Exhibit 10.3
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June 15, 2001
Mr. Stephen Cohen
101 Melrose Street
Arlington, MA 02474
Dear Stephen:
This letter will confirm our offer to you of employment with Genome
Therapeutics Corp. (the "Company"), under the terms and conditions that follow:
1. POSITION AND DUTIES. Effective January 22, 2001, you will be employed
by the Company, on a full-time basis as its Senior Vice President and Chief
Financial Officer. You agree to perform the duties of your position and such
other duties as may reasonably be assigned to you from time to time. You also
agree that, while employed by the Company, you will devote your full business
time and your best efforts, skill and knowledge exclusively to the advancement
of the business and interests of the Company and its subsidiaries and to the
discharge of your duties and responsibilities for them. You warrant that you are
free to enter into and fully perform this agreement and are not subject to any
employment, confidentiality, non-competition or other agreement which conflicts
with this agreement.
2. COMPENSATION AND BENEFITS. During your employment, as compensation for
all services performed by you for the Company and its subsidiaries, the Company
will provide you the following pay and benefits:
a. BASE SALARY. The Company will pay you a base salary at the rate
of Two Hundred and Ten Thousand Dollars ($210,000) per year, payable in
accordance with the regular payroll practices of the Company and subject to
increase from time to time by the Board of Directors of the Company (the
"Board") in its discretion (such base salary as in effect from time to time, the
"Base Salary").
b. BONUS COMPENSATION. During employment, you will be considered
annually for a bonus of up to thirty percent (30%) of your Base Salary. For
fiscal year 2001, your target bonus shall be pro-rated for the part of the
fiscal year for which you were employed by the Company. It is anticipated that
the Company's fiscal year will be changed to a December 31 year end. Bonus
awards will be determined by the Board, based on your performance and that of
the Company against goals established annually by the Board after consultation
with you. Subject to Board approval, half of any annual bonus will be paid in
cash and half will be paid in options on the Company's common stock.
c. OPTION GRANTS. As a bonus for commencing employment with the
Company, you have received a non-qualified stock option covering 19,164 shares
of the Company's common stock with an exercise price of $2.46 per share. The
Company has also granted to you an additional non-qualified stock option
covering 75,000 shares of the Company's common stock with an exercise price of
$8.20 per share. The terms of these options are governed by stock option
agreements between the Company and you.
d. PARTICIPATION IN EMPLOYEE BENEFIT PLANS. You will be entitled to
participate in all employee benefit plans from time to time in effect on the
same basis as other executive employees of the Company, except to the extent
such plans are duplicative of benefits otherwise provided to you under this
agreement. Your participation will be subject to the terms of the applicable
plan documents and applicable Company policies.
e. VACATIONS AND OTHER BENEFITS. You will be entitled to four (4)
weeks of vacation per year, in addition to holidays observed by the Company.
Vacation may be taken at such times and intervals as you shall determine,
subject to the business needs of the Company. In addition, the Company shall
provide you with a cellular telephone and related service plan.
f. RELOCATION EXPENSE REIMBURSEMENT. The Company shall reimburse
you, upon proper accounting, for reasonable and customary expenses up to $75,000
incurred by you in the course of relocating to the Boston, Massachusetts area,
including travel expenses arising from trips to Chicago to visit your wife
and/or trips by your wife to the Boston area. In addition, the Company shall pay
you such additional amount as is necessary to compensate you for any tax you may
incur by reason of such reimbursement payment. Your rights to seek reimbursement
pursuant to this Paragraph 2(f) shall expire on January 22, 2002; provided, that
you shall have rights to reimbursement in accordance with this Paragraph for any
expenses incurred prior to such date so long as you submit a reasonably detailed
reimbursement request within thirty days following January 22, 2002.
3. CONFIDENTIAL INFORMATION AND RESTRICTED ACTIVITIES. You acknowledge
that, in consideration for your employment with the Company, you have agreed to
and executed a joinder dated March 19, 2001 to Genome Therapeutics' Intellectual
Property Policy, including Appendix I thereof ("Invention, Assignment, Non-
Disclosure and Covenant Not To Compete"), which imposes certain non-competition,
non-solicitation and non-disclosure restrictions on you (such joinder being
referred to herein as the "Intellectual Property and Non-Compete Agreement").
