EXHIBIT 10.17
FORM OF EMPLOYMENT/SEVERANCE AGREEMENT
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January 1, 1996
Dear
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We are pleased to inform you that the Board of Directors (the "Board") of
Mycogen Corporation (the "Company") has authorized an employment package for you
which will provide certain assurances concerning the terms and conditions of
your continued employment with the Company and will allow you to participate in
a program of severance benefit payments should your employment terminate. The
purpose of this letter agreement (the "Agreement") is to document the terms of
your employment package by providing you with a formal employment contract.
The Company considers it essential to the continuing operation of the
Company and in the best interests of its shareholders to assure the continuous
dedication of key management personnel. It is recognized in the context of
public ownership that a termination of an employee's employment without cause
may be sought and that such circumstances could prove distracting to key
executives and detrimental to the ongoing management and administration of the
Company. Such distraction is not in the best interest of the shareholders of
the Company. Accordingly, the Board has determined to discourage the inevitable
distraction to you in the face of potentially disturbing circumstances inherent
in any uncertainty regarding your employment status. This Agreement is intended
to secure and encourage your ongoing retention by providing separation benefits
in the event that your employment is altered as hereinafter described. In order
to induce you to remain in the employ of the Company, and in consideration of
the your agreement set forth in Sections 10, 11, 12 and 13 of Part Two hereof,
the Company agrees to pay the severance payments and benefits set forth in this
Employment Agreement, under the circumstances described herein.
This Agreement supersedes any written employment agreement between you and
the Company prior to the date hereof.
Part One of this Agreement sets forth certain definitional provisions to be
in effect for purposes of determining your benefit entitlements. Part Two
specifies the terms and conditions which will apply to your continued employment
with the Company, including the severance payments and benefits to which you
will become entitled in the event your employment should be terminated. Part
Three provides an additional gross-up bonus to you in the particular
circumstance where the payment of or separation benefits generates the
imposition of an excise tax by the Internal Revenue Service. Part Four provides
for certain additional rights and responsibilities of both yourself and the
Company. Part Five concludes this Agreement with a series of general terms and
conditions applicable to your employment benefits.
PART ONE -- DEFINITIONS
DEFINITIONS. For purposes of this Agreement, including in particular the
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severance payments and benefits to which you may become entitled under Part
Three, the following definitions will be in effect:
"CHANGE IN CONTROL" means:
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(i) a merger or acquisition in which the Company is not the surviving
entity, except for a transaction the principal purpose of which is to change the
State of the Company's incorporation;
(ii) the sale, transfer or other disposition of all or substantially all
of the assets of the Company in liquidation or dissolution of the Company or a
sale/leaseback of all or substantially all of the Company's assets (with or
without a purchase option);
(iii) a transfer of all or substantially all of the Company's assets
pursuant to a partnership or joint venture agreement or similar arrangement
where the Company's resulting interest is or becomes fifty percent (50%) or
less;
(iv) any reverse merger in which the Company is the surviving entity but
in which fifty percent (50%) or more of the Company's outstanding voting stock
is transferred to holders different from those who held the stock immediately
prior to such merger;
(v) on or after the date hereof, a change in ownership of the Company
through an action or series of transactions, such that any person is or becomes
the beneficial owner, directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the securities of the combined
voting power of the Company's outstanding securities;
(vi) a change in the composition of the Board such that the individuals
elected to the Board at the last meeting of the shareholders at which there is
not a contested election subsequently cease to comprise a majority of the Board;
or
(vii) the occurrence of any other event constituting a "change in control"
under Code Section 280G or the Treasury regulations promulgated thereunder.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"EMPLOYEE" means .
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"EMPLOYEE BENEFIT PLAN" shall have the meaning given the term under Section
3 of ERISA.
"EMPLOYMENT PERIOD" means the period of your employment with the Company
governed by the terms and provisions of this Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
in effect from time to time.
"INVOLUNTARY TERMINATION" means the termination of your employment with
the Company:
(i) involuntarily upon your discharge, dismissal, or the Company's failure
to renew this Agreement pursuant to Section 3 of Part Two, whether or not in
connection with a Change in Control; or
(ii) voluntarily or involuntarily, provided such termination occurs in
connection with (a) a change in your position with the Company which materially
reduces your level of responsibility or changes your title, (b) a reduction in
your level of compensation (including base salary, fringe benefits and any non-
discretionary bonuses or other incentive payments earned pursuant to objective
standards or criteria) by more than ten percent (10%), or (c) a relocation of
your principal place of employment by more than fifty (50) miles or a change in
your responsibilities such that you must spend more than twenty percent (20%) of
your working days outside of the San Diego, California area, and such change,
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reduction or relocation is effected without your written concurrence.
