EXHIBIT 10.18
AGREEMENT
This agreement is made by and between Genelabs Technologies, Inc.
("Genelabs") and _____________________ ("Employee").
I. Option Acceleration Benefits. Immediately upon the effective date of
a Change in Control (as defined below), all unvested shares of any and all stock
options granted by Genelabs to Employee shall vest in full.
II. Severance Benefits. In the event that there is an Involuntary
Termination (as defined below) of Employee's employment with Genelabs or with
any successor thereto (collectively the "Company") within eighteen (18) months
immediately following the effective date of a Change in Control, Employee shall
be entitled to receive the following:
A. Salary Continuation. For a total of twelve (12) full calendar
months after such Involuntary Termination, continued payment of base
salary at the rate in effect for Employee immediately prior to the time
of the event resulting in Employee's Involuntary Termination, or if
greater, immediately prior to the Involuntary Termination, paid at
periodic intervals in accordance with the Company's payroll practices
for salaried employees and subject to all applicable tax withholding
requirements.
B. Bonus Payment. Not later than forty-five (45) days after the
Employee's Involuntary Termination, a lump sum payment of 100% of the
Employee's target bonus potential pursuant to any annual bonus or
incentive plan or program for the calendar year in which the Involuntary
Termination takes place, including 100% of any other annual incentive
bonus compensation for such calendar year (in each case, if applicable,
calculated as if Employee met 100% of Employee's objectives, and the
Company met 100% of the Company's objectives), and the amount of any
vested but unpaid long-term incentive bonus including any amount that
would have vested during that calendar year and/or would have been paid
out in the following calendar year, subject to all applicable tax
withholding requirements.
C. Health Care Coverage. For a total of twelve (12) full calendar
months immediately following the Employee's Involuntary Termination,
continued coverage under the Company's medical and dental benefit plans,
without charge, for Employee and/or Employee's eligible dependents upon
their respective election to receive such continued benefit plan
coverages pursuant to the federal law known as COBRA. Any other
coverages to which Employee and/or Employee's dependents may elect
during or after the twelve (12) month period of Company-paid coverage,
pursuant to COBRA, shall be at the sole cost and expense of Employee
and/or Employee's eligible dependents.
III. Internal Revenue Code Section 280G Treatment.
A. Notwithstanding any other provisions of this agreement, in
the event that any payment or benefit received or to be received by
Employee in connection with a Change in Control or the termination of
Employee's employment (whether pursuant to
the terms of this agreement or any other plan, arrangement or agreement
with the Company, any person whose actions result in a Change in Control
or any person affiliated with the Company or such person) (all such
payments and benefits, including the payments and benefits provided
under this agreement (the "Severance Payments"), being hereinafter
called "Total Payments") would be subject (in whole or part), to the
excise tax (the "Excise Tax") imposed under section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), then, after taking into
account any reduction in the Total Payments provided by reason of
section 280G of the Code in such other plan, arrangement or agreement,
the cash Severance Payments shall first be reduced, and the noncash
Severance Payments shall thereafter be reduced, to the extent necessary
so that no portion of the Total Payments is subject to the Excise Tax
but only if (i) the net amount of such Total Payments, as so reduced
(and after subtracting the net amount of federal, state and local income
taxes on such reduced Total Payments) is greater than or equal to (ii)
the net amount of such Total Payments without such reduction (but after
subtracting the net amount of federal, state and local income taxes on
such Total Payments and the amount of Excise Tax to which Employee would
be subject in respect of such unreduced Total Payments); provided,
however, that Employee may elect to have the noncash Severance Payments
reduced (or eliminated) prior to any reduction of the cash Severance
Payments.
B. For purposes of determining whether and the extent to which
the Total Payments will be subject to the Excise Tax, (i) no portion of
the Total Payments the receipt or enjoyment of which Employee shall have
waived at such time and in such manner as not to constitute a "payment"
within the meaning of section 280G(b) of the Code shall be taken into
account, (ii) no portion of the Total Payments shall be taken into
account which, in the opinion of tax counsel ("Tax Counsel") reasonably
acceptable to Employee and selected by the accounting firm (the
"Auditor") which was, immediately prior to the Change in Control, the
Company's independent auditor, does not constitute a "parachute payment"
within the meaning of section 280G(b)(2) of the Code (including by
reason of section 280G(b)(4)(A) of the Code) and, in calculating the
Excise Tax, no portion of such Total Payments shall be taken into
account which, in the opinion of Tax Counsel, constitutes reasonable
compensation for services actually rendered, within the meaning of
section 280G(b)(4)(B) of the Code, in excess of the "base amount" within
the meaning of section 280G(b)(3) of the Code, allocable to such
reasonable compensation, and (iii) the value of any non-cash benefit or
any deferred payment or benefit included in the Total Payments shall be
determined by the Auditor in accordance with the principles of sections
280G(d)(3) and (4) of the Code.
