Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "
Agreement "), dated as of September 30, 2009, is
hereby entered into in the State of Maryland by and between SUCAMPO
PHARMACEUTICALS, INC., a Delaware corporation (the " Company
"), and JAMES J. EGAN (" Executive ").
WHEREAS , Executive has been employed by the Company
since September 14, 2009 (the “Effective
Date”);
WHEREAS , Executive possesses certain skills, experience
or expertise which will be of use to the Company;
WHEREAS , the parties acknowledge that Executive's
abilities and services are unique and will significantly enhance
the business prospects of the Company; and
WHEREAS , in light of the foregoing, the Company desires
to continue to employ Chief Operating Officer and Executive desires
to remain in such employment.
NOW,
THEREFORE , in
consideration of the promises and the mutual covenants and
agreements herein contained, the Company and Executive hereby agree
as follows:
Article 1. Employment
Agreement
1.1
Employment and Duties
The
Company offers and Executive hereby accepts employment with the
Company for the Term (as hereinafter defined) as its Chief
Operating Officer, and in connection therewith, to
perform such duties as Executive shall reasonably be assigned by
Executive's supervisor and/or by the Company's Board of
Directors. Executive hereby warrants and represents that
Executive has no contractual commitments or other obligations to
third parties inconsistent with Executive's acceptance of this
employment and performance of the obligations set forth in this
Agreement. Executive shall perform such duties and carry
out Executive's responsibilities hereunder faithfully and to the
best of Executive's ability, and shall devote Executive's full
business time and best efforts to the business and affairs of the
Company during normal business hours (exclusive of periods of
vacation, sickness, disability, or other leaves to which Executive
is entitled). Executive will perform all of Executive's
responsibilities in compliance with all applicable laws and will
ensure that the operations that Executive manages are in compliance
with all applicable laws.
Article 2. Employment
Term
2.1
Term
The
term of Executive's employment hereunder (the " Term ")
shall be deemed to commence on the Effective Date and shall end on
the second anniversary of the Effective Date, unless sooner
terminated as hereinafter provided; provided ,
however , that the Term shall be automatically renewed and
extended for an additional period of one (1) year on each
anniversary thereafter unless either party gives a Notice of
Termination (as defined below) to the other party at least sixty
(60) days prior to such anniversary.
2.2
Survival on Merger or Acquisition
In the
event the Company is acquired during the Term, or is the
non-surviving party in a merger, or sells all or substantially all
of its assets, this Agreement shall not automatically be
terminated, and the Company agrees to use its best efforts to
ensure that the transferee or surviving company shall assume and be
bound by the provisions of this Agreement.
Article 3. Compensation and
Benefits
3.1
Compensation
(a)
Base Salary . The Company shall pay Executive a
salary at an annual rate that is not less than two hundred and
sixty-five thousand and no/100 dollars ($265,000.00), to be paid in
bi-weekly installments, in arrears (the " Base Salary
"). Thereafter, the Base Salary will be reviewed by the
Compensation Committee of the Board of Directors ("Compensation
Committee") at least annually, and the Committee's recommendation
shall be reviewed and approved by the Board of
Directors. The Base Salary may, in the sole discretion
of the Board of Directors, be increased, but not decreased (unless
mutually agreed by Executive and the
Company).
(b)
Stock Compensation . At least annually for the
Term of this Agreement, Executive shall be eligible for
consideration to receive restricted stock grants, incentive stock
options or other awards in accordance with the 2006 Stock Incentive
Plan. Recommendations concerning the decision to make an
award pursuant to that Plan and the amount of any award are
entirely discretionary and shall be made initially by the
Compensation Committee, subject to review and approval by the Board
of Directors. In the event that, during the Term (i) the
Company is acquired or is the non-surviving party in a merger, or
(ii) the Company sells all or substantially all of its assets, or
(iii) in the event of the death of Executive, all unvested
restricted stock awards and incentive stock options having
previously been awarded to Executive shall immediately vest and may
be exercised in accordance with the terms of the Plan and the
Executive's grant award.
