Exhibit 10.14
TERMINATION AGREEMENT
This Agreement is made as of the 10th day of July, 1995, between MGI
PHARMA, INC., a Minnesota corporation, with its principal offices at Suite 300E
Opus Center, 0000 Xxxx Xxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxx 00000 (the "Company")
and Xxx X. Xxx ("Employee"), residing at 0000 Xxxxxxxxx Xxxx, Xxxxx, XX 00000.
WITNESSETH THAT:
WHEREAS, this Agreement is intended to specify the financial arrangements
that the Company will provide to the Employee upon Employee's separation from
employment with the Company under any of the circumstances described herein; and
WHEREAS, this Agreement is entered into by the Company in the belief that
it is in the best interests of the Company and its shareholders to provide
stable conditions of employment for Employee notwithstanding the possibility,
threat or occurrence of certain types of change in control, thereby enhancing
the Company's ability to attract and retain highly qualified people.
NOW, THEREFORE, to assure the Company that it will have the continued
dedication of Employee notwithstanding the possibility, threat or occurrence of
a bid to take over control of the Company, and to induce Employee to remain in
the employ of the Company, and for other good and valuable consideration, the
Company and Employee agree as follows:
1. Term of Agreement. The term of this Agreement shall commence on the
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date hereof as first written above and shall continue through December 31, 1995;
provided that commencing on January 1, 1996 and each January 1 thereafter, the
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term of this Agreement shall automatically be extended for one additional year
unless not later than twelve months prior to such January 1, the Company shall
have given notice that it does not wish to extend this Agreement (which notice
may not, in any event, be given sooner than January 1, 1996); and provided,
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further, that notwithstanding any such notice by the Company not to extend, this
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Agreement shall continue in effect for a period of 24 months beyond the term
provided herein if a Change in Control (as defined in Section 3(i) hereof) shall
have occurred during such term.
2. Termination of Employment
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(i) Prior to a Change in Control. Prior to a Change in Control (as defined
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in Section 3(i) hereof), the Company may terminate Employee from employment with
the Company at will, with or without Cause (as defined in Section 3(iii)
hereof), at any time.
(ii) After a Change in Control
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(a) From and after the date of a Change in Control
(as defined in Section 3(i) hereof) during the term of
this Agreement, the Company shall not terminate Employee
from employment with the Company except as provided in
this Section 2(ii) or as a result of Employee's Disability (as defined in
Section 3(iv) hereof) or his death.
(b) From and after the date of a Change in Control
(as defined in Section 3(i) hereof) during the term of this Agreement, the
Company shall have the right to terminate Employee from employment with the
Company at any time during the term of this Agreement for Cause (as defined
in Section 3(iii) hereof), by written notice to the Employee, specifying
the particulars of the conduct of Employee forming the basis for such
termination.
(c) From and after the date of a Change in Control
(as defined in Section 3(i) hereof) during the term of this Agreement: (x)
the Company shall have the right to terminate Employee's employment without
Cause (as defined in Section 3(iii) hereof), at any time; and (y) the
Employee shall, upon the occurrence of such a termination by the Company
without Cause, or upon the voluntary termination of Employee's employment
by Employee for Good Reason (as defined in Section 3(ii) hereof), be
entitled to receive the benefits provided in Section 4 hereof. Employee
shall evidence a voluntary termination for Good Reason by written notice to
the Company given within 60 days after the date of the occurrence of any
event that Employee knows or should reasonably have known constitutes Good
Reason for voluntary termination. Such notice need only identify the
Employee and set forth in reasonable detail the facts and circumstances
claimed by Employee to constitute Good Reason.
Any notice given by Employee pursuant to this Section 2 shall be effective
five business days after the date it is given by Employee.
