Exhibit 10.20
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement") made and entered into as of April
15, 1999 (the "Effective Date"), by and between GENAISSANCE PHARMACEUTICALS,
INC. (the "Corporation"), a Delaware corporation with its principal office at 0
Xxxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxxx, 00000, and XXXXXX X. XXXXX, PH.D.
("Executive"), an individual who resides at 00 Xxxxxxxxxxx Xxx, Xxxxxxxxxxx,
Xxxxxxxxxxxxx, 00000-0000.
WHEREAS, the Corporation desires to employ Executive, and Executive
desires to accept employment with the Corporation, subject to the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. EMPLOYMENT. Executive shall be employed as an officer in the
capacity of Senior Vice President, Genomics ("SVP") of the Corporation during
the term of this Agreement, and Executive hereby accepts such employment, on the
terms and conditions hereinafter set forth. Executive represents that his
employment by the Corporation pursuant to this Agreement does not violate any
agreement, covenant or obligation to which he is a party or by which he is
bound.
2. DUTIES. During the term of this Agreement, Executive shall perform
all duties, consistent with his position as SVP in order to advance the
Corporation's genomics technology and related business efforts, assigned or
delegated to him by the Chief Executive Officer of the Corporation or his
delegate (the "CEO"), and normally associated with the position of SVP,
including, without limitation, managing the Corporation's genomics team,
addressing strategic and tactical business decisions of the Corporation with
other senior managers, and acting as liaison with the Corporation's Scientific
Advisory Board. He shall devote all of his full business time and best efforts
to the advancement of the interests and business of the Corporation except that
he shall be permitted from time to time to fulfill his responsibilities as a
member of the Scientific Advisory Board of Westminster College in New
Willmington, PA, so long as such responsibilities do not interfere with his
performance of his duties to the Corporation.
3. TERM. The term of Executive's employment under this Agreement
shall begin on the Effective Date, and shall expire at the close of business on
April 15, 2003, unless earlier terminated as provided in this Agreement (the
"Initial Term"). Upon expiration of the Initial Term, and each subsequent term
or extension thereof, this Agreement shall automatically be extended for an
additional term of one (1) year, unless Executive or the Corporation shall have
notified the other of his or its election to terminate this Agreement not later
than one hundred eighty (180) days prior to the end of such subsequent term or
extension thereof (the "Initial Term", together with any extensions, until
termination in accordance herewith, shall be referred
to herein as the "Employment Term"). If the Executive continues in the full-time
employ of the Corporation after the end of the Employment Term (it being
expressly understood and agreed that the Corporation does not now, nor hereafter
shall have, any obligation to continue the Executive in its employ, whether or
not on a full-time basis, after the Employment Term ends), then the Executive's
continued employment by the Corporation shall, notwithstanding anything to the
contrary expressed or implied herein, be terminable by the Corporation at will.
4. COMPENSATION. As compensation for the services to be rendered by
Executive to the Corporation pursuant to this Agreement, the Corporation shall
pay Executive and provide Executive with the following compensation and benefits
which Executive agrees to accept in full satisfaction for his services:
a. BASE SALARY. The Corporation shall pay Executive a base
salary, payable in equal installments at such payment intervals as are
the usual custom of the Corporation, but not less often than monthly,
at an annual rate of $185,000, less such deductions or amounts to be
withheld as shall be required by applicable law (the "Base Salary").
The Base Salary shall be reviewed annually by the CEO and shall be
increased (but not decreased), if at all, (effective as of each
successive anniversary of the Effective Date) by such amount, if any,
as the CEO, in his sole discretion, shall determine.
b. BONUSES. Beginning in the year 2000, during the first quarter
of each of the Corporation's fiscal years during the Employment Term,
the Corporation shall pay Executive a bonus (an "Incentive Bonus")
equal to such amount as shall be determined by the CEO in his sole
discretion based upon Executive's achievements in meeting his
performance goals and those of the Corporation for its most recently
ended fiscal year. For the fiscal year ending December 31, 1999, such
goals shall be established by June 1, 1999. Thereafter, such goals
shall be established in the first quarter of each fiscal year after the
commencement of the Employment Term. Each Incentive Bonus may be
payable in cash and/or stock options as determined by the CEO.
c. BENEFITS.
(i) Executive shall be entitled to participate, to the
extent he is eligible, in all group insurance programs, health,
medical, dental, and disability plans, and other employee benefit
plans (including, without limitation, the Corporation's 401(k)
plan) which the Corporation may hereafter in its sole and absolute
discretion make available generally to its senior management
(other than any incentive compensation or equity ownership plan,
for which he shall be eligible at the discretion of the CEO), but
the Corporation shall not be required to establish or maintain any
such program or plan.
