Document:

exv10w2

 

EXHIBIT 10.2

EMPLOYMENT AGREEMENT

     THIS
EMPLOYMENT AGREEMENT (the “Agreement”) is made as of May 31, 2004, by and between METAMORPHIX, INC., a Delaware corporation with its principal place of business at
8510 A Corridor Road, Savage Maryland 20763 (hereinafter referred to as the “Employer”) and THOMAS
P. RUSSO, a Maryland resident (hereinafter referred to as the “Employee”).

     NOW, THEREFORE, in consideration of the mutual covenants, promises, agreements,
representations, and warranties of Employer and Employee, each to the other made, and other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Employer
and Employee hereby covenant, promise, agree, represent, and warrant, as follows:

     SECTION 1. EMPLOYMENT.

          1.1. Engagement of Employment. Employer hereby employs Employee, and Employee accepts
such employment, on an “at will” basis, as Employer’s Chief Financial Officer and
Executive Vice President of Finance as of Tuesday, June 1, 2004, and Employee agrees to render
such duties as are set forth in Section 1.2, subject to the terms and conditions of this
Agreement.

          1.2. Duties. During Employee’s employment under this Agreement, Employee shall render
to the best of Employee’s ability, on behalf of Employer, on an exclusive basis, and at the
direction of Employer, services as Employer’s Chief Financial Officer and Executive Vice President
of Finance, and such other duties as the Board of Directors or the President and CEO shall direct.
In particular, subject to oversight and direction of the President and CEO, Employee as Chief
Financial Officer and Executive Vice President of Finance shall:

          (a) be primarily responsible for organizing and managing all of Employer’s financial
functions (with a primary emphasis during the first six to twelve months to lead the
Company successfully through an Initial Public Offering or other substantial financing);

          (b) manage Employer’s relationship with its accountants and auditor (developing and
maintaining effective tax planning, reporting, and compliance strategies), accomplish
timely annual audited financial statements and quarterly reviews (including the completion
of the 2003 audit), and assist the Audit Committee of the Board of Directors;

          (c) oversee Employer’s Vice President of Finance/Treasurer and, with the assistance
of such officer, oversee cash management, accounts payable, payroll, and banking
relationships;

          (d) develop a clear and comprehensive grasp of Employer’s businesses and products and
provide strong leadership and focus to all company financial endeavors (and providing the
President and CEO and the Board of Directors with regular forecasts, updates, and
reports);

 

 

          (e) develop and maintain credibility and relationships with the investment banking/Wall
Street communities;

          (f) drive the investor relations functions, develop appropriate and effective investor
relations polices and procedures for internal management and staff, and ensure comfort and
compliance in implementing them;

          (g) be available as “first call” contact for appropriate investors;

          (h) provide strategic counsel to the President and CEO regarding Employer’s growth
prospects and bring financial creativity and a thorough, highly analytical mind-set to the
corporate planning process;

          (i) support the business development function, particularly in providing due diligence
leadership in evaluating, negotiating, acquiring, and successfully integrating appropriate
strategic acquisitions;

          (j) fine-tune development and implementation of company financial and accounting
policies, maintain financial control within these guidelines; maintain familiarity with FASB
and SEC requirements;

          (k) provide leadership in preparation of company-wide budgeting, modeling, and
information reporting, provide pro active leadership in upgrading and modernizing management
information/control systems, and put out good information in a readily useful format on a
timely basis;

          (1) structure the finance function ahead of the business needs curve of Employer;
build a culture that will draw creative, capable financial managers, and create a context
in which others can succeed; and

          (m) perform such other managerial and operational functions within or outside the scope
of the above-referenced services as may be requested from time to time by the President and
CEO (e.g., until a COO is in place, oversee the Human Resource, Facility Management, and
other operational functions).

Employee shall report to Employer’s President and CEO.

     1.3. Exclusivity. Employee shall not pursue other employment, consulting, or
professional endeavors during his employment (except with the express prior written consent of the
President and CEO in his discretion).

     1.4. Employer Responsibilities. Employer shall provide Employee with suitable office
space, equipment, and support, including access to telephone, facsimile, photocopying, and any
other equipment and support reasonably required for the Employee to perform his duties as set forth
in Section 1.2 of this Agreement.

 

 

          1.5. Indemnification. Employee, as an officer of Employer, shall be indemnified by
Employer if, as, and when required in accordance with Article V of Employer’s By-Laws
and Delaware law.

     SECTION 2. COMPENSATION.

          2.1. Salary. Employer shall pay Employee (in addition to any benefits provided for
in this Agreement) a base annual salary (the “Annual Salary”), payable monthly (or other regular
pay period) in arrears, and subject to customary payroll deductions in accordance with the
general practice of Employer. The Annual Salary, as of the date of this Agreement, shall be Two
Hundred Fifty Thousand Dollars ($250,000).

          2.2 Bonus Compensation. In addition to the Annual Salary provided for by Section
2.1, subject to customary payroll deductions in accordance with the general practice of Employer,
Employer shall pay Employee additional compensation in the form of an annual bonus (the “Annual
Performance-Based Bonus”) as follows:

          (a) Amount. Employee and Employer’s President and CEO shall establish
challenging performance-based goals relating to Employee’s and Employer’s performance, as
soon as is practicable, for the remainder of 2004 and, in each December, for each
following calendar year (the “Performance Goals”). Employer shall pay Employee an Annual
Performance-Based Bonus, in cash, of up to thirty percent (30%) of the Annual Salary upon
achieving (in the judgment of the President and CEO, after consultation with the
Compensation Committee of the Board of Directors) all stated portions of the Performance
Goals;

          (b) Payment. Payment of the Annual Performance-Based Bonus earned with
respect to a particular calendar year shall be payable as of March 1 of the following year
(or upon such later, appropriate date if the applicable Performance Goals are based upon
financial reports not then received); and

          (c) Other. If Employee is not employed by Employer as of December 31 of any
calendar year and/or if Employee is in default of any material term of this Agreement,
then Employer may, in its sole discretion, discontinue or reduce any and all payments
attributable to the Annual Performance-Based Bonus.

     SECTION 3. BENEFITS. Employee shall be provided with at least such health, dental,
disability, life insurance, 401k Plan participation, and other benefits as may be provided to
comparable executive-level employees of Employer (other than any benefits given only to the
President and CEO) from time to time. At a minimum, however, assuming the insurability of
Employee at standard rates, Employer will provide Employee with life insurance coverage equal to
three (3) times your annual salary (but with such insurance not exceeding $750,000) and, if
obtainable from admitted carriers, will provide in any event at least $200,000 of coverage.

 

 

     SECTION 4. VACATION LEAVE. PERSONAL LEAVE. SICK LEAVE. AND
HOLIDAYS.

          4.1. Vacation, Personal, and Sick Leave. Employee shall be entitled to “Vacation” and
“Personal Leave” during each calendar year as set forth in this Section 4.1 and as follows:.
twenty (20) working days for “Vacation” and three (3) working days for “Personal” Leave during
each twelve (12) month period during which Employee is employed under this Agreement. Vacation and
Personal Leave shall be used for all vacation, personal leave, excess sick leave, and any other
time during which Employee is not required to perform the duties set forth in Section 1. Employee
shall take Employee’s Vacation and Personal Leave at such time or times in accordance with the
policy of Employer so as not to disrupt the Employer’s operations. Employee shall also be entitled
to up to such number of days of “Sick Leave” as may be set in accordance with Employer’s Sick
Leave Policy. During Employee’s Vacation, Personal, and Sick Leave, the Annual Salary, and all
benefits paid and provided pursuant to this Agreement, shall be paid and provided in full. Unused
Vacation, Personal, and Sick Leave for any given year that has not been taken by Employee is
subject to current Company policies.

          4.2. Holidays. In addition to Personal Leave, Employee shall be entitled to New
Year’s Day, President’s Day, Memorial Day, July 4th, Labor Day, Thanksgiving, three additional
floating holidays, and such other holidays as are recognized by Employer in accordance with
applicable federal, state, or local laws and as are offered to comparable employees of Employer.

     SECTION 5. BUSINESS EXPENSES. Employee is authorized to incur reasonable expenses,
including travel expenses, in connection with Employee’s exercise of Employee’s duties under this
Agreement. It is intended by Employer and Employee that all such expenses shall be ordinary and
necessary expenses incurred in connection with the duties of Employee under this Agreement.
Employer may establish guidelines, budgets, preapproval requirements, and restrictions pertaining
to Employee’s authorization to incur business expenses on behalf of Employer and Employee shall
comply with all Employer policies relating to the authorization and verification of such expenses.

     SECTION 6. CONFIRMATION OF “AT WILL” EMPLOYMENT AND
TERMINATION.

          6.1. “At Will”
Employment. Employee acknowledges and confirms that he is
an “at will” employee and that his employment, notwithstanding any provision of this Agreement, may
be terminated at any time by Employer, with or without cause. Employee shall adhere to and obey all
Employer policies as they now exist and. as they may be adopted and amended from time to
time.

          6.2. Severance Pay. Upon termination due to a reduction in work force, a job
elimination, or other reasons “without cause,” Employer shall provide Employee with severance pay
as set forth in the “Severance Requirements,” attached hereto as Exhibit A and which are
incorporated herein by reference, which Severance Requirements, to the extent in conflict with
this

 

 

Section 6.2, shall be overridden by this Section 6.2. Employer shall also provide
such severance pay to Employee if Employee resigns “for good reason,” namely only the
following (if occurring without Employer’s express written consent):

          (a) making any material change in Employee’s duties not generally
consistent with Employee’s scope of duties as set forth in Section 1.2, that is
not rescinded within thirty (30) days after Employee has given the Chief
Executive Officer
written notice of such change;

          (b) requiring Employee to be based at any office or location more than one
hundred (100) miles from the office at which Employee is based at the beginning
of his employment, i.e., in Savage, Maryland (except for any location to which
Employee and the Chief Executive Officer agree), except for travel
reasonably required in the performance of Employee’s responsibilities;

          (c) failing to comply (other than a failure to make payments) with any of the material
provisions of this Agreement, which .change or failure, as the case may be
continues unremedied for thirty (30) days, after Employee has given the Chief
Executive - Officer written notice of such change or failure which notice
specifies in detail the change or failure, as the case may be;

          (d) requiring that Employee take any act (or omission to act), on behalf
of Employer or otherwise, that would, in the reasonable judgment of counsel to
Employee, result in a violation of any law; and

          (e) the failure to have customary Directors and Officers Liability
Insurance in place for more than ten (10) days following written notice of
such failure to the Chief Executive Officer.

          6.3. Termination by Employee. Employee may terminate this Agreement at
any time upon at least two (2) weeks advance written notice. In the event Employee
terminates this Agreement, except as expressly set forth in Section 6.2, Employee
shall have no right to severance pay or accelerated vesting of stock options (other
than in accordance with such resolutions as the Board of Directors or its
Compensation Committee may adopt from time to time).

     SECTION 7. INCENTIVE STOCK OPTION AGREEMENT. Contemporaneously with this
Agreement, Employer has granted Employee the opportunity to purchase shares of
Employer’s common stock, pursuant to Employer’s 1996 Employees’ Incentive Stock
Option Plan, as amended from time to time, and a Stock Option Agreement between
Employer and Employee, a copy of which is attached hereto as Exhibit B and
incorporated herein by reference. Employee’s Stock Option Agreement does not obligate
Employee to exercise his options to purchase stock of Employer nor obligates Employer
to continue Employee’s employment.

 

 

     SECTION 8. NON-DISCLOSURE AND CONFIDENTIALITY AGREEMENT. As a condition of Employee’s
employment, Employer and Employee have entered into a Non-Disclosure and Confidentiality
Agreement, a copy of which is attached hereto as Exhibit C and incorporated herein by reference.

     SECTION 9. CONSTRUCTION OF AGREEMENT: CHOICE OF LAW,
SEVERABILITY, AND NUMBER. This Agreement was made in the State of Maryland. The validity,
legality, and construction of this Agreement or of any of its provisions shall be determined
under the laws of the State of Maryland. If any provision contained in this Agreement cannot be
enforced to its fullest extent, then such provision shall be enforced to the maximum extent
permitted by law, and Employer and Employee consent and agree that such provision may be
judicially modified accordingly in any proceeding brought to enforce such provision. The
invalidity, illegality, or inability to enforce any provision of this Agreement shall not affect
or limit the validity and enforceability of any other provision hereof. Where context requires,
the plural shall include the singular and vice versa.

     SECTION 10. NOTICES. All notices and communications hereunder shall be in writing and shall
be deemed given when sent postage prepaid by registered or certified mail, return receipt
requested, by hand delivery with a signed returned copy, or by delivery of a nationally
recognized overnight delivery service, and addressed as follows:

 

 

	 	 	 	 	 
	

	 	If intended for Employer:
	 	MetaMorphix, Inc.
	

	 	 	 	8510A Corridor Road
	

	 	 	 	Savage, Maryland 20763
	

	 	 	 	Attn: Director of Human Resources
	 
	 	 	 	 
	

	 	with a copy to:
	 	William E. Carlson, Esquire
	

	 	 	 	Shapiro Sher Guinot & Sandler
	

	 	 	 	2000 Charles Center South
	

	 	 	 	36 South Charles Street
	

	 	 	 	Baltimore, Maryland 21201
	 
	 	 	 	 
	

	 	If intended for Employee:
	 	Thomas P. Russo
	

	 	 	 	8504 Bradley Boulevard
	

	 	 	 	Bethesda, Maryland 20817

 

 

If, however, a party furnishes another party with notice of a change of address, as provided in
this Section, then all notices and communications thereafter shall be addressed as provided in
such notice.

     SECTION 11. ENTIRE AGREEMENT. This Agreement, which is the product of a negotiation between
Employer and Employee, the Incentive Stock Option Agreement, and the Non-Disclosure and
Confidentiality Agreement contain the entire understanding between Employer and Employee with
respect to matters set forth herein and therein and supersede all other oral and written
agreements or understandings between them with respect to matters set forth herein and therein
(including, but not limited to that May 10, 2004 offer letter). No modification or addition
hereto or waiver or cancellation of any provision shall be valid except as provided in a writing
signed by the party against whom such modification, addition, waiver, or cancellation is being
enforced.

     IN WITNESS WHEREOF, Employer and Employee have executed this Employment Agreement as of the
day and year first above written.

	 	 	 	 	 
	          [SEAL]
	 	 	 	 
	

	 	 	 	METAMORPHIX, INC.
	ATTEST:
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	William E. Carlson, Secretary
	 	 	 	 
	 
	 	 	 	 
	WITNESS :
	 	 	 	 

 

 

	 	 	 
	By:
	 	 
	

	 	 
	Edwin C. Quattlebaum, Ph.D., President and CEO

(SEAL) Thomas P. Russo

 

 

EXHIBIT A

METAMORPHIX, INC.

Severance Requirements

This policy applies to all full-time Vice Presidents and Officers not covered by a separate
agreement.

All employees who leave MetaMorphix will be treated in a fair and equitable manner. This policy
will provide procedural guidelines to ensure consistent and uniform practices.

If an employee resigns, he/she is expected to provide sufficient written notice to the Company (a
minimum of 2 weeks). Regardless of notification, resigning employees are not entitled to receive
severance benefits described in this section. Insufficient notice will result in the employee
being ineligible for re-employment. An employee’s manager is responsible for notifying the
Director of Human Resources of the employee’s decision to leave the Company.

An employee who desires to retire should notify his/her manager in writing of the decision at
least 90 days prior to the effective date of the retirement. This letter should be forwarded to
the Director of Human Resources, who will advise the employee of his benefits. Retiring employees
are not entitled to receive severance benefits as described in this section.

Before an employee may be discharged, the employee’s supervisor must review the circumstances
with the Director of Human Resources and obtain the approval of the company President. All
discharges must also be discussed with and reviewed by the Corporate Attorney.

In the event of a reduction in force or an organizational change, selection of individuals for
termination will be based on the following criteria: past job performance, skills and experience
relative to available positions, and finally, length of service. Additionally, MMI does not
discriminate in employment opportunities, nor will termination or reduction in work force be
based on race, color, religion, sex, sexual orientation, national origin, age, disability, or any
other characteristic protected by law.

Severance pay will only be paid to those employees who have been terminated as a result of a
reduction in force, a job elimination, and/or for other reasons without cause (and where the
Company has not offered the employee a reasonably comparable position). Severance payments would
likewise not be applicable in instances where termination of employment from the Company is
caused by the sale of assets, operations, or products to another concern and the employee is
offered employment by such concern in a reasonably comparable position.

 

 

Severance Schedule

When employees are terminated due to a reduction in work force, due to job elimination, or for
other reasons without cause, the following schedule of severance payments will be applicable:

	 	 	 
	Years of Service	 	MMI Vice Presidents and Officers
	1 month to 5 months

	 	1 month for each month of service
	6 months to 11 months

	 	6 months
	1 year and over

	 	12 months*

* Plus up to an additional 3 months, if the employee has not obtained another position at an equal
or greater level of compensation.

The amount payable will be calculated based on the employee’s straight-time salary rate. These
monies will be paid on regular pay days for the duration of the severance period.

Should an employee be terminated for cause, any consideration for severance shall be at the sole
discretion of the company chief executive officer. Employees tendering resignations are not
eligible for severance pay.

The Company’s group health, dental, and life insurance coverage (to the extent permitted by any
health, dental, group life, or other plan) will continue for the duration of the severance period,
as long as the appropriate, payroll deductions continue. The employee will receive pay
for any unused vacation/personal benefits in addition to the above-scheduled severance, and will
continue to contribute to the 401K during the severance period, if so desired.

Whenever possible, two weeks notice will be given to employees who are being terminated. If the
termination is effective immediately, the employee will be given an additional two week’s pay in
lieu of notice.

Employees are responsible for all MMI property, materials, or written information issued to them or
in their possession or control. Employees on or before their last day of work must return all MMI
property

 

 

EXHIBIT B

METAMORPHIX, INC.

Incentive Stock Option Agreement

     This Incentive Stock Option Agreement certifies that, pursuant to the MetaMorphix, Inc.
Amended and Restated 1996 Employee Incentive Stock Option Plan (the “Plan”), the Board has
granted an option to purchase shares of Common Stock of MetaMorphix, Inc. as stated below.
Capitalized terms used herein and not defined shall have the meaning ascribed to such terms in
the Plan.

	 	 	 	 	 
	

	 	Optionee:
	 	Thomas P. Russo
	 
	 	 	 	 
	

	 	Optionee’s address:
	 	8504 Bradley Boulevard
 Bethesda, Maryland 20817
	 
	 	 	 	 
	

	 	Social Security No.:	 	 
	

	 	 	 	 
	

	 	 	 	Up to Three Hundred Fifty Thousand (350,000) shares of Common Stock (the “Option Shares”)
	 
	 	 	 	 
	

	 	Option Shares:	 	 
	 
	 	 	 	 
	

	 	Per Share Exercise Price:
	 	$3.75 per share
	 
	 	 	 	 
	

	 	Grant Date:
	 	June 1, 2004
	 
	 	 	 	 
	

	 	Expiration Date:
	 	The tenth anniversary of the Grant Date.
	 
	 	 	 	 
	

	 	Summary Vesting Schedule:
	 	25% of the Option Shares each year over
four years, with vesting quarterly during the first
year and, thereafter, in equal monthly installments
over the following 36 months.

     This Agreement is subject to the Employment Agreement of even date between Employer
and Employee.

	 	 	 	 	 
	 	 	METAMORPHIX, INC.
	 
	 	 	 	 
	

	 	 	 	/s/ Edwin C. Quattlebaum, Ph.D.
	 
	 	 	 	 
	Dated: As of June 1, 2004

	 	By:
	 	(SEAL) Edwin C. Quattlebaum, Ph.D., President and CEO

     The undersigned hereby accepts the foregoing option and agrees to the terms and
conditions thereof. The undersigned hereby acknowledges receipt of a copy of the
Company’s 1996 Employee Incentive Stock Option Plan and agrees to be bound by the terms
of such Plan.

	 	 	 
	

	 	OPTIONEE:
	 
	 	 
	

	 	 
	

	 	Thomas P. Russo

 

 

Terms and Conditions of Incentive Stock Option Agreement

     1. Grant of Option. MetaMorphix, Inc., a Delaware corporation (the “Company”), hereby
grants to the Optionee, as of the applicable Grant Date, an option, pursuant to the Plan, to
purchase an aggregate number of shares (the “Option Shares”) of the Company’s common stock (the
“Common Stock”), at the Per Share Exercise Price, purchasable as set forth in and subject to the
terms and conditions of this option and the Plan. Except where the context otherwise requires, the
term “Company” shall include all future subsidiaries of the Company as defined in Sections 424(e)
and 424(f) of the Internal Revenue Code of 1986, as amended or replaced from time to time (the
“Code”).

     2. Incentive Stock Option. This option is intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code, and, as such, is subject to the requirements
and limitations contained in Section 11 of the Plan (particularly Section 11(c) of the Plan in
respect to the “$100,000” limitation).

