EXHIBIT 10.2
AQUILA BIOPHARMACEUTICALS, INC.
Employee Retention Agreement
September 2 1997
Xxxxxx Xxxxxxx-Xxxxx, Ph.D.
0 Xxxxxx Xxxx
Xxxxxxx, XX 00000
Dear Xx. Xxxxxxx-Xxxxx:
You are currently an officer of Aquila Biopharmaceuticals,
Inc., (the "Company"). In order to induce you to remain in its
employ, the Company agrees that you shall receive the severance
benefits as provided in this letter agreement (the "Agreement")
in the event your employment with the Company is terminated under
the circumstances described below. Capitalized terms not
otherwise defined herein have the meanings ascribed to them in
Section 5.
Reference is made to the Employment Agreement between you
and the Company dated April 6, 1995 (the "Employment Agreement").
1. Term of the Agreement. The term of this Agreement (the
"Term") shall commence as of the date hereof and shall continue
in effect until the later of July 1, 2002 or 24 months after any
Change of Control that may occur prior to July 1, 2002.
Notwithstanding the termination of your employment, any
obligations hereunder which by their terms continue (such as
severance benefits) shall survive such termination. This
Agreement does not constitute a contract of employment. Any
termination of your employment by the Company or by you during
the Term shall be communicated by written notice of termination
("Notice of Termination") to the other party hereto in accordance
with Section 8. The "Date of Termination" shall mean the
effective date of such termination as specified in the Notice of
Termination (provided that no such Notice of Termination shall
specify an effective date more than 180 days after the date of
such Notice of Termination) nor, except in the event of a
termination for Cause or Good Reason, less than thirty (30) days.
2. Continuance of Benefits. In the event of a Change in
Control, following such Change of Control and for a three year
period thereafter the Company shall arrange to provide you with
life, disability, dental, accident and group health insurance
benefits substantially similar with those you were receiving
immediately prior to the Change of Control.
3. Change in Employment Status.
(a) Any termination of your employment following a
Change in Control of the Company by the Company or by you during
the Term shall be communicated by written notice of termination
("Notice of Termination") to the other party hereto in accordance
with Section 8, which Notice of Termination shall specify the
provisions of this Agreement, if any, upon which such termination
is based.
(b) You shall be entitled to the benefits provided in
Section 4 if (but only if) the following event (a "Trigger
Event") occurs: a Change in Control shall have occurred during
the Term and your employment with the Company is subsequently
terminated or terminates for any reason within 24 months after
such Change in Control, unless such termination is (A) because of
your death or Disability (as defined in Section 5(b)), (B) by the
Company for Cause (as defined in Section 5(c)), or (C) by you
other than for Good Reason (as defined in Section 5(d)).
4. Compensation Upon Termination.
(a) In the event of the occurrence of a Trigger Event,
the Company will pay to you within thirty (30) days of the Date
of Termination an amount equal to the product of (i) three (3)
times (ii) the sum of (A) your annual base salary rate in effect
immediately prior to the Trigger Event (or such higher rate as
may have been in effect within the 90 days prior to the Notice of
Termination) plus (B) an annualized amount equal to the aggregate
bonus paid to (or accrued for) you by the Company during the
three years preceding such Trigger Event or such shorter period
of your employment divided by the lesser of three (3) or the
period of your employment (expressed in years and any fraction
thereof).
(b) In the event of a Trigger Event, following such
Trigger Event and for a three (3) year period after the Date of
Termination, the Company shall arrange to provide you with life,
disability, dental, accident and group health insurance benefits
substantially similar to those which you were receiving
immediately prior to the Trigger Event. Notwithstanding the
foregoing, the Company shall not provide any benefit otherwise
receivable by you pursuant to this paragraph (b) or Section 2
above if an equivalent benefit is actually received by you
through an entity to which you provide services during the
thirty-six (36) month period following your termination, and any
such benefit actually received by you shall be reported to the
Company. For purposes of the application of the Company's
benefits, after termination of employment, you shall be treated,
to the extent that applicable law pertaining to the particular
benefit plan permits the Company to do so, as if you had remained
in the employ of the Company, with a total annual salary at the
base salary rate used for the determination of your severance
amount above, and service
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or similar credits, if any, will continue to accrue during such
period as if you had remained in the employ of the Company. If
in spite of the provisions of this clause, benefits under any
benefit plan shall not be payable or provided to you under such
plan (or to your dependents, beneficiaries or estate), because
you are no longer deemed an employee of the Company, then the
Company shall pay or provide payment of such benefits to you or
your dependents, beneficiaries or estate. To the extent that
applicable law does not permit any Company benefit referred to
above to be provided, paid or funded through the applicable
Company benefit plan, then the Company shall not be required to
provide such benefit through such plan and shall only be required
to provide in the case of a benefit the tax treatment of which is
enhanced by such plan an amount equal to what would have been the
Company's initial contribution to such plan and not the
equivalent benefit. In addition, the Company shall maintain with
a reputable carrier directors and officers liability coverage for
your benefit with coverage amounts at least equal to those in
place prior to the Trigger Event and, unless and to the extent
available, on terms at least as favorable as the terms of such
coverage prior to the Trigger Event, until such time as all
applicable statutes of limitations shall have expired.
(c) Immediately prior to, but subject to, a Trigger
Event, all of your then outstanding options to purchase common
stock of the Company shall be accelerated so that they shall
become immediately exercisable in full, provided in the event of
a Trigger Event as a result of a tender offer, such options shall
become fully exercisable in a timely manner such that you may
participate in such tender offer at any stage.
(d) The Company shall pay to you all legal fees and
expenses incurred by you in connection with the execution of this
Agreement or seeking to obtain, interpret or enforce any right or
benefit provided by this Agreement.
(e) For purposes of this Section 4(e), the terms
"parachute payment," "excess parachute payment," "present value,"
and "base amount" have the meanings ascribed in Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code") and as
in effect at the date of this Agreement. The term "excise tax"
means the tax imposed by Code Section 4999.
(i) In the event that
A. excise tax is due with respect to one or
more payments made pursuant to this Agreement, and
B. the present value of the excess of
parachute payments to the Executive (whether or
not pursuant to this Agreement) over the excise
tax which would be payable as a result of
Executive's receipt of such payments is less than
three times Executive's base amount, and
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C. the present value of the parachute
payments to the Executive which are payable
without regard to this Agreement are less than
three times Executive's base amount,
then, and only then, subsection (ii) below shall apply.
(ii) If this subsection applies, any parachute
payments otherwise payable to the Executive hereunder shall be
limited as follows:
A. No parachute payments shall be payable
to the Executive under this Agreement to the
extent that the total of such parachute payments
and any parachute payments otherwise payable to
the Executive by the Company would equal or exceed
in their present value three times the Executive's
base amount. In the event that the present value
of such payments equals or exceeds such amount,
the provisions set forth below will apply and
parachute payments payable to the Executive under
this Agreement will be made only in accordance
with this subsection notwithstanding any other
provision to the contrary in this Agreement.
B. Not later than thirty (30) days after
the date of termination, the Company will provide
the Executive with a schedule specifying the
present value of all amounts, benefits and rights
("Severance Benefits") to be provided the
Executive under this Agreement (specifying the
section hereof under which each such payment is to
be made) and any other payments otherwise payable
to the Executive by the Company on or after the
change in control which, in the Company's opinion,
could constitute parachute payments under
Section 280G. No payments under this Agreement
shall be made until after thirty (30) days from
the receipt of such schedule by the Executive. At
any time prior to the expiration of said 30-day
period, the Executive shall have the right to
select from all or part of any category of payment
to be made under this Agreement those payments to
be made to the Executive in an amount the present
value of which (when combined with the present
value of any other payments otherwise payable to
the Executive by the Company that may be deemed to
be parachute payments) is less than three times
the Executive's base amount. If the Executive
fails to exercise her right to make a selection,
the selection shall be made by the Company.
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C. The references to Code Sections 280G and
4999 are specific references to such sections as
in effect on the date of this Agreement. If
either section is amended prior to the expiration
or termination of this Agreement, or replaced by a
successor statute, the limitations imposed by this
Section 4(e) upon payments to be made to the
Executive under this Agreement shall be deemed
modified without further action of the parties so
as to provide only for such limitations that are
consistent with such amendment(s) or successor
statute(s), as the case may be. In the event that
Section 4999, or any successor statute, is
repealed, this Section 4(e) shall cease to be
effective on the date of such repeal. The parties
to this Agreement recognize that final Treasury
Regulations under Section 280G may affect the
amounts that may be paid hereunder and agree that,
upon issuance of such final Regulations, this
Section 4(e) may be modified as in good faith
deemed necessary in light of the provisions of
such Regulations to achieve the purposes hereof,
and that consent to such modification(s) shall not
be unreasonably withheld.
(f) You shall not be obligated to seek to mitigate the
amount of any payments provided for in this Agreement by seeking
alternative employment or otherwise.
5. Certain Definitions.
As used herein, the following terms shall have the
following respective meanings:
(a) Change in Control. A "Change in Control" shall
occur or be deemed to have occurred only if any of the following
events occur:
(i) any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), (other than (A) the Company, (B)
any "group" including you, (C) any employee benefit plan of the
Company, or (D) any corporation owned directly or indirectly by
the stockholders of the Company in substantially the same
proportion 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 representing in the aggregate 20% or more of either (A)
the combined voting power of the Company's then outstanding
securities or (B) the then outstanding shares of common stock of
the Company;
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(ii) individuals who, as of the date hereof,
constitute the Board of Directors (the "Board") (as of the date
hereof, the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board, provided that any person
becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is
in connection with an actual or threatened election contest
relating to the election of the directors of the Company, as such
terms are used in Rule 14a-11 of Regulation 14A under the
Exchange Act) shall be, for purposes of this Agreement,
considered as though such person were a member of the Incumbent
Board; or
(iii) the stockholders of the Company approve 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 thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) more than 75% of the combined
voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected solely to
implement a recapitalization of the Company in which no "person"
(as hereinabove defined) increases the percentage held of the
combined voting power of the Company's then outstanding
securities (except by less than 5% of such person's holdings
preceding such recapitalization); or
(iv) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for
the sale, lease, exchange or disposition by the Company of all or
substantially all of the Company's assets.
(b) Disability. If, as a result of incapacity due to
physical or mental illness, you shall have been absent from the
full-time performance of your duties with the Company for six (6)
consecutive months and, within thirty (30) days after written
Notice of Termination is given to you, you shall not have
returned to the full-time performance of your duties, your
employment may be terminated for "Disability."
(c) Cause. The following shall constitute "Cause" for
termination:
(i) Deliberate dishonesty of Executive with
respect to the Company or any subsidiary or affiliate thereof; or
(ii) Conviction of Executive of a crime involving
moral turpitude; or
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(iii) The material failure by Executive to perform
Executive's duties under the Employment Agreement (other than any
such failure resulting from the incapacity of Executive due to
physical or mental illness) which failure continues for thirty
(30) days after notice to Executive setting forth in reasonable
detail the manner in which Executive has not performed
Executive's duties; or
(iv) Unlawful conduct pertaining to the Company or
any of its affiliates or shareholders or involving a criminal
act; material and conscious falsification or unauthorized
disclosure of important records or reports; embezzlement or
unauthorized conversion of property; violation of conflict of
interest or vendor relations policies; or willful disclosure of
significant trade secrets or other information likely to be used
to the detriment of the Company.
(d) Good Reason. For purposes of this Agreement,
"Good Reason" shall mean, without your written consent, the
occurrence of any of the following circumstances or any of the
circumstances set forth in the definition of cause for
termination by you in Section 6(c)(i-iii) of the Employment
Agreement within the six (6) months immediately prior to your
giving the Company a Notice of Termination:
(i) any reduction in your annual base salary from
time to time;
(ii) any failure by the Company to allow your
participation in a cash bonus program in a manner substantially
consistent with past practice in light of the Company's financial
performance and attainment of your specified goals, or the
substantial reduction of your participation in any other material
compensation plan (other than any stock option or stock award
program which programs are within the full discretion of the
Compensation Committee) on a significantly less favorable basis,
both in terms of the amount of benefits provided and the level of
your participation relative to other participants; unless such
circumstances are fully corrected prior to the Date of
Termination specified in the Notice of Termination given in
respect thereof;
(iii) the failure by the Company to continue to
provide you with benefits substantially similar to those enjoyed
by you under any of the Company's life insurance, medical, health
and accident, or disability plans in which you were
participating, the taking of any action by the Company which
would directly or indirectly materially reduce any of such
benefits, or the reduction in the number of paid vacation days to
which you are entitled; unless such circumstances are fully
corrected prior to the Date of Termination specified in the
Notice of Termination given in respect thereof;
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(iv) any requirement by the Company that the
location at which you perform your principal duties for the
Company be changed to a new location outside a radius of 50 miles
from your business location at the time of the Change in Control;
or
(v) the failure of the Company to obtain a
satisfactory agreement from any successor to assume and agree to
perform the Agreement, as contemplated in Section 7(a).