4. TERMINATION OF EMPLOYMENT; SEVERANCE. Your employment under this
agreement shall continue until one party delivers to the other party a written
notice of termination setting forth the reason, if any, for the termination. If
you terminate your
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employment without Good Reason (as defined below), you will give the Company two
month's written notice.
a. In the event of termination of your employment by the Company
other than for Cause (as defined below) or your termination of employment for
Good Reason, the Company will: (i) continue to pay you your Base Salary and
provide you with the benefits set forth in Paragraph 2(d) hereof for the lesser
of (x) a period of nine (9) months from the date of termination or (y) such
period of time that it takes you to find comparable employment; (ii) pay you on
the date of termination any Base Salary earned but not paid through the date of
termination; and (iii) pay you any bonus to which you are entitled in accordance
with Paragraph 2(b) above, prorated to the date of termination and payable at
the time such bonuses are payable to Company executives generally. All severance
payments will be payable in accordance with the normal payroll practices of the
Company.
b. In the event of termination of your employment by the Company for
Cause or termination by you other than for Good Reason, the Company will have no
further obligations to you other than paying you any Base Salary earned but not
paid through the date of termination.
c. If within two years of a Change of Control (as defined in Exhibit
A hereto) of the Company, (i) you are terminated other than for Cause, or (ii)
you terminate your employment with the surviving company due to the fact that
(a) the surviving company takes any action that results in a material diminution
in your position, authority or duties as such position, authority or duties
existed immediately prior to the Change of Control or (b) the surviving company
takes any action that would require you to have your principal place of work
changed to any location outside a thirty-five mile radius of the City of Boston,
then, in the case of either (i) or (ii), the Company will continue to pay your
Base Salary (as in effect at the time of your termination) and provide you with
the benefits set forth in Paragraph 2(d) above for a period of twelve (12)
months from the date of termination. The Company will also pay you on the date
of termination any Base Salary earned but not paid through the date of
termination. All severance payments will be payable in accordance with the
normal payroll practices of the Company. If you are eligible for severance
payments under this Paragraph 4(c) upon termination, then the provisions of
Paragraph 4(a) above shall not apply to such termination.
d. For purposes of this agreement, "Cause" shall mean: (i) your
material failure to perform (other than by reason of disability), or material
negligence in the performance of, your duties and responsibilities to the
Company or any of its subsidiaries; (ii) your material breach of this agreement
or any other agreement between you and the Company or any of its subsidiaries;
(iii) the commission of a felony or other crime involving an act of moral
turpitude; or (iv) a material act of dishonesty or breach of
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trust on your part resulting or intended to result, directly or indirectly, in a
personal gain or enrichment at the expense of the Company.
e. For purposes of this agreement, "Good Reason" shall mean: (i) any
action by the Company that results in a material diminution in your position,
authority or duties with the Company, excluding any isolated, insubstantial or
inadvertent action not taken in bad faith and which is promptly remedied by the
Company; (ii) material failure of the Company to provide you compensation and
benefits in accordance with the terms of Paragraph 2, above, for more than ten
business days after notice from you specifying in reasonable detail the nature
of the failure or (iii) a Change of Control.
f. This agreement shall automatically terminate in the event of your
death during employment. In the event you become disabled during employment and,
as a result, are unable, in the reasonable judgment of the Board, to continue to
perform substantially all of your duties and responsibilities under this
agreement, the Company will continue to pay you your Base Salary and to provide
you benefits in accordance with Paragraph 2(d) above, to the extent permitted by
plan terms, for up to twenty-six (26) weeks of disability during any period of
three hundred and sixty-five (365) consecutive calendar days. The obligations of
the Company to make payments to you due to disability pursuant to this Paragraph
4(f) shall be reduced by the amount of any payments you receive pursuant to the
Company's disability insurance policy. If you are, in the reasonable judgment of
the Board, unable to return to work after twenty-six (26) weeks of disability,
the Company may terminate your employment, upon notice to you.
