Document:

EX-10.6.2 AMENDMENT #2 TO LONG TERM INCENTIVE PLAN

 

Exhibit 10.6.2

AMENDMENT NO. 2

TO THE

REGENERON PHARMACEUTICALS, INC.

2000 LONG-TERM INCENTIVE PLAN

     WHEREAS, the Regeneron Pharmaceuticals, Inc. 2000 Long-Term Incentive Plan
(the “Plan”) was adopted by Regeneron Pharmaceuticals, Inc. (the “Company”) on
April 24, 2000 and became effective as of such date pursuant to the approval of
the company’s shareholders; and

     WHEREAS, pursuant to Section 19 of the Plan, the Board of Directors of the
Company is authorized to amend the Plan; and

     WHEREAS, the Board of Directors of the Company desires to amend the Plan,
in the manner set forth in paragraph 1 below.

     NOW THEREFORE, the Plan is hereby amended, effective as of December 20,
2002 as set forth below.

	 	1.	 	Section 12(b) of the Plan, Timing of Grant, is hereby amended
by deleting the section in its entirety and replacing it with the
following:
	 
	 	 	 	“On the first business day (i.e. a day other than Saturday, Sunday
or any other day in which the securities exchange on which the
Company Stock trades is closed) following January 1 of each
calendar year, each then serving Nonemployee Director shall be
automatically granted a Nonqualified Stock Option to purchase
15,000 shares of Company Stock. In addition, on the date the
shareholders approve this Plan, each then Nonemployee Director
shall be automatically granted a Nonqualified Stock Option to
purchase 5,000 shares of Company Stock.”
	 
	 	2.	 	The Plan is hereby ratified and confirmed in all other
respects

     IN WITNESS WHEREOF, this Amendment No. 2 has been duly executed by an
authorized officer of the Company.

	 
	REGENERON PHARMACEUTICALS, INC.

By: /s/ Stuart Kolinski

Name: Stuart Kolinski

Title: Vice President & General CounselEX-10.18 EMPLOYMENT AGREEMENT

 

Exhibit 10.17

As of December 20, 2002

Leonard S. Schleifer, M.D., Ph.D.

President and Chief Executive Officer,

Regeneron Pharmaceuticals, Inc.

777 Old Saw Mill River Road

Tarrytown, New York 10591-6707

Dear Len:

          This employment agreement will replace and update the agreement dated
February 12, 1998 between Regeneron Pharmaceuticals, Inc. (“Regeneron” or the
“Company”) and you. The compensation obligations of the Company under this
agreement (the “Agreement”) will be reduced by any amounts actually paid by any
affiliate, subsidiary, and related entity controlled by or under common control
with the Company (“Related Entity”).

     1.     Employment.

          (a)   You will continue to serve, during the Employment Term, as President
and Chief Executive Officer of the Company with the customary responsibilities
and authority of such positions and in accordance with the Company’s By-Laws.
You will report directly and only to the Board of Directors. If elected, you
will also continue to serve as a Director of the Company. The Company shall
during the Employment Term recommend and propose you as a Director of the
Company and any Related Entity and, if the Chairman of the Board of Directors
as of the date hereof at any time ceases to serve as such, as Chairman of the
Board of Directors. To the extent you are not elected Chief Executive Officer
of any Related Entity, such Chief Executive Officer shall report to you.

          (b)   During the Employment Term, you shall devote substantially all of your
business time and attention to the performance of your duties for the Company
and serve the Company diligently and to the best of your ability. You may,
however, perform teaching, consulting, patient care, and other activities as
you have done from time to time in the past, provided that they do not
materially conflict with the performance of your duties to the Company. In
addition, you may manage your personal investments and be involved in civic and
charitable activities so long as such activities do not materially interfere
with your providing

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services hereunder. During the Employment Term, you shall not serve as a
member of a board of directors of any other for-profit corporation (other than
a Related Entity) without the prior written consent of the Board of Directors
(which consent shall not be unreasonably withheld). In no event will the
provisions of this Agreement in any way modify, alter, reduce, or limit the
fiduciary obligations you owe to the Company as an officer and Director of the
Company.

     2.     Term. Except for earlier termination as provided in paragraph 4
hereof, your employment under this Agreement (the “Employment Term”) shall be
for an initial term commencing on the date hereof and ending on December 31,
2003 (the “Initial Term”). Unless notice is given of an intent not to extend
the Initial Term or any extension thereof, by you or by the Company on at least
ninety (90) days prior written notice, the Employment Term shall be deemed as
of such 90th day to have been extended and continue until the end of the
following calendar year unless otherwise terminated as provided in paragraph 4
hereof.

     3.     Compensation/Benefits.

          (a)   During the Employment Term, you will receive base salary at an annual
rate of not less than $575,000, paid currently at periodic intervals in
accordance with the Company’s payroll practices for salaried employees.
Adjustments in your base salary during the term of this Agreement (which shall
thereafter be your “Base Salary”) may be effected from time to time upon the
recommendation of the Compensation Committee and the approval of the Board of
Directors based upon an annual review by the Compensation Committee, but your
Base Salary, once increased, shall in no event be decreased; provided, however,
that in the event there is a general reduction of compensation applicable to
senior executives generally, nothing herein shall preclude the Board of
Director’s ability to reduce your Base Salary consistent with this reduction.
You shall also participate in and be the beneficiary of any cash bonus
payments, stock option and other equity programs, incentive programs, pension
plans, profit sharing plans and other benefit programs and fringe benefit
programs implemented by the Company and otherwise available to executive
officers, nonindependent directors, and employees of the Company, at a level
commensurate with your position, in accordance with the terms and conditions of
such programs.

          (b)   You have separately entered into one or more stock purchase agreements
and stock option award agreements with the Company. With the sole exception of
the provisions in this Agreement regarding vesting and exercisability of stock
options, nothing in this Agreement will affect any term or provision of any
stock purchase or stock option award agreement you have entered into or will

enter into with the Company under any stock purchase or incentive plan of the
Company and the stock options to purchase common shares previously granted to
you shall remain outstanding, and in effect, in accordance with their
respective terms.

          (c)   The Company will during the Employment Term maintain insurance on your
life in the amount of $1,000,000 payable to such beneficiary as you designate.
You may change the designated beneficiary of this policy at any time. The
Company will not borrow against or otherwise encumber the policy or proceeds
thereof. The Company will also during the Employment Term maintain for your
benefit a long term disability policy that will pay you at least 65 percent of
your Base Salary during such period as you are unable, for physical or mental

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reasons, to perform the responsibilities of your current position, with
such benefits commencing no later than six (6) months after incurrence of the
disability.

          (d)   During the Employment Term, the Company will pay for or will reimburse
the reasonable costs of your medical malpractice insurance and all customary,
ordinary, and necessary business expenses incurred by you in the performance of
your duties (including expenses related to equipment you customarily and
normally use in connection with the performance of your duties to the Company),
provided that you present such vouchers, receipts, or other documentation as
are required by the regular procedures of the Company for the reimbursement of
such expenses. In addition, during the Employment Term, the Company will pay
you a monthly automobile cash allowance of $1,500 plus all expenses of
maintaining and operating your automobile in accordance with current policy.