(ii) Executive shall be entitled to three (3) weeks paid
vacation during each calendar year. Such vacation may be taken at
such time or times as is reasonably consistent with the
Corporation's vacation policies and the performance by Executive
of his duties and responsibilities hereunder.
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(iii) Executive shall be entitled to participate in the
Corporation's 1993 Stock Option Plan (the "Plan") and the
Corporation shall use its best efforts to cause the board of
directors of the Corporation (the "Board") or the applicable
committee of the Board to grant Executive an option pursuant to
the terms of the Plan, having a ten-year term, to purchase 100,000
shares of the Corporation's common stock at an exercise price per
share equal to $3.00 (the "Option"), which Option shall be subject
to the provisions set forth in a separate agreement embodying the
grant of the Option and shall be in the form attached hereto as
Exhibit A. In addition to the foregoing, Executive shall be
entitled to participate in any program authorized by the Board
which grants additional stock options by the Corporation to the
founders of the Corporation, Xxxxxxxxx Xxxxx, M.D., Ph.D. and
Xxxxx X. Xxxxx (the "Founders"), under the following
circumstances: (A) such program is established in connection with
any equity financing of the Corporation that occurs after the
commencement of the Employment Term and prior to an initial
registered public offering of the Corporation's stock, and (B)
such equity financing results in a dilution of the existing stock
options held by the Founders or Executive. In addition, Executive
shall be eligible to participate in the Plan with respect to his
future performance as a senior executive of the Corporation.
(iv) The Corporation shall, during the Employment Term,
pay the premiums or a portion thereof (as specified hereafter) for
a $1,000,000 policy of term life insurance insuring the life of
Executive (subject to his meeting the insurability requirements of
the insurer). The Corporation shall pay the premiums for such
insurance policy up to the cost charged by the insurer to insure a
healthy 56 year old male non-smoker. Executive shall be the owner
of such policy and entitled to all of the rights of ownership
including designation of the beneficiary thereof.
(v) Subject to reasonable guidelines adopted by the
Board, throughout the Employment Term, the Corporation shall pay
the costs of dues for membership in at least one professional
organization whose activities are related to the business of the
Corporation.
(vi) The Corporation shall provide Executive with a
policy of long-term disability insurance with reasonable
coverages, which shall include the payment of benefits equal to at
least 60% of Executive's Base Salary during the disability
coverage period, and the Corporation shall pay the premiums or a
portion thereof (as specified hereafter) for such disability
insurance policy up to the cost charged by the insurer to insure a
healthy 56 year old male non-smoker.
(vii) The Corporation, at its expense, shall pay or
reimburse Executive for all reasonable moving expenses
attributable to the relocation of the Executive from Marlborough,
Massachusetts to Connecticut. At or about the commencement of the
Employment Term, the Corporation, at its expense, shall
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provide Executive with a furnished apartment or executive suite in
the New Haven area until the Executive and his family relocate.
x. XXXXXXXXX BENEFIT. If the Employment Term expires as a result
of either (i) the Executive terminating his employment pursuant to
Section 9(f) hereof, or (ii) the Corporation terminating Executive's
employment pursuant to Section 9(d) hereof, then upon the expiration of
the Employment Term, the Corporation shall be obligated to pay
Executive the applicable amounts specified in Section 10.
5. BUSINESS EXPENSES. The Corporation shall pay or reimburse
Executive for the reasonable and necessary business expenses of Executive
incurred in the performance of his duties hereunder, subject to reasonable
documentation thereof and the reasonable rules and regulations of the
Corporation relating thereto.
6. COVENANTS AGAINST COMPETITION.
a. In view of the unique value to the Corporation of the
services of Executive, and as a material inducement to the Corporation
to enter into this Agreement and to pay to Executive the compensation
and benefits set forth in this Agreement, Executive covenants and
agrees that during Executive's employment and for a period of six (6)
months after he ceases to be employed by the Corporation if his
employment ends prior to the expiration of the Employment Term, he will
not, except as otherwise authorized by this Agreement, compete in the
field of pharmacogenomics with the Corporation or any affiliate of the
Corporation, solicit the Corporation's customers or the customers of
any of its affiliates in the field of pharmacogenomics, or directly or
indirectly solicit for employment any of the Corporation's employees.
b. For the purposes of this Agreement:
(i) The term "compete" means engaging in the same or
any similar business as the Corporation or any of its affiliates
in any manner whatsoever, including without limitation as a
proprietor, partner, investor, shareholder, member, director,
officer, employee, consultant, independent contractor or
otherwise, within any geographic area in which the Corporation's
products are offered or distributed;
(ii) The term "affiliate", when used in reference to any
Person (as hereinafter defined), means any other Person that
directly or indirectly through one or more intermediaries
controls, is controlled by, or is under common control with the
first such Person; and
(iii) The term "customers" means all Persons to whom the
Corporation or any of its affiliates has provided any product or
service, whether or not for compensation, within a period of two
(2) years prior to the time Executive ceases to be employed by the
Corporation.