5. MISCELLANEOUS. This agreement sets forth the entire agreement between
you and the Company and replaces all prior and contemporaneous communications,
agreements and understandings, written or oral, with respect to the terms and
conditions of your employment; provided, that, you and the Company acknowledge
and agree that the Intellectual Property and Non-Competition Agreement shall
remain in full force and effect. This agreement may not be modified or amended,
and no breach shall be deemed to be waived, unless agreed to in writing by you
and an expressly authorized representative of the Board. This agreement may be
executed in two or more counterparts, each of which shall be an original and all
of which together shall constitute one and the same instrument. This is a
Massachusetts contract and shall be governed and construed in accordance with
the laws of the Commonwealth of Massachusetts, without regard to the conflict of
laws principles thereof. All payments made hereunder shall be net of any tax or
other amount required to be withheld by the Company by law. Neither you nor the
Company may make any assignment of this agreement or any interest in it, by
operation of law or otherwise, without the prior written consent of the other;
provided, however, that the Company may assign its rights and obligations under
this agreement without your consent to one of its subsidiaries or to any Person
that acquires substantially all the assets of the Company, by means of a merger
or otherwise. Your obligations to the Company under the Intellectual Property
and Non-Competition Agreement shall survive the termination of this agreement.
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6. NOTICES. Any notices provided for in this agreement shall be in
writing and shall be effective when delivered in person or deposited in the
United States mail, postage prepaid, and addressed to you at your last known
address on the books of the Company or, in the case of the Company, to it at its
principal place of business, attention of the Chief Executive Officer, or to
such other address as either party may specify by notice to the other actually
received.
7. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of your heirs and representatives and the successors and assigns of the
Company. The Company shall require any successor (whether direct or indirect, by
purchase, merger, reorganization, consolidation, acquisition of property or
stock, liquidation, or otherwise) to all or a significant portion of its assets,
by agreement in form and substance satisfactory to you, expressly to assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform this Agreement if no such succession
had taken place. Regardless of whether such agreement is executed, this
Agreement shall be binding upon any successor of the Company in accordance with
the operation of law and such successor shall be deemed the "Company" for
purposes of this Agreement.
If the foregoing is acceptable to you, please sign this letter in the space
provided and return it to me no later than June 29, 2001. At the time you sign
and return it this letter will take effect as a binding agreement between you
and the Company on the basis set forth above. The enclosed copy is for your
records.
Sincerely yours, Accepted and Agreed:
Steven M. Rauscher ------------------------------
President and Chief Executive Officer Stephen Cohen
Date:
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Definition of Change of Control
A "Change of Control" shall be deemed to have occurred if and when: (i) the
Company executes an agreement of acquisition, merger, or consolidation which
contemplates that after the effective date provided for in the agreement, all or
substantially all of the business and/or assets of the Company shall be
controlled by another corporation or other entity; PROVIDED, HOWEVER, for
purposes of this clause (i) that (A) if such an agreement requires as a
condition precedent approval by the Company's shareholders of the agreement or
transaction, a Change of Control shall not be deemed to have taken place unless
and until such approval is secured and, (B) if immediately after such effective
date the voting shareholders of such other corporation or entity shall be
substantially the same as the voting shareholders of the Company immediately
prior to such effective date, the execution of such agreement shall not, by
itself, constitute a "Change of Control;" (ii) any "person" (as such term is
used in Sections 13(d) or 14(d)(2) of the Securities Exchange Act of 1934)
becomes the beneficial owner, directly or indirectly, of securities of the
Company that represent 35% or more of the votes that could then be cast in an
election for members of the Company's Board; or (iii) during any period of 24
consecutive months, commencing after the effective date of this Agreement,
individuals who at the beginning of such 24-month period were directors of the
Company shall cease to constitute at least a majority of the Company's Board,
unless the election of each director who was not a director at the beginning of
such period has been approved in advance by directors representing at least two
thirds of (A) the directors then in office who were directors at the beginning
of the 24-month period, or (B) the directors specified in clause (A) plus
directors whose election has been so approved by directors specified in clause
(A).
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