          (e)   You shall be entitled to at least four (4) weeks of vacation per year,
which vacation may be taken at such times as you elect with due regard to the
needs of the Company.

          (f)   The Company will pay, or will reimburse the reasonable costs of, any
legal, accounting or other professional services you incur in connection with
your tax preparation and financial planning to a maximum of $12,500 per year,
including, without limitation, a tax gross-up reimbursement so long as the
total direct reimbursement and tax gross-up reimbursement is no more than
$12,500 per year; provided, however, that any unused portion of such amounts
shall remain available for your use in future years (in addition to the $12,500
to which you are entitled per year).

          (g)   During the Employment Term (and, subject to the terms of this
paragraph, thereafter), the Company will continue to designate you as its
nominee at the club at which you are currently designated as the nominee of the
Company (the “Club”) and pay any dues or other expenses incurred with regard to
your use of the Club. After your termination of employment with the Company,
you shall, at your election made to the Company within 45 days thereafter: (i)
elect not to be designated by the Company as the nominee for the Company’s Club
membership; (ii) if permitted by the Club, have the Company transfer the
Company’s Club membership to you, with the Company having its bond either
returned or assumed by you (in which case you would pay the Club any dues or
other Club expenses incurred thereafter and, if you assumed the bond, would pay
the Company the amount of the bond); or (iii) have the Company continue your
designation as nominee for the Company’s Club membership (in which case you
would pay the dues and other Club expenses incurred thereafter and deposit the
amount of the Club bond with the Company, with such amount (as adjusted in the
same manner as the bond) returned to you by the Company at the earlier of such
time as it receives a refund of the bond or you elect to cease being designated
as the Company’s nominee at the Club). Notwithstanding anything else herein,
this obligation shall survive any termination of your employment with the
Company.

          (h)   Following any termination of your employment with the Company, if and
to the extent the Company maintains any health benefit plans (and without any
obligation to do so), you and your (and, after your death, your wife’s)
dependents shall be entitled to continue to participate therein by paying an
amount equal to the COBRA cost thereof for the remainder of

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your life and that of your spouse at the time of such termination of
employment. Notwithstanding anything else herein, this provision shall survive
any termination of your employment with the Company.

     4.     Termination. Except as otherwise provided in paragraph 2, the
Employment Term shall end upon the earliest of the following to occur:

          (a)   Your death.

          (b)   Upon a vote of the Board of Directors and notice to you of termination
as a result of your Permanent Disability. Permanent Disability means your
inability, by reason of any physical or mental impairment, to substantially
perform the significant aspects of your regular duties as contemplated by this
Agreement and which inability is reasonably contemplated to continue for at
least one (1) year from its incurrence and at least ninety (90) days from the
date of such vote. Any question as to the existence, extent, or potentiality
of your Permanent Disability shall be determined by a qualified independent
physician selected by you (or, if you are unable to make such selection, by an
adult member of your immediate family), and reasonably acceptable to the
Company. Such physician’s written determination of your Permanent Disability
shall, upon delivery to the Company, be final and conclusive for purposes of
this Agreement; provided, however, that no such determination shall be final
and conclusive with respect to any disability coverage under paragraph 3(c).

          (c)   Your Involuntary Termination, as set forth in paragraph 6 below.

          (d)   Your Removal for Cause, as set forth in paragraph 7(a) below.

          (e)   Your voluntary termination (other than termination on account of
death, Permanent Disability or termination by you for Good Reason) upon ninety
(90) days prior written notice; provided, however, that the Company may waive
such notice requirement in a written waiver delivered to you.

     5.     Death and Disability.

          (a)   If the Employment Term terminates by reason of your death or your
Permanent Disability as provided in paragraph 4, then, except as provided in
this paragraph 5(a), no further compensation will become payable to you under
this Agreement, other than any unpaid Base Salary, earned but unpaid bonuses,
the pro rata portion of incentive compensation earned for services rendered
through the date of your death or Permanent Disability, any deferred
compensation and all other payments, benefits or fringe benefits to which you
may be entitled under the terms of any applicable compensation arrangement or
benefit, equity or fringe benefit plan or program or grant (other than any
severance plan) or this Agreement (collectively, “Entitlements”). Entitlements
shall be calculated and paid as set forth in subparagraph (b) below. You shall
also be entitled to the Stock Option Treatment (as set forth in paragraph 8(g)
below). In the event of your termination on account of your Permanent
Disability, the Company shall pay you 100% of your Base Salary reduced by any
insurance or other payments made under policies or plans paid for or maintained
by the Company and shall continue to provide you and

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your eligible dependents with the medical and dental care benefit coverage
and life insurance at a level of coverage comparable to the coverage in effect
for you at the time of your termination on account of Permanent Disability upon
the same terms and conditions (except for the requirement of your continued
employment) for a period of eighteen (18) months following your date of
termination.

          (b)   Earned but unpaid bonus shall mean any declared but unpaid bonus for
any prior bonus period and, if the bonus for the current bonus period is other
than totally discretionary, a pro rata portion of the calculated bonus for the
bonus period based on days in the bonus period prior to termination of your
services compared to total days in the bonus period. Any incentive
compensation shall be deemed earned and shall be paid based on actual results
during the measuring period and a pro rata measurement of the days in the
incentive period prior to termination of your services compared to total days
in the incentive period. Each Entitlement shall be promptly paid after the
amount thereof is determined. Any deferred compensation shall be paid in
accordance with the terms of the applicable plan.

     6.     Involuntary Termination.

          (a)   Involuntary Termination shall mean either your termination by the
Company in accordance with paragraph 6(b) hereof, or your resignation in
accordance with paragraph 6(c) hereof.

          (b)   Termination By The Company Without Cause:

          Your termination by the Company shall be considered to be “without cause”
if (i) you are terminated or dismissed, for reasons other than your death,
Permanent Disability or “Removal for Cause,” as President or Chief Executive
Officer, unless you have previously consented in writing to such removal or
dismissal (which consent may be given or withheld in your sole discretion);
provided, however, that your termination or dismissal as President shall not be
a Termination by the Company without Cause if the person appointed President
reports to you, or (ii) prior to your sixty-fifth (65th) birthday, the Company
gives notice of nonextension of the Employment Term pursuant to paragraph 2
hereof.

