Document:

ex10-3

 

Exhibit 10.3

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of
October 1, 2001 by and between United Therapeutics Corporation (the “Company”)
and Barry Kanarek, Ph.D. (“Executive”).

     WHEREAS, the Company currently employs Executive as the President of its
Unither Pharmaceuticals, Inc. subsidiary, and Executive shall continue in this
capacity subject to the terms and conditions contained herein; and

     WHEREAS, the parties desire this Agreement to supersede and replace all
previous agreements for employment entered into between the Company and
Executive.

     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. Company agrees to continue to employ Executive and
Executive agrees to accept such continuing 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 Executive by the Company will commence on
October 1, 2001 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. Executive shall continue to serve as President of
Unither Pharmaceuticals, Inc., or such other Executive Position as the CEO
determines, with such duties and responsibilities as are normally performed by
the President of a biotechnology company or as otherwise assigned by the CEO of
the Company. Executive shall have primary responsibility for the operations of
the Company’s subsidiaries Unither Pharmaceuticals, Inc., Cooke Pharma, Inc.,
and Medicomp, Inc. These duties shall include, without limitation, the
management of the Company’s iminosugar drug development program, and serving as
Chief Operating Officer of Cooke Pharma, Inc. and Medicomp, Inc. Executive
shall at all times exert his best efforts and loyalty on behalf of the Company
and shall devote full time and attention to such employment. 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 &
Analyst Communication Policy.

     4.     Compensation and Related Matters. Effective October 1, 2001, the
Company shall provide the following compensation and benefits to Executive:

             (a)     The Company shall pay to Executive an annual base salary of Two
Hundred Thousand Dollars ($200,000) (the “Base Salary”). 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 Executive with respect to payment of the Base
Salary and all other amounts and benefits payable under this Agreement.

             (b)     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 receive bonus compensation according to
the following schedule:

                       (i)     For 2002, Executive shall be entitled to receive $10,000 and options
to purchase 10,000 shares of the Company’s common stock for each calendar
quarter that Medicomp is cash-flow positive, and $10,000 and options to
purchase 10,000 shares of the Company’s common stock for each calendar quarter
that Cooke Pharma is cash-flow positive;

                       (ii)     For 2003, Executive shall be entitled to receive $10,000 and options
to purchase 10,000 shares of the Company’s common stock for each calendar
quarter that Medicomp produces revenue at a $10 million annualized rate, and
$10,000 and options to purchase 10,000 shares of the Company’s common stock for
each calendar quarter that Cooke Pharma concludes with 10,000 paying
subscribers at $49.99/month or more;

                       (iii)    For 2004, Executive shall be entitled to receive $10,000 and options
to purchase 10,000 shares of the Company’s common stock for each calendar
quarter that Medicomp produces at least ten cents per share of the Company’s
earnings, and $10,000 and options to purchase 10,000 shares of the Company’s
common stock for each calendar quarter that Cooke Pharma produces at least ten
cents per share of the Company’s earnings;

                       (iv)    The exercise price of all options to purchase shares of the Company’s
common stock granted in this Section 4(c) shall be at the NASDAQ closing price
of the Company’s common stock on January 1, 2002;

                       (v)     Options granted in this Section 4(c) shall vest as follows: 50% of
the options allocable to each calendar quarter shall vest upon achievement of
the corresponding milestone, and 50% shall vest 12 months from achievement of
the milestone. The Company shall make the determination of whether or not a
particular milestone has been

 

 

achieved based upon information contained in the Company’s Quarterly Report filed with the SEC on Form 10-Q and such other books and records of the Company
maintained in the ordinary course of business. Cash bonuses earned hereunder
shall be payable to Executive upon the Company’s determination that a
corresponding option grant has vested.

             (d)     All options previously awarded Executive, whether under any prior
agreement or otherwise, shall be unaffected by this Agreement.

     5.     Expenses. Executive shall be reimbursed by the Company for reasonable
travel and other expenses that are incurred and accounted for in accordance
with the Company’s normal practices and policies.

     6.     Vacation. Executive shall be entitled to vacation at such time or times
and for such period or periods as shall be mutually agreed upon by Executive
and the CEO, with the number of vacation days determined in accordance with the
Company’s employee manual.

     7.     Termination of Employment.

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

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

                       (i)     If, as a result of Executive’s incapacity due or other disability
owing to physical or mental illness, Executive shall have been unable to
perform all of 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 two (2) consecutive months, the Company may terminate
Executive’s employment hereunder.

                       (ii)     The Company may terminate Executive’s employment hereunder for
“Cause.” For purposes of this Agreement, the Company shall have “Cause” to
terminate Executive’s employment hereunder upon the (A) failure of Executive
(other than for reasons described in Sections 7(a) and 7(b)(i) hereof) to
perform or observe any of the material terms or provisions of this Agreement;
(B) negligent or unsatisfactory performance of Executive’s duties under this
Agreement and the failure of Executive, within 10 days after receipt of notice
from the Company setting forth in reasonable detail the nature of Executive’s
negligent or unsatisfactory performance, (i) to provide the Company with a
reasonably satisfactory explanation of 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 or other
employment- or profession-related similar action on the part of Executive; (D)
conviction of 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, or other act of dishonesty by Executive.

             (c)     Any termination of Executive’s employment by the Company or by
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 10(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 Executive’s employment under the provision
so indicated.

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

             (e)     Following termination of this Agreement, Executive shall promptly make
himself reasonably available to assist the Company with any information or
other requests.

             (f)     For a period of 91 days following termination of this Agreement,
Executive shall not trade in the Company’s stock and shall not make and
corresponding filings with the SEC without obtaining advance written permission
of the Company’s General Counsel.

     8.     Compensation Upon Termination.

             (a)     If Executive’s employment is terminated by Executive’s death, the
Company shall pay to Executive’s estate or as may be directed by the legal
representatives of such estate, Executive’s full Base Salary through the Date
of Termination at the rate in effect at the time of Executive’s death and all
other unpaid amounts, if any, to which 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(c) hereof, at the time such
payments are due.

             (b)     During any period that Executive fails to perform Executive’s duties
hereunder solely as a result of incapacity due to physical or mental illness
(“Disability Period”), Executive shall continue to receive 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 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 hereof, at the time such payments are due; provided that payments so
made to Executive during the Disability Period shall be reduced by the sum of
the amounts, if any, payable to 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 Executive shall terminate Executive’s employment or the Company
terminates Executive’s employment for Cause as provided in Section 7(b)(ii)
hereof, the Company shall pay Executive 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 to Executive
under this Agreement.

             (d)     Subject to Section 8(e) below, if the Company terminates Executive’s
employment without Cause, the Company shall pay to Executive an amount equal to
180 days of Executive’s Base Salary, payable in semi-monthly installments and
as is otherwise consistent with the Company’s payroll procedures.

             (e)     If Executive chooses to terminate his employment or the Company
terminates Executive’s employment without Cause solely as a result of either
(i) the transfer of control of the Company by acquisition, merger, or hostile
takeover, or (ii) if the Company’s current CEO Martine Rothblatt leaves
employment with the Company and Executive then chooses to leave employment with
the Company or is terminated without Cause, then the Company shall pay to
Executive an amount equal to 360 days of Executive’s Base Salary, payable in
semi-monthly installments and as is otherwise consistent with the Company’s
payroll procedures.

             (f)     Compensation to Executive upon termination described in this Section 8
shall be and is hereby made expressly contigent upon Executive’s ongoing
compliance with non-competition, confidentiality, non-solicitation, continuing
cooperation and all other obligations of Executive that survive termination of
this Agreement.

     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 this Section 9 (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 Intellectual Property right that 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 the United
Therapeutics Corporation prior to the date of this Agreement, and not otherwise
previously assigned or transferred prior to the date of this Agreement 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.

             (a)     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 five 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.

             (b)     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.

             (c)     Executive agrees not to accept employment from, nor render services in
any capacity for, nor have any other business relationships with, nor engage in
any business activity in which it would be useful or helpful to Executive or
others with whom he is associated for Executive to use or disclose Confidential
Information of the Company with, a person or entity engaged in a business
located anywhere in the world which directly competes with the Company’s then
existing or planned business a period of one (1) year following Executive’s
last receipt of compensation from the Company, whether the termination of
Executive’s employment by either party was with or without Cause. A person or
entity directly competes with the Company’s then existing or planned business
if such individual or entity is engaged in, or about to become engaged in,
research on, or development, production, manufacture, marketing, merchandising,
leasing, selling, licensing, servicing or promotion of a Competing Product. As
used in this Agreement, a “Competing Product” means any product, technology,
process, system or service, in existence or under development, of any person or
organization other than the Company which is the same as, similar to, competes
with or has a usage allied to a product, technology, process, system or service
in existence or planned by the Company as of the termination of Executive’s
employment hereunder. 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 the Company agree that the terms of this Section
10(c) 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.

