Exhibit 10.3
EXECUTIVE AGREEMENT
     This EXECUTIVE AGREEMENT (the “Agreement”) is made and entered into as of
the                      day of                      20                     
(the “Effective Date”), by and between HUMAN GENOME SCIENCES, INC. (the
“Company”), and                      (“Executive”).
     In consideration of the services provided by Executive and the covenants
and agreements contained herein, and for other good and valuable consideration
the sufficiency of which is acknowledged by the parties to this Agreement, the
Company and Executive agree as follows:
     1. Severance Benefits. Notwithstanding anything in any existing agreement
between the Company and Executive to the contrary, in the event that Executive’s
employment with the Company is terminated (a) by the Company without Cause (as
defined below), excluding for this purpose a termination due to death or total
disability (as determined under the Company’s long-term disability plan for
senior executives as then in effect), or (b) by Executive with Good Reason (as
defined below), the Company shall provide to Executive the following payments
and benefits:
     (a) Within 30 days after the date that such termination of employment
becomes effective (the “Date of Termination”), the Company shall pay to
Executive all accrued but unpaid base salary; any earned but unpaid bonuses; all
earned or vested incentive compensation or benefits; all accrued but unpaid
reimbursable business expenses; and all accrued but unused vacation time.
     (b) The Company shall provide or distribute, as applicable, all vested
benefits under the Company’s benefit plans, policies and programs in which
Executive participated, in accordance with the terms of such plans, policies and
programs, except to the extent that such benefits are duplicative of benefits
provided for under this Agreement.
     (c) The Company shall pay to Executive a pro-rata bonus payment the amount
of which will be the amount of Executive’s annual bonus earned for the prior
fiscal year multiplied by a fraction, the numerator of which is the number of
days during the year of Executive’s termination that transpired before the Date
of Termination, and the denominator of which is three hundred sixty-five (365).
The bonus payment will be paid to Executive within 30 days following the Date of
Termination.
     (d) The Company shall continue to pay Executive’s base salary during the
twelve (12) month period that commences on the Date of Termination (the
“Severance Period”). Such payments shall be paid at the same time and in the
same manner as base salary would have been paid if Executive had remained
actively employed by the Company until the end of the Severance Period.
     (e) The Company shall continue to provide coverage for Executive and
Executive’s eligible dependents, at the Company’s sole expense, under the
Company’s group health plan, within the meaning of Section 607 of the Employee
Retirement

 

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     Income Security Act of 1974, as amended, in which Executive and Executive’s
eligible dependents were participating as of the Date of Termination, for twelve
(12) months after the Date of Termination; provided that Executive is not
eligible to participate in a group health plan of another entity. Executive’s
(and Executive’s eligible dependents’) right to receive continuation coverage
under COBRA shall commence after, and not run coincident with, the continuation
coverage provided under this Section 1(e), and such COBRA coverage shall be
provided entirely at Executive’s expense. Executive’s (and Executive’s eligible
dependents’) right to receive continuation coverage under this Agreement other
than COBRA will terminate upon the earlier of the date specified herein or the
date that Executive (or such eligible dependent, as applicable) first becomes
eligible to participate in a group health plan of another entity.
     (f) Executive, or Executive’s estate, as applicable, shall have twelve
(12) months after the Date of Termination to exercise all vested stock options
outstanding as of the Date of Termination, but in no event may Executive or
Executive’s estate exercise any stock option beyond its term stated in the
applicable award agreement. The provisions of this Section 1(f) serve to amend
any provision in an applicable award agreement or plan document to the contrary,
whether now or hereafter existing.
     2. Release Contingency. The payments and benefits to be made pursuant to
Section 1(c), 1(d), 1(e) and 1(f) of this Agreement are conditioned upon
Executive’s prior execution and nonrevocation of a general release of claims
occurring up to the release date, in the form of Exhibit A attached hereto (with
such changes therein as may be necessary to make it valid and encompassing under
applicable law), within twenty-one (21) days of presentation thereof by the
Company to Executive.
     3. Definition of Cause. For purposes of this Agreement, “Cause” means
(i) Executive’s willful and continued failure substantially to perform the
duties of his or her position (other than as a result of disability, as defined
in Section 72(m)(7) of the Internal Revenue Code of 1986, as amended (the
“Code”), or as a result of termination by Executive for Good Reason) after
written notice to Executive by the Board of Directors of the Company
(the “Board”) specifying such failure, provided that such “Cause” shall have
been found by a majority vote of the Board after at least ten (10) days’ written
notice to Executive specifying the failure on the part of Executive and after an
opportunity for Executive to be heard at a meeting of the Board; (ii) any
willful act or omission by Executive constituting dishonesty, fraud or other
malfeasance, and any act or omission by Executive constituting immoral conduct,
which in any such case is injurious to the financial condition or business
reputation of the Company; or (iii) Executive’s indictment of a felony under the
laws of the United States or any state thereof or any other jurisdiction in
which the Company conducts business. For purposes of this definition, no act or
failure to act shall be deemed “willful” unless effected by Executive not in
good faith and without a reasonable belief that such action or failure to act
was in or not opposed to the best interests of the Company.
     4. Definition of Good Reason. For purposes of this Agreement, “Good Reason”
means, without Executive’s consent, (i) material diminution in Executive’s
title, position, duties or responsibilities, or the assignment to Executive of
duties that are inconsistent, in a material respect, with the scope of duties
and responsibilities associated with Executive’s position;

