EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of October 6,
1997, between ▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Employee") and Epitope, Inc., an Oregon
corporation (the "Company").
1. SERVICES.
1.1 EMPLOYMENT. The Company agrees to employ Employee
as President and Chief Executive Officer of the Company, and Employee hereby
accepts such employment in accordance with the terms and conditions of this
Agreement. Employment 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 otherwise set forth in Exhibit A
attached to this Agreement, and (c) as determined by the board of directors from
time to time. Subject to the provisions of Section 7.4 hereof, 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 board of directors.
1.3 OUTSIDE ACTIVITIES. Employee shall obtain the
consent of the board of directors before he engages, either directly or
indirectly, in any other professional or business activities that may require an
appreciable portion of Employee's time or effort to the detriment of the
Company's business.
1.4 DIRECTION OF SERVICES. Employee shall at all
times discharge his duties in consultation with and under the supervision and
direction of the board of directors.
2. COMPENSATION AND EXPENSES.
2.1 SALARY. As compensation for services under this
Agreement, the Company shall pay to Employee a regular salary of $20,416.67 per
month. Subject to the provisions of Section 7.4 hereof, such salary may be
adjusted from time to time in the discretion of the board of directors. Payment
shall be made on a bi-weekly basis, less all amounts required by law or
authorized by Employee to be withheld or deducted, at such times as shall be
determined by the board of directors. The board of directors may also authorize
payment to Employee of bonuses at such times and in such amounts as may be
determined by the board of directors.
2.2 ADDITIONAL EMPLOYEE BENEFITS. The Company shall
provide for Employee life insurance in the amount of $1 million payable to
Employee's designated beneficiary, provided the cost to the Company does not
exceed $10,000 per year. To the extent otherwise eligible, Employee shall also
be entitled to receive or participate in any additional
- 1 -
benefits, including without limitation medical and dental insurance programs,
profit sharing or pension plans, and medical reimbursement plans, which may from
time to time be made available by the Company to corporate officers. The Company
may change or discontinue such benefits at any time in its sole discretion.
2.3 EXPENSES. The Company shall reimburse Employee
for all reasonable and necessary expenses incurred in carrying out his duties
under this Agreement. The Company shall further reimburse Employee for
reasonable and necessary expenses incurred as follows: (a) Employee's reasonable
expenses incurred in moving himself, his family, and his household goods from
Alpharetta, Georgia to the Portland, Oregon metropolitan area; (b) up to two
months (which time period may be extended by the Company in its discretion at
Employee's request) of temporary housing at a cost of up to $1,000 per month;
(c) one round-trip, coach airline ticket per month for Employee for travel
between Atlanta, Georgia and Portland, Oregon until Employee has relocated his
residence to the Portland, Oregon metropolitan area; and (d) one round-trip,
coach airline ticket for Employee's spouse for travel between Atlanta, Georgia
and Portland, Oregon for purposes of locating and obtaining a new residence in
the Portland, Oregon metropolitan area. Employee shall present to the Company
from time to time an itemized account of such expenses in such form as may be
required by the Company. In addition, regarding the expenses listed as (a)
above, Employee shall obtain bids from at least two national moving companies
and select the company with the lowest bid. To the extent the reimbursement
payments under this section are includable in Employee's net taxable income, the
Company shall pay Employee an additional amount so that the amount paid to him
under this section, less taxes at Employee's effective marginal tax rate, equals
the expenses to be reimbursed.
2.4 FEES. 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 shall belong
to the Company. Employee shall pay or deliver such compensation to the Company
promptly upon receipt. For the purposes of this provision, "compensation" shall
include, but is not limited to, all professional and nonprofessional fees,
lecture fees, expert testimony fees, publishing 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 is involved and any subject matter that is
directly or indirectly researched, tested, developed, promoted, or marketed by
the Company.
3. STOCK OPTIONS. Employee has been granted a non-qualified
option to purchase 350,000 shares of common stock of the Company at an exercise
price equal to 75 percent of the fair market value of the stock on the date of
grant.
