Exhibit 10.13
ANIKA THERAPEUTICS, INC.
CHANGE IN CONTROL, BONUS AND SEVERANCE AGREEMENT
AGREEMENT made as of June 3, 1999 by and among Anika Therapeutics,
Inc., a Massachusetts corporation with its principal place of business in
Woburn, Massachusetts (the "Company"), and J. Xxxxxxxx Xxxxx of Acton,
Massachusetts (the "Executive"), an individual presently employed as the
Chairman, President and Chief Executive Officer of the Company.
1. PURPOSE. The Company considers it essential to the best interests
of its stockholders to xxxxxx the continuous employment of key management
personnel. The Board of Directors of the Company (the "Board") recognizes,
however, that, as is the case with many publicly held corporations, the
possibility of a Change in Control (as defined in Section 2 hereof) exists and
that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its stockholders. Therefore, the
Board has determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the Company's
management, including the Executive, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a Change in Control. 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. CHANGE IN CONTROL. A "Change in Control" shall mean the occurrence
of any one of the following events:
(a) any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "Act") (other than
the Company, any of its subsidiaries, any trustee, fiduciary or other
person or entity holding securities under any employee benefit plan or
trust of the Company or any of its subsidiaries), together with all
"affiliates" and "associates" (as such terms are defined in Rule 12b-2
under the Act) of such person, shall become the "beneficial owner" (as
such term is defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of the Company representing 51% or more of
the combined voting power of the Company's then outstanding securities
having the right to vote in an election of the Company's Board of
Directors ("Voting Securities"); or
(b) persons who, as of the date hereof, constitute the Company's
Board of Directors (the "Incumbent Directors") cease for any reason,
including, without limitation, as a result of a tender offer, proxy
contest, merger or similar transaction, to constitute at least a
majority of the Board, provided that any person becoming a director of
the Company subsequent to the date hereof whose election or nomination
for election was approved by a vote of at least a majority of the
Incumbent Directors shall, for purposes of this Agreement, be
considered an Incumbent Director; or
(c) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company where the shareholders of the
Company, immediately prior to the consolidation or merger, would not,
immediately after the consolidation or merger, beneficially own (as
such term is defined in Rule 13d-3 under the Act), directly or
indirectly, shares representing in the aggregate 51% of the voting
shares of the corporation issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation, if
any), (B) any sale, lease, exchange or other transfer (in one
transaction or a series of transactions contemplated or arranged by any
party as a single plan) of all or substantially all of the assets of
the Company or (C) any plan or proposal for the liquidation or
dissolution of the Company.
Notwithstanding the foregoing, a "Change in Control" shall not be
deemed to have occurred for purposes of the foregoing clause (a) solely as the
result of an acquisition of securities by the Company which, by reducing the
number of shares of Voting Securities outstanding, increases the proportionate
voting power represented by the Voting Securities beneficially owned by any
person to 51% or more of the combined voting power of all then outstanding
Voting Securities; PROVIDED, HOWEVER, that if any person referred to in this
sentence shall thereafter become the beneficial owner of any additional shares
of Voting Securities (other than pursuant to a share split, stock dividend or
similar transaction or direct purchase from the Company), then a "Change in
Control" shall be deemed to have occurred for purposes of the foregoing clause
(a).
3. TERMINATING EVENT. A "Terminating Event" shall mean any of the
events provided in this Section 3 occurring within eighteen (18) months
subsequent to a Change in Control as defined in Section 2:
(a) termination by the Company of the employment of the Executive
with the Company for any reason other than for Cause or the death of
the Executive. "Cause" shall mean, and shall be limited to, the
occurrence of any one or more of the following events:
(i) a willful act of dishonesty by the Executive with
respect to any matter involving the Company; or
(ii) conviction of the Executive of a crime involving moral
turpitude; or
(iii) the deliberate or willful failure by the Executive
(other than by reason of the Executive's physical or mental
illness, incapacity or disability) to substantially perform the
Executive's duties with the Company and the
2
continuation of such failure for a period of 30 days after
delivery by the Company to the Executive of written notice
specifying the scope and nature of such failure and its intention
to terminate the Executive for Cause.
A Terminating Event shall not be deemed to have occurred pursuant
to this Section 3(a) solely as a result of the Executive being an
employee of any direct or indirect successor to the business or assets
of the Company, rather than continuing as an employee of the Company
following a Change in Control.
