EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of February 14, 1997,
is entered into by and between Progenitor, Inc. ("Progenitor"), Mercator
Genetics, Inc., a Delaware corporation ("Mercator"), and Xxxxxxx Xxxxx, M.D.,
Ph.D. ("Xx. Xxxxx") and supersedes and replaces any prior employment agreement
previously entered into between Mercator or any subsidiary thereof and Xx.
Xxxxx.
RECITAL
Progenitor, Mercator and Xx. Xxxxx wish to set forth herein all of the
terms and conditions of their employment relationship.
ACCORDINGLY, the parties agree as follows:
1. TERM OF AGREEMENT.
(a) EFFECTIVE DATE. The Agreement shall become effective as of the
date ("Effective Date") on which the Effective Time of the Reorganization occurs
(as such terms are defined in the Agreement and Plan of Reorganization dated as
of February 14, 1997, by and among Progenitor, Mercator and MG Merger Sub Corp.,
a wholly-owned subsidiary of Progenitor). This Agreement shall not become
effective unless and until the Reorganization is consummated.
(b) PERIOD OF EMPLOYMENT. Progenitor shall employ Xx. Xxxxx to
render services to Progenitor in the position and with the duties and
responsibilities described in Section 2 for the period (the "Period of
Employment") commencing on the Effective Date and ending on the date upon which
the Period of Employment is terminated in accordance with Section 4.
2. POSITION AND RESPONSIBILITIES.
(a) POSITION. Xx. Xxxxx accepts employment with Progenitor as Senior
Vice President of Research and Development, and shall perform all services
appropriate to that position, as well as such other services as may be
reasonably assigned to Xx. Xxxxx by the Chief Executive Officer of Progenitor.
Such services shall include, without limitation, all services appropriate to
supervising and managing the preclinical and clinical development areas of
Progenitor and overseeing the research function, which will be headed by H.
Xxxxx Xxxxxxxxx, Vice President of Research and Chief Scientific Officer, except
that during a transition period, the Human Genetics program will report directly
to Xx. Xxxxx. Xx. Xxxxx shall devote reasonable business efforts and his full
business time to the performance of his duties and the 1997 Goals set forth in
Exhibit A hereto. Xx. Xxxxx shall at all times be subject to the direction and
supervision of the President and Chief Executive Officer of Progenitor. It is
understood that Xx. Xxxxx may be expected to travel if necessary or reasonably
advisable in order to meet the obligations of his position. Xx. Xxxxx'x
signature authority shall be the same as peer officers, i.e., any
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commitments or expenses of Progenitor over ten thousand dollars ($10,000)
require the signatures of two such officers (the second such signature to be
that of Xxxx X.X. Xxxxxxx, Vice President, Finance and Chief Financial Officer
or Xxxxxxx X. Given, President and Chief Executor Officer).
(b) OTHER ACTIVITY. Except upon the prior written consent of the
President and Chief Executive Officer of Progenitor, Xx. Xxxxx (during the
Period of Employment) shall not (i) engage in any other full or part-time
employment; or (ii) engage, directly or indirectly, in any other business or
commercial activity (whether or not pursued for pecuniary advantage) that might
materially interfere with the business of Progenitor or any Affiliate or
otherwise create a conflict of interest with Progenitor or any Affiliate. An
"Affiliate" shall mean any person or entity that directly or indirectly
controls, is controlled by, or is under common control with Progenitor. So that
Progenitor may be aware of the extent of any other demands upon Xx. Xxxxx'x time
and attention, Xx. Xxxxx shall disclose in confidence to the President and Chief
Executive Officer of Progenitor the nature and scope of any other business
activity in which he is or becomes engaged during the Period of Employment.
Notwithstanding the foregoing, Xx. Xxxxx may devote a reasonable amount of time
to professional, civic, and community affairs, and he may own up to one per cent
(1%) of the publicly traded stock of any business. Xx. Xxxxx does not currently
serve on any Boards of Directors other than as follows: Terminal Plaza
Associates.
(c) RESIGNATION. As of the Effective Date, Xx. Xxxxx hereby resigns
from all positions, offices and responsibilities with Mercator, including
without limitation, (i) his position as President and Chief Executive Officer
and (ii) his position on the Board of Directors of Mercator.
3. COMPENSATION AND BENEFITS.
(a) COMPENSATION. In consideration of the services to be rendered
under this Agreement, Progenitor shall pay Xx. Xxxxx a salary at the rate of two
hundred twenty-five thousand dollars ($225,000) per year, payable monthly,
pursuant to the procedures regularly established. The Board of Directors of
Progenitor ("Board") (or its Compensation Committee) shall review annually Xx.
Xxxxx'x salary for potential adjustment in its sole discretion and without
regard to any policy or practice Progenitor may have for adjusting salaries
generally, provided that Xx. Xxxxx'x salary may be adjusted downward only if and
to the extent that such downward adjustments are implemented for all other
senior managers of Progenitor, other than the President and Chief Executive
Officer. Progenitor shall also provide Xx. Xxxxx the additional compensation
set forth in the attached Exhibit B. Xx. Xxxxx shall not be entitled to any
compensation from Progenitor or Mercator other than as specifically set forth in
this Agreement, except as the Board in its sole discretion may determine to
provide.
(b) BONUSES. Xx. Xxxxx shall be eligible to receive annual bonuses
based upon the achievement of reasonable objectives established by the Board of
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Directors or its Compensation Committee. The potential amount of such bonuses,
the performance criteria for the award of the bonuses, and any amount actually
awarded shall be subject to the recommendation of the President and Chief
Executive Officer of Progenitor and the approval of the Board of Directors or
the Compensation Committee. Xx. Xxxxx'x potential bonuses shall be in the range
of 0 to 30% of salary and shall be not less than the potential bonuses provided
for other senior managers of Progenitor other than the President and Chief
Executive Officer.
