EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), dated as of May 1997
(the "Effective Date"), is entered into by and between Progenitor, Inc., a
Delaware corporation (the "Company"), and Xxxxxxxx X. Given, M.D., Ph.D.
("Given").
BACKGROUND
The Company has employed and desires to continue to employ Given as
President and Chief Executive Officer of the Company reporting to the Board
of Directors of the Company, and Given desires to be employed and to continue
to be employed by the Company as President and Chief Executive Officer.
Company and Given are entering into this Employment Agreement to set out
the terms and conditions of the Company's employment of Given in this
capacity.
All of the terms of the Agreement will be effective as of the Effective
Date with the exception of certain terms which will become effective upon the
closing of an Initial Public Offering of the Company's stock which is now in
the registration process with the SEC (the "IPO") at any time during 1997.
Those benefits that are contingent on the closing of the IPO, as described in
this Agreement, are Given's higher base salary, the grant to Given of
additional stock options to purchase the common stock of the Company, and
certain benefits associated with relocating Given to California.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants contained in this Employment Agreement ("Agreement")
and other good and valuable consideration the receipt of which is hereby
acknowledged, the parties agree as follows:
1. EMPLOYMENT; DUTIES
(a) Company hereby engages and employs Given, and Given hereby accepts
engagement and employment, as President and Chief Executive Officer of Company
reporting directly to the Board of Directors of the Company, to direct,
supervise and have responsibility for the daily operations of the Company,
including, but not limited to: (i) directing and supervising the business and
research and development efforts of the Company; (ii) managing the other
executives and personnel of the Company; (iii) evaluating, negotiating,
structuring and implementing business transactions with the Company's licensees,
customers and suppliers; and (iv) performing such other services as are
appropriate to Given's position and as the Board of Directors of the Company
(the "Board") may from time to time determine.
(b) Given will perform his duties from the Company's executive offices
which will be located in California; it being understood that the performance
of his duties may require significant domestic and international travel.
(c) Given will devote substantially all of his business time and
efforts to the proper discharge of his duties and responsibilities under this
Agreement.
2. TERM OF AGREEMENT
Given's employment under this Agreement will commence as of the
Effective Date and will continue until terminated pursuant to Section 7
(Termination); provided, however, that Company will not be obligated to
provide those benefits to Given pursuant to Section 3(a)(iv) (Home Mortgage
Interest Differential), Section 3(a)(v) (Home Loan), Section 3(a)(vi)
(Relocation Expenses), and Section 3(a)(vii) (Ohio Mortgage Interest
Assistance) and those other benefits as expressly provided in this Agreement
until the closing of the IPO.
3. COMPENSATION AND BENEFITS
(a) As compensation for the performance of his duties under this
Agreement, Given will be compensated as follows:
(i) BASE SALARY. Company will pay Given a base salary ("Base
Salary") at the rate of Two Hundred Seventy-Five Thousand Dollars ($275,000)
per year; provided, however, that contingent on the closing of the IPO,
Company will pay Given a Base Salary of Three Hundred Thousand Dollars
($300,000) per year. The applicable Base Salary will be payable in accordance
with the usual payroll period of Company. Given's Base Salary will be
subject to an annual review in the sole discretion of the Board or its
Compensation Committee, provided that the Base Salary may not be adjusted
downward;
(ii) ANNUAL BONUS. Company will pay Given an annual bonus of up to
40% of his Base Salary upon the achievement of certain reasonable and readily
ascertainable revenue, expense, or cashflow goals to be mutually agreed upon
from time to time by the Board or its Compensation Committee and Given;
(iii) OPTIONS. Given currently holds 80,000 shares of Company
Founder's Stock and 211,000 options to acquire the common stock of Company.
Conditioned on the closing of the IPO, Given will be granted an additional
310,000 options to purchase shares of common stock of Company ("Options"),
with an exercise price determined in accordance with the Company's stock
option plan, but not more than the price per share at which the Company's
stock is underwritten for sale in the IPO.
Given will vest in the Options on a quarterly basis over a
three-year period, commencing as of the date of grant, which will be no later
than the closing of the IPO. If Given's employment is terminated, Given will
vest in the Options pursuant to the terms of Section 7(b) of this Agreement.
To the maximum extent permitted by law, the Options will be
incentive stock options.
