PARADIGM GENETICS INC
EMPLOYMENT AGREEMENT W/PHILIP R. ALFANO
<DOCUMENT>
<TYPE>EX-10.42
<SEQUENCE>10
<FILENAME>dex1042.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT W/PHILIP R. ALFANO
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.42

                             PARADIGM GENETICS, INC.

                              EMPLOYMENT AGREEMENT

                                       FOR

                                  PHILIP ALFANO

       This EMPLOYMENT AGREEMENT ("Agreement") is entered into as of the 22nd
day of November, 2002, by and between Philip Alfano ("Executive") and PARADIGM
GENETICS, INC. ("Company").

       WHEREAS, the Company desires to compensate Executive for his personal
services to the Company; and

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

       NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties agree to the following:

1.     EMPLOYMENT BY THE COMPANY.

1.1    Effective Date and Term. The effective date of this Agreement shall be
       November 22, 2002 ("Effective Date"). The employee is employed on an "at
       will" basis. Employee's salary and performance will be reviewed at least
       annually for compensation changes. This document supercedes the
       Employment Agreement dated October 30, 2002 with changes incorporated at
       the request of the Paradigm Board of Directors.

1.2    Position. Subject to terms set forth herein, the Company agrees to employ
       Executive in the position of Vice President, Finance and Chief Financial
       Officer and Executive hereby accepts such employment. Executive's
       principal place of employment during the entire period of this Agreement
       shall be Raleigh/Durham, North Carolina. During the term of his
       employment with the Company, Executive will devote his best efforts and
       all of his business time and attention (except for vacation periods as
       set forth herein and reasonable periods of illness or other incapacities
       permitted by the Company's general employment policies) to the business
       of the Company.

1.3    Duties. Executive shall be proposed to the Board to be an officer of the
       Company, and serve in an executive capacity. He shall have such duties,
       responsibilities, and authority as are customarily associated with his
       then current title and as assigned to Executive by the Chief Executive
       Officer. The Chief Executive Officer has the right to assign and

<PAGE>

       change Executive's duties at any time.

1.4    Other Employment Policies. The 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.

2.     COMPENSATION.

2.1    Salary. Executive shall receive for services an annualized base salary of
       $200,000 subject to standard federal and state withholding requirements,
       payable in accordance with the Company's standard payroll practices.

2.2    Stock Options. Subject to the approval of the Company's Board of
       Directors ("Board"), the Company shall grant Executive an option
       ("Option") to purchase 100,000 shares of the Company's common stock under
       the Company's 2000 Stock Option Plan at a strike price determined on
       Executives first day of employment. More information concerning the Stock
       Option Plan will be provided to Executive shortly after he begins work.
       This grant will consist of incentive stock options. The Option shall vest
       according to the vesting schedule set forth in the governing grant
       notice, which shall provide that the shares subject to the Option will
       vest over a four-year period, with twenty-five percent (25%) of the
       shares subject to the Option vesting upon the Executives date of hire,
       and another (25%) after Executive successfully completes one year of
       continuous service with Paradigm, and one-forty-eighth (1/48thth) of the
       shares subject to the Option vesting for each month of Executive's
       continuous service thereafter. Executive agrees to execute Paradigm's
       standard form of stock option agreement.

2.3    Performance Bonus. Executive shall be eligible to participate in the 2003
       Leadership Incentive Plan (LIP) at 35 percent (at target) of his base
       salary (subject to standard federal and state withholding requirements)
       based on meeting his individual performance goals and Paradigm meeting
       its corporate goals. The current terms and conditions of this incentive
       opportunity are set forth in the attached 2002 Leadership Incentive Plan
       (LIP) [Exhibit B], for his reference. Payment of the bonus shall be
       subject to the satisfaction of mutually agreed upon performance goals,
       and within a reasonable period of time following the execution of this
       Agreement, the parties shall set forth those goals in a separate written
       document. The Company's Board of Directors, in its sole discretion, shall
       determine the extent to which Executive has achieved the performance
       goals upon which Executive's bonus is based. As part of a yearly review
       of performance, Executive will be eligible for a change in salary, bonus
       and stock options based on performance, as determined by the Company's
       Board of Directors.

