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Exhibit 10.16
EMPLOYMENT AGREEMENT
(EXECUTIVE EMPLOYEE)
This EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
effective as of September 27, 1996, by and between SAIGENE CORPORATION, a
Delaware corporation (the "Company") and Xxxxxx X. Xxxx ("Executive").
ARTICLE I
DUTIES AND TERM
1.1 EMPLOYMENT. In consideration of their mutual covenants and other
good and valuable consideration, the receipt, adequacy and sufficiency of which
is hereby acknowledged, the Company agrees to hire Executive, and Executive
agrees to remain in the employ of the Company, upon the terms and conditions
herein provided.
1.2 POSITION AND RESPONSIBILITIES.
(a) Executive shall serve as the Chief Executive Officer of
the Company (or in such other capacity and with such other title as the Company
may reasonably request) reporting directly to the Board of Directors of the
Company. Executive agrees to perform services not inconsistent with his position
as shall from time to time be assigned to him by the Board of Directors of the
Company. Executive further agrees to serve, if elected, as a director of the
Company and as an officer and/or director of any subsidiary or affiliate of the
Company. Executive shall devote all of his productive time, attention, knowledge
and skill to the discharge of his duties under this Agreement and shall devote
no less than five (5) business days a week (subject only to Company recognized
holidays and approved vacation days), eight (8) hours per day.
(b) During the period of his employment hereunder, Executive
shall devote substantially all of his business time, attention, skill and
efforts to the faithful performance of his duties hereunder. Executive may not,
without written notice to and express written permission of the Company, render
to others services of any kind for compensation, or engage in any other
research, scientific or business activity that would interfere with the
performance of Executive's duties under this Agreement, nor will Executive
accept competing employment, or make preparations to compete with Company.
1.3 TERM. The term of Executive's employment under this Agreement shall
commence on the date first above written and shall continue, unless sooner
terminated, until September 30, 1999.
1.4 LOCATION. During the period of his employment under this Agreement,
Executive's performance of this Agreement shall be rendered at the Company's
principal office, located at 1725
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000xx Xxxxxx, XX, #000, Xxxxxxx, Xxxxxxxxxx 00000, as well as such other place
or places as the Company shall in good faith require or as the interest, needs,
business and opportunities of the Company shall require or make advisable.
ARTICLE II
COMPENSATION
For all services rendered by Executive in any capacity during his
employment under this Agreement, including, without limitation, services as a
director, officer or member of any committee of the Board of the Company or of
the Board of Directors of any subsidiary or affiliate of the Company, the
Company shall compensate Executive as follows:
2.1 BASE SALARY. The Company shall pay to Executive an annual base
salary of One Hundred Sixty Thousand Eight Dollars ($160,008.00) (the "Base
Salary") during the term hereof; provided, however, that in the event the
Company institutes a salary reduction program which affects all exempt employees
(as defined by standard Company policies in compliance with the Fair Labor
Standards Act) by the same percentage, then Executive's Base Salary may be
reduced by such percentage (and the term "Base Salary" as used in this Agreement
shall refer to Base Salary as so adjusted). Executive's Base Salary shall be
paid in equal semi-monthly installments. The Base Salary may be reviewed
annually by the Board or a committee designated by the Board and the Board or
such committee may, in its discretion, increase the Base Salary.
2.2 BONUS COMPENSATION. During the period of Executive's employment
under this Agreement, the Company may, but shall not be required to, pay to
Executive such bonus or bonuses, in cash, stock, stock options or other
consideration, as the Board or a committee designated by the Board may determine
to be appropriate. The foregoing notwithstanding, the Company shall pay
Executive a one-time cash bonus equal to one (1) month's installment payment of
Executive's Base Salary upon successful completion of an Initial Public Offering
or Private Placement by the Company which raises more than Three Million Dollars
($3,000,000.00), if completed prior to October 1, 1997.
2.3 ADDITIONAL BENEFITS. Executive shall be entitled to participate in
all employee benefit and welfare programs, plans and arrangements (including,
without limitation, pension, profit-sharing, supplemental pension and other
retirement plans, insurance, hospitalization, medical and group disability
benefits, travel or accident insurance plans) and to receive fringe benefits,
such as dues and fees of professional organizations and associations, which are
from time to time available to the Company's Scientific or Technical personnel;
provided, however, there shall be no duplication of termination or severance
benefits, and to the extent that such benefits are specifically provided by the
Company to Executive under other provisions of this Agreement, the benefits
available under the foregoing plans and programs shall be reduced by any benefit
amounts paid under such other provisions. Executive shall during the period of
his employment hereunder continue to be provided with benefits at a level which
shall in no event be less in any material respect than the benefits made
available to Executive by the Company as of the date of this Agreement.
Notwithstanding the
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foregoing, the Company may terminate or reduce benefits under any benefit plans
and programs to the extent such reductions apply uniformly to all Executive
Employees entitled to participate therein, and Executive's benefits shall be
reduced or terminated accordingly. Specifically, without limitation, Executive
shall receive the following benefits:
(a) RELOCATION EXPENSES. In the event Executive's principal
place of employment is relocated outside King County, California, the Company
shall reimburse Executive for all usual relocation expenses incurred by
Executive and his household in moving to the new location, including, without
limitation, moving expenses and rental payments for temporary living quarters in
the area of relocation for a period not to exceed six (6) months.
