AMENDED AND RESTATED EXECUTIVE
EMPLOYMENT AGREEMENT
This AMENDED AND
RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (the “
Agreement ”) is effective as of June 16, 2008
(the “ Effective Date ”), between Clinical Data,
Inc. a Delaware corporation (the “ Company ”),
and Carol Reed, M.D. (the “ Executive
”).
WHEREAS, the
Executive is currently employed as the Executive Vice President and
Chief Medical Officer of the Company pursuant to an Executive
Employment Agreement effective as of May 12, 2006, between
Executive and the Company (the “Prior
Agreement”);
WHEREAS, the
Company has offered to continue employing the Executive on the
terms set forth below; and
WHEREAS, the
Executive has agreed to continued employment with the Company on
the terms as set forth below;
NOW THEREFORE, in
consideration of the foregoing, of the mutual promises contained
herein and of other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
1.
EMPLOYMENT TERM . The Executive’s term of
employment under this Agreement shall be for an initial term
commencing on the Effective Date and shall end on June 30,
2009. The term of this Agreement shall be automatically extended
thereafter for successive one (1) year periods unless, at
least ninety (90) days prior to the end of the initial term of
this Agreement or the then current succeeding one-year extended
term of this Agreement, the Company or Executive has notified the
other that the term hereunder shall terminate upon its expiration
date. The initial term of this Agreement, as it may be extended
from year to year thereafter, is herein referred to as the “
Employment Term .” In all events hereunder,
Executive’s employment is subject to earlier termination
pursuant to Section 7 hereof, and upon such earlier
termination the Employment Term shall be deemed to have
ended.
(a) Except as
provided in Section 2(b) below, the Executive shall serve as the
Company’s Executive Vice President and Chief Medical Officer
during the Employment Term. As such, the Executive shall have such
duties, authorities and responsibilities commensurate with the
duties, authorities and responsibilities of persons in similar
capacities in similarly sized companies and such other duties and
responsibilities as the Company’s Board of Directors (the
“ Board ”) shall designate that are consistent
with the Executive’s position.
(b) During
the Employment Term, the Executive shall use her best efforts to
perform faithfully and efficiently the duties and responsibilities
assigned to the Executive hereunder and devote all of the
Executive’s business time (excluding periods of vacation and
other approved leaves of absence) to the performance of the
Executive’s duties with the Company, provided the foregoing
shall not prevent the Executive from participating in charitable,
civic, educational, professional, community or industry affairs or,
with prior written approval of the Board, serving
on the board of
directors or advisory boards of other companies. The Executive
shall not manage the Executive’s and the Executive’s
family’s personal investments in a manner that creates a
potential business conflict or the appearance thereof. If at any
time service on any board of directors or advisory board would, in
the good faith judgment of the Board, conflict with the
Executive’s fiduciary duty to the Company or create any
appearance thereof, the Executive shall promptly resign from such
other board of directors or advisory board after written notice of
the conflict is received from the Board.
(c) The
Executive further agrees to serve without additional compensation
as an officer and/or director of any of the Company’s
subsidiaries and agrees that any amounts received from any such
corporation may be offset against the amounts due hereunder. In
addition, it is agreed that the Company may assign the Executive to
one of its subsidiaries for payroll purposes, but such assignment
shall not relieve the Company of its obligations
hereunder.
3.
BASE SALARY . The Company agrees to pay the Executive a
base salary (the “ Base Salary ”) at an annual
rate of $300,000, payable in accordance with the regular payroll
practices of the Company, but not less frequently than monthly. The
Executive’s Base Salary shall be subject to review by the
Board (or a committee thereof) and may be increased, but not
decreased, from time to time by the Board. The base salary as
determined herein from time to time shall constitute “Base
Salary” for purposes of this Agreement.
4.
BONUSES . The Executive shall be eligible to participate
in the Company’s bonus and other incentive compensation plans
and programs for the Company’s senior executives at a level
commensurate with her position for the fiscal year during the
Employment Term. The Executive shall have the opportunity to earn
an annual target bonus measured against performance criteria to be
determined by the Board (or a committee thereof) of one hundred
percent (100%) of Base Salary.