2.4    Standard Company Benefits. Executive shall be entitled to all rights and
       benefits for

<PAGE>

       which he is eligible under the terms and conditions of the standard
       Company benefits and compensation practices which may be in effect from
       time to time and provided by the Company to its employees generally.

2.5    Expense Reimbursement. The Company will reimburse Executive for
       reasonable business expenses in accordance with the Company's standard
       travel and expense reimbursement policy.

3.     PROPRIETARY INFORMATION, INVENTIONS AND NON-COMPETITION OBLIGATIONS.

3.1    Agreement. Executive agrees to execute and abide by the Proprietary
       Information, Inventions, Non-Competition, and Non-Solicitation Agreement
       attached hereto as Exhibit D.

4.     OUTSIDE ACTIVITIES.

4.1    Other Employment/Enterprise. Except with the prior written consent of the
       Board, Executive will not, while employed by the Company, 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 so long as such activities do not
       materially interfere with the performance of his duties hereunder.

4.2    Conflicting Interests. Except as permitted by Section 4.3, while employed
       by the Company, 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
       prospects, financial or otherwise.

4.3    Competing Enterprises. While employed by the Company, except on behalf of
       the Company, Executive will not directly or indirectly, whether as an
       employee, officer, director, stockholder, partner, proprietor, associate,
       representative, consultant, or in any capacity whatsoever engage in,
       become financially interested in, be employed by or have any business
       connection with any other person, corporation, firm, partnership or other
       entity whatsoever which compete directly with the Company, throughout the
       world, in any line of business engaged in (or planned to be engaged in)
       by the Company; provided, however, that anything above to the contrary
       notwithstanding, he may own, as a passive investor, securities of any
       competitor corporation, so long as his direct holdings in any one such
       entity shall not in the aggregate constitute more than 1% of the voting
       stock of such corporation.


5.     FORMER EMPLOYMENT.

<PAGE>

5.1    No Conflict With Existing Obligations. Executive represents that his
       performance of all the terms of this Agreement and as an employee of
       Paradigm does not and will not breach any agreement or obligation of any
       kind made prior to his employment by Paradigm, including agreements or
       obligations he may have with prior employers or entities for which he has
       provided services. Executive has not entered into, and agrees he will not
       enter into, any agreement or obligation either written or oral in
       conflict herewith.

5.2    No Disclosure of Confidential Information. If, in spite of the second
       sentence in Section 5.1, Executive should find that confidential
       information belonging to any former employer might be usable in
       connection with Paradigm's business, Executive will not intentionally
       disclose to Paradigm or use on behalf of Paradigm any confidential
       information belonging to any of Executive's former employers (except in
       accordance with agreements between Paradigm and any such former
       employer); but during Executive's employment by Paradigm, he will use in
       the performance of his duties all information which is generally known
       and used by persons with training and experience comparable to his own
       and all information which is common knowledge in the industry or
       otherwise legally in the public domain.

6.     TERMINATION OF EMPLOYMENT. The parties acknowledge that Executive's
       employment with Paradigm is at-will. The provisions of Sections 6.1
       through 6.6 govern the amount of compensation, if any, to be provided to
       Executive upon termination of employment and do not alter this at-will
       status.

6.1    Termination Without Cause. The Chief Executive Officer and Compensation
       Committee of the Board shall have the right to terminate Executive's
       employment with the Company at any time without Cause by giving notice as
       described in Section 6.6 of this Agreement.

