Document:

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Exhibit 10.1

ADVANCIS PHARMACEUTICAL CORPORATION

EXECUTIVE EMPLOYMENT AGREEMENT

     THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made this 15th
day of March, 2004 by and between Barry Hafkin, M.D. a resident of Danbury,
Connecticut, (the “Employee”), and Advancis Pharmaceutical Corporation, a
corporation organized and existing under the laws of the State of Delaware (the
“Company”).

BACKGROUND

     The Company is engaged in the business of developing, improving and
promoting antibiotic therapies and the delivery and dosage of antibacterials,
as well as extending the market and patent life of important anti-infectives
and oncology (as may be modified or expanded by the Company during the term of
this Agreement, collectively and individually, the “Business”).

     The Company desires to employ the Employee and the Employee desires to be
employed by the Company, upon the terms and conditions set forth in this
Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants and obligations
contained herein, and intending to be legally bound, the parties, subject to
the terms and conditions set forth herein, agree as follows:

     1. Employment and Term. The Company hereby employs the Employee and the
Employee hereby accepts employment with the Company, as Senior Vice President
and Chief Scientific Officer, (the “Position”) commencing on March 29, 2004
(the “Commencement Date”). Employee is employed by the Company on an at will
basis. The Employee shall be entitled to terminate this Agreement at any time
upon ninety (90) days prior written notice to the Company. The Company shall
be entitled to terminate this Agreement at any time subject to the provisions
of Section 8 hereof. (The entire period of time during which the Employee is
employed by the Company is referred to herein as the “Term”).

     2. Duties. During the Term, the Employee shall serve the Company
faithfully and to the best of his ability and shall devote his full time,
attention, skill and efforts to the performance of the duties required by or
appropriate for the Position. Subject to the oversight of the President & CEO,
the Employee shall (i) have responsibility for the planning, directing and
prioritizing all scientific research and development activities for the
Company, and (ii) such duties and responsibilities as may be assigned to him
from time to time by the President & CEO. The Employee shall perform such
duties and responsibilities at the Company’s facility located in Germantown,
Maryland or at such other location as may be mutually agreed upon by the
Company and the Employee in accordance with the business needs of the Company.
The Employee, as Chief Scientific Officer, shall report to the President & CEO.

 

 

     3. Other Business Activities. Except with the prior written consent of
the Company in its sole discretion, the Employee shall not engage, directly or
indirectly, during the Term, in any other business activities or pursuits
whatsoever, except activities in connection with charitable or civic
activities, personal investments and serving as an executor, trustee or in
other similar fiduciary capacity; provided that any such activities do not
interfere with the performance of his responsibilities and obligations pursuant
to this Agreement.

     4. Compensation. The Company shall pay the Employee, and the Employee
hereby agrees to accept, as compensation for all services to be rendered to the
Company and for the Employee’s intellectual property covenants and assignments
and covenant not to compete, as provided in Sections 6 and 7 hereof, the
compensation set forth in this Section 4.

          4.1 Salary. The Company shall pay the Employee a base salary at the
annual rate of Two Hundred Eighty Thousand Dollars ($280,000.00) (as the same
may hereafter be adjusted, the “Salary”) during the Term of this Agreement.
The Salary shall be inclusive of all applicable income, social security and
other taxes and charges that are required by law to be withheld by the Company
(collectively, “Taxes”) and shall be paid and withheld in accordance with the
Company’s normal payroll practice for its executive employees from time to time
in effect. The Salary shall be subject to increase at the option and in the
sole discretion of the Company based upon the demonstrated performance of the
Employee.

          4.2 Bonus. Upon the execution of this Agreement, the Employee shall be
eligible to be awarded an annual cash bonus, which bonus shall be determined by
the President & CEO and the Board of Directors and shall be in a target amount
of thirty percent (30%) of Salary paid during such applicable period, less
Taxes, provided that the Employee shall have achieved all of his performance
objectives established for such period. Such bonus shall be determined and
paid within ninety (90) days after the conclusion of such year.

          4.3 Fringe Benefits. The Employee shall be entitled to participate in the
following programs and receive the following benefits (collectively, the
“Benefits”) in accordance with the following provisions.

               (a) The Employee shall be entitled to participate in any retirement,
health or dental programs generally made available to executive employees of
the Company.

               (b) The Employee shall be entitled to participate in all vacation, life
and disability insurance and other fringe benefit programs of the Company to
the extent and on the same terms and conditions as are accorded to other
executive employees of the Company.

          4.4 Reimbursement of Expenses. During the Term, the Employee shall be
reimbursed for items of travel, food and lodging and miscellaneous expenses
reasonably incurred by him on behalf of the Company, provided that such
expenses are incurred,

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documented and submitted to the Company, all in accordance with the
reimbursement policies of the Company as in effect from time to time.

     5. Confidentiality. The Employee recognizes and acknowledges that the
Proprietary Information (as hereinafter defined) is a valuable, special and
unique asset of the Company. As a result, both during the Term and thereafter,
the Employee shall not, without the prior written consent of the Company, for
any reason either directly or indirectly divulge to any third-party or use for
his own benefit, or for any purpose other than the exclusive benefit of the
Company, any confidential, proprietary, business and technical information or
trade secrets of the Company or of any subsidiary or affiliate of the Company
(the “Proprietary Information”) revealed, obtained or developed in the course
of his employment with the Company. Proprietary Information shall include any
confidential or proprietary information or trade secrets relating to any
patents or other intellectual property assigned by the Employee to the Company.
Proprietary Information also shall include, but shall not be limited to the
intangible personal property described in Section 6(b) hereof and, in addition,
technical information, including research design, results, techniques and
processes; apparatus and equipment design; computer software; technical
management information, including project proposals, research plans, status
reports, performance objectives and criteria, and analyses of areas for
business development; and business information, including project, financial,
accounting and personnel information, business strategies, plans and forecasts,
customer lists, customer information and sales and marketing plans, efforts,
information and data. In addition, “Proprietary Information” shall include all
information and materials received by the Company or Employee from a third
party subject to an obligation of confidentiality and/or non-disclosure.
Nothing contained herein shall restrict the Employee’s ability to make such
disclosures during the course of his employment as may be necessary or
appropriate to the effective and efficient discharge of the duties required by
or appropriate for the Position or as such disclosures may be required by law.
Furthermore, nothing contained herein shall restrict the Employee from
divulging or using for his own benefit or for any other purpose any Proprietary
Information that is readily available to the general public so long as such
information did not become available to the general public as a direct or
indirect result of the Employee’s breach of this Section 5. Failure by the
Company to mark any of the Proprietary Information as confidential or
proprietary shall not affect its status as Proprietary Information under the
terms of this Agreement.