5.
EQUITY AWARDS . The Executive shall be subject to, and
shall comply with, the stock ownership guidelines of the Company as
may be in effect from time to time. If there is a Change in Control
(as defined in the attached Appendix C) or if the
Executive’s employment is terminated by the Company without
Cause (as defined in Section 7(c)), or by the Executive for
Good Reason (as defined in Section 7(e)), then all outstanding
unvested equity awards granted to the Executive listed on
Appendix D hereto shall become fully vested and the time
period that Executive may have to exercise each such option grant
shall be extended to the shorter of (i) three (3) years,
or (ii) the remaining term of the options (the “Extended
Exercise Period”) . The parties agree that the attached
Appendix D may be modified and updated upon a vote of the
Board of Directors, only in order for the Board to add to
Appendix D certain future awards that the Board agrees shall
also qualify for acceleration and the Extended Exercise Period.
Upon such a vote of the Board, the parties shall attach a revised
Appendix D to this Agreement, which shall include the
additional option grant(s) that the Board has expressly agreed
shall qualify for acceleration and the Extended Exercise Period,
and this Agreement shall not be deemed amended or modified in any
other manner as a result.
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(a)
BENEFIT PLANS . The Executive shall be entitled to
participate in all employee benefit plans of the Company including,
but not limited to, 401(k), profit sharing, medical coverage,
education, or other retirement or welfare benefits that the Company
has adopted or may adopt, maintain or contribute to for the benefit
of its senior executives at a level commensurate with the
Executive’s positions, subject to satisfying the applicable
eligibility requirements.
(b)
VACATION . The Executive shall be entitled to four
(4) weeks of paid vacation per year, plus any amounts (up to a
maximum of three (3) weeks) rolled over from previous years.
Vacation may be taken at such times as the Executive elects with
due regard to the needs of the Company.
(c)
BUSINESS AND ENTERTAINMENT EXPENSES . Upon presentation of
appropriate documentation, the Executive shall be reimbursed in
accordance with the Company’s expense reimbursement policy
for all reasonable and necessary business and entertainment
expenses incurred in connection with the performance of the
Executive’s duties hereunder.
(d) LONG
TERM DISABLITY INSURANCE . The Company shall procure and
maintain a long-term disability insurance policy with reasonable
coverages, which shall include the payment of benefits equal to at
least 60% of the Base Salary during the disability coverage period,
and the Company shall pay the premiums or a portion thereof (as
specified hereafter) for such disability insurance policy up to the
cost charged by the insurer to insure a healthy female non-smoker
on Executive’s age. Executive shall be responsible for all
taxes resulting from the maintenance of this policy by the
Company.
(e)
INDEMNIFICATION . The Company shall indemnify the Executive
to the same extent that its officers, directors and employees are
entitled to indemnification pursuant to the Company’s
Certificate of Incorporation and Bylaws for any acts or omissions
by reason of being an officer or employee of the Company as of the
Effective Date.
(f)
CERTAIN AMENDMENTS . Nothing herein shall be construed to
prevent the Company from amending, altering, eliminating or
reducing any plans, benefits or programs so long as the Executive
continues to receive compensation and benefits consistent with
Sections 3 through 6 hereof.
7.
TERMINATION . The Executive’s employment and the
Employment Term shall terminate on the first of the following to
occur:
(a)
DISABILITY . Upon written notice by the Company to the
Executive of termination due to Disability, while the Executive
remains Disabled. For purposes of this Agreement, “
Disability ” shall be deemed the reason for the
termination by the Company of the Executive’s employment, if,
as a result of the Executive incapacity due to physical or mental
illness, the Executive shall have been absent from fully performing
her duties with the Company for a cumulative period of three
(3) months, the Company shall have provided a notice of
termination under this Section 7(a), and, within thirty days
after such notice being given, the Executive shall not have
returned to the full performance of her duties
hereunder.
