EMPLOYMENT AGREEMENT
EMPLOYMENT
AGREEMENT
dated
December 15, 2005 by and between NexMed, Inc., a Nevada corporation (the
"Company") and Xxxxxx X. Xxx (the "Executive").
WHEREAS,
the Company desires to continue to employ Executive and to enter into
an
agreement (the "Agreement") embodying the terms of such employment;
WHEREAS,
the Company considers it essential to its best interests and the best interests
of its stockholders to xxxxxx the continued employment of Executive by the
Company during the term of this Agreement; and
WHEREAS,
Executive is willing to accept and continue her employment on the terms
hereinafter set forth in this Agreement.
NOW,
THEREFORE, in consideration of the premises and mutual covenants herein and
for
other good and valuable consideration, the parties agree as follows:
| 1. |
Term
of Employment.
Subject to earlier termination in accordance with the provisions
of
Section 6 of this Agreement, Executive shall be employed by the Company
pursuant to the terms of this Agreement for a period commencing on
December 15, 2005 (the "Effective Date") and ending on December 15,
2008
(the "Expiration Date"); provided,
however,
that,
the term of employment under this Agreement (the "Employment Term")
shall
be automatically extended for one additional year unless and until
either
party gives notice to the other, at least 60 days before the Expiration
Date, that the Employment Term should not be automatically
extended.
|
| 2. |
Position.
|
| (a) |
During
the Employment Term, Executive shall be employed as an Executive
Vice
President of the Company, and shall have such duties, authority,
and
responsibility as are commensurate with her position, subject to
the
direction of the Company's Board of Directors (the "Board"). Executive
shall initially have the title of Executive Vice President and Acting
Chief Executive Officer of the
Company.
|
| (b) |
During
the Employment Term, Executive shall devote all of her business time
and
attention to the performance of her duties hereunder faithfully and
to the
best of her abilities and shall not undertake employment with, or
participate in, the conduct of the business affairs of any other
person,
corporation, or entity; provided,
that,
nothing shall preclude Executive from (i) with the prior written
approval
of the Board, serving in due course as a director, trustee or member
of a
committee of any organization or (ii) participating in the affairs
of any
recognized charitable organizations, or in any community affairs,
of
Executive's choice.
|
| (c) |
Executive's
duties hereunder shall be performed for the Company worldwide, with
particular emphasis in the Company's headquarters in East Windsor,
New
Jersey.
|
| 3. |
Compensation.
|
| (a) |
Base
Salary.
During the Employment Term, the Company shall pay Executive a base
salary,
subject to increase at the discretion of the Board of Directors of
the
Company (the "Board"), at the annual rate of $200,000
(the "Base Salary"), payable in regular installments in accordance
with
the Company's usual payroll
practices.
|
| (b) |
Bonus.
With respect to each calendar year during the Employment Term, Executive
shall be eligible to earn an annual bonus award (the "Bonus"). The
amount
of the Bonus shall be determined by the Board, or the Compensation
Committee of the Board (the "Compensation Committee"), in its sole
discretion, based upon the achievement by the Company of objective
financial targets established and determined by the Board or the
Compensation Committee in consultation with Executive no later than
the
end of the first month of such calendar year. The Bonus in respect
of each
calendar year in the Employment Term shall be paid as promptly as
practicable following the delivery of the Company's audited financial
statements for such year or, if later, by April 30 of the calendar
year
following such year. Unless otherwise stated herein, the Bonus shall
not
accrue until the date on which it is paid, and Executive must be
employed
on the date the Bonus is paid in order to receive the
Bonus.
|
| (c) |
Stock
Option Grants.
|
| (i) |
On
December 15, 2005, the Compensation Committee approved a grant to
Executive of an option to purchase an aggregate of 180,000 shares
of the
Company's common stock (the "Option") based on the closing price
of the
Company’s Common Stock on December 14, 2005, of ninety-two cents ($.92)
per share. The Option shall vest in three equal installments (33.33%
of
the Stock Option Shares, which represents 60,000 Stock Option Shares)
on
December 31, 2006, December 31, 2007, and December 31, 2008, respectively,
assuming continuous and uninterrupted employment until such dates.
