EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of 5/16/99, between
Xxxxxxx Block ("Employee") and Epitope, Inc., an Oregon corporation (the
"Company").
1. SERVICES.
1.1 EMPLOYMENT. The Company agrees to employ Employee as Vice
President of Sales and Marketing, and Employee hereby accepts such employment,
in accordance with the terms and conditions of this Agreement.
1.2 DUTIES. Employee shall have the position named in Section 1
with such powers and duties appropriate to that office (a) as may be provided by
the bylaws of the Company and/or (b) as determined from time to time by the
President and Chief Executive Officer or the Board of Directors of the Company.
Employee's position and duties may be changed from time to time during the term
of this Agreement, and Employee's place of work may be relocated at the sole
discretion of the President and Chief Executive Officer, the Board of Directors,
or their designees.
1.3 OUTSIDE ACTIVITIES. Employee shall obtain the consent of the
President and Chief Executive Officer or the Board of Directors before he
engages, either directly or indirectly, in any other professional or business
activities that may require an appreciable portion of Employee's time or effort
or which could result in detriment to the Company's business.
1.4 DIRECTION OF SERVICES. Employee shall at all times discharge
his duties in consultation with and under the supervision and direction of the
President and Chief Executive Officer of the Company or such other designee
appointed by the President and Chief Executive Officer or the Board of
Directors.
2. COMPENSATION AND EXPENSES.
2.1 SALARY. As compensation for services under this Agreement,
the Company shall pay to Employee a regular salary of $150,000 per year. Such
salary may be adjusted from time to time in the discretion of the President and
Chief Executive Officer or the Board of Directors. Payment shall be made on a
bi-weekly basis, less all amounts deemed by the Company as required by law or
authorized by Employee to be withheld or deducted, in accordance with the
Company's usual payroll practices.
2.2 ADDITIONAL EMPLOYEE BENEFITS. To the extent otherwise
eligible, Employee shall also be entitled to receive or participate in any
additional benefits, including without limitation medical, dental, life, and
long-term disability insurance programs, medical reimbursement plans, and a
401(k) plan, which may from time to time be made generally
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available by the Company to corporate officers. The Company may change or
discontinue such benefits at any time in its sole discretion.
2.3 EXPENSES. The Company shall reimburse Employee for all
reasonable and necessary expenses incurred in carrying out his duties under this
Agreement. Employee shall present to the Company an itemized account of such
expenses in such form and at such time as may be required by the Company. The
Company shall further pay to Employee (a) a one-time relocation allowance of
$30,000; (b) the Company will also reimburse Employee's actual and reasonable
moving expenses for transferring Employee's family and his household goods to
Portland from North Carolina. To the extent the relocation allowance described
in this section is includable in Employee's net taxable income, the Company
shall pay Employee an additional amount so that the amount paid to him under
this section, less taxes at Employee's effective marginal tax rate, equals the
expenses to be reimbursed. The relocation allowance and the moving expenses must
be repaid by Employee on a prorated basis if Employee voluntarily leaves the
Company pursuant to Section 6.2 within two years of the date of hire or is
terminated pursuant to Section 6.3 within two years of the date of hire. The
prorated basis will be based on the numbers of complete months worked during the
initial two-year period.
2.4 FEES. All compensation earned by Employee, other than
pursuant to this Agreement, as a result of services performed on behalf of the
Company or as a result of or arising out of any work done by Employee in any way
related to the scientific or business activities of the Company shall belong to
the Company. Employee shall pay or deliver such compensation to the Company
promptly upon receipt. For the purposes of this provision, "compensation" shall
include, but is not limited to, all professional and nonprofessional fees,
lecture fees, expert testimony fees, publishing fees, royalties, and any related
income, earnings, or other things of value; and "scientific or business
activities of the Company" shall include, but not be limited to, any project or
projects in which the Company is involved and any subject matter that is
directly or indirectly researched, tested, developed, promoted, or marketed by
the Company.
