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EMPLOYMENT AGREEMENT
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AGREEMENT, dated as of February 20, 1997, between Transkaryotic Therapies,
Inc., a Delaware corporation (the "Company"), and Xxxxxx Xxxxxxx Xxxxxxx (the
"Executive").
1. EMPLOYMENT. The Company hereby employs the Executive and the Executive
hereby accepts employment with the Company upon the terms and conditions herein
set forth.
2. DUTIES. The Executive shall be engaged as a full-time employee to act
as the Company's Vice President, Finance and Chief Financial Officer, and shall
report to the Company's Founder and Chief Executive Officer. The Executive shall
perform the duties consistent with such position as the Founder and Chief
Executive Officer shall from time to time reasonably designate. The Executive
shall devote his entire time, attention and energies to the business of the
Company and shall not engage in any other business activity or activities,
whether or not such business activity is pursued for gain, profit or other
pecuniary advantage that, in the judgment of the Company, may conflict with the
proper performance of the Executive's duties under this Agreement.
Notwithstanding the foregoing, (a) with respect to businesses which do not
compete with the Company, the Executive may invest his personal or family assets
in such form or manner as will not require any services on the part of the
Executive in the operation of the affairs of the companies in which such
investments are made and in which his participation is solely that of an
investor, and (b) the Executive may purchase securities in any corporation whose
securities are regularly traded in recognized securities markets, provided that
such investments shall not result in his collectively owning beneficially at any
time one per cent (1%) or more of the equity securities of any corporation
engaged in a business competitive to that of the Company.
3. COMPENSATION.
(a) BASE SALARY. For services rendered under this Agreement, the Company
shall pay the Executive an annual salary of $170,000 (the "Base Salary"),
payable (after deduction of applicable withholding for Federal and state
income and payroll taxes) in equal semi-monthly installments. The Company
may review the Executive's compensation annually and make such increases to
the Base Salary as the Company determines are merited, based upon the
Executive's performance and consistent with the Company's compensation
policies as established by the Compensation Committee of the Company's
Board of Directors. Any such increase in annual Base Salary shall be
communicated to the Executive shortly after the January meeting of the
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Board of Directors and shall be made effective on the first day of January
each year.
(b) BONUS. At least thirty (30) days prior to each calendar year under this
Agreement, the Company shall establish objective performance goals for the
Executive for such calendar year. Upon the attainment of such performance
goals, but subject to the overall performance of the Company during such
year, the Executive may be entitled to a bonus, as determined by the
Compensation Committee of the Company's Board of Directors. Within thirty
(30) days after the close of each such calendar year, the Company shall
evaluate the attainment of the performance goals for such calendar year and
determine the amount of any performance bonus payable hereunder. Any such
performance bonus shall be payable within ninety (90) days after the
calendar year to which it relates.
(c) FRINGE BENEFITS. In addition to Base Salary and Bonus payments under
Sections 3(a), (b) and (c) above, the Executive shall be eligible for and
participate in such fringe benefits, in accordance with the terms of each
such benefit, as shall be generally provided to executives of the Company,
including incentive compensation, the Company's 401(k) Plan, health and
dental insurance, and any retirement programs, stock options plans or
employee stock purchase plans which may be adopted from time to time during
the term hereof by the Company. Nothing herein contained shall be deemed to
preclude the Company from granting such additional compensation or benefits
to the Executive as it shall in its sole discretion determine.
(d) STOCK OPTIONS. Upon authorization by the Company's Board of Directors
or Compensation Committee, the Company will promptly grant the Executive
under the Company's 1993 Long-Term Incentive Plan (the "Plan") a
nonstatutory stock option to purchase an aggregate of one hundred thousand
(100,000) shares of the Common Stock of the Company, par value $.01 per
share, at a purchase price of eighteen dollars ($18.00) per share. Of such
option, 10,000 shares will vest immediately on February 20, 1997, with the
remaining 90,000 shares vesting annually for a period of six (6) years on
the anniversary date of this Agreement in installments of 15,000 shares
each. Such option shall be exercisable during the ten (10) year period
following its date of vesting and shall be subject to all the terms and
conditions of the Plan and the Company's standard form of Stock Option
Agreement, copies of which have been delivered to the Executive separately.
