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Exhibit 10.17
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 Xxxxx X. Xxxxxxxx ("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 President and Chief Operations
Officer of the Company (or in such other capacity and with such other title as
the Company may reasonably request) reporting directly to the Chairman of 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 0000 000xx
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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
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Company as of the date of this Agreement. Notwithstanding the 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
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employment with the Company other than (x) upon Executive's death or disability,
(y) 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 authorizes
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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
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
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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.
(b) Executive expressly agrees and acknowledges that:
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(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 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.
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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.
(i) "Change In Control" - shall mean and shall be deemed to have
occurred if:
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(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.
(j) "Change In Control Resignation" -as defined in Section 3.2(b);
(k) "Code" - as defined in Section 4.4(b);
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(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);
(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
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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 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.
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(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 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.
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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:
Xxxxx X. Xxxxxxxx
P.O. Box 2721
Xxxxxxxxxxx, XX 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:
----------------------------------
Xxxxxx X. Xxxx
Its: Chief Executive Officer
EXECUTIVE
By:
----------------------------------
Xxxxx X. Xxxxxxxx
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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.
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
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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 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
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