Exhibit 10.3
FOUNDER EMPLOYMENT AGREEMENT
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This Founder Employment Agreement ("Agreement") is made and entered into as
of February 12, 1998 by Paradigm Genetics Inc., a North Carolina corporation
(hereinafter the "Company"), and Xxxxx X. Xxxxx (hereinafter "Founder"). The
Company desires to employ Founder as its President and Chief Executive Officer
and Founder desires to accept such employment on the terms set forth below.
In consideration of the mutual promises set forth below and other good and
valuable consideration, the receipt and sufficiency of which the parties
acknowledge, the Company and Founder agree as follows:
1. EMPLOYMENT. The Company employs Founder and Founder accepts employment
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on the terms and conditions set forth in this Agreement.
2. NATURE OF EMPLOYMENT. Founder shall serve as President and Chief
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Executive Officer and have such responsibilities and authority as the Company
may reasonably assign from time to time. Additionally, Founder agrees to perform
such other duties as the Company may reasonably assign from time to time.
2.1 Founder shall perform all duties and exercise all authority in
accordance with, and otherwise comply with, all Company policies, procedures,
practices and directions.
2.2 Founder shall devote all working time, best efforts, knowledge and
experience to successfully perform his duties and advance the Company's
interests. During his employment, Founder shall not engage in any other business
activities of any nature whatsoever (including board memberships) for which he
receives compensation without the Company's prior written consent; provided,
however, this provision does not prohibit him from personally owning and trading
in stocks, bonds, securities, real estate, commodities or other investment
properties for his own benefit which do not create actual or potential conflicts
of interest with the Company.
2.3 Founder's base of operation shall be at the Company's principal
executive office, subject to business travel as may be necessary in the
performance of his duties.
3. COMPENSATION.
3.1 Base Salary. Founder's annual salary for all services rendered shall
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be One Hundred Twenty Thousand Dollars ($120,000) (less applicable withholdings)
payable in accordance with the Company's policies, procedures and practices as
they may exist from time to time. Founder's salary shall be reviewed in
accordance with the Company's policies, procedures and practices as they may
exist from time to time.
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3.2 Bonus. Founder shall be eligible to receive bonus compensation, in
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addition to base salary, of twenty-five percent (25%) of Founder's annual base
salary calculated at the end of each calendar year. Such bonus shall be awarded
on the basis of mutually agreed upon objectives and criteria between Founder and
the Company (which shall include the hiring of a Chief Financial Officer of the
Company), and paid to Founder within thirty (30) days of the end of each
calendar year.
3.3 Stock Options. Founder shall be eligible to receive stock options in
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accordance with a written stock option agreement; provided, however, that the
grant of any options is subject to the applicable terms, conditions and
requirements of any applicable stock option plan, some of which are within the
plan administrator's discretion, as they may exist from time to time.
3.4 Tax Returns. Founder shall be entitled to tax return preparation and
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reasonable financial planning, consultation and advice by the Company's
accounting firm and/or legal counsel and/or financial consultants as the Company
may provide from time to time to Company Founders at Founder's compensation
level.
3.5 Other Benefits. Founder may participate in all medical, dental,
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disability, insurance, retirement, pension, personal leave, car allowance and
other employee benefit plans and programs which may be made available from time
to time to employees of the Company generally and to Company Founders at
Founder's compensation level; provided, however, that Founder's participation is
subject to the applicable terms, conditions and eligibility requirements of
these plans and programs, some of which are within the plan administrator's
discretion, as they may exist from time to time.
3.6 Business Expenses. Founder shall be reimbursed for reasonable and
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necessary expenses actually incurred by him in performing services under this
Agreement in accordance with and subject to the terms and conditions of the
applicable Company reimbursement policies, procedures and practices as they may
exist from time to time. Expenses covered by this provision include but are not
limited to travel, entertainment, professional dues, subscriptions and dues,
fees and expenses associated with membership in various professional, business
and civic associations of which Founder's participation is in the Company's best
interest.
3.7 Benefit Plans Subject to Amendment. Nothing in this Agreement shall
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require the Company to create, continue or refrain from amending, modifying,
revising or revoking any of the plans, programs or benefits set forth in
Sections 3.3 through 3.6. Any amendments, modifications, revisions and
revocations of these plans, programs and benefits shall apply to Founder.