       a)     In the event Executive's employment is terminated by the Company
              without Cause or for a reason other than Executive's death,
              disability or cessation of the Company's business pursuant to
              Section 6.5 below, Paradigm will continue to pay Executive his
              salary at the date of termination (less applicable deductions and
              withholdings), and provide his healthcare benefits in effect on
              the date of his termination through reimbursement of COBRA expense
              (less applicable employee premium sharing amounts) for a maximum
              time period of up to twelve (12) months following the Executive's
              final date of employment. These payments will only be made if: 1)
              Executive executes a general release of all claims against
              Paradigm, including but not limited to language waiving any all
              claims Executive has or has had against Paradigm or relating to
              any event or claim occurring prior to the date of the release, any
              state law claims and claims under federal employment law statutes,
              or any claims relating to his employment by or separation from
              Paradigm and language including a confidentiality and
              non-disparagement provision with language acceptable to the
              Company no later than twenty-one (21) days after

<PAGE>

              the date of termination (or within 45 days of the date of
              termination if the separation is subject to the Older Workers
              Benefit Protection Act; the parties agree that the determination
              of whether this Act applies will be made solely by Paradigm), and
              2) Executive must use diligent documented efforts to obtain other
              employment, which must be documented in detail monthly in writing
              to the Company's VP, Human Resources. Executive will only receive
              the salary and benefits as set forth above during this maximum
              twelve (12) month-period as long as he is unable to secure
              comparable regular, full time employment or a consulting
              engagement lasting for more than six (6) months. Executive shall
              have an obligation to notify the Company of any positions he
              accepts in any capacity during the applicable severance period.
              Executive must submit written resignation of any committee seat,
              regular or ex-officio. The parties agree that Paradigm's Vice
              President of Human Resources will determine and make the final
              decision on whether Executive has made diligent efforts to obtain
              other employment, and receive benefits, under this paragraph.

              Unless Executive's employment is terminated by death, disability
              or cessation of business under Section 6.5, or for cause,
              Executive will receive an additional 25% for a total of 50%
              vesting of his stock options under Section 2.2 above if terminated
              other than for cause in less than one year from the date of hire.

       b)     Executive shall not receive severance pay or continuation of
              benefits unless and until the above-referenced release of all
              claims becomes effective, and can no longer be revoked under its
              terms.

       c)     If the Company is acquired or a change of control of ownership
              with respect to the Company (as defined below) occurs at anytime
              during the twelve (12) month severance period, described above,
              all amounts of salary and the cash equivalent of the cost of COBRA
              expense for the remainder of the twelve (12) month period shall be
              due and payable to Executive in full.

       d)     If Paradigm is acquired or a change of control of ownership with
              respect to Paradigm (as defined below) occurs, Paradigm will
              increase two-fold the amount of stock options otherwise vested up
              to 100%. If redundancy occurs within twelve (12) months of a
              change of control, Executive is entitled to a full twelve (12)
              months of severance pay on a non-contingent basis.

              "Change of Control" means the occurrence of any of the following
              events: (a) Ownership. Any "Person" (as such term is used in
              Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
              as amended) becomes the "Beneficial Owner" (as defined in Rule
              13d-3 under said Act), directly or indirectly, of securities of
              Paradigm representing 50% or more of the total voting power

<PAGE>

              represented by Paradigm's then outstanding voting securities
              (excluding for this purpose Paradigm or its Affiliates or any
              employee benefit plan of Paradigm) pursuant to a transaction or a
              series of related transactions which the Board of Directors does
              not approve; or (b) Merger/Sale of Assets. A merger or
              consolidation of Paradigm whether or not approved by the Board of
              Directors, other than a merger or consolidation which would result
              in the voting securities of Paradigm outstanding immediately prior
              thereto continuing to represent (either by remaining outstanding
              or by being converted into voting securities of the surviving
              entity or the parent of such corporation) at least 80% of the
              total voting power represented by the voting securities of
              Paradigm or such surviving entity or parent of such corporation
              outstanding immediately after such merger or consolidation, or the
              stockholders of Paradigm approve an agreement for the sale or
              disposition by Paradigm of all or substantially all of Paradigm's
              assets.

6.2    Termination for Cause.

       (a)    The Chief Executive Officer and the Compensation Committee of the
              Board shall have the right to terminate Executive's employment
              with the Company at any time for Cause by giving notice as
              described in Section 6.6 of this Agreement.

