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Exhibit 10.64
EMPLOYMENT AGREEMENT
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Employment Agreement dated as of November 6, 1996 between Seragen, Inc.(the
"Company"), having an office at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
and ▇▇▇▇ Prior ("Prior"), presently residing at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇.
1. Term Of Employment.
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Subject to the terms and conditions of this Agreement, the Company hereby
employs Prior, and Prior hereby accepts employment by the Company, commencing on
November 6, 1996 (the "Effective Date") and continuing until the date Prior is
terminated pursuant to Paragraph 4 of this Agreement, except that any rights or
obligations arising before such date (including the right to future severance
payments) shall remain in full force and effect after such date.
2. Duties.
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(a) GENERAL. Effective as of the Effective Date, Prior is hereby
engaged to serve as Chief Executive Officer of the Company, with principal
responsibility for the day-to-day operation, decision making and management of
the Company. Prior shall report solely to the Board of Directors, shall perform
such executive duties as may be assigned to the Chief Executive Officer by the
Company's By-Laws or as may be assigned to him from time to time by the
Company's Board of Directors and shall possess such other titles, without
additional compensation, as may be assigned or granted to him from time to time
by the Company's Board of Directors. The Company shall use its best efforts to
solicit and encourage shareholders of the Company to appoint or elect Prior to
be a director of the Company during the term of his employment, and the Board
shall elect Prior to be the Chairman of the Board and a member of
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any Executive Committee or other Committee of the Board (other than Audit or
Compensation), and Prior agrees to serve in such capacities without additional
compensation. Prior agrees to devote his full business time, energy and skill to
the Company's affairs except as may be otherwise permitted pursuant to Paragraph
2(e) below, and shall at all times act with due regard to the best interests of
the Company.
(b) EXCLUSIVE MANAGEMENT OF COMPANY'S BUSINESS. Subject only to the
direction and control of the Company's Board of Directors, Prior shall perform
all services and duties necessary or appropriate for the management of the
Company's business and that of its subsidiaries. The By-Laws of the Company
shall be amended as necessary to state that (i) the president of the Company
shall report to and be subordinate to the Chief Executive Officer, and (ii) if
the By-Laws provide for a Vice Chairman of the Board of Directors the Vice
Chairman shall have no management authority.
(c) NO CHANGE IN DUTIES OR AUTHORITY. Beginning as of the Effective
Date and thereafter throughout the term of his employment hereunder, Prior shall
be elected to, and shall continue in, the offices denominated that of Chairman
of the Board and Chief Executive Officer of the Company in the By-Laws or other
constitutional instruments of the Company, and shall continue exclusively to
perform on behalf of the Company substantially the same functions, and
exclusively to have substantially the same authority, duties and
responsibilities as on the Effective Date.
(d) SUPPORT FACILITIES. The Company shall provide Prior throughout the
term of his employment with support facilities (including office facilities and
secretarial services) that
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are appropriate to his offices and duties as Chief Executive Officer of the
Company and Chairman of the Board of Directors.
(e) OUTSIDE COMMITMENTS. Prior represents and agrees that (i) he is
not currently employed by, nor sits on the Board of Directors of, any other
company or institution; and (ii) during his employment by the Company, he shall
not accept employment by, serve as a consultant to, or agree to sit on the Board
of Directors of, any company or other institution except as provided in the next
sentence or with the prior consent of the Board of Directors of the Company,
which shall not be unreasonably denied. Prior may during his employment with the
Company without the consent of the Board of Directors act as a trustee of any
institution, and sit on the Board of Directors of any company that is not
involved in producing and/or selling fusion toxins, except that until November
1, 1997 Prior will not accept appointment as a director of any for-profit
company without the written consent of the Company, which shall not be
unreasonably denied.
3. COMPENSATION AND OTHER BENEFITS. For all services to be rendered by
Prior and all covenants undertaken by him pursuant to this Agreement, the
Company shall pay and Prior shall accept the compensation set forth in this
Paragraph 3.
(a) SIGNING BONUS. Upon execution of this Agreement the Company shall
pay Prior a signing bonus of One Hundred Thousand ($100,000.00) Dollars.
