Exhibit 10.24
EMPLOYMENT, CONFIDENTIALITY
AND NON-COMPETITION AGREEMENT
THIS EMPLOYMENT, CONFIDENTIALITY AND NON-COMPETITION AGREEMENT (the
"Agreement") is made and entered into as of the 1st day of September, 2003 (the
"Effective Date"), by and between:
COMBINATORX, INCORPORATED, a Delaware
Corporation duly organized under law and
having an usual place of business at 000
Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
(hereinafter referred to as the "COMPANY")
and
XX. XXX XXXXXX of 0000 Xxxxxx Xxxxx,
Xxxxxxx, XX 00000 (hereinafter referred to
as the "EMPLOYEE")
The Company wishes to employ the Employee to serve as the Chief Medical
Officer and Executive Vice President of Clinical Research and, in connection
therewith, to provide specific medical and scientific expertise and direction
for the Company and the Employee desires to be so employed by the Company on the
terms and conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, accepted and agreed to the Company, and the Employee hereby agree
as follows:
1. EMPLOYMENT. The Company hereby employs the Employee as Chief
Medical Officer and Executive Vice President of Clinical Research and the
Employee accepts such employment, as of the Effective Date, for the compensation
and on the other terms and conditions set forth below.
2. PERIOD OF EMPLOYMENT; DUTIES. The employment of the Employee shall
be for a period of three (3) years commencing with the Effective Date and ending
on August 31, 2006 (the "Termination Date"), or earlier if the employment is
terminated pursuant to Section 4 below (the "Employment Period"). The Employee
shall be employed as the Chief Medical Officer and Executive Vice President of
Clinical Research, and shall have the title, duties and responsibilities
normally and customarily associated with said offices and positions.
The Company and the Employee agree that they will, on or before June 1,
2006, meet in order to negotiate an extension to the Agreement. If the parties
are, for whatever reason, unable to reach an agreement on the terms and
conditions of an extension, then this Agreement shall terminate on the
Termination Date and thereafter shall be of no further force or effect.
As a member of the Senior Management Team, the Employee shall report to
and take direction from the President/CEO.
During the Employment Period, Employee shall devote all of his business
time, attention and loyalty to the Company; PROVIDED, HOWEVER, that the
foregoing shall not prevent the Employee from serving on the board of directors
or similar body of corporations or entities approved by the Board, nor entering
into consulting arrangements mutually agreed to by the President/CEO and the
Employee. The Employee's verbal consulting arrangement with Alteon, Inc. is
hereby acknowledged and accepted. The Employee warrants and represents that he
is under no contractual or other restrictions or obligations which will in any
way limit his activities on behalf of or employment by the Company; and the
entering into of this Agreement does not violate any agreement, contract or
confidentiality agreement that the Employee may have entered into or that is
binding upon the Employee.
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The Employee shall be entitled to attend annually any one of the
following conferences: (i) the American Cardiology Congress, (ii) the European
Cardiology Congress or (iii) the World Cardiology Congress. Further, the
Employee shall be entitled to attend the 9th International Meeting of the
Academy of Periodontology to be held in South Africa from October 24, 2003 to
November 1, 2003. Recognizing that the Employee is an invited speaker at this
international conference, the Company shall be responsible for the Employee's
expenses associated with his attending this conference.
As of the Effective Date, the Clinical Advisor Agreement by and between
the Company and the Employee dated May 23, 2001 is declared null and void and
without further force or effect; provided, however, it is agreed and understood
that all options vested pursuant to the Clinical Advisor Agreement shall be
exercised and converted to the Company's Common Stock at the Company's cost and
expense.
3. COMPENSATION
3.1 ANNUAL BASE SALARY. Subject to the provisions hereof, from
the Effective Date through December 31, 2003, the Company shall pay Employee,
not less frequently than monthly in arrears, a base salary at an annual rate of
Two Hundred Eighty Seven Thousand Five Hundred Dollars ($287,500.00) (the "BASE
SALARY"). During the period of January 1, 2004 through December 31, 2004, the
Base Salary shall be Two Hundred Ninety Six Thousand One Hundred Twenty Five
($296,125.00) Dollars. Therefore, annually during the Employment Period, the
Base Salary shall be determined by the mutual agreement of the President/CEO and
the Employee but, in no event shall the Base Salary be less than the most
recently negotiated and accepted Base Salary. All payments of salary and other
compensation to the Employee shall be
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made after deduction of any taxes which are required to be withheld with respect
thereto under applicable federal and state laws.
