Exhibit 10.60
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") made and entered
into effective as of January, 1 2004 (the "Effective Date"), by and between
GENAISSANCE PHARMACEUTICALS, INC. (the "Corporation"), a Delaware corporation
with its principal office at 0 Xxxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxxx, 00000, and
XXX X. XXXXXX ("Executive"), an individual who resides at 000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
WHEREAS, the Corporation and Executive desire to enter into this Agreement
to set forth the terms and conditions of their employment relationship,
commencing as of the Effective Date; and
WHEREAS, Executive acknowledges that by executing and delivering this
Agreement, he will obtain certain rights also provided to other senior
management of the Corporation and such rights constitute valid consideration to
Executive.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. EMPLOYMENT. The Corporation shall employ Executive in the capacity of
Senior Vice President and Chief Financial Officer ("CFO") of the Corporation
during the term of this Agreement, and Executive hereby accepts such employment,
on the terms and conditions hereinafter set forth. Executive represents that his
employment by the Corporation pursuant to this Agreement does not violate any
agreement, covenant or obligation to which he is a party or by which he is
bound.
2. DUTIES. During the term of this Agreement, Executive shall perform all
duties, consistent with his position as CFO in order to advance the
Corporation's financial affairs and related business efforts, assigned or
delegated to him by the Chief Executive Officer of the Corporation (the "CEO"),
and normally associated with the position of CFO, including, without limitation,
formulating financial policy and plans and providing overall direction for the
accounting, tax, insurance, budget, credit, treasury and management information
reporting functions of the Corporation. He shall devote all of his full business
time and best efforts to the advancement of the interests and business of the
Corporation.
3. TERM. The term of this Agreement shall begin on the Effective Date,
and shall expire on the fourth anniversary of the effective date unless earlier
terminated as provided in this Agreement (the "Initial Term"). Upon expiration
of the Initial Term and any subsequent term or
extension thereof, this Agreement shall automatically be extended for an
additional term of one (1) year, unless Executive or the Corporation elect to
terminate this Agreement in accordance with the provisions of Section 12 of this
Agreement (the "Initial Term", together with any subsequent terms or extensions,
until termination or expiration in accordance with the provisions of this
Agreement, shall be referred to herein as the "Employment Term"). If Executive
continues in the employ of the Corporation after the end of any Employment Term
when no extension of this Agreement has been effected, then Executive's
continued employment by the Corporation shall, notwithstanding anything to the
contrary expressed or implied herein, be terminable by the Corporation at will.
4. COMPENSATION. As compensation for any and all services to be rendered
by Executive to the Corporation pursuant to this Agreement, the Corporation
shall pay Executive and provide Executive with the following compensation and
benefits, which Executive agrees to accept in full satisfaction for his
services:
a. BASE SALARY. The Corporation shall pay Executive a Base Salary,
payable in equal installments at such payment intervals as are the usual
payroll practices of the Corporation, at an annual rate of $220,000, less
such deductions or amounts to be withheld as shall be required by
applicable law or as may be allowed at the request of Executive (the "Base
Salary"). The Base Salary shall be reviewed annually by the Board after the
end of each fiscal year of the Corporation and shall be adjusted by such
amount, if any, as the CEO, in his sole discretion, shall determine and the
Board, in its sole discretion, shall approve. Any such adjustment of Base
Salary shall be made effective as of January 1 of the fiscal year to which
it applies.
b. BONUS. Provided Executive first meets the Corporation's
expectations for his performance during the Employment Term and remains
employed on the date of payment, Executive shall be eligible for a
discretionary bonus (a "Discretionary Bonus") of up to sixty percent (60%)
of his base compensation as determined by the CEO in his sole discretion
and approved by the Board in its sole discretion based upon Executive's
achievements in meeting his performance goals and those of the Corporation
for its most recently ended fiscal year. Goals shall be established after
the commencement of the Employment Term and then in the first quarter of
each subsequent fiscal year. For the first fiscal year of employment, the
bonus amount will be prorated based upon the effective date of the
Employment Agreement. Each Discretionary Bonus may be payable in cash,
stock options, and/or restricted stock upon such terms and conditions as
determined by the CEO. The Corporation shall pay any Discretionary Bonus by
the end of the first quarter of the following fiscal year. As any bonus
paid to Executive is discretionary, the payment of any bonus in a year must
not be construed as requiring the payment of a bonus in any other year.
c. BENEFITS.
(i) Executive shall be entitled to participate, to the extent
he is eligible, in all group insurance programs, health, medical,
dental, and disability plans (including, without limitations, the
Corporation's 401(k) plan), and other
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employee benefit plans which the Corporation may hereafter in its sole
and absolute discretion make available generally to its employees
(other than any incentive compensation or equity ownership plan), but
the Corporation shall not be required to establish or maintain any
such program or plan.
(ii) Executive shall be entitled to four (4) weeks paid
vacation during each calendar year, in accordance with the
Corporation's vacation policies. Such vacation may be taken at such
time or times as is reasonably consistent with the Corporation's
vacation policies and the performance by Executive of his duties and
responsibilities under this Agreement. Up to one week of unused
vacation time in one year may be carried over and used in the
subsequent year.