(b)
DEATH . Automatically on the date of death of the
Executive.
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(c)
CAUSE . Immediately upon written notice by the Company to
the Executive of a termination for Cause. “ Cause
” shall mean (i) the willful failure of the Executive to
render services to the Company in accordance with her assigned
duties consistent with this Agreement, and such failure continues
for a period of more than 30 days after written notice has
been provided to the Executive by the Board which itemizes the
reasons for such failure of performance; (ii) reckless
misconduct, bad faith or gross negligence of the Executive in
connection with the performance of her assigned duties or breach of
the material terms of this Agreement which results in material
loss, damage or injury to the Company or materially and adversely
affects the business activities, reputation, goodwill or image of
the Company; (iii) the conviction of the Executive of any
felony or a crime of moral turpitude, either in connection with the
performance of her obligations to the Company or which adversely
affects the Executive’s ability to perform such obligations,
or which adversely affects the business activities, reputation,
goodwill or image of the Company; (iv) dishonesty or breach of
fiduciary duty, which results in material loss, damage or injury to
the Company or materially and adversely affects the business
activities, reputation, goodwill or image of the Company;
(v) the commission by the Executive of an act of fraud,
embezzlement or deliberate disregard of the rules or policies of
the Company which results in material loss, damage or injury to the
Company or materially and adversely affects the business
activities, reputation, goodwill or image of the Company; or
(vi) the unauthorized and intentional disclosure by the
Executive of any trade secret or confidential information of the
Company or any of its clients or customers, which results in
material damage or injury to the Company, or materially and
adversely affects the business activities, reputation, goodwill or
image of the Company or its clients or customers.
(d)
WITHOUT CAUSE . Upon written notice by the Company to the
Executive of an involuntary termination without Cause and other
than due to death or Disability.
(e) GOOD
REASON . Upon written notice by the Executive to the Company of
a termination for Good Reason, unless the reasons for any proposed
termination for Good Reason are remedied in all material respects
by the Company within 30 days following written notification
by the Executive to the Company, that the Executive intends to
terminate the Executive’s employment hereunder for one of the
reasons set forth below. “ Good Reason ” shall
mean, without the Executive’s express written consent, the
occurrence of any of the following events:
(1) During
the Employment Term,
(A) an
adverse change in the Executive’s position as Senior Vice
President and Chief Medical Officer as a result of a material
diminution in the Executive’s duties or responsibilities or
the assignment to the Executive of any duties or responsibilities
that are inconsistent in any material respect with the
Executive’s position, authority, duties or responsibilities
as contemplated by this Agreement; provided, however, that
“Good Reason” shall not exist under this
Section 7(e)(1) solely because (i) the Company’s
stock is no longer publicly traded on an established securities
exchange or (ii) the Company has restructured, sold or
spun-off any of its businesses, products or services;
(B) any
material breach of this Agreement by the Company that is adverse to
the Executive;
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(C) the
failure of the Company to obtain an agreement from any successor to
all or substantially all of the assets or business of the Company
to assume and agree to perform this Agreement within fifteen
(15) days after a merger, consolidation, sale or similar
transaction; or
(D) the
Executive’s termination of employment at any time during the
thirty-day period beginning on the last day of the Employment Term,
as determined solely for this purpose under Section 1,
following the Company’s notice of nonrenewal.
(2) Notwithstanding
the foregoing, (i) a suspension of the Executive’s title
and authority while on administrative leave due to a reasonable
belief that the Executive has engaged in misconduct, whether or not
the suspected misconduct constitutes Cause for employment
termination, shall not be considered “Good Reason”,
(ii) an event shall not be considered Good Reason if the
Executive fails to deliver notice of termination for Good Reason
specifying such event in detail within 90 days of her actual
knowledge of such event, and (iii) changes to compensation and
benefit plans not specifically targeted to the Executive shall not
be considered Good Reason.
