EXHIBIT 10.86
ADAC LABORATORIES
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EXECUTIVE SEVERANCE AGREEMENT
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THIS EXECUTIVE SEVERANCE AGREEMENT is made and entered into as of this th
day of, 1996, by and between ADAC LABORATORIES (the "Company") and
("Executive").
WHEREAS, the Board of Directors (the "Board") of the Company has
recommended and authorized the Company entering into a severance agreement in
the form hereof with Executive; and
WHEREAS, the Board has determined that, in the event of a possible,
threatened or pending sale or other change in control of the Company (or its
subsidiaries), it is imperative that the Company and the Board be able to rely
upon Executive to continue in Executive's position, and that the Company be able
to receive and rely upon Executive's advice, if requested, as to the best
interests of the Company and its shareholders without concern that Executive
might be distracted by the personal uncertainties and risks created by any such
possible transactions; and
WHEREAS, in connection with the foregoing, Executive may, in addition to
Executive's regular duties, be called upon to assist in the assessment of any
such possible transactions, advise management and the Board as to whether such
proposals would be in the best interests of the Company and its shareholders,
and to take such other actions as the Board might determine to be appropriate.
NOW, THEREFORE, to assure the Company that it will have the continued
dedication of Executive and the availability of Executive's advice and counsel
notwithstanding the possibility, threat or occurrence of a sale of the Company
or other Change of Control, and to induce Executive to remain in the employ of
the Company, and for other good and valuable consideration, the Company and
Executive agree as follows:
1 EVENTS CAUSING PAYMENT OF SEVERANCE BENEFIT.
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(a) If Executive is employed full-time by the Company (or one of its
subsidiaries) at the time of a "Change in Control" (as defined in Section 4
hereof), Executive shall be entitled to a Severance Payment as set forth in
Section 2 hereof, payable upon the occurrence of the Change in Control;
provided,
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ADAC LABORATORIES
EXECUTIVE SEVERANCE AGREEMENT
however, that if, within ten (10) days prior to the Change in Control, Executive
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is offered employment by the Company (or one of its subsidiaries) or its
successor corporation on "Similar Terms" (as hereinafter defined) to those then
applicable to him as an executive employee of the Company (or one of its
subsidiaries), the Severance Payment shall be paid to him twelve (12) months
following the Change in Control, but only if the following events occur: (i)
Executive accepts such employment and (ii) Executive is not, during such twelve
(12) month period, terminated as an employee of the Company (or one of its
subsidiaries) or its successor corporation for "Cause" (as hereinafter defined).
(b) "Similar Terms" shall mean (i) duties and responsibilities
similar to those then applicable to Executive as an employee of the Company (or
one of its subsidiaries), (ii) base salary, cash incentive bonuses and other
non-cash perquisites no less than that received by Executive from the Company
(or one of its subsidiaries) during the twelve (12) months prior to the Change
in Control and (iii) a place of employment within ten miles of Executive's then-
existing place of employment.
(c) "Cause" shall mean any of the following: (i) gross and willful
refusal, which continues after thirty (30) days' written warning, to discharge
the normal and material employment duties required of the Executive, (ii) theft
or other misappropriation of Company (or one of its subsidiaries) property,
trade secrets or other intellectual property rights and use thereof to the
detriment of the Company or its successor corporation or (iii) commission of a
crime such that the Company's reputation with its customers is materially
damaged and cannot be repaired. Becoming fully or partially disabled (whether
mental or physical) shall not be deemed "Cause" herein.
(d) Notwithstanding the foregoing, should Executive be offered
employment upon Similar Terms which is accepted by him, he shall be entitled to
receive the Severance Payment immediately, without having to wait for the
expiration of the twelve-month period hereinabove provided, if at any time his
employer proposes to revise the terms and conditions of his employment in such a
manner that his employment would no longer be on Similar Terms.
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ADAC LABORATORIES
EXECUTIVE SEVERANCE AGREEMENT
(e) The death of Executive following a Change in Control shall
require the immediate payment of the Severance Payment, if not theretofore paid,
to Executive's successors as defined in Section 15 hereof.
(f) Notwithstanding any of the foregoing provisions, the Severance
Benefit described in Section 2 hereof shall be immediately payable to Executive
and all of Executive's Unvested Options shall immediately and fully vest and
become exercisable should (i) one or more persons or entities propose any of the
transactions or events described in Section 4 hereof and (ii) such person(s) or
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entity(ies) demand, as a condition thereof, that this Severance Agreement be
terminated prior to any Change in Control (as defined in Section 4 hereof).
2. AMOUNT OF SEVERANCE PAYMENT.
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The amount of the Severance Payment payable to Executive pursuant to this
Agreement shall be determined in accordance with the following formula: 2.99
times the total cash compensation (including base salary, bonuses and other
incentive compensation other than stock options) paid to Executive by the
Company (and its subsidiaries) during the twelve-month period ending immediately
preceding the event giving rise to the requirement to pay such Severance Payment
to Executive, less such amount as is necessary, in the opinion of tax counsel or
other appropriate tax advisor selected in good faith by the Company, to reduce
the Severance Payment to the maximum amount permitted to be paid without
incurring excise taxes for an "excess parachute payment" under Internal Revenue
Code Section 280(g).
3. STOCK OPTIONS.
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(a) Ten (10) days prior to a Change in Control (as defined in Section
4 hereof), those stock options held by Executive to purchase shares of common
stock of ADAC Laboratories which are then not exercisable ("Unvested Options")
shall immediately vest and become exercisable, notwithstanding the vesting
schedule set forth in Executive's stock option agreement(s). In the event that
(i) Executive exercises the Unvested Options, (ii) Executive sells or otherwise
disposes of the shares so purchased and (iii) Executive is offered employment by
the Company or its successor corporation on Similar Terms (as
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ADAC LABORATORIES
EXECUTIVE SEVERANCE AGREEMENT
defined in Section 1(b) above), he shall deposit into an escrow account with a
bank or trust company satisfactory to the Company or its successor an amount
equal to 50% of the difference between (x) the sale proceeds received from the
shares sold or otherwise disposed of which were obtained through the exercise of
previously Unvested Options (without regard to any Federal or state income taxes
which may result from such transaction) and (y) the purchase price for such
shares (such amount is hereinafter referred to as the "Escrowed Amount"). For
purposes of this subparagraph, if such shares are disposed of without
consideration or for a consideration less than the prevailing market price for
such shares at the time of such disposition, the market price of ADAC
Laboratories common stock on the date of such sale (or disposition at less than
fair market value) shall be used to determine the Escrowed Amount.
(b) The Escrowed Amount, including any interest earned thereon, shall
be returned to Executive twelve (12) months following the Change in Control if,
and only if, (i) Executive has accepted the employment which was offered on
Similar Terms and (ii) Executive has not, during such twelve-month period, been
terminated as an employee of the Company (or its subsidiary) or its successor
corporation for Cause (as defined in Section 1(c) above); if such events do not
occur, the Escrowed Amount shall be delivered to the Company or its successor
corporation and Executive shall have no further right thereto. Provided,
however, that notwithstanding any of the foregoing, if at any time prior to such
twelve-month period, Executive's employer proposes to revise the terms and
conditions of his employment such that his employment would no longer be on
Similar Terms, the Escrowed Amount shall be returned to Executive upon the date
of such employer's proposal.
4. CHANGE IN CONTROL.
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(a) A Change in Control of the Company shall be deemed to have
occurred if (i) any "person" or "group" (as defined in or pursuant to Sections
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated
under the Exchange Act), directly or indirectly, of securities of the Company
representing 40% or more of the voting power of the common stock outstanding
which votes generally for the election of
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ADAC LABORATORIES
EXECUTIVE SEVERANCE AGREEMENT
directors; or (ii) as a result of market or corporate transactions or
stockholder action, the individuals who constitute the Board of Directors of the
Company at the beginning of any period of 12 consecutive months (but commencing
not earlier than July 1, 1995), plus any new directors whose election or
nomination was approved by a vote of at least two-thirds of the directors still
in office who were directors at the beginning of such period of 12 consecutive
months, cease for any reason during such period of 12 consecutive months to
constitute at least two-thirds of the members of such Board; or (iii) the
Company sells, through merger, assignment or otherwise, in one or more
transactions, other than in the ordinary course of business, assets which
provided at least 2/3 of the revenues or pre-tax net income of the Company and
its subsidiaries on a consolidated basis during the most recently-completed
fiscal year; (iv) the Company sells, through merger, assignment or otherwise,
one of its subsidiaries, which is the principal employer of the Executive;
provided, however, for purposes of this subsection 4(a)(iv), no "Change in
Control" shall be deemed to have occurred if Executive is offered comparable
employment (similar duties and compensation) by the Company (or its
subsidiaries) at any of its facilities.
(b) Notwithstanding paragraph (a) above, the following events shall
not constitute a Change in Control: any acquisition of beneficial ownership
pursuant to (i) a reclassification, however effected, of the Company's
authorized common stock, or (ii) a corporate reorganization involving the
Company or any of its subsidiaries which does not result in a material change in
the ultimate ownership by the shareholders of the Company (through their
ownership of the Company or its successor resulting from the reorganization) of
the assets of the Company and its subsidiaries, but only if such
reclassification or reorganization has been approved by the Company's Board of
Directors.
5. FRINGE BENEFITS.
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(a) The Company shall provide to Executive (and his spouse and other
qualified dependents), for at least 12 months following a Change in Control (and
whether or not Executive is offered or accepts continuing employment with the
Company or its successor) all Fringe Benefits (as defined below) that were
available to Executive (and his spouse or qualified dependents)
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ADAC LABORATORIES
EXECUTIVE SEVERANCE AGREEMENT
immediately prior to the Change in Control. For purposes of this Agreement, the
term "Fringe Benefits" shall include, without limitation, all life, dental,
vacation, health, accident and disability benefit plans, other similar welfare
plans, country club dues, the provision of a company-owned automobile, company-
paid tax advice, professional financial planning assistance or any equivalent
successor policy, plan, program or arrangement that may now exist or be adopted
hereafter by the Company or its subsidiaries.
(b) If prior to the Change in Control the Executive was required to
contribute towards the payment of a Fringe Benefit as a condition of receiving
such Fringe Benefit, the Executive may be required to continue contributing
towards the payment of such Fringe Benefit under the same terms and conditions
as applied to the Executive immediately prior to the Change in Control in order
to receive such Fringe Benefit.
6. OTHER EMPLOYEE BENEFITS. The benefits provided to Executive hereunder
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shall not be affected by or reduced because of any other benefits (including,
but not limited to, salary, bonus, pension, or stock option) to which Executive
may be entitled by reason of his employment with the Company or any subsidiary
thereof or the termination of his employment with the Company, and no other such
benefit by reason of such employment shall be so affected or reduced because of
the benefits bestowed by this Agreement.
7. WITHHOLDING; NO RIGHT OF SET-OFF. All amounts payable by the Company
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hereunder shall be subject to withholding of such amounts related to taxes as
the Company may be legally obligated to so withhold. The right of Executive to
receive benefits under this Agreement, however, shall be absolute and shall not
be subject to any set-off, counterclaim, recoupment, defense, duty to mitigate
or other right the Company or its subsidiaries may have against him or anyone
else, except as specifically provided for herein.
8. SUBSEQUENT EMPLOYMENT. Executive's right to receive benefits under
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this Agreement shall not be reduced by reason of Executive's employment with any
other employer after terminating employment with the Company or any of its
subsidiaries. Any compensation for services rendered or
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ADAC LABORATORIES
EXECUTIVE SEVERANCE AGREEMENT
consulting fees earned after the date of termination shall not diminish
Executive's right to receive all amounts due hereunder.
9. SUBSIDIARY AND COMPANY DEFINED. For purposes of this Agreement, the
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term "Subsidiary" shall mean (i) any corporation, foreign or domestic, in which
the Company directly or indirectly owns 50% or more of the issued and
outstanding voting stock on an "as converted basis" and (ii) any partnership,
foreign or domestic, in which the Company owns a direct or indirect interest
equal to 50% or more of the outstanding equity interests. The term "Company,"
for purposes of this Agreement, means ADAC Laboratories unless the context of
this Agreement implies the inclusion of one or more Subsidiaries of ADAC
Laboratories.
10. EXECUTIVE'S INDEMNITY. Executive shall be entitled to any
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indemnification rights granted by the Company generally to its officers as
reflected in the bylaws or Articles of Incorporation of the Company in effect
immediately prior to any Change in Control of the Company. Any subsequent
changes to the bylaws or Articles of Incorporation reducing any such indemnity
previously granted to officers shall not affect the rights of Executive which
arose prior thereto.
11. COSTS OF ENFORCEMENT; INTEREST. In the event Executive must collect
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any part or all of the Severance Payment or Fringe Benefits or otherwise
enforces the terms of this Agreement by or through a lawyer or lawyers, the
Company will pay all costs of such collection or enforcement, including
reasonable legal fees incurred by Executive. In addition, the Company shall pay
to Executive interest on all or any part of the Severance Payment or the Fringe
Benefits that is not paid when due at a rate equal to the prime rate as
announced by Sanwa Bank or its successors from time to time.
12. AMENDMENT. This Agreement may not be amended without the prior
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written consent of both Executive and the Company.
13. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in this Agreement shall be
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deemed to give Executive the right to be retained in the service of the Company
or to deny the Company any right it may have to discharge or demote him at any
time;
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ADAC LABORATORIES
EXECUTIVE SEVERANCE AGREEMENT
provided, however, that any termination of employment of Executive, or any
removal of Executive as an executive officer of the Company primarily in
contemplation of a Change in Control shall not be effective to deny Executive
the benefits of this Agreement, including without limitation Sections 1 and 2
hereof. No provision of this Agreement shall in any way limit, restrict or
prohibit Executive's right to terminate employment with the Company or leave his
position as senior executive.
14. SEVERABILITY. The invalidity and unenforceability of any particular
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provision of this Agreement shall not affect any other provision hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.
15. SUCCESSORS.
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(a) The Company will require any successor, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all of the business and/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 it if no such succession
had taken place.
(b) This Agreement shall inure to the benefit of, and be enforceable
by, Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive dies
prior to the receipt of all benefits payable hereunder with respect to events
occurring prior to death, all such benefits shall be paid pursuant to the last
beneficiary designation executed by the Executive and filed with the Company. If
no beneficiary form has been filed with respect to this Agreement, all such
benefits shall be paid to the Executive's estate.
16. GOVERNING LAW. This Agreement shall be governed by and construed in
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accordance with the laws of the Company's state of incorporation.
17. TERM. This Agreement shall terminate and become null and void if,
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prior to (but not in contemplation of) a Change
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ADAC LABORATORIES
EXECUTIVE SEVERANCE AGREEMENT
in Control, Executive ceases to be employed as an executive officer with either
the Company or a Subsidiary.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement,
effective as of the 6th day of March, 1996.
ADAC LABORATORIES EXECUTIVE
By____________________________________ ______________________________________
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Xxxxx X. Xxxx,
Chairman of the Board and
Chief Executive Officer ______________________________________
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(Address)
______________________________________
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