EXHIBIT 10.6
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
This Amended and Restated Executive Employment Agreement ("Agreement") is
effective as of January 1, 2005 ("Effective Date"), by and between Structural
GenomiX, Inc., with its principal place of business at 00000 Xxxxxxx Xxxxxx, Xxx
Xxxxx, Xxxxxxxxxx 00000 ("SGX"), a Delaware corporation, and Xxxxxxx Xxxx, who
resides at ___________________________________________________ ("Executive").
This Agreement amends and restates and supercedes and terminates in its entirety
that certain Employment Agreement dated September 4, 2001 by and between SGX and
Executive, as amended by that certain letter agreement dated December 20, 2004
(together, the "Prior Agreement").
The parties agree as follows:
1. Employment. SGX hereby employs Executive, and Executive hereby accepts
such employment, upon the terms and conditions set forth herein.
2. Duties.
2.1. Position; Duties and Responsibilities. Executive is employed in
the position of President and Chief Executive Officer and shall have the duties
and responsibilities assigned by the Board of Directors of SGX (the "Board").
Executive is responsible for overseeing the business and operations of SGX and
doing and performing all services, acts, or things reasonably necessary or
advisable to accomplish the objectives and complete the tasks assigned to
Executive by the Board. Executive shall serve as the leader and principal
officer of the executive team and shall report directly to the Board. Executive
shall perform faithfully and diligently such duties, as well as such other
duties as the Board shall reasonably assign from time to time. SGX reserves the
right to modify Executive's position and duties at any time in its sole and
reasonable discretion.
2.2. Best Efforts/Full-time. Executive will expend Executive's best
efforts on behalf of SGX, and will abide by all policies and decisions made by
SGX, as well as all applicable federal, state and local laws, regulations or
ordinances. Executive will act in the best interest of SGX at all times.
Executive shall devote Executive's full business time and efforts to the
performance of Executive's assigned duties, unless Executive notifies SGX in
advance of Executive's intent to engage in other paid work and receives SGX'
express written consent to do so. SGX consents to the continuing service by
Executive on the Boards of Directors of Achillion Pharmaceuticals, Inc. and
Epimmune, Inc. Executive must not engage in any work, paid or unpaid, that
creates an actual or potential conflict of interest with SGX. If SGX believes a
conflict exists, SGX may ask Executive to choose whether to discontinue the
other work or resign employment with SGX.
2.3. Board Seat. Executive shall continue to serve as a member of the
Board.
2.4. Work Location. Executive's principal place of work shall be
located in San Diego, California, at SGX' offices or as reasonably assigned by
SGX.
3. Term. The employment relationship pursuant to this Agreement shall be
for an initial term commencing on the Effective Date set forth above and
continuing for the period of one (1) year and for consecutive one year terms
thereafter unless sooner terminated in accordance with paragraph 7 below.
4. Compensation.
4.1. Salary. As compensation for the proper and satisfactory
performance of all duties to be performed by Executive hereunder, SGX shall pay
to Executive an initial annualized Base Salary of Three Hundred Fifty Thousand
($350,000) per year, payable in accordance with the normal payroll practices of
SGX, less required deductions for state and federal withholding tax, social
security and all other employment taxes and payroll deductions. In the event
Executive's employment under this Agreement is terminated by either party, for
any reason, Executive will be entitled to receive the Base Salary prorated to
the date of termination.
4.2. Incentive Compensation. Executive will be eligible to receive
incentive compensation. If SGX, in its sole and absolute discretion, grants
executive incentive compensation, the terms, amount and payment of such, if any,
will be determined solely by SGX.
