Executive shall have a
reasonable period of time under the circumstances to cure such significant
material breach, unless cure of such significant material breach is not
possible.
(c) If the Company terminates Executive's employment at any time
for Cause, Executive's salary shall cease on and be paid through the date of
termination, and Executive will not be entitled to severance pay, pay in lieu of
notice or any other such compensation.
5.2 VOLUNTARY OR MUTUAL TERMINATION.
(a) Executive may voluntarily terminate his employment with the
Company at any time without notice, after which no further compensation will be
paid to Executive, unless such termination is for Good Reason.
(b) In the event Executive voluntarily terminates his employment
other than for Good Reason, he will not be entitled to severance pay, pay in
lieu of notice or any other such compensation.
(c) For purposes of this Agreement, "Good Reason" shall mean any
one of the following events which occurs on or after the Effective Date of this
Agreement: (i) reduction of Executive's then annual base salary by greater than
ten percent (10%), unless (A) such reduction occurs more than one hundred eighty
(180) days after a Change in Control and (B) the annual base salaries of all
other executive officers of the Company are concurrently reduced by greater than
ten percent (10%); (ii) material reduction in the package of welfare benefit
plans, taken as a whole, provided to the Executive (except that employee
contributions may be raised to the extent of any cost increases imposed by third
parties) or any action by the Company which would materially adversely affect
the Executive's participation or reduce the Executive's benefits under any such
plans; (iii) change in the Executive's responsibilities, authority, title,
reporting relationship or offices that results in a significant diminution of
position
4.
under the circumstances, excluding for this purpose an isolated, insubstantial
and inadvertent action not taken in bad faith which is remedied by the Company
promptly after notice thereof is given by the Executive; (iv) request that the
Executive relocate to a work site that is more than 35 miles from his then
current work site, (v) any breach by the Company of any material provision of
this Agreement; or (vi) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company.
5.3 SEVERANCE PAYMENT.
(a) In the event the Company terminates Executive's employment
without Cause or if Executive terminates his employment for Good Reason, the
Company shall pay monthly an amount equivalent to Executive's base salary and
the value of Executive's then current benefits, less standard withholdings and
deductions, from the date of termination for a period of eighteen (18) months,
provided that any income received from alternative employment during the final
six (6) months of the severance period will offset and reduce any amount paid by
the Company to Executive during such final six (6) month period, excluding fees
for serving solely as an outside director.
(b) Executive's outstanding Options shall have their vesting
accelerated in full so as to become one hundred percent (100%) vested and fully
exercisable as of the date of termination.
5.4 CESSATION. If Executive violates any provision of Sections 7 or
8, below, any severance payment being made to Executive will cease immediately,
and Executive will not be entitled to any further compensation from the Company.
6. CHANGE OF CONTROL.
6.1 DEFINITION. For purpose of this Agreement, "Change of Control"
means the occurrence of any of the following:
(a) the closing of a merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or the effective date of a plan of liquidation or dissolution of
the Company or the closing of the sale, lease, exchange or other transfer or
disposition by the Company of all or substantially all (more than fifty percent
(50%)) of the Company's assets;
(b) any person (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), is or
becomes the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of fifty percent (50%) or more of the Company's outstanding common
stock; or
5.
(c) a change in the composition of the Board within a three (3)
year period, as a result of which fewer than a majority of the directors are
Incumbent Directors. "Incumbent Directors" shall mean directors who either:
(i) are directors of the Company as of the date hereof;
(ii) are elected, or nominated for election, to the Board
with the affirmative votes of at least a majority of the directors of the
Company who are Incumbent Directors described in (i) above at the time of such
election or nomination; or
(iii) are elected, or nominated for election, to the Board
with the affirmative votes of at least a majority of the directors of the
Company who are Incumbent Directors described in (i) or (ii) above at the time
of such election or nomination.
Notwithstanding the foregoing, "Incumbent Directors." shall not include an
individual whose election or nomination is in connection with an actual or
threatened proxy contest relating to the election of directors to the Company.
6.2 TERMINATION FOLLOWING CHANGE OF CONTROL. In the event the
Company terminates Executive's employment without Cause or if Executive
terminates his employment for Good Reason in connection with or following a
Change of Control, the Company shall pay monthly an amount equivalent to
Executive's base salary and the value of Executive's then current benefits, less
standard withholdings and deductions, from the date of termination for a period
of eighteen (18) months, provided that any income received from alternative
employment during the final six (6) months of the severance period will offset
and reduce any amount paid by the Company to Executive during such final six (6)
month period.
6.3 STOCK OPTIONS. In the event of a Change of Control, Executive's
outstanding Options shall have their vesting accelerated in full so as to become
one hundred percent (100%) vested and immediately exercisable immediately prior
to the Change of Control, unless the acquiring entity assumes such Options or
substitutes similar options for Executive's Options.
