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Resignation; To be Treated as Termination Without Cause Pursuant to the Amended Employment Agreement.

Effective as of May 8, 2005, the Employee has voluntarily and permanently resigned from the General Counsel Position and any other employment with the Company or its subsidiaries. For purposes of this Severance Agreement, the Employee’s resignation shall be treated as a termination without “Cause” (as that term is defined in the Amended Employment Agreement), pursuant to Section 4(b)(iv) of the Amended Employment Agreement.

Payment and Benefits.

Incentive Compensation. Notwithstanding Section 1 hereof and as exclusive consideration for the releases in Section 4(c ) herein, the Employee shall be compensated as if the Employee had been terminated without Cause pursuant to the Amended Employment Agreement. The parties hereby agree that the Employee’s right to salary continuation, long-term incentives, and other compensation is as set forth below:

Employee shall receive a certificate for 2,667 shares of common stock of the Company (the “Shares”), issuable as soon as administratively practicable following December 31, 2005, in payment of the Company’s grant of 5,000 Restricted Stock Rights pursuant to the Company’s Stock Incentive Plan to the Employee on

Employee shall receive a share certificate for a number of shares of common stock of the Company, in payment of the Company’s grant of 5,000 Performance Restricted Stock Rights pursuant to the Company’s Stock Incentive Plan granted to the Employee by the Company on June 21, 2004, payable at the time set forth in, determined in accordance with, and subject to Exhibit B hereto.

Employee shall receive a share certificate for a number of shares of common stock of the Company, in payment of the Company’s grant of 5,000 Performance Restricted Stock Rights pursuant to the Company’s Stock Incentive Plan granted to the Employee by the Company on February 8, 2005, payable at the time set forth in, determined in accordance with, and subject to Exhibit C hereto.

Employee has an option to purchase up to 5,000 shares of the Company’s common stock pursuant to the Incentive Stock Option Award granted September 8, 2000 and an option to purchase up to 4,000 shares of the Company’s common stock pursuant to the Incentive Stock Option Award granted December 20, 2002, in each case to the extent permitted by, for the time period allowed, and subject to all the terms and conditions of such Incentive Stock Option Awards.

Salary Continuation. In accordance with Section 4(e) of the Amended Employment Agreement, the Company shall pay to the Employee the equivalent amount of her annual base salary of $180,000 per year for a period of one (1) year after termination of the Employee’s employment with the Company (the “Severance Period”), for a total gross sum of $180,000, subject to normal deductions and withholdings for payroll taxes and any other legally required deductions and withholdings in effect at the time of the payment made hereunder. The Company shall pay the sum of $180,000 (less all required deductions and withholdings determined with respect to this gross amount, and less $19,579.20 in attorneys’ fees and expenses previously incurred by the Employee and paid by the Company) in a lump sum payment to the Employee, made on the Effective Date of this Severance Agreement.

Unused Vacation. On the Effective Date of this Severance Agreement, the Company will pay the Employee for the Employee’s accrued unused vacation time in the total amount of $ 1,517.75 (subject to required deductions and withholdings), in accordance with the Amended Employment Agreement and the Company’s existing policies and procedures concerning unused vacation time. The Employee shall not accrue any additional vacation time during the Severance Period.

No Other Payments or Benefits. The Employee acknowledges and agrees that, other than (1) the payments described specifically in this Severance Agreement, (2) benefits, if any,

The Amended Employment Agreement.

The terms of the Severance Agreement shall control and shall be deemed to modify, amend or supersede the terms of the Amended Employment Agreement. Except for the rights, duties and obligations reflected in sections 1, 5 through 9, and 11 thereof, which shall continue in full force in accordance with their terms, the Amended Employment Agreement is hereby terminated and replaced by the Severance Agreement.

Employee Representations. Employee represents and agrees that she has had a full and adequate opportunity to discuss and consider her claims, if any. Further, Employee represents and agrees that:

This Agreement is written in a manner that Employee understands;

 

This Agreement and the promises made in this Agreement by Employee are granted in exchange for consideration which is in addition to anything of value to which she is entitled;

Employee has been advised to and has had the opportunity to consult with an attorney prior to deciding whether to enter into this Agreement; and

Employee has no existing claims to any benefits, rights, entitlements or payments from the Company other than those specifically identified in this Severance Agreement, including any claims for indemnification.

Effective Date. The Severance Agreement shall become effective immediately after both parties hereto have signed the Severance Agreement (“the Effective Date”).

Release of Claims by the Employee.As a material inducement to the Company to enter into the Severance Agreement, the Employee hereby irrevocably releases the Company and each of the owners, stockholders, predecessors, successors, directors, officers, employees, representatives, attorneys, subsidiaries and affiliates (and agents, directors, officers, employees, representatives and attorneys of such subsidiaries and affiliates) of the Company, and all persons acting by, through, under or in concert with them, including without limitation, M. Christine Jacobs, Bruce Smith, Otis W. Brawley, M.D., Orwin L. Carter, Ph. D., Earnest W. Deavenport, Jr., Patrick L. Flinn, John V. Herndon, Peter A.A. Saunders F.R.S.A., Philip A. Incarnati, Richard H. Miller, Eliot W. Robinson, Powell Goldstein LLP and its partners, members and employees, Edward J. Hardin, and Rogers & Hardin LLP and its partners, members and employees (collectively, the “Releasees”), from any and all charges, claims, liabilities, agreements, damages, causes of action, suits, costs, losses, debts and expenses (including attorneys’ fees and costs actually incurred) of any nature whatsoever, known or unknown, including, but not limited to, any claim of breach of fiduciary duty, rights arising out of alleged violations of any contracts, express or implied, any covenant of good faith and fair dealing, express or implied, or any tort, or any legal restrictions on the Company’s right to terminate employees, or any federal, state or other governmental statute, regulation, or ordinance, including, without limitation:

Release of Claims by the Company. The Company hereby irrevocably releases the Employee from any and all charges, claims, liabilities, agreements, damages, causes of action, suits, costs, losses, debts and expenses (including attorneys’ fees and costs actually incurred) of any nature whatsoever, known or unknown, including, but not limited to, any claim of breach of fiduciary duty, rights arising out of alleged violations of any contracts, express or implied, any covenant of good faith and fair dealing, express or implied, or any tort or violation of any other legal or contractual duty arising under the laws of the State of Georgia or the laws of the United States (“Claim” or “Claims”), which the Company now has, or claims to have, or which the Company at any time heretofore had, or claimed to have, or which the Company at any time hereinafter may have, or claim to have, against the Employee, in each case as to acts or omissions by the Employee occurring up to and including the Effective Date. The Company covenants and agrees not to institute, or participate in any way in any action against the Employee with respect to any Claim released herein, except as required by any subpoena, court order, or other compulsory process. Notwithstanding the foregoing, the Severance Agreement shall not release any Claims based on any rights, duties or obligations reflected in or deriving from sections 1, 5 through 9, and 11 thereof of the Amended Employment Agreement, as described in Section 3(a) above.

Employee’s Warranty of No Wrongful Acts. As a material inducement to the Company to release its Claims against the Employee, the Employee represents and warrants that she has committed no wrongful acts with respect to the Company, and that no wrongful acts

Covenant Not to Sue. Except as necessary to enforce the terms of this Severance Agreement, Employee covenants and agrees not to sue or otherwise assert a claim against the Company or the Releasees concerning any of the Claims released by the Employee pursuant to Section 4(c), including, without limitation, any matters arising out of the Employee’s employment with the Company. Except as necessary to enforce the terms of this Severance Agreement or the provisions of the Amended Employment Agreement specified in Section 3(a) above, the Company covenants and agrees not to sue or otherwise assert a claim against the Employee concerning any of the Claims released by the Company pursuant to Section 4(d), including, without limitation, any matters arising out of the Employee’s employment with the Company. In the event that any party hereto sues another or Employee sues a Releasee concerning any of the Claims released by this Severance Agreement, the party bringing suit shall (i) provide to the other parties or Releasee, as applicable, at least ten (10) days prior to filing suit, written notice of such suit or proceeding and a copy of the Complaint or other document by which such lawsuit is to be initiated; (ii) file the Complaint or other legal document by which the suit is commenced only in the United States District Court for the Northern District of Georgia or, if such Court does not have subject-matter jurisdiction, then in the Superior Court of Fulton County, Georgia, as the parties consent to personal jurisdiction in that county; and (iii) hold the sued party or Releasee, as applicable, harmless from any claim asserted in such lawsuit and indemnify the sued party or Releasee, as applicable, from all costs and expenses, including attorneys’ fees, arising from the defense of such claim. In the event that said suit is brought by the Employee, Employee shall be obligated to repay to the Company all of the amounts paid to Employee pursuant to Section 2, unless any suit is solely brought under the ADEA. Further, should any party sue or otherwise assert a claim against any of the other parties or Releasees, as applicable, the party suing agrees that injunctive relief is available to the parties or Releasees sued in addition to the legal relief described above and that any obligations under Section 2 shall cease.

Representation of No Pending Actions. The Employee warrants and represents that she has not filed any administrative action or claim against the Company or the Releasees with any local, state or federal agency. The Company warrants and represents that it has not filed any administrative action or claim against Employee with any local, state or federal agency. The Employee and the Company further warrant and represent that they are not plaintiffs in any law suit or any other action filed in any jurisdiction against the

No Disparagement.

By the Employee. The Employee further agrees that, as part of the consideration for the Severance Agreement, and for a period of five (5) years from the Effective Date, she will not, directly or indirectly, in any capacity or manner, make, cause, encourage or assist to be made any statements, comments or remarks, whether oral, verbal, in writing, or electronically transmitted, which might reasonably be considered to be derogatory, defamatory or critical of, or negative towards, or to malign, harm, defame, disparage or damage the reputation and good name of the Company, its subsidiaries or affiliates, their respective officers, directors, agents or employees, or the Releasees. Provided, however, that if the Employee is required by any applicable law, regulation, statute, subpoena, court order, or other compulsory process to disclose information related to her Employment with the Company, such disclosure of truthful information shall not constitute a breach of this section or of the Severance Agreement.

By the Company. The Company further agrees that, as part of the consideration for the Severance Agreement, and for a period of five (5) years from the Effective Date, the members of the Board of Directors, and all Company officers covered by Section 16(a) of the Securities Exchange Act of 1934, as amended, will not, directly or indirectly, in any capacity or manner, make, cause, encourage or assist to be made any statements, comments or remarks, whether oral, verbal, in writing or electronically transmitted, which might reasonably be considered to be derogatory, defamatory or critical of, or negative towards, or to malign, harm, defame or damage the reputation and good name of the Employee, nor will they authorize, condone, or encourage any such disparagement from others. The Company will advise the members of the Board of Directors, all Company officers covered by Section 16(a) of the Securities Exchange Act of 1934, as amended, and all employees of the Company who reported directly to the Employee (collectively, the “Persons to be Advised”), that a non-disparagement agreement is in effect, and will use reasonable efforts to enforce compliance with this agreement. The Company shall also direct the Persons to be Advised not to make, cause, encourage or assist to be made any statements, comments, or remarks, whether oral, verbal, in writing or electronically transmitted, which might reasonably be considered to be derogatory,

Third-Party Beneficiaries.

The Employee and the Company hereby acknowledge and agree that the Releasees described above are intended third-party beneficiaries for the purpose of providing them, and each of them, with enforceable rights under Sections 4(c), 4(f), and 5(a) hereunder.

No Admission; No Further Uses.

The Employee and the Company acknowledge and agree that the Severance Agreement is the result of a compromise and shall never at any time or for any purpose be construed as an admission by any party to the Severance Agreement of any wrongdoing or any liability or responsibility to the other party to the Severance Agreement (or to any other person), and each of the parties to the Severance Agreement specifically and vigorously disclaims any wrongdoing or any liability or responsibility to the other party to the Severance Agreement (or to any other person). The Severance Agreement shall not be used in any legal proceeding or for any purpose except to enforce the provisions hereof or as otherwise required by applicable law. All negotiations, proceedings and statements made in connection herewith shall be made without prejudice to any party hereto and shall not be deemed or construed to be admissions by any party of any act, omission, matter or proposition.

