EXHIBIT 10.23
EXECUTIVE
SEVERANCE BENEFITS AGREEMENT
This EXECUTIVE SEVERANCE BENEFITS AGREEMENT (the "AGREEMENT") is entered
into this 2/nd/ day of November, 1998 (the "Effective Date"), between XXXXXX
XXXXXXX, PH.D. ("EXECUTIVE") and SEQUUS PHARMACEUTICALS, INC. (the "COMPANY").
This Agreement is intended to provide Executive with the compensation and
benefits described herein upon the occurrence of specific events. Certain
capitalized terms used in this Agreement are defined in Article 5.
The Company and Executive hereby agree as follows:
ARTICLE 1
SCOPE OF AND CONSIDERATION FOR THIS AGREEMENT
1.1 Executive is currently employed by the Company.
1.2 The Company and Executive wish to set forth the compensation and
benefits which Executive shall be entitled to receive in the event Executive's
employment with the Company is terminated under the circumstances described
herein coincident with or following the effective date of a Change in Control.
1.3 The duties and obligations of the Company to Executive under this
Agreement shall be in consideration for Executive's past services to the
Company, Executive's continued employment with the Company, and Executive's
execution of a release in accordance with Section 3.1.
1.4 This Agreement shall supersede any other agreement relating to cash
severance benefits and health benefits in the event of Executive's severance
from employment with the Company coincident with or following the effective date
of a Change in Control. It is expressly understood that Executive is not
eligible to receive benefits under the SEQUUS Pharmaceuticals, Inc. Change in
Control Mid-Management Severance Benefit Plan; the SEQUUS Pharmaceuticals, Inc.
Change in Control Employee Severance Benefit Plan; the SEQUUS Pharmaceuticals,
Inc. Mid-Management Retention Bonus Plan; or the SEQUUS Pharmaceuticals, Inc.
Employee Retention Bonus Plan.
ARTICLE 2
SEVERANCE BENEFITS
2.1 SEVERANCE BENEFITS. If Executive's employment terminates due to an
Involuntary Termination Without Cause or a Constructive Termination coincident
with or within thirteen (13) months following the effective date of a Change in
Control, such termination of employment will be deemed a Covered Termination. A
Covered Termination entitles Executive to receive the following benefits set
forth in Sections 2.2, 2.3 and 2.4; provided, however, that
1.
the total amount of severance benefits received by the Executive pursuant to
this Agreement, any other agreement between Executive and the Company, and any
plan or practice of the Company or any successor to the Company or any affiliate
thereof providing severance benefits shall not exceed the amount of severance
benefits provided under this Agreement, and the severance benefits payable under
this Agreement shall be reduced to the extent of any excess; provided, further,
however, that forgiveness of a housing support loan shall not be considered a
severance benefit for purposes of the foregoing reduction.
2.2 SALARY CONTINUATION. Executive shall continue to receive Base Salary,
as defined in Section 5.1, for twenty-four (24) months following a Covered
Termination. Such amount shall be paid in regular installments on the normal
payroll dates of the Company and shall be subject to all required tax
withholding.
2.3 BONUS. The Company shall pay to Executive an amount equal to the
highest annual bonus paid to the Executive in the three years preceding the
effective date of the Change in Control, not to exceed $78,928, multiplied by a
fraction, the numerator of which is the number of months of salary continuation
pursuant to Section 2.2 above and the denominator of which is twelve (12). Such
amount shall be paid in regular installments on the normal payroll dates of the
Company and shall be subject to all required tax withholding.
2.4 HEALTH BENEFITS. Provided that Executive elects continued coverage
under federal COBRA law, the Company shall pay the premiums of Executive's group
health and life insurance coverage, including coverage for Executive's eligible
dependents; provided, however, that the Company shall pay premiums for
Executive's eligible dependents only for coverage for which those eligible
dependents were enrolled immediately prior to the Covered Termination. The
number of months of such premium payments shall equal the number of months of
salary continuation payments pursuant to Section 2.2 above, but in no event
shall such premium payments be made for a period exceeding eighteen (18) months
or be made following the effective date of Executive's coverage by a health or
life insurance plan of a subsequent employer. For the balance of the period that
Executive is entitled to coverage under federal COBRA law, Executive shall be
entitled to maintain such coverage at Executive's own expense.
2.5 MITIGATION. Except as otherwise specifically provided herein,
Executive shall not be required to mitigate damages or the amount of any payment
provided under this Agreement by seeking other employment or otherwise, nor
shall the amount of any payment provided for under this Agreement be reduced by
any compensation earned by Executive as a result of employment by another
employer or by any retirement benefits received by Executive after the date of
the Covered Termination.
ARTICLE 3
LIMITATIONS AND CONDITIONS ON BENEFITS
3.1 RELEASE PRIOR TO PAYMENT OF BENEFITS. Upon the occurrence of a Covered
Termination, and prior to the payment of any benefits under this Agreement on
account of such Covered Termination, Executive shall execute a release (the
"Release") in the form attached
2.
hereto and incorporated herein as Exhibit A or Exhibit B, as applicable. Such
Release shall specifically relate to all of Executive's rights and claims in
existence at the time of such execution and shall confirm Executive's
obligations under the Company's standard form of proprietary information and
inventions agreement. It is understood that, as specified in the applicable
Release, Executive has a certain number of calendar days to consider whether to
execute such Release, and Executive may revoke such Release within seven (7)
calendar days after execution. In the event Executive does not execute such
Release within the applicable period, or if Executive revokes such Release
within the subsequent seven (7) day period, no benefits shall be payable under
this Agreement, and this Agreement shall be null and void.
3.2 TERMINATION OF BENEFITS. Benefits under this Agreement shall terminate
immediately if the Executive, at any time, violates any proprietary information
or confidentiality obligation to the Company.
3.3 NON-DUPLICATION OF BENEFITS. Executive is not eligible to receive
benefits under this Agreement more than one time.
ARTICLE 4
PARACHUTE PAYMENTS
4.1 PARACHUTE PAYMENTS. If any payment or benefit Executive would receive
under this Agreement, when combined with any other payment or benefit Executive
receives pursuant to the termination of Executive's employment with the Company
("Payment"), would constitute a "parachute payment" within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code") and
would therefore be subject to the excise tax imposed by Section 4999 of the Code
(the "Excise Tax"), then such Payment shall be reduced by the smallest amount
that would result in no portion of the Payment being subject to the Excise Tax.
ARTICLE 5
DEFINITIONS
For purposes of the Agreement, the following terms are defined as follows:
5.1 "BASE SALARY" means Executive's annual base salary as in effect during
the last regularly scheduled payroll period immediately preceding the Covered
Termination, not to exceed $260,016.
5.2 "BOARD" means the Board of Directors of the Company.
5.3 "CAUSE" means that, in the reasonable determination of the Company or,
in the case of the Chief Executive Officer, the Board, Executive (i) has
committed an act that materially injures the business of the Company; (ii) has
refused or failed to follow lawful and reasonable directions of the Board or the
appropriate individual to whom Executive reports; (iii) has willfully or
habitually neglected Executive's duties for the Company; (iv) has been convicted
of a felony involving moral turpitude that is likely to inflict or has inflicted
material injury on the
3.
business of the Company; or (v) has materially violated a non-discrimination,
anti-harassment, conflict of interest, ethics, violence, substance abuse,
confidentiality or proprietary information policy of the Company.
Notwithstanding the foregoing, Cause shall not exist based on conduct described
in clause (ii) or clause (iii) unless the conduct described in such clause has
not been cured within fifteen (15) days following Executive's receipt of written
notice from the Company or the Board, as the case may be, specifying the
particulars of the conduct constituting Cause.
5.4 "CHANGE IN CONTROL" means the occurrence of any of the following:
(A) any "person," as such term is used in Sections 13(d) and 14(d) of
the Securities and Exchange Act of 1934, as amended from time to time, and any
successor statute (the "Exchange Act") (other than the Company, a subsidiary, an
affiliate, or a Company employee benefit plan, including any trustee of such
plan acting as trustee) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of the Company's
then outstanding securities;
(B) the solicitation of proxies (within the meaning of Rule 14a-1(k)
under the Exchange Act and any successor rule) with respect to the election of
any director of the Company where such solicitation is for any candidate who is
not a candidate proposed by a majority of the Board in office prior to the time
of such election; or
(C) the dissolution or liquidation (partial or total) of the Company
or a sale of assets involving 30% or more of the assets of the Company, any
merger or reorganization of the Company whether or not another entity is the
survivor, a transaction pursuant to which the holders, as a group, of all of the
shares of the Company outstanding prior to the transaction hold, as a group,
less than 70% of the shares of the Company outstanding after the transaction, or
any other event which the Board determines, in its discretion, would materially
alter the structure of the Company or its ownership.