The
Company will provide the Executive the ability to perform a cashless
exercise of all Stock Options, in accordance with the vesting
schedule.
|
| (ii) |
The
Option shall be subject to The NexMed, Inc. Stock Option and Long-Term
Incentive Compensation Plan (the "Option Plan") and the applicable
stock
option agreement.
|
| (iii) |
In
addition to the foregoing, the Compensation Committee may recommend
to the
Board that additional stock options be granted to Executive in accordance
with the terms and subject to the conditions of the Option
Plan.
|
| (iv) |
All
of Executive's outstanding but unvested stock options shall vest
immediately upon the occurrence of a Change in Control (as defined
in
Appendix A hereto).
|
| 4. |
Employee
Benefits.
During the Employment Term, Executive shall be eligible for inclusion,
to
the extent permitted by law, as a full-time employee of the Company
or any
of its subsidiaries, in any and all of the following plans, programs,
and
policies in effect at the time: (i) pension, profit sharing, savings,
and
other retirement plans and programs, (ii) life and health (medical,
dental, hospitalization, short-term and long-term disability) insurance
plans and programs, (iii) stock option and stock purchase plans and
programs, (iv) accidental death and dismemberment protection plans
and
programs, (v) travel accident insurance plans and programs, (vi)
vacation
policy (Executive shall have six weeks of vacation per calendar year),
and
(vii) other plans and programs sponsored by the Company or any subsidiary
for employees or executives generally, including any and all plans
and
programs that supplement any or all of the foregoing types of plans
or
programs.
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| 5. |
Business
Expenses and Perquisites.
The Company shall reimburse to Executive, or pay directly, all reasonable
expenses incurred by Executive in connection with the business of
the
Company, and its subsidiaries and affiliates, including but not limited
to
business-class travel, reasonable accommodations, and entertainment,
subject to documentation in accordance with the Company's policy.
|
| 6. |
Termination.
|
| (a) |
By
the Company for Cause.
The Company may, for Cause, terminate Executive's employment hereunder
at
any time by written notice to Executive. For purposes of this Agreement,
the term "Cause" shall mean Executive's (i) engaging in fraud against
the
Company or misappropriation of funds of the Company, (ii) disregard
or
failure to follow specific and reasonable directives of the Board,
(iii)
willful failure to perform her duties as Executive Vice President
and
Acting Chief Executive Officer of the Company, (iv) willful misconduct
resulting in material injury to the Company, (v) violation of the
terms of
the Confidential Information and Intellectual Property Agreement
between
Executive and NexMed (U.S.A.), Inc., a wholly-owned subsidiary of
the
Company, dated October 4, 2000 (the "Intellectual Property Agreement")
attached hereto as Exhibit "A", (vi) conviction of, or Executive's
plea of
guilty or no contest to, a felony or any crime involving as a material
element fraud or dishonesty, or (vii) material breach (not covered
by
clauses (i) through (vi) of this paragraph) of any of the other provisions
of this Agreement; provided,
that,
in the case of subclauses (ii), (iii) or (vii), Cause shall not exist
if
the act or omission deemed to constitute Cause is cured (if curable)
by
Executive within thirty (30) days after written notice thereof to
Executive by the Company. For purposes of the foregoing, no act,
or
failure to act, on Executive's part shall be considered "willful"
unless
done, or omitted to be done, by Executive other than in good faith,
and
without reasonable belief that her action or omission was in furtherance
of the interests of the Company.
|
In
the
event of the termination of Executive's employment under this Section 6(a)
for
Cause, the Employment Term shall end on the day of such termination and the
Company shall pay to Executive, no later than the payroll cycle following
Executive’s termination, in one lump sum: (i) any accrued but unpaid Base
Salary, less applicable deductions, including salary in respect of any accrued
and accumulated vacation due to Executive at the date of such termination;
and
(ii) any amounts owing, but not yet paid, pursuant to Section 5
hereof.
Except
as
specifically set forth in Section 8 hereof, the Company shall have no further
obligations to Executive under this Agreement.
| (b) |
Disability
or Death.