          (c)   Termination By You For Good Reason:

          Your resignation shall be considered to be for Good Reason if you resign
as President and Chief Executive Officer (whether or not you resign as a
Director and, if Chairman of the Board, as Chairman of the Board) upon ninety
(90) days’ prior written notice within ninety (90) days after the occurrence of
one of the following events: (i) your removal, dismissal or failure to be
re-elected as President or Chief Executive Officer (other than on account of
your termination for some other reason) or a de jure or de facto material
reduction in your duties, title, responsibilities, authority, status, or
reporting responsibilities (other than in connection with the appointment of a
Chief Operating Officer or President who reports to you), unless you have
previously consented in writing to such removal, dismissal or reduction (which
consent may be given or withheld in your sole discretion); (ii) the failure to
elect you, or your removal, dismissal or failure to be re-elected, as Chairman
of the Board if the current Chairman of the Board ceases

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to serve as such; (iii) the failure of the Company to pay to you any amount due
under this Agreement within ten (10) days after the later of its due date or
your written demand for payment of such amount; (iv) any material breach by the
Company of any provision of this Agreement which is not cured within thirty
(30) days after your giving of written notice of such breach to the Company;
(v) one year after a Change of Control, as defined in Exhibit A hereto, to the
extent you are employed hereunder at that time; (vi) the relocation of the
Company’s principal executive office more than fifty (50) miles from the
current location; or (vii) the failure of the Company to obtain and deliver to
you a reasonably satisfactory written agreement from any successor to the
Company as provided in paragraph 14(l).

          (d)   Upon an Involuntary Termination, you will become entitled to the
benefits specified in paragraph 8 of this Agreement. In addition, you will be
entitled to your Entitlements as calculated and paid in accordance with
paragraph 5(b) above.

     7.     Removal For Cause.

          (a)   Removal for Cause shall mean the termination of your duties as
President, Chief Executive Officer and, if you are then serving in such
capacity, Chairman of the Board, effected by the Board of Directors of the
Company (after a Board of Directors meeting for which you had at least ten (10)
days prior written notice and at which you had the opportunity to have counsel
present to represent you in connection with issues concerning your removal for
cause) by reason of any one or more of the following, which individually or in
the aggregate has a material adverse effect on the aggregate business or
affairs of the Company and any Related Entity:

		
	 	     (i)   your gross neglect of your duties, your willful and continuing
refusal to perform your duties (other than, in any such case, because of
a reasonably documented mental or physical illness), your refusal to obey
any lawful order of the Board of Directors, or any material breach by you
of any provision of paragraphs 11 or 12 of this Agreement, which, in any
of the foregoing events, continues for more than thirty (30) days
following your receipt of written notice from the Board of Directors that
describes such breach or other event;

		
	 	     (ii)   your willful misconduct with respect to the business or affairs
of the Company or of any Related Entity;

		
	 	     (iii)   your conviction of, or your plea of nolo contendere to, a
misdemeanor involving embezzlement or fraud or other offense involving
money or other property of the Company (other than a good faith dispute
over expense account items), any criminal violation of the Securities Act
of 1933 or the Securities Exchange Act of 1934, or any felony, provided
your rights of appeal with respect to such matter have either lapsed or
been exercised;

          (b)     Upon your Removal for Cause, the Company will only be required to pay
you any unpaid Base Salary earned by you pursuant to paragraph 3 for services
rendered through the date of such removal, any bonus which has been declared
but is unpaid as of the date of such removal and, in accordance with the terms
of any plan, any deferred compensation. In addition,

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you will be entitled to your Entitlements as calculated and paid in
accordance with paragraph 5(b) above. In such case, no amounts will be payable
to you under paragraph 8 of this Agreement for any reason whatsoever.

          (c)   In the event of your voluntary termination in accordance with
paragraph 4(e), you shall receive the same amounts as if you were Removed for
Cause plus the Stock Option Treatment (as set forth in paragraph 8(g)).

     8.     Severance Benefits.

          (a)   Subject to paragraphs 8(b) and 8(e), upon an Involuntary Termination,
you will become entitled to the following severance benefits:

		
	 	     (i)   The Company will pay you an amount equal to one and one-quarter
(1 1/4) times the sum of (x) your Base Salary in effect (or, if
improperly reduced, required to be in effect) at the time of your
Involuntary Termination and (y) the average of the annual bonuses paid or
payable to you during the three (3) completed fiscal years prior to your
Involuntary Termination; provided that such payment shall be payable in
twelve (12) equal monthly installments commencing no later than ten (10)
calendar days (including weekends and holidays) following such
Involuntary Termination.

		
	 	     (ii)   Unless you become eligible for comparable coverage under
another company’s plans or programs, the Company shall continue to

provide you and your eligible dependents, upon the same terms and
conditions (except for the requirement of your continued employment),
with the medical and dental care benefit coverage and life insurance at a
level of coverage comparable to the coverage in effect for you at the
time of your Involuntary Termination for the eighteen (18) month period
following your Involuntary Termination.

          (b)   Notwithstanding paragraph 8(a), upon your Involuntary Termination
within three (3) years after a Change of Control, as defined in Exhibit A
hereto, or within three (3) months prior thereto in anticipation of a Change of
Control, you will become entitled to the following severance benefits in lieu
of the amounts under paragraph 8(a) above:

		
	 	     (i)   The Company will make a lump sum payment to you within ten (10)
days after such termination of an amount equal to three (3) times the sum
of (x) your Base Salary in effect (or, if improperly reduced, required to
be in effect) at the time of your Involuntary Termination and (y) the
average of the annual bonuses paid or payable to you during the three (3)
completed fiscal years prior to your Involuntary Termination or, if
higher, the three (3) completed fiscal years prior to the Change of
Control.

		
	 	     (ii)   Any bonus, vacation pay or other compensation accrued or earned
under law or in accordance with the Company’s policies applicable to you
but not yet paid and any incurred but unreimbursed business expenses for
the period prior to termination shall be payable in accordance with the
Company’s policies and the terms of the applicable plan.

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	 	     (iii)   Until you and your dependents become eligible for comparable
coverage under another company’s plans or programs, the Company shall
continue to provide you and your eligible dependents, upon the same terms
and conditions (except for the requirement of your continued employment),
with the medical and dental care benefit coverage and life insurance at a
level of coverage comparable to the coverage in effect for you at the
time of your Involuntary Termination for the thirty-six (36) month period
following your Involuntary Termination.

		
	 	     (iv)   All stock options, whether heretofore or hereafter, granted to
you shall become fully vested and immediately exercisable and, if the
basis were an action in anticipation of the Change of Control, the option
shall remain exercisable (unless the original terms would otherwise end)
at least through the Change of Control.

          (c)   Each of your outstanding loans from the Company will become due and
payable in accordance with their existing terms and provisions, and none of
these loans will be forgiven or otherwise canceled in whole or in part.

          (d)   The Company agrees that if your employment with the Company is
terminated during the Employment Term for any reason whatsoever, you are not
required to seek other employment or to attempt in any way to reduce any
amounts payable to you 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 you or benefit provided to you as the
result of employment by another employer or otherwise. In addition, the
amounts payable hereunder shall not be subject to setoff, counterclaim,
recoupment, defense or other right which the Company may have against you or
others, except upon obtaining by the Company of a final nonappealable judgment
against you.

