SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
PHARMAGENICS, INC.
----------------------------------
Exhibit 10.62
to
QUARTERLY REPORT ON FORM 10-Q
For Quarter Ended September 30, 1996
June 27, 1996
Xxxxxxx X. Xxxxxxx, Ph.D.
000 Xxxxxx Xxxxxx
Xxxx Xxxxx, Xxx Xxxxxx 00000
Dear Xxxx:
This letter agreement (this "Agreement") sets forth the terms and
conditions of your employment by PharmaGenics, Inc., a Delaware corporation
(which corporation, including its successors and assigns, will be referred to in
this letter agreement as the "Company").
1. TERM. The Company hereby employs you and you hereby
accept employment by the Company subject to the terms and conditions
in this Agreement. Your employment shall be for a three-year period
(the "Term") commencing July 1, 1996 and ending June 30, 1999, subject
to earlier termination as provided in this Agreement. The Term and
each extension thereafter shall be automatically extended for
successive one-year periods unless either party shall give written
notice to the other party at least sixty (60) days prior to the
expiration of the then present term that it elects not to extend such
term. The employment period as described in this paragraph shall be
referred to in this Agreement as the "Employment Period."
2. DUTIES. (a) The Company shall employ you as President
and Chief Executive Officer of the Company. You shall perform well
and faithfully such duties and services consistent with your positions
with the Company as may be assigned to you from time to time by the
Board of Directors of the Company or its designee.
(b) The Company shall use its best efforts to ensure your election as
a member of the Board of Directors and of the Executive Committee
thereof during the Employment Period.
(c) Except for reasonable vacations of a duration consistent with
Company policy and absences for temporary illness,
Xxxxxxx X. Xxxxxxx, Ph.D.
June 27, 1996
Page 2
you shall devote your full time and energy to the business of the
Company during the Employment Period. You shall not engage in any
other business activity which in the Company's reasonable judgment
conflicts with your duties to the Company during the Employment
Period.
3. COMPENSATION; REIMBURSEMENT. (a) During the Employment
Period, commencing July 1, 1996, the Company shall pay you initially
an annual base salary (the "Base Salary") of $242,650, payable in such
installments as is consistent with Company policy for senior
executives. It is understood, however, that in the event that prior
to March 31, 1997 the Company undergoes a change in control and/or
receives additional financing in the cumulative amount of three
million dollars ($3,000,000), your annual base salary will be
increased to $260,000 retroactive to July 1, 1996. The Base Salary
shall be increased, as of each July 1 during the Employment Period by
(i) a percentage corresponding to the percentage increase (the "CPI
Increase"), if any, in the Revised Consumer Price Index (1967=100) --
All Urban Consumers [New Series] since the last adjustment date, or,
if no prior adjustment has been made, since July 1, 1996, and (ii)
such additional increases, if any, as determined by the Compensation
Committee of the Board of Directors in its sole discretion.
(b) On a calendar year basis within the Employment Period, the
Company shall pay you a cash bonus of at least $20,000, and may pay
you such additional bonuses as determined by the Compensation
Committee of the Board of Directors in its sole discretion. Such
bonus or bonuses shall be paid in such manner and at such times as is
consistent with Company policy for senior executives.
In addition, if, before the end of 1996, the Company (i) has an
Initial Public Offering with proceeds of at least twenty million
dollars ($20,000,000), or (ii) signs a definitive merger agreement in
which the Company's valuation is sixty million dollars ($60,000,000)
or greater, the Company shall pay you an additional one-time bonus of
$25,000 or a greater amount at the discretion of the Board of
Directors.
Xxxxxxx X. Xxxxxxx, Ph.D.
June 27, 1996
Page 3
(c) During the Employment Period, the Company shall, at your option,
either (i) pay to you a car allowance of up to $650 per month payable
upon your submission of appropriate documentation evidencing purchase
and delivery of the car, (ii) reimburse you for car rental or lease
and related expenses not to exceed $650 per month, or (iii) rent or
lease a car for you in which case you agree to reimburse the Company
for all expenses paid by the Company related to such car rental to the
extent such expenses exceed $650 per month. Such payments to you
shall be grossed up on an annual basis in an amount equal to federal
and state income taxes on such payments.
(d) During the Employment Period, you shall be entitled to such health
and other benefits as are made available to senior executives of the
Company.
(e) If at any time during the Employment Period the principal offices
of the Company shall be moved to a site outside a fifty-mile radius of
Xxxx Ridge, New Jersey, the Company shall reimburse you for reasonable
relocation costs related thereto.
4. TERMINATION. (a) The Company may terminate your
employment at any time, with or without "cause."
(b) In the event of termination by the Company of your employment
without "cause," such termination shall be effective immediately upon
notice to you, and, in such event, the Company shall pay you that
portion of your Base Salary prorated to the date of termination which
has not yet been paid to you within thirty (30) days of such notice,
plus twelve months' Base Salary (at the rate and frequency in effect
at the time of termination but with no additional increases), but
neither you nor your assigns, beneficiaries or estate shall have any
further rights or claims against the Company, other than any rights or
claims to which you are entitled as a shareholder of the Company.