3.2 FRINGE BENEFITS. During the Employment Period, the Employee
shall be entitled to all rights and benefits for which he shall be eligible
under group insurance and other fringe benefits which may be, from time to time,
be provided to the Company's executive employees generally.
Further, the Company shall reimburse the Employee for the out-of-pocket
expenses incurred by the Employee in the fulfillment of his duties and
responsibilities hereunder. Reimbursement shall be in accordance with the
Board's policies and procedures and in compliance with the requirements of the
Internal Revenue Code of 1986, as amended. Reimbursement of travel expenses will
be consistent with the Company's travel policies.
3.3 VACATION. During each year of the Employment Period, the
Employee shall be entitled to four (4) weeks of vacation which can be taken
consecutively. Vacation time, after the year in which it is earned, may not be
accrued.
3.4 BONUS PAYMENTS. In partial consideration of the Employee
entering into this Agreement, the Company shall provide the following:
A) PERFORMANCE BONUS. Upon the recommendation of the President/CEO
and based on the Company's financial and cash position and the Employee's
contribution to the Company's achievement of its annual goals, the
Company may, in its discretion, award an annual performance bonus, up to
thirty (30%) percent of the Employee's then Base Salary, either in cash
or stock options, to the Employee. Any such bonus shall not be added to
the Base Salary. Any performance bonus awarded for the period ending
December 31, 2003, shall be pro-rated.
B) STOCK OPTION AWARDS. In addition to the stock option grants
specified in Article 3.5, the Board may, on an annual basis in its
discretion, grant stock options to the Employee based on: (i) the
Employee's performance and (ii) the Company progress and attainment of
its business goals and objectives. The granting of the stock options and
the terms and conditions of the award (e.g. the number of shares
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granted and the vesting schedule), shall be solely within the discretion
of the Board of Directors.
3.5 STOCK OPTIONS. The Employee is hereby granted an Incentive
Grant Option to purchase up to Two Hundred Fifty Thousand (250,000) Shares of
the Company's Common Stock (the "Shares") at an exercise price of Fifty
(.50 CENTS) cents per Share (the "Purchase Price"), in accordance with the terms
and conditions of the Company's Stock Option Plan (the "Plan") and Incentive
Stock Option Grant Agreement (the "Grant"). Subject to the provisions of this
Agreement and the Grant, it is understood and agreed that, the vesting of the
Shares shall occur as follows: Fifteen Thousand Six Hundred Twenty Five (15,625)
Shares shall vest on each quarterly anniversary date following the Effective
Date (i.e., commencing December 1, 2003), and continuing thereafter until fully
vested in accordance with the terms of this Agreement.
3.6 SEVERANCE BENEFITS. Notwithstanding the foregoing, it is
agreed and understood that, in the event of a "Change of Control" as hereinafter
defined, the Employee shall be entitled to the following: (i) The Company shall
pay the Employee his then Base Salary for a period of eighteen (18) months, to
be paid in the usual and customary manner pursuant to the terms of this
Agreement, and (ii) all stock options granted by the Company to the Employee to
the extent not previously vested shall accelerate and be deemed fully vested.
For purposes of this Agreement, the term "Change of Control" shall mean: (a) a
sale, merger or consolidation in which securities possessing more than fifty
(50%) percent of the total combined voting power of the Company's outstanding
securities are transferred to a person or a person different from the persons
who held the securities immediately prior to such transaction, but excluding any
merger with the subsidiary or parent company of the Company; or (b) the sale,
transfer or other
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disposition of all or substantially all of the Company's assets to one or more
persons (other than a wholly owned subsidiary of the Company in a single
transaction or series of related transaction).
3.6 RELOCATION EXPENSE REIMBURSEMENT. To assist the Employee in
locating to the Greater Metropolitan Area ("Boston"), which the Employee has
agreed to do prior to the Effective Date, the Company will reimburse the
Employee for the reasonable moving expenses associated with the move of his
household goods and furniture.
3.7 HOUSING STIPEND. Further, during the Employment Period, the
Employee shall be entitled to an annual housing stipend of Fifty Thousand
($50,000) Dollars, subject to usual and customary state and federal tax
deductions; with the first such annual stipend to be paid on the Effective Date
and thereafter semi-annually during the Employment Period. The housing stipend
shall not be considered part of nor added to the Base Salary.
4. EARLY TERMINATION OF PERIOD OF EMPLOYMENT.
4.1 EMPLOYEE'S EARLIER TERMINATION. The Employee may terminate
his employment hereunder by giving the Company written notice thereof not later
than ninety (90) days prior to the date fixed for such termination in such
notice.
