ADEZA BIOMEDICAL CORPORATION AMENDED AND RESTATED MANAGEMENT CONTINUITY AGREEMENT
Exhibit (e)(4)
ADEZA
BIOMEDICAL CORPORATION
AMENDED
AND RESTATED
This Amended and Restated Management Continuity Agreement (the
“Agreement”) is dated as of January 12,
2007 by and between Xxxxx X. Xxxxxxxx
(“Employee”) and Adeza Biomedical Corporation.,
a Delaware corporation (the “Company” or
“Adeza”). This Agreement amends
sections 2(b)(i) — (iv) and
section 5(a) of the Management Continuity Agreement entered
into by and between Employee and the Company on October 21,
2004. This Agreement is intended to provide Employee with
certain benefits described herein upon the occurrence of
specific events.
RECITALS
A. It is expected that another company 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 of
Directors recognizes that such consideration can be a
distraction to Employee and can cause Employee to consider
alternative employment opportunities. The Board of Directors has
determined that it is in the best interests of the Company and
its stockholders to assure that the Company will have the
continued dedication and objectivity of the Employee,
notwithstanding the possibility, threat or occurrence of a
Change of Control (as defined below) of the Company.
B. The Company’s Board of Directors believes it is in
the best interests of the Company and its stockholders to retain
Employee and provide incentives to Employee to continue in the
service of the Company.
C. The Board of Directors further believes that it is
imperative to provide Employee with certain benefits upon a
Change of Control and, under certain circumstances, upon
termination of Employee’s employment, which benefits are
intended to provide Employee with financial security and provide
sufficient income and encouragement to Employee to remain with
the Company, notwithstanding the possibility of a Change of
Control.
D. To accomplish the foregoing objectives, the Board of
Directors has directed the Company, upon execution of this
Agreement by Employee, to agree to the terms provided in this
Agreement.
Now therefore, in consideration of the mutual promises,
covenants and agreements contained herein, and in consideration
of the continuing employment of Employee by the Company, the
parties hereto agree as follows:
1. At-Will Employment. The Company
and Employee acknowledge that Employee’s employment is and
shall continue to be at-will, as defined under applicable law,
and that Employee’s employment with the Company may be
terminated by either party at any time for any or no reason. If
Employee’s employment terminates for any reason, Employee
shall not be entitled to any payments, benefits, award or
compensation other than as provided in this Agreement. The terms
of this Agreement shall terminate upon the earlier of
(i) the date on which Employee ceases to be employed as an
executive corporate officer of the Company, other than as a
result of an involuntary termination by the Company without
Cause (as defined below) or Employee’s resignation for Good
Reason (as defined below); or (ii) the date that all
obligations of the parties hereunder have been satisfied. A
termination of the terms of this Agreement pursuant to the
preceding sentence shall be effective for all purposes, except
that such termination shall not affect the payment or provision
of compensation or benefits on account of a termination of
employment occurring prior to the termination of the terms of
this Agreement. The rights and duties created by this
Section 1 may not be modified in any way except by a
written agreement executed by an officer of the Company upon
direction from the Board of Directors.
2. Benefits Upon a Change of Control; Termination of
Employment.
(a) Treatment of Stock Options and Other Equity
Awards Upon a Change of Control. In the event
of a Change of Control and regardless of whether Employee’s
employment with the Company is terminated in connection with the
Change in Control, the vesting of each stock option and other
equity award to purchase
the Company’s Common Stock granted to Employee over the
course of his employment with the Company and held by Employee
on the effective date of a Change of Control shall accelerate
such that 75% of the aggregate number of unvested option shares
and other equity awards shall become immediately vested
immediately prior to the effective date of the Change of
Control, with the vesting acceleration applied with respect to
each outstanding option or equity award in the order in which
the award was granted. Each such option and equity award shall
be exercisable in accordance with the provisions of the
agreement and plan pursuant to which such option or award was
granted.
(b) Termination Following a Change of
Control. In the event that Employee’s
employment is terminated as a result of an involuntary
termination other than for Cause or if Employee resigns for Good
Reason at any time within 12 months following the effective
date of a Change of Control, then Employee will be entitled to
receive severance benefits as follows: (i) severance
payments during the period from the date of Employee’s
termination until the date 24 months after the effective
date of the termination (the “Severance
Period”) equal to the base salary which Employee was
receiving immediately prior to the Change of Control, which
payments shall be paid during the Severance Period in accordance
with the Company’s standard payroll practices, (ii) a
lump sum payment as soon as practicable after the date of
termination of employment equal to 200% of the bonus payment
made to Employee for the Company’s fiscal year prior to the
Company’s fiscal year in which the termination occurs,
(iii) a lump sum payment as soon as practicable after the
date of termination of employment equal to a pro-rata portion of
the bonus payment made to Employee for the Company’s fiscal
year prior to the Company’s fiscal year in which the
termination occurs based on the number of completed months of
Employee’s employment during such fiscal year;
(iv) continuation of the health insurance benefits provided
to Employee immediately prior to the Change of Control at
Company expense pursuant to the terms of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended
(“COBRA”) or other applicable law through the
earlier of the end of the Severance Period or the date upon
which Employee is no longer eligible for such COBRA or other
benefits under applicable law; (v) each stock option and
equity award to purchase the Company’s Common Stock granted
to Employee over the course of his employment with the Company
and held by Employee on the date of termination of employment
shall become immediately vested as to 100% of the then unvested
option shares; and (vi) each equity award granted on or
after July 23, 2004 shall remain exercisable for a period
of eighteen (18) months following Employee’s
termination date (but not later than the expiration date of the
award as set forth in the applicable award agreement). Each such
option and equity award shall otherwise be exercisable in
accordance with the provisions of the agreement and plan
pursuant to which such option or award was granted. In addition,
Employee will receive payment(s) for all salary, bonuses and
unpaid vacation accrued as of the date of Employee’s
termination of employment.
(c) Termination Not Following a Change of
Control. In the event that Employee’s
employment is terminated as a result of an involuntary
termination other than for Cause or if Employee resigns for Good
Reason at any time prior to or more than 12 months
following the effective date of a Change of Control, then
Employee will be entitled to receive severance benefits as
follows: (i) severance payments during the period from the
date of Employee’s termination until the date
12 months after the effective date of the termination (the
“Benefit Period”) equal to the base salary
which Employee was receiving immediately prior to the Change of
Control, which payments shall be paid during the Benefit Period
in accordance with the Company’s standard payroll
practices, (ii) a lump sum payment as soon as practicable
after the date of termination of employment equal to 50% of the
bonus paid to Employee for the Company’s fiscal year prior
to the Company’s fiscal year in which the termination
occurs, (iii) continuation of the health insurance benefits
provided to Employee immediately prior to the Change of Control
at Company expense pursuant to COBRA or other applicable law
through the earlier of the end of the Benefit Period or the date
upon which Employee is no longer eligible for such COBRA or
other benefits under applicable law; (iv) each stock option
and equity award to purchase the Company’s Common Stock
granted to Employee over the course of his employment with the
Company and held by Employee on the date of termination of
employment shall become immediately vested on such date as to
that number of shares that would have vested in accordance with
the terms of such option or equity award as of the date
12 months after the date of termination of employment
(assuming that Employee had remained an employee of the Company
for 12 months after the date of termination of employment)
and each such option and equity award shall be exercisable in
accordance with the provisions of the agreement and plan
pursuant to which such option or award was granted, provided
however that the vested shares underlying an equity award
granted on or after July 23, 2004, shall remain exercisable
for a period of eighteen (18) months following
Employee’s termination date (but not later than the
expiration date of the award as set forth in
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the applicable award agreement). In addition, Employee will
receive payment(s) for all salary, bonuses and unpaid vacation
accrued as of the date of Employee’s termination of
employment.
(d) Termination for Cause. If
Employee’s employment is terminated for Cause at any time,
then Employee shall not be entitled to receive payment of any
severance benefits. Employee will receive payment(s) for all
salary, bonuses and unpaid vacation accrued as of the date of
Employee’s termination of employment and Employee’s
benefits will be continued under the Company’s then
existing benefit plans and policies in accordance with such
plans and policies in effect on the date of termination and in
accordance with applicable law.
(e) Voluntary Resignation other than for Good
Reason. If Employee voluntarily resigns from
the Company for any reason other than Good Reason, then Employee
shall not be entitled to receive payment of any severance
benefits. Employee will receive payment(s) for all salary,
bonuses and unpaid vacation accrued as of the date of
Employee’s termination of employment and Employee’s
benefits will be continued under the terms of the Company’s
then existing benefit plans and policies in accordance with such
plans and policies in effect on the date of termination and in
accordance with applicable law.
3. 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) is or becomes the “Beneficial
Owner” (as defined in
Rule 13d-3
under said 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 without the approval of the Board;
(ii) Merger/Sale of Assets. A
merger or consolidation of the Company whether or not approved
by the Board, 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. A change in the composition of
the Board, 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 August 1, 2004 or
(B) are elected, or nominated for election, to the Board
with the affirmative votes of at least a majority of the
Incumbent Directors at the time of such election or nomination
(but an Incumbent Director 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).
(b) Cause. “Cause”
for termination of Employee’s employment will exist if
Employee is terminated by the Company, for any of the following
reasons, as determined in good faith by the Company:
(i) Employee’s gross negligence or willful failure
substantially to perform his duties and responsibilities to the
Company or deliberate violation of a Company policy;
(ii) Employee’s commission of any act of fraud,
embezzlement, dishonesty or any other willful misconduct that
has caused or is reasonably expected to result in material
injury to the Company; (iii) unauthorized use or disclosure
by Employee of any proprietary information or trade secrets of
the Company or any other party to whom the Employee owes an
obligation of nondisclosure as a result of his relationship with
the Company; or (iv) Employee’s willful breach of any
of his obligations under any written agreement or covenant with
the Company.
(c) Good Reason. “Good
Reason” for Employee’s resignation of his
employment will exist if Employee tenders his resignation to the
Company with 30 days prior written notice to the Company
within 120 days of the occurrence of any of the following
events: (i) a material reduction in the Employee’s job
responsibilities, as of immediately prior to the Change of
Control for purposes of Section 2(b) above and as of
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immediately prior to the termination date for purposes of
Section 2(c) above; (ii) relocation by the Company of
the Employee’s work site which has the effect of increasing
Employee’s then-current commute by more than 50 miles;
(iii) any reduction in Employee’s then-current base
salary
and/or
target bonus (other than in connection with a general decrease
in the base salaries and target bonus for all other executives
of the Company); (iv) a material reduction in
Employee’s benefits (other than a general decrease in the
benefit programs offered to all other executives of the
Company); or (v) the Company’s failure to obtain
agreement from any acquiror or successor to assume the
Company’s obligations under this Agreement.
4. Parachute Payments. In the
event that the severance and other benefits provided for in this
Agreement to Employee (the “Benefit”), determined
without regard to any additional payment required under this
section 4, would (i) constitute “parachute
payments” within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the
“Code”), and (ii) be subject to the excise tax
imposed by Section 4999 of the Code or any interest or
penalties payable with respect to such excise tax (such excise
tax, together with any such interest and penalties, are
hereinafter collectively referred to as the “Excise
Tax”), then Employee shall be entitled to receive from
the Company an additional payment (the “Gross-Up
Payment”) in an amount sufficient to reimburse Employee
for both (A) such Excise Tax, and (B) the income,
excise, employment and any other taxes imposed on the Gross Up
Payment provided under this Section 4. The accounting firm
engaged by the Company for general audit purposes as of the day
prior to the effective date of the Change of Control shall
perform the foregoing calculations. The Company shall bear all
expenses with respect to the determinations by such accounting
firm required to be made hereunder. The accounting firm engaged
to make the determinations hereunder shall provide its
calculations, together with detailed supporting documentation,
to the Company and to Employee within fifteen (15) calendar
days after the date on which Employee’s right to the
Benefit is triggered (if requested at that time by the Company
or by Employee) or such other time as requested by the Company
or by Employee. If the accounting firm determines that no Excise
Tax is payable with respect to the Benefit, it shall furnish the
Company and Employee with an opinion reasonably acceptable to
Employee that no Excise Tax will be imposed with respect to such
Benefit. Any good faith determinations of the accounting firm
made hereunder shall be final, binding and conclusive upon the
Company and Employee.
5. Limitations and Conditions on Benefits
(a) Income and Employment
Taxes. Employees agrees that he shall be
responsible for any applicable taxes of any nature (including
any penalties or interest that may apply to such taxes) that the
Company reasonably determines apply to any payment made
hereunder, that his receipt of any benefit hereunder is
conditioned on his satisfaction of any applicable withholding or
similar obligations that apply to such benefit, and that any
cash payment owed hereunder will be reduced to satisfy any such
withholding or similar obligations that may apply.
Notwithstanding any provision of this Agreement to the contrary,
if, at the time of Employee’s termination of employment, he
is a “specified employee” as defined in Code
Section 409A, and one or more of the payments or benefits
received or to be received by Employee pursuant to this
Agreement would constitute deferred compensation subject to Code
Section 409A, no such payment or benefit will be provided
under the Agreement until the earliest of (A) the date
which is six (6) months after Employee’s
“separation from service” for any reason, other than
death or “disability” (as such terms are used in
Section 409A(a)(2) of the Code), (B) the date of
Employee’s death or “disability” (as such term is
used in Section 409A(a)(2)(C) of the Code), or (C) the
effective date of a “change in the ownership or effective
control” or a “change in ownership of a substantial
portion of the assets” of the Company (as such terms are
used in Section 409A(a)(2)(A)(v) of the Code). The
provisions of this Section 5(a) shall only apply to the
extent required to avoid Employee’s incurrence of any
penalty tax or interest under Code Section 409A or any
regulations or Treasury guidance promulgated thereunder. In
addition, if any provision of the Agreement would cause Employee
to incur any penalty tax or interest under Code
Section 409A or any regulations or Treasury guidance
promulgated thereunder, the Company may reform such provision to
maintain to the maximum extent practicable in accordance with
the original intent of the applicable provision without
violating the provisions of Code Section 409A, including
without limitation to limit payment or distribution of any
amount of benefit hereunder in connection with a change of
control to a transaction meeting the definitions referred to in
clause (C) above, or in connection with a disability
as referred to in (B) above.
(b) Release Prior to Receipt of
Benefits. Prior to the receipt of any
benefits under this Agreement, Employee shall execute a release
of claims agreement (the “Release”) in the form
provided by the Company. Such Release
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shall specifically relate to all of Employee’s rights and
claims in existence at the time of such execution and shall
confirm Employee’s obligations under the Company’s
standard form of proprietary information agreement.
6. Conflicts. Employee represents
that his performance of all the terms of this Agreement will not
breach any other agreement to which Employee is a party.
Employee has not, and will not during the term of this
Agreement, enter into any oral or written agreement in conflict
with any of the provisions of this Agreement. Employee further
represents that he is entering into or has entered into an
employment relationship with the Company of his own free will
and that he has not been solicited as an employee in any way by
the Company.
7. 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
Employee’s rights hereunder and thereunder shall inure to
the benefit of, and be enforceable by, Employee’s personal
or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.
8. 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 Employee shall be addressed to Employee at the
home address which Employee 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.
9. Miscellaneous Provisions.
(a) No Duty to Mitigate. Employee
shall not be required to mitigate the amount of any payment
contemplated by this Agreement (whether by seeking new
employment or in any other manner), nor shall any such payment
be reduced by any earnings that Employee 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 Employee and by an authorized officer of the Company
(other than Employee). No waiver by either party of any breach
of, or of compliance with, any condition or provision of this
Agreement by the other party 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 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.
(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 therefor to carry out, insofar as may be
valid and enforceable, the intent and purpose of the invalid or
unenforceable term or provision.
(f) Arbitration. Employee and the
Company agree to attempt to settle any disputes arising in
connection with this Agreement through good faith consultation.
In the event that Employee and the Company are not able to
resolve any such disputes within fifteen (15) days after
notification in writing to the other, Employee and the Company
agree that any dispute or claim arising out of or in connection
with this Agreement will be finally settled by binding
arbitration in Santa Xxxxx County, California in accordance
with the rules of the American Arbitration
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Association by one arbitrator mutually agreed upon by the
parties. The arbitrator will apply California law, without
reference to rules of conflicts of law or rules of statutory
arbitration, to the resolution of any dispute. Except as set
forth in Subparagraph (e) above, the arbitrator shall
not have authority to modify the terms of this Agreement. The
Company shall pay the costs of the arbitration proceeding. Each
party shall, unless otherwise determined by the arbitrator, bear
its or his own attorneys’ fees and expenses, provided
however that if Employee prevails in an arbitration proceeding,
the Company shall reimburse Employee for his reasonable
attorneys’ fees and costs. Judgment on the award rendered
by the arbitrator may be entered in any court having
jurisdiction thereof. Notwithstanding the foregoing, the Company
and Employee may apply to any court of competent jurisdiction
for preliminary or interim equitable relief, or to compel
arbitration in accordance with this paragraph, without breach of
this arbitration provision.
(g) Legal Fees and Expenses. The
parties shall each bear their own expenses, legal fees and other
fees incurred in connection with the execution of this Agreement.
(h) No Assignment of Benefits. The
rights of any person to payments or benefits under this
Agreement shall not be made subject to option or assignment,
either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment,
attachment or other creditor’s process, and any action in
violation of this Section 10(h) shall be void.
(i) Assignment by Company. The
Company may assign its rights under this Agreement to an
affiliate, and an affiliate may assign its rights under this
Agreement to another affiliate of the Company or to the Company.
In the case of any such assignment, the term “Company”
when used in a section of this Agreement shall mean the
corporation that actually employs the Employee.
(j) 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.
The parties have executed this Agreement on the date first
written above.
ADEZA BIOMEDICAL CORPORATION.
| By: |
/s/ Xxxx
Xxxxxxx-Colbrie
|
| Title: | VP Finance and Administration |
| Address: | 0000 Xxxx Xxxxx |
Xxxxxxxxx, Xxxxxxxxxx 00000
XXXXX X. XXXXXXXX
| Signature: |
/s/ Xxxxx
X. Xxxxxxxx
|
| Address: |
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