EXHIBIT 10.41
PARADIGM GENETICS, INC.
EMPLOYMENT AGREEMENT
FOR
XXXXXXXX XXXXXX
This EMPLOYMENT AGREEMENT ("Agreement") is entered into as of the 22nd
day of November, 2002, by and between Xxxxxxxx Xxxxxx ("Executive") and PARADIGM
GENETICS, INC. ("Company").
WHEREAS, the Company desires to compensate Executive for his personal
services to the Company; and
WHEREAS, Executive wishes to be employed by the Company and provide
personal services to the Company in return for certain compensation.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties agree to the following:
1. EMPLOYMENT BY THE COMPANY.
1.1 Effective Date and Term. The effective date of this Agreement shall be
November 22, 2002 ("Effective Date"). The employee is employed on an "at
will" basis. Employee's salary and performance will be reviewed at least
annually for compensation changes. This document supercedes the
Employment Agreement dated July 10, 2002 with changes incorporated at the
request of the Paradigm Board of Directors.
1.2 Position. Subject to terms set forth herein, the Company agrees to employ
Executive in the position of President, and Chief Executive Officer and
Executive hereby accepts such employment. Executive's principal place of
employment during the entire period of this Agreement shall be
Raleigh/Durham, North Carolina. During the term of his employment with
the Company, Executive will devote his best efforts and all of his
business time and attention (except for vacation periods as set forth
herein and reasonable periods of illness or other incapacities permitted
by the Company's general employment policies) to the business of the
Company.
1.3 Duties. Executive shall be proposed to the Board to be an officer of the
Company, and serve in an executive capacity. He shall have such duties,
responsibilities, and authority
as are customarily associated with his then current title and as assigned
to Executive by the Board. The Board has the right to assign and change
Executive's duties at any time.
1.4 Other Employment Policies. The employment relationship between the
parties shall also be governed by the general employment policies and
practices of the Company, including those relating to protection of
confidential information and assignment of inventions.
2. COMPENSATION.
2.1 Salary. Executive shall receive for services an annualized base salary of
$270,000 subject to standard federal and state withholding requirements,
payable in accordance with the Company's standard payroll practices.
2.2 Stock Options. Subject to the approval of the Company's Board of
Directors ("Board"), the Company shall grant Executive an option
("Option") to purchase 300,000 shares of the Company's common stock under
the Company's 2000 Stock Option Plan at a strike price determined on your
first day of employment. More information concerning the Stock Option
Plan will be provided to you shortly after you begin work. This grant
includes both incentive stock options and non-qualified stock options.
The Option shall vest according to the standard vesting schedule set
forth in the governing grant notice, which shall provide that the shares
subject to the Option will vest over a four-year period, with twenty-five
percent (25%) of the shares subject to the Option vesting upon the
Executive's date of hire, and another (25%) after Executive successfully
completes one year of continuous service with Paradigm, and
one-forty-eighth (1/48thth) of the shares subject to the Option vesting
for each month of Executive's continuous service thereafter. Executive
agrees to execute the Company's standard form of stock option agreement.
2.3 Performance Bonus. Executive shall be eligible to participate in the 2003
Leadership Incentive Plan (LIP) at 35 percent (at target) of his base
salary (subject to standard federal and state withholding requirements)
based on meeting his individual performance goals and Paradigm meeting
its corporate goals. The current terms and conditions of this incentive
opportunity are set forth in the attached 2002 Leadership Incentive Plan
(LIP) [Exhibit B], for his reference. Payment of the bonus shall be
subject to the satisfaction of mutually agreed upon performance goals,
and within a reasonable period of time following the execution of this
Agreement, the parties shall set forth those goals in a separate written
document. The Company's Board of Directors, in its sole discretion, shall
determine the extent to which Executive has achieved the performance
goals upon which Executive's bonus is based. As part of a yearly review
of performance, Executive will be eligible for a change in salary, bonus
and stock options based on performance, as determined by the Company's
Board of Directors.