4. SICK LEAVE AND VACATION. During the term of this Agreement, the
Executive shall be entitled to sick leave and annual vacation consistent with
the Company's customary sick leave and vacation policies; the latter providing
for vacation of ten (10) days in the first twelve (12) months of employment, and
fifteen (15) days in subsequent annual periods from July 1.
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5. EXPENSES. During the term of this Agreement, the Company shall
reimburse the Executive in accordance with the Company's customary policies for
all reasonable out-of-pocket expenses incurred by the Executive in connection
with the business of the Company and in performance of his duties under this
Agreement upon the Executive's presentation to the Company of an itemized
accounting of such expenses with reasonable supporting data.
6. TERM.
(a) The Executive's employment under this Agreement shall commence on
February 20, 1997 (the "Commencement Date") and shall continue until
terminated by the Company as provided in this Section 6(a) or by the
Executive as provided in Section 6(c)below. The Company may, at its
election, terminate the obligations of the Company under this Agreement as
follows:
(i) Upon at least sixty (60) days prior written notice if the
Executive becomes physically or mentally incapacitated or is injured
so that he is unable to perform the services required of him hereunder
and such inability to perform continues for a period in excess of six
(6) months and is continuing at the time of such notice; or
(ii) For "Cause" upon prior written notice of such termination to the
Executive. For purposes of this Agreement, the Company shall have
"Cause" to terminate its obligations hereunder upon (a) the Company's
determination that the Executive has ceased or failed to substantially
perform his duties hereunder (other than as a result of his incapacity
due to physical or mental illness or injury), and at least thirty (30)
days prior written notice to the Executive, (b) the Executive's death,
(c) the Company's determination that the Executive has engaged or is
about to engage in conduct materially injurious to the Company (d) the
Executive's having been convicted of a felony, or (e) the Executive's
participation in activities proscribed by the provisions of Sections
2, 8 or 10 hereof or material breach of any of the other covenants
herein; or
(iii) Without Cause upon at least sixty (60) days prior written notice
of such termination to the Executive.
(b) If, subsequent to six (6) months of the date the Executive's employment
hereunder commences, this Agreement is terminated pursuant to Section
6(a)(i) above, subject to Section 10(d) below, the Executive shall receive
severance pay until the fourth anniversary of the date hereof at the rate
of one hundred per cent (100%) of Base Salary, reduced by applicable
payroll taxes and further reduced by the amount received by the Executive
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during such period under any Company maintained disability insurance policy
or plan or under Social Security or similar laws. Such severance payments
shall be paid periodically to the Executive as provided in Section 3(a) for
the payment of Base Salary. If this Agreement is terminated at any time
pursuant to Section 6(a)(ii) above, the Executive shall receive no
severance pay. If this Agreement is terminated pursuant to Section
6(a)(iii) above, the Executive shall receive severance pay, for a period of
twelve (12) months from and after such termination, equal to the Base
Salary less the amount, if any, earned by the Executive during such twelve
(12) month period, whether as salary, consulting fees, deferred payments or
other direct or indirect compensation. Such severance payments (less
applicable withholding and payroll taxes) shall be paid periodically to the
Executive as provided in Section 3(a) for the payment of Base Salary.
