Exhibit (d)(7)
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of September 19, 2001, by and between ImClone
Systems Incorporated a Delaware corporation (the "Company"), and Xxxxxx X.
Xxxxxx ("Executive").
IN CONSIDERATION of the premises and the mutual covenants set forth
below, the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby agrees to continue to employ
Executive as the Executive Vice President and Chief Operating Officer of the
Company (the "COO"), and Executive hereby accepts such continued employment, on
the terms and conditions hereinafter set forth.
2. TERM. The period of employment of Executive by the Company under
this Agreement (the "Employment Period") shall commence on the date hereof (the
"Commencement Date") and shall continue through the third anniversary thereof;
PROVIDED, THAT, the Employment Period shall automatically be extended for one
(1) additional day each day during the Employment Period unless either party
gives written notice not to extend this Agreement. The Employment Period may be
sooner terminated by either party in accordance with Section 6 of this
Agreement.
3. POSITION AND DUTIES. During the Employment Period, Executive shall
serve as COO, and shall report solely and directly to the Company's Board of
Directors (the "Board"). Executive shall have those powers and duties normally
associated with the position of COO of entities comparable to the Company and
such other powers and duties as may be prescribed by the Board; PROVIDED THAT,
such other powers and duties are consistent with Executive's position as COO of
the Company. Executive shall devote as much of his working time, attention and
energies during normal business hours (other than absences due to illness or
vacation) to satisfactorily perform his duties for the Company. Notwithstanding
the above, Executive shall be permitted, to the extent such activities do not
substantially interfere with the performance by Executive of his duties and
responsibilities hereunder to (i) manage Executive's personal, financial and
legal affairs and (ii) to serve on civic or charitable boards or committees (it
being expressly understood and agreed that Executive's continuing to serve on
any such board and/or committees on which Executive is serving, or with which
Executive is otherwise associated, as of the Commencement Date shall be deemed
not to interfere with the performance by Executive of his duties and
responsibilities under this Agreement). During the Employment Period, Executive
shall also serve as a director of the Company.
4. PLACE OF PERFORMANCE. The principal place of employment of Executive
shall be at the Company's principal executive offices in New York, New York.
5. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY AND BONUS. During the Employment Period, the
Company shall pay Executive a base salary at the rate of not less than $455,000
per year ("Base Salary"). Executive's Base Salary shall be paid in approximately
equal installments in
accordance with the Company's customary payroll practices. The Compensation
Committee of the Board (the "Committee") shall review Executive's Base Salary
for increase (but not decrease) no less frequently than annually and consistent
with the compensation practices and guidelines of the Company. If Executive's
Base Salary is increased by the Company, such increased Base Salary shall then
constitute the Base Salary for all purposes of this Agreement. In addition to
Base Salary, Executive shall be paid an annual bonus (the "Bonus") as provided
for under the annual incentive plan maintained by the Company and/or as the
Committee so determines; PROVIDED, THAT, Executive's minimum guaranteed annual
Bonus shall not be less than difference between (i) and (ii) where (i) is
$1,000,000 and (ii) is Executive's Base Salary for the relevant Bonus year.
(b) EXPENSES. The Company shall promptly reimburse Executive
for all reasonable business expenses upon the presentation of reasonably
itemized statements of such expenses in accordance with the Company's policies
and procedures now in force or as such policies and procedures may be modified
with respect to all senior executive officers of the Company. In addition,
during the Employment Period, Executive shall be entitled to, at the sole
expense of the Company, the use of an automobile appropriate to his position and
no less favorable than the automobile provided immediately prior to the date of
this Agreement. During the Employment Period, the Company shall also reimburse
Executive for up to $15,000 annually for personal tax planning and financial
advise.
(c) VACATION. Executive shall be entitled to the number of
weeks of paid vacation per year that he was eligible for immediately prior to
the date of this Agreement, or such greater amount as provided for under the
policies of the Company. In addition to vacation, Executive shall be entitled to
the number of sick days and personal days per year that other senior executive
officers of the Company with similar tenure are entitled under the Company's
policies.
(d) SERVICES FURNISHED. During the Employment Period, the
Company shall furnish Executive, with office space, stenographic and secretarial
assistance and such other facilities and services no less favorable than those
that he was receiving immediately prior to the date of this Agreement or, if
better, as provided to other senior executive officers of the Company.
(e) WELFARE, PENSION, INCENTIVE BENEFIT PLANS AND PERQUISITES.
