EXECUTIVE AGREEMENT
Exhibit 10.3
This EXECUTIVE AGREEMENT (the “Agreement”) is made and entered into as of the day of
20 (the “Effective Date”), by and between HUMAN GENOME SCIENCES, INC. (the
“Company”), and (“Executive”).
In consideration of the services provided by Executive and the covenants and agreements
contained herein, and for other good and valuable consideration the sufficiency of which is
acknowledged by the parties to this Agreement, the Company and Executive agree as follows:
1. Severance Benefits. Notwithstanding anything in any existing agreement between the
Company and Executive to the contrary, in the event that Executive’s employment with the Company is
terminated (a) by the Company without Cause (as defined below), excluding for this purpose a
termination due to death or total disability (as determined under the Company’s long-term
disability plan for senior executives as then in effect), or (b) by Executive with Good Reason (as
defined below), the Company shall provide to Executive the following payments and benefits:
(a) Within 30 days after the date that such termination of employment becomes effective
(the “Date of Termination”), the Company shall pay to Executive all accrued but unpaid base
salary; any earned but unpaid bonuses; all earned or vested incentive compensation or
benefits; all accrued but unpaid reimbursable business expenses; and all accrued but unused
vacation time.
(b) The Company shall provide or distribute, as applicable, all vested benefits under
the Company’s benefit plans, policies and programs in which Executive participated, in
accordance with the terms of such plans, policies and programs, except to the extent that
such benefits are duplicative of benefits provided for under this Agreement.
(c) The Company shall pay to Executive a pro-rata bonus payment the amount of which
will be the amount of Executive’s annual bonus earned for the prior fiscal year multiplied
by a fraction, the numerator of which is the number of days during the year of Executive’s
termination that transpired before the Date of Termination, and the denominator of which is
three hundred sixty-five (365). The bonus payment will be paid to Executive within 30 days
following the Date of Termination.
(d) The Company shall continue to pay Executive’s base salary during the twelve (12)
month period that commences on the Date of Termination (the “Severance Period”). Such
payments shall be paid at the same time and in the same manner as base salary would have
been paid if Executive had remained actively employed by the Company until the end of the
Severance Period.
(e) The Company shall continue to provide coverage for Executive and Executive’s
eligible dependents, at the Company’s sole expense, under the Company’s group health plan,
within the meaning of Section 607 of the Employee Retirement
Income Security Act of 1974, as amended, in which Executive and Executive’s eligible
dependents were participating as of the Date of Termination, for twelve (12) months after
the Date of Termination; provided that Executive is not eligible to participate in a
group health plan of another entity. Executive’s (and Executive’s eligible dependents’)
right to receive continuation coverage under COBRA shall commence after, and not run
coincident with, the continuation coverage provided under this Section 1(e), and such COBRA
coverage shall be provided entirely at Executive’s expense. Executive’s (and Executive’s
eligible dependents’) right to receive continuation coverage under this Agreement other than
COBRA will terminate upon the earlier of the date specified herein or the date that
Executive (or such eligible dependent, as applicable) first becomes eligible to participate
in a group health plan of another entity.
(f) Executive, or Executive’s estate, as applicable, shall have twelve (12) months
after the Date of Termination to exercise all vested stock options outstanding as of the
Date of Termination, but in no event may Executive or Executive’s estate exercise any stock
option beyond its term stated in the applicable award agreement. The provisions of this
Section 1(f) serve to amend any provision in an applicable award agreement or plan document
to the contrary, whether now or hereafter existing.
2. Release Contingency. The payments and benefits to be made pursuant to
Section 1(c), 1(d), 1(e) and 1(f) of this Agreement are conditioned upon Executive’s prior
execution and nonrevocation of a general release of claims occurring up to the release date, in the
form of Exhibit A attached hereto (with such changes therein as may be necessary to make it
valid and encompassing under applicable law), within twenty-one (21) days of presentation thereof
by the Company to Executive.
3. Definition of Cause. For purposes of this Agreement, “Cause” means (i) Executive’s
willful and continued failure substantially to perform the duties of his or her position (other
than as a result of disability, as defined in Section 72(m)(7) of the Internal Revenue Code of
1986, as amended (the “Code”), or as a result of termination by Executive for Good Reason) after
written notice to Executive by the Board of Directors of the Company (the “Board”) specifying such
failure, provided that such “Cause” shall have been found by a majority vote of the Board after at
least ten (10) days’ written notice to Executive specifying the failure on the part of Executive
and after an opportunity for Executive to be heard at a meeting of the Board; (ii) any willful act
or omission by Executive constituting dishonesty, fraud or other malfeasance, and any act or
omission by Executive constituting immoral conduct, which in any such case is injurious to the
financial condition or business reputation of the Company; or (iii) Executive’s indictment of a
felony under the laws of the United States or any state thereof or any other jurisdiction in which
the Company conducts business. For purposes of this definition, no act or failure to act shall be
deemed “willful” unless effected by Executive not in good faith and without a reasonable belief
that such action or failure to act was in or not opposed to the best interests of the Company.
