Exhibit 10.2

 

Genomic Health, Inc. Severance Plan For Executive Management

The Board of Directors of Genomic Health, Inc., a Delaware corporation (the
“Company”), has determined that it is in the best interests of the Company and
its stockholders to secure the continued services, dedication, and objectivity
of certain officers and employees of the Company without concern as to whether
such officers or employees might be hindered or distracted by personal
uncertainties and risks in connection with a Change of Control.  To encourage
the full attention and dedication to the Company by such officers and employees,
the Board of Directors of the Company has adopted this Genomic Health, Inc.
Severance Plan for Executive Management (the “Plan”). 

1.

Definitions

As used in this Plan, the following terms shall have the respective meanings set
forth below:

(a) “Administrator” means the person(s) designated by the Board as the
administrator of this Plan.

(b) “Base Salary” means the Participant’s annual rate of base salary in effect
immediately prior to the Effective Date.

(c) “Board” means the Board of Directors of the Company.

(d) “Cause” means (i) the willful and deliberate failure by a Participant to
perform his or her duties and responsibilities (other than as a result of
incapacity due to physical or mental illness) which is not remedied in a
reasonable period of time after receipt of written notice from the Board (in the
case of Participants who are executive officers of the Company appointed by the
Board) or the Company’s Chief Executive Officer (in the case of other
Participants) specifying such failure, (ii) willful misconduct by a Participant
that is demonstrably and materially injurious to the business or reputation of
the Company, including fraud, embezzlement, misappropriation of funds or a
willful and intentional material violation of the Confidential Information and
Invention Assignment Agreement between the Company and such Participant, or
(iii) a Participant’s conviction of, or plea of guilty or nolo contendere
to, any crime involving moral turpitude or any felony punishable by imprisonment
in the jurisdiction involved. 

(e) “Change of Control” means the occurrence of any one of the following events:

(i)

A change in the composition of the Board of Directors occurs, as a result of
which fewer than one-half of the incumbent directors are directors who either:

(A)

Had been directors of the Company on the “look-back date” (as defined below)
(the “original directors”); or

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(B)

Were elected, or nominated for election, to the Board of Directors with the
affirmative votes of at least a majority of the aggregate of the original
directors who were still in office at the time of the election or nomination and
the directors whose election or nomination was previously so approved (the
“continuing directors”); or

(ii)

Any “person” (as defined below) who by the acquisition or aggregation of
securities, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), directly
or indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company’s then outstanding securities ordinarily
(and apart from rights accruing under special circumstances) having the right to
vote at elections of directors (the “Base Capital Stock”); except that any
change in the relative beneficial ownership of the Company’s securities by any
person resulting solely from a reduction in the aggregate number of outstanding
shares of Base Capital Stock, and any decrease thereafter in such person’s
ownership of securities, shall be disregarded until such person increases in any
manner, directly or indirectly, such person’s beneficial ownership of any
securities of the Company; or

(iii)

The consummation of a merger or consolidation of the Company with or into
another entity or any other corporate reorganization, if persons who were not
stockholders of the Company immediately prior to such merger, consolidation or
other reorganization own immediately after such merger, consolidation or other
reorganization 50% or more of the voting power of the outstanding securities of
each of (A) the continuing or surviving entity and (B) any direct or indirect
parent corporation of such continuing or surviving entity; or

(iv)

The sale, transfer or other disposition of all or substantially all of the
Company’s assets.

For purposes of subsection (e)(i) above, the term “look-back” date shall mean
the date 24 months prior to the date of the event that may constitute a Change
in Control.

For purposes of subsection (e)(ii) above, the term “person” shall have the same
meaning as when used in Sections 13(d) and 14(d) of the Exchange Act but shall
exclude (1) a trustee or other fiduciary holding securities under an employee
benefit plan maintained by the Company or a parent or subsidiary of the
Company, (2) a corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as their ownership of the
Company’s common stock and (3) Julian C. Baker and Felix J. Baker and investment
funds affiliated with Julian C. Baker and Felix J. Baker.  

Any other provision of this Section 1(e) notwithstanding, a transaction shall
not constitute a Change in Control if its sole purpose is to change the state of
the Company’s incorporation or to

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create a holding company that will be owned in substantially the same
proportions by the persons who held the Company’s securities immediately before
such transaction.

(f) “Code” means the Internal Revenue Code of 1986, as amended.

(g) “Company” means Genomic Health, Inc., a Delaware corporation, and any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by operation of law, or otherwise.

(h) “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, or similar state law.

(i) “Effective Date” means the date on which a Change of Control occurs.

(j) “Equity Award” means an award granted to a Participant under the Equity
Plan, other than an award subject to performance-based vesting.

(k) “Equity Plan” means the Amended and Restated Genomic Health, Inc. 2005 Stock
Incentive Plan, as amended from time to time.

(l) “Good Reason” means the occurrence of any of the following which occurs
during the Termination Period without the Participant’s express written consent:
 

(i)

a substantial diminution in the Participant’s authorities, duties or
responsibilities relative to the Participant’s authority, duties or
responsibilities in effect immediately prior to the Termination Period other
than as a result of disability (provided that for this purpose, for a
Participant other than the Chief Executive Officer or Chief Financial Officer,
the Participant’s authority, duties and responsibilities will not be deemed to
be substantially diminished if following a Change of Control the Participant
retains the same authority, duties and responsibilities with respect to the
Company business or the business with which such business is operationally
merged or subsumed);

(ii)

a material decrease in the Participant’s Base Salary (except for a reduction due
to a change of duties as a result of disability or as part of a broad
cost-cutting effort);

(iii)

the relocation of the Participant’s principal location of work to a location
that is in excess of 50 miles from such location immediately prior to the
Termination Period, or

(iv)

the failure of a successor or transferee to assume the Company’s obligations
hereunder pursuant to Section 9 of this Agreement.

 

A Participant’s Qualifying Termination shall not be considered to be for Good
Reason unless (A) within ninety (90) days after the initial existence of the
applicable event or condition that is

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purported to give rise to a basis for termination for Good Reason, the
Participant provides written notice of the existence of such event or condition
to the Company, (B) such event or condition is not cured within thirty (30) days
after the date of the written notice from the Participant to the Company,
provided that the Company may notify the Participant at any time prior to
expiration of the cure period that it will not cure the circumstances, in which
case the cure period shall end immediately upon such notification, and (C) the
Participant terminates employment no later than thirty (30) days after the
expiration of the applicable cure period.

 

(m) “Participant” means certain officers and employees of the Company as
specified by the Board and set forth in Section 2(a) of the Plan.  

(n) “Plan” means this Genomic Health, Inc. Severance Plan for Executive
Management as set forth herein and as amended from time to time.

(o) “Qualifying Termination” means the termination of a Participant’s employment
(i) by the Company other than for Cause or disability (ii) by a Participant for
Good Reason, which termination occurs during a Termination Period (or, if the
applicable cure period described in Section 1(l) above expires following the
last day of the Termination Period, on or prior to the last day of the
expiration of the cure period).

(p) “Separation Benefit” means the benefits payable in accordance with Section
2(a)(ii)-(iv) of this Plan.

(q) “Termination Period” means the period of time beginning with the execution
of a definitive agreement that results in a Change of Control within three
months (or, if there is no such definitive agreement, the Effective Date), and
ending on the one-year anniversary of the Effective Date with respect to such
Change of Control.  

(r) “Variable Compensation” means the Participant’s target variable compensation
position target for the annual performance period in effect as of the date of
the Participant’s Qualifying Termination under the Company’s Executive Cash
Bonus Plan, as amended from time to time, or successor annual variable
compensation plan.

2.

Payments and Benefits Upon Termination of Employment

(a)

Upon a Qualifying Termination, a Participant shall be entitled to receive:

(i)

All accrued compensation, including (a) all salary, commissions, amounts under
accrued variable compensation or other plans, accrued but unused vacation or
paid time off earned but unused through the date of the Participant’s
termination of employment; (b) reimbursement of all business expenses incurred
by the Participant in connection with the business of the Company prior to his
or her termination of employment within ten (10) business days of submission,
within thirty (30) days following the Participant’s termination of employment,
of proper expense reports of all expenses; (c) the benefits, if any, under any
Company retirement plan, nonqualified deferred compensation plan or stock-based
compensation plan or agreement, health benefits plan or other Company

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benefit plan to which the Participant may be entitled pursuant to the terms of
such plans or agreements, payable when provided thereunder.  

(ii)

A single lump sum payment equal to the percent of the Participant’s Base Salary
shown below.

(iii)

If the Participant timely elects to continue Participant’s medical, dental, and
visions benefits under COBRA (including, if applicable, continuation of coverage
for the Participant’s spouse and dependents), then the Company will pay the
entire amount of the monthly premium under COBRA under the Company’s group plans
for active employees and their dependents, for the period following termination
of employment shown below (“COBRA Premiums”).  At the end of any Company-paid
period of COBRA coverage, the Participant may, at the Participant’s own expense,
continue COBRA coverage for the remainder of the period for which the
Participant is eligible, if applicable.   Any period for which the Participant
is entitled to Company-paid COBRA premiums that exceeds the maximum COBRA
coverage period will be considered COBRA coverage for purposes of the Plan, and
the Participant will be entitled to Company-paid health continuation coverage
for the entire period of COBRA Premiums set forth below, provided that the
Company-paid COBRA Premiums will stop if the Participant becomes eligible to
obtain comparable health care benefits from another employer.  Notwithstanding
the foregoing, if the Company’s payment of COBRA Premiums under this Section
2(a)(ii) would violate the nondiscrimination rules or result in the imposition
of penalties under the Patient Protection and Affordable Care Act of 2010 and
the related regulations and guidance promulgated thereunder (the "PPACA"), the
parties agree to reform this Section 2(a)(ii) in a manner as is necessary to
comply with the PPACA, and in compliance with Section 409A of the Code, to the
extent applicable.  

(iv)

Full vesting and immediate exercisability, if the Equity Award is in the form of
an exercisable right, of any Equity Awards held by the Participant on the date
of the Qualifying Termination or, if later, the Effective Date.   If the
Qualifying Termination is before the Effective Date, and an Equity Award would
otherwise have been forfeited upon such termination, the Equity Award shall not
be forfeited until it is determined whether the Equity Award is subject to
accelerated vesting by reason of the occurrence of a Change of Control within
the Termination Period, and the period to exercise an Equity Award that is in
the form of an exercisable right and that would become exercisable by reason of
the occurrence of such Change of Control shall not expire until three months
after the close of such Change of Control (but in no event later than the
expiration date of the Equity Award), notwithstanding any contrary provision of
the applicable Equity Award agreement otherwise limiting the post-termination
exercise period of such Equity Award. 

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Tier One

 

Chief Executive Officer

200% of Base Salary

24 Months of COBRA Premiums

100% Vesting of Equity Awards

 

Tier Two

 

Executive Vice Presidents

Senior Vice Presidents

Other Chief _____ Officers at same internal level as EVPs and SVPs

150% of Base Salary

18 Months of COBRA Premiums

100% Vesting of Equity Awards

 

Tier Three

 

Vice Presidents 

Other Chief _____ Officers at same internal level as VPs

100% of Base Salary

12 Months of COBRA Premiums

100% Vesting of Equity Awards

 

 

(b) The payments provided in Section 2(a)(i) shall be paid immediately upon the
Participant’s termination, unless otherwise indicated therein.  The payment of
the cash amounts and the provision of the benefits set forth in Sections
2(a)(ii) and 2(a)(iii) are subject to the Participant’s execution, delivery and
non-revocation of an effective release of all claims against the Company, its
successor or any of its respective affiliates in a form provided by the Company
(the “Release”) within the sixty (60) day period following the date of the
Participant’s Qualifying Termination or, if later, the Change of Control (the
“Release Period”).  The Company shall reimburse the Participant for COBRA
Premiums paid by the Participant pending the occurrence of the Change of Control
(where the Qualifying Termination occurred prior to the Change of Control), or
pending the irrevocability of the Release, in a cash lump sum.  The lump sum
payment of amounts due a Participant pursuant to Section 2(a)(ii) or, if
applicable, the immediately preceding sentence, shall be paid on the first
payroll date following the date on which the Release becomes irrevocable,
provided, that if the Release Period spans two (2) calendar years, then such
payment shall be made on the first payroll date that occurs in the second
calendar year.    

(c) Any Separation Benefit a Participant is entitled to hereunder shall be
reduced by the amount of any cash payments in the nature of separation
allowance, severance pay, or “notice” pay which the Company is required to pay
such Participant upon termination of employment pursuant to any applicable law
or other severance program or arrangement.  For this purpose, unemployment
compensation benefits shall not reduce the Separation Benefit hereunder.  In no
event shall the foregoing be interpreted or administered so as to result in an
acceleration of payment or further deferral of payment of any amounts (whether
under this plan or any other plan) in violation of Section 409A of the Code and
applicable guidance thereunder (“Section 409A”).

(d) Notwithstanding anything contained in this Plan to the contrary, to the
maximum extent permitted by applicable law, amounts payable and benefits
provided to a Participant pursuant to Section 2 shall be made in reliance upon
Treasury Regulation Section 1.409A-1(b)(9)

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(Separation Pay Plans) or Treasury Regulation Section 1.409A-1(b)(4) (Short-Term
Deferrals) or any other exception from Section 409A permitted under applicable
guidance.  For this purpose each installment or monthly payment or benefit to
which Participant is entitled under Section 2 shall be considered a separate and
distinct payment.  In addition, for purposes of the Plan, if any amounts or
benefits to be paid or provided under the Plan are considered to be nonqualified
deferred compensation subject to Section 409A then (i) no such amounts or
benefits shall be payable or provided unless the Participant’s termination of
employment constitutes a “separation from service” within the meaning of
Treasury Regulation Section 1.409A-1(h) and (ii) if the Participant is deemed at
the time of his or her separation from service to be a “specified employee” for
purposes of Section 409A(a)(2)(B)(i) of the Code, then no amounts or benefits
that are nonqualified deferred compensation shall be paid or provided to the
Participant until the first day of the seventh month following the Participant’s
separation from service or, if earlier, the date of the Participant’s death, to
the extent such delayed payment is required to avoid a prohibited distribution
under Code Section 409A(a)(2), or any successor provision thereof. To the extent
that any expense reimbursements or the provision of any in-kind benefits under
the Plan are determined to be subject to and not exempt from Section 409A,
Treasury Regulations section 1.409A-3(i)(1)(iv) shall govern such that:  the
amount of any such expenses eligible for reimbursement or the provision of any
in-kind benefit in one calendar year shall not affect the expenses eligible for
reimbursement or in-kind benefits to be provided in any other calendar year
(except for any aggregate limitation applicable to medical expenses); in no
event shall any expenses be reimbursed after the last day of the calendar year
following the calendar year in which such expenses were incurred; and in no
event shall any right to reimbursement or the provision of any in-kind benefit
be subject to liquidation or exchange for another benefit or payment.

3.

Equity Acceleration Without Regard to Termination.  The vesting of Equity Awards
that are not assumed or substituted by the successor corporation shall
accelerate immediately prior to the closing of the Change of Control.

4.

Confidentiality.  The Separation Benefits are expressly conditioned upon
Participant’s agreement not to, directly or indirectly, disclose or utilize any
trade secrets or confidential information of the Company, and the provision of
such Separation Benefits shall immediately cease in the event of the
Participant’s violation of the provisions of this Section 4.  

5.

Withholding Taxes.  The Company may withhold from all payments or benefits due
hereunder all taxes which, by applicable federal, state, local or other law, it
is required to withhold therefrom.

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6.

Federal Excise Tax Under Section 4999 of the Code. 

(a) Treatment of Excess Parachute Payments.  In the event that any benefits
payable to a Participant pursuant to this Plan (“Payments”) (i) constitute
“parachute payments” within the meaning of Section 280G of the Code, and (ii)
but for this Section 6 would be subject to the excise tax imposed by Section
4999 of the Code, or any comparable successor provisions (the “Excise Tax”),
then the Participant’s Payments hereunder shall be either (1) provided to the
Participant in full, or (2) provided to the Participant as to such lesser extent
which would result in no portion of such benefits being subject to the Excise
Tax, whichever of the foregoing amounts, when taking into account applicable
federal, state, local and foreign income and employment taxes, the Excise Tax,
and any other applicable taxes, results in the receipt by the Participant, on an
after-tax basis, of the greatest amount of benefits, notwithstanding that all or
some portion of such benefits may be taxable under the Excise Tax.  In the event
of a reduction of benefits hereunder, the Accountants (as defined below) shall
determine which benefits shall be reduced so as to achieve the principle set
forth in the preceding sentence.  In no event shall the foregoing be interpreted
or administered so as to result in an acceleration of payment or further
deferral of payment of any amounts (whether under this plan or any other plan)
in violation of Section 409A.

(b) Determination of Amounts.  All computations and determinations called for by
this Section 6 shall be promptly determined and reported in writing to the
Company and the Participant by independent public accountants or other
independent advisors selected by the Company and reasonably acceptable to the
Participant (the “Accountants”), and all such computations and determinations
shall be conclusive and binding upon the Participant and the Company.  For the
purposes of such determinations, the Accountants may rely on reasonable, good
faith interpretations concerning the application of Sections 280G and 4999 of
the Code. The Company and the Participant shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make their required determinations.  The Company shall bear all fees and
expenses charged by the Accountants in connection with such services.

7.

Settlement of Disputes.  All disputes hereunder shall be settled exclusively by
arbitration in the State of California.  Judgment may be entered on the
arbitration award in any court having jurisdiction. 

8.

Termination or Amendment of Plan.      The Board shall have the right at any
time prior to the commencement of a Termination Period,  in its sole discretion,
to terminate or amend the Plan, which right includes, but is not limited to the
right to add any person to the Plan as a Participant or to remove any person
from the Plan as a Participant.  In no event shall this Plan be terminated or
amended following the commencement of a Termination Period in any manner that
would adversely affect the rights or potential rights of a Participant (or his
or her dependents) under this Plan with respect to a Change of Control occurring
during such Termination Period;  provided,  however, that the Board may, in its
sole and absolute discretion and without the consent of any Participant, amend
the Plan to take effect retroactively or otherwise, as it deems necessary or
advisable for the purpose of conforming the Plan to any present or future law
relating to plans of this or similar nature (including, but not limited to,
Section 409A of the Code), and to the administrative regulations and rulings
promulgated thereunder.

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9.

Successors.

(a) This Plan shall not be terminated by any merger, consolidation, share
exchange, or similar event involving the Company whereby the Company is or is
not the surviving or resulting entity.  In the event of any merger,
consolidation, share exchange or similar event, the provisions of this Plan
shall be binding upon the surviving or resulting corporation or the person or
entity to which the Company’s assets are transferred.

(b) Concurrently with any merger, consolidation, share exchange or sale, lease
or transfer of all or substantially all of its assets, the Company will cause
any successor or transferee unconditionally to assume all of the obligations of
the Company hereunder.

(c) This Plan shall inure to the benefit of and be enforceable by each
Participant’s personal or legal representatives, executors, administrators,
successors, heirs, distributes, devisees, and legatees.  If a Participant shall
die while any amounts are payable to such Participant hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Plan to such Participant’s estate.

10.

No Mitigation or Offset.  The obligation of the Company to provide a Participant
with the Severance Benefits and otherwise to perform its obligations hereunder
shall not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against such Participant or
others.  In no event shall a Participant be obligated to seek other employment
or take other action by way of mitigation of the amounts payable to such
Participant under any of the provisions of this Plan and such amounts shall not
be reduced whether or not such Participant obtains other employment, except as
specifically provided herein.

11.

Governing Law; Law Validity.  The interpretation, construction and performance
of this Plan shall be governed by and construed and enforced in accordance with
the laws of the State of California without regard to the principle of conflicts
of laws.  The invalidity or unenforceability of any provision of this Plan shall
not affect the validity or enforceability of any other provision of this Plan,
which other provisions shall remain in full force and effect.

12.

Administration.  The Plan shall be administered by the Administrator.  The
Administrator may interpret the Plan, prescribe, amend and rescind rules and
regulations under the Plan and make all other determinations necessary or
advisable for the administration of the Plan, subject to all of the provisions
of the Plan.  The Administrator may delegate any of its duties hereunder to such
person or persons from time to time as it may designate.  The Plan is empowered,
on behalf of the Plan, to engage accountants, legal counsel and such other
personnel as it deems necessary or advisable to assist it in the performance of
its duties under the Plan.  The functions of any such persons engaged by the
Plan Administrator will be limited to the specified services and duties for
which they are engaged, and such persons will have no other duties, obligations
or responsibilities under the Plan.  Such persons will exercise no discretionary
authority or discretionary control respecting the management of the Plan.  All
reasonable expenses thereof will be borne by the Company.

13.

Notices

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(a) General.  For purposes of this Plan, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been duly
given when personally delivered or when mailed by United States certified mail,
return receipt requested, or by overnight courier, postage prepaid, as follows: 

if to the Company:

Genomic Health, Inc.

301 Penobscot Drive

Redwood City, CA  94063

if to the Participant, at the home address which the Participant most recently
communicated to the Company in writing.

Either party may provide the other with notices of change of address, which
shall be effective upon receipt.

(b) Notice of Termination.  Any termination by the Company of the Participant’s
employment or any resignation by the Participant that is a Qualifying
Termination shall be communicated by a notice of termination or resignation to
the other party hereto given in accordance with Section 13(a) above.  Such
notice shall indicate the specific termination provision in this Plan relied
upon, shall set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination under the provision so indicated, and shall
specify the termination date.

14.

Miscellaneous.

(a) The Company shall not be required to fund or otherwise segregate assets to
be used for the payment of any benefits under the Plan.  The Company shall make
such payments only out of its general corporate funds, and therefore its
obligation to make such payments shall be subject to any claims of its other
creditors.

(b) This Plan does not constitute a contract of employment or impose on the
Company any obligation to retain a Participant as an officer or employee (as the
case may be), to retain a Participant as a Participant (prior to the
commencement of a Termination Period), not change the status of a Participant’s
employment, or not to change the policies of the Company regarding termination
of employment.

(c) No rights of any Participant (or beneficiary) to payments of any amounts
under the Plan shall be sold, exchanged, transferred, assigned, pledged,
hypothecated or otherwise disposed of other than by will or by the laws of
descent and distribution.  No right or interest of any Participant under the
Plan shall be liable for, or subject to, any obligation or liability of such
Participant.

(d) Unless the Company specifically provides otherwise, any benefits payable
under this Plan shall not be taken into account for purposes of determining
benefits payable to a Participant under any other benefit plan or program.

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(e) The Company’s obligations hereunder shall be subject to all applicable laws,
and the Separation Benefit and other benefits payable hereunder may be adjusted
to comply with any such laws.

(f) If any provision of this Plan is determined to be invalid, illegal or
unenforceable, the remaining provisions of this Plan will not affect any other
provisions hereof, and this Plan will be construed and enforced as if such
provisions had not been included.

 

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