"OPTION" means any option granted to you under the Stock Option Plan which
is outstanding at the time of your Involuntary Termination.
"STOCK OPTION PLAN" means the Company's 1992 Stock Option Plan (including
the predecessor 1983 Stock Option Plan), as amended through the date hereof.
"RESTRICTED STOCK ISSUANCE PLAN" means the 1990 Restricted Stock Issuance
Plan, as revised on April 18, 1991, and as further amended through the date
hereof.
"TERMINATION FOR CAUSE" will mean an Involuntary Termination of your
employment for one or more alleged acts of fraud, embezzlement, misappropriation
of proprietary information or any other verifiable misconduct adversely
affecting the business reputation of the Company in a material manner.
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PART TWO -- TERMS AND CONDITIONS OF EMPLOYMENT
The following terms and conditions will govern your employment with the
Company throughout the Employment Period and will also, to the extent indicated
below, remain in effect following your termination date.
1. EMPLOYMENT AND DUTIES. The Company will continue to employ you as an
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executive officer in the position of . You agree to
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continue in such employment for the duration of the Employment Period and to
perform in good faith and to the best of your ability all services which may be
required of you in your executive position and to be available to render such
services at all reasonable times and places in accordance with reasonable
directives and assignments issued by the Board or your superiors. During your
Employment Period, you will devote your full time and effort to the business and
affairs of the Company within the scope of your executive office. Your principal
place of operations will be at the Company's corporate offices in San Diego,
California. You may, however, be required to travel periodically to Company
facilities in other geographic locations in connection with your duties.
2. TERM OF AGREEMENT. This Agreement shall be effective as of the date
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hereof. The term of this Agreement shall continue in effect from such date for
a period of one (1) year from such date, subject to the provisions of this Part
Two, unless sooner terminated by the parties in accordance with the provisions
hereof. No termination or expiration of this Agreement shall affect any rights,
obligations or liabilities of Employee or the Company that shall have accrued on
or prior to the date of termination or expiration.
3. AUTOMATIC EXTENSION. Commencing on the first anniversary of the
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effective date hereof, and on each succeeding anniversary of the date hereof,
the term of this Agreement shall automatically be extended for one (1)
additional year unless, not later than three (3) months preceding such
anniversary date, the Company shall have given written notice pursuant to
Section 6 of Part Five that it will not extend the term of this Agreement. The
automatic extension of the term of this Employment Agreement pursuant to this
Section 3 shall not be a modification of this Agreement in any significant
respect within the meaning of Section 280G of the Code and the rules and
regulations thereunder.
4. COMPENSATION.
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A. For service in the 1996 calendar year, your base salary will be the
annual rate of . Your annual rate of base salary
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will be subject to adjustment each calendar year by the Board.
B. Your base salary will be paid at periodic intervals in accordance
with the Company's payroll practices for salaried employees.
C. You will be entitled to such bonuses (if any) for service rendered
during the Employment Period as the Board may determine in its sole discretion
based upon the recommendation of the Company's Chief Employee Officer and such
additional factors as the Board deems appropriate, including your individual
performance and the Company's profitability.
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D. The Company will deduct and withhold, from the compensation payable
to you hereunder, any and all applicable Federal, State and local income and
employment withholding taxes and any other amounts required to be deducted or
withheld by the Company under applicable statute or regulation.
5. EXPENSE REIMBURSEMENT. You will be entitled to reimbursement from the
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Company for all customary, ordinary and necessary business expenses incurred by
you in the performance of your duties hereunder, provided you furnish the
Company with vouchers, receipts and other substantiation of such expenses within
thirty (30) days after they are incurred.
6. FRINGE BENEFITS. During the Employment Period, you will be eligible to
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participate in any group life insurance plan, group medical and/or dental
insurance plan, accidental death and dismemberment plan, short-term disability
program and other employee benefit plans, including profit sharing plans,
cafeteria benefit programs, and stock option plans, which are made available to
executives and for which you qualify.
7. VACATION. You will accrue paid vacation benefits during the Employment
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Period in accordance with the Company policy in effect for executive officers.
