10Q Q1 2001 EXH10.152



                                                          Exhibit 10.152



EMPLOYMENT AGREEMENT

This Employment Agreement ("Agreement") is entered into
as of this 23rd day of January, 2001 (the "Effective Date"), by and between
Paul Hastings ("Executive") and Axys Pharmaceuticals, Inc., a
Delaware corporation (the "Company").

Whereas, the Company desires to employ Executive to
provide personal services to the Company, and wishes to provide Executive with
certain compensation and benefits in return for such services; and

Whereas, Executive wishes to be employed by the
Company and provide personal services to the Company in return for certain
compensation and benefits.

Now, Therefore, in consideration of the mutual
promises and covenants contained herein, it is hereby agreed by and between the
parties hereto as follows:

1.Employment By The Company.
1.1The Company agrees to employ Executive in
the position of President and Chief Executive Officer of the Company. During
Executive's employment with the Company, Executive will devote his best efforts
and substantially all of his business time and attention to the business of the
Company.

1.2Executive shall serve in an executive capacity
and shall perform such duties as are customarily associated with his then
current titles, consistent with the Bylaws of the Company and as required by the
Company's Board of Directors (the "Board").

1.3The employment relationship between the parties
shall also be governed by the general employment policies and practices of the
Company, including those relating to protection of confidential information and
assignment of inventions, except that when the terms of this Agreement differ
from or are in conflict with the Company's general employment policies or
practices, this Agreement shall control.

1.4The Company and Executive each acknowledge that
either party has the right to terminate Executive's employment with the Company
at any time for any reason whatsoever, with or without Cause or advance notice.
This at-will employment relationship cannot be changed except in a writing
signed by both Executive and a majority of the Board.



2.Compensation.
2.1Salary. Executive shall receive, for services to
be rendered under this Agreement, an annualized base salary ("Base Salary")
equal to $400,000. Such Base Salary shall commence as of the Effective Date, and
shall be payable in installments consistent with the Company's payroll policies.
Executive's Base Salary shall be reviewed at least annually by the Board, and in
the Board's sole discretion, may be increased at any time.

2.2Termination.

(a)In the event Executive's employment
terminates for any reason other than death, disability, a termination upon a
Change of Control, a voluntary termination not for Good Reason, or a termination
for Cause, upon execution of an effective release in the form attached hereto as
Exhibit A: (i) Executive shall receive twelve (12) monthly payments each equal
in amount to one-twelfth (1/12th) of the sum of (x) the full amount
of one year's Target Bonus (at the level in effect at that time) and (y) his
then Base Salary; (ii) additional Stock Options (as defined below) shall,
immediately prior to Executive's termination of employment, become vested with
respect to that number of shares which would have become vested had Executive
remained in continuous service with the Company for an additional twelve (12)
months following the date of Executive's termination of employment; and (iii)
for a period of twelve (12) months (or until comparable benefits coverage
becomes available to Executive, if sooner), the Company shall pay the costs
associated with the continuation of Executive's medical, dental, and vision
benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA") as in effect immediately prior to Executive's termination of
employment.

(b)For purposes of this Agreement, "Good Reason"
means that any of the following are undertaken without Executive's express
written consent: (i) the assignment to Executive of any duties or
responsibilities which result in any diminution or adverse change of Executive's
position, status or circumstances of employment; (ii) a reduction by the Company
in Executive's Base Salary; (iii) the taking of any action by the Company which
would adversely affect Executive's participation in, or reduce Executive's
benefits under, the Company's benefit plans (including equity benefits) as of
the time this Agreement is executed, except to the extent the benefits of all
other executive officers of the Company are similarly reduced; (iv) a relocation
of Executive's principal office to a location more than forty (40) miles from
180 Kimball Way, South San Francisco, California, except for required travel by
Executive on the Company's business; (v) any breach by the Company of any
material provision of this Agreement; or (vi) any failure by the Company to
obtain the assumption of this Agreement by any successor or assign of the
Company. For purposes of this Agreement, "Cause" means: (V) an intentional
action or intentional failure to act by Executive which was performed in bad
faith and to the material detriment of the Company; (W) Executive intentionally
refuses or intentionally fails to act in accordance with any lawful and proper
direction or order of the Board; (X) Executive willfully and habitually neglects
the duties of employment; (Y) Executive violates Section 4 or Section 5 of this
Agreement or (Z) Executive is convicted of a felony crime involving moral
turpitude; provided, however, that in the event that any of the foregoing events
under clauses (V), (W), (X) or (Y) above is capable of being cured, the Company
shall provide written notice to Executive describing the nature of such event
and Executive shall thereafter have ten (10) business days to cure such
event.

