AMENDED AND
RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
This AMENDED AND
RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this “
Agreement ”) is entered into as of May 6, 2009,
by and between Cornerstone Therapeutics Inc., a Delaware
corporation (the “ Company ”), and Joshua
Franklin (the “ Executive ”). This Agreement
shall be effective on the Closing Date (as such term is defined in
the Stock Purchase Agreement, dated the same date as this Agreement
between the Company and Chiesi Farmaceutici SpA (the “
Effective Date ”).
WHEREAS, the
Executive is currently employed by the Company pursuant to the
terms of an employment agreement between Cornerstone BioPharma,
Inc. and the Executive dated as of September 29, 2008 (the
“Prior Agreement”);
WHEREAS, the
Company desires to continue such employment relationship and enter
into this Agreement, which will supersede the Prior Agreement and
set forth the terms and conditions under which the Executive will
continue to serve the Company and its affiliates; and
WHEREAS, the
Executive wishes to continue his employment with the Company on the
terms and conditions set forth herein.
NOW, THEREFORE, in
consideration of the premises and mutual agreements hereinafter
contained, the parties hereto 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 the Effective Date (the “
Commencement Date ”) and ending on the one year
anniversary of the Effective Date (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 ninety
(90) 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 Vice
President, Sales and Marketing 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
based at the Company’s office in Cary, North Carolina. The
Executive shall be subject to the supervision of, and shall have
such authority as is delegated to him by, the President and Chief
Executive Officer of the Company or his designee.
The
Executive hereby accepts such employment and agrees to undertake
the duties and responsibilities inherent in such position and such
other duties and responsibilities as the President and Chief
Executive Officer 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; provided ,
however , that the Executive may serve as a consultant or a
member of an advisory board or a board of directors with the prior
consent of the Board. 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
for the year starting January 1, 2009 in accordance with its
regular payroll practices at an annualized rate of $222,600, less
lawful deductions. Such salary shall be subject to adjustment
thereafter 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
(35) percent 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. Except as may be expressly provided below, the Executive
must be employed on the date that the bonus is paid to be eligible
for any Target Cash Bonus. Each cash bonus award that may become
payable shall be paid solely from the general assets of the
Company.
3.3.
Annual Target Equity Awards . The Executive shall be
eligible to receive an annual target equity award in the form of an
option to purchase, in whole or in part, up to fifty thousand
(50,000) shares of common stock of the Company in each of the year
2010, 2011 and 2012. The Board (or a committee thereof) shall
determine the amount of the actual equity award, if any, based on
overall corporate performance and individual performance. Each
grant of options under Sections 3.3 and 3.4 shall vest over a
four-year period, 25% per year, pursuant to the terms of the terms
of the Company Stock Plan.
3.4.
Grant of Options . Effective as of the date hereof, the
Executive shall be granted an option to purchase, in whole or in
part, fifty thousand (50,000) shares common stock. The option shall
be on such terms and conditions as are described on Appendix A
hereto.
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3.5.
Fringe Benefits. The Executive shall be entitled to
participate in all bonus and benefit programs (excluding the
Company’s Cash Bonus Program for Employees (Other than
Executive Officers)) that the Company establishes and makes
available to its employees or executives, if any, to the extent
that the Executive’s position, tenure, salary, age, health
and other qualifications make him eligible to participate;
provided , however , the Executive’s
participation is subject to the applicable terms, conditions and
eligibility requirements of these plans as they may exist from time
to time. The Executive shall be entitled to three (3) weeks of
paid vacation per year, accrued at a rate of 1.25 days per
month until the Executive has completed four (4) years of
service with the Company or any of its subsidiaries at which time
vacation shall accrue at 1.67 days per month (four
(4) weeks per year), and, if requested in writing by the Chief
Executive Officer, such vacation time shall be taken at such times
as may be approved by the Chief Executive Officer or his designee.
Accrued but unused vacation at the end of each year will not carry
over to the next year.
3.6.
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, in accordance with the
Company’s expense reimbursement policy, including the
Executive’s presentation 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.
3.7.
Car Allowance . The Executive will receive a monthly car
allowance in the amount of $850. Both a valid driver’s
license, an acceptable motor vehicle record and personal automobile
insurance are required at all times to operate a personal motor
vehicle on Company business. The Company reserves the right to
change or discontinue its vehicle reimbursement program at any
time.
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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 21), immediately upon written notice by the Company to
the Executive;
4.3.
At the election of the Executive, for Good Reason (as defined in
Section 21), upon written notice by the Executive to the
Company;
4.4.
At the election of the Company without Cause during a Change of
Control Period (as defined in Section 21) or at the election
of the Executive for Good Reason during a Change of Control
Period;
4.5.
Upon the death or Disability (as defined in Section 21) of the
Executive;
4.6.
At the election of the Executive, without Good Reason, by providing
written notice to the Company; and
4.7.
At the election of the Company, without Cause, by providing written
notice to the Executive.
