EMPLOYMENT AGREEMENT
This Employment Agreement (this "AGREEMENT") made as of September 1, 1997
by and between PHARMAPRINT INC., a Delaware corporation (the "COMPANY"), and
Xxxxxxx X. Xxxxxxxx, an individual residing at 2160 Veloz, Monticeto,
California, ("EXECUTIVE").
In consideration of the mutual promises and covenants set forth below, the
COMPANY and EXECUTIVE hereby agree as follows:
ARTICLE I - EMPLOYMENT
Section 1.1 - EMPLOYMENT AND POSITION.
The COMPANY shall employ EXECUTIVE as Chief Executive Officer. During his
employment hereunder, EXECUTIVE shall devote his full energies, experience,
skills, abilities, knowledge and productive time to the performance of his
duties under this AGREEMENT.
Section 1.2 - RESPONSIBILITIES, DUTIES AND AUTHORITY.
The responsibilities, duties and authority of EXECUTIVE shall be as
designated from time to time by the Board of Directors of the COMPANY and/or the
COMPANY and EXECUTIVE shall perform such additional functions and duties that
are reasonable and customary for the position designated in this AGREEMENT.
Section 1.3 - NO CONFLICT.
The COMPANY has entered into this AGREEMENT in reliance on EXECUTIVE's
representation and warranty that this AGREEMENT and the employment of EXECUTIVE
by the COMPANY will not violate or conflict with any AGREEMENT he may have with
any other entity or by which EXECUTIVE may be bound.
Section 1.4 - PLACE OF EMPLOYMENT.
EXECUTIVE's primary place of employment shall be at the COMPANY's
headquarters in Orange County, California; it being understood that the scope of
EXECUTIVE's duties hereunder may require a substantial amount of travel.
Section 1.5 - TERM
The term of this AGREEMENT shall be for three years unless earlier
terminated as provided herein.
ARTICLE II - TERMINATION OF EMPLOYMENT
Section 2.1 - TERMINATION OF AGREEMENT BY THE COMPANY.
(a) CAUSE. The COMPANY may terminate this AGREEMENT:
(1) at any time without advance notice in the event EXECUTIVE
commits any act of fraud, gross misconduct or is convicted of a felony, or
(2) in the event EXECUTIVE, in the reasonable opinion of the
Board of Directors, materially fails to fulfill his duties under this AGREEMENT
and such failure remains uncured, in the reasonable opinion of the Board of
Directors, thirty days after the COMPANY shall have given EXECUTIVE written
notice thereof.
Any termination pursuant to this Section 2.1(a) shall be deemed
to be for cause ("CAUSE").
(b) WITHOUT CAUSE. The COMPANY may terminate this AGREEMENT at any
time without Cause upon one hundred eighty (180) days' notice delivered to
EXECUTIVE.
Section 2.2 - TERMINATION OF AGREEMENT BY DISABILITY OF EXECUTIVE.
If, for a period of ninety (90) consecutive days or one hundred fifty (150)
days in any one year period, EXECUTIVE has been, in the opinion of a physician
selected by the COMPANY and reasonably acceptable to EXECUTIVE, disabled, and
during such period or periods is unable to substantially perform his duties
hereunder (an "EVENT OF DISABILITY"), this AGREEMENT shall then be terminated.
Section 2.3 - TERMINATION OF AGREEMENT BY DEATH OF EXECUTIVE.
This AGREEMENT shall be terminated without notice automatically upon
EXECUTIVE's death. In such case, the Termination Date shall be the date of
death.
Section 2.4 - TERMINATION OF AGREEMENT BY EXECUTIVE.
EXECUTIVE may terminate this AGREEMENT (a) if the COMPANY materially
changes EXECUTIVE's duties or authority as provided in this AGREEMENT,
including assignment to duties materially inconsistent with those set forth
herein, material reduction in EXECUTIVE's duties or authority, or material
interference by the Board of Directors which adversely affects EXECUTIVE's
ability to perform his duties hereunder, (b) if the COMPANY materially breaches
this AGREEMENT, including, without limitation, reducing EXECUTIVE's then
current Salary or failing to make any Salary or bonus payment when due and owing
or (c) upon ninety (90) days' advance notice.
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Section 2.5 - SEVERANCE COMPENSATION.