(c)In the event of Executive's termination upon a
Change of Control, upon execution of an effective release in the form attached
hereto as Exhibit A: (i) Executive shall, within seven (7) days of such
termination, one lump sum payment equivalent to eighteen (18) months of his then
Base Salary, plus a pro rata share of his Target Bonus for the calendar year in
which such termination occurs, plus the amount of eighteen months of his Target
Bonus, minus standard withholdings and deductions; (ii) all of Executive's
outstanding Stock Options shall become fully vested and exercisable immediately
upon the occurrence of such termination; and (iii) for a period of eighteen (18)
months (or until comparable benefits coverage becomes available to Executive, if
sooner), the Company shall pay the costs associated with the continuation of
Executive's medical dental, and vision benefits under COBRA as in effect
immediately prior to Executive's termination of employment. For purposes of this
paragraph, both Executive's "Base Salary" and "Target Bonus" shall be the
greater of those amounts in effect either immediately prior to the Change of
Control or the termination of Executive's employment.

(d) A termination upon a Change of Control shall
be deemed to occur for purposes of this Agreement in the event of a Change of
Control (as defined below) upon which or within thirteen (13) months following
the consummation of which: Executive does not continue to render services as
President and Chief Executive Officer of the Company (or any successor or
surviving corporation) or Executive terminates employment with the Company (or a
successor or surviving corporation) for Good Reason. For purposes of this
Agreement, a Change of Control means (i) any sale, merger, consolidation, tender
offer or similar acquisition of shares, or other transaction or series of
related transactions (each a "Transaction") as a result of which at least a
majority of the voting power of the Company is not held, directly or indirectly,
by the persons or entities who held the Company's securities with voting power
before such Transaction (provided, however, that any person who acquired voting
securities of the Company in contemplation of the Transaction and who
immediately after such Transaction possesses direct or indirect ownership of at
least ten percent (10%) of the securities of the Company or the surviving entity
(or if the Company or the surviving entity is a controlled affiliate of another
entity, then of such controlling entity) shall not be included in the group of
those persons or entities who held the Company's securities with voting power
before such Transaction); (ii) a sale or other disposition of all or a
substantial part of the Company's assets, whether in one transaction or a series
of related transactions; or (iii) individuals who on the date hereof constitute
the Board and any new director (other than a director designated by a person or
entity who has entered into an agreement to effect a transaction described in
clause (i) or (ii) above) whose nomination and/or election to the Board was
approved by a vote of at least a majority of the directors then still in office
who either were directors on the date hereof or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority of the Board.