3. Definitions
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(i) A "Change in Control" shall mean:
(a) a change in control of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or successor provision thereto, whether or not the Company is then subject
to such reporting requirement;
(b) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-
3 promulgated under the Exchange Act), directly or indirectly, of
securities of the Company representing 35% or more of the combined voting
power of the Company's then outstanding securities;
(c) the Continuing Directors (as defined in Section 3(v) hereof) cease to
constitute a majority of the Company's Board of Directors; provided that
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such change is the direct or indirect result of a proxy fight and contested
election or elections for positions on the Board of Directors; or
(d) the majority of the Continuing Directors
(as defined in Section 3(v) hereof) determine in their sole and absolute
discretion that there has been a change in control of the Company.
(ii) "Good Reason" shall mean the occurrence of any of the following
events, except for the occurrence of such an event in connection with the
termination or reassignment of Employee's employment by the Company for Cause
(as defined in Section 3(iii) hereof), for Disability (as defined in Section
3(iv) hereof) or for death:
(a) the assignment to Employee of employment responsibilities which are not
of comparable responsibility and status as the employment responsibilities
held by Employee immediately prior to a Change in Control;
(b) a reduction by the Company in Employee's base salary as in effect
immediately prior to a Change in Control;
(c) an amendment or modification of the Company's incentive compensation
program (except as may be required by applicable law) which affects the
terms or administration of the program in a manner adverse to the interest
of Employee as compared to the terms and administration of such program
immediately prior to a Change in Control;
(d) the Company's requiring Employee to be based anywhere other than within
50 miles of Employee's office location immediately prior to a Change in
Control, except for requirements of temporary travel on the Company's
business to an extent substantially consistent with Employee's business
travel obligations immediately prior to a Change in Control;
(e) except to the extent otherwise required by applicable law, the failure
by the Company to continue in effect any benefit or compensation plan,
stock ownership plan, stock purchase plan, bonus plan, life insurance plan,
health-and-accident plan or disability plan in which Employee is
participating immediately prior to a Change in Control (or plans providing
Employee with substantially similar benefits), the taking of any action by
the Company which would adversely affect Employee's participation in, or
materially reduce Employee's benefits under, any of such plans or deprive
Employee of any material fringe benefit enjoyed by Employee immediately
prior to such Change in Control, or the failure by the Company to provide
Employee with the number of paid vacation days to which Employee is
entitled immediately prior to such Change in Control in accordance with the
Company's vacation policy as then in effect; or
(f) the failure by the Company to obtain, as specified in Section 5(i)
hereof, an assumption of the obligations of the Company to perform this
Agreement by any successor to the Company.
(iii) "Cause" shall mean termination by the Company of Employee's
employment based upon (a) the willful and continued failure by Employee
substantially to perform his duties and obligations (other than any such failure
resulting from his incapacity due to physical or mental illness or any such
actual or anticipated failure resulting from Employee's termination for Good
Reason) or (b) the willful engaging by Employee in misconduct which is
materially injurious to the Company, monetarily or otherwise. For purposes of
this Section 3(iii), no action or failure to act on Employee's part shall be
considered "willful" unless done, or omitted to be done, by Employee in bad
faith and without reasonable belief that his action or omission was in the best
interests of the Company.
(iv) "Disability" shall mean any physical or mental condition which would
qualify Employee for a disability benefit under the Company's long-term
disability plan.
(v) "Continuing Director" shall mean any person who is a member of the
Board of Directors of the Company, while such person is a member of the Board of
Directors, who is not an Acquiring Person (as hereinafter defined) or an
Affiliate or
Associate (as hereinafter defined) of an Acquiring Person, or a representative
of an Acquiring Person or of any such Affiliate or Associate, and who (a) was a
member of the Board of Directors on the date of this Agreement as first written
above or (b) subsequently becomes a member of the Board of Directors, if such
person's initial nomination for election or initial election to the Board of
Directors is recommended or approved by a majority of the Continuing Directors.
For purposes of this Section 3(v): "Acquiring Person" shall mean any "person"
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act) who or
which, together with all Affiliates and Associates of such person, is the
"beneficial owner" (as defined in Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of the shares of Common Stock of the Company then outstanding,
but shall not include the Company, any subsidiary of the Company or any employee
benefit plan of the Company or of any subsidiary of the Company or any entity
holding shares of Common Stock organized, appointed or established for, or
pursuant to the terms of, any such plan; and "Affiliate" and "Associate" shall
have the respective meanings ascribed to such terms in Rule 12b-2 promulgated
under the Exchange Act.