4.3. Stock Options. Executive will receive a stock option or stock
options to purchase that number of shares of SGX common stock that, together
with Executive's currently outstanding stock options, if any, is equal to 3.5%
of the Fully Diluted Capitalization (as defined below) of SGX after giving
effect to the Next Equity Financing (as defined below), at a price per share
equal to the fair market value of SGX' common stock on the date of grant of each
such stock option as shall be determined by the Board in its sole and absolute
discretion. 25% of the shares subject to such stock options shall be fully
vested as of the date of grant and the remaining shares subject to such stock
options shall vest over three years after the vesting commencement date in equal
monthly installments (subject to acceleration of vesting under certain
circumstances as set forth in subparagraphs 7.2 and 7.4(a) below). Such stock
options shall be subject to the terms and conditions of SGX' 2000 Equity
Incentive Plan (the "Incentive Plan") and SGX' form of stock option agreement.
The Board shall grant such stock options as soon as reasonably practicable after
the number of shares issuable in connection with such Next Equity Financing is
ascertainable and the vesting commencement date of all such stock options shall
be the Effective Date. The offer of such stock options is conditioned upon
Executive's acceptance of this Agreement and will be in accordance with the
terms and requirements of the Incentive Plan and SGX' form of stock option
agreement. "Fully Diluted Capitalization" as used in this subparagraph 4.3 shall
mean the fully-diluted capitalization of SGX calculated on an as-converted basis
and including all outstanding preferred stock, common stock, warrants, all
options authorized under equity incentive plans (whether or not granted or
vested), and securities issuable upon conversion of outstanding convertible
notes, if any (but excluding shares issuable upon conversion of the Millennium
convertible note). "Next Equity Financing" as used in this subparagraph 4.3
shall mean the next private equity financing of SGX primarily for capital
raising purposes that raises at least $5 million of new investment and occurs
prior to the completion of an initial public offering of SGX' securities, and
such Next Equity Financing shall include the aggregate number of shares to be
issued in connection with such financing (including, if the financing occurs in
multiple tranches, the aggregate number of shares that are issued in all
tranches for which there is a contractual commitment to fund on the part of the
investors in such Next Equity Financing as of the initial closing thereof). Any
obligation of SGX that remains outstanding under this subparagraph 4.3 to grant
any additional stock options to Executive shall terminate and be of no further
force or effect upon the earlier to occur of (i) immediately prior to the
closing of an initial public offering of SGX' securities or (ii) immediately
prior to the consummation of a Change of Control (as defined below).
4.4. Cash Bonus Program. As Executive Vice President and Chief
Business Officer, Executive is eligible to earn a cash bonus equal to 35% of
Executive's base salary, or $122,500, provided Executive meets the eligibility
requirements and performance objectives set forth in SGX' bonus program, which
are determined in SGX' sole discretion.
4.5. Performance and Salary Review. SGX will periodically review
Executive's performance. Executive's salary and/or other compensation will be
reviewed yearly and may be adjusted from time to time in SGX' sole and absolute
discretion.
5. Customary Fringe Benefits. Executive will be eligible for all customary
and usual fringe benefits generally available to executives of SGX subject to
the terms and conditions of SGX' benefit plan documents. SGX reserves the right
to modify or eliminate the fringe benefits on a prospective basis, at any time,
effective upon notice to Executive.
6. Business Expenses. Executive will be reimbursed for all out-of-pocket
business expenses reasonably incurred in the performance of Executive's duties
on behalf of SGX. To obtain reimbursement, expenses must be submitted promptly
with appropriate supporting documentation in accordance with SGX' policies.