If Executive should suffer a Permanent Disability, the Company may
terminate Executive's employment hereunder upon ten (10) or more
days'
prior written notice to Executive. If Executive should pass away
during
the term of this Agreement, Executive’s employment shall be deemed
terminated on her date of death. For purposes of this Agreement,
a
"Permanent Disability" shall be deemed to have occurred only when
Executive has qualified for benefits (including satisfaction of any
applicable waiting period) under the Company's or a subsidiary's
long-term
disability insurance arrangement (the "LTD Policy"). In the event
of the
termination of Executive's employment hereunder by reason of Permanent
Disability or death, the Employment Term shall end on the day of
such
termination and the Company shall pay, no later than the payroll
cycle
following Executive’s termination, to Executive or Executive's legal
representative (in the event of Permanent Disability), or any beneficiary
or beneficiaries designated by Executive to the Company in writing,
or to
Executive's estate if no such beneficiary has been so designated
(in the
event of Executive's death), a single lump sum payment of: (i) any
accrued
but unpaid Base Salary, less applicable deductions, including salary
in
respect of any accrued and accumulated vacation, due to Executive
at the
date of such termination; (ii) any amounts owing, but not yet paid,
pursuant to Section 5 hereof.
|
In
addition, upon a termination under this Section 6(b), and upon the satisfaction
of the conditions set forth herein: (1) Executive shall receive a pro rata
Bonus
for the calendar year in which such termination occurs, equal to the Bonus
she
would have received, to the extent all criteria for such a Bonus have been
met
(with the exception of the Executive being employed of the date the Bonus is
to
be paid), for the calendar year of said termination multiplied by a fraction,
the numerator of which is the number of days in such year preceding and
including the date of termination, and the denominator of which is 365. Said
pro-rata Bonus shall be paid at the same time as the Bonus would have been
paid
had Executive remained employed by the Company through the date of payment;
(2)
Executive shall receive any unpaid Bonus for the calendar year preceding her
termination, to the extent that all criteria for such bonus have been met (with
the exception of the Executive being employed on the date the Bonus is to be
paid). Said Bonus shall be paid at the same time as the Bonus would have been
paid had Executive remained employed by the Company through the date of payment;
and (3) all of Executive's outstanding but unvested stock options granted
pursuant to Section 3(c) of this Agreement shall vest immediately. The payment
of the Bonuses and the acceleration of Executive’s options are conditioned upon
Executive (or her legal representative) signing a release in favor of the
Company, as provided for in Section 6(f).
Except
as
specifically set forth in Section 8 hereof, the Company shall have no further
obligations to Executive under this Agreement.
| (c) |
By
the Company without Cause.
The Company may, without Cause, terminate Executive's employment
hereunder
at any time upon ten (10) or more days' written notice to Executive.
The
Company, in its sole discretion, may provide the Executive with ten
(10)
days’ pay in lieu of notice. In the event Executive's employment is
terminated pursuant to this Section 6(c), the Employment Term shall
end on
the day of such termination and the Company shall pay to Executive,
no
later than the payroll cycle following Executive’s termination, in one
lump sum: (i) any accrued but unpaid Base Salary, less applicable
deductions, including salary in respect of any accrued and accumulated
vacation, due to Executive at the date of such termination, and (ii)
any
amounts owing, but not yet paid, pursuant to Section 5 hereof.
|
In
addition, upon a termination under this Section 6(c), and upon the satisfaction
of the conditions set forth herein: (1) Executive shall receive a pro rata
Bonus
for the calendar year in which such termination occurs, equal to the Bonus
she
would have received, to the extent all criteria for such a Bonus have been
met
(with the exception of the Executive being employed of the date the Bonus is
to
be paid), for the calendar year of said termination multiplied by a fraction,
the numerator of which is the number of days in such year preceding and
including the date of termination, and the denominator of which is 365. Said
pro-rata Bonus shall be paid at the same time as the Bonus would have been
paid
had Executive remained employed by the Company through the date of payment;
(2)
Executive shall receive any unpaid Bonus for the calendar year preceding her
termination, to the extent that all criteria for such bonus have been met (with
the exception of the Executive being employed on the date the Bonus is to be
paid). Said Bonus shall be paid at the same time as the Bonus would have been
paid had Executive remained employed by the Company through the date of payment;
(3) all of Executive's outstanding but unvested stock options granted pursuant
to Section 3(c) of this Agreement shall vest immediately; and (4) Executive
shall receive severance payments (the “Severance”) in an amount equal to the
Executive's annual Base Salary at the time of such termination of one month
for
every fully completed year of service, up to one year. The payment of the
Bonuses and the Severance, as well as the acceleration of Executive’s options,
are conditioned upon Executive signing a release in favor of the Company, as
provided for in Section 6(f).
