Document:

ex10-1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of
December 15th, 2000 (the “Effective Date”) by and between UP Subsidiary
Corporation (the “Company”) and Darlene Walley, Ph.D. (the “Executive”).

     WHEREAS, the Company desires to obtain the services of the Executive, and
the Executive is willing to render such services to the Company, upon the terms
and conditions herein set forth;

     NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows.

     1.     Employment. Upon the other terms and conditions hereinafter stated,
the Company agrees to employ the Executive and the Executive agrees to accept
employment by the Company for the term set forth in Section 2 hereof and in the
position and with the duties and responsibilities set forth in Section 3
hereof. Executive warrants that she is under no restriction that would prevent
her from entering into this Agreement and from complying with all of its
provisions to their fullest extent.

     2.     Term. The employment of the Executive by the Company will commence on
the Effective Date and end on the third anniversary of such date (the “Initial
Term”), and thereafter shall continue from year to year for additional one-year
terms (the “Additional Terms”), unless and until either party shall give notice
of such party’s intent to terminate not less than 30 days prior to the end of
the then-current Initial Term or Additional Term, which termination shall be
effective at the expiration of said term, or until sooner terminated as
hereinafter set forth.

     3.     Position and Duties. The Executive shall serve as President, with such
duties and responsibilities as are normally performed by the President of a
medical foods company and as otherwise assigned by the Board of Directors from
time to time that are not inconsistent with duties and responsibilities as are
normally performed by the President. Executive shall report directly to Barry
Kanarek, Ph.D. of United Therapeutics. The Executive shall at all times exert
her best efforts and loyalty on behalf of the Company and shall devote full
time and attention to such employment. The Executive agrees to abide by all
employment guidelines and policies as may be developed from time to time by the
Company, including, without limitation, the United Therapeutics Corporation
Company Manual, the United Therapeutics Corporation Securities Trades by
Company Personnel Policy and the United Therapeutics Corporation Media and
Analysts Policy.

     4.     Compensation and Related Matters.

               (a)     For services rendered under this Agreement, the Company shall pay to
the Executive an annual base salary of Two Hundred Thousand Dollars ($200,000)
(the

 

 

“Base Salary”), subject to increase, as determined by the Board of Directors of
the Company, in its sole discretion, on or before any anniversary date of this
Agreement, but such increase to be not less than 10% of Executive’s Base Salary
per year. The Base Salary shall be payable semi-monthly or in such other
installments as shall be consistent with the Company’s payroll procedures. The
Company shall deduct and withhold all necessary social security and withholding
taxes and any other similar sums required by law or authorized by the Executive
with respect to payment of the Base Salary and all other amounts and benefits
payable under this Agreement.

               (b)     The Executive shall be entitled to participate in any group life,
disability and medical insurance or other benefit plan or arrangement available
generally to the employees of the Company as determined by the Board of
Directors.

               (c)     Executive shall be entitled to participate in United Therapeutics
Corporation’s employee bonus plan.

               (d)     Executive shall also receive a cash bonus equal to 2% of CP sales
based on revenues received by CP from invoiced sales less (i) credits,
allowances, discounts and rebates to, and chargebacks from the account of,
third parties for spoiled, damaged, obsolete, outdated, rejected or returned
product and for retroactive price reductions in lieu of returned product; (ii)
actual shipping and handling, freight and insurance costs incurred in
transporting such product in final form to such third parties; (iii) cash,
quantity, and trade discounts; (iv) sales, use, excise, value-added and other
taxes or governmental charges incurred in connection with the sale, exportation
or importation, transportation, or delivery of such product in final form; and
(v) bad debts or uncollectible accounts. Such bonus amounts due shall be paid
within 60 days after the end of each quarter.

               (e)     CP shall also lease an automobile for Executive’s use and pay related
monthly insurance premiums in an amount not to exceed $1,000 per month.

               (f)     As an inducement to Executive to enter into this Agreement, within 30
days of signing this Agreement Executive shall be granted an option to purchase
60,000 shares of the common stock of United Therapeutics Corporation priced at
the NASDAQ closing price on the date of the grant and vesting in one-third
increments on each anniversary of this Agreement. Executive shall enter into a
separate stock option agreement with United Therapeutics Corporation setting
forth the terms of this option grant.

     5.     Expenses. The Executive shall be reimbursed by the Company for
reasonable travel and other expenses, as approved from time to time by the
Board of Directors, which are incurred and accounted for in accordance with the
Company’s normal practices.

     6.     Vacation. The Executive shall be entitled to vacation at such time or
times and for such period or periods as shall be mutually agreed upon by the
Executive and the Board of Directors.

     7.     Termination of Employment.

 

 

               (a)     Termination Without Cause or With Good Reason. In the event that
Executive is terminated by the Company without Cause or Executive voluntarily
terminates her employment with the Company for Good Reason, and Executive signs
and does not revoke a release of claims in the reasonable form provided to
Executive by the Company (which will include a release by the Company of the
Executive in reasonable form), then, Executive will be entitled to receive:

                         (i)     Earned and Unpaid Base Salary. All earned but unpaid Base Salary
otherwise owed to the Executive under the terms of this Agreement through the
date of termination, payable in a lump sum within thirty (30) days of the date
of Executive’s termination.

                         (ii)     Base Salary. Executive shall receive severance pay in an amount
equal to (A) twelve (12) months of Executive’s Base Salary (at the then current
level), if such termination occurs during the first Employment Year hereunder,
or (B) six (6) months of Executive’s Base Salary (at the then current level),
if such termination occurs following the first Employment Year hereunder, in
either case payable in a manner consistent with the Company’s then current
payroll procedures, with appropriate tax withholding and deductions, and for so
long as Executive is not in breach of her obligations under Section 10 below.

                         (iii)     Vacation Pay. Executive shall receive a payment equal to all
accrued but unused vacation pay, as determined on the termination date, and
such sum shall be payable in a lump sum within thirty (30) days of Executive’s
termination.

