EXHIBIT 99.3
TERMINATION AGREEMENT
THIS TERMINATION AGREEMENT (this "Agreement") is made and entered into
this 2nd day of June, 2003, by and between Texas Biotechnology Corporation, a
Delaware corporation having its principal executive office at 0000 Xxxx Xxxx
Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxxx 00000 (hereinafter referred to as the
"Company"), and Xxxxx X. Xxxxxxxx (hereinafter referred to as the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Executive in an executive
capacity and the Executive desires to enter the Company's employ.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Executive hereby agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms have the meanings
prescribed below:
AAA shall have the meaning assigned thereto in Section 13.13 hereof
Affiliate is used in this Agreement to define a relationship to a
person or entity and means a person or entity who, directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, such person or entity.
Agreement shall have the meaning assigned thereto in the preamble.
Annual Bonus shall have the meaning assigned thereto in Section 4.2
hereof.
Base Salary shall have the meaning assigned thereto in Section 4.1
hereof.
Board means the Board of Directors of the Company.
Bonus Payment shall have the meaning assigned thereto in Section 11.2
hereof.
Cause shall have the meaning assigned thereto in Section 5.3 hereof.
Change in Control of the Company shall be deemed to have occurred if
any of the events set forth in any one of the following paragraphs shall occur:
(a) any "person" (as defined in section 3(a)(9) of the Exchange
Act, and as such term is modified in sections 13(d) and 14(d) of the Exchange
Act), excluding the Company or any of its subsidiaries, a trustee or any
fiduciary holding securities under an employee benefit plan of the Company or
any of its subsidiaries, an underwriter temporarily holding securities pursuant
to an offering of such securities or a corporation owned, directly or
indirectly, by stockholders of
the Company in substantially the same proportions as their ownership of the
Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's then
outstanding securities; or
(b) during any period of not more than two consecutive years,
individuals who at the beginning of such period constitute the Board and any new
director (other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause (a), (c)
or (d) of this definition) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof;
or
(c) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (i) a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or other
fiduciary holder of securities under an employee benefit plan of the Company, at
least 50% of the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person
acquires more than 50% of the combined voting power of the Company's then
outstanding securities; or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
Notwithstanding the foregoing, no Change in Control shall be deemed to
have occurred if there is consummated any transaction or series of integrated
transactions immediately following which, in the judgment of the Compensation
Committee of the Board, the holders of the Common Stock, immediately prior to
such transaction or series of transactions continue to have the same
proportionate ownership in an entity which owns all or substantially all of the
assets of the Company immediately prior to such transaction or series of
transactions. Except during a Potential Change in Control of the Company, the
Board may (i) deem any other corporate event affecting the Company (other than
those described in clauses (a)-(d) of this definition) to be a "Change in
Control," and (ii) may amend this definition of "Change in Control" in
connection with an identical amendment being made to termination agreements
entered into by the Company and all of its senior executive officers.
Code means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated by the Internal Revenue Service thereunder, all as
in effect from time to time during the Employment Period.
Common Stock means the Company's common stock, par value $.05 per
share.
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Company means Texas Biotechnology Corporation, a Delaware corporation,
the principal executive office of which is located at 0000 Xxxx Xxxx Xxxxx,
Xxxxx 000, Xxxxxxxx, Xxxxx 00000.
Competing Business means any individual, business, firm, company,
partnership, joint venture, organization, or other entity that markets or has
entered clinical development of any product addressing the same disease target
as a product discovered by, or licensed to, the Company which is either (i) in
Phase III of clinical development, (ii) pending approval at U.S. Food & Drug
Administration or (iii) marketed by the Company or its licensee.
Confidential Information shall have the meaning assigned thereto in
Section 8.2 hereof.
Date of Termination means the earliest to occur of (i) the date of the
Executive's death or (ii) the date of receipt of the Notice of Termination, or
such later date as may be prescribed in the Notice of Termination in accordance
with Section 5.6 hereof.
Disability means an illness or other disability that prevents the
Executive from discharging his responsibilities under this Agreement for a
period of 180 consecutive calendar days, or an aggregate of 180 calendar days in
any calendar year, during the Employment Period, all as determined in good faith
by the Board (or a committee thereof).
Effective Date means the date of execution hereof.
Employment Period shall have the meaning assigned thereto in Section 3
hereof.
Executive means Xxxxx X. Xxxxxxxx, an individual residing in Houston,
Texas.
Exchange Act means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the Securities and Exchange Commission
thereunder, all as in effect from time to time during the Employment Period.
Excise Taxes shall have the meaning assigned thereto in Section 11.1
hereof.
Good Reason shall have the meaning assigned thereto in Section 5.5
hereof.
Initial Term shall have the meaning assigned thereto in Section 3
hereof.
Losses shall have the meaning assigned thereto in Section 11.8 hereof.
Material Injury shall have the meaning assigned thereto in Section 5.3
hereof.
Notice of Termination shall have the meaning assigned thereto in
Section 5.6 hereof.
Potential Change in Control of the Company shall be deemed to have
occurred if (a) the Company enters into an agreement the consummation of which
would result in the occurrence of a Change in Control, (b) any person (including
the Company) publicly announces an intention to take or consider taking action
which if consummated would constitute a Change in Control or (c)
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the Board adopts a resolution to the effect that a potential Change in Control
of the Company has occurred.
Proprietary Agreement shall have the meaning assigned thereto in
Section 10.4 hereof.
Rules shall have the meaning assigned thereto in Section 13.13 hereof.
Successor Provisions shall have the meaning assigned thereto in Section
11.5 hereof.
Tax Consultant shall have the meaning assigned thereto in Section 11.6
hereof.
Vacation Time shall have the meaning assigned thereto in Section 4.3
hereof.
Without Cause shall have the meaning assigned thereto in Section 5.4
hereof.
2. General Duties of the Company and the Executive.
2.1 (a) The Company agrees to employ the Executive, and the
Executive agrees to accept employment by the Company and to serve the Company as
its Vice President of Marketing and Sales. The Executive shall report to and be
subject to the direction of the Chief Executive Officer and the Board. The
Executive shall have the authority, duties and responsibilities that are
normally associated with and inherent in the executive capacity in which the
Executive will be performing, and shall have such other or additional duties
which are not inconsistent with the Executive's position, as may from time to
time be reasonably assigned to the Executive by the Chief Executive Officer or
the Board (or a committee thereof). While employed hereunder, the Executive
shall devote full time and attention during normal business hours to the affairs
of the Company and use his best efforts to perform faithfully and efficiently
his duties and responsibilities. The Executive agrees to cooperate fully with
the Chief Executive Officer and the Board, and other executive officers of the
Company, and not to engage in any activity which conflicts with or interferes
with the performance of his duties hereunder. During the Employment Period, the
Executive shall devote his best efforts and skills to the business and interests
of the Company, do his utmost to further enhance and develop the Company's best
interests and welfare, and endeavor to improve his ability and knowledge of the
Company's business, in an effort to increase the value of his services for the
mutual benefit of the parties hereto. During the Employment Period, it shall not
be a violation of this Agreement for the Executive (i) serve on any corporate
board or committee thereof with the approval of the Board, (ii) to serve on any
civic, or charitable boards or committees (except for boards or committees of a
Competing Business unless approved by the Board), (iii) deliver lectures,
fulfill teaching or speaking engagements, (iv) testify as a witness in
litigation involving a former employer or (v) manage personal investments;
provided, however, any such activities must not materially interfere with
performance of the Executive's responsibilities under this Agreement.