          (e)   In the event that you have received or commenced receipt of any
payments or other rights under paragraphs 5(a) or 8(a), you shall not be
entitled to any additional payments or rights under paragraphs 5(a), 8(a), or
8(b) with respect to any subsequent occurrence which might otherwise give rise
to such payments or rights under such paragraphs, except as specifically
provided with regard to paragraph 8(b).

          (f)   Payments under paragraph 8(b)(iii) may, at the discretion of the
Company, be made by continuing your participation in the applicable plan, in
the case of medical benefits, by paying the applicable COBRA premium for you
and your dependents, or by covering you and your dependents under substitute
arrangements, provided that, to the extent you incur tax that you would not
have incurred as an active employee as a result of the aforementioned coverage
or the benefits provided thereunder, you shall receive from the Company an
additional payment in the amount necessary so that you will have no additional
cost for receiving such items or any additional payment.

          (g)   Notwithstanding anything to the contrary in this Agreement or any
other agreement between you and the Company, the Company agrees that if your
employment with the Company terminates during the Employment Term for any
reason (other than a Removal for

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Cause), including a termination of employment pursuant to paragraphs 4(a),
4(b), 4(c) and 4(e), (i) all of your stock options and other equity awards
shall continue to vest in accordance with the terms of the applicable grant
agreement notwithstanding the employment termination, (ii) you (or your
executors or administrators of your estate, in the case of your death) shall be
entitled to exercise any of your stock options at any time during the original
term of such options, and (iii) all agreements relating to your stock options
or other equity shall be deemed amended to the extent inconsistent with the
foregoing (such continued vesting and exercisability, the “Stock Option
Treatment”).

          (h)   Any amounts payable and benefits or additional rights provided
pursuant to paragraphs 8(a) or 8(b) beyond Entitlements shall be payable only
if you deliver to the Company a release of all claims that you have or may have
against the Company and its affiliates occurring up to the release date in a
form substantially in the form of Exhibit B hereto.

     9.       Excise Tax. In the event that you become entitled to payments and/or
benefits which would constitute “parachute payments” within the meaning of
Section 280G(b)(2) of the Code, the provisions of Exhibit C shall apply.

     10.     Proprietary Information and Inventions. You understand and
acknowledge that:

          (a)   The Company is and will be engaged in a continuous program of
research, design, development, production, and marketing with respect to its
business.

          (b)   Your employment by the Company creates a relationship of confidence
and trust between the Company and you with respect to certain information
relating to the business and affairs of the Company or applicable to the
business of any client, customer, consultant, partner, external collaborator,
or service provider of the Company, which may be made known to you by the
Company or by any client, customer, consultant, partner, external collaborator,
or service provider of the Company, or learned by you during the period of your
affiliation with the Company.

          (c)   The Company will possess information created, discovered, or developed
by, or otherwise become known to, the Company (including, without limitation,
information created, discovered, developed, or made known to you during the
Employment Term) or in which property rights have been or may be assigned or
otherwise conveyed to the Company (whether or not the information has
commercial value in the business in which the Company is or proposes to be
engaged) and is treated by the Company as confidential. All this information
is “Proprietary Information,” which includes, but is not limited to, systems,
processes, formulae, data, functional specifications, computer software,
programs and displays, know-how, improvements, discoveries, inventions,
developments, designs, techniques, marketing plans, strategies, forecasts, new
and proposed products, unpublished financial statements, budgets, projections,
licenses, prices, costs, and customer, external collaborator, partner, client,
and supplier lists, and any and all intellectual properties. The foregoing,
however, shall not cover information generally known in the industry or which
hereafter become generally known in the industry.

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     11.     Ownership of Proprietary Information and Inventions.

          (a)   All Proprietary Information shall be the sole property of the Company
and its assigns, and the Company and its assigns will be the sole owners of all
inventions, patents, copyrights, trademarks, and other rights in connection
therewith. You hereby assign to the Company any right you may have or acquire
in such Proprietary Information. At all times, you will keep in strictest
confidence and trust all Proprietary Information and you will not use or
disclose any Proprietary Information without the written consent of the
Company.

          (b)   If your employment with the Company is terminated for any reason, you
will deliver to the Company all documents, notes, drawings, specifications,
computer software, data, inventions, organisms, and other materials of any
nature pertaining to any Proprietary Information, and will not take any of the
foregoing, or any reproduction of any of the foregoing, that is embodied in any
tangible medium of expression. This shall not limit you from retaining your
personal phone directories and rolodexes.

          (c)   You will promptly disclose to the Company (or any persons designated
by it) all discoveries, developments, designs, improvements, inventions,
formulae, processes, techniques, computer software, strategies, know-how, and
data, whether or not patentable or registrable under copyright or similar
statutes, made or conceived or reduced to practice or learned by you, either
alone or jointly with others, during your employment by the Company, which
result from carrying out your responsibilities to the Company, or result from
the use of premises or property owned, leased, or contracted for by the Company
(all such discoveries, developments, designs, improvements, inventions,
formulae, processes, techniques, computer software, know-how, and data are
referred to in this Agreement as Inventions). You will also promptly disclose
to the Company, and the Company agrees to receive all such disclosures in
confidence, all other discoveries, developments, designs, improvements,
inventions, formulae, processes, techniques, computer software, strategies,
know-how, and data, whether or not patentable or registrable under copyright or
similar statutes, made or conceived or reduced to practice or learned by you,
either alone or jointly with others, during your employment by the Company for
the purpose of determining whether they are Inventions, as that term is used in
this Agreement. At all times during your employment by the Company you will
use your reasonable business efforts to avoid conflicts of interest involving
potential rights and claims of the Company and of third parties to Inventions,
including those that might arise by virtue of your affiliation with a
university or other medical institution concurrently with your employment by
the Company and will take all action reasonably necessary and or desirable to
minimize the probability of any such conflicts of interest and to maximize the
likelihood that any Inventions made, conceived or developed or reduced to
practice by you (alone or jointly with others) during your employment by the
Company and which reasonably relate to the business of the Company will be and
become the sole, unencumbered property of the Company, and no other third party
(including, without limitation, any such university or other institution with
whom you may also be affiliated) will have any rights thereto and that any such
conflicts of interest be resolved in favor of the Company.

          (d)   All Inventions shall be the sole property of the Company and its
assigns, and the Company and its assigns shall be the sole owner of all
patents, copyrights, trademarks,

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and other rights in connection therewith. You hereby assign to the
Company any rights you may have or acquire in such Inventions. You will assist
the Company in every proper way as to all such Inventions (but at the Company’s
expense) to obtain and from time to time enforce patents, copyrights,
trademarks, and other rights and protections on and enforcing such Inventions,
as the Company may desire, together with any assignments thereof to the Company
or persons designated by it. Your obligation to assist the Company in
obtaining and enforcing patents, copyrights, trademarks, and other rights and
protections relating to such Inventions in any and all countries shall continue
beyond the Employment Term. If the Company is unable, after reasonable effort,
to secure your signature on any document or documents needed to apply for or
prosecute any patent, copyright, or other right or protection relating to an
Invention, for any other reason whatsoever, you hereby irrevocably designate
and appoint the Company and its duly authorized officers and agents as your
agent and attorney-in-fact, to act for and on your behalf to execute and file
any such application or applications and to do all other lawfully permitted
acts to further the prosecution and issuance of patents, copyrights, or similar
protections thereon with the same legal force and effect as if executed by you
and you hereby ratify, affirm, and approve all such lawfully permitted acts
accordingly.