(b) termination by the Executive of the Executive's employment
with the Company for Good Reason. "Good Reason" shall mean the
occurrence of any of the following events:
(i) a substantial adverse change in the nature or scope of
the Executive's responsibilities or duties from the
responsibilities or duties exercised by the Executive immediately
prior to the Change in Control, it being understood by the parties
hereto, that so long as the Executive retains primary management
responsibilities for the business conducted by Anika immediately
prior to the Change in Control, Good Reason shall not exist under
this Section 3(b)(i); or
(ii) a reduction in the Executive's annual base salary
and/or benefits as in effect on the date hereof or as the same may
be increased from time to time except for across-the-board salary
and/or benefits reductions similarly affecting all or
substantially all management employees.
For purposes of this Section 3, unless the context otherwise requires,
Company shall mean the Company or any successor thereto or to the business
thereof in a transation involving a Change in Control.
4. SPECIAL TERMINATION PAYMENTS. In the event a Terminating Event
occurs within eighteen (18) months after a Change in Control in lieu of any
payments under the Employment Letter (as hereinafter defined),
(a) the Company shall pay to the Executive, in addition to the
payment, if any, required by Section 5, an amount equal to 100% of the
Executive's annual salary as in effect immediately prior to the Change
in Control, said amount shall be paid in one lump sum payment no later
than thirty-one (31) days following the Date of Termination (as such
term is defined in Section 9(b)); and
3
(b) the Company shall forgive all outstanding loans from the
Company to the Executive, although the Executive understands that this
is a taxable event; and
(c) the Company shall continue to provide health, dental,
long-term disability, life insurance and other fringe benefits to the
Executive, on the same terms and conditions as though the Executive had
remained an active employee, for twelve (12) months; and
(d) the Company shall provide COBRA benefits to the Executive
following the end of the period referred to in Section 4(c) above, such
benefits to be determined as though the Executive's employment had
terminated at the end of such period.
5. PAYMENT UPON EFFECTIVE DATE OF CHANGE IN CONTROL. Upon the
effective date of a Change in Control, regardless of whether a Terminating Event
has occurred, in addition to any other payment required by Section 4, the
Company shall pay the Executive an amount in cash representing one hundred and
fifty percent (150%) of the Executive's annual salary as in effect immediately
prior to the Change in Control. Said amount shall be paid in one lump sum
payment no later than thirty-one (31) days following the effective date of a
Change in Control.
6. CERTAIN LIMITATIONS. It is the intention of the Executive and of
the Company that no payments by the Company to or for the benefit of the
Executive under this Agreement or any other agreement or plan, if any, pursuant
to which the Executive is entitled to receive payments or benefits shall be
nondeductible to the Company by reason of the operation of Section 280G of the
Code relating to parachute payments or any like statutory or regulatory
provision. Accordingly, and notwithstanding any other provision of this
Agreement or any such agreement or plan, if by reason of the operation of said
Section 280G or any like statutory or regulatory provision, any such payments
exceed the amount which can be deducted by the Company, such payments shall be
reduced to the maximum amount which can be deducted by the Company. To the
extent that payments exceeding such maximum deductible amount have been made to
or for the benefit of the Executive, such excess payments shall be refunded to
the Company 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 said Section 280G or any like statutory or
regulatory provision. To the extent that there is more than one method of
reducing the payments to bring them within the limitations of said Section 280G
or any like statutory or regulatory provision, the Executive shall determine
which method shall be followed, provided that if the Executive fails to make
such determination within forty-five (45) days after the Company has given
notice of
4
the need for such reduction, the Company may determine the method of such
reduction in its sole discretion.
7. TERM. This Agreement shall take effect on the date first set forth
above and shall terminate upon the earliest of (a) the termination by the
Company of the employment of the Executive for Cause; (b) the resignation or
voluntary termination of the Executive for any reason prior to a Change in
Control; or (c) the resignation of the Executive after a Change in Control for
any reason other than for Good Reason.
8. WITHHOLDING. All payments made by the Company under this Agreement
shall be net of any tax or other amounts required to be withheld by the Company
under applicable law.
9. NOTICE AND DATE OF TERMINATION; DISPUTES; ETC.
(a) NOTICE OF TERMINATION. After a Change in Control and during
the term of this Agreement, any purported termination of the
Executive's employment (other than by reason of death) shall be
communicated by written Notice of Termination from one party hereto to
the other party hereto in accordance with this Section 9. For purposes
of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement
relied upon and the Date of Termination. Further, a Notice of
Termination for Cause is required to include a copy of a resolution
duly adopted by the affirmative vote of not less than a majority of the
entire membership of the Board (exclusive of the Executive) at a
meeting of the Board (after reasonable notice to the Executive and an
opportunity for the Executive, accompanied by the Executive's counsel,
to be heard before the Board) finding that, in the good faith opinion
of the Board, the termination met the criteria for Cause set forth in
Section 3(a) hereof.