Except
as
specifically set forth in Section 8 hereof, the Company shall have no further
obligations to Executive under this Agreement.
| (d) |
By
Executive for Good Reason.
If any of the events described below occurs during the Employment
Term,
Executive may terminate Executive's employment hereunder for Good
Reason
by written notice to the Company identifying the event or omission
constituting Good Reason not more than one (1) month following the
occurrence of such event and, in the case of subclauses (ii), (iii),
or
(iv) below, a failure by the Company to cure such act or omission
within
thirty (30) days after receipt of such written notice. In such event,
the
Employment Term and Executive's employment hereunder will be terminated
effective as of the later of thirty-one (31) days after the Company's
receipt of Executive's notice of termination or thirty-one (31) days
after
the event, and Executive's termination for Good Reason pursuant to
this
Section 6(d) shall be treated for all purposes as a termination without
Cause pursuant to Section 6(c) and the provisions of Section 6(c)
shall
apply to such termination. The occurrence of any of the following
events
without Executive's consent shall permit Executive to terminate
Executive's employment for "Good Reason" pursuant to this Section
6(d):
|
| (i) |
A
"Change in Control" (as defined in Appendix A hereto) occurs;
|
| (ii) |
The
failure by the Company to observe or comply in any material respect
with
any of the material provisions of this Agreement;
and
|
| (iii) |
A
material diminution in Executive's
duties.
|
| (iv) |
The
assignment to Executive of duties that are materially inconsistent
with
Executive’s duties or that materially impair Executive’s ability to
function as the Executive Vice President and Acting Chief Executive
Officer of the Company.
|
| (v) |
The
relocation of Executive’s primary office from a location that is more than
50 miles from both (a) the Company’s executive offices at the time of
relocation and (b) Executive’s primary residence at the time of such
relocation.
|
Except
as
specifically set forth in Section 8 hereof, the Company shall have no further
obligations to Executive under this Agreement.
| (e) |
By
Executive without Good Reason.
Executive may terminate the Employment Term and Executive's employment
hereunder at any time without Good Reason upon thirty (30) days advance
written notice to the Company. In the event Executive's employment
is
terminated pursuant to this Section 6(e), the Company shall pay to
Executive, no later than ten (10) days after the last day of Executive's
employment, in one lump sum, the sum of (i) any accrued but unpaid
Base
Salary, less applicable deductions, including salary in respect of
any
accrued and accumulated vacation, due to Executive at the date of
such
termination, and (ii) any amounts owing, but not yet paid, pursuant
to
Section 5 hereof.
|
Except
as
specifically set forth in Section 8 hereof, the Company shall have no further
obligations to Executive under this Agreement.
| (f) |
Release.
Notwithstanding any other provision of this Agreement to the contrary,
Executive acknowledges and agrees that any and all payments and benefits
to which Executive is entitled under this Section 6(b), 6(c), or
6(d),
with the exception of accrued salary, accrued vacation payments,
and
payments pursuant to Section 5 of this Agreement, are conditioned
upon and
subject to Executive's first executing a Confidential Separation
Agreement
including a general waiver and release (and the expiration of any
associated revocation period), in such reasonable and customary form
as
shall be prepared by the Company, of all claims Executive may have
against
the Company, and related entities and individuals.
|
| 7. |
No
Mitigation; Employee Benefit Plans.
Executive shall not be required to mitigate amounts payable to her
under
this Agreement by seeking other employment or otherwise, and there
shall
be no offset against amounts payable to Executive under this Agreement
on
account of Executive's subsequent employment. Amounts payable to
Executive
under this Agreement shall not be offset by any claims that the Company
may have against Executive, and such amounts payable to Executive
under
this Agreement shall not be affected by any other circumstances,
including, without limitation, any counterclaim, recoupment, defense,
or
other right that the Company may have against Executive or others.
Provided,
however,
that,
payments made to Executive as a result of the termination of Executive's
employment hereunder shall not be considered as includible compensation
with respect to any employee benefit plans maintained by the Company,
except to the extent otherwise required by law.
|
| 8. |
Indemnification.
