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EXHIBIT 10.36
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into effective
as of the 2nd day of November, 1994, by and between Xxxxxxx X. Love
("Employee") and Biovensa Inc., a Delaware corporation (the "Company").
WHEREAS, the Company desires to employ Employee, and Employee desires
to become employed by the Company, on the terms hereinafter set forth.
NOW, THEREFORE, in consideration for the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DUTIES
1.1 DUTIES. During the term of this Agreement, the Company agrees
to employ Employee as President and Chief Executive Officer of the Company, and
as a member of the Board of Directors of the Company (the "Board"), and
Employee agrees to serve the Company in such capacities as the Board may
direct, all upon the terms and subject to the conditions set forth in this
Agreement.
1.2 EXTENT OF DUTIES. Subject to Employee engaging from time to
time in activities permitted under Section 5.2 hereof, Employee shall devote
his full-time business time, energy and skill to the affairs of the Company as
reasonably necessary to discharge his duties hereunder. The discharge of duties
hereunder shall be Employee's primary occupation. All other activities
permitted under Section 5.2 shall be secondary and shall be limited at all
times so as not to interfere in any material respect with the discharge of
Employee's duties hereunder.
ARTICLE 2
TERM OF EMPLOYMENT
The term of this Agreement shall commence on the date hereof and
continue for a period of four years, subject to earlier termination as
hereinafter provided.
ARTICLE 3
COMPENSATION
3.1 ANNUAL BASE COMPENSATION. As compensation for services
rendered under this Agreement, Employee shall be entitled to receive from
Company an annual base salary of $175,000 (before standard deductions) during
the first year of this Agreement. Employee's annual base salary shall be
subject to review and adjustment by the Board on an annual basis. Employee's
annual base salary shall be payable at regular intervals (at least monthly) in
accordance with the prevailing practice and policy of the Company.
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3.2 INCENTIVE BONUS. As additional compensation for services
rendered under this Agreement, Employee shall be entitled to an annual
incentive bonus if earned. Within 60 days after the date of this Agreement and
within 60 days after each anniversary of this Agreement during the term of this
Agreement, the Employee and the Board shall cooperate to establish performance
milestones for Employee's annual incentive bonus for the period ending on the
next anniversary of this Agreement. Employee's annual incentive bonus shall be
paid within 60 days after each anniversary of this Agreement.
3.3 STOCK OPTION. As additional compensation for services
rendered under this Agreement, the Company shall grant to Employee an option to
acquire up to a certain number of shares of common stock ("Common Stock") of
the Company. The exercise price of the option shall be equal to the Common
Stock equivalent purchase price per share of equity securities (anticipated to
be preferred stock) issued by the Company pursuant to its initial private
placement or other offering which results in gross proceeds to the Company in
excess of $3 million. The number of shares of Common Stock covered by the
option shall be equal to $100,000 divided by the Common Stock equivalent
purchase price per share applicable to such offering (for example, if the
private placement price is $1.50 per share, Employee would receive an option to
acquire up to 66,667 shares). The option shall vest over four years as
follows: 25% on the first anniversary of this Agreement, 25% on the second
anniversary of this Agreement, 25% on the third anniversary of this Agreement,
and 25% on the fourth anniversary of this Agreement. All options must be
exercised upon the later of (i) the fifth year anniversary of this Agreement,
(ii) one year subsequent to the termination of employment, for any reason, from
the Company, or (iii) one year subsequent to the termination of the "lock-up
period" that is negotiated by the Company and its underwriters in connection
with an initial public offering of the Company's Common Stock (the "Option
Term"). The option will be granted as an incentive stock option within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended. The
option will be granted contemporaneously with the completion of such initial
private placement or other offering pursuant to a separate instrument which
shall make reference to the provisions of this Agreement. Employee shall also
be entitled to such performance-based options as the Board may from time to
time grant to the executive officers of the Company.
3.4 OTHER BENEFITS. Employee shall, in addition to the
compensation provided for herein, be entitled to the following additional
benefits:
(a) MEDICAL, HEALTH AND DISABILITY BENEFITS. Employee
shall be entitled to receive all medical, health and disability
benefits that may, from time to time, be provided by the Company to
its executive officers.
(b) OTHER BENEFITS. Employee shall also be entitled to
receive any other benefits that may, from time to time, be provided by
the Company to all employees of Company as a group, or all executive
officers of the Company as a group, including any life insurance,
profit sharing, 401(k) or retirement benefits.
