EXECUTIVE EMPLOYMENT
AGREEMENT
THIS EXECUTIVE
EMPLOYMENT AGREEMENT (the “Agreement”) is entered
into as of August 20, 2008, by and between Cornerstone
BioPharma Holdings, Inc. (the “Company”) and David
Price (the “Executive”).
WHEREAS,
the Company desires to employ the Executive, and the Executive
desires to be employed by the Company.
NOW,
THEREFORE, in consideration of the mutual covenants and
promises contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, the parties agree as
follows:
1.
Term of Employment . The Company hereby agrees to employ
the Executive, and the Executive hereby accepts employment with the
Company, upon the terms set forth in this Agreement, for the period
commencing on September 8, 2008 (the “Commencement
Date”) and ending on September 7, 2009 (the
“Initial Term”) unless renewed or sooner terminated in
accordance with the provisions of this Section 1 or
Section 4, respectively. Upon each subsequent anniversary of
the Commencement Date, the term of this Agreement shall
automatically extend for an additional year (such period, including
the Initial Term and as it may be extended, the “Employment
Period”) unless (i) either the Company or the Executive
gives at least sixty (60) days notice of non-renewal prior to
such anniversary or (ii) the Agreement is terminated in
accordance with the provisions of Section 4.
2.
Title; Capacity . The Executive shall serve as Executive
Vice President, Finance, and Chief Financial Officer of each of the
Company, of Cornerstone BioPharma, Inc. and Aristos
Pharmaceuticals, Inc., and in such other position as the Company or
its Board of Directors (the “Board”) may determine from
time to time. The Executive shall be subject to the supervision of,
and shall have such authority as is delegated to him by, the
Company’s Chief Executive Officer (the
“CEO”).
The Executive
hereby agrees to undertake the duties and responsibilities inherent
in such positions and such other reasonable and lawful duties and
responsibilities as the CEO or his designee shall from time to time
reasonably assign to him. The Executive agrees to devote his entire
business time, attention and energies to the business and interests
of the Company during the Employment Period. The Executive agrees
to abide by any rules, regulations, instructions, personnel
practices and policies of the Company that are applicable to him
and any changes therein that may be adopted from time to time by
the Company.
3.
Compensation and Benefits .
3.1 Salary . The Company shall pay the Executive a
base salary in accordance with the Company’s regular payroll
practices at an annualized rate of Two Hundred Eighty-Five Thousand
and No/100 Dollars ($285,000.00), less lawful deductions. Such
salary shall be subject to annual increases as determined by the
Board.
3.2 Annual Target Cash Bonus . The Executive shall be
eligible to receive an annual target cash bonus of up to
thirty-five percent (35%) of his then annual base salary
(“Target Cash Bonus”). The Board (or a committee
thereof) shall determine the amount of the actual award, if any,
based on overall corporate performance and individual performance.
Actual awards may be greater than or less than the
Executive’s Target Cash Bonus, depending in part upon the
extent to which actual performance exceeds or falls below the
performance goals. Any bonus shall be paid in a single lump sum,
subject to lawful deductions, at such time as bonuses are regularly
paid to senior executives of the Company, but in any event such
bonus shall be paid on or before March 15 of the year
following the year to which the bonus relates. Each cash bonus
award that may become payable shall be paid solely from the general
assets of the Company. Any bonus awarded for the year 2008 shall be
calculated as if the Executive had been employed by the Company for
the entire calendar year of 2008.
3.3 Annual Equity Awards . The Executive shall be
eligible to receive annual equity awards on similar terms and
conditions as may be applicable to other senior executives of the
Company. The Compensation Committee of the Board shall determine
the amount of the actual equity award, if any, based on overall
corporate performance and individual performance.
3.4 Fringe Benefits and Vacation . The Executive
shall be entitled to participate in all bonus and benefit plans and
programs, including medical, health and life insurance, car
allowance, and 401(k) and profit sharing plans, if any, that the
Company establishes and makes available to its employees or
executives, to the extent that the Executive’s position,
tenure, salary, age, health and other qualifications make him
eligible to participate. All such plans and programs are subject to
amendment or termination from time to time by the Company in its
discretion. Notwithstanding anything to the contrary in any such
plan or program, the Executive shall be entitled to three
(3) weeks of paid vacation in his first year of employment
hereunder and, thereafter, shall be entitled to four (4) weeks
of paid vacation per year, vacation shall be accrued monthly, and
shall be taken at such times as may be approved by the CEO or his
designee.
3.5 Reimbursement of Expenses . The Company shall
reimburse the Executive for all reasonable travel, entertainment
and other expenses incurred or paid by the Executive in connection
with, or related to, the performance of his duties,
responsibilities or services under this Agreement, upon
presentation by the Executive of documentation, expense statements,
vouchers and/or such other supporting information as the Company
may request; provided, however, that the amount available for such
travel, entertainment and other expenses may be fixed in advance by
the Board. Notwithstanding the foregoing, (i) the expenses
eligible for reimbursement in any particular taxable year may not
affect the expenses eligible for reimbursement in any other taxable
year, (ii) such reimbursement must be made on or before the last
day of the year following the year in which the expense was
incurred, and (iii) the right to reimbursement is not subject
to liquidation or exchange for another benefit.