2.4 Relocation Allowance. The Company shall pay Executive an allowance for
relocation
of principal residence to the greater Raleigh/ Durham, North Carolina
metropolitan area pursuant to a relocation package as specified in the
enclosed "Relocation and Moving Policy Tier III". (Attached Exhibit C) If
Executive voluntarily terminates his employment with the Company within
12 months, Executive must repay all appropriate out-of-pocket expenses
incurred by the Company regarding his relocation package. This will be
deducted from the Executive's final pay, and the remaining amount due the
Company must be paid within 60 days of termination.
2.5 Standard Company Benefits. Executive shall be entitled to all rights and
benefits for which he is eligible under the terms and conditions of the
standard Company benefits and compensation practices which may be in
effect from time to time and provided by the Company to its employees
generally.
2.6 Expense Reimbursement. The Company will reimburse Executive for
reasonable business expenses in accordance with the Company's standard
travel and expense reimbursement policy.
3. PROPRIETARY INFORMATION, INVENTIONS AND NON-COMPETITION OBLIGATIONS.
3.1 Agreement. Executive agrees to execute and abide by the Proprietary
Information, Inventions, Non-Competition, and Non-Solicitation Agreement
attached hereto as Exhibit D.
4. OUTSIDE ACTIVITIES.
4.1 Other Employment/Enterprise. Except with the prior written consent of the
Board, Executive will not, while employed by the Company, undertake or
engage in any other employment, occupation or business enterprise, other
than ones in which Executive is a passive investor. Executive may engage
in civic and not-for-profit activities so long as such activities do not
materially interfere with the performance of his duties hereunder.
4.2 Conflicting Interests. Except as permitted by Section 4.3, while employed
by the Company, Executive agrees not to acquire, assume or participate
in, directly or indirectly, any position, investment or interest known by
him to be adverse or antagonistic to the Company, its business or
prospects, financial or otherwise.
4.3 Competing Enterprises. While employed by the Company, except on behalf of
the Company, Executive will not directly or indirectly, whether as an
employee, officer, director, stockholder, partner, proprietor, associate,
representative, consultant, or in any capacity whatsoever engage in,
become financially interested in, be employed by or have any business
connection with any other person, corporation, firm, partnership or other
entity whatsoever which compete directly with the Company, throughout the
world, in
any line of business engaged in (or planned to be engaged in) by the
Company; provided, however, that anything above to the contrary
notwithstanding, he may own, as a passive investor, securities of any
competitor corporation, so long as his direct holdings in any one such
entity shall not in the aggregate constitute more than 1% of the voting
stock of such corporation.
5. FORMER EMPLOYMENT.
5.1 No Conflict With Existing Obligations. Executive represents that his
performance of all the terms of this Agreement and as an employee of
Paradigm does not and will not breach any agreement or obligation of any
kind made prior to his employment by Paradigm, including agreements or
obligations he may have with prior employers or entities for which he has
provided services. Executive has not entered into, and agrees he will not
enter into, any agreement or obligation either written or oral in
conflict herewith.
5.2 No Disclosure of Confidential Information. If, in spite of the second
sentence in Section 5.1, Executive should find that confidential
information belonging to any former employer might be usable in
connection with Paradigm's business, Executive will not intentionally
disclose to Paradigm or use on behalf of Paradigm any confidential
information belonging to any of Executive's former employers (except in
accordance with agreements between Paradigm and any such former
employer); but during Executive's employment by Paradigm, he will use in
the performance of his duties all information which is generally known
and used by persons with training and experience comparable to his own
and all information which is common knowledge in the industry or
otherwise legally in the public domain.
6. TERMINATION OF EMPLOYMENT. The parties acknowledge that Executive's
employment with Paradigm is at-will. The provisions of Sections 6.1
through 6.6 govern the amount of compensation, if any, to be provided to
Executive upon termination of employment and do not alter this at-will
status.
6.1 Termination Without Cause. The Board and Compensation Committee of the
Board shall have the right to terminate Executive's employment with the
Company at any time without Cause by giving notice as described in
Section 6.6 of this Agreement.
a) In the event Executive's employment is terminated by the Company
without Cause or for a reason other than Executive's death,
disability or cessation of the Company's business pursuant to
Section 6.5 below, Paradigm will continue to pay Executive his
salary at the date of termination (less applicable deductions and
withholdings), and provide his healthcare benefits in effect on
the date of his termination through reimbursement of COBRA expense
(less applicable employee premium sharing amounts) for a maximum
time period of up to twelve (12) months following the Executive's
final date of
employment. These payments will only be made if Executive executes
a general release of all claims against Paradigm, including but
not limited to language waiving any all claims Executive has or
has had against Paradigm or relating to any event or claim
occurring prior to the date of the release, any state law claims
and claims under federal employment law statutes, or any claims
relating to his employment by or separation from Paradigm and
language including a confidentiality and non-disparagement
provision with language acceptable to the Company no later than
twenty-one (21) days after the date of termination (or within 45
days of the date of termination if the separation is subject to
the Older Workers Benefit Protection Act; the parties agree that
the determination of whether this Act applies will be made solely
by Paradigm). Executive shall have an obligation to notify the
Company of any positions he accepts in any capacity during the
applicable severance period. Executive must submit written
resignation of any committee seat, regular or ex-officio.
Unless Executive's employment is terminated by death, disability
or cessation of business under Section 6.5, or for cause,
Executive will receive an additional 25% for a total of 50%
vesting of his stock options under Section 2.2 above if terminated
other than for cause in less than one year from the date of hire.
b) Executive shall not receive severance pay or continuation of
benefits unless and until the above-referenced release of all
claims becomes effective, and can no longer be revoked under its
terms.
c) If the Company is acquired or a change of control of ownership
with respect to the Company (as defined below) occurs at anytime
during the twelve (12) month severance period, described above,
all amounts of salary and the cash equivalent of the cost of COBRA
expense for the remainder of the twelve (12) month period shall be
due and payable to Executive in full.
d) If Paradigm is acquired or a change of control of ownership with
respect to Paradigm (as defined below) occurs, Paradigm will
increase two-fold the amount of stock options otherwise vested up
to 100%. If redundancy occurs within twelve (12) months of a
change of control, Executive is entitled to a full twelve (12)
months of severance pay on a non-contingent basis.
"Change of Control" means the occurrence of any of the following
events: (a) Ownership. Any "Person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended) becomes the "Beneficial Owner" (as defined in Rule
13d-3 under said Act), directly or indirectly, of securities of
Paradigm representing 50% or more of the total voting power
represented by Paradigm's then outstanding voting securities
(excluding for this
purpose Paradigm or its Affiliates or any employee benefit plan of
Paradigm) pursuant to a transaction or a series of related
transactions which the Board of Directors does not approve; or (b)
Merger/Sale of Assets. A merger or consolidation of Paradigm
whether or not approved by the Board of Directors, other than a
merger or consolidation which would result in the voting
securities of Paradigm outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or
the parent of such corporation) at least 80% of the total voting
power represented by the voting securities of Paradigm or such
surviving entity or parent of such corporation outstanding
immediately after such merger or consolidation, or the
stockholders of Paradigm approve an agreement for the sale or
disposition by Paradigm of all or substantially all of Paradigm's
assets.
6.2 Termination for Cause.
(a) The Board and the Compensation Committee of the Board shall have
the right to terminate Executive's employment with the Company at
any time for Cause by giving notice as described in Section 6.6 of
this Agreement.