4.2 COMPANY'S EARLIER TERMINATION. The Company shall have the
right to terminate Employee's employment hereunder: (i) without cause, i.e. for
any reason or no reason whatsoever), upon ninety (90) days prior written notice
to the Employee and (ii) FOR CAUSE, immediately upon, or at any time after,
giving written notice of such termination. In the event that the Employee's
employment is terminated pursuant to section 4.2(i), i.e., without cause, then
the Employee shall continue to receive his Base Salary and fringe benefits for a
period of six (6) months following the date of termination. In the event of the
death or disability of the Employee,
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the Employee's Base Salary, fringe benefits and vesting of stock options shall
cease as of the Employee's death or disability. In the event that the Employee
is terminated without cause then, the vesting of stock options granted pursuant
to Article 3.5 of this Agreement shall be as follows: With respect to all
unvested options, the Employee shall be entitled to vest twenty five (25%)
percent of the then unvested options for each year of employment with the
Company. For example, if there is a termination without cause at the end of the
second year of employment, then fifty (50%) percent of the options would be
unvested and automatically an additional twenty five (25%) percent of the fifty
(50%) percent (i.e. 25% or 31,250 Shares shall be vested), and thereafter no
further or additional Shares shall vest. If the Employee terminates his
employment pursuant to Section 4.1 hereof the Base Salary, fringe benefits and
vesting of stock options shall cease as of the date of such termination of
employment.
If the Company terminates the Employee pursuant to (ii) above (i.e. FOR
CAUSE), then Employee's Base Salary, fringe benefits and vesting of stock
options shall cease and terminate as of the date of termination of the
Employee's employment. As used herein "FOR CAUSE" shall mean the determination,
in good faith, by the Board, that any one of the following events has occurred:
(a) the conviction of Employee of any felony; (b) the neglect or dereliction by
the Employee of his duties and responsibilities as set forth in Article 2
hereof, which neglect or dereliction of duties and responsibilities continues,
in the reasonable judgment of the Board, after written notice given to the
Employee by the Board; (c) breach by the Employee of this Agreement in any
material respect; (d) engaging in any fraudulent conduct toward the Company. A
determination that there is FOR CAUSE termination of the Employee's employment
shall be made by the Board, after notice to Employee and providing Employee an
opportunity to be heard,
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and such determination shall require that the Board find that there has occurred
an event of the kind described in (a), (b), (c), or (d) above.
For purposes of this Agreement, the term "disability" shall mean the
physical or mental illness or disability of Employee such that, in the good
faith and reasonable judgment of a reputable physician mutually selected by
Employee and the Board, he shall be unable to perform his duties of employment
in any material respect, with reasonable accommodation, and such inability may
reasonably be expected to be permanent or to continue for a period of at least
one hundred twenty (120) business days during any period of twelve (12)
consecutive months.
5. NON-COMPETITION.
5.1 NON-COMPETITION PERIOD. Employee shall not, directly or
indirectly (including, without limitation, either alone or as a partner,
officer, director, employee, joint venturer or stockholder of, or as a
consultant or other independent contractor to or agent or representative for,
any company, business, individual or other entity), engage in any business
activity which is directly or indirectly in competition with the Company's
Business, as hereinafter defined, at any time during the Employment Period and
for a period of two (2) years after the termination for any reason of the
Employment Period (the "POST-EMPLOYMENT PERIOD") (collectively, the Employment
Period and the Post-Employment Period are herein referred to as the
"NON-COMPETITION PERIOD"); PROVIDED, HOWEVER, that nothing in this Agreement
shall prevent or restrict the Employee from owning, directly or indirectly, not
more than five percent (5%) of the securities of any publicly traded company for
the sole purpose of a passive investment. For purposes of this Agreement, the
Company's Business shall be defined as: discovering, developing and
commercializing combination therapeutics and combination technologies for the
life
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sciences.
5.2 RESTRICTED BUSINESS ACTIVITIES: During the Non-Competition
Period, Employee will not, directly or indirectly:
(a) solicit or request any other employee of or
consultant to the Company to join the employ
of, or begin consulting for, any individual
or entity that researches, develops, markets
or sells products that compete with those of
the Company;
(b) solicit or request any individual or entity
that researches, develops, markets or sells
products that compete with those of the
Company, to employ or retain as a consultant
any employee or consultant of the Company;
(c) divert, directly or indirectly, to any
competitor of the Company, any customer of
the Company; or
(d) induce or attempt to induce any supplier or
vendor of the Company to terminate or breach
any written or oral agreement or
understanding with the Company.
