Exhibit 10.16
EMPLOYMENT AGREEMENT BETWEEN PHARMACEUTICAL PEPTIDES,
INC. ("THE COMPANY") AND XXXX X. XXXXXXX ("THE EMPLOYEE")
Commencement April 1, 1994 (commencing transition), September 1, 1994
Date (full-time). At the Company's discretion and in
consultation with the Employee that date may be extended
but not beyond the date the Employee presents himself
for full time employment. The Company will reimburse the
Employee for expenses associated with this transition,
including expenses after this date in connection with
terminating current employment, up to $10,000, and
reimburse beyond that by mutual agreement.
Term of Employ- Three years, with automatic annual renewal unless either
ment party terminates.
Time Commitment Except during the transition period, full-time, except
for (a) one day per week to devote to the practice of
medicine, including as an expert or consultant, at the
Xxxx-Xxxxxx Cancer Institute or other health care facil-
ity, (b) approved outside Directorships and service on
scientific boards, and (c) normal professional
activities. During the transition period, Employee may
provide services to Genetics Institute, Inc.
Principal Loca- Cambridge, Massachusetts or within a reasonable distance
tion from Brookline.
Title, Posi- Executive Vice President and Medical Advisor to the
tions, Reporting Board of Directors. As Medical Advisor to the Board of
Relationship Directors, Employee shall be provided notice of and the
materials for Board meetings and may attend such
meetings except as specifically requested not to by the
Board. The Company will not appoint a physician to the
Board of Directors primarily for medical advice without
offering such a position to the Employee. A Board of
Directors position offered to an Executive Vice
President will first be offered to the Employee. The
Employee will report only to the Chief Executive Officer
and the Board of Directors. The Employee will be a
member of the Management Committee, consisting of
Chairman, CEO and other Executive Vice Presidents, which
Committee will be responsible for the general management
of the company.
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Responsibilities Senior management responsibility and authority for
clinical and preclini-cal management, including:
responsibility for preclinical biology and
research (including, but not limited to, in vivo
evaluation of target molecules and pharmacological and
toxicological assessment)
shared responsibility for selection of drug
targets
responsibility for all medical and regulatory
activities of the Company and service as Chief Medical
and Regulatory Officer
creation of a Medical Advisory Board
shared responsibility for clinical scale
manufacturing and quality control and quality assurance
activities
shared responsibility for development of the
overall corporate business plan and corporate strategic
development
shared responsibility for patent affairs
Base Annual Xxx- $150,000 as Executive Vice President plus $35,000 as
ary Medical Advisor to the Board of Directors.
Bonuses Bonuses at the discretion of the Board of Directors upon
review of performance.
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Options Incentive stock options issued pursuant to rule 701
under the Securities Act of 1933 to purchase 62,456
shares of common stock, exercisable at fair market
value, as of no later than June 1, 1994, (subject to ad-
justment for stock splits, reverse stock splits and
similar transactions) subject to a four year vesting
schedule, vesting monthly. Term of options: 10 years.
Exercise period after employment termination: 1 year
death or disability, 90 days all other terminations.
Payment upon exercise: cash or if employment terminat-
ed without cause or as a result of constructive
termination, with two year note with interest at lowest
federal rate under Internal Revenue Code. In the event
of termination for cause, the Company shall have the
right to repurchase all vested shares at fair market
value by giving notice no later than 120 days after the
termination date. In the event of termination
without cause, the Company shall have the right of first
offer to repurchase all vested shares at fair market
value, or, if not offered to the Company for purchase,
to repurchase upon Initial Public Offering at the
closing price on the first trading day. The right of
first offer shall terminate on consummation of an
initial public offering.
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Termina- Termination by the Company at any time during or after
tion/Severance initial term without cause, by Constructive Termination
or following a Change of Control/Sale of Business, or as
a result of Disability or Death: Lump sum payment of a
multiple of then current annual base salary plus most
recent annual bonus, as follows:
First two years: 1.5 plus benefits, 2 years'
acceleration of options
After two years: 1 plus benefits, 1 year's
acceleration of options
Expiration of the term as a result of Company
notice: at least $185,000 plus benefits payable in 12
monthly installments
In the case of disability or death, net of any amounts
paid pursuant to disability coverage or life insurance
coverage provided through the Company's plan.
Benefits: In any circumstance that severance is due
(except following death), individual and family benefits
to continue for 18 months if termination during first
two years, otherwise one year following termination.
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Benefits Plans:
Participation in all benefit plans, including (to be
instituted within a reasonable time after employment):
Comprehensive medical and dental coverage (and
payment of 80% of COBRA premium, while available, until
coverage equivalent to current coverage provided)
A disability plan providing benefit equal to 65%
of compensation
term life insurance for 3 times base salary (after
the Company has a number of employees making such a plan
feasible)
401(k) plan (after the Company has a number of
employees making such a plan feasible)
Other Benefits:
three weeks vacation
reimbursements of reasonable business expenses
incurred
Legal Fees The Company agrees to pay the Employee's reasonable
attorney's fees in connection with employment agreement.