(b) REIMBURSEMENT OF BUSINESS EXPENSES. The Company shall, in
accordance with standard Company policies, pay, or reimburse Executive for all
reasonable travel and other expenses incurred by Executive in performing his
obligations under this Agreement.
(c) VACATIONS. Executive shall be entitled to fifteen (15)
business days excluding Company holidays, of paid vacation during each year of
employment hereunder. Executive may accrue and carry forward no more than
twenty-five (25) unused vacation days from any particular year of his employment
under this Agreement to the next.
ARTICLE III
TERMINATION OF EMPLOYMENT
3.1 DEATH OR RETIREMENT OF EXECUTIVE. Executive's employment under this
Agreement shall automatically terminate upon the death or retirement (as defined
in Section 6.1) of Executive.
3.2 BY EXECUTIVE. Executive shall be entitled to terminate his
employment under this Agreement by giving Notice of Termination (as defined in
Section 6.1) to the Company:
(a) For good reason (as defined in Section 6.1);
(b) At any time commencing with the date six (6) months
following the date of a change in control (as defined in Section 6.1) and ending
with the date twelve (12) months after the date of such change in control (a
"Change in Control Resignation"); and
(c) At any time without good reason.
3.3 BY COMPANY. The Company shall be entitled to terminate Executive's
employment under this Agreement by giving notice of termination to Executive:
(a) In the event of Executive's Disability (as defined in
Section 6.1);
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(b) For Cause (as defined in Section 6.1); and
(c) At any time without cause.
ARTICLE IV
COMPENSATION UPON TERMINATION OF EMPLOYMENT
If Executive's employment hereunder is terminated in accordance with
the provisions of Article III hereof, except for any other rights or benefits
specifically provided for herein following his period of employment, the Company
shall be obligated to provide compensation and benefits to Executive only as
follows, subject to the provisions of Section 5.4 hereof:
4.1 UPON TERMINATION FOR DEATH OR DISABILITY. If Executive's employment
hereunder is terminated by reason of his death or disability, the Company shall:
(a) Pay Executive (or his estate) or beneficiaries any Base
Salary which has accrued but not been paid as of the termination date (the
"Accrued Base Salary");
(b) Pay Executive (or his estate) or beneficiaries for unused
vacation days accrued as of the termination date in an amount equal to his Base
Salary multiplied by a fraction the numerator of which is the number of accrued
unused vacation days and the denominator of which is 360 (the "Accrued Vacation
Payment");
(c) Reimburse Executive (or his estate) or beneficiaries for
expenses incurred by him prior to the date of termination which are subject to
reimbursement pursuant to this Agreement (the "Accrued Reimbursable Expenses");
(d) Provide to Executive (or his estate) or beneficiaries any
accrued and vested benefit required to be provided by the terms of any
Company-sponsored benefit plans or programs (the "Accrued Benefits"), together
with any benefits required to be paid or provided in the event of Executive's
death or disability under applicable law;
(e) Pay Executive (or his estate) or beneficiaries any Bonus
with respect to a prior fiscal year which has accrued but has not been paid; and
in addition,
(f) Executive (or his estate) or beneficiaries shall have the
right to exercise all vested unexercised stock options and warrants outstanding
at the termination date in accordance with terms of the plans and agreements
pursuant to which such options or warrants were issued.
4.2 UPON TERMINATION BY COMPANY FOR CAUSE OR BY EXECUTIVE WITHOUT GOOD
REASON. If Executive's employment is terminated by the Company for Cause, or if
Executive terminates his employment with the Company other than (x) upon
Executive's death or disability, (y)
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for good reason, or (z) pursuant to a Change in Control Resignation (as defined
in Section 3.2 (b)) the Company shall:
(a) Pay Executive the Accrued Base Salary;
(b) Pay Executive the Accrued Vacation Payment;
(c) Pay Executive the Accrued Reimbursable Expenses;
(d) Pay Executive the Accrued Benefits, together with any
benefits required to be paid or provided under applicable law; and in addition
(e) Executive shall have the right to exercise vested options
and warrants in accordance with Section 4.1(f).