(c) The Executive may terminate his employment under this Agreement upon
breach by the Company or for Good Reason. Termination of the Executive's
employment for "breach" shall mean in the event that the Company fails to
perform, in any material respect, its obligations under this Agreement,
after written notice to the Company setting forth in reasonable detail the
nature of such breach, if such breach remains uncured for a period of 90
days following such notice to the Company. Termination of the Executive's
employment for "Good Reason" shall only mean termination based on (i) a
substantial diminution in the responsibilities, duties and powers of the
Executive including, without limitation, the Executive ceasing to be the
Vice President, Finance and Chief Financial Officer of the Company; and/or
(ii) the relocation of the Executive's present office location to an area
more than 100 miles from the metropolitan Boston area. In the event of
termination of employment pursuant to this paragraph (c), the Company shall
pay to the Executive severance pay for a period of twelve months in an
amount equal to (x) 100% of the Executive's Base Salary immediately prior
to such termination; plus, (y) any bonus payment for the fiscal year
preceding the year in which such termination occurs that was earned but not
paid at the date of such termination. The Executive shall not be required
to mitigate the amount of any payment provided for in this paragraph (c) by
seeking other employment or otherwise, but the amount of any payment or
benefit provided for in this paragraph (c) shall be reduced by an amount
equal to any compensation earned by Executive as a result of employment
with another employer after termination of employment with the Company, or
otherwise.
(d) The Executive may terminate his employment under this Agreement for any
reason upon at least sixty (60) days' prior written notice. In the event of
any such termination of employment pursuant to this paragraph (d)
(excluding any termination of employment paragraph (c) above), the
Executive shall not be entitled to any severance payments.
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7. REPRESENTATIONS. The Executive hereby represents to the Company that
(a) he is legally entitled to enter into this Agreement and to perform the
services and other obligations contemplated herein; (b) he has, and throughout
the term of this Agreement will continue to have, the full right, power and
authority, subject to no rights of third parties, to grant to the Company the
rights'contemplated by Section 9 hereof; and (c) he is not subject to any
agreement, rule, regulation or policy of any university, research institution
or other third party inconsistent with the foregoing representations.
8. DISCLOSURE OF INFORMATION.
(a) The Executive recognizes and acknowledges that the Company's trade
secrets, know-how and proprietary processes as they may exist from time to
time (including, without limitation, information regarding methods,
cultures, vectors, plasmids, synthesis techniques, nucleic acid sequences,
purification techniques and assay procedures) as well as the Company's
confidential business plans and financial data are valuable, special and
unique assets of the Company's business, access to and knowledge of which
are essential to the performance of the Executive's duties hereunder. The
Executive shall not, during or after the term of his employment by the
Company, in whole or in part, disclose such secrets, know-how, processes,
business plans or financial data to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever, nor shall
the Executive make use of any such property for his own purposes or for the
benefit of any person, firm, corporation or other entity (except the
Company) under any circumstances during or after the term of his
employment, provided that after the term of his employment, these
restrictions shall not apply to such secrets, know-how and processes which
the Executive can establish by competent proof:
(i) were known, other than under binder of secrecy, to the
Executive prior to his employment by the Company;
(ii) were passed into the public domain prior to or after their
development by or for the Company, other than through acts or
omissions attributable to the Executive; or
(iii) were subsequently obtained, other than under binder of
secrecy, from a third party not acquiring the information under an
obligation of confidentiality from the disclosing party.
(b) Upon termination of his employment hereunder, the Executive shall
promptly turn over to the Company all originals and copies which he may
have of any of the Company's confidential information described in this
Section 8.
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9. INTELLECTUAL PROPERTY. The Executive hereby sells, transfers and
assigns to the Company, or to any person or entity designated by the
Company, the entire right, title and interest of the Executive in and to
all inventions, ideas, discoveries and improvements (including, without
limitation, all microorganisms, strains or cultures) whether patented or
unpatented, and copyrightable material made or conceived by the Executive,
solely or jointly, during the term hereof, which arise out of research or
other activities conducted by, for or under the direction of the Company,
whether or not conducted at the Company's facilities, or which relate to
methods, apparatus, designs, products, processes or devices, sold, leased,
used or under consideration or development by the Company. The Executive
acknowledges that all copyrightable materials developed or produced by the
Executive within the scope of his employment constitute works made for
hire. The Executive shall communicate promptly and disclose to the Company,
in such form as the Company may reasonably request, all information,
details and data pertaining to any such inventions, ideas, discoveries and
improvements; and the Executive shall execute and deliver to the Company
such formal transfers and assignments and such other papers and documents
and shall give such testimony as may be necessary or required of the
Executive to permit the Company or any person or entity designated by the
Company to file and prosecute patent applications and, as to copyrightable
material, to obtain copyrights thereof. Any such invention, idea, discovery
or improvement disclosed by the Executive within one (1) year following the
termination of this Agreement shall be deemed to fall within the provisions
of this Section 9 unless proved to have been first conceived and made
following such termination.