4. Definition of Good Reason. For purposes of this Agreement, “Good Reason” means,
without Executive’s consent, (i) material diminution in Executive’s title, position, duties or
responsibilities, or the assignment to Executive of duties that are inconsistent, in a material
respect, with the scope of duties and responsibilities associated with Executive’s position;
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(ii) material reduction in Executive’s base compensation, as in effect immediately preceding
the Effective Date, or target bonus opportunity; (iii) relocation of Executive’s principal
workplace to a location which is more than fifty (50) miles from Executive’s principal workplace on
the Effective Date; or (iv) any material failure by the Company to comply with and satisfy the
requirements of Section 8 of this Agreement, provided that the successor shall have received at
least ten (10) days’ prior written notice from the Company or Executive of the requirements of
Section 8, and fails to remedy such material failure within thirty (30) days after receipt of such
notice. For purposes of clauses (i) and (ii) of the preceding sentence, an isolated and
inadvertent action not taken in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by Executive shall be excluded. For purposes of clause (i), no
material diminution of title, position, duties or responsibilities shall be deemed to occur solely
because the Company becomes a subsidiary of another corporation or change in the reporting
hierarchy incident thereto. For purposes of clauses (i), (ii) and (iii), Good Reason shall not
exist unless Executive notifies the Company of the existence of the condition specified under the
applicable clause no later than ninety (90) days after the initial existence of any such condition,
and the Company fails to remedy such condition within thirty (30) days after receipt of such
notice. Notwithstanding the foregoing, Good Reason shall not exist unless Executive’s termination
of employment occurs no later than two (2) years following the initial existence of any of the
conditions provided in this Section 4.
5. “At Will” Employment. Except as may otherwise be expressly provided under any
other executed agreement between Executive and the Company, nothing contained in this Agreement is
intended to change the fact that the employment of Executive by the Company is “at will” and may be
terminated by either Executive or the Company at any time.
6. Arbitration. Any controversy, dispute or claim of whatever nature arising out of,
or in relation to, the Company’s and Executive’s relationship as provided in this Agreement, shall
be resolved first by prompt, informal, good faith negotiations by the parties. If a mutually
satisfactory resolution is not reached by such good faith negotiations within forty-five (45) days,
the parties agree that such controversy, dispute or claim shall be resolved exclusively through
final and binding arbitration before a single neutral arbitrator selected jointly by the parties.
If the parties are unable to agree on a single arbitrator, each of the Company and Executive shall
select an arbitrator, and those arbitrators will jointly select a third, who will arbitrate the
dispute. The arbitrator must be a former judge, and the arbitration shall be conducted in
accordance with the rules of JAMS/ENDISPUTE then in effect. The arbitration shall take place in
Rockville, Maryland. The Company will pay the direct costs and expenses of the arbitration. The
Company and Executive will each separately pay its counsel fees and expenses; provided,
however, the Company shall reimburse Executive for Executive’s reasonable costs (including
without limitation, attorneys’ fees) incurred if Executive succeeds on the merits on a material
issue and Executive is not found to be in material breach. The parties agree that any award
rendered by the arbitrator shall be final and binding, and that judgment upon the award may be
entered in any court having jurisdiction thereof. The provisions of this Section 6 shall survive
the expiration or termination of this Agreement and of Executive’s employment.
7. Tax Withholding. The Company may withhold from any compensation and benefits
payable under this Agreement all applicable federal, state, local or other taxes.
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8. Assignment. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, representatives, successors and assigns. This Agreement
shall not be assignable by Executive (but any payments due under this Agreement which would be
payable at a time after Executive’s death shall be paid to Executive’s designated beneficiary or,
if none, Executive’s estate). The Company shall 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 expressly to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, the term “Company” shall mean both the
Company as defined above and any such successor.
9. Entire Agreement; Non-Duplication of Benefits. This Agreement shall constitute the
entire understanding of the parties with respect to the subject matter herein and shall supersede
any and all existing oral or written agreements, representations or warranties between Executive
and the Company or any of its subsidiaries or affiliated entities relating to the terms of
Executive’s employment by the Company, but shall not supersede that certain Employee Confidential
Information, Invention and Non-Competition Agreement between the Company and Executive dated
, , nor the provisions of the Company’s Second Amended and Restated Key Executive
Severance Plan (the “Severance Plan”) in which Executive is a participant. In the event that
Executive is entitled to benefits under the Severance Plan and this Agreement, Executive shall be
entitled to the better benefits of the two, determined in the aggregate and in Executive’s
discretion, and in no event will Executive be entitled to benefits under both this Agreement and
the Severance Plan.