     6. Property.

          6.1 Removal and Distribution. All right, title and interest in and to
Proprietary Information shall be and remain the sole and exclusive property of
the Company. During the Term, the Employee shall not remove from the Company’s
offices or premises any documents, records, notebooks, files, correspondence,
reports, memoranda or similar materials of or containing Proprietary
Information, or other materials or property of any kind belonging to the
Company, unless necessary or appropriate in accordance with the duties and
responsibilities required by or appropriate for the Position and, in the event
that such materials or property are removed, all of the foregoing shall be
returned to their proper files or places of safekeeping as promptly as possible
after the removal shall serve its specific purpose. The Employee shall not
make, retain, remove and/or distribute any copies of any of the foregoing for
any reason

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whatsoever, except as may be necessary in the discharge of the assigned duties
and shall not divulge to any third person the nature of and/or contents of any
of the foregoing or of any other oral or written information to which he may
have access or with which for any reason he may become familiar, except as
disclosure shall be necessary in the performance of the duties; and upon the
termination of his employment with the Company, the Employee shall return to
the Company all originals and copies of the foregoing then in his possession or
under his control, whether prepared by the Employee or by others.

          6.2 Developments.

               (a) The Employee acknowledges that all right, title and interest in and to
any and all writings, documents, inventions, discoveries, ideas, developments,
information, computer programs or instructions (whether in source code, object
code, or any other form), algorithms, formulae, plans, memoranda, tests,
research, designs, innovations, systems, analyses, specifications, models,
data, diagrams, flow charts, and/or techniques (whether patentable or
non-patentable or whether reduced to written or electronic form or otherwise)
that the Employee creates, makes, conceives, discovers or develops, either
solely or jointly with any other person, at any time during the Term, whether
during working hours or at the Company’s facility or at any other time or
location, and whether upon the request or suggestion of the Company or
otherwise, (collectively, “Intellectual Work Product”) shall be the sole and
exclusive property of the Company. The Employee shall promptly disclose to the
Company all Intellectual Work Product, and the Employee shall have no claim for
additional compensation for the Intellectual Work Product, except for any
excluded Intellectual Work Product that is wholly unrelated to the
pharmaceutical industry, in the broadest sense, provided that such Intellectual
Work Product is not conceived, discovered or developed, either solely or
jointly with any other person during working hours or at the Company’s facility
or using any other Company resource.

               (b) The Employee acknowledges that all the Intellectual Work Product that
is copyrightable shall be considered a work made for hire under United States
Copyright Law. To the extent that any copyrightable Intellectual Work Product
may not be considered a work made for hire under the applicable provisions of
the United States Copyright Law, or to the extent that, notwithstanding the
foregoing provisions, the Employee may retain an interest in any Intellectual
Work Product, the Employee hereby irrevocably assigns and transfers to the
Company any and all right, title, or interest that the Employee may have in the
Intellectual Work Product under copyright, patent, trade secret and trademark
law, in perpetuity or for the longest period otherwise permitted by law,
without the necessity of further consideration. The Company shall be entitled
to obtain and hold in its own name all copyrights, patents, trade secrets, and
trademarks with respect thereto.

               (c) The Employee shall reveal promptly all information relating to any
such Intellectual Property to the Board of Directors of the Company, and, at
the Company’s expense, shall cooperate with the Company and execute such
documents as may be necessary or appropriate (i) in the event that the Company
desires to seek copyright, patent or trademark protection, or other analogous
protection, thereafter relating to the Intellectual Work Product, and when such
protection is obtained, renew and restore the same, or (ii) to defend any

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opposition proceedings in respect of obtaining and maintaining such copyright,
patent or trademark protection, or other analogous protection.

               (d) In the event the Company is unable after reasonable effort to secure
the Employee’s signature on any of the documents referenced in Section 6.2 (c)
hereof, whether because of the Employee’s physical or mental incapacity or for
any other reason whatsoever, the Employee hereby irrevocably designates and
appoints the Company and its duly authorized officers and agents as the
Employee’s agent and attorney-in-fact, to act for and on the behalf and stead
to execute and file any such documents and to do all other lawfully permitted
acts to further the prosecution and issuance of any such copyright, patent or
trademark protection, or other analogous protection, with the same legal force
and effect as if executed by the Employee.

               (e) The Employee represents that the innovations, designs, systems,
analyses, ideas, and all copyrights, patents, trademarks and trade names, or
similar intangible personal property (collectively, the “Pre-existing
Property”) identified on Schedule I hereof comprise all of the innovations,
designs, systems, analyses, ideas and all copyrights, patents, trademarks and
trade names, or similar intangible personal property that the Employee has made
or conceived of prior to the date hereof, and same are excluded from the
operation of the other provisions of this Section 6.2. In the event that the
Employee learns of any Pre-existing Property that he inadvertently failed to
include in Schedule I, and the circumstances surrounding the failure of such
inclusion are reasonably satisfactory to the Company, the Employee and the
Company shall jointly amend Schedule I to include such property.

