Exhibit 10.3
April 24, 2009
Mr. James E.
Levine
182 W. Canton Street
Boston, Massachusetts 02116
Dear Jamie,
We are pleased to confirm the
compensation and employment agreement between you and Verenium
Corporation (the “Company” ). In
consideration of the covenants and agreements set forth below, the
Company hereby agrees to employ you, and you hereby agree to be
employed by the Company, on the following terms and
conditions:
1. Term . This employment agreement
(the “Agreement” ) shall become effective
as of April 29, 2009 (the “ Effective Date
”) and shall continue until it is terminated by you or the
Company in accordance with, and subject to the obligations set
forth in, the provisions of Section 5 below (the
“Term” ).
2. Duties and Responsibilities .
During the Term of this Agreement, you shall have, and you agree to
carry out to the best of your ability, the duties and
responsibilities of Executive Vice President and Chief Financial
Officer. You shall have such responsibilities and duties as are
assigned by the President and Chief Executive Officer (
“CEO” ) and/or the Board of Directors of
the Company (the “Board” ) and are
consistent with the position of Executive Vice President and Chief
Financial Officer. In the performance of your duties and
responsibilities hereunder, you shall regularly report to Carlos
Riva, President and CEO. You agree to devote your full business
time, attention and energies to the business and interests of the
Company during the Term of this Agreement and you will not accept
any outside position without the prior written consent of the CEO
or the Board, except that you may serve on up to a maximum of two
boards of directors provided that you have approval of the CEO or
the Board’s Compensation Committee and provided that your
time spent in such service is reasonable and does not detract from
the performance of your duties to the Company. You warrant that you
are free to enter into and fully perform this Agreement and are not
subject to any employment, confidentiality, non-competition or
other agreement which would restrict your performance under this
Agreement. You shall fulfill your duties and responsibilities to
the Company hereunder primarily from the Company’s office
located in Cambridge, Massachusetts provided, however, that the
Company may from time to time require you to travel temporarily to
other locations in connection with the Company’s
business.
3. Compensation and Benefits .
Subject to your adherence to all of your responsibilities under
this Agreement, during the Term of this Agreement you shall be
entitled to receive the following compensation and
benefits.
(a) Base Salary . Commencing on the
Effective Date, and during the Term of this Agreement, the Company
will pay you a base salary at not less than the biweekly rate of
$11,923.07 ( “Base Salary” ), minus
withholdings as required by law or other deductions authorized by
you, which amount shall be paid to you in periodic installments in
accordance with the Company’s payroll practices then in
effect. Your Base Salary shall be subject to review and upward
adjustment on an annual basis; provided, however, that subject to
the provisions of Section 5(f), your Base Salary may be
reduced at any time in connection with an across-the-board
reduction of all senior executives’ annual base
salaries.
(b) Incentive Bonus . For each
calendar year during the Term of this Agreement, you will be
eligible to receive an annual performance-based incentive bonus,
based upon the achievement of milestones set by the Board and/or
the CEO, with a target bonus of 50% percent of the Base Salary
earned during such period (the “ Bonus
”). Any incentive bonus earned by you will be paid in
accordance with the Company’s standard practices and policies
regarding bonuses, and which shall be paid in the calendar year
following the year for which the Bonus was earned. Except as
otherwise provided in this Agreement, to be eligible to have earned
a Bonus for a calendar year, you must be employed through the last
date of such calendar year.
(c) Benefits . During the Term of this
Agreement, you shall be entitled to participate, to the extent you
are otherwise eligible, in all group insurance programs or other
fringe benefit plans which the Company shall make available to
similarly situated employees. The Company may alter, modify, add to
or delete its employee benefit plans at any time as it, in its sole
judgment, determines to be appropriate, without recourse by
you.
(d) Vacation . You will be entitled to
four (4) weeks of vacation per calendar year, in accordance
with the Company’s vacation policy as in effect from time to
time.
(e) Stock Options and Restricted Shares
. Subject to approval by Verenium’s Board of Directors
you will be granted a restricted stock award of 50,000 shares of
Verenium stock. The award shall vest in eight (8) equal
quarterly installments on each quarterly anniversary of the
employment date, so that one hundred percent (100%) of the
Restricted Stock Award shares shall be fully vested on the second
annual anniversary of the employment date, subject to your
continued service with the Company through the applicable vesting
dates.