10. Amendment. This Agreement shall not be amended except by a written agreement
signed by both parties.
11. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Maryland applicable to agreements made and to be performed in that
State, without regard to its conflict of laws provisions.
12. Notices. Any notice, consent, request or other communication made or given in
connection with this Agreement shall be in writing and shall be deemed to have been duly given upon
receipt when delivered by hand or by overnight courier, or three (3) days after deposit in the U.S.
mail by registered or certified mail, return receipt requested, with proper postage affixed, to the
parties at their following respective addresses or at such other address as each may specify by
notice to the other in accordance with this Section. Notices to the Company shall be addressed to
the Secretary of Human Genome Sciences, Inc. at 00000 Xxxxx Xxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx 00000.
Notices to Executive shall be addressed to Executive’s address as reflected on Company’s personnel
records.
13. No Duty to Mitigate. The Company agrees that, if Executive’s employment with the
Company terminates, Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to or in respect of Executive 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 Executive as the result of employment by another employer or by
retirement benefits.
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14. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or limit
Executive’s continuing or future participation in any benefit, bonus, incentive or other plan or
program provided by the Company and for which Executive may qualify, nor shall anything herein
limit or otherwise negatively affect such rights as Executive may have under any stock option or
other agreement with the Company or any of its affiliated companies. Except as otherwise provided
herein, amounts and benefits which are vested benefits or which Executive is otherwise entitled to
receive under any plan, program, agreement or arrangement of the Company at or subsequent to the
Date of Termination shall be payable in accordance with such plan or program.
15. Counterparts. This Agreement may be executed in any number of counterparts, by
original signature or facsimile, each of which so executed shall be deemed to be an original, and
such counterparts will together constitute but one Agreement.
16. 409A Compliance.
(i) This Agreement is intended to comply with, or otherwise be exempt from, Section
409A of the Code and any regulations and Treasury guidance promulgated thereunder.
(ii) The Company and Executive agree that they will execute any and all amendments to
this Agreement as they mutually agree in good faith may be necessary to ensure compliance
with the provisions of Section 409A of the Code.
(iii) The preceding provisions, however, shall not be construed as a guarantee by the
Company of any particular tax effect to Executive under this Agreement. The Company shall
not be liable to Executive for any payment made under this Agreement, at the direction or
with the consent of Executive, which is determined to result in an additional tax, penalty,
or interest under Section 409A of the Code, nor for reporting in good faith any payment made
under this Agreement as an amount includible in gross income under Section 409A of the Code.
(iv) For purposes of Section 409A of the Code, the right to a series of installment
payments under this Agreement shall be treated as a right to a series of separate payments.
(v) With respect to any reimbursement of expenses of, or any provision of in-kind
benefits to, Executive, as specified under this Agreement, such reimbursement of expenses or
provision of in-kind benefits shall be subject to the following conditions: (1) the expenses
eligible for reimbursement or the amount of in-kind benefits provided in one taxable year
shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits
provided in any other taxable year, except for any medical reimbursement arrangement
providing for the reimbursement of expenses referred to in Section 105(b) of the Code; (2)
the reimbursement of an eligible expense shall be made no later than the end of the year
after the year in which such expense was incurred; and (3) the right to reimbursement or
in-kind benefits shall not be subject to liquidation or exchange for another benefit.
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(vi) For purposes of Section 409A of the Code, the Date of Termination shall be
construed as the date Executive first incurs a “separation from service” as defined under
Section 409A of the Code.
(vii) If a payment obligation under this Agreement arises on account of Executive’s
termination of employment while he is a “specified employee” (as defined under Section 409A
of the Code and determined in good faith by the Compensation Committee), any payment of
“deferred compensation” (as defined under Treasury Regulation Section 1.409A-1(b)(1), after
giving effect to the exemptions in Treasury Regulation Sections 1.409A-1(b)(3) through
(b)(12)) shall accrue with interest and shall be made within 15 days after the end of the
six-month period beginning on the date of such termination of employment or, if earlier,
within 15 days after appointment of the personal representative or executor of Executive’s
estate following his death. For purposes of the preceding sentence, interest shall accrue
at the prime rate of interest published in the northeast edition of The Wall Street Journal
on the date of Executive’s termination of employment.
IN WITNESS WHEREOF, this Agreement is EXECUTED and EFFECTIVE as of the day set forth above.
[NAME OF EXECUTIVE]
|
WITNESS: | |
(“Executive”) |
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HUMAN GENOME SCIENCES, INC.