(b) "Cause" for termination shall mean: (1) conviction of, or pleading
guilty or nolo contendere to, a felony or other crime involving
theft, fraud or moral turpitude; (2) drug or alcohol abuse; (3)
Executive's material breach of this Agreement, including
unsatisfactory job performance linked to employees' goals; (4)
Executive's refusal to abide by or comply with the appropriate
directives of the Board tied to reasonable allowance; (5)
Executive's dishonesty, fraud, or misconduct with respect to the
business affairs of the Company, including, without limitation,
fraud, misappropriation or embezzlement; (6) intentional damage of
any property worth in excess of $1,000 of the Company; (7) conduct
by Executive which demonstrates gross unfitness to serve or (8)
any violation of Paradigm rules or policies for which termination
is the normal discipline based on policy or past practice
(c) If the Board and Compensation Committee of the Board of Paradigm
believe Executive is guilty of poor job performance referenced
above in Section 6.2 (b)(3) that could lead to termination,
Executive shall be provided sixty (60) days notice of possible
termination and the opportunity to cure the stated deficiencies.
This 60-day period will only apply to poor job performance under
Section 6.2 (b) (3).
(d) In the event Executive's employment is terminated at any time with
Cause, he will not receive severance pay, accelerated vesting of
stock options, or any other compensation or benefits as the result
of his termination.
6.3 Voluntary or Mutual Termination.
(a) Executive may voluntarily terminate his employment with the
Company at any time by giving notice as described in Section 6.6.
(b) In the event Executive voluntarily terminates his employment, he
will not receive severance pay, further accelerated vesting of
stock options, or any other compensation or benefits as the result
of his termination.
6.4 Termination for Inability to Regularly Perform Duties.
(a) The Company's Board may terminate Executive in the event of any
illness, disability or other physical or mental incapacity in such
a manner that Executive is physically rendered unable regularly to
perform the essential functions of his job duties hereunder, with
or without reasonable accommodation, as validated by certified
physician.
(b) The Company's Board shall make the determination regarding whether
Executive is unable regularly to perform his duties as described
in subsection (a) above.
(c) In the event Executive's employment is terminated at any time for
inability to regularly perform duties as described in subsection
(a) above, he will not receive severance pay, accelerated vesting
of stock options, or any other compensation or benefits as the
result of his termination.
6.5 Dissolution, Liquidation or Insolvency of the Company. Notwithstanding
the above, in the event Executive's employment is terminated by the
Company in connection with or as a result of the liquidation,
dissolution, insolvency or other winding up of the affairs of the Company
without the establishment of a successor entity to the Company, the
Company shall have no obligation to provide severance or further
financial consideration to Executive, including a performance bonus,
except for any reasonable expense reimbursements or base salary that
Executive has accrued and earned at the time of such termination.
6.6 Notice: Effective Date of Termination. Termination of Executive's
employment pursuant to this Agreement shall be effective on the earliest
of:
(a) immediately after Executive, for any reason, gives written notice
to the Company's Board of his termination.
(b) immediately upon the Company's Board giving written notice to
Executive of his termination for Cause, without Cause or as a
result of an event listed in Section
6.4 or 6.5 above;
6.7 Non-Compete Provision. In consideration of his employment with Paradigm,
Executive agrees that for the longer of twelve (12) months after the
separation of his employment with the Company for any reason, whether
Executive's resignation or termination by Paradigm, or any period for
which he is receiving severance payments from Paradigm under the terms of
Section 6.1 (a) of this Agreement, he will not become engaged in any
"Competitive Activity" (as defined below).
