EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of December 15, 1998, by
and between D. Xx Xxxxxx ("Employee") and Agritope, Inc., a Delaware corporation
(the "Company").
1. Services.
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1.1 EMPLOYMENT. The Company agrees to employ Employee as the Vice
President - Research of the Company, and Employee hereby accepts such employment
in accordance with the terms and conditions of this Agreement. Employment shall
commence on the date of this Agreement and shall continue until terminated
pursuant to the terms of this Agreement.
1.2 DUTIES. Employee shall have the position named in Section 1.1 with
such powers and duties appropriate to that office (a) as may be provided by the
bylaws of the Company, (b) as set forth on Schedule 1.2 to this Agreement, and
(c) as determined by the Board of Directors from time to time. Subject to the
provisions of Section 5.2.1, Employee's position and duties may be changed from
time to time during the term of this Agreement, and Employee's place of work may
be relocated, at the sole discretion of the Company's Board of Directors.
Employee shall devote his full business time, attention and best efforts to the
affairs of the Company and its subsidiaries during the term of this Agreement.
1.3 OUTSIDE ACTIVITIES. Employee may engage in other activities, such
as activities involving charitable, educational, religious and similar types of
organizations (all of which are deemed to benefit Employer), speaking
engagements, and similar type activities, and may serve on the board of
directors of other corporations approved by the Board of Directors of Company,
in each case to the extent that such other activities do not materially detract
from or limit the performance of his duties under this Agreement, or inhibit or
conflict in any material way with the business of the Company and its
subsidiaries.
1.4 DIRECTION OF SERVICES. Employee shall at all times discharge his
duties in consultation with and under the supervision and direction of the
Company's Board of Directors.
2. Compensation.
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2.1 SALARY. As compensation for services under this Agreement, the
Company shall pay to Employee a regular salary to be established each year by
the Compensation Committee of the Board of Directors, if there is such a
committee, or if not, then by the Board of Directors. Effective January 1 of
each year that this Agreement is in effect, such salary may be adjusted annually
unless the Board of Directors in its discretion determines not to do so. Payment
shall be made on a monthly basis, less all amounts required by law to be
withheld or deducted, at such times as shall be determined by the Board of
Directors.
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2.2 ADDITIONAL EMPLOYEE BENEFITS. Employee shall also have the right to
receive or participate in (a) any additional benefits, including, but not
limited to, vacation and sick leave policies, insurance programs, profit sharing
or pension plans, and medical reimbursement plans, which may from time to time
be made available by the Company to its employees and, (b) subject to meeting
eligibility requirements, all incentive compensation plans of the Company. The
Company shall reimburse Employee for all reasonable and necessary expenses
incurred in carrying out his duties under this Agreement, and substantiated by
Employee.
2.3 EXTRAORDINARY COMPENSATION. Employee shall have the right, in
addition to all other compensation provided for in this Section 2, to additional
extraordinary compensation in accordance with the following terms:
2.3.1 TERMINATION. In the event of termination of employment
of Employee pursuant to Section 5.2.1, Employee shall continue to be paid the
salary provided in Section 2.1 for 12 months in the manner and at the times at
which regular compensation was paid to Employee during the term of his
employment under the Agreement.
2.3.2 TERMINATION AFTER CHANGE IN CONTROL. In the event that
the termination of the employment of Employee pursuant to Section 5.2.1 either
(a) occurs within 12 months following a change in control, within the meaning of
the Securities Exchange Act of 1934, or sale of substantially all of the assets
of the Company, or (b) is contingent upon such a change in control or sale of
assets, Employee shall continue to be paid the salary provided in Section 2.1
for 24 months, provided, however, that the present value of the stream of
payments to be made to Employee shall not exceed 295 percent of Employee's
Annualized Includable Compensation (in which event the payments shall be reduced
pro rata such that the present value thereof does not exceed such amount).
2.3.3 DEFINITIONS. The term Annualized Includable Compensation
shall mean the average annual compensation payable by the Company that was
includable in the gross income of Employee for the taxable years in the Base
Period. The term Base Period shall mean the period consisting of the most recent
five taxable years ending before the date on which the change in ownership or
control occurs. Present value shall be determined by using a discount rate equal
to 120 percent of the applicable Federal Rate (determined under Section 1274(d)
of the Internal Revenue Code of 1986, as amended) compounded semi-annually.