(b) SALARY. The Company shall pay Prior a salary at the rate of Three
Hundred Fifty Thousand ($350,000) Dollars per annum during the term of his
employment hereunder, payable in accordance with the Company's normal payroll
practices for its senior management. At such time as the Company achieves either
a market capitalization in excess of
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Two Hundred Fifty Million ($250,000,000) Dollars or an operating profit for any
fiscal quarter, the Company and Prior shall negotiate in good faith salary
increases and/or bonus schedules appropriate for the Chief Executive Officer of
a company operating at that level of financial success. In addition, the Company
may, at any time, in the discretion of its Board of Directors increase, but not
decrease, Prior's base salary based upon merit as a result of positive reviews
of Prior's performance by the Board of Directors.
(c) STOCK OPTIONS. The Company shall within 30 days of the date of
execution of this Agreement (the "Effective Date") grant Prior stock options
under the Seragen, Inc. 1992 Long Term Incentive Plan, a true copy of which is
attached as Exhibit D, (the "Plan") to purchase sufficient shares of the
Company's common stock, par value $0.01 per share ("Common Stock"), to equal
8.5% of the then outstanding Common Stock, measured on a Fully Diluted Basis (as
the term is defined in Paragraph 4), at the then fair market value per share of
Common Stock. To the extent permitted by federal income tax law, options issued
under the Plan to Prior shall be "incentive stock options". The stock options
shall be evidenced by an Incentive Stock Option Agreement and, if required, a
Non-Qualified Stock Option Agreement substantially in the form of Exhibits A and
B to this Agreement (the "Stock Option Agreements") except as expressly provided
otherwise herein. For the purposes of issuing Non-Qualified Stock Options
pursuant to this Agreement, the present fair market value per share of Common
Stock shall be the average bid price for a share of Common Stock for the ten
(10) consecutive trading day period ending on the Effective Date as reported on
the NASDAQ National Market. Both Stock Option Agreements shall provide that: (i)
the options issued thereunder shall vest, i.e., become exercisable, 2.0833% on
the Effective Date and on the first
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day of each calendar month thereafter so that Prior shall be fully (100%) vested
on the first day of the month immediately before the fourth anniversary of the
Effective Date; (ii) upon a Change in Ownership (as the term is defined in
Paragraph 4) in place of the vesting schedule provided in clause "i" above the
options shall vest retroactively as of the Effective Date 25% on the Effective
Date and an additional 2.0833% on the first day of each calendar month
thereafter so that Prior shall be fully (100%) vested on the first day of the
month immediately following the third anniversary of the Effective Date; (iii)
upon the termination by the Company of Prior's employment without Just Cause or
Prior's termination for Good Reason (as the terms are defined in Paragraph 4),
in place of the vesting schedules provided in clauses "i" and "ii" above the
options shall vest retroactively as of the Effective Date 25% on the Effective
Date and at the accelerated rate of an additional 3.125% on the first day of
each calendar month thereafter so that Prior shall be fully (100%) vested on the
first day of the month immediately following the second anniversary of the
Effective Date; (iv) options issued shall, to the extent vested, be fully
exercisable until the tenth (10th) anniversary of the Effective Date; (v) the
options shall be exercisable in accordance with the terms of the Plan, including
the right to pay the option exercise price in whole or in part by surrendering
shares of the Company's common stock with an aggregate fair market value equal
to the option exercise price or surrendering vested options with an aggregate
stock option spread equal to the option exercise price, and shall provide that
stock certificates shall be issued outright and free of escrow no later than
three (3) days after the date of exercise; (vi) stock certificates issued
pursuant to the exercise of an option shall not include any legends or be
subject to any transfer restrictions, except for restrictions required by
Section 16 of the Securities Act of 1933, as amended, and the rules and
regulations promulgated
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thereunder; (vii) the Company shall not terminate any option issued to Prior
upon a "Change in Control" as defined in the Plan without Prior's written
approval; (viii) in the event that before a Target Equity Financing (as defined
in Paragraph 4) the Company grants options or other equity interests to
management, employees, directors or consultants or the Company sells shares of
its Common Stock or any equity securities or securities convertible or
exchangeable into any equity securities of the Company, as part of a plan or
series of plans of financing, or the number of shares of Common Stock
outstanding on a Fully Diluted Basis increases as a result of a change in the
conversion ratio of any class of securities convertible or exchangeable into any
equity securities of the Company, the Company shall grant Prior additional stock
options under the Plan covering that number of shares of Common Stock necessary
to cause Prior's proportionate holdings of the outstanding Common Stock, on a
Fully Diluted Basis, immediately after the grant or sale of such options, shares
or other equity interests to equal his proportionate holdings of the outstanding
Common Stock, on a Fully Diluted Basis, immediately prior to such financing but
not to exceed 8-1/2% of the Common Stock on a Fully Diluted Basis; (ix) all
additional stock options shall have the same terms and conditions, and shall
vest as though they were granted on the same date as the initial options that
are required to be issued within 30 days of the Effective Date; (x) each option
shall include all other rights and benefits under the Plan, including Section 11
of the Plan (regarding accelerated vesting on Change in Control); and (xi) the
Company has registered, or within 30 days of the Effective Date shall at its own
expense register, under the Securities Act of 1933 all shares issued or to be
issued pursuant to the exercise of the stock options on Form S-8, the obligation
to maintain such registration to continue following Prior's termination of
employment. Prior agrees that, if requested by an
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underwriter of the Company's securities, Prior will comply with any reasonable
customary lockup periods in connection with the Company's offering of securities
provided that all other executive officers and directors of the Company also
must comply with such restrictions and provided that no such lock-up periods
shall exceed 180 days. The Plan shall be amended as necessary to provide or
permit the issuance of the options described in this Paragraph 3(c).
