Exhibit 10.4

 

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September 12, 2016

Melanie Nallicheri

Re:Employment with Foundation Medicine, Inc.

Dear Melanie:

On behalf of Foundation Medicine, Inc. (“Foundation Medicine” or “the Company”),
I am very pleased to offer you the position of Chief Business Officer and Head,
Biopharma.

The terms of your position with the Company are as set forth below in this
letter agreement (“Agreement”):

 

1.

Position.  Your position at the Company will be Chief Business Officer and Head,
Biopharma, reporting to Steven J. Kafka, Ph.D., President and Chief Operating
Officer. You will be a member of the Company’s Senior Management Team. In
addition to performing duties and responsibilities associated with the position
above, from time-to-time the Company may assign you other duties and
responsibilities consistent with such position.

 

2.

Start Date. You will begin your employment with the Company no later than
September 29, 2016.

 

3.

Compensation and Related Matters.

a.Base Salary. You will be paid on a salary basis at a rate of $13,846.15 per
bi-weekly pay period, representing payment for all hours worked by you for
Foundation Medicine, equivalent to an annualized base salary of approximately
$360,000. The base salary will be paid in accordance with Foundation Medicine’s
standard payroll practices and subject to customary deductions and withholdings
as required by law. You will be eligible to participate in annual merit salary
reviews in accordance with the Company’s

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compensation practices. To be eligible for a merit increase, you must be
employed by September 30 of the previous year. This position is exempt, so you
will not be eligible
for overtime pay.

b.Performance Incentive.  You will be eligible to participate in the Company’s
annual performance incentive program, subject to its terms and conditions and at
the discretion of the Company’s Board of Directors, with the potential to earn
an incentive equivalent to a target of up to 40% of your then annual base
salary. The performance incentive is based upon achievement of Company
performance, department performance, and individual performance. The Company may
also make adjustments in the targeted amount of your annual performance
incentive in its discretion. If you begin employment with the Company between
January 1 and September 30th, you will be eligible to earn a pro-rated
performance incentive based on the length of time that you have been employed
with the Company during this calendar year. If you begin employment between
October 1 and December 31st, you will not be eligible to participate in the
incentive program until the following calendar year. You must be employed by the
Company at the time a performance incentive is paid to earn any part of an
incentive.

c.Expenses. The Company will reimburse your reasonable out-of-pocket travel
expenses and other expenses related to your work in accordance with the
Company’s expense reimbursement policy.

d.Long-Term Incentives:  As an incentive for you to join Foundation Medicine and
to share in the long-term growth of Foundation Medicine, you will be eligible to
participate in a long-term incentive award program with two separate but
complementary awards: a cash incentive award, and an equity incentive award.
Both of these awards will vest over a four-year period.

Cash award:  Subject to approval by the Board of Directors (or committee
thereof) or the Chief Executive of the Company, as may be required by the
Company’s applicable governance rules, you will be granted a cash award of
$150,000 (“Cash Award”) effective on the first day of the calendar quarter
following your date of hire (“Grant Date”). Based on your date of hire, the
Grant Date of the Cash Award will be one of January 1, April 1, July 1 or
October 1. The Cash Award will vest over a four-year period as follows: 25% will
vest on the first anniversary of the Grant Date, and an additional 12.5% will
vest every six months thereafter until 100% of the Cash Award has vested. As a
condition to receiving each Cash Award payment, you must be an employee of
Foundation Medicine as of the relevant vesting date and without any prior
interruption of service. The Cash Award will be subject to the provisions of
Foundation Medicine’s then-current long term incentive cash award plan, as may
be amended from time to time. Each Cash Award will be subject to customary
deductions and tax withholdings as required by law.

Equity award:  Subject to approval by the Board of Directors (or a committee
thereof) or the Chief Executive Officer of the Company, as may be required by
the Company’s applicable governance rules, you will be granted an equity award
of Restricted Stock Units (RSUs) with an aggregate value of $1,500,000 (“Equity

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Award”). The number of RSUs to be granted will be calculated based on the 30-day
average closing price of Foundation Medicine common stock ending on a date that
is within five business days prior to the grant date. The effective date for the
grant will be the first day of the calendar quarter following your date of hire
(“Equity Grant Date”).  Accordingly, based on your date of hire, the Equity
Grant Date of the Equity

Award will be one of January 1, April 1, July 1 or October 1. The Equity Award
will vest over a four-year period as follows: 25% will vest on the first
anniversary of the Equity Grant Date, and an additional 6.25% will vest on the
first day of each subsequent quarter thereafter until 100% of the RSUs have
vested. As a condition to receiving each Equity Award, you must be an employee
of Foundation Medicine as of the relevant vesting date and without any prior
interruption of service. The Equity Award will be governed by a restricted stock
unit award agreement in the standard form approved by Foundation Medicine’s
Board of Directors and shareholders, and will be subject to the provisions of
Foundation Medicine’s then-current stock incentive plan (together with any other
incentive equity plan(s), as may be amended from time to time, any associated
award agreements, the “Equity Documents”).

e.Living Expense Assistance and Relocation.  The Company requires that as a
condition of employment, you relocate to Massachusetts.  The Company
acknowledges and agrees that you will commute from your home in California to
the Company’s offices in Cambridge on a weekly basis, in accordance to a
schedule agreed to by the COO (the “Transition Period”), and you will average
80% of your time in Massachusetts for not more than 12 months, the specifics of
which will fluctuate based on business needs but generally are anticipated to
include at least Tuesday through Thursday weekly.The Company acknowledges and
agrees that time you spend traveling to and from Cambridge each week during the
Transition Period (generally anticipated to be on Mondays and Thursdays) will be
included within the 80% average.  Changes and exceptions to this 80% requirement
may be made by mutual agreement with the President & COO; however, if the
requirement is not being met on a routine basis (based on the reasonable
judgment of the President & COO) you will be given notice of such and provided a
period of 30 days to remedy.