(f)
WITHOUT GOOD REASON . The Executive shall provide forty five
(45) days’ prior written notice to the Company of the
Executive’s intended termination of employment without Good
Reason (the “ Transition Period ”). During the
Transition Period, the Executive shall assist and advise the
Company in any transition of business, customers, prospects,
projects and strategic planning, and the Company shall pay the pro
rata portion of the Executive’s annual salary and benefits
through the end of the Transition Period. The Company may, in its
sole discretion, upon five (5) days prior written notice to
the Executive, make such termination of employment effective
earlier than the Transition Period, but it shall pay the pro rata
portion of the Executive’s salary and benefits through the
earlier of: the balance of the Transition Period, or such time
during the Transition Period as the Executive accepts employment or
a consulting engagement from a third party.
8.
CONSEQUENCES OF TERMINATION . Any termination payments
made and benefits provided under this Agreement to the Executive
shall be in lieu of any termination or severance payments or
benefits for which the Executive may be eligible under any of the
plans, policies or programs of the Company or its affiliates as may
be in effect from time to time. Except to the extent otherwise
provided in this Agreement, all benefits, including, without
limitation, stock options, stock appreciation rights, restricted
stock units and other awards under the Company’s long-term
incentive programs, shall be subject to the terms and conditions of
the plan or arrangement under which such benefits accrue, are
granted or are awarded. Subject to Section 9, the following
amounts and benefits shall be due to the Executive.
(a)
DISABILITY . Upon employment termination due to Disability,
the Company shall pay or provide the Executive (i) any unpaid
Base Salary through the date of termination and any accrued
vacation (up to a maximum of seven (7) weeks); (ii) any
unpaid bonus earned with respect to any fiscal year ending on or
preceding the date of termination; (iii) reimbursement for any
unreimbursed expenses incurred through the date of termination;
(iv) all other payments and benefits to which the Executive
may be entitled under the terms of any applicable compensation
arrangement or benefit, equity or perquisite plan or program or
grant or this Agreement,
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including but
not limited to any applicable insurance benefits (collectively,
“ Accrued Amounts ”). Executive will also be
paid a pro-rata portion of the Executive’s annual bonus for
the performance year in which the Executive’s termination
occurs (the “ Pro Rata Bonus ”), payable in
accordance with the last sentence of Section 8(e) (determined by
multiplying the amount the Executive would have received based upon
actual performance had employment continued through the end of the
performance year by a fraction, the numerator of which is the
number of days during the performance year of termination that the
Executive is employed by the Company and the denominator of which
is 365). Upon such termination, all stock options, stock
appreciation rights and restricted stock awards will fully vest and
become non-forfeitable. Notwithstanding anything contained herein
to the contrary, the Pro Rata Bonus shall not be paid in the event
the Executive voluntarily resigns from employment with the Company
or otherwise voluntarily terminates employment without Good
Reason.
(b)
DEATH . In the event the Employment Term ends on account of
the Executive’s death, the Executive’s estate (or to
the extent a beneficiary has been designated in accordance with a
program, the beneficiary under such program) shall be entitled to
any Accrued Amounts, including but not limited to proceeds from any
Company sponsored life insurance programs. Executive’s estate
(or beneficiary) will also be paid a pro-rata portion of the Pro
Rata Bonus. Upon the Executive’s death, all stock options,
stock appreciation rights and restricted stock awards will fully
vest and become non-forfeitable.
(c)
TERMINATION FOR CAUSE OR WITHOUT GOOD REASON . If the
Executive’s employment should be terminated (i) by the
Company for Cause, or (ii) by the Executive without Good
Reason, the Company shall pay to the Executive any Accrued Amounts
only, and shall not be obligated to make any additional payments to
Executive.
