Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”), made this 28th day of April 2008,
is entered into by Momenta Pharmaceuticals, Inc., a Delaware corporation with
its principal place of business at 675 West Kendall Street, Cambridge,
Massachusetts (the “Company”), and                       , an individual
residing at the address indicated below  (the “Employee”).

 

The Company desires to continue to employ the Employee and the Employee desires
to continue to be employed by the Company. In consideration of the mutual
covenants and promises contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are acknowledged by the
parties hereto, the parties agree as follows:

 

1.             TERM OF EMPLOYMENT. THE COMPANY HEREBY AGREES TO CONTINUE TO
EMPLOY THE EMPLOYEE AND THE EMPLOYEE HEREBY ACCEPTS CONTINUED EMPLOYMENT WITH
THE COMPANY, UPON THE TERMS SET FORTH IN THIS AGREEMENT, COMMENCING ON APRIL 28,
2008 (THE “COMMENCEMENT DATE”). THERE SHALL BE NO DEFINITE TERM OF EMPLOYMENT,
AND THE EMPLOYEE’S EMPLOYMENT SHALL CONTINUE TO BE AT-WILL, SUCH THAT BOTH THE
COMPANY AND THE EMPLOYEE REMAIN FREE TO END THE EMPLOYMENT RELATIONSHIP FOR ANY
REASON, AT ANY TIME, WITH OR WITHOUT NOTICE.

 

2.             TITLE AND CAPACITY. THE EMPLOYEE SHALL SERVE
AS                             , AND SHALL REPORT TO
THE                        OF THE COMPANY. THE EMPLOYEE SHALL BE BASED AT THE
COMPANY’S HEADQUARTERS IN CAMBRIDGE, MASSACHUSETTS.  THE EMPLOYEE HEREBY ACCEPTS
SUCH EMPLOYMENT AND AGREES TO UNDERTAKE THE DUTIES AND RESPONSIBILITIES INHERENT
IN SUCH POSITION AND SUCH OTHER DUTIES AND RESPONSIBILITIES AS THE COMPANY SHALL
FROM TIME TO TIME REASONABLY ASSIGN TO THE EMPLOYEE. THE EMPLOYEE AGREES TO
DEVOTE HIS/HER ENTIRE BUSINESS TIME, ATTENTION AND ENERGIES TO THE BUSINESS AND
INTERESTS OF THE COMPANY. THE EMPLOYEE AGREES TO ABIDE BY THE RULES,
REGULATIONS, INSTRUCTIONS, PERSONNEL PRACTICES AND POLICIES OF THE COMPANY AND
ANY CHANGES THEREIN THAT MAY BE ADOPTED FROM TIME TO TIME BY THE COMPANY.

 

3.             COMPENSATION AND BENEFITS.

 

3.1           BASE SALARY. THE COMPANY SHALL PAY THE EMPLOYEE, IN ACCORDANCE
WITH THE COMPANY’S REGULAR PAYROLL PRACTICES, A BASE SALARY AT THE ANNUALIZED
RATE OF $              .  SUCH SALARY SHALL BE SUBJECT TO ADJUSTMENT THEREAFTER,
AS DETERMINED BY THE BOARD OR A COMMITTEE OR DESIGNEE THEREOF.

 

3.2           ANNUAL DISCRETIONARY BONUS. IF THE COMPANY’S BOARD APPROVES AN
ANNUAL BONUS FOR CALENDAR YEAR 2008 OR ANY CALENDAR YEAR THEREAFTER, THE
EMPLOYEE WILL BE ELIGIBLE FOR A DISCRETIONARY BONUS AWARD. THE ANNUAL TARGET FOR
THE EMPLOYEE’S BONUS WILL BE AT % OF THE EMPLOYEE’S ANNUALIZED BASE SALARY. THE
COMPANY WILL DETERMINE, IN ITS SOLE DISCRETION, WHETHER (AND IN WHAT AMOUNT) A
BONUS AWARD IS PAYABLE TO THE EMPLOYEE. IN DETERMINING WHETHER A BONUS AWARD IN
ANY GIVEN YEAR SHALL BE GRANTED, THE COMPANY WILL REVIEW WHETHER IT HAS ACHIEVED
ITS ANNUALLY APPROVED CORPORATE GOALS AS WELL AS WHETHER THE EMPLOYEE HAS
ACHIEVED HIS/HER PERSONAL OBJECTIVES AS ESTABLISHED BY THE COMPANY. IN ORDER TO
BE ELIGIBLE FOR ANY BONUS HEREUNDER, THE EMPLOYEE MUST BE AN ACTIVE EMPLOYEE OF
THE COMPANY ON THE DATE SUCH BONUS IS DISTRIBUTED.

 

3.3           EMPLOYEE BENEFITS. SUBJECT TO THE PROVISIONS OF THIS SECTION 3.3,
THE EMPLOYEE SHALL BE ENTITLED TO PARTICIPATE IN ALL BENEFIT PLANS AND PROGRAMS
THAT THE COMPANY ESTABLISHES AND MAKES AVAILABLE TO ITS EMPLOYEES TO THE EXTENT
THAT THE EMPLOYEE IS ELIGIBLE UNDER (AND SUBJECT TO THE PROVISIONS OF) THE PLAN
DOCUMENTS GOVERNING THOSE PROGRAMS. THE EMPLOYEE SHALL BE ENTITLED TO TWENTY
(20) DAYS OF PAID VACATION TIME PER YEAR (PRO-RATED FOR ANY PARTIAL YEAR
WORKED), TO BE ADMINISTERED IN ACCORDANCE WITH COMPANY POLICY.

 

3.4           REIMBURSEMENT OF EXPENSES. THE COMPANY SHALL REIMBURSE THE
EMPLOYEE FOR ALL REASONABLE TRAVEL, ENTERTAINMENT AND OTHER EXPENSES INCURRED OR
PAID BY THE EMPLOYEE IN CONNECTION WITH, OR RELATED TO, THE PERFORMANCE OF
HIS/HER DUTIES, RESPONSIBILITIES OR SERVICES UNDER THIS AGREEMENT, UPON
PRESENTATION BY THE EMPLOYEE OF DOCUMENTATION, EXPENSE STATEMENTS, VOUCHERS
AND/OR SUCH OTHER SUPPORTING INFORMATION AS THE

 

--------------------------------------------------------------------------------

 

COMPANY MAY REASONABLY REQUEST; PROVIDED, HOWEVER, THAT THE AMOUNT AVAILABLE FOR
SUCH TRAVEL, ENTERTAINMENT AND OTHER EXPENSES MAY BE FIXED IN ADVANCE BY THE
COMPANY.

 

3.5           WITHHOLDING. ALL SALARY, BONUS AND OTHER COMPENSATION OR BENEFITS
PAYABLE TO THE EMPLOYEE SHALL BE SUBJECT TO APPLICABLE WITHHOLDINGS AND TAXES.

 

4.             PAYMENTS UPON RESIGNATION BY THE EMPLOYEE WITHOUT GOOD REASON OR
TERMINATION BY THE COMPANY FOR CAUSE.

 

4.1           PAYMENT UPON VOLUNTARY RESIGNATION OR TERMINATION FOR CAUSE. IF
THE EMPLOYEE VOLUNTARILY RESIGNS HIS/HER EMPLOYMENT OTHER THAN FOR GOOD REASON
(AS DEFINED IN SECTION 4.2), OR IF THE COMPANY TERMINATES THE EMPLOYEE FOR CAUSE
(AS DEFINED IN SECTION 4.3), THE COMPANY SHALL PAY THE EMPLOYEE ALL ACCRUED AND
UNPAID BASE SALARY THROUGH THE EMPLOYEE’S DATE OF TERMINATION AND ANY VACATION
THAT IS ACCRUED BUT UNUSED AS OF SUCH DATE. THE EMPLOYEE SHALL NOT BE ELIGIBLE
FOR ANY SEVERANCE OR SEPARATION PAYMENTS (INCLUDING, BUT NOT LIMITED TO, THOSE
DESCRIBED IN SECTIONS 5 AND 6 OF THIS AGREEMENT) OR ANY CONTINUATION OF BENEFITS
(OTHER THAN THOSE PROVIDED FOR UNDER THE FEDERAL CONSOLIDATED OMNIBUS BUDGET
RECONCILIATION ACT (“COBRA”)), OR ANY OTHER COMPENSATION PURSUANT TO THIS
AGREEMENT OR OTHERWISE. THE EMPLOYEE ALSO SHALL HAVE SUCH RIGHTS, IF ANY, WITH
RESPECT TO OUTSTANDING STOCK OPTIONS AND RESTRICTED STOCK GRANTS AS MAY BE
PROVIDED UNDER THE AGREEMENT APPLICABLE TO EACH.