(b) The Executive represents and covenants to the Company
that he is not subject or a party to any employment agreement,
noncompetition covenant, nondisclosure agreement, or any similar
agreement or covenant that would prohibit the Executive from executing
this Agreement and fully performing his duties and responsibilities
hereunder, or would in any manner, directly or indirectly, limit or
affect the duties and responsibilities that may now or in the future be
assigned to the Executive hereunder.
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The Executive further represents and warrants that he is not presently
subject to any legal actions, claims or administrative proceedings,
including bankruptcy proceedings or IRS audits or proceedings, which
would affect his ability to perform his responsibilities hereunder.
2.2 The Executive agrees and acknowledges that he owes a fiduciary
duty of loyalty, fidelity and allegiance to act at all times in the best
interests of the Company and to do no act and to make no statement, oral or
written, which would injure the Company's business, its interests or its
reputation.
2.3 The Executive agrees to execute and comply at all times during
the Employment Period with all applicable policies, rules and regulations of the
Company, including, without limitation, the Company's business ethics policy and
the Company's policy regarding trading in the Common Stock, as each is in effect
from time to time during the Employment Period.
3. Term.
Unless sooner terminated pursuant to other provisions hereof, the
Executive's period of employment under this Agreement shall be a period of one
year beginning on the Effective Date (the "Initial Term"). The Executive's
period of employment under this Agreement shall be automatically renewed for
successive one-year terms on each anniversary of the Effective Date (the Initial
Term and any and all renewals thereof are referred to herein collectively as the
"Employment Period"), unless written notice of nonrenewal is delivered by one
party to the other at least 60 days before the end of the Initial Term or any
such one-year renewal term.
4. Compensation and Benefits.
4.1 Base Salary. As compensation for services to the Company, the
Company shall pay to the Executive from the Effective Date until the Date of
Termination an annual base salary of $190,000 (the "Base Salary"). The Board (or
a committee thereof) will conduct an annual review of the Executive's
compensation and, in its discretion, may increase the Base Salary based upon
relevant circumstances. The Base Salary shall be payable in equal semi-monthly
installments or in accordance with the Company's established policy, subject
only to such payroll and withholding deductions as may be required by law and
other deductions (consistent with Company policy for all employees) relating to
the Executive's election to participate in the Company's insurance and other
employee benefit plans.
4.2 Bonus. In addition to the Base Salary, the Executive shall be
awarded, for each fiscal year until the Date of Termination, an annual bonus to
be determined by the Board (or a committee thereof), in its sole discretion
pursuant to the incentive or bonus plan for the Company's management as in
effect from time to time (the "Annual Bonus"). Each such Annual Bonus shall be
payable at a time to be determined by the Board (or a committee thereof) in its
sole discretion. Any bonus paid for calendar year 2003 will not be prorated
based on the number of days during 2003 that the Executive was employed by the
Company. The Executive will also receive a signing bonus of $10,000 payable on
the Effective Date.
4.3 Vacation. Until the Date of Termination, the Executive shall
be entitled to four (4) weeks paid vacation during each one-year period
commencing on the Effective Date (the
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"Vacation Time"). The use of any Vacation Time not taken during the applicable
one-year period will be subject to the Company's vacation policy as in effect
from time to time.
4.4 Incentive, Savings and Retirement Plans. Until the Date of
Termination, the Executive shall be eligible to participate in and shall receive
all benefits under all executive incentive, savings and retirement plans and
programs currently maintained or hereinafter established by the Company for the
benefit of its senior executive officers and/or employees.
4.5 Benefit Plans. Until the Date of Termination, the Executive
and/or the Executive's family, as the case may be, shall be eligible to
participate in and shall receive all benefits under each welfare benefit plan of
the Company currently maintained or hereinafter established by the Company for
the benefit of its employees. Such welfare benefit plans may include, without
limitation, medical, dental, disability, group life, accidental death and travel
accident insurance plans and programs. The Company shall not be obligated to
institute, maintain, or refrain from changing, amending, or discontinuing, any
such employee benefit program or plan, so long as such actions are similarly
applicable to covered employees generally.
4.6 Reimbursement of Expenses. The Executive may from time to time
until the Date of Termination incur various business expenses customarily
incurred by persons holding positions of like responsibility, including, without
limitation, travel, entertainment and similar expenses incurred for the benefit
of the Company. Subject to the Executive complying with the Company's policy
regarding the reimbursement of such expenses as in effect from time to time
during the Employment Period, which does not necessarily allow reimbursement of
all such expenses, the Company shall reimburse the Executive for such expenses
from time to time, at the Executive's request, and the Executive shall account
to the Company for all such expenses.
4.7 Stock Options.
(a) On the Effective Date, the Company will grant to the
Executive options (the "Options") to acquire 70,000 shares of Common
Stock, with the exercise price to be the closing sales price for the
Common Stock on The Nasdaq National Market on the trading day
immediately preceding the Effective Date. The Options will provide for
the vesting of one-third of the shares covered by the Options on each
of the first, second and third anniversaries of the Effective Date. The
Executive will be eligible for a new stock option grant in 2004 of up
to an additional 40,000 shares as part of his annual compensation
review of his performance in 2003. The Options will be granted pursuant
to, and will be governed by the terms of, the Company's incentive stock
plans as then in effect, and the provisions of this Agreement
(including Section 6.3(e) hereof). At the request of the Executive, the
Company will cause the Options to be granted as Incentive Stock Options
under the Code, to the extent permitted, and subject to the terms
provided under, the Code. All Options will provide that they will not
continue to vest after the breach (and failure to cure such breach as
provided for therein) by the Executive of any of Sections 7, 8, 9, 10
or 12 of this Agreement.
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(b) On the Effective Date, the Company will grant the
Executive 15,000 restricted shares of Common Stock. These shares
granted by the Company will be issued as "restricted stock" under the
Company's incentive stock plans, and will vest in one-third increments
on each of the first, second and third anniversaries of the Effective
Date. Prior to vesting, these shares will be held by the Company and
will bear the restrictive legends set forth in, and be governed by the
terms of, the Company's incentive stock plans. This restricted stock
will not be transferable or saleable until vested, and all unvested
restricted stock will be forfeited and cancelled by the Company if the
Executive terminates his employment for any reason or is terminated for
Cause by the Company prior to the third anniversary of their grant.
Upon death or Disability of the Executive, the unvested restricted
stock will vest in full. Upon the termination of Executive by the
Company Without Cause prior to the third anniversary of their grant,
all unvested restricted shares will vest. All unvested shares of
restricted stock will provide that they will be forfeited after the
breach (and failure to cure such breach as provided for therein) by the
Executive of any of Sections 7, 8, 9, 10 and 12 of this Agreement. Upon
the vesting of these shares of restricted stock, the Company will cause
the removal of the restrictive legends on the certificates representing
such shares that relate to the vesting conditions described in this
Section 4.7(b).
(c) The Company will cause the Options and restricted
stock to be issued under the Company's 1999 Incentive Stock Plan (the
"1999 Plan") by the execution and delivery of agreements containing the
terms and conditions set forth in this Agreement, and the other terms
and conditions of the 1999 Plan that are not inconsistent herewith. The
Compensation Committee has, pursuant to the 1999 Plan, authorized such
agreements to be issued on the terms set forth herein pursuant to the
authority granted to the Compensation Committee to alter appropriate
terms and conditions of the 1999 Plan when granting incentive awards
under the 1999 Plan.