               (b)     Voluntary Termination or Termination for Cause. In the event that
Executive is terminated by the Company for “Cause,” or in the event that
Executive voluntarily terminates her employment without Good Reason, then (i)
all vesting of her options will terminate immediately and all payments of
compensation by the Company to Executive hereunder will terminate immediately
(except as to amounts already earned which amounts shall be paid to Executive
within thirty (30) days of such termination), and (ii) Executive will only be
eligible for severance benefits in accordance with the Company’s established
policies as then in effect.

               (c)     Death or Disability. Executive’s employment will automatically
terminate upon her death. Upon Executive’s Disability (as defined herein), the
Company may terminate Executive’s employment hereunder by written notice to
Executive which termination shall be effective on the thirtieth (30th) day
after such notice; provided, that the Executive shall not have returned to the
performance of the Executive’s duties on a full-time basis during such thirty
(30) day period. In the event of Executive’s death or Disability (as defined
herein), the Executive or her estate, as applicable, shall be entitled to
receive the payments and benefits set forth in Section 7(a)(i) above and all
other unpaid amounts, if any, to which the Executive is entitled as of such
date in connection with any fringe benefits or under any incentive compensation
plan or program of the Company pursuant to Sections 4 hereof, at the time such
payments are due. The Executive or her estate, as applicable, shall be
permitted to exercise her options, to the extent vested as of the date of her
termination, in

 

 

accordance with the terms of the Executive’s stock option agreements.
Executive’s options will cease to vest on the date of her termination due to
death or Disability.

               (d)     Expenses. On termination of Executive’s employment hereunder for any
reason, the Company shall reimburse the Executive for any reasonable expenses
incurred by the Executive prior to the date of termination in accordance with
Section 5 hereof, promptly following Executive’s compliance with the Company’s
policies and terms described therein.

     8.     Definitions.

               (a)     Cause. For purposes of this Agreement, the Company shall have “Cause”
to terminate the Executive’s employment hereunder upon the (A) failure of the
Executive (other than for reasons described in Sections 7(c) hereof) to perform
or observe any of the material terms or provisions of this Agreement; (B)
negligent or unsatisfactory performance of the Executive’s duties under this
Agreement and the failure of the Executive, within 10 days after receipt of
notice from the Company setting forth in reasonable detail the nature of the
Executive’s negligent or unsatisfactory performance, (i) to provide the Company
with a reasonably satisfactory explanation of the Executive’s actions (or
inaction) and (ii) to correct to the satisfaction of the Company any reasonably
identified deficiencies; (C) employment- or profession-related misconduct on
the part of the Executive; (D) conviction of the Executive of a crime involving
a felony, fraud, embezzlement or the like; or (E) misappropriation of the
Company funds or misuse of the Company’s assets by Executive.

               (b)     Disability. For purposes of this Agreement, “Disability” shall mean
Executive’s mental or physical impairment that has prevented Executive from
performing the responsibilities and duties of her position for three months or
more in the aggregate during any six-month period. Any question as to the
existence or extent of Executive’s disability shall be resolved by a qualified
independent physician who is an acknowledged expert in the area of the mental
or physical impairment, selected in good faith by the Board; provided, however,
such selection must be reasonably acceptable to the Executive.

               (c)     Good Reason. For purposes of this Agreement, “Good Reason” means that
the Executive voluntarily terminates employment with the Company after any of
the following are undertaken without the Executive’s express written consent:
(i) material breach of any provision of this Agreement by the Company, which
breach shall not have been cured by the Company within thirty (30) days of
receipt of written notice specifying in reasonable detail the nature of such
material breach; (ii) any action by the Company that results in a material
diminution of Executive’s position, authority, duties or responsibilities,
which action shall not have been cured by the Company within thirty (30) days
of receipt of written notice specifying in reasonable detail the nature of such
material diminution of Executive’s position, authority, duties or
responsibilities; or (iii) the requirement that Executive relocate more than
fifty (50) miles from the current location of the Company’s principal executive
offices.

 

 

     9.     Intellectual Property Rights. Because of the highly specialized and
technical nature of the business of the Company and the nature and scope of
Executive’s employment, Executive agrees that any and all rights, title, and
interest, including but not limited to domestic and foreign patents,
copyrights, trademarks and trade secrets, in and to all inventions, processes,
computer programs, photographic, written or artistic works, or other forms of
intellectual property (“Intellectual Property”) which employee makes,
conceives, reduces to practice or develops, in whole or in part, during the
term of this Agreement in the furtherance of the Company’s business and in
connection with specific Company projects as defined in Paragraph 9 below
(whether or not made during the hours of employment or with the use of
Company’s materials, facilities or personnel, either solely or jointly with
others), or after termination of employment if such Intellectual Property is
based upon Confidential Information, shall be the sole and exclusive property
of the Company, and its respective successors, licensees, and assigns. In full
consideration of the compensation provided to Executive by the Company,
Executive agrees to each and all of the following:

               (a)     Work Made for Hire. Executive acknowledges and agrees that all works
of authorship created by Executive as an employee of the Company is a
commissioned “work for hire” within the meaning of United States copyright law
which will be owned solely and exclusively by the Company. If the work is
determined not to be a “work for hire” or such doctrine is not effective,
Executive hereby irrevocably assigns, conveys and otherwise transfers to the
Company, and its respective successors, licensees, and assigns, all right,
title and interest worldwide in and to the work and all proprietary rights
therein, including, without limitation, all copyrights, trademarks, design
patents, trade secret rights, moral rights, and all contract and licensing
rights, and all claims and causes of action with respect to any of the
foregoing, whether now known or hereafter to become known. In the event that
Executive has any right in the work which cannot be assigned, Executive agrees
to waive enforcement worldwide of such right against the Company, its
distributors and licensees or, if necessary, exclusively license such right,
worldwide to the Company with the right to sublicense. These rights are
assignable by the Company. Executive has not and hereby does not transfer any
Intellectual Property rights owned or held solely by Executive to the Company
relating to periods prior to the date of this Agreement and retains all rights
to same provided, however, that Executive acknowledges that Intellectual
Property rights that she created as an employee of the Cooke Pharma prior to
the date of this Agreement, and not otherwise previously assigned or
transferred prior to the date of this Agreement pursuant to the attached
schedule, are solely owned by the Company as a work made for hire.

