Change of Control Agreement
EXHIBIT
10.1
Agreement
(“Agreement”) made this __ day of _____, 200_ by and between Matritech, Inc.,
Delaware corporation with a principal place of business at 000 Xxxxxx Xxxxxx,
Xxxxxx, XX 00000 (the “Company”) and ________________, an individual residing at
______________ (the “Executive”).
1. Purpose.
The
Company considers it essential to the best interests of its stockholders to
xxxxxx the continuous and dedicated employment of its executive officers and
other key management personnel. The Compensation Committee of Board of Directors
of the Company recognizes, however, that competition for key management
personnel is keen and that, as a small publicly held corporation, the Company
may face special challenges in ensuring the continued commitment of its
management. To assist in ensuring that executive officers and other key
management personnel do not become distracted or consider leaving the employ
of
the Company due to concerns about their employment security in the event of
a
possible Change in Control (as defined in Section 2 hereof), the Committee
has
determined that appropriate steps should be taken to reinforce and encourage
the
continued attention and dedication of selected members of the Company’s
management, including the Executive. Nothing in this Agreement shall be
construed as creating an express or implied contract of employment and, except
as otherwise agreed in writing between the Executive and the Company, the
Executive shall not have any right to be retained in the employ of the
Company.
2. Definitions.
(a) “Change
of Control Transaction” shall mean any transaction involving the occurrence of
(x) a change in the ownership of the Company (as defined in section
1.409A-3(g)(5)(v) of the proposed regulations under Internal Revenue Code
section 409A or any similar provisions of any successor regulations), or (y)
a
change in effective control of the Company (as defined in section
1.409A-3(g)(5)(vi) of the proposed regulations under Internal Revenue Code
section 409A or any similar provisions of any successor regulations) or (z)
a
change in the ownership of a substantial portion of the assets of the Company
(as defined in section 1.409A-3(g)(5)(vii) of the proposed regulations under
Internal Revenue Code section 409A or any similar provisions of any successor
regulations).
(b) “Good
Reason” shall mean (a) any substantial diminution, without the Executive’s prior
written consent, in duties and responsibilities, as in effect immediately prior
to the Change of Control Transaction; (b) any reduction in the Executive’s base
salary, target annual bonus or benefits as in effect on the date hereof or
as
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the
same
may be increased prior to the Change of Control Transaction, except for
across-the-board salary or benefit reductions similarly affecting all or
substantially all management employees; or (c) any requirement by the Company
that the Executive perform his/her principal duties at a location more than
50
miles radius from the location at which the Executive performed such duties
immediately prior to the Change of Control Transaction.
3. Entitlement
to Change of Control Severance Benefits.
In the
event the Executive’s employment with the Company is terminated by the Company
without cause within three (3) months prior to or within twelve (12) months
after a Change of Control Transaction (as defined herein) or in the event the
Executive terminates his/her employment for Good Reason (as defined herein)
within twelve (12) months after a Change of Control Transaction, the Executive
shall receive compensation as set forth in Section 4 of this Agreement,
provided,
however,
that in
order to obtain benefits following a termination by the Executive for Good
Reason, the Executive must give written notice to the Company within 90 days
of
when the Executive first becomes aware of the grounds providing Good Reason
for
termination and further
provided
that the
Executive’s entitlement, if any, to Change of Control Severance Benefits shall
automatically cease in the event the Executive violates any covenant or
agreement contained in Section 6 hereof or in the Non-Disclosure and Inventions
Agreement previously executed by the Executive (or any substitute or successor
agreement of similar import which the Executive may hereafter enter into with
the Company).
4. Change
of Control Severance Benefits.
