EMPLOYMENT AGREEMENT
This AGREEMENT (the "Agreement") is made as of December 4, 1996 (the
"Effective Date"), by and between Endogen, Inc., a corporation with its
headquarters located in Woburn, Massachusetts (the "Employer"), and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ (the "Executive"). In consideration of the mutual covenants contained in
this Agreement, the Employer and the Executive agree as follows:
1. Employment. The Employer agrees to employ the Executive and the
Executive agrees to be employed by the Employer on the terms and conditions set
forth in this Agreement.
2. Capacity. The Executive shall serve the Employer as Vice President -
Finance, Treasurer and Chief Financial Officer or such other position as may be
agreed to by the Employer and the Executive from time to time.
3. Term. Subject to the provisions of Section 6, the term of employment
pursuant to this Agreement (the "Term") shall be three (3) years from the
Effective Date and shall be renewed automatically for periods of one (1) year
commencing at the third anniversary of the Effective Date and on each subsequent
anniversary thereafter, unless either the Executive or the Employer gives
written notice to the other not less than thirty (30) days prior to the date of
any such anniversary of such party's election not to extend the Term.
4. Compensation and Benefits. The regular compensation and benefits
payable to the Executive under this Agreement shall be as follows:
(a) Salary. For all services rendered by the Executive under
this Agreement, the Employer shall pay the Executive a salary (the
"Salary") at the annual rate of $120,000 for the first year of the
Term, $130,000 for the second year of the Term and such other amounts
as is determined by the Board of Directors of the Company (the "Board
of Directors") for the remaining years of the Term. The Salary shall be
payable in periodic installments in accordance with the Employer's
usual practice for its senior executives.
(b) Bonus. Beginning immediately on the Effective Date and
continuing for the Term of this Agreement, the Executive shall be
entitled to receive on a quarterly basis bonuses as set forth herein or
determined in the future under the Employer's Incentive Pay Plan with
the agreement of the Executive. Notwithstanding anything to the
contrary contained herein, the bonus to be paid to the Executive for
the first year of the Term of the Agreement shall be no less than
thirty-four thousand dollars ($34,000.00) consisting of (i) a sign-up
bonus of ten thousand dollars ($10,000.00) (the "Sign-up Bonus), such
amount to be paid on January 10, 1997, and (ii) a minimum annual bonus
of twenty-four thousand dollars ($24,000.00) (the "Minimum Annual
Bonus"), to be paid quarterly in the amount of $6,000.00 per quarter
and being made prior to the following dates in 1997: March 31; June 30;
September 30; and
December 31 (such dates referred to hereinafter collectively as the
"Bonus Payment Dates"). The actual amount of the bonus to be paid to
the Executive for the first year of the Term of this Agreement (in
addition to the Minimum Annual Bonus) shall be determined for the March
31, 1997 and June 30, 1997 dates pursuant to formulas and matrixes
already agreed to by the Employer and the Executive (the "Initial
Formulas and Matrixes"). The amount of Bonus payments to the Executive
(in addition to the Minimum Annual Bonus) for all fiscal quarters of
the Term commencing on and after June 1, 1997 shall be determined as
follows: at least thirty days prior to beginning of each fiscal year of
the Company the Employer and Executive shall agree on the formulas and
matrixes that will be used to determine the amount of Bonus payments to
be made to the Employee for each quarter for the following fiscal year
with the understanding that such formulas and matrixes shall be similar
in nature to the Initial Formulas and Matrixes and Bonus payments are
to be made on each Bonus Payment Date for the prior fiscal quarter.
(c) Regular Benefits. The Executive shall also be entitled to
participate in any employee benefit plans, medical insurance plans,
life insurance plans, disability income plans, retirement plans,
vacation plans, expense reimbursement plans and other benefit plans
which the Employer may from time to time have in effect for all or most
of its senior executives. Such participation shall be subject to the
terms of the applicable plan documents, generally applicable policies
of the Employer, applicable law and the discretion of the Board of
Directors, the Compensation Committee or any administrative or other
committee provided for in or contemplated by any such plan.
(d) Additional Benefits. The Employer shall provide the
following additional benefits to the Executive:
(i) Home Office. The Employer shall provide the
Executive with a home office such that the Executive shall be
able when necessary to conduct all of his duties pursuant to
this Agreement at his home. Such home office shall include
such equipment (the "Equipment") necessary for the Executive
to so conduct all such duties when necessary, including,
without limitation, a computer and printer, a phone and a
dedicated phone line so as to allow the Executive to
communicate with the headquarters of the Employer by voice and
electronically by modem and shall all be to the reasonable
satisfaction of the Executive. The Employer shall either pay
directly for the Equipment and the establishment of the home
office or shall reimburse the Executive for all such Equipment
and the expenses in connection with the establishment of the
home office upon presentation to the Company of receipts for
such Equipment and expenses, provided that authorization has
been received in advance by the Executive for purchases in
excess of $2,000.
