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Exhibit 10.12
RIBOGENE, INC.
[VICE PRESIDENTS AND DIRECTORS]
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement (the "Agreement") is made and entered
into effective as of July 20 l995, by and between Xxxxx X.X. Xxxxx ("Employee")
and Ribogene, Inc., a California corporation (the "Company").
RECITALS
A. It is expected that another company or other entity may from time to
time consider the possibility of acquiring the Company or that a change in
control may otherwise occur, with or without the approval of the Company's
Board of Directors (the "Board"). The Board recognizes that such consideration
can be a distraction to Employee and can cause Employee to consider alternative
employment opportunities. The Board has determined that it is in the best
interests of the Company and its shareholders to assure that the Company will
have the continued dedication and objectivity of Employee, not withstanding the
possibility, threat or occurrence of a Change of Control (as defined below) of
the Company.
B. The Board believes that it is in the best interests of the Company
and its shareholders to provide Employee with an incentive to continue his or
her employment with the Company.
C. The Board believes that it is imperative to provide Employee with
certain benefits upon termination of Employee's employment in connection with a
Change of Control, which benefits are intended to provide Employee with
financial security and provide sufficient income and encouragement to Employee
to remain with the Company not the possibility of a Change of Control.
D. To accomplish the foregoing objectives, the Board of Directors has
directed the Company, upon execution of this Agreement by Employee, to agree to
the terms provided in this Agreement.
E. Certain capitalized terms used in the Agreement are defined in
Section 4 below.
In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of Employee by the Company, the
parties agree as follows:
1 . At-Will Employment. The Company and Employee acknowledge that
Employee's employment is and shall continue to be at-will, as defined under
applicable law. If Employees employment terminates for any reason, including
(Without limitation) any termination prior to a Change of Control, Employee
shall not be entitled to any payments,
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benefits, damages, awards or compensation other than as provided by this
Agreement, or as may otherwise be available in accordance with another agreement
in place between Employee and the Company or with the Company's established
employee plans and written policies at the time of termination. The terms of
this Agreement shall terminate upon the earlier of (i) the date that all
obligations of the parties hereunder have been satisfied, (ii) June ___, 2000,
or (iii) twelve (12) months after a Change of Control. A termination of the
terms of this Agreement pursuant to the preceding sentence shall be effective
for all purposes, except that such termination shall not affect the payment or
provision of compensation or benefits on account of a termination of employment
occurring prior to the termination of the terms of this Agreement.
2. Severance Benefits.
(a) Termination Following A Change of Control. Subject to Section
5 below, if Employee's employment with the Company is terminated at any time
within 12 months after a Change of Control or if employment is terminated prior
to, but in contemplation of a Change of Control, then Employee shall be entitled
to receive severance benefits as follows:
(i) Voluntary Resignation. If the Employee voluntarily
resigns from the Company (other than as an Involuntary Termination (as defined
below) or if the Company terminates the Employee's employment for Cause (as
defined below)), then the Employee shall not be entitled to receive severance
payments under this Agreement. Employee's benefits will be terminated under the
terms of the Company`s then existing benefit plans and policies in accordance
with such plans and policies in effect on the date of termination or in
accordance with Employee's employment agreement with the Company.
(ii) Involuntary Termination. If Employee's employment is
terminated as a result of Involuntary Termination other than for Cause, Employee
shall be entitled to receive a lump sum severance payment equal to six (6)
months (the "Severance Period") of the salary which Employee was receiving
immediately prior to the Change of Control or as determined by Employee's
employment agreement with the Company.
(iii) Involuntary Termination for Cause. If Employee's
employment is terminated for Cause, then Employee shall not be entitled to
receive severance payments under this Agreement. Employee's benefits will be
terminated under the terms of the Company's then existing benefit plans and
policies in accordance with such plans and policies in effect on the date of
termination.