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(ii) material reduction in Executive’s base compensation, as in effect
immediately preceding the Effective Date, or target bonus opportunity;
(iii) relocation of Executive’s principal workplace to a location which is more
than fifty (50) miles from Executive’s principal workplace on the Effective
Date; or (iv) any material failure by the Company to comply with and satisfy the
requirements of Section 8 of this Agreement, provided that the successor shall
have received at least ten (10) days’ prior written notice from the Company or
Executive of the requirements of Section 8, and fails to remedy such material
failure within thirty (30) days after receipt of such notice. For purposes of
clauses (i) and (ii) of the preceding sentence, an isolated and inadvertent
action not taken in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by Executive shall be excluded. For
purposes of clause (i), no material diminution of title, position, duties or
responsibilities shall be deemed to occur solely because the Company becomes a
subsidiary of another corporation or change in the reporting hierarchy incident
thereto. For purposes of clauses (i), (ii) and (iii), Good Reason shall not
exist unless Executive notifies the Company of the existence of the condition
specified under the applicable clause no later than ninety (90) days after the
initial existence of any such condition, and the Company fails to remedy such
condition within thirty (30) days after receipt of such notice. Notwithstanding
the foregoing, Good Reason shall not exist unless Executive’s termination of
employment occurs no later than two (2) years following the initial existence of
any of the conditions provided in this Section 4.
     5. “At Will” Employment. Except as may otherwise be expressly provided
under any other executed agreement between Executive and the Company, nothing
contained in this Agreement is intended to change the fact that the employment
of Executive by the Company is “at will” and may be terminated by either
Executive or the Company at any time.
     6. Arbitration. Any controversy, dispute or claim of whatever nature
arising out of, or in relation to, the Company’s and Executive’s relationship as
provided in this Agreement, shall be resolved first by prompt, informal, good
faith negotiations by the parties. If a mutually satisfactory resolution is not
reached by such good faith negotiations within forty-five (45) days, the parties
agree that such controversy, dispute or claim shall be resolved exclusively
through final and binding arbitration before a single neutral arbitrator
selected jointly by the parties. If the parties are unable to agree on a single
arbitrator, each of the Company and Executive shall select an arbitrator, and
those arbitrators will jointly select a third, who will arbitrate the dispute.
The arbitrator must be a former judge, and the arbitration shall be conducted in
accordance with the rules of JAMS/ENDISPUTE then in effect. The arbitration
shall take place in Rockville, Maryland. The Company will pay the direct costs
and expenses of the arbitration. The Company and Executive will each separately
pay its counsel fees and expenses; provided, however, the Company shall
reimburse Executive for Executive’s reasonable costs (including without
limitation, attorneys’ fees) incurred if Executive succeeds on the merits on a
material issue and Executive is not found to be in material breach. The parties
agree that any award rendered by the arbitrator shall be final and binding, and
that judgment upon the award may be entered in any court having jurisdiction
thereof. The provisions of this Section 6 shall survive the expiration or
termination of this Agreement and of Executive’s employment.
     7. Tax Withholding. The Company may withhold from any compensation and
benefits payable under this Agreement all applicable federal, state, local or
other taxes.

