SCICLONE PHARMACEUTICALS, INC. CHANGE IN CONTROL AGREEMENT
SCICLONE
PHARMACEUTICALS, INC.
This
Change in Control Agreement (the “Agreement”) is effective as of June
2, 2006, by and between Xx. Xxxxxxxxx Xxxxxx (“Employee”)and SciClone
Pharmaceuticals, Inc., a Delaware corporation (the “Company”).
RECITALS
B. The
Board
of Directors of the Company (the “Board”) has determined that it is in the best
interests of the Company and its stockholders to assure that the Company will
have the continued dedication and objectivity of Employee, notwithstanding
the
possibility or occurrence of a Change in Control (as defined below) of the
Company.
C. The
Board
believes that it is imperative to provide Employee with certain severance
benefits upon Employee’s termination of employment following a Change in Control
that will provide Employee with enhanced financial security and provide
sufficient incentive and encouragement to Employee to remain with the Company
following a Change in Control.
AGREEMENT
Employee
and the Company agree as set forth below:
1. Limitation
On Compensation On Termination Following A Change in Control.
If
Employee’s employment with the Company terminates following a Change in Control,
but on or before the first anniversary of the Change in Control, Employee will
not be entitled to any payments, benefits, damages, awards or compensation
other
than as provided by this Agreement.
2. Severance
Benefits Upon Termination following a Change in Control.
Subject
to the limitations set forth in Sections 3 and 4 below, if Employee’s employment
with the Company terminates following a Change in Control but on or before
the
first anniversary of such Change in Control, then Employee will be entitled
to
receive, in addition to the compensation and benefits earned by Employee through
the date of his termination, severance benefits as follows:
(a) Involuntary
Termination.
If
Employee’s employment with the Company is terminated as a result of Involuntary
Termination, then Employee will be entitled to receive the following severance
benefits:
(i) Employee
will be entitled to receive severance pay in an amount equal to one hundred
fifty percent (150%) of his annual base salary as in effect at the time of
such
termination. Any severance to which Employee is entitled pursuant to this
section will be paid in a lump sum, less applicable withholding, within thirty
(30) days following Employee’s termination, subject to the provisions of Section
2(a)(v) hereof;
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(ii) With
respect to any unvested options to purchase shares of stock of the Company
held
by Employee as granted pursuant to the First Option (as defined by the
Employment Agreement), Employee will immediately become vested in full at the
time of such termination; and
(iii) The
exercise period for any unexercised portion of all nonstatutory stock options
held by Employee as at the date of such Involuntary Termination will be extended
to be 12 months after the date of such Involuntary Termination.
(iv) If
Employee was covered under the Company’s group health plan as of his Involuntary
Termination and he timely elects to continue his group health benefits pursuant
to federal law (COBRA) or the Company has paid Employee health care coverage
under another plan, the Company will pay the COBRA premiums or the premiums
under the other plan until the earlier of (A) the one year anniversary of
Employee’s Involuntary Termination, or (B) the date on which Employee
commences New Employment.
(v) To
the
extent, if any, required in order to avoid the imposition of additional tax
on
Employee or the Company pursuant to Section 409A of the Internal Revenue Code,
the payments set forth in Section 2(a)(i) hereof will not commence, and the
accelerated vesting as to options provided under Section 2(a)(ii) hereof, will
not be effective until the date occurring six months after the date of
Involuntary Termination .
(b) Voluntary
Resignation; Termination For Cause.
If
Employee’s employment terminates by reason of Employee’s voluntary resignation
(but not as a result of an Involuntary Termination) or as a result of Employee’s
termination for Cause, then Employee will not be entitled to receive any
severance pay or benefits under this Agreement.
(c) Disability;
Death.
If the
Company terminates Employee’s employment as a result of Employee’s Disability,
or death, then Employee will not be entitled to receive any severance pay or
benefits under this Agreement.
3. Release
of Claims; Resignation.
Employee’s entitlement to any severance pay or benefits under Section 2(a)
is conditioned upon Employee’s execution and delivery to the Company of
(a) a general release of known and unknown claims in the form attached
hereto as Schedule
A and
(b) a resignation from all of Employee’s positions with the Company,
including from the Board of Directors and any committees thereof on which
Employee serves, in a form satisfactory to the Company.
4. Parachute
Payments.
In the
event that any payment or benefit received or to be received by Employee
pursuant to this Agreement or otherwise (collectively, the “Payments”) would
result in a “parachute payment” as described in section 280G of the
Internal Revenue Code of 1986, as amended, notwithstanding the other provisions
of this Agreement, the amount of such Payments will not exceed the amount which
produces the greatest after-tax benefit to Employee. For purposes of the
foregoing, the greatest after-tax benefit will be determined within thirty
(30)
days of the occurrence of such payment to Employee, in Employee’s sole and
absolute discretion. If no such determination is made by Employee within thirty
(30) days of the occurrence of such payment, the Company will promptly make
such
determination in a fair and equitable manner.
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5. Consulting
Services.
During
the three (3) months following any Involuntary Termination for which Employee
receives the severance pay and benefits described in Section 2(a) hereof,
Employee will be retained by the Company as an independent contractor to provide
consulting services to the Company at its request for up to five (5) hours
per
week. These services will include any reasonable requests for information or
assistance by the Company, including, but not limited to, the transition of
Employee’s duties. Such services will be provided at mutually convenient times.
For the actual provision of such services, the Company will pay to Employee
a
consulting fee of $400.00 per hour, up to a maximum of $2,500.00 per day, plus
reasonable out-of-pocket expenses (for example, travel and lodging).
6. Definition
of Terms.
The
following terms referred to in this Agreement will have the following
meanings:
(a) “Cause”
will
mean any of the following, in each case, as determined by the Board after
reasonable and good faith consultation with Employee:
(i) Employee’s
theft, dishonesty, misconduct or falsification of any records of the Company,
its successor, or any subsidiary of the Company or its successor (collectively,
the “Company
Group”);
(ii)
Employee’s
misappropriation or improper disclosure of confidential or proprietary
information of the Company Group;
(iii)
any
intentional action by Employee which has a material detrimental effect on the
reputation or business of the Company Group;
(iv)
Employee’s
failure or inability to perform any reasonable assigned duties after written
notice from the Company Group of, and a reasonable opportunity to cure, such
failure or inability;
(v)
any
material breach by Employee of any employment agreement between Employee and
the
Company Group, which breach is not cured pursuant to the terms of such
agreement; or
(vi)
Employee’s
conviction of any criminal act which impairs Employee’s ability to perform his
or her duties for the Company Group.
(b) “Change
in Control”
will
mean: (i) a merger or other transaction in which the Company or substantially
all of its assets is sold or merged and as a result of such transaction, the
holders of the Company’s common stock prior to such transaction do not own or
control a majority of the outstanding shares of the successor corporation,
(ii)
the election of nominees constituting a majority of the Board which nominees
were not approved by a majority of the Board prior to such election, or (iii)
the acquisition by a third party of twenty percent (20%) or more of the
Company’s outstanding shares which acquisition was without the approval of a
majority of the Board in office prior to such acquisition.
