Exhibit 10.3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "AGREEMENT"), dated as of
May 1, 2006, between Celgene Corporation, a Delaware corporation with offices at
00 Xxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx 00000 (the "COMPANY"), and Xxxxxx X. Hugin,
a resident of New Jersey ("EMPLOYEE").
W I T N E S S E T H
WHEREAS, the Company and Employee have previously entered into an
employment agreement, originally effective as of January 1, 2000 and as amended
and restated as of May 1, 2003 (the "EMPLOYMENT AGREEMENT");
WHEREAS, Employee is currently employed as the Chief Financial Officer
of the Company, and serves as a member of the Board of Directors of the Company
(the "BOARD");
WHEREAS, the Company and Employee desire to amend and restate the
Employment Agreement again, to appoint Employee as the President and Chief
Operating Officer of the Company and to modify certain terms of the Employment
Agreement, effective as of the date set forth above.
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the parties
agree as follows:
1. TERM. The Company agrees to continue to employ Employee, and
Employee agrees to serve, on the terms and conditions of this Agreement for a
period commencing on the date hereof and ending three years from the date
hereof, or such other period as may be provided for in Section 10. The period
during which Employee is employed hereunder is hereinafter referred to as the
"EMPLOYMENT PERIOD." The Employment Period shall be automatically renewed for
successive one-year terms unless either party gives written notice to the other
at least six (6) months prior to the expiration of the then Employment Period,
of such party's intention to terminate Employee's employment hereunder at the
end of the then current Employment Period.
2. DUTIES AND SERVICES. During the Employment Period, Employee
shall be employed in the business of the Company as President and Chief
Operating Officer and, until the Board appoints another person as Chief
Financial Officer, Chief Financial Officer of the Company. In addition, Employee
shall continue to serve as a member of the Board. Employee shall perform such
duties and services, within his expertise and experience, as may be assigned to
him by, and subject to the direction of, the Chief Executive Officer and the
Board. Employee agrees to continue his employment as described in this Section 2
and agrees to devote all of his working time and efforts to the performance of
his duties under this Agreement, excepting disabilities, illness and vacation
time as provided by Section 3(e). In performing his duties hereunder, Employee
shall be available for reasonable travel as the needs of the business require.
Except as provided in Section 6 hereof, the foregoing shall not be construed as
preventing Employee from: (i) making investments in other businesses and
managing his and his family's personal investments; and (ii) participating in
charitable, civic, educational, professional,
community or industry affairs or serving on the board of directors of other
companies ("PROFESSIONAL ACTIVITIES"), provided that these Professional
Activities are approved by the Executive Committee of the Board.
3. COMPENSATION AND OTHER BENEFITS.
(a) As compensation for his services hereunder, the
Company shall pay Employee, during the Employment Period, a base salary payable
in equal semi-monthly installments at an annual rate of $626,000, provided that
such salary shall be reviewed annually by the Company's Board, or a committee
thereof, which may, in its sole discretion, increase (but not decrease) such
salary.
(b) The Company shall also pay Employee, during the
Employment Period, an annual target bonus, payable in February of each year for
the preceding year, in an amount equal to seventy five percent (75%) of
Employee's base salary (payable under Section 3(a) of this Agreement) measured
against objective criteria to be determined by the Company's Board, or a
committee thereof, after good faith consultation with Employee.
(c) Employee shall be entitled to continue to participate
in all group health and insurance programs and all other fringe benefit or
retirement plans which the Company may, in its sole and absolute discretion,
elect to make available to its employees generally, provided Employee meets the
qualifications therefor.
(d) Employee shall be eligible to participate in the
Company's 1998 Stock Incentive Plan, as amended and restated as of April 23,
2003 and as further amended (the "PLAN") and any other incentive plans of the
Company. Upon Employee's Disability (as defined in the Plan), termination of
employment with the Company due to Retirement (as defined in the Plan) or death,
Employee (or the legal representative of his estate, in the case of Employee's
death) shall be entitled to: (i) full vesting and immediate exercisability of
any outstanding stock options and other equity awards (and lapse of any
forfeiture provisions) granted to Employee at any time; and (ii) with respect to
stock options granted to Employee on or after January 1, 2000, Employee (or the
legal representative of his estate, in the case of Employee's death) shall be
entitled to exercise such stock options at any time during the three (3) year
period from the date of Employee's Disability, Retirement or death.