     7. Covenant not to Compete.

          7.1 Restrictions. Provided that the Company is in compliance with Section
8.4 hereof, if applicable, the Employee shall not, during the Term and for a
period of two (2) years thereafter (the “Restricted Period”), except as an
employee of the Company and in order to carry out the Employee’s duties
hereunder, do any of the following directly or indirectly without the prior
written consent of the Company in its sole discretion:

               (a) engage or participate, directly or indirectly, in any business
activity that is directly competitive with the products offered by the Company,
or the business of the Company or any of the Company’s subsidiaries or
affiliates as conducted during the Term. This claim is not meant to prevent
the Employee from seeking other positions in infectious disease research or
treatments that do not have a direct competitive threat to the Company. For a
term of twenty-four (24) months after the termination date, the Employee will
not plan, participate in, or assist in any medical development or marketing of
products that would directly compete with any of the Company’s formulations or
anti-infective compounds (drugs) either on the market or in development during
the term of employment. The definition “directly compete” would refer to the
medical development of drugs in the same chemical class as those developed and
sold by the Company during the employment term or the application of pulsatile
dosing of anti-infectives in other classes of anti-infective compounds than
those currently under development by the Company;

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               (b) become interested (as owner, stockholder, lender, partner,
co-venturer, director, officer, employee, agent, consultant or otherwise) in
any person, firm, corporation, association or other entity engaged in any
business that is competitive with the Business or of the business of the
Company or any subsidiary or affiliate of the Company as conducted during the
Term, or become interested in (as owner, stockholder, lender, partner,
co-venturer, director, officer, employee, agent, consultant or otherwise) any
portion of the business of any person, firm, corporation, association or other
entity where such portion of such business is competitive with the Business of
the Company or the business of any subsidiary or affiliate of the Company as
conducted during the Term (notwithstanding the foregoing, the Employee may hold
not more than one percent (1%) of the outstanding securities of any class of
any publicly-traded securities of a company that is engaged in activities
referenced in this Section 7.1, without prior approval of the Board of
Directors.

               (c) solicit, call on or transact or engage in any business activity that
directly competes with products or development programs of the Company, either
directly or indirectly, any (i) customer with whom the Company shall have dealt
at any time during the one (1) year period immediately preceding the
termination of the Employee’s employment hereunder, or (ii) corporate partner,
collaborator, independent contractor or supplier with whom the Company shall
have dealt at any time during the one (1) year period immediately preceding the
termination of the Employee’s employment hereunder;

               (d) influence or attempt to influence any then current or prospective
supplier, customer, corporate partner, collaborator, or independent contractor
of the Company to terminate or modify any written or oral agreement or course
of dealing with the Company; or

               (e) influence or attempt to influence any person either (i) to terminate
or modify an employment, consulting, agency, distributorship or other
arrangement with the Company, or (ii) to employ or retain, or arrange to have
any other person or entity employ or retain, any person who has been employed
or retained by the Company as an employee, consultant, agent or distributor of
the Company at any time during the one (1) year period immediately preceding
the termination of the Employee’s employment hereunder for a period of two (2)
years following the Employee’s termination date.

          7.2 Acknowledgment. The Employee acknowledges that he has carefully read
and considered the provisions of this Section 7. The Employee acknowledges
that the foregoing restrictions will limit his ability to earn a livelihood in
a business competitive with the Business, but he nevertheless believes that he
has received and will receive sufficient consideration and other benefits in
connection with the payment by the Company of the compensation set forth in
Sections 4 and 8.4 to justify such restrictions, which restrictions the
Employee does not believe would prevent him from earning a living in businesses
that are not competitive with the Business and without otherwise violating the
restrictions set forth herein.

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     8. Early Termination. The Employee’s employment hereunder may be
terminated during the Term upon the occurrence of any one of the events
described in this Section 8. Upon termination, the Employee shall be entitled
only to such compensation and benefits as described in this Section 8.

          8.1 Involuntary Termination.

               (a) Termination for Disability.

                    (i) In the event of the disability of the Employee such that the Employee
is unable to perform the duties and responsibilities hereunder to the full
extent required by this Agreement by reasons of illness, injury or incapacity
for a period of more than one hundred eighty (180) consecutive days or more
than one hundred eighty (180) days, in the aggregate, during any three hundred
sixty-five (365) day period (“Disability”), the Company shall have the right to
terminate Employee’s employment hereunder by written notice to the Employee.

                    (ii) In the event of a termination of the Employee’s employment hereunder
pursuant to Section 8.1(a)(i), the Employee will be entitled to receive all
accrued and unpaid (as of the date of such termination) Salary and applicable
Benefits; provided that the Employee has complied with all of his obligations
under this Agreement and continues to comply with all of his surviving
obligations hereunder listed in Section 10 and a pro-rata percentage of the
bonus (provided in Section 4.2) for the last fiscal year of the Company prior
to the date of Employee’s termination. Except as specifically set forth in
this Section 8.1(a)(ii) or as provided by applicable law, the Company shall
have no liability or obligation to the Employee for compensation or benefits
hereunder by reason of, or subsequent to, such termination.

               (b) Termination by Death. In the event that the Employee dies during the
Term, the Employee’s employment hereunder shall be terminated thereby and the
Company shall pay to the Employee’s executors, legal representatives or
administrators an amount equal to the accrued and unpaid portion of the Salary
for the month in which he dies and a pro-rata percentage of the bonus (provided
in Section 4.2) for the last fiscal year of the Company prior to the date of
Employee’s termination. Except as specifically set forth in this Section 8.1(b)
or as provided by applicable law, the Company shall have no liability or
obligation hereunder to the Employee’s executors, legal representatives,
administrators, heirs or assigns or any other person claiming under or through
him by reason of or subsequent to the Employee’s death.