3. STOCK OPTIONS. Subject to approval by the Executive
Compensation Committee and/or the Board of Directors, the Company shall grant
Employee an option to purchase up to 100,000 shares of common stock of the
Company pursuant to the terms of the Epitope, Inc. 1991 Stock Award Plan. The
options shall be incentive stock options up to the $100,000 annual limit imposed
by law, the remainder of the options shall be nonqualified options. The exercise
price shall be equal to the fair market value of the stock on the date of hire.
In the event of a change of control, as defined in the option agreement, while
Employee is employed by the Company, Employee's unvested stock options will vest
on the date of the change of control.
4. RESTRICTED STOCK GRANT. Employee shall also be entitled to a
restricted stock grant, valued at $30,000, up to a maximum of 7,500 Shares under
the terms of the 1991 Stock Award Plan. The grant value shall be based on the
stock price on Employee's hire date (i.e., the mean between the high and low
sales prices of the Common Stock). This grant is expressly conditioned on final
approval by the Board of Directors. Employee understands that this grant
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comes with certain restrictions, including inability to sell for one year from
grant. The Company encourages Employee to seek advice concerning the tax
consequences of this grant. Employee may elect to incur the tax expense at time
of grant or at the time the restrictions are lifted.
5. PROTECTION OF EMPLOYER INFORMATION.
5.1 BUSINESS PROTECTION AGREEMENT. Employee understands and
agrees to execute the Business Protection Agreement attached as Exhibit A. Such
Agreement is hereby incorporated herein. Employee understands that the execution
of this Business Protection Agreement is a pre-condition of his employment at
the Company.
5.2 MATERIALS PREPARED AND INVENTIONS MADE DURING EMPLOYMENT.
The Company shall be the exclusive owner of all materials, concepts, and
inventions Employee prepares, develops, or makes (whether alone or jointly with
others) within the scope of his employment, and of all related rights (including
copyrights, trademarks, and patents) and proceeds. Without limitation,
materials, concepts, and inventions that (a) relate to the Company's business or
actual or demonstrably anticipated research or development, or (b) result from
any work performed by Employee for the Company, shall be considered within the
scope of Employee's employment. Employee shall promptly disclose all such
materials, concepts, and inventions to the Company. Employee shall take all
action reasonably requested by the Company to vest ownership of such materials,
consents, and inventions in the Company and to permit the Company to obtain
copyright, trademark, patent, or similar protection in its name.
6. TERMINATION.
6.1 TERMINATION UPON DEATH. This Agreement shall terminate
immediately upon Employee's death.
6.2 TERMINATION BY EMPLOYEE. Employee may terminate his
employment under this Agreement by 90 days' advance written notice to the
Company.
6.3 TERMINATION BY THE COMPANY FOR CAUSE. The Company may
terminate Employee's employment under this Agreement for cause at any time, with
or without advance notice. "Cause" includes, but is not limited to: (a) a breach
of this Agreement by Employee (de minimus violations excluded) and Employee's
failure to promptly cure such breach after receipt of notice; (b) Employee's
refusal or failure to comply with the written/communicated policies or standards
of the Company or refusal or failure (after notice of deficiencies) to perform
any job duties of Employee; (c) any act of fraud, dishonesty, or misconduct by
Employee in connection with Employee's employment with the Company; (d) a
violation of the Business Protection Agreement; (e) the commission of an act or
omission of an act detrimental to the best interests of the Company (de minimus
violations excluded); or (f) Employee's failure to otherwise comply with the
standards of behavior that an employer reasonably has the right to expect of an
employee.
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6.4 TERMINATION BY THE COMPANY WITHOUT CAUSE. Employee
understands that his employment is at-will. The Company may also terminate
Employee's employment under this Agreement without cause by written notice
to Employee. Employee may (but shall not be required to) elect to treat any of
the following events as a termination without cause, provided Employee acts
within 60 days of the event:
6.4.1 A reduction in Employee's salary below the amount
being paid on the date of this Agreement (except as part of and in proportion to
a reduction in all executive officers' salaries) or a substantial diminution in
Employee's duties or title below those or that stated in this Agreement.
6.4.2 A relocation by the Company of the principal place
where Employee's duties are to be performed to a place outside of the Portland
metropolitan area.
