EXHIBIT 99.3
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is effective as of
May 12, 2006 (the "Effective Date"), between Clinical Data, Inc. a Delaware
corporation (the "Company"), and Xxxxxx X. Xxxxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive is currently employed as the Executive Vice
President and Chief Legal Officer of the Company;
WHEREAS, the Company has offered to continue employing the Executive on the
terms set forth below; and
WHEREAS, the Executive has agreed to continued employment with the Company
on the terms as set forth below;
NOW THEREFORE, in consideration of the foregoing, of the mutual promises
contained herein and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. EMPLOYMENT TERM. The Executive's term of employment under this Agreement
shall be for an initial term commencing on the Effective Date and shall end on
June 30, 2007. The term of this Agreement shall be automatically extended
thereafter for successive one (1) year periods unless, at least ninety (90) days
prior to the end of the initial term of this Agreement or the then current
succeeding one-year extended term of this Agreement, the Company or Executive
has notified the other that the term hereunder shall terminate upon its
expiration date. The initial term of this Agreement, as it may be extended from
year to year thereafter, is herein referred to as the "Employment Term." In all
events hereunder, Executive's employment is subject to earlier termination
pursuant to Section 7 hereof, and upon such earlier termination the Employment
Term shall be deemed to have ended.
2. POSITION & DUTIES.
(a) Except as provided in Section 2(b) below, the Executive shall serve as
the Company's Executive Vice President and Chief Legal Officer during the
Employment Term. As such, the Executive shall have such duties, authorities and
responsibilities commensurate with the duties, authorities and responsibilities
of persons in similar capacities in similarly sized companies and such other
duties and responsibilities as the Company's Board of Directors (the "Board")
shall designate that are consistent with the Executive's position.
(b) During the Employment Term, the Executive shall use his best efforts to
perform faithfully and efficiently the duties and responsibilities assigned to
the Executive hereunder and devote all of the Executive's business time
(excluding periods of vacation and other approved leaves of absence) to the
performance of the Executive's duties with the Company, provided the foregoing
shall not prevent the Executive from participating in charitable, civic,
educational, professional, community or industry affairs or, with prior written
approval of the Board, serving on the board of directors or advisory boards of
other companies. The Executive shall not
manage the Executive's and the Executive's family's personal investments in a
manner that creates a potential business conflict or the appearance thereof. If
at any time service on any board of directors or advisory board would, in the
good faith judgment of the Board, conflict with the Executive's fiduciary duty
to the Company or create any appearance thereof, the Executive shall promptly
resign from such other board of directors or advisory board after written notice
of the conflict is received from the Board.
(c) The Executive further agrees to serve without additional compensation
as a director of the Company and/or an officer and director of any of the
Company's subsidiaries and agrees that any amounts received from any such
corporation may be offset against the amounts due hereunder. In addition, it is
agreed that the Company may assign the Executive to one of its subsidiaries for
payroll purposes, but such assignment shall not relieve the Company of its
obligations hereunder.
3. BASE SALARY. The Company agrees to pay the Executive a base salary (the
"Base Salary") at an annual rate of $260,000, payable in accordance with the
regular payroll practices of the Company, but not less frequently than monthly.
The Executive's Base Salary shall be subject to review by the Board (or a
committee thereof) and may be increased, but not decreased, from time to time by
the Board. The base salary as determined herein from time to time shall
constitute "Base Salary" for purposes of this Agreement.
4. BONUSES. The Executive shall be eligible to participate in the Company's
bonus and other incentive compensation plans and programs for the Company's
senior executives at a level commensurate with his position for the fiscal year
during the Employment Term. The Executive shall have the opportunity to earn an
annual target bonus measured against performance criteria to be determined by
the Board (or a committee thereof) of 100% of Base Salary.
5. EQUITY AWARDS. The Executive shall be subject to, and shall comply with,
the stock ownership guidelines of the Company as may be in effect from time to
time. If there is a Change in Control (as defined in the attached Appendix C) or
if the Executive's employment is terminated by the Company without Cause (as
defined in Section 7(c)), or by the Executive for Good Reason (as defined in
Section 7(e)), then all outstanding unvested equity awards granted to the
Executive listed on Appendix D hereto shall become fully vested and the time
period that Executive may have to exercise such option grants shall be extended
for a period equal to the shorter of (i) three (3) years, or (ii) the remaining
term of the options (the "Extended Exercise Period"). The parties agree that the
attached Appendix D may be modified and updated upon a vote of the Board of
Directors, only in order for the Board to add to Appendix D certain future
awards that the Board agrees shall also qualify for acceleration and the
Extended Exercise Period. Upon such a vote of the Board, the parties shall
attach a revised Appendix D to this Agreement, which shall include the
additional option grant(s) that the Board has expressly agreed shall qualify for
acceleration and the Extended Exercise Period, and this Agreement shall not be
deemed amended or modified in any other manner as a result.
6. EMPLOYEE BENEFITS.
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(a) BENEFIT PLANS. The Executive shall be entitled to participate in all
employee benefit plans of the Company including, but not limited to, 401(k),
profit sharing, medical coverage, education, or other retirement or welfare
benefits that the Company has adopted or may adopt, maintain or contribute to
for the benefit of its senior executives at a level commensurate with the
Executive's positions, subject to satisfying the applicable eligibility
requirements.
(b) VACATION. The Executive shall be entitled to four (4) weeks of paid
vacation per year, plus any amounts (up to a maximum of three (3) weeks) rolled
over from previous years. Vacation may be taken at such times as the Executive
elects with due regard to the needs of the Company.
(c) BUSINESS AND ENTERTAINMENT EXPENSES. Upon presentation of appropriate
documentation, the Executive shall be reimbursed in accordance with the
Company's expense reimbursement policy for all reasonable and necessary business
and entertainment expenses incurred in connection with the performance of the
Executive's duties hereunder.
(d) [RESERVED]
(e) INDEMNIFICATION. The Company shall indemnify the Executive to the same
extent that its officers, directors and employees are entitled to
indemnification pursuant to any agreements with the Company relating thereto,
the Company's Certificate of Incorporation and Bylaws for any acts or omissions
by reason of being a director, officer or employee of the Company as of the
Effective Date. The parties acknowledge that the Executive is also afforded
contractual indemnification pursuant to that certain Indemnification Agreement
between the Executive and the Company, dated as of October 17, 2005 (the
"Indemnification Agreement"), which shall remain in full force and effect.
(f) CERTAIN AMENDMENTS. Nothing herein shall be construed to prevent the
Company from amending, altering, eliminating or reducing any plans, benefits or
programs so long as the Executive continues to receive compensation and benefits
consistent with Sections 3 through 6.
