1
EXHIBIT 10.3
Change In Control Agreement
THIS AGREEMENT between UroCor, Inc., a Delaware corporation (the
"Company"), and _______________________________________ (the "Employee") is
executed as of June 18, 2001 and is effective as of the ____ day of __________,
____ (the "Effective Date"). Certain capitalized terms used herein are defined
in Section 21.
Witnesseth:
WHEREAS, the Company considers it to be in the best interests of its
stockholders to encourage the continued employment of certain key employees of
the Company notwithstanding the possibility, threat or occurrence of a Change in
Control of the Company; and
WHEREAS, the Employee is a key employee of the Company; and
WHEREAS, the Company believes that the possibility of the occurrence of
a Change in Control of the Company may result in the termination by the Employee
of the Employee's employment by the Company or in the distraction of the
Employee from the performance of his duties to the Company, in either case to
the detriment of the Company and its stockholders; and
WHEREAS, the Company recognizes that the Employee could suffer adverse
financial and professional consequences if a Change in Control of the Company
were to occur; and
WHEREAS, the Company wishes to enter into this Agreement to protect the
Employee if a Change in Control of the Company occurs, thereby encouraging the
Employee to remain in the employ of the Company and not to be distracted from
the performance of his duties to the Company by the possibility of a Change in
Control of the Company;
NOW, THEREFORE, the parties agree as follows:
Section 1. Other Employment Arrangements.
(a) This Agreement does not affect the Employee's existing or
future employment arrangements with the Company unless a Change in Control of
the Company shall have occurred before the expiration of the term of this
Agreement. The Employee's employment with the Company shall continue to be
governed by the Employee's existing or future employment agreements with the
Company, if any, or, in the absence of any employment agreement, shall continue
to be at the will of the Board of Directors or, if the Employee is not an
officer of the Company at the time of the termination of the Employee's
employment with the Company, the will of the Chief Executive Officer of the
Company, except that if (i) a Change in Control of the Company shall have
occurred before the expiration of the term of this Agreement and (ii) the
Employee's employment with the Company is terminated (whether by the Employee or
-1-
2
the Company or automatically as provided in Section 3) after the occurrence of
that Change in Control of the Company, then the Employee shall be entitled to
receive certain benefits as provided in this Agreement.
(b) Notwithstanding anything contained in this Agreement to
the contrary, if following the commencement of any discussions with any person
that ultimately results in a Change in Control of the Company, (i) the
Employee's employment with the Company is terminated, (ii) the Employee is
removed from any material duties or position with the Company, (iii) the
Employee's Base Salary is reduced or (iv) the Employee's annual bonus is reduced
to an amount less than the Benchmark Bonus, then for all purposes of this
Agreement, such Change in Control of the Company shall be deemed to have
occurred on the date immediately prior to the date of such termination, removal
or reduction.
(c) Nothing in this Agreement shall prevent or limit the
Employee's continuing or future participation in any plan, program, policy or
practice of or provided by the Company or any of its Affiliates and for which
the Employee may qualify, nor shall anything herein limit or otherwise affect
such rights as the Employee may have under any contract or agreement with the
Company or any of its Affiliates. Amounts which are vested benefits or which the
Employee is otherwise entitled to receive under any plan, program, policy or
practice of or provided by, or any contract or agreement with, the Company or
any of its Affiliates at or subsequent to the date of termination of the
Employee's employment with the Company shall be payable or otherwise provided in
accordance with such plan, program, policy or practice or contract or agreement
except as explicitly modified by this Agreement.
Section 2. Change in Control of the Company. A "Change in Control of
the Company" shall have occurred if, after the Effective Date:
(i) a report on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report) shall be filed with
the Commission pursuant to the Exchange Act and that report
discloses that any person (within the meaning of Section 13(d)
or Section 14(d)(2) of the Exchange Act), other than the
Company (or one of its subsidiaries) or any employee benefit
plan sponsored by the Company (or one of its subsidiaries), is
the beneficial owner (as that term is defined in Rule 13d-3 or
any successor rule or regulation promulgated under the
Exchange Act), directly or indirectly, of 20 percent or more
of the outstanding Voting Stock;
(ii) any person (within the meaning of Section 13(d)
or Section 14(d)(2) of the Exchange Act), other than the
Company (or one of its subsidiaries) or any employee benefit
plan sponsored by the Company (or one of its subsidiaries),
shall purchase securities pursuant to a tender offer or
exchange offer to acquire any Voting Stock (or any securities
convertible into Voting Stock) and, immediately after
consummation of that purchase, that person is
-2-
3
the beneficial owner (as that term is defined in Rule 13d-3 or
any successor rule or regulation promulgated under the
Exchange Act), directly or indirectly, of 20 percent or more
of the outstanding Voting Stock (such person's beneficial
ownership to be determined, in the case of rights to acquire
Voting Stock, pursuant to paragraph (d) of Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange
Act);
(iii) the consummation of:
(x) a merger, stock exchange, consolidation
or reorganization of the Company with or into any
other person if as a result of such merger, stock
exchange, consolidation or reorganization, 50 percent
or less of the combined voting power of the
then-outstanding securities of such other person
immediately after such merger, stock exchange,
consolidation or reorganization are held in the
aggregate by the holders of Voting Stock immediately
prior to such merger, consolidation or
reorganization;
(y) any sale, lease, exchange or other
transfer of all or substantially all the assets of
the Company and its consolidated subsidiaries to any
other person if as a result of such sale, lease,
exchange or other transfer, 50 percent or less of the
combined voting power of the then-outstanding
securities of such other person immediately after
such sale, lease, exchange or other transfer are held
in the aggregate by the holders of Voting Stock
immediately prior to such sale, lease, exchange or
other transfer; or
(z) a transaction immediately after the
consummation of which any person (within the meaning
of Section 13(d) or Section 14(d)(2) of the Exchange
Act) would be the beneficial owner (as that term is
defined in Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act),
directly or indirectly, of more than 50 percent of
the outstanding Voting Stock;
(iv) the stockholders of the Company approve the
dissolution of the Company; or
(v) during any period of 12 consecutive months, the
individuals who at the beginning of that period constituted
the Board of Directors shall cease to constitute a majority of
the Board of Directors, unless the election, or the nomination
for election by the Company's stockholders, of each director
of the Company first elected during such period was approved
by a vote of at least a
-3-
4
two-thirds of the directors of the Company then still in
office who were directors of the Company at the beginning of
any such period.