Additionally, subject to approval by
Verenium’s Board of Directors, you will be granted an option
(in the form of an Incentive Stock Option) to acquire 250,000
shares of Verenium’s common stock at an exercise price equal
to the fair market value at the time of grant. Option vesting will
occur as follows: 25% after 12 months of employment, quarterly
thereafter on the remaining 75% over the subsequent three
years.
2
(f) Change in Control Acceleration of
Vesting. Upon a Change in Control (as defined below), the
vesting of stock options and any other equity awards to purchase
Company stock held by you will automatically accelerate as
follows:
(i) effective immediately prior to such Change in
Control, all stock options, restricted stock, and any other equity
awards except your “Undetermined Performance Based
Options” (as defined below), shall accelerate vesting and no
longer be subject to a risk of forfeiture or a right to repurchase
by the Company, if applicable, as if you had been employed by the
Company for an additional period of twenty four (24) months as
of the date of the Change in Control. Subject to your continued
service with the Company following the Change in Control, any
remaining unvested portion of such accelerated equity awards will
continue to vest according to the terms of the applicable equity
award agreements, but on the schedule and at the rate of number of
shares as such awards would have vested if the original vesting
schedule applicable to such options had been accelerated by
twenty-four (24 months. For example, if at the time of the Change
in Control the unvested portion of your equity award is 3,600
shares, which would otherwise continue to vest in 36 equal monthly
installments of 100 shares each, then (A) 2,400 shares shall
become vested immediately upon the Change in Control and
(ii) the remaining 1,200 shares will vest during your
continued service following the Change in Control in twelve monthly
installments of 100 shares, with the result being that your award
will be fully vested twenty-four months earlier than it would have
been had no Change in Control occurred.
(ii) for those Performance Based Options for which,
at the time of the Change in Control, performance assessments have
not yet been made by the Board or Compensation Committee that the
Performance Goals applicable to such awards have been achieved (the
“ Undetermined Performance Based Options
”) vesting of the Undetermined Performance Based Options
shall be accelerated so that such options shall vest on a pro rata
basis monthly, commencing from the date of the Change in Control
until the earlier of (x) the original vesting date of such
options, or (y) the date which is four (4) years after
the Change in Control. Following a Change in Control, the
Undetermined Performance Based Options that accelerate vesting
pursuant to this provision shall remain subject to acceleration of
vesting as provided in Section 3(e) based on achievement of
the Performance Goals.
(iii) In the event that the Company agrees to,
approves, enters, or is required to enter into a transaction, a
series of related transactions, or a proceeding, or nominates one
or more directors such that any of the foregoing would result in a
Change in Control, the Board will assess whether any additional
accelerated vesting of your equity awards should occur.
(g) Change in Control . For purposes
of this Agreement, “Change in Control”
means the occurrence, in a single transaction or in a series of
related transactions, of any one or more of the following
events:
(i) any Exchange Act Person becomes the Owner,
directly or indirectly, of securities of the Company representing
more than fifty percent (50%) of the combined voting power of
the Company’s then outstanding securities other than by
virtue of a merger, consolidation or similar transaction.