7. TERMINATION. The Executive's employment and the Employment Term shall
terminate on the first of the following to occur:
(a) DISABILITY. Upon written notice by the Company to the Executive of
termination due to Disability, while the Executive remains Disabled. For
purposes of this Agreement, "Disability" shall be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result of the
Executive incapacity due to physical or mental illness, the Executive shall have
been absent from fully performing his duties with the Company for a cumulative
period of six (6) months, the Company shall have provided a notice of
termination under this Section 7(a), and, within thirty days after such notice
being given, the Executive shall not have returned to the full performance of
his duties hereunder.
(b) DEATH. Automatically on the date of death of the Executive.
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(c) CAUSE. Immediately upon written notice by the Company to the Executive
of a termination for Cause. "Cause" shall mean (i) the willful failure of the
Executive to render services to the Company in accordance with his assigned
duties consistent with this Agreement, and such failure continues for a period
of more than 30 days after written notice has been provided to the Executive by
the Board which itemizes the reasons for such failure of performance; (ii)
reckless misconduct, bad faith or gross negligence of the Executive in
connection with the performance of his assigned duties or breach of the material
terms of this Agreement which results in material loss, damage or injury to the
Company or materially and adversely affects the business activities, reputation,
goodwill or image of the Company; (iii) the conviction of the Executive of any
felony or a crime of moral turpitude, either in connection with the performance
of his obligations to the Company or which adversely affects the Executive's
ability to perform such obligations, or which adversely affects the business
activities, reputation, goodwill or image of the Company; (iv) dishonesty or
breach of fiduciary duty, which results in material loss, damage or injury to
the Company or materially and adversely affects the business activities,
reputation, goodwill or image of the Company; (v) the commission by the
Executive of an act of fraud, embezzlement or deliberate disregard of the rules
or policies of the Company which results in material loss, damage or injury to
the Company or materially and adversely affects the business activities,
reputation, goodwill or image of the Company; or (vi) the unauthorized and
intentional disclosure by the Executive of any trade secret or confidential
information of the Company or any of its clients or customers, which results in
material damage or injury to the Company, or materially and adversely affects
the business activities, reputation, goodwill or image of the Company or its
clients or customers.
(d) WITHOUT CAUSE. Upon written notice by the Company to the Executive of
an involuntary termination without Cause and other than due to death or
Disability.
(e) GOOD REASON. Upon written notice by the Executive to the Company of a
termination for Good Reason, unless the reasons for any proposed termination for
Good Reason are remedied in all material respects by the Company within 30 days
following written notification by the Executive to the Company, that the
Executive intends to terminate the Executive's employment hereunder for one of
the reasons set forth below. "Good Reason" shall mean, without the Executive's
express written consent, the occurrence of any of the following events:
(1) During the Employment Term,
(A) an adverse change in the Executive's position as Executive
Vice President and Chief Legal Officer as a result of a material diminution in
the Executive's duties or responsibilities or the assignment to the Executive of
any duties or responsibilities that are inconsistent in any material respect
with the Executive's position, authority, duties or responsibilities as
contemplated by this Agreement; provided, however, that "Good Reason" shall not
exist under this Section 7(e)(1) solely because (i) the Company's stock is no
longer publicly traded on an established securities exchange or (ii) the Company
has restructured, sold or spun-off any of its businesses, products or services;
(B) any material breach of this Agreement by the Company that is
adverse to the Executive;
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(C) the Executive being required to relocate to a principal place
of employment more than fifty (50) miles from Newton, Massachusetts, the
Executive's current principal place of employment with the Company as of the
Effective Date;
(D) the failure of the Company to obtain an agreement from any
successor to all or substantially all of the assets or business of the Company
to assume and agree to perform this Agreement within fifteen (15) days after a
merger, consolidation, sale or similar transaction; or
(E) the Executive's termination of employment at any time during
the thirty-day period beginning on the last day of the Employment Term, as
determined solely for this purpose under Section 1, following the Company's
notice of nonrenewal.
(2) Notwithstanding the foregoing, (i) a suspension of the Executive's
title and authority while on administrative leave due to a reasonable belief
that the Executive has engaged in misconduct, whether or not the suspected
misconduct constitutes Cause for employment termination, shall not be considered
"Good Reason", (ii) an event shall not be considered Good Reason if the
Executive fails to deliver notice of termination for Good Reason specifying such
event in detail within 90 days of his actual knowledge of such event, and (iii)
changes to compensation and benefit plans not specifically targeted to the
Executive shall not be considered Good Reason.
(f) WITHOUT GOOD REASON. The Executive shall provide 60 days' prior written
notice to the Company of the Executive's intended termination of employment
without Good Reason (the "Transition Period"). During the Transition Period, the
Executive shall assist and advise the Company in any transition of business,
customers, prospects, projects and strategic planning, and the Company shall pay
the pro rata portion of the Executive's annual salary and benefits through the
end of the Transition Period. The Company may, in its sole discretion, upon five
(5) days prior written notice to the Executive, make such termination of
employment effective earlier than the Transition Period, but it shall pay the
pro rata portion of the Executive's salary and benefits through the earlier of:
the balance of the Transition Period, or such time during the Transition Period
as the Executive accepts employment or a consulting engagement from a third
party.
8. CONSEQUENCES OF TERMINATION. Any termination payments made and benefits
provided under this Agreement to the Executive shall be in lieu of any
termination or severance payments or benefits for which the Executive may be
eligible under any of the plans, policies or programs of the Company or its
affiliates as may be in effect from time to time. Except to the extent otherwise
provided in this Agreement, all benefits, including, without limitation, stock
options, stock appreciation rights, restricted stock units and other awards
under the Company's long-term incentive programs, shall be subject to the terms
and conditions of the plan or arrangement under which such benefits accrue, are
granted or are awarded. Subject to Section 9, the following amounts and benefits
shall be due to the Executive.
(a) DISABILITY. Upon employment termination due to Disability, the Company
shall pay or provide the Executive (i) any unpaid Base Salary through the date
of termination and any accrued vacation (up to a maximum of seven (7) weeks);
(ii) any unpaid bonus earned with
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respect to any fiscal year ending on or preceding the date of termination; (iii)
reimbursement for any unreimbursed expenses incurred through the date of
termination; (iv) all other payments and benefits to which the Executive may be
entitled under the terms of any applicable compensation arrangement or benefit,
equity or perquisite plan or program or grant or this Agreement, including but
not limited to any applicable insurance benefits (collectively, "Accrued
Amounts"). Executive will also be paid a pro-rata portion of the Executive's
annual bonus for the performance year in which the Executive's termination
occurs (the "Pro Rata Bonus"), payable in accordance with the last sentence of
Section 8(e) (determined by multiplying the amount the Executive would have
received based upon actual performance had employment continued through the end
of the performance year by a fraction, the numerator of which is the number of
days during the performance year of termination that the Executive is employed
by the Company and the denominator of which is 365). Upon such termination, all
stock options, stock appreciation rights and restricted stock awards will fully
vest and become non-forfeitable. Notwithstanding anything contained herein to
the contrary, the Pro Rata Bonus shall not be paid in the event the Executive
voluntarily resigns from employment with the Company or otherwise voluntarily
terminates employment without Good Reason.