(ii) Cellular Phone. The Employer shall provide the
Executive with a cellular phone and related long distance and
local phone services all as is
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reasonably satisfactory to the Executive and the Employer
shall pay for all reasonable business expenses in connection
with the Executive's use of such cellular phone during the
Term.
(iii) Vacation. During each 12 month period during
the Term the Executive shall be entitled to vacation time of
not less than 4 weeks, during which time the Executive's
Salary shall be paid in full.
(e) Equity Compensation. The Employer has granted on December
4, 1996 to the Employee an incentive stock option pursuant to, and
subject to the terms of, the Stock Option Agreement attached hereto as
Exhibit A. The Employee shall be eligible to be considered for
additional grants of stock options and restricted stock at future grant
dates at the discretion of the Board of Directors or Compensation
Committee of the Employer.
5. Extent of Service. During the Executive's employment under this
Agreement, the Executive shall devote the Executive's full business time to the
discharge of the Executive's duties and responsibilities under this Agreement.
The Executive shall not engage in any other substantial business activity;
provided that nothing in this Agreement shall be construed as preventing the
Executive from:
(a) investing the Executive's assets in any company or other
entity and in such form or manner as shall not require any material
activities on the Executive's part in connection with the operations or
affairs of the companies or other entities in which such investments
are made; or
(b) engaging in religious, charitable or other community or
non-profit activities (including, without limitation, the Association
for Corporate Growth, the Financial Executives Institute and the
National Investor Relations Institute) that do not impair the
Executive's ability to fulfill the Executive's duties and
responsibilities under this Agreement.
6. Termination and Termination Benefits. The Executive's employment
under this Agreement may terminate under the following circumstances set forth
in this Section 6.
(a) Termination by the Employer for Cause. The Employer may
terminate the employment of the Executive and this Agreement and all of
its obligations hereunder, except for obligations accrued but unpaid to
the effective date of termination, for Cause; provided, however, that
(i) the Employer shall provide five (5) business days' advance written
notice to the Executive that the Board of Directors is considering a
termination for Cause and the Executive shall be given an opportunity
in person, personally to be heard by the Board of Directors of the
Employer; (ii) such advance notice shall describe, in reasonable
detail, the circumstances constituting Cause. Any purported termination
for Cause which fails to conform to the procedures
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set forth in the foregoing sentence prior to the Employer terminating
the employment of the Employee shall be treated as a termination
without Cause. Only the following shall constitute "cause" for such
termination:
(i) an act of fraud, embezzlement, theft or any
other material violation of law involving
dishonesty in connection with the
Executive's duties or in the course of his
employment with the Employer or the
commission of a felony or intentional
disregard of the written rules or policies
of the Employer;
(ii) intentional wrongful damage to material
assets of the Employer; or
(iii) intentional wrongful disclosure of material
confidential information of the Employer.
(iv) the substantial and continuing gross and
willful failure of the Executive to render
services to the Employer substantially in
accordance with his or her obligations under
this Agreement, which materially and
adversely affects the business, financial
condition, operations, property or affairs
of the Employer, after 30 days' notice from
the Board of Directors of the Employer, such
notice setting forth in reasonable detail
the nature of such failure;
(v) dishonesty, breach of fiduciary duty or
breach of the terms of this Agreement or the
other agreements executed in connection
herewith;
(vi) the commission of an act which induces any
customer of the Employer to breach a
contract with the Employer.
In the event of a termination "for cause," inclusive, the Executive
shall be entitled to no severance or other termination benefits except as
required by law.
No act, or failure to act, on the part of the Executive shall be deemed
"intentional" if it was due primarily to an error in judgment or negligence, but
shall be deemed "intentional" only if done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that his action or
omission was in the best interest of the Employer. Failure to meet performance
standards or objectives of the Employer shall not constitute Cause for purposes
hereof.
(b) Termination by the Executive Upon Death. The Executive's
employment under this Agreement shall be terminated upon the death of
the Executive.