Without limiting the generality of the foregoing, (i) the Company's
election not to extend the Employment Period at
Xxxxxxx X. Xxxxxxx, Ph.D.
June 27, 1996
Page 4
any time after the Term, unless for reasons set forth in Sections 4(c)
and 4(d), shall be deemed to be a termination without "cause" under
this Section 4(b), and (ii) in the event that, at any time prior to
the end of the six-month period following the date as of which the
Company shall demote you from the office of President and Chief
Executive Officer or appoint an officer of the Company to whom you
will be subordinate, you shall terminate your employment (other than
for "cause" or for a reason described in Section 4(d) below), such
termination shall be deemed to be a termination by the Company without
"cause" under this Section 4(b).
(c) In the event of termination of your employment for "cause," such
termination shall be effective immediately upon notice to you and, in
such event or in the event of your "voluntary termination" (as defined
in this Section 4(c) below), the Company shall pay you that portion of
your Base Salary prorated to the date of termination which has not yet
been paid to you, including any CPI increase due you but not paid, but
neither you nor your assigns, beneficiaries or estate shall have any
further rights or claims against the Company, other than any rights or
claims to which you are entitled as a shareholder of the Company.
As used in the letter agreement, "cause" means (i) your willful
misconduct or gross negligence with respect to the business and
affairs of the Company (or any subsidiary or affiliate thereof), (ii)
your breach of the provisions of Section 5 or 6 hereof, or (iii) your
commission of an act involving embezzlement or fraud or conviction for
any indictable crime.
The termination of your employment for any reason other than as set
forth in Section 4(a), 4(b), or 4(d) hereof, including any election by
you not to extend the Employment Period after the Term, shall be a
"voluntary termination."
(d) In the event of disability (under circumstances rendering you
incapable of performing the services hereunder for a period of 180
consecutive days or longer or
Xxxxxxx X. Xxxxxxx, Ph.D.
June 27, 1996
Page 5
180 days during any twelve-month period), or such longer period of
time as necessary to qualify for disability benefits under the
Company's long-term disability benefits plan, the Company may
terminate your employment at any time thereafter, effective upon
notice to you. In the event of your death, your employment will be
deemed terminated on the date of your death. In each case, the
Company shall pay you (or your estate or beneficiaries as the case may
be) that portion of your Base Salary prorated to the date of
termination which has not been paid to you, plus six months' Base
Salary (at the rate and frequency in effect at the time of termination
but with no additional increases), but neither you nor your assigns,
beneficiaries or estate shall have any further rights or claims
against the Company, other than any rights or claims to which you are
entitled as a shareholder of the Company.
5. CONFIDENTIALITY. You agree that you will not, at any time
during the Employment Period, or for the five-year period immediately
following the Employment Period, disclose to any person, firm,
corporation or other business entity, except in furtherance of the
Company's business or as required by law, any non-public information
concerning the business, clients or affairs of the Company or any
subsidiary or affiliate thereof for any reason or purpose whatsoever
nor shall you make use of any of such non-public information for your
own purpose or for the benefit of any person, firm, corporation or
other business entity except the Company or any subsidiary or
affiliate thereof.
6. RESTRICTIVE COVENANT. (a) You hereby acknowledge and
recognize that during the Employment Period you will be privy to trade
secrets and confidential proprietary information critical to the
Company's business. You further acknowledge and recognize that the
Company would find it extremely difficult or impossible to replace you
and accordingly you agree that, in consideration of the premises
contained in this Agreement, the consideration to be received by you
hereunder and in consideration of certain stock and stock options to
be issued to you by the Company, you will not, (i) from or after the
date hereof through the
Xxxxxxx X. Xxxxxxx, Ph.D.
June 27, 1996
Page 6
first anniversary of the termination of the Employment Period
(provided, however, that in the event that for any reason you do not
receive payment as specified in Section 4(b) or as a result of a
termination of your employment by the Company without "cause," the
period in this clause (i) shall terminate thirty (30) days after the
termination date of your employment), (A) be employed as an officer
or director by any business which is engaged primarily in research and
development activities which are fundamentally the same as those of
the Company at the time of your termination (or time of determination
if during the Employment Period) ("Competing R & D") and the marketing
and/or distribution of products from Competing R & D (including
products licensed from another entity and based on Competing R & D)
(any such business or activity described in clause (A) being referred
to in this Agreement as a "Competing Business"), excluding any
employment with a "Fortune 500" corporation or activities by reason of
your employment with a "Fortune 500" corporation (provided that you
shall in any event be subject to the restrictions of Section 5 hereof)
or (B) from and after the date hereof through the first anniversary
of the termination of the Employment Period induce other employees of
the Company or any subsidiary or affiliate thereof to terminate their
employment with the Company or any subsidiary or affiliate thereof, or
engage in any Competing Business, except with the prior written
approval of the Company.
Notwithstanding anything to the contrary, it is explicitly understood
that in the event the Company ceases R&D operations, all of your
employment restrictions in this Section 6(a) will be waived, although
all of your confidentiality obligations will remain in full effect.