- 2 -
4. CONFIDENTIAL INFORMATION.
4.1 DEFINED. "Confidential Information" is all
nonpublic information relating to the Company or its business that is disclosed
to Employee, that Employee produces, or that Employee otherwise obtains during
employment. "Confidential Information" also includes information received from
third parties that the Company has agreed to treat as confidential. Examples of
Confidential Information are:
4.1.1 Marketing plans.
4.1.2 Customer lists.
4.1.3 Product design and manufacturing information.
4.1.4 Financial information.
"Confidential Information" does not include information which (a) is or becomes
generally available to the public other than as a result of a disclosure by
Employee; (b) becomes available to Employee on a nonconfidential basis from a
source other than the Company or its representatives, provided that such source
is not known by Employee to be bound by a confidentiality agreement with the
Company or its representatives or otherwise prohibited from transmitting the
information to Employee by a contractual, legal, or fiduciary obligation; (c)
can be demonstrated by written evidence or other convincing evidence to have
been known by Employee on a nonconfidential basis prior to its disclosure to
Employee by the Company or one of its representatives; or (d) can be
demonstrated by written or other convincing evidence to have been developed by
Employee in good faith and independent of Confidential Information.
4.2 ACCESS TO INFORMATION. Employee acknowledges that
in the course of his employment he will have access to 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.
4.3 OWNERSHIP. Employee acknowledges that all
Confidential Information shall continue to be the exclusive property of the
Company (or the third party that disclosed it to the Company), 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.
4.4 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 through no fault of Employee.
- 3 -
4.5 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 written or tangible materials containing
Confidential Information without retaining any excerpts or copies.
4.6 DURATION. The obligations set forth in this
Section 4 will continue beyond the term of employment of Employee by the Company
and for so long as Employee possesses Confidential Information.
5. MATERIALS PREPARED AND INVENTIONS MADE DURING EMPLOYMENT.
The Company shall be the exclusive owner of all materials, concepts, and
inventions Employee prepares, develops, or makes (whether alone or jointly with
others) within the scope of his employment, and of all related rights (including
copyrights, trademarks, and patents) and proceeds. Without limitation,
materials, concepts, and inventions that (a) relate to the Company's business or
actual or demonstrably anticipated research or development, or (b) result from
any work performed by Employee for the Company, shall be considered within the
scope of Employee's employment. Employee shall promptly disclose all such
materials, concepts, and inventions to the Company. Employee shall take all
action reasonably requested by the Company to vest ownership of such materials,
consents, and inventions in the Company and to permit the Company to obtain
copyright, trademark, patent, or similar protection in its name.
6. NONCOMPETITION.
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:
6.1 Engage or prepare to engage in any business that
sells products or services competing with those sold by the Company as of the
date of Employee's termination of employment with the Company;
6.2 Induce or attempt to induce any person who is an
employee of the Company during the term of this covenant to leave the employ of
the Company; or
6.3 Solicit, divert, or accept orders for products or
services that are substantially competitive with the products or services sold
by the Company from any customer of the Company.
7. TERMINATION.
7.1 TERMINATION UPON DEATH. This Agreement shall
terminate immediately upon Employee's death.
- 4 -
7.2 TERMINATION BY EMPLOYEE. Employee may terminate
his employment under this Agreement by 60 days' written notice to the Company.
7.3 TERMINATION BY THE COMPANY FOR CAUSE. The Company
may terminate Employee's employment under this Agreement for cause at any time,
with or without advance notice. For purposes of this Agreement, "cause" means:
(a) a material breach of this Agreement by Employee; (b) any willful or grossly
negligent act by Employee which causes material harm to the Company; (c)
Employee's refusal, failure, or inability to perform any material job duties of
Employee; (d) any act of fraud on the Company, any criminal act, or any act
involving moral turpitude by Employee; (e) the commission of any act in direct
competition with or materially detrimental to the best interests of the Company;
or (f) excessive absenteeism by Employee. The Company reserves the right to
determine the facts giving rise to cause for termination and whether those facts
constitute cause for termination. Notwithstanding the foregoing, Employee shall
not be deemed to have been terminated for cause unless and until there shall
have been delivered to Employee a copy of a resolution duly adopted by the board
of directors at a meeting of the board of directors (after reasonable notice to
Employee and an opportunity for Employee to be heard before the board of
directors) called and held for the purpose of finding whether in the good faith
opinion of the board of directors Employee has engaged in conduct constituting
cause as defined in this section.
7.4 TERMINATION BY THE COMPANY WITHOUT CAUSE. The
Company may terminate Employee's employment under this Agreement without cause
by written notice to Employee. Employee may (but shall not be required to) elect
to treat any of the following events as a termination without cause, provided
Employee acts within 60 days of the event:
7.4.1 A material breach of this Agreement by
the Company and a failure by the Company to cure the breach within 30 days after
Employee has given written notice of the breach to the board of directors.