4.3 UPON TERMINATION BY THE COMPANY WITHOUT CAUSE OR BY EXECUTIVE FOR
GOOD REASON PRIOR TO A CHANGE IN CONTROL. If Executive's employment is
terminated by the Company Without Cause or by Executive for Good Reason, the
Company shall:
(a) Pay Executive the Accrued Base Salary;
(b) Pay Executive the Accrued Vacation Payment;
(c) Pay Executive the Accrued Reimbursable Expenses;
(d) Pay Executive the Accrued Benefits, together with any
benefits required to be paid or provided under applicable law;
(e) Pay Executive any accrued but unpaid Bonus Payments;
(f) Pay Executive commencing on the thirtieth (30th) day
following the termination date twelve (12) monthly payments equal to one-twelfth
(1/12th) of the sum of (1) Executive's Base Salary in effect immediately prior
to the time such termination occurs, plus (2) if Executive is employed with
Company for more than twelve (12) months prior to his termination by the Company
Without Cause or by Executive for Good Reason, the Bonus amount paid to
Executive for the fiscal year (or if more than one Bonus has been paid to
Executive, the average of the Bonuses paid to Executive per annum for the two
(2) fiscal years) immediately preceding the fiscal year in which the termination
occurs; provided, however, should Executive attain alternative employment during
the twelve (12) month payment period, the Company's obligations under this
Section 4.3(f) will be reduced by the amount of Executive's compensation from
his new employer. For example, if Executive were entitled to receive $12,000.00
per month for twelve (12) months under this Section 4.3(f), and three (3) months
following his termination date he finds alternative employment that pays him
$10,000.00 per month, the Company would be obligated to pay Executive three (3)
monthly payments of $12,000.00, and nine (9) monthly payments of $2,000.00 under
this Section 4.3(f);
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(g) Maintain in full force and effect, for Executive's and his
eligible beneficiaries' continued benefit, until the first to occur of (x) his
attainment of alternative employment or (y) twelve (12) months following the
termination date of his employment hereunder the employee benefits provided
pursuant to Company-sponsored benefit plans, programs or other arrangements in
which Executive was entitled to participate as a full-time employee immediately
prior to such termination in accordance with Section 2.4 hereof, subject to the
terms and conditions of such plans and programs (the "Continued Benefits"). If
Executive's continued participation is not permitted under the general terms and
provisions of such plans, programs and arrangements, the Company shall arrange
to provide Executive with Continued Benefits substantially similar to those
which Executive would have been entitled to receive under such plans, programs
and arrangements; and in addition
(h) Executive shall have the right to exercise all vested
unexercised stock options and warrants in accordance with Section 4.1(f).
4.4 UPON TERMINATION BY THE COMPANY WITHOUT CAUSE FOLLOWING A CHANGE IN
CONTROL OR BY EXECUTIVE FOR GOOD REASON FOLLOWING A CHANGE IN CONTROL OR
PURSUANT TO A CHANGE IN CONTROL RESIGNATION. If following a Change In Control,
Executive's employment is terminated by the Company Without Cause or by
Executive for Good Reason or pursuant to a Change In Control Resignation, the
Company shall:
(a) Make the payments and provide to Executive the benefits
under Section 4.3 other than under Section 4.3(f) hereof; and in addition
(b) Pay to Executive a lump sum payment on or prior to the
thirtieth (30th) day following the termination date of Executive's employment
hereunder in an amount equal to two hundred percent (200%) of Executive's
aggregate total compensation under Sections 2.1 and 2.2 hereof for the fiscal
year immediately prior to the fiscal year in which the Change In Control occurs;
provided, however, the total payments received by Executive under this Section
4.4(b) plus (i) any payments received by Executive under Section 4.4(a)which
would be classified as parachute payments and (ii) any payments or value
received by Executive from stock options which would be classified as parachute
payments determined in accordance with Prop. Reg. Section 1.280G-1A-24(e)
Examples (7) and (8) may not exceed two hundred ninety-nine percent (299%) of
Executive's "Base Amount" as such term is defined in Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code") and the regulations
promulgated thereunder (the "Regulations"). Company and Executive agree that for
purposes of making any present value calculation under this Agreement, the
Applicable Federal Rate in effect on the date this Agreement is executed shall
control as permitted by Q&A 32 of Treas. Reg. Section 1.280G-1.
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ARTICLE V
RESTRICTIVE COVENANTS
5.1 CONFIDENTIALITY AND OWNERSHIP.
(a) During the term of this Agreement, Executive will have
access to trade secrets, data, know-how, technical and scientific knowledge and
other information of value to the Company and its business. Executive covenants
and agrees to hold in strictest confidence, and not disclose to any person
without the express written consent of the Company, any and all of the Company's
confidential information, as defined in Subparagraph (i) below, except as such
disclosure may be required in connection with his employment hereunder. In
addition, Executive may during the term of this Agreement create, make, develop,
invent or conceive inventions, discoveries, concepts, ideas, designs, works or
authorship, developments, information, improvements, or trade secrets, whether
patentable or not, and whether solely or jointly with others, which may or may
not also constitute Confidential Information (collectively referred to as
"Inventions"). Executive agrees that all works of authorship to which Executive
contributes shall be considered "works made for hire" and shall be the sole
property of the Company.
(b) Executive agrees that he will neither utilize any
Confidential Information for his own benefit or for the benefit of anyone except
Company, nor disclose, disseminate, lecture upon or publish articles about any
Confidential Information to any one outside the Company, or to any officer or
employee of Company not also having access to Confidential Information, at any
time either during or after employment by Company.
(c) Executive agrees to disclose promptly, in writing to the
Company's Chief Executive Officer, any Inventions that Executive may make,
develop or conceive, solely or jointly, during the period of employment by
Company, or by its predecessors, successors in business subsidiaries, parents or
affiliates. All such Inventions shall be and remain the property of Company.