No Additional Reliance.

The Employee and the Company acknowledge and agree that, in executing the Severance Agreement, they did not rely upon and have not relied upon any representations or statements not expressly a part hereof that have been made by the other party to the Severance Agreement or by the agents, representatives or attorneys of the other party hereto with regard to the subject matter, basis or effect hereof. Without limiting the general applicability of the foregoing statement, the parties expressly acknowledge that the Company has made no representation regarding the tax effect of any payment or other benefit conferred hereunder.

No Assignments.

Each of the parties hereto represents that such party has not heretofore assigned or transferred, or purported to assign or transfer, to any person or entity, any claim or any portion thereof or interest therein, and agrees to indemnify, defend and hold the other party hereto harmless from any and all claims based on or arising out of any such assignment or transfer, or purported assignment or transfer, of any Claims or any portion thereof or interest therein.

Further Assurances.

Each party hereto covenants and agrees, without the necessity of any further consideration, to execute and deliver any and all such further documents and take any and all such other actions, including, without limitation, any and all resignations, substitutions, and designations as may be necessary and appropriate to carry out the intent and purposes of the Severance Agreement and to consummate the transactions contemplated hereby.

Binding Effect.

The Severance Agreement shall be binding upon and inure to the benefit of the parties hereto and upon their respective heirs, personal representatives, administrators, successors and assigns, as the case may be.

No Waiver.

Failure by either party to insist upon strict compliance with any term of the Severance Agreement shall not be construed as a waiver thereof or of any right or remedy resulting from any breach of the Severance Agreement.

The Severance Agreement shall be governed by, construed and enforced in accordance with the laws of the State of Georgia, without giving effect to any principles of conflicts of laws.

Specific Performance; Attorneys’ Fees.

The Severance Agreement may be specifically enforced, and injunctive relief may be granted to prevent a breach of the Severance Agreement since there is no adequate remedy at law. The prevailing party in any proceeding brought to obtain specific performance or injunctive relief pursuant to this Severance Agreement shall be entitled to an award of its reasonable costs and expenses, including, without limitation, attorneys’ fees. 

Severability.

Except for Section 4(c) should any part, term or provision of the Severance Agreement be declared or determined by any court to be illegal, invalid or otherwise unenforceable, the legality, validity and enforceability of the remaining parts, terms or provisions hereof shall be deemed not to be affected, and the Severance Agreement shall be interpreted and enforced as if such illegal, invalid or unenforceable part, term or provision, to the extent possible, is not contained herein. If Section 4(c) is declared illegal, invalid or otherwise unenforceable, the Company may, at its option, declare this entire Severance Agreement null and void.

Construction.

As used in the Severance Agreement, the masculine shall include the feminine or neuter gender, and the singular shall include the plural, whenever the context so indicates or requires. Both parties acknowledge and agree that they participated jointly in the negotiation and drafting of this Agreement and the rule of construction that ambiguities are construed against the drafter is hereby waived.

No Release from Future Actions or Inactions.

Nothing contained herein shall be construed as a release by either of the parties hereto of, or an agreement by either of the parties hereto not to sue on any claims, manner of actions, causes of action, whether at law or in equity, suits, judgments, debts, liens, contracts, agreements, promises, liabilities, demands, damages, losses, costs, expenses or disputes (including attorneys’ fees and costs) arising out of any act, omission, matter, cause, conduct, claim, event or thing whatsoever which may occur after the Effective Date of this Severance Agreement to the end of time.

The Severance Agreement, including those provisions of the Amended Employment Agreement incorporated herein by Section 3(a) above, sets forth the complete and exclusive statement of the terms of the agreement between the parties hereto and fully supersedes any and all prior agreements or understandings between the parties hereto pertaining to the subject matter hereof.

Amendment.

The Severance Agreement may not be modified, amended, supplemented, or terminated except by a written instrument executed by the parties hereto.

Notice.

All notices, requests, demands, and other communications required hereunder shall be in writing and shall be deemed to have been duly given if delivered or if mailed, by United States certified or registered mail, postage prepaid, to the party to which the same is directed at the following addresses (or at such other addresses as shall be given in writing by the parties to one another):

Counterparts.

The Severance Agreement may be executed in one or more counterparts, each of which shall be an original, and all of which together shall be deemed to be one and the same Severance Agreement. Executed counterparts may be delivered via facsimile transmission.

Arbitration.

Any controversy or claim arising out of or relating to the Severance Agreement, or the breach thereof, shall be adjudicated through binding arbitration before a single arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association (the “AAA”) in Atlanta, Georgia, with the Company bearing financial responsibility for the filing costs charged by the AAA for such arbitration. However, the provisions of this section will not prevent the Company or the Employee from instituting an action in a court of law under the Severance Agreement for specific performance of the Severance Agreement or temporary or permanent injunctive relief. The parties hereto agree that the exclusive venue for any such lawsuit will be in the United States District Court for the Northern District of Georgia or, if such Court does not have subject-matter jurisdiction, then in the Superior Court of Fulton County, Georgia, and the Company and the Employee consent to the exercise of personal jurisdiction by either court for purposes of such lawsuit.

Any party who desires to submit a claim to arbitration in accordance with this Section shall file its demand for arbitration with the AAA within thirty (30) days of the event or incident giving rise to the claim. A copy of said demand shall be served on the other party in accordance with the notice provisions of the Severance Agreement. The parties agree that they shall attempt in good faith to select an arbitrator by mutual agreement within twenty (20) days after the responding party’s receipt of the demand for arbitration. If the parties do not agree on the selection of an arbitrator within that timeframe, the selection shall be made pursuant to the rules from the panels of arbitrators maintained by the AAA. If the Employee (or the Employee’s estate in the event of her death) prevails in the dispute, the Company will pay and be financially responsible for all costs, expenses, and reasonable attorneys’ fees incurred by the Employee in connection with the dispute, including but not limited to the reasonable expenses of the arbitrator incurred by the Employee. Any award rendered by the arbitrator shall be accompanied by a written opinion providing the reasons for the award. The arbitrator’s award shall be final and non-appealable. Nothing in this Section shall prevent the parties from settling any dispute or controversy by mutual agreement at any time.

A.

The number of shares of Common Stock of the Company (“Common Stock”) to be issued to the Employee (the “Recipient”) for each Performance Restricted Stock Right will be determined pursuant to the following schedule, but the resulting number will be multiplied by a fraction, the numerator of which is 492 (the number of days of the Recipient’s employment by the Company and its Affiliates from January 1, 2004, through the date the Employee resigned from the Company, and the denominator of which is 1096 (the number of days from and including January 1, 2004 through December 31, 2006). Fractional shares will be disregarded and will not be issued.

*   Plus a number of shares of Common Stock for each Performance Restricted Stock Right determined by interpolation for Company Total Shareholder Return Peer Percentile Ranking that falls between 30^th and 50^th, 50^th and 75^th, or 75^th and 85^th. (For example, a Company Total Shareholder Return Peer Percentile Ranking of 40^th would result in 0.65 of one share of Common Stock to be issued for each Restricted Stock Right.)

B.

“Company Total Shareholder Return Peer Percentile” shall mean the percentile ranking of the Company’s total shareholder return for the period beginning January 1, 2004, and ending December 31, 2006, as compared to the total shareholder return (where publicly available) for each of the following peer companies: ArQule, Inc., Cell Genesys, Inc., Corixa Corporation, Digene Corporation, Oscient Pharmaceuticals Corporation, Hybridon, Inc., Ilex Oncology, Inc., Medarex, Inc., Mentor Corporation, Myriad Genetics, Inc., Neogen Corporation, North American Scientific, Inc., Novoste Corporation, Nuvelo, Inc., OSI Pharmaceuticals, Inc., Protein Design Labs, Inc., Quidel Corporation, Synovis Life Technologies, Inc., Third Wave Technologies, Inc., Transkaryotic Therapies, Inc., Xoma Ltd., Zymogenetics, Inc. In the event that any of

C.