7.4.2 A reduction in Employee's salary below
the amount stated in Section 2.1 (except as part of and in proportion to a
reduction in all executive officers' salaries) or a substantial diminution in
Employee's duties or title below those or that stated in this Agreement.
7.4.3 A requirement by the Company that
Employee regularly report other than to the board of directors or the chairman
of the board.
7.4.4 A relocation by the Company of the
principal place where Employee's duties are to be performed to a place outside
of the Portland metropolitan area.
7.4.5 A "Change of Control" of the Company.
For purposes of this Agreement, a "Change of Control" shall mean a change of
control of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A as in effect on the date hereof pursuant
to the Securities Exchange Act of ▇▇▇▇ (▇▇▇ "▇▇▇▇▇▇▇▇ ▇▇▇"); provided that,
without limitation, such a change of control shall be deemed to have occurred at
- 5 -
such time as (i) any Acquiring Person hereafter becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 30
percent or more of the combined voting power of Voting Securities; (ii) during
any period of 12 consecutive calendar months, individuals who at the beginning
of such period constitute the board of directors cease for any reason to
constitute at least a majority thereof unless the election, or the nomination
for election, by the Company's shareholders of each new director was approved by
a vote of at least a majority of the directors then still in office who were
directors at the beginning of the period; (iii) there shall be consummated (a)
any consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which Voting Securities would
be converted into cash, securities, or other property, other than a merger of
the Company in which the holders of Voting Securities immediately prior to the
merger have the same, or substantially the same, proportionate ownership of
common stock of the surviving corporation immediately after the merger, or (b)
any sale, lease, exchange, or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Company; or (iv) approval by the shareholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company. For purposes of this
Agreement, "Acquiring Person" means any person or related persons which
constitute a "group" for purposes of Section 13(d) and Rule 13d-5 under the
Exchange Act, as such Section and Rule are in effect as of the date of this
Agreement; provided, however, that the term Acquiring Person shall not include:
(i) the Company or any of its subsidiaries; (ii) any employee benefit plan of
the Company or any of its subsidiaries; (iii) any entity holding voting capital
stock of the Company for or pursuant to the terms of any such employee benefit
plan; or (iv) any person or group solely because such person or group has voting
power with respect to capital stock of the Company arising from a revocable
proxy or consent given in response to a public proxy or consent solicitation
made pursuant to the Exchange Act. For purposes of this Agreement, "Voting
Securities" means the Company's issued and outstanding securities ordinarily
having the right to vote at elections for the Company's board of directors.
7.5 COMPENSATION UPON TERMINATION.
7.5.1 TERMINATION UNDER SECTION 7.1, 7.2, OR
7.3. In the event of a termination of Employee's employment under Sections 7.1,
7.2, or 7.3, Employee's regular compensation pursuant to Section 2.1 shall be
prorated and payable until the date of termination.
7.5.2 TERMINATION UNDER SECTION 7.4. In the
event of a termination of Employee's employment by the Company without cause as
provided in Section 7.4, Employee shall continue to be paid the salary provided
in Section 2.1 for 12 months from the date of notice of such termination of
employment, in the manner and at the times at which regular compensation was
paid to Employee during the term of his employment under this Agreement, except
that if Employee elects to treat an event described in Sections 7.4.1, 7.4.2,
7.4.3, 7.4.4, or 7.4.5 as a termination without cause but continues to work for
the Company or any of its subsidiaries, then any amounts Employee receives as
compensation during the 12- month period shall be credited against the amounts
payable to Employee under this section. Unless Employee elects to continue
working for the Company or any of its subsidiaries, as a condition to receipt of
the compensation described in the preceding sentence Employee shall sign
- 6 -
and deliver a release agreement, in form and substance satisfactory to the
Company, releasing all claims related to Employee's employment. The Company's
obligation to pay the amounts stated in this section shall terminate if Employee
engages, either individually or as a director, officer, partner, employee,
agent, representative, or consultant with any business, directly or indirectly
in any of the activities listed in Section 6.1, 6.2, or 6.3 anywhere in the
United States within one year after termination of employment.
