EMPLOYMENT AGREEMENT EXHIBIT 10.12
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
effective as of January 1, 1998 (the "Effective Date") by and between
GENEMEDICINE, INC., A Delaware corporation (the "Company") and Xxxx Xxxxxxxxx,
X.Xx. (the "Executive"). The Company and Executive are hereinafter collectively
referred to as the "Parties," and individually referred to as a "Party."
RECITALS
A. The Company hereby agrees to continue to employ Executive, and
Executive hereby accepts continued employment by the Company, upon the terms and
conditions set forth in this Agreement.
B. The Company and the Executive have previously entered into an
Employment and Stock Purchase Agreement, dated as of July 31, 1992 (the "Prior
Agreement") memorializing the terms of Executive's engagement by the Company.
C. The Company and the Executive desire to terminate the Prior Agreement
and to enter into this Agreement, the terms of which shall supersede in their
entirety the terms of the Prior Agreement.
AGREEMENT
In consideration of the foregoing recitals and the mutual promises and
covenants herein contained, and for other good and valuable consideration, the
Parties, intending to be legally bound, agree as follows:
1. EMPLOYMENT AND TERM
1.1 Executive shall remain the President and Chief Executive Officer of the
Company, and shall report to, and be subject to the general direction and
control of the Board of Directors of the Company (the "Board").
1.2 Except as otherwise provided for in this Agreement, the term of this
Agreement shall commence on the Effective Date and terminate six (6) months
after the Effective Date unless such term is extended by mutual written consent
(the "Term"); provided, however, that either party may terminate this Agreement
at any time, with or without cause subject to the terms and conditions of
Sections 4 and 5 herein.
1.3 Executive shall agree to resign from the Board upon his termination
from the Company, as set forth in Section 4 herein.
1.
2. LOYAL AND CONSCIENTIOUS PERFORMANCE
2.1 During the Term, Executive shall devote his full business energies,
interest, abilities and productive time to the proper and efficient performance
of his duties under this Agreement.
2.2 During the Term and for a period of eighteen (18) months thereafter,
Executive agrees to not, solicit, for himself or others, any person or entity
that is or was a customer of the Company during his employment with the Company,
or a potential customer with whom the Company had significant contacts during
his employment with the Company for any purpose or activity that is directly or
indirectly competitive with the business of the Company, or solicit the
employment or services of, or attempt to cause to leave the employment or
service of the Company, or any affiliate of the Company, or otherwise interfere
with the relationship of the Company or any affiliate of the Company, with any
person who is or was employed by, or otherwise engaged to perform services for,
the Company or any affiliate of the Company, whether such affiliation is in the
capacity of employee, consultant, independent contractor or otherwise.
2.3 Executive hereby acknowledges and agrees that the scope of the
covenants set forth in this Section 2 are reasonable and necessary to protect
the interests of the Company.
2.4 Although the restrictions set forth in this Section 2 are considered by
the Parties to be reasonable in all circumstances, it is recognized that
restrictions of the nature in question may fail for unforeseen reasons, and
accordingly it is hereby agreed and declared that if any of the restrictions set
forth in this Section 2 shall be adjudged to be void as going beyond what is
reasonable in all of the circumstances for the protection of the Company and of
the Executive or for any other reason, but would be valid if part of the wording
thereof were deleted or the periods (if any) thereof reduced or the range of
activities or area dealt with thereby reduced in scope, such restrictions shall
apply with such modifications as may be necessary to make them valid and
effective and such provisions shall be modified accordingly.
2.5 The provisions of this Section 2 shall survive any termination of this
Agreement.
3. COMPENSATION OF EXECUTIVE
3.1 During the Term, the Company shall pay Executive a salary (the "Base
Salary") of three hundred ten thousand one hundred twenty eight dollars
($310,128) per year, payable in regular periodic payments in accordance with
Company policy. Such salary shall be prorated for any partial year of
employment on the basis of a 365-day fiscal year.
3.2 During the Term, the Company agrees to pay Executive seven hundred
sixty five dollars and seven cents ($765.07) per month or such other reasonable
amount that the Executive is actually billed for reasonable health and medical
benefits chosen by the Executive.
3.3 The Company agrees to maintain Executive's membership at The Woodlands
Country Club (the "Club") during the Term.
3.4 If Executive sells the home in which he resides on the Effective Date
before the later of (i) December 31, 1999 or, (ii) the period of eighteen (18)
months from the Term, the
2.