2.3.4 CHANGE IN LAW. The parties agree that in the event
Section 280G or Section 4999 of the Internal Revenue Code is amended after the
date hereof with the effect that any of the compensation payable to Employee by
the Company pursuant to the foregoing provisions either (i) is not deductible
for tax purposes from the gross income of the Company, or (ii) subjects Employee
to a federal excise tax thereon, then, unless the parties otherwise agree, the
foregoing provisions may be modified at the discretion of the Board of Directors
in order to comply with the amended provisions of the Internal Revenue Code in
order that, to the greatest extent possible, such compensation shall be so
deductible by the Company and Employee shall not be subject to an excise tax
thereon.
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2.4 Fees.
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2.4.1 All compensation earned by Employee, other than pursuant
to this Agreement, as a result of services performed on behalf of the Company or
as a result of or arising out of any work done by Employee in any way related to
the scientific or business activities of the Company or its subsidiaries shall
belong to the Company or such subsidiary. Employee shall pay or deliver such
compensation to the Company or the subsidiary promptly upon receipt.
2.4.2 For the purposes of Section 2.4, "compensation" shall
include, but is not limited to, all professional and nonprofessional fees,
lecture fees, expert testimony fees, publishing fees, license fees, royalties,
and any related income, earnings or other things of value; and "scientific or
business activities of the Company" shall include, but not be limited to, any
project or projects in which the Company or its subsidiaries are involved and
any subject matter that is directly or indirectly researched, tested, developed,
promoted or marketed by the Company or its subsidiaries.
3. Confidential Information.
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3.1 ACCESS TO INFORMATION. Employee acknowledges that in the course of
his employment he will have access to proprietary information, trade secrets,
and other confidential information, that such information is a valuable asset of
the Company and that its disclosure or unauthorized use will cause the Company
substantial harm. As used in this Agreement, the term "Confidential Information"
means: any and all information of a proprietary or secret nature of the Company
and its subsidiaries which is or may be either applicable to or related in any
way to (i) their present or future businesses, (ii) their research and
development or investigations, or (iii) the business of any of their licensees,
licensors or customers. The term "Confidential Information" includes, without
limitation, trade secrets, processes, data, know-how, improvements, inventions,
techniques, marketing plans, research and development contracts and grants,
strategies and information concerning customers or vendors, customer lists and
customer leads, new project ideas and leads, all non-public financial
information, and all information which is maintained in confidence or is
designated as confidential by the Company or its subsidiaries for the protection
of their businesses.
3.2 OWNERSHIP. Employee acknowledges that all Confidential Information
shall continue to be the exclusive property of the Company or its subsidiaries,
whether or not prepared in whole or in part by Employee and whether or not
disclosed to Employee or entrusted to his custody in connection with his
employment by the Company.
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3.3 NONDISCLOSURE AND NONUSE. Unless authorized or instructed in
writing by the Company, or required by legally constituted authority, Employee
will not, except as required in the course of the Company's business, during or
after his employment, disclose to others or use any Confidential Information,
unless and until, and then only to the extent that, such items become available
to the public other than by his act or failure to prevent accidental or
negligent loss or release to any unauthorized person of the Confidential
Information.
3.4 RETURN OF CONFIDENTIAL INFORMATION. Upon request by the Company
during or after his employment, and without request upon termination of
employment pursuant to this Agreement, Employee will deliver immediately to the
Company all Confidential Information; Employee will thereafter retain no
excerpts, notes, photographs, reproductions or copies thereof.
3.5 WORK MADE FOR HIRE. Employee agrees that all creative work,
including without limitation designs, drawings, specifications, techniques,
models and processes, prepared or originated by Employee for the Company or its
subsidiaries, or during or within the scope of employment by the Company, which
may be subject to protection under federal copyright law, constitutes work made
for hire, all rights to which are owned by the Company; and, in any event,
Employee assigns to the Company all rights, title, and interest, whether by way
of copyright, trade secret, or otherwise, in all such work, whether or not
subject to protection by copyright or similar laws.