In the event that Executive is made a party or threatened to be made
a
party to any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (a "Proceeding"), by reason of
Executive's employment with, or serving as an officer of, the Company,
the
Company shall indemnify and hold Executive harmless, and defend Executive
to the fullest extent authorized by the laws of the state in which
the
Company is incorporated, as the same exist and may hereafter be amended,
against any and all claims, demands, suits, judgments, assessments,
and
settlements (collectively the "Claims"), including all expenses incurred
or suffered by Executive in connection therewith (excluding, however,
any
legal fees incurred by Executive for Executive's own counsel, except
as
otherwise provided in this Section 8, and excluding any proceedings
initiated by executive), and such indemnification shall continue
as to
Executive even after Executive is no longer employed by the Company
hereunder, and shall inure to the benefit of Executive's heirs, executors,
and administrators; provided,
however,
that,
Executive promptly gives written notice to the Company of any such
Claims
(although Executive's failure to promptly give notice shall not affect
the
Company's obligations under this Section 8 except to the extent that
such
failure prejudices the Company or its ability to defend such Claims).
The
Company shall have the right to undertake, with counsel or other
representatives of its own choosing, the defense or settlement of
any
Claims. In the event that the Company shall fail to notify Executive,
within ten days of its receipt of Executive's written notice, that
the
Company has elected to undertake such defense or settlement, or if
at any
time the Company shall otherwise fail to diligently defend or pursue
settlement of such Claims, then Executive shall have the right to
undertake the defense, compromise, or settlement of such Claims,
in which
event the Company shall hold Executive harmless from any legal fees
incurred by Executive for Executive's counsel. Neither Executive
nor the
Company shall settle any Claims without the prior written consent
of the
other, which consent shall not be unreasonably withheld or delayed.
In the
event that the Company submits to Executive a bona fide settlement
offer
from the claimant of Claims (which settlement offer shall include
as an
unconditional term thereof the giving by the claimant or the plaintiff
to
Executive a release from all liability in respect of such Claims),
and
Executive refuses to consent to such settlement, then thereafter
the
Company's liability to Executive for indemnification hereunder with
respect to such Claims shall not exceed the settlement amount included
in
such bona fide settlement offer, and Executive shall either assume
the
defense of such Claims or pay the Company's attorneys' fees and other
out-of-pocket costs incurred thereafter in continuing the defense
of such
Claims. Regardless of which party is conducting the defense of any
such
Claims, the other party, with counsel or other representatives of
its own
choosing and at its sole cost and expense, shall have the right to
consult
with the party conducting the defense of such Claims and its counsel
or
other representatives concerning such Claims and Executive and the
respective counsel or other representatives shall cooperate with
respect
to such Claims. The party conducting the defense of any such Claims
and
its counsel shall in any case keep the other party and its counsel
(if
any) fully informed as to the status of such Claims and any matters
relating thereto. Executive and the Company shall provide to the
other
such records, books, documents, and other materials as shall reasonably
be
necessary for each to conduct or evaluate the defense of any Claims,
and
will generally cooperate with respect to any matters relating thereto.
This Section 8 shall remain in effect after this Agreement is terminated,
regardless of the reasons for such termination. The indemnification
provided to Executive pursuant to this Section 8 shall not supersede
or
reduce any indemnification provided to Executive under any separate
agreement, or the By-Laws of the Company; in this regard, it is intended
that this Agreement shall expand and extend Executive's rights to
receive
indemnification.
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| 9. |
Withholding.
The Company shall have the right to deduct and withhold from all
payments
to Executive hereunder all payroll taxes, income tax withholding
and other
federal, state and local taxes and charges which currently are or
which
hereafter may be required by law to be so deducted and withheld.
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| 10. |
Restrictive
Covenants.
The restrictive covenants contained in the Confidential Information
and
Intellectual Property Agreement, signed by Executive on October 5,
2000
and attached hereto as Appendix B, including but not limited to,
Section
(2) (Confidential Information); Section 3 (Non-Solicitation of Employees);
and Section 4 (Non-Compete), are incorporated by reference as if
fully set
forth herein. Executive hereby reaffirms her obligations under that
agreement.
|
| 11. |
Non-Assignability.
Executive's rights and benefits hereunder are personal to Executive,
and
shall not be alienated, voluntarily or involuntarily assigned, or
transferred.
|
| 12. |
Binding
Effect.
This Agreement shall be binding upon the parties hereto, and their
respective assigns, successors, executors, administrators, and heirs.
In
the event the Company becomes a party to any merger, consolidation,
or
reorganization, this Agreement shall remain in full force and effect
as an
obligation of the Company or its successor(s) in interest. None of
the
payments provided for by this Agreement shall be subject to seizure
for
payment of any debts or judgments against Executive or Executive's
beneficiary or beneficiaries, nor shall Executive or any such beneficiary
or beneficiaries have any right to transfer or encumber any right
or
benefit hereunder.
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| 13. |
Entire
Agreement; Modification.
|
| (a) |
This
Agreement supersedes all prior agreements, with the exception of
the
Confidential Information and Intellectual Property Agreement, and
all
other agreements (or portions thereof) that deal with confidentiality
or
intellectual property. This Agreement sets forth the entire understanding
among the parties hereto with respect to the subject matter hereof,
may
not be changed orally, and may be changed only by an agreement in
writing
signed by the parties hereto.
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|
(b)
|
Executive
acknowledges that from time to time, the Company may establish, maintain
and distribute manuals, handbooks or personnel policies, and officers
or
other representatives of the Company may make written or oral statements
relating to personnel policies and procedures. Such manuals, handbooks
and
statements are intended only for general guidance. No policies, procedures
or statements of any nature by or on behalf of the Company (whether
written or oral, and whether or not contained in any manual or handbook
or
personnel policies), and no acts or practices of any nature, shall
be
construed to modify this Agreement or to create express or implied
obligations of any nature to
Executive.
|
| 14. |
Notices.
All notices and communications hereunder shall be in writing, sent
by
certified or registered mail, return receipt requested, postage prepaid;
by facsimile transmission, with proof of the time and date of receipt
retained by the transmitter; or by hand-delivery properly receipted.
The
actual date of receipt as shown by the return receipt therefore,
the
facsimile transmission sheet, or the hand-delivery receipt, as the
case
may be, shall determine the date on which (and, in the case of a
facsimile, the time at which) notice was given. All payments required
hereunder by the Company to Executive shall be sent postage prepaid,
or,
at Executive's election, shall be transferred to Executive electronically
to such bank account as Executive may designate in writing to the
Company,
including designation of the applicable electronic address. The foregoing
items (other than any electronic transfer to Executive) shall be
addressed
as follows (or to such other address as the Company and Executive
may
designate in writing from time to time):
|
To
the
Company:
NexMed,
Inc.
00
Xxxx
Xxxxxx Xxxxx
Xxxx
Xxxxxxx, XX 00000
Fax:
000-000-0000
Attention:
Vice President of Finance and Chief Financial Officer
To
Executive:
Xxxxxx
X.
Xxx
0
Xxxx
Xxxxx Xxxxx
Xxxxxxxxx
Xxxxxxxx, XX 00000
Fax:
000-000-0000
| 15. |
Governing
Law; Jurisdiction.
This Agreement shall be governed by, and construed and enforced according
to, the domestic laws of the State of New Jersey without giving effect
to
the principles of conflict of laws thereof, or such principles of
any
other jurisdiction, which could cause the application of the substantive
law of any jurisdiction other than the State of New Jersey. The Company
and Executive agree that the state or federal courts of New Jersey
shall
have exclusive jurisdiction to hear and determine any dispute which
may
arise under this Agreement.
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| 16. |
Severability.
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision
of
this Agreement, and each other provision of the Agreement shall be
severable and enforceable to the extent permitted by law.
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| 17. |
Headings.
The headings of the Sections hereof are provided for convenience
only and
are not to serve as a basis for interpretation or construction, and
shall
not constitute a part, of this Agreement.
|
| 18. |
Signature
in Counterparts.
This Agreement may be signed in counterparts, each of which shall
be an
original, with the same effect as if the signatures thereto and hereto
were upon the same instrument.
|
IN
WITNESS WHEREOF, Executive has hereunto set her hand and the Company has caused
this Agreement to be executed in its name on its behalf, all as of the day
and
year first above written.
|
/s/
Xxxxxx X. Xxx
Xxxxxx
X. Xxx
NEXMED,
INC.