3.6 Reimbursement of Moving Expenses . The Company
shall reimburse the Executive up to Twenty Thousand Dollars and
00/100 ($20,000.00) for reasonable moving expenses, including
expenses for temporary housing, incurred or paid by the Executive
for relocating his principal residence from New York to North
Carolina. Said reimbursement shall be in accordance with the
Company’s applicable policies and practices and upon
presentation by the Executive of such documentation as the Company
may request and all such reimbursement
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amounts shall
be paid on or before March 15 th of
the year following the year in which the expense was
incurred.
4.
Employment Termination . The employment of the Executive
by the Company pursuant to this Agreement shall terminate upon the
occurrence of any of the following:
4.1 Expiration of the Employment Period in accordance with
Section 1;
4.2 At the election of the Company, for Cause (as defined in
Section 18), immediately upon written notice by the Company to
the Executive;
4.3 Thirty (30) days after the death or Disability (as
defined in Section 18) of the Executive;
4.4 At the election of the Executive by providing written
notice to the Company; and
4.5 At the election of the Company, without Cause, by
providing written notice to the Executive.
4.6 At the election of the Executive, for Good Reason (as
defined in Section 18), upon written notice by the Executive
to the Company.
5.
Effect of Termination .
5.1 Termination for Cause . In the event the
Executive’s employment is terminated for Cause pursuant to
Section 4.2, the Company shall pay to the Executive the
compensation and benefits otherwise payable to him under
Section 3 through the last day of his actual employment by the
Company.
5.2 Termination at the Election of the Executive . In
the event the Executive elects to terminate his employment pursuant
to Section 4.4, the Company shall pay the Executive the
compensation and benefits otherwise payable to him under
Section 3 through the last day of his actual employment by the
Company.
5.3 Termination for Death or Disability . If the
Executive’s employment is terminated by death or because of
Disability pursuant to Section 4.3, the Company shall pay to
the estate of the Executive or to the Executive, as the case may
be, the compensation that would otherwise be payable to the
Executive up to the end of the month in which the termination of
his employment because of death or Disability occurs.
5.4 Termination Without Cause or For Good Reason . If
the Executive’s employment is terminated without Cause
pursuant to Section 4.5 or for Good Reason pursuant to
Section 4.6, the Company shall:
(i) pay the Executive a lump sum payment equal to six
(6) months of his then current annual base salary, less lawful
deductions, payable within thirty (30) days following the
termination of the Executive’s employment; and
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(ii) pay the Executive on the first business day of
each month an amount equal to (a) one hundred percent (100%)
of the Executive’s monthly COBRA premiums for the Executive
and his dependents, if any, if the Executive properly elects to
continue health and dental insurance under COBRA and (b) one
hundred percent (100%) of the cost of the monthly premiums paid by
the Company to insurance companies for life insurance and
disability insurance for the Executive in the month preceding the
termination of the Executive’s employment, such payments
under subsections (a) and (b) to continue until the
earlier of six (6) months after the termination of the
Executive’s employment or until the last day of the first
month that the Executive is eligible for other employer-sponsored
health coverage.
All such
above-described payments are subject to the Executive’s
execution and non-revocation of a severance agreement and release
of all claims drafted by and satisfactory to counsel for the
Company.
5.5 Payments to the Executive under this Section 5
shall be bifurcated into two portions, consisting of a portion that
does not constitute “nonqualified deferred
compensation” within the meaning of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”)
and the guidance issued thereunder
(“Section 409A”), and a portion that does
constitute nonqualified deferred compensation. Payments hereunder
shall first be made from the portion that does not consist of
nonqualified deferred compensation until it is exhausted and then
shall be made from the portion that does constitute nonqualified
deferred compensation. The determination of whether, and the extent
to which, any of the payments to be made to the Executive hereunder
are nonqualified deferred compensation shall be made after the
application of all applicable exclusions under Treasury Reg.
§1.409A-1(b)(9). Any payments that are intended to qualify for
the exclusion for separation pay due to involuntary separation from
service set forth in Reg. §1.409A-1(b)(9)(iii) must be paid no
later than the last day of the second taxable year of the Executive
following the taxable year of the Executive in which the
Executive’s termination of employment occurs.
(a) During the Employment Period and for a period of
one (1) year after the termination or expiration of the
Executive’s employment for any reason, the Executive will not
directly or indirectly:
(i) within the geographical areas set forth in Section
6(c) below, as an individual proprietor, partner, stockholder,
officer, employee, director, joint venturer, investor, lender, or
in any other capacity whatsoever (other than as the holder of not
more than one percent (1%) of the total outstanding stock of a
publicly held company), engage in the business of providing
services or developing, producing, marketing or selling products
competitive with the services provided or products being developed,
produced, marketed or sold by the Company while the Executive was
employed by the Company; or
(ii) either alone or in association with others,
recruit, solicit, induce, hire or engage as an independent
contractor or attempt to recruit, solicit, induce, hire or engage
as an independent contractor, any person who then is or was
employed by the Company except for an individual whose employment
with the Company has been terminated (X) by the
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employee for
any reason other than Good Reason for a period of six
(6) months or longer, (Y) by the Company for any reason, or
(Z) by the employee for Good Reason; or
(iii) either alone or in association with others,
solicit, divert or take away, or attempt to solicit, divert or take
away, the business or patronage of any of the clients, customers or
accounts, or prospective clients, customers or accounts, of the
Company which were contacted, solicited or served by the Executive
while employed by the Company.
(b) The Executive agrees that, if requested by the
Company in writing, he will give notice to the Company of each new
business activity he plans to unde
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