(b) You understand that the foregoing restrictions may limit your
ability to earn a livelihood in a Competing Business, but you
nevertheless believe that you have received and will receive
sufficient consideration and other benefits in connection with the
Company's issuance of certain stock and stock options to you, as an
employee of the Company and as otherwise provided hereunder to clearly
Xxxxxxx X. Xxxxxxx, Ph.D.
June 27, 1996
Page 7
justify such restrictions which, in any event (given your education,
skills and ability), you do not believe would prevent you from earning
a living.
7. COMPANY RIGHT TO INVENTIONS. You shall promptly disclose,
grant and assign to the Company for its sole use and benefit any and
all inventions, improvements and technical information relating in any
way to the business of the Company, which you may develop or acquire
during the Employment Period (whether or not during usual working
hours), together with all patent applications, letters patent,
copyrights and reissues thereof that may at any time be granted for or
upon any such invention, improvement or technical information. In
connection therewith, during the Employment Period and the five-year
period immediately following the Employment Period:
(a) You shall without charge, but at the expense of the Company,
promptly at all times hereafter execute and deliver such applications,
assignments, descriptions and other instruments as may be reasonably
necessary or proper in the reasonable opinion of the Company to vest
title to any such inventions, improvements, technical information,
patent applications, patents, copyrights or reissues thereof in the
Company and to enable it to obtain and maintain the entire right and
title thereto throughout the world;
(b) You shall render to the Company at its expense (including a
payment that is reasonable and customary in the industry for the time
involved in case you are not then in employ) all such assistance as it
may reasonably require in the prosecution of applications for said
patents, copyrights or reissues thereof, in the prosecution or defense
or interferences which may be declared involving any said
applications, patent or copyrights and in any litigation in which the
Company may be involved relating to any such patents, inventions,
improvements or technical information; and
(c) You represent and warrant that your employment with the Company
and your execution and delivery of this
Xxxxxxx X. Xxxxxxx, Ph.D.
June 27, 1996
Page 8
Agreement and compliance with all the terms of this Agreement does not
and will not breach any written or oral agreement you have entered
into relating to intellectual property, noncompetition or otherwise,
and you shall not enter into any written or oral agreement in conflict
with this Agreement.
The restrictions set forth in Sections 7(a) and 7(b) shall cease to
apply five (5) years following termination of the Employment Period.
8. NOTICES. All notices and other communications which are
required or permitted hereunder shall be in writing and sufficient if
delivered personally or by telefax or sent by air courier or first
class certified or registered mail, return receipt requested and
postage prepaid, addressed using the applicable address set forth in
this letter agreement or to such other address as the party to whom
notice is given may have furnished to the other party in writing in
accordance herewith. All notices and other communications given to
any party hereto in accordance with the provisions of this Agreement
shall be deemed to have been given on the date of delivery if
personally delivered or delivered by telefax; on the business day
after the date when sent if sent by air courier; and on the fifth
business day after the date when sent if sent by mail, in each case
addressed to such party as provided in this Section or in accordance
with the latest unrevoked direction from such party.
9. GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of
New Jersey.
10. ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties with respect to the subject matter
hereof and supersedes all prior agreements or understandings among the
parties with respect thereto.
Xxxxxxx X. Xxxxxxx, Ph.D.
June 27, 1996
Page 9
11. REMEDIES; SURVIVAL (a) You acknowledge and understand
that the provisions of this Agreement are of a special and unique
nature, the loss of which cannot be accurately compensated for in
damages by an action at law; and that the breach or threatened breach
of the provisions of this Agreement would cause the Company
irreparable harm. In the event of breach or threatened breach by you
of the provisions of Section 5 or 6 hereof, the Company shall be
entitled to an injunction restraining you from such breach. Nothing
herein contained shall be construed as prohibiting the Company from
pursuing any other remedies available for any breach or threatened
breach of this Agreement.
(b) Notwithstanding anything contained in this Agreement to the
contrary, the provisions of Sections 5 and 6 and this Section 11 shall
survive the expiration or other termination of this Agreement until,
by their terms, such provisions are no longer operative.
(c) It is the intent of the Company and you that this Agreement shall
be enforced to the fullest extent permitted by law. Accordingly, any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating
the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provisions in any other jurisdiction.
12. ASSIGNMENT. This Agreement is personal in its nature and
the parties hereto shall not, without the consent of the other, assign
or transfer this letter agreement or any rights or obligations
hereunder; provided, however, that the provisions hereof shall inure
to the benefit of, and be binding upon (i) each successor of the
Company, whether by merger, consolidation, transfer of all or
substantially all assets, or otherwise and (ii) your heirs and legal
representatives.
Xxxxxxx X. Xxxxxxx, Ph.D.
June 27, 1996
Page 10
Please acknowledge your agreement with the provisions set forth in
this Agreement by executing this Agreement in the space provided below for your
signature.
Very truly yours,
PharmaGenics, Inc.
By: /s/ X. Xxxxxx Xxxxxxxx
-------------------------
X. Xxxxxx Xxxxxxxx
Vice President
Xxxxxx to as of June 27, 1996.
/s/ Xxxxxxx X. Xxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxx
