Employment Agreement - Bio-Technology General Corp. and Virgil Thompson
AGREEMENT made as of April 27, 1999, between BIO-TECHNOLOGY
GENERAL CORP., a Delaware corporation with an office at 70 Wood Avenue South,
Iselin, New Jersey 08830 (the 'Company') and Virgil Thompson, residing at
________________________________________ (the 'Executive').
W I T N E S S E T H :
WHEREAS, the Company desires that Executive be employed to
serve in a senior executive capacity with the Company, and Executive desires to
be so employed by the Company, upon the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and of the
mutual promises, representations and covenants herein contained, the parties
hereto agree as follows:
The Company hereby employs Executive and Executive hereby
accepts such employment, subject to the terms and conditions herein set forth.
Executive shall hold the office of President and Chief Operating Officer of the
Company, reporting to the Chief Executive Officer of the Company. As long as
Executive is serving as President of the Company, the Company will include
Executive on management's slate of nominees for election as a director of the
The initial term of employment under this Agreement shall
begin on May 3, 1999 (the 'Employment Date') and shall continue for a period of
two (2) years from that date, subject to prior termination in accordance with
the terms hereof. Thereafter, this Agreement shall automatically be renewed for
successive two-year terms unless either party shall give the other ninety (90)
days prior written notice of its intent not to renew this Agreement.
As compensation for the employment services to be rendered by
Executive hereunder, including all services as an officer or director of the
Company and any of its subsidiaries, the Company agrees to pay, or cause to be
paid, to Executive, and Executive agrees to accept, an initial annual salary of
$320,000, payable in equal installments in accordance with Company practice.
Executive's annual salary hereunder for the remaining years of employment shall
be determined by
the Board of Directors of the Company in its sole discretion; provided, however,
that Executive's salary shall be increased each year (on the date of the annual
meeting of the Board of Directors of the Company), commencing with the 2000
annual meeting of the Board of Directors, by at least six percent (6%). In
addition, Executive shall be entitled to bonuses from time to time in such
amounts as may be determined by the Board of Directors of the Company in its
sole discretion. Such bonus may be paid, in the sole discretion of the Board of
Directors, in cash, shares of the Company's Common Stock, or a combination
The Company shall pay or reimburse Executive, upon presentment
of suitable vouchers, for all reasonable business and travel expenses which may
be incurred or paid by Executive in connection with his employment hereunder.
Executive shall comply with such restrictions and shall keep such records as the
Company may deem necessary to meet the requirements of the Internal Revenue Code
of 1986, as amended from time to time, and regulations promulgated thereunder.
5. OTHER BENEFITS.
Executive shall be entitled to a vacation allowance of five
(5) weeks per annum and to participate in and receive any other benefits
customarily provided by the Company to its senior management personnel
(including any profit sharing, pension, short and long-term disability
insurance, hospital, major medical insurance and group life insurance plans in
accordance with the terms of such plans) and including stock option and/or stock
purchase plans, all as determined from time to time by the Board of Directors of
the Company. Unused annual vacations in excess of one week may not be carried
over to other years without the consent of the Chief Executive Officer of the
Company. The Company shall also provide Executive with a leased company car.
6. STOCK OPTIONS.
(a) The Compensation and Stock Option Committee of the Board
of Directors (the 'Committee') has approved the grant to Executive of a stock
option (which shall be an incentive stock option to the extent permitted by
law), to purchase 200,000 shares of the Company's Common Stock (the 'Options'),
at an exercise price per share equal to the fair market value of the Company's
Common Stock on the Employment Date, such Options to become exercisable as to
50,000 shares on the first anniversary date of the Employment Date and as to an
additional 50,000 shares on each successive anniversary date of the Employment
(b) Any future grant of stock options shall be subject to such
terms as the Committee in its sole discretion shall specify at the time of
(a) Executive shall have day-to-day responsibility for the
operations of the Company (other than the operations of Bio-Technology General
(Israel) Ltd., QA/QC matters, legal matters and business development, which
shall be the responsibility of the Company's Chief Executive Officer). Although
business development shall be the responsibility of the Company's Chief
Executive Officer, the parties acknowledge that Executive will be involved in,
and have input with respect to, commercial and business development activities.