             (d)     While employed by the Company and for a period of one (1) year
following Executive’s last receipt of compensation from the Company, whether
the termination of Executive’s employment by either party was with or without
Cause, Executive will not hire, induce, attempt to hire, assist in hiring, or
cause to be hired, directly or indirectly, by another person or organization,
any person who was an employee or a contractor of the Company. In addition,
for the same period, Executive shall not identify, or

 

 

furnish any information about, any other employee of the Company to any other person or organization
for the purpose of assisting or facilitating the hiring efforts of such other
person or organization.

     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 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
Executive’s death shall inure to the benefit of Executive’s heirs, legatees,
legal representatives, executor or administrator. Notwithstanding the
foregoing, this Agreement applies with the prior written consent of 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 Executive:	 	
Barry Kanarek, Ph.D.

	 	 	

	 	 	

	 	 	
If to the Company:

	 	 	
United Therapeutics Corporation

1110 Spring Street

Silver Spring, Maryland 20910

	 	 	
Attn: Martine A. Rothblatt, CEO

	 	 	
With a copy to:

	 	 	
Paul A. Mahon, Esq.

United Therapeutics Corporation

1735 Connecticut Avenue, N.W.

Washington, D.C. 20009

 

 

             (d)     Amendment; Waiver. This Agreement shall not be amended, altered,
modified or discharged except by an instrument in writing duly executed by
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. The parties hereby irrevocably consent and
submit to the exclusive jurisdiction of the courts located in the State of
Maryland 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 such courts lack jurisdiction, venue is
improper, inconvenient forum or otherwise.

             (g)     Survival. It is the express intention and agreement of the parties
hereto that the provisions of Sections 7, 8, 9, and 10 hereof shall survive the
termination of employment of 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.

	 	 	 
	 	 	
UNITED THERAPEUTICS CORPORATION 

	/s/ Barry Kanarek	 	
/s/ Martine Rothblatt
	
	 	

	Barry Kanarek, Ph.D.	 	
Martine A. Rothblatt, CEOex10-4

 

Exhibit 10.4

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of June
16, 2001 by and between United Therapeutics Corporation (the “Company”) and
Paul A. Mahon (the “Executive”).

     WHEREAS, the Executive currently serves as outside General Counsel and
Assistant Secretary of the Company; and

     WHEREAS, the Company desires to employ Executive as its Senior Vice
President and General Counsel, subject to 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
June 16, 2001 for a term of five (5) years continuing to and including June 14,
2006. The term (as herein extended) shall automatically be extended by one (1)
additional year at the end of each year unless at least six (6) months prior to
the end of the term or any anniversary thereof, the Company shall deliver to
Executive or Executive shall deliver to the Company written notice that the
term shall not be so extended.

     3.     Position and Duties. Executive shall serve as Senior Vice President
and General Counsel, with such duties and responsibilities as are normally
performed by the Senior Vice President and General Counsel of a biotechnology
company and as otherwise assigned by the CEO from time to time that are not
inconsistent with duties and responsibilities as are normally performed by the
Senior Vice President and General Counsel. The Executive shall at all times
exert his best efforts and loyalty on behalf of the Company and shall devote
full time and attention to such employment, provided, however, that it shall
not be a violation of this Agreement for Executive to continue representing
legal clients through the law firm of Mahon Patusky Rothblatt & Fisher,
Chartered so long as such activities do not conflict or materially interfere
with the performance of Executive’s duties hereunder. Executive shall perform
his duties from the Company’s offices located in Washington, D.C. 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 and the United Therapeutics Corporation Securities Trades by Company
Personnel Policy.

     4.     Compensation and Related Matters. The Company shall provide the
following compensation and benefits to the Executive:

             (a)     The Company shall pay to the Executive an annual base salary of Three
Hundred Thousand Dollars ($300,000) (the “Base Salary”), such annual base
salary to be subject to review and increase at least annually by Compensation
Committee of the Company’s Board of Directors, with the first such review to
occur not later than December 31, 2001. 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)     The Executive shall be entitled to receive one hundred thousand
(100,000) incentive stock options at the NASDAQ closing price of the Company’s
common stock on June 15, 2001, vesting 20% on each of the next five
anniversaries of the commencement date of Executive’s employment with the
Company.

             (d)     All Options previously awarded Executive, whether under any prior
agreement or otherwise, shall be unaffected by this Agreement.