The Board shall in good faith take all necessary action to effect the terms
of this Agreement and to register the underlying shares of Common Stock under
applicable securities laws as provided herein.
(d) COMMUTING AND LIVING EXPENSE REIMBURSEMENT. The Company shall
within 10 days of receipt of reasonable substantiation reimburse Prior for (i)
the reasonable costs of moving Prior's personal goods from Prior's present New
Jersey apartment to a new apartment to be procured by him in the vicinity of the
Company's principal offices located in Hopkinton, Massachusetts, (ii) the lease
cancellation costs of his New Jersey apartment (approximately Twenty Seven
Hundred ($2,700.00) Dollars), (iii) all reasonable costs incurred by him, up to
a maximum of Four Thousand Five Hundred ($4,500.00) Dollars per month, in
connection with maintaining his residence, automobile parking space and aircraft
hangar space in Massachusetts (or any other place of business to which the
Company requires Prior to relocate), in order to carry out his duties and
responsibilities under this Agreement and weekly travel between such residence
and the location of his family residence located in Darnestown, Maryland, plus
(iv) any federal, state or local income or payroll taxes incurred by Prior with
respect to all payments made under this subparagraph (d), including this clause
(d)(iv), so that Prior shall be made whole on an after tax basis. In the event
Prior is involuntarily terminated or voluntarily
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terminates for Good Reason, then the Company shall immediately reimburse him on
a lump sum basis for the total of any remaining obligations under the new
apartment and hangar leases, subject to one year lease term limits. In the event
of a permanent relocation of Prior's family to Massachusetts or to any other
company-requested location away from his present Maryland family home (while
still in the Company's employ), then the commuting benefits under clauses
(d)(iii) and (d)(iv) above shall thereafter be replaced by a one time relocation
package as usual and customary for chief executive officers.
(e) VACATION AND EMPLOYEE BENEFITS. Prior shall be entitled to paid
vacations in accordance with the policies of the Company from time to time in
effect, subject to a minimum of four (4) weeks per year. Within 15 days after
each anniversary of the Effective Date the Company shall pay Prior for any
vacation not taken during the prior twelve (12) months. Prior shall be eligible
to participate in any pension, profit sharing or similar plan and any health,
hospitalization, medical, accident, disability, sick leave, supplementary income
benefit, life insurance or other similar benefit plan or program of the Company
now existing or hereafter established and available to the Company's employees
generally or to key employees as a group to the extent his age, health, and
other qualifications make him eligible to participate. Furthermore, Prior shall
be entitled to such additional benefits as may be granted to him from time to
time by the Board of Directors of the Company.
(f) TERMINATION AND SEVERANCE. Upon the giving of notice of the
termination of Prior's employment for any reason, the Company shall pay Prior
for up to four (4) weeks of any unused accrued vacation time together with all
salary and other benefits accrued through the date of termination. If either
Prior shall voluntarily terminate his employment for Good Reason
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or Prior's employment hereunder is terminated by the Company without Just Cause,
the Company shall provide Prior with the following severance benefits:
(i) upon the date of the giving of notice of such termination the
Company shall pay Prior as termination and severance pay in a lump sum an amount
equal to one year's salary based on his then salary rate; and
(ii) the Company will continue to provide Prior and his family
without cost or charge of any nature with the same medical and dental insurance
coverage provided to them prior to Prior's termination for the maximum period
provided with respect to group health plan benefits subject to "COBRA"
continuation coverage requirements (provided all applicable deductible and
co-payment amounts shall apply).