8. DEATH OR DISABILITY.
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A. Upon your death or disability during the Employment Period, the
employment relationship created pursuant to this Agreement will immediately
terminate, and no further compensation will become payable to you pursuant to
Part Two, Section 4. In connection with such termination, the Company will only
be required to pay you (or your estate) any unpaid compensation earned under
Part Two, Section 4 for services rendered through the date of your death or
disability, together with a special termination payment equal to the additional
amount of base salary you would have earned hereunder had your employment
continued for an additional thirty (30) days.
B. You will be deemed disabled if you are, in the Company's reasonable
opinion, unable by reason of any permanent physical or mental injury or illness
to substantially perform the services required of you hereunder either for a
period in excess of one hundred eighty (180) days or for a period of one hundred
eighty (180) days in the aggregate during any two hundred seventy (270) day
period. In such event, you will be deemed disabled as of the end of such one
hundred eightieth (180th) day.
C. Upon death or disability the terms of The Stock Plan will apply.
9. SEVERANCE BENEFITS.
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A. You will be entitled to receive the severance benefits specified
below in the event there should occur an Involuntary Termination of your
employment (other than a Termination for Cause) prior to January 1, 1999,
whether or not effected in connection with a Change in Control:
(i) SEVERANCE BENEFIT. The Company will make a severance payment to
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you, in one lump sum within fifteen (15) days of the date of your Involuntary
Termination, in an aggregate amount equal to times the sum of (a) the
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average annual rate of base salary and
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(b) the average bonus paid to you by the Company, in each case for service
rendered in the two (2) immediately preceding calendar years. If a bonus was
paid for only one of those calendar years, then the clause (b) amount will be
equal to that bonus.
(ii) WELFARE BENEFITS. For a period of months,
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Employee (and his dependents, as applicable) shall be provided by the Company
with the same life, health and disability plan participation, benefits and other
coverages to which he was entitled as an employee immediately before the
Involuntary Termination. In the event that under applicable law or the terms of
the relevant Employee Benefit Plans such participation, benefits and/or coverage
cannot be provided to Employee following his Involuntary Termination, such
coverage and/or benefits shall be provided directly by the Company pursuant to
this Agreement on a comparable basis. In its sole discretion, the Company may
obtain such coverage and benefits for Employee through private insurance
acquired at the Company's expense. Amounts paid or payable to or on behalf of
Employee pursuant to any "employee welfare benefit plan", as defined in ERISA,
providing health and/or disability benefits, that is sponsored by the Company or
an affiliate of the Company, shall be credited against amounts due under this
Section 9.A.(ii). To the maximum extent permitted by applicable law, the
benefits provided under this Section 9.A.(ii) shall be in discharge of any
obligations of the company or any rights of Employee under the benefit
continuation provisions under Section 4980A of the Code and Part VI of Title I
of the Employee Retirement Income Security Act ("COBRA") or any other
legislation of similar import.
(iii) UNVESTED STOCK. Any unvested shares of the Company's
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Common Stock which you hold under the Restricted Stock Issuance Plan at the time
of such Involuntary Termination will immediately vest in full.
(iv) OPTION ACCELERATION. Each of your Options under the Stock
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Option Plan will (to the extent not then otherwise exercisable) automatically
accelerate so that each such Option will become immediately exercisable for the
total number of shares purchasable thereunder. Each such accelerated Option,
together with all of your other vested Options, will remain exercisable for a
period of three (3) years following your Involuntary Termination and may be
exercised for any or all of the accelerated shares in accordance with the
exercise provisions of the Option agreement evidencing the grant.
B. You will be entitled to receive the severance benefits specified below in
the event there should occur an Involuntary Termination of your employment
(other than a Termination for Cause) at any time after January 1, 1999, whether
or not effected in connection with a Change in Control:
(i) SEVERANCE BENEFIT. The Company will make a severance payment to
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you, in one lump sum within fifteen (15) days of the date of your Involuntary
Termination, in an aggregate amount equal to times the sum of (a) the
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average annual rate of base salary and (b) the average bonus paid to you by the
Company, in each case for service rendered in the two (2) immediately preceding
calendar years. If a bonus was paid for only one of those calendar years, then
the clause (b) amount will be equal to that bonus.
(ii) WELFARE BENEFITS. For a period of months,
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Employee (and his dependents, as applicable) shall be provided by the Company
with the same life, health and disability plan participation, benefits and
coverages to which he was entitled as an
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employee immediately before the Involuntary Termination. In the event that under
applicable law or the terms of the relevant Employee Benefit Plans such
participation, benefits and/or coverage cannot be provided to Employee following
his Involuntary Termination, such coverage and/or benefits shall be provided
directly by the Company pursuant to this Agreement on a comparable basis. In its
sole discretion, the Company may obtain such coverage and benefits for Employee
through private insurance acquired at the Company's expense. Amounts paid or
payable to or on behalf of Employee pursuant to any "employee welfare benefit
plan", as defined in ERISA, providing health and/or disability benefits, that is
sponsored by the Company or an affiliate of the Company, shall be credited
against amounts due under this Section B.A.(ii). To the maximum extent permitted
by applicable law, the benefits provided under this Section B.A.(ii) shall be in
discharge of any obligations of the company or any rights of Employee under the
benefit continuation provisions under COBRA or any other legislation of similar
import.
(iii) UNVESTED STOCK. Any unvested shares of the Company's
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common stock which you hold under the Restricted Stock Issuance Plan at the time
of such Involuntary Termination will immediately vest in full.
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(iv) OPTION ACCELERATION. Each of your Options under the Stock
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Option Plan will (to the extent not then otherwise exercisable) automatically
accelerate so that each such Option will become immediately exercisable for the
total number of shares purchasable thereunder. Each such accelerated Option,
together with all of your other vested Options, will remain exercisable for a
period of three (3) years following your Involuntary Termination and may be
exercised for any or all of the accelerated shares in accordance with the
exercise provisions of the Option agreement evidencing the grant.
10. RESTRICTIVE COVENANT. During the Employment Period:
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(i) You will devote your full working time and effort to the
performance of your duties as an executive officer of the Company.
(ii) You will not directly or indirectly, whether for your own account
or as an employee, consultant or advisor, provide services to any business
enterprise other than the Company, unless otherwise authorized by the Company in
writing.
However, you will have the right to perform such incidental services as
are necessary in connection with (a) your private passive investments, (b) your
charitable or community activities, and (c) your participation in trade or
professional organizations, but only to the extent such incidental services do
not interfere with the performance of your services hereunder.
11. NON-SOLICITATION. During any period for which you are receiving
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compensation payments pursuant to Part Two, Section 4 and one (1) year
thereafter, you will not directly or indirectly solicit any Company employee to
leave the Company's employ for any reason or interfere in any other manner with
the employment relationships at the time existing between the Company and its
current employees.
12. CONFIDENTIALITY.
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A. You hereby acknowledge that the Company may, from time to time
during the Employment Period, disclose to you confidential information
pertaining to the Company's business and affairs and client base, including
(without limitation) customer lists and accounts, other similar items indicating
the source of the Company's income and information pertaining to the salaries,
duties and performance levels of the Company's employees. You will not, at any
time during or after such Employment Period, disclose to any third party or
directly or indirectly make use of any such confidential information, including
(without limitation) the names, addresses and telephone numbers of the Company's
customers, other than in connection with, and in furtherance of, the Company's
business and affairs. Nothing contained in this paragraph shall be construed to
prevent Employee from disclosing the amount of his salary.
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B. All documents and data (whether written, printed or otherwise
reproduced or recorded) containing or relating to any such proprietary
information of the Company which come into your possession during the Employment
Period will be returned by you to the Company immediately upon the termination
of the Employment Period or upon any earlier request by the Company, and you
will not retain any copies, notes or excerpts thereof. Notwithstanding the
foregoing, Employee shall be entitled to retain his file or rolodex containing
names, addresses and telephone numbers and personal diaries and calendars;
provided, however, that Employee shall continue to be bound by the terms of
Section 12.A. above to the extent such retained materials constitute
confidential information.
C. Your obligations under this Section 12 will continue in effect after
the termination of your employment with the Company, whatever the reason or
reasons for such termination, and the Company will have the right to communicate
with any of your future or prospective employers concerning your continuing
obligations under this Section 12.
13. OWNERSHIP RIGHTS.
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A. All materials, ideas, discoveries and inventions pertaining to the
Company's business or clients, including (without limitation) all patents and
copyrights, patent applications, patent renewals and extensions and the names,
addresses and telephone numbers of customers, will belong solely to the Company.