8. REMEDIES. 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 Sections 4 or 6 of this Agreement will
cause irreparable harm to the Company and agrees to the entry of a temporary
restraining order and permanent injunction by any court of competent
jurisdiction to prevent breach or further breach of Sections 4 or 6 of this
Agreement. Such remedy shall be in addition to any other remedy available to the
Company at law or in equity.
9. SEVERABILITY OF PROVISIONS. The provisions of this
Agreement are severable, and if any provision hereof is held invalid 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.
10. ATTORNEY FEES. In the event a suit or action is filed to
enforce Sections 4 or 6 of 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 fees
at trial or on appeal.
11. NONWAIVER. 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.
A waiver of any breach of a 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.
12. ARBITRATION.
12.1 CLAIMS COVERED. All claims or controversies,
except for those excluded by Section 12.2 ("claims"), whether or not arising out
of Employee's employment (or its termination), that the Company may have against
the Employee or that Employee may have against the Company or against its
officers, directors, employees or agents, in their capacity as such or
otherwise, shall be resolved as provided in this Section 12. Claims covered by
this Section 12 include, but are not limited to, claims for wages or other
compensation due; claims for breach of any contract or covenant (express or
implied); tort claims; claims for discrimination (including, but not limited to,
race, sex, sexual orientation, religion, national origin, age, marital status,
or disability); claims for benefits (except where an employee benefit or pension
plan specifies that its claims procedure shall culminate in an arbitration
procedure
- 7 -
different from this one), and claims for violation of any federal, state, or
other governmental law, statute, regulation, or ordinance, except as provided in
Section 12.2.
12.2 NON-COVERED CLAIMS. Claims arising out of
Sections 4 or 6 of this Agreement and workers' compensation or unemployment
compensation benefits are not covered by this Section 12. Non-covered claims
include but are not limited to claims by the Company for injunctive and/or other
equitable relief for unfair competition and/or the use and/or unauthorized
disclosure of trade secrets or confidential information, as to which Employee
understands and agrees that the Company may seek and obtain relief from a court
of competent jurisdiction.
12.3 REQUIRED NOTICE OF ALL CLAIMS AND STATUTE OF
LIMITATIONS. Company and Employee agree that the aggrieved party must give
written notice of any claim to the other party within one year of the date the
aggrieved party first has knowledge of the event giving rise to the claim;
otherwise the claim shall be void and deemed waived even if there is a federal
or state statute of limitations which would have given more time to pursue the
claim. The written notice shall identify and describe the nature of all claims
asserted and the facts upon which such claims are based.
12.4 HEARING OR MEDIATION. Prior to any arbitration
proceeding taking place pursuant to this section, Company or Employee may, at
its respective option, elect to submit the claim to non-binding mediation before
a mutually agreeable mediation tribunal or mediator, in which event both parties
shall execute a suitable confidentiality agreement and abide by the procedures
specified by the mediation tribunal or mediator.
12.5 ARBITRATION PROCEDURES. Any arbitration shall be
conducted in accordance with the then-current Model Employment Arbitration
Procedures of the American Arbitration Association ("AAA"), modified to
substitute for AAA actions, the United States Arbitration and Mediation Service
("USA&MS"), before an arbitrator who is licensed to practice law in the state of
Oregon (the "Arbitrator"). The arbitration shall take place in or near Portland,
Oregon.
12.5.1 SELECTION OF ARBITRATOR. The USA&MS
shall give each party a list of 11 arbitrators drawn from its panel of
labor-management dispute arbitrators. Each party may strike all names on the
list it deems unacceptable. If only one common name remains on the lists of all
parties, that individual shall be designated as the Arbitrator. If more than one
common name remains on the lists of all parties, the parties shall strike names
alternately until only one remains. The party who did not initiate the claim
shall strike first. If no common name remains on the lists of all parties, the
USA&MS shall furnish an additional list or lists until an Arbitrator is
selected.
12.5.2 APPLICABLE LAW. The Arbitrator shall
apply the substantive law (and the law of remedies, if applicable) specified in
this Agreement or federal law, or both, as applicable to the claim(s) asserted.
The Oregon Rules of Evidence shall apply. The Arbitrator, and not any federal,
state, or local court or agency, shall have exclusive
- 8 -
authority to resolve any dispute relating to the interpretation, applicability,
enforceability or formation of this Agreement, including but not limited to any
claim that all or any part of this Agreement is void or voidable. The
arbitration shall be final and binding upon the parties, except as provided in
this Agreement.