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur (A) on account of the acquisition of
securities of the Company by an investor, any affiliate thereof
or
3
any other Exchange Act Person from
the Company in a transaction or series of related transactions the
primary purpose of which is to obtain financing for the Company
through the issuance of equity securities or (B) solely
because the level of Ownership held by any Exchange Act Person (the
“ Subject Person ”) exceeds the designated
percentage threshold of the outstanding voting securities as a
result of a repurchase or other acquisition of voting securities by
the Company reducing the number of shares outstanding, provided
that if a Change in Control would occur (but for the operation of
this sentence) as a result of the acquisition of voting securities
by the Company, and after such share acquisition, the Subject
Person becomes the Owner of any additional voting securities that,
assuming the repurchase or other acquisition had not occurred,
increases the percentage of the then outstanding voting securities
Owned by the Subject Person over the designated percentage
threshold, then a Change in Control shall be deemed to
occur;
(ii) there is consummated a merger, consolidation or
similar transaction involving (directly or indirectly) the Company
and, immediately after the consummation of such merger,
consolidation or similar transaction, the stockholders of the
Company immediately prior thereto do not Own, directly or
indirectly, either (A) outstanding voting securities
representing more than fifty percent (50%) of the combined
outstanding voting power of the surviving Entity in such merger,
consolidation or similar transaction or (B) more than fifty
percent (50%) of the combined outstanding voting power of the
parent of the surviving Entity in such merger, consolidation or
similar transaction, in each case in substantially the same
proportions as their Ownership of the outstanding voting securities
of the Company immediately prior to such transaction;
(iii) the stockholders of the Company approve or the
Board approves a plan of complete dissolution or liquidation of the
Company, or a complete dissolution or liquidation of the Company
shall otherwise occur, except for a liquidation into a parent
corporation;
(iv) there is consummated a sale, lease, exclusive
license or other disposition of all or substantially all of the
consolidated assets of the Company and its Subsidiaries, other than
a sale, lease, license or other disposition of all or substantially
all of the consolidated assets of the Company and its Subsidiaries
to an Entity, more than fifty percent (50%) of the combined
voting power of the voting securities of which are Owned by
stockholders of the Company in substantially the same proportions
as their Ownership of the outstanding voting securities of the
Company immediately prior to such sale, lease, license or other
disposition; or
(v) individuals who, on the date this Plan is
adopted by the Board, are members of the Board (the “
Incumbent Board ”) cease for any reason to constitute
at least a majority of the members of the Board; provided,
however , that if the appointment or election (or nomination
for election) of any new Board member was approved or recommended
by a majority vote of the members of the Incumbent Board then still
in office, such new member shall, for purposes of this Plan, be
considered as a member of the Incumbent Board.
4
For the avoidance of doubt, the term
Change in Control shall not include a sale of assets, merger or
other transaction effected exclusively for the purpose of changing
the domicile of the Company. Capitalized terms utilized in the
foregoing definition of Change in Control shall have the following
meanings:
(vi) “Exchange Act Person”
means any natural person, Entity or “group” (within the
meaning of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (“ Exchange Act ”)),
except that “Exchange Act Person” shall not include
(i) the Company or any Subsidiary of the Company,
(ii) any employee benefit plan of the Company or any
Subsidiary of the Company or any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any
Subsidiary of the Company, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities,
(iv) an Entity Owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions
as their Ownership of stock of the Company; or (v) any natural
person, Entity or “group” (within the meaning of
Section 13(d) or 14(d) of the Exchange Act) that, as of the
Effective Date, is the Owner, directly or indirectly, of securities
of the Company representing more than fifty percent (50%) of
the combined voting power of the Company’s then outstanding
securities.
(vii) “Entity” means a
corporation, partnership, limited liability company or other
entity.
(viii) “ Own,” “Owned,”
“Owner,” “Ownership ” A person or
Entity shall be deemed to “Own,” to have
“Owned,” to be the “Owner” of, or to have
acquired “Ownership” of securities if such person or
Entity, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares voting
power, which includes the power to vote or to direct the voting,
with respect to such securities.
(ix) “ Subsidiary ” means,
with respect to the Company, (i) any corporation of which more
than fifty percent (50%) of the outstanding capital stock
having ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether, at the
time, stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening of any
contingency) is at the time, directly or indirectly, Owned by the
Company, and (ii) any partnership, limited liability company
or other entity in which the Company has a direct or indirect
interest (whether in the form of voting or participation in profits
or capital) of more than fifty percent (50%).
(h) Business Expense Reimbursement .
The Company shall reimburse you for the travel, entertainment and
all other business related expenses reasonably incurred by you in
the performance of your duties hereunder in accordance with the
Company’s policies as in effect from time to time for senior
executives
(i) Indemnification . The Company
agrees that you shall be entitled to indemnification to the fullest
extent permitted under the Company’s Articles of
Incorporation and Bylaws, and as required by law. In addition, the
Company will also provide you with an Indemnity Agreement, in the
form attached hereto as Exhibit A.
5
4. Confidential and Proprietary Information;
Restrictive Covenants; Non-solicitation;
Indemnification.
(a) Covenant not to Compete . You
acknowledge that by virtue of your employment pursuant to this
Agreement, you will have access to valuable trade secrets and other
confidential business and proprietary information of the Company.
