CHANGE IN CONTROL SEVERANCE AGREEMENT (this “Agreement”) dated February 2, 2007 between Diomed Holdings, Inc., a Delaware corporation (the “Company”), and John Welch (the “Executive”).
(this
“Agreement”)
dated
February 2, 2007 between Diomed Holdings, Inc.,
a
Delaware corporation (the “Company”),
and
Xxxx
Xxxxx (the “Executive”).
WHEREAS,
the Executive and the Company are parties to an existing letter agreement,
dated
as of September 9, 2002, as amended as of February 15, 2005 (the “Existing
Agreement”),
that
governs the Executive’s employment with the Company;
WHEREAS,
the Board of Directors of the Company (the “Board”)
considers it essential to the best interests of the Company and its shareholders
to assure that the Company and its subsidiaries will have the continued
dedication of the Executive, notwithstanding the possibility, threat or
occurrence of a Change in Control (as defined below); and
SECTION
1. Definitions.
For
purposes of this Agreement, the following terms shall have the meanings set
forth below:
(a) “280G
Gross-Up Payment”
shall
have the meaning set forth in Section 5(a).
(b) “Accounting
Firm”
shall
have the meaning set forth in Section 5(b).
(c) “Accrued
Rights”
shall
have the meaning set forth in Section 4(a)(v).
(d) “Affiliate(s)”
means,
with respect to any specified Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or
is under common control with such specified Person.
(e) “Annual
Base Salary”
shall
mean the Executive’s annual rate of base salary in effect immediately prior to
the Termination Date.
1
(f) “Cause”
means
the occurrence of any one of the following:
(i)
the
Executive is convicted of, or pleads guilty or nolo
contendere
to,
(A) a misdemeanor that involves moral turpitude or that involves
misappropriation of the assets of the Company or a Subsidiary or (B) a
felony;
(ii)
the
Executive commits one or more acts or omissions constituting fraud or other
willful misconduct that have a materially detrimental effect on the
Company;
(iii)
the
Executive continually and willfully fails, for at least 14 days following
written notice from the Company, to perform substantially the Executive’s
employment duties (other than as a result of incapacity due to physical or
mental illness or after delivery by the Executive of a Notice of Termination
for
Good Reason); or
(iv)
the
Executive commits a violation of any of the Company’s policies (including the
Company’s Code of Business Conduct and Ethics, as in effect from time to time)
that is materially detrimental to the best interests of the
Company.
(g) “Change
in Control”
means
(a) sale of all or substantially all of the Company’s assets, including the
assets of its Subsidiaries taken as a whole, (b) any merger, consolidation,
or
other business combination transaction of the Company with or into another
corporation, entity, or person, other than a transaction in which the holders
of
at least a majority of the shares of voting capital stock of the Company
outstanding immediately prior to such transaction continue to hold (either
by
such shares remaining outstanding or by their being converted into shares of
voting capital stock of the surviving entity) a majority of the total voting
power represented by the shares of voting capital stock of the Company (or
the
surviving entity) outstanding immediately after such transaction, (c) the direct
or indirect acquisition (including by way of a tender or exchange offer) by
any
person, or persons acting as a group, of beneficial ownership or a right to
acquire beneficial ownership of shares representing a majority of the voting
power of the then outstanding shares of capital stock of the Company, (d) a
contested election of Directors, as a result of which or in connection with
which the persons who were Directors before such election or their nominees
cease to constitute a majority of the Board or (e) a dissolution or liquidation
of the Company.
(h) “Change
in Control Date”
means
the date on which a Change in Control occurs (if any).
(i) “Code”
means
the Internal Revenue Code of 1986, as amended from time to time, and the
regulations promulgated thereunder.
(j) “Disability”
shall
have the meaning set forth in Section 4(b)(ii).
(l) “Exchange
Act”
means
the Securities Exchange Act of 1934, as amended from time to time, or any
successor statute thereto.
(m) “Excise
Tax”
means
the excise tax imposed by Section 4999 of the Code, together with any
interest or penalties imposed with respect to such tax.
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(n) “Good
Reason”
means,
without the Executive’s express written consent, the occurrence of any one or
more of the following:
(i) any
reduction in the authority, duties, titles or responsibilities held by the
Executive immediately prior to the Change in Control Date or any assignment
to
the Executive of duties or responsibilities that are inconsistent with the
Executive’s status, offices, titles and reporting relationships as in effect
immediately prior to the Change in Control Date, but excluding for this purpose
a reduction or assignment that is remedied by the Company within 30 business
days after receipt of notice thereof given by the Executive;
(ii) any
reduction in the annual base salary, annual bonus, annual incentive opportunity,
long term incentive opportunity or other compensation or benefits of the
Executive as in effect immediately prior to the Change in Control Date, other
than a reduction that is remedied by the Company within 30 business days after
receipt of notice thereof given by the Executive;
(iii) any
change of the Executive’s principal place of employment to a location more than
50 miles from the Executive’s principal place of employment immediately prior to
the Change in Control Date (other than a change that is remedied within 30
business days after receipt of notice thereof given by the
Executive);
(iv) any
failure of the Company to pay the Executive any compensation when due (other
than a failure that is remedied within 30 business days after receipt of written
notice thereof given by the Executive);
(v) delivery
by the Company or any Subsidiary of a written notice to the Executive of the
intent to terminate the Executive’s employment for any reason, other than Cause
or Disability, in each case in accordance with this Agreement, regardless of
whether such termination is intended to become effective during or after the
Protection Period; or
(vi) any
failure by the Company to comply with and satisfy the requirements of Section
10(c) (other than a failure that is remedied within 30 business days after
receipt of written notice thereof given by the Executive).