6. Employment Agreement.
The Employment Agreement shall be amended as follows:
(a) (i) Section 6(e) shall be amended by deleting
"ninety (90) days" and inserting in its place
"thirty (30) days;"
(ii) Section 6(f)(ii) shall be deleted in its
entirety and in its place shall be inserted
"Reserved;" and
(iii) Section 11, "Arbitration of Disputes," shall
not apply after any Change of Control, as
defined herein.
(b) Any salary continuation payments which you
actually receive under Section 6(f)(i) or (iii) of the Employment
Agreement following the termination of your employment with the
Company shall be credited against any payments which you are
entitled to receive under this Agreement.
(c) Except as expressly amended by this Agreement, the
terms of the Employment Agreement shall remain in effect.
7. Successors; Binding Agreement.
(a) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets
of the Company expressly to assume and agree to perform this
Agreement to the same extent that the Company would be required
to perform it if no such succession had taken place. Failure of
the Company to obtain an assumption of this Agreement prior to
the effectiveness of any succession shall be a breach of this
Agreement and shall entitle you to compensation from the Company
in the same amount and on the same terms as you would be entitled
hereunder if you had been terminated without Cause. As used in
this Agreement, "Company" shall mean the Company as defined above
and any successor to its business or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law,
or otherwise.
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(b) This Agreement shall inure to the benefit of and
be enforceable by your personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If you should die while any amount would
still be payable to you hereunder if you had continued to live,
all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to your devisee,
legatee or other designee or if there is no such designee, to
your estate.
8. Notice.
For the purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in
writing and shall be duly given when delivered or when mailed by
United States registered or certified mail, return receipt
requested, postage prepaid, addressed to the Chairman of the
Compensation Committee, Aquila Biopharmaceuticals, Inc., at 000
Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000, and to you at
the address shown above or to such other address as either the
Company or you may have furnished to the other in writing in
accordance herewith, except that notice of change of address
shall be effective only upon receipt.
9. Miscellaneous.
(a) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
(b) The validity, interpretation, construction and
performance of this Agreement shall be governed by the law of The
Commonwealth of Massachusetts.
(c) No waiver by you at any time of any breach of, or
compliance with, any provision of this Agreement to be performed
by the Company shall be deemed a waiver of that or any other
provision at any subsequent time.
(d) This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same
instrument.
(e) Any payments provided for hereunder shall be paid
net of any applicable withholding required under federal, state
or local law.
(f) The Company shall do, make, execute and deliver
all such additional and further acts, things, assurances and
instruments as you may reasonably request in order to assure to
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you your rights hereunder and to carry into effect the provisions
and intent of this Agreement. The Company shall, upon your
request, convert any options which are incentive stock options
into nonqualified options and shall amend any outstanding option
agreements in a manner consistent with this Agreement.
If this letter sets forth our agreement on the subject
matter hereof, kindly sign and return to the Company the enclosed
copy of this letter, which will then constitute our agreement on
this subject.
Sincerely,
AQUILA BIOPHARMACEUTICALS, INC.
By:__/s/ Xxxx X. Nelson________
Chairman of the Compensation
Committee
Agreed to this 10th day of September, 1997
/s/ Xxxxxx Xxxxxxx-Xxxxx
______________________________
(Signature)
Xxxxxx Xxxxxxx-Xxxxx
______________________________
(Print Name)
0 Xxxxxx Xxxx
Address: ______________________________
Xxxxxxx, XX 00000
______________________________
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Schedule to Exhibit 10.2 Employee Retention Agreements
Name Date of Execution Severance Payment
Xxxxxx X. Xxxxx 10/24/97 two times sum of
annual salary plus
average annual bonus
Xxxxxxx X. XxXxxxx 10/27/97 sum of annual salary
plus average annual
bonus
Xxxxxxx X. Xxxxxx 10/24/97 sum of annual salary
plus average annual
bonus
Xxxxxx X. Xxxxxx 10/24/97 sum of annual salary
plus average annual
bonus