          8.2 Termination for Cause.

               (a) The Company shall have the right to terminate the Employee’s
employment hereunder at any time for “cause” upon written notice to the
Employee. For purposes of this Agreement, “cause” shall mean the Employee’s
(including, if the Employee is not a natural person, any employee of or
contractor to the Employee who is involved, directly or indirectly, in the
provision of services to the Corporation) (a) dishonesty, embezzlement, theft
or fraudulent misconduct; (b) abuse of a controlled substance that materially
impairs the

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performance of the Employee’s duties to the Corporation; (c) conduct adverse to
the business, interests, or reputation of the Corporation; (d) material breach
of any of the terms hereof or of any agreement between the Corporation and the
Employee, (including, but not limited to, terms relating to non-disclosure,
non-competition and invention assignment) which, if curable, remains uncured
thirty (30) days after the Employee receives written notice of such breach; or
(e) commission of a felony.

               (b) In the event of a termination of the Employee’s employment hereunder
pursuant to Section 8.2(a), the Employee shall be entitled to receive all
accrued but unpaid (as of the effective date of such termination) Salary and
Benefits. All Salary and Benefits shall cease at the time of such termination,
subject to the requirements of applicable law. Except as specifically set
forth in this Section 8.2, the Company shall have no liability or obligation
hereunder by reason of or subsequent to such termination.

          8.3 Termination by the Company Without Cause.

               (a) Notwithstanding anything to the contrary set forth herein, the Company
shall have the right to terminate the Employee’s employment hereunder at any
time, for any reason or no reason, with or without cause, effective upon the
date designated by the Company upon written notice to the Employee.

               (b) In the event of a termination of the Employee’s employment hereunder
pursuant to Section 8.3(a), the Employee shall be entitled to receive all
accrued but unpaid (as of the effective date of such termination) Salary; a
pro-rata percentage of the bonus (provided in Section 4.2) for the last fiscal
year of the Company prior to the date of the Employee’s termination; and the
severance payments and Benefits in the manner set forth in Section 8.4;
provided that the Employee has complied with all of his obligations under this
Agreement and continues to comply with all of his surviving obligations
hereunder listed in Section 10. All Salary shall cease at the time of such
termination, except as required under applicable law. Except as specifically
set forth in this Section 8.3, the Company shall have no liability or
obligation hereunder by reason of or subsequent to such termination.

          8.4 Severance.

               (a) In the event of the termination of the Employee’s employment under
Section 8.3 the Employee shall be entitled to severance pay in an amount equal
to twenty-four (24) months of Salary, subject to all withholding obligations,
calculated on the basis of the Salary in effect at the date of termination and
paid in the same manner as Salary was then paid hereunder.

               (b) The Employee shall be entitled to receive all Benefits to which he was
entitled on the date preceding his termination for the period of time during
which he is entitled to receive severance pay hereunder.

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               (c) Except as provided in subsections (a) and (b) above, the Company shall
have no liability or obligation by reason of or subsequent to the termination
of the employment relationship between the Company and the Employee.

     9. Representations, Warranties and Covenants of the Employee.

          9.1 Restrictions. The Employee represents and warrants to the Company
that:

               (a) There are no restrictions, agreements or understandings whatsoever to
which the Employee is a party which would prevent or make unlawful the
Employee’s execution of this Agreement or the Employee’s employment hereunder,
or which is or would be inconsistent or in conflict with this Agreement or the
Employee’s employment hereunder, or, except as set forth in any agreements
previously provided to the Company, would prevent, limit or impair in any way
the performance by the Employee of the obligations hereunder; and

               (b) The Employee has disclosed to the Company all restraints,
confidentiality commitments or other employment restrictions that he has with
any other employer, person or entity.

          9.2 Obligations to Former Employers. The Employee covenants that in
connection with his provision of services to the Company, he shall not breach
any obligation (legal, statutory, contractual or otherwise) to any former
employer or other person, including, but not limited to obligations relating to
confidentiality and proprietary rights.

     10. Survival of Provisions. The provisions of this Agreement set forth in
Sections 5, 6, 7, 8, 9, 10, 19 and 20 hereof shall survive the termination of
the Employee’s employment hereunder.

     11. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the Company and the Employee and their respective
successors, executors, administrators, heirs and/or assigns; provided that
neither party shall make any assignment of this Agreement or any interest
herein, by operation of law or otherwise, without the prior written consent of
the other party.

     12. Notice. Any notice hereunder by either party shall be given by
personal delivery or by sending such notice by certified mail, return-receipt
requested, or telecopied, addressed or telecopied, as the case may be, to the
other party at its address set forth below or at such other address designated
by notice in the manner provided in this section. Such notice shall be deemed
to have been received upon the date of actual delivery if personally delivered
or, in the case of mailing, two (2) days after deposit with the U.S. mail, or,
in the case of facsimile
transmission, when confirmed by the facsimile machine report.

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               (a) if to the Company, to:

Advancis Pharmaceutical Corporation

20425 Seneca Meadows Parkway

Germantown, Maryland 20876

Attention: Human Resources

Facsimile: (301) 944-6701

with a copy to:

Howard Schwartz, Esquire

Piper Rudnick LLP

6225 Smith Avenue

Baltimore, Maryland 21209-3600

Facsimile: (410) 580-3251

               (b) if to the Employee, to:

Barry Hafkin, M.D.

126 Avalon Lake Road

Danbury, CT 06810

     13. Entire Agreement; Amendments. This Agreement contains the entire
agreement and understanding of the parties hereto relating to the subject
matter hereof, and merges and supersedes all prior and contemporaneous
discussions, agreements and understandings of every nature between the parties
hereto relating to the employment of the Employee with the Company. This
Agreement may not be changed or modified, except by an agreement in writing
signed by each of the parties hereto.

     14. Waiver. The waiver of the breach of any term or provision of this
Agreement shall not operate as or be construed to be a waiver of any other or
subsequent breach of this Agreement.

     15. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware, without regard to the
principles of conflicts of laws of any jurisdiction.