Executive hereby assigns to Company all Executive's rights, titles and interests
in and to any such Inventions, whether or not such Inventions may be reduced to
practice during the period of Executive's employment, and to execute all patent
or copyright applications, assignments and other documents, and to take all
other steps necessary, to vest in Company the entire right, title and interest
in and to those Inventions and in and to any patents or copyrights obtainable
therefor in the United States and in foreign countries, all at Company's
expense, but for no consideration to Executive in addition to Executive's salary
or wages. Executive agrees to keep adequate records of all Inventions and make
such records available to Company.
(d) If Company chooses to prosecute applications for patents
or copyrights for any such Inventions, Company shall assume the entire expense
of preparing, filing and prosecuting such applications, through counsel
appointed by Company; provided, however, that Company is under no obligation to
prosecute such applications. Executive agrees to cooperate with Company and do
whatever is necessary or appropriate to obtain patents, copyrights or other
legal protections for Inventions. If Executive is incapacitated or refuses to so
cooperate for any reason, Executive hereby
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authorizes Company to act as Executive's agent and to take whatever actions, or
execute whatever documents, may be needed to carry out this Agreement.
(e) All records and other material pertaining to Confidential
Information, whether developed by Executive or others, shall be and remain the
property of Company. Upon termination of Executive's employment with Company,
all documents, records, notebooks and other material of any kind pertaining to
or containing Confidential Information then in Executive's possession, or under
Executive's control, whether prepared by Executive or others, will be returned
to Company unconditionally.
(f) Executive shall not be obligated to assign any Invention
which relates to or would be useful in any business or activities in which
Company is engaged if such Invention was conceived and reduced to practice by
Executive prior to Executive's employment with Company, provided that all such
Inventions are listed at the time of employment on the attached Exhibit "B." If
no entry is made on Exhibit "B," then such entry shall be deemed to be "none,"
whether or not Exhibit "B" is signed by Executive. Except as listed on Exhibit
"B," Executive will not assert any rights to any Inventions, as having been made
or acquired by Executive prior to being employed by Company.
(g) Executive shall not be obligated to assign any Invention
which may be wholly conceived by Executive after Executive leaves the employ of
Company, except that Executive is so obligated if such Invention shall involve
the utilization of Confidential Information of Company.
(h) During and after Executive's employment with Company,
Executive will not solicit or induce any Executive or consultant of Company to
quit their employment or stop doing business with Company, unless Company is
specifically, in writing, authorized by Company to do so.
(i) Upon expiration or termination of this Agreement for any
reason, Executive shall immediately turnover to the Company any "Confidential
Information." Executive shall have no right to retain any copies of any material
qualifying as Confidential Information for any reason whatsoever after
expiration or termination of his employment hereunder without the express
written consent of the Company.
(j) For purposes of this Agreement, "Confidential Information"
means and includes the following: All scientific and/or technical information or
know-how possessed by the Company; all research, testing, or other
investigations conducted by the Company or for the Company's benefit; all
product ideas, including processes, applications and methods; the identity of
clients or customers or potential clients or customers of the Company or its
affiliates; any written, typed or printed lists, or other materials identifying
the clients or customers of the Company or its affiliates; any scientific,
technical or other information supplied by clients or customers of the Company
or its affiliates; any and all data or information involving the Company, its
affiliates, programs, methods or contacts employed by the Company or its
affiliates in the conduct of their business; any lists, documents, manuals,
records, forms or other materials used by the Company or its affiliates in the
conduct of their business; any descriptive materials describing the methods and
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procedures employed by the Company or its affiliates in the conduct of their
business; and an other secret or confidential information concerning the
Company's or its affiliates' business or affairs. The terms "list," "document"
or their equivalents, as used in this Subparagraph (i), are not limited to a
physical writing or compilation but also include any and all information
whatsoever regarding the subject matter of the "list" or "documents," whether or
not such compilation has been reduced to writing.
(k) Executive acknowledges that he is a key executive employee
of the Company and, as such, he has had and will continue to have access to
confidential information about the Company, its affiliates, and their clients
and that "Confidential Information" acquired by him at the expense of the
Company is for use in its business. Executive has substantial experience in the
industry and possesses special, unique, extraordinary skills and knowledge in
this field. Executive's managerial, marketing and technical services to the
Company are special, unique and extraordinary and the success or failure of the
Company is dependent upon his discharge of his duties and obligations.
Accordingly, by execution of this Agreement, and subject to Subparagraph (c)
hereof, Executive agrees that during his employment with the Company and for a
period of thirty-six (36) months following the date of expiration or termination
of his employment hereunder (the "Non-Competition Period") for any reason
(whether such termination shall be voluntary or involuntary), he shall not
violate the provisions of Section 5.2. Executive agrees that the thirty-six (36)
month period referred to in the preceding sentence shall be extended by the
number of days included in any period of time during which he is or was engaged
in activities constituting a breach of Section 5.2.
5.2 COMPETITION.
(a) During the Non-Competition Period specified in Section
5.1(k), Executive shall not:
(i) Except as a passive investor in publicly-held
companies, and except for investments held as of the date hereof, directly or
indirectly own, operate, mange, consult with, control, participate in the
management or control of, be employed by, maintain or continue any interest
whatsoever in any company that directly competes with the Company in the United
States; or
(ii) Directly or indirectly solicit any business of a
nature that is directly competitive with the business of the Company from any
individual or entity that obtained such products or services from the Company or
its affiliates at any time during his employment with the Company; or
(iii) Directly or indirectly solicit any business of
a nature that is directly competitive with the business of the Company from any
individual or entity solicited by him on behalf of the Company or its
affiliates; or
(iv) Employ, or directly or indirectly solicit, or
cause the solicitation of, any employees of the Company who are in the employ of
the Company on the termination date of his employment hereunder for employment
by others.