B. All materials, ideas, discoveries and inventions which you may
devise, conceive, develop or reduce to practice (whether individually or jointly
with others) during the Employment Period will be the sole property of the
Company and are hereby assigned by you to the Company, except for any idea,
discovery or invention (i) for which no Company equipment, supplies, facility or
trade secret information is used, (ii) which is developed entirely on your own
time and (iii) which neither (a) relates at the time of conception or reduction
to practice, to the Company's business or any actual or demonstrably-anticipated
research or development program of the Company nor (b) results from any work
performed by you for the Company. The foregoing exception corresponds to the
assignment of inventions precluded by California Labor Code Section 2870,
attached as Exhibit A.
C. You will, at all times whether during or after the Employment
Period, assist the Company, at the Company's sole expense, in obtaining,
maintaining, defending and enforcing patents, copyrights and other proprietary
rights of the Company. Such assistance will include (without limitation) the
execution of documents and assistance and cooperation in legal proceedings.
D. You will continue to be bound by all the terms and provisions of
your existing Proprietary Information and Invention Agreements with the Company,
and nothing in this document will be deemed to modify or affect your duties and
obligations under those other agreements.
14. TERMINATION OF EMPLOYMENT.
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A. The Company (or any successor entity resulting from a Change in
Control) may terminate your employment under this Agreement at any time for any
reason, with or without cause, by providing you with at least thirty (30) days
prior written notice. However, such notice requirement will not apply in the
event there is a Termination for Cause under subparagraph D below.
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B. In the event there is an Involuntary Termination of your employment
with the Company (other than Termination for Cause) during the Employment
Period, you will become entitled to the benefits specified in Part Two, Section
9 in addition to any unpaid compensation earned by you under Part Two, Section 4
for services rendered prior to such termination.
C. Should your employment with the Company terminate by reason of your
death or disability during the Employment Period, no severance benefits will be
payable to you under Part Two, Section 9, and only the limited death or
disability benefits provided under Part Two, Section 8 will be payable, to the
extent applicable.
D. The Company may at any time, upon written notice, terminate your
employment hereunder for any act qualifying as a Termination for Cause. Such
termination will be effective immediately upon such notice.
E. Upon such Termination for Cause, the Company will only be required
to pay you any unpaid compensation earned by you pursuant to Part Two, Section 4
for services rendered through the date of such termination, and no termination
or severance benefits will be payable to you under Part Two, Section 9.
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PART THREE -- INTERNAL REVENUE CODE LIMITATIONS
1. CODE LIMITATIONS. Notwithstanding anything to the contrary in this
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Agreement, if Employee is entitled to benefits hereunder following the
occurrence of a Change in Control, in no event shall the present value of
benefits payable under this Agreement, taken together with Employee's benefits
under the Stock Option Plan and Restricted Stock Issuance Plan and other
applicable sources, that, in the opinion of counsel (as identified in Section 3
of this Part Three), are considered "parachute payments" under Section 4999 of
the Code, be reduced by the excise tax imposed by Section 4999 of the Code. In
the event that such benefits so taken together would exceed the amount which is
exempt from the excise tax imposed by Section 4999 of the Code, the Company
shall pay to Employee an additional amount (the "Gross-Up Payment") such that
the net amount retained by Employee, after deduction for the amount of any
excise tax under Section 4999 and any interest charges or penalties in respect
of the imposition of such excise tax (but not any federal, state or local income
tax) on the present value of such benefits, and any federal, state and local
income tax, excise tax and penalties and interest, if applicable, upon the
additional payment provided for by this Section 1, shall be equal to the present
value of such benefits. For purposes of determining the additional amount to be
paid to Employee pursuant to this Section 1, Employee shall be deemed to pay
federal income taxes at the highest marginal rate of federal income taxation in
the calendar year in which the additional payment is to be made and state and
local income taxes at the highest marginal rates of taxation in the state and
locality of his residence on the date the additional payment is made, net of the
maximum reduction in federal income taxes which could be obtained from deduction
from such state and local taxes.
2. DEFINITIONS APPLICABLE TO THIS PART THREE. For purposes of this Part
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Three, the term "parachute payment" shall have the meaning ascribed to it under
Section 280G(b)(2) of the Code, and "present value" shall be determined in
accordance with Section 280G(d)(4) of the Code.