The
Executive’s right to terminate employment for Good Reason shall not be affected
by the Executive’s incapacity due to physical or mental illness. A termination
of employment by the Executive for Good Reason for purposes of this Agreement
shall be effectuated by giving the Company written notice (“Notice
of Termination for Good Reason”)
of the
termination setting forth in reasonable detail the specific conduct of the
Company that constitutes Good Reason and the specific provisions of this
Agreement on
which
the Executive relied. Unless the parties agree otherwise, a termination of
employment by the Executive for Good Reason shall be effective on the 30th
day
following the date when the Notice of Termination for Good Reason is given,
unless the Company elects to treat such termination as effective as of an
earlier date; provided,
however,
that so
long as an event that constitutes Good Reason occurs during the Protection
Period, for purposes of the payments, benefits and other entitlements set forth
herein, the termination of the Executive’s employment pursuant thereto shall be
deemed to occur during the Protection Period. If the Executive continues to
provide services to the Company after one of the events giving rise to Good
Reason has occurred, the Executive shall not be deemed to have consented to
such
event or to have waived the Executive’s right to terminate his or her employment
for Good Reason in connection with such event. In all cases, the Executive
shall
give the Company five days written notice after the occurrence of any event
that
constitutes Good Reason.
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(o) “Notice
of Termination for Good Reason”
shall
have the meaning set forth in Section 1(n).
(p) “Payment”
means
any payment, benefit or distribution (or combination thereof) by the Company,
any of its Affiliates or any trust established by the Company or its Affiliates,
to or for the benefit of the Executive, whether paid, payable, distributed,
distributable or provided pursuant to this Agreement or otherwise, including
any
payment, benefit or other right that constitutes a “parachute payment” within
the meaning of Section 280G of the Code.
(q) “Person”
means
a
“person” as such term is used in Section 13(d) of the Exchange Act.
(r) “Protection
Period”
means
the period commencing on the Change in Control Date and ending on the
540th
day
thereafter.
(s) “Qualifying
Termination”
means
any termination of the Executive’s employment (i) by the Company, other than for
Cause, death or Disability, that is effective (or with respect to which the
Executive is given written notice) during the Protection Period or (ii) by
the Executive for Good Reason during the Protection Period.
(t) “Section 409A
Tax”
shall
have the meaning set forth in Section 6.
(u) “Subsidiary”
means
any entity in which the Company, directly or indirectly, possesses 50% or more
of the total combined voting power of all classes of its stock.
(v) “Successor”
shall
have the meaning set forth in Section 10(c).
(w) “Termination
Date”
means
the date (if any) on which the termination of the Executive’s employment, in
accordance with the terms of this Agreement, is effective.
SECTION
2. Effectiveness
and Term.
This
Agreement shall become effective as of the date hereof (the “Effective
Date”)
and
shall remain in effect until the second anniversary of the Effective Date.
Notwithstanding the foregoing, in the event of a Change in Control during the
term of this Agreement, this Agreement shall not thereafter terminate, and
the
term hereof shall be extended, until the Company and its Subsidiaries have
performed all their obligations hereunder with no future performance being
possible; provided,
that
this Agreement shall only be effective with respect to the first Change in
Control that occurs during the term of this Agreement.
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SECTION
3. Impact
of a Change in Control on Equity Compensation Awards.
Effective as of any Change in Control Date during the term of this Agreement,
notwithstanding any provision to the contrary in any of the Company’s
equity-based, equity-related or other long-term incentive compensation plans,
practices, policies and programs (including the Company’s 1998 Stock Option
Plan, 2001 Stock Option Plan and 2003 Omnibus Incentive Plan) or any award
agreements thereunder, (a) all outstanding stock options, stock
appreciation rights, restricted shares and similar rights and awards then held
by the Executive that are unexercisable or otherwise unvested shall
automatically become fully vested and immediately exercisable, as the case
may
be, (b) all outstanding equity-based, equity-related and other long-term
incentive awards then held by the Executive that are subject to
performance-based vesting criteria shall automatically become fully vested
and
earned at a deemed performance level equal to the maximum performance level
with
respect to such awards and (c) all other outstanding equity-based,
equity-related and long-term incentive awards, to the extent not covered by
the
foregoing clause (a) or (b), then held by the Executive that are unvested
or subject to restrictions or forfeiture shall automatically become fully vested
and all restrictions and forfeiture provisions related thereto shall
lapse.
SECTION
4. Termination
of Employment.
(a)
Qualifying
Termination.
Subject
to Section 4(a)(v), in the event of a Qualifying Termination, the Executive
shall be entitled to the following payments and benefits:
(i)
Severance
Pay.
The
Company shall pay the Executive an amount equal to one and one-half (1.5) (the
“Multiple”)
times
the Executive’s Annual Base Salary (without regard to any reduction giving rise
to Good Reason) in a lump-sum payment payable on the tenth business day after
the date the release described in Section 4(a)(v) becomes effective and
irrevocable (the “Release
Effective Date”);
provided,
that
such amount shall be paid in lieu of, and the Executive hereby waives the right
to receive, any other cash severance payment relating to salary or bonus
continuation, or any other severance payments or benefits, the Executive is
otherwise eligible to receive upon termination of employment under any severance
plan, practice, policy or program of the Company or any Subsidiary or under
any
agreement between the Company and the Executive.
(ii)
Prorated
Annual Bonus.