(c) VACATION PAY. Employee shall be entitled to an
annual vacation as determined in accordance with the prevailing
practice and policy of the Company.
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(d) HOLIDAYS. Employee shall be entitled to holidays in
accordance with the prevailing practice and policy of the Company.
(e) REIMBURSEMENT OF EXPENSES. The Company shall
reimburse Employee for all expenses reasonably incurred by Employee on
behalf of the Company in accordance with the prevailing practice and
policy of the Company.
ARTICLE 4
TERMINATION
4.1 TERMINATION BY THE COMPANY WITHOUT CAUSE. Subject to the
provisions of this Section , this Agreement may be terminated by the Company
without cause upon 30 days prior written notice thereof given to Employee. In
the event of termination pursuant to this Section , the Company shall pay
Employee, within 15 days of such termination, (a) his base salary earned pro
rata to the date of such termination, plus (b) a lump-sum payment equal to one
full year of his then effective annual base salary under Section (unless
Employee makes an election under Section 4.5(a)(ii) to receive limited
accelerated vesting of his stock option in lieu of a lump-sum payment under
clause (b) above).
4.2 TERMINATION BY THE COMPANY FOR CAUSE. The Company may
terminate this Agreement at any time if such termination is for "cause" (as
defined below), by delivering to Employee written notice describing the cause
of termination 30 days before the date of such termination. In the event the
employment of Employee is terminated for "cause", Employee shall be entitled
only to his base salary earned pro rata to the date of such termination. The
determination of whether Employee shall be terminated for "cause" shall be made
by the Board, in the reasonable exercise of its business judgment, and shall be
limited to the occurrence of the following events:
(a) Conviction of or a plea of nolo contendere to the
charge of a felony (which, through lapse of time or otherwise, is not
subject to appeal);
(b) Failure (without proper legal cause) to perform in a
reasonably satisfactory manner, or negligence in performing,
Employee's material duties and responsibilities hereunder as
determined by the Board in the exercise of its reasonable judgment,
provided that a written warning is given to Employee by the Company
and such non-performance or negligence continues seven days
thereafter;
(c) Gross negligence in performing Employee's material
duties and responsibilities under this Agreement which are within
Employee's job responsibilities hereunder;
(d) Breach of fiduciary duty to the Company;
(e) Except with respect to limited activities permitted
under Section 1.2, the unauthorized absence of Employee from work
(other than for sick leave or disability) for
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a period of three working days or more during any period of 30 working
days during the term of this Agreement; or
(f) Breach of any material obligation of Employee under
the provisions of Article 5 hereof, provided that written notice
thereof is given to Employee by the Company and such breach continues
seven days thereafter.
4.3 TERMINATION UPON DEATH OR PERMANENT DISABILITY. In the event
that Employee dies, this Agreement shall terminate upon the Employee's death.
Likewise, if the Employee becomes unable to perform the essential functions of
his duties hereunder, with or without reasonable accommodation, on account of
illness, disability or other reason whatsoever for a period of more than 15
consecutive or nonconsecutive days in any six-month period, this Agreement
shall thereupon terminate. In the event of termination pursuant to this
Section 4.3, Employee (or his legal representatives) shall be entitled only to
his base salary earned pro rata to the date of such termination.
4.4 VOLUNTARY TERMINATION BY EMPLOYEE. Employee may terminate
this Agreement at any time upon delivering 30 days written notice of
resignation to the Company. In the event of such voluntary termination,
Employee shall be entitled to his base salary earned pro rata to the date of
his resignation. On or after the date the Company receives notice of
Employee's resignation, the Company may, at its option, pay Employee his base
salary through the effective date of his resignation and terminate his
employment immediately.
4.5 STOCK OPTIONS. The stock option issued to Employee pursuant
to Section 3.3 hereof will be issued pursuant to the Company's stock option
plan (the "Plan") to be adopted for key employees of the Company. The
instrument evidencing the granting of such option to Employee shall expressly
incorporate, and the Company covenants that the Plan shall permit, the
following rights which Employee shall have relating to termination of this
Agreement pursuant to the provisions of Article 4:
(a) In the event of termination by the Company without
cause under Section 4.1, (i) outstanding stock options held by Employee which
are then vested shall remain exercisable for the Option Term, (ii) if, within
10 days of such termination, Employee notifies the Company that he is making an
election under this Section 4.5(a)(ii), outstanding stock options held by
Employee which would vest within one year from the date of termination shall
automatically become vested and shall remain exercisable for the Option Term
(such limited accelerated vesting being in lieu of the lump-sum payment under
clause (b) of Section 4.1), and (iii) after giving effect to any accelerated
vesting under clause (ii) above, any then unvested portion of Employee's
outstanding stock options shall lapse.