(c) STOCK OPTIONS. Xx. Xxxxx shall receive stock options to purchase
shares of Progenitor Common Stock equal to one per cent (1%) of the outstanding
Common Stock of Progenitor on a fully-diluted basis ("Initial Options")
immediately after the closing of Progenitor's initial public offering of its
Common Stock and the closing of the Reorganization. The terms and conditions of
the Initial Options shall be subject to the recommendation of the Chief
Executive Officer of Progenitor and the approval of and grant by the Board of
Directors or the Compensation Committee, provided, however that (i) the exercise
price shall be the price to the public in the initial public offering, (ii) the
vesting schedule shall be one quarter (1/4) of the options vesting after one (1)
year with the remainder to vest ratably on a quarterly basis over the next three
(3) years such that the options are fully vested after four (4) years, and (iii)
the vesting shall accelerate in the event of a change of control of Progenitor
if, and to the extent that, such accelerated vesting is made available to any
other senior manager of Progenitor other than the President and Chief Executive
Officer. To the maximum extent permitted by law, the Inital Options shall be
incentive stock options. The Initial Options shall be in addition to Xx.
Xxxxx'x stock options rolling over from Mercator pursuant to the Agreement and
Plan of Reorganization, dated as of February 14, 1997, by and among Progenitor,
Reorganization Sub, and Mercator (the "Reorganization Agreement"). If the
closing of the Reorganization referred to above occurs prior to the initial
public offering, then Xx. Xxxxx shall receive the Initial Options as provided
above except that they shall be received in stages as follows: (A) immediately
after the closing of the Reorganization, Xx. Xxxxx shall receive options equal
to one per cent (1%) of the then outstanding Common Stock of Progenitor on a
fully-diluted basis, at a fair market value to the determined by the Board of
Progenitor; and (B) immediately after the initial public offering, if and when
such occurs, Xx. Xxxxx shall receive additional options at the price to the
public, such that the total number of options received under subparts A and B of
this Section equals one per cent (1%) of the outstanding Common Stock of
Progenitor on a fully-diluted basis as of immediately following the initial
public offering.
If Xx. Xxxxx is terminated without Cause (as defined below) or
resigns for Good Reason (as defined below) during the first year of the Period
of Employment, the vesting of one quarter (1/4) of the stock options granted
pursuant to this Section 3(c) which otherwise would vest after one (1) year
shall vest proratably as of the effective date of termination based on the
number of full months Xx. Xxxxx was employed by Progenitor divided by twelve
(12). If Xx. Xxxxx is terminated without Cause or resigns for Good Reason after
the first year of the Period of Employment, the vesting the remaining stock
options shall accelerate if, and to the extent that, such accelerated vesting
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is made available to any other senior manager of Progenitor other than the
President and Chief Executive Officer.
(d) BENEFITS. Xx. Xxxxx shall be entitled to vacation leave in
accordance with Progenitor's standard policies. Xx. Xxxxx shall have the right
to participate in and to receive benefits from all present and future benefit
plans specified in Progenitor's policies and generally made available to
similarly situated employees of Progenitor including without limitation, life
insurance (in the amount of $450,000), disability insurance, medical, dental,
retirement, sick leave, and all comparable benefits similarly titled.
Progenitor shall further provide to Xx. Xxxxx the benefits listed on the
attached Exhibit C (and in connection therewith, Progenitor and Xx. Xxxxx agree
that the term "Lender" pursuant to that certain Promissory Note dated as of
September 7, 1995 in the principal amount of $150,000 payable by Xx. Xxxxx
shall, from and after the Effective Date, refer to Progenitor and not Mercator).
Xx. Xxxxx also shall be entitled to any benefits or compensation tied to
termination as described in Section 4. No statement concerning benefits or
compensation to which Xx. Xxxxx is entitled shall alter in any way the term of
this Agreement, any renewal thereof, or its termination. All compensation and
comparable payments to be paid to Xx. Xxxxx under this Agreement shall be less
withholdings required by law. Xx. Xxxxx shall not be entitled to any benefits
from Progenitor or Mercator other than as specifically set forth in this
Agreement, except as the Board in its sole discretion may determine to provide.
(e) EXPENSES. Progenitor shall pay or reimburse Xx. Xxxxx for
reasonable travel and other business expenses incurred by Xx. Xxxxx in the
performance of his duties, in accordance with Progenitor's policies, as they may
be amended in Progenitor's sole discretion.
(f) LIMITATION ON PAYMENTS. Notwithstanding anything in this
Agreement to the contrary, if any portion of any payments to Xx. Xxxxx by
Progenitor under this Agreement and any other present or future plan of
Progenitor or other present or future agreement between Xx. Xxxxx and Progenitor
would not be deductible by Progenitor for federal income tax purposes by reason
of application of section 162(m) of the Internal Revenue Code of 1986, as
amended ("Code"), then payment of that portion to Xx. Xxxxx shall be deferred
until the earliest date upon which payment thereof can be made to Xx. Xxxxx
without being non-deductible pursuant to section 162(m) of the Code. In the
event of such deferral, Progenitor shall pay interest to Xx. Xxxxx on the
deferred amount at 120% of the applicable federal rate provided for in section
1274(d)(1) of the Code. In addition, notwithstanding any provision of this
Agreement to the contrary, the total payments or benefits to be made or provided
to Xx. Xxxxx by Progenitor (whether pursuant to this Agreement or otherwise)
shall not exceed three times Xx. Xxxxx'x annualized includible compensation for
the base period, as defined in Subsection (d) of Section 280G of the Code, minus
one dollar ($1.00). The intent of this portion of this Section 3(d) is to
prevent any payment or benefit to Xx. Xxxxx from being subject to the excise tax
imposed by Code Section 4999 and to prevent any item of expense or
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deduction of Progenitor from being disallowed as a result of the application of
Code Section 280G.
4. TERMINATION OF EMPLOYMENT.
(a) BY DEATH. The Period of Employment shall terminate automatically
upon the death of Xx. Xxxxx. Progenitor shall pay to Xx. Xxxxx'x beneficiaries
or estate, as appropriate, all vested compensation then due and owing, including
but not limited to payment for any accrued unused vacation and vested bonus
("Accrued Compensation"). Thereafter, all obligations of Progenitor under this
Agreement shall cease. Nothing in this Section shall affect any entitlement of
Xx. Xxxxx'x heirs to the benefits of any life insurance plan or other applicable
benefits.
