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 bonus shall also be paid to Employee at the
same time but no later than March 15 of the following year.
(b)
If Employee elects COBRA coverage for health
and/or dental insurance in a timely manner, the Company shall pay the monthly
premium payments for such timely elected coverage (consistent with what was in
place at the date of
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termination) when each premium is due until the earlier of: (i) (12)
twelve months from the date of termination; (ii) the date Employee obtains
new employment which offers health and/or dental insurance that is reasonably
comparable to that offered by the Company; or (iii) the date COBRA
continuation coverage would otherwise terminate in accordance with the
provisions of COBRA. Thereafter, health and dental insurance coverage shall be
continued only to the extent required by COBRA and only to the extent Employee
timely pays the premium payments himself.
(c)
Within thirty (30) days of the effective date
of termination, the Company shall pay Employee Ten Thousand Dollars ($10,000)
towards the cost of an outplacement consulting package for Employee.
(d)
The vesting of the then unvested equity
awards granted to Employee, whether stock options, restricted stock or stock
purchase rights under the Company’s equity compensation plan, or other equity
awards, shall immediately accelerate by a period of 12 months upon such
termination or resignation. Employee will be entitled to exercise such equity
awards in accordance with Section 7.6.
7.2
Change
of Control
. The Board of Directors of the Company has determined that it is
in the best interests of the Company and its stockholders to assure that the
Company will have the continued dedication of the Employee, notwithstanding the
possibility, threat or occurrence of a Change of Control (defined in Section 7.2(a) below).
The Board believes it is imperative to diminish the inevitable distraction of
the Employee by virtue of the personal uncertainties and risks created by a
pending or threatened Change of Control and to encourage the Employee’s full
attention and dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the Employee with compensation
and benefits arrangements upon a Change of Control which ensure that the
compensation and benefits expectations of the Employee will be satisfied and
which are competitive with those of other similarly-situated companies.
Therefore, in order to accomplish these objectives, the Board has caused the
Company to include the provisions set forth in this Section 7.2.
(a)
Change of Control. “Change of Control” shall
mean, and shall be deemed to have occurred if, on or after the date of this
Agreement, (i) any “person” (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) or group acting in
concert, other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company acting in such capacity or a corporation
owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing more than 50%
of the total voting power represented by the Company’s then outstanding Voting
Securities, (ii) during any 12-month period, individuals who at the
beginning of such period constitute the Board of Directors of the Company and
any new director whose election by the Board of Directors or nomination for
election by the Company’s stockholders was approved by a vote of at least two
thirds (2/3) of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof, (iii) the
consummation of a merger or consolidation of the Company with any other
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corporation other than a merger or consolidation which would result in
the Voting Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into Voting Securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the Voting Securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the sale or disposition by the Company of (in one
transaction or a series of related transactions) all or substantially all of
the Company’s assets.
(b)
Acceleration of Vesting of Equity
Awards. Subject to Employee’s agreement
to remain employed by the Company (or any successor), if requested, for a
period of at least six (6) months following such Change of Control at his
then current base salary, one hundred percent (100%) of the then
unvested equity awards granted to Employee, whether stock options, restricted
stock or stock purchase rights under the Company’s equity compensation plan, or
other equity awards, shall immediately become fully vested and exercisable upon
a Change of Control. Employee will be entitled to exercise such
vested equity awards in accordance with the applicable grant agreements.
(c)
LTIP Awards. Any awards granted to Employee
under the LTIP as of the effective date of the Change of Control shall be
treated as described in the LTIP.
Without limiting the foregoing, the LTIP shall provide that if, in
anticipation or contemplation of a pending or potential Change of Control or
while a potential Change of Control is under consideration or being negotiated
by the Company’s board of directors, 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), Employee
shall be deemed to remain an employee for purposes of the LTIP as of the
effective date of such Change of Control and shall receive a full payout under
the LTIP as described in Section 3.3 of this Agreement as though he
remained an employee of the Company as of the effective date of such Change of
Control.
(d)
If, within twelve (12) months before the
effective date of a Change of Control, 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), or, if
Employee remains employed with the Company on the effective date of a Change of
Control, subject to the conditions described in Section 7.3 below, the
Employee shall receive a single lump-sum payment on the effective date of such
Change of Control equal to twenty-four (24) months (or, in the event of a
Change of Control transaction occurring on or prior to April 18, 2010,
which has an equity value of less than $100 million, eighteen (18) months) at
Employee’s then current Base Salary and pro-rata target bonus through the
effective date of the Change of Control; provided, however, that any payments
previously made by the Company to Employee in connection with a termination
occurring within twelve (12) months before the effective date of such Change of
Control pursuant to Section 7.1(a) of this Agreement shall be
credited against the lump-sum payment due Employee pursuant to this Section 7.2(d).