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     8. Assignment. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, representatives, successors
and assigns. This Agreement shall not be assignable by Executive (but any
payments due under this Agreement which would be payable at a time after
Executive’s death shall be paid to Executive’s designated beneficiary or, if
none, Executive’s estate). The Company shall require 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 expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, the term “Company” shall
mean both the Company as defined above and any such successor.
     9. Entire Agreement; Non-Duplication of Benefits. This Agreement shall
constitute the entire understanding of the parties with respect to the subject
matter herein and shall supersede any and all existing oral or written
agreements, representations or warranties between Executive and the Company or
any of its subsidiaries or affiliated entities relating to the terms of
Executive’s employment by the Company, but shall not supersede that certain
Employee Confidential Information, Invention and Non-Competition Agreement
between the Company and Executive dated                                         
,                     , nor the provisions of the Company’s Second Amended and
Restated Key Executive Severance Plan (the “Severance Plan”) in which Executive
is a participant. In the event that Executive is entitled to benefits under the
Severance Plan and this Agreement, Executive shall be entitled to the better
benefits of the two, determined in the aggregate and in Executive’s discretion,
and in no event will Executive be entitled to benefits under both this Agreement
and the Severance Plan.
     10. Amendment. This Agreement shall not be amended except by a written
agreement signed by both parties.
     11. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland applicable to agreements made
and to be performed in that State, without regard to its conflict of laws
provisions.
     12. Notices. Any notice, consent, request or other communication made or
given in connection with this Agreement shall be in writing and shall be deemed
to have been duly given upon receipt when delivered by hand or by overnight
courier, or three (3) days after deposit in the U.S. mail by registered or
certified mail, return receipt requested, with proper postage affixed, to the
parties at their following respective addresses or at such other address as each
may specify by notice to the other in accordance with this Section. Notices to
the Company shall be addressed to the Secretary of Human Genome Sciences, Inc.
at 14200 Shady Grove Road, Rockville, Maryland 20850. Notices to Executive shall
be addressed to Executive’s address as reflected on Company’s personnel records.
     13. No Duty to Mitigate. The Company agrees that, if Executive’s employment
with the Company terminates, Executive is not required to seek other employment
or to attempt in any way to reduce any amounts payable to or in respect of
Executive by the Company pursuant to this Agreement. Further, the amount of any
payment or benefit provided for in this Agreement shall not be reduced by any
compensation earned by Executive as the result of employment by another employer
or by retirement benefits.