               (b)     Original Work. Executive agrees that Executive will not include any
copyrighted or patented material owned by a third party in any written,
copyrightable or patentable material furnished or delivered by Executive under
this Agreement without the unconditional written consent of the copyright or
patent owner unless specific written approval of the Company for inclusions of
such copyrighted or patented material is secured in advance. Executive also
agrees that all work (or tangible expression of an idea) that Executive creates
or contributes to the Company in the course of Executive’s employment hereunder
will be created solely by Executive, will be original to Executive, and will be
free of any third party claims or interests.

 

 

               (c)     Applications for Patent, Copyrights and Trademarks. Executive shall,
if the Company so decides at its sole discretion and expense, apply for United
States and foreign letters patent, copyrights, and/or trademarks, either in
Executive’s name or as the Company in its sole discretion may direct.
Executive hereby grants the Company the exclusive right, and appoints the
Company as Executive’s attorney-in-fact, to execute and prosecute an
application for domestic and/or foreign patent or other statutory protection,
and Executive shall execute and deliver to the Company, without charge to the
Company but at the Company’s expense, such other documents of registration and
recordation, and do such other acts, such as give testimony in support of
Executive’s inventorship, as may be necessary in the opinion of the Company to
vest in the Company or any other party nominated by the Company, or otherwise
to protect, the exclusive rights conveyed and/or granted to the Company
pursuant to this Agreement. Executive’s duty to support the Company’s claim of
rights in patents, copyrights, or trademarks claimed by the Company, and
resulting from Executive’s service to the Company as its employee, shall
continue for the life of any such patent, copyright or trademark.

               (d)     Assignment Except as otherwise may be agreed by the parties in a
signed writing, Executive agrees to assign to the Company and its respective
successors, licensees, and assigns, all of Executive’s rights, title and
interests in and to the Intellectual Property governed by this Agreement and
all rights, title, and interests in and to United States and foreign letters
patent, copyrights, and trademarks resulting therefrom. Executive acknowledges
this provision and understands fully its implications and meaning.

               (e)     Use. The Company and its respective successors, licensees, and
assigns, shall have the sole and exclusive right to practice, or to make, use
or sell products, processes or services derived from any discoveries or
creations within the scope of this Agreement or created by Executive and
covered by the terms of this Agreement, whether or not patentable or
copyrightable under the laws of any jurisdiction, or protected by the trade
secret laws of any jurisdiction.

               (f)     Trade Secret Protection. In the event that the Company decides not to
pursue patent, copyright or trademark protection for any discovery or creation
made by Executive, and instead decides to protect the discovery or creation
pursuant to the trade secret laws of any jurisdiction, such decision shall not
be construed as a waiver of the Company’s rights pursuant to this Agreement.
At the Company’s expense, Executive shall also take whatever steps are
necessary to sustain the Company’s claim to such trade secrets, including but
not limited to: (a) maintaining the confidential nature of any such
discoveries or creations; and (b) testifying and providing other support and
substantiation for the Company’s claims with regard to the discovery or
creation.

               (g)     Reports. With respect to discoveries made by Executive covered by the
terms of this Agreement, Executive shall maintain notebooks and other records
adequate to describe such discovery to others conversant in the subject of the
technology and to establish the date and circumstances of Executive’s
discovery. Executive shall notify the Company’s General Counsel of any such
discoveries and shall make copies of all documents or reports relating to such
discoveries available to the Company. Any such discovery shall be reported to
the Company’s General Counsel regardless of whether, in Executive’s opinion, a

 

 

given discovery is of value to the Company, or is protectable under patent,
copyright or the laws of any jurisdiction.

               (h)     Infringement Actions. In the event that the Company shall bring an
infringement suit against any third parties or shall be sued by any third
parties as a result of Executive’s authorship or creation, including any
addition and/or modification of the aforementioned items of Confidential
Information, Executive agrees to cooperate reasonably without charge to the
Company, but at its request and expense, in defending against or prosecuting
any such suit. This right shall be cumulative to any other rights of the
Company hereunder.

     10.     Obligation of Confidentiality and Non-Competition. Executive agrees
that Executive has a fiduciary duty to the Company and that Executive shall
hold in confidence and shall not, except in the course of performing
Executive’s employment obligations or pursuant to written authorization from
the Company, at any time during or for three years after termination of
Executive’s relationship with the Company knowingly (a) directly or indirectly
reveal, report, publish, disclose or transfer the Confidential Information or
any part thereof to any person or entity; (b) use any of the Confidential
Information or any part thereof for any purpose other than for the benefit of
the Company; (c) assist any person or entity other than the Company to secure
any benefit from the Confidential Information or any part thereof or (d)
solicit (on Executive’s behalf or on behalf of any third party) any employee of
the Company for the purpose of providing services or products which Executive
is prohibited from providing hereunder.

     Furthermore, Executive agrees that all Confidential Information, as
defined below, shall belong exclusively and without any additional compensation
to the Company. For the purposes of this Agreement, “Confidential Information”
shall mean each of the following: (a) any information or material proprietary
to the Company or designated as confidential either orally or in writing by the
Company; and (b) any information not generally known by non- Company personnel;
and (c) any information which Executive should know the Company would not care
to have revealed to others or used in competition with the Company; and (d) any
information which Executive made or makes, conceived or conceives, developed or
develops or obtained or obtains knowledge or access through or as a result of
Executive’s relationship with the Company (including information received,
originated, discovered or developed in whole or in part by Executive) from the
initial date of Executive’s employment with the Company.

     Furthermore, Executive agrees not to accept employment, consultancy or
other business relationships with a business which directly competes with the
Company’s then existing or planned business for twelve months following
Executive’s last receipt of compensation from the Company. For the purpose of
this paragraph, the Company’s business as of the date of this Agreement shall
be defined as medical foods development and marketing. The parties acknowledge
that the Company’s business after the date of this Agreement may evolve into
other or additional areas and activities. Executive and Company agree that the
terms of this Section 11 relating to non-competition are reasonable in scope
and length and are necessary for the protection of the Company. In the event
that a court finds the scope of this provision to be unreasonably broad or if
the length of time of this provision is

 

 

 found to be unreasonably long, an arbitrator or court, as applicable,
shall narrow the scope or shorten the length of time to the extent required to
render the provision reasonable and enforceable and shall enforce the provision
as so narrowed.