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(iv) The term "Person" means any natural person,
corporation, limited liability company, partnership of any type,
proprietorship, other business organization, trust, union,
association or governmental body.
c. None of the provisions of this Section 6 shall prohibit
Executive from investing in securities listed on a national securities
exchange or actively traded over-the-counter so long as such
investments are not greater than five percent (5%) of the outstanding
securities of any issuer of the same class or issue.
7. REASONABLENESS OF RESTRICTIONS.
a. Executive has carefully read and considered the provisions of
Section 6, and, having done so, agrees that:
(i) The restrictions set forth in Section 6, including
but not limited to the time period, scope and geographical area of
restriction, are fair and reasonable and are reasonably required
for the protection of the good will and other legitimate business
interests of the Corporation and its affiliates, officers,
directors, shareholders, and other employees;
(ii) Executive has received, or is entitled to receive
pursuant to the provisions of this Agreement, adequate
consideration for such obligations; and
(iii) Such obligations do not prevent Executive from
earning a livelihood.
b. If, notwithstanding the foregoing, any of the provisions of
Section 6 shall be held to be invalid or unenforceable, the remaining
provisions thereof shall nevertheless continue to be valid and
enforceable as though the invalid and unenforceable parts had not been
included therein. If any provision of Section 6 relating to the time
period and/or the areas of restriction and/or related aspects shall be
declared by a court of competent jurisdiction to exceed the maximum
restrictiveness such court deems reasonable and enforceable, the time
period and/or areas of restriction and/or related aspects deemed
reasonable and enforceable by the court shall become and thereafter be
the maximum restriction in such regard, and the restriction shall
remain enforceable to the fullest extent deemed reasonable by such
court.
8. REMEDIES FOR BREACH OF EXECUTIVE'S COVENANT OF NON-COMPETITION.
Executive recognizes and agrees that the Corporation would suffer irreparable
harm due to any breach of Section 6 and that the Corporation's remedy at law for
any such breach would be inadequate, and he agrees that, for breach of such
provisions, the Corporation shall, in addition to such other remedies as may be
available to it at law or in equity or as provided in this Agreement, be
entitled to injunctive relief and to enforce its rights by an action for
specific performance.
9. TERMINATION.
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a. In the event that Executive dies during the Employment Term,
this Agreement shall terminate upon his death, upon which event
Executive's legal representatives shall be entitled to receive, and the
Corporation shall pay or cause to be paid to Executive's legal
representatives, any Base Salary and other compensation or benefits
accrued but as yet unpaid on the date of Executive's death.
b. If during the Employment Term, Executive is prevented from
performing the duties or fulfilling responsibilities of his employment
under this Agreement by reason of any incapacity or disability for a
continuous period of six (6) months, as determined by an independent
qualified physician selected by the Corporation and reasonably
acceptable to Executive (or his representative), then the Corporation
may, upon thirty (30) days prior written notice to Executive, terminate
Executive's employment hereunder, but Executive shall continue to be
eligible to receive any benefits to which he may be entitled under the
terms of any disability plan or insurance policy maintained by the
Corporation for its employees generally or for Executive specifically.
In the event of such incapacity or disability, the Corporation shall
continue to pay full compensation to Executive in accordance with the
terms of this Agreement until the date of such termination, less any
amounts received by the Executive under any disability plan maintained
by the Corporation.
c. The Corporation may, upon written notice to Executive,
terminate Executive's employment hereunder For Cause. For purposes of
this Agreement, the term "For Cause" shall mean:
(i) A willful and material breach by Executive of his
duties hereunder;
(ii) Executive's conviction of any felony, or of a
lesser crime having as its predicate element fraud, dishonesty or
misappropriation of property of the Corporation;
(iii) Executive's engaging in bad faith or gross
negligence in the performance of his duties under this Agreement
as determined in good faith by the Board;
(iv) Executive's engaging in chronic alcoholism, drug
addiction or substance abuse which has interfered with the
performance of his duties under this Agreement; and/or
(v) Executive's perpetration of any act or omission
which submits the Corporation to criminal liability.