In addition, Executive shall perform such other duties and functions as the
Chief Executive Officer of the Company shall from time to time determine and
Executive shall comply in the performance of his duties with the policies of,
and be subject to, the direction of the Board of Directors of the Company. If
Executive shall be elected or appointed as a director of the Company or any of
its subsidiaries during the term of this Agreement, he will serve in such
capacity without further compensation.
(b) Executive agrees to devote his entire working time,
attention and energies to the performance of the business of the Company and of
any of its subsidiaries by which he may be employed; and Executive shall not,
directly or indirectly, alone or as a member of any partnership or other
organization, or as an officer, director or employee of any other corporation,
partnership or other organization, be actively engaged in or concerned with any
other duties or pursuits which interfere with the performance of his duties
hereunder, or which, even if non-interfering, may be, in the reasonable
determination of the Board of Directors of the Company in its sole discretion,
inimical, or contrary, to the best interests of the Company, except that
Executive shall be permitted to (i) remain on the Board of Directors of Aradigm
Corporation and Cypros Pharmaceuticals as long as such companies are not
competitors of the Company and the performance of his duties as a director does
not unreasonably interfere with the performance of his duties hereunder; (ii)
complete transitionary duties for Cytel Corporation as a consultant through July
31, 1999; and (iii) pursue such other duties or pursuits specifically authorized
by the Company's Board of Directors.
(c) All fees, compensation or commissions received by
Executive during the term of this Agreement for personal services (including,
but not limited to, commissions and compensation received as a fiduciary or a
director, and fees for lecturing and teaching) rendered at the request of the
Company shall be paid to the Company when received by Executive, except those
fees that the Company's Board of Directors determines may be kept by Executive.
This provision shall not be construed to prevent Executive from investing or
trading in nonconflicting investments as he sees fit for his own account,
including real estate, stocks, bonds, securities, commodities or other forms of
8. TERMINATION OF EMPLOYMENT; EFFECT OF TERMINATION.
(a) Executive's employment hereunder may be terminated at any
time upon written notice from the Company to Executive:
(i) upon the determination by the Board of Directors of the
Company that Executive's performance of his duties has not been fully
satisfactory for any reason which would not constitute justifiable
cause (as hereinafter defined) upon thirty (30) days' prior written
notice to Executive; or
(ii) upon the determination by the Board of Directors of the
Company that there is justifiable cause (as hereinafter defined) for
such termination upon ten (10) days' prior written notice to Executive.
(b) Executive's employment shall terminate upon:
(i) the death of Executive; or
(ii) the 'disability' of Executive (as hereinafter defined
pursuant to subsection (c) herein) pursuant to subsection (f) hereof.
(c) For the purposes of this Agreement, the term 'disability'
shall mean the inability of Executive, due to illness, accident or any other
physical or mental incapacity, substantially to perform his duties in a normal
manner for a period of three (3) consecutive months or for a total of six (6)
months (whether or not consecutive) in any twelve (12) month period during the
term of this Agreement as reasonably determined by the Board of Directors of the
Company after examination of Executive by an independent physician reasonably
acceptable to Executive.
(d) For the purposes hereof, the term 'justifiable cause'
shall mean and be limited to: any willful breach by Executive of the performance
of any of his duties pursuant to this Agreement; Executive's conviction (which,
through lapse of time or otherwise, is not subject to appeal) of any crime or
offense involving money or other property of the Company or its subsidiaries or
which constitutes a felony in the jurisdiction involved; Executive's performance
of any act or his failure to act, for which it is determined by independent
counsel retained by the Board of Directors and reasonably acceptable to
Executive (which may be counsel for the Company), after due inquiry in which
Executive is given the opportunity to be heard, that if he were prosecuted and
convicted, a crime or offense involving money or property of the Company or its
subsidiaries, or which would constitute a felony in the jurisdiction involved,
would have occurred; any unauthorized disclosure by Executive to any person,
firm or corporation other than the Company, its subsidiaries and its and their
directors, officers and employees, of any confidential information or trade
secret of the Company or any of its subsidiaries; any attempt by Executive to
secure any improper personal profit in connection with the business of the
Company or any of its subsidiaries; the failure by Executive to devote his full
time to the affairs of the Company and its subsidiaries; the engaging by
Executive in any business other than the business of the Company and its
subsidiaries which interferes with the performance of his duties hereunder where
such conduct shall not have ceased or offense been cured within thirty (30) days
following written warning from the Company; or Executive's repeated
and willful failure to follow the instructions of the Board of Directors or the
Chief Executive Officer of the Company (other than instructions which are
illegal or improper) where such conduct shall not have ceased or offense been
cured within thirty (30) days following written warning from the Company. Upon
termination of Executive's employment for justifiable cause, this Agreement
shall terminate immediately and Executive shall not be entitled to any amounts
or benefits hereunder other than such portion of Executive's annual salary and
vacation benefits as has been accrued through the date of his termination of
employment and reimbursement of expenses pursuant to Section 4 hereof.