By:/s/
Title:
|
Appendix
A
Change
in Control
For
the
purpose of this Agreement, a "Change in Control" shall be deemed to have taken
place if:
A. Individuals
who, on the date hereof, constitute the Board (the "Incumbent Directors") 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 was approved by a vote of at least two-thirds of the
Incumbent Directors then on the Board (either by a specific vote or by approval
of the proxy statement of the Company in which such person is named as a nominee
for director, without written objection to such nomination) shall be an
Incumbent Director; provided,
however,
that,
no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to directors
or
as a result of any other actual or threatened solicitation of proxies or
consents by or on behalf of any person other than the Board shall be deemed
to
be an Incumbent Director;
B. Any
"Person" (as such term is defined in Section 3(a)(9) of the Securities Exchange
Act of 1934 (the "Exchange Act") and as used in Sections 13(d)(3) and 14(d)(2)
of the Exchange Act) is or becomes a "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 25% or more of the combined voting power of the Company's
then outstanding securities eligible to vote for the election of the Board
(the
"Voting Securities"); provided,
however,
that,
the
event described in this paragraph B shall not be deemed to be a Change in
Control by virtue of any of the following acquisitions: (i) by the Company
or
any subsidiary of the Company in which the Company owns more than 25% of the
combined voting power of such entity (a "Subsidiary"), (ii) by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
Subsidiary, (iii) by any underwriter temporarily holding the Company's Voting
Securities pursuant to a public offering of such Voting Securities, (iv)
pursuant to a Non-Qualifying Transaction (as defined in paragraph C immediately
below), (v) pursuant to any acquisition by Executive or by any Person which
is
an "affiliate" (within the meaning of 17 C.F.R. § 230.405) of Executive (an
"Excluded Person");
C. The
consummation of a merger, consolidation, statutory share exchange or similar
form of corporate transaction involving the Company or any of its Subsidiaries
that requires the approval of the Company's stockholders, whether for such
transaction or the issuance of securities in the transaction (a "Business
Combination"), unless immediately following such Business Combination: (i)
more
than 25% of the total voting power of (A) the corporation resulting from such
Business Combination (the "Surviving Corporation"), or (B) if applicable, the
ultimate parent corporation that directly or indirectly has beneficial ownership
of 100% of the voting securities eligible to elect directors of the Surviving
Company (the "Parent Corporation"), is represented by the Company's Voting
Securities that were outstanding immediately prior to such Business Combination
(or, if applicable, is represented by shares into which the Company's Voting
Securities were converted pursuant to such Business Combination), and such
voting power among the holders thereof is in substantially the same proportion
as the voting power of the Company's Voting Securities among the holders thereof
immediately prior to the Business Combination, (ii) no Person (other than (A)
any employee benefit plan (or related trust) sponsored or maintained by the
Surviving Corporation or the Parent Corporation or (B) an Excluded Person is
or
becomes the beneficial owner, directly or indirectly, of 25% or more of the
total voting power of the outstanding voting securities eligible to elect
directors of the Parent Corporation (or, if there is no Parent Corporation,
the
Surviving Corporation) and (iii) at least a majority of the members of the
board
of directors of the Parent Corporation (or, if there is no Parent Corporation,
the Surviving Corporation) following the consummation of the Business
Combination were Incumbent Directors at the time of the Board's approval of
the
execution of the initial agreement providing for such Business Combination
(any
Business Combination which satisfies all of the criteria specified in (i),
(ii)
and (iii) above shall be deemed to be a "Non-Qualifying Transaction");
D. A
sale of
all or substantially all of the Company's assets, other than to an Excluded
Person;
E. The
stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company; or
F. Such
other events as the Board may designate.
Notwithstanding
the foregoing, a Change in Control of the Company shall not be deemed to occur
solely because any person acquires beneficial ownership of more than 25% of
the
Company's Voting Securities as a result of the acquisition of the Company's
Voting Securities by the Company which reduces the number of the Company's
Voting Securities outstanding; provided,
that,
if
after such acquisition by the Company such person becomes the beneficial owner
of additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person, a
Change in Control of the Company shall then occur.