6.4 PARACHUTE PAYMENTS.
(a) In the event that the severance, acceleration of stock
options and other benefits provided for in this Agreement or otherwise payable
to Executive (i) constitute "parachute payments" within the meaning of Section
280G (as it may be amended or replaced) of the Internal Revenue Code of 1986, as
amended or replaced (the "Code") and (ii) but for this Section 6.4, would be
subject to the excise tax imposed by Section 4999 (as it may be amended or
replaced) of the Code (the "Excise Tax"), then Executive's benefits hereunder
shall be either
(b) delivered in full, or
(c) delivered only as to such lesser extent which would result in
no portion of such benefits being subject to the Excise Tax,
whichever of the foregoing amounts, taking into account the applicable federal,
state and local
6.
income taxes and the Excise Tax, results in the receipt by Executive on an
after-tax basis, of the greatest amount of benefits, notwithstanding that all or
some portion of such benefits may be taxable under the Excise Tax. Unless the
Company and Executive otherwise agree in writing, any determination required
under this Section 6.4 shall be made in writing in good faith by the Company's
independent public accountants (the "Accountants"). In the event of a reduction
in benefits hereunder, Executive shall be given the choice of which benefits to
reduce. For purposes of making the calculations required by this Section 6.4,
the Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of the Code. The Company and Executive shall furnish
to the Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this Section 6.4. The
Company shall bear all costs the Accountants may reasonably incur in connection
with any calculations contemplated by this Section 6.4.
7. RESTRICTIVE COVENANT. In the event Executive voluntarily terminates
his employment with the Company without Good Reason or his employment is
terminated for Cause, then for eighteen (18) months immediately following the
termination date, Executive shall not, without first obtaining the prior written
approval of the Company, accept employment or establish a business relationship
with either Novartis Pharmaceuticals Corporation or Beaufort-Ipsen insofar as
such employment or business relationship relates to acromegaly, including the
development or commercialization of a drug or other therapy for the treatment of
acromegaly.
8. NONINTERFERENCE.
While employed by the Company, and for two (2) years immediately following
the Termination Date, Executive agrees not to interfere with the business of the
Company by:
(a) soliciting, attempting to solicit, inducing, or otherwise causing
any employee of the Company to terminate his or her employment in order to
become an employee, consultant or independent contractor to or for any
competitor of the Company; or
(b) directly or indirectly soliciting the business of any customer of
the Company which at the time of termination or one year immediately prior
thereto was listed on the Company's customer list.
9. GENERAL PROVISIONS.
9.1 NOTICES. Any notices provided hereunder must be in writing and
shall be deemed effective upon the earlier of personal delivery (including
personal delivery by facsimile transmission or the third day after mailing by
first class mail, to the Company at its primary office location and to Executive
at his address as listed on the Company payroll.
9.2 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed,
7.
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provisions had never been contained herein.
9.3 WAIVER. If either party should waive any breach of any
provisions of this Agreement, he or it shall not thereby be deemed to have
waived any preceding or succeeding breach of the same or any other provision of
this Agreement.
9.4 COMPLETE AGREEMENT. This Agreement, together with Exhibit A,
constitutes the entire agreement between Executive and the Company and it is the
complete, final, and exclusive embodiment of their agreement and supersedes any
prior agreement written or otherwise between Executive and the Company with
regard to this subject matter. It is entered into without reliance on any
promise or representation other than those expressly contained herein, and it
cannot be modified or amended except in a writing signed by an officer of the
Company.
9.5 COUNTERPARTS. This Agreement may be executed in separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
Agreement.
9.6 HEADINGS. The headings of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.
9.7 SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive and the Company, and
their respective successors, assigns, heirs, executors and administrators,
except that Executive may not assign any of his duties hereunder and he may not
assign any of his rights hereunder without the written consent of the Company,
which shall not be withheld unreasonably.
9.8 ATTORNEY FEES. If the Executive hereto brings any action or
arbitration to enforce his rights hereunder, and is the prevailing party in any
such action, he shall be entitled to recover his reasonable attorneys' fees and
costs incurred in connection with such action.
9.9 ARBITRATION. To ensure rapid and economical resolution of any
and all disputes that may arise in connection with the Agreement, the Executive
and the Company agree that, at the option of the Executive, any and all
disputes, claims, causes of action, in law or equity, arising from or relating
to this Agreement or its enforcement, performance, breach, or interpretation,
will be resolved, to the fullest extent permitted by law, by final and binding
confidential arbitration held in Austin, Texas and conducted by Judicial
Arbitration & Mediation Services/Endispute ("JAMS"), under its then-existing
Rules and Procedures. Nothing in this paragraph is intended to prevent either
the Executive or the Company from obtaining injunctive relief in court to
prevent irreparable harm pending the conclusion of any such arbitration. The
Company shall be solely responsible for payment of any and all JAMS fees and
costs for any such arbitration proceedings. If for any reason all or part of
this arbitration provision is held to be invalid or unenforceable in any respect
under any applicable law or rule in any jurisdiction, such invalidity or
unenforceability will not affect any other portion of this arbitration
provision, but this provision will be reformed, construed and enforced in such
jurisdiction to render such
8.
invalid or unenforceable part or parts of this provision consistent with the
general intent of the parties insofar as possible.
9.10 CHOICE OF LAW. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the law of the
State of Texas.
9.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first above written.
SENSUS DRUG DEVELOPMENT CORPORATION
By: /s/ John A. Scarlett
----------------------
Date: September 15, 1998
Accepted and agreed this
15th day of September, 1998.
/s/ Richard J. Hawkins
--------------------------
Richard J. Hawkins
10.