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(c) Termination by the Executive for Good Reason. The
Executive may terminate his employment with the Company (a termination
"For Good Reason") at any time subsequent to the occurrence of any of
the following events:
(i) that there has been a significant adverse change
in the nature or scope of the Executive's responsibilities,
authorities, powers, functions or duties;
(ii) a reduction in the Executive's salary as defined
in Section 4(a), except in the case where the CEO and all who
report to the CEO are taking comparable reductions in salary;
(iii) the relocation of the Employer's offices at
which the Executive is principally employed to a location more
than 50 miles from the location where the Executive is
principally employed; or
(iv) the failure by the Employer to pay to the
Executive any portion of his current compensation or the
failure by the Employer to continue in effect any material
compensation, incentive, bonus or benefit plan in which the
Executive participates unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has
been made with respect to such plan, or the failure by the
Employer to continue the Executive's participation therein (or
in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of
benefits provided and the level of the Executive's
participation relative to other participants. In the event the
Employer's fails to adhere to any portion of the above
compensation, incentive, bonus or benefits plan, the Executive
has thirty days in which to provide written notice of the
failure to the Employer. The Employer has thirty days, from
the receipt of written notice from the Executive, to cure the
deficiency.
(d) Termination by the Employer Without Cause. The Executive's
employment under this Agreement may be terminated by the Employer
without cause upon written notice to the Executive at least thirty (30)
days prior to such termination. During such thirty (30) day notice
period, the Executive will be available on a full time basis, for the
benefit of the Employer, to assist the Employer in making the
transition to a new successor of the Executive.
(e) Payment Through Termination Date and Certain Termination
Benefits. In all cases of termination of the Executive's employment the
Executive shall be paid (i) his Salary owed to him through the
termination date and (ii) any Bonus due to the Executive as of the date
of termination and all such payments shall be made on such termination
date. In addition, as soon as possible following the termination of the
Employee a calculation shall be made according to Section 4(b) hereof
of the amount
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of Bonus due to the Employee on a pro rata basis through the date of
termination and such payment shall promptly be paid to the Employee. In
addition, in the event of termination of the Executive's employment
with the Employer pursuant to Section 6 (c), (d) or (f) the Employer
shall provide to the Executive (or in the case of death, his
beneficiaries) the following termination benefits ("Termination
Benefits"):
(i) continuation of the Executive's Salary at
the rate then in effect pursuant to Section
4(a) for six (6) months from the termination
date;
(ii) continuation of the benefits, subject to the
terms and conditions of the applicable
benefit plans, being provided to the
Executive pursuant to Section 4(c) at the
time of termination for six (6) months from
the termination date;
(iii) if terminated under Section 6(d), all
outstanding options which have been granted
to the Executive, including without
limitation the options evidenced by the
Stock Option Agreement, which have not
vested shall vest in full upon the date of
termination and shall be exercisable in
full; and
(iv) commencing immediately on the date which is
six (6) months after the date of
termination, the continuation of group
health plan benefits to the extent
authorized by and consistent with 29 U.S.C.
ss. 1161 et seq. (commonly known as
"COBRA"), with the cost of the regular
premium for such benefits to be paid by the
Executive.
The Termination Benefits set forth in (i) and (ii) above shall continue
effective until the date which is six (6) months after the date of
termination.
(f) Disability. If the Executive shall be disabled so as to be
unable to perform the essential functions of the Executive's then
existing position or positions under this Agreement with or without
reasonable accommodation, the Employer may remove the Executive from
any responsibilities and/or reassign the Executive to another position
with the Employer for the remainder of the Term or during the period of
such disability. Notwithstanding any such removal or reassignment, the
Executive shall continue to receive the Executive's full Salary and
benefits under Section 4 of this Agreement for six (6) months. If any
question shall arise as to whether during any period the Executive is
disabled so as to be unable to perform the essential functions of the
Executive's then existing position or positions with or without
reasonable accommodation, the Executive may, and at the request of the
Employer shall, submit to the Employer a certification in reasonable
detail by a physician selected by the Employer to whom the Executive or
the Executive's guardian has no reasonable
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objection as to whether the Executive is so disabled or how long such
disability is expected to continue, and such certification shall for
the purposes of this Agreement be conclusive of the issue.
(g) Termination Pursuant to a Change of Control. If there is a
Change of Control, as defined in Section 6(g)(i) below, during the
Term, the provisions of this Section 6(g) shall apply and shall
continue to apply throughout the remainder of the term of this
Agreement. If, within one (1) year following a Change of Control, the
Executive's employment is terminated by the Employer or the Executive
following the occurrence of any of the events listed in Section
6(g)(ii) below (as determined by the Executive) or if the Executive's
employment is terminated without cause (in accordance with Section 6(d)
above), the Employer shall pay to the Executive (or the Executive's
estate, if applicable) a lump sum amount equal to the annual rate of
the Executive's Salary on the date of termination (for example, if such
termination occurred during the second year of the Term the Executive
would receive a lump sum payment of $130,000). All outstanding options
which have been granted to the Executive, including without limitation
the options evidenced by the Stock Option Agreement, which have not
vested shall vest in full upon the date of termination and shall be
exercisable in full; and
(i) Change of Control shall mean the occurrence of
one or more of the following events:
(A) any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange
Act")) becomes a "beneficial owner" (as such term is
defined in Rule 13d-3 promulgated under the Exchange
Act) directly or indirectly, of securities of the
Employer, representing fifty percent (50%) or more of
the combined voting power of the Employer's then
outstanding securities; or
(B) persons who, as of the Effective Date,
constituted the Employer's Board of Directors (the
"Incumbent Board") cease to constitute at least a
majority of the Board of Directors, provided that any
person becoming a director of the Employer subsequent
to the Effective Date whose election was approved by
at least a majority of the directors then comprising
the Incumbent Board shall, for purposes of this
Section 6(g), be considered a member of the Incumbent
Board; or
(C) the stockholders of the Employer approve
a merger or consolidation of the Employer with any
other corporation or other entity, other than (1) a
merger or consolidation which would result in the
voting securities of the Employer outstanding
immediately prior
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thereto continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving entity) more than fifty
percent (50%) of the combined voting power of the
voting securities of the Employer or such surviving
entity outstanding immediately after such merger or
consolidation or (2) a merger or consolidation
effected to implement a recapitalization of the
Employer (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than
fifty percent (50%) of the combined voting power of
the Employer's then outstanding securities; or
(D) the stockholders of the Employer approve
a plan of complete liquidation of the Employer or an
agreement for the sale or disposition by the Employer
of all or substantially all of the Employer's assets;
or
(E) The Employer files a report or proxy
statement with the Securities and Exchange Commission
pursuant to the Exchange Act disclosing in response
to Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) that a
change in control of the Employer has or may have
occurred or will or may occur in the future pursuant
to any then-existing contract or transaction; or
Notwithstanding the foregoing provisions of Section 6(g)(i)(A) or (E)
hereof, a "Change in Control" shall not be deemed to have occurred for purposes
of this Agreement solely because (i) the Employer, (ii) an entity in which the
Employer directly or indirectly beneficially owns 50% or more of the voting
securities, or (iii) any Employer-sponsored employee stock ownership plan or any
other employee benefit plan of the Employer, either files or becomes obligated
to file a report or a proxy statement under or in response to Schedule 13D,
Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or
report or item therein) under the Exchange Act, disclosing beneficial ownership
by it of shares of Voting Stock, whether in excess of 50% or otherwise, or
because the Employer reports that a change in control of the Employer has or may
have occurred or will or may occur in the future by reason of such beneficial
ownership.
(ii) The events referred to in Section 6(g) above
shall be as follows:
(A) that there has been a significant change
in the nature or scope of the Executive's
responsibilities, authorities, powers, functions or
duties from the responsibilities, authorities,
powers, functions or duties exercised by the
Executive, as reasonably determined by the Executive
in good faith, immediately prior to a Change of
Control;
(B) a reduction in the Executive's monetary
compensation as compared to that being paid to the
Executive prior to the Change of Control;
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(C) the relocation of the Employer's offices
at which the Executive is principally employed
immediately prior to the date of the Change of
Control to a location more than 50 miles from the
location where the Executive is principally employed
immediately prior to the date of the Change of
Control;
(D) the failure by the Employer to pay to
the Executive any portion of his current compensation
or the failure by the Employer to continue in effect
any material compensation, incentive, bonus or
benefit plan in which the Executive participates
immediately prior to the Change of Control, unless an
equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with
respect to such plan, or the failure by the Employer
to continue the Executive's participation therein (or
in such substitute or alternative plan) on a basis
not materially less favorable, both in terms of the
amount of benefits provided and the level of the
Executive's participation relative to other
participants, as existed at the time of the Change of
Control; or
(E) the failure of the Employer to obtain a
satisfactory agreement from any successor to assume
and agree to perform this Agreement or enter into a
new agreement on substantially the same terms.
(iii) It is the intention of the Executive and of the
Employer that no payments by the Employer to or for the
benefit of the Executive under this Agreement or any other
agreement or plan, if any, pursuant to which the Executive is
entitled to receive payments or benefits shall be
nondeductible to the Employer by reason of the operation of
Section 280G of the Code relating to parachute payments or any
like statutory or regulatory provision. Accordingly, and
notwithstanding any other provision of this Agreement or any
such agreement or plan, if by reason of the operation of said
Section 280G or any like statutory or regulatory provision,
any such payments exceed the amount which can be deducted by
the Employer, such payments shall be reduced to the maximum
amount which can be deducted by the Employer. To the extent
that payments exceeding such maximum deductible amount have
been made to or for the benefit of the Executive, such excess
payments shall be refunded to the Employer with interest
thereon at the applicable Federal rate determined under
Section 1274(d) of the Code, compounded annually, or at such
other rate as may be required in order that no such payments
shall be nondeductible to the Employer by reason of the
operation of said Section 280G or any like statutory or
regulatory provision. To the extent that there is more than
one method of reducing the payments to bring them within the
limitations
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of said Section 280G or any like statutory or regulatory
provision, the Executive shall determine which method shall be
followed, provided that if the Executive fails to make such
determination within forty-five (45) days after the Employer
has given notice of the need for such reduction, the Employer
may determine the method of such reduction in its sole
discretion.
7. Confidential Information and Cooperation. On the date herein, the
Executive will have entered into the standard Endogen Confidentiality and
Non-Compete Agreement, in the form attached hereto as Exhibit B.
8. Arbitration of Disputes. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof or otherwise arising out of the
Executive's employment or the termination of that employment (including, without
limitation, any claims of unlawful employment discrimination whether based on
age or otherwise) shall, to the fullest extent permitted by law, be settled by
arbitration in any forum and form agreed upon by the parties or, in the absence
of such an agreement, under the auspices of the American Arbitration Association
("AAA") in Boston, Massachusetts in accordance with the Employment Dispute
Resolution Rules of the AAA, including, but not limited to, the rules and
procedures applicable to the selection of arbitrators, except that the
arbitrator shall apply the law as established by decisions of the U.S. Supreme
Court, the Court of Appeals for the First Circuit and the U.S. District Court
for the District of Massachusetts in deciding the merits of claims and defenses
under federal law or any state or federal anti-discrimination law, and any
awards to the Executive for violation of any anti-discrimination law shall not
exceed the maximum award to which the Executive could be entitled under the
applicable (or most analogous) federal anti-discrimination or civil rights laws.
In the event that any person or entity other than the Executive or the Employer
may be a party with regard to any such controversy or claim, such controversy or
claim shall be submitted to arbitration subject to such other person or entity's
agreement. Judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. This Section 8 shall be specifically
enforceable. Notwithstanding the foregoing, this Section 8 shall not preclude
either party from pursuing a court action for the sole purpose of obtaining a
temporary restraining order or a preliminary injunction in circumstances in
which such relief is appropriate; provided that any other relief shall be
pursued through an arbitration proceeding pursuant to this Section 8.
9. Consent to Jurisdiction. To the extent that any court action is
permitted consistent with or to enforce Section 8 of this Agreement, the parties
hereby consent to the jurisdiction of the Superior Court of the Commonwealth of
Massachusetts and the United States District Court for the District of
Massachusetts.
10. Integration. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements between the parties with respect to any related subject matter,
with the exception of the Incentive Stock Option Agreement and the
Confidentiality and Non-Competition Agreements attached hereto as Exhibits A and
B, respectively.
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11. Assignment; Successors and Assigns, etc. Neither the Employer nor
the Executive may make any assignment of this Agreement or any interest herein,
by operation of law or otherwise, without the prior written consent of the other
party; provided that the Employer may assign its rights under this Agreement
without the consent of the Executive in the event that the Employer shall effect
a reorganization, consolidate with or merge into any other corporation,
partnership, organization or other entity, or transfer all or substantially all
of its properties or assets to any other corporation, partnership, organization
or other entity. This Agreement shall inure to the benefit of and be binding
upon the Employer and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns.
12. Enforceability. If any portion or provision of this Agreement
(including, without limitation, any portion or provision of any section of this
Agreement) shall to any extent be declared illegal or unenforceable by a court
of competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not be affected thereby,
and each portion and provision of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
13. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
14. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by a nationally recognized overnight courier service or by
registered or certified mail, postage prepaid, return receipt requested, to the
Executive at the last address the Executive has filed in writing with the
Employer or, in the case of the Employer, at its main offices, attention of the
Chief Executive Officer, and shall be effective on the date of delivery in
person or by courier or three (3) days after the date mailed.
15. Amendment. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by a duly authorized
representative of the Employer.
16. Governing Law. This is a Massachusetts contract and shall be
construed under and be governed in all respects by the laws of the Commonwealth
of Massachusetts, without giving effect to the conflict of laws principles of
such Commonwealth.
17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be taken to be
an original; but such counterparts shall together constitute one and the same
document.
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IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Employer, by its duly authorized officer, and by the
Executive, as of the Effective Date.
ENDOGEN, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and CEO
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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