EXHIBIT 10.24
KOSAN BIOSCIENCES, INC.
EMPLOYMENT AGREEMENT
This Agreement is entered into by and between Kosan Biosciences, Inc.,
a California corporation (the "Company"), and Xxxxxx X. Xxxxx ("Executive"), as
of November 1, 1998.
WHEREAS, Executive is currently employed as a professor with the
University of California at San Francisco ("UCSF") and works as a consultant for
the Company pursuant to the terms of the Amended and Restated Consulting
Agreement by and between Executive and the Company, dated March 29, 1996 (the
Consulting Agreement );
WHEREAS, Executive shall take a leave of absence from UCSF to become an
employee of the Company;
WHEREAS, as of the date Executive receives a leave of absence from
UCSF, the Company desires to employ the Executive as the Chief Executive Officer
and President of the Company, reporting to the Board of Directors of the Company
(the "Board");
WHEREAS, the parties desire and agree to enter into an employment
relationship by means of this Agreement; and
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually covenanted and
agreed by and among the parties as follows:
1. DUTIES AND SCOPE OF EMPLOYMENT.
(a) POSITION: EMPLOYMENT COMMENCEMENT DATE. As of the date
Executive receives a leave of absence from UCSF that, at a minimum, exceeds nine
(9) months ("Leave of Absence"), the Executive shall be employed as the Chief
Executive Officer and President of the Company reporting to the Board
("Commencement Date").
(b) OBLIGATIONS. Executive shall devote his full business
efforts and time to the Company. As Chief Executive Officer and President of the
Company, Executive shall have the duties and responsibilities customarily
associated with such positions, including senior management powers and
responsibilities for the Company's business and affairs. During the term of this
Agreement, Executive agrees not to actively engage in any other employment,
occupation or consulting activity for any direct or indirect remuneration that
creates an actual or potential conflict of interest with the Company without the
prior approval of the Board; provided, however, that Executive may engage in
activities that do not materially interfere with his duties and obligations
under this Agreement or create an actual or potential conflict of interest with
the Company for up to four hours per week. Executive shall report the nature and
extent of such activities, if any, to the Board every six months.
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2. AT-WILL EMPLOYMENT. Executive and the Company understand and
acknowledge that Executive's employment with the Company constitutes "at-will"
employment. Executive and the Company acknowledge that this employment
relationship may be terminated at any time, with or without good cause or for
any or no cause, at the option either of the Company or Executive.
3. COMPENSATION, FRINGE BENEFITS AND STOCK OPTIONS.
(a) BASE SALARY. While employed by the Company pursuant to
this Agreement, the Company shall pay the Executive as compensation for his
services a base salary at the annualized rate of $250,000 (the "Base Salary").
Such salary shall be paid periodically in accordance with normal Company payroll
practices and subject to the usual, required withholding. Executive's Base
Salary shall be adjusted annually by a percentage equal to the percent change
set forth in the U.S. Department of Labor and Bureau of Labor Statistics'
Consumer Price Index for U.S. Cities. Executive understands and agrees that
neither his job performance nor promotions, commendations, bonuses or the like
from the Company give rise to or in any way serve as the basis for modification,
amendment, or extension, by implication or otherwise, of this Agreement.
(b) DISCRETIONARY BONUS. The performance of Executive and the
Company may be reviewed by the Board periodically, and, on that basis, the Board
may, in its discretion, award the Executive a bonus. Any such bonus shall be
subject to applicable withholding.
(c) EXECUTIVE BENEFITS. During his employment hereunder,
Executive shall be eligible to participate in the employee benefit plans
currently and hereafter maintained by the Company of general applicability to
other key executives of the Company, including, without limitation, group
health, disability, and life insurance benefits and participation in any Company
profit-sharing, retirement or pension plan, and vacation consistent with the
vacation policies of the Company.
(d) STOCK OPTION. As of the Commencement Date, Executive shall
be granted a nonstatutory stock option which shall consist of 250,000 shares of
the Company's then issued and outstanding shares of Common Stock at an exercise
price equal to the fair market value of the Common Stock on the date of grant.
Subject to the acceleration of vesting provisions in this Section 3 and Section
5 of this Agreement, the Option shall commence vesting on October 1, 1998, and
shall vest and become exercisable as to 1/48th of the shares subject to the
Option per month, so as to be fully vested on October 1, 2002, subject to
Executive continuing to render services to the Company as President and Chief
Executive Officer. The Option shall be in all respects subject to the terms,
definitions and provisions of the Company's 1996 Stock Option Plan (the "Option
Plan") and the stock option agreement by and between Executive and the Company
(the "Option Agreement"), all of which documents are incorporated herein by
reference.
Notwithstanding the above, Executive shall fully vest in and
have the right to exercise the Option as to all of the shares subject to the
Option, including shares as to which it would not otherwise be vested or
exercisable, in the event that (i) the Company enters into a merger or other
reorganization (as defined in Section 181 of the California Corporations Code)
with or into another
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corporation or entity (except where California Corporations Code Section 1201(b)
does not require the approval of the outstanding shares of the Company with
respect to such merger or other reorganization), (ii) the Company sells all or
substantially all of its assets, (iii) a person or entity makes a tender or
exchange offer for and acquires 50% or more of the issued and outstanding voting
securities of the Company, or (iv) any person within the meaning of Section
3(a)(9) or Section 13(d)(3) of the Securities Exchange Act of 1934, as amended,
acquires more than 50% of the Company's issued and outstanding voting securities
of the Company.
4. EXPENSES. The Company will pay or reimburse Executive for
reasonable travel, entertainment or other expenses incurred by Executive in the
furtherance of or in connection with the performance of Executive's duties
hereunder in accordance with the Company's established policies.