6. PROPRIETARY RIGHTS.
6.1 DEFINITIONS. For the purposes of this Section 6, the terms
set forth below shall have the following meanings:
6.1.1 CONCEPTS AND IDEAS. Those concepts and ideas known to
the Employee at any time during the Employee's employment by the Company which
relate to the Company's present, past or prospective activities, services and
products, all of which shall remain the sole and exclusive property of the
Company. The Employee shall have no publication rights to any concepts and ideas
and/or Confidential Information, and all of the same shall belong exclusively to
the Company.
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6.1.2 CONFIDENTIAL INFORMATION. Confidential Information is
that secret or proprietary information of whatever kind or nature disclosed to
Employee or known by Employee (whether or not invented, discovered or developed
by Employee), at any time during Employee's establishment of or employment by
the Company as a consequence of or through such establishment or employment.
Such secret or proprietary information shall include (unless such information is
generally known in the industry through no action or fault of Employee),
information relating to the design, trade secrets, manufacture, application,
know-how, research and development relating to the Company's products,
materials, operating and other cost data, price lists and data relating to
pricing of the Company's products. Such secret or proprietary information shall
specifically include, without limitation, all information contained in the
Company's manuals, memoranda, plans, drawings and designs, specifications,
supply sources, customer lists and records legended or otherwise identified by
the Company or the Board as Confidential Information.
6.2 NON-DISCLOSURE TO THIRD PARTIES. Except as required by
Employee's duties in the course of his employment by the Company, Employee shall
not, at any time during or following the Employment Period, directly or
indirectly, use, publish, disseminate or otherwise disclose any Confidential
Information, Concepts or Ideas relating to the present, past or prospective
business of the Company to any third party without the prior written consent of
the Board which consent may be denied in each instance and all of the same,
together with publication rights, shall belong exclusively to the Company.
6.3 DOCUMENTS, ETC. All documents, procedural, manuals, guides,
specifications, plans, drawings, designs and similar materials, lists of
present, past or prospective
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customers, customer proposals, invitations to submit proposals, price lists and
data relating to the pricing of the Company's products and services, records,
notebooks and similar repositories of or containing Confidential Information
(including all copies thereof) that come into the Employee's possession or
control by reason of Employee's establishment of or employment by the Company,
whether prepared by Employee or others: (a) are the property of the Company, (b)
will not be used by Employee in any way adverse to the Company (c) will not be
removed from the Company's premises (except as Employee's duties require) and
(d) at the termination (for whatever reason) of Employee's employment by the
Company, will be left with, or forthwith returned by Employee to the Company.
6.4 ASSIGNMENT OF INVENTIONS. The Employee hereby agrees that
he will promptly make full written disclosure to the Company, and will hold in
trust for the sole right and benefit of the Company, and agrees to assign to the
Company or its designee all of his right, title and interest in and to any and
all of the inventions, original works of authorships, developments, concepts,
improvements or trade secrets, whether or not patentable or registerable under
patent, copyright or similar laws, that the Employee may, solely or jointly,
make, develop, conceive or reduce to practice, or cause to be made, developed,
conceived or reduced to practice, during the Employment Period (collectively,
referred to as the "Inventions"). Employee further agrees that all original
works of authorship that are made by the Employee (solely or jointly with
others), within the scope of and during the Employment Period that are
protectable by copyright are "works made for hire", as that term is defined in
the United States Copyright Act.
Employee hereby agrees to assist the Company or its designee at the
Company's expense, in every way to secure the Company's rights in the Inventions
and any copyrights, patents, or
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other intellectual property rights relating thereto in any and all countries,
including, disclosing to the Company all pertinent information data with respect
thereto, and executing all applications, specifications, oaths, assignments and
all other instruments that the Company shall deem necessary in order to apply
for and obtain such rights and in order to secure and convey to the Company and
its successors and assigns, the sole and exclusive rights, title and interests
in and to such Inventions, and any copyrights, patents or other intellectual
property rights relating thereto. The Employee agrees that his obligations to
execute or cause to be executed, when it is in his power to do so, any such
instruments or papers will continue after the termination of this Agreement. If
the Employee is unwilling or refuses, for any reason, to execute and deliver all
such documents needed to complete such applications in the United States of
America or foreign patents or any copyright registrations covering inventions or
original works of authorship assigned to the Company as above, then the Employee
hereby irrevocably designates and appoints the Company and its duly authorized
officers and agents as the Employee's agent and attorney-in- fact, coupled with
an interest, to act for an in the Employee's behalf and stead to execute and
file any such applications, at the Company's expense, and to do all other
lawfully permitted acts to further the prosecution in issuance of letters patent
or copyright registration thereon with the same legal force and effect as if
executed by the Employee.