     12.     Restricted
Covenant. (a)  You are aware that the services you perform
for the Company are of a special, unique character. You also acknowledge your
possession and future possession of Proprietary Information and the highly
competitive nature of the business of the Company. Accordingly, you agree
that, for the consideration set forth in this Agreement, you will not, without
the written permission of the Company pursuant to Board of Directors
authorization, during your employment under this Agreement and, if your
employment ends as a result of your voluntary termination of employment
pursuant to paragraph 4(e), for a period of one (1) year thereafter (six (6)
months, in the event of any such termination after the occurrence of a Change
of Control): (i) directly or indirectly engage or become interested or
involved in any Competitive Business (as defined in paragraph (b)), whether
such engagement, interest, or involvement shall be as an employer, officer,
director, owner shareholder, employee, partner, consultant, or in any other
capacity or relationship; provided, however, that this shall not preclude a
passive investment of less than one (1%) of the stock of any publicly traded
company; or (ii) materially assist others in engaging in any Competitive
Business in the manner described in the foregoing clause (i); provided,
further, that this shall not preclude you from providing investment banking
services to or on behalf of an entity after your termination of employment that
might otherwise be a Competitive Business so long as such services are to
arrange a purchase, sale or other business combination for or with such entity
or to arrange financing for such entity (including, without limitation,
obtaining a bank loan for such entity or participating in the sale of the debt
or equity securities of such entity).

          You understand that this provision is not meant to prevent you from
earning a living or fostering your career. It does intend, however, to prevent
Competitive Businesses from gaining any unfair advantage from your knowledge of
Proprietary Information. You understand that by making any other employer
aware of this provision, that employer can take such action as to avoid your
breach of this provision and to indemnify you in the event of a breach.

11

 

             (b)   The term “Competitive Business” means:

		
	 	     (i)   For the period commencing on the date of this Agreement and
ending on the date of your termination of employment any business or
activity that is substantially the same as any business or activity of
the Company as conducted by the Company or any Related Entity during such
period; and

		
	 	     (ii)   For the period thereafter, any business or activity described
in paragraph (i) above to the extent that on the date of your termination
of employment such business or activity represents at least 10% of the
research and development budget of the Company for the fiscal year in
which your termination occurs; provided, however, that any business or
activity of the Company shall be deemed to have been conducted by the
Company at the time of your termination of employment if the Company has
undertaken steps to commence such business or activity prior to your
termination of employment. Notwithstanding the foregoing, the provisions
of this paragraph shall not operate to preclude your employment with (or
providing consulting services to) any company that has a market
capitalization at the time of your termination of employment of at least
$500 million.

     13.     Litigation Support. Subject to your other commitments, following the
Employment Term, you shall make yourself reasonably available to cooperate (but
only truthfully) with the Company and provide information as to matters with
which you were personally involved, or have information on, while you were an
officer of the Company and which are or become the subject of litigation or
other dispute.

     14.     General Provisions.

          (a)   Death. Should you die before receipt of any or all severance payments
to which you became entitled under paragraph 8, then the balance of the
payments to which you are entitled shall continue to paid in accordance with
the terms hereof to the executors or administrators of your estate.

          (b)   General Creditor Status. The amounts to which you may become entitled
hereunder shall be paid, when due, from the general assets of the Company, and
no trust fund, escrow arrangements, or other segregated account shall be
established as a funding vehicle for such payment. Accordingly, your right (or
the right of the executors or administrators of your estate) to receive such
benefits shall at all times be that of a general creditor of the Company and
shall have no priority over the claims of other general creditors.

          (c)   Indemnification. During the Employment Term and thereafter, the
Company shall indemnify you and hold you harmless to the fullest extent
permitted by law against any judgments, fines, amounts paid in settlement and
reasonable expenses (including reasonable attorneys’ fees), and advance amounts
necessary to pay the foregoing at the earliest time and to the fullest extent
permitted by law, in connection with any claim, action or proceeding (whether
civil or criminal) against you as a result of you serving as an officer or
Director of the Company or in any capacity at the request of the Company in or
with regard to

12

 

any other entity, employee benefit plan or enterprise. This
indemnification is in addition to and not in lieu of any other indemnification
rights you may otherwise have.

          (d)   Remedies. Your obligations under paragraphs 11 or 12 of this
Agreement will survive termination of your employment by the Company. You
acknowledge that a remedy at law for any breach or threatened breach of such
provisions would be inadequate and therefore agree that the Company may be
entitled to injunctive relief and any other available rights and remedies in
case of any such breach or threatened breach; provided, however, that nothing
contained in this subparagraph (d) will be construed as prohibiting the Company
from pursuing any other remedies available for any such breach or threatened
breach.

          (e)   Interpretation. This Agreement shall be interpreted under the laws of
the State of New York without regard to conflict of law provisions thereof.

          (f)   Notices. Any notice which a party is required or may desire to give
under this Agreement will be given by personal delivery, air courier, or
registered or certified mail, return receipt requested, addressed to you at the
address of record with the Company and addressed to the Secretary of the
Company at its principal office, or at such other place as either party may
from time to time designate in writing given as aforesaid. The date of
delivery of any notice or communication will be deemed to be (i) the date of
delivery thereof, in the case of personal delivery; (ii) the day after the date
when dispatched, in the case of air courier; and (iii) the date of receipt, in
the case of mailing.

          (g)   Waivers. If either party shall waive any breach of any provision of
this Agreement, he or it will not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.

          (h)   Headings. The paragraph headings of this Agreement are for
convenience only and will not be deemed to effect the meaning of the Agreement.

          (i)   Superseding. This Agreement supersedes all prior agreements between
you and the Company relating to the subject of your personal services and
severance benefits, including the letter agreement dated September 14, 1993,
which is hereby terminated. The provisions of this Agreement may only be
amended by written instrument signed by you and a member of the Board of
Directors.

          (j)   No Guarantee of Employment or Service. Nothing in this Agreement is
intended to provide you with any right to continue in the service of the
Company for any period of specific duration, nor, except as specifically
provided herein, to provide the Company with any right to require you to
continue in the service of the Company.

          (k)   Amendment or Termination. This Agreement may not be amended or
terminated orally, but only by a writing executed by the party to be charged.