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 Without Good
Reason . In the event the Executive elects to terminate his
employment pursuant to Section 4.6, 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 4.5, in addition to any
disability or life insurance benefits for which the Executive or
the estate of the Executive may be eligible, the Company shall pay
to the estate of the Executive or to the Executive, as the case may
be, the compensation and benefits otherwise payable to him under
Section 3 through the last day of his actual employment by the
Company. In addition, if the Executive’s employment
terminates as a
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result of his
death, the Executive’s estate shall receive an amount equal
to a pro rata payment of the annual cash bonus for which he would
have been eligible, less lawful deductions, within ten
(10) calendar days following the effective date of the Release
required by Section 5.6, but not later than ninety
(90) days following termination of employment. Notwithstanding
the foregoing, if the ninetieth (90th) day following the
Executive’s termination from employment occurs in the
calendar year following the year of the Executive’s
termination, then the payment shall be made no earlier than January
1 of such subsequent calendar year. No other benefits are payable
upon the Executive’s termination pursuant to
Section 4.5.
5.4.
Termination Without Cause or for Good Reason and not during a
Change of Control Period . If the Executive’s employment
is terminated without Cause pursuant to Section 4.7, or for
Good Reason pursuant to Section 4.3 and such termination does
not occur during a Change of Control Period, the Company
shall:
(i) pay the
Executive a lump sum payment equal to one (1) times his
annualized base salary, less lawful deductions, payable within ten
(10) calendar days following the effective date of the Release
required by Section 5.6 but not later than ninety
(90) days following termination of employment. Notwithstanding
the foregoing, if the ninetieth (90 th )
day following the Executive’s termination from employment
occurs in the calendar year following the year of the
Executive’s termination, then the payment shall be made no
earlier than January 1 of such subsequent calendar year;
(ii) pay on behalf
of the Executive, in accordance with the Company’s regular
payroll practices, on a monthly basis an amount equal to
(a) one hundred (100) percent of the Executive’s monthly
health and dental 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) pay to the
Executive on the first business day of each applicable month one
hundred (100) percent of the cost of the monthly premiums paid
by the Company to the insurance companies for life insurance and
disability insurance for the Executive in the month preceding the
Executive’s termination of employment, such payments under
subsections (a) and (b) to continue until the earlier of
(x) twelve (12) months after the termination of the
Executive’s employment and (y) the last day of the first
month that the Executive is eligible for other employer-sponsored
health coverage. Notwithstanding the foregoing, to the extent such
payments are reimbursement to the Executive of medical expenses
incurred by the Executive as described in Reg. §
1.409A-1(b)(9)(v)(B), reimbursements may not be made beyond the
period of time during which the Executive would be entitled (or
would, but for such arrangement, be entitled) to COBRA continuation
coverage under a group health plan of the Company;
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(iii) pay the
Executive a lump sum payment in an amount equal to a pro rata
payment of the Target Cash Bonus for which he was eligible, less
lawful deductions; such payment shall be paid within ten
(10) calendar days following the effective date of the Release
required by Section 5.6, but not later than ninety
(90) days following termination of employment. Notwithstanding
the foregoing, if the ninetieth (90 th )
day following the Executive’s termination from employment
occurs in the calendar year following the year of the
Executive’s termination, then the payment shall be made no
earlier than January 1 of such subsequent calendar year;
and
(iv) accelerate
vesting of all of the Executive’s outstanding unvested stock
options and restricted stock by one year.
5.5.
Termination Without Cause or for Good Reason during a Change of
Control Period . If the Executive’s employment is
terminated without Cause pursuant to Section 4.4, or for Good
Reason pursuant to Section 4.4 and such termination occurs
during a Change of Control Period, the Company shall:
(i) pay the
Executive a lump sum payment equal to one (1) times his
annualized base salary, less lawful deductions, payable within ten
(10) calendar days following the effective date of the Release
required by Section 5.6, but not later than ninety
(90) days following termination of employment. Notwithstanding
the foregoing, if the ninetieth (90 th )
day following the Executive’s termination from employment
occurs in the calendar year following the year of the
Executive’s termination, then the payment shall be made no
earlier than January 1 of such subsequent calendar year;
(ii) pay on behalf
of the Executive, in accordance with the Company’s regular
payroll practices, on a monthly basis an amount equal to
(a) one hundred (100) percent of the Executive’s monthly
health and dental 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) pay to the
Executive on the first business day of each applicable month one
hundred (100) percent of the cost of the monthly premiums paid
by the Company to the insurance companies for life insurance and
disability insurance for the Executive in the month preceding the
Executive’s termination of employment, such payments under
subsections (a) and (b) to continue until the earlier of
(x) twelve (12) months after the termination of the
Executive’s employment and (y) the last day of the first
month that the Executive is eligible for other employer-sponsored
health coverage. Notwithstanding the foregoing, to the extent such
payments are reimbursement to the Executive of medical expenses
incurred by the Executive as described in Reg. §
1.409A-1(b)(9)(v)(B), reimbursements may not be made beyond the
period of time during which the Executive would be entitled (or
would, but for such arrangement, be entitled) to COBRA continuation
coverage under a group health plan of the Company;
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(iii) pay the
Executive a lump sum payment in an amount equal to a pro rata
payment of the Target Cash Bonus for which he was eligible, less
lawful deductions; such payment shall be paid ten
(10) calendar days following the effective date of the Release
required by Section 5.6, but not later than ninety
(90) days following termination of employment. Notwithstanding
the foregoing, if the ninetieth (90th) day following the
Executive’s termination from employment occurs in the
calendar year following the year of the Executive’s
termination, then the payment shall be made no earlier than January
1 of such subsequent calendar year; and
(iv) accelerate
vesting of one hundred (100) percent of all of the
Executive’s outstanding unvested stock options and restricted
stock.