7. Termination of Employment.
7.1. Termination for Cause by SGX. Although SGX anticipates a mutually
rewarding employment relationship with Executive, SGX may terminate Executive's
employment immediately at any time for cause. Cause includes, but is not limited
to, one or more of the following: (a) acts or omissions deemed by SGX to
constitute gross negligence, recklessness, willful misconduct or dishonesty on
the part of Executive with respect to Executive's obligations under this
Agreement or otherwise relating to the business of SGX; (b) Executive's willful,
material breach of this Agreement; (c) Executive's conviction or entry of a plea
of guilty or nolo contendere for fraud, misappropriation or embezzlement, or of
any felony; (d) Executive's material breach of fiduciary duty toward SGX; (e)
Executive's material breach of any element of SGX' Confidential Information and
Invention Assignment Agreement, including without limitation, Executive's theft,
dilution, or other misappropriation or careless treatment of SGX' proprietary
information; (f) Executive's inability to perform all of the essential functions
and duties of Executive's position, with or without reasonable accommodation
other than for reason of temporary illness; or (g) Executive's death. In the
event Executive's employment is terminated in accordance with this subparagraph
7.1, Executive shall be entitled to receive only the Base Salary then in effect,
prorated to the date of termination, and any benefits, including any benefits
under the Bonus Plan and Incentive Plan, and expense reimbursements to which
Executive is entitled by virtue of his prior employment with SGX (collectively
referred to as "Standard Entitlements."). All other SGX obligations to Executive
pursuant to this Agreement will become automatically terminated and completely
extinguished. Executive will not be entitled to receive the Severance Payment or
any part thereof described in subparagraph 7.2 below.
7.2. Termination Without Cause By SGX/Severance. SGX may terminate
Executive's employment under this Agreement without cause at any time on thirty
(30) days' advance written notice to Executive. In the event of such
termination, Executive will receive the Standard Entitlements, plus a severance
payment equivalent to twelve months of Executive's Base Salary then in effect on
the date of termination (the "Severance Payment") payable in accordance with
SGX' regular payroll cycle, and the vesting of any outstanding stock options
will be accelerated by 12 months, provided that Executive: (a) complies with all
surviving provisions of this Agreement as specified in subparagraph 16.7 below;
(b) executes a full general release, releasing all claims, known or unknown,
that Executive may have against SGX arising out of or any way related to
Executive's employment or termination of employment with SGX; and (c) agrees to
act as a consultant for SGX for up to a maximum of sixty (60) days, without
additional compensation, if requested to do so by SGX. All other SGX obligations
to Executive pursuant to this Agreement will become automatically terminated and
completely extinguished.
7.3. Voluntary Resignation By Executive. Executive may voluntarily
resign Executive's position with SGX at any time on thirty (30) days advance
written notice. In the event of Executive's resignation, Executive shall be
entitled to receive only the Base Salary then in effect, prorated to the date of
resignation, and the Standard Entitlements. All other SGX obligations to
Executive pursuant to this Agreement will become automatically terminated and
completely extinguished. In addition, Executive will not be entitled to receive
the Severance Payment described in paragraph 7.2 above.
7.4. Termination of Executive Following Change Of Control.
(a) Severance Payment. If Executive's employment is terminated by
SGX without cause within one year after a Change of Control (as that term is
defined below), Executive shall be entitled to receive the Standard
Entitlements, plus the Severance Payment described in subparagraph 7.2 above,
and that the vesting of any outstanding stock options will be accelerated by 24
months, provided Executive complies with the conditions in subparagraph 7.2
above. All other SGX obligations to Executive pursuant to this Agreement will
become automatically terminated and completely extinguished.
(b) 280G. If, due to the benefits provided under subparagraph
7.4(a) above, Executive is subject to any excise tax due to characterization of
any amounts payable under subparagraph 7.4(a) as excess parachute payments
pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), Executive may elect, in Executive's sole discretion, to reduce the
amounts payable under subparagraph 7.4(a) in order to avoid any "excess
parachute payment" under Section 280G(b)(1) of the Code.
(c) Change of Control. A Change of Control is defined as any one
of the following occurrences:
(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), other than a
trustee or other fiduciary holding securities of
SGX under an employee benefit plan of SGX, becomes the "beneficial owner" (as
defined in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of the securities of SGX representing more than 50% of (a) the
outstanding shares of common stock of SGX or (b) the combined voting power of
SGX' then-outstanding securities; or
(ii) The sale or disposition of all or substantially all of
SGX' assets (or any transaction having similar effect is consummated) other than
to an entity of which SGX owns at least 50% of the Voting Stock so long as the
sale or disposition is not under duress of SGX' financial hardship; or
(iii) SGX is party to a merger or consolidation that results
in the holders of voting securities of SGX outstanding immediately prior thereto
failing to continue to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) less than 50% of the
combined voting power of the voting securities of SGX or such surviving entity
outstanding immediately after such merger or consolidation.