The
Company shall pay the Executive an amount equal to the product of (A) the
Executive’s target annual bonus for the year in which the Termination Date
occurs (assuming all individual and business criteria are met at target levels)
and (B) a fraction, the numerator of which is the number of days in
the
current
fiscal year through the Termination Date, and the denominator of which is 365,
in a lump-sum payment on the tenth business day after the Release Effective
Date.
(iii)
Continued
Welfare Benefits.
The
Company shall continue to provide for a number of years equal to the Multiple
health, welfare and fringe benefits to the Executive and the Executive’s spouse
and dependents (in each case, provided in an applicable plan) at least equal
to
the levels of benefits provided by the Company and its Subsidiaries immediately
prior to the Change in Control Date. Nothing in this Section 4(a)(iii)
shall operate to reduce, or be construed as reducing, the Executive’s group
health plan continuation rights under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, in any manner.
5
(iv)
Accrued
Rights.
The
Executive shall be entitled to (A) payments of any unpaid annual base
salary or other amount earned or accrued through the Termination Date and for
reimbursement of any unreimbursed business expenses incurred through the
Termination Date, (B) the full amount of the Executive’s annual bonus for
the fiscal year immediately prior to the fiscal year in which the Termination
Date occurs in the event that the annual bonus for such prior fiscal year has
not been paid to the Executive by the Termination Date and (C) any vested
payments or benefits explicitly set forth in any other written agreements or
benefit plans in which the Executive participates (except for other severance
payments and benefits waived under Section 4(a)(i)) (the rights to such
payments, the “Accrued
Rights”).
(v)
Release
of Claims.
Notwithstanding any provision of this Agreement to the contrary, the Company
shall not be obligated to make any payments or provide any benefits described
in
this Section 4(a), other than payments or benefits in respect of the
Accrued Rights, unless and until such time as the Executive has executed and
delivered a Separation Agreement and Release substantially in the form of
Exhibit A hereto, which may be modified to comply with applicable laws to
the extent necessary to obtain a general release of claims, except that no
such
modification may affect the Executive’s rights to any payments or benefits under
this Agreement or impose any additional restriction or limitation on the
activities of the Executive following termination of employment beyond the
general release of claims, and such release has become effective and irrevocable
in accordance with its terms.
(b)
Non-Qualifying
Termination.
(i) In the event of any termination of the Executive’s employment other
than a Qualifying Termination (including a termination of employment as a result
of death or Disability), the Executive shall not be entitled to any additional
payments or benefits from the Company under this Section 4, other than
payments or benefits with respect to the Accrued Rights.
(ii)
For purposes of this Agreement, the Executive shall be deemed to have a
“Disability”
in
the
event of the Executive’s absence for a period of 180
consecutive business days as a result of incapacity due to a physical or mental
condition, illness or injury which is determined to be total and permanent
by a
physician mutually acceptable to the Company and the Executive or the
Executive’s legal representative (such acceptance not to be unreasonably
withheld) after such physician has completed an examination of the Executive.
The Executive agrees to make himself available for such examination upon the
reasonable request of the Company, and the Company shall be responsible for
the
cost of such examination.
6
SECTION
5. Certain
Additional Payments by the Company.
(a)
Notwithstanding anything in this Agreement to the contrary and except as
set forth below, in the event it shall be determined that any Payment that
is
paid or payable to or for the benefit of the Executive during the term of this
Agreement would be subject to the Excise Tax, the Executive shall be entitled
to
receive an additional payment (a “280G
Gross-Up Payment”)
in an
amount such that, after payment by the Executive of all taxes (and any interest
or penalties imposed with respect to such taxes), including any income and
employment taxes and Excise Taxes imposed upon the 280G Gross-Up Payment, the
Executive retains an amount of the 280G Gross-Up Payment equal to the Excise
Tax
imposed upon such Payments. The Company’s obligation to make 280G Gross-Up
Payments under this Section 5 shall not be conditioned upon the Executive’s
termination of employment and shall survive and apply after the Executive’s
termination of employment. At the time of any Payment during the period of
this
Agreement’s effectiveness, the Company shall provide the Executive a written
description of the application of the Excise Tax (if any) to such
Payment.
(b)
Subject to the provisions of Section 5(c), all determinations
required to be made under this Section 5, including whether and when a 280G
Gross-Up Payment is required, the amount of such 280G Gross-Up Payment and
the
assumptions to be utilized in arriving at such determination, shall be made in
accordance with the terms of this Section 5 by a nationally recognized
certified public accounting firm that shall be designated by the Company (other
than the Company’s regular auditor) (the “Accounting
Firm”).
The
Accounting Firm shall provide detailed supporting calculations both to the
Company and the Executive within 15 business days of the receipt of notice
from
the Executive that there has been a Payment or such earlier time as is requested
by the Company. For purposes of determining the amount of any 280G Gross-Up
Payment, the Executive shall be deemed to pay Federal income tax at the highest
marginal rate applicable to individuals in the calendar year in which any such
280G Gross-Up Payment is to be made and deemed to pay state and local income
taxes at the highest marginal rates applicable to individuals in the
jurisdictions in which the Executive is subject to tax in the calendar year
in
which any such 280G Gross-Up Payment is to be made, net of the maximum reduction
in Federal income taxes that can be obtained from deduction of state and local
taxes, taking into account limitations applicable to individuals subject to
Federal income tax at the highest marginal rate. All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any 280G Gross-Up Payment,
as determined pursuant to this Section 5, shall be paid by the Company to
the Executive within five business days of the receipt of the Accounting Firm’s
determination. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall so indicate to the Executive in writing. Any
determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of the Excise Tax, at the time of the initial determination by
the
Accounting Firm hereunder, it is possible that the amount of the 280G Gross-Up
Payment determined by the Accounting Firm to be due to the Executive, consistent
with the calculations required to be made hereunder, will be lower than the
amount actually due, including any interest and penalties (an “Underpayment”).