     16. Invalidity. If any provision of this Agreement shall be determined to
be void, invalid, unenforceable or illegal for any reason, the validity and
enforceability of all of the remaining provisions hereof shall not be affected
thereby. If any particular provision of this Agreement shall be adjudicated to
be invalid or unenforceable, such provision shall be deemed amended to delete
therefrom the portion thus adjudicated to be invalid or unenforceable, such
amendment to apply only to the operation of such provision in the particular
jurisdiction in which

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such adjudication is made; provided that, if any provision contained in this
Agreement shall be adjudicated to be invalid or unenforceable because such
provision is held to be excessively broad as to duration, geographic scope,
activity or subject, such provision shall be deemed amended by limiting and
reducing it so as to be valid and enforceable to the maximum extent compatible
with the applicable laws of such jurisdiction, such amendment only to apply
with respect to the operation of such provision in the applicable jurisdiction
in which the adjudication is made.

     17. Section Headings. The section headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation.

     18. Number of Days. In computing the number of days for purposes of this
Agreement, all days shall be counted, including Saturdays, Sundays and legal
holidays; provided that, if the final day of any time period falls on a
Saturday, Sunday or day which is a legal holiday in Delaware or Maryland, then
such final day shall be deemed to be the next day which is not a Saturday,
Sunday or legal holiday.

     19. Specific Enforcement The Employee acknowledges that the restrictions
contained in Sections 5, 6, and 7 hereof are reasonable and necessary to
protect the legitimate interests of the Company and its affiliates and that the
Company would not have entered into this Agreement in the absence of such
restrictions. The Employee also acknowledges that any breach by him of
Sections 5, 6, or 7 hereof will cause continuing and irreparable injury to the
Company for which monetary damages would not be an adequate remedy. The
Employee shall not, in any action or proceeding to enforce any of the
provisions of this Agreement, assert the claim or defense that an adequate
remedy at law exists. In the event of such breach by the Employee, the Company
shall have the right to enforce the provisions of Sections 5, 6, and 7 of this
Agreement by seeking injunctive or other relief in any court, and this
Agreement shall not in any way limit remedies of law or in equity otherwise
available to the Company.

     20. Consent to Suit. Subject to the provisions of Section 21 hereof, any
legal proceeding arising out of or relating to this Agreement shall be
instituted in the Court of Chancery of New Castle County, or if such court does
not have jurisdiction or will not accept jurisdiction, in any state or federal
court of general jurisdiction in the State of Delaware, and each of the Company
and the Employee hereby consents to the personal and exclusive jurisdiction of
such court and hereby waives any objection that either party may have to the
laying of venue of any such proceeding and any claim or defense of inconvenient
forum. If an action at law or in equity is necessary to enforce or interpret
the terms of this Agreement, the prevailing party shall be entitled to recover,
in addition to any other relief, reasonable attorneys’ fees, costs and
disbursements.

     21. Arbitration. Subject to the last sentence of this Section 21, if any
dispute arises over the terms of this Agreement between the parties to this
Agreement, either Employee or Company may submit the dispute to binding
arbitration within thirty (30) days after such dispute arises, to be governed
by the evidentiary and procedural rules of the American Arbitration Association
(Commercial Arbitration). Employee and Company shall mutually select one (1)
arbitrator within ten (10) days after a dispute is submitted to arbitration.
In the event that

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the parties do not agree on the identity of the arbitrator within such period,
the arbitrator shall be selected by the American Arbitration Association. The
arbitrator shall hold a hearing on the dispute in Wilmington, Delaware within
thirty (30) days after having been selected and shall issue a written opinion
within fifteen (15) days after the hearing. The arbitrator shall also decide
on the allocation of the costs of the arbitration to the respective parties,
but Employee and Company shall each be responsible for paying the fees of their
own legal counsel, if legal counsel is obtained. Either Employee or Company,
or both parties, may file the decision of the arbitrator as a final, binding
and unappealable judgment in a court of appropriate jurisdiction.
Notwithstanding the foregoing provisions of this Section 21 to the contrary,
matters in which an equitable remedy or injunctive relief is sought by a party,
including but not limited to the remedies referred to in Section 19 hereof,
shall not be required to be submitted to arbitration, if the party seeking such
remedy or relief objects thereto, but shall instead be subject to the
provisions of Sections 19 and 20 hereof.

     22. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.

     23. Authorization. In connection with the execution of this Agreement,
the Employee shall be provided with a copy of the resolutions of the Board of
Directors of the Company authorizing the execution of this Agreement on behalf
of the Company.

[SIGNATURES ON FOLLOWING PAGE]

12

 

     IN WITNESS WHEREOF, the parties have caused this Executive Employment
Agreement to be executed the day and year first written above.

	 	 	 	 	 
	 	ADVANCIS PHARMACEUTICAL CORPORATION

 

	 
	 	By:  	/s/ Edward M. Rudnic
 	 
	 	 	Edward M. Rudnic, Ph.D. 	 
	 	 	President & CEO
	 
 
		Barry Hafkin
		
Barry Hafkin, M.D.	 

13

 

Schedule I

Preexisting Property:

14exv10w1

 

EXHIBIT 10.1

INDEMNIFICATION AGREEMENT

     This Indemnification Agreement (“Agreement”) is effective as of this 15
day of March, 2004, by and between CoStar Group, Inc., a Delaware corporation
(the “Company”), and ____________(“Indemnitee”).