4. Benefits upon Termination under Section 2(ii)(c)
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(i) Upon the termination (voluntary or involuntary) of the employment of
Employee pursuant to Section 2(ii)(c) hereof, Employee shall be entitled to
receive the benefits specified in this Section 4. The amounts due to Employee
under subparagraphs (a), (b) and (c) of this Section 4(i) shall be paid to
Employee not later than one business day prior to the date that the termination
of Employee's employment becomes effective. All benefits to Employee pursuant
to this Section 4(i) shall be subject to any applicable payroll or other taxes
required by law to be withheld.
(a) The Company shall pay to Employee any and all amounts payable to
Employee pursuant to any standard or general severance policy of the
Company or its Board of Directors;
(b) In lieu of any further base salary payments to Employee for periods
subsequent to the date that the termination of Employee's employment
becomes effective, the Company shall pay as severance pay to Employee a
lump-sum cash amount equal to thirty-six (36) times the Employee's monthly
base salary (as in effect in the month preceding the month in which the
termination becomes effective or as in effect in the month preceding the
Change in Control, whichever is higher);
(c) The Company shall also pay to Employee all legal fees and expenses
incurred by Employee as a result of such termination of employment
(including all fees and expenses, if any, incurred by Employee in seeking
to obtain or enforce any
right or benefit provided to Employee by this Agreement whether by
arbitration or otherwise); and
(d) Any and all contracts, agreements or arrangements between the Company
and Employee prohibiting or restricting the Employee from owning,
operating, participating in, or providing employment or consulting services
to, any business or company competitive with the Company at any time or
during any period after the date the termination of Employee's employment
becomes effective, shall be deemed terminated and of no further force or
effect as of the date the termination of Employee's employment becomes
effective, to the extent, but only to the extent, such contracts,
agreements or arrangements so prohibit or restrict the Employee; provided
that the foregoing provisions shall not constitute a license or right to
use any proprietary information of the Company and shall in no way affect
any such contracts, agreements or arrangements insofar as they relate to
nondisclosure and nonuse of proprietary information of the Company
notwithstanding the fact that such nondisclosure and nonuse may prohibit or
restrict the Employee in certain competitive activities.
(ii) Employee shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise. The
amount of any payment or benefit provided in this Section 4 shall not be reduced
by any compensation earned by Employee as a result of any employment by another
employer or from any other source.
(iii) In the event that any payment or benefit received or to be received
by Employee in connection with a Change in Control of the Company or termination
of Employee's employment (whether payable pursuant to the terms of this
Agreement or any other plan, contract, agreement or arrangement with the
Company, with any person whose actions result in a Change in Control of the
Company or with any person constituting a member of an "affiliated group" as
defined in Section 280G(d)(5) of the Internal Revenue Code of 1986, as amended
(the "Code"), with the Company or with any person whose actions result in a
Change in Control of the Company) (collectively, the "Total Payments") would not
be deductible (in whole or in part) by the Company or such other person making
such payment or providing such benefit solely as a result of Section 280G of the
Code, the amount payable to Employee pursuant to Section 4(i)(b) hereof shall be
reduced until no portion of the Total Payments is not deductible solely as a
result of Section 280G of the Code or such amount payable to Employee pursuant
to Section 4(i)(b) is reduced to zero. For purposes of this limitation, (a) no
portion of the Total Payments shall be taken into account which in the opinion
of tax counsel selected by the Company and acceptable to Employee does not
constitute a "parachute payment" within the meaning of Section 280G(b)(2) of the
Code (such as
payments payable pursuant to the Company's standard or general severance
policies); (b) the payment pursuant to Section 4(i)(b) shall be reduced only to
the extent necessary so that the Total Payments (other than those referred to in
the immediately preceding clause (a)) in their entirety constitute reasonable
compensation within the meaning of Section 280G(b)(4)(B) of the Code, in the
opinion of the tax counsel referred to in the immediately preceding clause (a);
and (c) the value of any other non-cash benefit or of any deferred cash payment
included in the Total Payments shall be determined by the Company's independent
auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the
Code. In case of uncertainty as to whether all or some portion of a payment is
or is not payable to Employee under this Agreement, the Company shall initially
make the payment to the Employee, and Employee agrees to refund to the Company
any amounts ultimately determined not to have been payable under the terms
hereof.