(iv) Disability; Death. If the Company terminates
Employee's employment as a result of Employee's Disability, or Employee's
employment is terminated due to the death of Employee, then Employee shall not
be entitled to receive severance or other benefits except for those (if any) as
may then be established under the Company's then existing severance and benefits
plans and policies at the time of such Disability or death or under the terms of
Employee's employment agreement with the Company.
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(b) Termination Apart from Change of Control. In the event
Employee's employment terminates for any reason, either prior to the occurrence
of a Change of Control or after the 12-month period following the effective date
of a Change of Control, then Employee shall not be entitled to receive any
severance payments under this Agreement Employee's benefits will be terminated
under the terms of the Company's then existing benefit plans and policies in
accordance with such plans and policies in effect on the date of termination or
in accordance with Employee's employment agreement with the Company.
(c) Medical Benefits. In the event Employee is entitled to
severance benefits pursuant to subsection 2(a)(ii), then in addition to such
severance benefits, Employee shall receive 100% Company-paid health insurance
coverage as provided to such Employee (and his or her dependents, if applicable)
immediately prior to Employee's termination (the "Company-Paid Coverage").
Company-Paid Coverage shall continue for six (6) months following termination or
until Employee becomes covered under another employer's group health insurance
plan, whichever occurs first. For purposes of the continuation health coverage
required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"), the date of the "qualifying event" giving rise to Employee's
COBRA election period (and that of his "qualifying beneficiaries") shall be the
last date on which Employee receives Company-Paid Coverage under this Agreement.
(d) Stock Options. In the event Employee is entitled to severance
benefits pursuant to subsection 2(a)(ii), each stock option held by Employee
exercisable for shares of the Company's Common Stock shall be immediately
vested for an additional six (6) months as of the date of Employee's termination
of employment. In addition, Employee shall have the right to request extension
of the exercise period of each stock option exercisable for shares of the
Company's Common Stock held by Employee for a period of up to one (1) year
following the later of the end of the Severance Period or the expiration of a
lock-up agreement imposed on the Company's optionees at the time of Employee's
termination. Each such stock option shall otherwise remain exercisable in
accordance with the provisions of the plan and option agreement pursuant to
which the option was granted.
3. Definition of Terms. The following terms referred to in this
Agreement shall have the following meanings:
(a) Change of Control. "Change of Control" shall mean the
occurrence of any of the following events:
(i) Ownership. Any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said
Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the total voting power represented by the Company's
then outstanding voting securities [without the approval of the Board of
Directors of the Company]; or
(ii) Merger/Sale of Assets. A merger or consolidation of
the Company whether or not approved by the Board of Directors of the Company,
other than
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a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (5O%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the shareholders
of the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets.
(iii) Change in Board Composition. A change in the
composition of the Board of Directors of the Company, as a result of which fewer
than a majority of the directors are Incumbent Directors. "Incumbent Directors"
shall mean directors who either (A) are directors of the Company as of the date
hereof or (B) are elected, or nominated for election, to the Board of Directors
of the Company with the affirmative votes of at least a majority of the
Incumbent Directors at the time of such election or nomination (but shall not
include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to the
Company).
(b) Cause. "Cause" shall mean (i) material and willful breach of
any material terms of this Agreement, (ii) a material and willful violation of
any federal or state law, (iii) fraud, (iv) repeated unexplained or unjustified
absence, (v) willful breach of fiduciary duty under applicable laws, this
Agreement or Company policies first in effect prior to the occurrence of a
Change in Control or (vi) gross negligence or willful misconduct where such
gross negligence or willful misconduct has resulted or is likely to result in
substantial and material damage to the Company or its subsidiaries.
(c) Involuntary Termination. "Involuntary Termination" will
include Employee's voluntary termination, upon 30 days prior written notice to
the Company, with Employee's position following (i) a material reduction in job
responsibilities inconsistent with the Company and Employee's prior
responsibilities, as determined by the Compensation Committee of the Company's
Board of Directors without Employee's express written consent; (ii) a reduction
by the Company in the annual base compensation of Employee as in effect
immediately prior to such reduction, without Employee's express written consent;
(ii) Employee's refusal to relocate to a facility or location more than 50 miles
from the Company's current location; or (iv) any purported termination of
Employee by the Company which is not effected for Disability or for cause, or
for which the grounds relied upon are not valid.