 

4.2           DEFINITION OF “GOOD REASON”. FOR PURPOSES OF THIS AGREEMENT, “GOOD
REASON” MEANS THE OCCURRENCE, WITHOUT THE EMPLOYEE’S WRITTEN CONSENT, OF ANY OF
THE EVENTS OR CIRCUMSTANCES SET FORTH IN CLAUSES (A) THROUGH (D) BELOW,
PROVIDED, HOWEVER, THAT AN EVENT DESCRIBED IN CLAUSES (A) THROUGH (D) BELOW
SHALL NOT CONSTITUTE GOOD REASON UNLESS IT IS COMMUNICATED IN WRITING, WITHIN 90
DAYS OF THE EVENT GIVING RISE TO THE CLAIM, BY THE EMPLOYEE TO THE COMPANY OR
ITS SUCCESSOR AND UNLESS IT IS NOT CORRECTED BY THE COMPANY OR ITS SUCCESSOR AND
THE EMPLOYEE HAS NOT BEEN REASONABLY COMPENSATED FOR ANY LOSS OR DAMAGES
RESULTING THEREFROM WITHIN THIRTY (30) DAYS OF THE COMPANY’S OR SUCCESSOR’S
RECEIPT OF SUCH WRITTEN NOTICE:

 

(A)           THE ASSIGNMENT TO THE EXECUTIVE OF DUTIES INCONSISTENT IN ANY
MATERIAL RESPECT WITH THE EXECUTIVE’S POSITION (INCLUDING STATUS, OFFICES,
TITLES AND REPORTING REQUIREMENTS), AUTHORITY OR RESPONSIBILITIES, OR ANY OTHER
ACTION OR OMISSION BY THE COMPANY WHICH RESULTS IN A MATERIAL DIMINUTION IN SUCH
POSITION, AUTHORITY OR RESPONSIBILITIES;

(B)           A MATERIAL BREACH OF THIS AGREEMENT BY THE COMPANY;

(C)           A MATERIAL REDUCTION IN THE EMPLOYEE’S BASE SALARY; OR

(D)           A CHANGE BY THE COMPANY IN THE LOCATION AT WHICH THE EMPLOYEE
PERFORMS HIS/HER PRINCIPAL DUTIES FOR THE COMPANY TO A NEW LOCATION THAT IS BOTH
(I) OUTSIDE A RADIUS OF 50 MILES FROM THE EMPLOYEE’S PRINCIPAL RESIDENCE AND
(II) MORE THAN 30 MILES FROM THE LOCATION AT WHICH THE EMPLOYEE PERFORMED
HIS/HER PRINCIPAL DUTIES FOR THE COMPANY.

 

4.3           DEFINITION OF “CAUSE”. FOR PURPOSES OF THIS AGREEMENT, “CAUSE” IS
DEFINED AS: (I) A GOOD FAITH FINDING BY NO FEWER THAN TWO-THIRDS OF THE MEMBERS
OF THE BOARD (EXCLUDING THE EMPLOYEE, IF APPLICABLE) OF (A) THE EMPLOYEE’S
FAILURE TO (1) PERFORM REASONABLY ASSIGNED LAWFUL DUTIES OR (2) COMPLY WITH A
LAWFUL INSTRUCTION OF THE BOARD, CHIEF EXECUTIVE OFFICER OR SUCH OTHER EXECUTIVE
OFFICER WITH DIRECT SUPERVISORY AUTHORITY OVER THE EMPLOYEE SO LONG AS, IN THE
CASE OF (2), THE INSTRUCTION IS CONSISTENT WITH THE SCOPE AND RESPONSIBILITIES
OF THE EMPLOYEE’S POSITION, OR (B) THE EMPLOYEE’S DISHONESTY, WILLFUL MISCONDUCT
OR GROSS NEGLIGENCE, OR (C) THE EMPLOYEE’S SUBSTANTIAL AND MATERIAL FAILURE OR
REFUSAL TO PERFORM ACCORDING TO, OR TO COMPLY WITH, THE POLICIES, PROCEDURES OR
PRACTICES ESTABLISHED BY THE COMPANY OR THE BOARD AND, IN THE CASE OF (A) OR
(C), THE EMPLOYEE HAS HAD TEN (10) DAYS WRITTEN NOTICE TO CURE HIS/HER FAILURE
TO SO PERFORM OR COMPLY; OR (II) THE EMPLOYEE’S INDICTMENT, OR THE ENTERING OF A
GUILTY PLEA OR PLEA OF “NO CONTEST” WITH RESPECT TO, A FELONY OR ANY CRIME
INVOLVING MORAL TURPITUDE.

 

2

--------------------------------------------------------------------------------

 

5.             TERMINATION WITHOUT CAUSE, TERMINATION BY REASON OF DEATH OR
DISABILITY, RESIGNATION FOR GOOD REASON.

 

5.1           IF THE EMPLOYEE’S EMPLOYMENT WITH THE COMPANY IS TERMINATED BY
REASON OF THE EMPLOYEE’S DEATH OR DISABILITY (AS DEFINED IN SECTION 5.2), BY THE
COMPANY WITHOUT CAUSE (AS DEFINED IN SECTION 4.3), OR BY THE EMPLOYEE’S
VOLUNTARY RESIGNATION FOR GOOD REASON (AS DEFINED IN SECTION 4.2), OTHER THAN IN
CONNECTION WITH A CHANGE IN CONTROL (AS DEFINED IN SECTION 6.1(A)), THEN THE
EMPLOYEE SHALL BE PAID ALL ACCRUED AND UNPAID BASE SALARY AND ANY ACCRUED BUT
UNUSED VACATION THROUGH THE DATE OF TERMINATION. IN ADDITION, IF THE EMPLOYEE’S
EMPLOYMENT WITH THE COMPANY IS TERMINATED BY REASON OF THE EMPLOYEE’S
DISABILITY, BY THE COMPANY WITHOUT CAUSE, OR BY THE EMPLOYEE’S VOLUNTARY
RESIGNATION FOR GOOD REASON, SUBJECT TO THE EMPLOYEE’S EXECUTION AND
NON-REVOCATION OF A BINDING SEVERANCE AND MUTUAL RELEASE AGREEMENT IN A FORM
PROVIDED BY AND SATISFACTORY TO THE COMPANY (HEREINAFTER, A “SEVERANCE
AGREEMENT”), THE EMPLOYEE SHALL BE ELIGIBLE TO RECEIVE THE FOLLOWING SEPARATION
BENEFITS:

 

(A)           AN AMOUNT EQUAL TO THE SUM OF (I) TWELVE (12) MONTHS OF THE
EMPLOYEE’S BASE SALARY AS OF THE DATE OF TERMINATION (WHICH AMOUNT SHALL BE
PAYABLE IN INSTALLMENTS IN ACCORDANCE WITH THE COMPANY’S REGULAR PAYROLL
PRACTICES, BEGINNING ON THE NEXT PAYROLL DATE FOLLOWING THE 30TH DAY AFTER THE
DATE OF TERMINATION) AND (II) THE GREATER OF (X) THE ANNUAL DISCRETIONARY TARGET
BONUS ESTABLISHED BY THE BOARD (OR ANY OTHER PERSON OR PERSONS HAVING AUTHORITY
WITH RESPECT THERETO) FOR THE EMPLOYEE FOR THE FISCAL YEAR IN WHICH THE DATE OF
TERMINATION OCCURS OR (Y) THE ANNUAL BONUS PAID TO THE EMPLOYEE FOR THE MOST
RECENTLY COMPLETED FISCAL YEAR (WHICH AMOUNT SHALL BE PAYABLE IN ONE LUMP SUM ON
THE NEXT PAYROLL DATE FOLLOWING THE 30TH DAY AFTER THE DATE OF TERMINATION);

 

(B)           IF THE EMPLOYEE IS ELIGIBLE FOR AND ELECTS TO CONTINUE HIS/HER
MEDICAL AND/OR DENTAL HEALTH INSURANCE COVERAGE PURSUANT TO COBRA, THE COMPANY
SHALL CONTINUE TO CONTRIBUTE, UNTIL THE EARLIER OF (X) TWELVE (12) MONTHS
FOLLOWING THE DATE OF TERMINATION OR (Y) THE DATE ON WHICH THE EMPLOYEE BECOMES
ELIGIBLE TO RECEIVE GROUP MEDICAL AND/OR DENTAL INSURANCE COVERAGE THROUGH A NEW
EMPLOYER (THE “CONTRIBUTION PERIOD”), TOWARD THE COST OF THE EMPLOYEE’S COBRA
PREMIUMS THE SAME AMOUNT THAT IT PAYS ON BEHALF OF ACTIVE AND SIMILARLY SITUATED
EMPLOYEES RECEIVING THE SAME TYPE OF COVERAGE. THE REMAINING BALANCE OF ANY
PREMIUM COSTS, AND ALL PREMIUM COSTS AFTER THE CONTRIBUTION PERIOD, SHALL BE
PAID BY THE EMPLOYEE ON A MONTHLY BASIS. AFTER THE CONTRIBUTION PERIOD, THE
EMPLOYEE MAY CONTINUE RECEIVING COVERAGE UNDER COBRA AT HIS/HER OWN COST IF AND
TO THE EXTENT THAT HE/SHE REMAINS ELIGIBLE FOR COBRA CONTINUATION. THE EMPLOYEE
AGREES THAT HE/SHE SHALL NOTIFY THE COMPANY IN WRITING IMMEDIATELY FOLLOWING THE
DATE ON WHICH HE/SHE BECOMES ELIGIBLE FOR GROUP MEDICAL AND/OR DENTAL INSURANCE
COVERAGE THROUGH ANOTHER EMPLOYER;

 

(C)           THE COMPANY SHALL CONTINUE TO PROVIDE BENEFITS TO THE EMPLOYEE IN
ACCORDANCE WITH ANY APPLICABLE LIFE INSURANCE, ACCIDENT AND/OR DISABILITY PLANS
UNDER WHICH THE EMPLOYEE WAS ELIGIBLE AS OF THE DATE OF TERMINATION CONSISTENT
WITH SUCH BENEFITS AS MAY BE PROVIDED TO ACTIVE AND SIMILARLY SITUATED EMPLOYEES
COVERED BY SUCH PLANS, UNTIL THE EARLIER OF (X) TWELVE (12) MONTHS FOLLOWING THE
DATE OF TERMINATION OR (Y) THE DATE ON WHICH THE EMPLOYEE BECOMES ELIGIBLE TO
RECEIVE SUBSTANTIALLY COMPARABLE COVERAGE THROUGH A NEW EMPLOYER (THE “EXTENDED
BENEFITS PERIOD”); PROVIDED, HOWEVER, THAT IF SUCH PLANS DO NOT PERMIT CONTINUED
COVERAGE OF THE EMPLOYEE FOLLOWING THE DATE OF TERMINATION, THE COMPANY SHALL
INSTEAD REIMBURSE THE EMPLOYEE FOR THE REASONABLE COST OF PURCHASING
SUBSTANTIALLY COMPARABLE COVERAGE DURING THE EXTENDED BENEFITS PERIOD. THE
EMPLOYEE AGREES THAT HE/SHE SHALL NOTIFY THE COMPANY IN WRITING IMMEDIATELY
FOLLOWING THE DATE ON WHICH HE/SHE BECOMES ELIGIBLE FOR LIFE INSURANCE, ACCIDENT
AND/OR DISABILITY COVERAGE THROUGH A NEW EMPLOYER. THE BENEFITS PROVIDED AND/OR
PAYMENTS MADE UNDER THIS SUBSECTION SHALL BE IN INSTALLMENTS IN ACCORDANCE WITH
THE COMPANY’S REGULAR PAYROLL PRACTICES, BEGINNING WITH THE PAYROLL DATE
FOLLOWING THE 30TH DAY AFTER THE DATE OF TERMINATION; AND

 

(D)           THE EMPLOYEE SHALL BE ENTITLED TO CONTINUED VESTING OF ANY
UNVESTED STOCK OPTIONS AND ANY FUTURE STOCK OPTION GRANTS AWARDED TO THE
EMPLOYEE AFTER THE DATE OF THIS AGREEMENT (COLLECTIVELY, THE “OUTSTANDING STOCK
OPTIONS”) FOR A PERIOD OF TWELVE (12) MONTHS FROM THE DATE OF TERMINATION (THE
“EXTENDED VESTING DATE”) AND THE RIGHT TO EXERCISE ANY OUTSTANDING STOCK OPTIONS
SHALL TERMINATE ON THE EARLIER OF THREE

 

3

--------------------------------------------------------------------------------

 

MONTHS AFTER THE EXTENDED VESTING DATE AND THE ORIGINAL EXPIRATION DATE OF THE
OUTSTANDING STOCK OPTION (ASSUMING NO TERMINATION OF EMPLOYMENT OCCURRED). THE
EMPLOYEE SHALL ALSO BE ENTITLED TO IMMEDIATE VESTING, ON THE DATE OF
TERMINATION, OF ANY RESTRICTED STOCK AWARDS WITH UNDERLYING SHARES THAT VEST
SOLELY THROUGH THE PASSAGE OF TIME (I.E., SERVICE-BASED VESTING) AND NOT UPON
THE ACHIEVEMENT OF SPECIFIED CONDITIONS OR MILESTONES (I.E., PERFORMANCE-BASED
VESTING), INCLUDING ANY FUTURE RESTRICTED STOCK AWARDS GRANTED TO THE EMPLOYEE
AFTER THE DATE OF THIS AGREEMENT THAT CONTAIN SERVICE-BASED VESTING PROVISIONS
(COLLECTIVELY, “OUTSTANDING RESTRICTED STOCK AWARDS”), IN EACH CASE THAT WOULD
HAVE VESTED DURING THE PERIOD OF TWELVE (12) MONTHS FROM THE DATE OF
TERMINATION.  THE EMPLOYEE SHALL HAVE NO FURTHER RIGHTS WITH RESPECT TO ANY
OUTSTANDING RESTRICTED STOCK AWARDS THAT REMAIN UNVESTED AFTER TAKING INTO
ACCOUNT THE PREVIOUS SENTENCE.

 

5.2        FOR PURPOSES OF THIS AGREEMENT, “DISABILITY” SHALL MEAN THE
EMPLOYEE’S ABSENCE FROM THE FULL-TIME PERFORMANCE OF THE EMPLOYEE’S DUTIES WITH
THE COMPANY FOR 180 CONSECUTIVE CALENDAR DAYS AS A RESULT OF INCAPACITY DUE TO
MENTAL OR PHYSICAL ILLNESS WHICH IS DETERMINED TO BE TOTAL AND PERMANENT BY A
PHYSICIAN SELECTED BY THE COMPANY OR ITS INSURERS AND ACCEPTABLE TO THE EMPLOYEE
OR THE EMPLOYEE’S LEGAL REPRESENTATIVE.

 

5.3        TAXES.

 

(A)               NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, EXCEPT
AS SET FORTH IN SECTION 5.3(B), IN THE EVENT THAT THE COMPANY UNDERGOES A
“CHANGE IN OWNERSHIP OR CONTROL” (AS DEFINED BELOW), THE COMPANY SHALL NOT BE
OBLIGATED TO PROVIDE TO THE EMPLOYEE A PORTION OF ANY “CONTINGENT COMPENSATION
PAYMENTS” (AS DEFINED BELOW) THAT THE EMPLOYEE WOULD OTHERWISE BE ENTITLED TO
RECEIVE TO THE EXTENT NECESSARY TO ELIMINATE ANY “EXCESS PARACHUTE PAYMENTS” (AS
DEFINED IN SECTION 280G(B)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE “CODE”)) FOR THE EMPLOYEE. FOR PURPOSES OF THIS SECTION 5.3, THE CONTINGENT
COMPENSATION PAYMENTS SO ELIMINATED SHALL BE REFERRED TO AS THE “ELIMINATED
PAYMENTS” AND THE AGGREGATE AMOUNT (DETERMINED IN ACCORDANCE WITH TREASURY
REGULATION SECTION 1.280G-1, Q/A-30 OR ANY SUCCESSOR PROVISION) OF THE
CONTINGENT COMPENSATION PAYMENTS SO ELIMINATED SHALL BE REFERRED TO AS THE
“ELIMINATED AMOUNT.”

 

(B)              NOTWITHSTANDING THE PROVISIONS OF SECTION 5.3(A), NO SUCH
REDUCTION IN CONTINGENT COMPENSATION PAYMENTS SHALL BE MADE IF (I) THE
ELIMINATED AMOUNT (COMPUTED WITHOUT REGARD TO THIS SENTENCE) EXCEEDS (II) 110%
OF THE AGGREGATE PRESENT VALUE (DETERMINED IN ACCORDANCE WITH TREASURY
REGULATION SECTION 1.280G-1, Q/A-31, Q/A-32 AND Q/A-33 OR ANY SUCCESSOR
PROVISIONS) OF THE AMOUNT OF ANY ADDITIONAL TAXES THAT WOULD BE INCURRED BY THE
EMPLOYEE IF THE ELIMINATED PAYMENTS (DETERMINED WITHOUT REGARD TO THIS SENTENCE)
WERE PAID TO HIM/HER (INCLUDING, STATE AND FEDERAL INCOME TAXES ON THE
ELIMINATED PAYMENTS, THE EXCISE TAX IMPOSED BY SECTION 4999 OF THE CODE PAYABLE
WITH RESPECT TO ALL OF THE CONTINGENT COMPENSATION PAYMENTS IN EXCESS OF THE
EMPLOYEE’S “BASE AMOUNT” (AS DEFINED IN SECTION 280G(B)(3) OF THE CODE), AND ANY
WITHHOLDING TAXES). THE OVERRIDE OF SUCH REDUCTION IN CONTINGENT COMPENSATION
PAYMENTS PURSUANT TO THIS SECTION 5.3(B) SHALL BE REFERRED TO AS A
“SECTION 5.3(B) OVERRIDE.”  FOR PURPOSE OF THIS PARAGRAPH, IF ANY FEDERAL OR
STATE INCOME TAXES WOULD BE ATTRIBUTABLE TO THE RECEIPT OF ANY ELIMINATED
PAYMENT, THE AMOUNT OF SUCH TAXES SHALL BE COMPUTED BY MULTIPLYING THE AMOUNT OF
THE ELIMINATED PAYMENT BY THE MAXIMUM COMBINED FEDERAL AND STATE INCOME TAX RATE
PROVIDED BY LAW.