During the Transition Period, the Company will provide you with living expense
allowance, payable only in the form of reimbursement and not as an addition to
your salary, on a monthly basis at the equivalent of $35,000 annually (the
“Living Expense Allowance”).  This Living Expense Allowance will reimburse you
for living expenses, customary costs and food expenses (to the extent such food
expenses are not otherwise reimbursable as a business expense under the
Company’s business expense policy), in each instance as incurred in the
Cambridge area (“Living Expenses”).  Subject to your right to aggregate the
Living Expense Allowance with the Relocation Allowance as described below, the
costs of any Living Expenses under or over the Living Expense Allowance shall
not affect the amount of Living Expense Allowance eligible for reimbursement,
and you shall not be entitled to any supplemental payment if the actual Living
Expenses is less than the Living Expense Allowance.  The Company will also
reimburse or directly pay for your reasonable travel expenses incurred in
commuting between California and Cambridge, Massachusetts (“Commuting
Expenses”).

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In the event that you do not relocate to Massachusetts (or the commutable
surrounding areas) within 12 months, or do not renegotiate, at management’s
discretion, the terms of your agreement, the Company will no longer be required
to provide you with Living Expense Assistance.

If you relocate to the Cambridge area prior to the end of the Transition Period,
the Company will reimburse you for reasonable relocation expenses (“Relocation
Expenses”) incurred by you up to $75,000.00, subject to prior approval by the
COO and the Senior Vice President, Human Resources (“Relocation
Allowance”).  Reimbursable Relocation Expenses shall include costs or expenses
incurred by you in connection with having to change your family’s residence from
California to Massachusetts, such as, by way of example only, moving expenses,
transaction costs incurred in connection with the purchase of a new home, or
other costs incurred as a result of the relocation.  If you resign from the
Company without Good Reason within 18 months after the receipt of the relocation
assistance, you will reimburse the Company for the entirety of the amount of the
Relocation Allowance paid to you within thirty (30) days of your last day of
employment, in a check made payable to the Company.

The aggregate value of the Living Expense Allowance and the Relocation Allowance
is acknowledged to be $110,000, and you may reallocate expenses between these
categories provided that the Company’s total payment shall not exceed this
aggregate amount.

The Company will determine in its reasonable judgment what, if any, of your
Living Expenses, Commuting Expenses and Relocation Expenses paid for or
reimbursed by the Company are taxable to you in accordance with applicable law
and will comply with associated withholding and tax reporting obligations.  To
the extent certain of these Living Expenses, Commuting Expenses and Relocation
Expenses are deemed taxable by the IRS in a given year, the Company will provide
you with a tax gross-up payment such that after payment of taxes (federal, state
and employment) on such amount, there remains a balance sufficient to pay the
taxes (federal, state and employment) on the amount of your taxable reimbursable
Commuting Expenses and Living Expenses.  The Company will make such tax gross-up
payment promptly but in no event later than the end of the calendar year in
which you remit the related taxes.

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f.Other Benefits.  As a regular, full-time employee, you will be eligible to
participate in the employee benefit program that Foundation Medicine offers to
its employees in comparable positions, which currently include Health, Dental,
Life and Disability Insurance, matching 401(k) Plan, and Sick Time, subject to
plan terms and generally applicable Foundation Medicine policies.  You will be
also be entitled to accrue up to fifteen (15) days of vacation each calendar
year and to such other holidays as Foundation Medicine recognizes for employees
having comparable responsibilities and duties.  For any calendar year in which
you are employed with the Company for only a portion of such year, the vacation
time will be pro-rated.  Descriptions of the Company’s benefits will be
available upon request.  The Company retains the right to amend, modify, or
cancel any benefits program.  Where a particular benefit is subject to a formal
plan (for example, medical insurance or 401(k)), eligibility to participate in
and receive any particular benefit is governed solely by the applicable plan
document.

 

4.

At-Will Employment.  Your employment at all times shall remain “at will,”
meaning that either you or the Company may terminate the employment relationship
at any time, for any lawful reason, with or without cause.

 

5.

Non-Competition, Non-Solicitation, Confidentiality and Assignment Agreement.  As
part of your employment with Foundation Medicine, you will be exposed to, and
provided with, valuable confidential and/or trade secret information concerning
Foundation Medicine and its present and future business plans and
operations.  As a result, in order to protect Foundation Medicine’s substantial
investment of time and money in the creation and maintaining of its confidential
information and good-will with its customers, clients, and collaborators, your
offer of employment is contingent upon your signing the Company’s Employee
Non-Competition, Non-Solicitation, Confidentiality and Assignment Agreement (the
“Restrictive Covenant Agreement”), a copy of which is attached to this Offer as
Exhibit A and your continued willingness to abide by its terms.

By the same token, Foundation Medicine expects you to abide by and honor the
terms of any agreements you may have with your present or prior employers.  By
signing below, you represent that you are not subject to any agreements which
might restrict your conduct at the Company, and that you understand that if you
become aware at any time during your employment with the Company that you are
subject to any agreements which might restrict your activities at Foundation
Medicine, you are required to immediately inform the Company’s Senior Vice
President, Human Resources of the existence of such agreements.  In the event of
an irresolvable conflict, your employment by Foundation Medicine could be
subject to termination and such termination would be deemed a for “Cause”
termination for purposes of this Agreement and the Equity Documents.

Also, just as Foundation Medicine regards the protection of our confidential
information as a matter of great importance, we also respect that you may have
an obligation to your present and/or prior employers to safeguard the
confidential information of those companies.  Foundation Medicine respects these
obligations, and expects you to honor them as well.  To that end, we expect that
you have not taken any documents or other confidential information from your
employer.  Further, we want to make it perfectly clear you should not bring with
you to Foundation Medicine, or use in the performance of your

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duties for our Company, any proprietary business or technical information,
materials or documents of a former employer, or otherwise disclose or use any
former employer’s confidential information.

 

6.