8. Competitive Employment. During the term of Executive's employment with
SGX and during any period in which Executive is receiving payments (other than
any dividends on stock) from SGX or acting as a consultant with or without
payment, Executive agrees that Executive will not directly or indirectly compete
with SGX in any way, and will not act as an officer, director, executive,
consultant, shareholder (other than stock of publicly held companies),
volunteer, lender, or agent of any business enterprise of the same nature as, or
which is in competition with, the business in which SGX is now engaged or in
which SGX becomes engaged during the term of Executive's employment with SGX, as
may be determined by SGX in its sole discretion. Further, Executive agrees not
to refer any client or potential client to competitors of SGX without SGX'
written consent during the term of Executive's employment with SGX or during any
period in which Executive is receiving payments (other than any dividends on
stock) from SGX or acting as a consultant with or without payment.
9. Confidentiality and Proprietary Rights. Executive agrees to abide by
SGX' proprietary rights policies and to protect the intellectual property of
SGX. In accordance, Executive has signed, contemporaneously with the execution
of this Agreement, a Confidential Information and Invention Assignment
Agreement, which is incorporated herein by this reference.
10. Non-Solicitation.
10.1. Non-Solicitation of Employees and Independent Contractors.
Executive agrees that during Executive's employment with SGX and for a period of
one year after the termination of Executive's employment with SGX, Executive
will not directly or indirectly, separately or in association with others,
interfere with, impair, disrupt or damage SGX' relationship with any employee or
independent contractor; solicit, encourage or attempt to hire any of SGX'
employees or independent contractors; or cause others to solicit or encourage
any of SGX' employees or independent contractors to discontinue their employment
or services with SGX.
10.2. Non-Solicitation of Customers. Executive acknowledges that
proprietary information about SGX' customers is confidential and constitutes
trade secrets of SGX. Executive agrees that during Executive's employment with
SGX and for a period of one year following the termination of Executive's
employment with SGX, Executive will not, either directly or indirectly,
separately or in association with others, do any of the following: (i) make
known, to any person, firm or corporation, the names and addresses of any of the
customers of SGX or contacts of SGX within the pharmaceutical or biotechnology
industry or any other information pertaining to such persons; (ii) call on,
solicit, take away, or attempt to call on, solicit or take away any of the
customers of SGX on whom Executive called or with whom Executive became aware or
acquainted during Executive's association with SGX, whether for Executive or for
any other person, firm or corporation; or (iii) use or make known to any person
or entity, the strategies, tactics, practices, and procedures by which SGX does
business.
11. Injunctive Relief. Executive acknowledges that Executive's breach of
the covenants contained in paragraphs 8-10 (collectively "Covenants") would
cause irreparable injury to SGX and agrees that in the event of any such breach,
SGX shall be entitled to seek temporary, preliminary and permanent injunctive
relief without the necessity of proving actual damages or posting any bond or
other security.
12. Accounting and Indemnification. In the event Executive breaches any of
the Covenants contained in paragraphs 8-10, SGX shall have the right and remedy
to require Executive to: (a) account for and pay over to SGX all compensation,
profits, monies, accruals, increments or other benefits derived or received by
Executive or any associated party deriving such benefits as a result of any such
breach of the Covenants; and (b) to indemnify SGX against any other losses,
damages (including special and consequential damages), costs and expenses,
including actual attorneys' fees and court costs, which may be incurred by them
and which result from or arise out of any such breach or threatened breach of
the Covenants. Both parties agree that the provisions of this paragraph 12 will
not adequately compensate SGX for SGX' injury in the event of Executive's breach
of any of the Covenants. Accordingly, the parties agree the provisions of this
paragraph 12 will not in any way limit or interfere with SGX' right to seek
injunctive relief under paragraph 11.