Except with the prior written consent of the Board you will not,
during your employment by the Company, engage in competition with
the Company and/or any of its Affiliates, either directly or
indirectly in any manner or capacity, as adviser, principal, agent,
affiliate, promoter, partner, officer, director, employee,
stockholder, owner, co-owner, consultant, or otherwise, in any
phase of the business of researching, developing, manufacturing, or
marketing of products or services which are in the same field of
use or which otherwise compete with the products or services or
proposed products or services of the Company and/or any of its
Affiliates. For purposes of this Agreement,
“Affiliate” means any subsidiary of the
Company or any other entity that is controlled by or is under
common control with the Company. Except with the prior written
consent of the Board, you shall not, during your employment by the
Company and for a period of one (1) year thereafter (the
“Restricted Period” ), engage in
competition with the Company or any of its Affiliates, either
directly or indirectly, as adviser, principal, agent, affiliate,
promoter, partner, officer, director, employee, stockholder, owner,
co-owner, consultant, or otherwise, in any phase of the business of
the research, development, manufacturing, production, sales, or
marketing of biofuels. Ownership by you, as a passive investment,
of less than two percent (2%) of the outstanding shares of
capital stock of any corporation with one or more classes of its
capital stock listed on a national securities exchange or publicly
traded on the Nasdaq Stock Market or in the over-the-counter market
shall not constitute a breach of this paragraph.
(b) Agreement not to Participate in
Company’s Competitors . During any period during
which you are receiving compensation or consideration from the
Company, you will not acquire, assume, or participate in, directly
or indirectly, any position, investment, or interest known by you
at the time of such position, investment or interest to be adverse
or antagonistic to the Company, its business, or prospects,
financial or otherwise, or in any company, person, or entity that
is, directly or indirectly, in competition with the business of the
Company or any of its Affiliates. Ownership by you, as a passive
investment, of less than two percent (2%) of the outstanding
shares of capital stock of any corporation with one or more classes
of its capital stock listed on a national securities exchange or
publicly traded on the Nasdaq Stock Market or in the
over-the-counter market shall not constitute a breach of this
paragraph.
(c) Non-solicitation . During the
Restricted Period you shall not, either directly, or through
others: (1) hire or participate in the hiring of any
individual who is at that time an employee, consultant or
independent contractor of the Company or any Affiliate;
(2) solicit or attempt to solicit any individual who is at
that time an employee, consultant or independent contractor of the
Company or any Affiliate to terminate his or her relationship with
the Company or any Affiliate in order to become an employee,
consultant or independent contractor to or for any person or
business entity; or (3) solicit or attempt to solicit the
business of any client, customer, supplier, service provider,
vendor, or distributor of the Company or any Affiliate that is at
that time, or that was during the one (1) year immediately
prior thereto, doing business with the Company or any Affiliate for
the purpose of engaging in competition with the Company or any of
its Affiliates, provided that the foregoing prohibitions shall not
apply to any employee who responds to a general solicitation or
advertisement regarding employment with the Company or its
affiliates.
6
(d) Employee Invention and Non-Disclosure
Agreement . As a condition of employment, you agree to
execute and abide by the Company’s standard Employee
Invention and Non-Disclosure Agreement, a copy of which is attached
hereto as Exhibit B.