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(b) Executive expressly agrees and acknowledges that:
(i) It will require a substantial amount of time for
the Company to locate, hire and train an appropriate individual to perform the
functions and duties that Executive is performing hereunder;
(ii) The Company has protected business interests
throughout the United States of America and that competition with and against
such business interests would be harmful to the Company;
(iii) This covenant not to compete is reasonable as
to time and geographical area and does not place any unreasonable burden upon
him;
(iv) The general public will not be harmed as a
result of enforcement of this covenant not to compete;
(v) His personal legal counsel has reviewed this
covenant not to complete; and
(vi) He understands and hereby agrees to each and
every term and condition of to this covenant not to compete (including, without
limitation, the provisions of Section 5.2).
5.3 NON-DISPARAGEMENT. During the term of this Agreement and the
Non-Competition Period, neither Executive nor the Company shall disparage the
other, and neither shall disclose to any third party the conditions of
Executive's employment with the Company except as may be required (i) pursuant
to applicable law or regulations, including the rules and regulations of the
Securities and Exchange Commission, (ii) to effectuate the provisions of
employee plans or programs and insurance policies, or (iii) as may be otherwise
contemplated herein or unless such information becomes publicly available
without fault of the party making such disclosure.
5.4 REMEDIES. Executive expressly agrees and acknowledges that this
covenant not to compete is necessary for the protection of the Company and its
affiliates because of the nature and scope of their business and his position
with the Company. Further, Executive acknowledges that any breach of this
covenant not to compete would result in irreparable damage to the Company, and
in the event of his breach of this covenant not to compete, money damages will
not sufficiently compensate the Company for its injury caused thereby, and that
the remedy at law for any breach or threatened breach of Sections 5.1, 5.2 and
5.3 will be inadequate and, accordingly agrees, that the Company shall, in
addition to all other available remedies (including without limitation, seeking
such damages as it can show it has sustained by reason of such breach), be
entitled to injunctive relief or specific performance and that in addition to
such money damages he may be restrained and enjoined from any continuing breach
of this covenant not to compete without any bond or other security being
required of any court. Executive further acknowledges and agrees that if the
covenant not to compete herein
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is deemed to be unenforceable and/or the Executive fails to comply with this
Article V, the Company has no obligation to provide any compensation or other
benefits described in Article IV hereof.
ARTICLE VI
MISCELLANEOUS
6.1 DEFINITIONS. For purposes of this Agreement, the following terms
shall have the following meanings:
(a) "Accrued Base Salary" - as defined in Section 4.1(a);
(b) "Accrued Benefits" - as defined in Section 4.1(d);
(c) "Accrued Reimbursable Expenses" - as defined in Section
4.1(c);
(d) "Accrued Vacation Payment" - as defined in Section 4.1(b);
(e) "Base Amount" - as defined in Section 4.4(b);
(f) "Base Salary" - as defined in Section 2.1;
(g) "Board" - shall mean the Board of Directors of the
Company;
(h) "Cause" - shall mean the occurrence of any of the
following:
(i) Executive's misconduct which is injurious to the
Company;
(ii) Executive's engaging in fraudulent conduct with
respect to the Company's business or in conduct of a criminal nature that may
have an adverse impact on the Company's standing and reputation;
(iii) The continued and unjustified failure or
refusal by Executive to perform the duties required of him by this Agreement
which failure or refusal shall not be cured within fifteen (15) days following
(a) receipt of Executive of written notice from the Board specifying the factors
or events constituting such failure or refusal, and (b) a reasonable opportunity
for Executive to correct such deficiencies;
(iv) Executive's use of drugs and/or alcohol in
violation of law or of then-current Company policy; or
(v) Executive's breach of his obligation under
Section 1.2(c) hereof which shall not be cured within fifteen (15) days after
written notice thereof to Executive.
