Executive Employment Agreement - Seattle Genetics Inc. and H. Perry Fell
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is
made and entered into as of the 27th day of November, 2002 (the "Effective
Date"), by and between SEATTLE GENETICS, INC., a Delaware corporation
("Company"), and H. PERRY FELL ("Executive").
RECITALS:
A. The Company and Executive previously entered into an Executive
Employment Agreement dated as of October 25, 2001.
B. Effective as of the Effective Date, Executive is resigning as the
Company's Chief Executive Officer, but the Company desires that Executive
continue his services as Chairman of the Board and Chief Strategy Officer of the
Company, having been duly appointed to such positions by the Board of Directors
of the Company.
C. Executive desires to continue in such engagement.
D. This Agreement contains other provisions applicable to the continued
employment of Executive by the Company as Chairman of the Board and Chief
Strategy Officer.
In consideration of the above Recitals and the provisions of this
Agreement, the Company and Executive agree as follows:
I. DUTIES
1.1 Title and Responsibilities. As of the Effective Date, Executive hereby
resigns as Chief Executive Officer of the Company. Executive and the Company
agree that Executive shall continue to serve as Chairman of the Board and Chief
Strategy Officer of the Company. Executive's responsibilities and duties shall
include those inherent in Executive's position with the Company and shall
further include such other managerial responsibilities and executive duties
consistent with such position as may be assigned to him from time to time by the
Board of Directors of the Company. Executive shall devote his best efforts and
full business time to the business and interests of the Company. During the term
of his employment with the Company, Executive may serve on the board of
directors of other companies, manage personal investments, and engage in civic
and charitable activities, provided that such activities shall not represent a
conflict of interest with the Company and do not materially detract from
fulfilling Executive's responsibilities and duties to the Company.
1.2 Board of Directors. The Board of Directors of the Company shall take
whatever steps are necessary to continue to nominate Executive for election to
the Board of Directors of the Company in every election of Executive's class of
directors presented to stockholders following execution of this Agreement.
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II. COMPENSATION
2.1 Base Salary. Executive shall continue to be paid a base salary ("Base
Salary") by the Company during the term of Executive's employment with the
Company at his current rate. Executive's Base Salary shall be reviewed annually
by the Board of Directors and evaluated based on performance and salary levels
of other executives of comparable position within the industry and geographic
location of the Company. Based upon such evaluation and review, Executive's Base
Salary may be increased from time to time as determined by the Board of
Directors of the Company in its sole discretion.
2.2 Bonus. In addition to Base Salary, Executive may receive an annual
bonus ("Bonus") based upon performance criteria and financial and operational
results of the Company as determined by the Board of Directors of the Company.
2.3 Stock Options. Executive may be eligible to receive additional grants
of stock options or purchase rights from time to time in the future, on such
terms and subject to such conditions as the Board of Directors shall determine
as of the date of any such grant and pursuant to the existing stock plans of the
Company.
2.4 Other Benefits.
(i) Executive shall be entitled to such employee benefits generally
available to the full-time salaried employees of the Company, including without
limitation, health insurance, paid vacation of not less than four (4) weeks per
year, retirement plans and other similar benefits.
(ii) The Company shall pay or reimburse Executive for all travel and
entertainment expenses incurred by Executive in connection with his duties on
behalf of the Company, subject to the reasonable approval of the Company.
Executive shall only be entitled to reimbursement to the extent that Executive
follows the reasonable procedures established by the Company for reimbursement
of such expenses which will include, but will not be limited to, providing
satisfactory evidence of such expenditures.
III. TERMINATION OF EMPLOYMENT AND SEVERANCE BENEFITS
3.1 Termination of Employment.
(a) Termination of Employment. This Agreement may be terminated upon
the occurrence of any of the following events:
(i) The Company's determination in good faith that it is
terminating Executive for Cause (as defined in Section 3.3 below) ("Termination
for Cause");
(ii) The Company's determination that it is terminating
Executive without Cause, which determination may be made by the Company at any
time at the Company's sole discretion, for any or no reason ("Termination
Without Cause");
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(iii) The effective date of a written notice sent to the Company
from Executive stating that Executive is electing to terminate his employment
with the Company ("Voluntary Termination"); or
(iv) Following Executive's death.
3.2 Severance Benefits. Executive shall be entitled to receive severance
benefits upon termination of employment only as set forth in this Section 3.2:
(a) Voluntary Termination, Termination Without Cause and Termination
by Reason of Death. If Executive's employment is terminated either (i) under
Section 3.1(a)(iii) (Voluntary Termination), (ii) under Section 3.1(a)(ii)
(Termination Without Cause) or (iii) under Section 3.1(a)(iv) as a result of
Executive's death, Executive or Executive's estate or representative will be
entitled to receive payment of severance benefits equal to Executive's regular
monthly salary for twelve (12) months (the "Severance Period"). Such payments
shall be made, at Employee's or Employee's estate's or representative's option,
in a lump sum within thirty (30) days after the effective date of termination or
ratably over the Severance Period according to the Company's standard payroll
schedule. Executive or Executive's estate or representative will also be
entitled to receive payment on the date of termination of any bonus which has
been earned under Section 2.2, but not yet paid, and the pro rata portion of any
bonus based on achievement of the specific corporate and individual performance
targets established for the fiscal year in which the termination occurs. Health
insurance benefits with the same coverage provided to Executive prior to the
termination (e.g. medical, dental, optical, mental health) and in all other
respects significantly comparable to those in place immediately prior to the
termination will be provided at the Company's cost over the Severance Period. In
addition, the vesting of any unvested stock options or shares of restricted
stock held by Executive as of the date of Executive's termination of employment
shall accelerate such that the options or restricted securities shall become
vested as to an additional twelve (12) months of vesting.
(b) Termination for Cause. If Executive's employment is terminated
for Cause, then Executive shall not be entitled to receive payment of any
severance benefits. Executive will receive payment(s) for all salary and unpaid
vacation accrued as of the date of Executive's termination of employment and
Executive's benefits will be continued under the Company's then existing benefit
plans and policies in accordance with such plans and policies in effect on the
date of termination and in accordance with applicable law.
3.3 Definition of Cause. For purposes of this Agreement, "Cause" for
Executive's termination will exist at any time after the happening of one or
more of the following events:
(a) An action or omission of the Executive which constitutes a
willful and intentional material breach of this Agreement or the Confidentiality
Agreement (defined below), including without limitation, Executive's theft or
other misappropriation of the Company's proprietary information;
(b) Executive's commitment of fraud, embezzlement, misappropriation
of funds or breach of trust in connection with his employment; or
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(c) Executive's conviction of any crime which involves dishonesty
or a breach of trust, or gross negligence in connection with the performance of
the Executive's duties.
IV. CHANGE OF CONTROL
4.1 Accelerated Vesting. In the event of a Change of Control (as defined
below), the vesting of all of Executive's stock options or shares of restricted
stock then held by Executive at the time of such Change in Control shall be
accelerated completely so that one hundred percent (100%) of the shares of
Common Stock covered by the stock options or shares of restricted stock are
fully vested and exercisable.
For purposes of this Agreement, "Change of Control" shall mean the
occurrence of any of the following events: (i) an acquisition of the Company by
another entity by means of any transaction or series of related transactions
(including, without limitation, any reorganization, merger or consolidation but
excluding any merger effected exclusively for the purpose of changing the
domicile of the Company), or (ii) a sale of all or substantially all of the
assets of the Company (collectively, a "Merger"), so long as in either case the
Company's stockholders of record immediately prior to such Merger will,
immediately after such Merger, hold less than 50% of the voting power of the
surviving or acquiring entity.
V. RESTRICTIVE COVENANTS
5.1 Confidentiality Agreement. Executive shall sign, or has signed the
Company's form of Proprietary Information and Inventions Agreement (the
"Confidentiality Agreement") substantially in the form attached hereto as
Exhibit A. Executive hereby represents and warrants to the Company that he has
complied with all obligations under the Confidentiality Agreement and agrees to
continue to abide by the terms of the Confidentiality Agreement and further
agrees that the provisions of the Confidentiality Agreement shall survive any
termination of this Agreement or of Executive's employment relationship with the
Company, including the noncompetition provisions of the Confidentiality
Agreement in Sections 11 and 12 thereof.