5. Termination . You and the Company
shall be free to terminate this Agreement as follows and subject to
the payment obligations set forth herein:
(a) By the Company for Cause . The
Company shall have the right to terminate your employment hereunder
at any time for “Cause.” For purposes of
this Agreement only, “ Cause ” shall be
defined to include (1) material misconduct in the performance
of your duties and responsibilities hereunder, (2) your
material failure, refusal or inability (other than for reasons of
disability) to perform your duties and responsibilities hereunder
or to carry out any lawful direction of the CEO or the Board,
(3) breach by you of a material term of this Agreement, the
Employee Invention and Non-Disclosure Agreement, or any other
agreement between you and the Company, (4) conviction of or
plea of nolo contendere to, a felony or other crime
involving moral turpitude, or imprisonment for any crime;
(5) your material failure to comply with Company written
policies, including but not limited to Equal Employment Opportunity
and Harassment policies, Professional Conduct policy, and/or Code
of Business Conduct and Ethics policy; and (6) your violation
of any statutory or fiduciary duty owed to the Company; provided,
however, that in the event of a potential termination under
subclauses 2, 3, or 5 above, such termination may not occur until
at least thirty (30) days after the Company has provided you
with a detailed written notice of the ground(s) for such potential
termination, and then only if in the reasonable determination of
the CEO or the Board you have failed to correct the behavior giving
rise to such potential termination. Notwithstanding any other
provision of this Agreement, in the event of a termination for
Cause pursuant to this paragraph, the Company shall only be
obligated to pay you (i) your Base Salary through the date of
your termination, (ii) your accrued but unused vacation,
(iii) any earned, but unpaid, Bonus described in
Section 3(b) with respect to the calendar year immediately
preceding the year in which your employment is terminated, based on
the achievement of the performance milestones established for such
calendar year in accordance with Section 3(b), as determined
by the Board of Directors, which determination may occur either
before or after your termination of employment so that you may have
earned a Bonus described in Section 3(b) notwithstanding your
termination of employment following the calendar year for which the
Bonus was earned but prior to the date such determination (or an
associated bonus payment) is made (the “ Unpaid
Bonus ”), and (iv) such other benefits and
payments to which you may be entitled by law or pursuant to the
benefit plans of the Company then in effect (collectively, the
“Accrued Obligations” ). Any Accrued
Obligations other than Unpaid Bonus shall be paid to you either
upon, or as soon as administratively practicable following, your
termination of employment. Any Unpaid Bonus will be paid to you as
soon as administratively practicable following the later of:
(i) your termination of employment, or (ii) the
determination by the Board of Directors that one or more of the
performance milestones applicable to such Bonus amounts have been
achieved, provided that following a Change in Control, if
the Board of Directors has at any time determined (whether such
determination is made before or after a Change in Control) that one
or more pre-established performance milestones (if any) applicable
to such Bonus amount have been achieved, any determination by the
Board of Directors of the amount of Bonus payable shall be made
without any exercise of negative discretion by the Board of
Directors to reduce the Bonus amount.
7
(b) Death; Disability . Your
employment hereunder shall terminate in the event of your death and
in the event that you shall be prevented, by illness, accident,
disability or any other physical or mental condition (to be
determined by means of a written opinion of a competent medical
doctor chosen by mutual agreement of the Company and you or your
personal representative), from substantially performing your duties
and responsibilities hereunder, with or without a reasonable
accommodation, for one or more periods totaling ninety
(90) days in any twelve (12) month period. In the event
of a termination of your employment pursuant to this paragraph, you
or your estate, as applicable, shall be entitled to receive payment
of the Accrued Obligations. You shall also be eligible to receive
any disability-related benefits provided by the Company at the time
of such disability, in accordance with the terms and conditions of
such benefit plans.
(c) Termination by the Company Other Than for
Cause . The Company shall have the right to terminate your
employment hereunder at any time other than for Cause. In the event
of a termination by Company pursuant to this paragraph, you shall
be entitled to receive payment of the Accrued Obligations and the
following severance pay and related benefits:
(i) the Company will pay you severance pay in the
amount of (A) your then-current annual Base Salary plus
(B) the higher of (i) your Bonus for the year in which
the termination occurs or (ii) the average percentage of your
Base Salary paid to you as Bonus in the two fiscal years prior to
the termination date, in each case pro-rated by the number of days
you were employed in the calendar year of the termination,
provided however, that if the termination date occurs during
the first year of employment, the pro-rated amount of the Bonus, if
any, shall be determined in the sole discretion of the Board or the
Compensation Committee (A and B, collectively are the “
Severance Pay ”). Your Severance Pay shall be
paid in equal installments over a period of twelve (12) months
commencing with the first payroll period following the effective
date of the Release required by Section 5(e), minus required
withholdings, which severance payments will be made to you on the
Company’s normal payroll cycle;
(ii) should you elect to continue your group health
and dental insurance benefits in accordance with the provisions of
COBRA following the date of your termination, the Company shall pay
the full premium for such health and dental insurance continuation
benefits for a period of twelve (12) months after the
termination date; provided, however, that any such payments will
cease if you voluntarily enroll in a health insurance plan offered
by another employer or entity during the period in which the
Company is paying such premiums. You agree to immediately notify
the Company in writing of any such enrollment.