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(i) "Change In Control" - shall mean and shall be deemed to
have occurred if:
(i) After the date of this Agreement, any "person"
(as such term is used in Section 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or any successor provision
thereto) shall become the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act or any successor provision thereof) directly or
indirectly of securities of the Company representing fifteen percent (15%) or
more of the combined voting power of the Company's then outstanding securities
ordinarily having the right to vote at an election of directors; provided,
however, that, for purposes of this Subparagraph, "person" shall exclude the
Company, its subsidiaries, any person acquiring such securities directly from
the Company, any employee benefit plan sponsored by the Company or from
Executive or any stockholder owning fifteen percent (15%) or more of the
combined voting power of the Company's outstanding securities as of the date of
this Agreement; or
(ii) Any stockholder of the Company owning fifteen
percent or more of the combined voting power of the Company's outstanding
securities as of the date of this Agreement shall become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) directly or indirectly
of securities of the Company (other than through the acquisition of securities
directly from the Company or from Executive) representing twenty-five percent
(25%) or more of the combined voting power of the Company's then outstanding
securities ordinarily having the right to vote at an election of directors; or
(iii) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") case for any reason to constitute
at least eighty percent (80%) of the Board; provided, however, that any person
becoming a member of the Board subsequent to the date hereof whose election, or
nomination for election by the Company's stockholders, was approved by a vote of
at least eighty percent (80%) of the members then comprising the Incumbent Board
(other than an election or nomination of an individual whose initial assumption
of office is in connection with an actual or threatened election contest
relating to the election of directors of the Company, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act or any
successor provision thereto) shall be, for purposes of this Agreement,
considered as though such person were a member of the Incumbent Board; or
(iv) Approval by the stockholders of the Company and
consummation of (a) a reorganization, merger, consolidation, or sale or other
disposition of all or substantially all of the assets of the Company, in each
case, with or to a corporation or other person or entity of which persons who
were the stockholders of the Company immediately prior to such transaction do
not, immediately thereafter, own more than sixty percent (60%) of the combined
voting power of the outstanding voting securities entitled to vote generally in
the election of directors of the reorganized, merged, consolidated or purchasing
corporation (or, in the case of a non-corporate person or entity) were not
members of the Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger, consolidation or sale, or
(b) a liquidation or dissolution of the Company.
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(j) "Change In Control Resignation" -as defined in Section
3.2(b);
(k) "Code" - as defined in Section 4.4(b);
(l) "Common Stock" - shall mean shares of the common stock,
par value $.001 per share, of the Company;
(m) "Continued Benefits" - as defined in Section 4.3(g);
(n) "Expiration" shall mean the expiration of Executive's
employment hereunder in accordance with Section 1.3;
(o) "Good Reason" - shall mean the occurrence of any of the
following:
(i) The Company's failure to elect or reelect or to
appoint or reappoint Executive to offices, titles or positions carrying
comparable authority, responsibilities, dignity and importance to that of
Executive's offices and positions as of September 30, 1996, or in the case of a
Change In Control, involving duties of a scope comparable to those of
Executive's most significant offices or positions held at any time during the
90-day period immediately preceding the date such Change In Control occurs;
(ii) Material change by the Company in Executive's
function, duties or responsibilities (including reporting responsibilities)
which would cause Executive's position with the Company to become of less
dignity, responsibility and importance than those associated with his functions,
duties or responsibilities as of September 30, 1996, or in the case of a Change
In Control, involving duties of a scope less than that associated with
Executive's most significant position with the Company during the 90-day period
immediately preceding the date such Change In Control occurs;
(iii) Executive's Base Salary is reduced by the
Company (unless such reduction is pursuant to a salary reduction program as
described in Section 2.1 hereof) or there is a material reduction in the
benefits that are in effect for the Executive on September 30, 1996 in
accordance with Section 2.4 (unless such reduction is pursuant to a uniform
reduction in benefits for all Senior Executives);
(iv) The failure by the Company to obtain the
assumption by operation of law or otherwise of this Agreement by any entity
which is the surviving entity in any merger or other form of corporate
reorganization involving the Company or by any entity which acquires all or
substantially all of the Company's assets; or
(v) Other material breach of this Agreement by the
Company, which breach is not cured within fifteen (15) days after written notice
thereof is received by the Company.
(p) "Incumbent Board" - as defined in Section 6.1(i)(iii);
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(q) "Non-Competition Period" - as defined in Section 5.1(j);
(r) "Notice of Termination" - shall mean a notice which shall
indicate the specific termination provision of this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provisions
so indicated. Each Notice of Termination shall be delivered at least thirty (30)
days prior to the effective date of termination;
(s) "Confidential Information" - as defined in Section 5.1(i);
(t) "Retirement" - shall mean normal retirement at age 65;
(u) "Senior Executives" or "Executive Employees" - shall mean
the chief executive officer and the four (4) most highly compensated executive
officers of the Company determined in accordance with the rules and regulations
of the Securities and Exchange Commission under the Exchange Act;
(v) "Termination" - shall mean the termination of Executive's
employment hereunder other than upon expiration of the term of such employment
in accordance with Section 1.3;
(w) "Disability" - shall mean Executive's failure to perform
his duties hereunder on a full-time basis for a period exceeding one hundred
eighty (180) consecutive days or for periods aggregating more than 180 days
during any twelve-month period as a result of incapacity due to physical or
mental illness. If there is a dispute as to whether Executive is or was
physically or mentally unable to perform his duties under this Agreement, such
dispute shall be submitted for resolution to a licensed physician agreed upon by
the Board and Executive, or if an agreement cannot be promptly reached, the
Board and Executive shall promptly select a physician, and if these physicians
cannot agree, the physicians shall promptly select a third physician whose
decision shall be binding on all parties. If such a dispute arises, Executive
shall submit to such examinations and shall provide such information as such
physician(s) may request, and the determination of the physician(s) as to
Executive's physical or mental condition shall be binding and conclusive.
Notwithstanding the foregoing, if Executive participates in any group disability
plan provided by the Company which offers long-term disability benefits,
"Disability" shall mean total disability as defined therein.