Upon the Company giving Prior a notice of termination the Company
shall immediately pay Prior all compensation due to him through the end of the
notice period, including accrued vacation and severance pay. After the Company
or Prior has given to the other party a notice of termination (other than a
Termination for Just Cause), the Company may request in writing that Prior
vacate his office within 3 business days; in that event, Prior shall vacate his
office within the 3 day period and shall not be obligated to perform any
additional services thereafter.
(g) IRREVOCABLE LETTER OF CREDIT. Within 30 days of execution of this
Agreement the Company shall open with a bank an irrevocable letter of credit
(the "ILC") in the amount equal to One Hundred Seventy Five Thousand
($175,000.00) Dollars, naming Prior as beneficiary as partial security for the
payment of severance if Prior shall become entitled to severance benefits under
Paragraph 3(f) of this Agreement and the Company fails to pay in full
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Prior's severance benefits when due. The ILC shall have an initial term of three
years. If near the end of the initial term or any subsequent term of the ILC,
Prior determines in his sole judgment that substantial risks continue to exist
as to the Company's ability to meet its severance obligation after the
expiration of the then term of the ILC, then the Company shall renew the ILC for
an additional one year term. The ILC shall provide for payment upon delivery to
the issuer thereof of a written representation from Prior of Prior's entitlement
to a payment, the amount of the payment and the facts on which Prior bases his
entitlement to the payment and a copy of the written notice of termination of
employment given by Prior or by the Company. A copy of such written
representation shall be delivered to the Company simultaneously with its
delivery to the issuer. The payment of such amount shall be a credit against any
other severance payments due to Prior hereunder.
(h) DEATH OR DISABILITY. If Prior's employment is terminated by death
or disability, the Company shall pay to Prior's estate or to Prior, as the case
may be, the excess, if any, of his then annual salary amount over the amounts
received (i) under any employee life insurance policy maintained by the Company
payable to the beneficiary designated by Prior; or (ii) during the one year
period following such termination under any employee disability policy
maintained by the Company. The Company shall calculate and pay any amounts due
pursuant to clause (ii) herein no less frequently than semi-monthly. For the
purposes of this Paragraph, the word "disability" shall have the same meaning as
in the Company's then-applicable long-term disability policy.
(i) ASSET VALUE REALIZATION BONUS. The Company and its shareholders
presently intend to develop the business of the Company over the long term
through the efforts
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of Prior and the other company employees, which is intended to result in a
substantial increase in the value of the Common Stock and of the options issued
to Prior under Paragraph 3(c) above. If, however, there is a Change of Ownership
of the Company (as defined in Paragraph 4) then the Company shall pay Prior a
bonus (the "Asset Value Realization Bonus") equal to eight and one half (8 1/2%)
percent of the "Net Proceeds" for any acquisition that is part of the Change of
Ownership "Effected" during Prior's employment or at any time before the first
anniversary of Prior's termination of employment, which amount shall be reduced
(but not below zero) by the "Option Stock Gain" recognized by Prior as a result
of the sale by him of Common Stock acquired as a result of exercise of options
issued to him pursuant to subparagraph 3(c) above. The Company shall pay the
Asset Value Realization Bonus, or any increase in the Asset Value Realization
Bonus, on or before the closing of any acquisition that is part of a Change in
Ownership. If any part of the Net Proceeds is payable after closing (the
"Deferred Payments"), however, then the Company may defer the payment of the
part of the Asset Value Realization Bonus allocable to the Deferred Payments
until receipt of the Deferred Payments, provided the payor of the Deferred
Payments has agreed in writing to pay directly to Prior the Asset Value
Realization Bonus allocable to the Deferred Payments as and when such Deferred
Payments are made to the Company or its shareholders. "Net Proceeds" shall mean
the total cash plus any property received directly or indirectly by the Company
or its shareholders in kind with respect to all acquisitions constituting the
Change in Ownership, reduced by all investment banking fees, brokerage fees,
appraisal fees, and other professional expenses directly attributable to the
acquisitions. A transaction shall be "Effected" by a certain date if it is
consummated by that date or is the subject matter of an agreement or memorandum
of intent executed by that date and
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subsequently consummated. "Option Stock Gain" shall mean the difference between
the net proceeds from Prior's sale of Common Stock and the net cost to Prior to
exercise the options for such stock on the assumption that Prior has, in fact,
exercised all vested options and sold all Common Stock received on such exercise
as of the date of the Change in Ownership; Prior shall for this purpose be
deemed to have sold all Common Stock that (i) he owns at the time of the Change
of Ownership or could then own if he exercised all vested options, (ii) he is
permitted to sell, and (iii) in the event of a merger or sale of securities, he
has received an offer to purchase, and is permitted to sell, on the same terms
and conditions as those of the transactions that constitute the Change in
Ownership.