Work Authorization.  This offer of employment is contingent on you being legally
authorized to work in the United States, and you will need to complete an 1-9
Employment Verification Form no later than your first day of work.

 

7.

Termination of Employment.

a.Severance Payments.  Without otherwise limiting the “at will” nature of your
employment if: (i) your employment is terminated by the Company without Cause at
any time, or (ii) within twelve (12) months following a Change in Control you
terminate your employment with the Company for Good Reason in accordance with
the Good Reason Process, and, in either event, you enter into, do not revoke,
and comply with a Release, the Company shall pay or provide you with: (a) Salary
Continuation for twelve (12) months following your termination date (the “Salary
Continuation Period”); (b) Health Care Continuation during the Salary
Continuation Period; and (c) a Performance Incentive equal to your current year
target annual performance incentive amount, prorated based on the length of time
that you have been employed with the Company during the calendar year in which
your employment is terminated (collectively, the “Severance Payments”); provided
and notwithstanding the foregoing, if your employment is terminated in
connection with a Change in Control and you immediately become reemployed by any
direct or indirect successor to the business or assets of the Company, the
termination of your employment upon the Change in Control shall not be
considered a Termination without Cause for purposes of this Agreement.

b.Equity Acceleration.  In the event that you become entitled to Severance
Payments within eighteen (18) months following a Change in Control, and you
enter into, do not revoke, and comply with a Release, then all outstanding
unvested equity-based compensation awards that have been granted acceleration
rights and were granted to you under the Equity Documents prior to the Change of
Control shall become exercisable and vested in full, and all restrictions
thereon shall lapse, notwithstanding any vesting schedule or other provisions to
the contrary in the agreements evidencing such awards or in the underlying
equity plan, and the Company and you hereby agree that any agreements covering
such awards are hereby, and will be deemed to be, amended to give effect to this
provision.

c.Non-Eligibility for Severance Payments or Equity Award Acceleration.  For the
avoidance of doubt, you and the Company acknowledge that if your employment is
terminated: (i) by the Company for Cause, (ii) by you without Good Reason, (iii)
by you with Good Reason following a Change in Control but without complying with
the Good Reason Process, or (iv) as a result of your death or disability, then,
as a result of such termination, (w) you shall not be entitled to Severance
Payments, (x) you shall be entitled to receive only base salary earned plus
accrued but unused vacation pay through the date of termination, (y) the
unvested portion of your Equity Awards will not accelerate and (z) your Equity
Awards shall expire or be forfeited in accordance with the terms of the Equity
Documents.

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8.

Definitions.  For purposes of this Agreement, the following terms shall have the
following meanings:

“Company” means Foundation Medicine, Inc., and its successors and assigns.

“Cause” means one or more of the following events: (i) your conviction of, or
the entry of a pleading of guilty or nolo contendere to, any crime involving (A)
fraud or embezzlement, or (B) any felony; (ii) your willful failure to perform
(other than by reason of disability), or gross negligence in the performance of,
your duties and responsibilities as set forth in your job description; (iii) a
material breach by you of any provision of this Agreement, the Restrictive
Covenant Agreement, or any of the other agreements you have with the Company; or
(iv) material fraudulent conduct by you with respect to the
Company.  Notwithstanding the foregoing, “cause” shall not be deemed a basis for
the termination of your employment pursuant to clauses (ii) or (iii) of this
paragraph unless (a) the Company determines that your past or anticipated
activities have or will not cause imminent and material damage to the Company,
(b) the Company provides you with written notice specifying in reasonable detail
the alleged grounds for terminating your employment for “cause,” (c) you are
given not less than thirty days after the receipt of such notice to cure the
identified issues, to the extent such cure is reasonably practicable, and (d)
the Company determines, in its reasonable determination, that the identified
issues have not been remedied.

“Change in Control” shall mean:

a.any “person,” as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Act”) (other than the Company,
any of its subsidiaries, or any trustee, fiduciary or other person or entity
holding securities under any employee benefit plan or trust of the Company or
any of its subsidiaries), together with all “affiliates” and “associates” (as
such terms are defined in Rule 12b-2 under the Act) of such person, shall become
the “beneficial owner” (as such term is defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of the Company representing 50 percent or
more of the combined voting power of the Company’s then outstanding securities
having the right to vote in an election of the Board of Directors (“Voting
Securities”) (in such case other than as a result of an acquisition of
securities directly from the Company); or

b.the date when a majority of the members of the Board of Directors of the
Company is replaced by individuals who, prior to their election, or nomination
for election by the Company’s shareholders, were not approved by a majority of
the members of the Board of Directors in existence on the date immediately prior
to such election, appointment or nomination (excluding any individuals nominated
by any member of the Investor Group (as defined in that certain Investor Rights
Agreement, dated as of January 11, 2015 (as amended from time to time), by and
among the Company, Roche Holdings, Inc. and certain other stockholders of the
Company named therein (the “Investor Rights Agreement”) following the occurrence
of a Material Breach (as defined in the Investor Rights Agreement); or

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c.the consummation of (A) any consolidation or merger of the Company where the
stockholders of the Company, immediately prior to the consolidation or merger,
would not, immediately after the consolidation or merger, beneficially own (as
such term is defined in Rule 13d-3 under the Act), directly or indirectly,
shares representing in the aggregate more than 50 percent of the voting shares
of the Company issuing cash or securities in the consolidation or merger (or of
its ultimate parent corporation, if any), or (B) any sale or other transfer (in
one transaction or a series of transactions contemplated or arranged by any
party as a single plan) of all or substantially all of the assets of the
Company; or

d.the consummation by any member of the Investor Group of any tender or exchange
offer, merger, consolidation, business combination or other similar transaction
involving the Company that results in the Investor Group collectively owning all
of the outstanding Voting Securities of the Company.

