EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") dated as of April 1,
1997 by and between Alexion Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), and Xxxxxxx Xxxx, M.D. (the "Executive").
W I T N E S S E T H
WHEREAS, the Company and Executive are parties to that certain
Employment Agreement dated as of April 1, 1992, as amended as of February 13,
1996 (the "Old Employment Agreement");
WHEREAS, the Old Employment Agreement expires on April 1, 1997 and
the Company and Executive desire to enter into a new Employment Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
1. Employment, Duties and Acceptance.
(a) The Company hereby employs the Executive, for the Term (as
hereinafter defined), to render full-time services to the Company as Chief
Executive Officer ("CEO") and President, and to perform such duties commensurate
with such office as he shall reasonably be directed by the Board of Directors
(the "Board") of the Company to perform, which duties shall be consistent with
the provisions of the By-laws in effect on the date hereof that relate to the
duties of the CEO and President.
(b) The Executive hereby accepts such employment and agrees to
render the services described above. The Executive further agrees to accept
election and to serve during all or any part of the Term as a director of the
Company without any compensation therefor other than that specified in this
Agreement, if elected to such position by the shareholders of the Company. The
Company shall use its best efforts to cause the Executive to be elected as a
director and shall include him in the management slate for election as a
director at every shareholders meeting at which his term as a director would
otherwise expire.
(c) The principal place of employment of the Executive
hereunder shall at all times during the Term be in the greater New Haven,
Connecticut area, or other locations acceptable to the Executive, in his sole
discretion.
(d) Notwithstanding anything to the contrary herein, although
the Executive shall provide services as a full time employee, it is understood
that the Executive, with notification to the Board of Directors, may (1) have
non full-time academic appointments; (2) participate in professional activities;
(3) be a member of the scientific or medical advisory board or the Board of
Directors of, or to act as a
consultant to, other companies that do not directly compete with the Company;
(4) publish academic articles; and (5) support non-competing external research
programs (collectively, "Permitted Activities"); provided, however, that such
Permitted Activities do not interfere with the Executive's duties to the
Company.
2. Terms of Employment.
The term of the Executive's employment under this Agreement
(the "Term") commenced as of April 1, 1997 (the "Effective Date") and shall end
on the third anniversary thereof unless sooner terminated pursuant to Section 7
or 8 of this Agreement.
3. Compensation.
(a) As full compensation for all services to be rendered
pursuant to this Agreement, the Company agrees to pay the Executive, during the
Term, an annual base salary of not less than $250,000 for the first year of the
Term. The Executive's annual salary hereunder for the remaining years of
employment shall be determined by the Board of Directors or the Compensation
Committee of the Board of Directors in their sole discretion but shall not be
less than $250,000 for any such year.
(b) The Company agrees to grant on the date hereof to
Executive a nonqualified stock option, pursuant to a nonqualified stock option
agreement substantially in the same form as the option agreement dated April 1,
1992 by and between the Executive and the Company, to purchase 150,000 shares of
the Company's Common Stock (the "Options"), at an exercise price per share equal
to the closing sale price of the Company's Common Stock as reported on the
Nasdaq National Market System on April 1, 1997 ($10.375), the date of grant,
such Options to become exercisable as to 50,000 shares on the first anniversary
date of the date of grant and as to an additional 50,000 shares, on each
successive anniversary date of the date of grant.
(c) The Company shall pay or reimburse the Executive for all
reasonable expenses actually incurred or paid by him during the Term in the
performance of his services under this Agreement, upon presentation of expense
statements or vouchers or such other supporting information as it reasonably may
require.
(d) The Executive shall be eligible to participate under any
pension, group insurance or other so-called "fringe" benefits which the Company
generally provides for its executives on terms no less favorable than those
provided to other executives. In the event of the consummation of a Change in
Control of the Company, all stock options previously granted and the options to
be granted pursuant to Section 3(b) hereof shall immediately vest and remain
fully exercisable through their original term with all rights.
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4. Other Benefits.
In addition to all other benefits contained herein, the
Executive shall be entitled to:
(1) Payment of health, disability, life, and medical
malpractice insurance at regular rates with coverage reasonably satisfactory to
the Executive; and
(2) Vacation time of 4 weeks per year taken in accordance
with the vacation policy of the Company during the Term subject to fulfillment
of duties.
