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Exhibit 10.21
K.TULLY and D. FARRAR CIC AGREEMENT
This Agreement dated as of March 14, 2007, is entered into
by and between
("Employee") and Insmed Incorporated, a Virginia corporation
("Insmed").
Employee and Insmed hereby agree to the following terms and
conditions:
1. Purpose of Agreement. The purpose of this Agreement is
to provide that, in the event of a "Change in Control," Employee
may become entitled to receive additional benefits in the event of
his termination. It is believed that the existence of these
potential benefits will benefit Insmed by discouraging turnover and
causing Employee to be more able to respond to the possibility of a
Change in Control without being influenced by the potential effect
of a Change in Control on his job security.
2. Change in Control. As used in this Agreement, "Change
in Control" means an event or occurrence set forth in any one or
more of subsections (a) through (d) below (including an
event or occurrence that constitutes a Change in Control under one
of such subsections but is specifically exempted from another such
subsection):
(a) the acquisition by an individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person")
of beneficial ownership of any capital stock of Insmed if, after
such acquisition, such Person beneficially owns (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) 40% or more of
either (x) the then-outstanding shares of common stock of
Insmed (the "Outstanding Company Common Stock") or (y) the
combined voting power of the then-outstanding securities of Insmed
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (a), the following acquisitions
shall not constitute a Change in Control: (i) any acquisition
directly from Insmed (excluding an acquisition pursuant to the
exercise, conversion or exchange of any security exercisable for,
convertible into or exchangeable for common stock or voting
securities of Insmed, unless the Person exercising, converting or
exchanging such security acquired such security directly from
Insmed or an underwriter or agent of Insmed), (ii) any
acquisition by Insmed, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by Insmed
or any corporation controlled by Insmed, or (iv) any
acquisition by any corporation pursuant to a transaction which
complies with clauses (i) and (ii) of subsection
(c) of this Section 2; or
(b) such time as the Continuing Directors (as defined below) do
not constitute a majority of the Board of Directors of Insmed (the
"Board") (or, if applicable, the Board of Directors of a successor
corporation to Insmed), where the term "Continuing Director" means
at any date a member of the Board (i) who was a member of the
Board on the date of the execution of this Agreement or
(ii) who was nominated or elected subsequent to such date by
at least a majority of the directors who were Continuing Directors
at the time of such nomination or election or whose election to the
Board was recommended or endorsed by at least a majority of the
directors who were Continuing Directors at the time of such
nomination or election; provided, however, that there shall be
excluded from this clause (ii) any individual whose
initial
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assumption of office occurred as a result of an
actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation
of proxies or consents, by or on behalf of a person other than the
Board; or
(c) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving Insmed or a
sale or other disposition of all or substantially all of the assets
of Insmed in one or a series of transactions (a "Business
Combination"), unless, immediately following such Business
Combination, each of the following two conditions is satisfied:
(i) all or substantially all of the individuals and entities
who were the beneficial owners of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or
indirectly, more than 60% of the then-outstanding shares of common
stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such
Business Combination (which shall include, without limitation, a
corporation which as a result of such transaction owns Insmed or
substantially all of the Insmed’s assets either directly or
through one or more subsidiaries) (such resulting or acquiring
corporation is referred to herein as the "Acquiring Corporation")
in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities,
respectively; and (ii) no Person (excluding the Acquiring
Corporation or any employee benefit plan (or related trust)
maintained or sponsored by Insmed or by the Acquiring Corporation)
beneficially owns, directly or indirectly, 40% or more of the then
outstanding shares of common stock of the Acquiring Corporation, or
of the combined voting power of the then-outstanding securities of
such corporation entitled to vote generally in the election of
directors (except to the extent that such ownership existed prior
to the Business Combination); or
(d) approval by the stockholders of Insmed of a complete
liquidation or dissolution of Insmed.
3. Rights and Obligations Prior to a Change in Control .
Prior to a Change in Control, the rights and obligations of
Employee with respect to his employment by Insmed shall be whatever
rights and obligations are negotiated between Insmed and Employee
from time to time. The existence of this Agreement, which deals
with such rights and obligations subsequent to a Change in Control,
shall not be treated as raising any inference with respect to what
rights and obligations exist prior to a Change in Control unless
specifically stated elsewhere in this Agreement.