(b) DEATH. In the event the Employment Term ends on account of the
Executive's death, the Executive's estate (or to the extent a beneficiary has
been designated in accordance with a program, the beneficiary under such
program) shall be entitled to any Accrued Amounts, including but not limited to
proceeds from any Company sponsored life insurance programs. Executive's estate
(or beneficiary) will also be paid a pro-rata portion of the Pro Rata Bonus.
Upon the Executive's death, all stock options, stock appreciation rights and
restricted stock awards will fully vest and become non-forfeitable.
(c) TERMINATION FOR CAUSE OR WITHOUT GOOD REASON. If the Executive's
employment should be terminated (i) by the Company for Cause, or (ii) by the
Executive without Good Reason, the Company shall pay to the Executive any
Accrued Amounts only, and shall not be obligated to make any additional payments
to Executive.
(d) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. If the Executive's
employment by the Company is terminated by the Company other than for Cause (and
not due to Disability or death) or by the Executive for Good Reason, then the
Company shall pay or provide the Executive with:
(1) Accrued Amounts;
(2) the Pro Rata Bonus;
(3) subject to compliance with Section 11(a)-(g) inclusive, continued
payment of the Executive's Base Salary as in effect immediately preceding the
last day of the Employment Term for a period of 12 months after the last day of
employment;
(4) continued participation at the Company's expense in all medical,
dental and vision plans which cover the Executive (and eligible dependents) upon
the same terms and conditions (except for the requirements of the Executive's
continued employment) in effect for active employees of the Company, for a
period of 12 months following the last day of the
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Employment Term. In the event the Executive obtains other employment that offers
substantially similar or improved benefits, as to any particular medical, dental
or vision plan, such continuation of coverage by the Company for such similar or
improved benefit under such plan under this subsection shall immediately cease.
The continuation of health benefits under this subsection shall reduce the
Executive's rights and the Company's payment obligations under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA").
(e) The parties acknowledge and agree that all calculations of bonuses
by the Company are based on targets, goals and objectives established by the
Board of Directors for each fiscal year, and that any bonus plans, as well as
the Executive's rights to receive bonus payments, are conditioned on an
assessment by the Board of Directors (or a committee thereof) of the
satisfaction of performance targets for the applicable fiscal year in which the
bonus is to be paid. The parties acknowledge that calculations of applicable
bonuses have historically been made within 90 days following the conclusion of a
fiscal year for which the bonus may be due or accrued, and payment of the
applicable bonus has been historically made within 10 business days following
the Board of Directors' determination. Accordingly, the parties recognize and
agree that the right to receive any payment to which the Executive may be
entitled under the terms of any applicable bonus arrangement or benefit,
including any bonus-related portion of the Accrued Amount, or the Pro Rata
Bonus, can only be established after the review and calculations of the
applicable fiscal year bonus entitlements are made by the Board of Directors
(including any committee thereof). Once such calculations are made by the Board
of Directors (including any committee thereof), the Executive's right to receive
the Pro Rata Bonus (or any applicable bonus-related portion of the Accrued
Amount) shall be accrued and paid as promptly as practicable following a
determination of the bonus by the Board of Directors (or any committee thereof)
in the event the Executive is entitled to be paid such bonus under the preceding
provisions of Section 8(a)-(d) above. Notwithstanding the foregoing, if the
Executive is terminated by the Company without Cause, or by the Executive for
Good Reason, the Board of Directors (including any committee thereof) shall use
its best efforts to meet as promptly as practicable within 30 days following any
notice of such termination by the Company without Cause, or by the Executive for
Good Reason, in order to make a good faith determination of the Pro Rata Bonus,
and to pay such Pro Rata Bonus (if earned) within 30 days of such determination
by the Board of Directors (including any committee thereof).
9. CONDITIONS. Any payments or benefits made or provided pursuant to
Section 8 (other than Accrued Amounts) are subject to the Executive's (or, in
the event of the Executive's death, the beneficiary's or estate's, or in the
event of the Executive's Disability, the guardian's):
(a) compliance with the provisions of Section 11 hereof;
(b) delivery to the Company of the executed Agreement and General Release
(the "General Release"), which shall be in the form attached hereto as Appendix
A (with such changes therein or additions thereto as needed under then
applicable law to give effect to its intent and purpose) within 21 days of
presentation thereof by the Company to the Executive; and
(c) delivery to the Company of a resignation from all offices,
directorships and fiduciary positions with the Company, its affiliates and
employee benefit plans.
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Notwithstanding the due date of any post-employment payments, any amounts
due following a termination under this Agreement (other than Accrued Amounts)
shall not be due until after the expiration of any revocation period applicable
to the General Release without the Executive having revoked such General
Release, and any such amounts shall be paid or commence being paid to the
Executive within five (5) days of the expiration of such revocation period
without the occurrence of a revocation by the Executive (or such later date as
may be required under Section 409A of the Code). Nevertheless (and regardless of
whether the General Release has been executed by the Executive), upon any
termination of Executive's employment, Executive shall be entitled to receive
any Accrued Amounts, payable after the date of termination in accordance with
the Company's applicable plan, program, policy or payroll procedures.
10. SECTION 4999 EXCISE TAX.
(a) If any payments, rights or benefits (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement of Executive with the
Company or any person affiliated with the Company) (the "Payments") received or
to be received by Executive will be subject to the tax (the "Excise Tax")
imposed by Section 4999 of the Code (or any similar tax that may hereafter be
imposed), then, except as set forth in Section 10(b) below, the Company shall
pay to Executive an amount in addition to the Payments (the "Gross-Up Payment")
as calculated below. The Gross Up Payment shall be in an amount such that, after
deduction of any Excise Tax on the Payments and any federal, state and local
income and employment tax and Excise Tax on the Gross Up Payment, but before
deduction for any federal, state or local income and employment tax on the
Payments, the net amount retained by the Executive shall be equal to the
Payments.
(b) Notwithstanding anything in this Agreement to the contrary, if the
amount of Payments that will be subject to the Excise Tax does not exceed four
times the "Base Amount" (as defined in Section 280G(d)(2) of the Code), then
Executive's taxable cash-based benefits under this Agreement will first be
reduced in the order selected by Executive, and then, if necessary, Executive's
equity-based compensation (based on the value of such equity-based compensation
as a "parachute payment" as defined in Treasury Regulations promulgated under
Section 280G of the Code and IRS revenue rulings, revenue procedures and other
official guidance) shall be reduced in the order selected by Executive, and then
any other Payments shall be reduced as reasonably determined by the Company, to
the extent necessary to avoid imposition of the Excise Tax. If Executive does
not select the amount to be reduced within the time prescribed by the Company,
the reductions specified herein shall be made by the Company in its sole
discretion from such compensation as it shall determine. Any amount so reduced
shall be irrevocably forfeited and Executive shall have no further rights to
receive it.