During the Employment Period, Executive (and his spouse and dependents to the
extent provided therein) shall be entitled to participate in and be covered
under all the welfare benefit plans or programs maintained by the Company from
time to time for the benefit of its senior executives including, without
limitation, all medical, hospitalization, dental, disability, accidental death
and dismemberment and travel accident insurance plans and programs. The Company
shall at all times provide to Executive (and his spouse and dependents to the
extent provided under the applicable plans or programs) (subject to
modifications affecting all senior executive officers) the same type and levels
of participation and benefits as are being provided to other senior executives
(and their spouses and dependents to the extent provided under the applicable
plans or programs) on the Commencement Date. In addition, during the Employment
Period, Executive shall be eligible to participate in all pension, retirement,
savings and other employee benefit plans and programs maintained from time to
time by the Company for the benefit of its senior
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executives. During the Employment Period and subject to Executive's
insurability, the Company shall purchase for the benefit of Executive a term
life insurance policy with a death benefit of at least $5,000,000 and Executive
shall be provided such other benefits and perquisites that are no less favorable
than those provided immediately prior to the Commencement Date.
(f) STOCK OPTIONS.
(i) On the Commencement Date, the Company shall cause
the Company to grant Executive stock options to acquire 1,000,000 shares of the
Company's common stock (each, an "Option" and collectively the "Options") under
such terms and conditions as provided for under the Company's then existing
stock option plans which are not inconsistent with clause (ii) below.
(ii) The Options described in paragraph (i) above
shall be granted subject to the following terms and conditions: (A) except as
provided below, the Options shall be granted under and subject to the Company's
stock option plan; (B) the exercise price per share of each Option shall be
equal to the fair market value of the Company's common stock on the NASDAQ (or
such other principal trading market for the Company's common stock)on grant as
reasonably determined by the Board; (C) the Options shall be vested and be
exercisable as to 100% of the shares subject thereto on the third anniversary of
the date of granted; PROVIDED, THAT, if the Company's common stock shall achieve
a 10-day average trading closing price equal to or in excess of $60.00 per share
earlier than the third anniversary, 33-1/3% of the shares subject to the Option
shall become vested and exercisable, as to an additional 33-1/3% if the 10-day
average price equals or exceeds $80.00 per share and as to an additional 33-1/3%
if the 10-day average price equals or exceeds $100.00 per share; (D) each Option
shall be exercisable for the ten (10) year period following the date of grant;
PROVIDED, THAT, Executive is then employed; (E) each Option shall become 100%
vested and fully exercisable upon Change in Control and (F) each Option shall be
evidenced by, and subject to, a stock option agreement whose terms and
conditions are consistent with the terms hereof.
6. TERMINATION. Executive's employment hereunder may be terminated
during the Employment Period under the following circumstances:
(a) DEATH. Executive's employment hereunder shall terminate
upon his death.
(b) DISABILITY. If, as a result of Executive's incapacity due
to physical or mental illness, Executive shall have been substantially unable to
perform his duties hereunder for an entire period of six (6) consecutive months,
and within thirty (30) days after written Notice of Termination is given after
such six (6) month period, Executive shall not have returned to the substantial
performance of his duties on a full-time basis, the Company shall have the right
to terminate Executive's employment hereunder for "Disability", and such
termination in and of itself shall not be, nor shall it be deemed to be, a
breach of this Agreement.
(c) CAUSE. The Company shall have the right to terminate
Executive's employment for Cause, and such termination in and of itself shall
not be, nor shall it be deemed
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to be, a breach of this Agreement. For purposes of this Agreement, the Company
shall have "Cause" to terminate Executive's employment upon Executive's:
(i) final conviction of or plea of guilty or no
contest to a felony involving moral turpitude; or
(ii) willful misconduct that is materially and
demonstrably injurious economically to the Company.
For purposes of this Section 6(c), no act, or failure to act, by Executive shall
be considered "willful" unless committed in bad faith and without a reasonable
belief that the act or omission was in the best interests of the Company or any
entity in control of, controlled by or under common control with the Company
("Affiliates") thereof. Cause shall not exist under paragraph (ii) unless and
until the Company has delivered to Executive a copy of a resolution duly adopted
by three-quarters of the Board (excluding Executive) at a meeting of the Board
called and held for such purpose (after reasonable (but in no event less than
thirty (30) days) notice to Executive and an opportunity for Executive, together
with his counsel, to be heard before the Board), finding that in the good faith
opinion of the Board, Executive was guilty of the conduct set forth in paragraph
(ii) and specifying the particulars thereof in detail. This Section 6(c) shall
not prevent Executive from challenging in any arbitration or court of competent
jurisdiction the Board's determination that Cause exists or that Executive has
failed to cure any act (or failure to act) that purportedly formed the basis for
the Board's determination.