3.8 Life Insurance. The Founder may obtain and maintain a term life
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insurance policy, reasonably satisfactory to the Company, on the life of the
Founder in the amount of $500,000 and payable to the designee of Founder, for a
period of three (3) years from the date of this Agreement, and the Company shall
on an annual basis pay to the Founder additional compensation in an amount equal
to the annual premium for such policy (the "Insurance Bonus") plus an amount
equal to the applicable federal and state tax payable by the Founder in respect
of the Insurance Bonus; provided that the Company shall pay such amounts only so
long as the annual premium for such policy shall not increase by more than
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fifteen percent (15%) over the initial annual premium; but if the premium does
exceed such percentage, then Founder shall have the option of continuing to
maintain such life insurance and the Company shall be responsible for paying
such additional compensation except with respect to the amount of such excess.
4. TERM OF EMPLOYMENT. Either party may terminate the employment
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relationship with or without cause at any time.
If Founder terminates the employment relationship for any reason or the
Company terminates it for Cause (as defined below), then the Company's
obligation to compensate Founder ceases upon the date of termination except as
to amounts due at that time, and Founder shall be subject to the provisions set
forth in Section 5.2 for a period of twelve (12) months following the date of
termination (the "Non-Competition Period").
If the Company terminates Founder's employment without Cause, then its
obligation to compensate Founder ceases upon the date of termination except as
to amounts due at that time, and Founder shall be subject to the provisions set
forth in Section 5.2 for a period of three (3) months following the date of
termination, so long as the Company shall pay to Founder an amount equal to his
then current monthly salary (less applicable withholdings) payable on a monthly
basis during such three (3) month period following the date of termination;
provided, however, that within ten (10) business days after the date of
termination of employment, the Company may give to Founder written notice that
such three (3) month period shall be extended for up to twelve (12) months (in
the aggregate) following the date of termination and such period shall be so
extended, so long as the Company shall pay to Founder an amount equal to his
then current monthly salary (less applicable withholdings) on a monthly basis
during each such month so extended (such three (3) month period or such period
as so extended being referred to as the "Alternative Non-Competitive Period").
During the period in which Founder receives post-termination payments pursuant
to this Section 4, he may continue to participate in all employee welfare
benefit plans in which Founder participated on the date of termination of
employment; provided, that Founder's participation is subject to the applicable
terms, conditions and eligibility requirements of these plans and this is not a
guarantee of coverage.
For the purpose of this Agreement, "Cause" shall mean: (i) to the extent
permitted by law, Founder's attaining age 65; (ii) Founder's death; (iii)
Founder's physical or mental inability to perform his duties for a period of
three (3) months or more; (iv) Founder's acts constituting fraud, deceit or
unlawful or illegal conduct involving the Company or any felony affecting the
Company; (v) Founder's engaging in "Competitive Business Activities" as
described in Section 5; (vi) Founder's neglect of duty, or failure to follow
reasonable written directions of the Board of Directors, and the failure to cure
same within thirty (30) days after receipt of written notice thereof from the
Company; or (vii) Founder's material breach of this Agreement, or the Founder
Proprietary Information and Inventions Agreement between Founder and the
Company, and the failure to cure same within thirty (30) days after receipt of
written notice thereof from the Company.
This Agreement shall terminate upon the termination of the employment
relationship with the exception of Section 5 (Company Property and Competitive
Business Activities) and Section 3.8 (Life Insurance) which shall survive the
termination of Founder's
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employment and/or the termination of this Agreement regardless of the reasons
for such termination.
Founder is not entitled to receive any compensation or benefits upon his
termination except as: (i) set forth in this Agreement; (ii) otherwise required
by law; or (iii) otherwise required by any employee benefit plan in which he
participates with the following exception. Nothing in this Agreement, however,
is intended to waive or supplant any death, disability, retirement or pension
benefits to which he may be entitled under employee benefit plans in which he
participates.