3.6 DURATION. The obligations set forth in this Section 3 will continue
beyond the term of employment of Employee by the Company and for so long as
Employee possesses Confidential Information.
4. Noncompetition.
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4.1 COVENANT. Subject to the provisions of Section 4.3, Employee
covenants that Employee will not, throughout the United States, either
individually or as a director, officer, partner, employee, agent,
representative, or consultant with any business, directly or indirectly during
the term of employment and for one year thereafter:
4.1.1 Engage or prepare to engage in any business which
competes with the Company or its subsidiaries;
4.1.2 Induce or attempt to induce any person who is an
employee of the Company or its subsidiaries during the term of this covenant to
leave the employ of the Company or its subsidiaries; or
4.1.3 Solicit, divert or accept orders for products or
services that are substantially competitive with the products or services sold
by the Company or its subsidiaries from any customer of the Company or its
subsidiaries.
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4.2 ENFORCEMENT. Employee acknowledges and agrees that the time, scope
and other provisions of this Section 4 have been specifically negotiated by
sophisticated parties with the advice and consultation of counsel and
specifically hereby agrees that such time, scope and other provisions are
reasonable under the circumstances. Employee further agrees that if, at any
time, despite the express agreement of the parties hereto, a court of competent
jurisdiction holds that any portion of this Section 4 is unenforceable for any
reason, the maximum restrictions reasonable under the circumstances, as
determined by such court, will be substituted for any restrictions held
unenforceable.
4.3 RELEASE FROM OBLIGATION. In the event that Employee shall be
entitled to extraordinary compensation pursuant to the provisions of Section
2.3, Employee may elect to waive all rights to receive such compensation from
and after the date of such waiver in exchange for the release of Employee from
the obligations of Sections 4.1.1 and 4.1.3. Such waiver shall be in writing,
shall state that it is in consideration for the release of Employee from the
obligations of Sections 4.1.1 and 4.1.3, and shall be effective when delivered
to the Company. In the event of such a waiver, the amounts payable pursuant to
the provisions of Section 2.3 shall be prorated through the period commencing on
the date of termination of employment and ending on the date of delivery of the
written notice of waiver to the Company. For example, if such waiver is
delivered to the Company six months after the commencement of the one year
period set forth in this Section, Employee shall be paid one-half of the amounts
otherwise payable pursuant to the provisions of Section 2.3; in the event that
the Employee shall have received more than such prorata share of such
compensation, it shall be a condition of the Employee's rights under this
Section that he shall have returned to the Company any amounts in excess of such
prorata share with the delivery of the waiver notice to the Company.
5. Termination.
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5.1 VOLUNTARY RESIGNATION. Employee may terminate his employment
under this Agreement by 90 days' written notice to the Company.
5.2 Termination by the Company.
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5.2.1 The Company may terminate Employee's employment under
this Agreement without cause by 90 days' written notice to the Employee. If the
Company shall substantially diminish Employee's salary, duties or title, or
shall relocate the principal place where Employee's duties are performed to a
place outside of the Portland metropolitan area, then Employee may elect (but
shall not be required to do so) to treat such event as a termination without
cause.
5.2.2 The Company may terminate Employee's employment under
this Agreement by 30 days' written notice given at any time within six months
after the Company determines that Employee (a) has committed a material breach
of his obligations under this Agreement, and failed to cure such breach promptly
after receipt of written notice thereof from the Board of Directors of the
Company, (b) has willfully and continuously failed or refused to comply with the
material policies, standards and regulations of the Company, (c) has been guilty
of fraud, dishonesty or other acts of misconduct in rendering services on behalf
of the Company, or (d) has failed to otherwise comply with the standards of
behavior which an employer reasonably has the right to expect of an employee.
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5.2.3 In the event that the Board of Directors shall
reasonably determine that Employee has become physically or mentally disabled
such that Employee shall be unable to render services to the Company to the same
nature and extent as such services were rendered immediately prior to the
disability, the Board of Directors may terminate Employee's employment under
this Agreement by 60 days' written notice effective any time after the date 13
weeks following the determination of disability.