(e) Employee shall be entitled to paid vacation in
accordance with the Company's policy applicable to senior executives, but in no
event less than four (4) weeks per calendar year.
(f) Without limiting the generality of Section 3(c), the
Company shall pay or reimburse Employee for the reasonable expenses incurred by
Employee in connection with obtaining professional tax and financial planning
advice, up to a maximum of $15,000 in any calendar year during the Employment
Period.
4. EXPENSES. Employee shall be entitled to reimbursement for all
reasonable travel and other out-of-pocket expenses necessarily incurred in the
performance of his duties hereunder, upon submission and approval of written
statements and bills in accordance with the then regular procedures of the
Company.
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5. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE. Employee
represents and warrants to the Company that Employee is under no contractual or
other restriction or obligation which is inconsistent with the execution of this
Agreement, the performance of his duties hereunder or the other rights of the
Company hereunder.
6. NON-COMPETITION.
(a) In view of the unique and valuable services that
Employee has rendered or is expected to render to the Company, Employee's
knowledge of the customers, trade secrets and other proprietary information
relating to the business of the Company and its customers and suppliers and
similar knowledge regarding the Company which Employee has obtained or is
expected to obtain, and in consideration of the compensation to be received
hereunder, Employee agrees that:
(i) during the period he is employed by the Company under
this Agreement or otherwise, he will not Participate In (as hereinafter
defined in this Section 6) any other business or organization, whether
or not such business or organization now is or shall then be competing
with or of a nature similar to the business of the Company, without
obtaining the prior written consent of the Chief Executive Officer of
the Company;
(ii) until the first anniversary of the date of the
termination of Employee's employment under this Agreement or otherwise,
he will not Participate In any business which is engaged, directly or
indirectly, in the same business as the Company with respect to any
specific product or specific service sold or activity in which the
Company engages up to the time of termination of employment in any
geographical area in which at the time of termination such product or
service is sold or activity is engaged in by the Company;
(iii) if a Change in Control occurs and Employee's
employment with the Company is terminated under this Agreement without
Cause (as hereinafter defined) or by Employee for Good Reason (as
hereinafter defined) at any time during the period beginning on the
date of a Change in Control and ending two (2) years after the date of
such Change in Control or within ninety (90) days prior to a Change in
Control, then beginning on the later of the date Employee's employment
terminates (as described under this Section 6(a)(iii)) and the date of
a Change in Control and ending on the second anniversary of such date,
he will not Participate In any activity or business involved in the
research, development, commercialization of a small molecule which is:
(A) the generic equivalent of THALOMID (i.e., the same chemical
structure); (B) an anti-angiogenic agent for oncology use; (C) a
substantially specific TNFalpha inhibitor (via inhibition of synthesis
of TNFalpha, including via inhibition of PDE4) for the treatment of
Crohn's disease, rheumatoid arthritis, dermatological and auto-immune
conditions having excess levels of TNFalpha as the prime causative
factor, cachexia (AIDS or cancer), or any other indication for which
the Company has been granted orphan drug status; or (D) a formulation
of d- or dl-methylphenidate for the treatment of ADD/ADHD.
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(b) For purposes of this Section 6 the term "PARTICIPATE
IN" shall mean: "directly or indirectly, for his own benefit or for, with or
through any other person, firm or corporation, own, manage, operate, control,
loan money to or participate in the ownership, management, operation or control
of, or be connected as a director, officer, employee, partner, consultant,
agent, independent contractor or otherwise with, or acquiesce in the use of his
name in."
