Exhibit 10.42
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, effective as of April 22, 2002, is made by
and between Deltagen, Inc., a Delaware corporation (the "Company"), and Xxxxxxx
X. Xxxxxx, the undersigned individual ("Executive").
RECITAL
The Company and Executive desire to enter into an Employment Agreement
setting forth the terms and conditions of Executive's employment with the
Company.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the Company and Executive agree as follows:
1. Employment.
(a) Title and Responsibilities. Executive hereby accepts
employment with the Company pursuant to the terms and conditions hereof.
Executive agrees to serve the Company in the position of President and Chief
Operating Officer. Executive will be reporting to the Chief Executive Officer.
Within the limitations established by the Bylaws of the Company, the Executive
shall have the powers and duties commensurate with such position. In addition,
the Board of Directors will appoint you to the Board within six months of your
commencement of employment.
(b) Full-Time Attention. Executive shall devote his best efforts
and his full business time and attention to the performance of the services
customarily incident to such office and to such other services as the Company
may reasonably request. Executive may provide the consulting services set forth
in his June 26, 2002 agreement with Elan to the extent such consulting services
do not detract from or interfere with Executive's efforts, duties and
obligations to the Company.
(c) Other Activities. Except upon the prior written consent of
the Company, Executive shall not during the period of employment engage,
directly or indirectly, in any other business activity (whether or not pursued
for pecuniary advantage) that is or may be competitive with, or that might place
him in a competing position to that of the Company or any other corporation or
entity that directly or indirectly controls, is controlled by, or is under
common control with the Company (an "Affiliated Company"), provided that
Employee may own less than two percent (2%) of the outstanding securities of any
such publicly traded competing corporation. Executive represents and warrants
that the consulting services he will be providing to Elan will not be
competitive with the business activities of the Company, and the Company is
relying upon such representation and warranty in agreeing to permit Executive to
perform consulting services for Elan.
2. Compensation.
(a) Base Salary. Executive shall receive a Base Salary at an
annual rate of Three Hundred Eighty Thousand ($380,000), payable in accordance
with Company's customary payroll practices. The Company shall provide Executive
with annual performance reviews on or before February 1 of each year, and,
thereafter, Executive shall be entitled to such Base Salary as the company may
from time to time establish in its sole discretion.
(b) Annual Bonus. Executive shall be eligible to receive an
annual bonus of up to 60% of base salary as determined by the Board of Directors
upon the recommendations of its Compensation Committee and Chief Executive
Officer. The amount of bonus will be based upon Executive's achievement of his
individual performance objectives and the company's performance compared to
profitability objectives and other financial and non-financial objectives and
considerations; half of Executive's bonus, 30% of base salary, will be
guaranteed.
(c) Stock Options. Subject to approval of the Company's Board of
Directors, Executive will be granted a stock option under the Deltagen 2000
Stock Incentive Plan to purchase 700,000 shares of the Company's common stock
(the "Option"). To the maximum extent possible, the Option shall be an Incentive
Stock Option as such term is defined in Section 422 of the Internal Revenue Code
of 1986, as amended. The Option will be governed by and granted pursuant to a
separate stock option agreement and not this Agreement. In part, the stock
option agreement will provide that (i) the exercise price per share of the
Option will be equal to the fair market value of the Company's common stock
established on the date of grant; and (ii) the Option will be subject to vesting
over four (4) years so long as Employee continues to be employed with the
Company, according to the following schedule: Twenty-five percent (25%) of such
shares shall vest and become exercisable twelve (12) months following the grant
date, with an additional 1/48 of such shares vesting at the end of each monthly
period thereafter.
3. Accelerated Vesting of Options on account of a "Change of
Control". During the first year of Executive's employment, if the Company enters
into a "Change of Control" Transaction as defined in Section 3(d), then fifty
percent (50%) of all options held by Executive as of the date of completion of
the Change of Control Transaction shall become fully vested and exercisable. If
Executive has completed one year of service with the Company, prior to a "Change
of Control" of the Company, 75% of all options held by Executive shall become
fully vested and exercisable. If such one year of service is completed
subsequent to a "Change of Control" of the Company that occurred during
Executive's service with the Company, 75% of all options held by Executive at
the time of the "Change of Control" shall become fully vested and exercisable.