2.3Golden Parachute
Taxes.Notwithstanding anything contained in this Agreement to the
contrary, to the extent that payments and benefits provided under this Agreement
to Executive and benefits provided to, or for the benefit of, Executive under
any other Company plan or agreement (such payments or benefits are collectively
referred to as the "Payments") would be subject to the excise tax (the "Excise
Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), the Payments shall be reduced (but not below zero) to the
extent necessary so that no Payment to be made or benefit to be provided to the
Executive shall be subject to the Excise Tax, but only if, by reason of such
reduction, the net after-tax benefit received by Executive shall exceed the net
after-tax benefit received by him if no such reduction was made. For purposes of
this Section 2.3, "net after-tax benefit" shall mean (a) the Payments which
Executive receives or is then entitled to receive from the Company that would
constitute "parachute payments" within the meaning of Section 280G of the Code,
less (b) the amount of all federal, state and local income taxes payable with
respect to the foregoing calculated at the maximum marginal income tax rate for
each year in which the foregoing shall be paid Executive (based on the rate in
effect for such year as set forth in the Code as in effect at the time of the
first payment of the foregoing), less (c) the amount of excise taxes imposed
with respect to the payments and benefits described in (a) above by Section 4999
of the Code. The foregoing determination will be made by the a nationally
recognized accounting firm (the "Accounting Firm") selected by the Company
(which may be, but will not be required to be, the Company's independent
auditors). The Company will direct the Accounting Firm to submit its
determination and detailed supporting calculations to both the Executive and the
Company within fifteen (15) days after his date of termination of employment. If
the Accounting Firm determines that such reduction is required by this Section
2.3, the Executive, in his sole and absolute discretion, may determine which
Payments shall be reduced to the extent necessary so that no portion thereof
shall be subject to the excise tax imposed by Section 4999 of the Code, and the
Company shall pay such reduced amount to him. The fees and expenses of the
Accounting Firm for its services in connection with the determinations and
calculations contemplated by this Section 2.3 will be borne by the
Company.

2.4Annual Bonus. Executive will be eligible for an
annual bonus up to fifty percent (50%) of Executive's then current Base Salary
upon achievement of reasonable goals specified by the Board (the "Target
Bonus"). Such goals shall be set forth in writing by the Board prior to the
close of the first quarter of each fiscal year of the Company, with fifty
percent (50%) of such goals to be dependent on Executive's individual
performance and fifty percent (50%) of such goals to be dependent on the
Company's performance.


2.5Employee
Loan.On the Effective Date, the Company agrees to loan Executive
$300,000 pursuant to the terms of the form of promissory note attached hereto as
Exhibit B (the "Note"). The Note is full-recourse, secured by any shares of the
Company's common stock acquired by Executive upon the exercise of any Stock
Options, bears interest at the rate of 5.61% per annum and is payable in full on
the earlier of (a) thirty (30) days following Executive's termination of
employment (other than Executive's termination of employment for Good Reason or
Executive's termination of employment without Cause or due to death or
disability) or (b) January 2, 2004. Provided that Executive continues to render
services to the Company through each such date, the Company will forgive one
thirty-sixth (1/36th) of the principal amount of the Note and any
accrued interest thereon on the first day of each calendar month following the
Effective Date, such that (provided Executive has not ceased to render services
to the Company as of each such date) the Note shall be forgiven in its entirety
on January 1, 2004. In the event Executive is terminated without Cause or due to
death or disability or that Executive terminates his employment for Good Reason,
the Company will concurrently therewith forgive all remaining principal and
interest due under the Note.


2.6Medical and Dental Coverage. The Company shall
provide Executive with the medical and dental coverage which is no less
favorable than that provided to any other executive of the Company.

2.7Standard Company Benefits. Executive shall be
entitled to all other rights and benefits for which he is eligible under the
terms and conditions of such benefits which may be in effect from time to time
and provided by the Company to its employees generally and/or to its management
and executive employees in particular.

2.8Expenses. Executive shall be entitled to
receive prompt reimbursement of all reasonable expenses incurred by Executive in
performing Company services. Executive agrees to furnish the Company reasonably
adequate records and other documentary evidence of such expenses for which
Executive seeks reimbursement. Such expenses shall be accounted for under the
policies and procedures established by the Company.

2.9Vacation and Sick Leave. Executive shall be
entitled to vacation and to sick leave in accordance with policies as
periodically established by the Company for Company officers. In addition,
Executive shall be entitled, without loss of pay, to be absent voluntarily from
the performance of employment duties for such periods of time and for such valid
and legitimate reasons as the Board in its discretion may determine.