(d) Disability. "Disability" shall mean that Employee has been
unable to perform his duties under this Agreement as the result of his or her
incapacity due to physical or mental illness, and such inability, at least 26
weeks after its commencement, is determined to be total and permanent by a
physician selected by the Company or its insurer and acceptable to Employee or
Employee's legal representatives (such agreement as to acceptability not to be
unreasonably witheld).
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4. Limitation on Payments. To the extent that any of the payments or
benefits provided for in this Agreement or otherwise payable to Employee
constitute "parachute payments" within the meaning of Section 28OG of the
Internal Revenue Code of 1986, as amended (the "Code") and, but for this Section
5, would be subject to the excise tax imposed by Section 4999 of the Code, the
Company shall reduce the aggregate amount of such payments and benefits such
that the present value thereof (as determined under the Code and the applicable
regulations) is equal to 2.99 times Employee's "base amount" as defined in
Section 28OG(b)(3) of the Code.
5. Successors, Any successor to the Company (whether direct or indirect
and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company's business and/or assets
shall assume the obligations under this Agreement and agree expressly to perform
the obligations under this Agreement in the same manner and to the same extent
as the Company would be required to perform such obligations in the absence of a
succession. The terms of this Agreement and all of Employee's rights hereunder
shall inure to the benefit of, and be enforceable by, Employee's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees, and legatees.
6. Notice. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. Mailed notices to Employee shall be
addressed to Employee at the home address which Employee most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.
7. Miscellaneous Provisions.
(a) No Duty to Mitigate. Employee shall not be required to
mitigate the amount of any payment contemplated by this Agreement (whether by
seeking new employment or in any other manner), nor, except as otherwise
provided in this Agreement, shall any such payment be reduced by any earnings
that Employee may receive from any other source.
(b) Waiver. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by Employee and by an authorized officer of the Company
(other than Employee). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other condition or provision or of the same
condition or provision at another time.
(c) Whole Agreement. No agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof.
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(d) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California without reference to conflict of laws provisions.
(e) Severabilty. If any term or provision of this Agreement or
the application thereof to any circumstance shall, in any jurisdiction and to
any extent, be invalid or unenforceable, such term or provision shall be
ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
terms and provisions of this Agreement or the application of such terms and
provisions to circumstances other than those as to which it is held invalid or
unenforceable, and a suitable and equitable term or provision shall be
substituted therefor to carry out, insofar as may be valid and enforceable, the
intent and purpose of the invalid or unenforceable term or provision.
(f) Arbitration. Any dispute or controversy arising under or in
connection with this Agreement may be settled at the option of either party by
binding arbitration in the County of Contra Costa, California, in accordance
with the rules of the American Arbitration Association then in effect. Judgment
may be entered on the arbitrator's award in any court having jurisdiction.
Punitive damages shall not be awarded.
(g) Legal Fees and Expenses. The parties shall each bear their
own expenses, legal fees and other fees incurred in connection with this
Agreement.
(h) No Assignment of Benefits. The rights of any person to
payments or benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this subsection (h) shall be
void.
(i) Employment Taxes. All payments made pursuant to this
Agreement will be subject to withholding of applicable income and employment
taxes.
Assignment by Company. The Company may assign its rights under this
Agreement to an affiliate, and an affiliate may assign its rights under this
Agreement to another affiliate of the Company or to the Company; provided,
however, that no assignment shall be made if the net worth of the assignee is
less than the net worth of the Company at the time of assignment. In the case of
any such assignment, the term "Company" when used in a section of this Agreement
shall mean the corporation that actually employs Employee.
(k) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.
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Xxxxx X.X. Xxxxx
RIBOGENE, INC. -------------------------------
(Name of Employee}
By: [SIG] By: [SIG]
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Xxxxxxx X. Xxxxxx.
Title: V.P. of Finance & Administration
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