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have
occurred for purposes of the foregoing clause (a) (i) solely as the result of an
acquisition of securities by the Company which, by reducing the number of shares
of Voting Securities outstanding, increases the proportionate number of Voting
Securities beneficially owned by any person to 50 percent or more of the
combined voting power of all of the then outstanding Voting Securities;
provided, however, that if any person referred to in this sentence shall
thereafter become the beneficial owner of any additional shares of Voting
Securities (other than pursuant to a stock split, stock dividend, or similar
transaction or as a result of an acquisition of securities directly from the
Company) and immediately thereafter beneficially owns 50 percent or more of the
combined voting power of all of the then outstanding Voting Securities, then a
“Change in Control” shall be deemed to have occurred for purposes of the
foregoing clause (a); or (ii) as a result of Roche’s acquisition of Voting
Securities as provided under Section 4.03(a) and/or 4.04(b) of the Investor
Rights Agreement.

“Equity Award” means all incentive stock options, non-statutory stock options,
shares of restricted stock, restricted stock units or other incentive equity
awards in respect of shares of the Company’s equity securities that have been or
will be granted to you by the Company.

“Good Reason” means that you have complied with the “Good Reason Process”
(hereinafter defined) following the occurrence of any of the following events in
connection with a Change of Control:

(i)a material diminution in your responsibilities, your reporting relationship
to your supervisor, or your authority or duties;

(ii)a material diminution in your Base Salary except for across-the-board salary
reductions based on the Company’s financial performance similarly affecting all
or substantially all senior management employees of the Company;

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(iii)your work location is located more than fifty (50) miles from the Company’s
office location at which you were principally working as of the effective date
of the Change in Control; or

(iv)the material breach of this Agreement by the Company.

“Good Reason Process” means that (i) you reasonably determine that a Good Reason
condition has occurred, (ii) you notify the Company in writing of the first
occurrence of the Good Reason condition within sixty (60) days of the first
occurrence of such condition, (iii) you cooperate in good faith with the
Company’s efforts, for a period of not less than thirty (30) days following such
notice (the “Cure Period”), to remedy the Good Reason condition, (iv)
notwithstanding such efforts a material element of at least one Good Reason
condition continues to exist, and (v) you terminate your employment within sixty
(60) days after the end of the Cure Period.  If the Company fully cures the Good
Reason condition during the Cure Period, Good Reason shall be deemed not to have
occurred.  The Company’s success at curing a Good Reason condition shall not bar
or preclude your right to notify the Company of the occurrence of another Good
Reason condition and to proceed with the Good Reason Process.

“Health Care Continuation” means that if you are participating in the Company’s
group health plan immediately prior to the date of your termination, then
subject to your timely election and eligibility for benefits under the law known
as COBRA, and any law that is the successor to COBRA, the Company shall continue
to pay the employer portion of your health benefits until the earlier of the end
of the Salary Continuation Period and the date you become re-employed or
otherwise ineligible for COBRA.

“Release” shall mean a separation agreement in a form prescribed by the Company
that includes, without limitation, (i) a general release of claims and
non-disparagement covenant, both in favor of the Company and related persons and
entities, (ii)

reaffirmation of your obligations under the Employee Agreement, the terms of
which will be incorporated by reference into the Release, and (iii) a provision
stating that, if you breach any of the material provisions of Release, in
addition to all other rights and remedies, the Company shall have the right to
receive reimbursement for, or to terminate or cease payment of, Severance
Payments paid or payable to you.

“Salary Continuation” means that the Company shall continue to pay you your base
salary at the rate in effect on the date of termination during the Salary
Continuation Period.  The first payment of Salary Continuation shall be paid
within sixty (60) days after the date of termination and shall be made on the
Company’s regular payroll dates; provided, however, that if the sixty (60) day
period begins in one calendar year and ends in a second calendar year, the first
payment of Salary Continuation shall be paid in the second calendar year.  In
the event you miss one or more regular payroll periods between the date of
termination and the first Salary Continuation payment, the first Salary
Continuation payment shall include a “catch up” payment of accrued but unpaid
Salary Continuation payments.

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9.

Section 409A Compliance.  To the extent that any Severance Payments or other
benefits to you constitute “non-qualified deferred compensation” under Section
409A of the Internal Revenue Code of 1986 (as amended or replaced) (the “Code”),
then such Severance Payments or benefits shall begin only upon or after the date
of your “separation from service” (within the meaning of Section 409A of the
Code), which may occur on or after the date of the termination of your
employment.  Neither the Company nor you shall have the right to accelerate or
defer the delivery of any such payments except to the extent specifically
permitted or required by Section 409A.  Anything to the contrary
notwithstanding, if at the time of your separation from service within the
meaning of Section 409A of the Code, the Company determines that you are a
“specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code,
then to the extent any payment or benefit that you become entitled to under this
Agreement on account of your separation from service would be considered
deferred compensation otherwise subject to the twenty percent (20%) additional
tax imposed pursuant to Section 409A(a) of the Code as a result of the
application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be
payable and such benefit shall not be provided until the date that is the
earlier of (i) six (6) months and one day after your separation from service, or
(ii) the your death.  If any such delayed cash payment is otherwise payable on
an installment basis, the first payment shall include a catch-up payment
covering amounts that would otherwise have been paid during the six (6)-month
period but for the application of this provision, and the balance of the
installments shall be payable in accordance with their original schedule. The
determination of whether and when your “separation from service” from the
Company has occurred shall be made in a manner consistent with, and based on the
presumptions set forth in, Treasury Regulation Section 1.409A-l(h).  Solely for
purposes of this Section, “Company” shall include all persons with whom the
Company would be considered a single employer under Sections 414(b) and 414(c)
of the Code.

All in-kind benefits provided and expenses eligible for reimbursement under this
Agreement shall be provided by the Company or incurred by you during the time
periods set forth in this Agreement.  All reimbursements shall be paid as soon
as administratively practicable, but in no event shall any reimbursement be paid
after the last day of the taxable year following the taxable year in which the
expense was incurred.  The amount of in-kind benefits provided or reimbursable
expenses incurred in one taxable year shall not affect the in-kind benefits to
be provided or the expenses eligible for reimbursement in any other taxable year
(except for any lifetime or other aggregate limitation applicable to medical
expenses).  Such right to reimbursement or in-kind benefits is not subject to
liquidation or exchange for another benefit.

The parties intend that this Agreement will be administered in accordance with
Section 409A.  To the extent that any provision of this Agreement is ambiguous
as to its compliance with Section 409A, the provision shall be read in such a
manner so that all payments hereunder comply with Section 409A.  Each payment
pursuant to this Agreement is intended to constitute a separate payment for
purposes of Treasury Regulation Section 1,409A-2(b)(2).  The parties agree that
this Agreement may be amended, as reasonably requested by either party, and as
may be necessary to fully comply with Section 409A and all related rules and
regulations in order to preserve the payments and benefits provided hereunder
without additional cost to either party.  The

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Company shall have no liability to you or to any other person if any provisions
of this Agreement that are intended to be exempt from or compliant with Section
409A are not so exempt or compliant.

 

10.

Section 280G Limitation.

(a)Anything in this Agreement to the contrary notwithstanding, in the event that
the amount of any compensation, payment or distribution by the Company to or for
the benefit of you, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, calculated in a manner
consistent with Section 280G of the Internal Revenue Code of 1986, as amended
(the “Code”) and the applicable regulations thereunder (the “Severance
Payments”), would be subject to the excise tax imposed by Section 4999 of the
Code, the following provisions shall apply:

(i)If the Severance Payments, reduced by the sum of (1) the Excise Tax and (2)
the total of the Federal, state, and local income and employment taxes payable
by the Executive on the amount of the Severance Payments which are in excess of
the Threshold Amount, are greater than or equal to the Threshold Amount, you
shall be entitled to the full benefits payable under this Agreement.

(ii)If the Threshold Amount is less than (x) the Severance Payments, but greater
than (y) the Severance Payments reduced by the sum of (1) the Excise Tax and (2)
the total of the Federal, state, and local income and employment taxes on the
amount of the Severance Payments which are in excess of the Threshold Amount,
then the Severance Payments shall be reduced (but not below zero) to the extent
necessary so that the sum of all Severance Payments shall not exceed the
Threshold Amount.  In such event, the Severance Payments shall be reduced in the
following order: (1) cash payments not subject to Section 409A of the Code; (2)
cash payments subject to Section 409A of the Code; (3) equity-based payments and
acceleration; and (4) non-cash forms of benefits.  To the extent any payment is
to be made over time (e.g., in installments, etc.), then the payments shall be
reduced in reverse chronological order.

(b)For the purposes of this Section 9, “Threshold Amount” shall mean three times
the your “base amount” within the meaning of Section 280G(b)(3) of the Code and
the regulations promulgated thereunder less one dollar ($1.00); and “Excise Tax”
shall mean the excise tax imposed by Section 4999 of the Code, and any interest
or penalties incurred by the Executive with respect to such excise tax.

(c)The determination as to which of the alternative provisions of Section 9(a)
shall apply to you shall be made by a nationally recognized accounting firm
selected by the Company (the “Accounting Firm”), which shall provide detailed
supporting calculations both to the Company and you within 15 business days of
the termination date, if applicable, or at such earlier time as is reasonably
requested by the Company or you.  For purposes of determining which of the
alternative provisions of Section 9(a) shall apply, you shall be deemed to pay
federal income taxes at the highest marginal rate of federal income taxation
applicable to individuals for the calendar year in which the determination is to
be made, and state and local income taxes at the highest marginal

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

rates of individual taxation in the state and locality of the your residence on
the date of termination, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes.  Any
determination by the Accounting Firm shall be binding upon the Company and you.

 

11.

Litigation and Regulatory Cooperation.  During and after your employment, you
agree to cooperate fully with the Company in the defense or prosecution of any
claims or actions now in existence or which may be brought in the future against
or on behalf of the Company which relate to events or occurrences that
transpired while you were employed by the Company.  Your full cooperation in
connection with such claims or actions shall include, but not be limited to,
being available to meet with counsel to prepare for discovery or trial and to
act as a witness on behalf of the Company at mutually convenient times.  During
and after your employment, you also agree to cooperate fully with the Company in
connection with any investigation or review of any federal, state or local
regulatory authority as any such investigation or review relates to events or
occurrences that transpired while you were employed by the Company.  The Company
shall reimburse you for any reasonable out-of-pocket expenses incurred in
connection with your performance of obligations pursuant to this Section.

 

12.

Relief.  If you breach, or propose to breach, any portion of this Agreement,
including any of the Restrictive Covenants, or, if applicable, the Release
Agreement, the Company shall be entitled, in addition to all other remedies that
it may have, to an injunction or other appropriate equitable relief to restrain
any such breach, and, if applicable, the Company shall have the right to suspend
or terminate the payments, benefits and or accelerated vesting pursuant to
Section 6.  Such suspension or termination shall not limit the Company’s other
options with respect to relief for such breach and shall not relieve you of
duties under this Agreement, the Restrictive Covenants or the Release Agreement.

 

13.

Miscellaneous.

a.This Agreement, including the Restrictive Covenant Agreement and the Equity
Documents constitute the entire agreement as to your employment relationship
with Foundation Medicine and will supersede any prior agreements or
understandings, whether in writing or oral.

b.This Agreement shall remain in effect if you are transferred, promoted, or
reassigned to work in functions other than your current functions at the
Company.  Your obligations under this Agreement shall survive the termination of
your employment with the Company regardless of the manner or the reasons for
such termination.

c.This Agreement may not be modified or amended unless agreed to in writing by
you and an expressly authorized representative of the Company.