(j) CO-SALE RIGHT AND PAYMENT OF ASSET VALUE REALIZATION BONUS.
Simultaneously with the execution and delivery of this Agreement the Company and
certain principal shareholders shall execute and deliver to Prior an agreement
in substantially the form attached as Exhibit C.
(k) CAPITALIZED TERMS. All capitalized terms shall have the meanings
provided in Paragraph 4 unless provided elsewhere.
(l) EMPLOYMENT. All compensation payable and other benefits provided
under this Paragraph 3 shall be subject to customary withholding for income,
F.I.C.A. and other employment taxes. The value of stock issued pursuant to the
exercise of a non-qualified stock option or incentive stock option shall be
measured solely in accordance with IRS rules and regulations.
4. Termination Of Employment.
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(a) TERMINATION BY COMPANY. The Company may terminate Prior's
employment hereunder at any time without Just Cause, effective upon not less
than thirty (30) day's prior written notice. The Company may terminate Prior's
employment hereunder with Just Cause immediately without notice. If the
termination is for Just Cause, the Company shall provide Prior as soon as
practicable with a written explanation of the facts on which the termination is
based. For the purposes of this Agreement, the Company shall be deemed to have
terminated Prior without Just Cause if (i) Prior shall have notified the Company
in writing that he has Good Reason, as defined below, to terminate employment
with the Company, (ii) the Company shall not have eliminated such Good Reason
within thirty (30) days of such notice, and (iii) Prior shall have given notice
of termination of his employment more than thirty (30) days after delivery of
such notice of Good Reason and less than sixty (60) days after delivery of such
notice of Good Reason.
(b) TERMINATION BY PRIOR. Prior may terminate his employment hereunder
at any time upon not less than thirty (30) days' prior written notice. Upon
Prior's voluntary termination of employment without Good Cause pursuant to this
subparagraph 4(b), Prior shall not be entitled to the severance benefits
described in clauses 3(f)(i) and 3(f)(ii) above and shall take all necessary
acts to permit the Company to terminate the ILC.
(c) DISABILITY AND DEATH. The Company may determine, in its sole and
absolute discretion, that Prior is unable to carry out the functions of his
office as a result of physical or mental sickness or disability. Upon such
determination the Company may terminate Prior's employment upon not less than
thirty (30) day's prior written notice. For all purposes
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of this Agreement termination as a result of Prior's death or disability shall
be treated as a termination without Just Cause.
(d) JUST CAUSE. For the purposes of this Agreement, "Just Cause" shall
mean:
(1) the commission by Prior of a willful act of material fraud in
the performance of his duties on behalf of the Company; or
(2) the conviction or entry of a plea of guilty or nolo
contendere of Prior for commission of a felony or any crime involving moral
turpitude; or
(3) the breach by Prior of any material term of this Agreement or
the continuing willful failure of Prior to perform his material duties to the
Company (other than any such failure resulting from Prior's incapacity due to
physical or mental illness) after written notice thereof (specifying the
particulars thereof in reasonable detail) and a reasonable opportunity to cure
such breach or failure are given to Prior by the Board of Directors of the
Company. No notice, however, shall be due for a breach or failure to perform
that cannot be cured or for any act described in clauses (1) or (2).
For purposes of this subparagraph 4(d), no act, or failure to act, on
Prior's part shall be considered "willful" unless done, or omitted to be done,
by him not in good faith and without reasonable belief that his action or
omission was in the best interests of the Company.