5.3 Compensation Upon Termination.
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5.3.1 In the event of a termination under Section 5.1 or
5.2.2, Employee shall not be entitled to receive any compensation otherwise
payable pursuant to Sections 2.2 or 2.3. Employee will be entitled to receive
only: (i) salary payable under Section 2.1 through the day on which Employee's
employment is terminated, together with salary, compensation or benefits which
have been earned or become payable as of the date of termination but which have
not yet been paid to Employee; and (ii) such other benefits, if any, as shall be
determined to be applicable under the circumstances and in accordance with the
Company's plans and practices in effect on the date of termination.
5.3.2 In the event of a termination under Section 5.2.1,
Employee shall be entitled to receive extraordinary compensation payable
pursuant to Section 2.3, if applicable. Employee will also be entitled to
receive: (i) salary payable under Section 2.1 through the end of the month on
which Employee's employment is terminated, together with salary, compensation or
benefits which have been earned or become payable as of the date of termination
but which have not yet been paid to Employee; (ii) maintenance in effect for the
continued benefit of Employee and his dependents, at the expense of the Company,
of all insured and self-insured medical and dental benefit plans in which
Employee was participating immediately prior to termination, provided continued
participation is possible under the general terms and conditions of such plans,
until the earlier of the end of the salary period provided for in Section 2.3.2
or the date on which Employee obtains comparable insurance coverage from a new
employer; and (iii) such other benefits, if any, as shall be determined to be
applicable under the circumstances and in accordance with the Company's plans
and practices in effect on the date of termination.
5.3.3 In the event of a termination under Section 5.2.3, or as
a result of Employee's retirement or death, Employee (or Employee's estate) will
be entitled to receive: (i) salary payable under Section 2.1 through the end of
the month on which Employee's employment is terminated, together with salary,
compensation or benefits which have been earned or become payable as of the date
of termination but which have not yet been paid to Employee; (ii) such other
benefits, if any, as shall be determined to be applicable under the
circumstances and in accordance with the Company's plans and practices in effect
on the date of termination; and (iii) such other awards or bonuses as the Board
of Directors in its sole discretion may determine.
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6. Remedies.
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The respective rights and duties of the Company and Employee under this
Agreement are in addition to, and not in lieu of, those rights and duties
afforded to and imposed upon them by law or at equity. Employee acknowledges
that breach of this Agreement will cause irreparable harm to the Company and
agrees to the entry of a temporary restraining order and preliminary and
permanent injunction by any court of competent jurisdiction to prevent breach or
further breach of this Agreement. Such remedy shall be in addition to any other
remedy available to the Company at law or in equity.
7. Severability of Provisions.
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The provisions of this Agreement are severable, and if any provision
hereof is held or unenforceable, it shall be enforced to the maximum extent
permissible, and the remaining provisions of the Agreement shall continue in
full force and effect.
8. Attorney Fees.
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In the event a suit or action is filed to enforce this Agreement or
with respect to this Agreement, the prevailing party shall be reimbursed by the
other party for all costs and expenses incurred in connection with the suit or
action, including without limitation reasonable attorney's fees at the pre-trial
stage, at trial or on appeal.
9. Nonwaiver.
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Failure of the Company at any time to require performance of any
provision of this Agreement shall not limit the right of the Company to enforce
the provision. No provision of this Agreement or breach thereof may be waived by
either party except by a writing signed by that party. Any waiver of any breach
of any provision of this Agreement shall be construed narrowly and shall not be
deemed to be a waiver of any succeeding breach of that provision or a waiver of
that provision itself or of any other provision.
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10. Mediation and Arbitration.
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10.1 DISPUTES. Except as provided in Sections 3 and 4, the Company and
Employee agree to comply with the following two-step dispute resolution process
with regard to any controversy or claim arising out of or relating to this
Agreement or their employment relationship ("Dispute").
10.2 MEDIATION. In the event of a Dispute the Company and Employee
agree to submit it to mediation pursuant to the mediation services of
Arbitration Service of Portland, Inc. ("ASP"). The mediation shall be conducted
in Portland, Oregon, under the rules of ASP. The mediation will be conducted as
promptly as possible, and in no event later than 90 days from the date when one
party notifies the other of its intent to submit the Dispute to mediation or the
termination of Employee's employment, whichever is later. The Company will pay
the mediator's fees and other administrative costs of the mediation process. The
parties shall bear their own attorneys' fees and other costs.
10.3 ARBITRATION. In the event the Dispute is not successfully resolved
through mediation, the parties agree that it shall be settled by arbitration
administered through the arbitration services of ASP in accordance with its
rules. Judgment on the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof.
The arbitrators shall have the authority to award such remedies or
relief that a court of the State of Oregon could order or grant in an action
governed by Oregon law, including, without limitation, specific performance of
any obligation created under this Agreement, the issuance of an injunction, or
the imposition of sanctions for abuse or frustration of the arbitration process,
but shall not be empowered to award punitive damages. The arbitration
proceedings shall be conducted in Portland, Oregon.
11. Notices.
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All notices or other communications hereunder shall be deemed to have
been duly given and made if in writing and if served by personal delivery upon
the party for whom it is intended, if delivered by registered or certified mail,
return receipt requested, or by a national courier service, or if sent by
facsimile, provided that the facsimile is promptly confirmed by
Page 8 - EMPLOYMENT AGREEMENT--D. XX XXXXXX
telephone confirmation thereof, to the person at the address set forth below, or
such other address as may be designated in writing hereunder, in the same
manner, by such person:
To Employee:
D. Xx Xxxxxx
00000 XX Xxxxx Xxxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To Company:
Agritope, Inc.
00000 XX Xxxxx Xxxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
With a copy to:
Xxxxxx Xxxx LLP
000 XX Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx
00. Withholding.
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All payments to be made to Employee under this Agreement will be
subject to required withholding taxes and other deductions.
13. Successors; Binding Agreement.
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13.1 Any Successor (as hereinafter defined) to Company shall be bound
by this Agreement. At Employee's request, Company will seek to have any
Successor assent to the fulfillment by Company of its obligations under this
Agreement. For purposes of this Agreement, "Successor" shall mean any person
that succeeds to, or has the practical ability to control (either immediately or
with the passage of time), Company's business directly, by merger or
consolidation, or indirectly, by purchase of the Employer's voting securities,
all or substantially all of its assets or otherwise.
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13.2 For purposes of this Agreement, "Company" shall include any
corporation or other entity which is the surviving or continuing entity in
respect of any amalgamation, merger, consolidation, dissolution, asset or stock
acquisition or other form of business combination.
14. Miscellaneous.
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14.1 Except to the extent that the terms of this Agreement confer
benefits that are more favorable to Employee than are available under any other
employee benefit or executive compensation plan of Company in which Employee is
a participant, Employee's rights under any such employee benefit or executive
compensation plan shall be determined in accordance with the terms of such plan
(as it may be modified or added to by Company from time to time).
14.2 This Agreement constitutes the entire understanding between
Company and Employee relating to the employment of Employee by Company and its
subsidiaries and supersedes and cancels all prior agreements and understandings
with respect to the subject matter of this Agreement. Employee shall not be
entitled to any payment or benefit under this Agreement which duplicates a
payment or benefit received or receivable by Employee under such prior
agreements and understandings.
14.3 This Agreement may be amended but only by a subsequent written
agreement of the parties.
14.4 This Agreement shall be binding upon and shall inure to the
benefit of Employee, his heirs, executors, administrators and beneficiaries, and
shall be binding upon and inure to the benefit of Company and its successors and
assigns.
14.5 This Agreement shall be construed in accordance with the laws of
the state of Oregon, without regard to any conflicts of laws rules thereof.
14.6 All captions used herein are intended solely for convenience of
reference and shall in no way limit any of the provisions of this Agreement.
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IN WITNESS HEREOF, the parties have executed this Employment Agreement as of the
date first hereinabove written.
EMPLOYEE AGRITOPE, INC.
By
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D. Xx Xxxxxx President and
Chief Executive Officer
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Schedule 1.2
Schedule 1.2 to Employment Agreement--D. Ry. Xxxxxx
Specific Duties of Employee
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Duties of Employee as
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Vice President - Research
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Responsible for research activities of the Company. Duties include
supervising and planning all research activities, preparation of grant
applications and administration of grants, publication of scientific results,
liaison with scientific community, serve as the Company's representative on
scientific advisory board, liaison with respect to research activities of
strategic partners and licensees, and participation in negotiation of licenses
and strategic partner agreements.
Schedule 1.2