(d) GOOD REASON. Executive may terminate his employment for
"Good Reason" within ninety (90) days after Executive has actual knowledge of
the occurrence, without the written consent of Executive, of one of the
following events:
(i) (A) any change in the duties or responsibilities
of Executive that is inconsistent in any material and adverse respect with
Executive's position(s), duties, responsibilities or status with the Company
(including any material and adverse diminution of such duties or
responsibilities); PROVIDED, HOWEVER, that Good Reason shall not be deemed to
occur upon a change in duties or responsibilities that is solely and directly a
result of the Company no longer being a publicly traded entity (other than such
change which would have a material and adverse effect on Executive's duties or
responsibilities) and does not involve any other event set forth in this
paragraph (d) or (B) a material and adverse change in Executive's titles or
offices (including, if applicable, membership on the Board) with the Company;
(ii) a reduction in Executive's Base Salary or Bonus
opportunity;
(iii) the relocation of the Company's principal
executive offices or Executive's own office location outside of Manhattan, New
York;
(iv) the failure of the Company or any Affiliate to
continue in effect any material employee benefit plan, compensation plan,
welfare benefit plan or fringe benefit plan in which Executive is participating
immediately prior to the date of this Agreement or the taking of any action by
the Company or any Affiliate which would
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adversely affect Executive's participation in or reduce Executive's benefits
under any such plan, unless Executive is permitted to participate in other plans
providing Executive with substantially equivalent benefits;
(v) any refusal by the Company or any Affiliate to
continue to permit Executive to engage in activities not directly related to the
business of the Company which Executive was permitted to engage in prior to the
date of this Agreement;
(vi) any purported termination of Executive's
employment for Cause which is not effected pursuant to the procedures of Section
6(c) (and for purposes of this Agreement, no such purported termination shall be
effective);
(vii) the Company's or any Affiliate's failure to
provide in all material respects the indemnification set forth in Section 11 of
this Agreement;
(viii) for any reason within the thirty (30) day
period immediately following the first (1st) anniversary of a Change in Control
of the Company;
(ix) the failure of the Company to obtain the
assumption agreement from any successor as contemplated in Section 13(a);
(x) the Company or any Affiliate providing Executive
the notice not to renew the Employment Period as contemplated by Section 2
hereof; or
(xi) any other breach of a material provision of this
Agreement by the Company or any Affiliate.
For purposes of clauses (i) through (vii) and (xi) above, an isolated,
insubstantial and inadvertent action taken in good faith and which is remedied
by the Company within ten (10) days after receipt of notice thereof given by
Executive shall not constitute Good Reason. Executive's right to terminate
employment for Good Reason shall not be affected by Executive's incapacity due
to mental or physical illness and Executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any event or
condition constituting Good Reason.
(e) WITHOUT CAUSE. The Company shall have the right to
terminate Executive's employment hereunder without Cause by providing Executive
with a Notice of Termination at least thirty (30) days prior to such
termination, and such termination shall not in and of itself be, nor shall it be
deemed to be, a breach of this Agreement.
(f) WITHOUT GOOD REASON. Executive shall have the right to
terminate his employment hereunder without Good Reason by providing the Company
with a Notice of Termination at least thirty (30) days prior to such
termination, and such termination shall not in and of itself be, nor shall it be
deemed to be, a breach of this Agreement.
For purposes of this Agreement, a "Change in Control" of the Company means the
occurrence of one of the following events:
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1. individuals who, on the Commencement Date, constitute the
Board (the "Incumbent Directors") cease for any reason to constitute at
least a majority of the Board, provided that any person becoming a
director subsequent to the Commencement Date whose election or
nomination for election was approved by a vote of at least two-thirds
of the Incumbent Directors then on the Board (either by a specific vote
or by approval of the proxy statement of the Company in which such
person is named as a nominee for director, without objection to such
nomination) shall be an Incumbent Director; PROVIDED, HOWEVER, that no
individual initially elected or nominated as a director of the Company
as a result of an actual or threatened election contest with respect to
directors or as a result of any other actual or threatened solicitation
of proxies by or on behalf of any person other than the Board shall be
an Incumbent Director;
2. any "person" (as such term is defined in Section 3(a)(9) of
the Securities Exchange Act of 1934 (the "Exchange Act") and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes,
after the Commencement Date, a "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 35% or more of the combined voting power of
the Company's then outstanding securities eligible to vote for the
election of the Board (the "Company Voting Securities"); PROVIDED,