5. Successors and Binding Agreement
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(i) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise to all or substantially all of the
business and/or assets of the Company), by agreement in form and substance
satisfactory to Employee, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle Employee to
compensation from the Company in the same amount and on the same terms as
Employee would be entitled hereunder if employee terminated Employee's
employment after a Change in Control for Good Reason, except that for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the date that the termination of Employee's employment
becomes effective. As used in this Agreement, "Company" shall mean the Company
and any successor to its business and/or assets which executes and delivers the
agreement provided for in this Section 5(i) or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law.
(ii) This Agreement is personal to Employee, and Employee may not assign or
transfer any part of Employee's rights or duties hereunder, or any compensation
due to Employee hereunder, to any other person. Notwithstanding the foregoing,
this Agreement shall inure to the benefit of and be enforceable by Employee's
personal or legal representatives, executors, administrators, heirs,
distributees, devisees and legatees.
6. Arbitration. Any dispute or controversy arising under or in connection
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with this Agreement shall be settled
exclusively by arbitration in the Minneapolis-St. Xxxx metropolitan area, in
accordance with the applicable rules of the American Arbitration Association
then in effect. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
7. Modification; Waiver. No provisions of this Agreement may be modified,
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waived or discharged unless such waiver, modification or discharge is agreed to
in a writing signed by Employee and such officer as may be specifically
designated by the Board of Directors of the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.
8. Notice. All notices, requests, demands and all other communications
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required or permitted by either party to the other party by this Agreement
(including, without limitation, any notice of termination of employment and any
notice of intention to arbitrate) shall be in writing and shall be deemed to
have been duly given when delivered personally or received by certified or
registered mail, return receipt requested, postage prepaid, at the address of
the other party, as first written above (directed to the attention of the Board
of Directors and Corporate Secretary in the case of the Company). Either party
hereto may change its address for purposes of this Section 8 by giving 15 days'
prior notice to the other party hereto.
9. Severability. If any term or provision of this Agreement or the
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application hereof to any person or circumstances shall to any extent be invalid
or unenforceable, the remainder of this Agreement or the application of such
term or provision to persons or circumstances other than those as to which it is
held invalid or unenforceable shall not be affected thereby, and each term and
provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
10. Counterparts. This Agreement may be executed in several counterparts,
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each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
11. Governing Law. This Agreement has been executed and delivered in the
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State of Minnesota and shall in all respects be governed by, and construed and
enforced in accordance with, the laws of the State of Minnesota, including all
matters of construction, validity and performance, and without taking into
consideration the conflict of law provisions of such state.
12. Effect of Agreement; Entire Agreement. The Company and the Employee
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understand and agree that this Agreement is intended to reflect their agreement
only with respect to payments and benefits upon termination in certain cases and
is not intended to create any obligation on the part of either party to continue
employment. This Agreement supersedes any and all other oral or written
agreements or policies made relating to the subject matter hereof and
constitutes the entire agreement of the parties relating to the subject matter
hereof; provided that this Agreement shall not supersede or limit in any way
Employee's rights under any benefit plan, program or arrangements in accordance
with their terms.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, all as of the date first written above.
MGI PHARMA, INC.
By /s/ Xxxxx X. Xxxx
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Its VP, CFO
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and
By /s/ Xxxx-xxxx Xxxxx
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Its VP, General Counsel
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EMPLOYEE
/s/ Xxxx X. Xxx
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Xxxx X. Xxx