5. CANCELLATION OF CONSULTING AGREEMENT. Upon the Commencement
Date, Executive and Company agree to cancel and forego their rights, if any,
under the Consulting Agreement.
6. SEVERANCE BENEFITS.
(a) TERMINATION WITHOUT CAUSE DURING LEAVE OF ABSENCE. If
Executive's employment with the Company terminates other than voluntarily by the
Executive or for "Cause" (as defined herein) at any time during Executive's
Leave of Absence, then (i) Executive shall become a consultant of the Company
and enter into an agreement with the Company containing the terms of the
Consulting Agreement; provided, however, that Executive's compensation level
shall equal that of Xx. Xxxxxx, (ii) vesting of the Option will immediately
cease and Executive shall have the right to exercise any vested portion of the
Option for three (3) months following such termination, and (iii) Executive
shall only be eligible for severance benefits in accordance with the Company's
established policies as then in effect.
(b) VOLUNTARY TERMINATION DURING LEAVE OF ABSENCE. If
Executive's employment with the Company terminates voluntarily by the Executive
at any time during Executive's Leave of Absence, then (i) Executive shall become
a consultant of the Company and enter into an agreement with the Company
containing the terms of the Consulting Agreement; provided, however, that
Executive's compensation level shall equal that of Xx. Xxxxxx, (ii) the vesting
of the Option will immediately cease and Executive shall have thirty (30) days
to exercise vested shares, if any, subject to the Option, and (iii) Executive
shall only be eligible for severance benefits in accordance with the Company's
established policies as then in effect.
(c) TERMINATION WITHOUT CAUSE AFTER LEAVE OF ABSENCE. If
Executive's employment with the Company terminates other than voluntarily by the
Executive or for "Cause" (as defined herein) at any time after Executive's Leave
of Absence, then (i) Executive shall be entitled to receive a lump sum severance
payment (less applicable withholding taxes) in an amount equal to eighteen (18)
months of his Base Salary, as then in effect; and (ii) an additional eighteen
(18) months of the shares subject to the Option shall vest as of the date of
such termination and Executive have the right to exercise, for three (3) months
following termination, the vested and exercisable shares subject to the Option.
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(d) VOLUNTARY TERMINATION AFTER LEAVE OF ABSENCE. If
Executive's employment with the Company terminates voluntarily by Executive at
any time after the Leave of Absence, then Executive shall only be eligible for
severance benefits in accordance with the Company's established policies as then
in effect.
(e) TERMINATION FOR CAUSE. If Executive's employment with the
Company terminates for "Cause" (as defined herein) by the Company, then
Executive shall only be eligible for severance benefits in accordance with the
Company's established policies as then in effect. For this purpose, "Cause" is
defined as (i) an act of dishonesty made by Executive in connection with
Executive's responsibilities as an employee, (ii) Executive's conviction of, or
plea of NOLO CONTENDERE to, a felony, (iii) Executive's gross misconduct, or
(iv) Executive's failure to perform his employment duties.
7. ENFORCEMENT. In the event of any action to enforce the terms
of this Agreement, the prevailing party in such action shall be entitled to such
party's reasonable costs and expenses of enforcement including, without
limitation, reasonable attorneys' fees.
8. ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of (a) the heirs, executors and legal representatives of Executive
upon Executive's death and (b) any successor of the Company. Any such successor
of the Company shall be deemed substituted for the Company under the terms of
this Agreement for all purposes. As used herein, "successor" shall include any
person, firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly, acquires all or
substantially all of the assets or business of the Company. None of the rights
of Executive to receive any form of compensation payable pursuant to this
Agreement shall be assignable or transferable except through a testamentary
disposition or by the laws of descent and distribution upon the death of
Executive following termination without cause. Any attempted assignment,
transfer, conveyance or other disposition (other than as aforesaid) Of any
interest in the rights of Executive to receive any form of compensation
hereunder shall be null and void.
9. NOTICES. All notices, requests, demands and other
communications called for hereunder shall be in writing and shall be deemed
given if delivered personally, one (1) day after mailing via Federal Express
overnight or a similar overnight delivery service, or three (3) days after being
mailed by registered or certified mail, return receipt requested, prepaid and
addressed to the parties or their successors in interest at the following
addresses, or at such other addresses as the parties may designate by written
notice in the manner aforesaid:
If to the Company: Kosan Biosciences, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
If to Executive: Xxxxxx X. Xxxxx
at the last residential address known by
the Company.
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10. SEVERABILITY. In the event that any provision hereof becomes
or is declared by a court of competent jurisdiction to be illegal, unenforceable
or void, this Agreement shall continue in full force and effect without said
provision.
11. ENTIRE AGREEMENT. This Agreement, the Option Agreement and the
Confidential Information and Invention Assignment Agreement dated November 1,
1998 represent the entire agreement and understanding between the Company and
Executive concerning Executive's employment relationship with the Company, and
supersede and replace any and all prior agreements and understandings concerning
Executive's employment relationship with the Company.
12. NO ORAL MODIFICATION, CANCELLATION OR DISCHARGE. This
Agreement may only be amended, canceled or discharged in writing signed by
Executive and the Company.
13. GOVERNING LAW. This Agreement shall be governed by the
internal substantive laws, but not the choice of law rules, of the State of
California.
14. EFFECTIVE DATE. This Agreement is effective immediately after
it has been signed.
15. ACKNOWLEDGMENT. Executive acknowledges that he has had the
opportunity to discuss this matter with and obtain advice from his private
attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
respective dates set forth below
KOSAN BIOSCIENCES, INC.
By: /s/ XXXXXXX X. XXXXXXX
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Name: XXXXXXX X. XXXXXXX
Title: VP AND COO
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XXXXXX X. XXXXX
/s/ XXXXXX X. XXXXX
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Signature
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