12.5.3 AUTHORITY. The Arbitrator shall have
jurisdiction to hear and rule on pre-hearing disputes and is authorized to hold
pre-hearing conferences by telephone or in person as the Arbitrator deems
necessary. The Arbitrator shall have the authority to entertain a motion to
dismiss and/or a motion for summary judgment by any party and shall apply the
standards governing such motions under the Federal Rules of Civil Procedure. The
Arbitrator shall render an award and opinion in the form typically rendered in
labor arbitrations.
12.5.4 REPRESENTATION. Any party may be
represented by an attorney or other representative selected by the party.
12.5.5 DISCOVERY. Each party shall have the
right to take the deposition of one individual and any expert witness designated
by another party. Each party also shall have the right to make requests for
production of documents to any party. The subpoena right specified below shall
be applicable to discovery pursuant to this paragraph. Additional discovery may
be had only where the Arbitrator selected pursuant to this Agreement so orders,
upon a showing of substantial need. At least 30 days before the arbitration, the
parties must exchange lists of witnesses, including any experts, and copies of
all exhibits intended to be used at the arbitration. Each party shall have the
right to subpoena witnesses and documents for the arbitration.
12.5.6 REPORTER. Either party, at its
expense, may arrange for and pay the cost of a court reporter to provide a
stenographic record of proceedings.
12.5.7 POST-HEARING BRIEFS. Either party,
upon request at the close of hearing, shall be given leave to file a
post-hearing brief. The time for filing such a brief shall be set by the
Arbitrator.
12.6 ENFORCEMENT. Either party may bring an action in
any court of competent jurisdiction to compel arbitration under this Agreement
and to enforce an arbitration award. Except as otherwise provided in this
Agreement, both the Company and Employee agree that neither shall initiate or
prosecute any lawsuit or administrative action (other than for a non-covered
claim) in any way related to any claim covered by this Agreement. A party
opposing enforcement of an award may not do so in an enforcement proceeding, but
must bring a separate action in any court of competent jurisdiction to set aside
the award, where the standard of review will be the same as that applied by an
appellate court reviewing a decision of a trial court sitting without a jury.
12.7 ARBITRATION FEES AND COSTS. Company and Employee
shall equally share the fees and costs of the Arbitrator. Each party will
deposit funds or post other
- 9 -
appropriate security for its share of the Arbitrator's fee, in an amount and
manner determined by the Arbitrator, 10 days before the first day of hearing.
Each party shall pay for its own costs and attorneys' fees, if any, provided
that the Arbitrator, in its sole discretion, may award reasonable fees to the
prevailing party in a proceeding.
13. GENERAL TERMS AND CONDITIONS. This Agreement constitutes
the entire understanding of the parties relating to the employment of Employee
by the Company, and supersedes and replaces all written and oral agreements
heretofore made or existing by and between the parties relating thereto. This
Agreement shall be construed in accordance with the laws of the state of Oregon,
without regard to any conflicts of laws rules thereof. This Agreement shall
inure to the benefit of any successors or assigns of the Company. All captions
used herein are intended solely for convenience of reference and shall in no way
limit any of the provisions of this Agreement. Employee acknowledges that he
signed this Agreement upon his initial employment with the Company.
The parties have executed this Employment Agreement as of the
date stated above.
EPITOPE, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman, Board of Directors
- 10 -
EXHIBIT A TO EMPLOYMENT AGREEMENT
SPECIFIC DUTIES OF EMPLOYEE AS PRESIDENT AND CHIEF EXECUTIVE OFFICER
Employee as the President and Chief Executive Officer of the
Company shall be responsible for directing all phases of the operations and the
overall management of the Company, subject to direction by the board of
directors, as such positions are more particularly described in Article IV of
the bylaws of the Company. As President and Chief Executive Officer, Employee
shall report directly to the Chairman of the Board. In such capacities, Employee
shall be the key executive responsible for formulating and directing execution
of Company strategy in all phases of operations, development, and planning. As
Chief Executive Officer, Employee shall be the Company's principal spokesperson
and will serve as a director on the board of directors and as operating
management's principal liaison to the board of directors.
Pending the spin-off of the Company's subsidiary Agritope,
Inc. ("Agritope"), the President and Chief Executive Officer of Agritope shall
report to the Chairman of the Board of the Company, rather than to Employee.
