EXHIBIT 10.6
Form of Employment Agreement dated January 26, 1999
executed with Xxxxx Xxxxxxx, Xxxxxx X. Xxxxx,
Xxxx X. Xxxxxxxx, Xxxxx X. Quart and R. Xxxx Xxxxxx
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated January
26, 1999, is made and entered into by and among Xxxxxx-Xxxxxxx Company, a
Delaware corporation (the "Parent"), Agouron Pharmaceuticals, Inc., a California
corporation (the "Corporation"), and ___________(the "Executive").
WHEREAS, the Executive is currently employed by the
Corporation as its [position]_______________________________, and the
Corporation desires to secure the continued employment of the Executive; and
WHEREAS, pursuant to the Agreement and Plan of Merger among
the Parent, WL Acquisition Corporation, a California corporation and a direct
wholly-owned subsidiary of the Parent, and the Corporation (the "Merger
Agreement"), dated as of January 26, 1999, the parties thereto have agreed to a
merger with the Corporation pursuant to the terms thereof; and
WHEREAS, the Parent and the Corporation desire to secure the
Executive's participation in the manner hereinafter specified in the business of
the Corporation and the Parent and to make provision for payment of reasonable
compensation to the Executive for such services and the Executive is willing to
be employed by the Parent and the Corporation to perform the duties incident to
such employment upon the terms and conditions hereinafter set forth and thus to
forego opportunities elsewhere; and
WHEREAS, the parties desire to enter into this Agreement, as
of the Effective Date (as hereinafter defined), setting forth the terms and
conditions of the employment relationship of the Executive with the Corporation
and the Parent during the Term (as hereinafter defined).
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. Employment. (a) Employment. The Corporation and Parent
hereby agree to employ the Executive, and the Executive hereby agrees to serve,
as [position]______________________________ of the Corporation, or in such other
executive capacity as may be agreed to by the Executive and the Parent, during
the Term.
(b) Duties. As [position]_____________________________ of the
Corporation, the Executive will have full authority to act on behalf of the
Corporation in a manner that is consistent with his title and position. In such
capacity, the Executive also agrees to perform such duties and exercise such
powers commensurate with his office as may from time to time be reasonably
requested of him by the Board or vested in him by the bylaws of the Corporation.
During the Term, the Executive shall:
(1) devote substantially all of his business time, attention
and abilities to the business of the Corporation (including its
subsidiaries or affiliates, when so required); and
(2) faithfully serve the Corporation and use his best efforts
to promote and develop the interests of the Corporation.
(c) Position Reassignment: Notwithstanding the provisions of
the preceding Clauses 1(a) and 1(b), it is expressly understood and agreed that
at the option of the Parent, and upon written notice, the Executive shall
relinquish the position set forth in said Clauses, or such other executive
capacity in which the Executive may then be serving, and the Executive shall
instead be employed as an employee of the Corporation or the Parent, as
determined by the Parent. In such capacity, the Executive shall perform such
services at such times and in such capacities as may reasonably be required by
the Corporation or the Parent, as appropriate. A reassignment in accordance with
this paragraph shall be referred to herein as a " Reassignment".
2. Term of Employment. The term (the "Term") of the
Executive's employment hereunder shall be for a period of three years,
commencing on the Effective Time as defined in the Merger Agreement (the
"Effective Date"), and (unless earlier terminated in accordance with the terms
of Paragraph 4(a) below or as otherwise extended by the mutual agreement of the
parties) ending on the third anniversary thereof.
3. Compensation. Subject to, and in accordance with, the terms
of this Agreement, the Corporation shall pay compensation and provide benefits
to the Executive as follows:
(a) Base Salary. The Corporation shall pay to the Executive a
base salary of $____[insert current salary]_______ per annum during the Term
(the "Base Salary"). The Executive shall receive his or her salary in equal
monthly installments (or in such other equal installments in accordance with the
Corporation's payroll practices in effect from time to time). The Executive
shall be eligible for annual salary increases in accordance with the
compensation policies of the Corporation, as approved by the Parent, in effect
from time to time.
(b) Past-Service Bonus. On or before June 30, 1999, the
Corporation will pay the Executive a past service bonus for the fiscal year
ending June 30, 1999 in accordance with the Corporation's past practice, subject
to approval of the Parent (the "Past-Service Bonus"). The Past-Service Bonus
shall be no less than the bonus paid for the fiscal year ending June 30, 1998.
Executive's bonus for the fiscal year ending June 30, 1998, was $__[insert bonus
amount]____________.