3. INTERPRETATION. This Part Three shall be interpreted so as to avoid the
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imposition of excise taxes on Employee under Section 4999 of the Code, or to
minimize such taxes. In applying the provisions of this Part Three if, for any
reason, an exemption from the application of the rules of Section 4999 of the
Code shall be available under the terms of said Section or under any applicable
regulations or rulings thereunder, such exemption shall be fully applied. All
payments under this Agreement or otherwise that are, in the opinion of counsel
(as identified in this Section 3), parachute payments shall be taken into
account in applying the provisions of this Part Three, and no others. In
application of the provisions of this Part Three, calculations necessary to be
made pursuant to the provisions of this Part Three and interpretation of the
Code and applicable regulations for purposes of compliance with this Part Three
shall be made by the private law firm serving as executive compensation and tax
counsel to the Board immediately prior to the Change in Control, and the
determination of such counsel made in good faith shall be binding and conclusive
upon both the Company and Employee. All fees and expenses of such law firm
pertaining thereto shall be borne by the Company. Payments shall be made
pursuant to this Agreement notwithstanding that the status of any payment as a
parachute payment has not been finally determined by the Internal Revenue
Service or any court of competent jurisdiction, or by arbitration as provided in
Section 3 of Part Four. Any Gross-Up Payment, as determined pursuant to Section
1 of this Part Three, shall be paid by the Company to Employee within five (5)
days of the receipt of the law firm's determination. If the law firm determines
that no excise tax is payable by Employee, it shall furnish Employee with a
written opinion that failure to report the excise tax on Employee's applicable
federal income tax return would
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not result in the imposition of a negligence (or similar) penalty. Any
determination by the law firm shall be binding upon the Company and Employee. As
a result of the uncertainty in the application of Section 4999 of the Code at
the time of the initial determination by the law firm hereunder, it is possible
that Gross-Up Payments will not have been made in full by the Company,
consistent with the calculations required to be made hereunder (with such
shortfall as "Underpayment"). In the event that the Company exhausts its
remedies pursuant to Section 4 of this Part Three and Employee thereafter is
required to make a payment of any excise tax, the law firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of Employee.
4. INTERNAL REVENUE SERVICE CLAIMS. Employee shall notify the Company in
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writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable and shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid.
Employee shall not pay such claim prior to the expiration of the thirty (30) day
period following the date on which it gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies Employee in writing prior to the
expiration of such period that it desires to contest such claim, Employee shall:
(a) give the Company any information reasonably requested by the Company
relating to such claim (without requiring a waiver of Employee's attorney-client
privilege);
(b) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company;
(c) cooperate with the Company in good faith in order to effectively
contest such claim; and
(d) permit the Company to participate in any proceedings relating to such
claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Employee harmless, on an after-
tax basis, for any excise tax or income tax (including interest and penalties
and respect thereto) imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing provisions of this
Section 4, the Company shall control all proceedings taken in connection with
such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
Employee to pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and Employee agrees 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 Company shall
determine; provided, however, that if the Company directs Employee to pay such
claim and xxx for a refund, the Company shall advance the amount of such payment
to Employee, on an interest-free basis, and shall indemnify and hold Employee
harmless, on an after-tax basis, from any excise tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statue of limitations relating to
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payment of taxes for the taxable years of Employee with respect to which such
contested amount is claimed to be due is limited solely to issues relating to
such contested amount. Furthermore, the Company's control of the contest shall
be limited to issues with respect to which a Gross-Up Payment shall be payable
hereunder and Employee shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority.
5. INTERNAL REVENUE SERVICE REFUNDS. If, after the receipt by Employee of
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an amount advanced by the Company pursuant to Section 4 of this Part Three,
Employee becomes entitled to receive any refund with respect to such claim,
Employee shall (subject to the Company's complying with the requirements of
Section 4 of this Part Three), promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by Employee of any amount advanced
by the Company pursuant to Section 4 of this Part Three, a determination is made
that Employee shall not be entitled to any refund with respect to such claim and
the Company does not notify Employee in writing of its intent to contest such
denial or refund prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
PART FOUR - ADDITIONAL RIGHTS AND RESPONSIBILITIES
1. MITIGATION. Employee shall not be required to mitigate damages or the
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amount of any payment provided for under this Agreement by seeking other
employment or otherwise. The provisions of this Agreement, and any payment
provided for hereunder, shall not reduce any amounts otherwise payable, or in
any way diminish Employee's existing rights which would accrue solely as a
result of the passage of time, under any Company Employee Benefit Plan, "Payroll
practice" (as defined in ERISA), compensation arrangement, incentive plan, stock
option or other stock-related plan.