     While employed by the Company and for a period of twelve months after the
cessation of employment for any reason, Executive shall not induce or attempt
to influence, either directly or indirectly any other employee or contractor of
the Company to terminate his or her employment or relationship with the Company
or to work for Executive or any other person or entity.

     11.     Miscellaneous.

               (a)     Entire Agreement. This Agreement contains the entire agreement
between the parties hereto relating to the subject matter hereof, and this
Agreement supersedes all prior understandings and agreements, whether oral or
written, relating to the employment of the Executive by the Company.

               (b)     Assignment. This Agreement shall not be assignable or otherwise
transferable by either party hereto, but any amounts owing to Executive upon
the Executive’s death shall inure to the benefit of the Executive’s heirs,
legatees, legal representatives, executor or administrator. Notwithstanding
the foregoing, this Agreement applies with the prior written consent of the
Executive, which consent shall not be unreasonably withheld. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
any such respective heirs, legatees, executors, administrators,
representatives, successors and assigns.

               (c)     Notices. All notices, demands, requests or other communications which
may be, or are required to be given, served or sent by any party to any party
pursuant to this Agreement shall be in writing and shall be mailed by first
class, registered or certified mail, return receipt requested, postage prepaid,
or transmitted by hand delivery, telegram or telex and addressed as follows:

	 	 	 
	If to the Executive:	 	
Darlene Walley
	 	 	
128 Vicente Road
	 	 	
Berkeley, CA 94705
 
	 	 	
If to the Company:
 
	 	 	
UP Subsidiary Corporation
	 	 	
c/o United Therapeutics Corporation
	 	 	
1110 Spring Street
	 	 	
Silver Spring, MD 20910
	 	 	
Attn: CEO
 
	 	 	
With a copy to:
 
	 	 	
Paul A. Mahon, Esq.

 

 

	 	 	 
	 	 	
United Therapeutics Corporation
	 	 	
1110 Spring Street
	 	 	
Silver Spring, Maryland 20910

               (d)     Amendment; Waiver. This Agreement shall not be amended, altered,
modified or discharged except by an instrument in writing duly executed by the
Executive and the Company. Neither the waiver by the parties hereto of a
breach of, or default under, any of the provisions of this Agreement, nor the
failure of either of the parties, on one or more occasions, to enforce any of
the provisions of this Agreement or to exercise any right or privilege
hereunder, shall thereafter be construed as a waiver of any such provisions,
rights or privileges hereunder.

               (e)     Severability. The invalidity or unenforceabilty of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.

               (f)     Applicable Law. This Agreement and the rights and obligations of the
parties under this Agreement shall be construed, interpreted and enforced in
accordance with the laws of the State of Maryland, exclusive of the
choice-of-laws rules thereunder.

               (g)     Survival. It is the express intention and agreement of the parties
hereto that the provisions of Sections 8 7, 9, 10 and 11 hereof shall survive
the termination of employment of the Executive. In addition, all obligations
of the Company to make payments hereunder shall survive any termination of this
Agreement on the terms and conditions set forth.

               (h)     Execution. To facilitate execution, this Agreement may be executed in
as many counterparts as may be required; and it shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party, or that the
signatures of the persons required to bind any party, appear on one or more of
the counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.

     IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or
have caused this Agreement to be duly executed on their behalf, as of the date
first above written.

	 	 	 
	 	 	
UP Subsidiary Corporation
	 
	/s/ Darlene Walley

Darlene Walley, Ph.D.	 	
/s/ Barry Kanarek

By:  Barry B. Kanarek, Ph.D.ex10-2

 

Exhibit 10.2

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of
December 29, 2000 by and between UTSC Sub Acquisition, Inc. (the “Company”) and
Ricardo A. Balda (the “Executive”).

     WHEREAS, the Company desires to obtain the services of the Executive, and
the Executive is willing to render such services to the Company, upon the terms
and conditions herein set forth;

     NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein; and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

     1.     Employment. Upon the other terms and conditions hereinafter stated,
the Company agrees to employ the Executive and the Executive agrees to accept
employment by the Company for the term set forth in Section 2 hereof and in the
position and with the duties and responsibilities set forth in Section 3
hereof. Executive warrants that he is under no restriction that would prevent
him from entering into this Agreement and from complying with all of its
provisions to their fullest extent.

     2.     Term. The employment of the Executive by the Company will commence on
January 2, 2001 and end on the fifth anniversary of such date (the “Initial
Term”), and thereafter shall continue from year to year for additional one-year
terms (the “Additional Terms”), unless and until either party shall give notice
of such party’s intent to terminate not less than 90 days prior to the end of
the then-current Initial Term or Additional Term, which termination shall be
effective at the expiration of said term, or until sooner terminated as
hereinafter set forth.

     3.     Positions and Duties.

               (a)     The Executive shall serve as co-Chief Executive Officer of the Company,
with such duties and responsibilities as are normally performed by the Chief
Executive Officer of a medical device/telemedicine services company and as
otherwise assigned by the Board of Directors from time to time that are
consistent with duties and responsibilities as are normally performed by the
Chief Executive Officer. The Executive shall at all times exert his best
efforts and loyalty on behalf of the Company. Unless otherwise provided
herein, the Executive agrees to abide by all employment guidelines and policies
as may be developed from time to time by the Company, including, without
limitation, the United Therapeutics Corporation Company Manual, the United
Therapeutics Corporation Securities Trades by Company Personnel Policy and the
United Therapeutics Corporation Media and Analysts Policy. Martine Rothblatt,
the Chairman and CEO of United Therapeutics Corporation, will serve as the
Company’s other co-CEO. In the event that Martine Rothblatt ceases to serve as

1

 

Chairman or CEO of UT, then the Executive shall serve as the sole CEO of the
Company.