4.8 Indemnification Agreements. The Company has entered into an
Indemnification Agreement regarding indemnification of the Executive in the form
of such agreements entered into with the Company's other executive officers. The
Company will also cause the Executive to be covered by its director and officer
insurance policies as they are in effect from time to time for its executive
officers
4.9 Relocation Expenses. The Company will provide for
reimbursement of moving and relocation expenses of the Executive and his family
as set forth on Exhibit A attached hereto. The Executive will permanently
relocate to the Houston, Texas metropolitan area by September 30, 2003.
5. Termination.
5.1 Death. This Agreement shall terminate automatically upon the
death of the Executive.
5.2 Disability. The Company may terminate this Agreement, upon
written notice to the Executive delivered in accordance with Sections 5.6 and
13.1 hereof, upon the Disability of the Executive.
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5.3 Cause. The Company may terminate this Agreement, upon written
notice to the Executive delivered in accordance with Sections 5.6 and 13.1
hereof, for Cause. For purposes of this definition of "Cause," the term
"Company" shall mean the Company and/or its Affiliates. For purposes of this
Agreement, subject to the notice provisions set forth below, "Cause" means (i)
the conviction (or plea of nolo contendere or equivalent plea) of the Executive
of a felony (which, through lapse of time or otherwise, is not subject to
appeal), (ii) the Executive having engaged in intentional misconduct causing a
violation by the Company of any state or federal laws which results in a
material injury to the business, condition (financial or otherwise), results of
operations or prospects of the Company as determined in good faith by the Board
or a committee thereof (a "Material Injury"), (iii) the Executive having engaged
in a theft of corporate funds or corporate assets of the Company or in an act of
fraud upon the Company, (iv) an act of personal dishonesty taken by the
Executive that was intended to result in personal enrichment of the Executive at
the expense of the Company, (v) the Executive's refusal, without proper legal
cause, to perform his duties and responsibilities as contemplated in this
Agreement or any other breach by the Executive of this Agreement, and (vi) the
Executive's engaging in activities which would constitute a breach of the
Company's business ethics policy, the Company's policies regarding trading in
the Common Stock or any other applicable policies, rules or regulations of the
Company which results in a Material Injury. If the Company desires to terminate
the Executive for Cause pursuant to the provisions of this Section 5.3, the
Executive will be given a written notice by the Board of the facts and
circumstances providing the basis for termination for Cause, and the Executive
will have 30 days from the date of such notice to remedy, cure or rectify the
situation giving rise to termination for Cause to the reasonable satisfaction of
the Board (except in the event of termination for Cause pursuant to subparagraph
(i) above as to which no cure period will be permitted).
5.4 Without Cause. The Company may terminate this Agreement
Without Cause, upon written notice to the Executive delivered in accordance with
Sections 5.6 and 13.1 hereof. For purposes of this Agreement, the Executive will
be deemed to have been terminated "Without Cause" if the Executive is terminated
by the Company for any reason other than Cause, Disability or death or if the
Company delivers a notice of nonrenewal of this Agreement pursuant to Section 3
hereof.
5.5 Good Reason. The Executive may terminate this Agreement for
Good Reason, upon written notice to the Company delivered in accordance with
Sections 5.6 and 13.1 hereof. For purposes of this definition of "Good Reason,"
the term "Company" shall mean the Company and/or its Affiliates. For purposes of
this Agreement, "Good Reason" means (i) the assignment to the Executive of any
duties materially inconsistent in any respect with the Executive's duties or
responsibilities as contemplated in this Agreement, provided that the Executive
specifically terminates his employment for Good Reason hereunder within 120 days
from the date that he has actual notice of such material breach; (ii) any other
action by the Company which results in a material diminishment in the
Executive's position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities, provided that the
Executive specifically terminates his employment for Good Reason hereunder
within 120 days from the date that he has actual notice of such material breach;
(iii) any breach by the Company of any of the provisions of this Agreement,
provided that the Executive specifically terminates his employment for Good
Reason hereunder within 120 days from the date that he has actual notice of such
material breach; (iv) requiring the Executive to relocate to any office or
location
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other than Houston, Texas, without his consent; (v) a 5% or more reduction, or
attempted reduction, at any time during the Employment Period, of the Base
Salary of the Executive unless such reduction is also applied to all other
senior executive officers of the Company; or (vi) the taking of any action by
the Company which would adversely affect the Executive's participation in or
materially reduce the Executive's benefits provided under Section 4.5 hereof,
unless (A) there is substituted a comparable benefit that is at least
economically equivalent (in terms of the benefit offered to the Executive) to
the benefit in which the Executive's participation is being adversely affected
or to the Executive's benefits that are being materially reduced, or (B) the
taking of such action affects all other senior executive officers of the
Company.
Notwithstanding the preceding provisions of this Section 5.5, if the
Executive desires to terminate his employment for Good Reason, he shall first
give written notice of the facts and circumstances providing the basis for Good
Reason to the Board or the Compensation Committee thereof, and allow the Company
thirty (30) days from the date of such notice to remedy, cure or rectify the
situation giving rise to Good Reason to the reasonable satisfaction of the
Executive.
5.6 Notice of Termination. Any termination of this Agreement by
the Company or the Executive, shall be communicated by Notice of Termination to
the other party hereto given in accordance with this Agreement. For purposes of
this Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon, (ii)
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated and (iii) specifies the termination date, if such date is other than
the date of receipt of such notice (which termination date shall not be more
than 15 days after the giving of such notice, unless otherwise provided herein).
Notwithstanding the foregoing, the Company may elect to consider the Executive
as an employee after the Date of Termination for purposes of complying with the
provisions of Section 6 hereof.
6. Obligations of the Company upon Termination.
6.1 Cause; Other Than Good Reason. If this Agreement shall be
terminated either by the Company for Cause or by the Executive for any reason
other than Good Reason (including delivery by the Executive of a notice of
nonrenewal of this Agreement pursuant to Section 3 hereof), the Company shall
pay to the Executive, in a lump sum in cash within 30 days after the Date of
Termination, the aggregate of the Executive's Base Salary (as in effect on the
Date of Termination) through the Date of Termination, if not theretofore paid,
and, in the case of compensation previously deferred by the Executive, all
amounts of such compensation previously deferred and not yet paid by the
Company. All other obligations of the Company and rights of the Executive
hereunder shall terminate effective as of the Date of Termination, except as
provided for in any benefit plans, incentive stock plans or other compensation
plans and as otherwise provided in this Agreement.
6.2 Death or Disability. If this Agreement is terminated as a
result of the Executive's death or Disability, the Company shall pay to the
Executive or his estate, in a lump sum in cash within 30 days of the Date of
Termination, the Executive's Base Salary (as in effect on the Date of
Termination) through the Date of Termination, if not theretofore paid, and, in
the case of
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compensation previously deferred and bonuses previously earned by the Executive,
all amounts of such compensation previously deferred and earned and not yet paid
by the Company. The Executive or his estate shall also be entitled to receive
those death and Disability benefits to which the Executive is entitled under the
Company's benefit and insurance plans. All other obligations of the Company and
rights of the Executive hereunder shall terminate effective as of the Date of
Termination, except as provided for in any benefit plans, incentive stock plans
or other compensation plans and as otherwise provided in this Agreement.
6.3 Good Reason; Without Cause; Nonrenewal. If this Agreement
shall be terminated either by the Executive for Good Reason or by the Company
Without Cause (which includes delivery by the Company of a notice of nonrenewal
of this Agreement pursuant to Section 3 hereof):
(a) The Company shall pay to the Executive in a lump sum
in cash within 30 days after the Date of Termination, if not
theretofore paid, the Executive's Base Salary (as in effect on the Date
of Termination) through the Date of Termination, and in the case of
compensation previously deferred and bonuses previously earned by the
Executive, all amounts of such compensation previously deferred and
earned and not yet paid by the Company.