Non-competition The Employee will execute a non-com-petition agreement
in the form attached as Exhibit A.
Other Standard indemnification as an officer of the Company
to full extent permitted by statute
Provision that any successor must assume agreement
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Definitions Cause:
(1) Willful and continued failure to substantially
perform designated duties
(2) Willful malfeasance which is materially injurious to
the Company
(3) Conviction of a felony by a court of competent
jurisdiction
An act (or failure to act) will be considered "willful"
if done (or omitted to be done) not in good faith and
without reasonable belief that the action (or omission)
was in the Company's best interest
In the event of a termination for Cause, Employee will
be provided an opportunity to be heard before the Board
of Directors and in the case of (1) and (2) above, 30
day notice of the specific actions or inactions and an
opportunity to correct.
Constructive Termination:
(1) Failure to elect to or continue in position
(2) Material change in functions, duties, authority or
responsibilities to make position of less dignity,
importance, scope or authority, including a change in
the reporting structure
(3) Material change in business of the Company as
generally described in current Business Plan
(4) Failure of the Company to abide by material terms of
this agreement
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Change of Control/Sale of Business:
(1) Any person or group becomes the beneficial owner of
50% or more of the Company's outstanding shares of
beneficial interest while private, 30% if it becomes a
public company
(2) Election of new Directors such that a majority of
Directors were not nominated as candidates by a majority
of the Directors in office immediately preceding the
election
(3) Sale of the Company by merger, consolidation, asset
sale or otherwise
(4) Initial public offering by the Company
THE FOREGOING CONSTITUTES THE TERMS AND CONDITIONS UPON WHICH THE COMPANY AND
THE EMPLOYEE HAVE AGREED WITH RESPECT TO THE EMPLOYEE'S EMPLOYMENT. THIS
AGREEMENT, TOGETHER WITH EXHIBIT A, CONSTITUTES THE ENTIRE AGREEMENT OF THE
PARTIES AND MAY BE AMENDED ONLY BY A WRITING SIGNED BY BOTH PARTIES. THE
SIGNATURES BELOW INDICATE AGREEMENT OF BOTH PARTIES WITH THE FOREGOING.
April 4, 1994
/s/ Xxxxx X. Xxxxxx /s/ Xxxx X. Xxxxxxx
--------------------------- ----------------------------
Xxxxx X. Xxxxxx Xxxx X. Xxxxxxx
Chief Executive Officer
Pharmaceutical Peptides,
Inc.
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Exhibit A
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
In consideration of my employment with Pharmaceutical Peptides, Inc.
(the "Company"), I hereby agree with the Company as follows:
1. Prior Employment. I hereby represent and warrant to the Company
that (i) I have disclosed to the Company each and every employment agreement,
nondisclo-sure agreement, inventions agreement, noncompete agreement or other
similar agreement with any of my current or previous employers which has not by
its terms expired and (ii) my employment by the Company and my compliance with
the terms of this agreement will not result in a violation by me of any material
term of any agreement or obligation of mine with or to the Xxxx Xxxxxx Cancer
Institute or other not-for-profit institution.
2. Confidential Information. I understand that the Company's
confidential information includes and will include matters not generally known
outside the Company, such as developments, inventions, technologies, methods,
discoveries, improvements, modifications, designs, drawings, processes and trade
secrets relating to the Company's business, to proposed products and services
and to data relating to the technologies, business operations, methodologies and
techniques of the Company, including information concerning sales, costs,
profits, organizations, customer lists, personnel and pricing methods (all
information not generally known outside the Company being referred to herein as
"Confidential Information"). I further understand that while I am employed by
the Company, I may obtain or hear of Confidential Information of the Company and
of other parties which has been provided to the Company in confidence. I agree
not to disclose, use or copy any Confidential Information of the Company
(whether or not produced by me) or of other parties which has been provided to
the Company in confidence, except as the Company may specifically authorize or
direct or as required by law.