6.4.3 A "Change of Control" of the Company. For purposes
of this Agreement, a "Change of Control" shall mean a change of control of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A as in effect on the date hereof pursuant to the
Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); provided that, without
limitation, such a change of control shall be deemed to have occurred at such
time as (i) any Acquiring Person hereafter becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 30
percent or more of the combined voting power of Voting Securities; (ii) during
any period of 12 consecutive calendar months, individuals who at the beginning
of such period constitute the Board of Directors cease for any reason to
constitute at least a majority thereof unless the election, or the nomination
for election, by the Company's shareholders of each new director was approved by
a vote of at least a majority of the directors then still in office who were
directors at the beginning of the period; (iii) there shall be consummated (a)
any consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which Voting Securities would
be converted into cash, securities, or other property, other than a merger of
the Company in which the holders of Voting Securities immediately prior to the
merger have the same, or substantially the same, proportionate ownership of
common stock of the surviving corporation immediately after the merger, or (b)
any sale, lease, exchange, or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Company; or (iv) approval by the shareholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company. For purposes of this
Agreement, "Acquiring Person" means any person or related persons which
constitute a "group" for purposes of Section 13(d) and Rule 13d-5 under the
Exchange Act, as such Section and Rule are in effect as of the date of this
Agreement; provided, however, that the term Acquiring Person shall not include:
(i) the Company or any of its subsidiaries; (ii) any employee benefit plan of
the Company or any of its subsidiaries; (iii) any entity holding voting capital
stock of the Company for or pursuant to the terms of any such employee benefit
plan; or (iv) any person or group solely because such person or group has voting
power with respect to capital stock of the Company arising from a revocable
proxy or consent given in response to a public proxy or consent solicitation
made pursuant to the
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Exchange Act. For purposes of this Agreement, "Voting Securities" means the
Company's issued and outstanding securities ordinarily having the right to vote
at elections for the Company's Board of Directors.
6.5 COMPENSATION UPON TERMINATION.
6.5.1 TERMINATION UNDER SECTION 6.1, 6.2, OR 6.3. In the
event of a termination of Employee's employment under Section 6.1, 6.2, or 6.3,
Employee's regular compensation pursuant to Section 2.1 shall be prorated and
payable until the date of termination.
6.5.2 TERMINATION UNDER SECTION 6.4. In the event of a
termination of Employee's employment by the Company without cause as provided in
Section 6.4, Employee shall continue to be paid the salary provided in Section
2.1 for 12 months from the date of notice of such termination of employment, in
the manner and at the times at which regular compensation was paid to Employee
during the term of his employment under this Agreement, except that if Employee
elects to treat an event described in Sections 6.4.1, 6.4.2, or 6.4.3 as a
termination without cause but continues to work for the Company or any of its
subsidiaries, then any amounts Employee receives as compensation during the
12-month period shall be credited against the amounts payable to Employee under
this section. Unless Employee elects to continue working for the Company or any
of its subsidiaries, as a condition to receipt of the compensation described in
the preceding sentence, Employee shall sign, deliver, and abide by a Release and
Waiver of Claims Agreement, substantially in the form attached as Exhibit B to
this Agreement. Moreover, the Company's obligation to pay the amounts stated in
this section shall terminate if Employee breaches any aspects of the Business
Protection Agreement attached as Exhibit A.
7. REMEDIES. The respective rights and duties of the Company and
Employee under this Agreement are in addition to, and not in lieu of, those
rights and duties afforded to and imposed upon them by law or at equity.
Employee acknowledges that breach of the Business Protection Agreement will
cause irreparable harm to the Company and agrees to the entry of a temporary
restraining order and permanent injunction by any court of competent
jurisdiction to prevent breach or further breach of such Agreement. Such remedy
shall be in addition to any other remedy available to the Company at law or in
equity. In recognition of the paramount importance of such temporary restraining
order and permanent injunction, Employee waives any right he may have had to the
posting of a bond as a precondition to entry of such orders.