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     14. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or
limit Executive’s continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company and for which
Executive may qualify, nor shall anything herein limit or otherwise negatively
affect such rights as Executive may have under any stock option or other
agreement with the Company or any of its affiliated companies. Except as
otherwise provided herein, amounts and benefits which are vested benefits or
which Executive is otherwise entitled to receive under any plan, program,
agreement or arrangement of the Company at or subsequent to the Date of
Termination shall be payable in accordance with such plan or program.
     15. Counterparts. This Agreement may be executed in any number of
counterparts, by original signature or facsimile, each of which so executed
shall be deemed to be an original, and such counterparts will together
constitute but one Agreement.
     16. 409A Compliance.
     (i) This Agreement is intended to comply with, or otherwise be exempt from,
Section 409A of the Code and any regulations and Treasury guidance promulgated
thereunder.
     (ii) The Company and Executive agree that they will execute any and all
amendments to this Agreement as they mutually agree in good faith may be
necessary to ensure compliance with the provisions of Section 409A of the Code.
     (iii) The preceding provisions, however, shall not be construed as a
guarantee by the Company of any particular tax effect to Executive under this
Agreement. The Company shall not be liable to Executive for any payment made
under this Agreement, at the direction or with the consent of Executive, which
is determined to result in an additional tax, penalty, or interest under
Section 409A of the Code, nor for reporting in good faith any payment made under
this Agreement as an amount includible in gross income under Section 409A of the
Code.
     (iv) For purposes of Section 409A of the Code, the right to a series of
installment payments under this Agreement shall be treated as a right to a
series of separate payments.
     (v) With respect to any reimbursement of expenses of, or any provision of
in-kind benefits to, Executive, as specified under this Agreement, such
reimbursement of expenses or provision of in-kind benefits shall be subject to
the following conditions: (1) the expenses eligible for reimbursement or the
amount of in-kind benefits provided in one taxable year shall not affect the
expenses eligible for reimbursement or the amount of in-kind benefits provided
in any other taxable year, except for any medical reimbursement arrangement
providing for the reimbursement of expenses referred to in Section 105(b) of the
Code; (2) the reimbursement of an eligible expense shall be made no later than
the end of the year after the year in which such expense was incurred; and
(3) the right to reimbursement or in-kind benefits shall not be subject to
liquidation or exchange for another benefit.

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     (vi) For purposes of Section 409A of the Code, the Date of Termination
shall be construed as the date Executive first incurs a “separation from
service” as defined under Section 409A of the Code.
     (vii) If a payment obligation under this Agreement arises on account of
Executive’s termination of employment while he is a “specified employee” (as
defined under Section 409A of the Code and determined in good faith by the
Compensation Committee), any payment of “deferred compensation” (as defined
under Treasury Regulation Section 1.409A-1(b)(1), after giving effect to the
exemptions in Treasury Regulation Sections 1.409A-1(b)(3) through (b)(12)) shall
accrue with interest and shall be made within 15 days after the end of the
six-month period beginning on the date of such termination of employment or, if
earlier, within 15 days after appointment of the personal representative or
executor of Executive’s estate following his death. For purposes of the
preceding sentence, interest shall accrue at the prime rate of interest
published in the northeast edition of The Wall Street Journal on the date of
Executive’s termination of employment.
     IN WITNESS WHEREOF, this Agreement is EXECUTED and EFFECTIVE as of the day
set forth above.

     
[NAME OF EXECUTIVE]
  WITNESS:
(“Executive”)
   
 
   
 
   
 
   
HUMAN GENOME SCIENCES, INC.
  ATTEST:
(“Company”)
   
 
   
By:
   
 
 