 

(C)               FOR PURPOSES OF THIS SECTION 5.3 THE FOLLOWING TERMS SHALL
HAVE THE FOLLOWING RESPECTIVE MEANINGS:

 

(I)            “CHANGE IN OWNERSHIP OR CONTROL” SHALL MEAN A CHANGE IN THE
OWNERSHIP OR EFFECTIVE CONTROL OF THE COMPANY OR IN THE OWNERSHIP OF A
SUBSTANTIAL PORTION OF THE ASSETS OF THE COMPANY DETERMINED IN ACCORDANCE WITH
SECTION 280G(B)(2) OF THE CODE.

 

(II)           “CONTINGENT COMPENSATION PAYMENT” SHALL MEAN ANY PAYMENT (OR
BENEFIT) IN THE NATURE OF COMPENSATION THAT IS MADE OR MADE AVAILABLE (UNDER
THIS AGREEMENT OR OTHERWISE) TO A

 

4

--------------------------------------------------------------------------------

 

“DISQUALIFIED INDIVIDUAL” (AS DEFINED IN SECTION 280G(C) OF THE CODE) AND THAT
IS CONTINGENT (WITHIN THE MEANING OF SECTION 280G(B)(2)(A)(I) OF THE CODE) ON A
CHANGE IN OWNERSHIP OR CONTROL OF THE COMPANY.

 

(D)           ANY PAYMENTS OR OTHER BENEFITS OTHERWISE DUE TO THE EMPLOYEE
FOLLOWING A CHANGE IN OWNERSHIP OR CONTROL THAT COULD REASONABLY BE
CHARACTERIZED (AS DETERMINED BY THE COMPANY) AS CONTINGENT COMPENSATION PAYMENTS
(THE “POTENTIAL PAYMENTS”) SHALL NOT BE MADE UNTIL THE DATES PROVIDED FOR IN
THIS SECTION 5.3(D). WITHIN 30 DAYS AFTER EACH DATE ON WHICH THE EMPLOYEE FIRST
BECOMES ENTITLED TO RECEIVE (WHETHER OR NOT THEN DUE) A CONTINGENT COMPENSATION
PAYMENT RELATING TO SUCH CHANGE IN OWNERSHIP OR CONTROL, THE COMPANY SHALL
DETERMINE AND NOTIFY THE EMPLOYEE WITH REASONABLE DETAIL REGARDING THE BASIS FOR
ITS DETERMINATIONS) (I) WHICH POTENTIAL PAYMENTS CONSTITUTE CONTINGENT
COMPENSATION PAYMENTS, (II) THE ELIMINATED AMOUNT AND (III) WHETHER THE
SECTION 5.3(B) OVERRIDE IS APPLICABLE. WITHIN 30 DAYS AFTER DELIVERY OF SUCH
NOTICE TO THE EMPLOYEE, THE EMPLOYEE SHALL DELIVER A RESPONSE TO THE COMPANY
(THE “EMPLOYEE RESPONSE”) STATING EITHER (A) THAT HE/SHE AGREES WITH THE
COMPANY’S DETERMINATION PURSUANT TO THE PRECEDING SENTENCE, IN WHICH CASE HE/SHE
SHALL INDICATE, IF APPLICABLE, WHICH CONTINGENT COMPENSATION PAYMENTS, OR
PORTIONS THEREOF (THE AGGREGATE AMOUNT OF WHICH, DETERMINED IN ACCORDANCE WITH
TREASURY REGULATION SECTION 1.280G-1, Q/A-30 OR ANY SUCCESSOR PROVISION, SHALL
BE EQUAL TO THE ELIMINATED AMOUNT), SHALL BE TREATED AS ELIMINATED PAYMENTS OR
(B) THAT HE/SHE DISAGREES WITH SUCH DETERMINATION, IN WHICH CASE HE/SHE SHALL
SET FORTH (I) WHICH POTENTIAL PAYMENTS SHOULD BE CHARACTERIZED AS CONTINGENT
COMPENSATION PAYMENTS, (II) THE ELIMINATED AMOUNT, (III) WHETHER THE
SECTION 5.3(B) OVERRIDE IS APPLICABLE, AND (IV) WHICH (IF ANY) CONTINGENT
COMPENSATION PAYMENTS, OR PORTIONS THEREOF (THE AGGREGATE AMOUNT OF WHICH,
DETERMINED IN ACCORDANCE WITH TREASURY REGULATION SECTION 1.280G-1, Q/A-30 OR
ANY SUCCESSOR PROVISION, SHALL BE EQUAL TO THE ELIMINATED AMOUNT, IF ANY), SHALL
BE TREATED AS ELIMINATED PAYMENTS. IN THE EVENT THAT THE EMPLOYEE FAILS TO
DELIVER AN EMPLOYEE RESPONSE ON OR BEFORE THE REQUIRED DATE, THE COMPANY’S
INITIAL DETERMINATION SHALL BE FINAL AND THE CONTINGENT COMPENSATION PAYMENTS
THAT SHALL BE TREATED AS ELIMINATED PAYMENTS SHALL BE DETERMINED BY THE COMPANY
IN ITS ABSOLUTE DISCRETION. IF THE EMPLOYEE STATES IN THE EMPLOYEE RESPONSE THAT
HE/SHE AGREES WITH THE COMPANY’S DETERMINATION, THE COMPANY SHALL MAKE THE
POTENTIAL PAYMENTS TO THE EMPLOYEE WITHIN THREE BUSINESS DAYS FOLLOWING DELIVERY
TO THE COMPANY OF THE EMPLOYEE RESPONSE (EXCEPT FOR ANY POTENTIAL PAYMENTS WHICH
ARE NOT DUE TO BE MADE UNTIL AFTER SUCH DATE, WHICH POTENTIAL PAYMENTS SHALL BE
MADE ON THE DATE ON WHICH THEY ARE DUE). IF THE EMPLOYEE STATES IN THE EMPLOYEE
RESPONSE THAT HE/SHE DISAGREES WITH THE COMPANY’S DETERMINATION, THEN, FOR A
PERIOD OF 60 DAYS FOLLOWING DELIVERY OF THE EMPLOYEE RESPONSE, THE EMPLOYEE AND
THE COMPANY SHALL USE GOOD FAITH EFFORTS TO RESOLVE SUCH DISPUTE. IF SUCH
DISPUTE IS NOT RESOLVED WITHIN SUCH 60-DAY PERIOD, SUCH DISPUTE SHALL BE SETTLED
EXCLUSIVELY BY ARBITRATION IN BOSTON, MASSACHUSETTS, IN ACCORDANCE WITH THE
RULES OF THE AMERICAN ARBITRATION ASSOCIATION THEN IN EFFECT. JUDGMENT MAY BE
ENTERED ON THE ARBITRATOR’S AWARD IN ANY COURT HAVING JURISDICTION. THE COMPANY
SHALL, WITHIN THREE BUSINESS DAYS FOLLOWING DELIVERY TO THE COMPANY OF THE
EMPLOYEE RESPONSE, MAKE TO THE EMPLOYEE THOSE POTENTIAL PAYMENTS AS TO WHICH
THERE IS NO DISPUTE BETWEEN THE COMPANY AND THE EMPLOYEE REGARDING WHETHER THEY
SHOULD BE MADE (EXCEPT FOR ANY SUCH POTENTIAL PAYMENTS WHICH ARE NOT DUE TO BE
MADE UNTIL AFTER SUCH DATE, WHICH POTENTIAL PAYMENTS SHALL BE MADE ON THE DATE
ON WHICH THEY ARE DUE). THE BALANCE OF THE POTENTIAL PAYMENTS SHALL BE MADE
WITHIN THREE BUSINESS DAYS FOLLOWING THE RESOLUTION OF SUCH DISPUTE. SUBJECT TO
THE LIMITATIONS CONTAINED IN SECTIONS 5.3(A) AND (B) HEREOF, THE AMOUNT OF ANY
PAYMENTS TO BE MADE TO THE EMPLOYEE FOLLOWING THE RESOLUTION OF SUCH DISPUTE
SHALL BE INCREASED BY AMOUNT OF THE ACCRUED INTEREST THEREON COMPUTED AT THE
PRIME RATE ANNOUNCED FROM TIME TO TIME BY THE WALL STREET JOURNAL, COMPOUNDED
MONTHLY FROM THE DATE THAT SUCH PAYMENTS ORIGINALLY WERE DUE.

 

(E)           THE PROVISIONS OF THIS SECTION 5.3 ARE INTENDED TO APPLY TO ANY
AND ALL PAYMENTS OR BENEFITS AVAILABLE TO THE EMPLOYEE UNDER THIS AGREEMENT OR
ANY OTHER AGREEMENT OR PLAN OF THE COMPANY UNDER WHICH THE EMPLOYEE RECEIVES
CONTINGENT COMPENSATION PAYMENTS.

 

6.             TERMINATION FOLLOWING CHANGE OF CONTROL.

 

6.1           KEY DEFINITIONS. AS USED HEREIN, THE FOLLOWING TERMS SHALL HAVE
THE FOLLOWING RESPECTIVE MEANINGS:

 

5

--------------------------------------------------------------------------------

 

(A)           “CHANGE IN CONTROL” MEANS AN EVENT OR OCCURRENCE SET FORTH IN ANY
ONE OR MORE OF SUBSECTIONS (I) THROUGH (IV) BELOW (INCLUDING AN EVENT OR
OCCURRENCE THAT CONSTITUTES A CHANGE IN CONTROL UNDER ONE OF SUCH SUBSECTIONS
BUT IS SPECIFICALLY EXEMPTED FROM ANOTHER SUCH SUBSECTION), PROVIDED THAT SUCH
EVENT OR OCCURRENCE ALSO CONSTITUTES A CHANGE IN OWNERSHIP OR EFFECTIVE CONTROL
OF THE COMPANY OR IN THE OWNERSHIP OF A SUBSTANTIAL PORTION OF THE ASSETS OF THE
COMPANY, EACH WITHIN THE MEANING OF SECTION 409A (AS DEFINED BELOW):

 

(I)            THE ACQUISITION BY AN INDIVIDUAL, ENTITY OR GROUP (WITHIN THE
MEANING OF SECTION 13(D)(3) OR 14(D)(2) OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED (THE “EXCHANGE ACT”)) (A “PERSON”) OF BENEFICIAL OWNERSHIP OF ANY
CAPITAL STOCK OF THE COMPANY IF, AFTER SUCH ACQUISITION, SUCH PERSON
BENEFICIALLY OWNS (WITHIN THE MEANING OF RULE 13D-3 PROMULGATED UNDER THE
EXCHANGE ACT) 50% OR MORE OF EITHER (X) THE THEN-OUTSTANDING SHARES OF COMMON
STOCK OF THE COMPANY (THE “OUTSTANDING COMPANY COMMON STOCK”) OR (Y) THE
COMBINED VOTING POWER OF THE THEN-OUTSTANDING SECURITIES OF THE COMPANY ENTITLED
TO VOTE GENERALLY IN THE ELECTION OF DIRECTORS (THE “OUTSTANDING COMPANY VOTING
SECURITIES”); PROVIDED, HOWEVER, THAT FOR PURPOSES OF THIS SUBSECTION (I), THE
FOLLOWING ACQUISITIONS SHALL NOT CONSTITUTE A CHANGE IN CONTROL: (A) ANY
ACQUISITION DIRECTLY FROM THE COMPANY (EXCLUDING AN ACQUISITION PURSUANT TO THE
EXERCISE, CONVERSION OR EXCHANGE OF ANY SECURITY EXERCISABLE FOR, CONVERTIBLE
INTO OR EXCHANGEABLE FOR COMMON STOCK OR VOTING SECURITIES OF THE COMPANY,
UNLESS THE PERSON EXERCISING, CONVERTING OR EXCHANGING SUCH SECURITY ACQUIRED
SUCH SECURITY DIRECTLY FROM THE COMPANY OR AN UNDERWRITER OR AGENT OF THE
COMPANY), (B) ANY ACQUISITION BY THE COMPANY, (C) ANY ACQUISITION BY ANY
EMPLOYEE BENEFIT PLAN (OR RELATED TRUST) SPONSORED OR MAINTAINED BY THE COMPANY
OR ANY CORPORATION CONTROLLED BY THE COMPANY, OR (D) ANY ACQUISITION BY ANY
CORPORATION PURSUANT TO A TRANSACTION WHICH COMPLIES WITH CLAUSES (X) AND (Y) OF
SUBSECTION (III) OF THIS SECTION 6.1; OR

 

(II)           SUCH TIME AS THE CONTINUING DIRECTORS (AS DEFINED BELOW) DO NOT
CONSTITUTE A MAJORITY OF THE BOARD (OR, IF APPLICABLE, THE BOARD OF DIRECTORS OF
A SUCCESSOR CORPORATION TO THE COMPANY), WHERE THE TERM “CONTINUING DIRECTOR”
MEANS AT ANY DATE A MEMBER OF THE  BOARD (X) WHO WAS A MEMBER OF THE BOARD ON
THE DATE OF THE EXECUTION OF THIS AGREEMENT OR (Y) WHO WAS NOMINATED OR ELECTED
SUBSEQUENT TO SUCH DATE BY AT LEAST A MAJORITY OF THE DIRECTORS WHO WERE
CONTINUING DIRECTORS AT THE TIME OF SUCH NOMINATION OR ELECTION OR WHOSE
ELECTION TO THE BOARD WAS RECOMMENDED OR ENDORSED BY AT LEAST A MAJORITY OF THE
DIRECTORS WHO WERE CONTINUING DIRECTORS AT THE TIME OF SUCH NOMINATION OR
ELECTION; PROVIDED, HOWEVER, THAT THERE SHALL BE EXCLUDED FROM THIS CLAUSE
(Y) ANY INDIVIDUAL WHOSE INITIAL ASSUMPTION OF OFFICE OCCURRED AS A RESULT OF AN
ACTUAL OR THREATENED ELECTION CONTEST WITH RESPECT TO THE ELECTION OR REMOVAL OF
DIRECTORS OR OTHER ACTUAL OR THREATENED SOLICITATION OF PROXIES OR CONSENTS, BY
OR ON BEHALF OF A PERSON OTHER THAN THE BOARD; OR

 

(III)          THE CONSUMMATION OF A MERGER, CONSOLIDATION, REORGANIZATION,
RECAPITALIZATION OR STATUTORY SHARE EXCHANGE INVOLVING THE COMPANY OR A SALE OR
OTHER DISPOSITION OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY, IN
ONE OR A SERIES OF TRANSACTIONS (A “BUSINESS COMBINATION”), UNLESS, IMMEDIATELY
FOLLOWING SUCH BUSINESS COMBINATION, EACH OF THE FOLLOWING TWO CONDITIONS IS
SATISFIED: (X) ALL OR SUBSTANTIALLY ALL OF THE INDIVIDUALS AND ENTITIES WHO WERE
THE BENEFICIAL OWNERS OF THE OUTSTANDING COMPANY COMMON STOCK AND OUTSTANDING
COMPANY VOTING SECURITIES IMMEDIATELY PRIOR TO SUCH BUSINESS COMBINATION
BENEFICIALLY OWN, DIRECTLY OR INDIRECTLY, MORE THAN 50% OF THE THEN-OUTSTANDING
SHARES OF COMMON STOCK AND THE COMBINED VOTING POWER OF THE THEN-OUTSTANDING
SECURITIES ENTITLED TO VOTE GENERALLY IN THE ELECTION OF DIRECTORS,
RESPECTIVELY, OF THE RESULTING OR ACQUIRING CORPORATION IN SUCH BUSINESS
COMBINATION (WHICH SHALL INCLUDE, WITHOUT LIMITATION, A CORPORATION WHICH AS A
RESULT OF SUCH TRANSACTION OWNS THE COMPANY OR SUBSTANTIALLY ALL OF THE
COMPANY’S ASSETS EITHER DIRECTLY OR THROUGH ONE OR MORE SUBSIDIARIES) (SUCH
RESULTING OR ACQUIRING CORPORATION IS REFERRED TO HEREIN AS THE “ACQUIRING
CORPORATION”) IN SUBSTANTIALLY THE SAME PROPORTIONS AS THEIR OWNERSHIP,
IMMEDIATELY PRIOR TO SUCH BUSINESS COMBINATION, OF THE OUTSTANDING COMPANY
COMMON STOCK AND OUTSTANDING COMPANY VOTING SECURITIES, RESPECTIVELY; AND (Y) NO
PERSON (EXCLUDING ANY EMPLOYEE BENEFIT PLAN (OR RELATED TRUST) MAINTAINED OR
SPONSORED BY THE COMPANY OR BY THE ACQUIRING CORPORATION) BENEFICIALLY OWNS,
DIRECTLY OR INDIRECTLY, 50% OR MORE OF THE THEN OUTSTANDING SHARES OF COMMON
STOCK OF THE ACQUIRING CORPORATION, OR OF THE COMBINED VOTING POWER OF THE
THEN-OUTSTANDING SECURITIES OF SUCH CORPORATION ENTITLED TO VOTE GENERALLY IN
THE ELECTION OF DIRECTORS (EXCEPT TO THE EXTENT THAT SUCH OWNERSHIP EXISTED
PRIOR TO THE BUSINESS COMBINATION); OR

 

6

--------------------------------------------------------------------------------

 

(IV)          APPROVAL BY THE STOCKHOLDERS OF THE COMPANY OF A COMPLETE
LIQUIDATION OR DISSOLUTION OF THE COMPANY.

 

(B)           “CHANGE IN CONTROL DATE” MEANS THE FIRST DATE DURING THE PERIOD OF
TIME THE EMPLOYEE IS EMPLOYED PURSUANT TO THIS AGREEMENT ON WHICH A CHANGE IN
CONTROL OCCURS. ANYTHING IN THIS AGREEMENT TO THE CONTRARY NOTWITHSTANDING, IF
(A) A CHANGE IN CONTROL OCCURS, (B) THE EMPLOYEE’S EMPLOYMENT WITH THE COMPANY
IS TERMINATED PRIOR TO THE DATE ON WHICH THE CHANGE IN CONTROL OCCURS, AND
(C) IT IS REASONABLY DEMONSTRATED BY THE EMPLOYEE THAT SUCH TERMINATION OF
EMPLOYMENT (I) WAS AT THE REQUEST OF A THIRD PARTY WHO HAS TAKEN STEPS
REASONABLY CALCULATED TO EFFECT A CHANGE IN CONTROL OR (II) OTHERWISE AROSE IN
CONNECTION WITH OR IN ANTICIPATION OF A CHANGE IN CONTROL, THEN FOR ALL PURPOSES
OF THIS AGREEMENT THE “CHANGE IN CONTROL DATE” SHALL MEAN THE DATE IMMEDIATELY
PRIOR TO THE DATE OF SUCH TERMINATION OF EMPLOYMENT.

 

(C)           CHANGE OF CONTROL TERMINATION OCCURS WHERE THE EMPLOYEE IS
TERMINATED WITHOUT CAUSE (AS DEFINED IN SECTION 4.3) OR RESIGNS FOR GOOD REASON
(AS DEFINED IN SECTION 4.2), IN EITHER CASE WITHIN TWELVE (12) MONTHS FOLLOWING
THE CHANGE IN CONTROL DATE. IN ADDITION, ANY TERMINATION OF THE EMPLOYEE’S
EMPLOYMENT THAT OCCURS WITHIN TWELVE (12) MONTHS FOLLOWING THE CHANGE IN CONTROL
DATE SHALL BE COMMUNICATED BY A WRITTEN NOTICE TO THE OTHER PARTY (THE “NOTICE
OF TERMINATION”), GIVEN IN ACCORDANCE WITH SECTION 10 HEREOF. ANY SUCH NOTICE OF
TERMINATION SHALL: (I) INDICATE THE SPECIFIC TERMINATION PROVISION OF THIS
AGREEMENT RELIED UPON BY THE PARTY GIVING SUCH NOTICE, (II) IN THE CASE OF A
TERMINATION BY THE COMPANY FOR CAUSE OR BY THE EMPLOYEE FOR GOOD REASON, SET
FORTH IN REASONABLE DETAIL THE FACTS AND CIRCUMSTANCES CLAIMED TO PROVIDE A
BASIS FOR SUCH CAUSE OR GOOD REASON, AND (III) SPECIFY THE DATE OF TERMINATION
(AS DEFINED BELOW). THE EFFECTIVE DATE OF AN EMPLOYMENT TERMINATION (THE “DATE
OF TERMINATION”) SHALL BE THE CLOSE OF BUSINESS ON THE DATE SPECIFIED IN THE
NOTICE OF TERMINATION (WHICH DATE, OTHER THAN IN THE CASE OF A TERMINATION DUE
TO THE EMPLOYEE’S DEATH, OR A TERMINATION BY THE COMPANY FOR CAUSE (WHICH NOTICE
SHALL BE GOVERNED BY SECTION 4.3)), MAY NOT BE LESS THAN 15 DAYS OR MORE THAN
120 DAYS AFTER THE DATE OF DELIVERY OF SUCH NOTICE OF TERMINATION). IN THE EVENT
THE COMPANY FAILS TO SATISFY THE REQUIREMENTS OF THIS SECTION 6.1 (C) REGARDING
A NOTICE OF TERMINATION, THE PURPORTED TERMINATION OF THE EMPLOYEE’S EMPLOYMENT
PURSUANT TO SUCH NOTICE OF TERMINATION SHALL NOT BE EFFECTIVE FOR PURPOSES OF
THIS AGREEMENT.

 

6.2           BENEFITS TO EMPLOYEE UPON A CHANGE OF CONTROL TERMINATION.

 

In the event of a Change of Control Termination, the Employee shall be entitled
to all accrued and unpaid base salary and any accrued but unused vacation
through the date of termination the Employee shall be eligible to receive the
following separation benefits:

 

(A)           AN AMOUNT EQUAL TO THE SUM OF (I) TWELVE (12) MONTHS OF THE
EMPLOYEE’S BASE SALARY AS OF THE DATE OF TERMINATION (WHICH AMOUNT SHALL BE
PAYABLE IN ONE LUMP SUM ON THE NEXT PAYROLL DATE FOLLOWING THE 30TH DAY AFTER
THE DATE OF TERMINATION; PROVIDED, HOWEVER, THAT IF THE CHANGE IN CONTROL DATE
PRECEDES THE CHANGE IN CONTROL, THEN SUCH AMOUNT SHALL BE PAYABLE IN ACCORDANCE
WITH SECTION 5.1(A)(I) HEREOF), AND (II) THE GREATER OF (X) THE ANNUAL
DISCRETIONARY TARGET BONUS ESTABLISHED BY THE BOARD (OR ANY OTHER PERSON OR
PERSONS HAVING AUTHORITY WITH RESPECT THERETO) FOR THE EMPLOYEE FOR THE FISCAL
YEAR IN WHICH THE DATE OF TERMINATION OCCURS OR (Y) THE ANNUAL BONUS PAID TO THE
EMPLOYEE FOR THE MOST RECENTLY COMPLETED FISCAL YEAR (WHICH AMOUNT SHALL BE
PAYABLE IN ONE LUMP SUM ON THE NEXT PAYROLL DATE FOLLOWING THE 30TH DAY AFTER
THE DATE OF TERMINATION);

 

(B)           THE COMPANY SHALL, IF THE EMPLOYEE IS ELIGIBLE FOR AND ELECTS TO
CONTINUE HIS/HER MEDICAL AND/OR DENTAL HEALTH INSURANCE COVERAGE PURSUANT TO
COBRA, CONTINUE TO CONTRIBUTE DURING THE CONTRIBUTION PERIOD DEFINED ABOVE
TOWARD THE COST OF THE EMPLOYEE’S COBRA PREMIUMS THE SAME AMOUNT THAT IT PAYS ON
BEHALF OF ACTIVE AND SIMILARLY SITUATED EMPLOYEES RECEIVING THE SAME TYPE OF
COVERAGE. THE REMAINING BALANCE OF ANY PREMIUM COSTS, AND ALL PREMIUM COSTS
AFTER THE CONTRIBUTION PERIOD, SHALL BE PAID BY THE EMPLOYEE ON A MONTHLY BASIS.
AFTER THE CONTRIBUTION PERIOD, THE EMPLOYEE MAY CONTINUE RECEIVING COVERAGE
UNDER COBRA AT HIS/HER OWN COST IF AND TO THE EXTENT THAT HE/SHE REMAINS
ELIGIBLE FOR COBRA CONTINUATION. THE

 

7

--------------------------------------------------------------------------------

 

EMPLOYEE AGREES THAT HE/SHE SHALL NOTIFY THE COMPANY IN WRITING IMMEDIATELY
FOLLOWING THE DATE ON WHICH HE/SHE BECOMES ELIGIBLE FOR GROUP MEDICAL AND/OR
DENTAL INSURANCE COVERAGE THROUGH ANOTHER EMPLOYER; AND

 

(C)           DURING THE EXTENDED BENEFITS PERIOD DEFINED ABOVE, THE COMPANY
SHALL CONTINUE TO PROVIDE BENEFITS TO THE EMPLOYEE IN ACCORDANCE WITH ANY
APPLICABLE LIFE INSURANCE, ACCIDENT AND/OR DISABILITY PLANS UNDER WHICH THE
EMPLOYEE WAS ELIGIBLE AS OF THE DATE OF TERMINATION CONSISTENT WITH SUCH
BENEFITS AS MAY BE PROVIDED TO ACTIVE AND SIMILARLY SITUATED EMPLOYEES COVERED
BY SUCH PLANS; PROVIDED, HOWEVER, THAT IF SUCH PLANS DO NOT PERMIT CONTINUED
COVERAGE OF THE EMPLOYEE FOLLOWING THE DATE OF TERMINATION, THE COMPANY SHALL
INSTEAD REIMBURSE THE EMPLOYEE FOR THE REASONABLE COST OF PURCHASING
SUBSTANTIALLY COMPARABLE COVERAGE DURING THE EXTENDED BENEFITS PERIOD. THE
EMPLOYEE AGREES THAT SHE SHALL NOTIFY THE COMPANY IN WRITING IMMEDIATELY
FOLLOWING THE DATE ON WHICH SHE BECOMES ELIGIBLE FOR LIFE INSURANCE, ACCIDENT
AND/OR DISABILITY COVERAGE THROUGH ANOTHER EMPLOYER. THE BENEFITS PROVIDED
AND/OR PAYMENTS MADE UNDER THIS SUBSECTION SHALL BE IN INSTALLMENTS IN
ACCORDANCE WITH THE COMPANY’S REGULAR PAYROLL PRACTICES, BEGINNING WITH THE
PAYROLL DATE FOLLOWING THE 30TH DAY AFTER THE DATE OF TERMINATION; AND

 

(D)           THE EMPLOYEE SHALL BE ENTITLED TO IMMEDIATE VESTING OF ANY
UNVESTED OPTION SHARES, RESTRICTED SHARES AND ANY FUTURE GRANTS AWARDED TO THE
EMPLOYEE. ALL SUCH EQUITY AWARDS (WHETHER STOCK OPTIONS OR RESTRICTED STOCK
GRANTS) WILL REMAIN EXERCISABLE IN ACCORDANCE WITH THE APPLICABLE STOCK OPTION
PLAN OR GRANT AGREEMENT.

 

6.3           INJUNCTIVE RELIEF. THE COMPANY AND THE EMPLOYEE AGREE THAT ANY
BREACH OF SECTION 6 OF THIS AGREEMENT BY THE COMPANY IS LIKELY TO CAUSE THE
EMPLOYEE SUBSTANTIAL AND IRREVOCABLE DAMAGE AND THEREFORE, IN THE EVENT OF ANY
SUCH BREACH, IN ADDITION TO SUCH OTHER REMEDIES WHICH MAY BE AVAILABLE, THE
EMPLOYEE SHALL HAVE THE RIGHT TO SPECIFIC PERFORMANCE AND INJUNCTIVE RELIEF.

 

7.             MITIGATION. THE EMPLOYEE SHALL NOT BE REQUIRED TO MITIGATE THE
AMOUNT OF ANY PAYMENT OR BENEFITS PROVIDED FOR IN SECTIONS 5 OR 6 BY SEEKING
OTHER EMPLOYMENT OR OTHERWISE EXCEPT WITH REGARD TO MEDICAL AND DENTAL COVERAGE
IF NEW EMPLOYMENT IS OBTAINED.

 

8.             SURVIVAL. THE PROVISIONS OF SECTIONS 5, 6, 9 (INCLUDING EXHIBIT A
REFERENCED IN SECTION 9) AND 10 SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT
FOR ANY REASON.

 

9.             NON-COMPETITION, NON-SOLICITATION, CONFIDENTIAL INFORMATION AND
DEVELOPMENTS. THE EMPLOYEE HEREBY RESTATES AND REAFFIRMS ALL OF HIS/HER
OBLIGATIONS PURSUANT TO THE EMPLOYEE NONDISCLOSURE, NONCOMPETITION AND
ASSIGNMENT OF INVENTIONS AGREEMENT DATED AS OF                BETWEEN THE
COMPANY AND THE EMPLOYEE AND ATTACHED HERETO AS EXHIBIT A (THE “NONDISCLOSURE
AGREEMENT”) AND ACKNOWLEDGES THAT THE NONDISCLOSURE AGREEMENT REMAINS IN FULL
FORCE AND EFFECT AND IS INCORPORATED FULLY HEREIN.

 

10.           NOTICES. ANY NOTICE DELIVERED UNDER THIS AGREEMENT SHALL BE DEEMED
DULY DELIVERED THREE (3) BUSINESS DAYS AFTER IT IS SENT BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, OR ONE (1) BUSINESS
DAY AFTER IT IS SENT FOR NEXT-BUSINESS DAY DELIVERY SIGNATURE REQUIRED VIA A
REPUTABLE NATIONWIDE OVERNIGHT COURIER SERVICE, IN EACH CASE TO THE ADDRESS OF
THE RECIPIENT SET FORTH IN THE INTRODUCTORY PARAGRAPH HERETO. EITHER PARTY MAY
CHANGE THE ADDRESS TO WHICH NOTICES ARE TO BE DELIVERED BY GIVING NOTICE OF SUCH
CHANGE TO THE OTHER PARTY IN THE MANNER SET FORTH IN THIS SECTION 10.

 

11.           TERMINATION OF EXECUTIVE RETENTION AGREEMENT. THE COMPANY AND THE
EMPLOYEE HEREBY AGREE THAT, IN CONSIDERATION OF THE TERMS AND CONDITIONS OF THIS
AGREEMENT, THE EXECUTIVE RETENTION AGREEMENT DATED AS OF               BETWEEN
THE COMPANY AND THE EMPLOYEE (THE “EXECUTIVE RETENTION AGREEMENT”) IS HEREBY
EXPRESSLY TERMINATED BY MUTUAL AGREEMENT AND NEITHER PARTY HAS ANY FURTHER
RIGHTS OR OBLIGATIONS THEREUNDER.

 

12.           ENTIRE AGREEMENT. THIS AGREEMENT, INCLUDING THE NONDISCLOSURE
AGREEMENT ATTACHED HERETO AS EXHIBIT A, CONSTITUTES THE ENTIRE AGREEMENT BETWEEN
THE PARTIES AND SUPERSEDES ALL PRIOR AGREEMENTS AND

 

8

--------------------------------------------------------------------------------

 

UNDERSTANDINGS (INCLUDING, WITHOUT LIMITATION, THE EXECUTIVE RETENTION
AGREEMENT), WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER OF THIS
AGREEMENT.

 

13.           AMENDMENT. THIS AGREEMENT MAY BE AMENDED OR MODIFIED ONLY BY A
WRITTEN INSTRUMENT EXECUTED BY BOTH THE COMPANY AND THE EMPLOYEE.

 

14.           GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT
REFERENCE TO THE CONFLICT OF LAWS PROVISIONS THEREOF). ANY ACTION, SUIT OR OTHER
LEGAL PROCEEDING ARISING UNDER OR RELATING TO ANY PROVISION OF THIS AGREEMENT
SHALL BE COMMENCED ONLY IN A COURT OF THE COMMONWEALTH OF MASSACHUSETTS (OR, IF
APPROPRIATE, A FEDERAL COURT LOCATED WITHIN THE COMMONWEALTH OF MASSACHUSETTS),
AND THE COMPANY AND THE EMPLOYEE EACH CONSENTS TO THE JURISDICTION OF SUCH A
COURT. THE COMPANY AND THE EMPLOYEE EACH HEREBY IRREVOCABLY WAIVE ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER LEGAL PROCEEDING ARISING UNDER OR
RELATING TO ANY PROVISION OF THIS AGREEMENT.

 

15.           SUCCESSORS AND ASSIGNS. THE COMPANY SHALL REQUIRE ANY SUCCESSOR
(WHETHER DIRECT OR INDIRECT, BY PURCHASE, MERGER, CONSOLIDATION OR OTHERWISE) TO
ALL OR SUBSTANTIALLY ALL OF THE BUSINESS OR ASSETS OF THE COMPANY AS EXPRESSLY
TO ASSUME AND AGREE TO PERFORM THIS AGREEMENT TO THE SAME EXTENT THAT THE
COMPANY WOULD BE REQUIRED TO PERFORM IT IF NO SUCH SUCCESSION HAD TAKEN PLACE.
FAILURE OF THE COMPANY TO OBTAIN AN ASSUMPTION OF THIS AGREEMENT UPON THE
EFFECTIVENESS OF ANY SUCCESSION SHALL BE A BREACH OF THIS AGREEMENT AND SHALL
CONSTITUTE GOOD REASON IF THE EMPLOYEE ELECTS TO TERMINATE EMPLOYMENT, EXCEPT
THAT FOR PURPOSES OF IMPLEMENTING THE FOREGOING, THE DATE ON WHICH ANY SUCH
SUCCESSION BECOMES EFFECTIVE SHALL BE DEEMED THE DATE OF TERMINATION. AS USED IN
THIS AGREEMENT, “COMPANY” SHALL MEAN THE COMPANY AS DEFINED ABOVE AND ANY
SUCCESSOR TO ITS BUSINESS OR ASSETS AS AFORESAID WHICH ASSUMES AND AGREES TO
PERFORM THIS AGREEMENT, BY OPERATION OF LAW OR OTHERWISE. THIS AGREEMENT SHALL
BE BINDING UPON AND INURE TO THE BENEFIT OF BOTH PARTIES AND THEIR RESPECTIVE
SUCCESSORS AND ASSIGNS; PROVIDED, HOWEVER, THAT THE OBLIGATIONS OF THE EMPLOYEE
ARE PERSONAL AND SHALL NOT BE ASSIGNED BY THE EMPLOYEE.

 

16.           ACKNOWLEDGMENT. THE EMPLOYEE STATES AND REPRESENTS THAT HE/SHE HAS
HAD AN OPPORTUNITY TO FULLY DISCUSS AND REVIEW THE TERMS OF THIS AGREEMENT WITH
AN ATTORNEY. THE EMPLOYEE FURTHER STATES AND REPRESENTS THAT HE/SHE HAS
CAREFULLY READ THIS AGREEMENT, UNDERSTANDS THE CONTENTS HEREIN, FREELY AND
VOLUNTARILY ASSENTS TO ALL OF THE TERMS AND CONDITIONS HEREOF, AND SIGNS HIS/HER
NAME OF HIS/HER OWN FREE ACT. THE EMPLOYEE FURTHER ACKNOWLEDGES THAT THE LAW
FIRM OF WILMERHALE IS ACTING AS COUNSEL TO THE COMPANY IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND IS NOT ACTING AS COUNSEL FOR
THE EMPLOYEE.