Section 3. Term of this Agreement. The term of this Agreement shall
begin on the Effective Date and shall expire on the first to occur of:
(i) the Employee's death, the Employee's Disability
or the Employee's Retirement, which events shall also be
deemed automatically to terminate the Employee's employment by
the Company; or
(ii) the termination by the Employee or the Company
of the Employee's employment by the Company.
The expiration of the term of this Agreement shall not terminate this Agreement
itself or affect the right of the Employee or the Employee's legal
representatives to enforce the payment of any amount or other benefit to which
the Employee was entitled before the expiration of the term of this Agreement or
to which the Employee became entitled as a result of the event (including the
termination, whether by the Employee or the Company or automatically as provided
in this Section 3, of the Employee's employment by the Company) that caused the
term of this Agreement to expire.
Section 4. Event of Termination for Cause. An "Event of Termination for
Cause" shall have occurred if, after a Change in Control of the Company, the
Employee shall have committed:
(i) gross negligence or willful misconduct in
connection with his duties or in the course of his employment
with the Company;
(ii) an act of fraud, embezzlement or theft in
connection with his duties or in the course of his employment
with the Company;
(iii) intentional wrongful damage to property of the
Company;
(iv) intentional wrongful disclosure of secret
processes or confidential information of the Company; or
(v) an act leading to a conviction of a felony or a
misdemeanor involving moral turpitude.
For purposes of this Agreement, no act, or failure to act, on the part of the
Employee shall be deemed "intentional" if it was due primarily to an error in
judgment or negligence, but shall be deemed "intentional" only if done, or
omitted to be done, by the Employee not in good faith and without reasonable
belief that his action or omission was in the best interest of the Company.
Notwithstanding the foregoing, the Employee shall not be
-4-
5
deemed to have been terminated as a result of an "Event of Termination for
Cause" hereunder unless and until there shall have been delivered to the
Employee a copy of a resolution duly adopted by the affirmative vote of not less
than three-quarters of the Board of Directors then in office at a meeting of the
Board of Directors called and held for such purpose (after reasonable notice to
the Employee and an opportunity for the Employee, together with his counsel, to
be heard before the Board of Directors), finding that, in the good faith opinion
of the Board of Directors, the Employee had committed an act set forth above in
this Section 4 and specifying the particulars thereof in detail. Nothing herein
shall limit the right of the Employee or his legal representatives to contest
the validity or propriety of any such determination.
Section 5. An Event of Termination for Good Reason. An "Event of
Termination for Good Reason" shall have occurred if, after a Change in Control
of the Company, the Company shall:
(i) assign to the Employee any duties inconsistent
with the Employee's position (including offices, titles and
reporting requirements), authority, duties or responsibilities
with the Company in effect immediately before the occurrence
of the first Change in Control of the Company or otherwise
make any change in any such position, authority, duties or
responsibilities;
(ii) remove the Employee from, or fail to re-elect or
appoint the Employee to, any duties or position with the
Company or any of its Affiliates that were assigned or held by
the Employee immediately before the occurrence of the first
Change in Control of the Company, except that a nominal change
in the Employee's title that is merely descriptive and does
not affect rank or status shall not constitute such an event;
(iii) take any other action that results in a
material diminution in such position, authority, duties or
responsibilities or otherwise take any action that materially
interferes therewith;
(iv) reduce the Employee's annual base salary as in
effect immediately before the occurrence of the first Change
in Control of the Company or as the Employee's annual base
salary may be increased from time to time after that
occurrence (the "Base Salary");
(v) reduce the Employee's annual bonus to an amount
less than ___% of the Employee's Base Salary (the "Benchmark
Bonus");
(vi) relocate the Employee's principal office outside
of the metropolitan area of Oklahoma City, Oklahoma;
-5-
6
(vii) fail to (x) continue in effect any bonus,
incentive, profit sharing, performance, savings, retirement or
pension policy, plan, program or arrangement (such policies,
plans, programs and arrangements collectively being referred
to herein as "Basic Benefit Plans"), including, but not
limited to, any deferred compensation, supplemental executive
retirement or other retirement income, stock option, stock
purchase, stock appreciation, or similar policy, plan, program
or arrangement of the Company, in which the Employee was a
participant immediately before the occurrence of the first
Change in Control of the Company, or any substitute plan
adopted by the Board of Directors and in which the Employee
was a participant immediately before the occurrence of the
last Change in Control of the Company, unless an equitable and
reasonably comparable arrangement (embodied in a substitute or
alternative benefit or plan) shall have been made with respect
to such Basic Benefit Plan promptly following the occurrence
of the last Change in Control of the Company, or (y) continue
the Employee's participation in any Basic Benefit Plan (or any
substitute or alternative plan) on substantially the same
basis, both in terms of the amount of benefits provided to the
Employee (which are in any event always subject to the terms
of any applicable Basic Benefit Plan) and the level of the
Employee's participation relative to other participants, as
existed immediately before the occurrence of the first Change
in Control of the Company;
(viii) fail to continue to provide the Employee with
benefits substantially similar to those enjoyed by the
Employee under any of the Company's other employee benefit
plans, policies, programs and arrangements (the "Other Benefit
Plans"), including, but not limited to, life insurance,
medical, dental, health, hospital, accident or disability
plans, in which the Employee was a participant immediately
before the occurrence of the first Change in Control of the
Company;
(ix) take any action that would directly or
indirectly materially reduce any other non-contractual
benefits that were provided to the Employee by the Company
immediately before the occurrence of the first Change in
Control of the Company or deprive the Employee of any material
fringe benefit enjoyed by the Employee immediately before the
occurrence of the first Change in Control of the Company;
(x) fail to provide the Employee with the number of
paid vacation days to which the Employee was entitled in
accordance with the Company's vacation policy in effect
-6-
7
immediately before the occurrence of the first Change in
Control of the Company;
(xi) fail to continue to provide Employee with office
space, related facilities and support personnel (including,
but not limited to, administrative and secretarial assistance)
(y) that are both commensurate with Employee's
responsibilities to and position with the Company immediately
before the occurrence of the first Change in Control of the
Company and not materially dissimilar to the office space,
related facilities and support personnel provided to other
employees of the Company having comparable responsibility to
the Employee, or (z) that are physically located at the
Company's principal executive offices;
(xii) require the Employee to perform a majority of
his duties outside the Company's principal executive offices
for a period of more than 21 consecutive days or for more than
90 days in any calendar year;
(xiii) fail to honor any provision of any employment
agreement Employee has or may in the future have with the
Company or fail to honor any provision of this Agreement;
(xiv) give effective notice of an election to
terminate at the end of the term or extended the term of any
employment agreement Employee has or may in the future have
with the Company in accordance with the terms of any such
agreement; or
(xv) purport to terminate the Employee's employment
by the Company unless notice of that termination shall have
been given to the Employee pursuant to, and that notice shall
meet the requirements of, Section 6.