     WHEREAS, the Board of Directors of the Company desires to attract and
retain the services of highly qualified individuals to serve as directors and
officers of the Company, and believes that the Company should act to assure
such persons that there will be adequate certainty of protection through
insurance and indemnification against risks of claims and actions against them
arising out of their service to and activities on behalf of the Company; and

     WHEREAS, the Company has adopted provisions in its Bylaws providing for
indemnification of its officers and directors to the fullest extent permitted
by applicable law, and the Company wishes to clarify and enhance the rights and
obligations of the Company and Indemnitee with respect to indemnification; and

     WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting directors, officers,
employees, agents and fiduciaries to expensive litigation risks; and

     WHEREAS, the Company desires to have Indemnitee continue to serve as a
director or officer of the Company and in such other capacity with respect to
the Company as the Company may request, as the case may be, free from undue
concern for unpredictable, inappropriate or unreasonable legal risks and
personal liabilities by reason of Indemnitee acting in good faith in the
performance of Indemnitee’s duty to the Company;

     Now, therefore, in consideration of Indemnitee’s continued service as a
director or officer of the Company, the parties hereto agree as follows:

     1. Indemnification. The Company shall indemnify Indemnitee to the
fullest extent permitted by the Delaware General Corporation law in effect on
the date hereof or as such law may from time to time be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Company to provide broader indemnification rights than said law permitted the
Company to provide prior to such amendment). Indemnitee shall be entitled to
the indemnification rights if Indemnitee is a party or is threatened to be made
a party to any Proceeding (defined below) by reason of the fact that Indemnitee
is or was or has agreed to become a director, officer, employee or agent of the
Company or any direct or indirect subsidiary of the Company, or is or was
serving or has agreed to serve at the request of the Company as a director,
officer, employee, partner, agent or fiduciary of any other entity (including,
but not limited to, another corporation, partnership, joint venture or trust);
or by reason of anything alleged done or not done by Indemnitee in any such
capacity. Indemnitee shall be indemnified against all costs, damages, losses,
judgments, penalties, fines, liabilities, amounts paid in settlement by or on
behalf of Indemnitee, and Expenses (defined below) actually and reasonably
incurred by Indemnitee in connection with such Proceeding, and any federal,
state, local or foreign taxes imposed on the Indemnitee as a result of the
actual or deemed receipt of any payments under this Agreement, if Indemnitee
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and with respect to any criminal
Proceeding, had no reasonable cause to believe his or her conduct was unlawful.

 

 

     2. Continuation of Indemnity. All agreements and obligations of
the Company contained herein shall continue during the period Indemnitee is a
director, officer, employee or agent of the Company or any direct or indirect
subsidiary of the Company or is serving at the request of the Company as a
director, officer, employee, partner, agent or fiduciary of any other entity
(including, but not limited to, another corporation, partnership, joint venture
or trust of the Company) and shall continue thereafter with respect to any
possible claims based on the fact that Indemnitee was a director, officer
employee or agent of the Company or any direct or indirect subsidiary of the
Company or was serving at the request of the Company as a director, officer,
employee, partner, agent or fiduciary of any other entity (including, but not
limited to, another corporation, partnership, joint venture or trust), even if
Indemnitee has ceased to be such a director, officer, employee, agent or
fiduciary or is no longer employed by the Company or any of its direct or
indirect subsidiaries.

     3. Exceptions. No indemnification shall be paid to Indemnitee:

        (a) to the extent expressly prohibited by Delaware law or the Bylaws of
the Company;

        (b) in connection with an action, suit or proceeding, or part thereof
(including claims and counterclaims) initiated by Indemnitee, except a judicial
proceeding or arbitration pursuant to Section 11 to enforce rights under this
Agreement, unless the action, suit or proceeding (or part thereof) was
authorized by the Board of Directors of the Company;

        (c) with respect to any action, suit or proceeding brought by or on behalf
of the Company against Indemnitee that is authorized by the Board of Directors
of the Company, except as provided in Sections 9 and 10 below;

        (d) in the case of a Proceeding by or in the right of the Company to
procure a judgment in its favor, in respect of any claim, issue, or matter as
to which Delaware law expressly prohibits such indemnification by reason of any
adjudication of liability of Indemnitee to the Company, unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, Indemnitee is entitled to indemnification for such costs, judgments,
penalties, fines, liabilities and Expenses as such court shall deem proper,
except as provided in Sections 9 and 10 below; and

        (e) for a disgorgement of profits made from the purchase and sale by
Indemnitee of securities pursuant to Section 16(b) of the Securities Exchange
Act of 1934, as amended, or similar provisions of any state or common law.

     4. Expenses as a Witness. Notwithstanding any other provision of
this Agreement, to the maximum extent permitted by applicable law, Indemnitee
shall be entitled to advancement of all Expenses actually and reasonably
incurred or suffered by Indemnitee or on Indemnitee’s behalf if Indemnitee
appears as a witness or otherwise incurs legal expenses in connection with
appearing as a witness as a result of or related to Indemnitee’s service as a
director or officer of the Company, in any threatened, pending or completed
legal, administrative, investigative or other proceeding or matter to which
Indemnitee neither is, nor is threatened to be made, a party.

     5. Determination that Indemnification is Not Proper. Any
indemnification of Indemnitee under this Agreement shall be made by the Company
unless a determination is made that indemnification of the Indemnitee is not
proper in the circumstances because he or she has not met the applicable
standard of conduct set forth in this Agreement. Any such determination that
indemnification is not proper shall be

2

 

made (1) by the Board of Directors by a majority
vote of a quorum consisting of the Disinterested Directors (as defined below),
or (2) if such quorum is not obtainable, or even if obtainable, a quorum of
Disinterested Directors so directs, by Independent Counsel (as defined below)
in a written opinion, a copy of which shall be delivered to Indemnitee, or (3)
by vote of a majority of the stockholders present or voting by proxy at an
annual or special meeting of the stockholders. In the event a determination is
to be made under this Section 5, such Independent Counsel shall be selected by
the Board of Directors and approved by Indemnitee. Upon failure of the Board
so to select such Independent Counsel or upon failure of Indemnitee so to
reasonably approve, such Independent Counsel shall be selected upon application
to a court of competent jurisdiction. Any Expenses incurred by Indemnitee in
connection with a request for indemnification or payment of Expenses hereunder,
under any other agreement, any provision of the Company’s Bylaws or any
directors’ and officers’ liability insurance, shall be borne by the Company.
The Company hereby indemnifies Indemnitee for any such Expense and agrees to
hold Indemnitee harmless therefrom irrespective of the outcome of the
determination of Indemnitee’s entitlement to indemnification. If the person
making such determination shall determine that Indemnitee is entitled to
indemnification as to part (but not all) of the application for
indemnification, such person shall reasonably prorate such partial
indemnification among the claims, issues or matters at issue at the time of the
determination.