(c) Perquisites. The Executive shall be entitled to
participate in all of the Corporation's benefit and welfare plans (including
vacation policy) that the Executive was entitled to immediately prior to the
Effective Date until December 31, 2000 while such programs are available to the
Corporation's employees generally as provided in the Merger Agreement. Effective
as of January 1, 2001, the Executive shall also be provided with the opportunity
to enroll in the Parent's benefit plans at the same time and on the same terms
and conditions as are applicable to the Corporation's employees generally as
provided in the Merger Agreement; provided that the Executive shall be entitled
to participate in the Parent's tax-qualified defined benefit plan as of January
1, 2000. The vacation entitlement under the Corporation's vacation policy shall
not be reduced after transition to the Parent's policy. Without limiting the
generality of the foregoing, the parties hereto hereby expressly agree that the
Executive shall receive the following benefits:
(i) Past-Service Credit. For purposes of eligibility and
vesting (but not benefit accrual) in the Parent's benefit plans, the Executive
shall be given credit for all of his full and partial years of service with the
Corporation as an officer or employee that he had completed as of the Effective
Date. [Add the following if Executive has attained age 50 and completed seven
years (7) years of service with the Corporation as an officer or an employee as
of the Effective Date: In addition, if the Executive has attained age 50 and
completed seven years (7) years of service with the Corporation as an officer or
an employee as of the Effective Date and has remained employed with the
Corporation or Parent until the expiration of the three-year Term of the
Agreement, such Executive shall receive benefit accrual credit in the Parent's
pension plan for the aggregate full and partial years of service with both the
Corporation and the Parent as an officer and employee. Executive commenced his
service with the Corporation on _[insert date of employment with
Corporation_________________]. It is understood that such benefit accrual credit
may be provided in either the tax-qualified or the non-qualified pension plan as
determined by the Parent.
(ii) Incentive Bonus. Beginning July 1, 1999, the Executive
shall participate in an Incentive Bonus Plan in which the Executive will be
entitled to earn an annual bonus (the "Bonus") which will be based on the
achievement by the Executive, the Corporation and the Parent of certain
performance goals as of the end of each calendar year set at a level applicable
to other comparable executives of the Parent and its affiliates in the same
grade or band as the Executive in an amount determined by the Parent upon the
recommendation of the Chief Executive Officer of the Corporation; provided,
however, that the bonus for the period beginning on July 1, 1999 and ending on
December 31, 1999 shall be made on a pro-rata basis to reflect payment of the
Past-Service Bonus.
(iii) Stock Options. The Executive's stock options of the
Corporation that are outstanding as of the Effective Date as defined in the
Merger Agreement shall be assumed by the Parent in accordance with the terms of
the Merger Agreement ("Rollover Options"). In addition the Executive shall be
awarded additional stock options under the Parent's stock option plans on or
about June 30, 1999 under the terms and conditions that are consistent with
options granted in 1999 to comparable Executives of the Parent in the same grade
or band in accordance with the Parent's grant guidelines. Commencing January 1,
2000, the Executive shall be eligible to participate on an annual basis in the
Parent's stock option plans on the same date as grants made to other comparable
executives in the same grade or band as the Executive. Such option grants to the
Executive shall be
made under the same terms and conditions offered to other comparable executives
in the same grade or band as the Executive in an amount determined by the Parent
upon recommendation of the Chief Executive Officer of the Corporation; provided,
however, that the option grant for the period beginning on July 1, 1999 and
ending on December 31, 1999 shall be made on a pro-rata basis to reflect the
grant made on or about June 30, 1999.
(iv) Reimbursement of Expenses. The Corporation shall
reimburse the Executive for all reasonable expenses incurred personally by him
on behalf of the Corporation in accordance with the policies and procedures
applicable to comparable executives of the Parent within the same grade or band
as the Executive.
4. Termination, Reassignment or Resignation.
(a) Earlier Termination of Employment, Reassignment or
Resignation. Notwithstanding the provisions of Paragraph 2, the Executive's
employment with the Corporation may be terminated, the Executive may undergo
Reassignment or the Executive may resign such employment prior to the expiration
of the Term as follows:
(1) The Corporation, with the prior approval of the Parent,
may terminate the Executive's employment hereunder for Cause, provided
that the Corporation complies with the provisions of Paragraph 4(e)(1);
(2) The Corporation or the Parent may undertake a Reassignment
of the Executive in accordance with Paragraph 1(c) hereof at any time
if it deems it to be in its best interest of the Corporation or the
Parent, provided that the Corporation complies with the provisions of
Paragraph 4(e)(2);
(3) During the period that the Executive experiences a
Disability, the Corporation may designate the Executive's employment as
inactive hereunder, provided that the Corporation complies with the
provisions of Paragraph 4(e)(3);
(4) The Executive's employment hereunder shall terminate
automatically upon his death; or
(5) The Executive may resign from his employment with the
Corporation with or without Good Reason.
(b) Definition of "Cause". As used herein, "Cause" shall mean,
during the Term of this Agreement, the occurrence of any of the following:
(1) acts of common law fraud against the Parent, the
Corporation or their affiliates on the part of the Executive; provided,
however, that prior to the determination that "Cause" under this
Paragraph 4(b)(1) has occurred, the Corporation or the Parent shall (A)
provide to the Executive in writing, in reasonable detail, the reasons
for the determination that such "Cause" exists, (B) afford the
Executive a reasonable opportunity to remedy any such breach, (C)
provide the Executive an opportunity to be heard prior to the final
decision to terminate the Executive's employment hereunder for such
"Cause" and (D) make any decision that such "Cause" exists in good
faith;
(2) the conviction after the exhaustion of all appeals by the
Executive of a felony or the entry of a plea of nolo contendere for
such a felony;
(3) a material violation of the Executive's material
responsibilities as set forth herein which is willful and deliberate;
provided, however, that prior to the determination that "Cause" under
this Paragraph 4(b)(3) has occurred, the Corporation or the Parent
shall (A) provide to the Executive in writing, in reasonable detail,
the reasons for the determination that such "Cause" exists, (B) afford
the Executive a reasonable opportunity to remedy any such breach, (C)
provide the Executive an opportunity to be heard prior to the final
decision to terminate the Executive's employment hereunder for such
"Cause" and (D) make any decision that such "Cause" exists in good
faith; or
(4) a material violation of the Corporation's or the Parent's
significant policies as in effect from time to time, including, by way
of illustration, any violation of the Guidelines for the Conduct of
Research at the Xxxxx-Xxxxx Pharmaceutical Research Division, the
Policies and Procedures for the Receipt and Investigation of
Allegations of Scientific Misconduct, the Business Ethics and
Compliance Manual, the Management Integrity Policy, the Colleague
Agreement or the sexual harassment policy (copies of which shall be
made available to the Executive as soon as practicable after the
Effective Date); provided, however, that prior to the determination
that "Cause" under this Paragraph 4(b)(4) has occurred, the Corporation
or the Parent shall (A) provide to the Executive in writing, in
reasonable detail, the reasons for the determination that such "Cause"
exists, (B) afford the Executive a reasonable opportunity to remedy any
such breach, (C) provide the Executive an opportunity to be heard prior
to the final decision to terminate the Executive's employment hereunder
for such "Cause" and (D) make any decision that such "Cause" exists in
good faith.
(c) Definition of "Disability". The Executive shall be
considered to have a "Disability" if he satisfies the definition set forth in
the disability benefits plan in which he is enrolled at the time of the
determination or if there is no such plan, for a continuous period of six
months, he is unable to perform his duties under this Agreement for reasons of
health, and, in the opinion of a physician appointed by the Corporation, such
disability will continue for a prolonged period of time; provided, however, if
the Executive is able to and returns to his employment within one year of the
Disability, he shall not be deemed "Disabled" under this Agreement.
(d) Definition of "Good Reason". As used herein, "Good Reason"
shall mean the occurrence of any of the following:
(1) a Reassignment, as defined in Paragraph 1(c) hereof, that
constitutes a significant adverse reduction in the Executive's status,
authority, responsibilities or duties, provided, however, that Good
Reason shall not include any change that is a natural consequence of
the Corporation ceasing to be a public company or becoming a wholly
owned subsidiary of Parent, and provided, further, that the Executive
shall have a period of six (6) months after a Reassignment to invoke
the provisions of this clause by providing written notice to the
Corporation and Parent;
(2) any failure by the Corporation or Parent to pay to the
Executive the Base Salary or other compensation and benefits provided
for herein after failure to cure such nonperformance within thirty (30)
days after written demand by the Executive to the Corporation and the
Parent;
(3) except where expressly approved by the Executive, the
relocation of the Executive's principal place of business from La
Jolla, California that increases the Executive's commute by more than
50 miles; or
(4) any other material breach of this Agreement by the
Corporation or the Parent that continues to exist for thirty (30) days
after written notice thereof has been provided to the Corporation and
the Parent.
Additionally, the Corporation agrees to use its reasonable best efforts not to
cause Good Reason to occur within one (1) year after the Effective Date.
(e) Payments to the Executive upon Termination, Reassignment
of Employment or Good Reason. In the event that the Executive's employment with
the Corporation is terminated, undergoes Reassignment or Good Reason occurs
prior to the expiration of the three-year Term for the reasons provided in
Paragraph 4(a), then the Corporation shall pay to the Executive the following
amounts and shall provide to the Executive the following benefits, as
applicable:
(1) In the event that the Executive's employment hereunder
terminates for Cause, death or Disability, the Corporation shall pay to
the Executive an amount equal to the sum of (i) his accrued but unpaid
Base Salary, plus (ii) his accrued but unpaid vacation pay, plus (iii)
any other compensation payments or benefits (including post-retirement
benefits) which have accrued and are payable in connection with such
termination, plus (iv) his Past-Service Bonus to the extent it had not
been previously paid in accordance with Paragraph 3(b) and to the
extent it is attributable to the period prior to the event of Cause.
(2) In the event that the Executive undergoes a Reassignment,
the provisions hereof regarding compensation, benefits, perquisites
(including, without limitation, stock options and bonuses) and all
other terms and conditions of employment shall continue as though the
Reassignment had not occurred.
(3) In the event that the Executive's employment is designated
as inactive by reason of Disability, the Executive shall receive the
disability benefits under the disability benefit plan in which the
Executive is enrolled at the time of such determination.
(4) In the event that Good Reason exists as defined in
Paragraph 4(d), the Executive shall receive the following:
(i) If such Good Reason occurs and the Executive
resigns from employment under Paragraph 4(a)(5) within one (1) year
from the Effective Date, the Good Reason resignation shall constitute
an involuntary termination of employment. The Executive shall receive a
lump sum payment equal to his Base Salary and most recent bonus
multiplied by the remaining Term of the Agreement. The parties
recognize that under the stock option
plans of the Corporation, the stock options granted to the Executive
prior to the Effective Date shall become immediately exercisable as of
the date of termination of employment.
(ii) If such Good Reason occurs after a one (1) year
period from the Effective Date, the Executive, after invoking the
provisions of this Paragraph (4)(e)(4)(ii) by providing written notice
to the Corporation, shall remain an employee of the Corporation for the
balance of the three-year Term of the Agreement with such duties
(notwithstanding Paragraphs 1(b) and (c) hereof) to be determined by
mutual agreement between the Corporation and the Executive. The
Executive shall continue to receive salary, compensation and benefits
coverage as though the Good Reason had not occurred; provided, however,
that the annual bonus shall not be less than the prior year's bonus and
there shall not be further stock option grants or salary increases to
the Executive.
5. Protection of the Corporation's and Parent's Interests.
(a) Secrecy. The Executive acknowledges that certain
information not generally known, and proprietary to the Corporation or the
Parent, about the Corporation's or the Parent's, or some third party's (if the
Corporation or the Parent is under a confidentiality obligation to such third
party) products, processes, machines and services, including but not limited to,
information relating to research, development, manufacturing, purchasing,
accounting and finance, data processing, engineering and marketing
("Confidential Information") has been made available to the Executive during his
employment with the Corporation and will continue to be made available to
Executive during the term of employment with the Corporation and the Parent. The
Executive will treat as trade secrets all Confidential Information acquired by
him during the course of employment with the Corporation (either prior to
Effective Date or thereafter) and the Parent, and will not use any such trade
secret for his own benefit nor disclose it to any other third party during the
period of employment with the Corporation or the Parent or thereafter, except as
authorized in writing by the Parent. The Executive will not submit, during the
term of employment with the Corporation or the Parent and thereafter, any
information with respect to the Confidential Information for publication, except
as authorized by the Parent in writing. The Executive will not reveal to the
Corporation or the Parent any confidential information of a third party which
the Executive is prohibited from disclosing to the Corporation or the Parent.
Further, the Executive represents that he has informed the Corporation or the
Parent of all instances in which he has been advised by a former employer that
he is in possession of such confidential information and that he shall
immediately inform the Corporation of all instances in which he is so advised
during his employment with the Corporation or the Parent.
In addition, the Executive will not, during the term of employment with the
Corporation or the Parent, carry on any outside employment, business or other
activity which relates to Confidential Information or his duties at the
Corporation or the Parent, except as may be authorized by the Parent in writing.
The Executive acknowledges that the Confidential Information is of extremely
high value to the Corporation and the Parent and any action or omission on
Executive's part which may lead to the disclosure or misuse of any such
Confidential Information could be of extreme detriment to the Corporation or the
Parent and would cause irreparable harm to the Corporation or the Parent, for
which there would not be an adequate remedy at law. In the event of any breach
of the Executive's obligations set forth in this Paragraph 5, the Corporation
and the Parent shall, in addition to such
ther remedies as may be available to them at law or in equity, be entitled to
enforce their rights by obtaining injunctive relief against the Executive. The
Executive hereby waives any defense that he might have to the obtaining of such
injunctive relief.
(b) Exclusive Property. The Executive confirms that all
confidential information is and shall remain the exclusive property of the
Corporation or the Parent, as appropriate. All business records, papers and
documents kept or made by the Executive relating to the business of the
Corporation shall be and remain the property of the Corporation. Upon the
termination of his employment with the Corporation or upon the request of the
Corporation at any time, the Executive shall promptly deliver to the
Corporation, and shall not without the consent of the Parent retain copies of,
any written materials not previously made available to the public, or records
and documents made by the Executive or coming into his possession concerning the
business or affairs of the Corporation; provided, however, that subsequent to
any such termination, the Corporation shall provide the Executive with copies
(the cost of which shall be borne by the Executive) of any documents which are
requested by the Executive and which the Executive has determined in good faith
are (i) required to establish a defense to a claim that the Executive has not
complied with his duties hereunder or (ii) necessary to the Executive in order
to comply with applicable law.
(c) Assignment of Developments. During the term of employment
with the Corporation or the Parent, there are certain restrictions on the
Executive's ownership of "Inventions," as herein defined. The term "Inventions"
means any and all ideas, processes, trademarks, service marks, inventions,
technology, computer programs, original works of authorship, designs, formulas,
discoveries, patents, copyrights, and all improvements, rights and claims
related to the foregoing that are conceived, developed or reduced to practice by
the Executive, individually or jointly with others, during employment with the
Corporation or the Parent, except to the extent that California Labor Code
Section 2870 lawfully prohibits the assignment of rights in such Inventions. For
the Executive's information, Section 2870(a) provides:
Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights
in an invention to his or her employer shall not apply to an
invention that the employee developed entirely on his or her own time
without using the employer's equipment, supplies, facilities or trade
secret information, except for those inventions that either: (1)
Relate at the time of conception or reduction to practice of the
invention to the employer's business, or actual or demonstrably
anticipated research or development of the employer. (2) Result from
any work performed by the employee for the employer.
The Executive will upon request assign any such Invention to the Corporation
(without charge to the Corporation but at the Corporation's expense). The
Executive will not assert any right under any ideas, processes, trademarks,
service marks, inventions, technology, computer programs, original works of
authorship, designs, formulas, discoveries, patents, copyrights, and all
improvements, rights and claims related to the foregoing as having been made or
acquired by the Executive prior to commencement of his employment with the
Corporation, except as set forth on Exhibit A attached hereto (if any) and any
such item which is not listed on Exhibit A (if any) shall be presumed to have
been developed during the period of employment with the Corporation and shall be
subject to the provisions of Paragraph 5(c) of this Agreement.
Ideas, processes, trademarks, service marks, inventions, technology, computer
programs, original works of authorship, designs, formulas, discoveries, patents,
copyrights, and all improvements, rights and claims related to the foregoing
shall be presumed to be an Invention if it is conceived, developed, used, sold,
exploited or reduced to practice by the Executive or with the Executive's aid
within one (1) year after termination of employment with the Corporation or the
Parent. The Executive can rebut this presumption if he can prove that the item
is not an Invention. Nothing in this Agreement is intended to expand the scope
of protection provided by Sections 2870 through 2872 of the California Labor
Code.
Except with the prior written approval of the Corporation and Parent, the
Executive will refrain (during the term of employment with the Corporation and
the Parent and thereafter) from submitting for publication or publishing any
information with respect to any Invention.
The Executive will assist the Corporation and the Parent, during the term of
employment with the Corporation and the Parent and thereafter, in the
procurement, maintenance, protection, assignment, and enforcement of the
Corporation's and the Parent's rights with respect to such Inventions,
including, without limitation, patents, certificates of invention, copyrights,
and trademarks. In addition, the Executive will promptly deliver to the
Corporation (without charge to the Corporation but at the Corporation's expense)
executed instruments and do such other acts as may be deemed necessary or
desirable by the Corporation or the Parent with respect to any such Inventions.
It is understood that Executive will take such action whenever the Corporation
or the Parent shall make such request whether during the term of employment with
the Corporation or the Parent or thereafter.
In the event that the Corporation or the Parent is unable to secure the
Executive's signature to any document required for such procurement,
maintenance, protection, assignment or enforcement, the Executive hereby
irrevocably appoints the Corporation as agent and attorney-in-fact to act in his
behalf, to execute and file any such document and to do all other acts to
further such procurement, maintenance, protection, assignment or enforcement
with the same legal force and effect as if executed by the Executive.
(d) Injunctive Relief. Without intending to limit the remedies
available to the Corporation and the Parent, the Executive acknowledges that a
breach of any of the covenants contained in this Paragraph 5 may result in
material irreparable injury to the Corporation and the Parent for which there is
no adequate remedy at law, that it will not be possible to measure damages for
such injuries precisely and that, in the event of such a breach or threat
thereof, the Corporation and the Parent shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction restraining the
Executive from engaging in activities prohibited by this Paragraph 5 or such
other relief as may be required to specifically enforce any of the covenants in
this Paragraph 5. Without intending to limit the remedies available to the
Executive, the Executive shall be entitled to seek specific performance of the
Corporation's obligations under this Agreement.
(e) The Executive shall during the continuance of his
employment comply (and shall use his reasonable efforts to have his spouse or
partner and his minor children comply) with all applicable rules of law, stock
exchange regulations and codes of conduct applicable to employees, officers and
directors of the Corporation and the Parent then currently applicable in
relation to dealings in the shares, debentures and other securities of the
Parent, the Corporation or any of their
ffiliates or any unpublished share price sensitive information affecting the
securities of any other company with which the Corporation or the Parent has
dealings.
6. Change In Control Of Parent. The Executive shall be covered
by the Parent's Enhanced Severance Plan which provides certain protections in
the event of a "change in control" (as therein defined) of Parent. For purposes
of the Enhanced Severance Plan, the Executive shall be considered to hold a
position in Band 2 throughout the Term of this Agreement without regard to any
Reassignment.
7. Noncompetition. The Executive, the Corporation and the
Parent agree that the Executive's services as an employee are, by reason of his
extensive knowledge of the trade secrets and other confidential information of
the Corporation and access to the trade secrets and other confidential
information of the Corporation and the Parent which shall be made available to
the Executive during his employment with the Corporation and the Parent,
together with the technical skills and experience in the fields of discovery,
development, manufacturing and marketing of human pharmaceuticals targeting
cancer, AIDS and other serious diseases derived through his relationship with
Corporation and the Parent, of a special, unique, extraordinary and intellectual
character, the loss of which by the Corporation and the Parent would not be
capable of adequate compensation in damages. As a result, the Executive agrees
that for a period of two (2) years after the expiration of the Term of this
Agreement (determined without regard to any early termination of such term in
accordance with Paragraph 4 hereof or otherwise), the Executive shall not
engage, either directly or indirectly, in any manner or capacity (excluding
general administrative support), as employee, consultant, director or otherwise,
in any activity that is the same as an activity carried on by Corporation or the
Parent during the last year of the Executive's employment with the Corporation
in support of research, development or commercialization of any pharmaceutical
product that works by the same mechanism as that by which a product of the
Corporation works or is the subject of any research, development or commercial
activities of the Corporation, including, but not limited to, HIV immunogens and
agonists or antagonists of the following: HIV protease, HIV integrase, HIV
reverse transcriptase, HIV RNase H, herpes virus proteases, picornoviral
proteases, matrix metalloproteases, tyrosine kinases, GAR formyl transferase,
cyclin dependent kinases, FK binding proteins and gonadotropin release factors
(a "Restricted Activity"). The Executive agrees that during such two (2) year
period, he shall notify the General Counsel of the Parent at least ten (10) days
prior to the commencement of any business relationship so that the Parent may
determine whether a Restricted Activity is involved if a reasonably informed
person would conclude that there is a potential issue under this Paragraph (7).
8. Indemnification. The Parent and the Corporation agree to
indemnify, defend and hold harmless the Executive from and against any and all
liabilities to which he may be subject as a result of his employment hereunder
(as a result of his service as an officer or director of the Parent or the
Corporation or as an officer or director of any of their respective subsidiaries
or affiliates), as well as the costs, including attorney's and other
professional fees and disbursements, of any legal action brought or threatened
against him as a result of such employment in accordance with the
indemnification policies of the Parent.
9. Successors; Binding Agreement.
(a) Assumption by Successor. The Parent or the Corporation
will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or
substantially all of the business or assets of the Parent or the Corporation
expressly to assume and to agree to perform this Agreement in the same manner
and to the same extent that the Parent or the Corporation would be required to
perform it if no such succession had taken place; provided, however, that no
such assumption shall relieve the Parent and the Corporation of its obligations
hereunder. As used in this Agreement, the "Parent" and the "Corporation" shall
mean the Parent and the Corporation as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law or otherwise.
(b) Enforceability; Beneficiaries. This Agreement shall be
binding upon and inure to the benefit of the Executive (and his personal
representatives and heirs) and the Parent and the Corporation and any
organization which succeeds to substantially all of the business or assets of
the Parent and the Corporation, whether by means of merger, consolidation,
acquisition of all or substantially all of the assets of the Corporation or
otherwise. This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees or other beneficiary.
10. Reimbursement of Legal and Related Expenses. The Parent
agrees to reimburse the Executive for all reasonable legal fees and expenses
incurred by him in connection with the negotiation and preparation of this
Agreement. Furthermore, in the event that any good faith dispute shall arise
between the Executive and the Parent or the Corporation relating to his rights
under this Agreement, the Parent shall pay to the Executive all reasonable legal
fees and expenses incurred in connection with such dispute, unless it is finally
determined that the Executive's position in such dispute was frivolous or
undertaken in bad faith.
11. Nonsolicitation. The Executive recognizes that the
Corporation and the Parent have a substantial investment in their employees and,
therefore, the Executive agrees that he shall not, during the term of employment
with the Corporation or the Parent and for a period of three (3) years
thereafter, directly or indirectly, for the benefit of himself or others,
employ, solicit for employment or in any other way, assist in employing, as an
employee, consultant or otherwise, any employee of the Corporation or the Parent
about whom the Executive acquired knowledge through his employment.
12. Additional Payment.
(a) Gross-Up Payment. Notwithstanding anything herein to the
contrary, if it is determined that any payment made to the Executive, whether
pursuant to the terms of this Agreement or otherwise, would be subject to the
excise tax imposed by Section 4999 of the Code, or any interest or penalties
with respect to such excise tax (such excise tax, together with any interest or
penalties thereon, is herein referred to as an "Excise Tax"), then the Executive
shall be entitled to an additional payment (a "Gross-Up Payment") in an amount
that will place him in the same after-tax economic position that he would have
enjoyed if the Excise Tax had not applied, provided, however, that the
provisions of this Paragraph 12 shall not apply to any Excise Tax attributable
to a resignation without Good Reason from the employment of the Corporation that
occurs within one (1) year after the Effective Date. The amount of the Gross-Up
Payment shall be determined by the Accounting Firm (as hereinafter defined) in
accordance with such formula as the Accounting Firm deems appropriate. The
"Accounting Firm" shall mean a national accounting firm that is designated by
the Parent.
(b) Determination of Gross-Up Payment. All determinations
required under this Paragraph 12, including whether a Gross-Up Payment is
required, the amount of the payments constituting excess parachute payments, and
the amount of the Gross-Up Payment, shall be made by the Accounting Firm, which
shall provide detailed supporting calculations both to the Executive and the
Parent within fifteen days of the change in control, the date of termination
after the change in control or any other date reasonably requested by the
Executive or the Parent on which a determination under this Paragraph 12 is
necessary or advisable. The Parent shall pay to the Executive the initial
Gross-Up Payment within 5 days of the receipt by the Executive and the Parent of
the Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable by the Executive, such determination by the Accounting
Firm shall be binding upon the Executive and the Parent. If the initial Gross-Up
Payment is insufficient to cover the amount of the Excise Tax that is ultimately
determined to be owing by the Executive with respect to any payment (hereinafter
an "Underpayment"), the Parent, after exhausting its remedies under Paragraph
12(c) below, shall promptly pay to the Executive an additional Gross-Up Payment
in respect of the Underpayment.
(c) Procedures. The Executive shall notify the Parent in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Parent of a Gross-Up Payment. Such notice shall be
given as soon as practicable after the Executive knows of such claim and shall
apprise the Parent of the nature of the claim and the date on which the claim is
requested to be paid. The Executive agrees not to pay the claim until the
expiration of the thirty-day period following the date on which the Executive
notifies the Parent, or such shorter period ending on the date the taxes with
respect to such claim are due (the "Notice Period"). If the Parent notifies the
Executive in writing prior to the expiration of the Notice Period that it
desires to contest the claim, the Executive shall: (i) give the Parent any
information reasonably requested by the Parent relating to the claim; (ii) take
such action in connection with the claim as the Parent may reasonably request,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Parent and reasonably
acceptable to the Executive; (iii) cooperate with the Parent in good faith in
contesting the claim; and (iv) permit the Parent to participate in any
proceedings relating to the claim. The Executive shall permit the Parent to
control all proceedings related to the claim and, at its option, permit the
Parent to pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim. If
requested by the Parent, the Executive agrees either to pay the tax claimed and
xxx for a refund or contest the claim in any permissible manner and to prosecute
such contest to a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts as the Parent shall
determine; provided, however, that, if the Parent directs the Executive to pay
such claim and pursue a refund, the Parent shall advance the amount of such
payment to the Executive on an after-tax and interest-free basis (the
"Advance"). The Parent's control of the contest related to the claim shall be
limited to the issues related to the Gross-Up Payment and Executive shall be
entitled to settle or contest, as the case may be, any other issues raised by
the Internal Revenue Service or other taxing authority. If the Parent does not
notify the Executive in writing prior to the end of the Notice Period of its
desire to contest the claim, the Parent shall pay to the Executive an additional
Gross-Up Payment in respect of the excess parachute payments that are the
subject of the claim, provided that the Executive agrees to pay the amount of
the Excise Tax that is the subject of the claim to the applicable taxing
authority in accordance with applicable law.
(d) Repayments. If, after receipt of the Executive of an
Advance, the Executive becomes entitled to a refund with respect to the claim to
which such Advance relates, the Executive shall pay the Parent the amount of the
refund (together with any interest paid or credited thereon after Taxes
applicable thereto). If, after receipt by the Executive of an Advance, a
determination is made that the Executive shall not be entitled to any refund
with respect to the claim and the Parent does not promptly notify the Executive
of its intent to contest the denial of refund, then the amount of the Advance
shall not be required to be repaid by the Executive and the amount thereof shall
offset the amount of the additional Gross-Up Payment then owing to the
Executive.
(e) Further Assurances. The Parent shall indemnify the
Executive and hold him harmless, on an after-tax basis, from any costs,
expenses, penalties, fines, interest or other liabilities ("Losses") incurred by
him with respect to the exercise by the Parent of any of its rights under this
Paragraph 12, including, without limitation, any Losses related to the Parent's
decision to contest a claim or any imputed income to the Executive resulting
from any Advance or action taken on his behalf by the Parent hereunder. The
Parent shall pay all legal fees and expenses incurred under this Paragraph 12,
and shall promptly reimburse the Executive for the reasonable expenses incurred
by him in good faith in connection with any actions taken by the Parent or
required to be taken by the Executive hereunder. The Parent shall also pay all
of the fees and expenses of the Accounting Firm.
13. Consultancy to the Corporation after Termination of
Employment. If the Executive and the Corporation mutually agree, the Executive
and the Corporation may enter into a consultancy agreement in accordance with
such terms and conditions, and for such remuneration, as shall be mutually
agreed upon at the time. The parties recognize that if a stock option grant to
the Executive so provides then such consultancy shall not be deemed to
constitute a termination of employment for purposes of such stock option grant
(and, accordingly, the option shall continue to vest and be exercisable) until
the Executive ceases to be a consultant to the Corporation.
14. Assignment. Neither party may assign this Agreement or any
of his or its rights, benefits, obligations or duties hereunder to any other
person, firm, corporation or other entity.
15. Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given when personally delivered or on the fourth business day after being placed
in the mail, postage prepaid, addressed to the parties hereto as follows
(provided that notice of change of address shall be deemed given only when
actually received):
As to the Parent: Xxxxxx-Xxxxxxx Company.
000 Xxxxx Xxxx
Xxxxxx Xxxxxx, XX 00000
Attention: General Counsel
As to the Corporation: Agouron Pharmaceuticals, Inc.
00000 Xxxxx Xxxxxx Xxxxx Xxxx
XxXxxxx, XX 00000
Attention: General Counsel
As to the Executive: ________________
c/o Agouron Pharmaceuticals, Inc.
00000 Xxxxx Xxxxxx Xxxxx Xxxx
XxXxxxx, XX 00000
With a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxx.
The address of any of the parties may be changed from time to time by such party
serving notice upon the other parties.
16. Law Applicable. This Agreement shall be governed by the
laws of Delaware (other than Delaware principles of conflicts of laws). Any
dispute between the parties relating to this Agreement may be heard only in the
federal or state courts of Delaware and both parties hereby submit to the
exclusive jurisdiction of such courts.
17. Entire Agreement; Modification. This Agreement constitutes
the entire agreement between the parties with respect to the subject matter
hereof and supersedes and cancels all prior or contemporaneous oral or written
agreements and understandings between them with respect to the subject matter
hereof. This Agreement may not be changed or modified orally but only by an
instrument in writing signed by the parties hereto, which instrument states that
it is an amendment to this Agreement.
18. Severability. Should any provision of this Agreement or
any part thereof be held invalid or unenforceable, the same shall not affect or
impair any other provision of this Agreement or any part thereof and the
invalidity or unenforceability of any provision of this Agreement shall not have
any effect on or impair the obligations of the Parent, the Corporation or the
Executive.
19. Rules of Construction. The captions in this Agreement are
for convenience of reference only and in no way define, limit or describe the
scope or intent of any provisions or Paragraphs of this Agreement. All
references in this Agreement to particular Paragraphs are references to the
Paragraphs of this Agreement, unless some other reference is clearly indicated.
References to male gender shall include the female gender, where appropriate.
20. Execution. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the Parent, the Corporation and the
Executive have executed this Agreement, all as of the day and year first above
written.
XXXXXX-XXXXXXX COMPANY
By:
Name:
Title:
AGOURON PHARMACEUTICALS, INC.
By:
Name:
Title:
EXECUTIVE
By:
Name:
Title:
---------------------