(c) The process for calculating the Excise Tax, determining the amount of
any Gross-Up Payment and other procedures relating to this Section 10 are set
forth in Appendix B attached hereto. For purposes of making the determinations
and calculations required herein, the Accounting Firm (as defined in Appendix B)
may rely on reasonable, good faith interpretations concerning the application of
Section 280G and 4999 of the Code, provided that the Accounting Firm shall make
such determinations and calculations on the basis of "substantial authority"
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(within the meaning of Section 6662 of the Code) and shall provide opinions to
that effect to both the Company and Executive.
11. POST-EMPLOYMENT OBLIGATIONS
(a) CONFIDENTIALITY. The Executive agrees that the Executive shall not,
directly or indirectly, use, make available, sell, disclose or otherwise
communicate to any person, other than in the course of the Executive's
employment and for the benefit of the Company, either during the period of the
Executive's employment or at any time thereafter, any nonpublic, proprietary or
confidential information, knowledge or data relating to the Company, any of its
subsidiaries, affiliated companies or businesses, which shall have been obtained
by the Executive during the Executive's employment by the Company. The foregoing
shall not apply to information that (i) was known to the public prior to its
disclosure to the Executive; (ii) becomes known to the public subsequent to
disclosure to the Executive through no wrongful act of the Executive or any
representative of the Executive; or (iii) the Executive is required to disclose
by applicable law, regulation or legal process (provided that the Executive
provides the Company with prior notice of the contemplated disclosure and
reasonably cooperates with the Company at its expense in seeking a protective
order or other appropriate protection of such information). Notwithstanding
clauses (i) and (ii) of the preceding sentence, the Executive's obligation to
maintain such disclosed information in confidence shall not terminate where only
portions of the information are in the public domain.
(b) NON-SOLICITATION. During the Executive's employment with the Company
and for the 6 month period thereafter, whether at the end of the Employment Term
or thereafter, the Executive agrees that the Executive will not, directly or
indirectly, individually or on behalf of any other person, firm, corporation or
other entity, knowingly solicit, aid or induce (i) any managerial level employee
of the Company or any of its subsidiaries or affiliates to leave such employment
in order to accept employment with or render services to or with any other
person, firm, corporation or other entity unaffiliated with the Company or
knowingly take any action to materially assist or aid any other person, firm,
corporation or other entity in identifying or hiring any such employee
(provided, that the foregoing shall not be violated by general advertising not
targeted at Company employees nor by serving as a reference for an employee with
regard to an entity with which the Executive is not affiliated) or (ii) any
customer of the Company or any of its subsidiaries or affiliates to purchase
goods or services then sold by the Company or any of its subsidiaries or
affiliates from another person, firm, corporation or other entity or assist or
aid any other persons or entity in identifying or soliciting any such customer
(provided, that the foregoing shall not apply to any product or service which is
not covered by the non-competition provision set forth in Section 11(c), below).
(c) NON-COMPETITION. The Executive acknowledges that the Executive performs
services of a unique nature for the Company that are irreplaceable, and that the
Executive's performance of such services to a competing business (other than
respecting a product or service of the Company involving less than one percent
(1%) of the Company's revenues in the prior fiscal year ("De Minimis")) will
result in irreparable harm to the Company. Accordingly, during the Executive's
employment hereunder and for the six (6) month period thereafter, (whether at
the end of the Employment Term or thereafter), the Executive shall not, without
the Board's prior written consent, directly or indirectly engage in the
development,
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production, marketing, or sale of products or services that compete (or, upon
commercialization, could compete) with products of the Company or its affiliates
being developed, marketed or sold as of the date of such termination (such
business or activity, a "Competing Business") whether such engagement shall be
as an officer, director, owner, employee, partner, consultant, advisor or any
other capacity. This Section 11(c) shall not prevent the Executive from owning
not more than one percent (1%) of the total shares of all classes of stock
outstanding of any publicly held entity engaged in such business, nor will it
restrict the Executive from rendering services to charitable organizations, as
such term is defined in Section 501(c) of the Code.
(d) NON-DISPARAGEMENT. Each of the Executive and the Company (for purposes
hereof, "the Company" shall mean only (i) the Company by press release or other
formally released announcement and (ii) the executive officers and directors
thereof and not any other employees) agrees not to make any public statements
that disparage the other party, or in the case of the Company, its respective
affiliates, employees, officers, directors, products or services.
Notwithstanding the foregoing, statements made in the course of sworn testimony
in administrative, judicial or arbitral proceedings (including, without
limitation, depositions in connection with such proceedings) shall not be
subject to this Section 11(d).
(e) RETURN OF COMPANY PROPERTY AND RECORDS. The Executive agrees that upon
termination of the Executive's employment, for any cause whatsoever, the
Executive will surrender to the Company in good condition (reasonable wear and
tear excepted) all property and equipment belonging to the Company and all
records (including all copies or derivations) kept by the Executive containing
the names, addresses or any other information with regard to customers or
customer contacts of the Company, or concerning any proprietary or confidential
information of the Company or any operational, financial or other documents
given to or developed by the Executive during the Executive's employment with
the Company.
(f) COOPERATION. The Executive agrees that, following termination of the
Executive's employment for any reason, the Executive shall upon reasonable
advance notice, and to the extent it does not interfere with previously
scheduled travel plans and does not unreasonably interfere with other business
activities or employment obligations, assist and cooperate with the Company with
regard to any matter or project in which the Executive was involved during the
Executive's employment, including any litigation. The Company shall compensate
the Executive for any lost wages or expenses associated with such cooperation
and assistance.
(g) ASSIGNMENT OF INVENTIONS. The Executive will promptly communicate and
disclose in writing to the Company all inventions, developments and processes
including software, whether patentable or not, as well as patents and patent
applications (hereinafter collectively called "Inventions"), made, conceived,
developed, or purchased by the Executive, or under which the Executive acquires
the right to grant licenses or to become licensed, alone or jointly with others,
which have arisen or may arise out of the Executive's employment, or relate to
any matters pertaining to, or useful in connection with, the business, processes
or affairs of the Company or any of its subsidiaries. Included herein as if
developed during the employment period is any specialized equipment and software
developed for use in the business of the Company. All of the Executive's right,
title and interest in, to, and under all such Inventions, licenses, and right to
grant licenses shall be the sole property of the Company. Any such
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Inventions disclosed to anyone by the Executive within one (1) year after the
termination of employment for any cause whatsoever shall be deemed to have been
made or conceived by the Executive during the Term. As to all such Inventions,
the Executive will, upon request of the Company execute all documents which the
Company deems necessary or proper to enable it to establish title to such
Inventions or other rights, and to enable it to file and prosecute applications
for letters patent of the United States and any foreign country; and do all
things (including the giving of evidence in suits and other proceedings) which
the Company deems necessary or proper to obtain, maintain, or assert patents for
any and all such Inventions or to assert its rights in any Inventions not
patented.