Upon termination of this AGREEMENT, EXECUTIVE shall be entitled to the
following severance compensation:
(a) TERMINATION BY THE COMPANY WITHOUT CAUSE. Upon termination by
the COMPANY without Cause, EXECUTIVE shall be entitled to receive:
(i) Salary (as defined below) and Benefits earned or accrued
through the date of termination (the "TERMINATION DATE");
(ii) a lump sum, paid in cash within thirty (30) calendar days
after the Termination Date of the Salary expected to be received during the
twelve (12) months immediately following the Termination Date (without taking
into account any expected future inflation adjustments);
(iii) a sum equal to any bonus earned or accrued by EXECUTIVE
(and unpaid) to which EXECUTIVE would have been entitled pursuant to Section
3.2 hereof had EXECUTIVE's employment continued for a period of three months
after the Termination Date; and
(iv) in the event that EXECUTIVE is not eligible for insurance
through COBRA coverage on the Termination Date, the COMPANY shall, for a period
ending six months after the Termination Date, either provide EXECUTIVE with
continued medical, dental, disability, and health insurance at then existing or
reasonably comparable levels under the COMPANY's insurance plan(s) or pay for
comparable medical, dental, disability, and health insurance coverage providing
EXECUTIVE is insurable.
EXECUTIVE shall have no right to any other compensation or benefit.
(b) TERMINATION FOR CAUSE OR IN THE EVENT OF DEATH OR DISABILITY.
Upon termination (i) by the COMPANY for Cause, (ii) in the event of EXECUTIVE's
death, or (iii) by the COMPANY in an Event of Disability, EXECUTIVE (or his
estate, as the case may be) shall be entitled to Salary and Benefits earned or
accrued through the Termination Date. EXECUTIVE shall have no right to any
other compensation or benefit (including, without limitation, any expected
bonus).
(c) TERMINATION OF AGREEMENT BY EXECUTIVE. Upon termination by
EXECUTIVE, EXECUTIVE shall be entitled to:
(i) If the termination is voluntary, Salary and Benefits earned
or accrued through Termination Date pursuant to Section 2.5(a); or,
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(ii) If the termination is because of the occurrence of an event
described in Section 2.4(a) or 2.4(b) hereof, EXECUTIVE shall receive
compensation under Section 2.5(a) as if such termination were a termination by
the COMPANY without Cause.
(d) NO DUTY TO MITIGATE. Severance compensation shall be paid to
EXECUTIVE in accordance with the terms and conditions of this Section 2.5
regardless of whether EXECUTIVE obtains gainful employment after the
Termination Date.
ARTICLE III - COMPENSATION
Section 3.1 - BASE SALARY.
The COMPANY shall pay EXECUTIVE a base salary of one hundred eighty-two
thousand dollars ($182,000.00) per annum (the "SALARY"), payable in accordance
with the COMPANY's normal payroll periods. In the event this AGREEMENT is
extended, then the Salary shall be reviewed at least annually during such
extension periods by the Board of Directors and may be increased, but not
decreased, by the Board of Directors in its sole discretion.
Section 3.2 - BONUSES.
Bonuses shall be established by the COMPANY and payable to the EXECUTIVE
upon terms and conditions to be established by the COMPANY for benefit of
EXECUTIVE.
Section 3.3 - BENEFITS.
EXECUTIVE shall be entitled to the benefits generally made available by
the COMPANY from time to time to its EXECUTIVES, including, without limitation,
medical, dental, life, pension and retirement and disability insurance.
EXECUTIVE shall be entitled to four (4) weeks of paid vacation each year of
this AGREEMENT.
Section 3.4 - REIMBURSEMENT OF EXPENSES.
During the term of this AGREEMENT, the COMPANY shall reimburse EXECUTIVE
for reasonable and properly documented out-of-pocket expenses incurred in
connection with the business of the COMPANY, subject to such policies as the
COMPANY may from time to time reasonably establish.
Section 3.5 - STOCK OPTIONS.
In addition to the Salary and Bonus paid to EXECUTIVE by the COMPANY, the
COMPANY may grant EXECUTIVE non-qualified stock options (the "STOCK OPTIONS")
to purchase shares of the COMPANY's common stock, without par value (the "COMMON
STOCK")
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subject to the terms, conditions and restrictions of or related to the COMPANY's
Option Plan and any relevant vesting schedule contained in the option AGREEMENT
covering said grant.