HOWEVER, that an event described in this paragraph (2) shall not be
deemed to be a Change in Control if any of following becomes such a
beneficial owner: (A) the Company or any majority-owned subsidiary
(provided, that this exclusion applies solely to the ownership levels
of the Company or the majority-owned subsidiary), (B) any
tax-qualified, broad-based employee benefit plan sponsored or
maintained by the Company or any majority-owned subsidiary, (C) any
underwriter temporarily holding securities pursuant to an offering of
such securities, (D) any person pursuant to a Non-Qualifying
Transaction (as defined in paragraph (3)), or (E) Executive or any
group of persons including Executive (or any entity controlled by
Executive or any group of persons including Executive);
3. the consummation of a merger, consolidation, statutory
share exchange or similar form of corporate transaction involving the
Company or any of its Subsidiaries that requires the approval of the
Company's stockholders, whether for such transaction or the issuance of
securities in the transaction (a "Business Combination"), unless
immediately following such Business Combination: (A) 60% or more of the
total voting power of (x) the corporation resulting from such Business
Combination (the "Surviving Corporation"), or (y) if applicable, the
ultimate parent corporation that directly or indirectly has beneficial
ownership of 100% of the voting securities eligible to elect directors
of the Surviving Corporation (the "Parent Corporation"), is represented
by Company Voting Securities that were outstanding immediately prior to
such Business Combination (or, if applicable, is represented by shares
into which such Company Voting Securities were converted pursuant to
such Business Combination), and such voting power among the holders
thereof is in substantially the same proportion as the voting power of
such Company Voting Securities among the holders thereof immediately
prior to the Business Combination, (B) no person (other than any
employee benefit plan (or related trust) sponsored or maintained by the
Surviving Corporation or the Parent Corporation), is or becomes the
beneficial owner, directly or indirectly, of 35% or more of the total
voting power of the outstanding voting securities eligible to elect
directors of
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the Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) and (C) at least a majority of the members of
the board of directors of the Parent Corporation (or if there is no
Parent Corporation, the Surviving Corporation) following the
consummation of the Business Combination were Incumbent Directors at
the time of the Board's approval of the execution of the initial
agreement providing for such Business Combination (any Business
Combination which satisfies all of the criteria specified in (A), (B)
and (C) above shall be deemed to be a "Non-Qualifying Transaction"); or
4. Stockholder approval of a liquidation or dissolution of the
Company, unless the voting common equity interests of an ongoing entity
(other than a liquidating trust) are beneficially owned, directly or
indirectly, by the Company's shareholders in substantially the same
proportions as such shareholders owned the Company's outstanding voting
common equity interests immediately prior to such liquidation and such
ongoing entity assumes all existing obligations of the Company to
Executive under this Agreement.
Notwithstanding the foregoing, a Change in Control of the Company shall not be
deemed to occur solely because any person acquires beneficial ownership of more
than 35% of the Company Voting Securities as a result of the acquisition of
Company Voting Securities by the Company which reduces the number of Company
Voting Securities outstanding; PROVIDED, THAT, if after such acquisition by the
Company such person becomes the beneficial owner of Company Voting Securities
that increases the percentage of outstanding Company Voting Securities
beneficially owned by such person, a Change in Control of the Company shall then
occur.
7. TERMINATION PROCEDURE.
(a) NOTICE OF TERMINATION. Any termination of Executive's
employment by the Company or by Executive during the Employment Period (other
than termination pursuant to Section 6(a)) shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section 14.
For purposes of this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in this Agreement relied
upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated.
(b) DATE OF TERMINATION. "Date of Termination" shall mean (i)
if Executive's employment is terminated by his death, the date of his death,
(ii) if Executive's employment is terminated pursuant to Section 6(b), thirty
(30) days after Notice of Termination (provided that Executive shall not have
returned to the substantial performance of his duties on a full-time basis
during such thirty (30) day period), and (iii) if Executive's employment is
terminated for any other reason, the date on which a Notice of Termination is
given or any later date (within thirty (30) days after the giving of such
notice) set forth in such Notice of Termination.
8. COMPENSATION UPON TERMINATION OR DURING DISABILITY. In the event
Executive is disabled or his employment terminates during the Employment Period,
the Company shall provide Executive with the payments and benefits set forth
below. Executive
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acknowledges and agrees that the payments set forth in this Section 8 constitute
liquidated damages for termination of his employment during the Employment
Period.