(b) In event of termination by the Company for "cause"
under Section 4.2, upon death or disability under Section 4.3 or by Employee
pursuant to a voluntary resignation under Section 4.4, (i) any portion of
Employee's outstanding stock options which are vested as of the date of
termination shall remain exercisable for the Option Term and (ii) any then
unvested portion of Employee's outstanding stock options shall lapse.
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4.6 STOCK REPURCHASE RIGHT.
(a) Within 30 days after the date of full execution of
this Agreement, Employee will purchase, and the Company will sell to Employee,
480,000 shares (the "Shares") of Common Stock of the Company, representing 6%
of the total outstanding shares of Common Stock, for $48,000 or $.10 per share.
The purchase price will be paid $28,000 in cash and the balance pursuant to a
Promissory Note dated as of the date of issuance (the "Note"), executed by
Employee and payable to the order of the Company, in the stated principal
amount of $20,000. The Note will bear interest at a rate of 8% simple interest
(i.e. not compounded) and will be payable in quarterly installments based upon
a 10-year amortization schedule and will mature on the fourth anniversary of
this Agreement. The Note shall be secured by a pledge of that number of Shares
as is determined by dividing the outstanding principal balance of the Note by
the per share purchase price of the Shares (e.g. if the Note balance is
$20,000, the number of Shares pledged would be 200,000), with a mechanism for
partial releases of pledged shares to reflect reductions in the unpaid balance
of the Note on the same basis.
(b) In event that, prior to the fourth anniversary of
this Agreement, this Agreement is terminated by the Company for "cause" under
Section 4.2 or by Employee pursuant to a voluntary resignation under Section
4.4, the Company shall have the option, exercisable in its sole discretion, to
repurchase the Shares on the following terms:
(i) pursuant to the Company's option hereunder,
the Company shall be entitled to purchase (A) up to 100% of the Shares
if such termination occurs on or before the first anniversary of this
Agreement; (B) up to 75% of the Shares if such termination occurs
after the first anniversary of this Agreement and on or before the
second anniversary of this Agreement; (C) up to 50% of the Shares if
such termination occurs after the second anniversary of this Agreement
and on or before the third anniversary of this Agreement; and (D) up
to 25% of the Shares if such termination occurs before the fourth
anniversary of this Agreement;
(ii) such option shall be exercisable by the
Company within 30 days after the date of termination, by the Company
giving Employee written notice of exercise of the option, which notice
shall specify the number of Shares which the Company elects to
purchase;
(iii) unless exercised in accordance with clause
(ii) above, the option shall lapse on the 30th day after the date of
termination;
(iv) the closing of any purchase of Shares
pursuant to this Section shall occur within 30 days after notice of
exercise of the option is given by the Company to Employee;
(v) at closing, the Company shall pay to
Employee a purchase price equal to $.10 per Share purchased by the
Company plus simple interest (i.e. not compounded) on the total amount
of the purchase price from the date hereof through the date of
purchase at
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8%, and Employee shall deliver to the Company one or more certificates
representing the number of Shares purchased by the Company, duly
endorsed by Employee for transfer or accompanied by a stock power
executed by Employee; and
(vi) if at the time of closing the Note has not
been paid in full (whether principal and/or accrued, unpaid interest),
the purchase price to be paid by the Company shall be paid by
satisfaction of Employee's next accruing obligations under the Note
and the balance, if any, shall be paid in cash; and if at the time of
closing the Note has been paid in full, the purchase price shall be
paid in cash;
(vii) any balance of the Note remaining unpaid
after closing shall be immediately repaid in full by Employee.
(d) In the event of termination by the Company without
cause under Section 4.1 or upon death or disability under Section 4.3, the
Shares shall not be subject to any repurchase right by the Company hereunder.
4.7 EXCLUSIVITY OF TERMINATION PROVISIONS. The termination
provisions of this Agreement regarding the parties' respective obligations in
the event Employee's employment is terminated, are intended to be exclusive and
in lieu of any other rights or remedies to which Employee or the Company may
otherwise be entitled at law, in equity or otherwise. It is also agreed that,
although the personnel policies and fringe benefit programs of the Company may
be unilaterally modified from time to time, the termination provisions of this
Agreement are not subject to modification, whether orally, impliedly or in
writing, unless any such modification is mutually agreed upon and signed by the
parties.