6.2 KEY MAN INSURANCE. The Company shall have the right, in its sole
discretion, to purchase "key man" insurance on the life of Executive. The
Company shall be the owner and beneficiary of any such policy. If the Company
elects to purchase a policy, Executive shall take such physical examinations and
supply such information as may be reasonably requested by the insurer.
6.3 MITIGATION OF DAMAGES; NO SET-OFF DISPUTE RESOLUTION.
(a) Executive shall be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise.
The amount of any payment provided for in this Agreement, except as provided in
Sections 4.3(f) and (g) hereof, shall be reduced
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by any compensation earned by Executive as the result of employment by another
employer after the date of termination of his employment hereunder or otherwise.
(b) If there shall be any dispute between the Company and
Executive (i) in the event of any termination of Executive's employment by the
Company, whether such termination was for Cause, or (ii) in the event of any
termination of employment by Executive, whether Good Reason existed, or (iii)
otherwise, the dispute shall be resolved in accordance with the dispute
resolution procedures set forth in Exhibit "A" hereto, the provisions of which
are incorporated as a part hereof, and the parties hereto hereby agree that such
dispute resolution procedures shall be the exclusive method for resolution of
disputes under this Agreement. In the event of a dispute hereunder as to whether
a termination by the Company was for Cause or by the Executive for Good Reason,
until there is a resolution and award as provided in Exhibit "A," the Company
shall pay all amounts, and provide all benefits, to Executive and/or Executive's
family or other beneficiaries, as the case may be, that the Company would be
required to pay or provide hereunder as though such termination were by the
Company without Cause or by Executive for Good Reason and shall pay the
reasonable legal fees and expenses of counsel for Executive in connection with
such dispute resolution; provided, however, that the Company shall not be
required to pay any disputed amounts or any legal fees and expenses pursuant to
this Subparagraph (b) except upon receipt of a written undertaking by or on
behalf of Executive (and/or Executive's family or other beneficiaries, as the
case may be) to repay, without interest or penalty, as soon as practicable after
completion of the dispute resolution (A) all such amounts to which Executive (or
Executive's family or other beneficiaries, as the case may be) is ultimately
adjudged not to be entitled with respect to the payment of such disputed
amount(s) and (B) in addition, in the case of legal fees and expenses, a
proportionate amount of legal fees and expenses attributable to any of
Executive's claim(s) (or any of Executive's defenses or counter-claim(s), if
any, which shall have been found against Executive by the dispute resolver or
otherwise found to have been frivolous or without merit.
6.4 SUCCESSORS; BINDING AGREEMENT. This Agreement shall be binding upon
any successor to the Company and shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives, beneficiaries,
designees, executors, administrators, heirs, distributees, devisees and
legatees.
6.5 MODIFICATION; NO WAIVER. This Agreement may not be modified or
amended except by an instrument in writing signed by the parties hereto. No term
or condition of this Agreement shall be deemed to have been waived, nor shall
there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument by the party charged with such waiver or
estoppel. No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as to the
specific term or condition waived and shall not constitute a waiver of such term
or condition for the future or as to any other term or condition.
6.6 SEVERABILITY. The covenants and agreements contained herein are
separate and severable and the invalidity or unenforceability of any one or more
of such covenants or agreements, if not material to the employment arrangement
that is the basis for this Agreement, shall not affect the validity or
enforceability of any other covenant or agreement contained herein. If, in any
judicial
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proceeding, a court shall refuse to enforce one or more of the covenants or
agreements contained herein because the duration thereof is too long, or the
scope thereof is too broad, it is deemed reduced to the extent necessary to
permit the enforcement of such covenants or agreements.
6.7 NOTICES. All the notices and other communications required or
permitted hereunder shall be in writing and shall be delivered personally or
sent by registered or certified mail, return receipt requested, to the parties
hereto at the following addresses:
If to the Company, to it at:
Saigene Corporation
0000 000xx Xxxxxx, XX, #000
Xxxxxxx, Xxxxxxxxxx 00000
If Executive, to him at:
Xxxxxx X. Xxxx
00000 Xxxxxxx Xxx X-0
Xxxxxxx, Xxxxxxxxxx 00000
6.8 ASSIGNMENT. This Agreement and any rights hereunder shall not be
assignable by either party without the prior written consent of the other party
except as otherwise specifically provided for herein.
6.9 ENTIRE UNDERSTANDING. This Agreement (together with the Exhibit
incorporated as a part hereof) constitutes the entire understanding between the
parties hereto and no agreement, representation, warranty or covenant has been
made by either party except as expressly set forth herein.
6.10 EXECUTIVE'S REPRESENTATIONS. Executive represents and warrants
that neither the execution and delivery of this Agreement nor the performance of
his duties hereunder violates the provisions of any other agreement to which he
is a party or by which he is bound.