(a) TERMINATION BY COMPANY WITHOUT CAUSE OR BY EXECUTIVE FOR
GOOD REASON. If Executive's employment is terminated by the Company without
Cause or by Executive for Good Reason:
(i) within five (5) days following such termination,
the Company shall pay to Executive (A) his Base Salary and Bonus earned and/or
accrued, but unpaid through the Date of Termination, as soon as practicable
following the Date of Termination, (B) a pro rata portion of Executive's annual
bonus for the fiscal year in which Executive's Date of Termination occurs in an
amount at least equal to (1) Executive's target Bonus amount, multiplied by (2)
a fraction, the numerator of which is the number of days in the fiscal year in
which the Date of Termination occurs through the Date of Termination and the
denominator of which is three hundred sixty-five (365) (the "Pro-Rated Bonus");
(C) any accrued vacation pay; and (D) a lump-sum cash payment equal to three (3)
times the sum of Executive's Base Salary and highest Bonus paid to Executive in
the three-year period immediately preceding such termination (including, for
this purpose, any and all bonuses paid to Executive prior to the date of this
Agreement); PROVIDED, THAT, for purposes of this Section 8(a)(i), Executive's
Bonus shall be deemed to be no less than two times Executive's Base Salary; and
(ii) the Company shall maintain in full force and
effect, for the continued benefit of Executive, his spouse and his dependents
for a period of three (3) years following the Date of Termination the medical,
hospitalization, dental, and life insurance programs in which Executive, his
spouse and his dependents were participating immediately prior to the Date of
Termination at the level in effect and upon substantially the same terms and
conditions (including without limitation contributions required by Executive for
such benefits) as existed immediately prior to the Date of Termination;
PROVIDED, THAT, if Executive, his spouse or his dependents cannot continue to
participate in the Company programs providing such benefits, the Company shall
arrange to provide Executive, his spouse and his dependents with the economic
equivalent of such benefits which they otherwise would have been entitled to
receive under such plans and programs ("Continued Benefits"), PROVIDED, THAT,
such Continued Benefits shall terminate on the date or dates Executive receives
equivalent coverage and benefits, without waiting period or pre-existing
condition limitations, under the plans and programs of a subsequent employer
(such coverage and benefits to be determined on a coverage-by-coverage or
benefit-by-benefit, basis); and
(iii) the Company shall reimburse Executive pursuant
to Section 5 for reasonable expenses incurred, but not paid prior to such
termination of employment; and
(iv) Executive shall be entitled to any other rights,
compensation and/or benefits as may be due to Executive in accordance with the
terms and provisions of any agreements, plans or programs of the Company; and
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(v) with respect to equity awards granted or made on
or after the Commencement Date, notwithstanding the terms or conditions of any
stock option, stock appreciation right, restricted stock or similar agreements
between the Company and Executive to the contrary, and for purposes thereof,
such agreements shall be deemed to be amended in accordance with this Section
8(a)(v) if need be as of the Date of Termination and neither the Company, the
Board nor the Committee shall take or assert any position contrary to the
foregoing, such that Executive shall vest, as of the Date of Termination, in all
rights under such agreements (E.G., stock options that would otherwise vest
after the Date of Termination) and in the case of stock options, stock
appreciation rights or similar awards, thereafter shall be permitted to exercise
any and all such rights until the end of the term of such awards (regardless of
any termination of employment restrictions therein contained) and restricted
stock held by Executive shall become immediately vested as of the Date of
Termination; and
(vi) Executive shall be paid a lump sum payment equal
to the present value of the Company contributions that would have been made
under all Company savings programs (whether or not intended to be qualified
under Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code") if Executive had continued in the employ of the Company for an
additional three (3) years following his Date of Termination earning during such
three-year period the rate of Base Salary and Bonus in effect as of his Date of
Termination, assuming that the Company would have made the maximum contributions
permitted under such savings programs, and assuming, for purposes of determining
the amount of any Company matching contributions, that Executive would have
contributed the amount necessary to receive the maximum matching contributions
available under such savings programs; and
(vii) Any and all insurance benefits or policies for
the benefit of Executive shall become the sole property of Executive and, to the
extent applicable, all of the Company's rights therein (including repayment of
premiums) shall be forfeited by the Company and, to the extent not already made,
the Company shall make all contributions or payments required of such policies
for the year of termination.
(b) CAUSE OR BY EXECUTIVE WITHOUT GOOD REASON. If Executive's
employment is terminated by the Company for Cause or by Executive (other than
for Good Reason):
(i) the Company shall pay Executive his Base Salary,
Bonus and his accrued vacation pay through the Date of Termination, as soon as
practicable following the Date of Termination; and
(ii) the Company shall reimburse Executive pursuant
to Section 5 for reasonable expenses incurred, but not paid prior to such
termination of employment; and
(iii) Executive shall be entitled to any other
rights, compensation and/or benefits as may be due to Executive in accordance
with the terms and provisions of any agreements, plans or programs of the
Company.
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(c) DISABILITY. During any period that Executive fails to
perform his duties hereunder as a result of incapacity due to physical or mental
illness ("Disability Period"), Executive shall continue to receive his full Base
Salary set forth in Section 5(a) until his employment is terminated pursuant to
Section 6(b). In the event Executive's employment is terminated for Disability
pursuant to Section 6(b):
(i) the Company shall pay to Executive (A) his Base
Salary, Bonus and accrued vacation pay through the Date of Termination, as soon
as practicable following the Date of Termination, (B) his Pro-Rated Bonus and
(C) Continued Benefits for one (1) year; and
(ii) the Company shall reimburse Executive pursuant
to Section 5 for reasonable expenses incurred, but not paid prior to such
termination of employment; and
(iii) Executive shall be entitled to any other
rights, compensation and/or benefits as may be due to Executive in accordance
with the terms and provisions of any agreements, plans or programs of the
Company.