(e) If Executive shall die during the term of his employment
hereunder, this Agreement shall terminate immediately. In such event, the estate
of Executive shall thereupon be entitled to receive such portion of Executive's
annual salary and vacation benefits as has been accrued through the date of his
death and such bonus, if any, as the Board of Directors of the Company in its
sole discretion may determine to award taking into account Executive's
contributions to the Company prior to his death. If Executive's death shall
occur while he is on Company business, the estate of Executive shall be entitled
to receive, in addition to the other amounts set forth in this subsection (e),
an amount equal to one-half his then annual salary.
(f) Upon Executive's 'disability', the Company shall have the
right to terminate Executive's employment. Notwithstanding any inability to
perform his duties, Executive shall be entitled to receive his compensation as
provided herein until the termination of his employment for disability. Any
termination pursuant to this subsection (f) shall be effective on the date
thirty (30) days after which Executive shall have received written notice of the
Company's election to terminate.
(g) Notwithstanding any provision to the contrary contained
herein, in the event that Executive's employment is terminated by the Company at
any time for any reason other than justifiable cause, disability or death, or in
the event the Company shall fail to renew this Agreement or terminate
Executive's employment without justifiable cause at any time within two years
following the effective date of a Change in Control of the Company, the Company
shall pay to Executive, in full satisfaction and in lieu of any and all other
payments due and owing to Executive under the terms of this Agreement (other
than any payments constituting reimbursement of expenses pursuant to Section 4
hereof), a severance payment in an amount equal to the greater of (i) one (1)
year's salary plus Executive's most recent bonus, if any, or (ii) the product of
one (1) month's salary plus 1/12 of Executive's most recently declared bonus
multiplied by the number of years Executive has been employed by the Company,
payable bi-weekly in equal installments. In addition, upon a termination of
Executive's employment for any reason other than justifiable cause, disability
or death, fifty percent (50%) of the Options granted pursuant to Section 6(a)
hereof which are not then exercisable shall immediately become exercisable. As
used in this Agreement, a 'Change in Control of the Company' shall be deemed to
occur if (i) there shall be consummated (x) any consolidation or merger of the
Company in which the Company is not the continuing or surviving corporation or
pursuant to which shares of the Company's Common Stock would be converted into
or other property, other than a merger of the Company in which the holders of
the Company's Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger, or (y) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company, or (ii) the stockholders of the Company shall
approve any plan or proposal for liquidation or dissolution of the Company, or
(iii) any person (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the 'Exchange Act')), shall become
the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act)
of 40% or more of the Company's outstanding Common Stock other than pursuant to
a plan or arrangement entered into by such person and the Company, or (iv)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the entire Board of Directors of the Company shall cease
for any reason to constitute a majority thereof unless the election, or the
nomination for election by the Company's stockholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period.
(h) Executive may terminate his employment at any time upon
thirty (30) days' prior written notice to the Company. Upon Executive's
termination of his employment hereunder, this Agreement (other than Sections 8,
10, 11, 12 and 13, which shall survive) shall terminate immediately. In such
event, Executive shall be entitled to receive such portion of Executive's annual
salary and vacation benefits as has been accrued to date. Executive shall be
entitled to reimbursement of expenses pursuant to Section 4 hereof and to
participate in the Company's benefit plans to the extent participation by former
employees is required by law or permitted by such plans, with the expense of
such participation to be as specified in such plans for former employees.