ARTICLE IV - MAINTENANCE OF CONFIDENTIAL INFORMATION,
NON-COMPETITION AND HIRING OF EMPLOYEES
Section 4.1 - TRADE SECRETS AND CONFIDENTIAL INFORMATION.
EXECUTIVE acknowledges that the success of the COMPANY depends and will
depend in large part on its development of, and continued ability to protect,
its trade secrets and confidential information. EXECUTIVE understands that it
is the duty of every person employed by the COMPANY to preserve and protect the
COMPANY's trade secrets, consisting of formulas, patterns, devices, secret
inventions, processes and compilations of information, records and
specifications in connection with pharmaceutical drugs and drug development
technologies (the "TRADE SECRETS") and other related data, information or
technologies of the COMPANY considered by it to be confidential or proprietary
(collectively with Trade Secrets, the "CONFIDENTIAL INFORMATION"). During the
term of this AGREEMENT and at all times thereafter, EXECUTIVE shall not use for
his personal benefit, or disclose, communicate or divulge to, or use for the
direct or indirect benefit of any person or entity other than the COMPANY or its
affiliates, any Confidential Information.
Section 4.2 - COMPANY PROPERTY.
All Confidential Information and other materials, information and data of
any kind furnished by the COMPANY to EXECUTIVE, or developed by EXECUTIVE on
behalf of the COMPANY or at the COMPANY's direction or for the COMPANY's use or
otherwise in connection with the provision of services hereunder, are and shall
remain the sole and confidential property of the COMPANY. In the event that the
COMPANY requests the return of such materials at any time during the term of
this AGREEMENT or at or after the termination of this AGREEMENT, EXECUTIVE
shall immediately surrender such materials to the COMPANY.
Section 4.3 - TECHNOLOGY TRANSFER.
EXECUTIVE will promptly advise the COMPANY of each invention, discovery,
idea, or improvement (collectively hereafter referred to as "Invention"),
whether or not patentable, that is made or conceived by EXECUTIVE, either
alone or with others, during the term of his employment and directly or
indirectly related to EXECUTIVE's work and investigations or resulting from or
suggested by any work done for the COMPANY at its request. EXECUTIVE will
promptly submit to the President of the COMPANY a written disclosure of each
Invention describing its nature, use, and operation. To this end, EXECUTIVE
will maintain a record of all work of an important character, including each
Invention. EXECUTIVE, without further consideration, hereby assigns to the
COMPANY all right, title and interest in and to each and every Invention, which
EXECUTIVE may possess, whether or not patentable, and will, at all times during
the term hereof and thereafter its termination for any reason, assist the
COMPANY in every proper way with perfecting the
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COMPANY's interest in such invention. The COMPANY may obtain, for its own
benefit, patents or other forms of protection for each Invention in any and all
countries. From time to time on request, EXECUTIVE will execute all papers and
do all proper things that may reasonably be required to protect and maintain the
rights of the COMPANY in an Invention, whether or not patented.
Section 4.4 - NON-COMPETITION.
Without limiting the foregoing, during the term of this AGREEMENT and for
one (1) year thereafter, EXECUTIVE shall not directly or indirectly engage or
participate (as an employee, owner, partner, shareholder, joint venturer, agent,
representative or independent contractor, or in any other capacity calling for
the making of any investment or the rendering of any services or any acts of
management, operation or control) in any business that is the same as, similar
to or competitive with the business of the COMPANY as it has been or is being
conducted during the term of this AGREEMENT, including, but not limited to, the
development, manufacture and marketing of pharmaceuticals or dietary supplements
from natural medicines; provided, however, that EXECUTIVE may own up to one
percent (1%) of any class of securities of an entity engaged in such a
competitive business if such securities are (i) listed on a national securities
exchange or market or (ii) registered under the Securities Act.
Section 4.5 - HIRING OF EMPLOYEES.
During the term of this AGREEMENT and for a period of one (1) year
thereafter, EXECUTIVE will not, directly or indirectly, either for himself or
for any other person, firm, COMPANY or other entity, materially alter the
COMPANY's relationship with, take away or employ, or attempt to materially alter
the COMPANY's relationship with, solicit, divert, take away or employ any of the
customers, business or employees of the COMPANY or any of its affiliates;
provided, however, EXECUTIVE may employ during such period former employees of
the COMPANY or its affiliates whose employment has been terminated by the
COMPANY or such affiliates.