(b) BY DISABILITY. If, by reason of any physical or mental
incapacity, Xx. Xxxxx has been or will be prevented from properly performing his
duties under this Agreement for more than ninety (90) days in any one (1) year
period, then, to the extent permitted by law, Progenitor may terminate the
Period of Employment upon thirty (30) days' advance written notice. Progenitor
shall pay Xx. Xxxxx all Accrued Compensation through the last business day of
the notice period. Thereafter, all obligations of Progenitor under this
Agreement shall cease, provided however, that nothing in this Section shall
affect Xx. Xxxxx'x rights under any applicable Progenitor disability plan nor
Xx. Xxxxx'x right to disability insurance.
(c) BY EMPLOYER NOT FOR CAUSE. At any time, Progenitor may terminate
the Period of Employment for any reason, with or without cause, by providing Xx.
Xxxxx thirty (30) days advance written notice. Progenitor shall have the
option, in its complete discretion, (A) to require Xx. Xxxxx to work from home
and not to report to his office during the balance of the notice period, or (B)
to terminate Xx. Xxxxx at any time prior to the end of such notice period. In
either event, Progenitor shall (i) pay to Xx. Xxxxx all Accrued Compensation and
continue his benefits through the last business day of the notice period; (ii)
pay to Xx. Xxxxx on the last business day of the notice period a lump sum equal
to six (6) months salary; (iii) pay Xx. Xxxxx'x COBRA premiums for six (6)
months following the last business day of the notice period ("Benefit
Continuation Period"); and (iv) to the extent permitted by the applicable plans,
continue Xx. Xxxxx'x life insurance and disability insurance coverage during the
Benefit Continuation Period (items i through iv collectively referred to
hereafter as "Separation Benefits"). Thereafter, all of Progenitor's
obligations under this Agreement shall cease.
(d) BY EMPLOYER FOR CAUSE. At any time and, except as to clause (i)
of this Section 4(d), without prior notice, Progenitor may terminate the Period
of Employment for Cause (as defined below). In the event of termination for
Cause, Progenitor shall pay Xx. Xxxxx all Accrued Compensation through the date
of termination, thereafter, all of Progenitor's obligations under this Agreement
shall cease. Termination shall be for "Cause" if Xx. Xxxxx: (i) exhibits in
regard to his employment unfitness or unavailability for service, habitual
neglect, or incompetence or willfully breaches any
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material term of this Agreement; (ii) engages in employment-related misconduct
or acts in bad faith and to the detriment of Progenitor; (iii) exhibits
dishonesty in regard to his employment or is convicted of a crime involving
dishonesty, breach of trust, or physical or emotional harm to any person; (iv)
furnishes proprietary confidential information of Progenitor to a competitor or
a potential competitor except in the bona fide belief that such action was for
the benefit and best interest of Progenitor, or (v) is habitually intoxicated by
alcohol or drugs during work hours. Notwithstanding the above, upon the
occurrence of an event described in subsection (i) above, Progenitor shall give
Xx. Xxxxx thirty (30) days advance written notice of its intent to terminate and
the reason for termination. During this thirty (30) day period, Xx. Xxxxx shall
have an opportunity to correct the situation, and if corrected (in Progenitor's
reasonable judgment), Xx. Xxxxx'x Period of Employment shall not be terminated;
if not corrected (in Progenitor's reasonable judgment), termination shall become
effective upon expiration of such thirty (30) day period. If termination is due
to Xx. Xxxxx'x disability, Section 4(b) above shall control, and not this
Section 4(d) on termination for Cause.
(e) BY EMPLOYEE NOT FOR CAUSE. At any time, Xx. Xxxxx may terminate
the Period of Employment for any reason, with or without cause, by providing
Progenitor thirty (30) days' advance written notice. Progenitor shall have the
option, in its complete discretion, to make Xx. Xxxxx'x termination effective at
any time prior to the end of such notice period. In either event, Progenitor
shall pay Xx. Xxxxx all Accrued Compensation through the last day of the above
notice period, not to exceed thirty (30) days; thereafter, all of Progenitor's
obligations under this Agreement shall cease.
(f) BY EMPLOYEE FOR GOOD REASON. Xx. Xxxxx may terminate the Period
of Employment for Good Reason (as defined below), provided Xx. Xxxxx gives
Progenitor thirty (30) days' advance written notice of the reason for
termination and his intent to terminate this Agreement. During this period,
Progenitor shall have an opportunity to correct the condition constituting Good
Reason. If the condition is remedied within this period (in the reasonable
judgment of Xx. Xxxxx), Xx. Xxxxx'x notice to terminate shall be rescinded
without the necessity of any further action by any party; if not remedied,
termination shall become effective upon expiration of the above notice period.
Progenitor shall also have the option, in its complete discretion, to make Xx.
Xxxxx'x termination effective at any time prior to the end of the notice period.
In either event, Progenitor shall provide Xx. Xxxxx the Separation Benefits.
Thereafter, all of Progenitor's obligations under this Agreement shall cease.
Xx. Xxxxx shall be entitled to exercise his right to terminate this Agreement
for Good Reason only if he gives the required notice not more than sixty (60)
days after the occurrence of the event that is the basis for the Good Reason or
the occurrence of the most recent of a concerted continuous pattern of events.
Termination shall result from a "Good Reason" if: (i) there is
an adverse change in Xx. Xxxxx'x title or a material and adverse change in Xx.
Xxxxx'x position, duties, responsibilities, or status with Progenitor; (ii)
there is a reduction in Xx. Xxxxx'x salary then in effect, other than a
reduction comparable to reductions generally
6
applicable to similarly situated employees of Progenitor; (iii) there is a
material reduction in Xx. Xxxxx'x benefits, other than a reduction comparable to
reductions generally applicable to similarly situated employees of Progenitor;
(iv) Xx. Xxxxx is requested to relocate outside the San Francisco Bay Area; or
(v) Progenitor materially breaches this Agreement.
(g) TERMINATION OBLIGATIONS
i) All benefits to which Xx. Xxxxx is otherwise entitled shall
cease upon Xx. Xxxxx'x termination, unless explicitly continued either under
this Agreement or under any specific written or policy or benefit plan of
Progenitor.
ii) Upon termination of the Period of Employment, Xx. Xxxxx
shall be deemed to have resigned from all offices and directorships then held
with Progenitor or any Affiliate.
iii) Following any termination of the Period of Employment, Xx.
Xxxxx shall fully cooperate with Progenitor in all matters relating to the
winding up of pending work on behalf of Progenitor and the orderly transfer of
work to other employees of Progenitor. Xx. Xxxxx shall also cooperate, at
Progenitor's reasonable expense, in the defense of any action brought by any
third party against Progenitor that relates in any way to Xx. Xxxxx'x acts or
omissions while employed by Progenitor.
5. PROPRIETARY INFORMATION. Xx. Xxxxx shall execute and deliver
concurrently with the Effective Date a proprietary information agreement in the
form attached as EXHIBIT E ("Proprietary Information Agreement").
6. NONSOLICITATION. Xx. Xxxxx agrees that for a period of one year from
his termination of employment with Progenitor, he shall not solicit for
employment any person employed by Progenitor.
7. RELEASE OF CLAIMS.
(a) Xx. Xxxxx, Progenitor, and Mercator shall execute and deliver
concurrently with the Effective Date the Mutual Release attached hereto as
EXHIBIT F.
(b) Xx. Xxxxx represents that, after consulting with counsel, he is
not presently aware of any claims against Progenitor, Mercator, or any Affiliate
relating to his employment and based on Title VII of the Civil Rights Act of
1964, the Age Discrimination in Employment Act, the Americans with Disabilities
Act, the California Fair Employment and Housing Act, fraud, negligent or
intentional misrepresentation, negligent or intentional interference with
contract or prospective economic advantage, defamation, slander, or invasion of
privacy.
8. ARBITRATION.
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(a) ARBITRABLE CLAIMS. All disputes between Xx. Xxxxx (and his
attorneys, successors, and assigns) and Progenitor or Mercator (and their
Affiliates, shareholders, directors, officers, employees, agents, successors,
attorneys, and assigns) of any kind whatsoever, including without limitation,
all disputes relating in any manner to the employment or termination of Xx.
Xxxxx, and all disputes arising under this Agreement, ("Arbitrable Claims")
shall be resolved by arbitration. All persons and entities specified in the
preceding sentence (other than Progenitor, Mercator, and Xx. Xxxxx) shall be
considered third-party beneficiaries of the rights and obligations created by
this Section on Arbitration. Arbitrable Claims shall include, but are not
limited to, contract (express or implied) and tort claims of all kinds, as well
as all claims based on any federal, state, or local law, statute, or regulation,
excepting only claims under applicable workers' compensation law and
unemployment insurance claims. By way of example and not in limitation of the
foregoing, Arbitrable Claims shall include any claims arising under Title VII of
the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the
Americans with Disabilities Act, and the California Fair Employment and Housing
Act, as well as any claims asserting wrongful termination, breach of contract,
breach of the covenant of good faith and fair dealing, negligent or intentional
infliction of emotional distress, fraud, negligent or intentional
misrepresentation, negligent or intentional interference with contract or
prospective economic advantage, defamation, invasion of privacy, and claims
related to disability. Arbitration shall be final and binding upon the parties
and shall be the exclusive remedy for all Arbitrable Claims. THE PARTIES HEREBY
WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN REGARD TO ARBITRABLE CLAIMS.
(b) PROCEDURE. Arbitration of Arbitrable Claims shall be in
accordance with the National Rules for the Resolution of Employment Disputes of
the American Arbitration Association, as amended ("AAA Employment Rules"), as
augmented in this Agreement. Arbitration shall be initiated as provided by the
AAA Employment Rules, although the written notice initiating arbitration as
provided by the AAA Employment Rules shall also include a statement of the
claim(s) asserted and the facts upon which the claim(s) are based. Either party
may bring an action in court to compel arbitration under this Agreement and to
enforce an arbitration award. Otherwise, neither party shall initiate or
prosecute any lawsuit or administrative action in any way related to any
Arbitrable Claim. The Federal Arbitration Act shall govern the interpretation
and enforcement of this Section 8.
(c) ARBITRATOR SELECTION AND AUTHORITY. All disputes involving
Arbitrable Claims shall be decided by a single arbitrator. The arbitrator shall
be selected by mutual agreement of the parties within thirty (30) days of the
effective date of the notice initiating the arbitration. If the parties cannot
agree on an arbitrator, then the complaining party shall notify the AAA and
request selection of an arbitrator in accordance with the AAA Employment Rules.
The arbitrator shall have only such authority to award equitable relief,
including but not limited to injunctive relief, damages, costs, and fees as a
court would have for the particular claim(s) asserted. The fees of the
arbitrator shall be split between both parties equally. The arbitrator shall
have exclusive
8
authority to resolve all Arbitrable Claims, including, but not limited to,
whether any particular claim is arbitrable and whether all or any part of this
Agreement is void or unenforceable.
(d) CONTINUING OBLIGATIONS. The rights and obligations of Xx. Xxxxx
and Progenitor set forth in this Section on Arbitration shall survive the
termination of the Period of Employment and the expiration of this Agreement.
9. MISCELLANEOUS.
(a) NOTICES. Any notice under this Agreement must be in writing and
shall be effective upon delivery by hand, upon facsimile transmission, or three
(3) business days after deposit in the United States mail, postage prepaid,
certified or registered, and addressed to Progenitor or to Xx. Xxxxx at the
corresponding address or fax number below. Xx. Xxxxx shall be obligated to
notify Progenitor in writing of any change in his address. Notice of change of
address shall be effective only when done in accordance with this Section.
Progenitor's Notice Address:
Progenitor, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Given, M.D., Ph.D.
Fax Number: (000) 000-0000
With a copy to:
Xxxxx X. Xxxxxx
Xxxxxxxx & Xxxxxxxx, LLP
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Fax Number: (000) 000-0000
Xx. Xxxxx'x Notice Address:
Xxxxxxx Xxxxx, M.D., Ph.D.
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
With a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
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Attention: Xxxx X. Xxxx
Fax Number: (000) 000-0000
(b) ACTION BY PROGENITOR. All actions required or permitted to be
taken under this Agreement by Progenitor, including without LIMITATION, exercise
of discretion, consents, waivers, and amendments to this Agreement, shall be
made and authorized only by the President and Chief Executive Officer or by his
or her representative specifically authorized in writing to fulfill these
obligations under this Agreement.
(c) INTEGRATION. As of the Effective Date, this Agreement is
intended to be the final, complete, and exclusive statement of the terms of Xx.
Xxxxx'x employment by Progenitor, Mercator or any of their respective
Affiliates. This Agreement supersedes all other prior and contemporaneous
agreements and statements, whether written or oral, express or implied,
pertaining in any manner to the employment of Xx. Xxxxx, and it may not be
contradicted by evidence of any prior or contemporaneous statements or
agreements. To the extent that the practices, policies, or procedures of
Progenitor, now or in the future, apply to Xx. Xxxxx and are inconsistent with
the terms of this Agreement, the provisions of this Agreement shall control,
including without limitation any practices, policies, or procedures relating to
the employment, discipline, or termination of employees.
(d) AMENDMENTS; WAIVERS. This Agreement may not be amended except by
an instrument in writing, signed by Progenitor and Xx. Xxxxx. No failure to
exercise and no delay in exercising any right, remedy, or power under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, or power under this Agreement preclude any other
or further exercise thereof, or the exercise of any other right, remedy, or
power provided herein or by law or in equity.
(e) ASSIGNMENT, SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of (i) the heirs, executors and legal
representatives of Xx. Xxxxx upon Xx. Xxxxx'x death and (ii) any successor or
assignee of Progenitor. Notwithstanding the above, Xx. Xxxxx'x duties and
responsibilities set forth in Section 2 above shall not be assignable or
delegable. Nothing in this Agreement shall prevent the consolidation of
Progenitor with, or its merger into any other entity, or the sale by Progenitor
of all or substantially all of its assets, or the otherwise lawful assignment by
Progenitor of any rights or obligations under this Agreement.
(f) SEVERABILITY. If any provision of this Agreement, or its
application to any person, place, or circumstance, is held by an arbitrator or a
court of competent jurisdiction to be invalid, unenforceable, or void, such
provision shall be enforced to the greatest extent permitted by law, and the
remainder of this Agreement and such provision as applied to other persons,
places, and circumstances shall remain in full force and effect.
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(g) ATTORNEYS' FEES. In any arbitration proceeding brought to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees and costs.
(h) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the law of the State of California.
(i) INTERPRETATION. This Agreement shall be construed as a whole,
according to its fair meaning, and not in favor of or against any party. By way
of example and not in limitation, this Agreement shall not be construed in favor
of the party receiving a benefit nor against the party responsible for any
particular language in this Agreement. Captions are used for reference purposes
only and should be ignored in the interpretation of the Agreement.
(j) EMPLOYEE ACKNOWLEDGMENT. Xx. Xxxxx acknowledges that he has had
the opportunity to consult legal counsel in regard to this Agreement, that he
has read and understands this Agreement, that he is fully aware of its legal
effect, and that he has entered into it freely and voluntarily and based on his
own judgment and not on any representations or promises other than those
contained in this Agreement.
The parties have duly executed this Agreement as of the date first
written above.
XX. XXXXX
/S/ XXXXXXX XXXXX
--------------------------------------------------
Xxxxxxx Xxxxx, M.D., Ph.D.
PROGENITOR, INC.
By: /S/ XXXX X.X. XXXXXXX
-----------------------------------------------
Its: Vice President and Chief Financial Officer
----------------------------------------------
MERCATOR GENETICS, INC.
By: /S/ XXXXXXX XXXXX
-----------------------------------------------
Its: President and Chief Executive Offiver
----------------------------------------------
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EXHIBIT A
1997 Goals
1. Successfully design, implement and manage one or more research and
development programs which result in newly committed research and
development funding of between $2 million and $5 million per year for a 3
to 5 year period.
TARGET FOR COMPLETION: Within 12 months of the Effective Time of the
Reorganization.
2. Successfully merge the Research departments and employees of Mercator and
Progenitor into a newly-formed Research function, which will be headed by
H. Xxxxx Xxxxxxxxx, Vice President, Research and Chief Scientific Officer,
except that during a transition period the Human Genetics program will
report directly to Xx. Xxxxx. Recognizing Xx. Xxxxxxxxx' key role in
Progenitor, it is critical that this Reorganization be accomplished in a
way that optimizes Xx. Xxxxxxxxx' opportunity to continue to contribute to
the success of Progenitor. Any preclinical and clinical development
departments will report to Xx. Xxxxx.
TARGET FOR COMPLETION: Beginning immediately upon the Effective Time of
the Reorganization and ongoing thereafter.
3. In connection with the following programs:
(a) Genetics Program - asthma
(b) Genetics Program - schizophrenia
(c) Genetics Program - cancer or arteriosclerosis
(d) Developmental Biology Program - del-1 program
(e) Developmental Biology Program - Leptin receptor program
(f) Developmental Biology Program - model systems
(g) New Technology Programs - bioinformatics
(h) New Technology Programs - gene expression
Establish a strategic research plan using standard project management to
identify and implement an approved milestone-driven research and
development effort which results in a successful strategic alliance(s) in
genetics (minimum of $6 million in committed funding) and a successful
developmental biology alliance (minimum of $4 million in committed
funding), or results in additional equity financing of at least $15
million.
TARGET FOR COMPLETION: Within 12 months of the Effective Time of the
Reorganization.
Exhibit A
4. Successfully contribute to other corporate goals mutually defined with
other members of senior management, e.g., corporate strategic plans,
budgets, etc.
TARGET FOR COMPLETION: On-going.
Exhibit A
EXHIBIT B
ADDITIONAL COMPENSATION
All accrued but unpaid vacation of Xx. Xxxxx from his period of employment
by Mercator shall be carried over to employment by Progenitor. As of the date
of this Agreement, Xx. Xxxxx has 90 hours of accrued but unused vacation pay.
Any salary in the ordinary course of Xx. Xxxxx'x employment by Mercator
that is accrued but unpaid by Mercator shall be carried over to and paid by
Progenitor at the next regularly-scheduled payroll date.
Progenitor options shall be substituted in accordance with the
Reorganization Agreement for any Mercator employee stock options of Xx. Xxxxx,
all of which will be fully vested as of the Effective Time. Such options shall
be not be included in the calculation of the options to be granted to Xx. Xxxxx
pursuant to Section 3(c) of the Employment Agreement.
Progenitor shall not assume, but shall have no objection to the payment by
Mercator of, Xx. Xxxxx'x bonus of $40,000 effective January 1997 and payable
ratably from January through April, so long as the payment does not exceed the
budget provided Progenitor by Mercator in connection with the Loan Agreement.
The Retention Plan described in EXHIBIT D.
Exhibit B
EXHIBIT C
ADDITIONAL BENEFITS
- In September 1995, Mercator loaned $150,000 to Xxxxxxx Xxxxx. The related
note bears interest at the lesser of (i) 28.2% of the capital gain upon the
sale of the secured property or (ii) the Xxxxxx Mae Rate, compounded
annually. The balance is due no later than the first anniversary of Xx.
Xxxxx'x termination of employment.
- Reimbursement for reasonable business use of car phone.
Exhibit C
EXHIBIT D
Mercator Retention Plan
Xx. Xxxxx shall receive any payment to which Xx. Xxxxx is entitled by the
terms of the Mercator Retention Plan (as defined in the Reorganization
Agreement), at the rate of between fifteen percent (15%) and twenty five percent
(25%) of his base annual compensation.
Exhibit D
EXHIBIT E
PROGENITOR, INC.
PROPRIETARY INFORMATION AGREEMENT
As an employee of Progenitor, Inc., a Delaware corporation ("Progenitor"),
and in consideration of the covenants contained herein and in the Employment
Agreement between me and Progenitor dated February __, 1997 (the "Employment
Agreement"), I agree to the following:
1. MAINTAINING CONFIDENTIAL INFORMATION
(a) PROPRIETARY AND CONFIDENTIAL INFORMATION. "Proprietary
Information" is all information and any idea in whatever form, tangible or
intangible, pertaining in any manner to the business of Progenitor, Mercator
Genetics, Inc., or any affiliate or subsidiary (the "Company"), or their
employees, clients, consultants, licensees, collaborators, or business
associates, which was produced by any employee of the Company in the course of
his or her employment or otherwise produced or acquired by or on behalf of the
Company. All Proprietary Information not generally known outside of the
Company's organization, and all Proprietary Information so known only through
improper means, shall be deemed "Confidential Information." Without limiting
the foregoing definition, Proprietary and Confidential Information shall
include, but not be limited to: (i) trade secrets, formulas, processes,
know-how, designs, development or experimental work, computer programs, data
bases, other original works of authorship, electronic codes, inventions,
improvements, and research projects; (ii) information about costs, profits,
markets, sales, and lists of customers or clients; (iii) business, marketing,
and strategic plans; and (iv) employee personnel files and compensation
information.
(b) RESTRICTION ON USE. I agree at all times during the term of my
employment not to use Proprietary Information, nor to disclose Confidential
Information, except for the benefit of the Company. Following my employment, I
agree that I shall neither, directly or indirectly, use any Proprietary
Information nor disclose any Confidential Information, except as expressly and
specifically authorized in writing by the President and Chief Executive Officer
or Board of Directors of the Company.
(c) FORMER EMPLOYER INFORMATION. I agree that I will not, during my
employment with the Company, improperly use or disclose any proprietary or
confidential information or trade secrets of my former or concurrent employers
or companies, if any, and that I will not bring onto the premises of the Company
any unpublished document or any property belonging to my former or concurrent
employers or companies, if any, unless consented to in writing by said employers
or companies.
(d) THIRD PARTY INFORMATION. I recognize that the Company has
received and in the future will receive from third parties their confidential or
proprietary information or trade secrets subject to a duty on the Company's part
to maintain the
Exhibit E-1
confidentiality of such information and to use it only for certain limited
purposes. I agree that I owe the Company and such third parties, during the
term of my employment and thereafter, a duty to hold all such confidential or
proprietary information in the strictest confidence and not to disclose it to
any person, firm or corporation (except as necessary in carrying out my work for
the Company consistent with the company's agreement with such third party) or to
use it for the benefit of anyone other than for the Company or such third party
(consistent with the Company's agreement with such third party) without the
express written authorization of the President and Chief Executive Officer or
the Board of Directors of the Company.
2. RETAINING AND ASSIGNING INVENTIONS AND ORIGINAL WORKS
(a) INVENTION IDEAS. The term "Invention/Idea" includes any and all
ideas, processes, trademarks, service marks, inventions, technology, computer
hardware or software, original works of authorship, designs, formulas,
discoveries, patents, copyrights, products, and all improvements, know-how,
rights, and claims related to the foregoing that are conceived, developed, or
reduced to practice by me, alone or with others, during my employment with the
Company, except to the extent that California Labor Code Section 2870 lawfully
prohibits the assignment of rights in such intellectual property. A copy of
California Labor Code Section 2870 is attached hereto as Exhibit B.
(b) RECORDS. I agree to maintain adequate and current written
records on the development of all Invention/Ideas. The records will be in the
form of notes, sketches, drawings, and any other format that may be specified by
the Company. The records will be available to and remain the sole property of
the Company at all times.
(c) DISCLOSURE. I agree to disclose promptly to the Company all
Invention/Ideas and relevant records. I further agree that all information and
records pertaining to any idea, process, trademark, service xxxx, invention,
technology, computer hardware or software, original work of authorship, design,
formula, discovery, patent, copyright, product, and all improvements, know-how,
rights, and claims related to the foregoing ("Intellectual Property"), that I do
not believe to be an Invention/Idea, but that is conceived, developed, or
reduced to practice by me (alone or with others) during my employment with the
Company, shall be disclosed promptly to the Company (such disclosure to be
received in confidence). The Company shall examine such information to
determine if in fact the Intellectual Property is an Invention/Idea subject to
this Agreement. I understand that the Company's determination in this regard
shall not be binding upon me.
(d) INVENTIONS AND ORIGINAL WORKS ASSIGNED TO THE COMPANY. I agree
to assign, and hereby do assign, to the Company my entire right, title, and
interest (throughout the United States and in all foreign countries), free and
clear of all liens and encumbrances, in and to each Invention/Idea, which shall
be the sole property of the Company, whether or not patentable. In the event
any Invention/Idea is deemed by Company to be patentable or otherwise
registrable, I agree to assist the Company (at its
Exhibit E-2
expense) in obtaining letters patent or other applicable registrations thereon
and shall execute all documents and do all other things necessary or proper
thereto (including testifying at the Company's expense) and to vest the Company,
or any entity or person specified by the Company, with full and perfect title
thereto or interest therein. I further agree to take any action necessary or
advisable in connection with any continuations, renewals, or reissues thereof or
in any related proceedings or litigation. Should the Company be unable to
secure my signature on any document necessary to apply for, prosecute, obtain,
or enforce any patent, copyright, or other right or protection relating to any
Invention/Idea, whether due to my mental or physical incapacity or any other
cause, I irrevocably designates and appoints the Company and each of its duly
authorized officers and agents as my agent and attorney-in-fact, to act for and
in my behalf and stead and to execute and file any such document, and to do all
other lawfully permitted acts to further the prosecution, issuance, and
enforcement of patents, copyrights, or other rights or protections with the same
force and effect as if executed, delivered, and/or done by me.
I acknowledge that all original works of authorship which are
made by me (solely or jointly with others) within the scope of my employment and
which are protectable by copyright are "works made for hire," as that term is
defined in the United States Copyright Act (17 USCA, Section 101).
I hereby waive and quitclaim to the Company any and all claims,
of any nature whatsoever, which I now or may hereafter have for infringement of
any patents or copyright resulting from any such application for letters patent
or copyright registrations assigned hereunder to the Company.
I agree that my obligations to assist the Company to obtain
United States or foreign letters patent and copyright registrations, as the case
may be, covering Inventions/Ideas assigned hereunder to the Company shall
continue beyond the termination of my employment, but the Company shall
compensate me at a reasonable rate for time actually spent by me at the
Company's request on such assistance.
(e) INVENTIONS ASSIGNED TO THE UNITED STATES. I agree to assign to
the United States government all my right, title, and interest in and to any and
all inventions, original works of authorship, developments, improvements or
trade secrets whenever such full title is required to be in the United States by
a contract between the Company and the United States or any of its agencies.
3. EXCEPTION TO ASSIGNMENTS. I understand that the provisions of this
Agreement requiring assignment of the Company do not apply to any invention
which qualifies fully under the provisions of Section 2870 of the California
Labor Code, a copy of which is attached hereto as Exhibit B. I will advise the
Company promptly in writing of any Inventions that I believe meet the criteria
in Subparagraph 2(d) above, and I will at that time provide to the Company in
writing all evidence necessary to substantiate that belief. I understand that
the Company will keep in confidence and will not disclose to third parties
without my consent any confidential information disclosed in writing to the
Exhibit E-3
Company relating to inventions that qualify fully under the provisions of
Section 2870 of the California Labor Code.
4. COMPETITIVE ACTIVITY. I agree that for a period of six (6) months
after termination of my employment, I shall not, directly or indirectly, on
behalf of myself or any person, firm, partnership, joint venture, corporation or
other business entity, be employed by or consult with any entity listed on the
attached Exhibit C in any state where the Company conducts its business, unless
such employment or consulting occurs without the use in any way of Confidential
Information.
5. RETURNING COMPANY DOCUMENTS. I agree that, at the time of leaving the
employ of the Company, I will deliver to the Company (and will not keep in my
possession or deliver to anyone else) any and all tangible Proprietary
Information, devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials,
equipment, other documents or property, or reproductions of any aforementioned
items belonging to the Company, its successors or assigns.
6. REPRESENTATIONS. I agree to execute any proper oath or verify any
proper document required to carry out the terms of this Agreement. I represent
that my performance of all the terms of this Agreement will not breach any
agreement to keep in confidence proprietary information acquired by me in
confidence or in trust prior to my employment by the Company. I have not
entered into, and I agree I will not enter into, any oral or written agreement
in conflict herewith.
7. GENERAL PROVISIONS
(a) GOVERNING LAW. This Agreement will be governed by the laws of
the State of California.
(b) ENTIRE AGREEMENT. This Agreement sets for the entire agreement
and understanding between the Company and me relating to the subject matter
herein, merges all prior discussions between us and supersedes and replaces any
prior agreement concerning the subject matters herein. No modification of or
amendment to this Agreement, nor any waiver of any rights under this agreement,
will be effective unless in writing signed by the party to be charged. Any
subsequent change or changes in my duties, salary or compensation will not
affect the validity or scope of this Agreement.
(c) SEVERABILITY. If one or more of the provisions in this Agreement
are deemed void by law, then the remaining provisions will continue in full
force and effect.
(d) SUCCESSORS AND ASSIGNS. This Agreement will be binding upon my
heirs, executors, administrators and other legal representatives and will be for
the benefit of the Company, its successors, and its assigns.
Exhibit E-4
Date:
------------------------------
-----------------------------------
Signature
-----------------------------------
Name of Employee (typed or printed)
-----------------------------------
Witness
Exhibit E-5
EXHIBIT A
LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP
Identifying Number
Title Date or Brief Description
----- ---- --------------------
Exhibit A
EXHIBIT B
CALIFORNIA LABOR CODE SECTION 2870
EMPLOYMENT AGREEMENTS; ASSIGNMENT OF RIGHTS
(a) Any provision in any employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:
(1) Relate at the time of conception or reduction to practice of the
invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer.
(2) Result from any work performed by the employee for the employer.
(b) To the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and ins unenforceable.
Exhibit B
EXHIBIT C
LIST OF COMPETITORS
Any employment or consultation with the following companies would be subject to
the limitations of Section 4 of the Proprietary Information Agreement:
- Ontogeny
- Exelexis
- Creative Biomolecules
- Millenium Pharmaceuticals
- Sequana
- Human Genome Sciences
Exhibit C
EXHIBIT F
MUTUAL RELEASE
In consideration of the covenants contained herein and in the Employment
Agreement between the parties hereto dated February __, 1997 (the "Employment
Agreement"), Progenitor, Inc. ("Progenitor"), Mercator Genetics, Inc.
("Mercator"), and Xxxxxxx Xxxxx, M.D., Ph.D. ("Xx. Xxxxx") agree as follows:
1. XX. XXXXX RELEASE. Xx. Xxxxx and his representatives, heirs,
successors, and assigns do hereby completely release and forever discharge
Progenitor, Mercator, any Affiliate (as defined in the Employment Agreement) of
Progenitor or Mercator, and their present and former shareholders, officers,
directors, agents, employees, attorneys, successors, and assigns from all
claims, rights, demands, actions, obligations, liabilities, and causes of
action, known or unknown, mature or unmatured, arising from or in any way
related to his employment with Mercator or any of its Affiliates to the extent
that such claims are based on contract or the duty of good faith and fair
dealing, including without limitation, any claim relating to compensation or
benefits, except as set forth in EXHIBIT B, EXHIBIT D or otherwise in the
Employment Agreement or in the Agreement and Plan of Reorganization, dated as of
February __, 1997, by and among Progenitor, Reorganization Sub, and Mercator
("Xxxxx Released Claims").
2. PROGENITOR/MERCATOR RELEASE. Progenitor and Mercator and their
successors and assigns do hereby completely release and forever discharge Xx.
Xxxxx and his representatives, heirs, successors, and assigns from all claims,
rights, demands, actions, obligations, liabilities, and causes of action, known
or unknown, mature or unmatured, arising from or in any way related to his
employment with Mercator or any of its Affiliates to the extent that such claims
are based on contract or the duty of good faith and fair dealing, except as set
forth in the Employment Agreement or in the Agreement and Plan of Reorganization
referred to above ("Progenitor/Mercator Released Claims").
3. SECTION 1542 WAIVER. The parties understand and agree that the
Released Claims include not only claims presently known to Xx. Xxxxx,
Progenitor, or Mercator, but also include all unknown or unanticipated claims,
rights, demands, actions, obligations, liabilities, and causes of action of
every kind and character that would otherwise come within the scope of the Xxxxx
Released Claims or the Progenitor/Mercator Released Claims, respectively. The
parties understand that they may hereafter discover facts different from what
they now believe to be true, which if known, could have materially affected this
Agreement, but they nevertheless waive any claims or rights based on different
or additional facts. The parties knowingly and voluntarily waive any and all
rights or benefits that they may now have, or in the future may have, under the
terms of Section 1542 of the California Civil Code, which provides as follows:
F-1
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT
WITH THE DEBTOR.
4. INTEGRATION. The parties understand and agree that the preceding
Sections and the Employment Agreement recite the sole consideration for this
Agreement; that no representation or promise has been made by any party
concerning the subject matter of this Agreement, except as expressly set forth
in this Agreement or in the Employment Agreement; and that all agreements and
understandings between the parties concerning the subject matter of this
Agreement are embodied and expressed in this Agreement and the Employment
Agreement. This Agreement and the Employment Agreement shall supersede all
prior or contemporaneous agreements and understandings among the parties,
whether written or oral, express or implied, with respect to the subject matter
of this Agreement.
5. ASSIGNMENT; SUCCESSORS AND ASSIGNS. The parties represents that they
have not previously assigned or transferred any claims or rights released
pursuant to this Agreement. This Agreement shall be binding upon and shall
inure to the benefit of the parties and their respective heirs, successors,
attorneys, and permitted assigns. This Agreement shall also inure to the
benefit of any person or entity covered by the releases contained herein.
6. SEVERABILITY. If any provision of this Agreement, or its application
to any person, place, or circumstance, is held by an arbitrator or a court of
competent jurisdiction to be invalid, unenforceable, or void, such provision
shall be enforced to the greatest extent permitted by law, and the remainder of
this Agreement and such provision as applied to other persons, places, and
circumstances shall remain in full force and effect.
7. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the law of the State of California.
8. INTERPRETATION. This Agreement shall be construed as a whole,
according to its fair meaning, and not in favor of or against any party. By way
of example and not in limitation, this Agreement shall not be construed in favor
of the party receiving a benefit nor against the party responsible for any
particular language in this Agreement. Captions are used for reference purposes
only and should be ignored in the interpretation of the Agreement.
9. REPRESENTATION BY COUNSEL. The parties acknowledge that (i) they have
had the opportunity to consult counsel in regard to this Agreement; (ii) they
have read and understand the Agreement and they are fully aware of its legal
effect; and (iii) they are entering into this Agreement freely and voluntarily,
and based on each party's own
F-2
judgment and not on any representations or promises made by the other party,
other than those contained in this Agreement.
The parties have duly executed this Agreement as of February __, 1997.
XX. XXXXX
-----------------------------------
Xxxxxxx Xxxxx, M.D., Ph.D.
PROGENITOR, INC.
By:
--------------------------------
Its:
-------------------------------
MERCATOR GENETICS, INC.
By:
--------------------------------
Its:
-------------------------------
F-3