5.5 "COMPANY" means SEQUUS Pharmaceuticals, Inc. or, following a Change in
Control, the surviving entity resulting from such transaction.
5.6 "CONSTRUCTIVE TERMINATION" means that Executive voluntarily terminates
employment within thirteen (13) months following the effective date of a Change
in Control after any of the following are undertaken without Executive's express
written consent:
(A) the assignment to Executive of any duties or responsibilities
which results in a significant diminution in Executive's function as in effect
immediately prior to the effective date of the Change in Control; provided,
however, that (i) a mere change in Executive's title or reporting relationships
shall not constitute a Constructive Termination; and (ii) an Executive will be
deemed to have consented to any assignment of duties and responsibilities on the
date that is three (3) months after such assignment if Executive has not
voluntarily terminated employment prior to that date;
(B) a reduction by the Company in Executive's annual base salary, as
in effect on the effective date of the Change in Control or as increased
thereafter;
4.
(C) a relocation of Executive's business office to a location more
than thirty (30) miles from the location at which Executive performs duties as
of the effective date of the Change in Control, except for required travel by
Executive on the Company's business to an extent substantially consistent with
Executive's business travel obligations prior to the Change in Control;
provided, however, that if Executive performs sales functions for the Company, a
change of sales territory shall not constitute a basis for Constructive
Termination so long as the Executive's business office is not relocated as
provided above;
(D) a material breach by the Company of any provision of this
Agreement; or
(E) any failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company.
5.7 "COVERED TERMINATION" means an Involuntary Termination Without Cause
or a Constructive Termination; provided, however, that "Covered Termination"
does not include (i) any termination that occurs within thirty (30) days
following Executive's refusal to accept an offer of comparable employment by any
successor to the Company or an affiliate thereof (provided that "comparable
employment" shall mean employment with duties and responsibilities not violative
of Section 5.6(a); with base salary in an amount not violative of Section
5.6(b); and at a business office whose location is not violative of Section
5.6(c)); or (ii) any termination that occurs following Executive's refusal to
allow any successor to the Company or an affiliate thereof access to Executive's
employment records or access to Company personnel regarding Executive's
performance for the purpose of evaluating Executive for future employment.
5.8 "INVOLUNTARY TERMINATION WITHOUT CAUSE" means Executive's dismissal or
discharge other than for Cause coincident with or within thirteen (13) months
following the effective date of a Change in Control. The termination of
Executive's employment as a result of Executive's death or disability will not
be deemed to be an Involuntary Termination Without Cause.
ARTICLE 6
GENERAL PROVISIONS
6.1 EMPLOYMENT STATUS. This Agreement does not constitute a contract of
employment or impose upon Executive any obligation to remain as an employee, or
impose on the Company any obligation (i) to retain Executive as an employee,
(ii) to change the status of Executive as an at-will employee, or (iii) to
change the Company's policies regarding termination of employment.
6.2 NOTICES. Any notices provided hereunder must be in writing, and such
notices or any other written communication shall be deemed effective upon the
earlier of personal delivery (including personal delivery by facsimile) or the
third day after mailing by first class mail, to the Company at its primary
office location and to Executive at Executive's address as listed in the
Company's payroll records. Any payments made by the Company to Executive under
the terms
5.
of this Agreement shall be delivered to Executive either in person or at the
address as listed in the Company's payroll records.
6.3 SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.
6.4 WAIVER. If either party should waive any breach of any provisions of
this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
6.5 ARBITRATION. Unless otherwise prohibited by law or specified below,
all disputes, claims and causes of action, in law or equity, arising from or
relating to this Agreement or its enforcement, performance, breach, or
interpretation shall be resolved solely and exclusively by final and binding
arbitration held in San Francisco County, California through Judicial
Arbitration & Mediation Services/Endispute ("JAMS") under the then existing JAMS
arbitration rules. However, nothing in this section is intended to prevent
either party from obtaining injunctive relief in court to prevent irreparable
harm pending the conclusion of any such arbitration. Each party in any such
arbitration shall be responsible for its own attorneys' fees, costs and
necessary disbursement; provided, however, that in the event one party refuses
to arbitrate and the other party seeks to compel arbitration by court order, if
such other party prevails, it shall be entitled to recover reasonable attorneys'
fees, costs and necessary disbursements. Pursuant to California Civil Code
Section 1717, each party warrants that it was represented by counsel in the
negotiation and execution of this Agreement, including the attorneys' fees
provision herein.