(c)
Bonuses . Executive shall be eligible to receive
an annual bonus award in recognition of Executive's contributions
to the success of the Company pursuant to the Company's management
incentive bonus program as it may be amended or modified from time
to time. Recommendations concerning the decision to make
an award and the amount of any award are entirely discretionary and
shall be made initially by the Compensation Committee, subject to
review and approval by the Board of Directors.
(d)
Withholding Taxes . All compensation due to
Executive shall be paid subject to withholding by the Company to
ensure compliance with all applicable laws and
regulations.
3.2
Participation in Benefit Plans
Executive shall be entitled to participate in all
employee benefit plans or programs of the Company offered to other
employees to the extent that Executive's position, tenure, salary,
and other qualifications make Executive eligible to participate in
accordance with the terms of such plans. The Company
does not guarantee the continuance of any particular employee
benefit plan or program during the Term, and Executive's
participation in any such plan or program shall be subject to all
terms, provisions, rules and regulations applicable
thereto.
3.3
Expenses
The
Company will pay or reimburse Executive for all reasonable and
necessary out-of-pocket expenses incurred by Executive in the
performance of Executive's duties under this
Agreement. Executive shall provide to the Company
detailed and accurate records of such expenses for which payment or
reimbursement is sought, and Company payments shall be in
accordance with the regular policies and procedures maintained by
the Company from time to time.
3.4
Professional Organizations
During
the Term, Executive shall be reimbursed by the Company for the
annual dues payable for membership in professional societies
associated with subject matter related to the Company's
interests. New memberships for which reimbursement will
be sought shall be approved by the Company in advance.
3.5
Parking
During
the Term, the Company shall either provide parking for Executive's
automobile at the Company's expense or reimburse Executive for such
expense.
Article 4. Termination of
Employment
4.1
Definitions
As used
in Article 4 of this Agreement, the following terms shall have the
meaning set forth for each below:
(a) "
Benefit Period " shall mean the six (6) month period
commencing on the Date of Termination which occurs in connection
with a termination of employment described in the first sentence of
Section 4.4(a), or a period ending when Executive becomes eligible
for group medical benefits coverage from another source, whichever
is shorter.
(b) "
Cause " shall mean any of the following:
(i) the
gross neglect or willful failure or refusal of Executive to perform
Executive's duties hereunder (other than as a result of Executive's
death or Disability);
(ii) perpetration
of an intentional and knowing fraud against or affecting the
Company or any customer, supplier, client, agent or employee
thereof;
(iii) any
willful or intentional act that could reasonably be expected to
injure the reputation, financial condition, business or business
relationships of the Company or Executive's reputation or business
relationships;
(iv) conviction
(including conviction on a nolo contendere plea) of a felony
or any crime involving fraud, dishonesty or moral
turpitude;
(v) the
material breach by Executive of this Agreement (including, without
limitation, the Employment Covenants set forth in Article 5 of this
Agreement); or
(vi) the
failure or continued refusal to carry out the directives of
Executive's supervisor or the Board of Directors that are
consistent with Executive's duties and responsibilities under this
Agreement which is not cured within thirty (30) days after receipt
of written notice from the Company specifying the nature of such
failure or refusal; provided , however , that Cause
shall not exist if such refusal arises from Executive's reasonable,
good faith belief that such failure or refusal is required by
law.
(c) "
Date of Termination " shall mean the date specified in the
Notice of Termination (as hereinafter defined) (except in the case
of Executive's death, in which case the Date of Termination shall
be the date of death); provided , however , that if
Executive's employment is terminated by the Company other than for
Cause, the date specified in the Notice of Termination shall be at
least thirty (30) days from the date the Notice of Termination is
given to Executive.
(d) "
Notice of Termination " shall mean a written notice from the
Company to Executive that indicates Section 2 or the specific
provision of Section 4 of this Agreement relied upon as the reason
for such termination or nonrenewal, the Date of Termination, and,
in the case of termination or non-renewal by the Company for Cause,
in reasonable detail, the facts and circumstances claimed to
provide a basis for termination or
nonrenewal.