(h) EQUITABLE RELIEF AND OTHER REMEDIES. The parties acknowledge and agree
that the other party's remedies at law for a breach or threatened breach of any
of the provisions of this Section would be inadequate and, in recognition of
this fact, the parties agree that, in the event of such a breach or threatened
breach, in addition to any remedies at law, the other party, without posting any
bond, shall be entitled to obtain equitable relief in the form of specific
performance, temporary restraining order, a temporary or permanent injunction or
any other equitable remedy which may then be available.
(i) REFORMATION. If it is determined by a court of competent jurisdiction
in any state that any restriction in this Section 11 is excessive in duration or
scope or is unreasonable or unenforceable under the laws of that state, it is
the intention of the parties that such restriction may be modified or amended by
the court to render it enforceable to the maximum extent permitted by the law of
that state.
(j) SURVIVAL OF PROVISIONS. The obligations contained in this Section 11
shall survive the termination or expiration of the Executive's employment with
the Company and shall be fully enforceable thereafter.
12. NO ASSIGNMENT.
(a) The Executive may not assign or delegate any rights or obligations
hereunder without first obtaining the written consent of the other party hereto.
(b) The Company, without the Executive's consent, may assign this Agreement
to a parent or subsidiary, or to any successor to all or substantially all of
the business and/or assets of the Company provided the Company shall require
such successor to expressly assume and agree in writing to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place and shall deliver a
copy of such assignment to the Executive.
13. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given (a) on the date of delivery if delivered by hand,
(b) on the date of transmission, if delivered by confirmed facsimile, (c) on the
first business day following the date of deposit if delivered by guaranteed
overnight delivery service, or (d) on the fourth business day following the date
delivered or mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
11
If to the Executive: at the address (or to the facsimile number) shown on
the records of the Company.
If to the Company:
Xxxxxx X. Xxxxxx, Chair of the Compensation Committee
Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No. (000) 000-0000
And
Xxxxxx X. Xxxx, Chairman of the Board
Third Security, LLC
The Governor Tyler
0000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile No. (000) 000-0000
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
14. SECTION HEADINGS; INCONSISTENCY. The section headings used in this
Agreement are included solely for convenience and shall not affect, or be used
in connection with, the interpretation of this Agreement. If there is any
inconsistency between this Agreement and any other agreement (including but not
limited to any option, stock, long-term incentive or other equity award
agreement), plan, program, policy or practice (collectively, "Other Provision")
of the Company the terms of this Agreement shall control over such Other
Provision.
15. PRIOR AGREEMENTS. This Agreement supersedes and replaces any and all
prior employment agreements and change in control agreements (collectively, the
"Prior Agreements") between the Company and the Executive. By signing this
Agreement, the Executive acknowledges that the Prior Agreements are terminated
and cancelled, and releases and discharges the Company from any and all
obligations and liabilities heretofore or now existing under or by virtue of
such Prior Agreements, it being the intention of the parties hereto that this
Agreement effective immediately shall supersede and be in lieu of the Prior
Agreements. Notwithstanding anything contained in this Agreement to the
contrary, the Indemnification Agreement shall not be affected by this Agreement
and, except to the extent expressly superceded hereby, the Stock Option
Agreements listed from time to time on Appendix D shall remain in full force and
effect.
16. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity of unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
17. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the
12
same instruments. One or more counterparts of this Agreement may be delivered by
facsimile, with the intention that delivery by such means shall have the same
effect as delivery of an original counterpart thereof.
18. MISCELLANEOUS. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and such officer or director as may be
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. This Agreement together with all exhibits hereto sets
forth the entire agreement of the parties hereto in respect of the subject
matter contained herein. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the Commonwealth of Massachusetts without regard to its conflicts
of law principles.
19. PAYMENT OF COMPENSATION. The parties shall revisit this Agreement when
the IRS issues final regulations under Section 409A of the Code for the sole
purpose of determining whether any amendments are required in order to comply
with such regulations. The parties shall promptly agree in good faith on
appropriate provisions to avoid any material risk of noncompliance without
materially changing the economic value (to the Executive) or the cost (to the
Company) of this Agreement. Notwithstanding the foregoing, the Company shall in
no event be obligated to indemnify the Executive for any taxes or interest that
may be assessed by the IRS pursuant to Section 409A of the Code. To the extent
the Executive does not receive payments under this Agreement as required by this
Agreement due to the application of Section 409A, all suspended payments shall
earn and accrue interest at the prevailing "Prime Rate" of interest as published
by The Wall Street Journal at the time the payment is made, and any payment when
so made, shall be made as a lump sum payment, including accrued interest.
20. MITIGATION OF DAMAGES. In no event shall the Executive be obliged to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement,
nor shall the amount of any payment hereunder be reduced by any compensation
earned by the Executive as a result of employment by another employer, except as
set forth in this Agreement.
21. REPRESENTATIONS. The Executive represents and warrants to the Company
that the Executive has the legal right to enter into this Agreement and to
perform all of the obligations on the Executive's part to be performed hereunder
in accordance with its terms and that the Executive is not a party to any
agreement or understanding, written or oral, which could prevent the Executive
from entering into this Agreement or performing all of the Executive's
obligations hereunder. The Executive further represents and warrants that he has
been advised to consult with an attorney and that he has been represented by the
attorney of his choosing during the negotiation of this Agreement, that he has
consulted with his attorney before executing this Agreement, that he has
carefully read and fully understand all of the provisions of this Agreement and
that he is voluntarily entering into this Agreement.
13
22. WITHHOLDING. The Company may withhold from any and all amounts payable
under this Agreement such federal, state and local taxes as may be required to
be withheld pursuant to any applicable law or regulation.
23. SURVIVAL. The respective obligations of, and benefits afforded to, the
Company and Executive which by their express terms or clear intent survive
termination of Executive's employment with the Company, including, without
limitation, the provisions of Sections 8 through 24, inclusive of this
Agreement, will survive termination of Executive's employment with the Company,
and will remain in full force and effect according to their terms.
24. AGREEMENT OF THE PARTIES. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any party
hereto. Neither Executive nor the Company shall be entitled to any presumption
in connection with any determination made hereunder in connection with any
arbitration, judicial or administrative proceeding relating to or arising under
this Agreement.
