EXHIBIT 10.3
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement (this "Amendment"), made as
of the 10th day of July, 2001, is entered into by The Medicines Company, a
Delaware corporation with its principal place of business at Xxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000 (the "Company"), and Xxxxx Xxxxx,
residing at Xxx Xxxxx Xxxxx, Xxx Xxxxx, Xxx Xxxxxx 00000 (the "Employee").
WHEREAS, the Company and the Employee are parties to an Employment
Agreement dated as of April 1, 2000, as amended (the "Employment
Agreement"); and
WHEREAS, the Company and the Employee desire to make certain
amendments to the terms of the Employment Agreement to reflect the
Employee's agreement to devote his full business time to the Company;
NOW THEREFORE, in consideration of these premises, the mutual
covenants and promises contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
parties hereto agree as follows:
I. Employment Agreement
1. Defined Terms. The capitalized terms used herein but not otherwise
defined shall have the meanings assigned to them in the Employment Agreement.
2. Title; Capacity. The Employment Agreement is hereby amended by
deleting Section 2 of the Employment Agreement in its entirety and inserting
in lieu thereof the following:
"2. Title; Capacity. The Employee shall serve as Senior Vice
President or in such other position as the Company or its Board of
Directors (the "Board") may determine from time to time. The
Employee shall be based at the Company's principal offices in New
Jersey, unless otherwise agreed by the parties. The Employee shall
be subject to the supervision of, and shall have such authority as
is delegated to him by Xxxxx Xxxxxxxx (or if Xx. Xxxxxxxx shall have
ceased to serve as Chief Executive Officer or Chairman of the
Company, the Board or such officer of the Company as may be
designated by the Board).
The Employee hereby accepts such employment on a full-time basis and
agrees to undertake the duties and responsibilities inherent in such
position and/or such other duties and responsibilities as Xx.
Xxxxxxxx (or the Board or its designee) shall from time to time
reasonably assign to him. The Company acknowledges and agrees that
during the Employment Period, the Employee may continue to serve on
the board of directors of the companies listed on Exhibit A attached
hereto (as amended from time
to time upon the written agreement of the Company and the Employee,
the "Permitted Boards"). The Company also acknowledges and agrees
that the Employee may devote a portion of his business time to the
winding down and termination of operations of Stack Pharmaceuticals,
Inc. ("SPI"), provided that the Employee is working in good faith to
wind down and terminate the operations of SPI as promptly as
possible, consistent with good business judgment and SPI's
obligations under contracts to which SPI is currently a party. The
Employee agrees to abide by the rules, regulations, instructions,
personnel practices and policies of the Company and any changes
therein which may be adopted from time to time by the Company except
as provided in these agreements. The Employee acknowledges receipt
of copies of all such rules and policies committed to writing as of
the date of this Agreement."
3. Salary; Vacation. The annual base salary payable to the Employee shall
be $265,000 commencing on August 1, 2001. The Employee shall be entitled to
four weeks paid vacation per year, to be taken at such times as may be
approved by Xx. Xxxxxxxx (or the Board or its designee).
4. Termination for Cause. The Employment Agreement is hereby amended by
deleting paragraphs (e) and (f) of Section 4.2 of the Employment Agreement in
their entirety and inserting in lieu thereof the following:
"(e) the Employee's excessive use of alcohol and/or drugs which is
judged by the Board to materially interfere with the performance of
his duties;
"(f) any misconduct by the Employee which in the
reasonable judgment of the Board would jeopardize the
success of the Company; or
"(g) the Employee's breach of the Invention and Non-Disclosure
Agreement dated as of July 10, 2001 between the Company and the
Employee."
5. Non-Compete.
(a) The Employment Agreement is hereby amended by deleting the last
sentence of Section 6.1 of the Employment Agreement in its entirety and
inserting in lieu thereof the following:
"For this purpose, "Competitive Products" shall mean a product with
chemical or commercial characteristics of the kind or type developed
or being developed, produced, marketed or sold by the Company during
the Employment Period.";
provided that this amendment shall not be effective with respect to the
activities and business conducted by SPI under contracts to which SPI is
currently a party until such time as the operations of SPI are wound down
and terminated.
