Exhibit 10.3
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT dated as of September 18, 2006
is made by and between GenVec, Inc. (the "Company"), and Douglas J.
Swirsky (the "Executive").
WHEREAS the Company considers it essential to
its best interests and to the best interests of its stockholders to
foster the continuous employment of its key management personnel;
and
WHEREAS the Company recognizes that the
possibility of a Change in Control (as defined in Section 9.6
hereof) exists, as in the case of any publicly-held corporation,
and that such possibility, and the uncertainty and questions which
it may raise among management, may result in the departure or
distraction of management personnel to the detriment of the Company
and its stockholders; and
WHEREAS the Company has determined that
appropriate steps should be taken to reinforce and encourage the
continued attention and dedication of members of the Company's
management, including the Executive, to their assigned duties
without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in
Control;
NOW, THEREFORE, in consideration of the
premises and the mutual covenants herein contained, the Company and
the Executive hereby agree as follows:
1. Defined
Terms . Definitions of certain capitalized terms used in this
Agreement are provided in Section 9 and elsewhere in this
Agreement.
2. Term of
Agreement . This Agreement shall become effective on the date
hereof and shall remain in effect indefinitely thereafter;
provided, however, that (a) except as provided in clause (b)
of this sentence, either the Company or the Executive may terminate
this Agreement by giving the other party at least one (1) year
advance written notice of such termination, and (b) if a
Change in Control shall have occurred during the term of this
Agreement, this Agreement may not be terminated until all
obligations of either party hereto have been performed in full and
the Coverage Period has expired without the occurrence of a
Triggering Event. Notwithstanding the foregoing, this Agreement
shall terminate upon the Executive's Disability or death, except as
to obligations of the Company hereunder arising from a Change in
Control and/or a termination of the Executive's employment that, in
either case, occurred prior to his Disability or death.
3. Agreement of
the Company . In order to induce the Executive to remain in the
employ of the Company, the Company agrees, under the terms and
conditions set forth herein, that, upon the occurrence of both a
Change in Control and a Triggering Event during the term of this
Agreement, the Company shall provide to the Executive the benefits
described in this Section 3 (the "Severance Benefits").
3.1 Severance
Payment . In lieu of any further salary payments to the
Executive for periods subsequent to the Date of Termination, the
Company shall pay to the Executive a lump sum severance payment, in
cash, without discount, equal to the sum of (i) the product of (x)
18 months and (y) the Executive's Monthly Base Salary and (ii) the
Executive’s Average Bonus divided by 12 and multiplied by 18
months.
3.2 Continued
Benefits . For an 18 month period after the Date of Termination
(the "Benefits Period"), the Company shall provide the Executive
with life insurance and health insurance (together, “Welfare
Benefits”) substantially similar in all respects to those
which the Executive was receiving immediately prior to the Notice
of Termination. During the Benefits Period, the Executive shall be
entitled to elect to change his level of coverage and/or his choice
of coverage options (such as the Executive only or family medical
coverage) with respect to the Welfare Benefits to be provided by
the Company to the Executive
to the same extent that actively employed
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 officer of the Company by
reason of making the same changes in his level of coverage or
coverage options. In the event that the Executive becomes employed
by a new employer and is eligible to receive health insurance
and/or other welfare benefits (“New Coverage”), the
Welfare Benefits coverage provided under this Section 3.2 shall be
secondary to such New Coverage.
3.3 Accrued
Compensation and Other Benefits . To the extent
not theretofore paid or provided, the Company shall timely pay or
provide to Executive his Accrued Compensation and any Other
Benefits to which Executive is entitled.
3.4 Bonus
.
(a) Termination Year Bonus . The
Company shall pay to the Executive a lump sum cash payment equal
to: (x) the product of (i) the Executive's highest annual base
salary in effect during the one (1) year period preceding the
Executive's Date of Termination divided by twelve (12) and (ii) the
Executive's Target Percentage (determined as of the Date of
Termination), multiplied by (y) the number of months (including
fractions thereof) elapsed from the first day of the Termination
Year to the Date of Termination.
(b) Preceding Fiscal Year Bonus . To
the extent that as of the Date of Termination the Company has not
yet determined and paid to the Executive any incentive award to
which the Executive is entitled under any Company incentive plan
with respect to the fiscal year preceding the Termination Year, the
Company shall also pay to the Executive a lump sum cash payment at
a minimum equal to the product of (x) the Executive's highest
annual base salary in effect during such fiscal year and (y) the
Executive's highest Target Percentage in effect during such fiscal
year.
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Gross-Up Payment; Certain Limitations on
Payments and Benefits.