ARTICLE V - GENERAL PROVISIONS
Section 5.1 - ASSIGNMENT; AGREEMENT TO SURVIVE DISSOLUTION OR MERGER.
This AGREEMENT shall not be terminated by the voluntary or involuntary
dissolution of the COMPANY or by any merger where the COMPANY is not the
surviving or resulting corporation, or upon any transfer of all or substantially
all of the business or assets of the COMPANY. In the event of any such merger
or transfer, the provisions of this AGREEMENT shall be binding on and shall
inure to the benefit of the surviving entity or the entity to which such
business or assets shall be transferred. This AGREEMENT may not be assigned by
EXECUTIVE.
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Section 5.2 - REMEDIES.
EXECUTIVE is obligated under this AGREEMENT to render services of a
special, unique, unusual, extraordinary and intellectual character, thereby
giving this AGREEMENT peculiar value. EXECUTIVE is also obligated, under
Article IV hereof, to protect the Confidential Information of the COMPANY. Any
loss resulting from a breach of EXECUTIVE's obligations to render services or
protect Confidential Information could not be reasonably or adequately
compensated in damages in an action at law. Therefore, in addition to other
remedies provided by law or this AGREEMENT, the COMPANY shall have the right to
obtain injunctive relief, in the appropriate court, against the performance
elsewhere by EXECUTIVE of services in direct or indirect competition with the
COMPANY, and, at any time, against the dissemination by EXECUTIVE of
Confidential Information, or the use of such information by EXECUTIVE in
violation of Article IV hereof.
Section 5.3 - CHOICE OF LAW.
The formation, construction and performance of this AGREEMENT shall be in
accordance with the laws of the State of California.
Section 5.4 - NOTICES.
Any notice to the COMPANY required or permitted hereunder shall be given in
writing, either by personal service, by facsimile, or by certified mail, postage
prepaid, duly addressed to the General Counsel of the COMPANY at the COMPANY's
then principal place of business. Any such notice to EXECUTIVE shall be given
in a like manner, and if mailed, shall be addressed to EXECUTIVE at his
residence then shown in the files of the COMPANY. For the purpose of
determining compliance with any time limit herein, a notice sent by mail shall
be deemed given four days after the postmark date. Any other notice shall be
deemed given upon receipt of the notice.
Section 5.5 - SOLE AND ENTIRE AGREEMENT.
This AGREEMENT constitutes the sole and entire existing employment
AGREEMENT between the parties and completely and correctly expresses all of the
rights and obligations of the parties. All prior AGREEMENTS, conditions,
practices, customs, usages and obligations are completely superseded and revoked
insofar as any such prior AGREEMENT, conditions, practice, custom, usage or
obligations might have given rise to any enforceable right.
Section 5.6 - WAIVERS.
The waiver in any particular instance or series of instances of any term or
condition of this AGREEMENT or any breach hereof by either party shall not
constitute a waiver of such term or condition or of any breach thereof in any
other instance.
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Section 5.7 - AMENDMENT.
This AGREEMENT is subject to amendment only by subsequent written AGREEMENT
between, and executed by, the parties hereto. Commencement or continuation of
any custom, practice or usage by the COMPANY shall not constitute an amendment
hereof or otherwise give rise to enforceable rights or create obligations of the
COMPANY.
Section 5.8 - SEPARABILITY.
In the event any Article or portion thereof is declared illegal, the
remainder of this AGREEMENT shall remain in full force and effect.
Section 5.9 - DURATION OF RIGHTS.
The provisions of Section 2.5, Article III and Article IV of this AGREEMENT
shall survive the termination of this AGREEMENT. All other rights and
obligations created by or arising under this AGREEMENT shall terminate
automatically upon termination of this AGREEMENT except as otherwise expressly
provided herein.
IN WITNESS WHEREOF, the parties have executed this AGREEMENT at Irvine,
California as of the date first above written.
EXECUTIVE PHARMAPRINT INC.
By:
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Xxxxxx X. Xxxxxxxx Title:
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