2.10Stock Options.Executive shall be granted options to purchase
500,000 shares of the Company's common stock (the "Time Vesting Options") at an
exercise price equal to the fair market value of the Company's common stock as
of the date of grant of such options. Provided Executive remains in continuous
service with the Company as of the applicable vesting dates, twelve and one half
percent (12-1/2%) of the Time Vesting Options shall vest upon the six (6) month
anniversary of the Effective Date and the remaining Time Vesting Options shall
vest at the rate of 1/42nd of such remaining options per month, such that one
hundred percent (100%) of the Time Vesting Options shall be vested on the fourth
(4th) anniversary of the Effective Date. The Time Vesting Options shall be
treated as incentive stock options within the meaning of Section 422 of the Code
to the maximum extent possible and shall become exercisable as they become
vested, and the remaining portion of the Time Vesting Options shall become
exercisable upon the date of grant of such options. The vested portion of all
Stock Options which are not incentive stock options shall be transferable to
family members to the maximum extent permitted by the Securities Act of 1933, as
amended. Other terms and conditions of the Time Vesting Options shall be
consistent with the terms of the Company's compensatory stock plan under which
they are granted and as mutually agreed to by the Company and Executive. In
addition to the Time Vesting Options, effective as of the Effective Date,
Executive shall be granted non-statutory stock options to purchase 100,000
shares of the Company's common stock (the "Performance Vesting Options") at an
exercise price equal to the fair market value of the Company's common stock as
of the Effective Date. Provided Executive remains in continuous service with the
Company through the seventh (7th) anniversary of the Effective Date, the
Performance Vesting Options shall become vested and exercisable in their
entirety as of the seventh (7th) anniversary of the Effective Date; provided
however, that upon the determination by the Board of Directors that Executive
has met by Executive's performance during 2001 at least seventy-five percent
(75%) of certain performance goals to be established jointly by Executive and
the Board and/or the Compensation Committee of the Board during the first
quarter of calendar year 2001, the Performance Vesting Options shall vest and
become exercisable pursuant to the schedule described above with respect to the
Time Vesting Options as if governed by such schedule as of their date of grant.
Other terms and conditions of the Performance Vesting Options shall be
consistent with the terms of the Company's compensatory stock plan under which
they are granted and as mutually agreed to by the Company and Executive. The
Time Vesting Options and Performance Vesting Options, together with any
additional options to purchase shares of the Company's common stock that
Executive may be granted from time to time are referred to herein collectively
as the "Stock Options." The Stock Options shall be granted by the Board or
authorized committee of the Board, and shall be granted pursuant to, and except
as provided herein shall be governed by, the terms of the Company's stock option
plans and customary forms of stock option agreement as amended from time to
time.



3.Confidential Information Obligations.
3.1Agreement. Executive agrees to execute and abide
by Executive's Employment, Confidential Information and Invention Assignment
Agreement ("Confidentiality Agreement"),

3.2Remedies. Executive's duties under the
Confidentiality Agreement shall survive termination of his employment with the
Company. Executive acknowledges that a remedy at law for any breach or
threatened breach by him of the provisions of the Confidentiality Agreement
would be inadequate, and he therefore agrees that the Company shall be entitled
to injunctive relief in case of any such breach or threatened breach.



4.Outside Activities.
4.1Except with the prior written consent of
the Board, Executive will not during the term of this Agreement undertake or
engage in any other employment, occupation or business enterprise, other than
ones in which Executive is a passive investor. Executive may engage in civic and
not-for-profit activities and may, upon notice to the Board, serve as a member
of Boards of Directors of companies not deemed to be engaged in competition with
the Company so long as such activities do not materially interfere with the
performance of his duties hereunder, and the Company hereby agrees that
Executive may serve as a director of RxMarketplace.com, ViaCell, and LXR without
further notice to the Board.

4.2Except as permitted by Section 4.3, Executive
agrees not to acquire, assume, or participate in (directly or indirectly) any
position, investment or interest known by him to be adverse or antagonistic to
the Company, its business, or its prospects, financial or otherwise.

4.3During the term of his employment by the
Company, except on behalf of the Company, Executive will not have any direct or
indirect business connection or interest, in any capacity whatsoever, with any
other person or entity known by him to compete directly with the Company,
throughout the world, in any line of business engaged in (or planned to be
engaged in) by the Company. Nothing in this paragraph shall bar Executive from
owning securities of any competitor corporation as a passive investor, so long
as his aggregate direct holdings in any one such corporation shall not
constitute more than 1% of the voting stock of that corporation.