25. DISPUTE RESOLUTION. In the event of any controversy, dispute or claim
between the parties under, arising out of or related to this Agreement
(including but not limited to, claims relating to breach, termination of this
Agreement, or the performance of a party under this Agreement) whether based on
contract, tort, statute or other legal theory (collectively referred to
hereinafter as "Disputes"), the parties shall follow the dispute resolution
procedures set forth below. The parties shall first attempt to resolve a
dispute, at the written request of either party, through discussions between the
Executive and an authorized senior management representative of the Company. If
a dispute is not resolved by the foregoing discussions between the senior
management of the Company and the Executive within thirty (30) days, the parties
agree, at the written request of either party, to submit the dispute to a sole
mediator selected by the parties for settlement within an additional thirty-day
period.
To the extent any Dispute is not settled by mediation as outlined above,
then any Dispute shall be finally settled by arbitration in accordance with the
rules of the American Arbitration Association then in force, and that the
arbitration hearings shall be held in Boston, Massachusetts. The parties agree
to (i) appoint an arbitrator who is knowledgeable in employment and human
resource matters and, to the extent possible, the industry in which the Company
operates, and instruct the arbitrator to follow substantive rules of law; (ii)
require the testimony to be transcribed; and (iii) require the award to be
accompanied by findings of act and a statement of reasons for the decision. The
arbitrator shall have the authority to permit discovery, to the extent deemed
appropriate by the arbitrator, upon request of a party, but such discovery
process shall continue for no more than thirty (30) days. The arbitrator shall
have no power or authority to add to or detract from the written agreement of
the parties. If the parties cannot agree upon an arbitrator within ten (10) days
after demand by either of them, either or both parties may request the American
Arbitration Association name a panel of five (5) arbitrators. The Company shall
strike the names of two (2) off this list, the Executive shall also strike two
(2) names, and the remaining name shall be the arbitrator. The parties shall
stipulate that arbitration shall be completed within sixty (60) days. All costs
and expenses, including attorneys' and the arbitrator's fees, of all parties
incurred in any dispute which is determined and/or settled by arbitration shall
be borne by the party determined to be primarily liable in respect of such
14
dispute; provided, however, that if complete liability is not assessed against
any one party, the parties shall share the total costs in proportion to their
respective amounts of liability so determined. Any award shall be final, binding
and conclusive upon the parties and a judgment rendered thereon may be entered
in any court having jurisdiction thereof. This Section shall not limit the right
of any party to xxx for injunctive relief for a breach of the obligations in
Section 11 (a)-(g) inclusive.
15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
effective as of the date first written above.
CLINICAL DATA, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxx
Its: Chairman of the Compensation Committee
Date: November 6, 2006
XXXXXX X. XXXXXX
/s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Date: November 6, 2006
APPENDIX A
FORM OF RELEASE
AGREEMENT AND GENERAL RELEASE
Clinical Data, Inc., its affiliates, subsidiaries, divisions, successors
and assigns in such capacity, and the current, future and former employees,
officers, directors, trustees and agents thereof (collectively referred to
throughout this Agreement as "Employer"), and Xxxxxx X. Xxxxxx ("Executive"),
the Executive's heirs, executors, administrators, successors and assigns
(collectively referred to throughout this Agreement as "Employee") agree:
1. Last Day of Employment. Executive's last day of employment with Employer
is [INSERT DATE]. In addition, effective as of [INSERT DATE], Executive resigns
from the Executive's position as Chief Executive Officer of Employer and will
not be eligible for any benefits or compensation after [INSERT DATE], other than
as specifically provided in Sections 6 and 8 of the Executive Employment
Agreement between Employer and Executive dated as of [INSERT DATE], 2006 (the
"Employment Agreement"). Executive further acknowledges and agrees that, after
[INSERT DATE], the Executive will not represent the Executive as being a
director, employee, officer, trustee, agent or representative of Employer for
any purpose. In addition, effective as of [INSERT DATE], Executive resigns from
all offices, directorships, trusteeships, committee memberships and fiduciary
capacities held with, or on behalf of, Employer or any benefit plans of
Employer. These resignations will become irrevocable as set forth in Section 3
below.
2. Consideration. The parties acknowledge that this Agreement and General
Release is being executed in accordance with Section 9 of the Employment
Agreement.
3. Revocation. Executive may revoke this Agreement and General Release for
a period of fifteen (15) calendar days following the day Executive executes this
Agreement and General Release. Any revocation within this period must be
submitted, in writing, to Employer and state, "I hereby revoke my acceptance of
our Agreement and General Release." The revocation must be personally delivered
to Xxxxxx X. Xxxx, Chairman of the Board, c/o Third Security, LLC, The Governor
Tyler, 0000 Xxxxx Xxxxxx, Xxxxxxx, XX 00000, or his designee, or mailed to this
same person and address, and postmarked within fifteen (15) calendar days of
execution of this Agreement and General Release. This Agreement and General
Release shall not become effective or enforceable until the revocation period
has expired. If the last day of the revocation period is a Saturday, Sunday, or
legal holiday, then the revocation period shall not expire until the next
following day which is not a Saturday, Sunday, or legal holiday.
4. General Release of Claims. (A) The Employee knowingly and voluntarily
releases and forever discharges Employer from any and all actions, causes of
action, contributions, indemnities, duties, debts, sums of money, suits,
controversies, restitutions, understandings, agreements, promises, claims
regarding stock, stock options or other forms of equity compensation,
commitments, damages, fees and liabilities, responsibilities and any and all
claims, demands, executions and liabilities of whatsoever kind, nature or
description, oral or written, known or unknown, matured or unmatured, suspected
or unsuspected at the present time, in law or in equity, whether known and
unknown, against Employer, which the Employee has,
17
has ever had or may have as of the date of execution of this Agreement and
General Release, including, but not limited to, any alleged violation of:
- Title VII of the Civil Rights Act of 1964, as amended;
- The Civil Rights Act of 1991;
- Sections 1981 through 1988 of Title 42 of the United States Code, as
amended;
- The Employee Retirement Income Security Act of 1974, as amended;
- The Immigration Reform and Control Act, as amended;
- The Americans with Disabilities Act of 1990, as amended;
- The Age Discrimination in Employment Act of 1967, as amended;
- The Older Workers Benefit Protection Act of 1990;
- The Worker Adjustment and Retraining Notification Act, as amended;
- The Occupational Safety and Health Act, as amended;
- The Family and Medical Leave Act of 1993;
- Any wage payment and collection, equal pay and other similar laws,
acts and statutes of the Commonwealth of Massachusetts;
- Any other federal, state or local civil or human rights law or any
other local, state or federal law, regulation or ordinance;
- Any public policy, contract, tort, or common law; or
- Any allegation for costs, fees, or other expenses including attorneys'
fees incurred in these matters.
Notwithstanding anything herein to the contrary, the sole matters to which
the Agreement and General Release do not apply are: (i) Employee's express
rights or claims for accrued vested benefits under any employee benefit plan,
policy or arrangement maintained by Employer or under COBRA; (ii) Employee's
rights under the provisions of the Employment Agreement which are intended to
survive termination of employment; (iii) Employee's rights as a stockholder; or
(v) any rights of the Executive to indemnification as a Director or Officer of
the Company.