In the event of termination For Cause of Executive's employment,
Executive's right to receive compensation and other benefits hereunder (other
than any Base Salary accrued but as yet unpaid on the effective date of such
termination) shall terminate on the effective date of such termination, and
Executive shall not be entitled to any severance payments or benefits pursuant
to Section 10.
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d. The Corporation may, at any time, for reason other than For
Cause, terminate Executive's employment upon at least thirty (30) days
written notice to Executive. In the event of such termination for
reason other than For Cause, the Corporation shall be obligated to pay
Executive the severance payments specified in Section 10.
e. Executive may, at his option, upon ninety (90) days prior
written notice to the Corporation, terminate his employment hereunder.
In the event of a voluntary termination of his employment by the
Executive pursuant to this Section 9(e), Executive's rights to receive
compensation and other benefits (other than any Base Salary accrued but
as yet unpaid on the effective date of such termination) shall
terminate on the effective date of such termination, and Executive
shall not be entitled to any severance payments pursuant to Section 10.
f. Executive may, at his option, upon at least fifteen (15) days
written notice to the Corporation, terminate his employment hereunder,
if the Corporation, without Executive's express written consent, (i)
removes him as an officer of the Corporation, (ii) demotes him from
SVP, (iii) assigns him duties materially inconsistent with the position
and/or duties described in Sections 1 or 2, (iv) diminishes his
responsibilities described in Sections 1 or 2, (v) fails to grant the
options referred to in Section 4(c)(iii) prior to August 15, 1999, (vi)
breaches any material obligations to Executive under this Agreement, or
(vii) hereafter fails to afford the Executive anti-dilution protection
in respect of Corporation stock and/or options held by the Executive
from time to time proportionate to that afforded to each of the
Founders in respect of Corporation stock and/or options held by them,
respectively, from time to time, in connection with any equity
financing effected prior to the initial registered public offering of
the Corporation's stock. Upon any termination by Executive under this
Section 9(f) the Corporation shall be obligated to pay Executive the
severance payments specified in Section 10.
g. In the event of termination or expiration of Executive's
employment other than for death, Executive shall resign from all
positions held in the Corporation, including without limitation any
position as a director, officer, agent, trustee or consultant of the
Corporation or any affiliate of the Corporation.
10. SEVERANCE PAYMENTS. If the Corporation terminates Executive's
employment pursuant to Section 9(d) or if Executive terminates his employment
pursuant to Section 9(f), the parties recognize and agree that actual damages
due Executive would be difficult if not impossible to ascertain and agree that,
in lieu of any other rights to which Executive may be entitled (but not in lieu
of any rights or remedies that Executive may have in respect of tortious conduct
on the part of the Corporation or in respect of any violation by the Corporation
of any employment practice, employment discrimination, age discrimination or
civil rights law or regulation applicable to the Executive), the Corporation
shall pay Executive, as severance pay or as liquidated damages, or both,
Executive's Base Salary, as in effect at the time of such termination or
expiration for a period of six (6) calendar months following the date of such
termination or expiration, such payments to be made in the same manner in which
such salary
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payments were made to Executive immediately prior to the date of such
termination or expiration.
11. WAIVER. A party's failure to insist on compliance or enforcement
of any provision of this Agreement shall not affect the validity or
enforceability or constitute a waiver of future enforcement of that provision or
of any other provision of this Agreement by that party or any other party.
12. GOVERNING LAW. This Agreement shall in all respects be subject to,
and governed by, the laws of the State of Connecticut.
13. SEVERABILITY. The invalidity or unenforceability of any provision
in the Agreement shall not in any way affect the validity or enforceability of
any other provision and this Agreement shall be construed in all respects as if
such invalid or unenforceable provision had never been in the Agreement.
14. NOTICE. Any and all notices required or permitted herein shall be
in writing and shall be deemed to have been duly given (a) when delivered if
delivered personally, (b) on the fifth day following the date of deposit in the
United States mail if sent first class, postage prepaid, by registered or
certified mail, or (c) one day after delivery to a nationally recognized
overnight courier service. The parties' respective addresses for such notices
shall be those set forth following their respective signatures below, or such
other address or addresses as either party may hereafter designate in writing to
the other.
15. ASSIGNMENT. This Agreement, together with any amendments hereto,
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors, assigns, heirs, executors, and legal and personal
representatives, except that the rights and benefits of Executive under this
Agreement may not be assigned without the prior written consent of the
Corporation. Without limiting the generality of the foregoing, this Agreement
shall be binding upon and inure to the benefit of any corporation with which or
into which the Corporation or its successors may be merged or which may succeed
to its assets or business.