(iii) Executive shall be entitled to participate in the
Corporation's 2000 Amended and Restated Equity Incentive Plan (the
"Plan") and the Corporation shall use its best efforts to cause the
Board or the applicable committee of the Board to grant Executive a
one-time initial option, having a ten-year term, to purchase 200,000
shares of the Corporation's common stock at an exercise price per
share equal to the price in effect at the close of business on the
effective date of the employment agreement (the "Option"). The Option
shall vest quarterly each calendar year over a forty-eight (48) month
period during the Employment Term, such that 1/16 of the Option shall
vest each quarter year, with accelerated vesting only in the event of
Executive's death or permanent disability or the termination of
Executive's employment without Cause pursuant to Section 12d hereof or
termination of his employment by his exercise of his rights under
Sections 12f, 12g or 12k hereof. The Option shall not be subject to
accelerated vesting in the event Executive is terminated for Cause
pursuant to Section 12c hereof. Executive understands and agrees that
any stock rights granted to Executive shall be subject to the
provisions of the Plan and any separate written agreements embodying
the grant of the rights that are required by the Plan. The rights
shall be set forth in a separate agreement embodying the grant of the
rights which shall be otherwise in the form stipulated in the Plan. To
the extent that there is any conflict between the vesting provisions
of this Agreement and the provisions of the Plan, the provisions of
this Agreement shall govern.
(iv) The Corporation shall purchase and throughout the
Employment Term pay the premiums for a $1,000,000 policy of term life
insurance insuring the life of Executive (subject to his meeting the
suitability requirements of the insurer). Executive shall be the owner
of such policy and entitled to all of the rights of ownership
including designation of the beneficiary thereof.
(v) Subject to reasonable guidelines adopted by the Board,
throughout the Employment Term, the Corporation shall pay the costs of
dues for membership in professional organizations whose activities are
reasonably related to the business of the Corporation.
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(vi) The Corporation shall provide Executive with a policy of
long-term disability insurance with reasonable coverages, which shall
include the payment of benefits equal to at least sixty percent (60%)
of Executive's Base Salary during the disability coverage period, and
the Corporation shall pay the premiums or a portion thereof (as
specified hereafter) for such disability insurance policy up to the
cost charged by the insurer to insure a healthy 46- male, non-smoker.
d. TAXES. All compensation and benefits are subject to applicable
withholding taxes, federal, state, and local, and any other proper
deductions.
e. BENEFIT PLANS. Executive understands that the Corporation may
amend, change, or cancel its employment policies and benefit plans at any
time as allowed by law or by any applicable plan documents.
5. BUSINESS EXPENSES. The Corporation shall pay, or reimburse Executive
for, the reasonable and necessary business expenses of Executive incurred in the
performance of his duties hereunder, provided Executive provides timely and
reasonable documentation thereof in accordance with the rules and regulations of
the Corporation relating thereto.
6. COMPLIANCE WITH POLICIES. Executive acknowledges and agrees
that, except as set forth in this Agreement, compliance with the Corporation's
policies, practices and procedures is a term and condition of his employment
under this Agreement.
7. INVENTIONS AND IMPROVEMENTS. Executive acknowledges, covenants and
agrees that the Corporation shall be the sole owner of all the fruits and
proceeds of Executive's services to the Corporation, including but not limited
to all writings, inventions, discoveries, designs, systems, processes, software
or other improvements relating to the business or products of the Corporation,
whether or not patentable, registerable, or copyrightable, which Executive may,
alone or with others, conceive, create, develop, produce or make during or as a
result of his employment with the Corporation (collectively, the "Invention"),
free and clear of any claims by Executive of any kind or character whatsoever
other than Executive's rights to compensation under this Agreement. Executive
agrees that he shall disclose each of the Inventions promptly and completely to
the Corporation, and shall, at the request of the Board, execute such
assignments, certificates or other instruments as the Board or the Corporation
from time to time deem necessary or desirable to evidence, establish, maintain,
perfect, protect, enforce or defend the Corporation's right, title and interest
in or to any or all of the Inventions. Executive agrees that he is bound by the
terms of a certain Employee Agreement on Ideas, Inventions, and Confidential
Information, to be signed on his first day of employment (the "Inventions
Agreement"), which shall continue in full force and effect according to its
terms and nothing in this Agreement shall be interpreted or construed as
modifying the Inventions Agreement. To the extent that there is any conflict
between the provisions of this Section and the provisions of the Inventions
Agreement, the provisions of the Inventions Agreement shall govern.
8. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
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a. Executive acknowledges that, in and as a result of his employment
by the Corporation, he will be making use of, acquiring and/or adding to
the Corporation's Confidential Information (as hereinafter defined). As a
material inducement to the Corporation to employ Executive and to pay
Executive the compensation and benefits set forth in this Agreement,
Executive covenants and agrees that he shall not, at any time during or
following the term of his employment with the Corporation, directly or
indirectly divulge or disclose for any purposes whatsoever, any
Confidential Information that has been obtained by, or disclosed to, him as
a result of his employment with the Corporation. For purposes of this
Agreement, "Confidential Information" means, collectively, all confidential
matters and materials of the Corporation, including without limitation, (i)
the Corporation's proprietary information, inventions, trade secrets,
knowledge, data, know-how, intellectual property, systems, procedures,
manuals, pricing policies, operational methods and information relating to
the Corporation's products, processes, formulae, business plans, marketing
plans and strategies, pricing strategies, customer lists, and all other
subject matters pertaining to the business and/or financial affairs of the
Corporation; (ii) the Corporation's information regarding plans and
strategies for research, development, new products, future business plans,
budgets and unpublished financial statements, licenses, prices and costs;
(iii) information regarding the skills and compensation of other employees
of the Corporation; and (iv) information disclosed in confidence to the
Corporation by a third party with a duty on the Corporation to maintain the
confidentiality of such information. The term "Confidential Information"
shall not include any information that (x) has been made available
generally to the public either by the Corporation or by a third party with
the Corporation's consent, unless such information became available as a
result of any action by Executive in violation of this Agreement, any other
agreement, or her obligations under law, or (y) has been made available as
a result of a final award, order, or ruling by an arbitration tribunal or a
court of competent jurisdiction that has determined that such Confidential
Information may be disclosed.
b. If Executive is required by a court, arbitration tribunal, or
governmental agency (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigation demand or similar
process) to disclose any Confidential Information, Executive may disclose
such Information to such court, tribunal, or agency without liability
hereunder, PROVIDED, THAT Executive first provides the Corporation with
notice of any such requirement(s) as promptly as practicable, but in any
case with sufficient timeliness to enable the Corporation to seek an
appropriate protective order and/or waive its compliance with the relevant
provisions of this Agreement.
9. COVENANTS AGAINST COMPETITION.
a. NON-SOLICITATION OF EMPLOYEES. While employed by the Corporation
and for a period of six (6) months, followed by a second period of six (6)
months, for a total period of twelve (12) months, from the date of
termination of Executive's Employment Term with the Corporation for any
reason, Executive shall not directly or indirectly solicit, induce or
encourage any of the Corporation's employees (except Xxxxxx Xxxxxxxxx, in
the event she is employed by the Corporation) to terminate their
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employment with the Corporation or to accept employment with any
competitor, supplier, client, agent or broker of the Corporation, nor shall
Executive cooperate with any others in doing or attempting to do so. As
used in this paragraph, the term "solicit, induce or encourage" includes,
but is not limited to, (i) initiating communications with any employee of
the Corporation relating to possible employment or independent contractor
relationship, (ii) offering bonuses or additional compensation to encourage
any employee of the Corporation to terminate his or her employment with the
Corporation and accept employment with a competitor, supplier, client,
agent or broker of the Corporation, or (iii) referring any employee of the
Corporation to recruiters, personnel or agents employed by competitors,
suppliers, clients, agents or brokers of the Corporation. Notwithstanding
the foregoing, the term "solicit, induce or encourage", as used in this
Section 9a, specifically excludes any action by the Executive related to
any of the Corporation's employees where it is in the Corporation's best
interest to terminate any such employees as in the case of a planned
reduction in force by the Corporation.
b. NON-COMPETE. While Executive is employed by the Corporation
and for a period of six (6) months, followed by a second period of six (6)
months, for a total period of twelve (12) months, from the date of
termination of Executive's Employment Term for any reason, Executive shall
not directly or indirectly, as a principal, agent, contractor, employee,
employer, partner, shareholder, proprietor, investor, member, director,
officer or consultant or in any other capacity, engage in or perform any
managerial or executive services (a) for any corporation, partnership,
individual or entity which is engaged in a business competitive with the
Corporation or affiliate of the Corporation, or (b) to any customer of the
Corporation or affiliate of the Corporation.
c. For the purposes of this Agreement:
(i) The term "engaged in a business competitive with the
Corporation" means directly or indirectly engaging in the business of
pharmacogenomics or pharmacogenetics or in the same or any similar
business as the Corporation or any of its affiliates in any manner
whatsoever within any geographic area in which the Corporation's
products or services are offered or distributed;
(ii) The term "affiliate" means any legal entity that directly
or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with the Corporation; and
(iii) The term "customer" means any business, company, person,
and any other entity to whom the Corporation or any of its affiliates
has provided any product or service, whether or not for compensation,
within a period of two (2) years prior to the time Executive ceases to
be employed by the Corporation.
d. EXCLUSION FOR INVESTMENTS. None of the provisions of this
Section 9 shall prohibit Executive from investing in securities (i) listed
on a national securities exchange or actively traded over-the-counter so
long as such investments are not greater than five percent (5%) of the
outstanding securities of any issuer of the same class or issue or (ii) of
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entities engaged in a business competitive with the Corporation so long as
any such entity was not engaged in a business competitive with the
Corporation at the time Executive made such investment.
10. REASONABLENESS OF RESTRICTIONS.
a. Executive has carefully read and considered the provisions of
Section 8 and Section 9, and, having done so, agrees that:
(i) The restrictions set forth in Section 8 and Section 9,
including but not limited to the character, duration, and geographical
area of restriction, are fair and reasonable and are reasonably
required for the protection of the good will and other legitimate
business interests of the Corporation and its affiliates, officers,
directors, shareholders, and other employees;
(ii) Executive has received, or is entitled to receive,
adequate consideration for such obligations; and
(iii) Such obligations do not prevent Executive from earning a
livelihood.
b. If, notwithstanding the foregoing, any of the provisions of
Section 8 or Section 9 shall be held to be invalid or unenforceable, the
remaining provisions thereof shall nevertheless continue to be valid and
enforceable as though the invalid and unenforceable parts had not been
included therein. If any provision of Section 8 or Section 9 is determined
by a court of competent jurisdiction that the character, duration,
geographical scope, or related aspects are unreasonable in light of the
circumstances as they then exist, then it is the intention of the parties
that Section 8 and/or Section 9 shall be construed by the court in such a
manner as to impose only those restrictions on the conduct of Executive
that are reasonable in light of the circumstances as they then exist and as
are necessary to assure the Corporation of the intended benefit of this
Agreement and such restrictions, as so modified, shall become and
thereafter be the maximum restriction in such regard, and the restriction
shall remain enforceable to the fullest extent deemed reasonable by such
court.
11. REMEDIES FOR BREACH OF EXECUTIVE'S COVENANTS OF NON-DISCLOSURE AND
NON-COMPETITION. Executive recognizes and agrees that the Corporation's remedy
at law for any breach of Section 8 or Section 9 would be inadequate as such a
breach would cause irreparable harm to the Corporation, and he agrees that, for
any actual or threatened breach of such provisions, the Corporation shall, in
addition to such other remedies as may be available to it at law or in equity,
be entitled to injunctive relief and to enforce its rights by an action for
specific performance. All of the Corporation's remedies for any breach of this
Agreement shall be cumulative and the pursuit of any one remedy shall not
exclude the Corporation's pursuit of any other remedies.
12. TERMINATION AND SEVERANCE.
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a. DEATH. In the event that Executive dies during the Employment
Term, this Agreement shall terminate automatically upon his death, upon
which event Executive's legal representatives shall be entitled to receive,
and the Corporation shall pay or cause to be paid to Executive's legal
representatives, any Base Salary and other compensation or benefits accrued
but as yet unpaid on the date of Executive's death.
b. INCAPACITY OR DISABILITY. If during the Employment Term,
Executive is prevented from performing the duties or fulfilling
responsibilities of his employment under this Agreement by reason of any
incapacity or disability for a continuous period of six (6) months, as
determined by an independent qualified physician selected by the
Corporation and reasonably acceptable to Executive (or his representative),
then the Corporation may terminate Executive's employment hereunder, but
Executive shall continue to be eligible to receive any benefits to which he
may be entitled under the terms of any long-term disability plan or
insurance policy maintained by the Corporation for its employees generally
or for Executive specifically. In the event of such incapacity or
disability, the Corporation shall continue to pay full compensation to
Executive in accordance with the terms of this Agreement until the date of
such termination.
c. BY CORPORATION FOR CAUSE. The Corporation may, upon written
notice to Executive, terminate Executive's employment hereunder for Cause
(as defined hereafter); provided that the Corporation shall first provide
Executive with an opportunity to be heard by the Board on any proposed
termination for Cause by the Board. For purposes of this Agreement, the
term "Cause" shall mean (i) Executive's material breach of this Agreement
if the Corporation has notified Executive of such breach and he has not
cured such breach within 15 days of having received such notice; (ii)
Executive's material failure to adhere to any policy of the Corporation
generally applicable to employees of the Corporation if Executive has been
given a reasonable opportunity to comply with such policy or cure his
failure to comply; (iii) Executive's appropriation (or attempted
appropriation) of a business opportunity of the Corporation, including
attempting to secure or securing any personal profit in connection with any
transaction entered into on behalf of the Corporation; (iv) Executive's
misappropriation (or attempted misappropriation) of any of the
Corporation's funds or property; (v) Executive's conviction of, or the
entering of a guilty plea or plea of no contest with respect to, a felony,
the equivalent thereof, or of a lesser crime having as its predicate
element fraud, dishonesty or misappropriation of property of the
Corporation; (vi) Executive's willful misconduct or insubordination; (vii)
Executive's physical or mental disability or other inability to perform the
essential functions of his position for a consecutive six (6) month period,
with or without reasonable accommodation, as determined by an independent
qualified physician selected by the Corporation and reasonably acceptable
to Executive (or his representative) if Executive is not eligible for
benefits under the terms of any long-term disability policy or insurance
policy maintained by the Corporation for its employees generally or for
Executive specifically; (viii) Executive's engaging in bad faith or gross
negligence in the performance of his duties under this Agreement as
determined in good faith by the Board; or (ix) any other conduct of
Executive sufficiently detrimental to the Corporation so as to warrant
immediate termination of Executive's employment with the Corporation.