(d)
TERMINATION WITHOUT CAUSE OR FOR GOOD REASON . If the
Executive’s employment by the Company is terminated by the
Company other than for Cause (and not due to Disability or death)
or by the Executive for Good Reason, then the Company shall pay or
provide the Executive with:
(3) subject
to compliance with Section 11(a)-(g) inclusive, continued
payment of the Executive’s Base Salary as in effect
immediately preceding the last day of the Employment Term for a
period of twelve (12) months after the last day of
employment;
(4) continued
participation at the Company’s expense in all medical, dental
and vision plans which cover the Executive (and eligible
dependents) upon the same terms and conditions (except for the
requirements of the Executive’s continued employment) in
effect for active employees of the Company, for a period of twelve
(12) months following the last day of the Employment Term. In
the event the Executive obtains other employment that offers
substantially similar or improved benefits, as to any particular
medical, dental or vision plan, such continuation of coverage by
the Company for such similar or improved benefit under such plan
under this subsection shall immediately cease. The continuation of
health benefits under
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this subsection
shall reduce the Executive’s rights and the Company’s
payment obligations under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“ COBRA
”).
(e) The
parties acknowledge and agree that all calculations of bonuses by
the Company are based on targets, goals and objectives established
by the Board of Directors for each fiscal year, and that any bonus
plans, as well as the Executive’s rights to receive bonus
payments, are conditioned on an assessment by the Board of
Directors (or a committee thereof) of the satisfaction of
performance targets for the applicable fiscal year in which the
bonus is to be paid. The parties acknowledge that calculations of
applicable bonuses have historically been made within 90 days
following the conclusion of a fiscal year for which the bonus may
be due or accrued, and payment of the applicable bonus has been
historically made within 10 business days following the Board of
Directors’ determination. Accordingly, the parties recognize
and agree that the right to receive any payment to which the
Executive may be entitled under the terms of any applicable bonus
arrangement or benefit, including any bonus-related portion of the
Accrued Amount, or the Pro Rata Bonus, can only be established
after the review and calculations of the applicable fiscal year
bonus entitlements are made by the Board of Directors (including
any committee thereof). Once such calculations are made by the
Board of Directors (including any committee thereof), the
Executive’s right to receive the Pro Rata Bonus (or any
applicable bonus-related portion of the Accrued Amount) shall be
accrued and paid as promptly as practicable following a
determination of the bonus by the Board of Directors (or any
committee thereof) in the event the Executive is entitled to be
paid such bonus under the preceding provisions of
Section 8(a)-(d) above. Notwithstanding the foregoing, if the
Executive is terminated by the Company without Cause, or by the
Executive for Good Reason, the Board of Directors (including any
committee thereof) shall use its best efforts to meet as promptly
as practicable within 30 days following any notice of such
termination by the Company without Cause, or by the Executive for
Good Reason, in order to make a good faith determination of the Pro
Rata Bonus, and to pay such Pro Rata Bonus (if earned) within
30 days of such determination by the Board of Directors
(including any committee thereof).
9.
CONDITIONS . Any payments or benefits made or provided
pursuant to Section 8 (other than Accrued Amounts) are subject
to the Executive’s (or, in the event of the Executive’s
death, the beneficiary’s or estate’s, or in the event
of the Executive’s Disability, the
guardian’s):
(a) compliance
with the provisions of Section 11 hereof;
(b) delivery
to the Company of the executed Agreement and General Release (the
“ General Release ”), which shall be in the form
attached hereto as Appendix A (with such changes
therein or additions thereto as needed under then applicable law to
give effect to its intent and purpose) within 21 days of
presentation thereof by the Company to the Executive;
and
(c) delivery
to the Company of a resignation from all offices, directorships and
fiduciary positions with the Company, its affiliates and employee
benefit plans.
Notwithstanding
the due date of any post-employment payments, any amounts due
following a termination under this Agreement (other than Accrued
Amounts) shall not be due until after the expiration of any
revocation period applicable to the General Release without
the
7
Executive
having revoked such General Release, and any such amounts shall be
paid or commence being paid to the Executive within five
(5) days of the expiration of such revocation period without
the occurrence of a revocation by the Executive (or such later date
as may be required under Section 409A of the Code).