(iii) notwithstanding the terms of any stock option
grants and/or restricted stock awards, the vesting of such equity
awards will automatically accelerate such that, in addition to any
vesting acceleration earned by you pursuant to Section 3(e) or
3(f) of this Agreement prior to the effective date of such
termination, effective on the date of such termination you will be
deemed vested as if you had remained employed by the Company for an
additional period of twenty four (24) months as of the date of
termination and all restricted stock held by you that would
otherwise vest as if you had been employed by the Company for an
additional twenty four (24) months as of the date of
termination shall automatically and immediately vest and no longer
be subject to forfeiture or a right to repurchase by the Company as
of the date of termination.
8
(d) Termination by the Company Other Than for
Cause or by the Executive for Good Reason Following a Change in
Control . In the event that within fifteen (15) months
following the effective date of a Change in Control the Company
shall terminate your employment other than for Cause, or you shall
resign from employment for Good Reason, you shall receive all of
the benefits specified in Section 5(c) of this Agreement, and,
additionally, all equity awards except any Undetermined Performance
Based Options that are unvested as of the effective date of such
termination shall be immediately accelerated such that they shall
be fully vested and exercisable as of the effective date of such
termination.
(e) Release and Non-disclosure . Your
right to receive such severance pay, stock and/or option
accelerated vesting benefits, and related benefits as set forth in
Sections 5(c) and (d) shall be contingent upon (x) your
compliance with all of your obligations under this Agreement and
the Employee Invention and Non-Disclosure Agreement, and
(y) your delivery to the Company of a general release of all
claims against the Company and its affiliates in the form attached
hereto as Exhibit A or in such other form as may be specified by
the Company (the “ Release ”), within the
applicable time period set forth therein but in no event later than
forty-five (45) days following your termination of employment,
and permitting such release to become fully effective in accordance
with its terms.
(f) Termination by You for Good Reason
. You shall have the right to terminate your employment
hereunder at any time for “ Good Reason ”
(as defined below). In the event that you resign your employment
with “Good Reason,” your resignation
shall be deemed to be a termination of your employment by the
Company other than for Cause pursuant to paragraph 5(c) above, in
which event both you and the Company shall have your respective
rights and obligations under such paragraph 5(c) above in the event
of such a termination. In the event that you do not send the
Company a written notice of your intent to resign pursuant to this
paragraph within ninety (90) days following an event
constituting Good Reason, your rights under this paragraph 5(d)
shall cease as to such event. For purposes of this Agreement, the
phrase “Good Reason” shall mean any one of the
following events which occurs without your consent on or after the
commencement of your employment, provided that you have first
provided written notice to any member of the Board (or the
surviving corporation, as applicable) within 90 days of the first
such occurrence of such condition specifying the event(s)
constituting Good Reason and specifying that you intend to
terminate your employment not earlier than 30 days after providing
such notice, and the Company (or surviving corporation) has not
cured such event(s) within 30 days (or such longer period as may be
specified by you in such notice) after your written notice is
received by such member of the Board (or by the surviving
corporation) (the “ Cure Period ”), and you
resign within thirty (30) days following the end of the Cure
Period: (i) a material reduction in your duties, authority or
responsibilities as described in Section 2 of this Agreement,
(ii) a material reduction in your Base Salary, provided,
however, that a reduction in your Base Salary shall not constitute
Good Reason if it (A) is made in connection with an
across-the-board reduction of all senior executives’ annual
base salaries, and (B) does not occur within the fifteen
(15) month period following the effective date of a Change in
Control, (iii) material reduction of your ability to
participate in the Company’s fringe and benefit plans that
effectively constitutes your “involuntary separation from
service” for purposes of Treas. Reg.
Section 1.409A-1(n), other than
9
any reduction that (A) is part
of a general reduction or other concessionary arrangement affecting
all senior officers, and (B) does not occur within the fifteen
(15) month period following the effective date of a Change in
Control, (it being understood that, solely for purposes of this
paragraph 5(f), such a reduction in the ability to participate in
the Company’s fringe and benefit plans is considered a
material breach of this Agreement), (iv) the Company requires
you to permanently relocate your office to a location outside the
geographic area described in Section 2 of this Agreement which
requires a one-way increase in your driving distance of more than
twenty-five (25) miles, or (v) any other conduct that
constitutes a material breach by the Company of a material term of
this Agreement, or any other written agreement between the Company
and you.