          (l)   Assignment. None of the benefits to which you may become entitled
hereunder may be assigned, transferred, pledged, or otherwise encumbered by
you, and to the

13

 

maximum extent permissible under law, such benefits will not be subject to
the claims of your creditors or to levy, attachment, execution, or other legal
process. This Agreement shall be binding upon and inure to the benefit of the
Company, its successors and permitted assigns and your executors and heirs,
provided that the Company may not assign the Agreement except in connection
with a sale of all or substantially all of its assets and then only if said
acquiror assumes in a writing delivered to you the obligations of the Company
hereunder.

          (m)   Costs of Collection. In the event either party collects any part or
all of the payments provided for hereunder or otherwise successfully enforces
the terms of this Agreement by or through a lawyer or lawyers, the losing party
shall pay all costs of such collection or enforcement, including reasonable
legal fees and other fees and expenses which the successful party may incur
plus interest (“Costs”); provided, however, that the Company shall not be
entitled to recover any Costs from you unless an arbitrator determines that
your action to recover any payment or to enforce the terms of this Agreement
was not grounded on a reasonable good faith interpretation of the Agreement or
that the action was undertaken for the primary purpose of harassing the
Company. Interest shall be calculated at the prime rate as announced from time
to time by Citibank, N.A. on all or any part of any amount to be paid to you
hereunder that is not paid when due. The prime rate for each calendar quarter
shall be the prime rate in effect on the first day of the calendar quarter.

          (n)   Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three (3) arbitrators in New York, New York, in
accordance with the rules of the American Arbitration Association then in
effect, and judgement may be entered on the arbitrators’ award in any court
having jurisdiction. The Company shall pay all costs of the American
Arbitrator Association and the arbitrator. The decision upon arbitration shall
be final and binding upon both you and the Company. Notwithstanding the
foregoing, you shall be entitled to seek specific performance from a court of
your right to be paid until the date of termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement and
the Company shall have the right to obtain injunctive relief from a court
pursuant to subparagraph (d) above.

14

 

          Please indicate your acceptance by signing the enclosed copy of this
letter and returning it to the Company.

	 	 	 
	 	 	
Very truly yours,
	 	 	 
	 	 	
REGENERON PHARMACEUTICALS, INC.
	 	 	 
	 	 	
**/s/Charles Baker

Chairman of the Compensation

Committee of the Board of Directors

AGREED TO AND ACCEPTED BY:

LEONARD S. SCHLEIFER, M.D., Ph.D.

	 	 	 
	Signature:	 	
**/s/Leonard S. Schleifer

15

 

EXHIBIT A

CHANGE OF CONTROL

     For purposes of this Agreement, “Change of Control” shall be deemed to
have occurred if the event set forth in any one of the following paragraphs
shall have occurred:

     (i)    any “Person” (as defined in Section 3(a)(9) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), as modified and used in Sections
13(d) and 14(d) thereof, except that such term shall not include (1) the
Company, (2) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, (3) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (4) a corporation owned,
directly or indirectly, by the shareholders of the Company in substantially the
same proportions as their ownership of stock of the Company) is or becomes the
“Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company (not including in the securities
Beneficially Owned by such Person any securities acquired directly from the
Company) representing 20% or more of the Company’s then outstanding securities,
excluding any Person who is an officer or director of the Company or who
becomes such a Beneficial Owner in connection with a transaction described in
clause (A) of paragraph (iii) below; or

     (ii)    the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the date
hereof, constitute the Board of Directors and any new director (other than a
director whose initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board of Directors or nomination for election by
the Company’s shareholders was approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors on the date hereof or whose appointment, election or nomination for
election was previously so approved or recommended; or

     (iii)    there is consummated a merger or consolidation of the Company with
any other corporation other than (A) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior to
such merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity or any parent thereof) at least 60% of the combined voting power of the
voting securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the
securities Beneficially Owned by such Person any securities acquired directly
from the Company) representing 20% or more of the combined voting power of the
Company’s then outstanding securities; or

     (iv)    the shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an agreement
for the sale or disposition by

 

 

the Company of all or substantially all of the Company’s assets, other than a
sale or disposition by the Company of all or substantially all of the Company’s
assets to an entity at least 75% of the combined voting power of the voting
securities of which are owned by Persons in substantially the same proportions
as their ownership of the Company immediately prior to such sale.

2

 

EXHIBIT B

FORM OF RELEASE

	 	 	 
	To:	 	
Regeneron Pharmaceuticals, Inc.

777 Old Saw Mill River Road

Tarrytown, New York 10591-6707

Attention: [General Counsel]

     1.     Termination. (a) I hereby acknowledge that my employment with
Regeneron Pharmaceuticals, Inc. (the “Company”) [will terminate] [has
terminated] on      ,      (the “Termination Date”) pursuant to
provisions of paragraphs 8     of my employment agreement dated as of December
20, 2002 with the Company (the “Employment Agreement”), that the Company will
not have an obligation to rehire me or to consider me for reemployment after
the Termination Date and that my employment with the Company is permanently and
irrevocably severed.

          (b)   I hereby confirm my resignation from my position as President and
Chief Executive Officer of the Company and that I will not be eligible for any
benefits or compensation after the Termination Date, other than as specifically
provided hereunder and in paragraphs 3 and 8 of the Employment Agreement [or in
any capacity as a director of the Company]. In addition, effective as of the
Termination Date, I hereby resign from all offices, directorships,
trusteeships, committee memberships and fiduciary capacities held with, or on
behalf of, the Company or any of its affiliates or any benefit plans of the
Company or any of its affiliates [other than as a director]. These
resignations will become irrevocable on the Effective Date of this Agreement,
as defined in Section 6 below.

     2.     Consideration. I acknowledge that this General Release is being
executed in accordance with paragraph 8(h) of the Employment Agreement.

     3.     General Release. (a) For and in consideration of the payments to be
made and the promises set forth under the Employment Agreement, I, for myself
and for my heirs, dependents, executors, administrators, trustees, legal
representatives and assigns (collectively referred to as “Releasors”), hereby
forever release, waive and discharge the Company, its affiliates, employee
benefit and/or pension plans or funds, insurers, successors and assigns, and
all of its or their past, present and/or future directors, officers, trustees,
agents, members, partners, counsel, employees, fiduciaries, administrators,
representatives, successors and assigns, whether acting on behalf of the
Company or its affiliates or in their individual capacities (collectively
referred to as “Releasees”), from any and all claims, demands, causes of
action, fees and liabilities of any kind whatsoever, whether known or unknown,
which Releasors ever had, now have, or hereafter may claim to have against
Releasees by reason of any actual or alleged act, omission, transaction,
practice, policy, procedure, conduct, occurrence, or other matter up to and
including the date of my execution of this General Release, in connection with,
or in any way related to or arising out of, my employment, service as a
director, service as a trustee, service as a fiduciary or termination of any of
the foregoing with the Company.