Section 6. Notice of Termination. If a Change in Control of the Company
shall have occurred before the expiration of the term of this Agreement, any
subsequent termination by the Employee or the Company of the Employee's
employment by the Company, or any determination of the Employee's Disability,
shall be communicated by notice to the other party that shall indicate the
specific paragraph of Section 7 pursuant to which the Employee is to receive
benefits as a result of the termination. If the notice states that the
Employee's employment by the Company has been automatically terminated as a
result of the Employee's Disability, the notice shall (i) specifically describe
the basis for the determination of the Employee's Disability, and (ii) state the
date of the determination of the Employee's Disability, which date shall be not
more than ten days before the date such notice is given. If the notice is from
the Company and states that the Employee's employment by the Company is
terminated by the Company as a result of the occurrence of an Event of
Termination for Cause, the notice shall specifically describe the action or
inaction of the Employee that the Company believes
-7-
8
constitutes an Event of Termination for Cause and shall be accompanied by a copy
of the resolution satisfying Section 4. If the notice is from the Employee and
states that the Employee's employment by the Company is terminated by the
Employee as a result of the occurrence of an Event of Termination for Good
Reason, the notice shall specifically describe the action or inaction of the
Company that the Employee believes constitutes an Event of Termination for Good
Reason. Each notice given pursuant to this Section 6 (other than a notice
stating that the Employee's employment by the Company has been automatically
terminated as a result of the Employee's Disability) shall state a date, which
shall be not fewer than 30 days nor more than 60 days after the date such notice
is given, on which the termination of the Employee's employment by the Company
is effective. The date so stated in accordance with this Section 6 shall be the
"Termination Date". If a Change in Control of the Company shall have occurred
before the expiration of the term of this Agreement, any subsequent purported
termination by the Company of the Employee's employment by the Company, or any
subsequent purported determination by the Company of the Employee's Disability,
shall be ineffective unless that termination or determination shall have been
communicated by the Company to the Employee by notice that meets the
requirements of the foregoing provisions of this Section 6 and the provisions of
Section 9.
Section 7. Benefits Payable on Change in Control and Termination.
(a) If (x) a Change in Control of the Company shall have
occurred before the expiration of the term of this Agreement, and (y) the
Employee's employment by the Company is terminated (whether by the Employee or
the Company or automatically as provided in Section 3) after the occurrence of
that Change in Control of the Company, the Employee shall be entitled to the
following benefits:
(i) If the Employee's employment by the Company is
terminated (x) by the Company as a result of the occurrence of
an Event of Termination for Cause, or (y) by the Employee
before the occurrence of an Event of Termination for Good
Reason, then the Company shall pay to the Employee the Base
Salary accrued through the Termination Date but not previously
paid to the Employee, and the Employee shall be entitled to
any other amounts or benefits provided under any plan, policy,
practice, program, contract or arrangement of or with the
Company, including, but not limited to, the Basic Benefit
Plans and the Other Benefit Plans, which shall be governed by
the terms thereof (except as explicitly modified by this
Agreement).
(ii) If the Employee's employment by the Company is
automatically terminated as a result of the Employee's death,
the Employee's Disability or the Employee's Retirement, then
(x) the Company shall pay to the Employee the Base Salary
accrued through the date of the occurrence of that event but
not previously paid to the Employee, and (y) the Employee
shall be entitled to any other amounts or benefits provided
under any plan, policy,
-8-
9
practice, program, contract or arrangement of or with the
Company, including, but not limited to, the Basic Benefit
Plans and the Other Benefit Plans, which shall be governed by
the terms thereof (except as explicitly modified by this
Agreement).
(iii) If the Employee's employment by the Company is
terminated (x) by the Company otherwise than as a result of
the occurrence of an Event of Termination for Cause, or (y) by
the Employee after the occurrence of an Event of Termination
for Good Reason, then the Employee shall be entitled to the
following:
(1) the Company shall pay to the Employee
the Base Salary and compensation for earned but
unused vacation time accrued through the Termination
Date but not previously paid to the Employee;
(2) the Company shall pay to the Employee an
amount equal to the product of (A) the highest
aggregate annual bonus, incentive or other payment of
cash compensation in addition to annual base salary
pursuant to any bonus, incentive, profit-sharing,
performance, discretionary pay or similar policy,
plan, program or arrangement of the Company paid or
payable to the Employee (including any deferred
portion thereof) for any fiscal year (or portion
thereof) of the Company ending after the Effective
Date (the "Highest Bonus"), and (B) a fraction, the
numerator of which is the number of days in the
current fiscal year of the Company through the Date
of Termination and the denominator of which is 365;
(3) the Company shall pay to the Employee,
as a lump sum, an amount (the "Severance Payment")
equal to _________ times the sum of:
(A) the amount (including any
deferred portion thereof) of the Base Salary
that would have been paid to the Employee
during the fiscal year of the Company in
which the Termination Date occurs based on
the assumption that the Employee's
employment by the Company had continued
throughout that fiscal year at the Base
Salary at the
-9-
10
highest rate in effect at any time during
the term of this Agreement; plus
(B) the amount of the Highest
Bonus;
(4) the Company (at its sole expense) shall
take the following actions:
(A) throughout the Relevant Period,
the Company shall maintain in effect, and
not materially reduce the benefits provided
by, each of the Other Benefit Plans in which
the Employee was a participant immediately
before the Termination Date; and
(B) the Company shall arrange for
the Employee's uninterrupted participation
throughout the Relevant Period in each of
such Other Benefit Plans,
provided that if the Employee's participation after
the Termination Date in any such Other Benefit Plan
is not permitted by the terms of that Other Benefit
Plan, then throughout the Relevant Period, the
Company (at its sole expense) shall provide the
Employee with substantially the same benefits that
were provided to the Employee by that Other Benefit
Plan immediately before the Termination Date; and
(5) the Employee shall be entitled to any
other amounts or benefits provided under any plan,
policy, practice, program, contract or arrangement of
or with the Company, including, but not limited to,
the Basic Benefit Plans and the Other Benefit Plans,
which shall be governed by the terms thereof (except
as explicitly modified by this Agreement).
(b) Each payment required to be made to the Employee pursuant
to the foregoing provisions of this Section 7(a) above (i) shall be made by
check drawn on an account of the Company at a bank located in the United States
of America, and (ii) shall be paid (x) if the Employee's employment by the
Company was terminated as a result of the Employee's death, the Employee's
Disability or the Employee's Retirement, not more than 30 days immediately
following the date of the occurrence of that event, and (y) if the
-10-
11
Employee's employment by the Company was terminated for any other reason, not
more than ten days immediately following the Termination Date.
Section 8. Successors. If a Change in Control of the Company shall have
occurred before the expiration of the term of this Agreement,
(i) the Company shall not, directly or indirectly,
consolidate with, merge into or sell or otherwise transfer its
assets as an entirety or substantially as an entirety to, any
person, or permit any person to consolidate with or merge into
the Company, unless immediately after such consolidation,
merger, sale or transfer, the Successor shall have assumed in
writing the Company's obligations under this Agreement; and
(ii) not fewer than ten days before the consummation
of any consolidation of the Company with, merger by the
Company into, or sale or other transfer by the Company of its
assets as an entirety or substantially as an entirety to, any
person, the Company shall give the Employee notice of that
proposed transaction.
Section 9. Notice. Notices required or permitted to be given by either
party pursuant to this Agreement shall be in writing and shall be deemed to have
been given when delivered personally to the other party or when deposited with
the United States Postal Service as certified or registered mail with postage
prepaid and addressed:
(i) if to the Employee, at the Employee's address
last shown on the Company's records, and
(ii) if to the Company, at 000 Xxxxxxxx Xxxxxxx,
Xxxxxxxx Xxxx, Xxxxxxxx 00000, directed to the attention of
the Company's President.
or, in either case, to such other address as the party to whom or which such
notice is to be given shall have specified by notice given to the other party.
Section 10. Withholding Taxes. The Company may withhold from all
payments to be paid to the Employee pursuant to this Agreement all taxes that,
by applicable federal or state law, the Company is required to so withhold.
Section 11. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by, or benefit from, the Company or any of its Affiliates to or for
the benefit of the Employee, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (any such
payments, distributions or benefits being individually referred to herein as a
"Payment," and any two or more of such payments, distributions or benefits being
referred to herein as "Payments"), would be subject to the excise tax imposed by
-11-
12
Section 4999 of the Code (such excise tax, together with any interest thereon,
any penalties, additions to tax, or additional amounts with respect to such
excise tax, and any interest in respect of such penalties, additions to tax or
additional amounts, being collectively referred herein to as the "Excise Tax"),
then the Employee shall be entitled to receive an additional payment or payments
(individually referred to herein as a "Gross-Up Payment" and any two or more of
such additional payments being referred to herein as "Gross-Up Payments") in an
amount such that after payment by the Employee of all taxes (as defined in
Section 11(k)) imposed upon the Gross-Up Payment, the Employee retains an amount
of such Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 11(c) through (i),
any determination (individually, a "Determination") required to be made under
this Section 11(b), including whether a Gross-Up Payment is required and the
amount of such Gross-Up Payment, shall initially be made, at the Company's
expense, by nationally recognized tax counsel mutually acceptable to the Company
and the Employee ("Tax Counsel"). Tax Counsel shall provide detailed supporting
legal authorities, calculations, and documentation both to the Company and the
Employee within 15 business days of the termination of the Employee's
employment, if applicable, or such other time or times as is reasonably
requested by the Company or the Employee. If Tax Counsel makes the initial
Determination that no Excise Tax is payable by the Employee with respect to a
Payment or Payments, it shall furnish the Employee with an opinion reasonably
acceptable to the Employee that no Excise Tax will be imposed with respect to
any such Payment or Payments. The Employee shall have the right to dispute any
Determination (a "Dispute") within 15 business days after delivery of Tax
Counsel's opinion with respect to such Determination. The Gross-Up Payment, if
any, as determined pursuant to such Determination shall, at the Company's
expense, be paid by the Company to the Employee within five business days of the
Employee's receipt of such Determination. The existence of a Dispute shall not
in any way affect the Employee's right to receive the Gross-Up Payment in
accordance with such Determination. If there is no Dispute, such Determination
shall be binding, final and conclusive upon the Company and the Employee,
subject in all respects, however, to the provisions of Section 11(c) through (i)
below. As a result of the uncertainty in the application of Sections 4999 and
280G of the Code, it is possible that Gross-Up Payments (or portions thereof)
which will not have been made by the Company should have been made
("Underpayment"), and if upon any reasonable written request from the Employee
or the Company to Tax Counsel, or upon Tax Counsel's own initiative, Tax
Counsel, at the Company's expense, thereafter determines that the Employee is
required to make a payment of any Excise Tax or any additional Excise Tax, as
the case may be, Tax Counsel shall, at the Company's expense, determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to the Employee.
(c) The Company shall defend, hold harmless, and indemnify the
Employee on a fully grossed-up after tax basis from and against any and all
claims, losses, liabilities, obligations, damages, impositions, assessments,
demands, judgements, settlements, costs and expenses (including reasonable
attorneys', accountants', and experts' fees and expenses) with respect to any
tax liability of the Employee resulting
-12-
13
from any Final Determination (as defined in Section 11(j)) that any Payment is
subject to the Excise Tax.