(d) DEATH. If Executive's employment is terminated by his
death:
(i) the Company shall pay in a lump sum to
Executive's beneficiary, legal representatives or estate, as the case may be,
Executive's Base Salary, Bonus and accrued vacation pay through the Date of
Termination, his Pro-Rated Bonus and shall provide Executive's spouse and
dependents with Continued Benefits for two (2) years; and
(ii) the Company shall reimburse Executive's
beneficiary, legal representatives, or estate, as the case may be, pursuant to
Section 5 for reasonable expenses incurred, but not paid prior to such
termination of employment; and
(iii) Executive's beneficiary, legal representatives
or estate, as the case may be, shall be entitled to any other rights,
compensation and benefits as may be due to any such persons or estate in
accordance with the terms and provisions of any agreements, plans or programs of
the Company.
(e) ADDITIONAL PAYMENTS. (i) Anything in this Agreement to the
contrary notwithstanding, in the event it shall be determined that any payment,
award, benefit or distribution (or any acceleration of any payment, award,
benefit or distribution) by the Company or any entity which effectuates a Change
in Control (or other change in ownership) to or for the benefit of Executive
(the "Payments") would be subject to the excise tax imposed by Section 4999 of
the Code, or any interest or penalties are incurred by Executive with respect to
such excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), then the Company
shall pay to Executive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by Executive of all taxes (including any Excise Tax)
imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up
Payment equal to the sum of (x) the Excise Tax imposed upon the Payments and (y)
the product of any deductions disallowed because of the inclusion of the
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Gross-Up Payment in Executive's adjusted gross income and the highest applicable
marginal rate of federal income taxation for the calendar year in which the
Gross-Up Payment is to be made. For purposes of determining the amount of the
Gross-Up Payment, Executive shall be deemed to (A) pay federal income taxes at
the highest marginal rates of federal income taxes at the highest marginal rate
of taxation for the calendar year in which the Gross-Up Payment is to be made,
(B) pay applicable state and local income taxes at the highest marginal rate of
taxation for the calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes and (C) have otherwise allowable
deductions for federal income tax purposes at least equal to those which could
be disallowed because of the inclusion of the Gross-Up Payment in Executive's
adjusted gross income. Notwithstanding the foregoing provisions of this Section
8(e)(i), if it shall be determined that Executive is entitled to a Gross-Up
Payment, but that the Payments would not be subject to the Excise Tax if the
Payments were reduced by an amount that is less than 10% of the portion of the
Payments that would be treated as "parachute payments" under Section 280G of the
Code, then the amounts payable to Executive under this Agreement shall be
reduced (but not below zero) to the maximum amount that could be paid to
Executive without giving rise to the Excise Tax (the "Safe Harbor Cap"), and no
Gross-Up Payment shall be made to Executive. The reduction of the amounts
payable hereunder, if applicable, shall be made by reducing first the payments
under Section 8(a)(i)(D), unless an alternative method of reduction is elected
by Executive. For purposes of reducing the Payments to the Safe Harbor Cap, only
amounts payable under this Agreement (and no other Payments) shall be reduced.
If the reduction of the amounts payable hereunder would not result in a
reduction of the Payments to the Safe Harbor Cap, no amounts payable under this
Agreement shall be reduced pursuant to this provision.
(ii) Subject to the provisions of Section 8(e)(i), all
determinations required to be made under this Section 8(e), including whether
and when a Gross-Up Payment is required, the amount of such Gross-Up Payment,
the reduction of the Payments to the Safe Harbor Cap and the assumptions to be
utilized in arriving at such determinations, shall be made by a nationally
recognized public accounting firm that is retained by the Company (the
"Accounting Firm"). In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change
in Control (or change in ownership), Executive may appoint another nationally
recognized public accounting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the Accounting Firm
hereunder). The Accounting Firm shall provide detailed supporting calculations
both to the Company and Executive within fifteen (15) business days of the
receipt of notice from the Company or the Executive that there has been a
Payment, or such earlier time as is requested by the Company (collectively, the
"Determination"). All fees and expenses of the Accounting Firm shall be borne
solely by the Company and the Company shall enter into any agreement requested
by the Accounting Firm in connection with the performance of the services
hereunder. The Gross-up Payment under this Section 8(e) with respect to any
Payments shall be made no later than thirty (30) days following such Payment. If
the Accounting Firm determines that no Excise Tax is payable by Executive, it
shall furnish Executive with a written opinion to such effect, and to the effect
that failure to report the Excise Tax, if any, on Executive's applicable federal
income tax return should not result in the imposition of a negligence or similar
penalty. In the event the Accounting Firm determines that the Payments shall be
reduced to the Safe Harbor
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Cap, it shall furnish Executive with a written opinion to such effect. The
Determination by the Accounting Firm shall be binding upon the Company and
Executive.