(e) GOOD REASON. For the purposes of this Agreement, "Good Reason"
shall mean:
(i) the Board of Directors refuses to accept a bona fide and
legitimate offer of equity or debt financing brought to it with Prior's good
faith recommendation for approval;
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(ii) the Board of Directors refuses to expeditiously approve any
significant spending cuts or major operational changes proposed by Prior;
(iii) the Company shall have materially breached its obligations
under this Agreement, and such breach is not cured within twenty (20) days of
Prior's sending a written notice of such breach;
(iv) the Company shall have incurred a Change in Ownership;
(v) the Company shall have incurred a Change in Control;
(vi) the Company shall be Insolvent;
(vii) Prior shall at any time during his employment and more than
30 days after the Effective Date not be a member of the Board of Directors, the
Chairman of the Board of Directors or a member of any Executive Committee or
other Committee (other than Audit and Compensation), unless Prior shall have
resigned from or failed to accept such position(s);
(viii) the Company shall have acted in bad faith to cause Prior
to resign from the Company;
(ix) there shall be more than nine (9) members of the Board of
Directors of the Company;
(x) the Stock Option Agreements required under subparagraph 3(c)
and the agreement described in subparagraph 3(j) and attached as Exhibit C shall
not have been properly issued and executed in full and delivered to Prior within
30 days of the execution of this Agreement; or
(xi) the breach by any party other than Prior of any material
term of the agreement with the principal shareholders described in Paragraph
3(j) above, after written
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notice thereof (specifying the particulars thereof in reasonable detail) and a
reasonable opportunity to cure such breach or failure are given to the breaching
party by Prior.
Good Reason shall not arise in any situation in which Prior shall have
given written consent to the act or failure to act of the Company.
(f) TARGET EQUITY FINANCING. Target Equity Financing shall mean all
proceeds of at least Twenty Million ($20,000,000) Dollars from the sale or
issuance of stock of the Company or of debt securities of the Company with
conversion rights, other than (i) stock or debt securities sold or issued to a
shareholder and/or affiliated investment entities who as of the Effective Date
collectively own at least 1% of the Common Stock as measured on a Fully Diluted
Basis; or (ii) stock issued as a result of the exercise of options presently
outstanding or issued pursuant to the Plan.
(g) INSOLVENCY. For the purposes of this Agreement, the Company shall
be Insolvent if (i) it commences any case, proceeding or other action (A) under
the Federal Bankruptcy Code seeking to have an order for relief entered with
respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or any
substantial part of its property, or the Company shall make a general assignment
for the benefit of its creditors, or (ii) there shall be commenced against the
Company any case, proceeding or other action of a nature referred to in clause
(i) above, which case, proceeding or other action results in the entry of an
order for relief from which no stay has been granted within sixty (60) days, or,
(iii) for a period in excess of sixty (60) days, the Company shall generally
not, or shall
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be unable to, pay its debts as they become due or shall admit in writing its
inability to pay its debts.
(h) CHANGE IN OWNERSHIP. For purposes of this Agreement, a "Change in
Ownership" of the Company shall mean (i) the acquisition by any "person" or
group of "persons" (as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934 ("Exchange Act")), whether by way of merger, sale of assets, stock
purchase, tender offer or otherwise, of (A) all or substantially all of the
equity securities of the Company or (B) all or substantially all of the
operating assets of the Company and its subsidiaries taken as a whole, or (ii)
the sale or out-licensing after the date hereof of the majority (in value) of
the technology assets of the Company and its subsidiaries taken as a whole.
(i) CHANGE IN CONTROL. For purposes of this Agreement, a "Change in
Control" of the Company shall have the same meaning as provided by Section 11(b)
of the Seragen, Inc. 1992 Long Term Incentive Plan as in effect on the date
hereof.
(j) FULLY DILUTED BASIS. For purposes of this Agreement, "Fully
Diluted Basis" shall mean that all shares of Common Stock issuable upon exercise
of options outstanding under the Plan or any other stock option plan (including
the options granted to Prior pursuant to this Agreement) and all shares of
Common Stock issuable on exercise of all other outstanding options, warrants,
conversion rights or other rights issued by the Company to acquire equity
securities shall be deemed to be outstanding.
5. Confidentiality.
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a. Prior acknowledges that during the course of his employment with
the Company he will have access to and may obtain, develop or learn of
Confidential Information (as defined below).
b. Prior agrees that while employed by the Company and thereafter he
shall hold such Confidential Information in strictest confidence and that he
shall not at any time, during or after the conclusion of his employment with the
Company, or in any manner, either directly or indirectly, use (for his own
benefit or otherwise), divulge, disclose or communicate to any unauthorized
person, firm or corporation in any manner whatsoever any Confidential
Information, except that for Confidential Information not of a technological or
financial nature, this restriction shall terminate three (3) years after the
termination of Prior's employment with the Company.
c. Under this Agreement, the term "Confidential Information" shall
mean information and know-how, whether or not in writing, regarding diphtheria
fusion toxins or any other technology owned by the Company before Prior's
termination or utilizing technologies utilized in products being developed,
produced, marketed or sold by the Company before Prior's termination, and
information regarding the Company's business or financial affairs other than any
information that (i) is known by Prior or generally known within the industry
before the date of this Agreement or becomes common knowledge within the
industry thereafter; or (ii) is disclosed to Prior by a third party which did
not obtain the information, directly or indirectly, under an obligation of
confidence to the Company; or (iii) Prior is required to disclose by enforceable
legal process.