In
the event the Company exhausts its remedies pursuant to Section 5(c) and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be paid by the Company to the Executive within
five business days of the receipt of the Accounting Firm’s
determination.
7
(c)
The Executive shall notify the Company in writing of any written claim by the
Internal Revenue Service that, if successful, would require the payment by
the
Company of a 280G Gross-Up Payment. Such notification shall be given as soon
as
practicable, but no later than ten business days after the Executive is informed
in writing of such claim. Failure to give timely notice shall not prejudice
the
Executive’s right to 280G Gross-Up Payments and rights of indemnity under this
Section 5. The Executive shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which the Executive gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to
such
claim is due). If the Company notifies the Executive in writing prior to the
expiration of such period that the Company desires to contest such claim, the
Executive shall (i) give the Company any information reasonably requested
by the Company relating to such claim, (ii) take such action in connection
with contesting such claim as the Company shall reasonably request in writing
from time to time, including accepting legal representation with respect to
such
claim by an attorney reasonably selected by the Company, (iii) cooperate
with the Company in good faith in order effectively to contest such claim and
(iv) permit the Company to participate in any proceedings relating to such
claim; provided,
that
the Company shall bear and pay directly all costs and expenses (including
additional income taxes, interest and penalties) incurred in connection with
such contest, and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest or
penalties) imposed as a result of such representation and payment of costs
and
expenses. Without limitation on the foregoing provisions of this
Section 5(c), the Company shall control all proceedings taken in connection
with such contest, and, at its sole discretion, may pursue or forgo any and
all
administrative appeals, proceedings, hearings and conferences with the
applicable taxing authority in respect of such claim and may, at its sole
discretion, either direct the Executive to pay the tax claimed and xxx for
a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as
the
Company shall determine; provided,
however,
that
(A) if the Company directs the Executive to pay such claim and xxx for a
refund, the Company shall advance the amount of such payment to the Executive,
on an interest-free basis, and shall indemnify and hold the Executive harmless,
on an after-tax basis, from any Excise Tax or income tax (including interest
or
penalties) imposed
with respect to such advance or with respect to any imputed income in connection
with such advance and (B) if such contest results in any extension of the
statute of limitations relating to payment of taxes for the taxable year of
the
Executive with respect to which such contested amount is claimed to be due,
such
extension must be limited solely to such contested amount. Furthermore, the
Company’s control of the contest shall be limited to issues with respect to
which the 280G Gross-Up Payment would be payable hereunder, and the Executive
shall be entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing
authority.
8
(d)
If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 5(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company’s complying with the requirements of Section 5(c)) promptly pay to
the Company the amount of such refund received (together with any interest
paid
or credited thereon after taxes applicable thereto). If, after the receipt
by
the Executive of an amount advanced by the Company pursuant to
Section 5(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of the 30-day period after such determination, then
such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of 280G Gross-Up
Payment required to be paid.
SECTION
6. Section 409A.
It is
the intention of the Company and the Executive that the provisions of this
Agreement comply with Section 409A of the Code, and all provisions of this
Agreement shall be construed and interpreted in a manner consistent with
Section 409A of the Code. To the extent necessary to avoid imposition of
any additional tax or interest penalties under Section 409A (such tax and
interest penalties, a “Section 409A
Tax”),
notwithstanding the timing of payment provided in any other Section of this
Agreement, the timing of any payment, distribution or benefit pursuant to this
Agreement shall be subject to a six-month delay in a manner consistent with
Section 409A(a)(2)(B)(i) of the Code; provided,
that
(a) the Executive shall be credited with interest in respect of such
payment, distribution or benefit during such six-month period at the rate set
forth in Section 12 and (b) if the Executive dies during such
six-month period, any such delayed payments shall not be further delayed, and
shall be immediately payable to the Executive’s devisee, legatee or other
designee or, should there be no such designee, to the Executive’s estate in
accordance with the applicable provisions of this Agreement. From and after
the
Effective Date and for the remainder of the term of this Agreement, (i) the
Company shall administer and operate this Agreement in compliance with
Section 409A of the Code and any rules, regulations or other guidance
promulgated thereunder as in effect from time to time and (ii) in the event
that the Company determines that any provision of this Agreement or any such
plan or arrangement does not comply with Section 409A of the Code or any
such rules, regulations or guidance and that the Executive may become subject
to
a Section 409A Tax, the Company and the Executive shall negotiate in good
faith to amend or modify such provision to avoid the application of such
Section 409A Tax; provided,
that
such amendment or modification shall not (and the Executive shall not be
obligated to consent
to any
such amendment or modification that would) reduce the economic value to the
Executive of such provision.
(a)
The Company’s obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim,
right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and, except as otherwise expressly
provided for in this Agreement, such amounts shall not be reduced whether or
not
the Executive obtains other employment.
9
(b)
The Company shall reimburse, upon the Executive’s demand, any and all
reasonable legal fees and expenses that the Executive may incur in good faith
as
a result of any contest, dispute or proceeding (regardless of whether formal
legal proceedings are ever commenced and regardless of the outcome thereof
and
including all stages of any contest, dispute or proceeding) by the Company
against the Executive (or, in the event that the Executive is the prevailing
party, by the Executive against the Company), with respect to the validity
or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest regarding
the amount of any payment owed pursuant to this Agreement), and shall indemnify
and hold the Executive harmless, on an after-tax basis, for any tax (including
Excise Tax) imposed on the Executive as a result of payment by the Company
of
such legal fees and expenses.
SECTION
8. Non-Exclusivity
of Rights.
Nothing
in this Agreement shall prevent or limit the Executive’s Accrued
Rights.
SECTION
9. Withholding.
The
Company may deduct and withhold from any amounts payable under this Agreement
such Federal, state, local, foreign or other taxes as are required to be
withheld pursuant to any applicable law or regulation.
SECTION
10. Assignment.
(a)
This Agreement is personal to the Executive and, without the prior written
consent of the Company, shall not be assignable by the Executive otherwise
than
by will or the laws of descent and distribution, and any assignment in violation
of this Agreement shall be void.
(b)
Notwithstanding the foregoing Section 10(a), this Agreement and all rights
of the Executive hereunder shall inure to the benefit of, and be enforceable
by,
the Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts would still be payable to him or her hereunder if he
or
she had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the Executive’s
devisee, legatee or other designee or, should there be no such designee, to
the
Executive’s estate.
(c)
The Company shall 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 (a “Successor”)
to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement and the Separation
Agreement and Release, (i) the term “Company” shall mean the Company as
hereinbefore defined and any Successor and any permitted assignee to which
this
Agreement is assigned and (ii) the term “Board” shall mean the Board as
hereinbefore defined and the board of directors or equivalent governing body
of
any Successor and any permitted assignee to which this Agreement is
assigned.
10
SECTION
11. Dispute
Resolution.
(a)
Except as otherwise specifically provided herein, the Executive and the
Company each hereby irrevocably submit to the exclusive jurisdiction of any
state court located within the Commonwealth of Massachusetts over any dispute
arising out of or relating to this Agreement. Except as otherwise specifically
provided in this Agreement, the parties undertake not to commence any suit,
action or proceeding arising out of or relating to this Agreement in a forum
other than a forum described in this Section 11(a); provided,
however,
that
nothing herein shall preclude the Company or the Executive from bringing any
suit, action or proceeding in any other court for the purposes of enforcing
the
provisions of this Section 11 or enforcing any judgment obtained by the
Company or the Executive.
(b)
The agreement of the parties to the forum described in Section 11(a) is
independent of the law that may be applied in any suit, action or proceeding
and
the parties agree to such forum even if such forum may under applicable law
choose to apply non-forum law. The parties hereby waive, to the fullest extent
permitted by applicable law, any objection that they now or hereafter have
to
personal jurisdiction or to the laying of venue of any such suit, action or
proceeding brought in an applicable court described in Section 11(a), and
the parties agree that they shall not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court. The
parties agree that, to the fullest extent permitted by applicable law, a final
and non-appealable judgment in any suit, action or proceeding brought in any
applicable court described in Section 11(a) shall be conclusive and binding
upon
the parties and may be enforced in any other jurisdiction.
(c)
The parties hereto irrevocably consent to the service of any and all
process in any suit, action or proceeding arising out of or relating to this
Agreement by the mailing of copies of such process to such party at such party’s
address specified in Section 18.
(d)
Each party hereto hereby waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in respect of any
suit,
action or proceeding arising out of or relating to this Agreement. Each party
hereto (i) certifies that no representative, agent or attorney of any other
party has represented, expressly or otherwise, that such party would not, in
the
event of any suit, action or proceeding, seek to enforce the foregoing waiver
and (ii) acknowledges that it and the other parties hereto
have
been induced to enter into this Agreement by, among other things, the mutual
waiver and certifications in this Section 11(d).
SECTION
12. Default
in Payment.
Any
payment not made within ten business days after it is due in accordance with
this Agreement shall thereafter bear interest, compounded annually, at the
prime
rate in effect from time to time at Citibank, N.A., or any successor
thereto.
11
SECTION
13. GOVERNING
LAW. THIS
AGREEMENT SHALL BE DEEMED TO BE MADE IN THE STATE OF DELAWARE, AND THE VALIDITY,
INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT IN ALL RESPECTS
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO ITS
PRINCIPLES OF CONFLICTS OF LAW.
SECTION
14. Amendment;
No Waiver.
No
provision of this Agreement may be amended, modified, waived or discharged
except by a written document signed by the Executive and a duly authorized
officer of the Company; provided,
that
prior to the Change in Control Date, this Agreement may be amended or modified,
without the Executive’s consent, through a resolution duly adopted by the Board.
The failure of a party to insist upon strict adherence to any term of this
Agreement on any occasion shall not be considered a waiver of such party’s
rights or deprive such party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. No failure or delay
by either party in exercising any right or power hereunder will operate as
a
waiver thereof, nor will any single or partial exercise of any such right or
power, or any abandonment of any steps to enforce such right or power, preclude
any other or further exercise thereof or the exercise of any other right or
power. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party, which
are not set forth expressly in this Agreement.
SECTION
15. Severability.
If any
term or provision of this Agreement is invalid, illegal or incapable of being
enforced by any applicable law or public policy, all other conditions and
provisions of this Agreement shall nonetheless remain in full force and effect
so long as the economic and legal substance of the transactions contemplated
by
this Agreement is not affected in any manner materially adverse to any party.
Upon any such determination that any term or other provision is invalid, illegal
or incapable of being enforced, the parties hereto shall negotiate in good
faith
to modify this Agreement so as to effect the original intent of the parties
as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated
to
the fullest extent possible.
SECTION
16. Entire
Agreement.
This
Agreement sets forth the entire agreement of the parties hereto in respect
of
the subject matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative
of any party hereto, and any prior agreement of the parties hereto in
respect
of the subject matter contained herein is hereby terminated and canceled. None
of the parties shall be liable or bound to any other party in any manner by
any
representations and warranties or covenants relating to such subject matter
except as specifically set forth herein.
SECTION
17. Survival.
The
rights and obligations of the parties under the provisions of this Agreement,
including Sections 4, 5, 6, 7, 10, 11 and 12, shall survive and remain
binding and enforceable, notwithstanding the expiration of the Protection Period
or the term of this Agreement, the termination of the Executive’s employment
with the Company for any reason or any settlement of the financial rights and
obligations arising from the Executive’s employment hereunder, to the extent
necessary to preserve the intended benefits of such provisions.
12
SECTION
18. Claims
for Benefits.
A
Participant may submit a written claim for benefits under the Plan in accordance
with the terms and conditions set forth in this Section 18.
(a)
Filing
of Claims.
A claim
for benefits shall be made by filing a written request with a person or
committee designated by the Company (the “Plan
Administrator”),
which
shall be delivered to the Plan Administrator and accompanied by such
substantiation of the claim as the Plan Administrator considers necessary and
reasonable for the type of claim being filed.
(b)
Denial
of Claims.
If a
claim is denied in whole or in part, the Participant shall receive a written
or
electronic notice explaining the denial of the claim within ninety (90) days
after the Plan Administrator’s receipt of the claim, unless special
circumstances exist that require an extension of the time for processing such
claim. If an extension of time is necessary, the Participant shall be notified
in writing of the extension and reason for the extension within ninety (90)
days
after the Plan Administrator’s receipt of the claim. The written extension
notification shall also indicate the date by which the Plan Administrator
expects to render a final decision. A notice of denial of claim shall contain
the following:
1. the
specific reason or reasons for the denial;
2. reference
to the specific Plan provisions on which the denial is based;
3. a
description of any additional materials or information necessary for such
Participant to perfect the claim and an explanation of why such material or
information is necessary; and
4. a
description of the Plan’s review procedures and the time limits applicable to
such procedures, including a statement of the Participant’s right to bring a
civil action under Section 502(a) of ERISA following an adverse benefit
determination on review.
(c)
Payment
of Claims.
The
full value of a payment made according to the provisions of the Plan satisfies
that much of the claim and all related claims under the Plan against the Plan
Administrator and the Company, each of whom, as a condition to a payment from
it
or directed by it, may require the Participant, beneficiary, or legal
representative to execute a receipt and release of the claim in a form
determined by the person requesting the receipt and release.
(d)
Request
for Review of Denied Claims.
A
Participant whose claim for benefits has been denied by the Plan Administrator
may request a review of such denial in accordance with the terms and conditions
of this Section 18(d).
13
(i)
A
Participant may file a written request for a review of the denial of a claim
within sixty (60) days after receiving written notice of the denial. The written
request should be sent to the Plan Administrator, who will forward it to a
committee established by the Company to provide review (the “Review
Committee”).
The
Participant may submit written comments, documents, records and other relevant
information in support of the claim. A Participant shall be provided, upon
request to the Plan Administrator and without charge, reasonable access to,
and
copies of, all documents, records, and other information relevant to the
Participant’s claim for benefits. A document, record, or other information shall
be considered relevant if it:
1. was
relied upon in denying the claim;
2. was
submitted, considered or generated in the course of processing the claim,
regardless of whether it was relied upon;
3. demonstrates
compliance with the claims procedures process; or
4. constitutes
a statement of Plan policy or guidance concerning the denied benefit, regardless
of whether it was relied upon.
Relevant
information shall not include any documents or records (or portions thereof)
that would, through their release, violate any other applicable law or
compromise the confidentiality of certain employee data or business records,
including, but not limited to, any documents subject to attorney-client
privilege.
(ii)
In
reviewing a denied claim, the Review Committee shall take into consideration
all
comments, documents, records, and other information submitted by the Participant
in support of the claim, without regard to whether such information was
submitted or considered in the initial benefit determination.
(iii)
The
Review Committee will notify the Participant in writing of its decision on
the
appeal. Such notification will be in writing in a form designed to be understood
by the Participant. If the claim is denied in whole or in part on appeal, the
notification will also contain:
5. the
specific reason or reasons for the denial;
6. reference
to the specific Plan provisions on which the determination is
based;
7. a
statement that the Participant is entitled to receive, upon request to the
Plan
Administrator and free of charge, reasonable access to, and copies of, all
documents, records, and other information relevant to the Participant’s claim
for benefits. A document, record, or other information shall be considered
relevant if it:
(a) was
relied upon in denying the claim;
14
(b) was
submitted, considered or generated in the course of processing the claim,
regardless of whether it was relied upon;
(c) demonstrates
compliance with the claims procedures process; or
(d) constitutes
a statement of Plan policy or guidance concerning the denied benefit, regardless
of whether it was relied upon; and
8. a
statement that the Participant has a right to bring an action under
Section 502(a) of ERISA.
Relevant
information shall not include any documents or records (or portions thereof)
that would, through their release, violate any other applicable law or
compromise the confidentiality of certain employee data or business records,
including, but not limited to, any documents subject to attorney-client
privilege.
Such
notification will be given by the Review Committee within sixty (60) days after
the complete appeal is received by the Review Committee (or within one hundred
twenty (120) days if the Review Committee determines special circumstances
require an extension of time for considering the appeal, and if written notice
of such extension and circumstances is given to the Participant within the
initial sixty (60) day period). Such written extension notice shall also
indicate the date by which the Review Committee expects to render a
decision.
If
the
Participant’s written request for review is received by the Plan Administrator
more than thirty (30) days before a Review Committee meeting, the Review
Committee’s decision must be rendered at the next meeting after the request for
review is received. If special circumstances require an extension of time for
processing, the Review Committee’s decision must be rendered not later than the
Review Committee’s third meeting after the request for review is received, and
written notice of the extension must be furnished to the Participant before
the
extension begins. In the case of such regularly scheduled meetings, the
Participant shall be notified of the review determination as soon as possible,
but no later than five days after the review determination has been made. If
notice that a claim has been denied on review is not received by the Participant
within the time required in this paragraph, the claim is deemed denied on
review.
15
SECTION
19. Notices.
All
notices or other communications required or permitted by this Agreement will
be
made in writing and all such notices or communications will be deemed to have
been duly given when delivered or (unless otherwise specified) mailed by United
States certified mail, return receipt requested, postage prepaid, addressed
as
follows:
|
If
to the Company:
|
|
Diomed
Holdings, Inc.
Xxx
Xxxxxx Xxxx
Xxxxxxx,
XX 00000
|
|
|
|
|
|
|
|
Attention:
Corporate Secretary
|
|
|
|
|
|
|
|
Fax:
|
|
|
|
|
|
If
to the Executive:
|
|
At
the address for the Executive most recently on file with
the Company
|
or
to
such other address as any party may have furnished to the other in writing
in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
SECTION
20. Headings
and References.
The
headings of this Agreement are inserted for convenience only and neither
constitutes a part of this Agreement nor affect in any way the meaning or
interpretation of this Agreement. When a reference in this Agreement is made
to
a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated.
SECTION
21. Counterparts.
This
Agreement may be executed in one or more counterparts (including via facsimile),
each of which shall be deemed to be an original, but all of which together
shall
constitute one and the same instrument.
SECTION
22. Interpretation.
For
purposes of this Agreement, the words “include” and “including”, and variations
thereof, shall not be deemed to be terms of limitation but rather shall be
deemed to be followed by the words “without limitation”.
The
term
“or” is not exclusive. The word “extent” in the phrase “to the extent” shall
mean the degree to which a subject or other thing extends, and such phrase
shall
not mean simply “if”.
[signature
page follows]
16
| DIOMED HOLDINGS, INC. | ||
| |
|
|
| By: | ||
|
Name:
Xxxxx
X. Xxxxx, Xx.
|
||
|
Title: President
and Chief Executive Officer
|
||
| XXXX XXXXX | ||
| |
|
|
|
Name: Xxxx
Xxxxx
|
||
17
EXHIBIT
A
SEPARATION
AGREEMENT AND RELEASE
I.
Release.
For good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned, with the intention of binding himself/herself,
his/her heirs, executors, administrators and assigns, does hereby release and
forever discharge Diomed Holdings, Inc., a Delawere corporation , [to be
amended, if necessary, to add or identify any additional or other entity that
may be the Executive’s employer at the time of the Qualifying Termination set
forth in Section 4 of that certain Change in Control Severance Agreement
between the Executive and Company] (the “Company”), and its or their parents,
subsidiaries, affiliates, predecessors, successors, and/or assigns, past,
present, and future, together with its and their officers, directors,
executives, agents, employees, and employee benefits plans (and the trustees,
administrators, fiduciaries and insurers of such plans), past, present, and
future (collectively, the “Released Parties”), from any and all claims, actions,
causes of action, demands, rights, damages, debts, accounts, suits, expenses,
attorneys’ fees and liabilities of whatever kind or nature in law, equity, or
otherwise, whether now known or unknown (collectively, the “Claims”),
which
the undersigned now has, owns or holds, or has at any time heretofore had,
owned
or held against any Released Party, from the beginning of time to the date
of
the Executive’s execution of this Separation Agreement and Release, including
without limitation, any Claims arising out of or in any way connected with
the
undersigned’s employment relationship with the Company, its subsidiaries,
predecessors or affiliated entities, or the termination thereof, under any
Federal, state or local statute, rule, or regulation, or principle of common,
tort or contract law, including but not limited to, the Family and Medical
Leave
Act of 1993, as amended
(the
“FMLA”),
29
U.S.C. §§ 2601 et seq.
, Title
VII of the Civil Rights Act of 1964, as amended
, 42
U.S.C. §§ 2000e et seq.
, the
Age Discrimination in Employment Act of 1967, as amended
, 29
U.S.C. §§ 621 et seq.
, the
Americans with Disabilities Act of 1990, as amended
, 00
X.X.X. §§ 00000 et seq.
, the
Worker Adjustment and Retraining Notification Act of 1988, as amended
, 29
U.S.C. §§ 2101 et seq.
, the
Employee Retirement Income Security Act of 1974, as amended
, 29
U.S.C. §§ 1001 et seq.
, and
all other Federal, state, or local statutes, regulations or laws; provided,
however
, that
nothing herein shall release the Company of its obligations under that certain
Change in Control Severance Plan of the Company (including the Accrued Rights
(as defined therein)). Except as set forth in Section II below, the
undersigned understands that, as a result of executing this Separation Agreement
and Release, he/she will not have the right to assert that the Company or any
other Released Party unlawfully terminated his/her employment or violated any
of
his/her rights in connection with his/her employment or otherwise.
The
undersigned affirms that he/she is not presently party to any Claim, complaint
or action against any Released Party in any forum or form and that he/she knows
of no facts which may lead to any Claim, complaint or action being filed against
any Released Party in any forum by the undersigned or by any agency, group,
etc.