               (b)     United Therapeutics Corporation shall cause the number of members of
its Board of Directors to be increased by one and shall cause the Executive to
be appointed to fill such newly created directorship.

     4.     Compensation and Related Matters.

               (a)     For services rendered under this Agreement, the Company shall pay to
the Executive an initial annual base salary of Two Hundred Thousand Dollars
($200,000) (the “Base Salary’), subject to increase, which shall be considered
and determined by the Board of Directors of the Company, in its sole
discretion, on or before any anniversary date of this Agreement. The Base
Salary shall be payable semi-monthly or in such other installments as shall be
consistent with the Company’s payroll procedures, but not less often than
monthly. The Company shall deduct and withhold all necessary social security
and withholding taxes and any other similar sums required by law or authorized
by the Executive with respect to payment of the Base Salary and all other
amounts and benefits payable under this Agreement.

               (b)     The Executive shall be entitled to participate in any group life,
disability and medical insurance or other benefit plan or arrangement available
generally to the employees of the Company as determined by the Board of
Directors; provided however, the Company shall allow Employee to become
eligible to participate in such programs under the shortest eligibility period
allowable under the relevant documents or other applicable laws. Unless
otherwise provided herein, the Executive shall be entitled to participate in
other benefit plans as are generally provided by United Therapeutics
Corporation to Chief Executive Officers of its subsidiaries and to its Board of
Directors, including, but not limited to, other cash and stock option bonus
plans.

               (c)     As an inducement to executive to enter into this Agreement, Executive
shall be granted within thirty days of Closing an option to purchase 40,000
shares of the common stock of United Therapeutics Corporation outside of the
Company’s Equity Incentive Plan priced at the NASDAQ closing price on the date
of this Agreement, with vesting in one-fourth increments on each anniversary of
this Agreement. Executive shall enter into a separate stock option agreement
with United Therapeutics Corporation setting forth the terms of this option
grant.

               (d)     The Executive shall be entitled to participate in the Company’s
Employee Incentive Bonus Pool adopted by the Company as of the date of this
Agreement and contemplated by that Employee Incentive Bonus Pool Agreement
dated December 28, 2000. Executive shall be entitled to receive one-third of
the amounts funded and/or paid under paragraph 1 of the Employee Incentive
Bonus Pool Agreement dated December 28, 2000. Executive shall also be entitled
to participate in any other bonus compensation program as are generally
provided by United

2

 

 Therapeutics Corporation to its Chief Executive Officers, Board of
Directors or employees.

     5.     Expenses. The Executive shall be reimbursed by the Company for
reasonable and ordinary business expenses incurred by the Executive in the
performance of his responsibilities and the promotion of the Company’s
businesses and accounted for in accordance with the Company’s normal practices,
including, without limitation, travel and lodging, parking at or near the
Company’s offices, phone charges, club memberships and dues, meals and other
expenses, as approved from time to time by the Board of Directors. In
addition, the Company shall also provide the Executive with a monthly
automobile allowance equal to the amount of the Executive’s lease payments on
his current automobile, a BMW540, which lease matures in December 2000, but
not to exceed $1,000 per month. Thereafter, the Company shall lease a
comparable automobile for use of the Executive through the end of the Initial
Term or, if applicable, the end of any Additional Terms. The Company shall
also pay the reasonable and ordinary fees for The Executive Committee, a
support organization for CEOs.

     6     Vacation. The Executive shall be entitled to five (5) weeks of vacation
each year at such time or times and for such period or periods as shall be
mutually agreed upon by the Executive and the Company.

     7.     Termination of Employment.

               (a)     The Executive’s employment hereunder shall terminate upon the
Executive’s death.

               (b)     The Company may terminate the Executive’s employment hereunder as set
forth in Section 2 above, and under the following circumstances:

                         (i)     If, as a result of the Executive’s incapacity due to physical or
mental illness, the Executive shall have been unable to perform all of the
Executive’s material duties hereunder by reason of illness, or physical or
mental disability or other similar capacity, which inability shall continue for
more than three (3) consecutive months, the Company may terminate the
Executive’s employment hereunder.

                         (ii)     The Company may terminate the Executive’s employment hereunder for
“Cause.” For purposes of this Agreement, the Company shall have “Cause” to
terminate the Executive’s employment hereunder upon the (A) negligence,
malfeasance, willful misconduct or fraud on the part of the Executive in the
performance of his Duties hereunder and the failure of the Executive, within 10
days after receipt of notice from the Company setting forth in reasonable
detail the nature of the Executive’s alleged negligence, malfeasance, willful
misconduct or fraud, (i) to provide the Company with a reasonably satisfactory
explanation of the Executive’s actions (or inaction) and (ii) to reasonably
correct to the satisfaction of the Company any such misconduct; (B) conviction
of the Executive of a crime involving a felony,

3

 

 fraud, embezzlement or the like; or (C) misappropriation of the Company
funds or misuse of the Company’s assets by Executive.

               (c)     The Executive may terminate his employment hereunder for “Good
Reason.” For purposes of this Agreement, the Executive shall have “Good Reason”
to terminate his employment hereunder upon (A) the change in control of United
Therapeutics Corporation or the Company by any means including, but not limited
to, any company or companies acquiring, directly or indirectly, all or
substantially all of the assets of United Therapeutics Corporation or the
Company, whether by merger, consolidation, purchase, lease or otherwise; or (B)
the filing for bankruptcy or dissolution proceedings by United Therapeutics
Corporation or the Company.

               (d)     Any termination of the Executive’s employment by the Company or by the
Executive (other than pursuant to Section 7(a) hereof) shall be communicated by
written “Notice of Termination” to the other party hereto in accordance with
Section 12(c) hereof, which shall indicate the specific termination provision
in this Agreement relied upon, if any, and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated.