Notwithstanding any other provision of this Schedule, if a Change in Control occurs before December 31, 2006, then 492/1096 of one share of Common Stock will be issuable as of the date of the Change of Control for each Performance Restricted Stock Right and the Performance Restricted Stock Rights will terminate as of such date. Fractional shares will be disregarded and will not be issued.

D.

“Change in Control” means any one of the following events which occurs following the date of grant:

E.

A share certificate shall be issued as soon as reasonably practicable after the Company determines the number of shares to be issued, subject to Section G below.

F.

If the Company declares a dividend (other than a stock dividend) payable to shareholders of Common Stock and if the dividend is payable to shareholders of record before a share certificate for Common Stock has been issued hereunder, the number of Performance Restricted Stock Rights shall be increased by a number equal to the amount of the dividend per share, multiplied by the number of Performance Restricted Stock Rights (before adjustment), divided by the Fair Market Value per share of Common Stock as of the dividend declaration date.

The Performance Restricted Stock Rights are subject to the terms of the Company’s 2000 Stock Incentive Plan.

A.

The number of shares of Common Stock of the Company (“Common Stock”) to be issued to the Employee (the “Recipient”) for each Performance Restricted Stock Right will be determined pursuant to the following schedule, but the resulting number will be multiplied by a fraction, the numerator of which is 126 (the number of days of the Recipient’s employment by the Company and its Affiliates from January 1, 2005, through the date the Employee resigned from the Company, and the denominator of which is 1095 (the number of days from and including January 1, 2005 through December 31, 2007). Fractional shares will be disregarded and will not be issued.

 

 

 

 

 

2

 

* 1.5

 

* 1

 

* 0.30

* Plus a number of shares of Common Stock for each Performance Restricted Stock Right determined by interpolation for Company Total Shareholder Return Peer Percentile Ranking that falls between 30^th and 50^th, 50^th and 75^th, or 75^th and 85^th. (For example, a Company Total Shareholder Return Peer Percentile Ranking of 40^th would result in 0.65 of one share of Common Stock to be issued for each Restricted Stock Right.)

B.

“Company Total Shareholder Return Peer Percentile” shall mean the percentile ranking of the Company’s total shareholder return for the period beginning January 1, 2005, and ending December 31, 2007, as compared to the total shareholder return (where publicly available) for each of the following peer companies: ArQule, Inc., Cell Genesys, Inc., Corixa Corporation, Digene Corporation, Oscient Pharmaceuticals Corporation, Hybridon, Inc., Ilex Oncology, Inc., Medarex, Inc., Mentor Corporation, Myriad Genetics, Inc., Neogen Corporation, North American Scientific, Inc., Novoste Corporation, Nuvelo, Inc., OSI Pharmaceuticals, Inc., Protein Design Labs, Inc., Quidel Corporation, Synovis Life Technologies, Inc., Third Wave Technologies, Inc., Transkaryotic Therapies, Inc., Xoma Ltd., Zymogenetics, Inc. In the event that any of

C.

Notwithstanding any other provision of this Schedule, if a Change in Control occurs before December 31, 2007, then 126/1095 of one share of Common Stock will be issuable as of the date of the Change of Control for each Performance Restricted Stock Right and the Performance Restricted Stock Rights will terminate as of such date. Fractional shares will be disregarded and will not be issued.

D.

“Change in Control” means any one of the following events which occurs following the date of grant:

E.

A share certificate shall be issued as soon as reasonably practicable after the Company determines the number of shares to be issued, subject to Section G below.

F.

If the Company declares a dividend (other than a stock dividend) payable to shareholders of Common Stock and if the dividend is payable to shareholders of record before a share certificate for Common Stock has been issued hereunder, the number of Performance Restricted Stock Rights shall be increased by a number equal to the amount of the dividend per share, multiplied by the number of Performance Restricted Stock Rights (before adjustment), divided by the Fair Market Value per share of Common Stock as of the dividend declaration date.

H.

The Performance Restricted Stock Rights are subject to the terms of the Company’s 2000 Stock Incentive Plan.