     6. Presumptions and Effect of Certain Proceedings. Upon making a
request for indemnification, Indemnitee shall be presumed to be entitled to
indemnification hereunder and the Company shall have the burden of proof in
making any determination contrary to such presumption. The termination of any
Proceeding by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself: (a) create a presumption
that Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, or, with respect to any criminal Proceeding, that Indemnitee had
reasonable cause to believe that Indemnitee’s conduct was unlawful; or (b)
otherwise adversely affect the rights of Indemnitee to indemnification except
as may be provided herein. In any Proceeding to determine Indemnitee’s right
to indemnification, a determination pursuant to Section 5 of this Agreement
that the Indemnitee has not met the applicable standard of conduct and is not
entitled to indemnification shall not create a presumption that the Indemnitee
has not met the applicable standard of conduct.

     7. Notification and Defense of Claim. Promptly after receipt by
Indemnitee of notice of any Proceeding, Indemnitee will, if a claim in respect
thereof is to be made against the Company under this Agreement, notify the
General Counsel of the Company in writing of the commencement thereof; but the
omission so to notify the Company will not relieve it from any liability that
it may have to Indemnitee. In addition, Indemnitee shall give the Company such
information and cooperation as it may reasonably require and as shall be within
Indemnitee’s power. Notwithstanding any other provision of this Agreement,
with respect to any such Proceeding of which Indemnitee notifies the Company:

     (a) The Company shall be entitled to participate therein at its own
expense;

     (b) Except as otherwise provided below, to the extent that it may wish,
the Company, jointly with any other indemnifying party similarly notified,
shall be entitled to assume the defense thereof, with counsel reasonably
satisfactory to Indemnitee, which in the Company’s sole discretion may be
regular counsel to the Company and may be counsel to other officers and
directors of the Company. Indemnitee shall have the right to employ
Indemnitee’s own counsel in such Proceeding, but the fees and expenses of such
counsel shall be at the expense of Indemnitee unless (i) the employment of
counsel by Indemnitee has been authorized by the Company, (ii) Indemnitee shall
have reasonably concluded that there will be a conflict of interest between the
Company and Indemnitee in the conduct of the defense of such action or (iii)
the Company shall not within 60 calendar days of receipt of notice from
Indemnitee in fact have employed counsel to assume the defense of the action,
in each of which cases the fees and expenses of

3

 

Indemnitee’s counsel shall be at the expense of the Company. The Company
shall not be entitled to assume the defense of any Proceeding brought by or on
behalf of the Company or as to which Indemnitee shall have made the conclusion
provided for in (ii) above; and

     (c) If the Company has assumed the defense of a Proceeding, the Company
shall not be liable to indemnify Indemnitee under this Agreement for any
amounts paid in settlement of any Proceeding effected without the Company’s
written consent. The Company shall not settle any Proceeding in any manner
that would impose any penalty or limitation on or disclosure obligation with
respect to Indemnitee without Indemnitee’s written consent. Neither the
Company nor Indemnitee will unreasonably withhold, delay or condition its
consent to any proposed settlement.

     8. Advance Payment of Expenses. All Expenses incurred by
Indemnitee in advance of the final disposition of any Proceeding shall be paid
by the Company at the request of Indemnitee, each such payment to be made
within twenty days after the receipt by the Company of a statement from
Indemnitee requesting such payment from time to time. Indemnitee’s entitlement
to such Expenses shall include those incurred in connection with any Proceeding
by Indemnitee seeking a judgment in court or an adjudication or award in
arbitration pursuant to this Agreement (including the enforcement of this
provision). Such statement or statements shall reasonably evidence the
expenses and costs incurred by Indemnitee in connection therewith. Indemnitee
hereby undertakes to reimburse such amount of Expenses if it is finally
determined, after all appeals by a court of competent jurisdiction, that
Indemnitee is not entitled to be indemnified against such Expenses by the
Company as provided by this Agreement or otherwise. Indemnitee’s undertaking
to reimburse any such amounts is not required to be secured. For purposes of
this Section 8, “final disposition” shall be deemed to occur in the event
Indemnitee has entered a plea of guilty in any such Proceeding.

     9. Indemnification for Expenses of Successful Party.
Notwithstanding any limitations set forth herein, to the extent that Indemnitee
has been successful, on the merits or otherwise, in whole or in part, in
defense of any action, suit or proceeding (including an action, suit or
proceeding brought by or on behalf of the Company) or in defense of any claim,
issue or matter therein, including, without limitation, the dismissal of any
action without prejudice, or if it is ultimately determined that Indemnitee is
otherwise entitled to be indemnified against Expenses, Indemnitee shall be
indemnified against all Expenses actually and reasonably incurred in connection
therewith.

     10. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the costs, judgments, damages, losses, penalties, fines, liabilities
or Expenses actually and reasonably incurred in connection with any action,
suit or proceeding (including an action, suit or proceeding brought by or on
behalf of the Company), but not, however, for all of the total amount thereof,
the Company shall nevertheless indemnify Indemnitee for the portion of such
costs, judgments, damages, losses, penalties, fines, liabilities and Expenses
actually and reasonably incurred to which Indemnitee is entitled.