               (e)     For purposes of this Agreement, the “Date of Termination” shall mean
(i) if the Executive’s employment is terminated by the Executive’s death, the
date of the Executive’s death; (ii) if the Executive’s employment is terminated
pursuant to Section 7(b)(i) hereof, thirty (30) days after the Notice of
Termination; provided, that the Executive shall not have returned to the
performance of the Executive’s duties on a full-time basis during such thirty
(30) day period; (iii) if the Executive’s employment is terminated pursuant to
Section 7(b)(ii) hereof, the date specified in the Notice of Termination which
date, in the case of termination for negligent performance, shall not be sooner
than thirty (30) days from the date of the Notice of Termination; and (iv) if
the Executive’s employment is terminated for any other reason, the date on
which the Notice of Termination is given; provided however, the date provided
in such Notice of Termination shall not be less than 90 days after the Notice
of Termination is sent pursuant to Section 12(c) hereof.

     8.     Compensation Upon Termination.

               (a)     If the Executive’s employment is terminated by the Executive’s death,
the Company shall continue to pay to the Executive’s estate or as may be
directed by the legal representatives of such estate, the Executive’s full Base
Salary through the end of the calendar year following the Executive’s death at
the rate in effect at the time of the Executive’s death and all other unpaid
amounts, if any, to which the Executive is entitled as of such date in
connection with any fringe benefits or under any incentive compensation plan or
program of the Company pursuant to Section 4 hereof, at the time such payments
are due.

4

 

               (b)     During any period that the Executive fails to perform the Executive’s
duties hereunder solely as a result of incapacity due to physical or mental
illness (“disability period”), the Executive shall continue to receive the
Executive’s full base salary through the Date of Termination at the rate in
effect at the time the Notice of Termination is given and all other unpaid
amounts, if any, to which the Executive is entitled as of the Date of
Termination in connection with any fringe benefits or under any incentive
compensation plan or program of the Company, at the time such payments are due;
provided that payments so made to the Executive during the disability period
shall be reduced by the sum of the amounts, if any, payable to the Executive at
or prior to the time of any such payment under disability benefit plans of the
Company and which amounts were not previously applied to reduce any such
payment.

               (c)     If the Executive shall terminate the Executive’s employment other than
for Good Reason as provided in Section 7(c) hereof or the Company terminates
the Executive’s employment for Cause as provided in Section 7(b)(ii) hereof,
the Company shall pay the Executive the Executive’s full Base Salary through
the Date of Termination at the rate in effect at the time the Notice of
Termination is given, and the Company shall have no further obligations to the
Executive under this Agreement. If the Company terminates the Executive’s
employment other than for Cause as provided in Section 7(b)(ii) hereof,
Executive shall continue to receive payments under the Company’s Employee
Incentive Bonus Pool for the full term the Pool is in existence.

               (d)     If the Company terminates this Agreement without Cause or if the
Executive terminates this Agreement for Good Reason as provided for in
paragraph 7 above, then the Executive shall receive the following termination
benefits: (1) an amount equal to the Executive’s then current Base Salary, plus
(2) the greater of $70,000 or the amount of Executive’s most recent annual
bonus paid under Section 4(d) (collectively (1) and (2) hereinafter referenced
as “Termination Benefits”) for each year of the period ending on the earlier of
(i) five (5) years from the date of such termination, or (ii) the tenth (10th)
anniversary date following the execution of this Agreement by both parties.
The Termination Benefits shall be paid in such manner as normally and
customarily are paid by the Company. If the Company terminates this Agreement
at the end of the Initial Term or at the end of any Additional Term, then the
Executive shall be entitled to receive the Termination Benefits for each year
of the period between such termination and January 1, 2011.

     9.     Intellectual Property Rights. Because of the highly specialized and
technical nature of the business of the Company and the nature and scope of
Executive’s employment, Executive agrees that any and all rights, title, and
interest, including but not limited to domestic and foreign patents,
copyrights, trademarks and trade secrets, in and to all inventions, processes,
computer programs, photographic, written or artistic works, or other forms of
intellectual property (“Intellectual Property”) which employee makes,
conceives, reduces to practice or develops, in whole or in part, during the
term of this Agreement in the furtherance of the Company’s business and in
connection with specific Company projects as defined in Paragraph 10 below
(whether or not made during the hours of employment or with the use of

5

 

Company’s materials, facilities or personnel, either solely or jointly with
others), or after termination of employment if such Intellectual Property is
based upon Confidential Information, shall be the sole and exclusive property
of the Company, and its respective successors, licensees, and assigns. Neither
this Paragraph nor any of its subparts shall apply to any invention developed
entirely on Executive’s own time without using the Company’s equipment,
supplies, facilities or Confidential Information, except for those items and
inventions that either: (i) relate, at the time of conception or reduction to
practice of the invention, to the Company’s business or any of the products or
services being developed, manufactured, sold or licensed by the Company or
which may conveniently be used in relation therewith, or actual, or
demonstrably anticipated research or development of the Company, or (ii) result
from any work performed by Executive for the Company. In full consideration of
the compensation provided to Executive by the Company, Executive agrees to each
and all of the following:

               (a)     Work Made for Hire. Executive acknowledges and agrees that all works
of authorship created by Executive as an employee of the Company is a
commissioned “work for hire” within the meaning of United States copyright law
which will be owned solely and exclusively by the Company. If the work is
determined not to be a “work for hire” or such doctrine is not effective,
Executive hereby irrevocably assigns, conveys and otherwise transfers to the
Company, and its respective successors, licensees, and assigns, all right,
title and interest worldwide in and to the work and all proprietary rights
therein, including, without limitation, all copyrights, trademarks, design
patents, trade secret rights, moral rights, and all contract and licensing
rights, and all claims and causes of action with respect to any of the
foregoing, whether now known or hereafter to become known. In the event that
Executive has any right in the work which cannot be assigned, Executive agrees
to waive enforcement worldwide of such right against the Company, its
distributors and licensees or, if necessary, exclusively license such right,
worldwide to the Company with the right to sublicense. These rights are
assignable by the Company. Executive has not and hereby does not transfer any
Intellectual Property rights owned or held solely by Executive to the Company
relating to periods prior to the date of this Agreement and retains all rights
to same provided, however, that Executive acknowledges that Intellectual
Property rights that he created as an employee of Medicomp, Inc, or Telemedical
Procedures, LLC. prior to the date of this Agreement, and not otherwise
previously assigned or transferred prior to the date of this Agreement pursuant
to the attached schedule, are solely owned by the Company as a work made for
hire.