(e)
Parachute Gross-up. Any payments due Employee as a result of a
change in control shall be adjusted as provided in Exhibit B attached to
this Agreement; provided, however, that the parties hereto anticipate (to the
fullest extent
7
permissible by law) that the value of Employee’s non-compete and
non-solicitation obligations set forth in Section 8 of this Agreement
would result in a determination by the “Accountants” (as defined in Exhibit B),
in accordance with subsection (b) of Exhibit B, that the payments to
be made by Company to Employee pursuant to this Section 7.2 would not be
subject to the “Excise Tax” (as defined in Exhibit B).
7.3
Conditions
Precedent to Payment of Severance
. The Company’s obligations to Employee
described in Sections 7.1 and 7.2 are contingent on Employee’s (i) resignation
from the Board of Directors if required in accordance with Section 1.2 and
(ii) delivery to the Company of a signed waiver and release in a form
reasonably satisfactory to the Company of all claims he may have against the
Company, and his not revoking such release within 21 days after his date of
termination.
Moreover,
the Employee’s rights to receive ongoing payments and benefits pursuant to
Sections 7.1 and 7.2 (including, without limitation, the right to ongoing
payments under the Company’s equity plans and LTIPs) are conditioned on the
Employee’s ongoing compliance with his obligations as described in Section 8
hereof. Any cessation by the Company of any such payments and
benefits shall be in addition to, and not in lieu of, any and all other
remedies available to the Company for Employee’s breach of his obligations
described in Section 8 hereof.
7.4
No
Severance Benefits
. Employee is not entitled to any severance benefits if
this Agreement is terminated pursuant to Sections 6.1(a) or 6.2(a) of
this Agreement; provided however, Employee shall be entitled to (i) Base Salary
prorated through the effective date of such termination; (ii) Bonuses
which have been earned and for which the payment date occurs prior to the
effective date of such termination; and (iii) medical coverage and other
benefits required by law and plans (as provided in Section 7.5, below).
7.5
Benefits
Required by Law and Plans: Vacation Time Pay
. In the event of the
termination of Employee’s employment, Employee will be entitled to medical and
other insurance coverage, if any, as is required by law and, to the extent not
inconsistent with this Agreement, to receive such additional benefits as
Employee may be entitled under the express terms of applicable benefit plans
(other than bonus or severance plans) of the Company, its subsidiaries and
Affiliates.
7.6
Exercise
Period of Equity Awards after Termination
. Unless it would subject the
Employee to adverse tax consequences under Section 885 of the American
Jobs Creation Act of 2004, Pub. Law No. 108-357, 118 Stat. 1418 (the Act),
which added § 409A to the Internal Revenue Code, notwithstanding anything
contained herein or in the equity grant agreements to the contrary, in the
event of the termination of Employee’s employment with the Company, Employee’s
vested equity awards shall be open for exercise until the earlier of (i) two
(2) years from the date of termination or (ii) the latest date on
which those equity awards expire or are eligible to be exercised under the
grant agreements, determined without regard to such termination or resignation;
provided further that such extended exercise period shall not apply in the
event the Employee resigns without Good Reason or is terminated by the Company
for Cause, in which case, the exercise periods shall continue to be governed by
the terms of the grant agreements.
7.7
409A Compliance
. Notwithstanding anything in this Section 7
to the contrary, to the extent that any payments under this Section 7 are
considered deferred compensation subject to
Section 409A of the Internal Revenue
Code, such payments shall not be paid for six months following the Employee’s
separation from service (if, and only to the extent, applicable and
8
required
for compliance with Section 409A).
To the extent that any payment is delayed pursuant to this subsection,
it shall be paid on the first day after the end of such required period.
8.
Restrictions
.
8.1
The
Confidential Information Agreement
. Employee will enter into and comply
with the terms of the Employee Confidentiality and Assignment Agreement in
substantially the form attached hereto as Schedule A (the “Confidential
Information Agreement”).
8.2
Agreement
Not to Compete
. In consideration for all of the payments and benefits that
may become due to Employee under this Agreement, Employee agrees that for a
period of eighteen (18) months after termination of his employment for any
reason, he will not, directly or indirectly, without the Company’s prior
written consent, (a) perform for a Competing Entity in any Restricted Area
any of the same services or substantially the same services that he performed
for the Company; (b) in any Restricted Area, advise, assist, participate
in, perform services for, or consult with a Competing Entity regarding the
management, operations, business or financial strategy, marketing or sales
functions or products of the Competing Entity (the activities in clauses (a) and
(b) collectively are, the “Restricted Activities”); or (c) solicit or
divert the business of any Restricted Customer by offering competitive products
or services to such Restricted Customer to the detriment of the Company.