5.Noninterference. While employed by the Company,
and for one (1) year immediately following the termination of Executive's
employment, Executive agrees not to interfere with the Company's business by
soliciting, attempting to solicit, inducing, or otherwise causing any employee
of the Company to terminate his or her employment in order to become an
employee, consultant, or independent contractor to or for any competitor of the
Company. Executive agrees that this restriction is reasonably necessary to
protect the Company's legitimate business interest in its substantial
relationships with employees, consultants, and independent contractors and its
valuable confidential business information.

6.General Provisions.
6.1Notices. Any notices provided hereunder must be in
writing and shall be deemed effective upon the earlier of (i) personal delivery
(including delivery by fax or overnight courier) or (ii) the third day after
mailing by first-class mail, to the Company at its primary office location and
to Executive at his address as then listed in the Company's payroll records.

6.2Severability. Whenever possible, each provision
of this Agreement will be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement is held to be
invalid, illegal, or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality, or unenforceability will
not affect any other provision or any other jurisdiction, but this Agreement
will be reformed and construed in such jurisdiction so as to render it
enforceable under applicable law insofar as possible consistent with the intent
of the parties.

6.3Waiver. If either party should waive any
breach of any provisions of this Agreement, that party shall not thereby be
deemed to have waived any preceding or succeeding breach of the same or any
other provision of this Agreement.

6.4Complete Agreement. This Agreement and its
Exhibits constitute the entire agreement between Executive and the Company and
it is the complete, final, and exclusive embodiment of their agreement with
regard to this subject matter and supersedes all prior letter agreements and
understandings between the parties. It is entered into without reliance on any
promise or representation other than those expressly contained herein, and it
cannot be modified or amended except in a writing signed by both the Executive
and at least one member of the Compensation Committee of the Board.

6.5Counterparts. This Agreement may be executed in
separate counterparts, any one of which need not contain signatures of more than
one party, but all of which taken together will constitute one and the same
Agreement.

6.6Headings. The headings of the sections hereof
are inserted for convenience only and shall not be deemed to constitute a part
hereof nor to affect the meaning thereof.

6.7Successors and Assigns. This Agreement is intended to bind and inure to the
benefit of and be enforceable by Executive and the Company, and their respective
successors, assigns, heirs, executors and administrators, except that Executive
may not assign any duties hereunder and may not assign any rights hereunder
without the written consent of the Company, which shall not be withheld
unreasonably.

6.8Choice of Law. All questions concerning the
construction, validity and interpretation of this Agreement will be governed by
the law of the State of California, without regard to such state's conflict-of-
laws rules.

6.9Non-Publication. The parties mutually agree not
to disclose publicly the terms of this Agreement except to the extent that
disclosure is mandated by applicable law or such disclosure is to the parties'
respective attorneys, accountants other advisors, and immediate family.

6.10Agreement Controls. In the event of a conflict
between the text of the Agreement and any summary, description or other
information regarding the Agreement, the text of the Agreement shall
control.

6.11Attorneys' Fees. If either party hereto brings
any action to enforce his or its rights hereunder, each party in any such action
shall be responsible for his or its costs and attorneys fees incurred in
connection with such action.

6.12Tax Withholding. All payments made pursuant to
this Agreement shall be subject to all applicable federal, state and local
income and employment tax withholding.

6.13Arbitration. To ensure rapid and economical
resolution of any and all disputes which may arise under this Agreement, the
Company and Executive each agree that any and all disputes or controversies,
whether of law or fact of any nature whatsoever (including, but not limited to,
all state and federal statutory and common law discrimination claims), with the
sole exception of those disputes which may arise from Executive's
Confidentiality Agreement, arising from or regarding the interpretation,
performance, enforcement or breach of this Agreement, or any other disputes or
claims arising from or related to Executive's employment or the termination of
his employment, shall be resolved by final and binding confidential arbitration
conducted by Judicial Arbitration and Mediation Services Inc. ("JAMS") under the
then existing JAMS Rules of Practice and Procedure; provided that the arbitrator
shall: (a) have the authority to compel adequate discovery for the resolution of
the dispute and to award such relief as would otherwise be permitted by law; and
(b) issue a written arbitration decision including the arbitrator's essential
findings and conclusions and a statement of the award. The Company shall pay all
of Executives' JAMS arbitration fees. In addition to any other relief, the
arbitrator may award to the prevailing party recovery of its attorneys' fees and
costs. Nothing in this Agreement is intended to prevent either Executive or the
Company from obtaining injunctive relief in court to prevent irreparable harm
pending the conclusion of any such arbitration.

6.14Right to Work. As required by law, this offer
of employment is subject to satisfactory proof of Executive's right to work in
the United States.

6.15No Duty to Seek Employment.Executive and
the Company acknowledge and agree that nothing contained in the Agreement shall
be construed as requiring Executive to seek or accept alternative or replacement
employment in the event of his termination of employment by the Company for any
reason, and no payment or benefit payable hereunder shall be conditioned on
Executive's seeking or accepting such alternative or replacement employment.




[Remainder of this page intentionally left blank]

In Witness Whereof, the parties have executed this
Agreement on the day and year first above written.

Axys Pharmaceuticals, Inc. 

 

 

By: /s/ Douglas Altschuler

Name:Douglas Altschuler

Title:V.P./General Counselor

 

 













Accepted and agreed this

                   23rd day of January, 2001

 

/s/ Paul J. Hastings


Paul Hastings













Exhibit A

RELEASE

Certain capitalized terms used in this Release are
defined in the Employment Agreement entered into as of _____________, 2000
between Axys Pharmaceuticals, Inc. and me which I have reviewed.

I acknowledge that I have read and understand Section 1542 of
the California Civil Code which reads as follows: "A general release does not
extend to claims which the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor." I hereby expressly
waive and relinquish all rights and benefits under that section and any law of
any jurisdiction of similar effect with respect to my release of any claims I
may have against the Company.

Except as otherwise set forth in this Release, I hereby
release, acquit and forever discharge the Company, its parents and subsidiaries,
and their officers, directors, agents, servants, employees, shareholders,
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 out
of or in any way related to claims and demands directly or indirectly arising
out of my employment with the Company or the termination of that employment,
including but not limited to, claims of intentional and negligent infliction of
emotional distress, any and all tort claims for personal injury, claims or
demands related to salary, bonuses, commissions, or any other ownership
interests in the Company, vacation pay, fringe benefits, expense reimbursements,
severance pay, or any other form of disputed compensation; claims pursuant to
any federal, state or local law or cause of action including, but not limited
to, the federal Civil Rights Act of 1964, as amended; the federal Age
Discrimination in Employment Act of 1967, as amended ("ADEA"); the federal
Employee Retirement Income Security Act of 1974, as amended; the federal
Americans with Disabilities Act of 1990; the California Fair Employment and
Housing Act, as amended; tort law; contract law; statutory law; common law;
wrongful discharge; discrimination; fraud; defamation; and breach of the implied
covenant of good faith and fair dealing; provided, however, that nothing in this
paragraph shall be construed in any way to release the Company from its
obligation to indemnify me from any third party action brought against me based
on my employment with the Company, pursuant to the Company's by-laws, any
applicable agreement or applicable law, or to reduce or eliminate any coverage I
may have under the Company's director and officer liability policy, if any.

I acknowledge that I am knowingly and voluntarily waiving and
releasing any rights I may have under ADEA. I also acknowledge that the
consideration given under the Agreement for the waiver and release in the
preceding paragraph hereof is in addition to anything of value to which I was
already entitled. I further acknowledge that I have been advised by this
writing, as required by the ADEA, that: (A) my waiver and release do not apply
to any rights or claims that may arise on or after the date I execute this
Release; (B) I should consult with an attorney prior to executing this Release;
(C) I have twenty-one (21) days to consider this Release (although I may choose
to voluntarily execute this Release earlier); (D) I have seven (7) days
following the execution of this Release to revoke this Release; and (E) this
Release shall not be effective until the date upon which the revocation period
has expired, which shall be the eighth day after this Release is executed by
me.

Paul Hastings

Date:____________________