13. Return of SGX Property. On termination of employment with SGX for
whatever reason, or at the request of SGX before termination, Executive agrees
to promptly deliver to SGX all records, files, computer disks, memoranda,
documents, lists and other information regarding or containing any Proprietary
Information (as defined in the Confidential Information and Invention Assignment
Agreement executed herewith), including all copies, reproductions, summaries or
excerpts thereof, then in Executive's possession or control, whether prepared by
Executive or others. Executive also agrees to promptly return, upon termination
or at any time upon SGX' request, any and all SGX property issued to Executive,
including but not limited to computers, facsimile transmission equipment,
cellular phones, keys and credits cards. Executive further agrees that should
Executive discover any SGX property or Proprietary Information in Executive's
possession after Executive's termination and departure from SGX, Executive
agrees to return it promptly to SGX without retaining copies or excerpts of any
kind.
14. No Violation of Rights of Third Parties. Executive warrants that
Executive's performance of all the terms of this Agreement does not and will not
breach any agreement to keep in confidence proprietary information, knowledge or
data acquired by Executive prior to Executive's employment with SGX. Executive
agrees not to disclose to SGX, or induce SGX to use, any confidential or
proprietary information or material belonging to any previous employers or
others. Executive warrants that Executive is not a party to any other agreement
that will interfere with Executive's full compliance with this Agreement.
Executive further agrees not to enter into any agreement, whether written or
oral, in conflict with the provisions of this Agreement.
15. Agreement to Arbitrate. Executive and SGX agree to arbitrate any
controversy, claim or dispute between them arising out of or in any way related
to this Agreement, the employment relationship between them, and any disputes
upon termination of employment, except as provided in subparagraph 15.1 below,
to the fullest extent permitted by law. This method of resolving disputes shall
be the sole and exclusive remedy of the parties. Accordingly, the parties
understand that, except as provided in this paragraph 15 or as otherwise
required by law, they are giving up their rights to have their disputes decided
in a court of law and, if applicable, by a jury, and instead agree that their
disputes shall be decided by arbitration.
15.1. Scope of the Agreement. The disputes subject to this agreement
to arbitrate include all potential claims between Executive and SGX relating to
employment, such as breach of contract, tort, discrimination, harassment,
wrongful termination, demotion, discipline, failure to accommodate, family and
medical leave, compensation or benefits claims, constitutional claims and claims
for violation of any local, state or federal law, statute, regulation or
ordinance or common law to the fullest extent permitted by law. Claims for
workers' compensation or unemployment insurance benefits, if any, and SGX' right
to obtain injunctive relief pursuant to paragraph 11 above are excluded. For the
purposes of this agreement to arbitrate, references to "SGX" include SGX and all
subsidiary and related entities and their employees, supervisors, officers,
directors, owners, agents, benefit plans, benefit plan sponsors, fiduciaries,
administrators, affiliates and all successors and assigns of any of them, and
this agreement to arbitrate shall apply to them to the extent Executive's claims
arise out of or relate to their actions on behalf of SGX.
15.2. Initiation of Arbitration. Either party may exercise the right
to arbitrate by providing the other party with written notice of any and all
claims forming the basis of such right in sufficient detail to inform the other
party of the substance of such claims.
15.3. Arbitration Procedure. The arbitration will be conducted in
accordance with the then current rules for resolution of employment disputes of
the American Arbitration Association ("AAA") at its offices
in San Diego, California. If the parties cannot agree on the single neutral
arbitrator, such arbitrator shall be selected in accordance with the AAA rules.