Company agrees to reimburse Executive for reasonable closing costs up to a
maximum of thirty thousand dollars ($30,000), provided that Executive personally
incurs such closing costs in the sale of his home. Executive shall also be
entitled to receive from the Company an additional payment (the "gross-up
payment") in an amount that is equal to the taxes imposed upon the
reimbursement, if any. Executive shall not be entitled to any additional payment
on the gross-up payment. Executive must submit appropriate documentation in
accordance with the Company's expense reimbursement policy in order to receive
reimbursement for such costs.
3.5 During the Term, the Company agrees to reimburse the Executive for all
reasonable and necessary business expenses in accordance with the Company's
expense reimbursement policies.
3.6 All of Executive's compensation shall be subject to customary
withholding taxes and any other employment taxes as are commonly required to be
collected or withheld by the Company.
4. TERMINATION
Executive's employment with the Company may be terminated under the following
conditions:
4.1 Death or Disability. Executive's termination shall be effective upon
the date of Executive's death or, disability as defined under Section 4.1.1.
4.1.1 The term "disability" shall mean total mental or physical incapacity
of the Executive, which continues for not less than one (1) month and is based
upon a certification of such incapacity by Executive's physician or a duly
licensed physician selected by the Board.
4.2 Termination by the Company/Expiration of the Term. Executive shall be
deemed terminated upon the expiration of the Term of this Agreement; provided,
however, that the Company may terminate Executive's employment under this
Agreement at any time and for any reason by delivery of written notice to the
Executive prior to the expiration of the Term. Any notice of termination given
pursuant to this Section 4.2 shall effect termination as of the date specified
in such notice or, in the event no such date is specified, on the last day of
the month in which such notice is delivered or deemed delivered as provided in
Section 9 below.
4.3 Termination by Executive. Executive may terminate his employment under
this Agreement at any time and for any reason prior to the expiration of the
Term by delivery of a written notice to the Company. Any notice of termination
given pursuant to this Section 4.3 shall effect termination as of the date
specified in such notice or, in the event no date is specified, on the last day
of the month in which such notice is delivered or deemed delivered as provided
in Section 9 below.
5. COMPENSATION UPON TERMINATION
5.1 Termination by the Company/Expiration of Term. Upon the termination of
Executive's employment as described in Section 4.2, and upon Executive's
furnishing to the Company and an executed waiver and release of claims (a form
of which is attached hereto as Exhibit A), Executive shall be entitled to the
following:
3.
5.1.1 Executive's Base Salary and accrued benefits through the date of
termination;
5.1.2 Continuation of Executive's annual Base Salary in effect at the
time of termination through the later of (i) December 31, 1999, or (ii) a period
of eighteen (18) months from the Term;
5.1.3 Each of the stock option grants set forth on Exhibit B are
hereby amended to reflect that: (i) the vesting of each outstanding stock option
(the "Options") shall be accelerated such that the Options shall be fully vested
upon termination, and (ii) each Option shall be exercisable up to and including
two (2) years from the termination date of Executive's employment. Pursuant to
applicable tax laws, the Options will lose potentially favorable tax treatment
afforded incentive stock options if not exercised within ninety (90) days of
Executive's termination date.
5.1.4 Seven hundred sixty five dollars and seven cents ($765.07) per
month from the Company for reasonable health benefits chosen by the Executive,
plus continued payment for Club membership, through (i) December 31, 1999, or
(ii) a period of eighteen (18) months from the Term. Executive shall be solely
responsible for all expenses arising from his use of the Club other than the
Club membership fee.
5.2 Death and Disability. If Executive's employment shall be terminated by
death or disability as provided in Section 4.1, the provisions of Section 5.1
shall apply.
5.3 Termination by Executive. If Executive shall terminate Executive's
employment with the Company prior to the end of the Term of the Agreement, then
upon Executive's furnishing to the Company an executed waiver and release of
claims (a form of which is attached hereto as Exhibit A), Executive shall be
entitled to the following:
5.3.1 Executive's Base Salary and accrued benefits through the date of
termination;
5.3.2 Continuation of Executive's Base Salary in effect at the time of
termination for a period of eighteen (18) months;
5.3.3 Each of the stock option grants set forth on Exhibit B are
hereby amended to reflect that: (i) the Options shall be accelerated such that
the number of vested shares under the Options shall equal the number of shares
that would have vested under the Options had Executive remained an employee for
an additional eighteen (18) months, and (ii) each Option shall be exercisable up
to and including two (2) years from the termination date of Executive's
employment;
5.3.4 Seven hundred sixty five dollars and seven cents ($765.07) per
month from the Company for reasonable health benefits chosen by the Executive,
plus continued payment for Club membership, for eighteen (18) months. Executive
shall be solely responsible for all expenses arising from his use of the Club
other than the Club membership fee.
4.
5.4 Change of Control. If, during the Term, a Change of Control occurs as
defined in Section 7.1.1, and the Executive's employment with the new company is
terminated by the new company for any reason whatsoever, the provisions of
Section 5.1 shall apply upon such termination.
6. Confidential Information; Executive's Duties Upon Termination
6.1 No Confidential Information shall be disclosed by the Executive to any
third party or used by the Executive for the benefit of the Executive or any
third party without the prior written consent of the Company.
6.2 Confidential information shall not include information that:
6.2.1 at the time of its disclosure, is publicly available through no
fault of the Parties;
6.2.2 at the time of its disclosure, is, without fault of the
receiving party, part of the public domain;
6.2.3 subsequent to its disclosure hereunder, is obtained by the
Executive from a third party not subject to a contractual or fiduciary
obligation for confidentiality to the disclosing party;
6.2.4 is required to be disclosed under court or governmental order,
rule or regulation; or
6.2.5 is disclosed pursuant to any research grant related to
technology outside of gene therapy.
6.3 Upon termination of the employment of Executive for any reason,
Executive will deliver to the Company all documents, notebooks, designs,
specifications, customer lists, drawings, manuals, reports, plans and other data
of any nature containing or relating to the Confidential Information, Technology
or Inventions, and Executive will not deliver to anyone else any of such
documents or data or any reproduction of such documents or data containing or
relating to the Confidential Information, Technology or Inventions of the
Company.
6.4 Executive agrees to make prompt and complete disclosure to the Company
of every Invention. Executive agrees that the Company shall have sole ownership
rights to all Inventions and agrees to cooperate fully, at no expense to the
Executive, with the Company to secure and defend the Company's said ownership
rights. Executive hereby assigns to the Company any rights the Executive may
acquire in any such Inventions.
6.4.1 Exhibit C hereto contains a true, complete and accurate list of
all inventions, copyrights, patents or improvements of the Executive relevant to
the subject matter of the employment of the Executive by the Company that had
been made or conceived or first reduced to practice by the Executive alone or
jointly with others prior to the employment of the Executive and prior to
Executive's execution of this Agreement and which Executive desires to remove
from the operation of this Agreement.
5.
6.5 Executive represents that the performance of all the terms of this
Agreement by Executive and as an officer of the Company does not and, to the
best knowledge of the Executive, will not breach any agreement or duty to keep
in confidence proprietary information acquired by Executive in confidence or in
trust prior to the employment of the Executive by the Company. Executive
represents that the Executive has not entered into, and the Executive hereby
covenants that the Executive will not enter into, any agreement either written
or oral, in conflict herewith. Executive represents that at the present time
Executive is not restricted from entering into this Agreement.
6.6 Executive represents that Executive has not brought to the Company and
covenants that Executive will not bring to the Company or use in the performance
of the Executive's responsibilities at the Company any proprietary information,
materials or documents of a former or present employer that are not generally
available to the public, unless the Executive has obtained prior written
authorization from the former or present employer. Executive hereby covenants
that the Executive shall not breach any obligation of confidentiality or duty
that the Executive may have to former or present employers.
6.7 The provisions of this Section 6 shall survive any termination of this
Agreement.
7. Definitions
7.1 As used herein, the following terms shall have the following meanings:
7.1.1 Change of Control means the occurrence of one or more of the
following events: (i) a dissolution or liquidation of the Company; (ii) a merger
or consolidation in which the Company is not the surviving corporation in which
the Company's shareholders immediately prior to the transaction do not hold
beneficial ownership of a least fifty percent (50%) of the outstanding voting
shares of the new or continuing corporation; (iii) a reverse merger in which the
Company is the surviving corporation but the shares of the Company's common
stock outstanding immediately preceding the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise; (iv) at least a majority of the outstanding corporate shares of the
Company are sold, exchanged or otherwise disposed of, in one transaction or
series of related transactions and the Company's shareholders immediately prior
to such transaction or transactions do not hold beneficial ownership of at least
fifty percent (50%) of the outstanding voting shares of the Company or of the
ownership interests of the entity for which shares of the Company were exchanged
(taking into account only such shareholders' ownership of the Company prior to
the time such transaction or transactions commenced); or (v) the Company sells
all or substantially all of its assets to a single purchaser or to a group of
associated purchasers.