 

17.           SECTION 409A.

 

17.1         DISTRIBUTIONS. SUBJECT TO THIS SECTION 17.1, ANY PAYMENTS OR
BENEFITS UNDER SECTIONS 5 AND 6 SHALL BEGIN ONLY UPON THE DATE OF A “SEPARATION
FROM SERVICE” AS DEFINED BELOW WHICH OCCURS ON OR AFTER THE DATE OF TERMINATION
UNDER SECTION 5.1 OR A CHANGE OF CONTROL TERMINATION UNDER SECTION 6.1(C). THE
FOLLOWING RULES SHALL APPLY WITH RESPECT TO DISTRIBUTION OF THE PAYMENTS AND
BENEFITS, IF ANY, TO BE PROVIDED TO THE EMPLOYEE UNDER SECTIONS 5 AND 6:

 

(A)           IT IS INTENDED THAT EACH INSTALLMENT OF THE PAYMENTS AND BENEFITS
PROVIDED UNDER SECTIONS 5 AND 6 SHALL BE TREATED AS A SEPARATE “PAYMENT” FOR
PURPOSES OF SECTION 409A OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED,
AND THE GUIDANCE ISSUED THEREUNDER (“SECTION 409A”). NEITHER THE COMPANY NOR THE
EMPLOYEE SHALL HAVE THE RIGHT TO ACCELERATE OR DEFER THE DELIVERY OF ANY SUCH
PAYMENTS OR BENEFITS EXCEPT TO THE EXTENT SPECIFICALLY PERMITTED OR REQUIRED BY
SECTION 409A;

 

(B)           IF, AS OF THE DATE OF THE “SEPARATION FROM SERVICE” OF THE
EMPLOYEE FROM THE COMPANY (AS DEFINED BELOW), THE EMPLOYEE IS NOT A “SPECIFIED
EMPLOYEE” (WITHIN THE MEANING OF SECTION 409A), THEN EACH INSTALLMENT OF THE
PAYMENTS AND BENEFITS SHALL BE MADE ON THE DATES AND TERMS SET FORTH IN SECTIONS
5 AND 6; AND

 

9

--------------------------------------------------------------------------------

 

(C)           IF, AS OF THE DATE OF THE “SEPARATION FROM SERVICE” OF THE
EMPLOYEE FROM THE COMPANY, THE EMPLOYEE IS A “SPECIFIED EMPLOYEE” (WITHIN THE
MEANING OF SECTION 409A), THEN:

 

(I)            EACH INSTALLMENT OF THE PAYMENTS AND BENEFITS DUE UNDER SECTIONS
5 AND 6 THAT, IN ACCORDANCE WITH THE DATES AND TERMS SET FORTH HEREIN, WILL IN
ALL CIRCUMSTANCES, REGARDLESS OF WHEN THE SEPARATION FROM SERVICE OCCURS, BE
PAID WITHIN THE SHORT-TERM DEFERRAL PERIOD (AS HEREINAFTER DEFINED) SHALL BE
TREATED AS A SHORT-TERM DEFERRAL WITHIN THE MEANING OF TREASURY REGULATION
SECTION 1.409A-1(B)(4) TO THE MAXIMUM EXTENT PERMISSIBLE UNDER SECTION 409A. FOR
PURPOSES OF THIS AGREEMENT, THE “SHORT-TERM DEFERRAL PERIOD” MEANS THE PERIOD
ENDING ON THE LATER OF THE 15TH DAY OF THE THIRD MONTH FOLLOWING THE END OF THE
EMPLOYEE’S TAX YEAR IN WHICH THE SEPARATION FROM SERVICE OCCURS AND THE 15TH DAY
OF THE THIRD MONTH FOLLOWING THE END OF THE COMPANY’S TAX YEAR IN WHICH THE
EMPLOYEE’S SEPARATION FROM SERVICE OCCURS; AND

 

(II)           EACH INSTALLMENT OF THE PAYMENTS AND BENEFITS DUE UNDER SECTIONS
5 AND 6 THAT IS NOT DESCRIBED IN SECTION 17.1(C)(I) AND THAT WOULD, ABSENT THIS
SUBSECTION, BE PAID WITHIN THE SIX-MONTH PERIOD FOLLOWING THE “SEPARATION FROM
SERVICE” OF THE EMPLOYEE FROM THE COMPANY SHALL NOT BE PAID UNTIL THE DATE THAT
IS SIX MONTHS AND ONE DAY AFTER SUCH SEPARATION FROM SERVICE (OR, IF EARLIER,
THE EMPLOYEE’S DEATH), WITH ANY SUCH INSTALLMENTS THAT ARE REQUIRED TO BE
DELAYED BEING ACCUMULATED DURING THE SIX-MONTH PERIOD AND PAID IN A LUMP SUM ON
THE DATE THAT IS SIX MONTHS AND ONE DAY FOLLOWING THE EMPLOYEE’S SEPARATION FROM
SERVICE AND ANY SUBSEQUENT INSTALLMENTS, IF ANY, BEING PAID IN ACCORDANCE WITH
THE DATES AND TERMS SET FORTH HEREIN; PROVIDED, HOWEVER, THAT THE PRECEDING
PROVISIONS OF THIS SENTENCE SHALL NOT APPLY TO ANY INSTALLMENT OF PAYMENTS AND
BENEFITS IF AND TO THE MAXIMUM EXTENT THAT THAT SUCH INSTALLMENT IS DEEMED TO BE
PAID UNDER A SEPARATION PAY PLAN THAT DOES NOT PROVIDE FOR A DEFERRAL OF
COMPENSATION BY REASON OF THE APPLICATION OF TREASURY
REGULATION 1.409A-1(B)(9)(III) (RELATING TO SEPARATION PAY UPON AN INVOLUNTARY
SEPARATION FROM SERVICE). ANY INSTALLMENTS THAT QUALIFY FOR THE EXCEPTION UNDER
TREASURY REGULATION SECTION 1.409A-1(B)(9)(III) MUST BE PAID NO LATER THAN THE
LAST DAY OF THE EMPLOYEE’S SECOND TAXABLE YEAR FOLLOWING THE EMPLOYEE’S TAXABLE
YEAR IN WHICH THE SEPARATION FROM SERVICE OCCURS.

 

17.2         THE DETERMINATION OF WHETHER AND WHEN A SEPARATION FROM SERVICE HAS
OCCURRED SHALL BE MADE AND IN A MANNER CONSISTENT WITH, AND BASED ON THE
PRESUMPTIONS SET FORTH IN, TREASURY REGULATION SECTION 1.409A-1(H).

 

17.3         ALL REIMBURSEMENTS AND IN-KIND BENEFITS PROVIDED UNDER THE
AGREEMENT SHALL BE MADE OR PROVIDED IN ACCORDANCE WITH THE REQUIREMENTS OF
SECTION 409A TO THE EXTENT THAT SUCH REIMBURSEMENTS OR IN-KIND BENEFITS ARE
SUBJECT TO SECTION 409A.

 

17.4         THE COMPANY MAKES NO REPRESENTATION OR WARRANTY AND SHALL HAVE NO
LIABILITY TO THE EMPLOYEE OR ANY OTHER PERSON IF ANY PROVISIONS OF THIS
AGREEMENT ARE DETERMINED TO CONSTITUTE DEFERRED COMPENSATION SUBJECT TO
SECTION 409A BUT DO NOT SATISFY AN EXEMPTION FROM, OR THE CONDITIONS OF, SUCH
SECTION.

 

18.           MISCELLANEOUS.

 

18.1         NO DELAY OR OMISSION BY THE COMPANY IN EXERCISING ANY RIGHT UNDER
THIS AGREEMENT SHALL OPERATE AS A WAIVER OF THAT OR ANY OTHER RIGHT. A WAIVER OR
CONSENT GIVEN BY THE COMPANY ON ANY ONE OCCASION SHALL BE EFFECTIVE ONLY IN THAT
INSTANCE AND SHALL NOT BE CONSTRUED AS A BAR TO OR WAIVER OF ANY RIGHT ON ANY
OTHER OCCASION.

 

18.2         THE CAPTIONS OF THE SECTIONS OF THIS AGREEMENT ARE FOR CONVENIENCE
OF REFERENCE ONLY AND IN NO WAY DEFINE, LIMIT OR AFFECT THE SCOPE OR SUBSTANCE
OF ANY SECTION OF THIS AGREEMENT.

 

18.3         IN CASE ANY PROVISION OF THIS AGREEMENT SHALL BE INVALID, ILLEGAL
OR OTHERWISE UNENFORCEABLE, THE VALIDITY, LEGALITY AND ENFORCEABILITY OF THE
REMAINING PROVISIONS SHALL IN NO WAY BE AFFECTED OR IMPAIRED THEREBY.

 

10

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year set forth above.

 

 

MOMENTA PHARMACEUTICALS, INC.

 

 

 

By:

 

 

 

 

 

Title:

 

 

 

 

 

 

EMPLOYEE

 

 

 

 

 

Name

 

11

--------------------------------------------------------------------------------