4. Effect of a Change in Control . In the event of a
Change in Control and Employee’s employment is terminated
pursuant to a "Qualifying Termination" (as set forth below) on or
prior to the date that is within twelve (12) months of the
effective date of the Change in Control (the "Change in Control
Date"), Employee shall be entitled to the severance payments and
other benefits set forth in this Agreement.
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5. Qualifying Termination . If, subsequent
to a Change in Control, Employee’s employment terminates
within one year of the Change in Control Date, such termination
shall be considered a Qualifying Termination unless:
(a) Employee voluntarily terminates employment. However, it
shall not be considered a voluntary termination of employment if,
following the Change in Control, Employee’s compensation or
duties are changed in any material respect from what they were
immediately prior to a Change in Control, and subsequent to such
change Employee elects to terminate employment. A "change in any
material respect" shall encompass (i) any significant
diminution in Employee’s position, authority, duties,
responsibilities, or reporting relationship, (ii) any material
reduction in Employee’s then compensation and/or benefits,
unless such reduction is an across-the-board reduction of the
compensation and/or benefits of all similarly situated executives
, (iii) any change in Employee’s job location to
a site more than 50 miles away from his place of employment prior
to the Change in Control or (iv) the failure of Insmed to
obtain the agreement of any successor to Insmed to assure and agree
to perform this Agreement.
(b) The termination is on account of Employee’s death or
disability. As used herein, "disability" refers to an illness or
accident that causes Employee to be unable to perform the duties of
his job for at least six consecutive months, as determined by a
physician mutually acceptable to Insmed and Employee.
(c) Employee is involuntarily terminated for "Cause", or it is
determined that the facts conclusively demonstrate that Employee
would have been terminated had any of the events set forth in
clauses (i) through (iii) below had been known at the
date of termination. For this purpose "Cause" means:
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(i) Employee’s willful and continued failure to
substantially perform his reasonable assigned duties (other than
any such failure resulting from incapacity due to physical or
mental illness or any failure after Employee gives notice of
termination for any of the reasons set forth in Section 5(a)),
which failure is not cured within 60 days after a written demand
for substantial performance is received by Employee from the Chief
Executive Officer which specifically identifies the manner in which
the Chief Executive Officer believes Employee has not substantially
performed his duties;
(ii) Employee’s willful engagement in illegal conduct or
gross misconduct that is materially and demonstrably injurious to
Insmed; or
(iii) Employee’s conviction of a felony involving a crime
of moral turpitude.
For purposes of this Section 5(c), no act or failure to act
by Employee shall be considered "willful" unless it is done, or
omitted to be done, in bad faith and without reasonable belief that
Employee’s action or omission was in the best interests of
Insmed.
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6. Constructive Qualifying Termination .
If Employee’s employment terminates as a result of any change
described in Section 5(a) of this Agreement or as a result of
a termination by Insmed without Cause and a Change in Control
occurs within six (6) months thereafter, subject to the
execution of a release of employment claims in a form acceptable to
Insmed and the expiration of the statutory revocation period,
Employee shall be entitled to the compensation, payments and other
benefits that Employee would have received if such termination had
occurred after a Change in Control; provided, however, that
Employee’s option exercise period would not be extended to
the extent such options had expired prior to a Change in
Control.
7. Date and Notice of Termination . Any termination of
Employee’s employment by Insmed or by Employee shall be
communicated by a written notice of termination to the other party
(the "Notice of Termination"). Where applicable, the Notice of
Termination shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed.
8. Severance Payments .
(a) If Employee is terminated as a result of a Qualifying
Termination, subject to the execution of a release of employment
claims in a form acceptable to Insmed and the expiration of the
statutory revocation period, Insmed shall pay Employee within 30
days of said Qualifying Termination a cash lump sum equal 1.0 times
Employee’s "Compensation" as a severance payment ("Severance
Payment"). For this purpose, "Compensation" means the sum of
Employee’s highest annual salary rate (i.e. Employee’s
highest rate of annual salary while an employee of Insmed) plus a
bonus calculated by multiplying Employee’s annual salary by
the maximum bonus potential for the year containing the Change in
Control Date, and
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