(B) For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by the undersigned parties, except as expressly
provided under paragraph (C) immediately below, the Company does hereby remise,
release, acquit and forever discharge Employee of and from all actions, causes
of action, contributions, indemnities, duties, debts, sums of money, suits,
controversies, restitutions, understandings, agreements, promises,
18
commitments, damages, responsibilities and any and all claims, demands,
executions and liabilities of whatsoever kind, nature or description, oral or
written, known or unknown, matured or unmatured, suspected or unsuspected at the
present time, in law or in equity, including, without limitation, any claims
which have heretofore arisen or which may arise out of or are or may be in any
way or in any manner connected with or related to Employee's acts performed for,
on behalf and in the name of the Company, any actions taken by Employee in his
capacity as an officer or director of the Company, or the Employee's employment
by the Company, which the Releasing Party ever had, now has or hereafter can,
shall or may have against the Released Party, from the beginning of the world to
the date hereof.
(C) Expressly excluded from the above release of all claims are any and all
claims which result from any of the following upon final adjudication thereof by
a court of competent jurisdiction after all appeal periods have lapsed or have
been waived by the relevant party: (i) theft, embezzlement or forgery by
Employee relating to the Company, its clients or former clients or its
affiliated companies; (ii) gross negligence or actual or constructive fraud by
Employee in the conduct of the Company's business or in the conduct of the
affairs of any client or former client of the Company; and (iii) breach of any
duty owed by Employee under applicable law including, but not limited to, breach
of any fiduciary duty or breach of any other legal duty by Employee in the
conduct of the Company's business as an officer or director of the Company, or
in the conduct of the affairs of any client or former client of the Company.
(D) The parties recognize and agree that the Employee's right to receive
any bonus payment to which the Employee may be entitled under Section 8 of the
Executive Employment Agreement, including any bonus-related portion of the
Accrued Amount, or the Pro Rata Bonus, can only be established after the review
and calculations of the applicable fiscal year bonus entitlements are made by
the Board of Directors (including any committee thereof). Once such calculations
are made by the Board of Directors (including any committee thereof), the
Employee's right to receive the Pro Rata Bonus (or any applicable bonus-related
portion of the Accrued Amount) shall be accrued and paid as promptly as
practicable following a determination of the bonus by the Board of Directors (or
any committee thereof) in the event the Employee is entitled to be paid such
bonus under the provisions of Section 8(a)-(d) of the Executive Employment
Agreement. Notwithstanding the foregoing, if the Employee is terminated by the
Company without Cause, or by the Executive for Good Reason, the Board of
Directors (including any committee thereof) shall use its best efforts to meet
as promptly as practicable within 30 days following any notice of such
termination by the Company without Cause, or by the Executive for Good Reason,
in order to make a good faith determination of the Pro Rata Bonus, and to pay
such Pro Rata Bonus (if earned) within 30 days of the determination by the Board
of Directors (including any committee thereof).
5. No Claims Permitted. Employee waives Executive's right to file any
charge or complaint against Employer arising out of Executive's employment with
or separation from Employer before any federal, state or local court or any
state or local administrative agency, except where such waivers are prohibited
by law.
6. Affirmations. Employee affirms Executive has not filed, has not caused
to be filed, and is not presently a party to, any claim, complaint, or action
against Employer in any forum. Employee further affirms that the Executive has
been paid and/or has received all
19
compensation, wages, bonuses, commissions, and/or benefits to which Executive
may be entitled and no other compensation, wages, bonuses, commissions and/or
benefits are due to Executive, except as provided in Sections 6 and 8 of the
Employment Agreement. Employee also affirms Executive has no known workplace
injuries.
7. Cooperation; Return of Property. Employee agrees to reasonably cooperate
with Employer and its counsel in connection with any investigation,
administrative proceeding or litigation relating to any matter that occurred
during Executive's employment in which Executive was involved or of which
Executive has knowledge. Employer will reimburse the Employee for any reasonable
out-of-pocket travel, delivery or similar expenses incurred in providing such
service to Employer. Employee represents that Executive has returned to Employer
all property belonging to Employer, including but not limited to any leased
vehicle, laptop, cell phone, keys, access cards, phone cards and credit cards,
provided that Executive may retain, and Employer shall cooperate in
transferring, Executive's cell phone number and any home communication and
security equipment as well as Executive's rolodex and other address books.
8. Governing Law and Interpretation. This Agreement and General Release
shall be governed and conformed in accordance with the laws of the Commonwealth
of Massachusetts without regard to its conflict of laws provisions. In the event
Employee or Employer breaches any provision of this Agreement and General
Release, Employee and Employer affirm either may institute an action to
specifically enforce any term or terms of this Agreement and General Release.
Should any provision of this Agreement and General Release be declared illegal
or unenforceable by any court of competent jurisdiction and should the provision
be incapable of being modified to be enforceable, such provision shall
immediately become null and void, leaving the remainder of this Agreement and
General Release in full force and effect. Nothing herein, however, shall operate
to void or nullify any general release language contained in the Agreement and
General Release.
9. No Admission of Wrongdoing. Employee agrees neither this Agreement and
General Release nor the furnishing of the consideration for this Release shall
be deemed or construed at any time for any purpose as an admission by Employer
of any liability or unlawful conduct of any kind.
10. Amendment. This Agreement and General Release may not be modified,
altered or changed except upon express written consent of both parties wherein
specific reference is made to this Agreement and General Release.
11. Entire Agreement. This Agreement and General Release sets forth the
entire agreement between the parties hereto and fully supersedes any prior
agreements or understandings between the parties; provided, however, that
notwithstanding anything in this Agreement and General Release, the provisions
in the Employment Agreement which are intended to survive termination of the
Employment Agreement, including but not limited to those contained in Section 11
thereof, shall survive and continue in full force and effect. Employee
acknowledges Executive has not relied on any representations, promises, or
agreements of any kind made to Executive in connection with Executive's decision
to accept this Agreement and General Release.
20
EMPLOYEE HAS BEEN ADVISED THAT EXECUTIVE HAS UP TO TWENTY-ONE (21) CALENDAR
DAYS TO REVIEW THIS AGREEMENT AND GENERAL RELEASE AND HAS BEEN ADVISED IN
WRITING TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTION OF THIS AGREEMENT AND
GENERAL RELEASE.
EMPLOYEE AGREES ANY MODIFICATIONS, MATERIAL OR OTHERWISE, MADE TO THIS
AGREEMENT AND GENERAL RELEASE DO NOT RESTART OR AFFECT IN ANY MANNER THE
ORIGINAL TWENTY-ONE (21) CALENDAR DAY CONSIDERATION PERIOD.