(d) If a party hereto receives any written or oral
communication with respect to any question, adjustment, assessment or pending or
threatened audit, examination, investigation or administrative, court or other
proceeding which, if pursued successfully, could result in or give rise to a
claim by the Employee against the Company under this Section 11 ("Claim"),
including, but not limited to, a claim for indemnification of the Employee by
the Company under Section 11(c), then such party shall promptly notify the other
party hereto in writing of such Claim ("Tax Claim Notice").
(e) If a Claim is asserted against the Employee ("Employee
Claim"), the Employee shall take or cause to be taken such action in connection
with contesting such Employee Claim as the Company shall reasonably request in
writing from time to time, including the retention of counsel and experts as are
reasonably designated by the Company (it being understood and agreed by the
parties hereto that the terms of any such retention shall expressly provide that
the Company shall be solely responsible for the payment of any and all fees and
disbursements of such counsel and any experts) and the execution of powers of
attorney, provided that:
(i) within 30 calendar days after the Company
receives or delivers, as the case may be, the Tax Claim Notice
relating to such Employee Claim (or such earlier date that any
payment of the taxes claimed is due from the Employee, but in
no event sooner than five calendar days after the Company
receives or delivers such Tax Claim Notice), the Company shall
have notified the Employee in writing ("Election Notice") that
the Company does not dispute its obligations (including, but
not limited to, its indemnity obligations) under this
Agreement and that the Company elects to contest, and to
control the defense or prosecution of, such Employee Claim at
the Company's sole risk and sole cost and expense; and
(ii) the Company shall have advanced to the Employee
on an interest-free basis, the total amount of the tax claimed
in order for the Employee, at the Company's request, to pay or
cause to be paid the tax claimed, file a claim for refund of
such tax and, subject to the provisions of the last sentence
of Section 11(g), xxx for a refund of such tax if such claim
for refund is disallowed by the appropriate taxing authority
(it being understood and agreed by the parties hereto that the
Company shall only be entitled to xxx for a refund and the
Company shall not be entitled to initiate any proceeding in,
for example, United States Tax Court) and shall indemnify and
hold the Employee harmless, on a fully grossed-up after tax
basis, from any tax imposed with respect to such advance or
with respect to any imputed income with respect to such
advance; and
-13-
14
(iii) the Company shall reimburse the Employee for
any and all costs and expenses resulting from any such request
by the Company and shall indemnify and hold the Employee
harmless, on fully grossed-up after-tax basis, from any tax
imposed as a result of such reimbursement.
(f) Subject to the provisions of Section 11(e) hereof, the
Company shall have the right to defend or prosecute, at the sole cost, expense
and risk of the Company, such Employee Claim by all appropriate proceedings,
which proceedings shall be defended or prosecuted diligently by the Company to a
Final Determination; provided, however, that (i) the Company shall not, without
the Employee's prior written consent, enter into any compromise or settlement of
such Employee Claim that would adversely affect the Employee, (ii) any request
from the Company to the Employee regarding any extension of the statute of
limitations relating to assessment, payment, or collection of taxes for the
taxable year of the Employee with respect to which the contested issues involved
in, and amount of, the Employee Claim relate is limited solely to such contested
issues and amount, and (iii) the Company's control of any contest or proceeding
shall be limited to issues with respect to the Employee Claim and the Employee
shall be entitled to settle or contest, in his sole and absolute discretion, any
other issue raised by the Internal Revenue Service or any other taxing
authority. So long as the Company is diligently defending or prosecuting such
Employee Claim, the Employee shall provide or cause to be provided to the
Company any information reasonably requested by the Company that relates to such
Employee Claim, and shall otherwise cooperate with the Company and its
representatives in good faith in order to contest effectively such Employee
Claim. The Company shall keep the Employee informed of all developments and
events relating to any such Employee Claim (including, without limitation,
providing to the Employee copies of all written materials pertaining to any such
Employee Claim), and the Employee or his authorized representatives shall be
entitled, at the Employee's expense, to participate in all conferences, meetings
and proceedings relating to any such Employee Claim.
(g) If, after actual receipt by the Employee of an amount of a
tax claimed (pursuant to an Employee Claim) that has been advanced by the
Company pursuant to Section 11(e)(ii) hereof, the extent of the liability of the
Company hereunder with respect to such tax claimed has been established by a
Final Determination, the Employee shall promptly pay or cause to be paid to the
Company any refund actually received by, or actually credited to, the Employee
with respect to such tax (together with any interest paid or credited thereon by
the taxing authority and any recovery of legal fees from such taxing authority
related thereto), except to the extent that any amounts are then due and payable
by the Company to the Employee, whether under the provisions of this Agreement
or otherwise. If, after the receipt by the Employee of an amount advanced by the
Company pursuant to Section 11(e)(ii), a determination is made by the Internal
Revenue Service or other appropriate taxing authority that the Employee shall
not be entitled to any refund with respect to such tax claimed and the Company
does not notify the Employee in writing of its intent to contest such denial of
refund prior to the expiration of 30 calendar days after such determination,
then such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall
-14-
15
offset, to the extent thereof, the amount of any Gross-Up Payments and other
payments required to be paid hereunder.
(h) With respect to any Employee Claim, if the Company fails
to deliver an Election Notice to the Employee within the period provided in
Section 11(e)(i) hereof or, after delivery of such Election Notice, the Company
fails to comply with the provisions of Section 11(e)(ii) and (iii) and (f)
hereof, then the Employee shall at any time thereafter have the right (but not
the obligation), at his election and in his sole and absolute discretion, to
defend or prosecute, at the sole cost, expense and risk of the Company, such
Employee Claim. The Employee shall have full control of such defense or
prosecution and such proceedings, including any settlement or compromise
thereof. If requested by the Employee, the Company shall cooperate, and shall
cause its Affiliates to cooperate, in good faith with the Employee and his
authorized representatives in order to contest effectively such Employee Claim.
The Company may attend, but not participate in or control, any defense,
prosecution, settlement or compromise of any Employee Claim controlled by the
Employee pursuant to this Section 11(h) and shall bear its own costs and
expenses with respect thereto. In the case of any Employee Claim that is
defended or prosecuted by the Employee, the Employee shall, from time to time,
be entitled to current payment, on a fully grossed-up after tax basis, from the
Company with respect to costs and expenses incurred by the Employee in
connection with such defense or prosecution.
(i) In the case of any Employee Claim that is defended or
prosecuted to a Final Determination pursuant to the terms of this Section 11(i),
the Company shall pay, on a fully grossed-up after tax basis, to the Employee in
immediately available funds the full amount of any taxes arising or resulting
from or incurred in connection with such Employee Claim that have not
theretofore been paid by the Company to the Employee, together with the costs
and expenses, on a fully grossed-up after tax basis, incurred in connection
therewith that have not theretofore been paid by the Company to the Employee,
within ten calendar days after such Final Determination. In the case of any
Employee Claim not covered by the preceding sentence, the Company shall pay, on
a fully grossed-up after tax basis, to the Employee in immediately available
funds the full amount of any taxes arising or resulting from or incurred in
connection with such Employee Claim at least ten calendar days before the date
payment of such taxes is due from the Employee, except where payment of such
taxes is sooner required under the provisions of this Section 11(i), in which
case payment of such taxes (and payment, on a fully grossed-up after tax basis,
of any costs and expenses required to be paid under this Section 11(i) shall be
made within the time and in the manner otherwise provided in this Section 11(i).
(j) For purposes of this Agreement, the term "Final
Determination" shall mean (A) a decision, judgment, decree or other order by a
court or other tribunal with appropriate jurisdiction, which has become final
and non-appealable; (B) a final and binding settlement or compromise with an
administrative agency with appropriate jurisdiction, including, but not limited
to, a closing agreement under Section 7121 of the Code; (C) any disallowance of
a claim for refund or credit in respect to an overpayment
-15-
16
of tax unless a suit is filed on a timely basis; or (D) any final disposition by
reason of the expiration of all applicable statutes of limitations.
(k) For purposes of this Agreement, the terms "tax" and
"taxes" mean any and all taxes of any kind whatsoever (including, but not
limited to, any and all Excise Taxes, income taxes, and employment taxes),
together with any interest thereon, any penalties, additions to tax, or
additional amounts with respect to such taxes and any interest in respect of
such penalties, additions to tax, or additional amounts.
Section 12. Expenses of Enforcement. If a Change in Control of the
Company shall have occurred before the expiration of the term of this Agreement,
then, upon demand by the Employee made to the Company, the Company shall
reimburse the Employee for the reasonable expenses (including attorneys' fees
and expenses) incurred by the Employee in enforcing or seeking to enforce the
payment of any amount or other benefit to which the Employee shall have become
entitled pursuant to this Agreement, including those incurred in connection with
any arbitration initiated pursuant to Section 20. To the extent that any such
reimbursement would be subject to the Excise Tax, then the Employee shall be
entitled to receive Gross-Up Payments in an amount such that after payment by
the Employee of all taxes imposed on such Gross-Up Payments, the Employee
retains an amount equal to the Excise Tax imposed upon the reimbursement, and
the other provisions of Section 11 hereof shall also apply to such circumstance
unless the context thereof otherwise indicates.
Section 13. Employment by Wholly Owned Entities. If, at or after the
Effective Date, the Employee is or becomes an employee of one or more
corporations, partnerships, limited liability companies or other entities that
are, directly or indirectly, wholly owned by the Company ("Wholly Owned
Entities"), references in this Agreement to the Employee's employment by the
Company shall include the Employee's employment by any such Wholly Owned Entity.
Section 14. No Obligation to Mitigate; No Rights of Offset.
(a) The Employee shall not be required to mitigate the amount
of any payment or other benefit required to be paid to the Employee pursuant to
this Agreement, whether by seeking other employment or otherwise, nor shall the
amount of any such payment or other benefit be reduced on account of any
compensation earned by the Employee as a result of employment by another person.
(b) The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against the Employee or others.
Section 15. Amendment and Waiver. No provision of this Agreement may be
amended or waived (whether by act or course of conduct or omission or otherwise)
unless that amendment or waiver is by written instrument signed by the parties
hereto. No
-16-
17
waiver by either party of any breach of this Agreement shall be deemed a waiver
of any other or subsequent breach.
Section 16. Governing Law. The validity, interpretation, construction
and enforceability of this Agreement shall be governed by the laws of the State
of Oklahoma.
Section 17. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
Section 18. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together will constitute the same instrument.
Section 19. Assignment. This Agreement shall inure to the benefit of
and be enforceable by the Employee's legal representative. The Company may not
assign any of its obligations under this Agreement unless (i) such assignment is
to a Successor and (ii) the requirements of Section 8 are fulfilled.
Section 20. Arbitration. Except as otherwise explicitly provided in
Section 11, any dispute between the parties arising out of this Agreement,
whether as to this Agreement's construction, interpretation or enforceability or
as to any party's breach or alleged breach of any provision of this Agreement,
shall be submitted to arbitration in accordance with the following procedures:
(i) Either party may demand such arbitration by
giving notice of that demand to the other party. The notice
shall state (x) the matter in controversy, and (y) the name of
the arbitrator selected by the party giving the notice.
(ii) Not more than 15 calendar days after such notice
is given, the other party shall give notice to the party who
demanded arbitration of the name of the arbitrator selected by
the other party. If the other party shall fail to timely give
such notice, the arbitrator that the other party was entitled
to select shall be named by the Arbitration Committee of the
American Arbitration Association. Not more than 15 calendar
days after the second arbitrator is so named, the two
arbitrators shall select a third arbitrator. If the two
arbitrators shall fail to timely select a third arbitrator,
the third arbitrator shall be named by the Arbitration
Committee of the American Arbitration Association.
(iii) The dispute shall be arbitrated at a hearing
that shall be concluded within ten days immediately following
the date the dispute is submitted to arbitration unless a
majority of the arbitrators shall elect to extend the period
of arbitration. Any award made by a majority of the
arbitrators (x) shall be made within ten days following the
conclusion of the arbitration hearing,
-17-
18
(y) shall be conclusive and binding on the parties, and (z)
may be made the subject of a judgment of any court having
jurisdiction.