3. Discoveries. I agree to make full and prompt disclosure to the
Company of any and all inventions, technologies, improvements, modifications,
processes, discoveries, methods, and developments (all of
which are collectively termed "Discoveries"), whether patentable or not,
performed, made, conceived or reduced to practice by me or under my direction or
jointly with others during my employment by the Company, whether or not made,
conceived or reduced to practice during normal working hours or on the premises
of the Company. I hereby assign and transfer to the Company all of my right,
title and interest in and to all Discoveries and any patents or patent
applications covering such Discoveries. I further agree, both during and after
my employment with the Company, to execute and deliver such assignments, patents
and applications, and other documents as the Company may direct, and agree to
cooperate fully with the Company to enable the Company to secure and patent and
otherwise perfect and protect such Discoveries in any and all countries. This
paragraph will not apply to Discoveries, and for all purposes of this Agreement
the term "Discoveries" shall not include any of the foregoing which would
otherwise be included within the meaning of such term, but (a) which do not
relate to the actual, planned or anticipated business or research and
development of the Company or affiliated corporations and which are performed,
made, conceived or reduced to practice by me during other than while working as
an employee of the Company, not on the Company's premises and without the use of
any of the Company's tools, devices, equipment, resources or Confidential
Information or (b) are inventions, ideas, discoveries, innovations, or
improvements (whether or not patentable) or material made subject to copyright
which is or becomes the property of Genetics Institute, Inc. ("GI") pursuant to
my Employment Agreement with GI dated January 9, 1992.
4. Intellectual Property Rights. I acknowledge and agree that any
and all right, title and interest which I may have in and to any Discoveries and
any other intellectual property rights within the scope of my employment belongs
to the Company exclusively throughout the world. I hereby waive and release all
my rights, if any, to the foregoing and hereby assign and transfer to the
Company without further compensation any interest I may have in the entire
worldwide right, title and interest in and to the foregoing. I further agree to
execute any papers and to assist the Company in any manner deemed necessary by
the Company to permit the Company to apply for, obtain and defend patents and
other intellectual property rights related to the foregoing.
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5. Obligations to other Parties. I hereby represent to the Company
that, as of the date hereof, I have no present obligation to assign to any
former employer or any other person, corporation or firm, any items covered by
paragraph 3. I will not disclose and have not disclosed to the Company, and I
will not induce or cause and have not induced or caused the Company to use, any
confidential information of other persons, corporations or firms, including
former employers. In addition, I will not bring or provide and have not brought
or provided to the Company, any documents or other tangible items containing
confidential information of other persons, corporations or firms, including any
former employers.
6. Competitive Activities Prohibited. During the term of my
employment by the Company, I will not become employed full-time or part-time by
or act on behalf of any other person, corporation or firm which is engaged in
any business or activity competitive with that of the Company, unless such
employment has been approved by the Company in a writing signed by an officer of
the Company. I also agree that I will not, for a period of one year after the
termination of my employment with the Company, solicit or seek to obtain orders
for any products directly competitive with those manufactured or sold by the
Company from any person or organization that is a customer of the Company or
recruit or otherwise seek to cause employees of the Company to terminate their
employment or violate any agreement with the Company.
7. Affiliates or Subsidiaries. If my employment is transferred to a
subsidiary or affiliated company of the Company, this Agreement will continue to
apply as though I were still employed by the Company unless I sign an agreement
provided to me by such other company covering essentially the same matters as
this Agreement.
8. Termination of Employment. Upon any termination of my employment
by the Company, I agree to leave with or return to the Company all records,
drawings, notebooks and other documents pertaining to the Company's Confidential
Information, whether prepared by me or others, and any equipment, tools or
devices owned by the Company then in my possession or under my control however
such items were obtained.
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9. Vesting of Rights. The rights, title and other interests granted
by me to the Company under this Agreement shall automatically vest in the
Company as each item to which a right, title or other interest applies comes
into existence.
10. Survival. My obligations under this Agreement shall survive any
termination of my employment with the Company. This Agreement shall be binding
upon my heirs, executors and administrators and shall inure to the benefit of
the Company and its successors and assigns.
11. Entire Agreement; Modifications. This Agreement constitutes the
entire agreement covering the subject matter set forth herein and may be
modified only by agreement in writing signed by me and an officer of the
Company.
12. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts.
Date: April 4, 1994 /s/ Xxxx X. Xxxxxxx
----------------------------
Signature of Employee
Xxxx X. Xxxxxxx
----------------------------
Printed Name of Employee
Witness:
__________________________________
ACCEPTED AND AGREED TO:
PHARMACEUTICAL PEPTIDES, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Title: President
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Amendment No. 1 to Employment Agreement
AGREEMENT dated as of April 1, 1997 by and between Xxxx X. Xxxxxxx
("Employee") and Praecis Pharmaceuticals, Inc. (the "Company").
WHEREAS, Employee and the Company entered into an Employment
Agreement dated April 4, 1994 (the "Employment Agreement");
WHEREAS, as of March 28, 1997, Employee and the Company agreed to
an extension of the renewal date under the Employment Agreement (the
"Extension Letter");
WHEREAS, Employee and the Company desire to amend the Employment
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
set forth and other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties agree as
follows:
1. The paragraph entitled "Base Annual Salary" is hereby
amended by deleting it in its entirety and inserting in its place the
following:
"$195,000 as Executive Vice President and
Medical Advisor to the Board of Directors."