- 2 -
(b) The Employment Agreement is hereby amended by adding the following
sentence to the end of Section 6.2 of the Employment Agreement:
"The Company also agrees that a directorship by the Employee on a
Permitted Board shall not be considered a violation of Section 6.1,
so long as the Employee notifies the Company in writing of any
potential violation of Section 6.1 as a result of such directorship
and Xx. Xxxxxxxx (or the Board or its designee) agrees in writing
that such directorship shall not be considered a violation of
Section 6.1."
6. Inventions and Proprietary Information.
(a) The Employment Agreement is hereby amended by deleting Section 8 in
its entirety. This amendment shall only be effective from and after the
date hereof and shall have no retroactive effect on the Employee.
(b) On or prior to the date hereof, the Employee shall have executed an
Invention and Non-Disclosure Agreement (the "Invention Agreement") with
the Company, which shall be effective from and after the date hereof. The
Employee hereby confirms and ratifies his obligation thereunder.
II. Stock Options
Upon the date hereof, the Company shall grant to the Employee
non-statutory stock options to purchase 200,000 shares of Common Stock on
the terms and in the form of Non-statutory Stock Option Agreement attached
hereto as Exhibit B (the "Option Agreement"). Such options shall vest in
equal monthly installments in arrears over the four-year period commencing
on the date hereof in accordance with the Option Agreement; provided,
however, that, subject to the express terms set forth in the Option
Agreement,
(a) if a Change in Control Event (as defined in the Option Agreement) occurs
prior to the date, if any, on which the Employee is first elected as Chief
Executive Officer of the Company, upon such Change in Control Event such
options shall become immediately exercisable in full, and
(b) if a Change in Control Event occurs on or after the date, if any, on which
the Employee is first elected as Chief Executive Officer of the Company,
then following such Change in Control Event such options shall become
immediately exercisable in full if, on or prior to the first anniversary
of the date of the consummation of the Change in Control Event, a
Termination Event (as defined in the Option Agreement) occurs.
III. Winding Down of Stack Pharmaceuticals, Inc.
The Company and the Employee agree that promptly following the
execution of this Agreement, the Company and the Employee shall discuss in
good faith the Company's role in the winding down and termination of the
operations of Stack Pharmaceuticals, Inc. ("SPI"), including without
limitation the proposed transition to the
- 3 -
Company of certain activities currently being undertaken by SPI, the
proposed acquisition by the Company of certain assets of SPI and the
proposed assumption by the Company of certain obligations and liabilities
of SPI (it being understood that neither SPI nor the Company shall be
obligated hereunder to consummate any transaction with respect to the
winding down and termination of the operations of SPI until such time as
definitive agreements are entered into between SPI and the Company).
IV. Miscellaneous Provisions
1. The captions of the sections of this Amendment are for convenience of
reference only and in no way define, limit, or affect the scope or substance of
any section of this Amendment.
2. This Amendment shall be construed, interpreted, and enforced in accordance
with the laws of the Commonwealth of Massachusetts, without giving effect to
conflict of laws provisions.
3. This Amendment, together with the Employment Agreement, the Invention
Agreement and the Option Agreement, constitute the entire agreement between the
parties and supersedes all prior agreements and understandings, whether written
or oral, relating to the subject matter hereof.
4. In all respects other than as specifically provided in this Amendment, the
Employment Agreement is hereby ratified and affirmed.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the day and year set forth above.
THE MEDICINES COMPANY
By: /s/ Xxxxx Xxxxxxxx
--------------------------
Xxxxx X. Xxxxxxxx
Chief Executive Officer
EMPLOYEE
/s/ Xxxxx Xxxxx
--------------------------------
Xxxxx Xxxxx
- 4 -
EXHIBIT B
THE MEDICINES COMPANY
Nonstatutory Stock Option Agreement
Granted Under 1998 Stock Incentive Plan
1. Grant of Option.
This agreement evidences the grant by The Medicines Company, a Delaware
corporation (the "Company") on July 10, 2001 (the "Grant Date") to Xxxxx Xxxxx,
an employee of the Company (the "Participant"), of an option to purchase, in
whole or in part, on the terms provided herein and in the Company's 1998 Stock
Incentive Plan (the "Plan"), a total of 200,000 shares (the "Shares") of common
stock, $0.001 par value per share ("Common Stock"), of the Company at a price of
$18.10 per Share. Unless earlier terminated, this option shall expire on the
tenth anniversary of the Grant Date (the "Final Exercise Date").
It is intended that the option evidenced by this agreement shall not be
an incentive stock option as defined in Section 422 of the Internal Revenue Code
of 1986, as amended and any regulations promulgated thereunder (the "Code").
Except as otherwise indicated by the context, the term "Participant", as used in
this option, shall be deemed to include any person who acquires the right to
exercise this option validly under its terms.
2. Vesting Schedule.
(a) The options will vest in equal monthly installments in arrears over
the four-year period commencing on the Grant Date as determined by multiplying
the original number of Shares by a fraction, the numerator of which shall equal
the total number of months elapsed from the Grant Date and the denominator shall
be 48. This option shall expire upon, and will not be exercisable after, the
Final Exercise Date.
(b) The right of exercise shall be cumulative so that to the extent the
option is not exercised in any period to the maximum extent permissible it shall
continue to be exercisable, in whole or in part, with respect to all shares for
which it is vested until the earlier of the Final Exercise Date or the
termination of this option under Section 3 hereof or the Plan.
(c) Upon the occurrence of an Acquisition Event (as defined below)
(regardless of whether such event also constitutes a Change in Control Event (as
defined below)), or the execution by the Company of any agreement with respect
to an Acquisition Event (regardless of whether such event will result in a
Change in Control Event), the Board shall provide that this option shall be
assumed, or equivalent options shall be substituted, by the acquiring or
succeeding corporation (or an affiliate thereof); provided that if such
Acquisition Event also constitutes a Change in Control Event, except to the
extent specifically provided to the contrary in this agreement or any other
agreement between the Participant and the Company,
(i) if such Change in Control Event occurs prior to the date, if any,
on which the Participant is first elected as Chief Executive Officer of
the Company, such assumed or substituted options shall become
immediately exercisable in full, and
(ii) if such Change in Control Event occurs on or after the date, if
any, on which the Participant is first elected as Chief Executive
Officer of the Company, such assumed or substituted options shall
become immediately exercisable in full if, on or prior to the first
anniversary of the date of the consummation of the Change in Control
Event, a Termination Event (as defined below) occurs.
Notwithstanding the foregoing, if the acquiring or succeeding
corporation (or an affiliate thereof) does not agree to assume, or substitute
for, this option, then the Board shall (x) upon written notice to the
Participant, provide that all then unexercised portion of this option will
become exercisable in full as of a specified time (the "Acceleration Time")
prior to the Acquisition Event and will terminate immediately prior to the
consummation of such Acquisition Event, except to the extent exercised by the
Participant before the consummation of such Acquisition Event, and/or (y) in the
event of an Acquisition Event under the terms of which holders of Common Stock
will receive upon consummation thereof a cash payment for each share of Common
Stock surrendered pursuant to such Acquisition Event (the "Acquisition Price"),
provide that this option shall terminate upon consummation of such Acquisition
Event and the Participant shall receive, in exchange therefor, a cash payment
equal to the amount (if any) by which (A) the Acquisition Price multiplied by
the number of shares of Common Stock subject to this option (whether or not then
exercisable), exceeds (B) the aggregate exercise price of this option.
(d) Following the occurrence of a Change in Control Event that does not
also constitute an Acquisition Event, except to the extent specifically provided
to the contrary in this agreement or any other agreement between the Participant
and the Company,
(i) if such Change in Control Event occurs prior to the date, if any,
on which the Participant is first elected as Chief Executive Officer of
the Company, this option shall become immediately exercisable in full,
and
(ii) if such Change in Control Event occurs on or after the date, if
any, on which the Participant is first elected as Chief Executive
Officer of the Company, this option shall become immediately
exercisable in full if, on or prior to the first anniversary of the
date of the consummation of the Change in Control Event, a Termination
Event occurs.
(e) With the consent of the Board, which may be withheld, the
Participant may at any time exercise this option as to all or any part of the
Shares, including then unvested Shares, provided, that the Participant as a
condition to such exercise executes and delivers an Agreement Covering Shares
Acquired Upon Exercise of Unvested Options (and escrow agreement), upon terms
satisfactory to the Company, pursuant to which the Company shall have the right
to purchase, upon termination of the Participant's employment, all Shares that
would not then have been vested under the terms set forth in this agreement or
the Plan.
(f) Notwithstanding anything in this option to the contrary, in the
event that the Participant's relationship with the Company is terminated by
reason of death or disability (within the meaning of Section 22(e)(3) of the
Code), then, in addition to the Shares as to which this option is exercisable as
of such termination date pursuant to the terms hereof, this option shall also
become exercisable for an additional number of Shares equal to 50% of the Shares
covered by this option which were not otherwise exercisable as of such
termination date. For example, if as of the termination date, 6,000 shares of a
10,000 share stock option had vested and no shares covered by such option had
been exercised, upon such termination date, the option would become exercisable
for an additional 2,000 shares (50% of (10,000 - 6,000)) or total of 8,000
shares.
(g) For purposes of this Section 2, the following terms shall have the
definitions set forth below:
(1) An "Acquisition Event" shall mean:
(A) any merger or consolidation of the Company with or
into another entity as a result of which the Common
Stock is converted into or exchanged for the right to
receive cash, securities or other property; or
(B) any exchange of shares of the Company for cash,
securities or other property pursuant to a statutory
share exchange transaction.
(2) A "Change in Control Event" shall mean:
(A) any sale or transfer of all or substantially all of
the assets of the Company to another corporation or
entity, any merger, consolidation or reorganization
of the Company into or with another corporation or
entity, with the result that, upon conclusion of the
transaction, the voting securities of the Company
immediately prior thereto do not represent (either by
remaining outstanding or by being converted into
voting securities of the surviving entity) more than
50% of the combined voting power of the voting
securities of the continuing or surviving entity of
such consolidation, merger or reorganization; or
(B) following the date on which the Company becomes
subject to the periodic reporting requirements under
Section 13 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), a disclosure that any
person (as the term "person" is used in Section
13(d)(3) or Section 14(d)(2) of the Exchange Act),
other than (i) any shareholder who, prior to the
Company becoming subject to such reporting
requirements of Section 13 of the Exchange Act,
previously held at least 30% of the combined voting
power of outstanding voting securities of the
Company, (ii) the Company or (iii) any corporation
owned directly or indirectly by the
stockholders of the Company in substantially the same
proportion as their ownership of stock of the
Company, becomes the beneficial owner as the term
"beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation thereto under the
Exchange Act) of securities representing 30% or more
of the combined voting power of the then outstanding
voting securities of the Company; or
(C) such time as individuals who as of the date of the
initial adoption of the Plan constitute the Board of
Directors of the Company, and any new director (other
than a director designated by a person who has
entered into an agreement with the Company to effect
any transaction described in clause (A) or (B) of
this section) whose election by the Board or
nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds of the
directors then still in office who were either
directors at the beginning of the period or whose
election or whose nomination for election was
previously so approved, cease for any reason to
constitute a majority of the Board of Directors.