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(c) “Constructive
Termination”
will
mean any one or more of the following:
(i) without
Employee’s express written consent, the assignment to Employee, following the
Change in Control, of any title or duties, or any limitation of Employee’s
responsibilities, that are substantially inconsistent with Employee’s title(s),
duties, or responsibilities with the Company Group immediately prior to the
date
of the Change in Control (including, but not limited to, Employee’s failure to
report to the Chief Executive Officer and/or failure to be a member of the
executive staff);
(ii) without
Employee’s express written consent, the relocation of the principal place of
Employee’s employment, following the Change in Control, to a location that is
more than fifty (50) miles from Employee’s principal place of employment
immediately prior to the date of the Change in Control, or the imposition of
travel requirements substantially more demanding of Employee than such travel
requirements existing immediately prior to the date of the Change in
Control;
(iii)
any
failure by the Company Group, following the Change in Control, to pay, or any
material reduction by the Company Group of, (1) Employee’s base salary in
effect immediately prior to the date of the Change in Control, or
(2) Employee’s bonus compensation, if any, in effect immediately prior to
the date of the Change in Control (subject to applicable performance
requirements with respect to the actual amount of bonus compensation earned
by
Employee), unless base salary and/or bonus reductions comparable in amount
and
duration are concurrently made for a majority of the other employees of the
Company Group who have substantially similar titles and responsibilities as
Employee; and
(iv)
any
failure by the Company Group, following the Change in Control, to
(1) continue to provide Employee with the opportunity to participate, on
terms no less favorable than those in effect for the benefit of any employee
group which customarily includes a person holding the employment position or
a
comparable position with the Company Group then held by Employee, in any benefit
or compensation plans and programs, including, but not limited to, the Company
Group’s life, disability, health, dental, medical, savings, profit sharing,
stock purchase and retirement plans, if any, in which Employee was participating
immediately prior to the date of the Change in Control, or in substantially
similar plans or programs, or (2) provide Employee with all other fringe
benefits (or substantially similar benefits), including, but not limited to,
relocation benefits, provided to any employee group which customarily includes
a
person holding the employment position or a comparable position with the Company
Group then held by Employee, which Employee was receiving immediately prior
to
the date of the Change in Control.
However,
the foregoing conditions will not constitute a Constructive Termination unless
Employee has given written notice of any such condition(s) to the Chairman
of
the Board and allowed the Company Group at least twenty (20) days thereafter
to
correct such condition(s). If such condition(s) are not corrected within that
twenty (20) day period, Employee may give written notice of his Constructive
Termination to the Board, which will be an Involuntary Termination.
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(d) The
phrases “determined
by the Board,”
“decided
by the Board,”
mean
in each case a determination or decision made by the affirmative vote of at
least a majority of the total then-authorized number of members of the Board
calculated without counting Employee, if he is then a member of the
Board.
(e) “Disability”
means
the inability of Employee, in the opinion of a licensed, qualified physician,
to
perform the essential functions of Employee’s position with the Company Group,
with or without reasonable accommodation, because of the sickness or injury
of
Employee.
(f) “Involuntary
Termination”
will
mean the occurrence of either of the following events after a Change in Control,
but on or before the first anniversary of such Change in Control:
(i) termination
by Company Group of Employee’s employment without Cause; or
(ii) Employee’s
Constructive Termination.
;
provided,
however,
that
“Involuntary Termination” will not include any termination of Employee’s
employment that is (1) for Cause, (2) a result of Employee’s death or
Disability, or (3) a result of Employee’s voluntary
resignation.
(g) “New
Employment”
will
mean any full-time employment, but not including any consultancy that is less
than full-time, obtained by Employee after the termination of Employee’s
employment with the Company.
7. Nonsolicitation.
During
his employment with the Company, and for a period of one (1) year following
the
termination of his employment for any reason, Employee will not directly or
indirectly recruit, solicit, or induce any person who on the date hereof is,
or
who subsequently becomes, an employee, sales representative or consultant of
the
Company, to terminate his or her relationship with the Company.
8. Successors.
(a) Company’s
Successors.
Any
successor to the Company or to all or substantially all of the Company’s
business and/or assets will be bound by this Agreement in the same manner and
to
the same extent as the Company. For all purposes under this Agreement, the
term
“Company” will include any successor to the Company’s business and/or
assets.
(b) Employee’s
Successors.
All
rights of Employee hereunder will inure to the benefit of, and be enforceable
by, Employee’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. The Employee will have
no right to assign any of his obligations or duties under this Agreement to
any
other person or entity.
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9. Notice.
(a) General.
Notices
and all other communications contemplated by this Agreement will be in writing
and will 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. In the case of Employee, mailed notices will be addressed
to
Employee at the home address which he most recently communicated to the Company
in writing. In the case of the Company, mailed notices will be addressed to
its
corporate headquarters, and all notices will be directed to the attention of
its
Secretary.
(b) Notice
of Termination.
Any
termination by the Company Group or Employee of their employment relationship
will be communicated by a written notice of termination to the other
party.
10. Miscellaneous
Provisions.