 
         H. Thomas Watkins
   
Title: President and Chief Executive Officer
   

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EXHIBIT A to EXECUTIVE AGREEMENT
GENERAL RELEASE
     For and in consideration of the promises made in the Executive Agreement
(defined below), the adequacy of which is hereby acknowledged, the undersigned
(“Executive”), for himself, his heirs, administrators, legal representatives,
executors, successors, assigns, and all other persons claiming through
Executive, if any (collectively, “Releasers”), does hereby release, waive, and
forever discharge Human Genome Sciences, Inc. (“Company”), Company’s
subsidiaries, parents, affiliates, related organizations, employees, officers,
directors, attorneys, successors, and assigns (collectively, the “Releasees”)
from, and does fully waive any obligations of Releasees to Releasers for, any
and all liability, actions, charges, causes of action, demands, damages, or
claims for relief, remuneration, sums of money, accounts or expenses (including
attorneys’ fees and costs) of any kind whatsoever, whether known or unknown or
contingent or absolute, which heretofore has been or which hereafter may be
suffered or sustained, directly or indirectly, by Releasers in consequence of,
arising out of, or in any way relating to Executive’s employment with Company or
any of its affiliates, status as an officer, and the termination of Executive’s
employment or removal as an officer. The foregoing release and discharge, waiver
and covenant not to sue includes, but is not limited to, all claims and any
obligations or causes of action arising from such claims, under common law
including wrongful or retaliatory discharge, breach of contract (including but
not limited to any claims under the Executive Agreement between Company and
Executive, dated as of                                          , 20
                    , as amended from time to time (the “Executive Agreement”)
and any claims under any stock option and equity-based award agreements between
Executive and Company) and any action arising in tort including libel, slander,
defamation or intentional infliction of emotional distress, and claims under any
federal, state or local statute including Title VII of the Civil Rights Act of
1964, the Civil Rights Act of 1866 and 1871 (42 U.S.C. § 1981), the National
Labor Relations Act, the Family and Medical Leave Act, the Age Discrimination in
Employment Act (ADEA), the Fair Labor Standards Act, the Americans with
Disabilities Act of 1990, the Rehabilitation Act of 1973, the Maryland Human
Rights Act, or the discrimination or employment laws of any state or
municipality, and/or any claims under any express or implied contract which
Releasers may claim existed with Releasees. This also includes a release by
Executive of any claims for breach of contract, wrongful discharge and all
claims for alleged physical or personal injury, emotional distress relating to
or arising out of Executive’s employment with Company or the termination of that
employment; and any claims under the WARN Act or any similar law, which
requires, among other things, that advance notice be given of certain work force
reductions. This release and waiver does not apply to any claims or rights that
may arise after the date Executive signs this General Release. The foregoing
release does not apply to (a) any claims for severance pay or benefits under the
Executive Agreement, (b) any claims or rights under directors and officers
liability insurance, (c) Executive’s rights under any tax-qualified pension or
claims for accrued vested benefits under any other employee benefit plan
maintained by Company; or (d) Executive’s rights as a stockholder.
     Excluded from this release and waiver are any claims which cannot be waived
by law, including but not limited to the right to participate in an
investigation conducted by certain government agencies.

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     Executive agrees never to sue Releasees, in any forum for any claim covered
by the above waiver and release language. Executive represents and warrants that
Executive has not filed and will not file any complaint, charge, or lawsuit
against the Releasees with any government agency or any court. If Executive
violates this General Release by suing Releasees other than as set forth in the
first paragraph hereof, Executive shall be liable to the Company for its
reasonable attorneys’ fees and other litigation costs incurred in defending
against such a suit, as permitted by law.
     Executive acknowledges and recites that:
     (a) Executive has executed this General Release knowingly and voluntarily;
     (b) Executive has read and understands this General Release in its
entirety;
     (c) Executive has been advised and directed orally and in writing (and this
subparagraph (c) constitutes such written direction) to seek legal counsel and
any other advice he wishes with respect to the terms of this General Release
before executing it;
     (d) Executive’s execution of this General Release has not been forced by
any employee or agent of the Company, and Executive has had an opportunity to
negotiate about the terms of this General Release after consultation with an
attorney of his choosing; and
     (e) Executive has been offered twenty-one (21) calendar days after receipt
of this General Release to consider its terms before executing it.
     This General Release shall be governed by the laws of the State of
Maryland, except for the application of pre-emptive Federal law.
     Executive shall have seven (7) days from the date hereof to revoke this
General Release by providing written notice of the revocation to the Company, as
provided in Section 12 of the Executive Agreement, in which event this General
Release shall be unenforceable and null and void.
PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND
UNKNOWN CLAIMS.

             
 
          EXECUTIVE
 
           
Date:
           
 
 
 
     
 
 
          [Name of Executive]
 
           
 
          HUMAN GENOME SCIENCES, INC.
 
           
Date:
          By:
 
 
 
     
 
 
          Name:
 
         
 
 
          Its:
 
         
 

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