5. COMPANY PROPERTY AND COMPETITIVE BUSINESS ACTIVITIES. Founder
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acknowledges and agrees that: (i) by virtue of his employment by and position
with the Company, he has or will have access to trade secrets and confidential
information of the Company, including valuable information about its business
operations and methods and entities with whom it does business in various
locations throughout the world, and he has developed or will develop
relationships with the Company's clients and customers and others with whom it
does business in various locations throughout the world; (ii) the market for the
Company's services is highly competitive and the Company competes on a worldwide
basis with other biotechnology and genomics companies; the Company's business is
worldwide, and the Company competes within the biotechnology and genomics
industry which is characterized by a global, worldwide marketplace; (iii) the
Founder has highly specialized scientific knowledge in the biotechnology and
genomics industry which is essential to the Company's ability to offer highly
specialized, global biotechnology and genomics services and to compete within
that industry; (iv) this Agreement is being executed contemporaneously with the
Stock Purchase Agreement dated on or about the date hereof among the Company and
certain investors, and this Agreement constitutes part of the consideration for
the parties entering into such Stock Purchase Agreement, and the Company is
relying on this Agreement in connection with entering into such Stock Purchase
Agreement and the transactions contemplated thereby; and (v) the "Competitive
Business Activities" provisions set forth in this Section 5 are reasonably
necessary to protect the Company's legitimate business interests, are reasonable
as to the time, territory and scope of activities which are restricted, do not
interfere with public policy or public interest and are described with
sufficient accuracy and definiteness to enable him to understand the scope of
the restrictions imposed upon him.
5.1 Company Property. Upon termination of his employment, Founder shall:
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(i) deliver to the Company all Company property (including, but not limited to,
keys, credit cards, client or customer files, contracts, proposals, work in
process, manuals, forms, computer stored work in process and other computer
data, research materials, other items of business information concerning any
Company client or customer, or Company business or business methods, including
all copies thereof) which is in his possession, custody or control; (ii) bring
all such records, files and other materials up to date before returning them;
and (iii) fully cooperate with the Company in winding up his work and
transferring that work to other individuals designated by the Company.
5.2 Competitive Business Activities. During his employment and during the
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Non-Competition Period or Alternative Non-Competition Period set forth in
Section 4, as applicable, Founder will not engage in the activities set forth
below in this Section 5.2 (except that in any event the activities set forth on
Schedule A attached hereto shall be permitted):
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(a) on Founder's own or another's behalf, whether as an officer, director,
stockholder, partner, associate, owner, employee, consultant, advisor or
otherwise, directly or indirectly:
(i) compete with the Company within the geographical areas set forth
in Section 5.2.1;
(ii) solicit or do business which is the same as, similar to or
otherwise in competition with the business engaged in by the Company from or
with persons or entities: (a) who are customers of the Company; (b) who Founder,
or someone for whom he had management responsibility or supervision, solicited,
negotiated, contracted, serviced or had contact with on the Company's behalf;
(c) who were customers of the Company at any time during the last year of
Founder's employment with the Company; or (d) to whom the Company had made
proposals to do business at any time during the last year of Founder's
employment with the Company; or
(iii) offer employment to or otherwise solicit for employment or
engagement (as a consultant, advisor, independent contractor or otherwise) any
employee or other person who had been employed or engaged by the Company during
the last year of Founder's employment with the Company; or
(b) within the geographical areas set forth in Section 5.2.1, be employed
(or otherwise engaged) by any person or entity that competes with the Company in
the field of agricultural biotechnology and genomics, in (i) a management
capacity, (ii) other capacity providing the same or similar services which
Founder provided to the Company, or (iii) any capacity connected with
competitive business activities; or
(c) take any action which is materially detrimental or otherwise intended
to be adverse to the Company's goodwill, name, business relations, prospects and
operations.
5.2.1 The restrictions set forth in Section 5.2 apply to the following
geographical areas: (i) the Raleigh/Durham/Research Triangle Park, North
Carolina metropolitan area; (ii) any city, metropolitan area, county (or similar
political subdivisions in foreign countries) in which the Company is located or
does or, during Founder's employment with Company did business; (iii) any city,
metropolitan area, county (or similar political subdivision in foreign
countries) in which Founder's services were provided (in person or otherwise),
or for which Founder had responsibility, or in which Founder worked on Company
projects, while employed by the Company; (iv) the State of North Carolina; (v)
the Los Angeles, California metropolitan area; (vi) the San Francisco,
California/San Francisco Bay metropolitan area; and (vii) the State of
California.
5.2.2 Notwithstanding the foregoing, Founder's ownership, directly or
indirectly, of not more than one percent of the issued and outstanding stock of
a corporation the shares of which are regularly traded on a national securities
exchange or in the over-the-counter market shall not violate Section 5.2.
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5.3 Remedies. Founder acknowledges that his failure to abide by the
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"Company Property" or "Competitive Business Activities" provisions of this
Section 5 would cause irreparable harm to the Company for which legal remedies
would be inadequate. Therefore, in addition to any other relief to which the
Company may be entitled by virtue of Founder's failure to abide by these
provisions, the Company may seek legal and equitable relief, including but not
limited to preliminary and permanent injunctive relief, for Founder's actual or
threatened failure to abide by these provisions.