7.1.2 Confidential Information shall mean, subject to Section 6.2, the
Technology in the field of gene therapy known by, or disclosed to, or learned
by, or developed by, the Executive in the course and scope of the performance of
this Agreement, which information is not generally known in the trade, science
or industry in which the Company and/or its affiliates are engaged.
6.
7.1.3 Inventions shall mean all improvements, discoveries, inventions,
whether patentable or not, copyrightable works, copyrights, trade secrets,
formulae, processes techniques, and other developments and advances with respect
to the Technology in the field of gene therapy that are developed, conceived or
reduced to practice by the Executive in the course and scope of the performance
of this Agreement during the Term and for a period of one year thereafter that
result from the Executive's duties hereunder or result from the use of premises
or equipment owned, leased or contracted for by the Company.
7.1.4 Technology shall mean all know-how, information, ideas,
concepts, designs, specifications, suggestions, improvements, discoveries,
inventions, copyrightable works, uncopyrightable works, copyrights, patent
rights, unpatentable works, patents, trade secrets, formulae, processes,
techniques, methods, machines, devices, products, services, marketing plans,
strategies, forecasts and customer lists and other data, in each case that are
included within the field of gene therapy, and includes, without limiting the
generality of the foregoing, notebooks, drawings, computer software, manuals,
reports, specifications and other writings or compilations of information,
engineering and other scientific and practical information, models and records.
8. Assignment and Binding Effect
8.1 This Agreement, including Exhibits A, B and C shall be binding upon and
inure to the benefit of Executive and Executive's heirs, executors, personal
representatives, assigns, administrators and legal representatives. Because of
the unique and personal nature of Executive's duties under this Agreement,
neither this Agreement nor any rights or obligations under this Agreement shall
be assignable by Executive. This Agreement shall be binding upon and inure to
the benefit of the Company and its successors, assigns and legal
representatives.
9. Notices
9.1 All notices or demands of any kind required or permitted to be given by
the Company or Executive under this Agreement shall be given in writing and
shall be personally delivered (and receipted for) or mailed by certified mail,
return receipt requested, postage prepaid, addressed as follows:
9.1.1 If to the Company:
Vice President, Human Resources
GeneMedicine, inc.
0000 Xxx Xxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxx 00000-0000
If to Executive:
Xxxx Xxxxxxxxx, X.Xx.
0 Xxxxxxx Xxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxx 00000-0000
7.
Any such written notice shall be deemed received when personally delivered or
three (3) days after its deposit in the United States mail as specified above.
Either Party may change its address for notices by giving notice to the other
Party in the manner specified in this section.
10. Choice of Law
10.1 This Agreement shall be construed and enforced in accordance with the
laws of the State of Texas without regard to the place of execution or the place
for performance thereof. This Agreement is to be at least partially performed in
Xxxxxx County, Texas, and, as such, the Company and the Executive agree that
personal jurisdiction and venue shall be proper with the state or federal courts
situated in Xxxxxx County, Texas, to hear such disputes arising under this
Agreement .
11. Integration
11.1 This Agreement contains the complete, final and exclusive agreement of
the Parties relating to the subject matter of this Agreement, and supersedes all
prior oral and written employment agreements or arrangements between the
Parties, including without limitation the Prior Agreement, and except for the
benefits Executive may be entitled to under the terms and conditions of the
GeneMedicine, inc. Cash Incentive Retention and Severance Plan.
12. Public Announcements
12.1 The Parties agree that no public announcements regarding the terms and
conditions of this Agreement, including Executive's termination of employment,
will be made by either party, except as is required in order to comply with all
applicable laws and regulations; provided that, the Company shall use reasonable
efforts to give Executive an opportunity to review and comment regarding any
such required public announcements.
13. Amendment
13.1 This Agreement cannot be amended or modified except by a written
agreement signed by Executive and the Company.
14. Waiver
14.1 No term, covenant or condition of this Agreement or any breach thereof
shall be deemed waived, except with the written consent of the Party against
whom the wavier in claimed, and any waiver or any such term, covenant, condition
or breach shall not be deemed to be a waiver of any preceding or succeeding
breach of the same or any other term, covenant, condition or breach.
