EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into effective November
14, 1997, between HEALTHCARE CAPITAL CORP., an Alberta, Canada corporation
("Corporation"), and XXXXX X. KAWASAKI ("Executive").
RECITALS
A. Executive is currently Vice President - Finance and Chief Financial
Officer of Corporation. Executive is an innovative, highly experienced, and
knowledgeable executive whose creativity, expertise, and effort have been
instrumental in the development of the business and growth of Corporation.
B. Corporation recognizes that the future growth, profitability, and
success of the business of Corporation and its subsidiaries require, and will be
substantially and materially advanced by, the continued employment of Executive.
Corporation desires, therefore, to secure for Corporation and its affiliates the
continued benefit of Executive's experience, ability, and leadership. In order
to retain the services of Executive and to maximize the period of his continued
availability, and in recognition of his continuing contribution to Corporation's
success, Corporation desires to offer Executive the compensation, amenities, and
other benefits that executives of comparable experience and ability generally
receive.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms have the
meanings set forth in this Section 1:
"AFFILIATE" - Any person, firm, corporation, association, organization,
or unincorporated trade or business that, now or hereinafter, directly or
indirectly, controls, is controlled by, or is under common control with
Corporation.
"BOARD" - The board of directors of Corporation.
"CAUSE" - Cause for termination of employment means:
(i) A material act of fraud or dishonesty by Executive within the
course of performing his duties for Corporation or its Affiliates;
(ii) Gross negligence or intentional misconduct by Executive in
performing material duties for Corporation or its Affiliates, or
unjustifiable
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neglect by Executive of the performance of material duties for
Corporation or its Affiliates;
(iii) Commission of an act (or failure to take an action)
intentionally against the interest of Corporation or its Affiliates
that causes Corporation or an Affiliate material injury; or
(iv) An act of serious moral turpitude that causes Corporation or
an Affiliate material injury.
Notwithstanding the foregoing, Executive will not be deemed to have been
terminated for Cause unless and until there has been delivered to Executive a
copy of a resolution duly adopted by the affirmative vote of not less than a
majority of the entire membership of the Board (excluding Executive if at the
time he is member of the Board), at a meeting of the Board called and held for
that purpose, finding that, in the good faith opinion of the Board, Executive
was guilty of conduct constituting Cause as defined in this Agreement and
specifying the particulars thereof in detail. Executive must have been given
reasonable notice of such meeting and Executive, together with his counsel, must
have been given an opportunity to be heard before the Board at the meeting. This
provision will not be deemed to restrict the authority, discretion, or power of
the Board, by any action taken in compliance with Corporation's articles of
incorporation and bylaws, to remove Executive as an officer or director of
Corporation, with or without Cause. Rather, the foregoing provisions merely
define, for purposes of Executive's contractual rights and remedies under this
Agreement, the circumstances in which termination of Executive's employment will
constitute termination for Cause.
"CHANGE IN CONTROL" - A change in control of Corporation means:
(i) The acquisition by any Person of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50
percent or more of the combined voting power of the then outstanding
Voting Securities; provided, however, that for purposes of this
paragraph (i), the following acquisitions will not constitute a Change
of Control: (A) any acquisition directly from Corporation, (B) any
acquisition by Corporation, (C) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by Corporation or any
corporation controlled by Corporation, (D) any acquisition by Warburg,
Xxxxxx Ventures, L.P. ("WPV") or by any Person that, now or
hereinafter, directly or indirectly controls, is controlled by, is
under common control with, or is otherwise an affiliate of, WPV, or (E)
any acquisition by any corporation pursuant to a transaction which
complies with clauses (A), (B), and (C) of paragraph (iii) below; or
(ii) individuals who, as of the date of this Agreement, constitute
the Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a
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director subsequent to the date of this Agreement whose election, or
nomination for election by Corporation's shareholders, was approved by
a vote of at least a majority of the directors then comprising the
Incumbent Board will be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board; or
(iii) consummation of a reorganization, merger, or consolidation
or sale or other disposition of all or substantially all of the assets
of Corporation (a "Business Combination") in each case, unless,
following such Business Combination, (A) all or substantially all of
the individuals and entities who were the beneficial owners of the
Voting Securities outstanding immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50
percent of, respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns Corporation or all or substantially all of
Corporation's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Voting
Securities, (B) no Person (excluding any employee benefit plan (or
related trust) of Corporation or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 50
percent or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination or
the combined voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership existed prior
to the Business Combination and (C) at least a majority of the members
of the board of directors of the corporation resulting from such
Business Combination were members of Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination.
"COMPETITIVE ENTITY" - A Person, firm, or entity engaged in the
national or regional (in the United States or Canada) retail provision of
audiology services and/or dispensing of hearing aids.
"DISABILITY" OR "DISABLED" - Inability to perform duties with
Corporation on a full-time basis by reason of "Total Disability" within the
meaning of Corporation's Group Long Term Disability Insurance Plan or any
successor plan or program maintained by Corporation. In the event Corporation no
longer maintains a similar plan or program,
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Disability or Disabled means inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment.
"EFFECTIVE DATE" - December 24, 1997.
"EXCESS PARACHUTE PAYMENT" - Has the meaning given in Section 280G(b)
of the Code.
"EXCHANGE ACT" - The Securities Exchange Act of 1934, as amended.
"EXCISE TAX" - A tax imposed by Section 4999(a) of the Code, or any
successor provision, with respect to an Excess Parachute Payment.
"GOOD REASON" - For all purposes of this Agreement, termination by
Executive of his employment with Corporation during the Employment Term for
"Good Reason" means termination based on any of the following:
(a) A change in Executive's status or position or positions with
Corporation that represents a material demotion from Executive's status
or position or positions as of the date of this Agreement or a material
change in Executive's duties or responsibilities that is inconsistent
with such status or position or positions;
(b) A reduction by Corporation in Executive's Base Salary (as in
effect on the date of this Agreement or as increased at any time during
the Term of this Agreement);
(c) The failure of Corporation to continue Executive's
participation (on terms comparable to those for other key executives of
Corporation) in any Plans and vacation programs or arrangements in
which other key executives of Corporation are participants (unless such
failure to continue is caused by an action or status of Executive); or
(d) Corporation's requiring Executive to be based more than 35
miles from Corporation's principal executive office, except for
required travel on Corporation's business to an extent substantially
consistent with Executive's business travel obligations as of the date
of this Agreement.
"OTHER AGREEMENT" - A plan, arrangement, or agreement pursuant to which
an Other Payment is made.
"OTHER PAYMENT" - Any payment or benefit payable to Executive in
connection with a Change in Control of Corporation pursuant to any plan,
arrangement, or agreement (other than this Agreement) with Corporation, any
person whose actions result in a change in control of Corporation, or any person
affiliated with Corporation or such person.
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"OUTSIDE TAX COUNSEL" - Outside tax counsel selected by Corporation and
reasonably acceptable to Executive.
"PARACHUTE PAYMENT" - A payment or benefit payable to Executive in
connection with a Change in Control of Corporation that is treated as a
parachute payment within the meaning of Code Section 280G(b)(2).
"PERSON" - Any individual, corporation, partnership, limited liability
company, group, association, or other "person," as such term is used in Section
13(d)(3) or Section 14(d) of the Exchange Act, other than Corporation or any
employee benefit plan or plans sponsored by Corporation.
"PLAN" - Any compensation plan such as a plan providing for incentive
or deferred compensation, stock options or other stock or stock-related grants
or awards, or any employee benefit plan such as a thrift, investment, savings,
pension, profit sharing, medical, disability, accident, life insurance,
cafeteria, or relocation plan or any other plan, policy, or program of
Corporation providing similar types of benefits to employees of Corporation.
"SEVERANCE PAYMENTS" - The severance payments described in Section 5.4
of this Agreement.
"TERM" - The period from the Effective Date through December 24, 2001;
provided, however, that the Term will automatically be extended to December 24,
2002 (and thereafter will be similarly extended in additional one-year
extensions) unless, on or before June 30, 2001 (or, if the term has been
extended, June 30 of the last year of the Term), either Corporation or Executive
gives written notice of non-extension of the Term.
"TERMINATION BENEFITS" - The payments and benefits described in Section
5 of this Agreement.
"TERMINATION DATE" - The date Executive's employment with Corporation
is terminated for any reason by Corporation or by Executive.
"TOTAL PAYMENTS" - All payments or benefits payable to Executive in
connection with a Change in Control of Corporation, including Severance Payments
and Other Payments.
"VOTING SECURITIES" - Corporation's issued and outstanding securities
ordinarily having the right to vote at elections of Corporation's Board.
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2. EMPLOYMENT. Corporation hereby agrees to employ Executive, and
Executive hereby accepts employment with Corporation, during the Term of this
Agreement on the terms and conditions set forth in this Agreement. Corporation's
agreement to employ Executive is subject to the reservations provided in the
definition of "Cause" in Section 1 and in Section 3.3.
3. EXECUTIVE DUTIES.
3.1 Position and Duties. Executive agrees to render services to
Corporation as Vice President and Chief Financial Officer of Corporation and as
an executive officer of such of Corporation's Affiliates as the parties to this
Agreement mutually agree, including Affiliates that may be formed or acquired
subsequent to the Effective Date. As Chief Financial Officer of Corporation,
Executive will have responsibility for all financial and accounting matters
affecting Corporation's business and will have such executive and managerial
duties as Corporation's Chief Executive Officer or President prescribes from
time to time.
3.2 Exclusive Employment. Executive agrees that during the Term of this
Agreement:
(a) Executive will devote substantially all his regular business
time solely and exclusively to the business of Corporation, whether
such business is operated directly by Corporation or through one or
more Affiliates of Corporation;
(b) Executive will diligently carry out his responsibilities under
this Agreement;
(c) Executive will not, directly or indirectly, without the prior
approval of the Board, provide services on behalf of any Competitive
Entity or on behalf of any subsidiary or affiliate of any such
Competitive Entity, as an employee, consultant, independent contractor,
agent, sole proprietor, partner, member, joint venturer, corporate
officer, or director;
(d) Executive will not acquire by reason of purchase the ownership
of more than 1 percent of the outstanding equity interest in any
Competitive Entity; and
(e) Except as expressly set forth above, Executive may engage in
personal business and investment activities.
3.3 Corporation Reserved Rights. Corporation reserves, on its own
behalf and on behalf of its shareholders, the right to elect, from time to time,
any person to its Board, to appoint any person as an officer of Corporation, and
to remove any officer or director, including Executive, in any manner and upon
the basis or bases presently or
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subsequently provided for by its articles of incorporation and bylaws. Nothing
in this Agreement will be deemed to constitute any restriction on the authority,
discretion, or power of the Board, but rather will only give Executive
contractual rights and remedies.
3.4 Nondisclosure. During and after the Term of this Agreement,
Executive agrees not to disclose to any persons with interests adverse or
potentially adverse to Corporation (other than an employee or agent of
Corporation or any Affiliate entitled to receive such information) confidential
information relating to the business of Corporation or any Affiliate and
obtained by Executive while providing services to Corporation or any Affiliate
without the consent of the Board, or until the information ceases to be
confidential. Notwithstanding the foregoing, Executive will not be precluded
from making disclosures respecting Corporation or any Affiliate where the
disclosures are made pursuant to compulsory legal process or when otherwise
required by an appropriate government agency.
4. COMPENSATION AND BENEFITS.
4.1 Base Salary. As compensation for the performance of Executive's
services hereunder, inclusive of services as an officer and director of
Corporation's Affiliates, Corporation will pay to Executive in accordance with
its normal payroll practices an annual salary (the "Base Salary") of $115,000
per year, subject to such increases (but not decreases) as are determined from
time to time by the Board, or a compensation committee designated by the Board.
4.2 Incentive Bonuses.
4.2.1 Initial Bonus. Upon execution of this Agreement, Corporation will
pay Executive a bonus for services performed in Corporation's fiscal year ended
July 31, 1997, in an amount equal to $42,500.
4.2.2 Annual Bonus. During the Term of this Agreement, Executive will
be eligible to receive an incentive bonus for each fiscal year (beginning with
the fiscal year ending July 31, 1998) (an "Annual Bonus") in an amount (as
determined by the Board) up to 50 percent of Executive's Base Salary for such
fiscal year. The Annual Bonus for each fiscal year will be payable no later than
120 days following the end of each fiscal year.
4.3 Stock Options
4.3.1 Option Limitations. Corporation's common stock is traded on the
Alberta Stock Exchange ("ASE"). The rules of the ASE limit the number of shares
of Corporation's common stock with respect to which its listed companies may
grant stock options. Corporation has granted options up to the maximum permitted
under such rules. Corporation intends to apply for listing on the American Stock
Exchange ("AMEX") when it is able to meet the listing requirements for the AMEX.
At such time as Corporation obtains an AMEX listing, it will be permitted to
grant additional stock options.
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4.3.2 Option Awards. At such time as Corporation is permitted to grant
additional options, Corporation will immediately grant Executive nonqualified
stock option awards (the "Options") under Corporation's Stock Award Plan for the
following number of shares of Corporation's common stock with the following
option exercise prices:
Per Share
Group No. Shares Option Exercise Price(1)
----- ---------- ------------------------
1 640,000 US $1.35
2 160,000 US $2.00
3 200,000 US $2.40
The Options will have the following additional features:
o The number of shares subject to the Options and the respective
option exercise prices will be adjusted to reflect any reverse stock
split or other similar restructuring of Corporation's common stock;
o The effective date of the option grants (the "Grant Date") will
be the date the Board takes action to grant the Options;
o The Options will have a term of the shorter of (a) the maximum
term allowable under the rules of the principal stock exchange or
market system on which shares of Corporation's common stock are traded
on the Grant Date or (b) 10 years, commencing on the Grant Date;
o The Options of each group will become exercisable over four
years at 25 percent per year as follows, based on the anniversaries of
the Grant Date:
Cumulative
Anniversary of Percentage
Grant Date Exercisable
-------------- -----------
Prior to First 0%
First 25%
Second 50%
Third 75%
Fourth 100%
-------------------
(1) The option exercise prices will be the greater of the fair market value of a
share of common stock on the Grant Date or the minimum prices shown in the table
so that the grant of the Options will not result in any direct charge to
Corporation's reported earnings.
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o The Options will become immediately and fully exercisable in the
event that, within one year following a Change in Control of
Corporation, Executive is terminated without Cause or one of the events
described in the definition of Good Reason in Section 1 of this
Agreement occurs (provided, however, that for this purpose, an
acquisition of more than 50 percent of the Voting Securities by WPV, or
any person that directly or indirectly controls, is controlled by, is
under common control with, or is otherwise affiliated with WPV, will
constitute a Change in Control);
o Corporation agrees to register the shares subject to the Option;
o The Option will be governed by an Award Agreement as approved by
the Board; and
o Vested Options will remain exercisable for 90 days after
termination of employment or, in the case of termination due to death
or Disability, for one year.
4.4 Other Benefits. During the Term of this Agreement, Executive will
be entitled to participate in all Plans (including Plans adopted following the
Effective Date) covering Corporation's key executive and managerial employees
(as described in Corporation's employee manual, as amended from time to time),
including, without limitation, Plans providing medical, disability, and life
insurance benefits, and vacation pay. In addition Corporation will pay up to
$500 per calendar month during the Term of this Agreement for lease of an
automobile for Executive's use (subject to normal Corporation policies regarding
accounting for personal use of such automobile).
4.5 Expenses. Executive is authorized to incur on behalf of
Corporation, and Corporation will directly pay or will fully reimburse Executive
for all customary and reasonable out-of-pocket expenses incurred for promoting,
pursuing, or otherwise furthering the business of Corporation or its affiliates.
5. TERMINATION OF AGREEMENT.
5.1 Death. If Executive dies prior to the expiration of the Term of
this Agreement, Corporation will pay to Executive's representative his Base
Salary through the date of death. All benefits, including death benefits, to
which Executive is then entitled under Plans in which Executive is a participant
will be payable as provided in those Plans. This Agreement will terminate as of
the date of death and Corporation will have no further obligations to Executive
under this Agreement.
5.2 Disability. In the event Executive becomes Disabled during the
Term, the Agreement will remain in effect and Executive will be entitled to
continue to receive the compensation and benefits described in Section 4 until
the expiration of the Term with the following modifications:
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(a) The Annual Bonus, if any, that otherwise would be earned by
Executive for the year in which his employment is terminated by reason
of Disability (the "Disability Year") will be prorated based on the
number of days before and after the Termination Date;
(b) Executive will not be entitled to any Annual Bonus for years
following the Disability Year; and
(c) The amounts otherwise payable to Executive as Base Salary
following the Termination Date will be reduced by the amount, if any,
of benefits paid to Executive under Corporation's Group Long Term
Disability Insurance Plan. To the extent allowable under applicable law
and other Corporation Plans, Executive will be treated as an employee
of Corporation during the period after the Termination Date and through
the end of the Term for purposes of this Agreement and the Plans in
which Executive is a participant.
5.3 Termination for Cause or Voluntary Termination Without Good Reason.
Pending the determination by the Board whether or not Cause exists for
termination of Executive's employment pursuant to the definition of Cause in
Section 1, the Board may suspend Executive or relieve Executive of his duties as
an officer, but may not terminate Executive's employment. Upon such
determination that Cause exists, Corporation may terminate Executive's
employment. If Corporation terminates Executive's employment for Cause or
Executive terminates employment other than for Good Reason, Corporation will pay
Executive his Base Salary through the effective date of such termination and,
only if Corporation elects, additional compensation equal to one-half of
Executive's Base Salary for the period during which Executive is obligated not
to compete pursuant to Section 5.7 of this Agreement. This Agreement will
terminate as of the Termination Date, and Corporation will have no further
obligations to Executive under this Agreement. All accrued benefits to which
Executive is then entitled under Plans in which he is a participant will be
payable as provided in those Plans.
5.4 Termination Without Cause or With Good Reason. If Executive's
employment with Corporation is terminated (other than for Disability or upon
Executive's death) by Corporation without Cause or by Executive with Good
Reason, Corporation will pay Executive the following amounts ("Severance
Payments"):
(a) Executive's Base Salary through the Termination Date; and
(b) In lieu of any further salary payments to Executive for
periods subsequent to the Termination Date, an amount of severance pay
equal to Executive's Base Salary (payable in 12 substantially equal
monthly installments commencing on the first day of the first calendar
month beginning after the Termination Date).
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5.5 Related Benefits. Except in connection with Executive's death or
Termination by Corporation for Cause or Disability or by voluntary Termination
by Executive without Good Reason, Corporation will retain in full force and
effect for the continued benefit of Executive for one year after the Termination
Date all Plans in which Executive was entitled to participate immediately prior
to the Termination Date, provided that Executive's continued participation is
possible under the general terms and provisions of such Plans; provided,
however, that if the participation by Executive in any Plan is barred by the
provisions of such Plan, Corporation will arrange to provide Executive with
benefits substantially similar to those to which Executive is entitled to
receive under such Plan (provided, however, that the cost of such benefits does
not exceed 125 percent of the prevailing cost of similar benefits under
Corporation's Plans).
5.6 No Mitigation. Executive will not be required to mitigate the
amount of any payment provided for in this Section 5 by seeking other employment
or otherwise. However, except in the case of a termination of Executive without
Cause or with Good Reason within one year following a Change in Control of
Corporation, the amount of any payment or related benefit provided for in this
Section 5 will be reduced by any compensation earned or related benefit received
by Executive as a result of either employment by another employer or self-
employment after the Termination Date. Executive agrees to provide Corporation
with any information reasonably necessary to determine the amount of such
reduction.
5.7 Noncompetition Following Termination. Executive acknowledges that
the agreements and covenants contained in this Section 5.7 are essential to
protect the value of Corporation's business and assets and that, by his current
employment with Corporation and its subsidiaries, Executive has obtained and
will obtain such knowledge, contacts, know-how, training and experience, and
that such knowledge, contacts, know-how, training and experience could be used
to the substantial advantage of a Competitive Entity and to Corporation's
substantial detriment. Therefore Executive agrees that:
(a) In the event Executive's employment is terminated (whether by
Corporation or by Executive) for any reason before the expiration of
the Term, Executive will not, for a period of two years from the
Termination Date, participate (as an owner, employee, officer, partner,
member, shareholder, director, consultant, or otherwise) in any
Competitive Entity. The benefits payable under this Agreement,
including without limitation Corporation's obligation to pay Severance
Benefits pursuant to Section 5.4 of this Agreement, and, if Corporation
so elects, the additional compensation provided in Section 5.3 of this
Agreement, are in consideration of Executive's performance of the
covenants in this Section 5.7.
(b) Executive acknowledges that pursuant to the terms of this
Agreement, he is receiving a "bona fide advancement" in terms of his
employment with Corporation within the meaning of ORS 653.295.
Executive further acknowledges that he is receiving consideration under
this Agreement
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in addition to such consideration as to which he would be entitled in
the absence of this Agreement, and he acknowledges that his agreement
to the provisions of this Section 5.7 is a necessary condition for
Corporation to enter into this Agreement and pay the consideration
provided for in this Agreement.
(c) Executive acknowledges that Corporation's remedy at law for a
breach by him of the provisions of this Section 5.7 will be inadequate.
Accordingly, in the event of the breach or threatened breach by
Executive of any provision of this Section 5.7, Corporation will be
entitled to injunctive relief in addition to any other remedy it may
have. If any of the provisions of, or covenants contained in, this
Section 5.7 are hereafter construed to be invalid or unenforceable in
any jurisdiction, the same will not affect the remainder of the
provisions or the enforceability thereof in any other jurisdiction,
which will be given full effect, without regard to the invalidity or
unenforceability in such other jurisdiction. If any of the provisions
of, or covenants contained in, this Section 5.7 are held to be
unenforceable in any jurisdiction because of the duration or
geographical scope of such provision or covenant, Executive and
Corporation agree that the court making such determination will have
the power to reduce the duration or geographical scope of such
provision or covenant and that, in its reduced form, such provision or
covenant will be enforceable; provided, however, that the determination
of such court will not affect the enforceability of this Section 5.7 in
any other jurisdiction.
6. EFFECT OF CHANGE IN CONTROL.
6.1 Treatment of Severance Benefits. The Severance Benefits payable
under Section 5.4 of this Agreement are not conditioned upon a Change in Control
of Corporation but are payable upon any termination described in that Section,
whether or not a Change in Control has occurred. Thus, it is the parties' mutual
intention that the Severance Benefits are not to be treated as Total Payments.
In the event a termination of employment that would otherwise be governed by
Section 5.4 occurs following a Change in Control and the Severance Payments are
deemed to be Total Payments, the Severance Payments will be reduced pursuant to
Section 6.2.
6.2 Reduction in Severance Payments to Avoid Excess Parachute Tax
Payments.
6.2.1 Reduction. In the event that any portion of the Total Payments
received by Executive in connection with a Change in Control of Corporation
would constitute an Excess Parachute Payment that is subject to an Excise Tax,
the Severance Payments otherwise payable under Section 5.4 will be reduced to
the extent necessary to avoid such Excess Tax, until either (i) no portion of
the Total Payments are subject to such Excise Tax or (ii) the Severance Payments
are reduced to zero.
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6.2.2 Application. For purposes of this limitation:
(a) No portion of the Total Payments, the receipts or enjoyment of
which Executive has effectively waived in writing prior to the date of
payment of the Severance Payments, will be taken into account;
(b) No portion of the Total Payments will be taken into account
which, in the opinion of Outside Tax Counsel, does not constitute a
Parachute Payment;
(c) If Executive and Corporation disagree whether any payment of
Severance Payments will result in an Excise Tax, the matter will be
conclusively resolved by an opinion of Outside Tax Counsel;
(d) Executive agrees to provide Outside Tax Counsel with all
financial information necessary to determine the after-tax consequences
of payments of Severance Payments for purposes of determining whether,
or to what extent, Severance Payments are to be reduced pursuant to
this Section 6.2.
(e) The Severance Payments will be reduced only to the extent
necessary so that the Total Payments (other than those referred to in
Section 6.2.2(a) or 6.2.2(b)) in their entirety constitute, in the
opinion of Tax Counsel, reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the Code; and
(f) The value of any noncash benefit or any deferred payment or
benefit included in the Total Payments, and whether or not all or a
portion of any payment or benefit is a Parachute Payment for purposes
of Section 6.2.2(b), will be determined by Corporation's independent
accountants in accordance with the principles of Section 280(G)(d)(3)
and (4) of the Code.
6.2.3 Effect on Other Agreements. In the event that any Other Agreement
has a provision that requires a reduction in the Other Payment governed by such
Other Agreement to avoid or eliminate an Excess Parachute Payment, the reduction
in Severance Payments pursuant to this Section 6.2 will be given effect before
any reduction in the Other Payment pursuant to the Other Agreement. To the
extent possible, Corporation and Executive agree that reductions in benefits
under any Plan will be reduced in the following order of priority:
(i) Severance Payments under this Agreement;
(ii) Plan benefit continuation; and
(iii) The acceleration in the exercisability of any stock option
or other stock related award granted to Executive by Corporation.
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7. SUCCESSORS; BINDING EFFECT.
7.1 Corporation. This Agreement will inure to the benefit of, and be
binding upon, any corporate or other successor or assignee of Corporation that
acquires, directly or indirectly, by merger, consolidation or purchase, or
otherwise, all or substantially all the business or assets of Corporation.
Corporation will require any such successor, by an agreement in form and
substance reasonably satisfactory to Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent as Corporation
would be required to perform if no such succession had taken place.
7.2 Executive. This Agreement will inure to the benefit of and be
enforceable by Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and legatees. If
Executive should die while any amount would still be payable to Executive
hereunder if Executive had continued to live, all such amounts, unless otherwise
provided herein, will be paid in accordance with the terms of this Agreement to
Executive's devisee, legatee, or other designee or, if there is no such
designee, to Executive's estate.
8. WAIVER AND MODIFICATION. Any waiver, alteration, or modification of
any of the terms of this Agreement will be valid only if made in writing and
signed by the parties to this Agreement. No waiver by either of the parties of
its rights under this Agreement will be deemed to constitute a waiver with
respect to any subsequent occurrences or transactions hereunder unless the
waiver specifically states that it is to be construed as a continuing waiver.
9. GOVERNING LAW; SEVERABILITY. The validity, interpretation,
construction, and performance of this Agreement will be governed by and
construed in accordance with the laws of the state of Oregon. Any provision of
this Agreement that is prohibited or unenforceable will be ineffective only to
the extent of that prohibition or unenforceability without invalidating the
remaining provisions of this Agreement.
10. NOTICES. For the purposes of this Agreement, notices and all
communications provided for in this Agreement must be in writing and will be
deemed to have been given upon the earlier of (i) personal delivery or (ii)
three business days after being mailed by United States registered mail, return
receipt requested, with postage prepaid, addressed to the respective party at
the address set forth below (or to such other address as either party may have
furnished to the other in writing in accordance with this Section 9, except that
notices of change of address will be effective only upon receipt):
To Corporation: HealthCare Capital Corp.
000 X.X. Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
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To Executive: Xxxxx X. Kawasaki
0000 X.X. Xxxxxxx Xxxx Xxxxx
Xxxx Xxxx, Xxxxxx 00000
11. HEADINGS. Headings herein are for convenience only, are not a part
of this Agreement, and are not to be used in construing this Agreement.
12. ARBITRATION. Any dispute or claim that arises out of or that
relates to this Agreement or to the interpretation, breach, or enforcement of
this Agreement, must be resolved by mandatory arbitration in accordance with the
then effective arbitration rules of Arbitration Service of Portland, Inc., and
any judgment upon the award rendered pursuant to such arbitration may be entered
in any court having jurisdiction thereof.
13. ATTORNEYS' FEES. In the event of any suit or action or arbitration
proceeding to enforce or interpret any provision of this Agreement (or which is
based on this Agreement), the prevailing party will be entitled to recover, in
addition to other costs, reasonable attorneys' fees in connection with such
suit, action, arbitration, and in any appeal. The determination of who is the
prevailing party and the amount of reasonable attorneys' fees to be paid to the
prevailing party will be decided by the arbitrator or arbitrators (with respect
to attorneys' fees incurred prior to and during the arbitration proceedings) and
by the court or courts, including any appellate courts, in which the matter is
tried, heard, or decided, including the court which hears any exceptions made to
an arbitration award submitted to it for confirmation as a judgment (with
respect to attorneys' fees incurred in such confirmation proceedings).
14. EFFECT OF TERMINATION OF AGREEMENT. If this Agreement is
terminated, all rights and benefits that have become vested hereunder prior to
termination will remain in full force and effect, and the termination of the
Agreement will not be construed as relieving any party from the performance of
any accrued obligation incurred to the other under this Agreement.
15. ENTIRE AGREEMENT. This Agreement constitutes and embodies the
entire understanding and agreement of the parties hereto relating to the matters
addressed in this Agreement. Except as otherwise provided in this Agreement,
there are no other agreements or understandings, written or oral, in effect
between the parties relating to the matters addressed herein.
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IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
effective as of the Effective Date.
Corporation: HEALTHCARE CAPITAL CORP.
By /s/ Xxxxxxx X. Xxxxxx
EXECUTIVE: /s/ Xxxxx X. Kawasaki
Xxxxx X. Kawasaki