10. COVENANTS NOT TO COMPETE OR INTERFERE.
(a) Subject to Section 10(b) below, during the term of this Agreement and
the period ending twenty-four (24) months from and after the termination of
the Executive's employment hereunder, the Executive shall not engage in any
business (whether as an officer, director, owner, employee, partner,
consultant, advisor or other direct or indirect participant) engaged in the
development of gene therapy and/or gene targeting and/or gene activation
methods and/or the sale of products or rendering of services related to
gene therapy and/or gene targeting and/or gene activation and/or to any
other activities which directly compete with the Company's business
activities. This Agreement shall not be construed to restrict the
Executive's right to be employed as a faculty member of any university or
employee of any nonprofit agency or foundation after any termination of
this Agreement where this covenant not to compete shall continue to be in
effect. During the period in which this covenant not to compete is in
effect the Executive also shall not interfere with, disrupt or attempt to
disrupt the relationship, contractual or otherwise, between the Company and
any customer, supplier, lessor, lessee, employee, consultant, research
partner or investor of the Company.
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(b) If this Agreement is terminated by the Company pursuant to Section
6(a)(iii) above, the provisions of the first sentence of Section 10(a)
shall apply until twelve (12) months from and after such termination.
(c) It is the desire and intent of the parties that the provisions of this
Section 10 shall be enforced to the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which enforcement
is sought. Accordingly, if any particular Subsection or portion of this
Section 10 shall be adjudicated to be invalid or unenforceable, this
Section 10 shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only
with respect to the operation of this Section in the particular
jurisdiction in which such adjudication is made.
(d) In the event of any breach of the provisions of this Section 10 by the
Executive, any and all rights of the Executive to receive severance
payments under Section 6(b) above shall automatically terminate.
11. INJUNCTIVE RELIEF. If there is a breach or threatened breach of the
provisions of Section 8, 9 or 10 of this Agreement, the Company shall be
entitled to an injunction, without bond, restraining the Executive from such
breach. Nothing herein shall be construed as prohibiting the Company from
pursuing any other remedies for such breach or threatened breach.
12. INSURANCE. The Company may, at its election and for its benefit,
insure the Executive against accidental loss or death, and the Executive shall
submit to such physical examinations and supply such information as may be
required in connection therewith.
13. NOTICES. Any notice required or permitted to be given under this
Agreement to the Executive shall be sufficient if in writing and if sent by
certified or registered mail to his residence, or in the case of the Company, to
Transkaryotic Therapies, Inc., 000 Xxxxxx Xxxxxx, Xxxxxxxxx, XX 00000,
Attention: Chief Executive Officer, or to such other offices or addresses as the
Company shall designate from time to time in writing to the Executive. Any such
notice shall be effective on the earlier of (a) the date on which it is
personally delivered or (b) three (3) days after it is deposited in the United
States mails, postage prepaid.
14. WAIVER OF BREACH. A waiver by the Company or the Executive of a breach
of any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach by the other party.
15. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the Commonwealth of
Massachusetts.
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16. ASSIGNMENT. This Agreement may be assigned, without the consent of the
Executive, by the Company to any person, partnership, corporation or other
entity which succeeds to the business of the Company or which has purchased
substantially all the assets of the Company, provided such assignee assumes all
the liabilities of the Company hereunder.
17. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties and supersedes any prior understandings or agreements between the
Executive and the Company. This agreement may be changed only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the date first above written.
TRANSKARYOTIC THERAPIES, INC.
By: /s/ Xxxxxxx X Xxxxxx, M.D., Ph.D.
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Xxxxxxx X Xxxxxx, M.D., Ph.D.
Founder and Chief Executive
Officer
/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
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