CHANGE OF CONTROL AGREEMENT
Exhibit 10.12
This Change of
Control Agreement (the “Agreement”) is made and entered into effective
as of 9/15/05 by and between Xxxxxx X. Xxxxxx and Concentric Medical, Inc., a Delaware
corporation (the “Company”).
RECITALS
A. It is expected that another company or other entity may from time to time consider the
possibility of acquiring the Company or that a change in control may otherwise occur, with or
without the approval of the Company’s Board of Directors (the “Board”).
B. The Board believes that it is in the best interests of the Company and its stockholders to
appropriately compensate Mr. Unkar for his services as a member of the Board, including with
respect to a change of control of the Company.
C. To accomplish the foregoing objectives, the Board of Directors has directed the Company,
upon execution of this Agreement by Xx. Xxxxxx, to agree to the terms provided in this Agreement.
D. Certain capitalized terms used in the Agreement are defined in Section 2 below.
In consideration of the mutual covenants contained in this Agreement, and in consideration of
the continuing services of Xx. Xxxxxx by the Company, the parties agree as follows:
1. Stock Options and Restricted Stock. Subject to Section 3 below, upon the effective
date of a Change of Control (as defined below) and regardless of whether Xx. Xxxxxx’x services as a
director or consultant to the Company is terminated in connection with the Change of Control, each
stock option granted to Xx. Xxxxxx (or shares of Common Stock purchased by Xx. Xxxxxx and subject
to a repurchase option in favor of the Company) that are held by Xx. Xxxxxx on the date of the
transaction shall become immediately vested (or the repurchase option shall be released) as to
fifty percent (50%) of the total number of shares subject to the option or purchased by the
Employee that have not yet vested or been released from the Company’s repurchase option. In the
case of options, each such option shall be exercisable in accordance with the provisions of the
option agreement and plan pursuant to which such option was granted. The option shares that remain
unvested or the repurchase option that remains in effect as of the effective date of the
transaction shall thereafter vest or terminate at the same rate (that is, the same number of shares
shall vest or terminate during each vesting period) that was in effect prior to the Change of
Control, and shall accordingly vest or terminate over a period that is one-half of the total
vesting period that would otherwise be then remaining under the terms of the option agreement
pursuant to which each such option was granted or stock purchase agreement pursuant to which such
stock was purchased.
2. Definition of Terms. The following terms referred to in this Agreement shall have
the following meanings:
(a) Change of Control. “Change of Control” shall mean the occurrence of any
of the following events:
(i) Ownership. Any “Person” (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) is or becomes the
“Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more of the total voting power
represented by the Company’s then outstanding voting securities;
(ii) Merger/Sale of Assets. A merger or consolidation of the Company whether or not
approved by the Board of Directors of the Company, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting securities of the
surviving entity) at least 50% of the total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately after such merger or consolidation, or
the stockholders of the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all of the Company’s
assets; or
(iii) Change in Board Composition. After the Company has become subject to the
provisions of the Exchange Act, a change in the composition of the Board of Directors of the
Company, as a result of which fewer than a majority of the directors are Incumbent Directors.
“Incumbent Directors” shall mean directors who either (A) are directors of the Company as
of the date of this Agreement or (B) are elected, or nominated for election, to the Board of
Directors of the Company with the affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination (but shall not include an individual whose
election or nomination is in connection with an actual or threatened proxy contest relating to the
election of directors to the Company).
3. Limitation on Payments. In the event that the severance benefits provided for in
this Agreement to Xx. Xxxxxx (i) constitute “parachute payments” within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and (ii) but for
this Section, would be subject to the excise tax imposed by Section 4999 of the Code, then Xx.
Xxxxxx’x benefits under Section 1 shall be payable either: (i) in full, or (ii) as to such lesser
amount which would result in no portion of such severance benefits being subject to excise tax
under Section 4999 of the Code, whichever of the foregoing amounts, taking into account the
applicable federal, state and local income taxes and the excise tax imposed by Section 4999,
results in the receipt by Xx. Xxxxxx on an after-tax basis, of the greatest amount of benefits
under Section 1, notwithstanding that all or some portion of such benefits maybe taxable under
Section 4999 of the Code. Unless the Company and Xx. Xxxxxx otherwise agree in writing, any
determination required under this Section 3 shall be made in writing by the Company’s independent
public accountants (the “Accountants”), whose determination shall be conclusive and binding
upon Xx. Xxxxxx and the Company for all purposes. For purposes of making the calculations required
by this Section 3, the Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations concerning the application
of Section 280G and 4999 of the Code. The Company and Xx. Xxxxxx shall furnish to the Accountants
such information and documents as the
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Accountants may reasonably request in order to make a determination under this Section. The
Company shall bear all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section 3.
4. Successors. Any successor to the Company (whether direct or indirect and whether
by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of
the Company’s business and/or assets shall assume the obligations under this Agreement and agree
expressly to perform the obligations under this Agreement in the same manner and to the same extent
as the Company would be required to perform such obligations in the absence of a succession. The
terms of this Agreement and all of Xx. Xxxxxx’x rights hereunder shall inure to the benefit of, and
be enforceable by, Xx. Xxxxxx’x personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
5. Notice. Notices and all other communications contemplated by this Agreement shall
be in writing and shall 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. Mailed notices
to Xx. Xxxxxx shall be addressed to Xx. Xxxxxx at the home address which Xx. Xxxxxx most recently
communicated to the Company in writing. In the case of the Company, mailed notices shall be
addressed to its corporate headquarters, and all notices shall be directed to the attention of its
Secretary.
6. Miscellaneous Provisions.
(a) No Duty to Mitigate. Xx. Xxxxxx shall not be required to mitigate the amount of
any payment contemplated by this Agreement, nor, except as otherwise provided in this Agreement,
shall any such payment be reduced by any earnings that Xx. Xxxxxx may receive from any other
source.
(b) Waiver. No provision of this Agreement shall be modified, waived or discharged
unless the modification, waiver or discharge is agreed to in writing and signed by Xx. Xxxxxx and
by an authorized officer of the Company (other than Xx. Xxxxxx). No waiver by either party of any
breach of, or of compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other condition or provision or of the same condition or
provision at another time.
(c) Whole Agreement. No agreements, representations or understandings (whether oral
or written and whether express or implied) which are not expressly set forth in this Agreement have
been made or entered into by either party with respect to the subject matter hereof. This
Agreement supersedes any agreement of the same title and concerning similar subject matter dated
prior to the date of this Agreement, and by execution of this Agreement both parties agree that any
such predecessor agreement shall be deemed null and void.
(d) Choice of Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of California without reference to conflict of
laws provisions.
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(e) Severability. If any term or provision of this Agreement or the application
thereof to any circumstance shall, in any jurisdiction and to any extent, be invalid or
unenforceable, such term or provision shall be ineffective as to such jurisdiction to the extent of
such invalidity or unenforceability without invalidating or rendering unenforceable the remaining
terms and provisions of this Agreement or the application of such terms and provisions to
circumstances other than those as to which it is held invalid or unenforceable, and a suitable and
equitable term or provision shall be substituted therefore to carry out, insofar as may be valid
and enforceable, the intent and purpose of the invalid or unenforceable term or provision.
(f) Arbitration. Any dispute or controversy arising under or in connection with this
Agreement may be settled at the option of either party by binding arbitration in the County of
Santa Clara, California, in accordance with the rules of the American Arbitration Association then
in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction.
Punitive damages shall not be awarded.
(g) Legal Fees and Expenses. The parties shall each bear their own expenses, legal
fees and other fees incurred in connection with this Agreement.
(h) Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which together will constitute one and the same instrument.
(Signature Page Follows)
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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.
CONCENTRIC MEDICAL, INC.
| By: | /s/ Xxxx Xxxxx | /s/ Xxxxxx X. Xxxxxx | ||||||
| Xxxxxx X. Xxxxxx | ||||||||
| Name: | Xxxx Xxxxx | |||||||
| Title: | Vice President | |||||||