9. REPRESENTATIONS AND AGREEMENTS OF EXECUTIVE.
(a) Executive represents and warrants that he is free to enter
into this Agreement and to perform the duties required hereunder, and that there
are no employment contracts or under standings, restrictive covenants or other
restrictions, whether written or oral, preventing the performance of his duties
hereunder or requiring him to perform employment, consulting, business related
or similar duties for any other person. Notwithstanding the foregoing, the
Company agrees that Executive may act as a consultant to Cytel Corporation to
assist in certain transitionary duties until no later than July 31, 1999.
(b) Executive agrees to submit to a medical examination and to
cooperate and supply such other information and documents as may be required by
any insurance company in connection with the Company's obtaining life insurance
on the life of Executive, and any other type of insurance or fringe benefit as
the Company shall determine from time to time to obtain.
(a) Executive agrees that during his employment by the Company
and for a period of one (1) year following the termination of Executive's
employment hereunder, other than by reason of the Company's election not to
renew this Agreement (the 'Non-Competitive Period'), Executive shall not,
directly or indirectly, as owner, partner, joint venturer, stockholder,
employee, broker, agent, principal, trustee, corporate officer, director,
licensor, or in any capacity whatsoever engage in, become financially interested
in, be employed by, render any consultation or business advice with respect to,
or have any connection with, any products or services or proposed products or
services which are competitive with products or services of the Company or any
of its subsidiaries, in any geographic area where, at the time of the
termination of his employment hereunder, the business of the Company or any of
its subsidiaries was being conducted or was proposed to be conducted in any
manner whatsoever; provided, however, that Executive may own any securities of
any corporation which is engaged in such business and is publicly owned and
traded but in an amount not to exceed at any one time one percent (1%) of any
class of stock or securities of such corporation. In addition, Executive shall
not, directly or indirectly, request or cause any collaborative partners,
universities, governmental agencies, contracting parties, suppliers or customers
with whom the Company or any of its subsidiaries has a business relationship to
cancel or terminate any such business relationship with the Company or any of
its subsidiaries or solicit from the Company any employee of the Company.
(b) If any portion of the restrictions set forth in this
Section 10 should, for any reason whatsoever, be declared invalid by a court of
competent jurisdiction, the validity or enforceability of the remainder of such
restrictions shall not thereby be adversely affected.
(c) Executive acknowledges that the Company conducts business
on a world-wide basis, that its sales and marketing prospects are for continued
expansion into world markets and that, therefore, the territorial and time
limitations set forth in this Section 10 are reasonable and properly required
for the adequate protection of the business of the Company and its subsidiaries.
In the event any such territorial or time limitation is deemed to be
unreasonable by a court of competent jurisdiction, Executive agrees to the
reduction of the territorial or time limitation to the area or period which such
court shall deem reasonable.
(d) The existence of any claim or cause of action by Executive
against the Company or any subsidiary shall not constitute a defense to the
enforcement by the Company or any subsidiary of the foregoing restrictive
covenants, but such claim or cause of action shall be litigated separately.
11. INVENTIONS AND DISCOVERIES.
(a) Executive shall promptly and fully disclose to the
Company, and with all necessary detail for a complete understanding of the same,
all developments, know-how, discoveries, inventions, improvements, concepts,
ideas, writings, formulae, processes and methods of a financial or other nature
(whether copyrightable, patentable or otherwise) made, received, conceived,
acquired or written during working hours, or otherwise, by Executive (whether or
not at the request or upon the suggestion of the Company) during the period of
his employment with, or rendering of advisory or consulting services to, the
Company or any of its subsidiaries, solely or jointly with others, in or
relating to any activities of the Company or its subsidiaries known to him as a
consequence of his employment or the rendering of advisory and consulting
services hereunder (collectively the 'Subject Matter').