"Competitive Activity" means: (A) Directly or indirectly, engaging,
assisting or participating in, whether as a President, CEO, Vice
President, director, officer, employee, agent, manager, consultant,
partner, owner or independent contractor or other participant, any
business, firm, corporation, partnership, enterprise or organization
located in Durham and Wake Counties, North Carolina, the State of North
Carolina or the United States of America or the countries of Western
Europe that competes with the business engaged or hereafter engaged in by
Paradigm; (B) the sale, trade, service or production or attempted sale,
trade, service or production of genomics in Durham and Wake Counties,
North Carolina, the State of North Carolina or the United States of
America or the countries of Western Europe. (C) the sale, trade, service
or production or attempted sale, trade, service or production of products
in Durham and Wake Counties, North Carolina, the State of North Carolina
or the United States of America or the countries of Western Europe which
are competitor products to the products produced, sold or designed by the
Paradigm facility in Research Triangle Park, North Carolina during his
employment with Paradigm; and (D) employment, whether direct or as
independent contractor, with Metabolon, Beyond Genomics, SurroMed,
Phenomenome, Metabometrix, or Cantata, and any of their successor
businesses or businesses which acquire these companies after the date of
this Agreement in Durham and Wake Counties, North Carolina, the State of
North Carolina or the United States of America or the countries of
Western Europe.
In further consideration of his employment with Paradigm, Executive for
the duration of his employment with Paradigm and for the longer of twelve
(12) months after the separation of his employment with the Company for
any reason, whether Executive's resignation or termination by Paradigm,
or any period for which he is receiving severance payments from Paradigm
under the terms of Section 6.1 (a) of this Agreement, he shall not
recruit or encourage employees of Paradigm to leave Paradigm or to be
hired by any company or business with which he affiliated or allow any
such company or business, to the extent it is in his control, to engage
in any activity which, were it done by him, would violate any provision
of this Section 6.7; provided, however, that Paradigm acknowledges and
agrees that a company or business with which Executive is affiliated may
employee or engage Paradigm employees that have left Paradigm, so long as
the company or business did not recruit or encourage the Paradigm
employee to leave Paradigm. It is understood that discussions, whether
occurring before or after the date of this Agreement, resulting from
general employment advertisements or initiated by Paradigm employees, do
not constitute recruitment or encouragement to leave.
7. GENERAL PROVISIONS.
7.1. Notices. Any notices provided hereunder must be in writing and shall be
deemed effective upon the earlier of personal delivery (including
personal delivery by hand, telecopier, or telex) or the third day after
mailing by first class mail, to the Company at its primary office
location and to Executive at his address as listed on the Company
payroll.
7.2 Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule
in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision or any other jurisdiction, but this
Agreement will be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provisions had never been
contained herein.
7.3 Waiver. If either party should waive any breach of any provisions of this
Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
7.4 Complete Agreement. This Agreement and its Exhibits A - E constitute the
entire agreement between Executive and the Company. This Agreement is the
complete, final and exclusive embodiment of their agreement with regard
to this subject matter and supercedes any prior oral discussions or
written communications and agreements. This Agreement is entered into
without reliance on any promise or representation other than those
expressly contained herein, and it cannot be modified or amended except
in writing signed by the Board of the Company.
7.5 Counterparts. This Agreement may be executed in separate counterparts,
any one of which need not contain signatures of more than one party, but
all of which taken together will constitute one and the same Agreement.
7.6 Headings. The headings of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor
to affect the meaning thereof.
7.7 Successors and Assigns. This Agreement is intended to bind and inure to
the benefit of and be enforceable by Executive and the Company, and their
respective successors, assigns, heirs, executors and administrators,
except that Executive may not assign any of his duties hereunder and he
may not assign any of his rights hereunder without the written consent of
the Company, which shall not be withheld unreasonably.
7.8 Choice of Law. All questions concerning the construction, validity and
interpretation of this Agreement will be governed by the law of the State
of North Carolina. Executive
expressly consents to the jurisdiction of the state and federal courts
for Durham County, North Carolina, for all actions arising out of or
relating to this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first below written.
Paradigm Genetics, Inc.
By: /s/ Xxxxx X. Xxxxx
--------------------------------
For Paradigm Genetics, Inc.
Title: VP Human Resources
Date: 11/23/02
Accepted and agreed this 23rd day of November, 2002.
/s/ Xxxxxxxx Xxxxxx
---------------------------------------
Xxxxxxxx Xxxxxx, Ph.D.