5.6
Release of Claims as a Condition of Payment .
Notwithstanding any provision of this Agreement to the contrary,
the Company’s obligation to provide the payments and benefits
under Sections 5.2, 5.3, 5.4, and 5.5 is conditioned upon the
Executive’s, or the Executive’s estate, execution of a
severance agreement and full release of all claims against the
Company and all affiliated persons and entities, drafted by and
satisfactory to counsel for the Company (the “Release”)
and the Executive’s compliance with Sections 7 and 8 of
this Agreement. The Release shall include clauses covering
confidentiality, non-disparagement, cooperation, and
non-admissions, among other terms, all in a form acceptable to the
Company. If the Executive chooses not to execute such a release or
fails to comply with those Sections, then the Company’s
obligation to compensate the Executive ceases on the effective
termination date except as to base salary up through the
termination date. The Release shall be provided to the Executive
within thirty (30) days of the Executive’s separation from
service and the Executive must execute it within the time period
specified in the Release (which shall not be longer than forty-five
(45) days from the date of receipt). Such Release shall not be
effective until any applicable revocation period specified therein
has expired.
6.
Vesting of Stock Upon a Change of Control . One
hundred (100) percent of the Executive’s outstanding
unvested stock options and restricted stock will vest on a Change
of Control (as defined in Section 21).
(a) During
the Executive’s employment with the Company and for a period
of one year following the cessation thereof, the Executive will not
engage in any of the following on his own behalf or in any capacity
on another’s behalf:
(i) engage
in any business activity (or assist others to engage in any
business activity) that directly competes with the Company;
or
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(ii) have
any interest in any business that directly competes with the
Company; or
(iii) be
employed (or otherwise engaged) in (A) a management capacity,
(B) other capacity providing the same or similar services
which Executive provided to the Company, or (C) any capacity
connected with competitive business activities, by any person or
entity that engages in the same, similar or otherwise competitive
business as the Company.
The
restrictions set forth in subparagraphs 7(a)(i)–(iii) shall
apply in the following severable geographic areas: (i) the
Raleigh-Cary-Durham-Chapel Hill, NC metropolitan areas;
(ii) any city, metropolitan area, county, state (or similar
political subdivisions in foreign countries) in which the Company
is located or does or, during the last twelve (12) months of
Executive’s employment with the Company, did business;
(iii) any city, metropolitan area, county, or state (or
similar political subdivisions in foreign countries) in which
Executive’s services were provided, or for which Executive
had responsibility, or in which Executive worked on Company
projects, during the last twelve (12) months of
Executive’s employment with the Company; or (iv) the
entire United States of America and its territories.
(b) During
Executive’s employment with the Company and for a period of
one (1) year following the cessation thereof (whether
voluntary or involuntary and regardless of the reason for, or party
initiating, the termination), Executive will not engage in any of
the following on his own behalf or in any capacity on
another’s behalf, directly or indirectly:
(i) solicit,
persuade, induce, encourage or attempt to solicit, persuade, induce
or encourage any person to leave his or her employment with the
Company or to refrain from providing services to the Company;
or
(ii) induce
or attempt to induce (including, without limitation, by soliciting
business from), or otherwise encourage or assist, any customer,
client, or business relation of the Company with which Executive
had contact on behalf of the Company (A) to cease doing
business with the Company or reduce the level of business it
conducts with the Company, or (B) to purchase or promote any
prescription pharmaceutical product that competes directly with the
Company’s products for the treatment of any indication for
which the Company has received United States Food and Drug
Administration (“ FDA ”) approval or for an
indication which the Company’s products are being developed
or may be developed.
Upon cessation
of Executive’s employment with the Company, the Executive
will sever all marketing and sales relationships with customers of
the Company and Executive agrees that any attempt to retain these
customers for his or her own or another’s benefit will be a
material breach of this Agreement.
(c)
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 undertake during the non-
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competition
period, at least ten (10) business days prior to beginning any
such activity. The notice shall state the name and address of the
individual, corporation, association or other entity or
organization (“Entity”) for whom such activity is
undertaken and the name of the Executive’s business
relationship or position
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