(c) Employee further agrees that, during the period he is
employed by the Company under this Agreement or otherwise and until the first
anniversary of the date of the termination of Employee's employment under this
Agreement or otherwise, he will not directly or indirectly reveal the name of,
solicit or interfere with, or endeavor to entice away from the Company, any of
its suppliers, customers or employees.
7. PATENTS, ETC. Any interest in patents, patent applications,
inventions, technological innovations, copyrights, copyrightable works,
developments, discoveries, designs and processes ("INVENTIONS") which Employee
during the period he is employed by the Company under this Agreement or
otherwise, and for six months thereafter, may conceive of or develop and either
relating to the specific fields in which the Company may then be engaged or
conceived of or developed utilizing the time, material, facilities or
information of the Company shall belong to the Company; as soon as Employee
conceives of or develops any Invention, he agrees immediately to communicate
such fact in writing to the Secretary of the Company, and without further
compensation, but at the Company's expense (except as noted in clause (a) of
this Section 7), forthwith upon request of the Company, Employee shall execute
all such assignments and other documents (including applications for patents,
copyrights, trademarks and assignments thereof) and take all such other action
as the Company may reasonably request in order (a) to vest in the Company all
Employee's right, title and interest in and to the Inventions, free and clear of
liens, mortgages, security interests, pledges, charges and encumbrances arising
from the acts of Employee ("LIENS") (Employee to take such action, at his
expense, as is necessary to remove all such Liens) and (b) if patentable or
copyrightable, to obtain patents or copyrights (including extensions and
renewals) therefor in any and all countries in such name as the Company shall
determine.
8. CONFIDENTIAL INFORMATION. All confidential information which
Employee may now possess, may obtain during or after the Employment Period, or
may create prior to the end of the period he is employed by the Company under
this Agreement or otherwise relating to the business of the Company or of any
customer or supplier of the Company shall not be published, disclosed or made
accessible by him to any other person, firm or corporation either during or
after the termination of his employment or used by him except during the
Employment Period in the business and for the benefit of the Company, in each
case without the prior written permission of the Company. Employee shall return
all tangible evidence of such confidential information to the Company prior to
or at the termination of his employment. As used in this Section 8,
"confidential information" shall mean any information except that information
which is or comes into the public domain through no fault of Employee or which
Employee obtains after the termination of his employment by the Company under
this Agreement or otherwise from a third party who has the right to disclose
such information.
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9. LIFE INSURANCE. If requested by the Company, Employee shall
submit to such physical examinations and otherwise take such actions and execute
and deliver such documents as may be reasonably necessary to enable the Company,
at its expense and for its own benefit, to obtain life insurance on the life of
Employee. Subject to its ability to do so under the terms of such policy, if
any, insuring the life of Employee, upon the termination of Employee's
employment hereunder, the Company will assign to Employee its rights under such
insurance policy, provided that, concurrently with such assignment, Employee
shall reimburse the Company for any premium payments made by the Company in
respect of time periods subsequent to such date of termination. Nothing herein
contained shall obligate the Company to obtain such insurance.
10. TERMINATION.
(a) Employee's employment and the Employment Period shall
terminate on the first of the following to occur:
(i) the Company provides written notice to Employee of a
termination for Cause; such written notice shall be provided to
Employee not less than ten (10) days prior to the date of termination.
"CAUSE" shall mean: (A) Employee's conviction of a crime involving
moral turpitude or a felony, (B) Employee's acts or omissions taken in
bad faith and to the detriment of the Company after a written demand
for cessation of such conduct is delivered to Employee by the Company,
which demand specifically identifies the manner in which the Company
believes that Employee has engaged in such conduct and the injury to
the Company, and after Employee's failure to correct such act or
omission within ten (10) days following such written demand, or (C)
Employee's breach of any material term of this Agreement after written
demand for substantial performance is delivered to Employee by the
Company, which demand specifically identifies the manner in which the
Company believes Employee has breached this Agreement, and after
Employee's failure to correct such breach within ten (10) days
following such written demand.