3. Exercise of Option and Provisions for Termination.

          (a) Vesting Schedule. Except as otherwise provided in this Agreement, the option for
the Option Shares may be exercised prior to the tenth anniversary of the Grant Date (hereinafter
the “Option Expiration Date”) and shall vest (provided Optionee is then an employee) in
installments as follows: (i) 25% of the Option Shares per year over four years, (ii) in quarterly
installments during the first year (i.e., on September 16, December 16, March 16, and June 16,
respectively), and (iii) thereafter, in equal monthly installments, vesting on the sixteenth day of
each month, over the remaining 36 months. No fractional shares of Common Stock shall be issued upon
conversion of this Option, nor shall the Company be required to pay cash in lieu of fractional
interests, it being the intent of the parties that all fractional shares shall be eliminated and
that all issuances of Common Stock shall be rounded up to the nearest whole share. The right of
exercise shall be cumulative so that if the option is not exercised to the maximum extent
permissible during any exercise period, it shall be exercisable, in whole or in part, with respect
to all shares not so purchased at any time prior to the Option Expiration Date or the earlier
termination of this option. This option may not be exercised at any time on or after the Option
Expiration Date, except as otherwise provided in Section 3(e) below.

          (b) Exercise. Subject to the conditions set forth in this Agreement and the Plan, this
option shall be exercised by the Optionee’s delivery of written notice of exercise to the Treasurer
of the Company, specifying the number of shares to be purchased and the purchase price to be paid
therefor and accompanied by payment in full accordance with Section 4 hereof. Such exercise shall
be effective upon receipt by the Treasurer of the Company of such written notice together with the
required payment. The Optionee may purchase less than the number of shares covered hereby, provided
that no partial exercise of this option may be for any fractional share or for fewer than ten whole
shares.

          (c) Continuous Relationship with the Company Required. Except as otherwise provided in
this Section 3 and Section 11(d) of the Plan, this option may not be exercised unless the

 

 

Optionee, at the time he or she exercises this option, is, and has been at all times since the
date of grant of this option, an employee of the Company (an “Eligible Optionee”).

          (d) Termination of Relationship with the Company. If the Optionee ceases to be an
Eligible Optionee for any reason, then, except as provided in paragraphs (e) and (f) below, the
right to exercise this option shall terminate six months after such cessation (but in no event
after the Expiration Date applicable to such option), provided that this option: (i)
shall be intended to remain an incentive stock option only for a period of three months after
such cessation, and (ii) shall be exercisable only to the extent that the Optionee was entitled
to exercise this option on the date of such cessation. Notwithstanding the foregoing, if the
Optionee, prior to the Option Expiration Date, materially violates the non-competition or
confidentiality provisions of any employment contract, confidentiality and nondisclosure
agreement or other agreement between the Optionee and the Company, the right to exercise the
options granted under this Agreement shall terminate immediately upon such violation.

          (e) Exercise Period Upon Death or Disability. If the Optionee dies or becomes
disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Option Expiration Date
while he or she is an Eligible Optionee, or if the Optionee dies within three months after the
Optionee ceases to be an Eligible Optionee (other than as the result of a termination of such
relationship by the Company for “cause” as specified in paragraph (f) below), this option shall
be exercisable, within the period of three months following the date of death, and within the
period of one year following the disability, of the Optionee (whether or not such exercise occurs
before the applicable Expiration Date), by the Optionee or by the person to whom this option is
transferred by will or the laws of descent and distribution, provided that this
option shall be exercisable only to the extent that this option was exercisable by the Optionee
on the date of his or her death or disability. Except as otherwise indicated by the context, the
teen “Optionee”, as used in this option, shall be deemed to include the estate of the Optionee or
any person who acquires the right to exercise this option by bequest or inheritance or otherwise
by reason of the death of the Optionee.

          (f) Discharge for Cause. If the Optionee, prior to the Option Expiration Date, is
discharged by the Company for “cause” (as defined below for the purposes of this Agreement), the
right to exercise this option shall terminate immediately upon such cessation of employment.
“Cause” shall mean willful misconduct by the Optionee or willful failure to perform his or her
responsibilities in the best interests of the Company (including, without limitation, breach by
the Optionee of any provision of any employment, consulting, advisory, nondisclosure,
non-competition or other similar agreement between the Optionee and the Company), as determined by
the Board of Directors of the Company, which determination shall be conclusive. The Optionee
shall be considered to have been discharged “for cause” if the Company determines, within thirty
(30) days after the Optionee’ s resignation, that discharge for cause was warranted.

     4. Purchase Price.

          (a) General. Subject to Section 2.2 of the Plan, the purchase price per share of
stock deliverable upon the exercise of an option shall be determined by the Board of Directors,
provided, however, that the exercise price shall not be less than 100% of the fair
market value of

 

 

such stock, as determined by the Board of Directors, at the time of grant of such option, or less
than 110% of such fair market value in the case of options described in Section 11(b) of the Plan.

          (b) Method of Payment. Options granted under the Plan may provide for the payment of
the exercise price by delivery of-0) cash or a check to the order of the Company in an amount
equal to the exercise price of such options, (ii) shares of Common Stock of the Company
already owned by the Optionee having a Fair Market Value equal in amount to the
exercise price of the options being exercised, (iii) written direction from the Optionee to
exercise the options on a net basis (“cashless exercise”) whereupon the number of shares of Common
Stock issued upon such exercise shall be reduced by that number of shares which have an aggregate
Fair Market Value equal to the requisite aggregate Exercise Price, (iv) a promissory note of the
Optionee payable on such terms (as are specified by the Board of Directors) which the Board of
Directors determines are consistent with the purpose of the Plan and with applicable laws and
regulations, or (v) any combination of the aforementioned methods or by any other means deemed
acceptable by the Board of Directors. For purposes hereof, the term “Fair Market Value” shall mean
(1) if the Common Stock is then traded on any national securities exchange or the Nasdaq National
market, the average closing price for the Company’s Common Stock for the last ten (10) trading
days prior to the Exercise Date, or (2) if not so traded, the good faith determination of the
Board of Directors of the Company.

     5. Delivery of Shares: Compliance with Securities Law. Etc.

          (a) General. The Company shall, upon payment of the option price for the number of
shares purchased and paid for, make prompt delivery of such shares to the Optionee, provided that
if any law or regulation requires the Company to take any action with respect to such shares
before the issuance thereof, then the date of delivery of such shares shall be extended for the
period necessary to complete such action.

          (b) Listing, Qualification, Etc. This option shall be subject to the requirement that
if, at any time, counsel to the Company shall determine that the listing, registration or
qualification of the shares subject hereto upon or with any securities exchange or regulatory
body, or that the disclosure of non-public information or the satisfaction of any other condition
is necessary as a condition of, or in connection with, the issuance or purchase of shares
hereunder, this option may not be exercised, in whole or in part, unless such listing,
registration, qualification, consent or approval, disclosure or satisfaction of such other
condition shall have been effected or obtained on terms acceptable to the Board of Directors (or
an opinion of counsel has been obtained that such registration, qualification, consent, or
approval is not necessary). Nothing herein shall be deemed to require the Company to apply for,
effect or obtain such listing, registration, qualification, or disclosure, or to satisfy such
other condition.

     6. Nontransferability of Option. This option is personal and no rights granted
hereunder may be transferred, assigned, pledged or hypothecated in any way (whether by operation
of law or otherwise), nor shall any such rights be subject to execution, attachment or similar
process, except that this option may be transferred by will or the laws of descent and
distribution. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of
this option or of such

 

 

rights contrary to the provisions hereof, or upon the levy of any attachment or similar process
upon this option or such rights, this option and such rights shall, at the election of the
Company, become null and void.

     7. No Special Employment or Similar Rights. Nothing contained in the Plan or this
option shall be construed or deemed by an person under any circumstances to bind the Company to
continue the employment or other relationship of the Optionee with the Company for the period
within which this option may be exercised.

     8. Rights as a Shareholder. The Optionee shall have no rights as a shareholder with
respect to any shares which may be purchased by exercise of this option (including, without
limitation, any rights to receive dividends or non-cash distributions with respect to such shares)
unless and until a certificate representing such shares is duly issued and delivered to the
Optionee. No adjustment shall be made for dividends or other rights for which the record date is
prior to the date such certificate is issued.

     9. Adjustment Provisions.

          (a) General. If, through or as a result of any merger, consolidation, sale of all or
substantially all of the assets of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other similar transaction,
(i) the outstanding shares of Common Stock are increased or decreased or are exchanged for a
different number or kind of shares or other securities of the Company, or (ii) additional shares
or new or different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Common Stock or other securities, the Optionee shall,
with respect to this option or any unexercised portion hereof, be entitled to the rights and
benefits, and be subject to the limitations, set forth in Section 14 of the Plan.

          (b) Board Authority to Make Adjustments. Any adjustments under this Section 9 will be
made by the Board of Directors, whose determination as to what adjustments, if any, will be made
and the extent thereof will be final, binding and conclusive. No fractional shares will be issued
pursuant to this option on account of any such adjustments.

     10. Merger, Consolidation, Asset Sale. Liquidation, etc. In the event of (a) a “Change
of Control” of the Company as a result of a merger, consolidation, or any other event or series of
events or (b) a sale or other disposition by the Company of all or substantially all of the assets
of the Company, each option under the Plan shall terminate simultaneously with the happening of
such event; provided, however, the Company will issue a “Notice of Termination” to
the optionee with respect to the options granted hereunder. Such notice shall give the optionee the
right, for a period of thirty (30) days after the date of the Notice, to exercise all of the Option
Shares granted to the optionee pursuant to the Plan; provided, however, that the
vesting of any and all options previously granted to the optionees shall be automatically
accelerated as of the date immediately prior to the sending of the Notice of Termination. For
purposes of this Section 10, the term “Change of Control” shall mean a transaction in which more
than fifty percent (50%) of the voting power of the Company is transferred to a third party.

 

 

     11. Withholding Taxes. The Company’s obligation to deliver shares upon the exercise
of this option shall be subject to the Optionee’s satisfaction of all applicable federal, state
and local income and employment tax withholding requirements.

     12. Investment Representations: Legends.

          (a) Representations. The Optionee represents, warrants and covenants that:

               (i) Any shares purchased upon exercise of this option shall be acquired for the Optionee’s
account for investment only, and not with a view to, or for sale in connection with, any
distribution of the shares in violation of the Securities Act of 1933 (the “Securities Act”), or
any rule or regulation under the Securities Act.

               (ii) The Optionee has had such opportunity as he or she has deemed adequate to obtain from
representatives of the Company such information as is necessary to permit the Optionee to evaluate
the merits and risks of his or her investment in the Company.

               (iii) The Optionee is able to bear the economic risk of holding such shares acquired pursuant
to the exercise of this option for an indefinite period.

               (iv) The Optionee understands that (A) the shares acquired pursuant to the exercise of this
option will not be registered under the Securities Act and are “restricted securities” within the
meaning of Rule 144 under the Securities Act; (B) such shares cannot be sold, transferred or
otherwise disposed of unless they are subsequently registered under the Securities Act or an
exemption from registration is then available; (C) in any event, an exemption from registration
under Rule 144 or otherwise under the Securities Act will not be available for at least two years
and even then will not be available unless a public market then exists for the Common Stock,
adequate information concerning the Company is then available to the public, and other terms and
conditions of Rule 144 are complied with; and (D) there is now no registration statement on file
with the Securities and Exchange Commission with respect to any stock of the Company and the
Company has no obligation or current intention to register any shares acquired pursuant to the
exercise of this option under the Securities Act.

               (v) The Optionee agrees that, if the Company offers any of its Common Stock for sale pursuant
to a registration statement under the Securities Act, the Optionee will not, without the prior
written consent of the Company, offer, sell, contract to sell or otherwise dispose of, directly or
indirectly (a “Disposition”), any shares purchased upon exercise of this option for a period of
ninety (90) days after the effective date of such registration statement.

By making payment upon exercise of this option, the Optionee shall be deemed to have reaffirmed,
as of the date of such payment, the representations made in this Section 12.

          (b) Legends on Stock Certificate. All stock certificates representing shares of
Common Stock issued to the Optionee upon exercise of this option shall have affixed thereto
legends substantially in the following form, in addition to any other legends required by
applicable state law:

 

 

“The securities represented hereby have not been registered under the
securities act of 1933, as amended (the “securities’ act”), or any
provincial or state securities laws, and may not be sold, transferred,
pledged, hypothecated or otherwise disposed of until either (1) a
registration statement under the securities act and applicable provincial
or state securities laws shall have become effective with regard thereto,
or (2) an exemption from registration under the securities act or
applicable provincial or state securities laws is available in connection
with such offer, sale or transfer.”

“The shares of stock represented by this certificate are subject to
certain restrictions on transfer contained in an Option Agreement, a copy
of which will be furnished upon request by the issuer.”

     13. Miscellaneous.

          (a) Except as provided herein, this option may not be amended or otherwise modified unless
evidenced in writing and signed by the Company and the Optionee.

          (b) All notices under this option shall be mailed or delivered by hand to (i) the Company at
the address set forth below, (ii) the Optionee at the address set forth on the first page of this
option, or (iii) at such other address as may be designated in writing by either of the parties to
one another.

	 	 	 	 	 
	

	 	If to the Company:
	 	MetaMorphix, Inc: 8510A
	

	 	 	 	Corridor Road Savage,
	

	 	 	 	Maryland 20763
	 
	 	 	 	 
	

	 	 	 	Attn: President and CEO

          (c) This option shall be governed by and construed in accordance with the laws of

 

 

State of Delaware.

 

 

EXHIBIT C

MetaMorphix, Inc.

Non-Disclosure and Confidentiality Agreement

     THIS NON-DISCLOSURE AND CONFIDENTIALITY AGREEMENT (the “Agreement”) is made by and between
THOMAS P. RUSSO (hereafter referred to as the “Employee”) and MetaMorphix, Inc., a Delaware
corporation (hereafter referred to as the “Company”), is and shall be effective as of
                   
referred to as the “Effective Date”).

1. Company’s Business and Technology.

The Company and its affiliates (including, but not limited to, its subsidiary, MMI Genomics,
Inc.) are engaged in the commercial development of Growth Factors, agonists and antagonists of
growth factors, immunopharmaceuticals, genomics, proteomics, and related technology (hereafter
referred to as the “Company’s Technology” or as the “Company’s Business”). The Company’s
Technology includes, but is not limited to, the commercialization of proprietary proteins,
genes, peptides, small molecules, antisense molecules and nucleic acids, antibodies, receptors
and various protein and non-protein chemical entities which directly or indirectly affect the
biology or pharmacology of a wide variety of organisms, including fish, warm blooded animals,
and humans. The Company’s Business includes discovery research, bioinformatics, genetics,
human and veterinary pharmaceutical development, veterinary medicine, agriculture, human and
veterinarian diagnostics, research reagents, and other human and agricultural products and
services.

2. Confidentiality.

2.1 The Employee acknowledges that in connection with the performance of his duties, the
Company (and/or its affiliates) will be disclosing confidential and/or proprietary information
to the Employee, including, but not limited to, confidential and closely held financial
reports and information and commercially valuable
technical and business information (“Confidential Information”). Confidential Information
includes without limitation any technologies, methodologies, information or materials that the
Employee develops or acquires knowledge of, or has access to, as a result of his employment
with the Company. The Employee acknowledges that the Company’s Business is extremely
competitive, which is dependent in part upon the maintenance of secrecy, and that any
unauthorized disclosure of Confidential Information to any third party will result in serious
harm to the Company and its affiliates.

 

 

2.2 The Employee covenants and agrees that the Confidential Information will be used only in
connection with the duties and responsibilities of the Employee’s position, or any future
position that the Employee may have with the Company, and that the Confidential Information will
not be used in any other way, even if not envisioned by the Employee, to the detriment of the
Company.

2.3 The Employee covenants and agrees not to disclose, directly or indirectly, the
Confidential Information to any third person or entity, other than representatives or agents of
the Company, or to such parties as expressly directed by the Company’s management. The Employee
will treat all such information as confidential and the sole property of the Company.

2.4 “Confidential. Information” does not include information which, in the
judgment of the Chief Scientific Officer (or other management of the Company with equal
authority), (a) was actually known to the Employee upon the commencement of his employment, other
than by previous disclosure by the Company, as evidenced by written records at the time of such
pre-employment disclosure; (b) is at the time of disclosure or later becomes publicly known (or
generally known in the scientific or biotechnology community) under circumstances involving no
breach of this Agreement; (c) is lawfully and in good faith made available to the Employee by a
third party who did not derive it from the Company and who imposes no obligation of confidence on
the Employee; or (d) after the termination of Employee’s employment, developed by the Employee
independent of any disclosure by the Company (and without reliance upon Confidential Information
known to the then former employee), as clearly evidenced by written records.

2.5 Subject to Section 2.8 hereof, the Employee shall continue to be bound by the terms of
the confidentiality provisions contained in this Section 2 during Employee’s employment and,
subsequently, for a period of five (5) years after the termination of Employee’s employment with
the Company.

2.6 The Employee recognizes that in the event of a breach by Employee of this Agreement, the
damages and harm to the Company would be irreparable. Accordingly, Employee acknowledges that the
Company would be entitled, among other available remedies, to seek and obtain injunctive relief.

2.7 If the Employee is requested or becomes compelled pursuant to a civil lawsuit or any
criminal investigation, indictment, or proceeding (by oral questions, interrogatories, requests
for information or documents, subpoena, civil investigative demand, or similar process) to
disclose any of the Confidential Information, the Employee will provide the Company with prompt
written notice prior to such disclosure so that the Company may seek a protective order or other
appropriate remedy. In the event that such protective order or other remedy is not obtained, the
Employee will furnish only that portion of the Confidential Information that is legally

 

 

required, and the Employee will exercise its best efforts to obtain reliable assurance that
confidential treatment will be accorded to the Confidential Information.

2.8 Notwithstanding anything in this Section 2 or in Section 3.1 to the
contrary, (excluding, however, subsection 2.7 hereof) Employee may never disclose specific
SNP sequences or other intentionally unpatented confidential scientific information, all of
which are highly guarded, unpatented trade secrets.

3. Inventions, Trade Secrets, Intellectual Property and Business Information.

3.1 The Employee covenants and agrees to promptly and fully disclose in writing to the
Company, or a designated representative of the Company, any invention, improvement, discovery,
formula, technique, method, trade secret or other intellectual property, whether patentable or
not, whether copyrightable or not (collectively “Invention(s)”) made, conceived, developed, or
first reduced to practice by the Employee, either alone or jointly with others, while
performing services as an employee of the Company, or relating to the Company’s Technology (as
defined in Section 1) while performing services as an employee of the Company and/or while
utilizing Company resources, or resources of Company’s affiliates and/or subsidiaries
(including, but not limited to, Company facilities, Company equipment, or Company Confidential
Information (as defined in Section 2.1, and subject to, Section 2.4), and/or
facilities, equipment, Confidential Information of the Company’s affiliates and subsidiaries,
and other employees of the Company, its affiliates or subsidiaries). The Employee is bound to
this provision during Employee’s employment and, subsequently for a period of five (5) years
following the termination of employment with the Company. The Employee will execute any legal
documents necessary to perfect the assignment of such inventions or copyrights in any and all
countries which the Company deems important to its business. The Employee appoints the Company
as his agent and attorney-in-fact to execute and file any such document(s), to do all lawful
acts necessary to apply for and obtain patents or copyrights, to sign as “Inventor”, and to
enforce the Company’s rights under this section. All cost associated with such patents or
copyrights will be at the Company’s own expense and the Employee will not be compensated for
his time and other expenses for such efforts, other than Employee’s salary (if Employee is
then employed by the Company).

3.2 The Employee acknowledges, covenants and agrees that all Inventions that the Employee
must disclose to the Company pursuant to this Section shall be the, sole and
exclusive property of the Company.

4. Confidentiality Obligations Imposed By Other Agreements.

4.1 In accordance with Section 11.3 of the December 1, 1994 Collaboration
Agreement between the Company, The Johns Hopkins University (JHU), and

 

 

Genetics Institute, Inc. (GI), Employee (to the extent permitted, from time-to-time, by the
Company) may have access to Confidential Information (as described therein) of JHU and GI
and, accordingly, shall be bound by Sections 11.1, 11.2, and 11.4 of the Collaboration
Agreement.

4.2 Employee, upon request, shall sign such other confidentiality, nondisclosure, and
other such agreements, required by third parties (with whom the Company has a relationship).

5. Other Obligations.

The Employee represents that Employee is not bound by any agreement that prevents him/her
from disclosing to the Company any information (as required hereunder) that the Employee is
obligated to keep secret pursuant to any existing confidentiality agreement with a third
party or consistent with his duties or obligations to such third party, and Employee further
recognizes that nothing in this Agreement imposes any obligation on the Employee to the
contrary.

6. No Conflict: Valid and Binding.

The Employee represents that to his knowledge, neither the execution of this Agreement, nor
the performance of the Employee’s duties under this Agreement will result in a violation or
breach of any other agreement by which the Employee is bound. Employee shall not enter into
any agreement that would conflict with this Agreement. The Company’s rights under this
Agreement may be assigned to any purchaser of all, substantially all, or a “business
division” portion of the Company’s assets.

7. Severability.

If any provision of this Agreement shall be declared invalid, illegal or unenforceable, such
provision shall be severed and the remaining provisions shall continue in full force and
effect.

8. Governing Law. This Agreement shall be governed by the laws of the State of
Maryland.

9. Miscellaneous.

9.1 This Agreement (together with the contemporaneous Employment Agreement) represents
the “entire agreement” between Employee and the Company with respect to the matters set forth
herein.

 

 

9.2 Nothing in this Agreement suggests any term of employment or that Employee’s
employment is anything other than “at-will” employment.

9.3 The affiliates and subsidiaries of the Company shall be the intended third party
beneficiaries of the Company’s rights under this Agreement (including, but not limited to, the
Company’s right to enforce its rights against Employee).

IN WITNESS WHEREOF, the parties have executed this Non-Disclosure and Confidentiality Agreement as
of the above -indicated Effective Date.

	 	 	 	 	 
	Employee

	 	 	 	MetaMorphix
	 
	 	 	 	 
	/s/ Thomas Russo

	 	By
	 	/s/ Edwin C. Quattlebaum, Ph.D.
	Thomas P. Russo

	 	 	 	Edwin C. Quattlebaum, Ph.D.

President and CEO May  2004
	 
	 	 	 	 
	May 31, 2004exv10w3

 

Exhibit 10.3

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made as of September 5, 2000, by and between
METAMORPHIX, INC., a Delaware corporation with its principal place of business at 1450 South
Rolling Road, Baltimore, Maryland 21227 (hereinafter referred to as the “Employer”) and RONALD L.
STOTISH, PH.D., a Pennsylvania resident (hereinafter referred to as the “Employee”).

Explanatory Statement

     A. Employer desires to employ Employee as its Vice President of Research and Development, in
accordance with the terms and conditions of this Agreement.

     B. Employee desires to serve in the employ of the Employer on a full-time basis subject to
the terms and conditions of this Agreement.

     C. Contemporaneously with the execution and delivery of this Agreement, Employer and
Employee have entered into an Incentive Stock Option Agreement (the “Stock Option Agreement”) and
a Non-Disclosure and Confidentiality Agreement (the “Confidentiality Agreement”).

Agreement

     NOW, THEREFORE, in consideration of the mutual covenants, promises, agreements,
representations, and warranties of Employer and Employee, each to the other made, the Explanatory
Statement which shall be deemed a substantial part hereof, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Employer and Employee
hereby covenant, promise, agree, represent, and warrant as follows:

     SECTION 1. EMPLOYMENT.

          1.1. Engagement of Employment. Employer hereby employs Employee, and Employee accepts
such employment, on an “at will” basis, as Vice President of Research and Development, as of
September 5, 2000, and Employee agrees to render such duties as are set forth in Section 1.2,
subject to the terms and conditions of this Agreement.

          1.2. Duties. During Employee’s employment under this Agreement, Employee shall
render to the best of Employee’s ability, on behalf of Employer, on an exclusive basis, and at
the direction of Employer, services as Employer’s Vice President of Research and Development, and
such other duties as the President shall direct. In particular, subject to oversight and
direction of the Board of Directors, the Chairman, and President and Chief Executive Officer,
Employee shall:

               (a) plan, manage, coordinate, and oversee all of Employer’s research efforts at
Employer’s facilities and at universities and other companies at which sponsored research
or collaborations occur;

 

 

               (b) in conjunction with the President/CEO, propose and develop plans of research and
development, timetables, strategies, and budgets and assist in the development of
Employer’s business plans;

               (c) coordinate patent-filing and management efforts;

               (d) develop further and oversee policies and procedures of confidentiality and
non-disclosure;

               (e) serve as a member of Employer’s Operating Committee; and

               (f) perform such other managerial and operational functions within and outside the
scope of such research and development services as may be requested from time-to-time by
Employer.

Upon the commencement of employment, Employee shall report to Employer’s Chairman, President and
Chief Executive Officer. However, as the management and operational organization of Employer
evolves, such reporting responsibility may be modified.

          1.3. Exclusivity. Employee shall not pursue other employment, consulting, or
professional endeavors during his employment.

          1.4. Employer Responsibilities. Employer shall provide Employee with suitable office
space and equipment, including access to telephone, facsimile, photocopying, and any other
equipment reasonably required for the Employee to perform his duties as set forth in Section 1.1.
hereof.

SECTION 2. COMPENSATION.

          2.1. Salary. Employer shall pay Employee (in addition to any benefits provided for in
this Agreement) a base annual salary (the “Annual Salary”), payable monthly in arrears, and
subject to customary payroll deductions in accordance with the general practice of Employer. The
Annual Salary shall be Two Hundred Twenty-Five Thousand Dollars ($225,000).

          2.2. Bonus Compensation. In addition to the Annual Salary provided for by Section
2.1, subject to customary payroll deductions in accordance with the general practice of Employer,
Employer shall pay Employee additional compensation in the form of an annual bonus (the “Annual
Performance-Based Bonus”) as follows:

               (a) Amount. In December of each year during Employee’s employment (and during
the fourth quarter for the year 2000), Employee and Employer’s President shall establish
challenging performance-based goals relating to Employee’s and Employer’s performance over
the following calendar year (the “Performance Goals”). Employer shall pay Employee an
Annual Performance-Based Bonus, in cash, of up to

 

 

twenty-five percent (25%) of the Annual Salary upon achieving (in the judgment of the
Board of Directors) all stated portions of the Performance Goals;

               (b) Payment. Payment of the Annual Performance-Based Bonus earned with
respect to a particular calendar year shall be payable as of March 1 of the following year
(or upon such later, appropriate date if the applicable Performance Goals are based upon
financial reports not then received); and

               (c) Other. Employee is not employed by Employer as of December 31 of any
calendar year and/or if Employee is in default of any material term of this Agreement,
then Employer may, in its sole discretion, discontinue or lessen any and all payments
attributable to the Annual Performance-Based Bonus.

     SECTION 3. BENEFITS. Employee shall be provided with at least such health, dental,
disability, life insurance, and other benefits as may be provided to comparable management-level
employees of Employer from time to time.

     SECTION 4. VACATION LEAVE, SICK LEAVE, AND HOLIDAYS.

          4.1. Vacation and Sick Leave. Employee shall be entitled to “Vacation” during each
calendar year as set forth in this Section 4.1 and as follows: twenty-three (23) working days for
“Vacation” during each year during which Employee is employed under this Agreement (and a prorated
amount during 2000). Vacation shall be used for all vacation, personal leave, excess sick leave,
and any other time during which Employee is not required to perform the duties set forth in
Section 1. Employee shall take Employee’s Vacation at such time or times in accordance with the
policy of Employer so as not to disrupt the Employer’s operations. Employee shall also be entitled
to up to such number of days of “Sick Leave” as may be set in accordance with Employer’s Sick
Leave Policy. During Employee’s Vacation and Sick Leave, the Monthly Salary, and all benefits paid
and provided pursuant to this Agreement, shall be paid and provided in full. Unused Vacation and
Sick Leave for any given year that has not been taken by Employee within such year may not be
carried over to the following year.

          4.2. Holidays. In addition to Vacation and Sick Leave, Employee shall be entitled to
New Year’s Day, Memorial Day, July 4th, Labor Day, Thanksgiving, Christmas, and such other
holidays as are recognized by Employer in accordance with applicable federal, state, or local laws
and as are offered to comparable employees of Employer.

     SECTION 5. BUSINESS EXPENSES. Employee is authorized to incur reasonable expenses,
including travel expenses, in connection with Employee’s exercise of Employee’s duties under this
Agreement. It is intended by Employer and Employee that all such expenses shall be ordinary and
necessary expenses incurred in connection with the duties of Employee under this Agreement.
Employer may establish guidelines, budgets, preapproval requirements, and restrictions pertaining
to Employee’s authorization to incur business expenses on behalf of Employer and Employee shall
comply with all Employer policies relating to the authorization and verification of such expenses.

 

 

     SECTION 6. RELOCATION AND TEMPORARY HOUSING ASSISTANCE.

          6.1. Relocation of Personal Residence. Upon Employee’s relocation of his personal
residence to the Maryland area, Employer shall reimburse Employee for the following expenses, if
reasonable and documented, incurred during Employee’s relocation and before the first anniversary
of Employee’s employment:

               (a) Up to two (2) house hunting trips;

               (b) household moving expenses (including, but not limited to, the moving of
household goods and re-registration of family automobiles); and

               (c) home-selling and home-purchasing expenses incurred before the first anniversary
of the date upon which Employer commences its next long-term lease (but, in any event, no
expenses incurred later than December 31, 2002), including those costs associated with
closing the sales transaction on Employee’s current home (in Pennsylvania and new home
within commuting distance of Employer’s offices), including, if applicable, broker’s
commissions, “points”, and such other costs as are attributable to Employee on the
settlement statement furnished at the time of closing

(which expense reimbursement will be “grossed up” and will not exceed Ninety Thousand Dollars
($90,000) when “grossed up”).

          6.2. Temporary Living Expenses. Prior to Employee’s relocation of his personal
residence to the Maryland area, Employer shall reimburse Employee for the cost of temporary
housing for up to three (3) months if reasonable and documented and not exceeding Two Thousand
Dollars ($2,000) per month.

	   	SECTION 7. CONFIRMATION OF “AT WILL” EMPLOYMENT AND
TERMINATION.

          7.1. “At Will” Employment. Employee acknowledges and confirms that he is an “at
will” employee and that his employment, notwithstanding any provision of this Agreement, may be
terminated at any time by Employer, with or without cause. Employee shall adhere to and obey all
Employer policies as they now exist and as they may be adopted and amended from time to time.

          7.2. Severance pay. Upon termination due to a reduction in work force and upon
certain other “without cause” terminations, Employer shall provide Employee with severance pay as
set forth in the attached “Severance Requirements” which are incorporated herein by reference.

          7.3. Termination by Employee. Employee may terminate this Agreement at any time. In
the event Employee terminates this Agreement, Employee shall have no right to severance pay or
accelerated vesting of stock options (other than in accordance with such severance policy as the
Board of Directors or its Compensation Committee may adopt from time to time with respect to
comparable employees).

 

 

     SECTION 8. INCENTIVE STOCK OPTION AGREEMENT. Contemporaneously with this Agreement,
Employer has granted Employee the opportunity to purchase up to two hundred thousand (200,000)
shares of Employer’s common stock at One Dollar and Eighty-Five Cents ($1.85) per share pursuant
to an Incentive Stock Option Agreement, the form of which is attached hereto as Exhibit B
and incorporated herein by reference, and Employer’s 1996 Employees’ Incentive Stock Option Plan.
As further set forth in the Incentive Stock Option Agreement, sixty thousand (60,000) shares are
“Performance Option Shares” that vest only in accordance with the Merit Plan adopted by the Board
of Directors and upon achieving performance objectives established by the President and Chief
Executive Officer. The Incentive Stock Option Agreement shall not obligate Employee to exercise
his option to purchase stock of Employer and does not obligate Employer to continue Employee’s
employment.

     SECTION 9. NON-DISCLOSURE AND CONFIDENTIALITY AGREEMENT. Employer and Employee have
entered into a Non-Disclosure and Confidentiality Agreement, a copy of which is attached hereto
as Exhibit C and incorporated herein by reference.

     SECTION 10. CONSTRUCTION OF AGREEMENT: CHOICE OF LAW, SEVERABILITY, AND
NUMBER. This Agreement was made in the State of Maryland. The validity, legality, and
construction of this Agreement or of any of its provisions shall be determined under the laws of
the State of Maryland. If any provision contained in this Agreement cannot be enforced to its
fullest extent, then such provision shall be enforced to the maximum extent permitted by law, and
Employer and Employee consent and agree that such provision may be judicially modified accordingly
in any proceeding brought to enforce such provision. The invalidity, illegality, or inability to
enforce any provision of this Agreement shall not affect or limit the validity and enforceability
of any other provision hereof. Where context requires, the plural shall include the singular and
vice versa.

     SECTION 11. NOTICES. All notices and communications hereunder shall be in writing and
shall be deemed given when sent postage prepaid by registered or certified mail, return receipt
requested, by hand delivery with a signed returned copy, or by delivery of a nationally recognized
overnight delivery service, and addressed as follows:

	 	 	 
	If intended for Employer:

	 	MetaMorphix, Inc.
	

	 	1450 South Rolling Road

	

	 	Baltimore, Maryland 21227
	

	 	Attn: Edwin C. Quattlebaum, President
	

	 	and Chief Executive Officer
	 
	 	 
	with a copy to:

	 	Shapiro and Olander
	

	 	2000 Charles Center South
	

	 	36 South Charles Street

	

	 	Baltimore, Maryland 21201
	

	 	Attn: William E. Carlson, Esq.

 

 

	 	 	 
	If intended for Employee:

	 	Ronald L. Stotish, Ph.D.
	

	 	117 Gwyn Lynn
	

	 	lvyland, Pennsylvania 18974

If, however, a party furnishes another party with notice of a change of address, as provided in
this Section, then all notices and communications thereafter shall be addressed as provided in
such notice.

     SECTION 12. ENTIRE AGREEMENT. This Agreement, which is the product of a negotiation
between Employer and Employee, the Incentive Stock Option Agreement,
and the Non-Disclosure and
Confidentiality Agreement contain the entire understanding between Employer and Employee with
respect to matters set forth herein and therein and supersede all other oral and written
agreements or understandings between them with respect to matters set forth herein and therein. No
modification’ or addition hereto or waiver or cancellation of any provision shall be valid except
as provided in a writing signed by the party against whom such modification, addition, waiver, or
cancellation is being enforced.

     IN WITNESS WHEREOF, Employer and Employee have executed this Employment Agreement as of the
day and year first above written.

[SEAL]

METAMORPHIX, INC.

	 	 	 	 	 
	By: /s/ William E. Carlson, Secretary

	 	 	 	 
	 

	 	 	 	 
	William E. Carlson, Secretary

	 	 	 	 
	 
	By: /s/ Ronald L. Stotish, Ph.D. (SEAL)

	 	 	 	 
	 

	 	 	 	 
	RONALD L. STOTISH, PH.D.

	 	 	 	 

 

 

EXHIBIT A

METAMORMIX, INC.

Severance Requirements

 

 

EXHIBIT B

METAMORPHIX, INC.

Incentive Stock Option Agreement

 

 

EXHIBIT C

METAMORPHIX, INC.

Non-Disclosure and Confidentiality Agreement

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}]]