The
compensation to be provided to the Executive by the Company if the Executive
becomes entitled to Change of Control Severance Benefits under this Agreement
shall include: (a) base salary at the rate in effect as of the date of
termination or, if the Executive has terminated his/her employment for Good
Reason due to a reduction in his or her base salary, the annual rate of base
salary in effect immediately prior to such reduction, (b) annual bonus, in
cash,
at the target percentage of base salary in effect as of the date of termination
or, if the Executive has terminated his/her employment for Good Reason due
to a
reduction in his or her base salary or target annual bonus, the target
percentage of base salary in effect immediately prior to such reduction and
(c)
health insurance, life insurance and disability insurance received by the
Executive as of the date of termination or, if the Executive has terminated
his/her employment for Good Reason due to a reduction in his or her benefits,
the benefits received by the Executive immediately prior to such reduction
(collectively, the “Change of Control Severance Benefits”).
5.
Payment
of the Change of Control Severance Benefits.
The
Change of Control Severance Benefits described in clauses (a), (b) and (c)
of
Section 4 above shall be provided to the Executive for a period of [12, 18,
24]
months following termination of employment; provided that such number of months
of base salary and target annual bonus shall determine the amount of payments
to
be made under clauses (a) and (b) of Section 4, but the timing of payments
shall
be governed by this Section 5. Payments to
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be
made
by the Company to the Executive pursuant to clauses (a) and (b) of Section
4
hereof shall initially be made on whatever the then customary payment schedule
is for compensation of executive employees of the Company (i.e. monthly,
bi-weekly, or the like). However, all payments due under clauses (a) and (b)
of
Section 4 of this Agreement but not yet made on or before March 12 of the first
calendar year following the termination which results in entitlement to the
Change of Control Severance Benefits shall be accelerated and paid on that
March
12 date.
The
payments to be made pursuant to clauses (a) and (b) of Section 4 and the
benefits to be provided pursuant to clause (c) of Section 4 shall not be
considered employee compensation or be subject to tax withholding by the
Company. Rather they shall be made in exchange for the Executive’s covenant not
to compete, as set forth in Section 6(a) hereof. If, at any time, the payments
made pursuant to clauses (a) and (b) of Section 4 and benefits provided pursuant
to clause (c) of Section 4 are determined by any state or federal taxing
authority to be employee compensation, then the Company agrees to pay its share
of FICA and Medicare tax on such payments, plus any interest or penalty that
may
be due as a result of the taxing authority’s determination and that relates to
the Company’s unpaid tax.
In
the
event the Executive secures a new employment position during the period of
the
Company’s continuing payment of compensation to him/her, the Executive shall
promptly notify the Company of the commencement of the new employment position
and shall inform the Company of the extent to which benefits to be provided
by
the Company under clause (c) above are duplicative of benefits then available
to
the Executive through his/her new employment position. To the extent that the
benefits to be provided by the Company hereunder are duplicative, the Company
shall be entitled to cease provision of such benefits. Nothing contained herein
shall, however, be construed as reducing the obligation of the Company to
continue to make the payment due under clauses (a) and (b) of Section 4.
The
Company agrees that, if the Executive’s employment by the Company is terminated
and the Executive becomes entitled to receive any Change of Control Severance
Benefits hereunder, the Executive is not required to seek other employment
or to
attempt in any way to reduce any amounts payable to the Executive by the Company
pursuant to Sections 5 or 7 hereof. Further, except for the possible abatement
of fringe benefits described in clause (c) of Section 4 in the circumstances
set
forth in the preceding paragraph, and the possible reduction of payments as
a
result of the application of the provisions of Section 8 hereof, the amount
of
any payment provided for in this Agreement shall not be reduced by any
compensation earned by the Executive as the result of employment by another
employer, by self-employment or consulting, by retirement benefits, by
disability benefits, by offset against any amount claimed to be owed by the
Executive to the Company, or otherwise.
6.
Non-competition;
Non-solicitation.
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(a)
Non-compete.
The
Executive acknowledges that he/she has gained or will gain extensive and
valuable experience and knowledge in the business conducted by the Company
and
has had or will have extensive contacts with the customers, suppliers,
investors, employees and/or consultants of the Company. The Executive recognizes
that it is critical to the ongoing success of the Company that it preserve
its
goodwill and protect its proprietary rights and its other important business
interests.