2. The paragraph entitled "Bonuses" is hereby amended by
deleting it in its entirety and inserting in its place the following:
"(i) $25,000 upon completion of the Phase II clinical
trials of PPI-149 now underway, IND #51,710, Protocol
#000-00-00, (a) payable at such time as Synthelabo _____
("Synthelabo") is obligated to make a payment to the Company
pursuant to a determination of completion of such trials in
accordance with the _____ Agreement between the Company and
Synthelabo (the "Synthelabo Agreement"), (b) in the event no
licensing agreement is in effect with Synthelabo with
respect to prostate cancer trials of PPI-149, then payable
at such other time as any other llcensee is obligated to pay
to the Company a sum of funds as a result of
completion of a Phase II study of PPI-149, or (c) in the
event no licensing agreement is in effect with respect to
prostate cancer trials of PPI-149 and provided the
completion of such Phase II clinical trials is successful in
accordance with the protocol therefor, then payable upon
consummation of an underwritten initial public offering of
the Company's common stock (the "IPO");
(ii) $50,000 earned upon the first to occur of (a)
completion of Phase II clinical trials of PPI-149 in a
depot formulation for chronic therapy of prostate
cancer, payable at such time as Synthelabo is obligated
to make a payment to the Company pursuant to the
Synthelabo Agreement upon a determination in accordance
therewith that there has been a demonstration in such
trials of the safety and efficacy of a Praecis depot
formulation of PPI-149 for chronic therapy of prostate
cancer or (b) the commencement a Phase III clinical
trial employing a depot formulation of PPI-149 for
treatment of prostate cancer;
(iii) $75,000 payable upon the filing of a New
Drug Application with the United States Food and
Drug Administration for a depot formulation of
PPI-149 for treatment of prostate cancer; and
(iv) $100,000 payable upon the issue of the
Registration Approval and Reimbursement Approval,
if required, for a depot formulation of PPI-149
for treatment of prostate cancer in any Major
European Territory Country (each of the preceding
capitalized terms in this clause (iv), as defined
in the attached Schedule A) (a) by Synthelabo, or
(b) by any other licensee of the Company."
3. To amend the paragraph "Options" by adding at the end
thereof the following:
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"The Company shall grant to Employee as of May 1,
1997 an option pursuant to Rule 701 under the
Securities Act of 1933 to purchase 80,000 shares
of common stock of the Company on the following
terms: (i) the number of shares shall be subject
to proportionate adjustment for any stock split or
stock dividend after the date hereof, (ii) a ten
year term, (iii) exercise period following
termination: 1 year death or disability, 90 days
all other terminations; (iv) payment upon
exercise: cash or if employment terminated without
cause or as a result of constructive termination,
with two year note with interest at lowest federal
rate under Internal Revenue Code, (v) the option
shall be an incentive stock option to the full
extent permissible under the Internal Revenue
Code, (vi) the option shall vest and become
exercisable in equal monthly installments over ten
years at the rate of 666.67 shares per month,
commencing May 1, 1998, and (vii) in the event the
Fair Market Value of a share of common stock of
the Company is at least $309.30 (subject to
proportionate adjustment in the event of a stock
split, stock dividend, stock combination or
reverse stock split), then such option shall
become fully vested and exercisable. As used
herein, Fair Market Value shall mean the closing
sales price on the largest national exchange on
which shares of the Company's common stock are
listed or on the Nasdaq National Market System or,
if not so listed, as determined by the Board of
Directors in good faith considering recent
transactions in the Company's common stock. In
addition, Employee shall be entitled to such other
grants of stock options as the Compensation
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Committee of the Board of Directors shall determine from
time to time in accordance with the usual practice of the
Company with respect to review of compensation of its senior
executives and in recognition of Employee's performance."
4. The Company shall pay the Employee's reasonable legal fees
and expenses in connection with this amendment.
5. Except as expressly provided in this Amendment No. 1, the
Employment Agreement is affirmed and shall remain in full force and
effect.
6. This Amendment No. 1 (together with the Employment
Agreement, the Proprietary Information and Inventions Agreement
between Employee and the Company dated April 4, 1997, stock option
agreements for options previously granted to Employee pursuant to the
terms in the Employment Agreement and otherwise) constitutes the
entire agreement between the parties with respect to the subject
matter hereof and supersedes the Extension Letter and any other
agreements pertaining to the subject matter hereof. This agreement
may only be amended in a writing signed by both parties.
IN WITNESS WHEREOF, the parties have executed this agreement.
PRAECIS PHARMACEUTICALS, INC.
/s/ Xxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------------ -------------------------
Xxxx X. Xxxxxxx Xxxxxxx X. Xxxxxx
Chief Executive Officer
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