7. EQUITABLE RELIEF. Employee agrees that any breach of Sections 5 and 6
above by Employee would cause irreparable damage to the Company and that, in the
event of such breach, the Company shall have, in addition to any and all
remedies of law, the right to an injunction, specific performance or other
equitable relief to prevent the violation or threatened violation of Employee's
obligations hereunder.
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8. WAIVER. Any waiver by either party of a breach of any provision of
this Agreement by the other party shall not operate or be construed as a waiver
of any subsequent breach of the same or any other provision hereof by such other
party. All waivers shall be in writing.
9. SEVERABILITY; REFORMATION. In case any one or more of the
provisions or parts of a provision contained in this Agreement shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
or part of a provision of this Agreement; and this Agreement shall, to the
fullest extent lawful, be reformed and construed as if such invalid or illegal
or unenforceable provision, or part of a provision, had never been contained
herein, and such provision or part reformed so that it would be valid, legal and
enforceable to the maximum extent possible. Without limiting the foregoing, if
any provision (or part of provision) contained in this Agreement shall for any
reason be held to be excessively broad as to duration, activity or subject, it
shall be construed by limiting and reducing it, so as to be enforceable to the
fullest extent compatible with then existing and applicable law.
10. ASSIGNMENT. The Company shall have the right to assign its rights
and obligations under this Agreement to a party which assumes the Company's
obligations hereunder. This Agreement is personal to the Employee and
accordingly, the Employer shall not have the right to assign his rights or
obligations under this Agreement. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
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11. HEADINGS. Headings and sub-headings are for convenience only and
shall not be deemed to be a part of this Agreement.
12. AMENDMENTS. This Agreement may be amended or modified, in whole or
in part, only by an instrument in writing signed by all parties hereto. Any
amendment, consent, decision, waiver or other action to be made, taken or given
by the Company with respect to the Agreement shall be made, taken or given on
behalf of the Company only by authority of the Board.
13. NOTICES. Any notices or other communications required hereunder
shall be in writing and shall be deemed given when delivered in person or when
mailed, by certified or registered first-class mail, postage prepaid, return
receipt requested, or by faxed transmission where the date and time of the
transmission are clearly stated, addressed, if to the Company, at 000 Xxxxxx
Xxxxxx, Xxxxxx, XX 00000, with a copy to Xxxxx X. Xxxx, Esquire, Xxxxx and
Xxxxxx LLP, 00 Xxxxx Xxxxx, Xxxxxx, XX 00000 or, if to the Employee, at 0000
Xxxxxx Xxxxx, Xxxxxxx, XX 00000xx to such other addresses of which a party shall
have notified the others in accordance with the provisions of this Section 13.
14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original and all of which shall
be deemed a single agreement.
15. SURVIVAL. The provisions of this Agreement shall survive the
termination of the Employee's employment hereunder in accordance with their
terms.
16. ARBITRATION. In the event of any dispute or disagreement arising
out of or related to this Agreement, the dispute or disagreement shall be first
negotiated by the parties, in
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good faith, and the parties shall use their best efforts to reach a resolution.
In the event that the parties are, for whatever reason, unable to reach a
resolution, then, in that event, either party may refer the matter to the
American Arbitration Association for resolution in accordance with the then
applicable rules and regulations of the American Arbitration Association. The
arbitration shall be held in Boston, Massachusetts before a single arbitrator
and the decision of the arbitrator shall be final and binding upon the parties
and the award may be entered in any court of competent jurisdiction. The cost of
the arbitration filing fee and the arbitrator's fee shall be divided equally
between the parties and otherwise, each party shall be responsible for its own
costs and expenses, including attorneys' fees and disbursements.
17. GOVERNING LAW. This Agreement shall be construed in accordance
with and governed for all purposes by the laws of the Commonwealth of
Massachusetts applicable to contracts executed and wholly performed within such
jurisdiction. In enforcing such governing laws, any court of competent
jurisdiction shall afford all relief which a Massachusetts court would afford
under the circumstances.
EXECUTED as an instrument, under seal, as of the date first above
written.
COMBINATORX, INCORPORATED
By: /s/ Xxxxxx Xxxxxx
------------------------------
Xxxxxx Xxxxxx, President/CEO
Hereunto Duly Authorized
EMPLOYEE:
/s/ Xxx Xxxxxx
---------------------------------
Xx. Xxx Xxxxxx
00