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d.No waiver of any provision hereof shall be effective unless made in writing
and signed by the waiving party.  The failure of any party to require the
performance of any term or obligation of this Agreement, or the waiver by any
party of any breach of this Agreement, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.

e.All forms of compensation referred to in this Agreement are subject to
reduction to reflect applicable withholding and payroll taxes and other
deductions required by law.

f.This Agreement shall inure to the benefit of, and be binding upon, the Company
and you, and our respective heirs, legal representatives, successors and
assigns.  This Agreement may be assigned by the Company without your consent to
any successor entity in the event of a merger, acquisition, change of control,
or sale of all or substantially all of the business or assets of the
Company.  “Foundation Medicine” and “Company” shall also mean any such successor
entity as the context requires.

g.The resolution of any disputes as to the meaning, effect, performance or
validity of this Agreement, the Restrictive Covenants Agreement or arising out
of, related to, or in any way connected with your employment with the Company or
any other relationship between you and the Company will be governed by the law
of the Commonwealth of Massachusetts, excluding laws relating to conflicts or
choice of law.  Any dispute arising under this Agreement shall be resolved
exclusively by arbitration conducted before a single arbitrator in accordance
with the Employment Arbitration Rules of JAMS in effect at the time such
arbitration is conducted.  All hearings shall be held in Boston,
Massachusetts.  Judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof.  The parties shall bear
equally the costs of arbitration, including the costs of the arbitrator.

h.If any portion or provision of this Agreement shall to any extent be declared
illegal or unenforceable by a court of competent jurisdiction, then the
remainder of this Agreement, or the application of such portion or provision in
circumstances other than those as to which it is so declared illegal or
unenforceable, shall not be affected thereby, and each portion and provision
hereof shall be valid and enforceable to the fullest extent permitted by law.

i.This Agreement may be executed in two counterparts, each of which shall be an
original and all of which together shall constitute one and the same instrument.

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

We look forward to you joining the Company. If you have further questions or
require additional information, please feel free to contact me.

Sincerely,

FOUNDATION MEDICINE, INC.

 

/s/ Sarah Larson

By:

 

Sarah Larson

Title:

 

Senior Vice President, Human Resources

 

 

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

Please confirm your acceptance of this offer by signing this letter and emailing
the signed letter to Wendy Durkin.

YOU ACKNOWLEDGE THAT YOU HAVE CAREFULLY READ THIS AGREEMENT, INCLUDING EXHIBIT
A, AND UNDERSTAND AND AGREE TO ALL OF THE PROVISIONS IN THIS AGREEMENT AND ITS
EXHIBITS.  FACIMILE AND PDF SIGNATURES SHALL HAVE THE SAME LEGAL EFFECT AS
ORIGINALS.

Accepted and agreed by:

/s/ Melanie Nallicheri

Employee Signature

Melanie Nallicheri

Print Employee’s Name

Date: September 13, 2016

 

 

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

 

EXHIBIT A

Employee Non-Competition, Non-Solicitation, Confidentiality and Assignment
Agreement

(See attached)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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[g2018050220495952027496.jpg]

Non-Competition, Non-Solicitation,
Confidentiality and Assignment Agreement

In consideration and as a condition of my employment or continued employment by
Foundation Medicine, Inc. (the “Company”), I hereby agree as follows:

 

 

1.Proprietary Information.  I agree that all information, whether or not in
writing, whether or not disclosed before or after I was first employed by the
Company, concerning the Company’s business, technology, business relationships
or financial affairs that the Company has not released to the general public
(collectively, “Proprietary Information”), and all tangible embodiments thereof,
are and will be the exclusive property of the Company.  By way of illustration,
Proprietary Information may include information or material that has not been
made generally available to the public, such as: (a) corporate information,
including plans, strategies, methods, policies, resolutions, notes, email
correspondence, negotiations  or litigation; (b) marketing information,
including strategies, methods, customer identities or other information about
customers, prospect identities or other information about prospects, or market
analyses or projections; (c) financial information, including cost and
performance data, debt arrangements, equity structure, investors and holdings,
purchasing and sales data and price lists; and (d) operational and technological
information, including plans, specifications, manuals, forms, templates,
software, designs, methods, procedures, formulas, discoveries, inventions,
improvements, biological or chemical materials, concepts and ideas; and (e)
personnel information, including personnel lists, reporting or organizational
structure, resumes, personnel data, compensation structure, performance
evaluations and termination arrangements or documents.  Proprietary Information
includes, without limitation, (1) information received in confidence by the
Company from its customers or suppliers or other third parties, and (2) all
biological or chemical materials and other tangible embodiments of the
Proprietary Information.

2.Recognition of Company’s Rights.  I will not, at any time, without the
Company’s prior written permission, either during or after my employment,
disclose or transfer any Proprietary Information to anyone outside of the
Company, or use or permit to be used any Proprietary Information for any purpose
other than the performance of my duties as an

employee of the Company.  I will cooperate with the Company and use my best
efforts to prevent the unauthorized disclosure of all Proprietary
Information.  I will deliver to the Company all copies and other tangible
embodiments of Proprietary Information in my possession or control upon the
earlier of a request by the Company or termination of my employment.

3.Rights of Others.  I understand that the Company is now and may hereafter be
subject to non-disclosure or confidentiality agreements with third persons that
require the Company to protect or refrain from use of proprietary
information.  I agree to be bound by the terms of such agreements in the event I
have access to such proprietary information.

4.Commitment to Company; Avoidance of Conflict of Interest.  While an employee
of the Company, I will devote my full-time efforts to the Company’s business and
I will not engage in any other business activity that conflicts with my duties
to the Company.  I will advise the President of the Company or his or her
nominee at such time as any activity of either the Company or another business
presents me with a conflict of interest or the appearance of a conflict of
interest as an employee of the Company.  I will take whatever action is
requested of me by the Company to resolve any conflict or appearance of conflict
that it finds to exist.

5.Developments.  I hereby assign and transfer and, to the extent any such
assignment cannot be made at present, will assign and transfer, to the Company
and its successors and assigns, all my right, title and interest in and to all
Developments (as defined below) that:  (a) are created, developed, made,
conceived or reduced to practice by me (alone or jointly with others) or under
my direction (collectively, “conceived”) during the period of my employment and
six (6) months thereafter and that relate to the business of the Company or to
products, methods or services being researched, developed, manufactured or sold
by the Company; or (b) result from tasks assigned to me by the Company; or
(c) result from the use of premises, Proprietary Information or personal
property (whether tangible or intangible) owned, licensed or leased by the
Company (collectively, “Company-

 

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

Related Developments”), and all patent rights, trademarks, copyrights and other
intellectual property rights in all countries and territories worldwide
claiming, covering or otherwise arising from or pertaining to Company-Related
Developments (collectively, “Intellectual Property Rights”).  I further agree
that “Company-Related Developments” include, without limitation, all
Developments that (i) were conceived by me before my employment, (ii) relate to
the business of the Company or to products, methods or services being
researched, developed, manufactured or sold by the Company, and (iii) were not
subject to an obligation to assign to another entity when conceived.  I will
make full and prompt disclosure to the Company of all Company-Related
Developments, as well as all other Developments conceived by me during the
period of my employment and six (6) months thereafter.  I acknowledge that all
work performed by me as an employee of the Company is on a “work for hire”
basis.  I hereby waive all claims to any moral rights or other special rights
that I may have or accrue in any Company-Related Developments.

“Developments” mean inventions, discoveries, designs, developments, methods,
modifications, improvements, processes, biological or chemical materials,
algorithms, databases, computer programs, formulae, techniques, trade secrets,
graphics or images, audio or visual works, and other works of authorship.

If, in the course of my employment with the Company, I incorporate a Development
conceived by me before my employment that are not Company-Related Developments
(“Prior Inventions”) into a Company product, process or research or development
program or other work done for the Company, I hereby grant to the Company a
nonexclusive, royalty-free, fully paid-up, irrevocable, perpetual, worldwide
license (with the full right to sublicense through multiple tiers) to make, have
made, modify, use, offer for sale, import and sell such Prior
Invention.  Notwithstanding the foregoing, I will not incorporate, or permit to
be incorporated, Prior Inventions in any Company-Related Development without the
Company’s prior written consent.

I understand that to the extent this Agreement is required to be construed in
accordance with the laws of any state which precludes a requirement in an
employee agreement to assign certain classes of inventions made by an employee,
this Section will be interpreted not to apply to any invention which a court
rules and/or the Company agrees falls within such classes.

6.Documents and Other Materials.  I will keep and maintain adequate and current
records of all Proprietary Information and Company-Related Developments
conceived by me, which records will be

available to and remain the sole property of the Company at all times.  All
files, letters, notes, memoranda, reports, records, data, sketches, drawings,
notebooks, layouts, charts, quotations and proposals, specification sheets,
program listings, blueprints, models, prototypes, materials or other written,
photographic or other tangible material containing or embodying Proprietary
Information, whether created by me or others, which come into my custody or
possession, are the exclusive property of the Company to be used by me only in
the performance of my duties for the Company.  In the event of the termination
of my employment for any reason, I will deliver to the Company all of the
foregoing, and all other materials of any nature pertaining to the Proprietary
Information of the Company and to my work, and will not take or keep in my
possession any of the foregoing or any copies.  Any property situated on the
Company’s premises and owned by the Company, including laboratory space,
computers, disks and other storage media, filing cabinets or other work areas,
is subject to inspection by the Company at any time with or without notice.

7.Enforcement of Intellectual Property Rights.  I will cooperate fully with the
Company, both during and after my employment with the Company, with respect to
the procurement, maintenance and enforcement of Intellectual Property Rights, as
well as all other patent rights, trademarks, copyrights and other intellectual
property rights in all countries and territories worldwide owned by or licensed
to the Company.  I will sign, both during and after the term of this Agreement,
all papers, including copyright applications, patent applications, declarations,
oaths, assignments of priority rights, and powers of attorney, which the Company
may deem necessary or desirable in order to protect its rights and interests in
any Company-Related Development or Intellectual Property Rights.  If the Company
is unable, after reasonable effort, to secure my signature on any such papers, I
hereby irrevocably designate and appoint each officer of the Company as my agent
and attorney-in-fact to execute any such papers on my behalf, and to take any
and all actions as the Company may deem necessary or desirable in order to
protect its rights and interests in the same.

8.Non-Competition and Non-Solicitation. In order to protect the Company’s
Proprietary Information and good will, during my employment and for a period of
one (1) year following the termination of my employment for any reason (the
“Restricted Period”), I will not directly or indirectly, whether as owner,
partner, shareholder, director, consultant, agent, employee, co-venturer or
otherwise, engage, participate or invest in any business activity anywhere in
the world that develops, manufactures or markets any products, or performs any
services, that are otherwise competitive with or similar to the

 

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

products or services of the Company, or products or services that the Company
has under development or that are the subject of active planning at any time
during my employment; provided that this will not prohibit any possible
investment in publicly traded stock of a company representing less than one
percent of the stock of such company.  In addition, during the Restricted
Period, I will not, directly or indirectly, in any manner, other than for the
benefit of the Company, (a) call upon, solicit, divert or take away any of the
customers, business or prospective customers of the Company or any of its
suppliers, and/or (b) solicit, entice or attempt to persuade any other employee
or consultant of the Company to leave the services of the Company for any
reason.  I acknowledge and agree that if I violate any of the provisions of this
Section, the running of the Restricted Period will be extended by the time
during which I engage in such violation(s).

9.Government Contracts.  I acknowledge that the Company may have from time to
time agreements with other persons or with the United States Government or its
agencies that impose obligations or restrictions on the Company regarding
inventions made during the course of work under such agreements or regarding the
confidential nature of such work.  I agree to comply with any such obligations
or restrictions upon the direction of the Company.  In addition to the rights
assigned under Section 5, I also assign to the Company (or any of its nominees)
all rights which I have or acquired in any Developments, full title to which is
required to be in the United States under any contract between the Company and
the United States or any of its agencies.