The parties are entitled to representation by an attorney or other
representative of their choosing. The parties will also be permitted to conduct
discovery sufficient to present their respective cases. The arbitrator will be
required to issue a written arbitration decision that will reveal the essential
findings and conclusions on which an award is based, and shall have the power to
enter any award that could be entered by a judge of the Superior Court of the
State of California, and only such power, and shall follow the law. In the event
the arbitrator does not follow the law, the arbitrator will have exceeded the
scope of his or her authority and the parties may, at their option, file a
motion to vacate the award in court. Otherwise, the parties agree to abide by
and perform any award rendered by the arbitrator. Judgment on the award may be
entered in any court having jurisdiction thereof.
16. General Provisions.
16.1. Successors and Assigns. The rights and obligations of SGX under
this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of SGX. Executive shall not be entitled to assign any of
Executive's rights or obligations under this Agreement other than to the estate
of Executive.
16.2. Waiver. Either party's failure to enforce any provision of this
Agreement shall not in any way be construed as a waiver of any such provision,
or prevent that party thereafter from enforcing each and every other provision
of this Agreement.
16.3. Severability. In the event any provision of this Agreement is
found to be unenforceable by an arbitrator or court of competent jurisdiction,
such provision shall be deemed modified to the extent necessary to allow
enforceability of the provision as so limited, it being intended that the
parties shall receive the benefit contemplated herein to the fullest extent
permitted by law. If a deemed modification is not satisfactory in the judgment
of such arbitrator or court, the unenforceable provision shall be deemed
deleted, and the validity and enforceability of the remaining provisions shall
not be affected thereby.
16.4. Interpretation; Construction. The headings set forth in this
Agreement are for convenience only and shall not be used in interpreting this
Agreement. This Agreement has been drafted by legal counsel representing SGX,
but Executive has participated in the negotiation of its terms. Furthermore,
Executive acknowledges that Executive has had an opportunity to review and
revise the Agreement and have it reviewed by legal counsel, if desired, and,
therefore, the normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement.
16.5. Governing Law. This Agreement will be governed by and construed
in accordance with the laws of the United States and the State of California.
Each party consents to the jurisdiction and venue of the state or federal courts
in the State where Executive is employed, in any action, suit, or proceeding
arising out of or relating to this Agreement.
16.6. Notices. Any notice required or permitted by this Agreement
shall be in writing and shall be delivered as follows with notice deemed given
as indicated: (a) by personal delivery when delivered personally; (b) by
overnight courier upon written verification of receipt; (c) by telecopy or
facsimile transmission upon acknowledgment of receipt of electronic
transmission; or (d) by certified or registered mail, return receipt requested,
upon verification of receipt. Notice shall be sent to the addresses set forth
below, or such other address as either party may specify in writing.
16.7. Survival. Paragraphs 8 ("Competitive Employment"), 9
("Confidentiality and Proprietary Rights"), 10 ("Non-Solicitation"), 11
("Injunctive Relief"), 12 ("Accounting and Indemnification"), 13 ("Return of SGX
Property"), 15 ("Agreement to Arbitrate"), 16 ("General Provisions") and 17
("Entire Agreement") of this Agreement shall survive Executive's employment by
SGX.
17. Entire Agreement. This Agreement, including SGX' Incentive Plan, bonus
program and Confidential Information and Invention Assignment Agreement herein
incorporated by reference, constitutes the entire agreement between the parties
relating to this subject matter and supersedes all prior or simultaneous
representations, discussions, negotiations, and agreements, whether written or
oral, including but not limited to the Offer Letter of July 16, 2001 and the
Prior Agreement. This Agreement may be amended or modified only with the written
consent of Executive and the Board. No oral waiver, amendment or modification
will be effective under any circumstances whatsoever.
THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY
UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES
HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN BELOW.
Executive
Dated: February __, 2005 /s/ Xxxxxxx Xxxx
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Xxxxxxx Xxxx
Structural GenomiX, Inc.
Dated: February __, 2005 By: /s/ Xxxx Xxxxxx
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Its: _____________________