5.4 Other Agreements. Nothing in this Agreement shall terminate, revoke
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or diminish Founder's obligations or the Company's rights and remedies under law
or any agreements relating to trade secrets, confidential information, non-
competition and intellectual property which Founder has executed in the past or
may execute in the future or contemporaneously with this Agreement, including
without limitation agreements related to intellectual property rights previously
executed by and between Founder and Founder's previous employer, Novartis Crop
Protection, Inc. and its affiliates ("Novartis").
6. EMPLOYEE REPRESENTATION. Founder represents and warrants to the Company
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that, to the best of his knowledge, his employment and obligations under this
Agreement will not (i) breach any legal duty or obligation he owes to another or
(ii) violate any law, recognized ethics standard or recognized business custom.
The Founder has not and will not use any trade secrets of Novartis in the course
of his employment with the Company that may expose the Company or any employees
of the Company to any liability under any agreement, rule, regulation or
statute. No patent, discovery, invention, improvement, process or device made,
discovered or developed by Founder while employed with Novartis or within six
months subsequent to such employment has or will be used in any business of the
Company in any manner that violates or infringes the intellectual property
rights of Novartis or violates any agreement between Founder and Novartis.
7. CONFIDENTIALITY, TRADE SECRETS AND INTELLECTUAL PROPERTY AGREEMENT.
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Founder's employment and continued employment shall be contingent upon his
execution of confidentiality, trade secrets and intellectual property agreements
as the Company may require Company Founders at his compensation level to execute
from time to time.
8. WAIVER OF BREACH. The Company's or Founder's waiver of any breach of a
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provision of this Agreement shall not waive any subsequent breach by the other
party.
9. ENTIRE AGREEMENT. Except as expressly provided in this Agreement, this
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Agreement: (i) supersedes all other understandings and agreements, oral or
written, between the parties with respect to the subject matter of this
Agreement; and (ii) constitutes the sole agreement between the parties with
respect to this subject matter. Each party acknowledges that: (i) no
representations, inducements, promises or agreements, oral or written, have been
made by any party or by anyone acting on behalf of any party, which are not
embodied in this Agreement; and (ii) no agreement, statement or promise not
contained in this Agreement shall be valid. No change or modification of this
Agreement shall be valid or binding upon the parties unless such change or
modification is in writing and is signed by the parties.
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10. SEVERABILITY. If a court of competent jurisdiction holds that any
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provision or sub-part thereof contained in this Agreement is invalid, illegal or
unenforceable, that invalidity, illegality or unenforceability shall not affect
any other provision in this Agreement. Additionally, if any of the provision,
clauses or phrases in the Competitive Business Activities provisions set forth
in this Agreement are held unenforceable by a court of competent jurisdiction,
then the parties desire that they be "blue-penciled' or rewritten by the court
to the extent necessary to render them enforceable.
11. PARTIES BOUND. The terms, provisions, covenants and agreements
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contained in this Agreement shall apply to, be binding upon and inure to the
benefit of the Company's successors and assigns. Founder may not assign this
Agreement without the Company's prior written consent.
12. GOVERNING LAW. This Agreement and the employment relationship created
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by it shall be governed by North Carolina law without giving effect to North
Carolina choice of law provisions. The parties hereby consent to jurisdiction in
North Carolina for the purpose of any litigation relating to this Agreement and
agree that any litigation by or involving them relating to this Agreement shall
be conducted in the courts of Wake County, North Carolina or the federal courts
of the United States for the Eastern District of North Carolina.
[Signatures appear on next page]
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IN WITNESS WHEREOF, the parties have entered into this Agreement on the day
and year first written above.
/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
PARADIGM GENETICS INC.
By: /s/ Xxxx Xxxxx
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Name: Xxxx Xxxxx
Title: CEO/President
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SCHEDULE A
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PERMITTED BUSINESS ACTIVITIES
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In addition to those activities permitted by Section 5 of the attached Founder
Employment Agreement, Founder is permitted to work on all activities within
biotechnology and genomics. Notwithstanding the foregoing sentence, Founder
shall be prohibited, during the period set forth in Section 4, from engaging in
activities pertaining to agricultural seeds and chemical research, including
without limitation agricultural fungicide discovery.
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