(iv) HOME MORTGAGE INTEREST DIFFERENTIAL. The Company will pay
Given the sum of Four Thousand Dollars ($4,000) per month on the first day of
each calendar month for a period of three (3) years to be used by Given to
make payments on any mortgage loan he may obtain in connection with a new
home he may purchase in California ("New Home") commencing when the New Home
is acquired.
(v) HOME LOAN. The Company will loan to Given for purposes of
purchasing the New Home a sum of up to Two Hundred Thousand Dollars
($200,000). This New Home Loan will bear simple interest at seven percent
(7%) per year, with interest to accrue and not compound during the initial
three (3) years of the loan, and with no payments of principal or interest to
be due during these initial three years. After the initial three (3) years
of the New Home Loan, interest only payments will be due and payable on the
15th day of each calendar month, with the interest accrued as of the third
anniversary of the Loan to be amortized and paid in 36 equal monthly
installments over the subsequent three (3) year period together with the
interest then currently accruing. The New Home Loan will be secured by a
customary form second deed of trust on the New Home, and will be subordinate
to any seller financing or bank or financial institution first deed of trust
on the New Home.
In addition, the New Home Loan will be repayable as follows:
(A) Installments of twenty-five percent (25%) of the original
principal balance of the Loan, plus accrued interest on this amount, will be
forgiven by the Company upon the closing of each single transaction which
provides the Company with committed funds of at least $2,000,000 in the form
of either equity, convertible debt or gross income to the Company;
(B) Within thirty days after the sale of any securities of
the Company then held by Given which were acquired pursuant to options
granted to him by the Company, an amount equal to twenty-five percent (25%)
of the net proceeds (netting out in the account the sums necessary to
exercise the options) received by Given from the sale of these securities;
(C) Upon the sale of the New Home; and
(D) In full upon the earlier of the fifth anniversary of the
making of the New Home Loan or one (1) year after the termination of Given's
employment by the Company.
If any portion of the Loan is forgiven pursuant to Section 3(a)(v)(A),
at the time of the forgiveness, the Company will also pay to Given an amount to
take into account the gross up for federal and state income taxes on the
forgiven amounts.
(vi) RELOCATION EXPENSES. Company will reimburse Given for his
reasonable moving costs and house-hunting expenses in California, which will be
limited to the following:
(A) 7.5% of sales price of Given's home in Ohio;
(B) 3.5% of purchase price of Given's New Home;
(C) Reasonable moving expenses to move Given's household goods
and two (2) cars;
(D) A reasonable number of house-hunting and school-hunting
trips, not to exceed a total of four (4) round-trips, for
Given and his spouse, with one of these round-trips to
include Given and his family;
(E) Reasonable cost of final trip to move Given's family;
(F) Temporary housing in the San Francisco Bay Area for Given's
family for a period not to exceed six (6) months; and
(G) Storage of Given's household goods for a period not to
exceed six (6) months.
(vii) OHIO MORTGAGE INTEREST ASSISTANCE. Company will pay the
monthly mortgage payment on Given's home in Ohio from the date Given acquires
the New Home until the earlier of (a) the one year anniversary from the date
Given acquires the New Home, or (b) the sale of the home in Ohio; provided
that after three bids have been placed on the house, Given must accept the
next cash offer on reasonable terms which exceeds the highest bid previously
rejected. If the home is not sold after the end of the one-year period, the
Company will arrange for the home to be sold to a professional relocation
company at its then fair market value with the proceeds to be paid to Given
and his mortgage lender.
With respect to any payments received by Given pursuant to Section 3(a)(vi)
and (vii) for which Given is not allowed a corresponding deduction or offset
to income on his personal income tax return, the Company will pay to Given in
the same calendar year as the payments are made an additional amount to take
into account the gross up for federal and state income taxes on the amount of
the benefit paid to Given.
The Company will withhold all applicable federal, state and local taxes,
social security and workers' compensation contributions and such other
amounts as may be required by law or agreed upon by the parties with respect
to the compensation payable to Given pursuant to this Section 3(a).
(b) The Company will reimburse Given for all reasonable expenses
incurred by Given in furtherance of the business and affairs of the Company,
including reasonable travel and entertainment, against receipt by the Company
of appropriate vouchers or other proof of Given's expenditures and otherwise
in accordance with the Company's Expense Reimbursement Policy as may from
time to time be adopted by the Board.
(c) Given will be entitled to paid vacation of not less than four (4)
weeks per year.