(b) Executive hereby assigns and transfers, and agrees to
assign and transfer, to the Company, all his rights, title and interest in and
to the Subject Matter, and Executive further agrees to deliver to the Company
any and all drawings, notes, specifications and data relating to the Subject
Matter, and to execute, acknowledge and deliver all such further papers,
including applications for copyrights or patents, as may be necessary to obtain
copyrights and patents for any thereof in any and all countries and to vest
title thereto to the Company. Executive shall assist the Company in obtaining
such copyrights or patents during the term of this Agreement, and any time
thereafter on reasonable notice and at mutually convenient times, and Executive
agrees to testify in any prosecution or litigation involving any of the Subject
Matter; provided, however, that Executive shall be compensated in a timely
manner at the rate of $100.00 per hour (with a minimum of $500.00 per day), plus
out-of-pocket expenses incurred in rendering such assistance or giving or
preparing to give such testimony if it is required after termination of his
12. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) Executive shall not, during the term of this Agreement, or
at any time following termination of this Agreement, directly or indirectly,
disclose, permit to be known or make accessible (other than as is required in
the regular course of his duties or is required by law (in which case Executive
shall give the Company prior written notice of such required disclosure) or with
the prior written consent of the Board of Directors of the Company), to any
person, firm or corporation, any confidential information acquired by him during
the course of, or as an incident to, his employment or the rendering of his
advisory or consulting services hereunder, relating to the Company or any of its
subsidiaries, the directors of the Company or its subsidiaries, any client of
the Company or any of its subsidiaries, or any corporation, partnership or other
entity owned or controlled, directly or indirectly, by any of the foregoing, or
in which any of the foregoing has a beneficial interest, including, but not
limited to, the business affairs of each of the foregoing. Such confidential
information shall include, but shall not be limited to, proprietary technology,
secrets, patented processes, research and development data, know-how, market
studies and forecasts, competitive analyses, pricing policies, employee lists,
personnel policies, the substance of agreements with customers and others,
marketing or dealership arrangements, servicing and training programs and
arrangements, customer lists and any other documents embodying such confidential
information. This confidentiality obligation shall not apply to any confidential
information which thereafter becomes publicly available other than pursuant to a
breach of this Section 12(a) by Executive.
(b) All information and documents relating to the Company and
its affiliates as hereinabove described (or other business affairs) shall be the
exclusive property of the Company, and Executive shall use commercially
reasonable best efforts to prevent any publication or disclosure thereof. Upon
termination of Executive's employment with the Company, all documents, records,
reports, writings and other similar documents containing confidential
information, including copies thereof, then in Executive's possession or control
shall be returned and left with the Company.
13. SPECIFIC PERFORMANCE.
Executive agrees that if he breaches, or threatens to commit a
breach of, any of the provisions of Sections 10, 11 or 12 (the 'Restrictive
Covenants'), the Company shall have, in addition to, and not in lieu of, any
other rights and remedies available to the Company under law and in equity, the
right to have the Restrictive Covenants specifically enforced by any court of
competent jurisdiction, it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to the Company and that
money damages would not provide an adequate remedy to the Company.
Notwithstanding the foregoing, nothing herein shall constitute a waiver by
Executive of his right to contest whether a breach or threatened breach of any
Restrictive Covenant has occurred.
14. AMENDMENT OR ALTERATION.
No amendment or alteration of the terms of this Agreement
shall be valid unless made in writing and signed by both of the parties hereto.
15. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New Jersey applicable to agreements made and to be performed therein.
The holding of any provision of this Agreement to be invalid
or unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect.
Any notices required or permitted to be given hereunder shall
be sufficient if in writing, and if delivered by hand, or sent by certified
mail, return receipt requested, to the addresses set forth above or such other
address as either party may from time to time designate in writing to the other,
and shall be deemed given as of the date of the delivery or mailing.
18. WAIVER OR BREACH.
It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.
19. ENTIRE AGREEMENT AND BINDING EFFECT.
This Agreement contains the entire agreement of the parties
with respect to the subject matter hereof and shall be binding upon and inure to
the benefit of the parties hereto and their respective legal representatives,
heirs, distributors, successors and assigns. Notwithstanding the foregoing, all
prior agreements between Executive and the Company relating to the
confidentiality of information, trade secrets, patents and stock options shall
not be affected by this Agreement.
The termination of Executive's employment hereunder or the
expiration of this Agreement shall not affect the enforceability of Sections 8,
10, 11, 12 and 13 hereof.
21. FURTHER ASSURANCES.
The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
The Section headings appearing in this Agreement are for the
purposes of easy reference and shall not be considered a part of this Agreement
or in any way modify, demand or affect its provisions.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
BIO-TECHNOLOGY GENERAL CORP.
By: /s/ Sim Fass
/s/ Virgil Thompson