       (b)    "Cause" for termination shall mean: (1) conviction of, or pleading
              guilty or nolo contendere to, a felony or other crime involving
              theft, fraud or moral turpitude; (2) drug or alcohol abuse; (3)
              Executive's material breach of this Agreement, including
              unsatisfactory job performance linked to employees' goals; (4)
              Executive's refusal to abide by or comply with the appropriate
              directives of the Board tied to reasonable allowance; (5)
              Executive's dishonesty, fraud, or misconduct with respect to the
              business affairs of the Company, including, without limitation,
              fraud, misappropriation or embezzlement; (6) intentional damage of
              any property worth in excess of $1,000 of the Company; (7) conduct
              by Executive which demonstrates gross unfitness to serve or (8)
              any violation of Paradigm rules or policies for which termination
              is the normal discipline based on policy or past practice

       (c)    If the Chief Executive Officer and Compensation Committee of the
              Board of Paradigm believe Executive is guilty of poor job
              performance referenced above in Section 6.2 (b)(3) that could lead
              to termination, Executive shall be provided sixty (60) days notice
              of possible termination and the opportunity to cure the stated
              deficiencies. This 60-day period will only apply to poor job
              performance under Section 6.2 (b) (3).

       (d)    In the event Executive's employment is terminated at any time with
              Cause, he will not receive severance pay, accelerated vesting of
              stock options, or any other compensation or benefits as the result
              of his termination.

<PAGE>

6.3    Voluntary or Mutual Termination.

       (a)    Executive may voluntarily terminate his employment with the
              Company at any time by giving notice as described in Section 6.6.

       (b)    In the event Executive voluntarily terminates his employment, he
              will not receive severance pay, further accelerated vesting of
              stock options, or any other compensation or benefits as the result
              of his termination.

6.4    Termination for Inability to Regularly Perform Duties.

       (a)    The Company's Chief Executive Officer may terminate Executive in
              the event of any illness, disability or other physical or mental
              incapacity in such a manner that Executive is physically rendered
              unable regularly to perform the essential functions of his job
              duties hereunder, with or without reasonable accommodation, as
              validated by certified physician.

       (b)    The Company's Chief Executive Officer shall make the determination
              regarding whether Executive is unable regularly to perform his
              duties as described in subsection (a) above.

       (c)    In the event Executive's employment is terminated at any time for
              inability to regularly perform duties as described in subsection
              (a) above, he will not receive severance pay, accelerated vesting
              of stock options, or any other compensation or benefits as the
              result of his termination.

6.5    Dissolution, Liquidation or Insolvency of the Company. Notwithstanding
       the above, in the event Executive's employment is terminated by the
       Company in connection with or as a result of the liquidation,
       dissolution, insolvency or other winding up of the affairs of the Company
       without the establishment of a successor entity to the Company, the
       Company shall have no obligation to provide severance or further
       financial consideration to Executive, including a performance bonus,
       except for any reasonable expense reimbursements or base salary that
       Executive has accrued and earned at the time of such termination.

6.6    Notice: Effective Date of Termination. Termination of Executive's
       employment pursuant to this Agreement shall be effective on the earliest
       of:

       (a)    immediately after Executive, for any reason, gives written notice
              to the Company's Chief Executive Officer of his termination.

       (b)    immediately upon the Company's Chief Executive Officer giving
              written notice to Executive of his termination for Cause, without
              Cause or as a result of an event

<PAGE>

              listed in Section 6.4 or 6.5 above;

6.7    Non-Compete Provision. In consideration of his employment with Paradigm,
       Executive agrees that for the longer of twelve (12) months after the
       separation of his employment with the Company for any reason, whether
       Executive's resignation or termination by Paradigm, or any period for
       which he is receiving severance payments from Paradigm under the terms of
       Section 6.1 (a) of this Agreement, he will not become engaged in any
       "Competitive Activity" (as defined below).