     11. Remedies of Indemnitee in Cases of Determination not to
Indemnify. In the event that a determination is made that Indemnitee is
not entitled to indemnification hereunder or if payment has not been timely
made following a request for indemnification, or if Expenses are not paid
pursuant to Section 8, Indemnitee shall be entitled to final adjudication in a
court of competent jurisdiction of entitlement to such indemnification or
payment. Alternatively, Indemnitee at Indemnitee’s option may seek an award in
an arbitration to be conducted by a single arbitrator pursuant to the rules of
the American Arbitration Association, such award to be made within sixty days
following the filing of the demand for arbitration. The Company shall not
oppose Indemnitee’s right to seek any such adjudication or the right to seek
any such award in arbitration. The determination in any such judicial
proceeding or arbitration shall be made de novo and Indemnitee shall not be
prejudiced by reason of a determination (if

4

 

so made) pursuant to Section 5 that Indemnitee is not entitled to
indemnification. The Company further agrees to stipulate in any such court or
before any such arbitrator that the Company is bound by all the provisions of
this Agreement and is precluded from making any assertions to the contrary. If
the court or arbitrator shall determine that Indemnitee is entitled to any
indemnification or payment of Expenses hereunder, the Company shall pay all
Expenses actually and reasonably incurred by Indemnitee in connection with such
adjudication or award in arbitration (including, but not limited to, any
appellate Proceedings).

     12. Expenses to Enforce Agreement. In the event that Indemnitee is
subject to or intervenes in any Proceeding in which the validity or
enforceability of this Agreement is at issue or seeks an adjudication or award
in arbitration to enforce Indemnitee’s rights under, or to recover damages for
breach of, this Agreement, Indemnitee, if Indemnitee prevails in whole or in
part in such action, shall be entitled to recover from the Company and shall be
indemnified by the Company against any actual Expenses incurred by Indemnitee.

     13. Separability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason whatsoever
(a) the validity, legality and enforceability of the remaining provisions of
this Agreement (including without limitation, all portions of any paragraphs of
this Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not by themselves invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby, and (b) to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, all portions of any paragraph of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that are not themselves
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent of the parties that the Company provide protection to Indemnitee to
the fullest enforceable extent.

     14. Other Rights to Indemnification. Indemnification and payment
of Expenses provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may now or in the future be entitled under any
provision of the Bylaws or other organizational documents of the Company, vote
of stockholders or Disinterested Directors, provision of law, agreement or
otherwise.

     15. Insurance. If the Company obtains insurance to protect itself
or its officers or directors against any expense, liability or loss, the
Company shall use its reasonable efforts to obtain insurance to cover the
Indemnitee to at least the same extent as any other director or officer of the
Company, as applicable. If the Company has liability insurance in effect which
may cover a claim, the Company shall give notice to such insurers and shall
take all necessary or desirable action to cause such insurers to pay, on behalf
of the Indemnitee, all amounts payable as a result of such Proceeding in
accordance with the terms of such policies.

     16. No Duplication of Payments. The Company shall not be liable
under this Agreement to make any payment in connection with any indemnification
to the extent that Indemnitee has otherwise actually received payment (under
any insurance policy, indemnity clause, bylaw or otherwise) of the amounts
otherwise indemnifiable hereunder.

     17. Assignment. This Agreement shall be binding upon all
successors and assigns of the Company (including any transferee of all or
substantially all of its assets and any successor by merger or operation of
law) and shall inure to the benefit of the heirs, personal representatives and
estate of Indemnitee.

5

 

     18. Definitions. For purposes of this Agreement:

     (a) “Disinterested Director” means a director of the Company who is not or
was not a party to the Proceeding in respect of which indemnification is being
sought by Indemnitee.

     (b) “Expenses” includes, without limitation, expenses incurred in
connection with the defense or settlement of any and all Proceedings,
attorneys’ fees and expenses, witness fees and expenses, fees and expenses of
accountants and other advisors and experts, retainers and disbursements and
advances thereon, the premium, security for, and other costs relating to any
bond (including cost bonds, appraisal bonds or their equivalents), and any
expenses of establishing a right to indemnification under Sections 5, 11 and 12
above but shall not include the amount of judgments, fines or penalties
actually levied against Indemnitee.

     (c) “Independent Counsel” means a law firm or a member of a law firm that
neither is presently nor in the past five years has been retained to represent:
(i) the Company or Indemnitee in any matter material to either such party, or
(ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term
“Independent Counsel” shall not include any person who, under the applicable
standards of professional conduct then prevailing, would have a conflict of
interest in representing either the Company or Indemnitee in an action to
determine Indemnitee’s right to indemnification under this Agreement.

     (d) “Proceeding” includes any threatened, pending or completed
investigation, action, suit, alternative dispute resolution mechanism,
investigation, inquiry, administrative or legislative proceeding or other
proceeding or appeal of such proceeding, whether brought in the name of the
Company or otherwise, against Indemnitee, for which indemnification is not
prohibited under Section 3 above and whether of a civil, criminal,
administrative or investigative nature.

     19. Other Provisions.

     (a) This Agreement shall be interpreted and enforced in accordance with
the laws of the State of Delaware.

     (b) The headings of the sections of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement
or to affect the construction thereof. References herein to section numbers
are to sections of this Agreement. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular or plural
as appropriate.

     (c) This Agreement may be executed in one or more counterparts, each of
which shall for all purposes be deemed to be an original but all of which
together shall constitute one and the same Agreement. Only one such
counterpart signed by the party against whom enforceability is sought needs to
be produced as evidence of the existence of this Agreement.

     (d) This Agreement shall not be deemed an employment contract between the
Company and any Indemnitee who is an officer of the Company.

     (d) Upon a payment to Indemnitee under this Agreement, the Company shall
be subrogated to the extent of such payment to all of the rights of Indemnitee
to recover against any person for such liability, and Indemnitee shall execute
all documents and instruments required and shall take such other actions as may
be necessary to secure such rights, including the execution of such documents
as may be necessary for the Company to bring suit to enforce such rights.

     (e) No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by both parties hereto. No waiver of any of
the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.

6

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.

	 	 	 
	CoStar Group, Inc.
	

	 	 
	By
	 	 
	

	 	
 
	

	 	 
	Name:
	

	 	 
	Title:
	

	 	 
	

	 	 
	Indemnitee:
	

	 	 
	

	 	 
	
 
	

	 	 
	Name:

7

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