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ATTEST: | |
(“Company”) |
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By: |
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H. Xxxxxx Xxxxxxx |
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Title: President and Chief Executive Officer |
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EXHIBIT A to EXECUTIVE AGREEMENT
GENERAL RELEASE
GENERAL RELEASE
For and in consideration of the promises made in the Executive Agreement (defined below), the
adequacy of which is hereby acknowledged, the undersigned (“Executive”), for himself, his heirs,
administrators, legal representatives, executors, successors, assigns, and all other persons
claiming through Executive, if any (collectively, “Releasers”), does hereby release, waive, and
forever discharge Human Genome Sciences, Inc. (“Company”), Company’s subsidiaries, parents,
affiliates, related organizations, employees, officers, directors, attorneys, successors, and
assigns (collectively, the “Releasees”) from, and does fully waive any obligations of Releasees to
Releasers for, any and all liability, actions, charges, causes of action, demands, damages, or
claims for relief, remuneration, sums of money, accounts or expenses (including attorneys’ fees and
costs) of any kind whatsoever, whether known or unknown or contingent or absolute, which heretofore
has been or which hereafter may be suffered or sustained, directly or indirectly, by Releasers in
consequence of, arising out of, or in any way relating to Executive’s employment with Company or
any of its affiliates, status as an officer, and the termination of Executive’s employment or
removal as an officer. The foregoing release and discharge, waiver and covenant not to xxx
includes, but is not limited to, all claims and any obligations or causes of action arising from
such claims, under common law including wrongful or retaliatory discharge, breach of contract
(including but not limited to any claims under the Executive Agreement between Company and
Executive, dated as of
, 20 , as amended from time to time (the “Executive
Agreement”) and any claims under any stock option and equity-based award agreements between
Executive and Company) and any action arising in tort including libel, slander, defamation or
intentional infliction of emotional distress, and claims under any federal, state or local statute
including Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866 and 1871 (42
U.S.C. § 1981), the National Labor Relations Act, the Family and Medical Leave Act, the Age
Discrimination in Employment Act (ADEA), the Fair Labor Standards Act, the Americans with
Disabilities Act of 1990, the Rehabilitation Act of 1973, the Maryland Human Rights Act, or the
discrimination or employment laws of any state or municipality, and/or any claims under any express
or implied contract which Releasers may claim existed with Releasees. This also includes a release
by Executive of any claims for breach of contract, wrongful discharge and all claims for alleged
physical or personal injury, emotional distress relating to or arising out of Executive’s
employment with Company or the termination of that employment; and any claims under the WARN Act or
any similar law, which requires, among other things, that advance notice be given of certain work
force reductions. This release and waiver does not apply to any claims or rights that may arise
after the date Executive signs this General Release. The foregoing release does not apply to (a)
any claims for severance pay or benefits under the Executive Agreement, (b) any claims or rights
under directors and officers liability insurance, (c) Executive’s rights under any tax-qualified
pension or claims for accrued vested benefits under any other employee benefit plan maintained by
Company; or (d) Executive’s rights as a stockholder.
Excluded from this release and waiver are any claims which cannot be waived by law, including
but not limited to the right to participate in an investigation conducted by certain government
agencies.
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Executive agrees never to xxx Releasees, in any forum for any claim covered by the above
waiver and release language. Executive represents and warrants that Executive has not filed and
will not file any complaint, charge, or lawsuit against the Releasees with any government agency or
any court. If Executive violates this General Release by suing Releasees other than as set forth
in the first paragraph hereof, Executive shall be liable to the Company for its reasonable
attorneys’ fees and other litigation costs incurred in defending against such a suit, as permitted
by law.
Executive acknowledges and recites that:
(a) Executive has executed this General Release knowingly and voluntarily;
(b) Executive has read and understands this General Release in its entirety;
(c) Executive has been advised and directed orally and in writing (and this
subparagraph (c) constitutes such written direction) to seek legal counsel and any other
advice he wishes with respect to the terms of this General Release before executing it;
(d) Executive’s execution of this General Release has not been forced by any employee
or agent of the Company, and Executive has had an opportunity to negotiate about the terms
of this General Release after consultation with an attorney of his choosing; and
(e) Executive has been offered twenty-one (21) calendar days after receipt of this
General Release to consider its terms before executing it.
This General Release shall be governed by the laws of the State of Maryland, except for the
application of pre-emptive Federal law.
Executive shall have seven (7) days from the date hereof to revoke this General Release by
providing written notice of the revocation to the Company, as provided in Section 12 of the
Executive Agreement, in which event this General Release shall be unenforceable and null and void.
PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
| EXECUTIVE | ||||||
Date: |
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| [Name of Executive] | ||||||
| HUMAN GENOME SCIENCES, INC. | ||||||
Date:
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By: | |||||
| Name: | ||||||
| Its: | ||||||
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