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Chief Financial Officer Employment Agreement

This is an actual contract by Cornerstone Therapeutics.

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Sectors: Biotechnology / Pharmaceuticals
Governing Law: North Carolina, View North Carolina State Laws
Effective Date: February 01, 2011
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Exhibit 10.1

Execution Version

EXECUTIVE EMPLOYMENT AGREEMENT

This EXECUTIVE EMPLOYMENT AGREEMENT (this " Agreement" ) is entered into as of February 1, 2011 (the " Effective Date" ), by and between Cornerstone Therapeutics Inc., a Delaware corporation (the " Company" ), and Vincent T. Morgus (the " Executive" ).

WHEREAS, the Company desires to employ the Executive and enter into this Agreement, which will set forth the terms and conditions under which the Executive will serve the Company and its affiliates; and

WHEREAS, the Executive wishes to be employed by 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 and ending on the date that 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 and in such other positions 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 February 1, 2011 in accordance with its regular payroll practices at an annualized rate of $285,000, less lawful deductions. Such salary shall be subject to adjustment thereafter as determined by the Board.

3.2. Annual Target Cash Bonus and Equity Compensation . 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. Notwithstanding the foregoing, the Executive shall be eligible to receive a Target Cash Bonus for 2011 of up to thirty-two and eight hundredths percent (32.08%) of his then annual base salary. 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, and the Compensation Committee of the Board shall determine the amount of the actual equity award, if any. The Executive acknowledges that the Compensation Committee may consider that he was employed by the Company for only eleven months of 2011 in determining the amount of his actual equity award for such year.

3.3. Grant of Restricted Stock and Stock Options . The Executive will be granted, effective as of the Effective Date, fifty-five thousand (55,000) shares of restricted common stock and options to acquire seventy thousand (70,000) shares of common stock. The grant shall be on such terms and conditions as are described in Appendix A hereto, and the documents referenced therein.

3.4. 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 accrue 1.67 vacation days per month (four (4) weeks per year), and, if requested in writing by the President and Chief Executive Officer, such vacation time shall be taken at such times as may be approved by the President and Chief Executive Officer or his designee. Accrued but unused vacation at the end of each year will not carry over past January 31 of the next year, except to the extent provided for in Company policies.

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, 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.

3.6. Car Allowance . The Executive will receive a monthly car allowance in the amount of $850. 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 allowance program at any time.

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. At the election of the Company, for Cause, immediately upon written notice by the Company to the Executive;

4.2. At the election of the Executive, for Good Reason, upon written notice by the Executive to the Company;

4.3. At the election of the Company without Cause during a Change of Control Period (as defined in Section 20) or at the election of the Executive for Good Reason during a Change of Control Period;

4.4. Upon the death or Disability (as defined in Section 20) of the Executive;

4.5. At the election of the Executive, without Good Reason, by providing written notice to the Company at least ninety (90) days prior to such termination; and

4.6. At the election of the Company, without Cause, by providing written notice to the Executive at least ninety (90) days prior to such termination.

5. Effect of Termination .

5.1. Termination for Cause . In the event the Executive' s employment is terminated for Cause pursuant to Section 4.1, the Company shall pay to the Executive the compensation and benefits otherwise payable and expenses otherwise reimbursable 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 4.5, the Company shall pay the Executive the compensation and benefits otherwise payable and expenses otherwise reimbursable to him under Section 3 through the last day of his actual employment by the Company. Executive shall not be liable to the Company for any damages arising from or associated with the Company' s not having a Chief Financial Officer during any period following a termination by the Executive of his employment and this Agreement pursuant to Section 4.5.

5.3. Termination for Death or Disability . If the Executive' s employment is terminated by death or because of Disability pursuant to Section 4.4, 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 and expenses otherwise reimbursable 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 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 4.4.

5.4. Termination Without Cause or for Good Reason, and not during a Change of Control Period . Provided that the Company has not provided notice of termination without Cause to the Executive pursuant to Section 4.6 prior to the first anniversary of the Effective Date (such anniversary date, the " Benefit Date" ), if the Executive' s employment is terminated without Cause pursuant to Section 4.6, or for Good Reason pursuant to Section 4.2, and such termination does not occur during a Change of Control Period, the Company shall:

(a) pay the Executive the compensation and benefits otherwise payable and expenses otherwise reimbursable to him under Section 3 through the last day of his actual employment by the Company;

(b) 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 (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;

(c) pay on behalf of the Executive, in accordance with the Company' s regular payroll practices, on a monthly basis an amount equal to (i) 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 (ii) 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 (i) and (ii) 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. a7 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;

(d) 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 (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

(e) 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 4.3, or for Good Reason pursuant to Section 4.3, and such termination occurs during a Change of Control Period, the Company shall:

(a) pay the Executive the compensation and benefits otherwise payable and expenses otherwise reimbursable to him under Section 3 through the last day of his actual employment by the Company;

(b) 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 (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;

(c) 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. a7 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;

(d) 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

(e) accelerate vesting of one hundred (100) percent of all of the Executive' s outstanding unvested stock options and restricted stock.

5.6 Conditions to Payment .

(a) Notwithstanding any provision of this Agreement to the contrary, the Company' s obligation to provide the payments and benefits under Sections 5.3, 5.4, and 5.5 is conditioned upon the Executive' s, or the Executive' s estate' s, execution of a severance agreement and full release of all claims against the Company and all affiliated persons and entities, drafted by and reasonably 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 reasonably acceptable to the Company. The Executive, at his expense, may consult with legal counsel and may propose revisions to the Release, which the Company agrees to consider in good faith. 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.

(b) Notwithstanding any provision of this Agreement to the contrary, the Company' s obligation to provide the payments and benefits under Sections 5.4 shall not arise until the Benefit Date and is expressly conditioned upon the Executive remaining an employee in good standing with the Company through the Benefit Date.

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 20).

7. Non-Compete .

7.1. During the Executive' s employment with the Company and for a period of one year following the cessation thereo
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