August 19, 1997
Xx. Xxxxx X. Xxxxxxx
Chairman of the Board
Epitope, Inc.
0000 XX Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Dear Xxxxx:
This will confirm my agreement with Epitope, Inc. (the "Company") made
in connection with recent management and strategic changes at the Company:
1. Effective May 30, 1997, I was removed as President and Chief
Executive Officer of the Company by action of the Board of Directors. This
action substantially diminished my duties and title and constituted a
"termination without cause" by the Company within the meaning of Section 5.2.1
of the Amended and Restated Employment Agreement dated as of January 8, 1991
between the Company and me (the "Employment Agreement").
2. As a result of such termination, the Company is obligated to pay me
24 months of my regular salary as President and Chief Executive Officer of the
Company, as extraordinary compensation under Section 2.3 and Schedule 2.3 of the
Employment Agreement. Because I have agreed to serve as President and Chief
Executive Officer of the Company's Agritope, Inc. subsidiary ("Agritope"), we
have agreed that payment of the extraordinary compensation will commence in the
first month following the earlier of (i) termination of my employment with
Agritope for any reason, (ii) the closing of a transaction by which the Company
no longer controls Agritope (an "Agritope Disposition"), or (iii) the 90th day
(the "Cut-Off Date") after the Company's first public announcement of its intent
to proceed with a specific Agritope Disposition which is subsequently closed. If
payment of extraordinary compensation is to commence under clause (iii), any
salary paid me by the Company or any subsidiary for the period between the
Cut-Off Date and the closing of the Agritope Disposition shall be credited
against the obligation to pay me extraordinary compensation.
Xx. Xxxxx X. Xxxxxxx
August 19, 1997
Page 2
3. My services as President and Chief Executive Officer of Agritope
shall include the primary responsibility for arranging a transaction by which
Xxxxxxxx can become a corporation separate from the Company through a sale,
spin-off, initial public offering or other corporate transaction.
4. Section 3.1 of the Employment Agreement shall not apply to
Confidential Information (as defined in Section 3.1) of Agritope to which I have
had access during my employment with the Company and Agritope.
5. Section 4.1 of the Employment Agreement shall not apply to services
that I perform for or on behalf of Agritope either during the time in which
Agritope is owned by the Company or after it is no longer controlled by the
Company.
6. Termination of my employment as President and Chief Executive
Officer of the Company shall not constitute a termination of employment for
purposes of any of the stock option or stock award plans of the Company or
Agritope under which I now hold options. Any stock options held by me under such
plans, which by their terms are slated to expire in 1997, shall be extended or
exchanged for new stock options with terms consistent with the Company's
policies for executive compensation.
7. The Indemnification Agreement dated June 14, 1989 between the
Company and me shall be amended or replaced by a new agreement to provide that
it applies to services performed by me as a director, officer and key employee
of Agritope through the date of an Agritope Disposition.
8. The Company will pay my reasonable attorneys' fees related to these
changes in my employment arrangements not to exceed $2,500.
9. This Agreement constitutes an amendment to the Employment
Agreement. Except as so amended, the terms of the Employment Agreement remain in
full force and effect.
Xx. Xxxxx X. Xxxxxxx
August 19, 1997
Page 2
Please sign below to indicate the agreement of the Company to these
terms.
Very truly yours,
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
The above terms are agreed to as of the above date:
EPITOPE, INC.
By: /s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Chairman of the Board
By: /s/ W. Xxxxxxx Xxxxxxxxx
W. Xxxxxxx Xxxxxxxxx
President and Chief Executive
Officer