If Executive has completed two years of service with the Company, prior to a
"Change of Control" of the Company, 100% of all options held by Executive shall
become fully vested and exercisable. If such two years of service is completed
subsequent to a "Change of Control" of the Company that occurred during
Executive's service with the Company, 100% of all options held by Executive at
the time of the "Change of Control" shall become fully vested and exercisable.
Notwithstanding anything in the agreement to the contrary, if the Executive
terminates his employment in an "Eligible Termination," as defined in Section
3(a), following a "Change of Control" of the Company, 100% of all options held
by Executives as of the "Eligible Termination Date," as defined in Section 3(b),
shall become fully vested and exercisable.
(a) "Eligible Termination" means any termination within eighteen
months (18) of a Change of Control of the Company (other than for disability or
death) of a Covered Executive's employment (i) by the Company for any reason
other than Cause; or (ii) by the Covered Executive for Good Reason.
(b) "Eligible Termination Date" means the effective date of a
Covered Executive's Eligible Termination.
(c) "Good Reason" means the Company has, without the written
consent of the Covered Executive: (i) Reduced the powers, duties or title of the
Covered Executive; (ii) Reduced the Covered Executive's base salary; or (iii)
Required the Covered Executive to relocate his or her principal place of
business by more than 40 miles from its location immediately prior to the Change
of Control.
(d) "Change of Control" means any of the following events shall
have occurred: (i) The consummation of a merger or consolidation of the Company
with
or into another entity or any other corporation reorganization, 50% or more of
the combined voting power of the continuing or surviving entity's securities
outstanding immediately after such merger, consolidation or other reorganization
is owned by persons who were not stockholders of the Company immediately prior
to such merger, consolidation or other reorganization; (ii) A change in the
composition of the Board of Directors, as a result of which 50% or less of the
incumbent directors are directors who either (a) had been directors of the
Company 24 months prior to such change; or (b) were elected, or nominated for
election, to the Board of Directors with the affirmative votes of at least a
majority of the directors who had been directors of the Company 24 months prior
to such change and who were still in office at the time of the election or
nomination; or (iii) Any "person" (as such term is used in Section 13(d) and
Section 14 of the Exchange Act) that by the acquisition of securities is or
becomes the beneficial owner, directly or indirectly, of securities of the
Company representing 40% or more of the combined voting power of the Company's
then outstanding securities ordinarily (and apart from rights accruing under
special circumstances) having the right to vote at elections of directors (the
"Base Capital Stock"), except that any change in the relative beneficial
ownership of the Company's securities resulting solely from a reduction in the
aggregate number of outstanding shares of Base Capital Stock, and any decrease
thereafter in such person's ownership of securities, shall be disregarded until
such person increases in any manner, directly or indirectly, such person's
beneficial ownership of any securities of the Company. Thus, for example, any
person who owns less than 40% of the Company's outstanding shares, shall cause a
Change of Control to occur as of any subsequent date if such person then
acquires an additional interest in the Company which, when added to the person's
previous holdings, causes the person to hold more than 50% of the Company's
outstanding shares.
Notwithstanding the foregoing, the term "Change of Control" shall not include a
transaction, the sole purpose of which is to change the state of the Company's
incorporation.
4. Other Employment Benefits.
(a) Business Expenses. Upon submission of itemized expense
statements in accordance with the policies and procedures established by the
Company, Executive shall be entitled to reimbursement for reasonable travel and
other reasonable business expenses duly incurred by Executive in the performance
of his duties under this Agreement.
(b) Benefit Plans. Executive shall be entitled to participate in
the Company's medical, dental and vision plans, life and disability insurance
plans and retirement plans pursuant to their terms and conditions. Executive
shall be entitled to participate in any other benefit plan offered by the
Company to its employees during the term of this Agreement. Nothing in this
Agreement shall preclude the Company or any affiliate of the Company from
terminating or amending any employee benefit plan or program from time to time.