               (b)     Original Work. Executive agrees that Executive will not include any
copyrighted or patented material owned by a third party in any written,
copyrightable or patentable material furnished or delivered by Executive under
this Agreement without the unconditional written consent of the copyright or
patent owner unless specific written approval of the Company for inclusions of
such copyrighted or patented material is secured in advance. Executive also
agrees that all work (or tangible expression of an idea) that Executive creates
or contributes to the Company in the course of Executive’s employment hereunder
will be created solely by Executive, will be original to Executive, and will be
free of any third party claims or interests.

6

 

               (c)     Applications for Patent, Copyrights and Trademarks. Executive shall,
if the Company so decides at its sole discretion and expense, apply for United
States and foreign letters patent, copyrights, and/or trademarks, either in
Executive’s name or as the Company in its sole discretion may direct.
Executive hereby grants the Company the exclusive right, and appoints the
Company as Executive’s attorney-in-fact, to execute and prosecute an
application for domestic and/or foreign patent or other statutory protection,
and Executive shall execute and deliver to the Company, without charge to the
Company but at the Company’s expense, such other documents of registration and
recordation, and do such other acts, such as give testimony in support of
Executive’s inventorship, as may be necessary in the opinion of the Company to
vest in the Company or any other party nominated by the Company, or otherwise
to protect, the exclusive rights conveyed and/or granted to the Company
pursuant to this Agreement. Executive’s duty to support the Company’s claim of
rights in patents, copyrights, or trademarks claimed by the Company, and
resulting from Executive’s service to the Company as its employee, shall
continue for the life of any such patent, copyright or trademark.

               (d)     Assignment. Except as otherwise may be agreed by the parties in a
signed writing, Executive agrees to assign to the Company and its respective
successors, licensees, and assigns, all of Executive’s rights, title and
interests in and to the Intellectual Property governed by this Agreement and
all rights, title, and interests in and to United States and foreign letters
patent, copyrights, and trademarks resulting therefrom. Executive acknowledges
this provision and understands fully its implications and meaning.

               (e)     Use. The Company and its respective successors, licensees, and
assigns, shall have the sole and exclusive right to practice, or to make, use
or sell products, processes or services derived from any discoveries or
creations within the scope of this Agreement or created by Executive and
covered by the terms of this Agreement, whether or not patentable or
copyrightable under the laws of any jurisdiction, or protected by the trade
secret laws of any jurisdiction.

               (f)     Trade Secret Protection. In the event that the Company decides not to
pursue patent, copyright or trademark protection for any discovery or creation
made by Executive, and instead decides to protect the discovery or creation
pursuant to the trade secret laws of any jurisdiction, such decision shall not
be construed as a waiver of the Company’s rights pursuant to this Agreement.
At the Company’s expense, Executive shall also take whatever steps are
necessary to sustain the Company’s claim to such trade secrets, including but
not limited to: (a) maintaining the confidential nature of any such discoveries
or creations; and (b) testifying and providing other support and substantiation
for the Company’s claims with regard to the discovery or creation.

               (g)     Reports. With respect to discoveries made by Executive covered by the
terms of this Agreement, Executive shall maintain notebooks and other records
adequate to describe such discovery to others conversant in the subject of the
technology and to establish the date and circumstances of Executive’s
discovery.

7

 

     Executive shall notify the Company’s General Counsel of any such
discoveries and shall make copies of all documents or reports relating to such
discoveries available to the Company. Any such discovery shall be reported to
the Company’s General Counsel regardless of whether, in Executive’s opinion, a
given discovery is of value to the Company, or is protectable under patent,
copyright or the laws of any jurisdiction.

               (h)     Infringement Actions. In the event that the Company shall bring an
infringement suit against any third parties or shall be sued by any third
parties as a result of Executive’s authorship or creation, including any
addition and/or modification of the aforementioned items of Confidential
Information, Executive agrees to cooperate reasonably without charge to the
Company, except for reimbursement for reasonable expenses incurred by Executive
for activities authorized in advance by Company, in defending against or
prosecuting any such suit. This right shall be cumulative to any other rights
of the Company hereunder.

     10.     Obligation of Confidentiality and Non-Competition. Executive agrees
that Executive has a fiduciary duty to the Company and that Executive shall
hold in confidence and shall not, except in the course of performing
Executive’s employment obligations or pursuant to written authorization from
the Company, at any time during or for three years after termination of
Executive’s employment with the Company knowingly (a) directly or indirectly
reveal, report, publish, disclose or transfer the Confidential Information or
any part thereof to any person or entity; (b) use any of the Confidential
Information or any part thereof for any purpose other than for the benefit of
the Company; (c) assist any person or entity other than the Company to secure
any benefit from the Confidential Information or any part thereof.

     Furthermore, Executive agrees that all Confidential Information, as
defined below, shall belong exclusively and without any additional compensation
to the Company. For the purposes of this Agreement, “Confidential Information”
shall mean each of the following: (a) any information or material proprietary
to the Company or designated as confidential either orally or in writing by the
Company; and (b) any information not generally known by non-Company personnel;
and (c) any information which Executive should know the Company would not care
to have revealed to others or used in competition with the Company discovered
or developed in whole or in part by Executive) from the initial date of
Executive’s employment with the Company.

     Furthermore, Executive agrees not to accept employment, consultancy or
other business relationships with a business which directly competes with the
Company’s then existing or planned business for twelve months following
Executive’s last receipt of compensation from the Company; provided however,
the Executive shall have the right to waive his right to receive any further
compensation from the Company after the five year period immediately following
the termination of his employment with the Company. For the purpose of this
paragraph, the Company’s business as of the date of this Agreement shall be
defined as telemedicine devices and telemedicine services produced, sold,
conducted, developed, or in the process of development by the Company on the
date of termination. The parties acknowledge that the Company’s business after
the date of this Agreement may evolve into other or additional areas and
activities.