8. SEVERABILITY OF PROVISIONS. The provisions of this Agreement are
severable, and if any provision hereof is held invalid or unenforceable, it
shall be enforced to the maximum extent permissible, and the remaining
provisions of the Agreement shall continue in full force and effect.
9. ATTORNEY FEES. In the event a suit or action is filed to enforce
the Business Protection Agreement, the prevailing party shall be reimbursed by
the other party for all costs and expenses incurred in connection with the suit
or action, including without limitation reasonable attorney fees at trial or on
appeal.
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10. NONWAIVER. Failure of the Company at any time to require
performance of any provision of this Agreement shall not limit the right of the
Company to enforce the provision. No provision of this Agreement or breach
thereof may be waived by either party except by a writing signed by that party.
A waiver of any breach of a provision of this Agreement shall be construed
narrowly and shall not be deemed to be a waiver of any succeeding breach of that
provision or a waiver of that provision itself or of any other provision.
11. ARBITRATION.
11.1 CLAIMS COVERED. To the extent provided by law, the
Company and Employee mutually consent to the resolution of all claims or
controversies, except for those excluded by Section 11.2, whether or not arising
out of Employee's employment (or its termination), that the Company may have
against Employee or that Employee may have against the Company or against its
officers, directors, employees or agents, in their capacity as such or
otherwise, by binding arbitration as provided in this Section. Claims covered by
this Section include, but are not limited to, claims for wages or other
compensation due; claims for breach of any contract or covenant (express or
implied); tort claims; claims for discrimination (including, but not limited to,
race, sex, sexual orientation, religion, national origin, age, marital status,
or disability); claims for benefits (except where an employee benefit or pension
plan specifies that its claims procedure shall culminate in an arbitration
procedure different from this one); and claims for violation of any federal,
state, or other governmental law, statute, regulation, or ordinance except as
provided in Section 11.2
11.2 NON-COVERED CLAIMS. Claims arising out of the Business
Protection Agreement and workers' compensation or unemployment compensation
benefits are not covered by this Section 11.1. Non-covered claims include but
are not limited to claims by the Company for injunctive and/or other equitable
relief for unfair competition and/or the use and/or unauthorized disclosure of
trade secrets or confidential information, as to which Employee understands and
agrees that the Company may seek and obtain relief from a court of competent
jurisdiction.
11.3 REQUIRED NOTICE OF ALL CLAIMS AND STATUTE OF
LIMITATIONS. Company and Employee agree that the aggrieved party must give
written notice of any claim to the other party within one year of the date the
aggrieved party first has knowledge of the event giving rise to the claim;
otherwise the claim shall be void and deemed waived even if there is a federal
or state statute of limitations which would have given more time to pursue the
claim. The written notice shall identify and describe the nature of all claims
asserted and the facts upon which such claims are based.
11.4 HEARING OR MEDIATION. Prior to any arbitration
proceeding taking place pursuant to this section, Company or Employee may, at
its respective option, elect to submit the claim to non-binding mediation before
a mutually agreeable mediation tribunal or mediator, in
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which event both parties shall execute a suitable confidentiality agreement and
abide by the procedures specified by the mediation tribunal or mediator.
11.5 ARBITRATION PROCEDURES. Any arbitration shall be
conducted in accordance with the then-current Model Employment Arbitration
Procedures of the American Arbitration Association ("AAA"), modified to
substitute for AAA actions, the United States Arbitration and Mediation Service
("USA&MS"), before an arbitrator who is licensed to practice law in the state of
Oregon (the "Arbitrator"). The arbitration shall take place in or near Portland,
Oregon.
11.5.1 SELECTION OF ARBITRATOR. The USA&MS shall give
each party a list of 11 arbitrators drawn from its panel of labor-management
dispute arbitrators. Each party may strike all names on the list it deems
unacceptable. If only one common name remains on the lists of all parties, that
individual shall be designated as the Arbitrator. If more than one common name
remains on the lists of all parties, the parties shall strike names alternately
until only one remains. The party who did not initiate the claim shall strike
first. If no common name remains on the lists of all parties, the USA&MS shall
furnish an additional list or lists until an Arbitrator is selected.