6.11 GOVERNING LAW. This Agreement shall be construed in accordance
with and governed for all purposes by the laws of the State of Washington
applicable to contracts executed and wholly performed within such state.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
COMPANY
SAIGENE CORPORATION,
a Delaware corporation
By:
------------------------------------
Xxxxx X. Xxxxxxxx
Its: Chief Operations Officer
EXECUTIVE
By:
------------------------------------
Xxxxxx X. Xxxx
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EXHIBIT "A"
DISPUTE RESOLUTION PROCEDURES
A. If a controversy should arise which is covered by Section 6.3 of
Article VI, then not later than twelve (12) months from the date of the event
which is the subject of dispute either party may serve on the other a written
notice specifying the existence of such controversy and setting forth in
reasonably specific detail the grounds thereof ("Notice of Controversy");
provided that, in any event, the other party shall have at least thirty (30)
days from and after the date of the Notice of Controversy to serve a written
notice of any counterclaim ("Notice of Counterclaim"). The Notice of
Counterclaim shall specify the claim or claims in reasonably specific detail. If
the Notice of Controversy or the Notice of Counterclaim, as the case may be, is
not served within the applicable period, the claim set forth therein will be
deemed to have been waived, abandoned and rendered unenforceable.
B. Following receipt of the Notice of Controversy (or the Notice of
Counterclaim, as the case may be), there shall be a three (3) week period during
which the parties will make a good faith effort to resolve the dispute through
negotiation ("Period of Negotiation"). Neither party shall take any action
during the Period of Negotiation to initiate arbitration proceedings.
C. If the parties should agree during the Period of Negotiation to
mediate the dispute, then the Period of Negotiation shall be extended by an
amount of time to be agreed upon by the parties to permit such mediation. In no
event, however, may the Period of Negotiation be extended by more than five (5)
weeks or, stated differently, in no event may the Period of Negotiation be
extended to encompass more than a total of eight (8) weeks.
D. If the parties agree to mediate the dispute but are thereafter
unable to agree within one (1) week on the format and procedures for the
mediation, then the effort to mediate shall cease, and the Period of Negotiation
shall terminate four (4) weeks from the Notice of Controversy (or the Notice of
Counterclaim, as the case may be).
E. Following the termination of the Period of Negotiation, the dispute
(including the main claim and counterclaim, if any) shall be settled by
arbitration, and judgment upon the award may be entered in any court having
jurisdiction thereof. The format and procedures of the arbitration are set forth
below (referred to below as the "Arbitration Agreement").
F. A notice of intention to arbitrate ("Notice of Arbitration") shall
be served within forty-five (45) days of the termination of the Period of
Negotiation. If the Notice of Arbitration is not served within this period, the
claim set forth in the Notice of Controversy (or the Notice of Counterclaim, as
the case may be) will be deemed to have been waived, abandoned and rendered
unenforceable.
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G. The arbitration, including the Notice of Arbitration, will be
governed by the Commercial Rules of the American Arbitration Association except
that the terms of this Arbitration Agreement shall control in the event of any
difference or conflict between such Rules and the terms of this Arbitration
Agreement.
H. The dispute resolver shall reach a decision on the merits on the
basis of applicable legal principles as embodied in the law of the State of
Washington.
I. There shall be one dispute resolver, regardless of the amount in
controversy. The dispute resolver will be empowered to render an award and
interim decisions and shall be a member of the bar of any of the fifty States of
the United States or of the District of Columbia. The dispute resolver shall be
promptly appointed pursuant to Rule 13 of the Commercial Rules of the American
Arbitration Association ("AAA"). If the dispute resolver has not been appointed
within forty-five (45) days of the AAA's initial transmission of lists of
potential arbitrators, then the AAA shall unilaterally designate the dispute
resolver.
J. At the time of appointment and as a condition thereto, the dispute
resolver will be apprised of the time limitations and other provisions of this
Arbitration Agreement and shall indicate such dispute resolver's agreement to
the Tribunal Administrator to comply with such provisions and time limitations.
K. During the 30-day period following appointment of the dispute
resolver, either party may serve on the other a request for limited numbers of
documents directly related to the dispute. Such documents will be produced
within seven (7) days of the request.
L. Following the 30-day period of document production, there will be a
forty-five (45) day period during which limited depositions will be permissible.
Neither party will take more than five (5) depositions, and no deposition will
exceed three (3) hours of direct testimony.
M. Disputes as to discovery or prehearing matters of a procedural
nature shall be promptly submitted to the dispute resolver pursuant to telephone
conference call or otherwise. The dispute resolver shall make every effort to
render a ruling on such interim matters at the time of the hearing (or
conference call) or within five (5) business days thereafter.
N. Following the period of depositions, the arbitration hearing shall
promptly commence. The dispute resolver will make every effort to commence the
hearing within thirty (30) days of the conclusion of the deposition period and,
in addition, will make every effort to conduct the hearing on consecutive
business days to conclusion.
O. An award will be rendered, at the latest, within nine (9) months of
the date of the Notice of Arbitration and within thirty (30) days of the close
of the arbitration hearing. The award shall set forth the grounds for the
decision in reasonably specific detail and shall also specify whether any claim
(or defense or counterclaim) of Executive is found to be frivolous or without
merit and
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what proportion, if any, of his legal fees and expenses which have been paid by
the Company Executive shall be required to repay to the Company in accordance
with Section 6.3(b).
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EXHIBIT B
INVENTIONS LISTED BY EXECUTIVE AS NOT BEING ASSIGNABLE TO COMPANY