6.6 COMPLETE AGREEMENT. This Agreement, including Exhibit A and Exhibit
B, constitutes the entire agreement between Executive and the Company and is the
complete, final, and exclusive embodiment of their agreement with regard to this
subject matter, wholly superseding all written and oral agreements with respect
to cash severance benefits and health benefits to Executive in the event of
employment termination other than any outstanding loans by the Company to
Executive. It is entered into without reliance on any promise or representation
other than those expressly contained herein.
6.7 AMENDMENT OR TERMINATION OF AGREEMENT. This Agreement may be changed
or terminated only upon the mutual written consent of the Company and Executive.
The written consent of the Company to a change or termination of this Agreement
must be signed by an executive officer of the Company after such change or
termination has been approved by the Board.
6.
6.8 COUNTERPARTS. This Agreement may be executed in separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
Agreement.
6.9 HEADINGS. The headings of the Articles and Sections hereof are
inserted for convenience only and shall not be deemed to constitute a part
hereof nor to affect the meaning thereof.
6.10 SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive, and the Company, and any
surviving entity resulting from a Change in Control and upon any other person
who is a successor by merger, acquisition, consolidation or otherwise to the
business formerly carried on by the Company, and their respective successors,
assigns, heirs, executors and administrators, without regard to whether or not
such person actively assumes any rights or duties hereunder; provided, however,
that Executive may not assign any duties hereunder and may not assign any rights
hereunder without the written consent of the Company, which consent shall not be
withheld unreasonably.
6.11 CHOICE OF LAW. All questions concerning the construction, validity
and interpretation of this Agreement will be governed by the law of the State of
California, without regard to such state's conflict of laws rules.
6.12 NON-PUBLICATION. The parties mutually agree not to disclose publicly
the terms of this Agreement except to the extent that disclosure is mandated by
applicable law or to respective advisors (e.g., attorneys, accountants).
6.13 CONSTRUCTION OF AGREEMENT. In the event of a conflict between the
text of the Agreement and any summary, description or other information
regarding the Agreement, the text of the Agreement shall control.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
Effective Date written above.
SEQUUS PHARMACEUTICALS, INC. XXXXXX XXXXXXX, PH.D.
By: /s/ I. Xxxxx Xxxxxxxxx, M.D. /s/ Xxxxxx Xxxxxxx, Ph.D.
---------------------------- ---------------------------
Name: I. Xxxxx Xxxxxxxxx, M.D
Title: Chief Executive Officer
Exhibit A: Release (Individual Termination)
Exhibit B: Release (Group Termination)
7.
EXHIBIT A
RELEASE
(INDIVIDUAL TERMINATION)
Certain capitalized terms used in this Release are defined in the Executive
Severance Benefits Agreement (the "Agreement") which I have executed and of
which this Release is a part.
I hereby confirm my obligations under the Company's proprietary information
and inventions agreement.
I acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR." I hereby expressly waive and
relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to my release of any claims I may
have against the Company.
Except as otherwise set forth in this Release, I hereby release, acquit and
forever discharge the Company, its parents and subsidiaries, and their officers,
directors, agents, servants, employees, shareholders, successors, assigns and
affiliates, of and from any and all claims, liabilities, demands, causes of
action, costs, expenses, attorneys fees, damages, indemnities and obligations of
every kind and nature, in law, equity, or otherwise, known and unknown,
suspected and unsuspected, disclosed and undisclosed (other than any claim for
indemnification I may have as a result of any third party action against me
based on my employment with the Company), arising out of or in any way related
to agreements, events, acts or conduct at any time prior to the date I execute
this Release, including, but not limited to: all such claims and demands
directly or indirectly arising out of or in any way connected with my employment
with the Company or the termination of that employment, including but not
limited to, claims of intentional and negligent infliction of emotional
distress, any and all tort claims for personal injury, claims or demands related
to salary, bonuses, commissions, stock, stock options, or any other ownership
interests in the Company, vacation pay, fringe benefits, expense reimbursements,
severance pay, or any other form of disputed compensation; claims pursuant to
any federal, state or local law or cause of action including, but not limited
to, the federal Civil Rights Act of 1964, as amended; the federal Age
Discrimination in Employment Act of 1967, as amended ("ADEA"); the federal
Employee Retirement Income Security Act of 1974, as amended; the federal
Americans with Disabilities Act of 1990; the federal Worker Adjustment and
Retraining Notification Act of 1988; the California Fair Employment and Housing
Act, as amended; tort law; contract law; statutory law; common law; wrongful
discharge; discrimination; fraud; defamation; emotional distress; and breach of
the implied covenant of good faith and fair dealing; provided, however, that
nothing in this paragraph shall be construed in any way to release the Company
from its obligation to indemnify me pursuant to the Company's indemnification
obligation pursuant to agreement or applicable law.
I acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under ADEA. I also acknowledge that the consideration given
under the Agreement for the waiver and release in the preceding paragraph hereof
is in addition to anything of value to which I was already entitled. I further
acknowledge that I have been advised by this writing, as required by the ADEA,
that: (A) my waiver and release do not apply to any rights or claims that may
arise on or after the date I execute this Release; (B) I have the right to
consult with an attorney prior to executing this Release; (C) I have twenty-one
(21) days to consider this Release (although I may choose to voluntarily execute
this Release earlier); (D) I have seven (7) days following the execution of this
Release by the parties to revoke the Release; and (E) this Release shall not be
effective until the date upon which the revocation period has expired, which
shall be the eighth day after this Release is executed by me.
XXXXXX XXXXXXX, PH.D.
/s/ Xxxxxx Xxxxxxx, Ph.D.
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Date:_____________________________
EXHIBIT B
RELEASE
(GROUP TERMINATION)
Certain capitalized terms used in this Release are defined in the Executive
Severance Benefits Agreement (the "Agreement") which I have executed and of
which this Release is a part.
I hereby confirm my obligations under the Company's proprietary information
and inventions agreement.
I acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR." I hereby expressly waive and
relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to my release of any claims I may
have against the Company.
Except as otherwise set forth in this Release, I hereby release, acquit and
forever discharge the Company, its parents and subsidiaries, and their officers,
directors, agents, servants, employees, shareholders, successors, assigns and
affiliates, of and from any and all claims, liabilities, demands, causes of
action, costs, expenses, attorneys fees, damages, indemnities and obligations of
every kind and nature, in law, equity, or otherwise, known and unknown,
suspected and unsuspected, disclosed and undisclosed (other than any claim for
indemnification I may have as a result of any third party action against me
based on my employment with the Company), arising out of or in any way related
to agreements, events, acts or conduct at any time prior to the date I execute
this Release, including, but not limited to: all such claims and demands
directly or indirectly arising out of or in any way connected with my employment
with the Company or the termination of that employment, including but not
limited to, claims of intentional and negligent infliction of emotional
distress, any and all tort claims for personal injury, claims or demands related
to salary, bonuses, commissions, stock, stock options, or any other ownership
interests in the Company, vacation pay, fringe benefits, expense reimbursements,
severance pay, or any other form of disputed compensation; claims pursuant to
any federal, state or local law or cause of action including, but not limited
to, the federal Civil Rights Act of 1964, as amended; the federal Age
Discrimination in Employment Act of 1967, as amended ("ADEA"); the federal
Employee Retirement Income Security Act of 1974, as amended; the federal
Americans with Disabilities Act of 1990; the federal Worker Adjustment and
Retraining Notification Act of 1988; the California Fair Employment and Housing
Act, as amended; tort law; contract law; statutory law; common law; wrongful
discharge; discrimination; fraud; defamation; emotional distress; and breach of
the implied covenant of good faith and fair dealing; provided, however, that
nothing in this paragraph shall be construed in any way to release the Company
from its obligation to indemnify me pursuant to the Company's indemnification
obligation pursuant to agreement or applicable law.
I acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under ADEA. I also acknowledge that the consideration given
under the Agreement for the waiver and release in the preceding paragraph hereof
is in addition to anything of value to which I was already entitled. I further
acknowledge that I have been advised by this writing, as required by the ADEA,
that: (A) my waiver and release do not apply to any rights or claims that may
arise on or after the date I execute this Release; (B) I have the right to
consult with an attorney prior to executing this Release; (C) I have forty-five
(45) days to consider this Release (although I may choose to voluntarily execute
this Release earlier); (D) I have seven (7) days following the execution of this
Release by the parties to revoke the Release; (E) this Release shall not be
effective until the date upon which the revocation period has expired, which
shall be the eighth day after this Release is executed by me; and (F) I have
received with this Release a detailed list of the job titles and ages of all
employees who were terminated in this group termination and the ages of all
employees of the Company in the same job classification or organizational unit
who were not terminated.
XXXXXX XXXXXXX, PH.D.
/s/ Xxxxxx Xxxxxxx, Ph.D.
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