(b) The Company shall, promptly upon submission by the
Executive of supporting documentation, pay or reimburse to the
Executive any costs and expenses paid or incurred by the Executive
which would have been payable under Section 4.6 hereof if the
Executive's employment had not terminated.
(c) During the 12-month period commencing on the Date of
Termination, the Company shall continue benefits (other than disability
benefits), at the Company's expense, to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them under Section 4.5 hereof if the Executive's employment
had not been terminated. Benefits otherwise receivable by the Executive
pursuant to this Section shall be reduced to the extent substantially
similar benefits are actually received by or made available to the
Executive by any other employer during the same time period for which
such benefits would be provided pursuant to this Section at a cost to
the Executive that is commensurate with the cost incurred by the
Executive immediately prior to the Date of Termination (without giving
effect to any increase in costs paid by the Executive after the Change
in Control which constitutes or may constitute Good Reason); provided,
however, that if the Executive becomes employed by a new employer which
maintains a medical plan that either (i) does not cover the Executive
or a family member or dependent with respect to a preexisting condition
which was covered under the applicable Company medical plan, or (ii)
does not cover the Executive or a family member or dependent for a
designated waiting period, the Executive's coverage under the
applicable Company medical plan shall continue (but shall be limited in
the event of noncoverage due to a preexisting condition, to such
preexisting condition) until the earlier of the end of the applicable
period of noncoverage under the new employer's plan or the first
anniversary of the Date of Termination. The Executive agrees to report
to the Company any coverage and benefits actually received by the
Executive or made available to the Executive from such other
employer(s). The
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Executive shall be entitled to elect to change his level of coverage
and/or his choice of coverage options (such as Executive only or family
medical coverage) with respect to the benefits to be provided by the
Company to the Executive to the same extent that actively employed
senior executive officers of the Company are permitted to make such
changes; provided, however, that in the event of any such changes the
Executive shall pay the amount of any cost increase that would actually
be paid by an actively employed senior executive officer of the Company
by reason of making the same change in his level of coverage or
coverage options.
(d) During the 12-month period following the Date of
Termination, the Company shall pay to the Executive, in equal
semi-monthly installments, the Executive's Base Salary (as in effect on
the Date of Termination).
(e) During the 12-month period after the Date of
Termination, all stock options and restricted stock held by the
Executive will continue to vest and be exercisable in accordance with
their terms in effect on the Date of Termination. On the conclusion of
said 12-month period, all unexpired, unexercised options will be fully
vested and all restricted stock will be fully vested. Thereafter, all
such fully vested stock options will be exercisable by the Executive
until the earlier to occur of the expiration of the term of each stock
option or 12 months after the date they become fully vested.
Notwithstanding any of the above to the contrary, the Executive will
not be entitled to any of the benefits or payments provided in Section 6.3 (c),
(d) or (e) hereof if (i) the Executive breaches this Agreement including the
provisions of Sections 8, 9, 10 and 12 hereof, or (ii) the Executive fails to
execute a release from liability and waiver of right to xxx the Company or its
Affiliates in a form reasonably acceptable to the Company.
6.4 Termination of Employment Following a Change in Control.
(a) If this Agreement shall be terminated within two
years after a Change in Control which occurs during the term of this
Agreement, provided such termination is by the Executive for Good
Reason or by the Company Without Cause (which includes delivery by the
Company of a notice of nonrenewal of this Agreement pursuant to Section
3 hereof), in lieu of any obligation the Company may have pursuant to
Section 6.3 hereof:
(1) The Company shall pay to the Executive in a
lump sum in cash within five (5) days after the Date of
Termination, if not theretofore paid, the Executive's Base
Salary (as in effect on the Date of Termination) through the
Date of Termination, and in the case of compensation
previously deferred and bonuses previously earned by the
Executive, all amounts of such compensation previously
deferred and earned and not yet paid by the Company.
(2) The Company shall, promptly upon submission
by the Executive of supporting documentation, pay or reimburse
to the Executive any costs and expenses paid or incurred by
the Executive which would have been payable under Section 4.6
hereof if the Executive's employment had not terminated.
11
(3) The Company shall pay to the Executive in a
lump sum in cash within five (5) days after the Date of
Termination a severance payment equal to one and one-half
(1.5) times the sum of (i) the Executive's Base Salary (as in
effect on Date of Termination) and (ii) the Executive's most
recent Annual Bonus. If the most recent Annual Bonus was a
stock option or a stock grant, the value of the bonus will be
deemed to be the number of option shares times the closing
price of the Common Stock for the 20 trading days prior to the
Date of Termination.
(4) During the 18-month period commencing on the
Date of Termination, the Company shall continue benefits
(other than disability benefits), at the Company's expense to
the Executive and/or the Executive's family at least equal to
those which would have been provided to them under Section 4.5
hereof if the Executive's employment had not been terminated
(without giving effect to any reduction in such benefits
subsequent to the Change in Control which reduction
constitutes or may constitute Good Reason).
(b) The Company shall pay to the Executive all legal fees
and expenses incurred by the Executive as a result of a termination
which entitles the Executive to any payments under Section 6.4 hereof
including all such fees and expenses, if any, incurred in contesting or
disputing any Notice of Termination under Section 5.3 hereof or in
seeking to obtain or enforce any right or benefit provided by Section
6.4 hereof. Such payments shall be made within five (5) days after
delivery of the Executive's respective written requests for payment
accompanied by such evidence of fees and expenses incurred as the
Company reasonably may require.
(c) Any determination by the Executive pursuant to this
Section 6.4 that Good Reason exists for the Executive's termination of
employment and that adequate remedy has not occurred shall be presumed
correct and shall govern unless the party contesting the determination
shows by a clear preponderance of the evidence that it was not a good
faith reasonable determination.
(d) Notwithstanding any dispute concerning whether Good
Reason exists for termination of employment or whether adequate remedy
has occurred, the Company shall immediately pay to the Executive any
amounts otherwise due under this Section 6.4. The Executive may be
required to repay such amounts to the Company if any such dispute is
finally determined adversely to the Executive.
(e) The Executive shall not be required to mitigate
damages with respect to the amount of any payment provided under this
Section 6.4 by seeking other employment or otherwise, nor shall the
amount of any payment provided under this Section 6.4 be reduced by
retirement benefits, deferred compensation or any compensation earned
by the Executive as a result of employment by another employer.
12
7. Executive's Obligation to Avoid Conflicts of Interest. For purposes of
this Section 7, all references to the Company shall mean and include its
Affiliates. The Executive further agrees to comply with the Company's conflict
of interest policy, including the Company's business ethics policy, as in effect
from time to time.
8. Executive's Confidentiality Obligation.
8.1 For purposes of this Section 8, all references to the Company
shall mean and include its Affiliates. The Executive hereby acknowledges,
understands and agrees that all Confidential Information, as defined in Section
8.2 hereof, whether developed by the Executive or others employed by or in any
way associated with the Executive or the Company, is the exclusive and
confidential property of the Company and shall be regarded, treated and
protected as such in accordance with this Agreement. The Executive acknowledges
that all such Confidential Information is in the nature of a trade secret.
Failure to xxxx any writing confidential shall not affect the confidential
nature of such writing or the information contained therein.