15. Severability
15.1 The finding by a court of competent jurisdiction of the
unenforceability, invalidity or illegality of any provision of this Agreement
shall not render any other provision of this Agreement unenforceable, invalid or
illegal. Such court shall have the authority to modify or replace the invalid or
unenforceable term or provision with a valid and enforceable term or
8.
provision which most accurately represents the Parties' intention with respect
to the invalid or unenforceable term or provision.
16. Interpretation; Construction
16.1 The headings set forth in this Agreement are for convenience of
reference only and shall not be used in interpreting this Agreement. This
Agreement has been drafted by legal counsel representing the Company, but
Executive has been encouraged, and has consulted with, his own independent
counsel and tax advisors with respect to the terms of this Agreement. The
Parties acknowledge that each Party and its counsel has reviewed and revised, or
had an opportunity to review and revise, this Agreement, and the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement.
17. Representations and Warranties
17.1 Executive represents and warrants that he is not restricted or
prohibited, contractually or otherwise, from entering into and performing each
of the terms and covenants contained in this Agreement, and that his execution
and performance of this Agreement will not violate or breach any other
agreements between Executive and any other person or entity.
18. Counterparts
18.1 This Agreement may be executed in two counterparts, each of which shall
be deemed an original, all of which together shall contribute one and the same
instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
The Company:
GENEMEDICINE, INC.
a Delaware Corporation
By:Xxxxxxx Xxxxxxx
---------------
Date:______________________________
EXECUTIVE:
Xxxx Xxxxxxxxx
-----------------------------------
Date:______________________________
9.
Waiver and Release Agreement - Exhibit A
Stock Options Exhibit B
Inventions Exhibit C
10.
EXHIBIT A
RELEASE AND WAIVER OF CLAIMS
In consideration of the payments and other benefits set forth in Sections 5.1
and 5.3 of the Employment Agreement dated January 1, 1998, to which this form is
attached, I hereby furnish GeneMedicine, inc. (the "Company") with the following
release and waiver.
I hereby release, and forever discharge the Company, its officers, directors,
agents, employees, stockholders, successors, assigns and affiliates, of and from
any and all claims, liabilities, demands, causes of action, costs, expenses,
attorneys' fees, damages, indemnities and obligations of every kind and nature,
in law, equity, or otherwise, known and unknown, suspected and unsuspected,
disclosed and undisclosed, arising at any time prior to and including my
employment termination date with respect to any claims relating to my employment
and the termination of my employment, including but not limited to, claims
pursuant to any federal, state or local law relating to employment, including,
but not limited to, discrimination claims, claims under the California Fair
Employment and Housing Act, and the Federal Age Discrimination in Employment Act
of 1967, as amended ("ADEA"), or claims for wrongful termination, breach of the
covenant of good faith, contract claims, tort claims, and wage or benefit
claims, including but not limited to, claims for salary, bonuses, commissions,
stock, stock options, vacation pay, fringe benefits, severance pay or any form
of compensation.
I acknowledge that, among other rights, I am waiving and releasing any rights
I may have under ADEA, that this waiver and release is knowing and voluntary,
and that the consideration given for this waiver and release is in addition to
anything of value to which I was already entitled as an employee of the Company.
I further acknowledge that I have been advised, as required by the Older Workers
Benefit Protection Act, that: (a) the waiver and release granted herein does
not relate to claims which may arise after this agreement is executed; (b) I
have the right to consult with an attorney prior to executing this agreement
(although I may choose voluntarily not to do so); (c) I have twenty-one (21)
days from the date I receive this agreement, in which to consider this agreement
(although I may choose voluntarily to execute this agreement earlier); (d) I
have seven (7) days following the execution of this agreement to revoke my
consent to the agreement; and (e) this agreement shall not be effective until
the seven (7) day revocation period has expired.
Date: __________________ By: Xxxx Xxxxxxxxx
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EXHIBIT B
STOCK OPTIONS
Grant Date Type Shares Price Shares Exercised Outstanding Outstanding
Granted Un-Vested Exercisable
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30-Aug-94 ISO 50,000 8.375 0 7,217 42,713
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11-Jul-95 ISO 20,000 9.750 0 7,418 12,512
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1-Jul-96 ISO 40,000 3.813 0 24,990 15,050
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8-Jul-97 ISO 30,000 6.875 0 26,250 3,750
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8-Jul-97 ISO 20,000 6.875 0 17,472 2,521
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6-Jan-98 ISO 50,000 5.375 0 50,000 0
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EXHIBIT C
INVENTIONS