5. Confidentiality.
(a) The Executive acknowledges that, during the course of
performing his services hereunder, the Company will be disclosing information to
the Executive related to the Company's Field of Interest, Inventions, projects
and business plans, as well as other information (collectively, "Confidential
Information"). The Executive acknowledges that the Company's business is
extremely competitive, dependent in part upon the maintenance of secrecy, and
that any disclosure of the Confidential Information would result in serious harm
to the Company.
(b) The Executive agrees that the Confidential Information
only shall be used by the Executive in connection with his activities hereunder
as an employee of the Company, and shall not be used in any way that is
detrimental to the Company.
(c) The Executive agrees not to disclose, directly or
indirectly, the Confidential Information to any third person or entity, other
than representatives or agents of the Company. The Executive shall treat all
such information as confidential and proprietary property of the Company.
(d) The term "Confidential Information" does not include
information that (1) is or becomes generally available to the public other than
by disclosure in violation of this Agreement, (2) was within the relevant
party's possession prior to being furnished to such party, (3) becomes available
to the relevant party on a nonconfidential basis or (4) was independently
developed by the relevant party without reference to the information provided to
the Company.
(e) The Executive may disclose any Confidential Information
that is required to be disclosed by law, government regulation or court order.
If disclosure is required, the Executive shall if reasonably possible give the
Company advance notice so that the Company may seek a protective order or take
other action reasonable in light of the circumstances.
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(f) Upon termination of this Agreement, the Executive shall
promptly return to the Company all materials containing Confidential
Information, as well as data, records, reports and other property, furnished by
the Company to the Executive or produced by the Executive in connection with
services rendered hereunder. Notwithstanding such return or any other provision
of this Agreement, the Executive shall continue to be bound by the terms of the
confidentiality provisions contained in this Section 5 for a period of three
years after the termination of this Agreement.
6. Non-Competition.
(a) During the Term, the Executive shall not (1) provide any
services, directly or indirectly, to any other business or commercial entity
without the consent of the Board of Directors, such consent not to be
unreasonably withheld, or (2) participate in the formation of any business or
commercial entity without the consent of the Board of Directors, such consent
not to be unreasonably withheld; provided, however, that nothing contained in
this Section 6(a) shall be deemed to prohibit the Executive from acquiring,
solely as an investment, shares of capital stock (or other interests) of any
corporation (or other entity) not exceeding 2% of such corporation's (or other
entity's) then outstanding shares of capital stock; and provided, further, that
nothing contained herein shall be deemed to limit Executive's Permitted
Activities pursuant to Section 1(d).
(b) If Executive is terminated by the Company for Cause or if
Executive terminates this Agreement in violation of the provisions of this
Agreement, for a period of one year following the date of termination, the
Executive shall not (1) provide any services, directly or indirectly, to any
other business or commercial entity engaged primarily in the Company's Field of
Interest or (2) participate in the formation of any business or commercial
entity engaged primarily in the Company's Field of Interest; provided, however,
that nothing contained in this Section 6(b) shall be deemed to prohibit the
Executive from acquiring, solely as an investment, shares of capital stock (or
other interests) of any corporation (or other entity) in the Company's Field of
Interest not exceeding 2% of such corporation's (or other entity's) then
outstanding shares of capital stock; and provided, further, that nothing
contained herein shall be deemed to limit Executive's Permitted Activities
pursuant to Section 1(d). This Section 6(b) shall be subject to written waivers
that may be obtained by the Executive from the Company.
(c) If the Executive commits a breach, or threatens to commit
a breach, of any of the provisions of this Section 6, the Company shall have the
right and remedy to have the provisions of this Agreement specifically enforced
by any court having equity jurisdiction, it being acknowledged and agreed that
any such breach or threatened breach will cause irreparable injury to the
Company and that money damages will not provide an adequate remedy to the
Company.
(d) If any of the covenants contained in Section 5, 6 or 10,
or any part thereof, is hereafter construed to be invalid or unenforceable, the
same shall not
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affect the remainder of the covenant or covenants, which shall be given full
effect without regard to the invalid portions.
(e) If any of the covenants contained in Section 5, 6 or 10,
or any part thereof, is held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or area of
such provision and, in its reduced form, such provision shall then be
enforceable.
(f) The parties hereto intend to and hereby confer
jurisdiction to enforce the covenants contained in Sections 5, 6 and 10 upon the
courts of any state within the geographical scope of such covenants. In the
event that the courts of any one or more of such states shall hold any such
covenant wholly unenforceable by reasons of the breadth of such scope or
otherwise, it is the intention of the parties hereto that such determination not
bar or in any way affect the Company's right to the relief provided above in the
courts of any other states within the geographical scope of such other
covenants, as to breaches of such covenants in such other respective
jurisdictions, the above covenants as they relate to each state being, for this
purpose, severable into diverse and independent covenants.
7. Termination by the Company.
(a) The Company may terminate this Agreement if any one or
more of the following shall occur:
(1) The Executive shall die during the Term; provided,
however, that the Executive's legal representatives shall be entitled to
receive his Salary through the last day of the month in which his death occurs.
(2) The Executive shall become physically or mentally
disabled so that he is unable substantially to perform his services hereunder
for (a) a period of 120 consecutive days, or (b) for shorter periods
aggregating 180 days during any twelve-month period. Notwithstanding such
disability the Company shall continue to pay the Executive his Salary through
the date of such termination.
(3) The Executive acts, or fails to act, in a manner that
provides Cause for termination. For purposes of this Agreement, the term
"Cause" means (a) the willful and continual neglect by the Executive of his
duties or obligations hereunder; provided such neglect remains uncured for a
period of 30 days after written notice describing the same is given to the
Executive; provided, that isolated and insubstantial failures shall not
constitute Cause hereunder, (b) the conviction of the Executive of any felony
involving moral turpitude, or (c) any act of fraud or embezzlement involving
the Company or any of its Affiliates.
(4) The Executive engages in a wilful and material breach
of the terms of Sections 5 and 6 of this Agreement and such breach continues
uncured
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for 30 days after written notice of such breach is given by the Company to the
Executive.
(b) All determinations of Cause or termination pursuant to
this Section 7 shall require at least a two-thirds vote of the entire Board
excluding the participation of Executive.
8. Termination by the Executive.
The Executive may terminate this Agreement on written notice
to the Company if any one or more of the following shall occur:
(1) loss of any material duties or authority by the
Executive and such loss continues for 30 days after written notice of such loss
is given to the Company;
(2) a material breach of the terms of this Agreement by
the Company and such breach continues uncured for 30 days after notice of such
breach is first given; provided, however, it shall constitute the termination
of this Agreement if such breach is for the payment of money and continues
uncured for ten days after notice of such breach is given;
(3) a Change in Control occurs; provided that the
Executive gives notice of termination within 90 days after such occurrence;
(4) a Prohibited Event (as defined in Section 14) occurs;
provided that the Executive gives notice of termination within 90 days after
such occurrence and such Prohibited Event is not remedied within 30 days of
such notice;
(5) the Company shall make a general assignment for
benefit of creditors; or any proceeding shall be instituted by the Company
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking entry of an order for relief
or the appointment of a receiver, trustee, or other similar official for it or
for any substantial part of its property or the Company shall take any
corporate action to authorize any of the actions set forth above in this
subsection 8(5);
(6) an involuntary petition shall be filed or an action
or proceeding otherwise commenced against the Company seeking reorganization,
arrangement or readjustment of the Company's debts or for any other relief
under the Federal Bankruptcy Code, as amended, or under any other bankruptcy or
insolvency act or law, state or federal, now or hereafter existing and shall
remain undismissed or unstayed for a period of 30 days;
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(7) a receiver, assignee, liquidator, trustee or similar
officer for the Company or for all or any part of its property shall be
appointed involuntarily; or
(8) a material breach by the Company of any other
material agreement with the Executive and such breach continues for 30 days
after notice of such breach is first given; provided, however, it shall
constitute the termination of this Agreement if such breach is for the payment
of money and continues uncured for ten days after notice of such breach is
first given;