(d) Company will make available to Given and his dependents, medical,
disability, life insurance and other health benefits as Company makes
available to its senior officers and directors. Company will provide Given
with term life insurance coverage not less than $1,000,000 in addition to the
group term life insurance plan available to all Company employees, both of
which will be payable to the beneficiary of Given's choice. Company will
also provide Given with executive disability insurance coverage providing for
not less than 60% of Given's Base Salary tax-free for life, and Given will
have the opportunity to purchase additional disability insurance coverage at
the same premium rate as is paid by the Company providing for 20% of his
Base Salary (or such lesser percentage as he may choose) tax-free for life.
4. REPRESENTATIONS AND WARRANTIES BY GIVEN AND CORPORATION
Given hereby represents and warrants to Company as follows:
(a) Neither the execution and delivery of this Agreement nor the
performance by Given of his duties and other obligations hereunder violate or
will violate any statute, law, determination or award, or conflict with or
constitute a default under (whether immediately, upon the giving of notice or
lapse of time or both) any prior employment agreement, contract, or other
instrument to which Given is a party or by which he is bound.
(b) Given has the full right, power and legal capacity to enter and
deliver this Agreement and to perform his duties and other obligations under
it. This Agreement constitutes the legal, valid and binding obligation of
Given enforceable against him in accordance with its terms. No approvals or
consents of any persons or
entities are required for Given to execute and deliver this Agreement or
perform his duties and other obligations hereunder.
(c) Given understands that some or all of the stock issuable upon
exercise of the Options received by Given pursuant to Section 3(a) may not be
registered under the Securities Act of 1933 (the "1933 Act"), and
acknowledges that he will be obligated to agree, as a condition to the
issuance of the stock, that he will acquire such stock for his own account
for investment and not with a view to, or for resale in connection with a
distribution thereof, and will bear the economic risk of his investment in
such stock for an indefinite period of time.
Company hereby represents and warrants to Given as follows:
(a) Company was duly organized and is validly existing and in good
standing under the laws of the State of Delaware, with all requisite
corporate power and authority to own its properties and conduct its business
in the manner presently contemplated.
(b) Company has full power and authority to enter into this Agreement
and to incur and perform its obligations under this Agreement.
(c) The execution, delivery and performance by Company of this
Agreement does not conflict with or result in a breach or violation of or
constitute a default under (whether immediately, upon the giving of notice or
lapse of time or both) the certificate of incorporation or bylaws of Company,
or any agreement or instrument to which Company is a party or by which
Company or any of its properties may be bound or affected.
5. NON-COMPETITION
(a) Given understands and recognizes that his services to Company are
special and unique and agrees that, during the term of this Agreement and,
unless such termination is by Given pursuant to Section 7(a)(v), for a period
of nine (9) months from the date of termination of his employment under this
Agreement, he will not in any manner, directly or indirectly, on behalf of
himself or any person, firm, partnership, joint venture, corporation or other
business entity ("Person"), enter into or engage in any business, either as
an individual for his own account, or as a partner, joint venturer,
executive, agent, consultant, salesperson, officer, director or shareholder
of a Person, with the companies listed in Exhibit A, which are directly
competitive with Company.
(b) During the term of this Agreement and, unless such termination is
by Given pursuant to Section 7(a)(v), for a period of nine (9) months from
the date of termination of his employment under this Agreement, Given will
not, directly or indirectly, without the prior written consent of Company,
initiate contact with any person who is then an employee of Company or any of
its affiliates to solicit that person for employment by another Person.
(c) In the event that Given breaches any provisions of this section or
there is a threatened breach, then, in addition to any other rights which
Company may have, Company will be entitled, without the posting of a bond or
other security, to injunctive relief to enforce the restrictions contained in
this section. In the event that an actual proceeding is brought in equity to
enforce the provisions of this section, Given will not urge as a defense that
there is an adequate remedy at law nor will Company be prevented from seeking
any other remedies which may be available.
6. CONFIDENTIAL INFORMATION
(a) Given agrees that during the course of his employment or at any time
after termination, he will not disclose or make accessible to any other person,
the Company's confidential products, services and technology, both current and
under development, promotion and marketing programs, lists, trade secrets and
other confidential and proprietary business information of Company or any of its
clients; provided that this confidential material will not include information
which lawfully becomes publicly available or which Given is required to deliver
by Court order, where Given has provided the Company with at least 15 days prior
notice of the Court order requiring the disclosure to allow the Company to seek
appropriate protective orders in the proceedings. Given agrees: (i) not to use
any such
information for himself or others; and (ii) not to take any such material or
reproductions of the material from Company's facilities at any time during
his employment by Company, except as required in Given's duties to Company.
Given agrees immediately to return all the material and reproductions of the
material in his possession to Company upon request and in any event upon
termination of his employment.
(b) Except with prior written authorization by the Company, or as Given
in the good faith exercise of his duties as the President and CEO of the
Company deems in the best interests of the Company, Given agrees not to
disclose or publish any of the confidential, technical or business
information or material of the Company, its clients or any other party to
whom the Company owes an obligation of confidence, at any time during or
after his employment with the Company.
(c) Given hereby assigns to the Company all right, title and interest
he may have or acquire in all inventions (including patent rights) developed
by Given as a part of his duties under the terms of this Agreement
("Inventions") and agrees that all Inventions will be the sole property of
Company and its assigns, and the Company and its assigns will be the sole
owner of all patents, copyrights and other rights in connection with the
Inventions. Given further agrees to assist the Company in every proper way,
at the Company's expense, to obtain and from time to time enforce patents,
copyrights or other rights on the Inventions in any and all countries.
7. TERMINATION
(a) Given's employment under this Agreement will begin as of the
Effective Date of this Agreement and will continue until terminated upon the
first to occur of the following events:
(i) The death of Given;
(ii) Termination by the Board upon thirty (30) days prior written
notice because of any physical or mental incapacity which has or
will prevent Given from properly performing his duties under this
Agreement for more than ninety (90) days in any one (1) year
period;
(iii) Termination by the Board for just cause without prior
notice. Only the following actions or omissions by Given will
constitute "just cause":
(A) Willful or intentional material breach of any provision of
the Agreement which Given fails to cure or fails to begin
good faith efforts to cure within fifteen (15) days after
written notice from the Board of the breach;
(B) Commission by Given of an act of fraud or theft against
Company; or
(C) Conviction of Given of any felony act other than one
involving the operation of a motor vehicle;
(iv) Termination by the Board for any reason, without just cause as
defined in Section 7(a)(iii), upon thirty (30) days prior written
notice;
(v) Termination by Given for just cause without prior notice. Only
the following actions or omissions by the Company will constitute
"just cause":
(A) Willful or intentional material breach by the Company of any
provision of this Agreement which the Company fails to cure
or fails to begin good faith efforts to cure within fifteen
(15) days after notice from Given of the breach; or
(B) Any action by the Company to intentionally harm Given;
(vi) Termination by Given for any reason, without just cause as
defined in Section 7(a)(v), upon thirty (30) days prior written
notice; or
(vii) Termination by either Given or the Company within one (1)
year after a Change in Control. A "Change in Control" is deemed
to have occurred if any "person" (as the term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act")), becomes, after the date of this Agreement the
"beneficial owner" (as defined in Rule 13(d)-3 under the Exchange
Act), directly or indirectly, of securities of Company
representing fifty percent (50%) or more of the combined voting
power of Company's then outstanding securities.
(b) Upon termination, Given will be entitled to the following:
(i) Upon termination by the Board without just cause pursuant to
Section 7(a)(iv) or by Given for just cause pursuant to Section
7(a)(v) or upon termination resulting from Given's death
pursuant to Section 7(a)(i) or from Given's disability pursuant
to Section 7(a)(ii), Given (or his estate in the event of a
termination pursuant to Section 7(a)(i)) will be entitled to the
following:
(A) all vested compensation then due and owing;
(B) as of the date of the termination, the Company will pay
either in a lump sum or in equal monthly payments over a
period of twelve (12) months, at the option of the Company,
the total sum of the Base Salary for a period of twelve (12)
months and a bonus equal to a percentage of the annual Base
Salary, which percentage is equal to the average of the
actual annual bonus percentage for the two (2) years
immediately prior to the date of the termination ("Average
Annual Bonus");
(C) Company will continue to pay for his, or his heirs', COBRA
premiums and the premium for his executive disability
insurance coverage, if applicable, for a period of eighteen
(18) months commencing as of the date of termination; and
(D) any options to acquire the common stock of Company in which
Given has not yet fully vested as of the date of termination
will be deemed to vest on the same date they would have
vested as if he had continued to be employed by the Company,
provided that they would have vested within two (2) years
after the date of termination; provided that to the extent
required by the plan pursuant to which the options were
granted, the options will be deemed to have vested
immediately upon termination to the extent required to
prevent them from lapsing.
(ii) Upon termination by the Board for just cause pursuant to Section
7(a)(iii), Given will be entitled to the following:
(A) all vested compensation then due and owing;
(B) as of the date of the termination, Company will pay either
in a lump sum or in equal monthly payments over a period of
three (3) months, at the option of the Company, the total
sum of the Base Salary for a period of three (3) months and
25% of the Average Annual Bonus;
(C) Company will continue to pay for his COBRA premiums and the
premium for his executive disability insurance coverage for
a period of nine (9) months commencing as of the date of
termination; and
(D) any options to acquire the common stock of Company in which
Given has not yet fully vested as of the date of termination
will be deemed to vest on the same date they would have
vested as if he had continued to be employed by the Company,
provided that they would have vested within one (1) year
after the date of termination; provided that to the extent
required by the plan pursuant to which the options were
granted, the options will be deemed to have vested
immediately upon termination to the extent required to
prevent them from lapsing.
(iii) Upon termination by Given for any reason, without just
cause, pursuant to Section 7(a)(vi), Given will be entitled to
all vested compensation then due and owing together with all
options then vested.
(iv) Upon termination resulting from a Change in Control pursuant to
Section 7(a)(vii), Given will be entitled to:
(A) all vested compensation then due and owing;
(B) as of the date of the termination, the Company will pay a
lump sum equal to the Base Salary and the maximum bonus of
40% of the Base Salary for a period of twelve (12) months;
and
(C) any options to acquire the common stock of Company in which
Given has not yet fully vested as of the date of termination
will be deemed to have accelerated and become fully vested.
(c) After the Company has fulfilled its obligations under Section 7(b),
all obligations of the Company under this Agreement will cease.
8. NOTICES
All notices and any other communications permitted or required under this
Agreement must be in writing and will be effective (i) immediately upon delivery
in
person, or (i) 24 hours after deposit with a commercial courier or delivery
service for overnight delivery, or (iii) three (3) days after deposit with the
United States Postal Service, certified mail, return receipt requested, postage
prepaid. All notices must be properly addressed and delivered to the parties at
the addresses set forth below, or at such other addresses as either party may
subsequently designate by written notice given in the manner provided in this
Section:
Company: Progenitor, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Given: Xxxxxxxx X. Given
0000 Xxxxxxx Xxxxx
Xxx Xxxxxx, XX 00000
9. SEVERABILITY OF PROVISIONS
If any provision of this Agreement is declared by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced in whole or
in part, such provision will be interpreted so as to remain enforceable to the
maximum extent permissible, consistent with applicable law, and the remaining
conditions and provisions or portions thereof will nevertheless remain in full
force and effect and enforceable to the extent they are valid, legal and
enforceable, and no provision will be deemed dependent upon any other covenant
or provision unless otherwise expressed in this Agreement.
10. ENTIRE AGREEMENT; MODIFICATION
This Agreement contains the entire agreement of the parties relating to the
subject matter hereof, and supersedes any other similar employment agreement,
and the parties agree that they have made no agreements, representations or
warranties relating to the subject matter of this Agreement which are not set
forth in this Agreement. This Agreement may be modified only by a written
instrument signed by the party against whom the modification is to be enforced.
11. BINDING EFFECT
The rights, benefits, duties and obligations under this Agreement will
inure to, and be binding upon, the Company, its successors and assigns, and upon
Given and his heirs, executors and legal representatives upon Given's death.
This Agreement constitutes a personal service agreement, and the performance of
Given's obligations under this Agreement may not be transferred or assigned by
Given.
12. NON-WAIVER
The failure of either party to insist upon the strict performance of any of
the terms, conditions and provisions of this Agreement will not be construed as
a waiver or relinquishment of future compliance with those provisions, and those
terms, conditions and provisions will remain in full force and effect. No
waiver of any term or condition of this Agreement on the part of either party
will be effective for any purpose whatsoever unless the waiver is in writing and
signed by the waiving party.
13. GOVERNING LAW
This Agreement will be governed by, and construed and interpreted in
accordance with, the laws of the State of California without regard to
principles of conflict of laws.
14. HEADINGS
The headings of sections are inserted for convenience and will not affect
any interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
PROGENITOR, INC.,
a Delaware Corporation
By: /s/ Xxxxx Xxxxxx
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Its: Chairman of Board of Directors and Director
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/s/ Xxxxxxxx X. Given
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XXXXXXXX X. GIVEN, M.D., Ph.D.