Employee acknowledges that in his position with the Company he has had and will
have access to knowledge of confidential information about all aspects of the Company
that would be of significant value to the Company’s competitors.
8.3
Additional
Definitions
.
(a)
“Customer” means any individual or entity for
whom the Company has provided services or products or made a proposal to
perform services or provide products.
(b)
“Restricted Customer” means any Customer with
whom/which Employee had contact on behalf of the Company during the 12 months
preceding the end, for whatever reason, of his employment.
(c)
“Competing Entity” means any business entity
engaged in the development, design, manufacture, marketing, distribution or
sale of molecular diagnostic products.
(d)
“Restricted Area” means any geographic
location where if Employee were to perform any Restricted Activities for a
Competing Entity in such a location, the effect of such performance would be
competitive to the Company.
8.4
Reasonable
Restrictions On Competition Are Necessary
.
Employee acknowledges that reasonable restrictions on competition are
necessary to protect the interests of the Company. Employee also acknowledges
that he has certain skills necessary to the success of the Company, and that
the Company has provided and will provide to him certain confidential
information that it would not otherwise provide because he has agreed not to
compete with the business of the Company as set forth in this Agreement.
8.5
Restrictions
Against Solicitations
. Employee further covenants and agrees that during
Employee’s employment by the Company and for a period of eighteen (18) months
following the termination of his employment with the Company for any reason, he
will not, except with the prior consent of the Company’s Chief Executive
Officer, directly or indirectly, solicit or hire, or encourage the solicitation
or hiring of, any person who is an employee of the
9
Company for any position as an employee, independent contractor,
consultant or otherwise, provided that the foregoing shall not prevent Employee
from serving as a reference.
8.6
Affiliates
.
For purposes of this Section 8, the term “Company” will be deemed to
include the Company and its Affiliates.
8.7
Ability
to Obtain Other Employment
. Employee hereby represents that his experience
and capabilities are such that in the event his employment with the Company is
terminated, he will be able to obtain employment if he so chooses during the
period of noncompetition following the termination of employment described
above without violating the terms of this Agreement, and that the enforcement
of this Agreement by injunction, as described below, will not prevent him from
becoming so employed. To assist Employee
in obtaining subsequent employment, the Company agrees to respond within 3
business days to any request of Employee as to whether a new position would be
viewed by the Company as violation of the restrictions in this Agreement.
8.8
Injunctive
Relief
. Employee understands and agrees that if he violates any provision
of this Section 8, then in any suit that the Company may bring for that
violation, an order may be made enjoining him from such violation, and an order
to that effect may be made pending litigation or as a final determination of
the litigation. Employee further agrees that the Company’s application for an
injunction will be without prejudice to any other right of action that may
accrue to the Company by reason of the breach of this Section 8.
8.9
Severability
.
In case any provisions (or portions thereof) contained in this Agreement shall,
for any reason, be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect the other
provisions of this Agreement, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein. If, moreover, any one or more of the
provisions contained in this Section 8 shall for any reason be held to be
excessively broad as to duration, geographical scope, activity or subject, it
shall be construed by limiting and reducing it, so as to be enforceable to the
extent compatible with the applicable law as it shall then appear.
8.10
Section 8 Survives Termination
. The provisions of this Section 8 will
survive termination of this
Agreement and the termination of the Employee’s employment. Employee understands
that his obligations under this Section 8 will continue in accordance with
its express terms regardless of any changes in title, position, duties, salary,
compensation or benefits or other terms and conditions of employment. The Company will have the right to assign
Employee’s obligations under this Section 8 to its affiliates, successors
and assigns. Employee expressly consents
to be bound by the provisions of this Section 8 for the benefit of the
Company or any parent, subsidiary or affiliate to whose employ Employee may be
transferred without the necessity that this Agreement be re-executed at the
time of such transfer.
9.
Arbitration
. Unless other arrangements are agreed
to by Employee and the Company, any disputes arising under or in connection
with this Agreement, other than a dispute in which the primary relief sought is
an equitable remedy such as an injunction, will be resolved by binding
arbitration to be conducted pursuant to the Agreement for Arbitration Procedure
of Certain Employment Disputes attached as Exhibit C hereof.
10.
Assignments: Transfers: Effect of Merger
. No rights
or obligations of the Company under this Agreement may be assigned or
transferred by the Company except that such rights or obligations may be
assigned or transferred pursuant to a merger or consolidation, or pursuant to
the sale or transfer of all
10
or substantially all of the
assets of the Company, provided that the assignee or transferee is the
successor to all or substantially all of the assets of the Company. This
Agreement will not be terminated by any merger, consolidation or transfer of
assets of the Company referred to above. In the event of any such merger,
consolidation or transfer of assets, the provisions of this Agreement will be
binding upon the surviving or resulting corporation or the person or entity to
which such assets are transferred. The Company agrees that concurrently with
any merger, consolidation or transfer of assets referred to above, it will
cause any successor or transferee unconditionally to assume, either
contractually or as a matter of law, all of the obligations of the Company
hereunder in a writing promptly delivered to the Employee. This Agreement will
inure to the benefit of, and be enforceable by or against, Employee or
Employee’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, designees and legatees. None of Employee’s
rights or obligations under this Agreement may be assigned or transferred by
Employee other than Employee’s rights to compensation and benefits, which may
be transferred only by will or operation of law. If Employee should die while
any amounts or benefits have been accrued by Employee but not yet paid as of
the date of Employee’s death and which would be payable to Employee hereunder
had Employee continued to live, all such amounts and benefits unless otherwise
provided herein will be paid or provided in accordance with the terms of this
Agreement to such person or persons appointed in writing by Employee to receive
such amounts or, if no such person is so appointed, to Employee’s estate.
11.
No Set-off. No Mitigation Required
. Except as
expressly provided otherwise in this Agreement, the obligation of the Company
to make any payments provided for hereunder and otherwise to perform its
obligations hereunder will not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against Employee or others. In no event will Employee be obligated to seek
other employment or take other action by way of mitigation of the amounts
payable to Employee under any of the provisions of this Agreement, and such
amounts will not be reduced (except as otherwise specifically provided herein)
whether or not Employee obtains other employment.
12.
Taxes
. The Company shall have the right to deduct
from any payments made pursuant to this Agreement any and all federal, state,
and local taxes or other amounts required by law to be withheld.
13.
409A Compliance
. The intent of Employee and the Company is
that the severance and other benefits payable to Employee under this Agreement
not be deemed “deferred compensation” under, or otherwise fail to comply with, Section 409A
of the Internal Revenue Code. Employee
and the Company agree to use reasonable best efforts to amend the terms of this
Agreement from time to time as may be necessary to avoid the imposition of
penalties or additional taxes under Section 409A of the Internal Revenue
Code; provided, however, any such amendment will provide Employee substantially
equivalent economic payments and benefits as set forth herein and will not in
the aggregate, materially increase the cost to, or liability of, the Company
hereunder.
14.
Miscellaneous
. No amendment, modification or waiver
of any provisions of this Agreement or consent to any departure thereof shall
be effective unless in writing signed by the party against whom it is sought to
be enforced. This Agreement contains the entire Agreement that exists between
Employee and the Company with respect to the subjects herein contained and
replaces and supersedes all prior agreements, oral or written, between the
Company and Employee with respect to the subjects herein contained. Nothing
herein shall affect any terms in the Confidential Information Agreement, the
Agreement
for Arbitration Procedure of Certain Employment Disputes,
the LTIP, and any stock plans or agreements
between Employee and the Company now and hereafter in effect from time to time
(except as and to the extent expressly provided herein). If any provision of
this Agreement is held for any reason to be unenforceable, the remainder of
this Agreement shall remain in full force and effect. Each section is intended
to be a severable and independent section within this Agreement. The headings
11
in this Agreement are intended
solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement. This Agreement is made in the
State of Wisconsin and shall be governed by and construed in accordance with
the laws of said State.
This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument. All notices and all other communications provided for in this
Agreement shall be in writing and shall be considered duly given upon personal
delivery, delivery by nationally reputable overnight courier, or on the third
business day after mailing from within the United States by first class
certified or registered mail, return receipt requested, postage prepaid, all
addressed to the address set forth below each party’s signature. Any party may
change its address by furnishing notice of its new address to the other party
in writing in accordance herewith, except that any notice of change of address
shall be effective only upon receipt.
12
The
parties hereto have executed this Employment Agreement as of the date first
written above.
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/s/
Kevin T. Conroy
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Kevin
T. Conroy (“Employee”)
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Notice
Address:
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5759
Ballina Parkway
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Madison,
WI 53711
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EXACT
Sciences Corporation (“Company”)
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By:
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/s/ Patrick
J. Zenner
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Patrick J.
Zenner
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Chairman of
the Board of Directors
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Notice
Address:
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100
Campus Drive
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Marlborough,
MA 01752
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13
Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT
(“Agreement”) is entered into effective as of the 18
th
day of March, 2009, by and
between Maneesh Arora (“Employee”) and EXACT Sciences Corporation, a Delaware
corporation (the “Company”).
WHEREAS
, the
Company desires to employ Employee as its Senior Vice President and Chief
Financial 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
.
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 Senior Vice President and Chief Financial 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 or committee member of other
corporations, charitable organizations and trade associations (provided that
the Company is notified in advance of all such 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.
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
$240,000, 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.
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 forty percent (40%) 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 CEO, 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
1
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-half percent
(0.5%) 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-quarter percent (0.25%) 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-eighth percent (0.125%) 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 $2,750,000
($2,500,000 + $125,000 + $125,000) and (ii) $1,100,000,000, Employee would
receive a cash payout of $3,875,000 ($3,750,000 + $62,500 + $62,500).
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 One Million Two Hundred Fifty Thousand (1,250,000) 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 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.
2
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 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.
(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
3
occurrence of a material breach by the Company of any of its
obligations to Employee under this Agreement or (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.
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
(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.
4
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
fifteen (15) 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 bonus shall also be paid to Employee at the
same time but no later than March 15 of the following year.
(b)
If Employee elects COBRA coverage for health
and/or dental insurance in a timely manner, the Company shall pay the monthly
premium payments for such timely elected coverage (consistent with what was in
place at the date of termination) when each premium is due until the earlier
of: (i) (12) twelve months from the date of termination; (ii) the
date Employee obtains new employment which offers health and/or dental
insurance that is reasonably comparable to that offered by the Company; or (iii) the
date COBRA continuation coverage would otherwise terminate in accordance with
the provisions of COBRA. Thereafter, health and dental insurance coverage shall
be continued only to the extent required by COBRA and only to the extent
Employee timely pays the premium payments himself.
(c)
Within thirty (30) days of the effective date
of termination, the Company shall pay Employee Ten Thousand Dollars ($10,000)
towards the cost of an outplacement consulting package for Employee.
5
(d)
The vesting of the then unvested equity
awards granted to Employee, whether stock options, restricted stock or stock
purchase rights under the Company’s equity compensation plan, or other equity
awards, shall immediately accelerate by a period of 12 months upon such
termination or resignation. Employee will be entitled to exercise such equity
awards in accordance with Section 7.6.
7.2
Change
of Control
. The Board of Directors of the Company has determined that it is
in the best interests of the Company and its stockholders to assure that the
Company will have the continued dedication of the Employee, notwithstanding the
possibility, threat or occurrence of a Change of Control (defined in Section 7.2(a) below).
The Board believes it is imperative to diminish the inevitable distraction of
the Employee by virtue of the personal uncertainties and risks created by a
pending or threatened Change of Control and to encourage the Employee’s full
attention and dedication to the Company currently and in the event of any threatened
or pending Change of Control, and to provide the Employee with compensation and
benefits arrangements upon a Change of Control which ensure that the
compensation and benefits expectations of the Employee will be satisfied and
which are competitive with those of other similarly-situated companies.
Therefore, in order to accomplish these objectives, the Board has caused the
Company to include the provisions set forth in this Section 7.2.
(a)
Change of Control. “Change of Control” shall
mean, and shall be deemed to have occurred if, on or after the date of this
Agreement, (i) any “person” (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) or group acting
in concert, other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company acting in such capacity or a corporation
owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing more than 50%
of the total voting power represented by the Company’s then outstanding Voting
Securities, (ii) during any 12-month period, individuals who at the
beginning of such period constitute the Board of Directors of the Company and
any new director whose election by the Board of Directors or nomination for
election by the Company’s stockholders was approved by a vote of at least two
thirds (2/3) of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof, (iii) the
consummation of a merger or consolidation of the Company with any other
corporation other than a merger or consolidation which would result in the
Voting Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into Voting Securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the Voting Securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the sale or disposition by the Company of (in one
transaction or a series of related transactions) all or substantially all of
the Company’s assets.
(b)
Acceleration of Vesting of Equity Awards.
Subject to Employee’s agreement to remain employed by the Company (or any
successor), if requested, for a period
6
of at least six (6) months following such Change of Control at his
then current base salary,
one hundred percent (100%) of the then
unvested equity awards granted to Employee, whether stock options, restricted
stock or stock purchase rights under the Company’s equity compensation plan, or
other equity awards, shall immediately become fully vested and exercisable upon
a Change of Control
. Employee will be entitled to exercise such
vested equity awards in accordance with the applicable grant agreements.
(c)
LTIP Awards. Any awards granted to Employee
under the LTIP as of the effective date of the Change of Control shall be
treated as described in the LTIP.
Without limiting the foregoing, the LTIP shall provide that if, in
anticipation or contemplation of a pending or potential Change of Control or
while a potential Change of Control is under consideration or being negotiated
by the Company’s board of directors, 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), Employee
shall be deemed to remain an employee for purposes of the LTIP as of the
effective date of such Change of Control and shall receive a full payout under
the LTIP as described in Section 3.3 of this Agreement as though he
remained an employee of the Company as of the effective date of such Change of
Control.
(d)
If, within twelve (12) months before the
effective date of a Change of Control, 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), or, if
Employee remains employed with the Company on the effective date of a Change of
Control, subject to the conditions described in Section 7.3 below, the
Employee shall receive a single lump-sum payment on the effective date of such
Change of Control equal to eighteen (18) months (or, in the event of a Change
of Control transaction occurring on or prior to April 18, 2010, which has
an equity value of less than $100 million, fifteen (15) months) at Employee’s
then current Base Salary and pro-rata target bonus through the effective date
of the Change of Control; provided, however, that any payments previously made
by the Company to Employee in connection with a termination occurring within
twelve (12) months before the effective date of such Change of Control pursuant
to Section 7.1(a) of this Agreement shall be credited against the
lump-sum payment due Employee pursuant to this Section 7.2(d).
7.3
Conditions
Precedent to Payment of Severance
. The Company’s obligations to Employee
described in Sections 7.1 and 7.2 are contingent on Employee’s delivery to the
Company of a signed waiver and release in a form reasonably satisfactory to the
Company of all claims he may have against the Company, and his not revoking
such release within 21 days after his date of termination.
Moreover, the Employee’s rights to receive
ongoing payments and benefits pursuant to Sections 7.1 and 7.2 (including,
without limitation, the right to ongoing payments under the Company’s equity
plans and LTIPs) are conditioned on the Employee’s ongoing compliance with his
obligations as described in Section 8 hereof. Any cessation by the Company of any such payments and
benefits shall be in addition to, and not in lieu of, any and all other
remedies available to the Company for Employee’s breach of his obligations
described in Section 8 hereof.
7.4
No
Severance Benefits
. Employee is not entitled to any severance benefits if
this Agreement is terminated pursuant to Sections 6.1(a) or 6.2(a) of
this Agreement; provided
7
however, Employee shall be entitled to (i) Base Salary prorated
through the effective date of such termination; (ii) Bonuses which have
been earned and for which the payment date occurs prior to the effective date
of such termination; and (iii) medical coverage and other benefits
required by law and plans (as provided in Section 7.5, below).
7.5
Benefits
Required by Law and Plans: Vacation Time Pay
. In the event of the
termination of Employee’s employment, Employee will be entitled to medical and
other insurance coverage, if any, as is required by law and, to the extent not
inconsistent with this Agreement, to receive such additional benefits as
Employee may be entitled under the express terms of applicable benefit plans
(other than bonus or severance plans) of the Company, its subsidiaries and
Affiliates.
7.6
Exercise
Period of Equity Awards after Termination
. Unless it would subject the
Employee to adverse tax consequences under Section 885 of the American
Jobs Creation Act of 2004, Pub. Law No. 108-357, 118 Stat. 1418 (the Act),
which added § 409A to the Internal Revenue Code, notwithstanding anything
contained herein or in the equity grant agreements to the contrary, in the
event of the termination of Employee’s employment with the Company, Employee’s
vested equity awards shall be open for exercise until the earlier of (i) two
(2) years from the date of termination or (ii) the latest date on
which those equity awards expire or are eligible to be exercised under the
grant agreements, determined without regard to such termination or resignation;
provided further that such extended exercise period shall not apply in the
event the Employee resigns without Good Reason or is terminated by the Company
for Cause, in which case, the exercise periods shall continue to be governed by
the terms of the grant agreements.
7.7
409A Compliance
. Notwithstanding anything in this Section 7
to the contrary, to the extent that any payments under this Section 7 are
considered deferred compensation subject to Section 409A of the Internal
Revenue Code, such payments shall not be paid for six months following the
Employee’s separation from service (if, and only to the extent, applicable and
required for compliance with Section 409A). To the extent that any payment is delayed
pursuant to this subsection, it shall be paid on the first day after the end of
such required period.
8.
Restrictions
.
8.1
The
Confidential Information Agreement
. Employee will enter into and comply with
the terms of the Employee Confidentiality and Assignment Agreement in
substantially the form attached hereto as Schedule A (the “Confidential
Information Agreement”).
8.2
Agreement
Not to Compete
. In consideration for all of the payments and benefits that
may become due to Employee under this Agreement, Employee agrees that for a
period of eighteen (18) months after termination of his employment for any
reason, he will not, directly or indirectly, without the Company’s prior
written consent, (a) perform for a Competing Entity in any Restricted Area
any of the same services or substantially the same services that he performed
for the Company; (b) in any Restricted Area, advise, assist, participate
in, perform services for, or consult with a Competing Entity regarding the
management, operations, business or financial strategy, marketing or sales
functions or products of the Competing Entity (the activities in clauses (a) and
(b) collectively are, the “Restricted Activities”); or (c) solicit or
divert the business of any Restricted Customer by offering competitive products
or services to such Restricted Customer to the detriment of the Company.
Employee acknowledges that in his position with the Company he has had and will
have access to knowledge of confidential information about all aspects of the
Company that would be of significant value to the Company’s competitors.
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8.3
Additional
Definitions
.
(a)
“Customer” means any individual or entity for
whom the Company has provided services or products or made a proposal to
perform services or provide products.
(b)
“Restricted Customer” means any Customer with
whom/which Employee had contact on behalf of the Company during the 12 months
preceding the end, for whatever reason, of his employment.
(c)
“Competing Entity” means any business entity
engaged in the development, design, manufacture, marketing, distribution or
sale of molecular diagnostic products.
(d)
“Restricted Area” means any geographic
location where if Employee were to perform any Restricted Activities for a
Competing Entity in such a location, the effect of such performance would be
competitive to the Company.
8.4
Reasonable
Restrictions On Competition Are Necessary
.
Employee acknowledges that reasonable restrictions on competition are
necessary to protect the interests of the Company. Employee also acknowledges
that he has certain skills necessary to the success of the Company, and that
the Company has provided and will provide to him certain confidential
information that it would not otherwise provide because he has agreed not to
compete with the business of the Company as set forth in this Agreement.
8.5
Restrictions
Against Solicitations
. Employee further covenants and agrees that during
Employee’s employment by the Company and for a period of eighteen (18) months
following the termination of his employment with the Company for any reason, he
will not, except with the prior consent of the Company’s Chief Executive
Officer, directly or indirectly, solicit or hire, or encourage the solicitation
or hiring of, any person who is an employee of the Company for any position as
an employee, independent contractor, consultant or otherwise, provided that the
foregoing shall not prevent Employee from serving as a reference.
8.6
Affiliates
.
For purposes of this Section 8, the term “Company” will be deemed to
include the Company and its Affiliates.
8.7
Ability
to Obtain Other Employment
. Employee hereby represents that his experience
and capabilities are such that in the event his employment with the Company is
terminated, he will be able to obtain employment if he so chooses during the
period of noncompetition following the termination of employment described
above without violating the terms of this Agreement, and that the enforcement
of this Agreement by injunction, as described below, will not prevent him from
becoming so employed. To assist Employee
in obtaining subsequent employment, the Company agrees to respond within 3
business days to any request of Employee as to whether a new position would be
viewed by the Company as violation of the restrictions in this Agreement.
8.8
Injunctive
Relief
. Employee understands and agrees that if he violates any provision
of this Section 8, then in any suit that the Company may bring for that
violation, an order may be made enjoining him from such violation, and an order
to that effect may be made pending litigation or as a final determination of
the litigation. Employee further agrees that the Company’s application for an
injunction will be without prejudice to any other right of action that may
accrue to the Company by reason of the breach of this Section 8.
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8.9
Severability
.
In case any provisions (or portions thereof) contained in this Agreement shall,
for any reason, be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect the other
provisions of this Agreement, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained
herein. If, moreover, any one or more of
the provisions contained in this Section 8 shall for any reason be held to
be excessively broad as to duration, geographical scope, activity or subject,
it shall be construed by limiting and reducing it, so as to be enforceable to
the extent compatible with the applicable law as it shall then appear.
8.10
Section 8 Survives Termination
. The provisions of this Section 8 will
survive termination of this
Agreement and the termination of the Employee’s employment. Employee
understands that his obligations under this Section 8 will continue in
accordance with its express terms regardless of any changes in title, position,
duties, salary, compensation or benefits or other terms and conditions of
employment. The Company will have the
right to assign Employee’s obligations under this Section 8 to its
affiliates, successors and assigns.
Employee expressly consents to be bound by the provisions of this Section 8
for the benefit of the Company or any parent, subsidiary or affiliate to whose
employ Employee may be transferred without the necessity that this Agreement be
re-executed at the time of such transfer.
9.
Arbitration
. Unless other arrangements are agreed
to by Employee and the Company, any disputes arising under or in connection
with this Agreement, other than a dispute in which the primary relief sought is
an equitable remedy such as an injunction, will be resolved by binding arbitration
to be conducted pursuant to the Agreement for Arbitration Procedure of Certain
Employment Disputes attached as Exhibit B hereof.
10.
Assignments: Transfers: Effect of Merger
. No rights
or obligations of the Company under this Agreement may be assigned or
transferred by the Company except that such rights or obligations may be
assigned or transferred pursuant to a merger or consolidation, or pursuant to
the sale or transfer of all or substantially all of the assets of the Company,
provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company. This Agreement will not be
terminated by any merger, consolidation or transfer of assets of the Company
referred to above. In the event of any such merger, consolidation or transfer
of assets, the provisions of this Agreement will be binding upon the surviving
or resulting corporation or the person or entity to which such assets are
transferred. The Company agrees that concurrently with any merger,
consolidation or transfer of assets referred to above, it will cause any
successor or transferee unconditionally to assume, either contractually or as a
matter of law, all of the obligations of the Company hereunder in a writing
promptly delivered to the Employee. This Agreement will inure to the benefit
of, and be enforceable by or against, Employee or Employee’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
designees and legatees. None of Employee’s rights or obligations under this
Agreement may be assigned or transferred by Employee other than Employee’s
rights to compensation and benefits, which may be transferred only by will or
operation of law. If Employee should die while any amounts or benefits have
been accrued by Employee but not yet paid as of the date of Employee’s death
and which would be payable to Employee hereunder had Employee continued to
live, all such amounts and benefits unless otherwise provided herein will be
paid or provided in accordance with the terms of this Agreement to such person
or persons appointed in writing by Employee to receive such amounts or, if no
such person is so appointed, to Employee’s estate.
11.
No Set-off. No Mitigation Required
. Except as
expressly provided otherwise in this Agreement, the obligation of the Company
to make any payments provided for hereunder and otherwise to perform its
obligations hereunder will not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against Employee or others. In no
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event will Employee be
obligated to seek other employment or take other action by way of mitigation of
the amounts payable to Employee under any of the provisions of this Agreement,
and such amounts will not be reduced (except as otherwise specifically provided
herein) whether or not Employee obtains other employment.
12.
Taxes
. The Company shall have the right to deduct
from any payments made pursuant to this Agreement any and all federal, state,
and local taxes or other amounts required by law to be withheld.
13.
409A Compliance
. The intent of Employee and the Company is
that the severance and other benefits payable to Employee under this Agreement
not be deemed “deferred compensation” under, or otherwise fail to comply with, Section 409A
of the Internal Revenue Code. Employee
and the Company agree to use reasonable best efforts to amend the terms of this
Agreement from time to time as may be necessary to avoid the imposition of
penalties or additional taxes under Section 409A of the Internal Revenue Code;
provided, however, any such amendment will provide Employee substantially
equivalent economic payments and benefits as set forth herein and will not in
the aggregate, materially increase the cost to, or liability of, the Company
hereunder.
14.
Miscellaneous
. No amendment, modification or waiver
of any provisions of this Agreement or consent to any departure thereof shall
be effective unless in writing signed by the party against whom it is sought to
be enforced. This Agreement contains the entire Agreement that exists between
Employee and the Company with respect to the subjects herein contained and
replaces and supersedes all prior agreements, oral or written, between the
Company and Employee with respect to the subjects herein contained. Nothing herein
shall affect any terms in the Confidential Information Agreement, the
Agreement
for Arbitration Procedure of Certain Employment Disputes,
the LTIP, and any stock plans or agreements
between Employee and the Company now and hereafter in effect from time to time
(except as and to the extent expressly provided herein). If any provision of
this Agreement is held for any reason to be unenforceable, the remainder of
this Agreement shall remain in full force and effect. Each section is intended
to be a severable and independent section within this Agreement. The headings
in this Agreement are intended solely for convenience of reference and shall be
given no effect in the construction or interpretation of this Agreement. This
Agreement is made in the State of Wisconsin and shall be governed by and
construed in accordance with the laws of said State.
This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument. All notices and all other communications provided for in this
Agreement shall be in writing and shall be considered duly given upon personal
delivery, delivery by nationally reputable overnight courier, or on the third
business day after mailing from within the United States by first class
certified or registered mail, return receipt requested, postage prepaid, all
addressed to the address set forth below each party’s signature. Any party may
change its address by furnishing notice of its new address to the other party
in writing in accordance herewith, except that any notice of change of address
shall be effective only upon receipt.
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The
parties hereto have executed this Employment Agreement as of the date first
written above.
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/s/
Maneesh Arora
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Maneesh
Arora (“Employee”)
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Notice
Address:
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EXACT
Sciences Corporation (“Company”)
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By:
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/s/
Patrick J. Zenner
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Patrick
J. Zenner
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Chairman
of the Board of Directors
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Notice
Address:
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100
Campus Drive
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Marlborough,
MA 01752
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