C. At the time that payments are made under this agreement, the
Company shall provide Employee with a written statement setting forth
the manner in which such payments were calculated and the basis for such
calculations including, without limitation, any opinions or other advice
the Company has received from Tax Counsel, the Auditor or other advisors
or consultants (and any such opinions or advice which are in writing
shall be attached to the statement). If Employee objects to the
Company's calculations, the Company shall pay to Employee such portion
of the Severance Payments (up to 100% thereof) as Employee determines is
necessary to result in the proper application of subsection A of this
Section III.
IV. Definitions. For the purposes of this agreement, the following
definitions shall apply:
A. "Involuntary Termination" shall exclude any termination of
Employee's employment by reason of Employee's death or due to Employee's
disability (within the meaning of section 22(e)(3) of the Code) or by
the Company for Cause (as defined below), and shall mean and include:
1. any other termination of Employee's employment by
Company;
2. Employee's resignation within ninety (90) days
following:
a. a reduction in Employee's rate of base salary
by more than ten percent (10%), unless the reduction is
part of an overall reduction for all employees at the
same level as Employee;
b. a relocation by the Company of Employee's
place of employment by more than fifty (50) miles,
without Employee's written consent; or
c. a material reduction in the level of
Employee's duties and responsibilities or the level of
management to which Employee reports,
provided, however, that Employee shall have given
written notice to the Company through the highest level
employee of its human resources department (or the
equivalent), and the Company shall have had a period of
thirty (30) days within which to cure the action(s)
described in the notice given by the Employee.
B. A termination for "Cause" shall mean termination of
Employee's employment by the Company for any of the following reasons:
1. Employee's conviction of or plea of guilty or nolo
contendre to a felony offense;
2. Employee's commission of an act of fraud against the
Company, material misappropriation of Company property, or
embezzlement of Company funds;
3. Employee's breach of one or more of Employee's
obligation under any applicable confidential/proprietary/trade
secret information and/or inventions agreement(s);
4. Employee's engaging in any employment or business
activity that is in competition with the business or proposed
business of the Company;
5. misconduct by the Employee which has a materially
adverse effect upon the Company's operations, business or
reputation; or
6. if Employee is an officer of the Company, a material
breach of any of Employee's fiduciary obligations.
C. "Change in Control" means a change in the ownership or
control of the Company, effected through any of the following events:
1. any "person," as such term is used in Sections 13(d)
and 14 (d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (other than the Company; any trustee or
other fiduciary holding securities under an employee benefit
plan of the Company; or any company owned, directly or
indirectly, by the shareholders of the Company in substantially
the same proportions as their ownership of common stock of the
Company) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such person any securities acquired
directly from the Company or its affiliates) representing
twenty-five percent (25%) or more of the combined voting power
of the Company's then outstanding securities;
2. during any period of two consecutive years,
individuals who at the beginning of such period constitute the
Board of Directors of the Company (the "Board"), and any new
director (other than a director designated by a person who has
entered into an agreement with the Company to effect a
transaction described in clause (1), (3) or (4) of this
definition) whose election by the Board or nomination for
election by the Company's shareholders was approved by a vote of
at least two thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or
whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority
thereof;
3. the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other
than (A) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit
plan of the Company, at least sixty percent (60%) of the
combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger
or consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no person acquires more than fifty percent
(50%) of the combined voting power of the Company's then
outstanding securities; or
4. the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the
Company's assets.
IN WITNESS WHEREOF, the parties below, duly authorized, hereby agree to the
terms and conditions of this agreement effective as of ________________________.
GENELABS TECHNOLOGIES, INC.
By:
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Name:
Title:
EMPLOYEE
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Name:
