Exhibit 10.1
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT
AGREEMENT (“Agreement”) is entered into effective
as of the 18th day of March, 2009, by and between Kevin T. Conroy
(“Employee”) and EXACT Sciences Corporation, a Delaware
corporation (the “Company”).
WHEREAS , the Company desires to employ Employee as its
President and Chief Executive Officer and Employee desires to
accept such employment pursuant to the terms and conditions set
forth in this Agreement.
NOW, THEREFORE
, in consideration of the mutual
covenants and conditions hereinafter set forth, and other good and
valuable consideration, receipt of which is hereby acknowledged,
the parties agree as follows:
1.
Employment .
1.1
President and Chief Executive Officer . The Company
hereby agrees to employ Employee as (i) a Vice President
between the date of this Agreement and April 1, 2009, and
(ii) as the Company’s President and Chief Executive
Officer thereafter, effective April 2, 2009, and Employee
hereby agrees to serve the Company in such positions, all subject
to the terms and provisions of this Agreement subject to the
authority and direction of the Board of Directors of the
Company. Employee agrees (a) to devote his full-time
professional efforts, attention and energies to the business of the
Company, and (b) shall faithfully and to the best of his
ability perform his duties hereunder. Employee may serve as a
director of the Wisconsin Technology Council and as a director or
committee member of other corporations, charitable organizations
and trade associations (provided that the Company is notified in
advance of all such other positions) and may otherwise engage in
charitable and community activities, deliver lectures and fulfill
speaking engagements, and manage personal investments, but only if
such services and activities do not interfere with the performance
of his duties and responsibilities under this Agreement.
1.2
Director . On the effective date of this Agreement,
the Company shall appoint the Employee to its Board of Directors,
in accordance with applicable law and the Company’s
Bylaws. Upon any termination of Employee’s employment
with the Company, or upon the request of the Board of Directors in
connection with any Change of Control, Employee shall resign any
and all positions on the Company’s Board of
Directors.
2.
Term of Employment. Employee’s employment (the
“Employment Term”) will continue until terminated as
provided in Section 6 below.
3.
Compensation . During the Employment Term, Employee shall
receive the following compensation.
3.1
Base Salary . Employee’s annual base salary on the
date of this Agreement is $340,000, payable in accordance with the
normal payroll practices of the Company (“Base
Salary”). Employee’s Base Salary will be subject to
annual review by the Compensation Committee and the Board of
Directors of the Company. During the Employment Term, on each
anniversary date of this Agreement, the Company shall review the
Base Salary amount to determine any increases. In no event shall
the Base Salary be less than the Base Salary amount for the
immediately preceding twelve (12) month period other than as
permitted in Section 6.1(c) hereunder.
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3.2
Annual Bonus Compensation . Employee shall be eligible to
receive an annual cash bonus as determined by the Company’s
Compensation Committee each calendar year. Employee’s target
annual bonus percentage that he is eligible to earn for each
calendar year shall be fifty percent (50%) of his Base Salary as of
January 1 of the applicable new calendar year. Any such bonus
shall be based upon the achievement of goals determined by the
Compensation Committee after consultation with the Employee, shall
be paid no later than March 15 following the end of each
calendar year, and except as set forth in Section 7 hereof,
Employee shall not be entitled to receive an annual bonus for any
calendar year (including the bonus referenced above) unless he
remains employed with the Company through December 31 of the
applicable calendar year; provided, however, that if Employee is
terminated with Cause or resigns without Good Reason, no bonus will
be due.
3.3
Long Term Incentive Plan . The Company shall implement a
Long Term Incentive Plan (“LTIP”) as soon as reasonably
practicable. Employee’s benefits under the LTIP shall
be determined pursuant to the terms of the LTIP, and such benefits
may not be terminated or diminished without the written consent of
the Employee. Without limiting the foregoing, the LTIP shall
provide for a cash payout to Employee upon a Change of Control (as
defined in Section 7.2(a)) as follows: (a) One percent (1%) of
the equity value of any Change of Control transaction having an
equity value between One Hundred Million Dollars ($100,000,000) and
Five Hundred Million Dollars ($500,000,000); (b) for Change of
Control transactions having an equity value between Five Hundred
Million Dollars ($500,000,000) and One Billion Dollars
($1,000,000,000), the cash payout to Employee would be equal to the
amount calculated in (a) above plus one-half percent (0.5%)
for each incremental Fifty Million Dollars ($50,000,000) in equity
value over Five Hundred Million Dollars ($500,000,000);
(c) for Change of Control transactions having an equity value
between One Billion Dollars ($1,000,000,000) and Two Billion
Dollars ($2,000,000,000), the cash payout to Employee would be
equal to the amounts calculated in (a) and (b) above plus
one-quarter percent (0.25%) for each incremental Fifty Million
Dollars ($50,000,000) in equity value over One Billion Dollars
($1,000,000,000); and (d) for Change of Control transactions
having an equity value greater than Two Billion Dollars
($2,000,000,000), there would be no further increase in the cash
payout to Employee beyond that calculated under subsections (a),
(b) and (c). For example, in connection with a Change of
Control transaction having an equity value of (i) $600,000,000,
Employee would receive a cash payout of $5,500,000 ($5,000,000 +
$250,000 + $250,000) and (ii) $1,100,000,000, Employee would
receive a cash payout of $7,750,000 ($7,500,000 + $125,000 +
$125,000).
3.4
Equity Incentives and Other Long Term Compensation .
The Board of Directors, upon the recommendation of the Compensation
Committee, or the Compensation Committee, may grant Employee from
time to time options to purchase shares of the Company’s
common stock, and/or other equity awards including without
limitation restricted stock, both as a reward for past individual
and corporate performance, and as an incentive for future
performance. Such options and/or other awards, if awarded,
will be pursuant to the Company’s then current stock option
plan. Employee will receive an initial stock option grant of
Two Million Five Hundred Thousand (2,500,000) shares of the
Company’s common stock pursuant to the Company’s stock
option plan upon commencement of employment. Such stock
option shall qualify as an incentive stock option to the maximum
amount permissible by law. The price of the stock option
grant will be not greater than the fair market value per share on
the date of grant and will have a term of ten years. Twenty
five percent (25%) of the shares underlying such options shall vest
on the first anniversary of the date of grant and the balance shall
vest in equal quarterly installments over the remaining three-year
period, subject to the acceleration of vesting (i) as
described in Section 6.3 hereof, (ii) as described in
Section 7.1(d) and 7.2(b) hereof, and (iii) as
may be set forth in the
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grant agreements issued by the
Company, as amended, provided, that in the event of a conflict
between any grant agreement and this Agreement, this Agreement
shall control.
4.
Benefits .
4.1
Benefits . Employee will be entitled to participate in the
sick leave, insurance (including medical, life and long-term
disability), profit-sharing, retirement, and other benefit programs
that are generally provided to employees of the Company similarly
situated, all in accordance with the rules and policies of the
Company as to such matters and the plans established
therefore.
4.2
Vacation and Personal Time . The Company will provide
Employee with four (4) weeks of paid vacation each calendar
year Employee is employed by the Company, in accordance with
Company policy. The foregoing vacation days shall be in addition to
standard paid holiday days for employees of the Company.
4.3
Indemnification . To the fullest extent permitted by
applicable law and as provided for in the Company’s articles
of incorporation and bylaws the Company will, during and after
termination of employment, indemnify Employee (including providing
advancement of expenses) for any judgments, fines, amounts paid in
settlement and reasonable expenses, including attorneys’
fees, incurred by Employee in connection with the defense of any
lawsuit or other claim or investigation to which Employee is made,
or threatened to be made, a party or witness by reason of being or
having been an officer, director or employee of the Company or any
of its subsidiaries or affiliates as deemed under the Securities
Exchange Act of 1934 (“Affiliates”) or a fiduciary of
any of their benefit plans.
4.4
Liability Insurance . Both during and after termination (for
any reason) of Employee’s employment, the Company shall cause
Employee to be covered under a directors and officers’
liability insurance policy for his acts (or non-acts) as an officer
or director of the Company or any of its Affiliates. Such policy
shall be maintained by the Company, at its expense in an amount and
on terms (including the time period of coverage after the
Employee’s employment terminates) at least as favorable to
the Employee as policies covering the Company’s other members
of its Board of Directors.
5.
Business Expenses . Upon submission of a satisfactory
accounting by Employee, consistent with the policies of the
Company, the Company will reimburse Employee for any reasonable and
necessary out-of-pocket expenses incurred by Employee in the
furtherance of the business of the Company.
6.
Termination .
6.1
By Employee .
(a)
Without Good Reason. Employee may
terminate his employment pursuant to this Agreement at any time
without Good Reason (as defined below) with at least thirty (30)
business days’ written notice (the “Employee Notice
Period”) to the Company. Upon termination by Employee under
this section, the Company may, in its sole discretion and at any
time during the Employee Notice Period, suspend Employee’s
duties for the remainder of the Employee Notice Period, as long as
the Company continues to pay compensation to Employee, including
benefits, throughout the Employee Notice Period.
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(b)
With Good Reason. Employee may
terminate his employment pursuant to this Agreement with Good
Reason (as defined below) at any time within ninety (90) days after
the occurrence of an event constituting Good Reason.