(a) No
Duty to Mitigate.
The
Employee will 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 will any such payment be reduced by any earnings that Employee may receive
from any other source.
(b) Waiver.
No
provision of this Agreement will 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 will be considered a waiver of any other
condition or provision or of the same condition or provision at another
time.
(c) Choice
of Law.
The
validity, interpretation, construction and performance of this Agreement will
be
governed by the laws of the State of California.
(d) Severability.
The
invalidity or unenforceability of any provision or provisions of this Agreement
will not affect the validity or enforceability of any other provision hereof,
which will remain in full force and effect.
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(e) Arbitration.
In the
event of any dispute or claim relating to or arising out of Employee’s
employment relationship with the Company, this Agreement, or the termination
of
Employee’s employment with the Company for any reason (including, but not
limited to, any claims of breach of contract, wrongful termination, fraud or
age, race, sex, national origin, disability or other discrimination or
harassment), Employee and the Company agree that all such disputes will be
fully, finally and exclusively resolved by binding arbitration conducted by
the
American Arbitration Association in San Mateo County, California (“AAA”) under
the AAA’s National Rules for the Resolution of Employment Disputes then in
effect, which are available online at the AAA’s website at xxx.xxx.xxx.
Judgment upon any decision or award rendered by the arbitrator may be entered
in
any court having jurisdiction over the matter. The Employee and the Company
knowingly and willingly waive their respective rights to have any such disputes
or claims tried to a judge or jury.
(f) Prior
Agreements.
This
Agreement supersedes all prior understandings and agreements, whether written
or
oral, regarding the subject matter of this Agreement.
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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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SCICLONE
PHARMACEUTICALS, INC.
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By:
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/s/ Xxxx Xxxxxxx | |
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Xxxx
Xxxxxxx
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Chairman
of the Board of Directors
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EMPLOYEE
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| /s/ Xx. Xxxxxxxxx Xxxxxx | ||
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Xx.
Xxxxxxxxx Xxxxxx
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Schedule
A
RELEASE
In
exchange for the severance pay and benefits described in the Change in Control
Agreement between SciClone Pharmaceuticals, Inc. (the “Company”) and me of ___,
2006, I hereby release the Company, its parents and subsidiaries, and their
officers, directors, employees, attorneys, stockholders, successors, assigns
and
affiliates, of and from any and all claims, liabilities, and causes of action
of
every kind and nature, whether known or unknown, based upon or arising out
of
any agreements, events, acts, omissions or conduct at any time prior to and
including the execution date of this Release, including, but not limited to:
all
claims concerning my employment with the Company or the termination of that
employment; all claims pursuant to any federal, state or local law, statute,
or
cause of action, including, but not limited to, the federal Civil Rights Act
of
1964, as amended; the federal Americans with Disabilities Act of 1990; the
federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the
California Fair Employment and Housing Act, as amended; tort law; contract
law;
wrongful discharge; race, sex, age or other discrimination or harassment; fraud;
defamation; emotional distress; and breach of the implied covenant of good
faith
and fair dealing.
I
am
knowingly, willingly and voluntarily releasing any claims I may have under
the
ADEA. I acknowledge that the consideration given for the 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) this Release does not apply to
any
rights or claims that may arise after I sign it; (b) I have the right to consult
with an attorney prior to signing this Release; (c) I have twenty-one (21)
days
to consider this Release (although I may choose to voluntarily sign this Release
earlier); (d) I have seven (7) days after I sign this Release to revoke it;
and
(e) this Release will not be effective until the eighth day after it is signed
by me.
In
giving
this release, which includes claims that may be unknown to me at present, 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
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 unknown
claims I may have, and I affirm that it is my intention to release all known
and
unknown claims that I have or may have against the parties released
above.
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This
Release contains the entire agreement between the Company and me regarding
the
subjects above, and it cannot be modified except by a document signed by me
and
an authorized representative of the Company.
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EMPLOYEE
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Date:
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Xx. Xxxxxxxxx Xxxxxx | |||
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SCICLONE
PHARMACEUTICALS, INC.
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By:
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Its:
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