(ii) Employee's death, in which case, this Agreement shall
terminate on the date of Employee's death, whereupon Employee's estate
shall be entitled to receive a lump sum payment in an amount equal to
Employee's annual base salary (at the rate in effect, or required to be
in effect, immediately prior to the date of Employee's death) and the
portion of Employee's annual target bonus (as provided in Section 3(b))
pro-rated up to Employee's date of death (assuming the target has been
met).
(iii) Nothing contained in this Section 10(a) shall be
deemed to limit any other right the Company may have to terminate
Employee's employment hereunder upon any ground permitted by law.
(iv) If Employee's employment is terminated by the Company
as a result of the disability or incapacitation of Employee or for any
reason other than pursuant to the provisions of paragraphs (i) or (ii)
of this Section 10(a) or the provisions of Section 10(b), upon
termination by the Company of Employee's employment, whether during the
Employment Period or thereafter, Employee shall be entitled to receive
a lump sum
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payment in an amount equal to Employee's annual base salary (at the
rate in effect, or required to be in effect, immediately prior to the
date of Employee's termination) and the portion of Employee's annual
target bonus (as provided in Section 3(b)) pro-rated up to Employee's
date of disability, incapacitation or termination (assuming the target
has been met).
(v) In the event of Employee's termination for any reason
under this Agreement or otherwise, the Company shall pay and provide to
Employee (in addition to any other payments or benefits payable under
this Agreement): (A) any incurred but unreimbursed business expenses
for the period prior to the termination payable in accordance with the
Company's policies; (B) any base salary, bonus, vacation pay or other
deferred compensation accrued or earned under law or in accordance with
the Company's policies applicable to Employee but not yet paid; and (C)
any other amounts or benefits due under the terms of the then
applicable employee benefit, equity or incentive plans of the Company
applicable to Employee (the "ACCRUED BENEFITS").
(vi) Payments of any amounts or benefits hereunder shall
be made no later than ten (10) days after Employee's termination date,
other than benefits under a plan with the terms which do not require or
permit payment within such ten (10) day period.
(b) During the ninety (90) day period prior to Change in
Control or during the two (2) year period following a Change in Control,
Employee may terminate his employment by written notice to the Company within
thirty (30) calendar days after he has obtained actual knowledge of the
occurrence of a Good Reason event. For purposes of this Agreement, Good Reason
shall mean the occurrence of any of the following events without Employee's
express written consent:
(i) failure to elect or appoint, or reelect or reappoint,
Employee to, or removal of Employee from, his position with the Company
as President and Chief Operating Officer, as a member of the Board or
as Secretary to the Board, except in connection with the termination of
Employee's employment pursuant to Section 10(a);
(ii) a significant change in the nature or scope of the
authorities, powers, functions, duties or responsibilities normally
attached to Employee's position as President and Chief Operating
Officer, as a member of the Board or as Secretary to the Board, except
in each case in connection with the termination of Employee's
employment for Cause or as a result of Employee's death, or temporarily
as a result of Employee's illness or other absence;
(iii) a determination by Employee made in good faith that,
as a result of a Change in Control, he is unable effectively to carry
out the authorities, powers, functions, duties or responsibilities
attached to his position as President and Chief Operating Officer, as a
member of the Board or as Secretary to the Board and the situation is
not remedied within 30 calendar days after receipt by the Company of
written notice from Employee of such determination;
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(iv) a breach by the Company of any material provision of
this Agreement (not covered by clause (i), (ii) or (iii) of this
Section 10(b)) or of any other agreement, which is not remedied within
30 calendar days after receipt by the Company of written notice from
Employee of such breach;
(v) a reduction in Employee's annual base salary;
(vi) a fifty (50) mile or greater relocation of the
Company's principal office;
(vii) failure of the Company to continue in effect any
health or welfare plan, employee benefit plan, pension plan, fringe
benefit plan or compensation plan in which Employee (and eligible
dependents) are participating immediately prior to a Change in Control,
unless Employee (and eligible dependents) are permitted to participate
in other plans providing Employee (and eligible dependents) with
substantially comparable benefits at no greater after-tax cost to
Employee (and eligible dependents), or the taking of any action by the
Company which would adversely affect Employee's (and eligible
dependents) participation in or reduce Employee's (and eligible
dependents) benefits under any such plan; or
(viii) failure of a successor to assume this Agreement.