ARTICLE 5
CONFIDENTIALITY AND NON-COMPETITION
5.1 CONFIDENTIALITY.
(a) Employee acknowledges that the Company has a
proprietary interest in maintaining the confidentiality of Confidential
Information (defined below), and Employees shall not, during the term of this
Agreement and for three years after the termination of this Agreement, disclose
any Confidential Information to any third party or use any Confidential
Information for his benefit or for the benefit of any third party; provided
that the foregoing is not intended to restrict disclosures in the course of
employment under this Agreement and in furtherance of the business of the
Company; provided further that Employee nonetheless agrees to abide by the
terms of any confidentiality agreement entered into by the Company with third
parties which extend beyond said three-year term of the foregoing
confidentiality.
(b) For the purposes of this Agreement, "Confidential
Information" means all information which is learned or developed by Employee in
the course and performance of his duties under this Agreement, including
without limitation, reports, laboratory notebooks, information and
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data relating to the Company's drug development or manufacturing activities,
excluding in any event, however, information which:
(i) at the time of disclosure, is, or, after
disclosure, becomes generally known or available to the public other
than as a consequence of Employee's breach of this Agreement;
(ii) was known or otherwise available to Employee
prior to the disclosure by the Company;
(iii) disclosed by a third party to Employee after
the disclosure by the Company if such third party's disclosure neither
violates any obligation of the third party to the Company nor is a
consequence of Employee's breach of this Agreement;
(iv) is required to be disclosed under the terms
of a subpoena or order issued by a court of competent jurisdiction or
by a governmental body, provided that Employee shall immediately
notify the Company of the existence, terms and circumstances
surrounding such required disclosure so that it may seek an
appropriate protective order; or
(v) the Company authorizes for release.
5.2 NON-COMPETITION.
(a) During the term of this Agreement, Employee shall not
engage, anywhere in the world, whether directly or indirectly, as principal,
owner, officer, director, agent, employee, consultant or partner, in the
research, development, manufacture or commercialization of products that
compete with the Company's products or programs ("Restricted Activities"),
provided that the foregoing shall not restrict Employee from engaging in any
Restricted Activities which the Company directs Employee to undertake or which
the Company are otherwise expressly authorizes. The foregoing shall not
restrict Employee from owning less than 5% of the outstanding capital stock of
any company which engages in Restricted Activities, provided that Employee is
not otherwise involved with such company as an officer, director, agent,
employee or consultant.
(b) Subject to Employee's continuing compliance with the
provisions of Section 1.2 and Section 5.2(a), Employee may be a principal,
owner, officer, director, agent, consultant or partner, of any corporation,
partnership or other entity.
(c) The foregoing provisions of this Section 5.2 shall
not be held invalid because of the scope of the territory covered, the actions
restricted thereby, or the period of time such covenant is operative. Any
dispute under this Section shall be subject to arbitration under Article 7
hereof.
5.3 REMEDIES. In the event of a breach or threatened breach by
the Employee of Section 5.1 or 5.2 hereof, the Company shall be entitled to a
temporary restraining order and an injunction restraining the Employee from the
commission of such breach. Nothing herein shall be construed
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as prohibiting the Company from pursuing any other remedies available to it for
such breach or threatened breach, including the recovery of money damages.
ARTICLE 6
PROPRIETARY PROPERTY ASSIGNMENT
6.1 OWNERSHIP. All notes, reference materials, sketches,
diagrams, reproductions, memoranda, documentation and records incorporating or
reflecting any Confidential Information shall belong exclusively to the Company
and shall be delivered to the Company upon termination of Employee's employment
with the Company, for whatever reason said termination occurs. All inventions,
improvements, ideas or discoveries made or conceived by Employee in the course
of performance Employee's duties hereunder for the Company, whether patentable
or unpatentable, or for which equipment, supplies or facilities of the Company
are used, or which is derived from trade secrets owned by the Company, during
the term of this Agreement ("Proprietary Property") shall be the sole property
of the Company and shall be promptly reported both orally and in writing to the
Company.
6.2 COOPERATION. Employee, without charge to the Company, shall
execute, acknowledge and deliver to the Company all such further papers,
including applications for patents or copyrights, the expense of which is to be
borne by the Company, as may be necessary to enable the Company to protect said
Proprietary Property by patent, copyright or otherwise, in any and all
countries, and to vest title to said Proprietary Property in the Company or its
nominees (and their successors or assigns) and to maintain and enforce such
protection; and further Employee shall render all such assistance (with
reasonable compensation for Employee's time at all times after the termination
of this Agreement) as may be reasonably necessary to perfect or protect any
such patent or copyright.