VI. OTHER PROVISIONS
6.1 Limitation on Stock Option Acceleration Benefits. In the event that
any stock option acceleration benefits provided for in this Agreement to
Executive (i) constitute "parachute payments" within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code") and (ii) but for
this Section 6.1, would be subject to the excise tax imposed by Section 4999 of
the Code, then Executive's acceleration benefits under Section 3.2(b) shall be
payable either:
(a) in full, or
(b) as to such lesser amount which would result in no portion of
such benefits being subject to excise tax under Section 4999 of the Code,
whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the excise tax imposed by Section 4999, results
in the receipt by Executive on
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an after-tax basis, of the greatest amount of benefits under Section 3.2(b)
notwithstanding that all or some portion of such benefits may be taxable under
Section 4999 of the Code. Unless the Company or Executive otherwise agree in
writing, any determination required under this Section 6.1 shall be made in
writing by independent public accountants appointed by Employee and reasonably
acceptable to the Company (the "Accountants"), whose determination shall be
conclusive and binding upon Executive and the Company for all purposes. For
purposes of making the calculations required by this Section 6.1, the
Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the Code. The Company
and Executive shall furnish to the Accountants such information and documents as
the Accountants may reasonably request in order to make a determination under
this Section 6.1. The Company shall bear all costs the Accountants may
reasonably incur in connection with any calculations contemplated by this
Section 6.1.
6.2 Indemnification. The Company hereby agrees to indemnify and hold the
Executive harmless, to the fullest extent permitted by law and as set forth in
the Amended and Restated Certificate of Incorporation of the Company, from and
against any expenses, including legal fees, and all judgments, fines and amounts
paid in settlement and reasonably incurred in connection with legal,
administrative or investigative proceedings to which the Executive is made, or
threatened to be made, a party by reason of the fact the Executive is or was a
director or officer of the Company.
6.3 Entire Agreement. This Agreement contains the entire agreement and
understanding of the parties with respect to Executive's employment by the
Company and compensation payable to Executive by the Company and supersedes all
prior understandings, agreements and discussions. This Agreement may only be
amended or modified by a written instrument executed by Executive and the
Chairman of the Board of the Company pursuant to authorization by the Board of
Directors.
6.4 Notices. Any and all notices permitted or required to be given under
this Agreement must be in writing. Notices will be deemed given (i) on the first
business day after having been sent by commercial overnight courier with written
verification of receipt, or (ii) on the third business day after having been
sent by registered or certified mail from a location on the United States
mainland, return receipt requested, postage prepaid, whichever occurs first, at
the address set forth below or at any new address, notice of which will have
been given in accordance with this Section 6.4:
If to the Company: Seattle Genetics, Inc.
21823 30th Dr. SE
Bothell, WA 98021
Attn: Chief Executive Officer
with a copy to: General Counsel
If to Executive: H. Perry Fell
c/o Seattle Genetics, Inc.
21823 30th Dr. SE
Bothell, WA 98021
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6.5 Non-Waiver. Failure to enforce at any time any of the provisions of
this Agreement shall not be interpreted to be a waiver of such provisions or to
affect either the validity of this Agreement or the right of either party
thereafter to enforce each and every provision of this Agreement.
6.6 Separability. If one or more provisions of this Agreement is finally
determined to be invalid or unenforceable, such provision will not affect or
impair the other provisions of this Agreement, all of which will continue to be
in effect and will be enforceable, provided, however, that any such invalid
provisions shall, to the extent possible, be reformed so as to implement insofar
as practicable the intentions of the parties.
6.7 Term. The employment of Executive under this Agreement shall be for an
unspecified term. The Company and Executive acknowledge and agree that
Executive's employment is and shall continue to be at-will, as defined under
applicable law, and that Executive's employment with the Company may be
terminated by either party at any time for any or no reason, and with or without
notice. If Executive's employment terminates for any reason, Executive shall not
be entitled to any payments, benefits, damages award or compensation other than
as provided in this Agreement.
6.8 Law. This Agreement shall be interpreted in accordance with the laws
of the State of Washington.
6.9 No Duty to Mitigate. Executive shall not be required to mitigate the
amount of any payment contemplated by this Agreement (whether by seeking new
employment or in any other manner), nor, except as otherwise provided in this
Agreement, shall any such payment be reduced by any earnings that Executive may
receive from any other source.
6.10 Legal Fees. In the event either party breaches this Agreement, the
nonbreaching party shall be en entitled to recover from the breaching party any
and all damages, costs and expenses, including without limitation, attorneys'
fees and court costs, incurred by the nonbreaching party as a result of the
breach.
6.11 Counterparts. This Agreement may be executed in counterparts which
when taken together will constitute one instrument. Any copy of this Agreement
with the original signatures of all parties appended will constitute an
original.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
SEATTLE GENETICS, INC.
By: /s/ Clay B. Siegall
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Name: Clay B. Siegall, Ph.D.
Title: President & Chief Executive Officer
EXECUTIVE
/s/ H. Perry Fell
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H. PERRY FELL
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