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d. While an employee of the Company and thereafter, Prior (i) shall
use, divulge, disclose or communicate Confidential Information only in the scope
of his employment with the Company and only as expressly directed or permitted
by the Company, and (ii) shall not for whatever reason, use, divulge, disclose,
or communicate for any purpose any Confidential Information, except that for
Confidential Information not of a technological or financial nature, this
restriction shall terminate three (3) years after the termination of Prior's
employment with the Company.
e. While employed by the Company and thereafter Prior shall not make
or use any notes or memoranda relating to any Confidential Information except
for the benefit of the Company, and will, at the Company's request, return each
original and every copy of any and all notes, memoranda, correspondence,
diagrams or other records, in written or other form, that he may at any time
have within his possession or control that contain any Confidential Information.
6. NON-COMPETITION. Prior acknowledges and recognizes the highly
competitive nature of the business conducted by the Company. Accordingly, Prior
agrees that, in consideration of the premises contained herein, he shall not,
for his own benefit or for the benefit of any other person or entity, while
employed by the Company and for a one-year period thereafter:
(1) become an employer, officer, director, owner, employee, partner,
consultant or other participant in any entity, or assist any
person, which competes with or which is about to compete with the
Company in the business of developing, manufacturing, marketing
or selling
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pharmaceutical products based upon diphtheria fusion toxins or
any other technology owned by the Company before Prior's
termination (a "Competitive Business"); or
(2) own any interest in any entity which engages, or is about to
engage in a Competitive Business; provided, however, that Prior
shall have the right to acquire as a passive investor an equity
interest of not more than one percent (1%) of the issued and
outstanding shares of any publicly traded corporation's stock.
7. COMPANY RIGHT TO INVENTIONS. Prior shall promptly disclose, grant and
assign to the Company for its sole use and benefit any and all inventions,
improvements, technical information and suggestions relating in any way to
diphtheria fusion toxins or other technology created by the Company, which he
may develop or acquire while employed by the Company (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:
a. Prior 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; and
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b. Prior shall render to the Company at its expense (including a
reasonable payment for the time involved in case he is not then in its 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 of interferences which may be declared involving any of
said applications, patents or copyrights and in any litigation in which the
Company may be involved relating to any such patents, inventions, improvements
or technical information.
8. BREACH. In the event of breach by Prior of any provision of Paragraphs
5, 6 and 7 hereof, the remedy at law will be deemed inadequate, and the Company
will be entitled, in addition to any other remedies available by law, to
appropriate injunctive and other relief. Should any provision hereof be adjudged
to any extent invalid by any competent tribunal, such provision will be deemed
modified to the extent necessary to make it enforceable.
9. INDEMNITY. To the extent permitted by law, the Company shall indemnify
Prior and hold him harmless for all acts or decisions made by him in good faith
while performing services for the Company or any designee of the Company and
shall pay or reimburse Prior all expenses as and when incurred, including
attorney's fees, actually and necessarily incurred by Prior in connection with
the defense of any action, suit or proceeding to which Prior may be made a party
by reason of his performing services hereunder and in connection with any
related appeal including the cost of court settlements. The Company shall also
obtain and maintain during the term of this Agreement coverage for him under an
insurance policy reasonably acceptable to Prior covering the other officers and
directors of the Company against lawsuits. In the event of any change in
legislation restricting the ability of the Company to provide indemnification to
Prior, then the Company shall provide Prior with a minimum of Five Million
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($5,000,000.00) Dollars in prepaid personal liability insurance coverage for all
claims arising during his employment by the Company, whether made during or
after such period. In any event, the Company shall during Prior's employment and
for three (3) years thereafter maintain in force a D&O policy in the amount of
at least Five Million ($5,000,000.00) Dollars at no cost to Prior.