 

 

          (b)   Without limiting the generality of the foregoing, this General Release
is intended and shall release the Releasees from any and all claims, whether
known or unknown, which Releasors ever had, now have, or may hereafter claim to
have against the Releasees including, but not limited to, (i) any claim of
discrimination or retaliation under the Age Discrimination in Employment Act
(“ADEA”), Title VII of the Civil Rights Act of 1964, the Americans with
Disabilities Act (“ADA”), the Employee Retirement Income Security Act of 1974
or the Family and Medical Leave Act; (ii) any claim under the New York State
Human Rights Law and the New York City Administrative Code; (iii) any other
claim (whether based on federal, state or local law, statutory or decisional)
relating to or arising out of my employment, the terms and conditions of such
employment, the termination of such employment and/or any of the events
relating directly or indirectly to or surrounding the termination of such
employment, including, but not limited, breach of contract (express or
implied), wrongful discharge, tortious interference, detrimental reliance,
defamation, emotional distress or compensatory or punitive damages; and (iv)
any claim for attorney’s fees, costs, disbursements and the like.

          (c)   I further acknowledge and agree that by virtue of the foregoing, I
have waived all relief available to me (including without limitation, monetary
damages, equitable relief and reinstatement) under any of the claims and/or
causes of action waived in Sections 3(a) and (b) above. Therefore I agree that
I will not seek or accept any award or settlement from any source or proceeding
(including, but not limited to, any proceeding brought by any other person or
by any government agency) with respect to any claim or right waived in this
General Release. I further agree, to the maximum extent permitted by law, that
I will not sue or commence any proceeding (judicial or administrative), or
participate in any action, suit or proceeding (unless compelled by legal
process or court order), against the Company (or any of its affiliates), with
respect to any claim released by Sections 3(a) and (b) above, other than a
claim contesting the validity of the release under applicable provisions of the
ADEA. I also warrant and represent that as of the date I sign this Agreement,
I have not taken or engaged in any of the acts described in the foregoing
sentences. I understand that this release has neither the purpose nor intent
of interfering with my protected right to file a charge with or participate in
an investigation or proceeding pursuant to the statutes administered and
enforced by the EEOC, specifically: the ADEA, the Equal Pay Act, Title VII of
the Civil Rights Act of 1964 and the ADA. I understand that I will not breach
this release if I file a charge with or participate in an investigation or
proceeding pursuant to the statutes administered and enforced by the EEOC.
However, by signing this release, I understand that I waive any right I may
have to recover money or other relief in any lawsuit or proceeding brought by
me or by an agency or third party, including the EEOC, on my behalf. If,
notwithstanding the foregoing promises and understandings, I violate this
Section 3(c), I shall be required, to the maximum extent permitted by law, to
indemnify and hold harmless the Company (and its affiliates) from and against
any and all demands, assessments, judgments, costs, damages, losses and
liabilities, and attorneys’ fees and other expenses which result from, or are
incident to, such violation.

          (d)   Notwithstanding anything herein to the contrary, the sole matters to
which the release and covenants in this Section 3 do not apply are: (i) my
rights of indemnification and directors and officers liability insurance
coverage which I was entitled immediately prior to the Termination Date under
the Company’s By-laws or otherwise with regard to my service as an officer and
director of the Company (including, without limitation, under paragraph 14(c)
of the

2

 

Employment Agreement); (ii) my rights under any tax-qualified pension or tax
deferred annuity plan or claims for accrued vested benefits under any other
employee benefit plan, program, policy or arrangement maintained by the Company
or under COBRA; (iii) my rights under the provisions of the Employment
Agreement which are intended to survive termination of employment (including
claims to payments, benefits or entitlements specifically payable or provided
under the Employment Agreement); or (iv) my rights as a stockholder or as a
director of the Company.

     4.     Governing Law; Enforceability. The interpretation of this General
Release will be construed and enforced in accordance with the laws of the State
of New York without regard to that state’s principles of conflicts of law. If,
at any time after the execution of this General Release, any provision of this
General Release will be held to be illegal or unenforceable by a court of
competent jurisdiction, solely such provision will be of no force or effect.

     5.     Acknowledgement. I acknowledge that I have been advised by the Company
in writing to consult, and I have consulted, independent legal counsel of my
choice before signing this General Release. I further acknowledge that I have
had the opportunity to consult independent legal counsel and to consider the
terms of this General Release for a period of at least 21 days. I further
acknowledge that I have carefully read this General Release in its entirety;
that I have had an adequate opportunity to consider it and to consult with any
advisors of my choice about it; that I have consulted with independent legal
counsel of my choice who has answered to my satisfaction all questions I had
regarding this General Release; that I understand all the terms of this General
Release and their significance; that I am legally competent to execute this
Agreement; that I have not relied on any statements or explanations made by the
Company, any agent of the Company or its counsel; that I knowingly and
voluntarily assent to all the terms and conditions contained herein; and that I
am signing this General Release voluntarily and of my own free will.

     6.     Effective Date. I further acknowledge that this General Release will
not become effective until the eighth day following my execution of this
General Release (the “Effective Date”), and that I may at any time prior to the
Effective Date revoke this General Release by delivering written notice of
revocation to the Company, at 777 Old Saw Mill River Road, Tarrytown, New York
10591-6707, to the attention of the [General Counsel]. In the event that I
revoke this General Release prior to the eighth day after its execution, this
General Release will automatically be null and void.

     7.     Survival. The provisions in the Employment Agreement which are
intended to survive termination of employment hall survive and continue in full
force and effect.

	 	 	 
	By:	 	
 

	 	 	

	 	 	    
Executive
	 	 	 
	Dated:	 	
            ,

3

 

Acknowledged and Agreed:

REGENERON PHARMACEUTICALS, INC.

	 	 	 
	By:	 	 
	 	 	

Name:
	 	 	
Title:

4

 

EXHIBIT C

GOLDEN PARACHUTE PROVISION

     (a)    (i)   In the event that you shall become entitled to payments and/or
benefits provided by this Agreement or any other amounts in the “nature of
compensation” (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with the Company, any person whose actions
result in a change of ownership or effective control covered by Section
280G(b)(2) of the Code or any person affiliated with the Company or such
person) as a result of such change in ownership or effective control
(collectively the “Company Payments”), and such Company Payments will be
subject to the tax (the “Excise Tax”) imposed by Section 4999 of the Code (and
any similar tax that may hereafter be imposed by any taxing authority) the
Company shall pay to you at the time specified in subsection (d) below (x) an
additional amount (the “Gross-up Payment”) such that the net amount retained by
you, after deduction of any Excise Tax on the Company Payments and any U.S.
federal, state, and for local income or payroll tax upon the Gross-up Payment
provided for by this paragraph (a), but before deduction for any U.S. federal,
state, and local income or payroll tax on the Company Payments, shall be equal
to the Company Payments and (y) an amount equal to the product of any
deductions disallowed for federal, state or local income tax purposes because
of the inclusion of the Gross-Up Payment in your adjusted gross income
multiplied by the highest applicable marginal rate of federal, state or local
income taxation, respectively, for the calendar year in which the Gross-Up
Payment is to be made.