11.5.2 APPLICABLE LAW. The Arbitrator shall apply the
substantive law (and the law of remedies, if applicable) specified in this
Agreement or federal law, or both, as applicable to the claim(s) asserted. The
Arbitrator, and not any federal, state, or local court or agency, shall have
exclusive authority to resolve any dispute relating to the interpretation,
applicability, enforceability or formation of this Agreement, including but not
limited to any claim that all or any part of this Agreement is void or voidable.
The arbitration shall be final and binding upon the parties, except as provided
in this Agreement.
11.5.3 AUTHORITY. The Arbitrator shall have
jurisdiction to hear and rule on pre-hearing disputes and is authorized to hold
pre-hearing conferences by telephone or in person as the Arbitrator deems
necessary. The Arbitrator shall have the authority to entertain a motion to
dismiss and/or a motion for summary judgment by any party and shall apply the
standards governing such motions under the Federal Rules of Civil Procedure. The
Arbitrator shall render an award and opinion in the form typically rendered in
labor arbitrations.
11.5.4 REPRESENTATION. Any party may be represented by
an attorney or other representative selected by the party.
11.5.5 DISCOVERY. Each party shall have the right to
take the deposition of one individual and any expert witness designated by
another party. Each party also shall have the right to make requests for
production of documents to any party. The subpoena right specified below shall
be applicable to discovery pursuant to this paragraph. Additional discovery may
be had only where the Arbitrator selected pursuant to this Agreement so orders,
upon a showing of substantial need. At least 30 days before the arbitration, the
parties must exchange lists of witnesses, including any experts, and copies of
all exhibits intended to be used at the
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arbitration. Each party shall have the right to subpoena witnesses and documents
for the arbitration.
11.5.6 REPORTER. Either party, at its expense, may
arrange for and pay the cost of a court reporter to provide a stenographic
record of proceedings.
11.5.7 POST-HEARING BRIEFS. Either party, upon
request at the close of hearing, shall be given leave to file a post-hearing
brief. The time for filing such a brief shall be set by the Arbitrator.
11.6 ENFORCEMENT. Either party may bring an action in any
court of competent jurisdiction to compel arbitration under this Agreement and
to enforce an arbitration award. Except as otherwise provided in this Agreement,
both the Company and Employee agree that neither shall initiate or prosecute any
lawsuit (other than for a non-covered claim) in any way related to any claim
covered by this Agreement. A party opposing enforcement of an award may not do
so in an enforcement proceeding, but must bring a separate action in any court
of competent jurisdiction to set aside the award, where the standard of review
will be the same as that applied by an appellate court reviewing a decision of a
trial court sitting without a jury.
12. ARBITRATION FEES AND COSTS. Company and Employee shall equally
share the fees and costs of the Arbitrator. Each party will deposit funds or
post other appropriate security for its share of the Arbitrator's fee, in an
amount and manner determined by the Arbitrator, 10 days before the first day of
hearing. Each party shall pay for its own costs and attorneys' fees, if any,
provided that the Arbitrator, in its sole discretion, may award reasonable fees
to the prevailing party in a proceeding.
13. GENERAL TERMS AND CONDITIONS. This Agreement and the incorporated
Exhibits constitute the entire understanding of the parties relating to the
employment of Employee by the Company, and supersedes and replaces all written
and oral agreements heretofore made or existing by and between the parties
relating thereto. This Agreement shall be construed in accordance with the laws
of the state of Oregon, without regard to any conflicts of laws rules thereof.
This Agreement shall inure to the benefit of any successors or assigns of the
Company. All captions used herein are intended solely for convenience of
reference and shall in no way limit any of the provisions of this Agreement.
Employee acknowledges that he signed this Agreement and the attached Business
Protection Agreement upon his initial employment with the Company.
The parties have executed this Employment Agreement as of the date
stated above.
EPITOPE, INC.
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/s/ Xxxxxxx Block By: /s/ Xxxx Xxxxxx
--------------------------- -------------------------------
XXXXXXX BLOCK
Title: President and CEO
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