(c) Vacation. Executive shall receive four (4) weeks of annual
paid vacation in accordance with Company policy during the term of this
Agreement, as long as the scheduling of Executive's vacation does not interfere
with the Company's normal business operations.
(d) Relocation Assistance. Specific benefits to assist Executive
in moving from Weston, Connecticut, to the Bay Area shall include: (i) The
shipment of Executive's household goods payable against receipts. (ii) The
storage of Executive's household goods, after arrival in the Bay Area, up to 60
days, which may be extended with Company approval if necessary. (iii)
Reimbursement for travel for Executive and family when starting employment and
when moving to the Bay Area permanently. (iv) Company will pay for two round
trips for Executive and family, including reasonable lodging and meal costs for
up to ten days, for the purpose of locating a new residence. (v) Upon
Executive's arrival in the Bay Area, Company will provide temporary lodging for
Executive and family for up to 60 days; temporary living expenses may be
extended with Company approval if necessary. Company will reimburse Executive
reasonable commuting expenses if Executive's family does not move to the Bay
Area
within 5 months of Executive's date of hire. (vi) Company will reimburse
Executive for normal closing costs and real estate broker's commission on the
sale of Executive's current home; Company will reimburse Executive for normal
closing costs on the purchase of a home in the Bay Area. (vii) In the event
Executive ceases to be employed by Deltagen due to resignation or termination
for "Cause", as defined in Section 5(d), within the first year of his
employment, the relocation benefits paid according to Sections 4(d) i-vi above
will be repaid by Executive no later than his last day of employment. (viii) Any
amount paid by Deltagen, Inc. for Executive, either directly or indirectly, as
payment or reimbursement of expenses for a move from one residence to another
that is attributable to employment must be included in his gross income as
compensation for services. Therefore, as a partial offset for this extra tax
liability, Deltagen will provide Executive with a tax allowance of 43% on
taxable items. Before the end of the calendar year Executive will receive a
statement from the Company summarizing his relocation expense reimbursements and
identifying the amounts that must be included on Executive's W-2 form, the
amounts subject to withholding taxes, and the amount of any applicable tax
allowance. It will also indicate the date that his payroll check will be
affected by application of the tax allowance and required withholdings.
(e) Home Loan. Company will provide Executive a home loan of up
to $630,000 ("Loan"), the terms of which shall be governed by a certain separate
Loan Agreement dated June 24, 2002 and not by this Agreement. In part, the Loan
will bear interest at an annual rate equal to the rate announced by X.X. Xxxxxx
Xxxxx & Co., Inc. as its Prime Rate. The amount of $552,000 for the Loan and the
interest on that portion of the Loan will be forgiven at the end of five years
of continued employment. The amount of $78,000 will be due to be repaid with
interest at the end of five years of continued employment. Executive will be
fully responsible for the taxes due related to the Loan and interest on the
Loan. The Loan will be secured by a Second Deed of Trust in Deltagen's name. If
Executive ceases to be employed by Deltagen due to voluntary resignation or
termination for "Cause", the Loan will become interest-bearing at prime plus 2%
and will be due within a reasonable period not to exceed six months. If
Executive is terminated for any other reason, the Loan will be forgiven.
5. Term and Termination of Employment.
(a) Term of Employment. Unless otherwise terminated by the
Company in accordance with this Agreement, the term of Executive's employment
with the Company under this Agreement shall commence on Executive's date of hire
and shall continue until the five (5) year anniversary thereof (the "Initial
Term"). At the end of the Initial Term, the Employment Term shall thereafter be
extended for successive additional one (1) year periods unless either the
Company or the Executive gives the other party written notice at least ninety
(90) days prior to the end of the Initial Term or any then current additional
term. The Initial Term plus any additional term shall be referred to as the
"Employment Term".
(b) Termination Upon Death of Executive. The Employment Term
shall terminate automatically upon the death of Executive. In such event, the
Company shall pay to Executive's beneficiaries or his estate, as the case may
be, any accrued Base Salary, any bonus compensation to the extent awarded by the
Company's Board of Directors, any vested deferred compensation (other than
pension plan or profit-sharing plan benefits which will be paid in accordance
with the applicable plan), any benefits under any plans of the Company in which
Employee is a participant to the full extent of Employee's rights under such
plans, any accrued vacation pay and any appropriate business expenses incurred
by Executive in connection with his duties hereunder, all to the date of
termination (collectively "Accrued Compensation"), but no other compensation or
reimbursement of any kind, including, without limitation, severance
compensation, and thereafter, the Company's obligations hereunder shall
terminate.
(c) Termination Upon Disability of Executive. If Executive is
prevented from properly performing his duties hereunder by reason of any
physical or mental incapacity for a period of more than 180 days in the
aggregate in any 365-day period, then, to the extent permitted by law, the
Company may terminate the employment on the 180th day of such incapacity. In
such event, the Company
shall pay to Executive all Accrued Compensation, shall continue to pay to
Executive the Base Salary then in effect until such time as Executive shall
become entitled to receive disability insurance payments under the long-term
disability insurance policy maintained by the Company, and all other obligations
of the Company hereunder shall terminate.
(d) Termination For Cause. Notwithstanding anything herein to the
contrary, the Company may terminate Executive's employment hereunder for Cause
for any one of the following reasons: (i) any intentional action or intentional
failure to act by Employee which was performed in bad faith and to the material
detriment of the Company; (ii) Employee intentionally refuses or intentionally
fails to act in accordance with any lawful and proper direction or order of the
Company; (iii) Employee willfully and habitually neglects the duties of
employment; or (iv) Employee is convicted of a felony crime. Upon termination of
Executive's employment with the Company for Cause, the Company shall be under no
further obligation to Executive, except to pay all accrued but unpaid Base
Salary and accrued vacation to the date of termination thereof. Upon termination
for Cause, Executive shall be deemed to have resigned from the Board of
Directors of the Company if he is a director.
(e) Termination Without Cause. The Company may terminate
Executive's employment hereunder at any time without Cause, provided, however,
that Executive shall be entitled to severance pay in the amount of twelve (12)
months of Base Salary in addition to accrued but unpaid Base Salary, accrued
vacation, and the guaranteed portion of Executive's bonus, which is 30% of Base
Salary; provided that Executive executes that form of Release attached as
Exhibit A hereto.
(f) Cooperation. After notice of termination, Executive shall
cooperate with the Company, as reasonably requested by the Company, to effect a
transition of Executive's responsibilities and to ensure that the Company is
aware of all matters being handled by Executive.
6. Employee's Proprietary Information and Inventions Agreement.
Executive is simultaneously executing an Employee's Proprietary Information and
Inventions Agreement (the "Employee's Proprietary Information and Inventions
Agreement"). The obligations under the Employee's Proprietary Information and
Inventions Agreement shall survive termination of this Agreement for any reason.
7. Exclusive Employment. During employment with the Company,
Executive will not do anything to compete with the Company's present or
contemplated business, nor will Executive plan or organize any competitive
business activity. Executive will not enter into any agreement which conflicts
with his duties or obligations to the Company. As set forth in Sections 1(b) and
(c) above, Executive may provide the consulting services set forth in his June
26, 2002 agreement with Elan to the extent such consulting services do not
detract from or interfere with Executive's efforts, duties and obligations to
the Company, and Executive represents and warrants that the consulting services
he will be providing to Elan will not be competitive with the business
activities of the Company, and the Company is relying upon such representation
and warranty in agreeing to permit Executive to perform consulting services for
Elan. Executive will not, during his employment or within one (1) year after it
ends, without the Company's express written consent, directly or indirectly,
solicit or encourage any employee, agent, independent contractor, supplier,
customer, consultant or any other person or company to terminate or alter a
relationship with the Company.
8. Assignment and Transfer. Executive's rights and obligations under
this Agreement shall not be transferable by assignment or otherwise, and any
purported assignment, transfer or delegation thereof shall be void. This
Agreement shall inure to the benefit of, and be binding upon and enforceable by,
any purchaser of substantially all of Company's assets, any corporate successor
to Company or any assignee thereof.
9. No Inconsistent Obligations. Executive is aware of no
obligations, legal or
otherwise, inconsistent with the terms of this Agreement or with his undertaking
employment with the Company. Executive will not disclose to the Company, or use,
or induce the Company to use, any proprietary information or trade secrets of
others. Executive represents and warrants that he or she has returned all
property and confidential information belonging to all prior employers.
10. Employee Acknowledgment. Employee acknowledges (a) that he has
consulted with or has had the opportunity to consult with independent counsel of
his own choice concerning this Agreement, and has been advised to do so by the
Company, and (b) that he has read and understands the Agreement, is fully aware
of its legal effect, and has entered into it freely based on his own judgment.
11. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
(b) Entire Agreement. Except with respect to the Stock Option
Plan and Stock Option Agreement referenced in Section 2(c), this Agreement,
together with the attached exhibits and the Employee's Proprietary Information
and Inventions Agreement, contains the entire agreement and understanding
between the parties hereto and supersedes any prior or contemporaneous written
or oral agreements, representations and warranties between them respecting the
subject matter hereof. Each of the parties acknowledges that it has not relied
on any promise, representation or warranty, expressed or implied, not contained
in this Agreement.
(c) Amendment. This Agreement may be amended only by a writing
signed by Executive and by a representative of the Company duly authorized by
the Board of Directors.
(d) Severability. If any term, provision, covenant or condition
of this Agreement, or the application thereof to any person, place or
circumstance, shall be held to be invalid, unenforceable or void, the remainder
of this Agreement and such term, provision, covenant or condition as applied to
other persons, places and circumstances shall remain in full force and effect.
(e) Construction. The headings and captions of this Agreement are
provided for convenience only and are intended to have no effect in construing
or interpreting this Agreement. The language in all parts of this Agreement
shall be in all cases construed according to its fair meaning and not strictly
for or against the Company or Executive.
(f) Rights Cumulative. The rights and remedies provided by this
Agreement are cumulative, and the exercise of any right or remedy by either
party hereto (or by its successor), whether pursuant to this Agreement, to any
other agreement, or to law, shall not preclude or waive its right to exercise
any or all other rights and remedies.
(g) Nonwaiver. No failure or neglect of either party hereto in
any instance to exercise any right, power or privilege hereunder or under law
shall constitute a waiver of any other right, power or privilege or of the same
right, power or privilege in any other instance. All waivers by either party
hereto must be contained in a written instrument signed by the party to be
charged and, in the case of the Company, by an officer of the Company (other
than Executive) or other person duly authorized by the Company.
(h) Notices. Any notice, request, consent or approval required or
permitted to be given under this Agreement or pursuant to law shall be
sufficient if in writing and, if and when sent by certified or registered mail,
with postage prepaid, to Executive's residence (as noted in the Company's
records), or to the Company's principal office, as the case may be.
(i) Assistance in Litigation. Executive shall, during and after
termination of employment, upon reasonable notice, furnish such information and
proper assistance to the Company as may reasonably be required by the Company in
connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become a party; provided, however, that such assistance
following termination shall be furnished at mutually agreeable times and for
compensation equivalent to Executive's hourly rate of pay based upon Executive's
Base Salary at termination of employment.
(j) Arbitration. Any controversy, claim or dispute arising out of
or relating to this Agreement, either during the existence of the employment
relationship or afterwards, between the parties hereto, their assignees, their
affiliates, their attorneys, or agents, shall be resolved by arbitration in
Santa Xxxxx County, California. Such arbitration shall be conducted in
accordance with the then prevailing commercial arbitration rules of the American
Arbitration Association (but the arbitration shall be in front of an arbitrator
appointed by JAMS/Endispute ("JAMS")), with the following exceptions if in
conflict: (i) one arbitrator shall be chosen by JAMS; (ii) each party to the
arbitration will pay its pro rata share of the expenses and fees of the
arbitrator(s), together with other expenses of the arbitration incurred or
approved by the arbitrator(s); and (iii) arbitration may proceed in the absence
of any party if written notice (pursuant to the JAMS' rules and regulations) of
the proceedings has been given to such party. The parties agree to abide by all
decisions and awards rendered in such proceedings. Such decisions and awards
rendered by the arbitrator shall be final and conclusive and may be entered in
any court having jurisdiction thereof as a basis of judgment and of the issuance
of execution for its collection. All such controversies, claims or disputes
shall be resolved in this manner in lieu of any action at law or equity;
provided, however, that nothing in this Section 13(j) hereof shall be construed
as precluding the Company from bringing an action for injunctive relief or other
equitable relief or relief under the Employee's Proprietary Information and
Inventions Agreement. The arbitrator shall not have the right to award punitive
damages, consequential damages, lost profits or speculative damages to either
party. The parties shall keep confidential the existence of the claim,
controversy or disputes from third parties (other than the arbitrator), and the
determination thereof, unless otherwise required by law or necessary for the
business of the Company. The arbitrator(s) shall be required to follow
applicable law.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the dates set forth below.
DELTAGEN, INC. EXECUTIVE:
By: /s/ Xxxxxxx Xxxxxxxx /s/ Xxxxxxx X. Xxxxxx
-------------------------------------- ------------------------------------
Name: Xxxxxxx Xxxxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Chairman and Chief Executive Officer
Date: July 30, 2002 Date: July 30, 2002
------------------------------------ ------------------------------
EXHIBIT A
GENERAL RELEASE
The undersigned (hereinafter, the "Terminated Employee")
hereby releases, discharges and acquits Deltagen, Inc. (the "Company"), its
agents, employees, shareholders, directors, officers, successors, attorneys and
assigns (collectively, "Releasees") from any and all claims, demands,
liabilities or causes of action, known or unknown, against Releasees or any of
them, which Terminated Employee now owns or holds or will own or hold at any
time in the future, by reason of any action, matter, cause or thing whatsoever
related to the termination of the Terminated Employee's employment with the
Company or in any way related to the employment relationship between the
Terminated Employee and the Company and/or arising out of the termination of
that employment or relationship, including but not limited to any and all claims
pursuant to the Age Discrimination in Employment Act, 29 U.S.C. Section 621 et
seq. and any other applicable law, statute, code or ordinance. It is the
intention of the Terminated Employee in executing this General Release that the
general release provided for herein shall be effective as a bar to each every
claim, demand and cause of action hereinabove specified, and shall extend to
claims that the Terminated Employee does not know or suspect to exist in his
favor at the time of executing this General Release, which if known by the
Terminated Employee might have materially affected his entering into this
General Release. It is the further intention of the Terminated Employee in
executing this General Release to waive California Civil Code Section 1542 and
any other provision of any other state's or jurisdiction's law or laws of a
similar nature or with similar effect. California Civil Code Section 1542
provides as follows:
A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have
materially affected his settlement with the debtor.
The Terminated Employee acknowledges that he is aware that he
may hereafter discover facts different from or in addition to those he now knows
or believes to be true with respect to the matters herein released and the
Terminated Employee agrees that this General Release shall be and remain in
effect in all respects as a complete general release notwithstanding any such
different or additional facts.
The Terminated Employee acknowledges that he has been advised
to consult with an attorney prior to signing this General Release and that he
has in fact consulted with an attorney, that the Terminated Employee understands
that he is not waiving any claims which may arise after the date of this
Release, that the Terminated Employee has been given a period of at least 21
days in which to consider whether to enter into this Release, and that, if
required by law, the Terminated Employee is entering into this Release of his
own free will.
The Terminated Employee further acknowledges and understands
that he, if he is 40 years of age or older, may revoke this General Release
within 7 days from the date it is executed by him and that this General Release
shall not become effective or enforceable until that 7-day period has expired.
Such a revocation must be transmitted to the Vice President of Human Resources
of the Company in writing. Such a revocation will immediately void all of the
promises and obligations set forth in this General Release and any obligations
of the Company to Employee pursuant to the terms of that Employment Agreement
dated April 22, 2002, between the Company and the Terminated Employee, including
but not limited to any of the Company's obligations to remit the sums set forth
therein.
________________________________________________
[Name of Terminated Employee]