2. LEGAL COSTS. If any legal action or other proceeding is brought by
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Employee for the enforcement of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with any of the
provisions of this Agreement, Employee shall be entitled to recover reasonable
attorneys fees and other costs incurred in that action or proceeding, in
addition to any other relief to which he may be entitled, in the event and to
the extent that Employee prevails in such action or other proceeding.
Notwithstanding anything hereinabove to the contrary, as between Employee and
the Company, the Company shall bear all legal costs and expenses of defending
the validity of this Agreement against any third party. The Company shall bear
all legal costs and expenses incurred in contesting or disputing the
characterization of any amounts paid pursuant to this Agreement as being
nondeductible under Section 280G of the Code or subject to imposition of an
excise tax under Section 4999 of the Code.
3. FULL SETTLEMENT. The Company's obligations to make the payments provided
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for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by an set-off, counterclaim, recoupment, defense or other claim,
or other action which the Company may have against Employee or others.
PART FIVE -- MISCELLANEOUS PROVISIONS
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1. SUCCESSORS. This Agreement shall be binding upon and inure to the
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benefit of the Company and any successor of the Company, including, without
limitation, any corporation or corporations acquiring directly or indirectly all
or substantially all of the stock, business or assets of the Company whether by
merger, consolidation, division, sale or otherwise (and such successor shall
thereafter be deemed "the Company" for the purposes of this Employment
Agreement). 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, by agreement in form and substance
satisfactory to Employee, to expressly assume and agree to perform this
Employment 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. Failure
of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this Employment
Agreement entitling Employee to the benefits hereunder, as though Employee was
subject to Involuntary Termination. This Agreement shall be binding upon and
inure to the benefit of Employee, his successors, assigns, executors,
administrators or beneficiaries.
2. DEATH. Should you die before receipt of all the separation payments to
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which you may become entitled under Part Two, Section 9, then such payment or
payments will be made, on the due date or dates hereunder had you survived, to
the executors or administrators of your estate. Should you die before you
exercise your outstanding vested options, then each such option may be
exercised, within twelve (12) months after your death, by the executors or
administrators of your estate or by person to whom the option is transferred
pursuant to your will or in accordance with the laws of inheritance. In no
event, however, may any such vested option be exercised after the specified
expiration date of the option term.
3. INDEMNIFICATION. The indemnification provisions for Officers and
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Directors under the Company's Bylaws will (to the maximum extent permitted by
law) be extended to you, during the period following your Involuntary
Termination, with respect to any and all matters, events or transactions
occurring or effected during your Employment Period.
4. MISCELLANEOUS. The provisions of this Agreement will be construed and
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interpreted under the laws of the State of California. This Agreement
incorporates the entire Agreement between you and the Company relating to the
terms of your employment and the subject of severance benefits and supersedes
all prior agreements and understandings with respect to such subject matter.
This Agreement may only be amended by written instrument signed by you and an
authorized officer of the Company.
5. ARBITRATION. Any controversy which may arise between you and the Company
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with respect to the construction, interpretation or application of any of the
terms, provisions, covenants or conditions of this Agreement or any claim
arising from or relating to this Agreement will be submitted to final and
binding arbitration in San Diego, California in accordance with the rules of the
American Arbitration Association then in effect.
6. NOTICES. Any notice required to be given under this Agreement shall be
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deemed sufficient, if in writing, and sent by certified mail, return receipt
requested, via overnight courier, or hand delivered to the Company at 0000
Xxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx, 00000, and to Employee at his most recent
address reflected in the permanent Company records.
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Please indicate your acceptance of the foregoing provisions of this Agreement
by signing the enclosed copy of this Agreement and returning it to the Company.
Very truly yours,
MYCOGEN CORPORATION
By:
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Chairman and
Chief Executive Officer
ACCEPTED BY AND AGREED TO
Signature:
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Dated:
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EXHIBIT A
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Section 2870. APPLICATION OF PROVISION PROVIDING THAT EMPLOYEE WILL ASSIGN OR
OFFER TO ASSIGN RIGHTS IN INVENTION TO EMPLOYER.
(a) Any provision in an employment agreement which provides that an employee
will assign, or offer to assign, any of his or her rights in an invention to his
or her employer will 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 his employer.
(b) To the extent a provision in an employment agreement purports to require
an employee to assign an invention otherwise excluded from being required to be
assigned under subdivision (a), the provision is against the public policy of
this state and is unenforceable.
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