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In the event of termination for Cause of Executive's employment,
Executive's right to receive compensation and other benefits hereunder
(other than any Base Salary and any vacation accrued but as yet unpaid on
the effective date of such termination) shall terminate on the effective
date of such termination, and Executive shall not be entitled to any
severance payments or other benefits.
d. TERMINATION BY THE CORPORATION WITHOUT CAUSE. The Corporation may
elect to terminate Executive's employment at any time without Cause upon
written notice to Executive. In the event of such termination without
Cause, Executive shall be entitled to a severance payment in an amount
equal to 125% of Executive's Base Salary as of the date of termination,
such payment to be made in equal installments over a twelve (12) month
period on the Corporation's usual pay periods.
e. NONRENEWAL OF AGREEMENT. The Corporation may elect to not renew
or extend this Agreement at any time without cause upon written notice to
Executive not later than thirty (30) days prior to the end of any Initial
Term or any extended Employment Term. In the event of a nonrenewal or
non-extension pursuant to this Paragraph, Executive's rights to receive
compensation and other benefits (other than any Base Salary and vacation
accrued but as yet unpaid on the effective date of such termination) shall
terminate at the expiration of the Initial Term or Employment Term. In the
event of such termination, Executive shall be entitled to a severance
payment following the end of such Initial Term or Employment Term in an
amount equal to 125% of Executive's Base Salary as of the date of
termination, such payment to be made in equal installments over a twelve
(12) month period on the Corporation's usual pay periods.
f. BY EXECUTIVE FOR CERTAIN REASONS. Executive may, at his option,
upon at least thirty (30) days written notice to the Corporation, terminate
his employment hereunder, if the Corporation, without Executive's express
written consent, (i) removes him as an officer of the Corporation, (ii)
demotes him from CFO, (iii) assigns him duties materially inconsistent with
the position and/or duties described in Sections 1 or 2, (iv) materially
diminishes his responsibilities and/or duties described in Sections 1 or 2,
(v) breaches any material obligations to Executive under this Agreement, or
(vi) the Corporation moves to a new location more than thirty-five (35)
miles from its existing location at 5 Science Park, New Haven, Connecticut.
Upon any termination by Executive under this Paragraph the Corporation
shall be obligated to pay Executive the severance payments specified in
Section 12(d).
g. BY EXECUTIVE FOLLOWING CHANGE OF CONTROL. Executive may, at his
option, upon thirty (30) days written notice to the Corporation, terminate
his employment hereunder for Good Reason (as hereinafter defined) following
a Change of Control of the Corporation. Upon any termination by Executive
under this Paragraph, the Corporation shall be obligated to pay Executive a
severance payment in an amount equal to 150% of Executive's Base Salary as
of the date of termination for an eighteen (18) month period, payable in
equal installments over such eighteen (18) month period on the
Corporation's
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usual pay periods. Termination by Executive pursuant to this paragraph
shall not be deemed a voluntary termination by Executive pursuant to
Section 12k hereof.
h. GOOD REASON DEFINED. For purposes of this Agreement, the term
"Good Reason" means, during the thirty (30) period prior to or the twelve
(12) month period following a Change of Control, without Executive's
express written consent, the occurrence of any of the following
circumstances:
(i) the assignment to Executive of any duties inconsistent
(except in the nature of a promotion) with the position in
the Corporation that he held immediately prior to the
Change of Control or substantial adverse alteration in the
nature or status of his position or responsibilities or
the conditions of his employment from those in effect
immediately prior to the Change of Control;
(ii) a reduction, other than a de minimis reduction, by the
Corporation in Executive's annual Base Salary as in effect
on the date hereof, as the same may be increased from time
to time;
(iii) the failure by the Corporation to continue in effect any
material compensation or benefit plan in which Executive
participates immediately prior to the Change of Control
unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect
to such plan, or the failure by the Corporation to
continue Executive's participation therein (or in such
substitute or alternative plan) on a basis not materially
less favorable, both in terms of the amount of benefits
provided and the level of his participation relative to
other participants, than existed immediately prior to the
Change of Control; or
(iv) the failure by the Corporation or its successor or any
surviving entity to maintain Executive as the Chief
Financial Officer of the top level operating company
affiliated with the Corporation or its successor or
surviving entity.
i. CHANGE OF CONTROL DEFINED. For purposes of this Agreement, a
"Change of Control" shall be deemed to have occurred if the transaction is
of a nature that would be required to be reported in response to Item l(a)
of the Current Report on Form 8-K, as in effect on January 1, 2003,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 0000 (xxx
"Xxxxxxxx Xxx"); provided that, without limitation, such a "Change of
Control" shall be deemed to have occurred if: (i) a third Person, including
a "group" as such term is used in Section 13(d)(3) of the Exchange Act,
other than the trustee of any employee benefit plan of the Corporation,
becomes the beneficial owner, directly or indirectly, of 35% or more of the
combined voting power of the Corporation's outstanding voting securities
ordinarily having the right to vote for the election of directors of the
Corporation; (ii) during any period of twenty-four (24) consecutive
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months individuals who, at the beginning of such consecutive twenty-four
(24) month period, constitute the Board of Directors of the Corporation
(the "Board") cease for any reason (other than retirement upon reaching
normal retirement age, disability, or death) to constitute at least a
majority of the Board; provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for election by
the Corporation's shareholders, was approved by a vote of at least three
quarters of the directors comprising the Incumbent Board shall be, for
purposes of this Agreement, considered as though such person were a member
of the Incumbent Board; or (iii) the Corporation shall cease to be a
publicly owned corporation having its outstanding Common Stock listed on
the New York Stock Exchange or quoted in the NASDAQ National or Small Cap
Market System, except where the delisting is related to a private purchase
of the Corporation's stock by a group consisting of the Corporation's
current officers.
For these purposes, a "Change of Control" also shall not be deemed to
have occurred where with respect to any transaction otherwise constituting
a "Change of Control," the Corporation's CEO and CFO are reasonably
expected to maintain their existing positions with the Corporation.
For these purposes, Incumbent Board means the Board as in existence
twenty-four (24) months prior to the date the action is being considered.
Notwithstanding the foregoing, if the Incumbent Board specifically
determines that any transaction does not constitute a Change of Control for
purposes of this Agreement such determination shall be conclusive and
binding.
j. PERSON DEFINED. For purposes of this Agreement, the term "Person"
means any individual, corporation, association, partnership, limited
partnership, limited liability company, limited liability partnership,
organization, business, joint venture, sole proprietorship, governmental
agency, entity or subdivision or other entity of any kind or nature.
k. VOLUNTARY TERMINATION BY EXECUTIVE. Executive may, at his option,
upon thirty (30) days prior written notice to the Corporation, terminate
his employment hereunder. In the event of a voluntary termination of his
employment by the Executive pursuant to this Paragraph, Executive's rights
to receive compensation and other benefits (other than any Base Salary and
vacation accrued but as yet unpaid on the effective date of such
termination) shall terminate on the effective date of such termination, and
Executive shall not be entitled to any severance payments or other
benefits.
l. ELIGIBILITY FOR SEVERANCE; REQUIREMENT OF RELEASE. Except as
provided in Sections 12d, 12e, 12f, and 12g, Executive shall not be
eligible for or entitled to any severance payments in the event of
termination of his employment hereunder. No severance shall be paid under
this Agreement unless Executive first executes and agrees to be bound by a
release of all claims, on a form provided by the Corporation, which
releases any and all claims that Executive has or might have against the
Corporation and which contains terms customary in such agreements.
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m. RESIGNATION. In the event of termination of his employment other
than for death, Executive shall be deemed to have resigned from all
positions held in the Corporation, including without limitation any
position as a director, officer, agent, trustee, or consultant of the
Corporation or any affiliate of the Corporation. Upon request of the
Corporation, Executive shall promptly sign and deliver to the Corporation
any and all documents reflecting such resignations as of the date of
termination of her employment.
13. VESTING UPON CHANGE OF CONTROL. Any stock options and restricted stock
granted to Executive by the Corporation shall accelerate and immediately vest
upon the occurrence of the following events: if (a) any "person," as such term
is used in Sections 13(d) and 14(e) of the Securities and Exchange Act of 1934,
as amended (the "Exchange Act") (other than the Corporation, any trustee or
other fiduciary holding securities under an employee benefit plan of the
Corporation, or any corporation owned directly or indirectly by the stockholders
of the Corporation in substantially the same proportion as their ownership of
stock in the Corporation) is or becomes the "Beneficial Owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 50% or more of the combined voting power of the
Corporation's then outstanding securities (other than as a result of
acquisitions of such securities from the Corporation); (b) individuals who, as
of the date hereof, constitute the Board of Directors of the Corporation (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board, provided that any person becoming a director after the date hereof whose
election, or nomination for election by the Corporation's stockholders, was
approved by a majority of the directors then comprising the Incumbent Board
(other than an election or nomination of an individual whose initial assumption
of office is in connection with an actual or threatened election contest
relating to the election of the directors of the Corporation) shall be, for
purposes of this Agreement, considered to be a member of the Incumbent Board;
(c) the stockholders of the Corporation approve a merger or consolidation of the
Corporation with any other corporation, other than (i) a merger or consolidation
that would result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 50% of the combined voting power of the voting securities of
the Corporation or such surviving entity outstanding immediately after such
merger or consolidation or (ii) a merger or consolidation effected to implement
a recapitalization of the Corporation (or similar transaction) in which no
"person" (as defined above, acquires more than 20% of the combined voting power
of the Corporation's then outstanding securities; or (d) the stockholders of the
Corporation approve a plan of complete liquidation of the Corporation or an
agreement for the sale or disposition of the Corporation of all or substantially
all of the Corporation's assets. To the extent permitted by applicable law,
Executive shall be entitled to exercise, for a period of 12 months from the
effective date of termination of his employment, all of his stock options and
restricted grants, which vest pursuant to this Section or were otherwise vested
prior to the termination of his employment.
14. PAYMENT OR BENEFIT IN CONNECTION WITH CHANGE OF CONTROL.
a. Notwithstanding any other provision of this Agreement, in the
event that any payment or benefit received or to be received by the
Executive (i) is deemed to be in connection with a Change of Control
(whether payable pursuant to the terms of this
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Agreement or any other plan, arrangement or agreement with the Corporation,
its successors, any person whose actions result in a Change of Control or
any corporation ("Affiliates") affiliated (or which, as a result of the
completion of the transactions causing a Change of Control will become
affiliated) with the Corporation within the meaning of Section 1504 of the
Internal Revenue Code of 1986, as amended (the "Code") (collectively with
the payments and benefits pursuant to this Agreement if deemed to be paid
pursuant to a Change of Control, "Total Payments") and (ii) is determined
by the Corporation's independent certified accounting firm (the "Tax
Advisor") that such amount exceeds 2.99 times the base amount (as such term
is defined under Section 280G(b)(3) of the Code) but that is less than 4
times the base amount and that an excise tax is payable by Executive under
Section 4999 of the Code, then the amount of payments to the Executive
shall be reduced so that the payments do not exceed the limits then set
forth in Section 280G of the Code.
b. Notwithstanding any other provisions of this Agreement or the
provisions of Section (a) above, in the event that the Total Payments
received or to be received by Executive in connection with a Change of
Control would be subject (in whole or part), to an excise tax pursuant to
Section 4999 of the Code (such tax hereinafter referred to as the "Excise
Tax") because the amount of the Total Payments equals or exceeds four (4)
times the base amount (as such term is defined under Section 280G(b)(3) of
the Code), then the Total Payments shall be grossed up to the extent
necessary to reflect any Excise Taxes due by Executive and the income taxes
attributable thereto so that the Executive will be entitled to a net amount
equal to the Total Payments (the "Grossed-Up Payment"). For purposes of
determining whether and the extent to which the Total Payments will be
subject to the Excise Tax, (i) no portion of the Total Payments the receipt
or enjoyment of which Executive shall have effectively waived in writing
prior to the date of this termination of employment shall be taken into
account, (ii) no portion of the Total Payments shall be taken into account
which in the opinion of tax counsel selected by Corporation does not
constitute a "parachute payment" within the meaning of Section 280G(b)(2)
of the Code, (including by reason of Section 280(b)(4)(A) of the Code) and,
in calculating the Excise Tax, no portion of such Total Payment shall be
taken into account which constitutes reasonable compensation for services
actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code,
in excess of the base amount as defined in Section 280G(b)(3) of the Code
allowable to such reasonable compensation, and (iii) the value of any
non-cash benefit or any deferred payment or benefit included in the Total
Payments shall be determined by Corporation in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code. Prior to the
thirtieth day following the date of Executive's termination of employment,
Corporation shall provide Executive with its calculation of the amounts
referred to in this Section and such supporting materials as are reasonably
necessary for Executive to evaluate Corporation's calculations but the
Corporation's calculations shall be used for purposes of any payments
pursuant to this Section.
c. If the Corporation's Tax Advisor determines that the Total
Payments received or to be received by Executive fall under subparagraph
(a) above and upon audit
13
by the Internal Revenue Service the IRS determines that an Excise Tax is
due and payable due to the amount of the Total Payments received by
Executive, then the Corporation agrees to make a Grossed-Up Payment
calculated in the same manner as provided in subparagraph (b).
d. In the event of any IRS audit concerning to the Total Payments
payable or paid to Executive, the Corporation may in its sole discretion
choose to respond to the audit. If the Corporation chooses not to respond,
then it shall be the sole responsibility of Executive to respond to the
audit.
15. WAIVER. A party's failure to insist on compliance or enforcement of
any provision of this Agreement shall not affect the validity or enforceability
or constitute a waiver of future enforcement of that provision or of any other
provision of this Agreement by that party or any other party.
16. GOVERNING LAW. This Agreement shall in all respects be subject
to, and governed by, the laws of the State of Connecticut without reference to
its conflict of laws
17. SEVERABILITY. The invalidity or unenforceability of any provision
in the Agreement shall not in any way affect the validity or enforceability of
any other provision and this Agreement shall be construed in all respects as if
such invalid or unenforceable provision had never been in the Agreement.
18. NOTICE. Any and all notices required or permitted herein shall be in
writing and shall be deemed to have been duly given (a) when delivered if
delivered personally, (b) on the fifth day following the date of deposit in the
United States mail if sent first class, postage prepaid, or by certified mail,
or (c) one day after delivery to a nationally recognized overnight courier
service. The parties' respective addresses for such notices shall be those set
forth below, or such other address or addresses as either party may hereafter
designate in writing to the other.
If to the Corporation: Genaissance Pharmaceuticals, Inc.
Xxxx Xxxxxxx Xxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000-0000
Attention: Xxxxx Xxxxx
Facsimile No.: (000) 000-0000
With a copy to: Xxxxxxxx & Xxxx LLP
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attention: Xxxxxxx XxXxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Employee: Xxx X. Xxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
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19. ASSIGNMENT. This Agreement shall inure to the benefit of, and shall be
binding upon, the parties hereto and their respective successors, assigns,
heirs, and legal representatives, including any entity with which the
Corporation may merge or consolidate or to which all or substantially all of its
assets may be transferred. The duties and covenants of Executive under this
Agreement, being personal, may not be delegated.
20. AMENDMENTS. This Agreement may be amended at any time by mutual
consent of the parties hereto, with any such amendment to be invalid unless in
writing and signed by the Corporation and Executive and expressly referring to
this Agreement.
21. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding by and between Executive and the Corporation with respect to the
employment of Executive and supersedes all existing agreements between the
Corporation and Executive with respect to such subject matter. No
representations, promises, agreements, or understandings, written or oral,
relating to the employment of Executive by the Corporation, or any of its
officers, directors, employees, or agents, not contained herein shall be of any
force or effect, provided that, Xxxxxxxx 0, 0, 0, 0, xxx 0 xxxxx xx supplemental
to any other agreement of Executive with the Corporation related to the matters
identified therein.
22. NO UNDUE INFLUENCE; CONSTRUCTION. This Agreement is executed
voluntarily and without any duress or undue influence. Executive acknowledges
that he has read this Agreement and executed it with his full and free consent.
No provision of this Agreement shall be construed against any party by virtue of
the fact that such party or its counsel drafted such provision or the entirety
of this Agreement.
23. REFERENCES TO GENDER AND NUMBER TERMS. In construing this Agreement,
feminine or number pronouns shall be substituted for those masculine in form and
vice versa, and plural terms shall be substituted for singular and singular for
plural in any place in which the context so requires.
24. COUNTERPARTS; HEADINGS; SECTIONS. This Agreement may be executed in
multiple counterparts, each of which shall be considered to have the force and
effect of any original but all of which taken together shall constitute but one
and the same instrument. The various headings in this Agreement are inserted for
convenience only and are not part of the Agreement. All references to "Sections"
and "Paragraphs" in this Agreement refer to the various corresponding sections
and paragraphs of this Agreement.
25. SURVIVAL. The covenants and agreements contained in Sections 5
through 9 shall survive any termination of Executive's employment with the
Corporation.
26. ARBITRATION. Executive and the Corporation shall submit any disputes
arising under this Agreement to an arbitration panel conducting a binding
arbitration in Hartford, Connecticut or at such other location as may be
agreeable to the parties, in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association in
effect on the date of such arbitration (the "Rules"), and judgment upon the
award rendered by the arbitrator or arbitrators may be entered in any court
having jurisdiction thereof;
15
PROVIDED, HOWEVER, that nothing herein shall impair the Corporation's right to
seek equitable relief for any breach or threatened breach of Section 8 or
Section 9. The award of the arbitrators shall be final and shall be the sole and
exclusive remedy between the parties regarding any claims, counterclaims, issues
or accountings presented to the arbitration panel. The parties hereto further
agree that the arbitration panel shall consist of one (1) person mutually
acceptable to the Corporation and Executive, PROVIDED that if the parties cannot
agree on an arbitrator within thirty (30) days of filing a notice of
arbitration, the arbitrator shall be selected by the manager of the principal
office of the American Arbitration Association serving Hartford County in the
State of Connecticut. Each party will pay for the fees and expenses of its own
attorneys, experts, witnesses, and preparation and presentation of proofs and
post-hearing briefs (unless (i) the party prevails on a claim for which
attorney's fees and expenses are recoverable under the Rules and those amounts
are included as part of the award or (ii) Executive prevails on a claim for
breach of this Agreement after the Corporation has terminated Executive pursuant
to Section 12c(ix) hereof, in which case, the Corporation will pay for
Executive's above-described fees and expenses related to such claim). Any action
to enforce or vacate the arbitrator's award shall be governed by the federal
Arbitration Act, if applicable, and otherwise by applicable state law. If either
the Corporation or Executive pursues any claim, dispute or controversy against
the other in a proceeding other than the arbitration provided for herein, the
responding party shall be entitled to dismissal or injunctive relief regarding
such action and recovery of all costs, losses and attorney's fees related to
such action. Executive acknowledges and expressly agrees that this arbitration
provision constitutes a voluntary waiver of trial by jury in any action or
proceeding to which Executive and the Corporation may be parties arising out of
or pertaining to this Agreement.
THE NEXT PAGE IS THE SIGNATURE PAGE
16
IN WITNESS WHEREOF, the Corporation and Executive have duly executed this
Agreement on the dates set forth below.
CORPORATION:
GENAISSANCE PHARMACEUTICALS, INC.
By: /s/ Xxxxx Xxxxx
---------------------------------------------
Name: Xxxxx Xxxxx
Its President and Chief Executive Officer
Date: 2/26/04
------------------------------------------
EXECUTIVE:
/s/ Xxx X. Xxxxxx
------------------------------------------------
Name: Xxx X. Xxxxxx
Date: 2/25/04
------------------------------------------
Personally appeared, Xxxxx Xxxxx, President and Chief Executive Officer of
Genaissance Pharmaceuticals, Inc., who acknowledged that the execution of this
Agreement was his free act and deed, and the free act and deed of the
corporation, before me, this 26th day of February, 2004.
/s/ Xxxxxx Xxxxxxxxx
-------------------------------
Notary Public
My Commission Expires: 12/31/06
Personally appeared, Xxx X. Xxxxxx, who acknowledged that the execution
of this Agreement was his free act and deed, before me, this 25th day of
February, 2004.
/s/ Xxxxxx Xxxxxxxxx
-------------------------------
Notary Public
My Commission Expires: 12/31/06
17