          (ii)   Notwithstanding the foregoing, if it shall be determined that you are
entitled to a Gross-Up Payment, but that if the Company Payments (other than
that portion valued under Q&A 24(c) of the proposed regulations under Section
280G of the Code(the “Stock Vesting Value”)) (the “Cash Payments”) are reduced
by the amount necessary such that the receipt of the Company Payments would not
give rise to any Excise Tax (the “Reduced Payment”) and the Reduced Payment
(other than the Stock Vesting Value) would not be less than 90% of the Cash
Payment, then no Gross-Up Payment shall be made to you and the Cash Payments,
in the aggregate, shall be reduced to the Reduced Payments (other than the
Stock Vesting Value). If the Reduced Payments is to be effective, payments
shall be reduced as mutually agreed between the Company and you or, in the
event the parties cannot agree, in the following order (1) any lump sum
severance based on a multiple of Base Salary or annual bonus, (2) any other
cash amounts payable to you and (3) any benefits valued as parachute payments.

          (iii)   In the event that the Internal Revenue Service or court ultimately
makes a determination that the excess parachute payments plus the base amount
is an amount other than as determined initially, an appropriate adjustment
shall be made with regard to the Gross-Up Payment or Reduced Payment, as
applicable to reflect the final determination and the resulting impact on
whether (ii) applies.

     (b)    For purposes of determining whether any of the Company Payments and
Gross-up Payments (collectively the “Total Payments”) will be subject to the
Excise Tax and the amount of such Excise Tax, (x) the Total Payments shall be
treated as “parachute payments” within the meaning of Section 280G(b)(2) of the
Code, and all “parachute payments” in excess of the “base

 

 

amount” (as defined under Section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless and except to the extent that, in the
opinion, delivered to the Company and you at a level of more likely than not,
of the Company’s independent certified public accountants appointed prior to
any change in ownership (as defined under Section 280G(b)(2) of the Code) or
tax counsel selected by such accountants (the “Accountants”) such Total
Payments (in whole or in part) either do not constitute “parachute payments,”
represent reasonable compensation for services actually rendered within the
meaning of Section 280G(b)(4) of the Code in excess of the “base amount” or are
otherwise not subject to the Excise Tax, and (y) the value of any non-cash
benefits or any deferred payment or benefit shall be determined by the
Accountants in accordance with the principles of Section 280G of the Code. In
the event that the Accountants are serving (or decline to serve) as accountant
or auditor for the individual, entity or group effecting the Change of Control,
you may appoint another nationally recognized accounting firm or law firm to
make the determinations hereunder (which accounting firm or law firm shall then
be referred to as the “Accountants” hereunder). All determinations hereunder
shall be made by the Accountants which shall provide detailed supporting
calculations both to the Company and you at such time as it is requested by the
Company or you. If the Accountants determine that payments under this
Agreement must be reduced pursuant to this paragraph, they shall furnish you
with a written opinion to such effect. The determination of the Accountants
shall be final and binding upon the Company and you, subject to the other
provisions herein.

     (c)    For purposes of determining the amount of the Gross-up Payment, you
shall be deemed to pay U.S. federal income taxes at the highest marginal rate
of U.S. federal income taxation in the calendar year in which the Gross-up
Payment is to be made and state and local income taxes at the highest marginal
rate of taxation in the state and locality of your residence for the calendar
year in which the Company Payment is to be made, net of the maximum reduction
in U.S. federal income taxes which could be obtained from deduction of such
state and local taxes if paid in such year. In the event that the Excise Tax
is subsequently determined by the Accountants to be less than the amount taken
into account hereunder at the time the Gross-up Payment is made, you shall
repay to the Company, at the time that the amount of such reduction in Excise
Tax is finally determined, the portion of the prior Gross-up Payment
attributable to such reduction (plus the portion of the Gross-up Payment
attributable to the Excise Tax and U.S. federal, state and local income tax
imposed on the portion of the Gross-up Payment being repaid by you if such
repayment results in a reduction in Excise Tax or a U.S. federal, state and
local income tax deduction), plus interest on the amount of such repayment at
the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the
foregoing, in the event any portion of the Gross-up Payment to be refunded to
the Company has been paid to any U.S. federal, state and local tax authority,
repayment thereof (and related amounts) shall not be required until actual
refund or credit of such portion has been made to you, and interest payable to
the Company shall not exceed the interest received or credited to you by such
tax authority for the period it held such portion. Furthermore, to the extent
the foregoing provision shall be deemed to create a loan of a personal nature
in violation of Section 402 of the Sarbanes-Oxley Act of 2002, the provision
for repayment shall be null and void. You and the Company shall mutually agree
upon the course of action to be pursued (and the method of allocating the
expense thereof) if your claim for refund or credit is denied.

2

 

     In the event that the Excise Tax is later determined by the Accountant or
the Internal Revenue Service to exceed the amount taken into account hereunder
at the time the Gross-up Payment is made (including by reason of any payment
the existence or amount of which cannot be determined at the time of the
Gross-up Payment), the Company shall make an additional Gross-up Payment in
respect of such excess (plus any interest or penalties payable with respect to
such excess) at the time that the amount of such excess is finally determined.

     (d)    The Gross-up Payment or portion thereof provided for in subsection (c)
above shall be paid not later than the thirtieth (30th) day following an event
occurring which subjects you to the Excise Tax; provided, however, that if the
amount of such Gross-up Payment or portion thereof cannot be finally determined
on or before such day, the Company shall pay to you on such day an estimate, as
determined in good faith by the Accountant, of the minimum amount of such
payments and shall pay the remainder of such payments (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code), subject to further
payments pursuant to subsection (c) hereof, as soon as the amount thereof can
reasonably be determined, but in no event later than the ninetieth day after
the occurrence of the event subjecting you to the Excise Tax. In the event
that the amount of the estimated payments exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by the Company
to you, payable on the fifth day after demand by the Company (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code), provided
that, to the extent the foregoing provision shall be deemed to create a loan of
a personal nature in violation of Section 402 of the Sarbanes-Oxley Act of
2002, the provision for repayment shall be null and void.

     (e)    In the event of any controversy with the Internal Revenue Service (or
other taxing authority) with regard to the Excise Tax, you shall permit the
Company to control issues related to the Excise Tax (at its expense), provided
that such issues do not potentially materially adversely affect you, but you
shall control any other issues. In the event the issues are interrelated, you
and the Company shall in good faith cooperate so as not to jeopardize
resolution of either issue, but if the parties cannot agree you shall make the
final determination with regard to the issues. In the event of any conference
with any taxing authority as to the Excise Tax or associated income taxes, you
shall permit the representative of the Company to accompany you, and you and
your representative shall cooperate with the Company and its representative.

     (f)    The Company shall be responsible for all charges of the Accountant.

     (g)    The Company and you shall promptly deliver to each other copies of any
written communications, and summaries of any verbal communications, with any
taxing authority regarding the Excise Tax covered by this Exhibit C.

3

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