16. AMENDMENTS. This Agreement may be amended at any time by mutual
consent of the parties hereto, with any such amendment to be invalid unless in
writing and signed by the Corporation and Executive.
17. ENTIRE AGREEMENT. This Agreement and the agreements concerning
stock option grants and confidentiality and non-disclosure executed in
connection herewith contain the entire agreement and understanding by and
between Executive and the Corporation with respect to the employment of
Executive and supersede all existing agreements between the Corporation and
Executive with respect to such employment. No representations, promises,
agreements, or understandings, written or oral, relating to the employment of
Executive by the Corporation not contained herein shall be of any force or
effect.
18. REFERENCES TO GENDER AND NUMBER TERMS. In construing this
Agreement, feminine or number pronouns shall be substituted for those masculine
in form and vice versa, and
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plural terms shall be substituted for singular and singular for plural in any
place in which the context so requires.
19. COUNTERPARTS; HEADINGS; SECTIONS. This Agreement may be executed
in multiple counterparts, each of which shall be considered to have the force
and effect of any original but all of which taken together shall constitute but
one and the same instrument. The various headings in this Agreement are inserted
for convenience only and are not part of the Agreement. All references to
"Sections" and "paragraphs" in this Agreement refer to the various corresponding
sections and paragraphs of this Agreement.
20. SURVIVAL. The covenants and agreements contained in Sections 6
through 10 shall survive any termination or expiration of this Agreement and the
termination of Executive's employment hereunder.
21. ARBITRATION. Executive and the Corporation will submit any
disputes arising under this Agreement to an arbitration panel, consisting of one
or more natural persons (as set forth below) each of whom has experience
arbitrating employment disputes involving executives, conducting a binding
arbitration in Hartford, Connecticut, administered by the AAA (as defined
hereafter) and in accordance with the Commercial Arbitration Rules of the
American Arbitration Association ("AAA") in effect on the date of such
arbitration (the "Rules"), and judgment upon the award rendered by the
arbitrator or arbitrators may be entered in any court having jurisdiction
thereof; PROVIDED, HOWEVER, that nothing herein shall impair the Corporation's
right to seek equitable relief from a court of competent jurisdiction for breach
or threatened breach of Section 7 or Section 8. The award of the arbitrators
shall be final and shall be the sole and exclusive remedy between the parties
regarding any claims, counterclaims, issue or accounting presented to the
arbitration panel. The parties hereto further agree that the arbitration panel
shall consist of one (1) person mutually acceptable to the Corporation and
Executive, PROVIDED, THAT, if the parties cannot agree on an arbitrator within
fifteen (15) days of filing a notice of arbitration, the arbitration panel shall
consist of three (3) persons, one selected by the Corporation, one selected by
Executive (or his representative) and one selected by the arbitrators so
selected by the parties hereto, or if the parties hereto cannot agree, selected
by the manager of the principal office of the American Arbitration Association
in Hartford County in the State of Connecticut. All fees and expenses of the
arbitration charged by the AAA, including a transcript if either party requests,
shall be borne equally by the parties. If Executive prevails as to any material
issue presented in the arbitration, the entire cost of such proceedings
(including, without limitation, Executive's reasonable attorney's fees but
excluding the fees and expenses charged by the AAA) shall be borne by the
Corporation. If Executive does not prevail as to any material issue, each party
will pay for the fees and expenses of its own attorneys, experts, witnesses, and
preparation and presentation of proofs and post-hearing briefs (unless the party
prevails on a claim for which attorney's fees are recoverable under the Rules).
Any action to enforce or vacate the arbitrator's award shall be governed by the
federal Arbitration Act, if applicable, and otherwise by applicable state law.
If either the Corporation or Executive pursues any claim, dispute or controversy
against the other in a proceeding other than the arbitration provided for
herein, the responding party shall be entitled to dismissal or injunctive relief
regarding such action and recovery of all costs, losses and attorney's fees
related to such action.
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THE NEXT PAGE IS THE SIGNATURE PAGE
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IN WITNESS WHEREOF, the Corporation and Executive have duly executed
this Agreement as of the day and year first above written.
CORPORATION:
GENAISSANCE PHARMACEUTICALS, INC.
By: /s/ Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
Its Executive Vice President
and Chief Financial Officer
Address for Notice Purposes:
0 Xxxxxxx Xxxx
Xxxxx 0000
Xxx Xxxxx, XX 00000
EXECUTIVE:
/s/ Xxxxxx X. Xxxxx
-------------------------------
XXXXXX X. XXXXX
Address for Notice Purposes:
00 Xxxxxxxxxxx Xxx
Xxxxxxxxxxx, XX 00000-0000
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