(g) Termination by You for Any Other
Reason . You shall have the right to terminate your
employment hereunder at any time for any reason not otherwise
covered by paragraph 5(d) by providing ninety (90) days’
prior written notice to the Company. In the event of a termination
by you pursuant to the preceding sentence, the Company shall only
be obligated to pay you the Accrued Obligations. The Company shall
be obligated, however, to continue to pay your full compensation as
described in Section 3 hereof up to and through the expiration
of the ninety (90) day notice period.
6. Specific Performance . You
recognize and agree that the Company’s remedy at law for
breach of the Employee Invention and Non-Disclosure Agreement would
be inadequate, and further agree that, for breach of such
provisions, the Company shall be entitled to seek injunctive relief
and to enforce its rights by an action for specific
performance.
7. Certain Tax Issues
.
(a) Withholding . All payments made to
you pursuant to this Agreement or otherwise in connection with your
employment shall be subject to the usual withholding practices of
the Company and will be made in compliance with existing federal
and state requirements regarding the withholding of tax.
(b) Application of Internal
Revenue Code Section 409A . Notwithstanding anything to the contrary set
forth herein, any Severance Pay amounts that constitute
“nonqualified deferred compensation” within the meaning
of Section 409A of the Code shall not commence in connection
with your termination of employment unless and until you have also
incurred a “separation from service” within the meaning
of Section 409A of the Code, unless the Company reasonably
determines that such amounts may be provided to you without causing
you to incur the additional 20% tax under Section 409A. To the
extent any payments or benefits pursuant to Section 5 above
(a) are paid following the date of termination of your
employment through March 15 of the calendar year following
such termination, such severance benefits are intended to
constitute separate payments for purposes of
Section 1.409A-2(b)(2) of the Treasury Regulations and thus
payable pursuant to the “short-term deferral” rule set
forth in Section 1.409A-1(b)(4) of the Treasury Regulations;
(b) are paid following said March 15, such Severance
Benefits are intended to constitute separate payments for purposes
of Section 1.409A-2(b)(2) of the Treasury Regulations made
upon an involuntary separation from service and payable pursuant to
Section 1.409A-1(b)(9)(iii) of the Treasury Regulations, to
the maximum extent permitted by said provision, and (c) are in
excess of the amounts specified in clauses (a) and (b) of
this paragraph, shall
10
(unless otherwise exempt under
Treasury Regulations) be considered separate payments subject to
the distribution requirements of Section 409A(a)(2)(A) of the
Internal Revenue Code of 1986, as amended (the “
Code ”), including, without limitation, the
requirement of Section 409A(a)(2)(B)(i) of the Code that
payments or benefits be delayed until 6 months after your
separation from service if you are a “specified
employee” within the meaning of the aforesaid section of the
Code at the time of such separation from service. In the event that
a six month delay of any such separation payments or benefits is
required, on the first regularly scheduled pay date following the
conclusion of the delay period you shall receive a lump sum payment
or benefit in an amount equal to the separation payments and
benefits that were so delayed, and any remaining separation
payments or benefits shall be paid on the same basis and at the
same time as otherwise specified pursuant to this Agreement
(subject to applicable tax withholdings and deductions).
(c) Parachute Payment . In the event
the benefits provided by this Agreement, when aggregated with any
other payments or benefits received by you, would
(i) constitute a “parachute payment” within the
meaning of Section 280G of the Code, and (ii) but for
this sentence, be subject to the excise tax imposed by
Section 4999 of the Code (the “Excise
Tax” ), then such Payment shall be reduced to the
Reduced Amount. The “Reduced Amount”
shall be either (x) the largest portion of the Payment that
would result in no portion of the Payment being subject to the
Excise Tax or (y) the largest portion, up to and including the
total, of the Payment, whichever amount, after taking into account
all applicable federal, state and local employment taxes, income
taxes, and the Excise Tax (all computed at the highest applicable
marginal rate), results in your receipt, on an after-tax basis, of
the greater amount of the Payment notwithstanding that all or some
portion of the Payment may be subject to the Excise Tax. If a
reduction in payments or benefits constituting “parachute
payments” is necessary so that the Payment equals the Reduced
Amount, reduction shall occur in the following order unless you
elect in writing a different order (provided, however, that such
election shall be subject to Company approval if made on or after
the effective date of the event that triggers the Payment):
reduction of cash payments; cancellation of accelerated vesting of
stock awards; reduction of e