ARTICLE 7
ARBITRATION
Any controversy of any nature whatsoever, including but not limited to
tort claims or contract disputes, between the parties to this Agreement or
between the Employee, his heirs, executors, administrators, legal
representatives, successors, and assigns and the Company and its affiliates,
arising out of or related to the Employee's employment with the Company, any
resignation from or termination of such employment and/or the terms and
conditions of this Agreement, including the implementation, applicability and
interpretation thereof, shall, upon the written request of one party served
upon the other, be submitted to and settled by arbitration in accordance with
the provisions of the Federal Arbitration Act, 9 U.S.C. Sections 1-15, as
amended. Each of the parties to this Agreement shall appoint one person as an
arbitrator to hear and determine such disputes, and if they should be unable to
agree, then the two arbitrators shall choose a third arbitrator from a panel
made up of experienced arbitrators selected pursuant to the procedures of the
American Arbitration Association (the "AAA") and, once chosen, the third
arbitrator's decision (which shall be in writing and issued to each party)
shall be final, binding and conclusive upon the parties to this Agreement.
Each party shall be responsible for the fees and expenses of its arbitrator and
the fees and expenses of the third arbitrator shall be shared equally by the
parties. The terms
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of the commercial arbitration rules of AAA shall apply except to the extent
they conflict with the provisions of this paragraph. It is further agreed that
any of the parties hereto may petition the United States District Court for the
Western District of Texas, San Antonio Division, for a judgment to be entered
upon any award entered through such arbitration proceedings.
ARTICLE 8
MISCELLANEOUS
8.1 MODIFICATION; AMENDMENT; WAIVER. No modification, amendment
or waiver of any provisions of this Agreement shall be effective unless
approved in writing by both parties. The failure at any time to enforce any of
the provisions of this Agreement shall in no way be construed as a waiver of
such provisions and shall not affect the right of either party thereafter to
enforce each and every provision hereof in accordance with its terms.
8.2 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be held to
be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
8.3 ASSIGNMENT. The rights and obligations of the parties under
this Agreement shall be binding upon and inure to the benefit of their
respective successors, assigns, executors, administrators and heirs, provided,
however, that neither the Company nor Employee any assign any rights, duties or
obligations under this Agreement without the prior written consent of the
other.
8.4 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered
personally, mailed by certified mail (return receipt requested) or sent by
reputable overnight delivery service, cable, telegram, facsimile transmission
or telex to the parties at the following addresses or at such other addresses
as shall be specified by the parties by like notice:
If to the Company: Biovensa Inc.
00000 Xxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxx 00000
Attention: Chairman of the Board
If to the Employee: Xxxxxxx X. Love
00 Xxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
8.5 COMPLETE AGREEMENT. This Agreement constitutes the entire
agreement between the parties and cancels and supersedes all other agreements
between the parties which may have related to the subject matter contained in
this Agreement.
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8.6 GOVERNING LAW. This Agreement and performance under it, and
all proceedings that may ensue from its breach, shall be construed in
accordance with and under the laws of the State of Texas.
8.7 IRS CONTINGENCY. This Agreement is conditioned on the
issuance of a private letter ruling by the U.S. Internal Revenue Service to
Cancer Therapy and Research Foundation of South Texas ("CTRF") and/or CTRC
Research Foundation ("CTRCRF") that this Agreement is fair and reasonable and
does not provide excessive compensation to Employee for the services and other
contributions to be made by Employee hereunder. This Agreement is additionally
conditioned on a similar favorable opinion by the outside auditors for CTRF and
CTRCRF. Further, the parties agree that CTRF and/or CTRCRF shall have the
option to obtain a "fairness opinion" of a consultant of their choice and at
their expense, in addition to their outside auditor, and that should CTRF or
CTRCRF exercise their option to obtain such an opinion, then this Agreement is
further conditioned on that opinion being that this Agreement is fair and
reasonable and does not provide excessive compensation for the services and
other contributions to be made by Employee hereunder. Should the IRS, the
outside auditor for CTRF or CTRCRF, or the consultant retained by CTRF or
CTRCRF determine that this Agreement provides excessive compensation, then the
parties agree to modify same in order to satisfy any fairness requirements.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the day and year indicated above.
BIOVENSA INC.
By /s/ XXXX X. XXXXX
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Name Xxxx X. Xxxxx
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Title Chairman of the Board
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/s/ XXXXXXX X. LOVE
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XXXXXXX X. LOVE
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