Accordingly,
the Executive agrees that he/she will not, while employed by the Company and,
in
the event the Executive becomes entitled to receive Change of Control Severance
Benefits hereunder, for the duration of time covered by the payments under
clauses (a) and (b) of Section 4 of this Agreement (without regard to the
acceleration of payment provisions of Section 5), directly or indirectly, engage
in (whether as an officer, employee, consultant, director, proprietor, agent,
partner or otherwise) or have an ownership interest in, or participate in the
financing, operation, management or control of, any person, firm, corporation
or
business engaged in competition with the Company or any of its subsidiaries
or
affiliates in the business of development, manufacture, marketing, distribution
and licensing of cancer diagnostic technologies, products and services. It
is
agreed that ownership of no more than 4.9% of the outstanding voting stock
of a
corporation shall not constitute a violation of this provision. In recognition
of the fact that the Company’s business is global, the territory to which the
restrictions contained in this Section 6(a) shall apply shall be worldwide.
The
Company may, in its sole discretion, waive the foregoing restrictions or their
application in any particular circumstance and may condition any such waiver
upon receipt of assurances satisfactory to the Company, from the Executive
and/or others, that the Executive’s proposed activity will not adversely affect
the Company’s goodwill, proprietary rights or other important business
interests.
(b)
Non-solicitation.
The
Executive agrees that he/she will not, while employed by the Company and, in
the
event the Executive becomes entitled to receive Change of Control Severance
Benefits hereunder, for the duration of time covered by the payments under
clauses (a) and (b) of Section 4 of this Agreement (without regard to the
acceleration of payment provisions of Section 5), recruit or otherwise solicit,
entice and induce (i) any persons or companies who are or have recently been
customers, suppliers or business patronage of the Company or any of its
subsidiaries or affiliates if such solicitation is for the purpose of, or
results in, competition with the Company or any of its subsidiaries or
affiliates, or (ii) any employees of the Company or any of its subsidiaries
or
affiliates to terminate their employment with, or otherwise cease their
relationships with the Company or any of its subsidiaries or affiliates, in
order to engage in any activity for any business, firm, corporation or any
other
entity that conducts research with respect to, develops, produces or
manufactures any products or technologies or provides services similar to those
developed, produced, manufactured or provided by the Company.
7. Other
Change of Control Payments.
In the
event of a Change of Control Transaction, the Executive shall receive, in a
lump
sum payment paid within thirty (30) days of the Change of Control Transaction,
(i) a pro-rated incentive bonus based on the
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portion
of the then current fiscal year completed at the time of the Change of Control
Transaction compared to the Executive’s target annual bonus for such year and
(ii) all deferred compensation, if any, then maintained in the Executive’s
account, including without limitation all restricted stock issued pursuant
to
the Amended and Restated Management Bonus Plan, whether or not otherwise vested,
and all other restricted stock which by the terms of the individual restricted
stock award agreement is to be vested upon an Acquisition (as defined in such
individual agreements). All payments to be made by the Company under this
Section 7 shall be net of any tax or other amounts required to be withheld
by
the Company under applicable law.
8. Application
of Section 280G of the Internal Revenue Code.
If the
payments and benefits provided for in this Agreement, together with any other
payments or benefits which the Executive has the right to receive from the
Company (or any of its subsidiaries or affiliates), would constitute an “excess
parachute payment” (as defined in Section 280G of the Internal Revenue Code) or
would otherwise be non-deductible by the Company as a result of application
of
any similar statutory or regulatory provision, the Executive shall receive
either (a) all compensation and benefits provided for him or her under this
Agreement or (b) the maximum of compensation and benefits that will avoid an
excess parachute payment under Section 280G, whichever would provide the greater
after-tax benefit to the Executive. In the event that clause (b) of this Section
8 provides the greater after-tax benefit, the Executive shall be entitled to
select the items to be abated, provided that if the Executive fails to make
such
selection within forty-five (45) days after the Company has given notice of
the
need for such abatement, the Company may determine the method of such abatement
in its sole discretion. If the Executive is to receive benefits under clause
(b)
of this Section 8 and through error or otherwise the Executive receives
payments, together with other payments the Executive has the right to receive
from the Company (or its affiliates or subsidiaries) in excess of 2.99 times
the
Executive’s base amount, the Executive agrees to immediately refund the
overpayment to the Company, together with interest thereon at the applicable
Federal rate determined under Section 1274(d) of the Code, compounded annually,
or at such other rate as may be required in order that no such payments shall
be
nondeductible to the Company by reason of the operation of Section 280G or
any
similar statutory or regulatory provision.