(iv) All expenses of the arbitration shall be borne
by the Company.
The agreement of the parties contained in the foregoing provisions of this
Section 20 shall be a complete defense to any action, suit or other proceeding
instituted in any court or before any administrative tribunal with respect to
any dispute between the parties arising out of this Agreement.
Section 21. Interpretation.
(a) As used in this Agreement, the following terms and phrases
have the indicated meanings:
(i) "Affiliate" and "Affiliates" mean, when used with
respect to any entity, individual, or other person, any other
entity, individual, or other person which, directly or
indirectly, through one or more intermediaries controls, or is
controlled by, or is under common control with such entity,
individual or person.
(ii) "Base Salary" has the meaning assigned to that
term in Section 5.
(iii) "Basic Benefit Plans" has the meaning assigned
to that term in Section 5.
(iv) "Benchmark Bonus" has the meaning assigned to
that term in Section 5.
(v) "Board of Directors" means the Board of Directors
of the Company.
(vi) "Change in Control of the Company" has the
meaning assigned to that phrase in Section 2.
(vii) "Claim" has the meaning assigned to such term
in Section 11.
(viii) "Code" means the Internal Revenue Code of
1986, as amended from time to time.
(ix) "Commission" means the United States Securities
and Exchange Commission or any successor agency.
(x) "Company" has the meaning assigned to that term
in the preamble to this Agreement. The term "Company" shall
-18-
19
also include any Successor, whether the liability of such
Successor under this Agreement is established by contract or
occurs by operation of law.
(xi) "Determination" has the meaning assigned to that
term in Section 11.
(xii) "Dispute" has the meaning assigned to that term
in Section 11.
(xiii) "Effective Date" has the meaning assigned to
that term in the preamble to this Agreement.
(xiv) "Election Notice" has the meaning assigned to
such term in Section 11.
(xv) "Employee" has the meaning assigned to such term
in the preamble to this Agreement.
(xvi) "Employee Claim" has the meaning assigned to
such term in Section 11.
(xvii) "Employee's Disability" means:
(A) if no Change in Control of the Company shall have
occurred before the date of determination, the physical or
mental disability of the Employee determined in accordance
with the disability policy of the Company at the time in
effect and generally applicable to its salaried employees; and
(B) if a Change in Control of the Company shall have
occurred at that date, the physical or mental disability of
the Employee determined in accordance with the disability
policy of the Company in effect immediately before the
occurrence of the first Change in Control of the Company and
generally applicable to its salaried employees.
The Employee's Disability, and the automatic termination of
the Employee's employment by the Company by reason of the
Employee's Disability, shall be deemed to have occurred on the
date of determination, provided that if (1) a Change in
Control of the Company shall have occurred before the
expiration of the term of this Agreement, (2) the Company
shall have subsequently given notice pursuant to Section 6 of
the Company's determination of the Employee's Disability and
(3) the Employee shall have given notice to the Company that
the Employee disagrees with that
-19-
20
determination, then (A) whether the Employee's Disability
shall have occurred shall be submitted to arbitration pursuant
to Section 20, and (B) if a majority of the arbitrators decide
that the Employee's Disability had not occurred, at the date
of determination by the Company, then (I) the Employee's
Disability, and the automatic termination of the Employee's
employment by the Company by reason of the Employee's
Disability, shall be deemed not to have occurred, and (II) on
demand by the Employee made to the Company, the Company shall
reimburse the Employee for the reasonable expenses (including
attorneys' fees and expenses) incurred by the Employee in
obtaining that decision.
(xviii) "Employee's Retirement" means (x) if no
Change in Control of the Company shall have occurred before
the date of the Employee's proposed retirement, the retirement
of the Employee in accordance with the retirement policy of
the Company at the time in effect and generally applicable to
its salaried employees, and (y) if a Change in Control of the
Company shall have occurred at that date, the retirement of
the Employee from the employ of the Company in accordance with
the retirement policy of the Company in effect immediately
before the occurrence of the first Change in Control of the
Company and generally applicable to its salaried employees.
(xix) "Event of Termination for Good Reason" has the
meaning assigned to that phrase in Section 5.
(xx) "Event of Termination for Cause" has the meaning
assigned to that phrase in Section 4.
(xxi) "Exchange Act" means the Securities Exchange
Act of 1934, as amended from time to time.
(xxii) "Excise Tax" has the meaning assigned to that
term in Section 11.
(xxiii) "Expiration Date" has the meaning assigned to
that term in Section 3.
(xxiv) "Final Determination" has the meaning assigned
to such term in Section 11.
(xxv) "Gross-Up Payment" has the meaning assigned to
that term in Section 11.
-20-
21
(xxvi) "Other Benefit Plans" has the meaning
assigned to that term in Section 5.
(xxvii) "Payment" has the meaning assigned to that
term in Section 11.
(xxviii) "person" means any individual, corporation,
partnership, joint venture, association, joint-stock company,
limited partnership, limited liability company, trust,
unincorporated organization, government, or agency or
political subdivision of any government.
(xxix) "Relevant Period" means a period beginning on
the Termination Date and ending on the first to occur of (x)
the last day of the __th calendar month immediately following
the calendar month in which the Termination Date occurs, (y)
the date on which the Employee becomes a full time employee of
another person and (z) the Employee's normal retirement date,
determined in accordance with the retirement policy of the
Company in effect on the Termination Date.
(xxx) "Severance Payment" has the meaning assigned
to that term in Section 7.
(xxxi) "Successor" means a person with or into which
the Company shall have been merged or consolidated or to which
the Company shall have transferred its assets as an entirety
or substantially as an entirety.
(xxxii) "Tax" has the meaning assigned to that term
in Section 11.
(xxxiii) "Tax Claim Notice" has the meaning assigned
to that term in Section 11.
(xxxiv) "Tax Counsel" has the meaning assigned to
that term in Section 11.
(xxxv) "Termination Date" has the meaning assigned
to that term in Section 6.