(e) "
Good Reason " shall mean:
(i) Company
effects a material diminution of Executive's position, authority or
duties;
(ii) any
requirement that Executive, without his/her consent, move his/her
regular office to a location more than fifty (50) miles from
Company's executive offices;
(iii) the
material failure by Company, or its successor, if any, to pay
compensation or provide benefits or perquisites to Executive as and
when required by the terms of this Agreement; or
(iv) any
material breach by Company of this Agreement.
The
Executive shall have Good Reason to terminate Executive's
employment if (i) within twenty-one (21) days following Executive's
actual knowledge of the event which Executive determines
constitutes Good Reason, Executive notifies the Company in writing
that Executive has determined a Good Reason exists and specifies
the event creating Good Reason, and (ii) following receipt of such
notice, the Company fails to remedy such event within twenty-one
(21) days. If either condition is not met, Executive
shall not have a Good Reason to terminate Executive's
employment.
(f) "
Change in Control " shall mean:
(i) the
acquisition by any person of beneficial ownership of fifty percent
(50%) or more of the outstanding shares of the Company's voting
securities; or
(ii) the
Company is the non-surviving party in a merger; or
(iii) the
Company sells all or substantially all of its assets; provided,
however, that no "Change in Control" shall be deemed to have
occurred merely as the result of a refinancing by the Company or as
a result of the Company's insolvency or the appointment of a
conservator; or
(iv) the
Compensation Committee of the Company, in its sole and absolute
discretion determines that there has been a sufficient change in
the share ownership or ownership of the voting power of the
Company's voting securities to constitute a change of effective
ownership or control of the Company.
4.2
Termination Upon Death or Disability
This
Agreement, and Executive's employment hereunder, shall terminate
automatically and without the necessity of any action on the part
of the Company upon the death of Executive. In addition,
if at any time during the Term, Executive shall become physically
or mentally disabled (as determined by an independent physician
competent to assess the condition at issue), whether totally or
partially, so that Executive is unable substantially to perform
Executive's duties and services hereunder, with or without
reasonable accommodation, for either (i) a period of sixty (60)
consecutive calendar days, or (ii) ninety (90) consecutive or
non-consecutive calendar days during any consecutive five (5) month
period (the "Disability Date"), the Company may terminate this
Agreement and Executive's employment hereunder by written notice to
Executive after the Disability Date (but before Executive has
recovered from such disability).
4.3
Company's and Executive's Right to Terminate
This
Agreement and Executive's employment hereunder may be terminated at
any time by the Company for Cause or, if without Cause, upon thirty
(30) days prior written notice to Executive. In the
event the Company should give Executive notice of termination
without Cause, the Company may, at its option, elect to provide
Executive with thirty (30) days' salary in lieu of Executive's
continued active employment during the notice
period. This Agreement and Executive's employment
hereunder may be terminated by Executive at any time for Good
Reason and, if without Good Reason, upon thirty (30) days prior
written notice to the Company.
4.4
Compensation Upon Termination
(a)
Severance . In the event the Company terminates
Executive’s employment without Cause or pursuant to Section
4.2 due to the disability of Executive, or elects not to renew this
Agreement under circumstances where Executive is willing and able
to execute a new agreement providing terms and conditions
substantially similar to those in this Agreement, or in the event
Executive terminates employment for Good Reason, Executive shall be
entitled to receive: (i) Executive's Base Salary through the Date
of Termination, (ii) reimbursement of any COBRA continuation
premium payments made by Executive for the Benefit Period, and
(iii) a lump sum severance payment equal to six (6) months of
Executive's then current Base Salary to be made not later than ten
(10) business days following the expiration of the revocation
period in Executive's Release (as provided in Section 4.4(c) below)
without any revocation having occurred. Notwithstanding
the foregoing, the Company shall, to the extent necessary and only
to the extent necessary, modify the timing of delivery of severance
benefits to Executive if the Company reasonably determines that the
timing would subject the severance benefits to any additional tax
or interest assessed under Section 409A of the Internal Revenue
Code. In such event, the payments will be made as soon
as practicable without causing the severance benefits to trigger
such additional tax or interest under Section 409A of the Internal
Revenue Code. In the event this Agreement is terminated
(or not renewed) for any reason