The undersigned further affirms that he/she has been paid and/or has received
all leave (paid
or
unpaid), compensation, wages, bonuses, commissions, and/or benefits to which
he/she may be entitled and that no other leave (paid or unpaid), compensation,
wages, bonuses, commissions and/or benefits are due to him/her from the Company
and its subsidiaries, except as specifically provided in this Separation
Agreement and Release. The undersigned furthermore affirms that he/she has
no
known workplace injuries or occupational diseases and has been provided and/or
has not been denied any leave requested under the FMLA. If any agency or court
assumes jurisdiction of any such Claim, complaint or action against any Released
Party on behalf of the undersigned, the undersigned hereby waives any right
to
individual monetary or other relief.
18
The
undersigned further declares and represents that he/she has carefully read
and
fully understands the terms of this Separation Agreement and Release and that,
through this document, he/she is hereby advised to consult with an attorney
prior to executing this Separation Agreement and Release, that he/she may take
up to and including 21 days from receipt of this Separation Agreement and
Release, to consider whether to sign this Separation Agreement and Release,
that
he/she may revoke this Separation Agreement and Release within seven calendar
days after signing it by delivering to the Company written notification of
revocation (and that this Separation Agreement and Release shall not become
effective or enforceable until the expiration of such revocation period), and
that he/she knowingly and voluntarily, of his/her own free will, without any
duress, being fully informed and after due deliberate action, accepts the terms
of and signs the same as his own free act.
II.
Protected
Rights.
The
Company and the undersigned agree that nothing in this Separation Agreement
and
Release is intended to or shall be construed to affect, limit or otherwise
interfere with any non-waivable right of the undersigned under any Federal,
state or local law, including the right to file a charge or participate in
an
investigation or proceeding conducted by the Equal Employment Opportunity
Commission (“EEOC”)
or to
exercise any other right that cannot be waived under applicable law. The
undersigned is releasing, however, his/her right to any monetary recovery or
relief should the EEOC or any other agency pursue Claims on his/her behalf.
Further, should the EEOC or any other agency obtain monetary relief on his/her
behalf, the undersigned assigns to the Company all rights to such
relief.
III.
Third-Party
Litigation.
The
undersigned agrees to be available to the Company and its affiliates on a
reasonable basis in connection with any pending or threatened claims, charges
or
litigation in which the Company or any of its affiliates is now or may become
involved, or any other claims or demands made against or upon the Company or
any
of its affiliates, regardless of whether or not the undersigned is a named
defendant in any particular case.
IV.
Return
of Property.
The
undersigned shall return to the Company on or before 10 days after termination
date, all property of the Company in the undersigned’s possession or subject to
the undersigned’s control, including without limitation any laptop computers,
keys, credit cards, cellular telephones and files. The undersigned shall not
alter any of the Company’s records or computer files in any way after
termination date.
19
V.
Confidential
Information.
The
undersigned acknowledges that Confidential Information (as defined below) is
a
valuable asset of the Company and that unauthorized disclosure or utilization
thereof could be detrimental to the Company. The undersigned, therefore, shall
not, after the term of employment with the Company, disclose in any way or
to
any extent, to any person or organization other than the Company, or utilize
for
the benefit or profit of the undersigned or any other person or organization
other than the Company, any Confidential Information, except (a) as may be
authorized in writing in advance by the Company; (b) is publicly available
or becomes publicly available other than through a breach of this document
by
the undersigned or, based on the undersigned’s knowledge, the breach of this
document by others; and (c) upon prior notification to the Company, the
undersigned may be required by law to disclose. “Confidential Information” means
information disclosed — whether orally or in writing — to the undersigned, or
otherwise known to the undersigned as a direct or indirect result of his or
her
employment by the Company, concerning (i) the Company’s products, patent
applications, research activities, formulations, processes, protocols,
procedures, other intellectual properties, machines, services, and all matters
having to do with the business or operations of the Company, including, but
not
limited to, all information of any type related to research, product
development, manufacturing, quality matters, purchasing, finance, data
processing, engineering, facilities, marketing, merchandising and selling,
personnel, organization matters, policy matters, legal and other corporate
affairs and (ii) information of any type about any third party with which
the Company is in technical or commercial cooperation, acquired by the
undersigned, directly or indirectly, in connection with his or her employment
by
the Company. Included in the foregoing definition by way of illustration, but
not limitation, are such items as research projects, findings or reports,
business plans and projections, formulae, processes, methods of manufacture,
computer programs, sales, costs, pricing data, regulatory matters, operating
procedures, information about employees and personnel practices, and lists
of
investigators, consultants, suppliers and customers. The undersigned agrees
not
to remove any Confidential Information from the Company, not to request that
others do so on the undersigned’s behalf and to return any Confidential
Information currently in the undersigned’s possession to the
Company.
VI.
Severability.
If any
term or provision of this Separation Agreement and Release is invalid, illegal
or incapable of being enforced by any applicable law or public policy, all
other
conditions and provisions of this Separation Agreement and Release shall
nonetheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated by this Separation Agreement and
Release is not affected in any manner materially adverse to any
party.
VII.
GOVERNING
LAW. THIS
SEPARATION AGREEMENT AND RELEASE SHALL BE DEEMED TO BE MADE IN THE STATE OF
DELAWARE, AND THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF
THIS
AGREEMENT IN ALL RESPECTS SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE
WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.
Effective
on the eighth calendar day following the date set forth below.
20
| DIOMED HOLDINGS, INC. | ||
| |
|
|
| By: | ||
|
Name: Xxxxx
X. Xxxxx, Xx.
|
||
| Title: President and Chief Executive Officer | ||
|
[EXECUTIVE]
|
||
| |
|
|
|
[name] |
||
21