An election by Employee to terminate his employment under the provisions of this
Section 10(b) shall not constitute a breach by Employee of this Agreement and
shall not be deemed a voluntary termination of employment by Employee for the
purpose of interpreting the provisions of any of the Company's employee benefit
plans, programs or policies.
(c) Upon the occurrence of a Change in Control and
thereafter: (A) if Employee's employment with the Company is terminated by the
Company without Cause or as a result of the disability or incapacitation of
Employee, or by Employee with Good Reason at any time during the period
beginning on the date of the Change in Control and ending two (2) years after
the date of such Change in Control, or (B) if Employee's employment with the
Company is terminated by the Company without Cause or by Employee for Good
Reason within ninety (90) days prior to the occurrence of a Change in Control,
then Employee shall be entitled to receive from the Company:
(i) a lump sum amount, payable within ten (10) days after
such termination (or, if such termination occurred prior to a Change in
Control, within ten (10) days after the Change in Control) equal to (A)
three (3) times Employee's base salary in effect, or required to be in
effect, immediately prior to the Change in Control, and (B) three (3)
times the highest annual bonus paid or payable to Employee within three
(3) years prior to the Change in Control;
(ii) within ten (10) days after such termination (or, if
such termination occurred prior to a Change in Control, within ten (10)
days after the Change in Control) equal to the Accrued Benefits;
(iii) payment by the Company of the premiums for Employee
and Employee's and dependents' health and welfare coverage (including,
without limitation, medical,
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dental, life insurance and disability coverage) for three (3) years
from the later of the occurrence of a Change in Control or the date of
termination of Employee's employment, under the Company's health and
welfare plans which cover the senior executives of the Company or
materially similar benefits ("CONTINUATION COVERAGE"), subject to
Employee's payment of customary premiums (if any) in effect prior to
the Change in Control;
(iv) upon the occurrence of a Change in Control, full and
immediate vesting of all stock options and equity awards held by
Employee.
Payments under (iii) above may, at the discretion of the Company, be made by
continuing Employee's participation in the plan as a terminee or by covering
Employee and Employee's dependents under substitute arrangements, provided that,
notwithstanding anything herein to the contrary, to the extent Employee incurs
tax that Employee would not have incurred as an active employee as a result of
the aforementioned coverage or the benefits provided thereunder, Employee shall
receive from the Company an additional grossed up payment in the amount
necessary so that Employee will have no additional cost for receiving such items
or any additional payment. Notwithstanding anything herein to the contrary,
Employee (and his eligible dependents) shall retain all rights under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") and
such COBRA continuation coverage shall be available to Employee (and his
eligible dependents) at the expiration of the Continuation Coverage described
herein.