9. Severance.
If the Company terminates this Agreement without Cause or if
the Executive terminates this Agreement pursuant to Section 8 then: (1) the
Company shall pay the Executive a lump sum cash payment (the "Severance
Payment") equal to the Executive's annual salary then in effect multiplied by
the number of years remaining in the Term (2) all stock options and stock
awards (and similar equity rights) shall vest and become exercisable
immediately prior to termination and remain exercisable through their original
terms with all rights. In the event of termination of this Agreement by the
Company by reason of the death or disability of the Executive the Company shall
not be obligated to make the Severance Payment to the Executive if the Company
provided the Executive with both life insurance and disability insurance
pursuant to subsection 4(1) at the time of his death or disability. After
termination of employment for any reason other than death of the Executive, the
Company shall continue to provide all benefits subject to COBRA at its expense
for the maximum required COBRA period. In addition, if on April 1, 2000, the
Executive shall cease to be employed by the Company in the capacity of CEO by
reason of the Company's decision not to continue to employ Executive as CEO at
least on terms substantially similar to those set forth herein then the
Executive shall be entitled to a Severance Payment equal to the annual salary
the Executive was entitled to for the final year of the Term.
10. Inventions Discovered by the Executive While Performing
Services Hereunder.
During the Term, the Executive shall promptly disclose to the
Company any invention, improvement, discovery, process, formula, or method or
other intellectual property, whether or not patentable, whether or not
copyrightable, in the Company's Field of Interest (collectively, "Inventions")
made, conceived or first reduced to practice by the Executive, either alone or
jointly with others, while performing service hereunder. The Executive hereby
assigns to the Company all of his right, title and interest in and to any such
Inventions. During and after the Term, the Executive shall execute any
documents necessary to perfect the assignment of such Inventions to the Company
and to enable the Company to apply for, obtain, and enforce patents and
copyrights in any and all countries on such Inventions. The Executive hereby
irrevocably designates the counsel to the Company as his agent and
attorney-in-fact to
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execute and file any such document and to do all lawful acts necessary to apply
for and obtain patents and copyrights and to enforce the Company's rights under
this Section. This Section 10 shall survive the termination of this Agreement.
11. Indemnification.
The Company shall indemnify the Executive, to the maximum
extent permitted by applicable law, against all costs, charges and expenses
incurred or sustained by him in connection with any action, suit or proceeding
to which he may be made a party by reason of his being an officer, director or
employee of the Company or of any subsidiary or affiliate of the Company. The
Company shall provide, at its expense, Directors and Officers insurance for the
Executive in amounts reasonably satisfactory to the Executive, to the extent
such insurance is available at reasonable rates, which determination shall be
made by the Board.
12. Excise Tax.
If any payments made to or in respect of this Agreement, or
otherwise in respect of his employment by the Company, become subject to the
excise tax described in Code section 4999, the Company shall make a special
payment to him sufficient, on an after-tax basis (taking into account federal,
state and local taxes and related interest and penalties), to put him in the
same position as would have been the case had no such excise taxes been
applicable to any payments or benefits provided in this Agreement or otherwise
in respect of the Employee's employment by the Company.
13. No Mitigation.
The Executive shall not be required to mitigate the amount of
any payment provided for hereunder by seeking other employment or otherwise,
nor shall the amount of any payment provided for hereunder be reduced by any
compensation earned by the Executive as the result of employment by another
employer after the date of termination of his employment by the Company.
14. Prohibited Events:
The occurrence of any of the following events shall
constitute a "Prohibited Event":
(1) The Executive is not continuously a member of the
Board of Directors and CEO and President of the Company during the Term;
(2) The CEO is not the highest ranking officer of the
Company with the power to appoint and remove all other employees of the
Company; or
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(3) The retention of any senior executive officer by the
Company, or an offer to pay compensation to any senior executive of the Company
that in either case is unacceptable to the Executive, in his reasonable
judgment.
15. Definitions.
As used herein, the following terms have the following
meaning:
(1) "Affiliate" means and includes any person,
corporation or other entity controlling, controlled by or under common control
with the corporation in question.