10.Prior Agreements.  I hereby represent that, except as I have fully disclosed
previously in writing to the Company, I am not bound by the terms of any
agreement with any previous employer or other party to refrain from using or
disclosing any trade secret or confidential or proprietary information in the
course of my employment with the Company or to refrain from competing, directly
or indirectly, with the business of such previous employer or any other
party.  I further represent that my performance of all the terms of this
Agreement as an employee of the Company does not and will not breach any
agreement to keep in confidence proprietary information, knowledge or data
acquired by me in confidence or in trust prior to my employment with the
Company.  I will not disclose to the Company or induce the Company to use any
confidential or proprietary information or material belonging to any previous
employer or others.

11.Remedies Upon Breach.  I understand that the restrictions contained in this
Agreement are necessary for the protection of the business and goodwill of the
Company and I consider them to be reasonable for such purpose.  Any breach of
this

Agreement is likely to cause the Company substantial and irrevocable damage and
therefore, in the event of such breach, the Company, in addition to such other
remedies that may be available, will be entitled to specific performance and
other injunctive relief.

12.Publications and Public Statements.  I will obtain the Company’s written
approval before publishing or submitting for publication any material that
relates to my work at the Company and/or incorporates any Proprietary
Information.  To ensure that the Company delivers a consistent message about its
products, services and operations to the public, and further in recognition that
even positive statements may have a detrimental effect on the Company in certain
securities transactions and other contexts, any statement about the Company
which I create, publish or post during my period of employment and for six (6)
months thereafter, on any media accessible by the public, including but not
limited to electronic bulletin boards and Internet-based chat rooms, must first
be reviewed and approved by an officer of the Company before it is released in
the public domain.

13.No Employment Obligation.  I understand that this Agreement does not create
an obligation on the Company or any other person to continue my employment.  I
acknowledge that, unless otherwise agreed in a formal written employment
agreement signed on behalf of the Company by an authorized officer, my
employment with the Company is at will and therefore may be terminated by the
Company or me at any time and for any reason.

14.Survival and Assignment by the Company.  I understand that my obligations
under this Agreement will continue in accordance with its express terms
regardless of any changes in my title, position, duties, salary, compensation or
benefits or other terms and conditions of employment.  I further understand that
my obligations under this Agreement will continue following the termination of
my employment regardless of the manner of such termination and will be binding
upon my heirs, executors and administrators.  The Company will have the right to
assign this Agreement to its affiliates, successors and assigns.  I expressly
consent to be bound by the provisions of this Agreement for the benefit of the
Company or any parent, subsidiary or affiliate to whose employ I may be
transferred without the necessity that this Agreement be resigned at the time of
such transfer.

15.Disclosure to Future Employers.  I will provide a copy of this Agreement to
any prospective employer, partner or co-venturer prior to entering into an
employment, partnership or other business relationship with such person or
entity.

16.Exit Interview.  If and when I depart from the Company, I may be required to
attend an exit

 

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

interview and sign an “Employee Exit Acknowledgement” to reaffirm my acceptance
and acknowledgement of the obligations set forth in this Agreement.  During the
Restricted Period following termination of my employment, I will notify the
Company of any change in my address and of each subsequent employment or
business activity, including the name and address of my employer or other
post-Company employment plans and the nature of my activities.

17.Severability.  In case any provisions (or portions thereof) contained in this
Agreement will, for any reason, be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability will not affect the
other provisions of this Agreement, and this Agreement will be construed as if
such invalid, illegal or unenforceable provision had never been contained
herein.  If, moreover, any one or more of the provisions contained in this
Agreement will for any reason be held to be excessively broad as to duration,
geographical scope, activity or subject, it will be construed by limiting and
reducing it, so as to be enforceable to the extent compatible with the
applicable law as it will then appear.

18.Entire Agreement.  This Agreement constitutes the entire and only agreement
between the Company and me respecting the subject matter hereof, and supersedes
all prior agreements and understandings, oral or written, between us concerning
such subject matter.  No modification, amendment, waiver or termination of this
Agreement or of any provision hereof will be binding unless made in writing and
signed by an authorized officer of the

Company.  Failure of the Company to insist upon strict compliance with any of
the terms, covenants or conditions hereof will not be deemed a waiver of such
terms, covenants or conditions.  In the event of any inconsistency between this
Agreement and any other contract between the Company and me, the provisions of
this Agreement will prevail.

19.Interpretation.  This Agreement will be deemed to be made and entered into in
the Commonwealth of Massachusetts, and will in all respects be interpreted,
enforced and governed under the laws of the Commonwealth of Massachusetts.  I
hereby agree to consent to personal jurisdiction of the state and federal courts
situated within Suffolk County, Massachusetts for purposes of enforcing this
Agreement, and waive any objection that I might have to personal jurisdiction or
venue in those courts.  As used in this Agreement, “including” means “including
but not limited to.”

BY SIGNING BELOW, I CERTIFY THAT I HAVE READ THIS AGREEMENT CAREFULLY AND AM
SATISFIED THAT I UNDERSTAND IT COMPLETELY.

IN WITNESS WHEREOF, the undersigned has executed this agreement as a sealed
instrument as of the date set forth below.

Signed:

/s/ Melanie Nallicheri
(Employee’s full name)

Type or print name:  Melanie Nallicheri

Date:  September 13, 2016

 

 

 

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EXHIBIT A

TO:

Foundation Medicine, Inc.

FROM:

 

DATE:

 

SUBJECT:

Prior Inventions

 

 

The following is a complete list of all inventions or improvements
relevant to the subject matter of my employment by the Company that have been
made or conceived or first reduced to practice by me alone or jointly with
others prior to my engagement by the Company:

 

□

No inventions or improvements

 

□

See below:

 

 

□

Additional sheets attached

The following is a list of all patents, patent applications and other patent
rights that I have invented:

 

□

None

 

□

See below: