Exhibit 10.59
EMPLOYMENT AGREEMENT
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 XXXXXXX
XXXXXX, PH.D. ("Executive"), an individual who resides at 00 Xxxxxx Xxxx Xxxxx,
Xxxxxxxx, Xxxxxxxxxxx, 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;
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 Scientific Officer ("SVP") 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 SVP in order to advance the
Corporation's Informatics technology, Medical Affairs and related business
efforts, assigned or delegated to him by the Chief Executive Officer of the
Corporation or his delegate (the "CEO"), and normally associated with the
position of SVP, including, without limitation, managing the Corporation's
Informatics team, addressing strategic and tactical business decisions of the
Corporation related to Informatics with other senior managers and advisors to
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, 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") in an amount, if any,
determined 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 in the
first quarter of each fiscal year after the commencement of the Employment
Term. 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 as soon as
reasonably possible after the close of its books at the end of the 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 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
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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's Employee Stock Purchase Plan, or any
successor plans. In addition, Executive shall be eligible to
participate in the Plan with respect to his future performance as a
senior executive of the Corporation. 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.
(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.
(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 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 male non-smoker of Executive's age.
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.
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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, dated February 22, 1999 (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.
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
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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 to terminate their 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 Section
9a, 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
paragraph, 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
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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 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 pursuant
to the terms of this Agreement, adequate consideration for such
obligations; and
(iii) Such obligations do not prevent Executive from earning a
livelihood.
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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.
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 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);
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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, 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 the
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.
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 Section 12e, 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
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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 SVP, (iii) assigns him duties materially inconsistent with
the position and/or duties described in Sections 1 or 2, (iv) materially
diminishes his responsibilities described in Sections 1 or 2, (v) breaches
any material obligations to Executive under this Agreement, or (iv) in
connection with a Change of Control (as defined hereafter), the Corporation
requires Executive to relocate his office to a location that is more than
thirty-five (35) miles from its existing location at 5 Science Park, New
Haven, Connecticut. Upon any termination by Executive under this Section
12f, the Corporation shall be obligated to pay Executive the severance
payments specified in Section 12d.
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 usual pay periods. Termination by Executive of his employment
pursuant to this paragraph shall not be deemed a voluntary termination by
Executive pursuant to Section 12i below.
h. GOOD REASON DEFINED. For purposes of this Agreement, the term
"Good Reason" means, during the thirty (30) day 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;
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(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.
i. 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.
j. 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 (other than claims that Executive may then or thereafter have in
respect of Base Salary, reimbursement of reasonable expenses incurred
within the three (3) month period prior to the date of his termination or
other expenses due to him under this Agreement), 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.
k. 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 his employment.
13. VESTING UPON CHANGE OF CONTROL; EXERCISE.
a. Any stock grant or options granted to Executive by the Corporation
shall accelerate and immediately vest as of the date of any termination or
expiration of Executive's employment with the Corporation (or its successor),
which occurs at the time of, or within the six (6) month period after a Change
of Control. "Change of Control" means 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)
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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 by the Corporation of all or substantially
all of the Corporation's assets. Notwithstanding the foregoing, if the Incumbent
Board specifically determines in good faith that any transaction does not
constitute a Change of Control for purposes of this Agreement, such
determination shall be conclusive and binding.
b. In the event Executive's stock grants and/or options accelerate
pursuant to this Agreement, Executive shall be permitted to exercise any and all
vested options which he holds for a period of up to twelve (12) months following
the date of termination or expiration of his employment to the extent permitted
by applicable law.
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 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) it is determined by the
Corporation's independent certified accounting firm (the "Tax Advisor")
that the Total Payments exceed 2.99 times the base amount (as such term is
defined under Section
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280G(b)(3) of the Code) but equal less than 4 times such 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 subsection 14a above, in the event that the Tax Advisor
determines that the Total Payments 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") and the Tax Advisor determines that the
Total Payments equal or exceed 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 to the additional payment)
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 Advisor 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 allocable 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 Tax Advisor'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 subsection 14a
above and upon audit by the Internal Revenue Service (the "IRS"), the IRS
determines that an Excise Tax is due and payable due to the amount of the
Total Payments received by Executive, notwithstanding the reductions in
payments under subsection 14a, then in lieu of any further reduction the
Corporation agrees to make a Grossed-Up Payment calculated in the same
manner as provided in subsection 14b above.
d. In the event of any IRS audit concerning 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
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Executive to respond to the audit. Each party shall reasonably cooperate
with the other in any such proceedings.
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. The parties acknowledge that each of them will act in good
faith and deal fairly with respect to their respective rights and obligations
under this Agreement.
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: Xxxxxxx Xxxxxx, Ph.D.
00 Xxxxxx Xxxx Xxxxx
Xxxxxxxx, XX 00000
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.
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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; 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
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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
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IN WITNESS WHEREOF, the Corporation and Executive have duly executed this
Agreement on the dates set forth below.
CORPORATION:
GENAISSANCE PHARMACEUTICALS, INC.
By: /s/ Xxx X. Xxxxxx
---------------------------------------
Name: Xxx X. Xxxxxx
Its SVP and Chief Financial Officer
Date: 2/23/04
------------------------------------
EXECUTIVE:
/s/ Xxxxxxx Xxxxxx, Ph.D.
------------------------------------------
Name: Xxxxxxx Xxxxxx, Ph.D.
Date: 2/20/04
------------------------------------
Personally appeared, Xxx X. Xxxxxx, SVP and Chief Financial 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 23rd day of February, 2004.
/s/ Xxxxxx Xxxxxxxxx
-------------------------------
Notary Public
My Commission Expires: 12/31/06
Personally appeared, Xxxxxxx Xxxxxx, Ph.D, who acknowledged that the
execution of this Agreement was his free act and deed, before me, this 20th day
of February, 2004.
/s/ Xxxxxx Xxxxxxxxx
-------------------------------
Notary Public
My Commission Expires: 12/31/06
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