(3) "Termination Event" shall mean the termination of the
Participant's employment by (i) by the Company or the
acquiring or succeeding corporation without Cause (as defined
in the Employment Agreement dated as of April 1, 2000, as
amended, between the Company and the Participant, as amended
from time to time); (ii) as a result of his death or
disability (within the meaning of Section 22(4)(3) of the
Code); or (iii) by the Participant upon written notice given
promptly after the Company's or the acquiring or succeeding
corporation's taking any of the following actions, which
actions shall not have been cured within a 30-day period
following such notice: (w) the principal place of the
performance of the Participant's responsibilities (the
"Principal Location") is changed to a location outside of a 30
mile radius from the Principal Location immediately prior to
the Change in Control Event; (x) there is a material reduction
in the Participant's responsibilities without Cause; (y) there
is a material reduction in the Participant's salary; or (z)
there is a significant diminution in the scope of the
Participant's responsibilities without the Participant's
agreement (excluding increases in responsibility and sideways
moves to jobs with similar descriptions).
3. Exercise of Option.
Form of Exercise. Each election to exercise this option shall
be in writing, signed by the Participant, and received by the Company at its
principal office, accompanied by this agreement, and payment in full in the
manner provided in the Plan. The Participant may purchase less than the number
of shares covered hereby, provided that no partial exercise of this option may
be for any fractional share or for fewer than ten whole shares.
Continuous Relationship with the Company Required. Except as
otherwise provided in this Section 3, this option may not be exercised unless
the Participant, at the time he or she exercises this option, is, and has been
at all times since the date of grant of this option, an employee, officer or
director of, or consultant or advisor to, the Company or any parent or
subsidiary of the Company as defined in Section 424(e) or (f) of the Code (an
"Eligible Participant").
Termination of Relationship with the Company. If the
Participant ceases to be an Eligible Participant for any reason, then, except as
provided in paragraphs (d) and (e) below, the right to exercise this option
shall terminate three months after such cessation (but in no event after the
Final Exercise Date), provided that this option shall be exercisable only to the
extent that the Participant was entitled to exercise this option on the date of
such cessation. Notwithstanding the foregoing, if the Participant, prior to the
Final Exercise Date, violates the non-competition or confidentiality provisions
of any employment contract, confidentiality and nondisclosure agreement or other
agreement between the Participant and the Company, the right to exercise this
option shall terminate immediately upon written notice to the Participant from
the Company describing such violation.
Exercise Period Upon Death or Disability. If the Participant
dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code)
prior to the Final Exercise Date while he or she is an Eligible Participant and
the Company has not terminated such relationship for "cause" as specified in
paragraph (e) below, this option shall be exercisable, within the period of one
year following the date of death or disability of the Participant, by the
Participant, provided that this option shall be exercisable only to the extent
that this option was exercisable by the Participant on the date of his or her
death or disability, and further provided that this option shall not be
exercisable after the Final Exercise Date.
Discharge for Cause. If the Participant, prior to the Final
Exercise Date, is discharged by the Company for Cause, the right to exercise
this option shall terminate immediately upon the effective date of such
discharge. "Cause" shall mean: (i) conviction of any felony or any crime
involving moral turpitude or dishonesty; (ii) participation in a fraud or act of
dishonesty against the Company; (iii) willful and material breach of the
Company's policies; (iv) intentional and material damage to the Company's
property; or (v) material breach of such Participant's non-disclosure,
non-competition or other similar agreement with the company.
4. Withholding.
No Shares will be issued pursuant to the exercise of this option unless
and until the Participant pays to the Company, or makes provision satisfactory
to the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.
5. Nontransferability of Option.
This option may not be sold, assigned, transferred, pledged or otherwise
encumbered by the Participant, either voluntarily or by operation of law, except
by will or the laws of descent and distribution, and, during the lifetime of the
Participant, this option shall be exercisable only by the Participant.
6. Provisions of the Plan.
This option is subject to the provisions of the Plan, a copy of which is
furnished to the Participant with this option.
IN WITNESS WHEREOF, the Company has caused this option to be executed
under its corporate seal by its duly authorized officer. This option shall take
effect as a sealed instrument.
The Medicines Company
Dated: __________ By: _________________________
Xxxxx Xxxxxxxx
Chief Executive Officer
PARTICIPANT'S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the
terms and conditions thereof. The undersigned hereby acknowledges receipt of a
copy of the Company's 1998 Stock Incentive Plan.
PARTICIPANT: ____________________________
Address: ___________________________________
__________________________________