HAVING ELECTED TO EXECUTE THIS AGREEMENT AND GENERAL RELEASE, TO FULFILL
THE PROMISES SET FORTH HEREIN, AND TO RECEIVE THE SUMS AND BENEFITS SET FORTH IN
THE EMPLOYMENT AGREEMENT, EMPLOYEE FREELY AND KNOWINGLY, AND AFTER DUE
CONSIDERATION, ENTERS INTO THIS AGREEMENT AND GENERAL RELEASE INTENDING TO
WAIVE, SETTLE AND RELEASE ALL CLAIMS EXECUTIVE HAS OR MIGHT HAVE AGAINST
EMPLOYER.
IN WITNESS WHEREOF, the parties hereto knowingly and voluntarily executed
this Agreement and General Release as of the date set forth below:
CLINICAL DATA, INC.
By: ___________________________
Xxxxxx X. Xxxxxx
Its: Chairman of the Compensation Committee
Date: _____________________________
XXXXXX X. XXXXXX
___________________________________
Date: _____________________________
21
APPENDIX B
TAX GROSS-UP PAYMENT RULES AND PROCEDURES
1. Subject to Paragraph 3 below, all determinations required to be made
under Section 10 of this Agreement, including whether a Gross-Up Payment is
required and the amount of such Gross-Up Payment, shall be made by an accounting
firm (the "Accounting Firm") selected in accordance with Paragraph 2 below. The
Accounting Firm shall provide detailed supporting calculations both to the
Company and Executive within 15 business days of the event that results in the
potential for an excise tax liability for the Executive, which could include but
is not limited to a Change in Control and the subsequent vesting of any cash
payments or awards, or the Executive's termination of employment, or such
earlier time as is required by the Company. The initial Gross-Up Payment, if
any, as determined pursuant to this Paragraph 1, shall be paid on the
Executive's behalf to the applicable taxing authorities within five (5) days of
the receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable to the Executive, it shall furnish the
Executive with a written report indicating that he has substantial authority not
to report any Excise Tax on his federal income tax return. Any determination by
the Accounting Firm shall be binding upon the Company and Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Paragraph 3 below and Executive thereafter is required to make a payment or
additional payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment,
increased by all applicable interest and penalties associated with the
Underpayment, shall be promptly paid by the Company to or for the benefit of
Executive. For purposes of determining the amount of the Gross-Up Payment,
Executive shall be deemed to pay federal income tax at the highest marginal rate
of federal income taxation in the calendar year in which the Gross-Up Payment is
to be made and state and local income taxes on earned income at the highest
marginal rate of taxation in the state and locality of Executive's residence on
the Effective Date of Termination, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes.
2. The Accounting Firm shall be a public accounting firm proposed by the
Company and agreed upon by the Executive. If Executive and the Company cannot
agree on the firm to serve as the Accounting Firm within ten (10) days after the
date on which the Company proposed to Executive a public accounting firm to
serve as Auditor, then Executive and the Company shall each select one
accounting firm and those two firms shall jointly select the accounting firm to
serve as the Accounting Firm within ten (10) days after being requested by the
Company and Executive to make such selection. The Company shall pay the
Auditor's fee.
3. Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than fifteen (15) business days after Executive knows
of such claim and shall apprise the Company of the nature
22
of such claim and the date on which such claim is requested to be paid.
Executive shall not pay such claim prior to the expiration of the period ending
on the date that any payment of taxes with respect to such claim is due or the
thirty day period following the date on which Executive gives such notice to the
Company, whichever period is shorter. If the Company notifies Executive in
writing prior to the expiration of such period that it desires to contest such
claim, Executive shall (i) give the Company any information reasonably requested
by the Company relating to such claim, (ii) take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company, (iii)
cooperate with the Company in good faith in order effectively to contest such
claim, and (iv) permit the Company to participate in any proceedings relating to
such claim; provided, however, that the Company shall bear and pay directly all
costs and expenses (including attorneys fees and any additional interest and
penalties) incurred in connection with such contest and shall indemnify and hold
Executive harmless, on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as a result of
such representation and payment of costs and expenses. Without limitation of the
foregoing provisions of this Paragraph 3, the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect to such claim and may, at its
sole option, either direct Executive to pay the tax claimed and xxx for a refund
or contest the claim in any permissible manner, and Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs
Executive to pay such claim and xxx for a refund, the Company shall advance the
amount of such payment to Executive, on an interest-free basis and shall
indemnify and hold Executive harmless, on an after-tax basis, from any Excise
Tax and income tax, including interest or penalties with respect thereto,
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of Executive
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service or
any other authority.
4. If, after the receipt by Executive of an amount advanced by the Company
pursuant to Paragraph 3 above, Executive becomes entitled to receive any refund
with respect to such claim, Executive shall (subject to the Company's complying
with the requirements of Paragraph 3), promptly pay to the Company the amount of
such refund (together with any interest paid or credited thereon after taxes
applicable thereto).
23
APPENDIX C
DEFINITION OF A CHANGE IN CONTROL
A "Change in Control" means the consummation of or entering into by the Company
of any agreement, contract, plan or understanding with respect to (i) the
merger, consolidation or reorganization of the Company into or with another
corporation in a business combination transaction in which the Company is the
target of such transaction (except one in which the holders of capital stock of
the Company immediately prior to such merger, consolidation or reorganization
continue to beneficially own (within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934, as amended (the "Act")) at least a majority of the voting
power of the capital stock of the surviving corporation), (ii) any sale, lease
or transfer of all or substantially all of the capital stock, assets or
intellectual property of the Company (except (A) to an entity majority-owned or
controlled by the Company or by any of the holders of capital stock of the
Company, or (B) in any transaction structured as a spin-off or divestiture of
assets or intellectual property of the Company or its subsidiaries ), (iii) any
other transaction other than an equity financing transaction or series of
related equity financing transactions pursuant to or as a result of which an
individual, entity or group (within the meaning of Sections 13(d)(3) or 14(d)(2)
of the Act) acquires or beneficially owns capital stock of the Company
representing a majority of the Company's outstanding voting power, or (iv) a
complete or substantial liquidation or dissolution of the Company. In the event
of any interpretation of this definition, the Board of Directors of the Company,
upon advice of legal counsel, shall have final and conclusive authority, so long
as such authority is exercised in good faith.
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APPENDIX D
EQUITY AWARDS
The following chart summarizes the Executive's outstanding options as of
November 1, 2006 that are subject to Section 5 of this Agreement:
GRANT # OF
DATE OPTIONS VESTED UNVESTED
-------- ---------- --------- ---------
5/07/03 15,000 15,000* -
9/23/05 8,000 8,000
10/17/05 50,000 50,000
5/12/06 60,000 - 60,000
6/22/06 3,030 - 3,030
TOTAL 136,030 73,000 63,030
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