(iii) As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the Determination, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment") or Gross-Up Payments are made by the Company which should
not have been made ("Overpayment"), consistent with the calculations required to
be made hereunder. In the event that the Executive thereafter is required to
make payment of any Excise Tax or additional Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) shall be promptly paid by the Company to or for the
benefit of Executive. In the event the amount of the Gross-up Payment exceeds
the amount necessary to reimburse the Executive for his Excise Tax, the
Accounting Firm shall determine the amount of the Overpayment that has been made
and any such Overpayment (together with interest at the rate provided in Section
1274(b)(2) of the Code) shall be promptly paid by Executive to or for the
benefit of the Company. Executive shall cooperate, to the extent his expenses
are reimbursed by the Company, with any reasonable requests by the Company in
connection with any contests or disputes with the Internal Revenue Service in
connection with the Excise Tax.
9. MITIGATION. Executive shall not be required to mitigate amounts
payable under this Agreement by seeking other employment or otherwise, and there
shall be no offset against amounts due Executive under this Agreement on account
of subsequent employment except as specifically provided herein. Additionally,
amounts owed to Executive under this Agreement shall not be offset by any claims
the Company may have against Executive and the Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder, shall not be affected by any other circumstances, including, without
limitation, any counterclaim, recoupment, defense or other right which the
Company may have against Executive or others.
10. RESTRICTIVE COVENANTS.
(a) CONFIDENTIAL INFORMATION. Executive shall hold in a
fiduciary capacity for the benefit of the Company all trade secrets and
confidential information, knowledge or data relating to the Company and its
businesses and investments, which shall have been obtained by Executive during
Executive's employment by the Company and which is not generally available
public knowledge (other than by acts by Executive in violation of this
Agreement). Except as may be required or appropriate in connection with his
carrying out his duties under this Agreement, Executive shall not, without the
prior written consent of the Company or as may otherwise be required by law or
any legal process, or as is necessary in connection with any adversarial
proceeding against the Company (in which case Executive shall use his reasonable
best efforts in cooperating with the Company in obtaining a protective order
against disclosure by a court of competent jurisdiction), communicate or divulge
any such trade secrets, information, knowledge or data to anyone other than the
Company and those designated by the Company or on behalf of the Company in the
furtherance of its business or to perform duties hereunder.
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(b) NON-SOLICITATION. Executive hereby agrees, in
consideration of his employment hereunder and in view of the confidential
position to be held by Executive hereunder, that after his termination of
employment in which he is entitled to the benefits set forth in Section 8(a)
hereof and through the first anniversary thereof, Executive shall not directly
or indirectly induce any employee of the Company to terminate such employment or
to become employed by any other biopharmaceutical company.
(c) NON-COMPETITION. Executive hereby agrees, in consideration
of his employment hereunder and in view of the confidential position to be held
by Executive hereunder, that after his termination of employment in which he is
entitled to the benefits set forth in Section 8(a) hereof and through the first
anniversary thereof, he shall not be employed by or perform activities on behalf
of, or have an ownership interest in, any person, firm, corporation or other
entity, or in connection with any business enterprise, that is directly or
indirectly engaged in any of the biopharmaceutical business in which the Company
and its subsidiaries have significant involvement (other than direct or
beneficial ownership of up to one percent (1%) of any entity whether or not in
the same or competing business).
(d) BLUE PENCIL. The parties hereby acknowledge that the
restrictions in this Section 10 have been specifically negotiated and agreed to
by the parties hereto and are limited only to those restrictions necessary to
protect the Company and its subsidiaries from unfair competition. The parties
hereby agree that if the scope or enforceability of any provision, paragraph or
subparagraph of this Section 10 is in any way disputed at any time, and should a
court find that such restrictions are overly broad, the court may modify and
enforce the covenant to the extent that it believes to be reasonable under the
circumstances. Each provision, paragraph and subparagraph of this Section 10 is
separable from every other provision, paragraph, and subparagraph and
constitutes a separate and distinct covenant. Executive acknowledges that the
Company's business is not limited by geographical scope, is operating throughout
the world and that the effect of Section 10(c) may be to prevent him from
working in a competitive business after his termination of employment hereunder.
(e) REMEDIES. Executive hereby expressly acknowledges that any
breach or threatened breach by Executive of any of the terms set forth in
Section 10 of this Agreement may result in significant and continuing injury to
the Company, the monetary value of which would be impossible to establish.
Therefore, Executive agrees that the Company shall be entitled to apply for
injunctive relief in a court of appropriate jurisdiction.
11. INDEMNIFICATION. The Company agrees that if Executive is made a
party or a threatened to be made a party to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a "Proceeding"), by
reason of the fact that Executive is or was a trustee, director or officer of
the Company or any subsidiary of the Company or is or was serving at the request
of the Company or any subsidiary as a trustee, director, officer, member,
employee or agent of another corporation or a partnership, joint venture, trust
or other enterprise, including, without limitation, service with respect to
employee benefit plans, whether or not the basis of such Proceeding is alleged
action in an official capacity as a trustee, director, officer, member, employee
or agent while serving as a trustee, director, officer, member, employee or
agent, Executive shall be indemnified and held harmless by the Company to the
fullest extent authorized by Delaware law, as the same exists or may hereafter
be amended, against all
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Expenses incurred or suffered by Executive in connection therewith, and such
indemnification shall continue as to Executive even if Executive has ceased to
be an officer, director, trustee or agent, or is no longer employed by the
Company and shall inure to the benefit of his heirs, executors and
administrators. As used in this Agreement, the term "Expenses" shall include,
without limitation, damages, losses, judgments, liabilities, fines, penalties,
excise taxes, settlements, and costs, attorneys' fees, accountants' fees, and
disbursements and costs of attachment or similar bonds, investigations, and any
expenses of establishing a right to indemnification under this Agreement.
12. LEGAL FEES; ARBITRATION. As soon as administratively possible
following the Commencement Date and in any case, within 10 business days
thereafter, the Company shall reimburse Executive for his legal fees and
expenses associated with the preparation and negotiation of this Agreement.
Except as provided for in Section 10 of this Agreement, if any contest or
dispute arises between the parties with respect to this Agreement, such contest
or dispute shall be submitted to binding arbitration for resolution in New York,
New York in accordance with the rules and procedures of the Employment Dispute
Resolution Rules of the American Arbitration Association then in effect. The
decision of the arbitrator shall be final and binding on both parties, and any
court of competent jurisdiction may enter judgment upon the award. The Company
shall pay all expenses relating to such arbitration, including, but not limited
to, Executive's legal fees and expenses, regardless of outcome, unless the
arbitrator determines that Executive has acted in bad faith.
13. SUCCESSORS; BINDING AGREEMENT.
(a) COMPANY'S SUCCESSORS. No rights or obligations of the
Company under this Agreement may be assigned or transferred except that the
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as herein before defined and any
successor to its business and/or assets (by merger, purchase or otherwise) which
executes and delivers the agreement provided for in this Section 13 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) EXECUTIVE'S SUCCESSORS. No rights or obligations of
Executive under this Agreement may be assigned or transferred by Executive other
than his rights to payments or benefits hereunder, which may be transferred only
by will or the laws of descent and distribution. Upon Executive's death, this
Agreement and all rights of Executive hereunder shall inure to the benefit of
and be enforceable by Executive's beneficiary or beneficiaries, personal or
legal representatives, or estate, to the extent any such person succeeds to
Executive's interests under this Agreement. Executive shall be entitled to
select and change a beneficiary or beneficiaries to receive any benefit or
compensation payable hereunder following Executive's death by giving the Company
written notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary(ies), estate or
other legal representative(s). If Executive should die following his Date of
Termination while any amounts would still be
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payable to him hereunder if he had continued to live, all such amounts unless
otherwise provided herein shall be paid in accordance with the terms of this
Agreement to such person or persons so appointed in writing by Executive, or
otherwise to his legal representatives or estate.
14. NOTICE. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered either personally or by
United States certified or registered mail, return receipt requested, postage
prepaid, addressed as follows:
If to Executive:
c/o ImClone Systems Incorporated
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to the Company:
ImClone Systems Incorporated
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
15. MISCELLANEOUS. No provisions of this Agreement may be amended,
modified, or waived unless such amendment or modification is agreed to in
writing signed by Executive and by a duly authorized officer of the Company, and
such waiver is set forth in writing and signed by the party to be charged. No
waiver by either party hereto at any time of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The respective rights and obligations of the
parties hereunder of this Agreement shall survive Executive's termination of
employment and the termination of this Agreement to the extent necessary for the
intended preservation of such rights and obligations. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of New York without regard to its conflicts of law
principles.
16. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
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17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
18. ENTIRE AGREEMENT. Except as other provided herein, this Agreement
sets forth the entire agreement of the parties hereto in respect of the subject
matter contained herein and supersede all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto in
respect of such subject matter. Except as other provided herein, any prior
agreement of the parties hereto in respect of the subject matter contained
herein is hereby terminated and cancelled.
19. WITHHOLDING. All payments hereunder shall be subject to any
required withholding of Federal, state and local taxes pursuant to any
applicable law or regulation.
20. NONCONTRAVENTION. The Company represents that the Company is not
prevented from entering into, or performing this Agreement by the terms of any
law, order, rule or regulation, its by-laws or declaration of trust, or any
agreement to which it is a party, other than which would not have a material
adverse effect on the Company's ability to enter into or perform this Agreement.
21. SECTION HEADINGS. The section headings in this Agreement are for
convenience of reference only, and they form no part of this Agreement and shall
not affect its interpretation.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
IMCLONE SYSTEMS INCORPORATED
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President, Finance &
Chief Financial Officer
/s/ Xxxxxx X. Xxxxxx, M.D.
---------------------------------------------
Xxxxxx X. Xxxxxx, M.D.
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