10. NOTICES. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be deemed to have
been given when sent by facsimile or when mailed at any general or branch United
States Post Office enclosed in a certified postpaid envelope and addressed to
the address of the respective party stated below or to such changed address as
the party may have fixed by notice:
To the Company: Seragen, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
To Prior: ▇▇. ▇▇▇▇ Prior
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
11. LEGAL FEES. The Company shall pay Prior's reasonable legal fees
incurred with respect to the negotiation and preparation of this Agreement.
12. MISCELLANEOUS.
(a) CONSTRUCTION. This Agreement shall be construed, interpreted and
governed by the laws of the Commonwealth of Massachusetts without regard to the
conflicts of law provisions thereof.
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(b) BINDING AGREEMENT; ASSIGNABILITY. This Agreement shall be binding
upon and inure to the benefit of Prior, his legal representatives, heirs and
distributees, and the Company, its successors and assigns; provided, however,
that because this Agreement is a personal service contract, Prior shall not
assign any of his employment duties or obligations hereunder and any purported
assignment shall be null and void AB INITIO.
(c) PREVIOUS AGREEMENTS. This Agreement supersedes all other
agreements between the Company and Prior.
(d) ENTIRE AGREEMENT. This Agreement, including all agreements
referenced in this Agreement, contains the entire agreement of the parties with
respect to its subject matter, and no waiver, modification or change of any of
its provisions shall be valid unless in writing and signed by the party against
whom such claimed waiver, modification or change is sought to be enforced.
(e) WAIVER. The waiver of any breach of any duty, term or condition of
this Agreement shall not be deemed to constitute a waiver of any preceding or
succeeding breach of the same or of any other duty, term or condition of this
Agreement.
(f) HEADINGS. The headings of the Paragraphs and subparagraphs of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part hereof or to affect the meaning thereof.
(g) SURVIVAL OF CERTAIN PROVISIONS. The provisions of Paragraph 5, 6,
7 and 9 shall survive termination of this Agreement.
(h) REPRESENTATIONS AND WARRANTIES OF PRIOR. Prior represents and
warrants that his performance of all of the terms of this Agreement and as an
employee of the Company
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does not and will not breach any non-compete agreement or agreement to keep in
confidence proprietary information, knowledge, or data acquired by him in
confidence or in trust from a third party prior to his employment with the
Company.
(I) REPRESENTATIONS AND WARRANTIES OF COMPANY. A. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and is duly qualified to do business in the
Commonwealth of Massachusetts and has full power and authority to operate its
businesses as now operated and to perform this Employment Agreement in
accordance with its terms.
B. The execution and delivery of this Employment Agreement to Prior
and the carrying out of the provisions hereof have been duly authorized by the
Board of Directors of the Company, and the Company shall furnish Prior duly
certified copies of the authorizing resolutions of the Company's Board of
Directors.
C. This Employment Agreement shall be, when duly executed and
delivered, a legal and binding obligation of Company, enforceable in accordance
with its terms.
D. On or before the Effective Date the Company shall have obtained a
$5,000,000 D&O liability insurance policy naming Prior as an insured party and
such policy shall be in full force and effect.
E. Neither the execution nor delivery of this Employment Agreement,
nor the compliance with its terms, shall constitute a violation or breach of the
Certificate of Incorporation, as amended to date, or of the By-laws, as
currently in effect, of the Company or of any agreement between the Company and
any other party.
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(j) SHAREHOLDERS APPROVAL. The execution by the Company of this
Agreement and each other act of the Company required under this Agreement shall
be authorized by the Company's shareholders as soon as practicable if such
execution or other act of the Company is either required by applicable law.
(k) ARBITRATION. Except as provided in Paragraph 8 above, any claim or
controversy arising out of or relating to this Agreement or the breach thereof
shall be settled by arbitration in accordance with the laws of the Commonwealth
of Massachusetts. Such arbitration shall be conducted in the City of Boston in
accordance with the rules then-existing of the American Arbitration Association
for commercial disputes. In any such arbitration each party shall have the right
to demand (i) a written statement setting forth, for each cause of action, a
detailed statement of the facts on which it is based and a description of how
the amount demanded was calculated; and (2) to demand inspection and copying of
relevant documents and things in the possession or control of any of the other
parties, prior to the arbitration hearing. The arbitrator shall have authority
to order compliance with, and shall otherwise supervise, such demands for
written statements and/or for pre-hearing inspection and copying. Judgment upon
the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the day and year first above written.
--------------------------
----------------------------------- ▇▇▇▇ PRIOR
Witness
Seragen, Inc.
[SEAL]
Attest: By:
--------------------------
----------------------------------- ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Secretary President and Chief
Technology Officer
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