Nevertheless (and regardless of whether the General Release has
been executed by the Executive), upon any termination of
Executive’s employment, Executive shall be entitled to
receive any Accrued Amounts, payable after the date of termination
in accordance with the Company’s applicable plan, program,
policy or payroll procedures.
10.
SECTION 4999 EXCISE TAX .
(a) If any
payments, rights or benefits (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement of Executive
with the Company or any person affiliated with the Company) (the
“Payments”) received or to be received by Executive
will be subject to the tax (the “Excise Tax”) imposed
by Section 4999 of the Code (or any similar tax that may
hereafter be imposed), then, except as set forth in Section 10(b)
below, the Company shall pay to Executive an amount in addition to
the Payments (the “Gross-Up Payment”) as calculated
below. The Gross Up Payment shall be in an amount such that, after
deduction of any Excise Tax on the Payments and any federal, state
and local income and employment tax and Excise Tax on the Gross Up
Payment, but before deduction for any federal, state or local
income and employment tax on the Payments, the net amount retained
by the Executive shall be equal to the Payments.
(b) Notwithstanding
anything in this Agreement to the contrary, if the amount of
Payments that will be subject to the Excise Tax does not exceed
four times the “Base Amount” (as defined in
Section 280G(d)(2) of the Code), then Executive’s
taxable cash-based benefits under this Agreement will first be
reduced in the order selected by Executive, and then, if necessary,
Executive’s equity-based compensation (based on the value of
such equity-based compensation as a “parachute payment”
as defined in Treasury Regulations promulgated under
Section 280G of the Code and IRS revenue rulings, revenue
procedures and other official guidance) shall be reduced in the
order selected by Executive, and then any other Payments shall be
reduced as reasonably determined by the Company, to the extent
necessary to avoid imposition of the Excise Tax. If Executive does
not select the amount to be reduced within the time prescribed by
the Company, the reductions specified herein shall be made by the
Company in its sole discretion from such compensation as it shall
determine. Any amount so reduced shall be irrevocably forfeited and
Executive shall have no further rights to receive it.
(c) The
process for calculating the Excise Tax, determining the amount of
any Gross-Up Payment and other procedures relating to this
Section 10 are set forth in Appendix B attached hereto.
For purposes of making the determinations and calculations required
herein, the Accounting Firm (as defined in Appendix B) may
rely on reasonable, good faith interpretations concerning the
application of Section 280G and 4999 of the Code, provided
that the Accounting Firm shall make such determinations and
calculations on the basis of “substantial authority”
(within the meaning of Section 6662 of the Code) and shall
provide opinions to that effect to both the Company and
Executive.
11.
POST-EMPLOYMENT OBLIGATIONS
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(a)
CONFIDENTIALITY . The Executive agrees that the Executive
shall not, directly or indirectly, use, make available, sell,
disclose or otherwise communicate to any person, other than in the
course of the Executive’s employment and for the benefit of
the Company, either during the period of the Executive’s
employment or at any time thereafter, any nonpublic, proprietary or
confidential information, knowledge or data relating to the
Company, any of its subsidiaries, affiliated companies or
businesses, which shall have been obtained by the Executive during
the Executive’s employment by the Company. The foregoing
shall not apply to information that (i) was known to the
public prior to its disclosure to the Executive; (ii) becomes
known to the public subsequent to disclosure to the Executive
through no wrongful act of the Executive or any representative of
the Executive; or (iii) the Executive is required to disclose
by applicable law, regulation or legal process (provided that the
Executive provides the Company with prior notice of the
contemplated disclosure and reasonably cooperates with the Company
at its expense in seeking a protective order or other appropriate
protection of such information). Notwithstanding clauses (i) and
(ii) of the preceding sentence, the Executive’s
obligation to maintain such disclosed information in confidence
shall not terminate where only portions of the information are in
the public domain.
(b)
NON-SOLICITATION . During the Executive’s employment
with the Company and for the twelve (12) month period
thereafter, whether at the end of the Employmen
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