EXHIBIT 10.13
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the 16th day of March, 1998,
by and between NEOPHARM, INC., a Delaware corporation (the "Company") and JAMES
M. HUSSEY ("Executive").
WITNESSETH:
WHEREAS, the Company desires to employ the Executive, and the Executive
desires to accept such employment, upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the covenants and mutual agreements
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby agree
as follows:
1. Employment. Throughout the Term (as defined in Section 2 below), the
Company shall employ Executive as provided herein, and Executive hereby
accepts such employment. In accepting such employment, Executive states
that, to the best of his knowledge, he is not now, and by accepting such
employment, will not be, under any restrictions in the performance of the
duties contemplated under this Agreement as a result of the provisions of
any prior employment agreement or non-compete or similar agreement to
which Executive is or was a party.
2. Term of Employment. The term of Executive's employment by the Company
hereunder shall commence on March 16, 1998 (the "Effective Date") and
shall continue thereafter unless sooner terminated as a result of
Executive's death or in accordance with the provisions of Section 7 below
(the "Term").
3. Duties. Throughout the Term, and except as otherwise expressly provided
herein, Executive shall be employed by the Company as the President and
Chief Executive Officer ("CEO") of the Company. In such capacity,
Executive shall devote his full time to the performance of his duties as
President and CEO of the Company in accordance with the Company's By-laws,
this Agreement and the directions of the Company's Board of Directors. In
addition, the Company shall promptly appoint Executive to the Board and
thereafter nominate Executive as a nominee for election to the Board and
solicit proxies for his election for so long as this Agreement is in
effect. Without limiting the generality of the foregoing, throughout the
Term Executive shall faithfully perform his duties as President and CEO at
all times so as to promote the best interests of the Company.
4. Compensation.
(a) Salary. For any and all services performed by Executive under
this Agreement during the Term, in whatever capacity, the
Company shall pay to Executive an annual salary of Two Hundred
Fifty Thousand Dollars ($250,000) per year (the "Salary") less
any and all applicable federal, state and local payroll and
withholding taxes. The Salary shall be paid in the same
increments as the Company's normal payroll, but no less
frequent than monthly and prorated, however, for any period of
less than a full month. The Salary will be reviewed annually
by the Compensation Committee of the Board and a determination
shall be made at that time as to the appropriateness of an
increase, if any, thereto.
(b) Bonus. In addition to the Salary, Executive shall be eligible
to receive from the Company an incentive compensation bonus
(the "Bonus") based on a percentage of his Salary. The Bonus,
if any, shall be determined based on the achievement by the
Company of certain specific strategic plans and goals
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(the "Performance Goals") during the preceding calendar year
(the "Measurement Period") as shall be determined by the Board
in consultation with the Executive. The initial Performance
Goals will be established by the Board within ninety (90) days
of Executive's employment hereunder. Thereafter, the
Performance Goals for each Measurement Period shall be
established as promptly as possible in each such Measurement
Period, with the expectation that the Performance Goals be in
place each year prior to distribution of the Company's annual
proxy materials. Following each Measurement Period, the
Compensation Committee of the Board shall review the
Performance Goals for the prior Measurement Period in light of
the Company's actual performance during such Measurement
Period as reflected on the Company's audited financial
statements. Achievement of various levels of the Performance
Goals shall result in the following payments as a percentage
of Salary:
BONUS AS PERCENT
LEVEL OF ACHIEVEMENT OF SALARY
Below Threshold 0%
Threshold Goal 20-50%
TargetGoal 50%
Stretch Goal 50-80%
Payment of each year's Bonus, if any, shall be made
within thirty (30) days after the Company's performance for
the Measurement Period is established on the basis of the
Company's audited financial statements. In addition, and at
its sole discretion, the Board may award additional
compensation to Executive based on Executive's contributions
to the Company.
5. Benefits and Other Rights. In consideration for Executive's performance
under this Agreement, the Company shall provide to Executive the
following benefits:
(a) The Company will provide Executive with cash advances for or
reimbursement of all reasonable out-of-pocket business
expenses incurred by Executive in connection with his
employment hereunder; provided, Executive adheres to any and
all reasonable policies established by Company from time to
time with respect to such reimbursements or advances,
including, but not limited to, a requirement that Executive
submit supporting evidence of any such expenses to the
Company.
(b) The Company will provide Executive with a monthly car
allowance in the amount of Seven Hundred and Fifty Dollars
($750.00) subject to standard payroll withholding for taxes.
(c) The Company will provide Executive and his family with group
medical coverage under the terms of the Company's health
insurance plan, but subject to completion of normal waiting
periods. During any such waiting period, or in the event that
at the date of this Agreement the Company's group medical
coverage is not yet in effect, then, in either case, Company
will pay, or reimburse Executive for, the cost of COBRA
coverage for Executive and his family under his prior health
plan.
(d) During the Term the Executive shall be entitled to three (3)
weeks paid vacation, it being understood and agreed that
unused vacation shall not be carried over from one year to the
next.
(e) As a one time benefit, the Company will reimburse, or pay
directly on Executive's behalf, the expenses, including, but
not limited to, realtor fees, associated with moving
Executive's family and household possessions
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from Naperville, Illinois to the northern suburbs of the
Chicago metropolitan area ("Moving Expenses"); provided, in
each case, that Executive shall provide such documentation of
all Moving Expenses as the Company shall reasonably request.
6. OPTIONS.
(a) The Company shall grant to Executive options pursuant to the
Company's 1995 Stock Plan (the "Option Plan"), as amended, to
purchase 400,000 shares of the Company's common stock at an
option exercise price of $4.75 per share of common stock (the
"Options") which was the fair market value (as determined
under the Option Plan) of the Company's common stock as of
January 12, 1998, which was the date of Executive's acceptance
of employment with the Company and which date shall be the
date of grant of the Options for purposes of the Option Plan
(the "Date of Grant"). The Options shall vest in equal
installments of 100,000 Options per year on each of the first
four anniversaries of the Date of Grant. The Options shall not
be exercisable subsequent to the date ten (10) years after the
Date of Grant. In all other respects the Options shall be
governed by the terms and conditions of the Option Plan.
(b) In the event the Company shall elect to obtain additional
capital investment in the future, after the completion of any
such capital investment program by the Company, the Board will
evaluate the awarding of additional stock options to Executive
based on the success of such fundraising endeavors and
Executive's contributions to that success.
7. TERMINATION OF THE TERM.
(a) The Company shall have the right to terminate the Term,
effective upon delivery of written notice of termination to
Executive setting forth the basis of such termination, under
the following circumstances:
(i) Executive shall die; or
(ii) With or without cause, effective ninety (90) days
after delivery of written notice to Executive by the
Company or, in lieu of said ninety (90) day notice,
upon payment to Executive of three months
compensation based on his then current Salary.
(b) This Agreement may be terminated by the Executive at any time
upon ninety (90) days prior written notice to the Company.
8. Effect of Expiration or Termination of the Term. Promptly following the
termination of the Term, and except as provided in Section 7 or as
otherwise expressly agreed by the Company, Executive shall
(a) provide the Company with all reasonable assistance necessary
to permit the Company to continue its business operations
without interruption and in a manner consistent with
reasonable business practices; provided, however, that such
transition period shall not exceed thirty (30) days after
termination nor require more than forty (40) hours of
Executive's time per week. In the event that the Company shall
request Executive to provide transitional assistance after the
effective date of termination, Executive shall be paid at any
hourly rate based on an 8 hour work day, a 2,080 hour work
year and his then current Salary, based upon time sheets
submitted by Executive specifying the services performed and
the amount of time expended;
(b) deliver to the Company possession of any and all property
owned or leased
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by the Company which may then be in Executive's possession or
under his control, including without limitation any and all
such keys, credit cards, automobiles, equipment, supplies,
books, records, files, computer equipment, computer software
and other such tangible and intangible property of any
description whatsoever. If, following the expiration or
termination of the Term, Executive shall receive any mail
addressed to the Company, then Executive shall immediately
deliver such mail, unopened and in its original envelope or
package, to the Company; and
(c) Other than as provided in Section 7, upon a termination of
employment all other benefits and/or entitlements to
participate in programs or benefits, if any, will cease as of
the effective date medical insurance coverage at his own
expense as provided by applicable law or written Company
policy.
9. CONFIDENTIALITY. The Executive acknowledges that during the period of
his employment by the Company, and in his performance of services
hereunder, he will be placed in a relationship of trust and confidence
regarding the Company and its affairs. In the course of and due to that
relationship he will have contact with the Company's customers,
suppliers, affiliates, and distributors and their personnel. In the
course of the aforesaid relationship, he will have access to and will
acquire confidential information relating to the business and
operations of the Company, including, without limitation, information
relating to processes, plans and methods of operation of the Company.
The Executive acknowledges that any such information that is not a
trade secret, nonetheless constitutes confidential information as
between himself and the Company, that the disclosure thereof (or of any
information which he knows relates to confidential, trade, or other
secret aspects of the Company's business) would cause substantial loss
to the goodwill of the Company, and will continue to be made known to
Executive only because of the position of trust and confidence which he
will continue to occupy hereunder. In view of the foregoing, and in
consideration of the covenants and premises of this Agreement, the
Executive agrees that he will not, at any time during the term of his
employment, and for a period of twelve months thereafter, disclose to
any person, firm or Company any trade secrets or confidential
information or such ideas which he may have acquired or developed or
may acquire or develop relating to the Business of the Company while
serving the Company as an Executive.
10. REMEDIES.
(a) The covenants of Executive set forth in Section 9 are separate
and independent covenants for which valuable consideration has
been paid, the receipt, adequacy and sufficiency of which are
acknowledged by Executive, and have also been made by
Executive to induce the Company to enter into this Agreement.
The aforesaid covenants may be availed of, or relied upon, by
the Company in any court of competent jurisdiction, and shall
form the basis of injunctive relief and damages including
expenses of litigation (including, but not limited to,
reasonable attorney's fees upon trial and appeal) suffered by
the Company arising out of any breach of the aforesaid
covenants by Executive. The covenants of Executive set forth
in this Section 10 are cumulative to each other and to all
other covenants of Executive in favor of the Company contained
in this Agreement and shall survive the termination of this
Agreement for the purposes intended.
(b) The covenants contained in Section 9 above shall be construed
as agreements which are independent of any other provision of
this Agreement, and the existence of any claim or cause of
action by any party hereto against any other party hereto, of
whatever nature, shall not constitute a defense to the
enforcement of such covenants. If any of such covenants shall
be deemed unenforceable by virtue of its scope in terms of
geographical area, length
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of time or otherwise, but may be made enforceable by the
imposition of limitations thereon, Executive agrees that the
same shall be enforceable to the fullest extent permissible
under the laws and public policies of the jurisdiction in
which enforcement is sought. The parties hereto hereby
authorize any court of competent jurisdiction to modify or
reduce the scope of such covenants to the extent necessary to
make such covenants enforceable.
11. ENFORCEMENT COSTS. If any legal action or other proceeding is brought
for the enforcement of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with any
provisions of this Agreement, the successful or prevailing party or
parties shall be entitled to recover reasonable attorney's fees, court
costs and all expenses even if not taxable as court costs (including,
without limitation, all such fees, costs and expenses incident to
appeal and other post-judgment proceedings), incurred in that action or
proceeding, in addition to any other relief to which such party or
parties may be entitled. Attorney's fees shall include, without
limitation, paralegal fees, investigative fees, administrative costs,
sales and use taxes and all other charges billed by the attorney to the
prevailing party.
12. NOTICES. Any and all notices necessary or desirable to be served
hereunder shall be in writing and shall be
(a) personally delivered, or
(b) sent by certified mail, postage prepaid, return
receipt requested, or guaranteed overnight delivery
by a nationally recognized express delivery Company,
in each case addressed to the intended recipient at
the address set forth below.
(c) For notices sent to the Company:
NeoPharm, Inc.
100 Corporate North
Bannockburn, Illinois 60015
Telephone No.: (847) 295-8678
Facsimile No.: (847) 295-8654
With a copy to:
Burke, Warren, Mackay & Serritella, P.C.
330 N. Wabash, Suite 2200
Chicago, Illinois 60611
Attn: Christopher R. Manning
(d) For notices sent to Executive:
James M. Hussey
4111 Kingshill Circle
Naperville, Illinois 60564
Either party hereto may amend the addresses for notices to such party
hereunder by delivery of a written notice thereof served upon the other
party hereto as provided herein. Any notice sent by certified mail as
provided above shall be deemed delivered on the third (3rd) business
day next following the postmark date that it bears.
13. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of the
parties
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hereto with respect to the subject matter hereof, and all prior
negotiations, agreements and understandings are merged herein. This
Agreement may not be modified or revised except pursuant to a written
instrument signed by the party against whom enforcement is sought.
14. SEVERABILITY. The invalidity or unenforceability of any provision
hereof shall not affect the enforceability of any other provision
hereof, and except as otherwise provided in Section 11 above, any such
invalid or unenforceable provision shall be severed from this
Agreement.
15. WAIVER. Failure to insist upon strict compliance with any of the terms
or conditions hereof shall not be deemed a waiver or such term or
condition, and the waiver or relinquishment of any right or remedy
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or remedy at any other time or times.
16. GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereto shall be governed by and construed in accordance with
the laws of the State of Illinois, without regard to its conflicts of
laws provisions. Each party hereto hereby (a) agrees that any
litigation which may be initiated with respect to this Agreement or to
enforce rights granted hereunder shall be initiated in a court located
in Cook County, Illinois and (b) consents to personal jurisdiction of
such courts for such purpose.
17. BENEFIT AND ASSIGNABILITY. This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns. The
rights and obligations of Executive hereunder are personal to him, and
are not subject to voluntary or involuntary alienation, transfer,
delegation or assignment.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the day and year first above written.
NEOPHARM, INC.
By:
Its:
EXECUTIVE:
JAMES M. HUSSEY
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