8

 

Executive and Company agree that the terms of this Section 10 relating to
non-competition are reasonable in scope and length and are necessary for the
protection of the Company. In the event that a court finds the scope of this
provision to be unreasonably broad or if the length of time of this provision
is found to be unreasonably long, an arbitrator or court, as applicable, shall
narrow the scope or shorten the length of time to the extent required to render
the provision reasonable and enforceable and shall enforce the provision as so
narrowed.

     While employed by the Company and for a period of twelve months after the
cessation of employment for any reason, Executive shall not induce or attempt
to influence, either directly or indirectly any other employee or contractor of
the Company to terminate his or her employment or relationship with the Company
or to work for Executive or any other person or entity.

     11.     Indemnification. The Company shall indemnify, defend and hold and
save Executive, his heirs, administrators and executors, and each of them,
harmless for any and all actions and causes of action, claims, demands,
liabilities, losses, damages or expenses, of whatsoever kind and nature,
including judgments, interest and attorneys’ fees and all other reasonable
costs, expenses and charges which he, his heirs, administrators and executors,
or any of them shall or may be at any time, or from time to time, subsequent to
the date of this Agreement sustain or incur, or become subject to by reason of
any claim or claims against him, his heirs, administrators or executors or any
of them for any reason related to his or his heirs, administrators or
executors, or any of them, carrying out the terms and conditions of his
responsibilities under this Agreement, except for willful misconduct or
criminal acts under U.S. law, and provided further that Executive, his heirs,
administrators, executors, or any one of them promptly notifies the Company and
its general counsel of adverse claims or threatened or actual lawsuits. United
Therapeutics Corporation shall purchase and maintain adequate insurance for
this such indemnification coverage from a carrier mutually acceptable to United
Therapeutics Corporation and the Executive.

     12     Miscellaneous.

               (a)     Entire Agreement. This Agreement contains the entire agreement
between the parties hereto relating to the subject matter hereof, and this
Agreement supersedes all prior understandings and agreements, whether oral or
written, relating to the employment of the Executive by the Company.

               (b)     Assignment. Neither this Agreement, nor any of Executive’s rights,
powers, duties or obligations hereunder may be assigned by Employee; provided
however, any amounts owing to Executive upon the Executive’s death shall inure
to the benefit of the Executive’s heirs, legatees, legal representatives,
executor or administrator. Successors of the Company shall include, without
limitation, any company or companies acquiring, directly or indirectly, all or
substantially all of the assets of the Company, whether by merger,
consolidation, purchase, lease or otherwise, and such successor shall
thereafter be deemed “the Company” for the purpose hereof.

9

 

               (c)     Notices. All notices, demands, requests or other communications which
may be, or are required to be given, served or sent by any party to any party
pursuant to this Agreement shall be in writing and shall be mailed by first
class, registered or certified mail, return receipt requested, postage prepaid,
or transmitted by hand delivery, telegram or telex and addressed as follows:

	 	If to the Executive:

	 	Personal & Confidential—To Be Opened by Addressee Only

Ricardo Balda

7845 Ellis Road

Melbourne, Florida 32904

	 	 	 
	And copy to:	 	
Attn: Glenn Adams, Esq.
	 	 	
Holland & Knight LLP
	 	 	
200 South Orange Avenue; Suite 2600
	 	 	
Orlando, Florida, 32801

               
                     
If to the Company:

	 	UTSC Sub Acquisition, Inc.

c/o United Therapeutics Corporation

1110 Spring Street

Silver Spring, MD 20910

Attn: CEO

	 	With a copy to:

	 	Paul A. Mahon, Esq.

United Therapeutics Corporation

1110 Spring Street

Silver Spring, Maryland 20910

               (d)     Amendment; Waiver. This Agreement shall not be amended, altered,
modified or discharged except by an instrument in writing duly executed by the
Executive and the Company. Neither the waiver by the parties hereto of a
breach of, or default under, any of the provisions of this Agreement, nor the
failure of either of the parties, on one or more occasions, to enforce any of
the provisions of this Agreement or to exercise any right or privilege
hereunder, shall thereafter be construed as a waiver of any such provisions,
rights or privileges hereunder.

               (e)     Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.

10

 

               (f)     Applicable Law. This Agreement and the rights and obligations of the
parties under this Agreement shall be construed, interpreted and enforced in
accordance with the laws of the State of Florida, exclusive of the
choice-of-laws rules thereunder. Each of the parties hereto hereby irrevocably
consents and submits to jurisdiction of the Circuit Court of the 18th
Judicial Circuit in and for Brevard County, Florida and United States District
Court the Middle District of Florida in connection with any suit, action or
other proceeding concerning the interpretation or enforcement of this
Agreement. Each party waives and agrees not to assert any defense that the
court lacks jurisdiction, venue is improper, inconvenient forum or otherwise.

               (g)     Attorneys Fees. If either party initiates proceedings for the other’s
breach of this Employment Agreement, the prevailing party shall recover its/his
reasonable attorneys’ fees and costs, including such fees and costs of any
enforcement or appeal proceedings.

               (h)     Survival. It is the express intention and agreement of the parties
hereto that the provisions of Sections 8, 9, 10, 11 and 12 hereof shall survive
the termination of employment of the Executive. In addition, all obligations
of the Company to make payments hereunder shall survive any termination of this
Agreement on the terms and conditions set forth herein. All obligations of the
Company to make payments hereunder shall also be binding upon successors of the
Company whether by merger, consolidation, purchase, lease or otherwise.

               (i)     Execution. To facilitate execution, this Agreement may be executed in
as many counterparts as may be required; and it shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party, or that the
signatures of the persons required to bind any party, appear on one or more of
the counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.

     IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or
have caused this Agreement to be duly executed on their behalf, as of the date
first above written.

	 	 	 
	 	 	
UTSC Sub Acquisition, Inc.
	 
	 
	/s/ Ricardo Balda

Ricardo A. Balda	 	
/s/ Martine Rothblatt

Martine A.  Rothblatt, Co-CEO

11

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