       "Competitive Activity" means: (A) Directly or indirectly, engaging,
       assisting or participating in, whether as a President, CEO, Vice
       President, director, officer, employee, agent, manager, consultant,
       partner, owner or independent contractor or other participant, any
       business, firm, corporation, partnership, enterprise or organization
       located in Durham and Wake Counties, North Carolina, the State of North
       Carolina or the United States of America or the countries of Western
       Europe that competes with the business engaged or hereafter engaged in by
       Paradigm; (B) the sale, trade, service or production or attempted sale,
       trade, service or production of genomics in Durham and Wake Counties,
       North Carolina, the State of North Carolina or the United States of
       America or the countries of Western Europe. (C) the sale, trade, service
       or production or attempted sale, trade, service or production of products
       in Durham and Wake Counties, North Carolina, the State of North Carolina
       or the United States of America or the countries of Western Europe which
       are competitor products to the products produced, sold or designed by the
       Paradigm facility in Research Triangle Park, North Carolina during his
       employment with Paradigm; and (D) employment, whether direct or as
       independent contractor, with Metabolon, Beyond Genomics, SurroMed,
       Phenomenome, Metabometrix, or Cantata, and any of their successor
       businesses or businesses which acquire these companies after the date of
       this Agreement in Durham and Wake Counties, North Carolina, the State of
       North Carolina or the United States of America or the countries of
       Western Europe.

       In further consideration of his employment with Paradigm, Executive for
       the duration of his employment with Paradigm and for the longer of twelve
       (12) months after the separation of his employment with the Company for
       any reason, whether Executive's resignation or termination by Paradigm,
       or any period for which he is receiving severance payments from Paradigm
       under the terms of Section 6.1 (a) of this Agreement, he shall not
       recruit or encourage employees of Paradigm to leave Paradigm or to be
       hired by any company or business with which he affiliated or allow any
       such company or business, to the extent it is in his control, to engage
       in any activity which, were it done by him, would violate any provision
       of this Section 6.7; provided, however, that Paradigm acknowledges and
       agrees that a company or business with which Executive is affiliated may
       employee or engage Paradigm employees that have left Paradigm, so long as
       the company or business did not recruit or encourage the Paradigm
       employee to leave Paradigm. It is understood that discussions, whether
       occurring before or after the date of this Agreement, resulting from
       general employment advertisements or initiated by Paradigm employees, do
       not constitute recruitment or encouragement to leave.

<PAGE>

7.     GENERAL PROVISIONS.

7.1.   Notices. Any notices provided hereunder must be in writing and shall be
       deemed effective upon the earlier of personal delivery (including
       personal delivery by hand, telecopier, or telex) or the third day after
       mailing by first class mail, to the Company at its primary office
       location and to Executive at his address as listed on the Company
       payroll.

7.2    Severability. 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, construed and enforced in such jurisdiction
       as if such invalid, illegal or unenforceable provisions had never been
       contained herein.

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

7.4    Complete Agreement. This Agreement and its Exhibits A - E constitute the
       entire agreement between Executive and the Company. This Agreement is the
       complete, final and exclusive embodiment of their agreement with regard
       to this subject matter and supercedes any prior oral discussions or
       written communications and agreements. This Agreement 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 writing signed by the President and Chief Executive Officer of the
       Company.

7.5    Counterparts. 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.

7.6    Headings. 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.

7.7    Successors 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 of his duties hereunder and he
       may not assign any of his rights hereunder without the written consent of
       the Company, which shall not be withheld unreasonably.

7.8    Choice of Law. All questions concerning the construction, validity and
       interpretation of this Agreement will be governed by the law of the State
       of North Carolina. Executive

<PAGE>

       expressly consents to the jurisdiction of the state and federal courts
       for Durham County, North Carolina, for all actions arising out of or
       relating to this Agreement.

       IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first below written.

                                        PARADIGM GENETICS, INC.

                                        By: /s/ James D. Bucci
                                            ----------------------------
                                            For Paradigm Genetics, Inc.

                                        Date: 11/22/02

Accepted and agreed this 22nd day of November, 2002.


      /s/ Philip Alfano
------------------------------
        Philip Alfano

</TEXT>
</DOCUMENT>