(2) "Change in Control" means the occurrence of any of
the following events (without the consent of the Executive);
(a) Any corporation, person or other entity makes a
tender or exchange offer for shares of the Company's Common Stock pursuant to
which such corporation, person or other entity acquires 25% or more of the
issued and outstanding shares of the Company's Common Stock;
(b) The stockholders of the Company approve a definitive
agreement to merge or consolidate the Company with or into another corporation
where the Company is not the surviving corporation or to sell or otherwise
dispose of all or substantially all of the Company's assets; or
(c) Any person within the meaning of Section 3(a)(9) or
Section 13(d)(3) of the Securities Exchange Act of 1934 acquires more than 25%
of the Company's issued and outstanding voting securities.
(3) "Company's Field of Interest" means the primary
businesses of the Company as described in the Company's filings with the
Securities and Exchange Commission during the Executive's employment hereunder
and as determined from time to time by the Board of Directors.
(4) "Subsidiary" means any corporation or other business
entity controlled, directly or indirectly, by the corporation in question.
16. Representations and Assignment by Executive.
Executive represents and warrants that he has full right,
power and authority to execute the terms of this Agreement; this Agreement has
been duly executed by Executive and such execution and the performance of this
Agreement by Executive does not result in any conflict, breach or violation of
or default under any other agreement or any judgment, order or decree to which
Executive is a party or by which he is bound. Executive acknowledges and agrees
that any material breach of the
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representations set forth in this subparagraph will constitute Cause under
Section 7(a)(3).
17. Arbitration.
Any controversy or claim arising out of or relating to this
Agreement or the breach thereof shall be settled by arbitration in the City of
New York, in accordance with the rules then existing of the American
Arbitration Association (three arbitrators), and judgment upon the award
rendered may be entered in any court having jurisdiction thereof. The parties
shall be free to pursue any remedy before the arbitration tribunal that they
shall be otherwise permitted to pursue in a court of competent jurisdiction.
The award of the arbitrators shall be final and binding. During the pendency of
any arbitration or any dispute not yet submitted to arbitration, the Company
shall not be entitled to any offset against payments, stock awards or other
benefits due to the Executive under this Agreement or otherwise.
18. Legal Costs.
If the Executive institutes any legal action to enforce his
rights under, or to recover damages for breach of, this Agreement, and the
Executive prevails, he shall be entitled to recover from the Company any actual
expenses for attorney's fees and disbursements incurred by him. If any payment
made to or in respect of the Executive pursuant to this Section 18 becomes
subject to any tax, the Company shall make a special payment to him sufficient,
on an after-tax basis (taking into account federal, state and local taxes and
related interest and penalties), to put him in the same position as would have
been the case had such taxes been applicable to any payments or benefits
provided in this Section.
19. Notices.
All notices, requests, consents and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given if sent by private overnight mail service
(delivery confirmed by such service), registered or certified mail (return
receipt requested and received), telecopy (confirmed receipt by return fax from
the receiving party) or delivered personally, as follows (or to such other
address as either party shall designate by notice in writing to the other in
accordance herewith):
If to the Company:
Alexion Pharmaceuticals, Inc.
00 Xxxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
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With a copy to:
Fulbright & Xxxxxxxx, L.L.P.
000 Xxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
If to the Executive:
Xxxxxxx Xxxx, M.D.
00 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
20. General.
(a) This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Connecticut applicable to
agreements made and to be performed entirely in Connecticut.
(b) This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, relating to the subject matter hereof. No representation, promise or
inducement has been made by either party that is not embodied in this Agreement,
and neither party shall be bound by or liable for any alleged representation,
promise or inducement not so set forth.
(c) This Agreement may be amended, modified, superseded,
canceled, renewed or extended, and the terms or covenants hereof may be waived,
only by a written instrument executed by the parties hereto, or in the case of a
waiver, by the party waiving compliance. The failure of a party at any time or
times to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by a party of the
breach of any term or covenant contained in this Agreement, whether by conduct
or otherwise, or any one or more or continuing waivers of any such breach, shall
constitute a waiver of the breach of any other term or covenant contained in
this Agreement.
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(d) This Agreement shall be binding upon the legal
representatives, heirs, distributees, successors and assigns of the parties
hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
ALEXION PHARMACEUTICALS, INC.
By: /s/ XXXX XXXXX
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/s/ XXXXXXX XXXX
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Xxxxxxx Xxxx, M.D.
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