8.2 For purposes of this Agreement, "Confidential Information"
means information, which is used in the business of the Company and (i) is
proprietary to, about or created by the Company, (ii) gives the Company some
competitive business advantage or the opportunity of obtaining such advantage or
the disclosure of which could be detrimental to the interests of the Company,
(iii) is designated as Confidential Information by the Company, is known by the
Executive to be considered confidential by the Company, or from all the relevant
circumstances should reasonably be assumed by the Executive to be confidential
and proprietary to the Company, or (iv) is not generally known by non-Company
personnel. Confidential Information excludes, however, any information that is
lawfully in the public domain or has been publicly disclosed by the Company.
Such Confidential Information includes, without limitation, the following types
of information and other information of a similar nature (whether or not reduced
to writing or designated as confidential):
(a) Internal personnel and financial information of the
Company, vendor information (including vendor characteristics,
services, prices, lists and agreements), purchasing and internal cost
information, internal service and operational manuals, and the manner
and methods of conducting the business of the Company;
(b) Marketing and development plans, price and cost data,
price and fee amounts, pricing and billing policies, quoting
procedures, marketing techniques, forecasts and forecast assumptions
and volumes, and future plans and potential strategies (including,
without limitation, all information relating to any acquisition
prospect and the identity of any key contact within the organization of
any acquisition prospect) of the Company which have been or are being
discussed;
(c) Names of customers and their representatives,
contracts (including their contents and parties), customer services,
and the type, quantity, specifications and content of products and
services purchased, leased, licensed or received by customers of the
Company;
13
(d) Confidential and proprietary information provided to
the Company by any actual or potential customer, government agency or
other third party (including businesses, consultants and other entities
and individuals); and
(e) Work product resulting from or related to the
research, development or production of the drug development programs of
the Company.
8.3 As a consequence of the Executive's acquisition or anticipated
acquisition of Confidential Information, the Executive shall occupy a position
of trust and confidence with respect to the affairs and business of the Company.
In view of the foregoing and of the consideration to be provided to the
Executive, the Executive agrees that it is reasonable and necessary that the
Executive make each of the following covenants:
(a) At any time during the Employment Period and
thereafter, the Executive shall not disclose Confidential Information
to any person or entity, either inside or outside of the Company, other
than as necessary in carrying out his duties and responsibilities as
set forth in Section 2 hereof, without first obtaining the Company's
prior written consent (unless such disclosure is compelled pursuant to
court orders or subpoena, and at which time the Executive shall give
prior written notice of such proceedings to the Company).
(b) At any time during the Employment Period and
thereafter, the Executive shall not use, copy or transfer Confidential
Information other than as necessary in carrying out his duties and
responsibilities as set forth in Section 2 hereof, without first
obtaining the Company's prior written consent.
(c) On the Date of Termination, the Executive shall
promptly deliver to the Company (or its designee) all written
materials, records and documents made by the Executive or which came
into his possession prior to or during the Employment Period concerning
the business or affairs of the Company, including, without limitation,
all materials containing Confidential Information.
9. Disclosure of Information, Ideas, Concepts, Improvements, Discoveries
and Inventions.
As part of the Executive's fiduciary duties to the Company, the
Executive agrees that during his employment by the Company and thereafter
following the Date of Termination, the Executive shall promptly disclose in
writing to the Company all information, ideas, concepts, improvements,
discoveries and inventions, whether patentable or not, and whether or not
reduced to practice, which are conceived, developed, made or acquired by the
Executive during the Employment Period, either individually or jointly with
others, and which relate to the business, products or services of the Company or
its Affiliates, irrespective of whether the Executive used the Company's time or
facilities and irrespective of whether such information, idea, concept,
improvement, discovery or invention was conceived, developed, discovered or
acquired by the Executive on the job, at home, or elsewhere. This obligation
extends to all types of information, ideas and concepts, including information,
ideas and concepts relating to research and development of drugs, drug discovery
and manufacturing processes, new types of services,
14
corporate opportunities, acquisition prospects, prospective names or service
marks for the Company's business activities, and the like.
10. Ownership of Information, Ideas, Concepts, Improvements, Discoveries
and Inventions, and all Original Works of Authorship.
10.1 All references in this Section 10 to the Company shall mean
and include its Affiliates. All information, ideas, concepts, improvements,
discoveries and inventions, whether patentable or not, which are conceived,
made, developed or acquired by the Executive or which are disclosed or made
known to the Executive, individually or in conjunction with others, during the
Executive's employment by the Company and which relate to the business, products
or services of the Company or its Affiliates (including, without limitation, all
such information relating to research and development of drugs, drug discovery
and manufacturing processes, corporate opportunities, research, financial and
sales data, pricing and trading terms, evaluations, opinions, interpretations,
acquisition prospects, the identity of customers or their requirements, the
identity of key contacts within the customers' organizations, marketing and
merchandising techniques, and prospective names and service marks) are and shall
be the sole and exclusive property of the Company. Furthermore, all drawings,
memoranda, notes, records, files, correspondence, manuals, models,
specifications, computer programs, maps and all other writings or materials of
any type embodying any of such information, ideas, concepts, improvements,
discoveries and inventions are and shall be the sole and exclusive property of
the Company.
10.2 In particular, the Executive hereby specifically sells,
assigns, transfers and conveys to the Company all of his worldwide right, title
and interest in and to all such information, ideas, concepts, improvements,
discoveries or inventions, and any United States or foreign applications for
patents, inventor's certificates or other industrial rights which may be filed
in respect thereof, including divisions, continuations, continuations-in-part,
reissues and/or extensions thereof, and applications for registration of such
names and service marks. The Executive shall assist the Company and its nominee
at all times, during the Employment Period and thereafter, in the protection of
such information, ideas, concepts, improvements, discoveries or inventions, both
in the United States and all foreign countries, which assistance shall include,
but shall not be limited to, the execution of all lawful oaths and all
assignment documents requested by the Company or its nominee in connection with
the preparation, prosecution, issuance or enforcement of any applications for
United States or foreign letters patent, including divisions, continuations,
continuations-in-part, reissues and/or extensions thereof, and any application
for the registration of such names and service marks.
10.3 In the event the Executive creates, during the Employment
Period, any original work of authorship fixed in any tangible medium of
expression which is the subject matter of copyright (such as, videotapes,
written presentations on acquisitions, computer programs, drawings, maps,
architectural renditions, models, manuals, brochures or the like) relating to
the Company's business, products or services, whether such work is created
solely by the Executive or jointly with others, the Company shall be deemed the
author of such work if the work is prepared by the Executive in the scope of his
employment; or, if the work is not prepared by the Executive within the scope of
his employment but is specially ordered by the Company as a contribution to a
collective work, as a part of a motion picture or other
15
audiovisual work, as a translation, as a supplementary work, as a compilation or
as an instructional text, then the work shall be considered to be work made for
hire, and the Company shall be the author of such work. If such work is neither
prepared by the Executive within the scope of his employment nor a work
specially ordered and deemed to be a work made for hire, then the Executive
hereby agrees to sell, transfer, assign and convey, and by these presents, does
sell, transfer, assign and convey, to the Company all of the Executive's
worldwide right, title and interest in and to such work and all rights of
copyright therein. The Executive agrees to assist the Company and its
Affiliates, at all times, during the Employment Period and thereafter, in the
protection of the Company's worldwide right, title and interest in and to such
work and all rights of copyright therein, which assistance shall include, but
shall not be limited to, the execution of all documents requested by the Company
or its nominee and the execution of all lawful oaths and applications for
registration of copyright in the United States and foreign countries.
10.4 The provisions of this Section 10 shall not supersede any
proprietary information agreement (the "Proprietary Agreement") between the
Executive and the Company which shall remain in full force and effect and,
moreover, this Agreement, the Proprietary Agreement and any such other similar
agreement between the parties shall be construed and applied as being mutually
consistent to the fullest extent possible.
11. Certain Payments by the Company
11.1 In the event that the Executive is deemed to have received an
"excess parachute payment" (as defined in Section 280G(b) of the Code) which is
subject to the excise taxes (the "Excise Taxes") imposed by Section 4999 of the
Code in respect of any payment pursuant to this Agreement or any other
agreement, plan, instrument or obligation, in whatever form, the Company shall
make the Bonus Payment (defined below) to the Executive notwithstanding any
contrary provision in this Agreement or any other agreement, plan, instrument or
obligation.
11.2 The term "Bonus Payment" means a cash payment in an amount
equal to the sum of (i) all Excise Taxes payable by the Executive, plus (ii) all
additional Excise Taxes and federal or state income taxes to the extent such
taxes are imposed in respect of the Bonus Payment, such that the Executive shall
be in the same after-tax position and shall have received the same benefits that
he would have received if the Excise Taxes had not been imposed. For purposes of
calculating any income taxes attributable to the Bonus Payment, the Executive
shall be deemed for all purposes to be paying income taxes at the highest
marginal federal income tax rate, taking into account any applicable surtaxes
and other generally applicable taxes which have the effect of increasing the
marginal federal income tax rate and, if applicable, at the highest marginal
state income tax rate, to which the Bonus Payment and the Executive are subject.
An example of the calculation of the Bonus Payment is set forth below. Assume
that the Excise Tax rate is 20%, the highest federal marginal income tax rate is
40% and the Executive is not subject to state income taxes. Further assume that
the Executive has received an excess parachute payment in the amount of
$200,000, on which $40,000 ($200,000 x 20%) in Excise Taxes are payable. The
amount of the required Bonus Payment is thus computed to be $100,000, i.e., the
Bonus Payment of $100,000, less additional Excise Taxes on the Bonus Payment of
$20,000 (i.e., 20% x $100,000) and income taxes of $40,000 (i.e., 40% x
$100,000), yields $40,000, the amount of the Excise Taxes payable in respect of
the original excess parachute payment.
16
11.3 The Executive agrees to reasonably cooperate with the Company
to minimize the amount of the excess parachute payments, including, without
limitation, assisting the Company in establishing that some or all of the
payments received by the Executive that are "contingent on a change," as
described in Section 280G(b)(2)(A)(i) of the Code, are reasonable compensation
for personal services actually rendered by the Executive before the date of such
change or to be rendered by the Executive on or after the date of such change.
In the event that the Company is able to establish that the amount of the excess
parachute payments is less than originally anticipated by the Executive, the
Executive shall refund to the Company any excess Bonus Payment to the extent not
required to pay Excise Taxes or income taxes (including those incurred in
respect of receipt of the Bonus Payment). Notwithstanding the foregoing, the
Executive shall not be required to take any action which his attorney or tax
advisor advises him in writing (i) is improper or (ii) exposes the Executive to
personal liability. The Executive may require the Company to deliver to the
Executive an indemnification agreement in form and substance reasonably
satisfactory to the Executive as a condition to taking any action required by
this Section 11.3.
11.4 The Company shall make any payment required to be made under
Section 11 hereof in a cash lump sum after the date on which the Executive
received or is deemed to have received any such excess parachute payment. Any
payment required to be paid by the Company under Section 11 hereof which is not
paid within 30 days of receipt by the Company of the Executive's written demand
therefor, delivered in accordance with Section 13.1 hereof, shall thereafter be
deemed delinquent, and the Company shall pay to the Executive immediately upon
demand interest at the highest nonusurious rate per annum allowed by applicable
law from the date such payment becomes delinquent to the date of payment of such
delinquent sum with interest.
11.5 In the event that there is any change to the Code which
results in the recodification of Section 280G or Section 4999 of the Code, or in
the event that either such section of the Code is amended, replaced or
supplemented by other provisions of the Code of similar import ("Successor
Provisions"), then this Agreement shall be applied and enforced with respect to
such new Code provisions in a manner consistent with the intent of the parties
as expressed herein, which is to assure that the Executive is in the same
after-tax position and has received the same benefits that he would have been in
and received if any taxes imposed by Section 4999 (or any Successor Provisions)
had not been imposed.
11.6 All determinations required to be made under Section 11 hereof
including, without limitation, whether and when a Bonus Payment is required, and
the amount of such Bonus Payment and the assumptions to be utilized in arriving
at such determinations, unless otherwise expressly set forth in this Agreement,
shall be made within 30 days from the Date of Termination by the independent tax
consultant(s) selected by the Company and reasonably acceptable to the Executive
(the "Tax Consultant"). The Tax Consultant must be a qualified tax attorney or
certified public accountant. All fees and expenses of the Tax Consultant shall
be paid in full by the Company. Any Excise Taxes as determined pursuant to
Section 11 hereof shall be paid by the Company to the Internal Revenue Service
or any other appropriate taxing authority on the Executive's behalf within five
(5) business days after receipt of the Tax Consultant's final determination by
the Company and the Executive.
17
11.7 If the Tax Consultant determines that there is substantial
authority (within the meaning of Section 6662 of the Code) that no Excise Taxes
are payable by the Executive, the Tax Consultant shall furnish the Executive
with a written opinion that failure to disclose or report the Excise Taxes on
the Executive's federal income tax return will not constitute a substantial
understatement of tax or be reasonably likely to result in the imposition of a
negligence or any other penalty.
11.8 The Company shall indemnify and hold harmless the Executive,
on an after-tax basis, from any costs, expenses, penalties, fines, interest or
other liabilities ("Losses") incurred by the Executive with respect to the
exercise by the Company of any of its rights under Section 11 hereof, including,
without limitation, any Losses related to the Company's decision to contest a
claim of any imputed income to the Executive. The Company shall pay all fees and
expenses incurred under Section 11 hereof, and shall promptly reimburse the
Executive for the reasonable expenses incurred by the Executive in connection
with any actions taken by the Company or required to be taken by the Executive
hereunder. Any payments owing to the Executive and not made within 30 days of
delivery, in accordance with Section 13.1 hereof, to the Company of evidence of
the Executive's entitlement thereto shall be paid to the Executive together with
interest at the maximum nonusurious rate permitted by law.
12. Executive's Non-Competition Obligation.
12.1 (a) All references in this Section 12 to the Company
shall mean and include its Affiliates. During the Employment Period and for the
12-month period following the Date of Termination hereof, the Executive shall
not, acting alone or in conjunction with others, directly or indirectly, in the
United States and any other business territories in which the Company is
presently or from time to time during the Employment Period conducting business,
invest or engage, directly or indirectly, in any Competing Business or accept
employment with or render services to such a Competing Business as a director,
officer, agent, executive or consultant or in any other capacity; provided,
however, that this Section 12.1(a) shall not be deemed violated if the Executive
is or becomes the Beneficial Owner of up to three percent of the Voting Stock of
any corporation subject to the periodic reporting requirements of the Exchange
Act. Notwithstanding the above, the Executive may serve as an officer, director,
agent, employee or consultant to a Competing Business whose business is
diversified and which is, as to the part of its business to which the Executive
is providing services, not a Competing Business; provided, that prior to
accepting employment or providing services to such a Competing Business, the
Executive and the Competing Business will provide written assurances
satisfactory to the Company that the Executive will not render services directly
or indirectly for a 12-month period to any portion of the Competing Business
which competes directly or indirectly with the Company.
(b) In addition to the other obligations agreed to by the
Executive in this Agreement, the Executive agrees that for 12 months following
the Date of Termination hereof, he shall not directly or indirectly, (i) hire or
attempt to hire any employee of the Company, or induce, entice, encourage or
solicit any employee of the Company to leave his or her employment, or (ii)
contact, communicate or solicit any distributor, customer or acquisition or
business prospect or business opportunity of the Company for the purpose of
causing them to
18
terminate or alter or amend their business relationship with the Company to the
Company's detriment.
Notwithstanding the foregoing, if the Company fails to make the
payments to the Executive set forth in Section 6.3 or 6.4 hereof, then the terms
of this Section 12.1 will not be effective from the date of such nonpayment;
provided, that if the Company subsequently makes any such payments, this Section
12.1 will become effective in accordance with its terms for so long as the
Company continues to make the payments required by Section 6.3 or 6.4 hereof.
12.2 (a) The Executive hereby specifically acknowledges and
agrees that:
(1) The Company expended and will continue to expend
substantial time, money and effort in developing its business;
(2) The Executive will, in the course of his
employment, be personally entrusted with and exposed to
Confidential Information;
(3) The Company, during the Employment Period and
thereafter, will be engaged in its highly competitive business
in which many firms compete;
(4) The Executive could, after having access to the
Company's financial records, contracts, and other Confidential
Information and know-how and, after receiving training by and
experience with the Company, become a competitor;
(5) The Company will suffer great loss and
irreparable harm if the Executive terminates his employment
and enters, directly or indirectly, into competition with the
Company;
(6) The temporal and other restrictions contained in
this Section 12 are in all respects reasonable and necessary
to protect the business goodwill, trade secrets, prospects and
other reasonable business interests of the Company;
(7) The enforcement of this Agreement in general, and
of this Section 12 in particular, will not work an undue or
unfair hardship on the Executive or otherwise be oppressive to
him; it being specifically acknowledged and agreed by the
Executive that he has activities and other business interests
and opportunities which will provide him adequate means of
support if the provisions of this Section 12 are enforced
after the Termination Date; and
(8) The enforcement of this Agreement in general, and
of this Section 12 in particular, will neither deprive the
public of needed goods or services nor otherwise be injurious
to the public.
(b) The Executive agrees that if an arbitrator (pursuant
to Section 13.13 hereof) or a court of competent jurisdiction
determines that the length of time or any other restriction, or portion
thereof, set forth in this Section 12 is overly restrictive and
unenforceable, the arbitrator or court shall reduce or modify such
restrictions to those
19
which it deems reasonable and enforceable under the circumstances, and
as so reduced or modified, the parties hereto agree that the
restrictions of this Section 12 shall remain in full force and effect.
The Executive further agrees that if an arbitrator or court of
competent jurisdiction determines that any provision of this Section 12
is invalid or against public policy, the remaining provisions of this
Section 12 and the remainder of this Agreement shall not be affected
thereby, and shall remain in full force and effect.
(c) In the event of any pending, threatened or actual
breach of any of the covenants or provisions of Sections 8, 9, 10 or 12
hereof, as determined by a court of competent jurisdiction, it is
understood and agreed by the Executive that the remedy at law for a
breach of any of the covenants or provisions of these Sections may be
inadequate and, therefore, the Company shall be entitled to a
restraining order or injunctive relief in addition to any other
remedies at law and in equity, as determined by a court of competent
jurisdiction. Should a court of competent jurisdiction or an arbitrator
(pursuant to Section 13.13 hereof) declare any provision of Sections 8,
9, 10 or 12 hereof to be unenforceable due to an unreasonable
restriction of duration or geographical area, or for any other reason,
such court or arbitrator is hereby granted the consent of each of the
Executive and the Company to reform such provision and/or to grant the
Company any relief, at law or in equity, reasonably necessary to
protect the reasonable business interests of the Company or any of its
Affiliates. The Executive hereby acknowledges and agrees that all of
the covenants and other provisions of Sections 8, 9, 10 or 12 hereof
are reasonable and necessary for the protection of the Company's
reasonable business interests. The Executive hereby agrees that if the
Company prevails in any action, suit or proceeding with respect to any
matter arising out of or in connection with Sections 8, 9, 10 or 12
hereof, the Company shall be entitled to all equitable and legal
remedies, including, but not limited to, injunctive relief and
compensatory damages, as determined by a court of competent
jurisdiction.
(d) It is acknowledged, understood and agreed by and
between the parties hereto that the covenants made by the Executive in
this Section 12 are essential elements of this Agreement and that, but
for the agreement of the Executive to comply with such covenants, the
Company would not have entered into this Agreement.
13. Miscellaneous.
13.1 Notices. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be deemed to have been given when (i) delivered by hand or
sent by facsimile, or (ii) on the third business day following deposit in the
United States mail by registered or certified mail, return receipt requested, to
the addresses as follows (provided that notice of change of address shall be
deemed given only when received):
20
If to the Company to:
Encysive Pharmaceuticals Inc.
0000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
If to the Executive to:
Xxxxx X. Xxxxxxxx
Encysive Pharmaceuticals Inc.
0000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
or to such other names or addresses as the Company or the Executive, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section 13.1.
13.2 Waiver of Breach. The waiver by any party hereto of a breach
of any provision of this Agreement shall neither operate nor be construed as a
waiver of any subsequent breach by any party. Except as expressly provided for
herein, the failure of either party hereto to take any action by reason of any
breach will not deprive such party of the right to take action at any time while
such breach occurs.
13.3 Assignment. This Agreement shall be binding upon and inure to
the benefit of the Company, its successors, legal representatives and assigns,
and upon the Executive, his heirs, executors, administrators, representatives
and assigns; provided, however, the Executive agrees that his rights and
obligations hereunder are personal to him and may not be assigned without the
express written consent of the Company. Any reference to "Company" herein shall
mean the Company as well as any successors thereto.
13.4 Entire Agreement; No Oral Amendments. This Agreement, together
with any exhibit attached hereto and any document, policy, rule or regulation
referred to herein, replaces all previous agreements and discussions relating to
the same or similar subject matter between the Executive and the Company
(including, but not limited to, that certain Offer Letter dated May 9, 2003, as
amended which is hereby terminated), and constitutes the entire agreement
between the Executive and the Company with respect to the subject matter of this
Agreement. This Agreement may not be modified in any respect by any verbal
statement, representation or agreement made by any executive, officer, or
representative of the Company or by any written agreement unless signed by an
officer of the Company who is expressly authorized by the Company to execute
such document.
13.5 Enforceability. If any provision of this Agreement or
application thereof to anyone or under any circumstances shall be determined to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions or applications of this Agreement which can be given
effect without the invalid or unenforceable provision or application.
21
13.6 Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAW.
13.7 Corporate Authority. The Company has all corporate power and
authority necessary to enter into this Agreement and to perform its obligations
hereunder. This Agreement has been duly authorized, executed and delivered by
the Company.
13.8 Defense of Claims. The Executive agrees that, during the
Employment Period and for a period of two (2) years after his Termination Date,
upon request from the Company, he will reasonably cooperate with the Company and
its Affiliates in the defense of any claims or actions that may be made by or
against the Company or any of its Affiliates that affect his prior areas of
responsibility, except if the Executive's reasonable interests are adverse to
the Company or Affiliates in such claim or action. To the extent travel is
required to comply with the requirements of this Section 13.8, the Company
shall, to the extent possible, provide the Executive with notice at least 10
days prior to the date on which such travel would be required. The Company
agrees to promptly pay or reimburse the Executive upon demand for all of his
reasonable travel and other direct expenses incurred, or to be reasonably
incurred, to comply, with his obligations under this Section 13.8.