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In the event that (a) the Executive
becomes entitled to the Severance Benefits or any other benefits or
payments in connection with a Change in Control or the termination
of the Executive's employment, whether pursuant to the terms of
this Agreement or otherwise (collectively, but excluding the amount
of any Gross-Up Payment under this Section 4, the "Total
Benefits"), and (b) any of the Total Benefits will be subject
to the Excise Tax, then the Total Benefits shall be reduced to the
extent necessary so that no portion of the Total Benefits is
subject to the Excise Tax; provided, however that if the amount of
such reduction would exceed $10,000, no such reduction shall be
made and the Company shall instead pay to the Executive an
additional amount (the "Gross-Up Payment") equal to the Excise Tax
on the Total Benefits plus an amount equal to any federal income
taxes and FICA and Medicare withholding taxes payable upon such
Gross-Up Payment. For purposes of determining the amount of such
Excise Tax, the amount of the Total Benefits that shall be treated
as subject to the Excise Tax shall be equal to (i) the Total
Benefits, minus (ii) the amount of such Total Benefits that, in the
opinion of tax counsel selected by the Company and reasonably
acceptable to the Executive ("Tax Counsel"), are not excess
parachute payments (within the meaning of Section 280G(b)(1)
of the Code).
5. Timing of
Payments . The payments provided for in Sections 3.1 and 4
shall be made on the Date of Termination; provided, however, that
if the amounts of such payments cannot be finally determined on or
before such day, the Company shall pay to the Executive on such day
an estimate, as determined in good faith by the Company, of the
minimum amount of such payments and shall pay the remainder of such
payments (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code from the Date of Termination to the
payment of such remainder) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day
after the Date of Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Company
to the Executive, payable on the fifth (5th) business day after
demand by the Company (together with interest at the rate provided
in Section 1274(b)(2)(B) of the Code from the Date of Termination
to the repayment of such excess).
6. Reimbursement
of Legal Costs . The Company shall pay to the Executive all
reasonable legal fees and expenses incurred by the Executive as a
result of a bona fide dispute regarding the application of any
provision of this Agreement including all such fees and expenses,
if any, incurred (a) in disputing any Notice of Termination under
Section 7.1 hereof, (b) in seeking to obtain or enforce
any right or benefit provided by this Agreement or (c) in
connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code to
any payment or benefit provided hereunder. Such payments shall be
made within five (5) business days after delivery of the
Executive's respective written requests for payment accompanied
with such evidence of fees and expenses incurred as the Company
reasonably may require.
7. Termination
Procedures .
7.1 Notice of
Termination . After a Change in Control, any termination of the
Executive's employment (other than by reason of death) must be
preceded by a written Notice of Termination from the terminating
party to the other party hereto in accordance with Section 8.5
hereof. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall (a) specify the date of termination
(the "Date of Termination") which shall not be more than sixty (60)
days from the date such Notice of Termination is given,
(b) indicate the notifying party's opinion regarding the
specific provisions of this Agreement that will apply upon such
termination and (c) set forth in reasonable detail the facts
and circumstances claimed to provide a basis for the application of
the provisions indicated. Termination of the Executive's employment
shall occur on the specified Date of Termination even if there is a
dispute between the parties relating to the provisions of this
Agreement applicable to such termination.
7.2 Dispute
Concerning Applicable Termination Provisions . If within thirty
(30) days of receiving the Notice of Termination the party
receiving such notice notifies the other party that a dispute
exists concerning the provisions of this Agreement that apply to
such termination, the dispute shall be resolved either by mutual
written agreement of the parties or by expedited commercial
arbitration under the rules of the American Arbitration
Association. The parties shall pursue the resolution of such
dispute with reasonable diligence. Within five (5) days of such a
resolution, any party owing any payments pursuant to the provisions
of this Agreement shall make all such payments together with
interest accrued thereon at the rate provided in
Section 1274(b)(2)(B) of the Code.
8.
Miscellaneous .
8.1 No
Mitigation . The Company agrees that, if the Executive's
employment by the Company is terminated in a manner that results in
the payment of Severance Benefits hereunder, the Executive shall
not be required to seek other employment or to attempt in any way
to reduce any amounts payable to the Executive by the Company
pursuant to this Agreement. Further, the amount of any payment or
benefit provided for under this Agreement shall not be reduced by
any compensation earned by the Executive as the result of
employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by the Executive to the
Company, or otherwise.
8.2 Successors
. In addition to any obligations imposed by law upon any successor
to the Company, the Company shall be obligated to require any
successor (whether direct or indirect, by purchase, merger,
consolidation, operation of law, or otherwise) to all or
substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required
to