(xxxvi) "this Agreement" means this Change in
Control Agreement as it may be amended from time to time in
accordance with Section 15.
(xxxvii) "Underpayment" has the meaning assigned to
that term in Section 11.
-21-
22
(xxxviii) "Voting Stock" means shares of capital
stock of the Company the holders of which are entitled to vote
for the election of directors, but excluding shares entitled
to so vote only upon the occurrence of a contingency unless
that contingency shall have occurred.
(xxxix) "Wholly Owned Entities" has the meaning
assigned to that term in Section 13.
(b) In the event of the enactment of any successor provision
to any statute or rule cited in this Agreement, references in this Agreement to
such statute or rule shall be to such successor provision.
(c) The headings of Sections of this Agreement shall not
control the meaning or interpretation of this Agreement.
(d) References in this Agreement to any Section are to the
corresponding Section of this Agreement unless the context otherwise indicates.
This Agreement amends and restates in its entirety that certain Change
in Control Agreement dated ________ __, ____ between the Company and the
Employee.
IN WITNESS WHEREOF, the Company and the Employee have executed this
Agreement as of the date first set forth above to be effective as of the
Effective Date.
"Company"
UROCOR, INC.
By
--------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
"Employee"
----------------------------------------
Name:
-----------------------------------
-22-
23
CHANGE IN CONTROL AGREEMENT AMENDMENT NO. 1
THIS CHANGE IN CONTROL AGREEMENT AMENDMENT NO. 1 (this "Change in
Control Agreement Amendment No. 1") is entered into as of June 28, 2001, by and
between UroCor, Inc., a Delaware corporation (the "Company"), and
_______________ (the "Employee"). Capitalized terms not defined herein shall
have the meaning ascribed to them in the Change in Control Agreement (as defined
herein).
WITNESSETH:
WHEREAS, the Company and the Employee have entered into that certain
Change in Control Agreement, executed as of June 18, 2001, that is effective as
of ___________ (the "Change in Control Agreement"); and
WHEREAS, in connection with that certain Agreement and Plan of Merger
dated as of June 28, 2001, among Dianon Systems, Inc., UroCor Acquisition Corp.
and the Company (the "Merger Agreement"), the Company and the Employee desire to
amend the Change in Control Agreement as set forth herein;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Section 7(a)(iii)(2) of the Change in Control Agreement is hereby
amended and restated in its entirety to read as follows:
"(2) the Company shall pay to the Employee an amount equal to the product of (A)
the highest aggregate annual bonus, incentive or other payment of cash
compensation in addition to annual base salary pursuant to any bonus, incentive,
profit-sharing, performance, discretionary pay or similar policy, plan, program
or arrangement of the Company paid or payable to the Employee (including any
deferred portion thereof) for any fiscal year (or portion thereof) of the
Company ending after December 31, 2001, and (B) a fraction, the numerator of
which is the number of days in the current fiscal year of the Company through
the Date of Termination and the denominator of which is 365;"
2. Section 7(a)(iii)(3)(B) of the Change in Control Agreement is hereby
amended and restated in its entirety to read as follows:
"(B) the amount of the highest aggregate
annual bonus, incentive or other payment of cash
compensation in addition to annual base salary
pursuant to any bonus, incentive, profit-sharing,
performance, discretionary pay or similar policy,
plan, program or arrangement of the Company
(other than the UroCor, Inc. 2001 Employee Bonus
Plan) paid or payable to the Employee (including
any deferred portion thereof) for any fiscal year
(or portion thereof) of the Company ending after
the Effective Date;"
24
3. This Change in Control Agreement Amendment No. 1 shall become
effective as of the Effective Time (as defined the Merger Agreement) and, in the
event the Merger Agreement is terminated, shall terminate upon the date of such
termination.
4. Each reference to the Change in Control Agreement in the Change in
Control Agreement shall, unless the context otherwise requires, mean the Change
in Control Agreement as amended by this Change in Control Agreement Amendment
No. 1.
5. The Change in Control Agreement, as amended hereby, is in all
respects ratified, approved and confirmed.
6. This Change in Control Agreement Amendment No. 1 shall be governed
by and construed in accordance with the laws of the State of Oklahoma without
regard to any principles of conflicts of law that, if applied, might require or
permit the application of the laws of a different jurisdiction.
IN WITNESS WHEREOF, the parties hereto caused this Change in Control
Agreement Amendment No. 1 to be duly executed and delivered as of the day and
year first above written.
UROCOR, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
EMPLOYEE
By:
--------------------------------
Name:
------------------------------
Address:
---------------------------
---------------------------
---------------------------
25
SCHEDULE 10.1
CHANGE IN CONTROL AGREEMENTS
SECTION 5 (v) SECTION 7 (a) SECTION 21 (a)
EMPLOYEE EFFECTIVE DATE PERCENTAGE (iii) 3 LUMP SUM (xxx) MONTH
-------- -------------- ------------- ---------------- --------------
Xxxxxxx X. Xxxxxx, Chief Executive October 21, 1998 50% 1 1/2 18
Officer and President
Xxxxx X. Xxxxxx, Senior Vice President April 12, 1999 30% 1 1/2 18
and Chief Financial Officer
Xxxx X. Xxxx, Senior Vice President March 9, 2000 40% 1 1/2 18
and General Manager, Sales, Marketing
and Operations
Xxxx X. Xxxxxxxxx, Xx., Vice President December 22, 1999 35% 1 1/2 18
for Business Development
Xxxxxx X. Xxxxxx, Vice President and October 21, 1998 30% 1 1/2 18
General Manager, UroSciences Group
Xxxxxxx X. Xxxxxx, Vice President, April 19, 2001 0% 1 1/2 18
Chief Compliance Officer
Xxxxxx X. Xxxxxx, Chief Information April 1, 2000 30% 1 1/2 18
Officer
Xxxxxx X. XxXxxx, Director Human April 19, 2001 30% 1 12
Resources
Xxxxxxx X. Xxxxx, Ph.D., Vice April 17, 2000 10% 1 1/2 18
President-Product Development
Xxxxxx X. X'Xxxx, Medical Director October 21, 1998 20% 1 1/2 18