13.9 Withholdings: Right of Offset. The Company may withhold and
deduct from any benefits and payments made or to be made pursuant to this
Agreement (a) all federal, state, local and other taxes as may be required
pursuant to any law or governmental regulation or ruling, (b) all other employee
deductions made with respect to the Company's employees generally, and (c) any
advances made to the Executive and owed to the Company.
13.10 Nonalienation. The right to receive payments under this
Agreement shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge or encumbrance by the Executive, his dependents or
beneficiaries, or to any other person who is or may become entitled to receive
such payments hereunder. The right to receive payments hereunder shall not be
subject to or liable for the debts, contracts, liabilities, engagements or torts
of any person who is or may become entitled to receive such payments, nor may
the same be subject to attachment or seizure by any creditor of such person
under any circumstances, and any such attempted attachment or seizure shall be
void and of no force and effect.
13.11 Incompetent or Minor Payees. Should the Board determine that
any person to whom any payment is payable under this Agreement has been
determined to be legally incompetent or is a minor, any payment due hereunder
may, notwithstanding any other provision of this Agreement to the contrary, be
made in any one or more of the following ways: (a) directly to such minor or
person; (b) to the legal guardian or other duly appointed personal
representative of the person or estate of such minor or person; or (c) to such
adult or adults as have, in the good faith knowledge of the Board, assumed
custody and support of such minor or person; and any payment so made shall
constitute full and complete discharge of any liability under this Agreement in
respect to the amount paid.
13.12 Title and Headings; Construction. Titles and headings to
Sections hereof are for the purpose of reference only and shall in no way limit,
define or otherwise affect the
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provisions hereof. Any and all Exhibits referred to in this Agreement are, by
such reference, incorporated herein and made a part hereof for all purposes. The
words "herein", "hereof", "hereunder" and other compounds of the word "here"
shall refer to the entire Agreement and not to any particular provision hereof.
13.13 Arbitration.
(a) If any dispute or controversy arises between the
Executive and the Company relating to (1) this Agreement in any way or
arising out of the parties' respective rights or obligations under this
Agreement on (2) the employment of the Executive or the termination of
such employment, then either party may submit the dispute or
controversy to arbitration under the then-current Commercial
Arbitration Rules (the "Rules") of the American Arbitration Association
(the "AAA"). Any arbitration hereunder shall be conducted before a
panel of three arbitrators unless the parties mutually agree that the
arbitration shall be conducted before a single arbitrator. The
arbitrators shall be selected (from lists provided by the AAA) through
mutual agreement of the parties, if possible. If the parties fail to
reach agreement upon appointment of arbitrators within twenty (20) days
following receipt by one party of the other party's notice of desire to
arbitrate, then within five (5) days following the end of such 20-day
period, each party shall select one arbitrator who, in turn, shall
within five (5) days jointly select the third arbitrator to comprise
the arbitration panel hereunder. The site for any arbitration hereunder
shall be in Xxxxxx County, Texas, unless otherwise mutually agreed by
the parties, and the parties hereby waive any objection that the forum
is inconvenient.
(b) The party submitting any matter to arbitration shall
do so in accordance with the Rules. Notice to the other party shall
state the question or questions to be submitted for decision or award
by arbitration. Notwithstanding any provision of this Section 13.13,
the Executive shall be entitled to seek specific performance of the
Executive's right to be paid during the pendency of any dispute or
controversy arising under this Agreement. In order to prevent
irreparable harm, the arbitrator may grant temporary or permanent
injunctive or other equitable relief for the protection of property
rights.
(c) The arbitrator shall set the date, time and place for
each hearing, and shall give the parties advance written notice in
accordance with the Rules. Any party may be represented by counsel or
other authorized representative at any hearing. The arbitration shall
be governed by the Federal Arbitration Act, 9 U.S.C. Sections 1 et.
seq. (or its successor). The arbitrator shall apply the substantive law
and the law of remedies, if applicable) of the State of Texas to the
claims asserted to the extent that the arbitrator determines that
federal law is not controlling.
(d) (1) Any award of an arbitrator shall be final
and binding upon the parties to such arbitration, and each party shall
immediately make such changes in its conduct or provide such monetary
payment or other relief as such award requires. The parties agree that
the award of the arbitrator shall be final and binding and shall be
subject only to the judicial review permitted by the Federal
Arbitration Act.
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(2) The parties hereto agree that the
arbitration award may he entered with any court having
jurisdiction and the award may then be enforced as between the
parties, without further evidentiary proceedings, the same as
if entered by the court at the conclusion of a judicial
proceeding in which no appeal was taken. The Company and the
Executive hereby agree that a judgment upon any award rendered
by an arbitrator may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
(e) Each party shall pay any monetary amount required by
the arbitrator's award, and the fees, costs and expenses for its own
counsel, witnesses and exhibits, unless otherwise determined by the
arbitrator in the award. The compensation and costs and expenses
assessed by the arbitrator(s) and the AAA shall be split evenly between
the parties unless otherwise determined by the arbitrator in the award.
If court proceedings to stay litigation or compel arbitration are
necessary, the party who opposes such proceedings to stay litigation or
compel arbitration, if such party is unsuccessful, shall pay all
associated costs, expenses, and attorney's fees which are reasonably
incurred by the other party as determined by the arbitrator.
13.14 Survival of Certain Provisions. Wherever appropriate to the
intention of the parties hereto, the respective rights and obligations of said
parties, including, but not limited to, the rights and obligations set forth in
Sections 8 through 12 hereof and this Section 13, shall survive any termination
or expiration of this Agreement.
13.15 No Strict Construction. The Executive represents to the
Company that he is knowledgeable and sophisticated as to business matters,
including the subject matter of this Agreement, that he has read the Agreement
and that he understands its terms and conditions. The parties hereto agree that
the language used in this Agreement shall be deemed to be the language chosen by
them to express their mutual intent, and no rule of strict construction shall be
applied against either party hereto. The Executive acknowledges that he has had
the opportunity to consult with counsel of his choice, independent of Employer's
counsel, regarding the terms and conditions of this Agreement and has done so to
the extent that he, in his discretion, deemed to be appropriate.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first written above.
Encysive Pharmaceuticals Inc.
By: /s/ Xxxxx X. Given, M.D.
-------------------------------------
Xxxxx X. Given, M.D.,
President and Chief Executive Officer
Executive:
By: Xxxxx X. Xxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxx
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EXHIBIT A
RELOCATION POLICY FOR SENIOR EXECUTIVES
SALE OF PRIMARY RESIDENCE
1. Transportation of Household Goods
a. Transportation and lodging of spouse and children
(one time) from previous to new residence.
b. Meals during relocation
c. Shipping of two automobiles
2. Temporary Living up to 60 days for the employee
COSTS RELATED TO SALE OF HOME
1. Up to 5% of seller's portion of Realtor commission
2. Inspections, if required
3. Document and transfer fees
COSTS RELATED TO PURCHASE OF NEW HOME
(Only applicable if a previous home is sold)
1. Origination fee up to 1%
2. Legal fees
3. Document and transfer fees
4. Survey and inspections
COSTS NOT PAID FOR BY THE COMPANY
1. Interest in any form (i.e. points)
2. Taxes
3. Insurance of any kind
4. Prepayment penalties
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ADDITIONAL RELOCATION BENEFITS PER OFFER LETTER
1. Reimbursement for one additional house hunting trip for
Executive and spouse (airfare, hotel, meals, rental car).
2. All reimbursed expenses which are taxable will be grossed up
for federal income taxes due thereon.
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