(c)
Good Reason. “Good
Reason” shall mean any of the following:
(i) Employee’s Base Salary is reduced (x) in a
manner that is not applied proportionately to other senior
executive officers of the Company or (y) by more than thirty
percent (30%) of Employee’s then current Base Salary;
(ii) Employee’s duties, authority or responsibilities
are materially reduced or are materially inconsistent with the
scope of authority, duties and responsibilities of Employee’s
position; (iii) the occurrence of a material breach by the
Company of any of its obligations to Employee under this Agreement;
(iv) the Company materially violates or continues to
materially violate any law or regulation contrary to the written
advice of Employee and the Company’s outside counsel to the
Board of Directors and the Company fails to rectify such violation
within thirty (30) days of the written advice that such violations
are taking place or (v) Employee is not nominated for election
as a member of the Company’s Board of Directors at any
Company annual meeting or other stockholder meeting at which
Company directors are elected.
6.2
By the Company .
(a)
With Cause. The Company may
terminate Employee’s employment pursuant to this Agreement
for Cause, as defined below, immediately upon written notice to
Employee.
(b)
“Cause” shall mean any
of the following:
(i)
any willful failure or refusal to
perform the Employee’s duties which continues for more than
ten (10) days after written notice from the Company,
specifically identifying the manner in which the Company believed
the Employee had failed or refused to perform his
duties;
(ii)
the commission of any fraud or
embezzlement by the Employee in connection with the
Employee’s duties or committed in the course of
Employee’s employment;
(iii)
any gross negligence or willful
misconduct of the Employee with regard to the Company or any of its
subsidiaries resulting in a material economic loss to the
Company;
(iv)
a conviction of, or plea of guilty
or nolo contendere to, a felony or other crime involving
moral turpitude,
(v)
the Employee is convicted of a
misdemeanor the circumstances of which involve fraud, dishonesty or
moral turpitude and which is substantially related to the
circumstances of Employee’s job with the Company;
(vi)
any willful and material violation
by the Employee of any statutory or common law duty of loyalty to
the Company or any of its subsidiaries resulting in a material
economic loss; or
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(vii)
any material breach by the Employee
of this Agreement or any of the agreements referenced in
Section 8 of this Agreement.
(c)
Without Cause
. Subject to Section 7.1,
the Company may terminate Employee’s employment pursuant to
this Agreement without Cause upon at least thirty days’
written notice (“Company Notice Period”) to
Employee. Upon any termination by the Company under this
Section 6.2(c), the Company may, in its sole discretion and at
any time during the Company Notice Period, suspend Employee’s
duties for the remainder of the Company Notice Period, as long as
the Company continues to pay compensation to Employee, including
benefits, throughout the Company Notice Period.
6.3
Death or Disability . Notwithstanding Section 2, in the
event of the death or disability of Employee during the Employment
Term, (i) Employee’s employment and this Agreement shall
immediately and automatically terminate, (ii) the Company shall pay
Employee (or in the case of death, employee’s designated
beneficiary) Base Salary and accrued but unpaid bonuses, in each
case up to the date of termination, and (iii) all equity
awards granted to Employee, whether stock options or stock purchase
rights under the Company’s equity compensation plan, or other
equity awards, that are unvested at the time of termination shall
immediately become fully vested and exercisable upon such
termination. Neither Employee, his beneficiary nor estate shall be
entitled to any severance benefits set forth in Section 7 if
terminated pursuant to this section. In the event of the disability
of Employee, the parties agree to comply with applicable federal
and state law.
6.4
Survival. The Confidential Information Agreement described
in Section 8 hereof and attached hereto as Schedule A shall
survive the termination of this Agreement.
7.
Severance and Other Rights Relating to Termination and Change of
Control.
7.1
Termination of Agreement Pursuant to Section 6.l(b) or
6.2(c) . If the Employee terminates his employment for Good
Reason pursuant to Section 6.1(b), or the Company terminates
Employee’s employment without Cause pursuant to
Section 6.2(c), subject to the conditions described in
Section 7.3 below, the Company will provide Employee the
following payments and other benefits:
(a)
(i) salary continuation for a
period of eighteen (18) months at Employee’s then current
Base Salary, which shall commence on the first payroll date which
is on or immediately follows the 30 th day following the termination of
Employee’s employment, (ii) any accrued but unpaid Base
Salary as of the termination date; and (iii) any accrued but
unpaid bonus, including without limitation any performance-based
bonus, as of the termination date, all on the same terms and at the
same times as would have applied had Employee’s employment
not terminated; provided, that if at the end of the applicable
period within which Employee’s employment was terminated a
target bonus, or any other performance-based bonus, is paid to
other senior executives, a pro-rata target or other
performance-based