     5.     Expenses.

             (a)     The Executive shall be reimbursed by the Company for reasonable travel
and other expenses which are incurred and accounted for in accordance with the
Company’s normal practices.

             (b)     The Company shall reimburse the Executive for all professional license
fees and continuing legal education requirements that may be required of
Executive in order to maintain his license to practice law in the jurisdictions
in which he is licensed or may become licensed.

     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 CEO, with the number of vacation days determined in
accordance with the Company’s employee manual in recognition of Executive’s
services to the Company since 1996.

     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 or other disability
owing 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 two (2) 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) failure of the
Executive (other than for reasons described in Sections 7(a) and 7(b)(i)
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 or other employment- or profession-related
similar action 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.

             (c)     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 10(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.

             (d)     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 of Executive’s employment
solely pursuant to clause (B) of Section 7(b)(ii) by reason of inadequate
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.

     8.     Compensation Upon Termination.

 

 

             (a)     If the Executive’s employment is terminated by the Executive’s death,
the Company shall 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
Date of Termination 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(c) hereof, at
the time such payments are due.

             (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 hereof, 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 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 to the Executive under this Agreement.

             (d)     If (i) the Company terminates the Executive’s employment without
Cause, or (ii) the Executive’s employment is terminated as a result of the
transfer of control of the Company by acquisition, merger, hostile takeover or
for any other reason whatsoever, or (iii) Executive’s authority and
responsibilities are materially diminished without cause relating to the
performance of Executive’s services hereunder and Executive terminates this
Agreement as a result of such unjustified diminution of authority, then should
any of the foregoing events occur, the Company shall pay to Executive a
lump-sum amount equal to the greater of either
(a) the amount Executive would have been entitled to receive in Base Salary for
the time remaining in Executive’s then current term of employment, or (b) an
amount equal to two years of Base Salary. Such payment shall be fully due and
payable to Executive in a lump sum upon Executive’s Date of Termination.
Additionally, in the event of termination contemplated in this Section 8(d),
all options granted to Executive pursuant to Section 4(c) shall immediately
vest in Executive.

     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 he created as an employee of the United Therapeutics
Corporation prior to the date of this Agreement, and not otherwise previously
assigned or transferred prior to the date of this Agreement 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.

             (a)     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.

             (b)     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.

             (c)     Executive agrees not to accept employment from, nor render services in
any capacity for, nor have any other business relationships with, nor engage in
any business activity in which it would be useful or helpful to Executive or
others with whom he is associated for Executive to use or disclose Confidential
Information of the Company with, a person or entity engaged in a business
located anywhere in the world which directly competes with the Company’s then
existing or planned business a period of one (1) year following Executive’s
last receipt of compensation from the Company, whether the termination of
Executive’s employment by either party was with or without Cause. A person or
entity directly competes with the Company’s then existing or planned business
if such individual or entity is engaged in, or about to become engaged in,
research on, or development, production, manufacture, marketing, merchandising,
leasing, selling, licensing, servicing or promotion of a Competing Product. As
used in this Agreement, a “Competing Product” means any product, technology,
process, system or

 

 

service, in existence or under development, of any person or
organization other than the Company which is the same as, similar to, competes
with or has a usage allied to a product, technology, process, system or service
in existence or planned by the Company as of the termination of Executive’s
employment hereunder. 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 the Company agree that the terms of this Section
10(c) 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.

             (d)     While employed by the Company and for a period of one (1) year
following Executive’s last receipt of compensation from the Company, whether
the termination of Executive’s employment by either party was with or without
Cause, the Executive will not hire, induce, attempt to hire, assist in hiring,
or cause to be hired, directly or indirectly, by another person or
organization, any person who was an employee or a contractor of the Company.
In addition, for the same period, the Executive shall not identify, or furnish
any information about, any other employee of the Company to any other person or
organization for the purpose of assisting or facilitating the hiring efforts of
such other person or organization.

     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:	 	
Paul A. Mahon
	 	 	
3703 Northampton Street, N.W.
	 	 	
Washington, D.C. 20016

	If to the Company:	 	
United Therapeutics Corporation

 

 

	 
	1110 Spring Street

Silver Spring, Maryland 20910

	Attn: Martine A. Rothblatt, CEO

             (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 District of Columbia, 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 7, 8, 9, and 10 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.

	 	 	 
	 	 	
UNITED THERAPEUTICS CORPORATION

	/s/ Paul Mahon	 	
/s/ Martine Rothblatt
	
	 	

	Paul A. Mahon	 	
Martine A. Rothblatt, CEO

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