(b) DATE OF TERMINATION. "Date of Termination," with respect to
any purported termination of the Executive's employment after a Change
in Control and during the term of this Agreement, shall mean the date
specified in the Notice of Termination. In the case of a termination by
the Company other than a termination for Cause (which may be effective
immediately), the Date of Termination shall not be less than 30 days
after the Notice of Termination is given. In the case of a termination
by the Executive, the Date of Termination shall not be less than 15
days from the date such Notice of Termination is given. Notwithstanding
Section 3(a) of this Agreement, in the event that the Executive gives a
Notice of Termination to the Company, the Company may unilaterally
accelerate the Date of Termination and such acceleration shall not
result in a second Terminating Event for purposes of Section 3(a) of
this Agreement.
5
(c) NO MITIGATION. The Company agrees that, if the Executive's
employment by the Company is terminated during the term of this
Agreement, 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 4 and 5 hereof. Further, 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 retirement benefits, by offset against any amount
claimed to be owed by the Executive to the Company, or otherwise.
(d) MEDIATION OF DISPUTES. The parties shall endeavor in good
faith to settle within 90 days any controversy or claim arising out of
or relating to this Agreement or the breach thereof through mediation
with JAMS/Endispute or similar organizations. If the controversy or
claim is not resolved within 90 days, the parties shall be free to
pursue other legal remedies in law or equity.
10. ASSIGNMENT; PRIOR AGREEMENTS; NON-SOLICITATION. Except for an
assignment by the Company in connection with a Change in Control in which the
successor, if other than the Company, shall assume and agree to perform this
Agreement in writing, 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 a Terminating
Event but prior to the completion by the Company of all payments due him under
Sections 4 and 5 of this Agreement, the Company shall continue such payments to
the Executive's beneficiary designated in writing to the Company prior to his
death (or to his estate, if the Executive fails to make such designation). This
Agreement supercedes all prior Agreements, whether written or oral with respect
to the subject matter hereof. Notwithstanding the foregoing: (A) Section 4 of
that certain Employment Letter dated September 24, 1996 (the "Employment
Letter"), shall govern any termination of the Executive's employment with the
Company (i) prior to the effective date of a Change in Control or (ii) following
the expiration of eighteen (18) months after a Change in Control; this Agreement
shall govern in the event of any termination of Executive's employment with the
Company during the eighteen (18) months after a Change in Control; and (B) that
certain Non-Disclosure and Non-Competition Agreement of August 1997 by and
between Executive and the Company shall remain in full force and effect in
accordance with its terms.
Executive covenants to the Company that during his employment with the
Company and until one (1) year from the date he is no longer employed by the
Company, any
6
affiliate thereof or any successor thereto, he will not in any manner, on his
own behalf, or as a partner, officer, director, employee, agent or entity,
directly or indirectly, induce or attempt to influence any person serving as an
employee of the Company or any successor thereto to leave its employ or hire any
such person.
11. ENFORCEABILITY. If any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
12. WAIVER. No waiver of any provision hereof shall be effective
unless made in writing and signed by the waiving party. The failure of any party
to require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
13. NOTICES. Any notices, requests, demands, and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, 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.
14. EFFECT ON OTHER PLANS. Except as provided in Section 10 hereof,
nothing in this Agreement shall be construed to limit the rights of the
Executive under the Company's benefit plans, programs or policies.
15. AMENDMENT. 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.
16. GOVERNING LAW. This is a Massachusetts contract and shall be
construed under and be governed in all respects by the laws of the Commonwealth
of Massachusetts.
17. OBLIGATIONS OF SUCCESSORS. In addition to any obligations imposed
by law upon any successor to the Company, the Company will use its 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.
7
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Company by their duly authorized officers and by the
Executive, as of the date first above written.
COMPANY:
ANIKA THERAPEUTICS, INC.
By: /s/ Xxxx Xxxxx
-------------------------------------
Name: Xxxx Xxxxx
Title: Chief Financial Officer
EXECUTIVE:
/s/ J. Xxxxxxxx Xxxxx
------------------------------------------
J. Xxxxxxxx Xxxxx
8