9. Notices.
Any
notice, request, demand, and other communication provided for or permitted
by
this Agreement shall be sufficient if in writing and delivered in person or
sent
by registered or certified mail, postage prepaid, or by overnight delivery
service, to the Executive at the last address the Executive has filed in writing
with the Company, or to the Company at its main office, attention of the Board
of Directors.
10. Amendments.
This
Agreement may be amended or modified only by a written instrument signed by
the
Executive and by a duly authorized representative of the Company.
11. Assignment;
Entire Agreement.
Except
for an assignment by the Company in connection with a Change of Control
Transaction in which the successor, if other than the Company, shall assume
and
agree to perform this Agreement in writing,
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neither
the Company nor the Executive may make any assignment of this Agreement or
any
interest herein, by operation of law or otherwise, without the prior written
consent of the other party, and without such consent any attempted transfer
shall be null and void and of no effect. This Agreement shall inure to the
benefit of and be binding upon the Company and the Executive, their respective
successors, executors, administrators, heirs and permitted assigns. In the
event
of the Executive’s death after he/she becomes entitled to the Change of Control
Severance Benefits or other Change of Control Payments but prior to the
completion by the Company of all payments due him or her under this Agreement,
the Company shall continue such payments to the Executive’s beneficiary
designated in writing to the Company prior to his or her death (or to his or
her
estate, if the Executive fails to make such designation). This Agreement
supersedes all prior Agreements, whether written or oral with respect to the
subject matter hereof. Notwithstanding the foregoing, the Non-Disclosure and
Inventions Agreement executed by the Executive (or any substitute or successor
agreement of similar import which the Executive may hereafter enter into with
the Company) and individual restricted stock award agreements executed prior
to
or after this Agreement between the Executive and the Company shall remain
in
full force and effect in accordance with its terms.
12. Obligations
of Successors.
In
addition to any obligations imposed by law upon any successor to the Company,
the Company will use commercially reasonable efforts to require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to
all or substantially all of the business or assets of the Company 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 if no such succession
had
taken place.
13.
Dispute
Resolution.
In the
event of any dispute between the Company and the Executive as to any claim
arising out of or relating to this Agreement or the breach thereof, the parties
shall endeavor in good faith to settle the dispute through mediation using
a
professional mediator mutually selected by them. If the dispute has not been
resolved within 90 days, either party shall be free to pursue legal remedies,
at
law or in equity.
14.
Severability.
If any
term or provision of this Agreement is declared by a court of competent
jurisdiction to be invalid or unenforceable for any reason, this Agreement
shall
remain in full force and effect, and either (a) the invalid or unenforceable
provision shall be modified to the minimum extent necessary to make it valid
and
enforceable, or (b) if such a modification is not possible, this Agreement
shall
be interpreted as if such invalid or unenforceable provisions were not a part
hereof.
15.
Governing
Law and Venue. This
Agreement shall be construed and enforced in accordance with the substantive
law
of the Commonwealth of Massachusetts, without giving effect to its conflicts
of
law principles. The parties agree that any litigation pertaining to this
Agreement shall be maintained exclusively in the courts of general jurisdiction
located in Massachusetts, and each party agrees to submit to the jurisdiction
and venue of any such court. Notwithstanding the foregoing, the Company
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shall
be
entitled to file litigation against the Executive in any jurisdiction where
by
Company deems it necessary or advisable to do so in order to enforce the
provisions of Section 6 hereof.
In
Witness Whereof, the parties have executed this Agreement as of the date first
above written.
|
Matritech,
Inc.
|
Executive | |
| By: _________________________________ | ___________________________________ | |
| Its _____________________________ |
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