(d) For purposes of this Agreement, a Change in Control
shall mean the occurrence of the following:
(i) any person (as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") and as
used in Sections 13(d) and 14(d) thereof), excluding the Company, any
subsidiary of the Company and any employee benefit plan sponsored or
maintained by the Company or any subsidiary of the Company (including
any trustee of any such plan acting in his capacity as trustee),
becoming the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of securities of the Company representing thirty percent
(30%) of the total combined voting power of the Company's then
outstanding securities;
(ii) the merger, consolidation or other business
combination of the Company (a "TRANSACTION"), other than (A) a
Transaction involving only the Company and one or more of its
subsidiaries, or (B) a Transaction immediately following which the
stockholders of the Company immediately prior to the Transaction
continue to have a majority of the voting power in the resulting entity
and no person (other than those covered by the exceptions in (a) above)
becomes the beneficial owner of securities of the resulting entity
representing more than twenty-five percent (25%) of the voting power in
the resulting entity;
(iii) during any period of two (2) consecutive years
beginning on or after the date hereof, the persons who were members of
the Board immediately before the beginning of such period (the
"INCUMBENT DIRECTORS") ceasing (for any reason other than
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death) to constitute at least a majority of the Board or the board of
directors of any successor to the Company, provided that, any director
who was not a director as of the date hereof shall be deemed to be an
Incumbent Director if such director was elected to the board of
directors by, or on the recommendation of or with the approval of, at
least two-thirds of the directors who then qualified as Incumbent
Directors either actually or by prior operation of the foregoing unless
such election, recommendation or approval occurs as a result of an
actual or threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act or any
successor provision) or other actual or threatened solicitation of
proxies or contests by or on behalf of a person other than a member of
the Board; or
(iv) the approval by the stockholders of the Company of
any plan of complete liquidation of the Company or an agreement for the
sale of all or substantially all of the Company's assets other than the
sale of all or substantially all of the assets of the Company to a
person or persons who beneficially own, directly or indirectly, at
least fifty percent (50%) or more of the combined voting power of the
outstanding voting securities of the Company at the time of such sale.
(e) To the extent that Employee is entitled to payment
under Section 10(c) upon a Change in Control due to Employee's termination
without Cause or for Good Reason within ninety (90) days prior to a Change in
Control, any such payments under Section 10(c) shall be reduced by any payments
made to Employee prior to a Change in Control under Sections 10(a)(iv) and
10(a)(v).
(f) Notwithstanding any provision of this Section 10 or
Section 11 to the contrary, if Employee is a "specified employee" as defined in
Section 409A of the Internal Revenue Code of 1986, as amended (the "CODE"), to
the extent necessary to comply with Section 409A of the Code, Employee shall not
be entitled to any payment pursuant to this Section 10 or Section 11 until the
earlier of (i) the date which is six (6) months after the termination of
employment or (ii) the date of Employee's death, and the first such payment
shall equal the sum of all payments that would have been made from the date of
termination to the date of such first payment were it not for the delay in
payment required by Section 409A of the Code.
11. LIMITATION ON PAYMENTS.
(a) In the event that Employee shall become entitled to
the payments and/or benefits provided by Section 10(c) or any other amounts
(whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Company, any person whose actions result in a change of
ownership or effective control covered by Section 280G(b)(2) of the Code or any
person affiliated with the Company or such person) as a result of such change of
ownership or effective control (collectively the "COMPANY PAYMENTS"), and such
Company Payments will be subject to the tax (the "EXCISE TAX") imposed by
Section 4999 of the Code (and any similar tax that may hereafter be imposed) the
Company shall pay to Employee at the time specified in subsection (d) below an
additional amount (the "GROSS-UP PAYMENT") such that the net amount retained by
Employee, after deduction of any Excise Tax on the Company Payments and any
federal, state, and local income or payroll tax upon the Gross-up Payment
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provided for by this paragraph (a), but before deduction for any federal, state,
and local income or payroll tax on the Company Payments, shall be equal to the
Company Payments. Notwithstanding the foregoing provisions of this Section 11 to
the contrary, if it shall be determined that Employee is entitled to a Gross-up
Payment, but the Company Payments do not exceed one hundred five percent (105%)
of the greatest amount that could be paid to Employee such that the receipt of
Company Payments would not give rise to any Excise Tax (the "REDUCED AMOUNT"),
then no Gross-up Payment shall be made to Employee and the Company Payments, in
the aggregate, shall be reduced to the Reduced Amount.
(b) For purposes of determining whether any of the
Company Payments and Gross-up Payments (collectively the "TOTAL PAYMENTS") will
be subject to the Excise Tax and determining the amount of such Excise Tax: (i)
the Total Payments shall be treated as "parachute payments" within the meaning
of Section 280G(b)(2) of the Code, and all "parachute payments" in excess of the
"base amount" (as defined under Section 280G(b)(3) of the Code) shall be treated
as subject to the Excise Tax, unless and except to the extent that, in the
opinion of the Company's independent certified public accountants appointed
prior to any change in ownership (as defined under Section 280G(b)(2) of the
Code) or tax counsel selected by such accountants (the "ACCOUNTANTS") such Total
Payments (in whole or in part), (A) do not constitute "parachute payments," (B)
represent reasonable compensation for services actually rendered within the
meaning of Section 280G(b)(4) of the Code or (C) are otherwise not subject to
the Excise Tax; and (ii) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Accountants in accordance with the
principles of Section 280G of the Code.
(c) For purposes of determining the amount of the
Gross-up Payment, 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 Gross-up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of Employee's
residence for the calendar year in which the Company Payment is to be made, net
of the maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes if paid in such year. In the event that
the Excise Tax is subsequently determined by the Accountants to be less than the
amount taken into account hereunder at the time the Gross-up Payment is made,
Employee shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the prior Gross-up
Payment attributable to such reduction (plus the portion of the Gross-up Payment
attributable to the Excise Tax and federal, state and local income tax imposed
on the portion of the Gross-up Payment being repaid by Employee if such
repayment results in a reduction in Excise Tax or a federal, state and local
income tax deduction), plus interest on the amount of such repayment at the rate
provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in
the event any portion of the Gross-up Payment to be refunded to the Company has
been paid to any federal, state and local tax authority, repayment thereof (and
related amounts) shall not be required until actual refund or credit of such
portion has been made to Employee, and interest payable to the Company shall not
exceed the interest received or credited to Employee by such tax authority for
the period it held such portion. Employee and the Company shall mutually agree
upon the course of action to be pursued (and the method of allocating the
expense thereof) if Employee's claim for refund or credit is denied.
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In the event that the Excise Tax is later determined by the Accountants
or the Internal Revenue Service to exceed the amount taken into account
hereunder at the time the Gross-up Payment is made (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-up Payment), the Company shall make an additional Gross-up Payment in
respect of such excess (plus any interest or penalties payable with respect to
such excess) at the time that the amount of such excess is finally determined.
(d) The Gross-up Payment or portion thereof provided for
in subsection (c) above shall be paid not later than the thirtieth (30th) day
following an event occurring which subjects Employee to the Excise Tax;
provided, however, that if the amount of such Gross-up Payment or portion
thereof cannot be finally determined on or before such day, the Company shall
pay to Employee on such day an estimate, as determined in good faith by the
Accountants, of the minimum amount of such payments and shall pay the remainder
of such payments (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code), subject to further payments pursuant to subsection
(c) hereof, as soon as the amount thereof can reasonably be determined, but in
no event later than the ninetieth (90th) day after the occurrence of the event
subjecting Employee to the Excise Tax. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute an advance by the Company to Employee, payable on
the fifth (5th) day after demand by the Company (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Code).
(e) In the event of any controversy with the Internal
Revenue Service (or other taxing authority) under this Section 11, Employee
shall permit the Company to control issues related to this Section 11 (at its
expense), provided that such issues do not potentially materially adversely
affect Employee, but Employee shall control any other issues. In the event the
issues are interrelated, Employee and the Company shall in good faith cooperate
so as not to jeopardize resolution of either issue, but if the parties cannot
agree, Employee shall make the final determination with regard to the issues. In
the event of any conference with any taxing authority as to the Excise Tax or
associated income taxes, Employee shall permit the representative of the Company
to accompany him, and Employee and his representative shall cooperate with the
Company and its representative.
(f) The Company shall be responsible for all charges of
the Accountants.
(g) Nothing in this Section is intended to violate the
Xxxxxxxx-Xxxxx Act and to the extent that any advance or repayment obligation
hereunder would do so, such obligation shall be modified so as to make the
advance a nonrefundable payment to Employee and the repayment obligation null
and void.
12. SUCCESSORS. In addition to any obligations imposed by law upon
any successor to the Company, the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree in writing to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place.
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13. SURVIVAL. The covenants, agreements, representations and
warranties contained in or made pursuant to this Agreement shall survive
Employee's termination of employment.
14. ENTIRE AGREEMENT; MODIFICATION. This Agreement sets forth the
entire understanding of the parties with respect to the subject matter hereof,
supersedes all existing agreements between them concerning such subject matter
(including, without limitation, the employment agreement in effect prior to the
date hereof, except that Section 19 thereof shall survive) and may be modified
only by a written instrument duly executed by each party.
15. NOTICES. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested, or delivered against receipt to the
party to whom it is to be given at the address of such party set forth in the
preamble to this Agreement (or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 15).
Notice to the estate of Employee shall be sufficient if addressed to Employee as
provided in this Section 15. Any notice or other communication given by
certified mail shall be deemed given three days after the time of certification
thereof, except for a notice changing a party's address which shall be deemed
given at the time of receipt thereof.
16. WAIVER. Any waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Agreement. The failure of a party to insist upon strict adherence to any
term of this Agreement on one or more occasions shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing,
signed by the party giving such waiver.
17. BINDING EFFECT. Employee's rights and obligations under this
Agreement shall not be transferable by assignment or otherwise, such rights
shall not be subject to commutation, encumbrance or the claims of Employee's
creditors, and any attempt to do any of the foregoing shall be void. The
provisions of this Agreement shall be binding upon and inure to the benefit of
Employee and his heirs and personal representatives, and shall be binding upon
and inure to the benefit of the Company and its successors and its assigns under
Section 12.
18. NO THIRD PARTY BENEFICIARIES. This Agreement does not create,
and shall not be construed as creating, any rights enforceable by any person not
a party to this Agreement (except as provided in Sections 12 and 17).
19. LEGAL FEES. To the fullest extent permitted by law, the
Company shall promptly pay upon submission of statements all legal and other
professional fees, costs of litigation, prejudgment interest, and other expenses
incurred in connection with any dispute concerning payments, benefits and other
entitlements to which Employee may have under this Agreement; provided, however,
the Company shall be reimbursed by Employee for the fees and expenses advanced
in the event Employee's claim is, in a material manner, in bad faith or
frivolous and the arbitrator or court, as applicable, determines that the
reimbursement of such fees and expenses is appropriate.
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20. NO DUTY TO MITIGATE/NO OFFSET. The Company agrees that if
Employee's employment with the Company is terminated pursuant to this Agreement
during the term of this Agreement, Employee shall not be required to seek other
employment or to attempt in any way to reduce any amounts payable to Employee by
the Company pursuant to this Agreement. Further, the amount of any payment or
benefit provided for in this Agreement shall not be reduced by any compensation
earned by Employee or benefit provided to Employee as the result of employment
by another employer or otherwise. The Company's obligations to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against Employee. Notwithstanding the foregoing, payments
and benefits under the Agreement will cease to be paid and may be recouped by
the Company in the event Employee breaches any of the terms of Section 6, 7 or 8
hereunder.
21. COUNTERPARTS; GOVERNING LAW. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. It shall be
governed by and construed in accordance with the laws of the State of New
Jersey, without giving effect to the conflict of laws.
22. SECTION 409A. This Agreement is intended to comply with the
applicable requirements of Section 409A of the Code and shall be limited,
construed and interpreted in accordance with such intent. If any provision of
this Agreement (or of any award of compensation, including equity compensation
or benefits) would cause Employee to incur any additional tax or interest under
Section 409A of the Code, including proposed, temporary or final regulations or
any other guidance issued by the Secretary of the Treasury and the Internal
Revenue Service with respect thereto, the Company shall, after consulting with
Employee, reform such provision to comply with Section 409A of the Code;
provided that the Company agrees to maintain, to the maximum extent practicable,
the original intent and economic benefit to Employee of the applicable provision
without violating the provisions of Section 409A of the Code.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
CELGENE CORPORATION
--------------------------
Name:
Title:
--------------------------
Xxxxxx X. Hugin
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