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Exhibit 10.39
May 10, 1999
Xx. Xxxx X. Xxxxxxxx, M.D.
c/o SONUS Pharmaceuticals, Inc.
00000 00xx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Re: Change In Control Agreement
Dear Xxxx:
In consideration of your employment with SONUS Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), this letter agreement (the "Agreement")
sets forth the compensation benefits you will be entitled to receive in the
event your employment terminates in connection with a change in control of the
Company under the conditions described below. This Agreement takes effect on
the date you commence employment with the Company.
1. TERMINATION OF EMPLOYMENT.
1.1 During the term of this Agreement, you will be entitled to the
benefits provided in Section 2 of this Agreement in the event (A) a Change in
Control has occurred; and (B)(i) you terminate your employment with the Company
for Good Reason within 12 months following the Change of Control, or (ii) the
Company terminates your employment for reasons other than Cause, Disability, or
your death within 12 months following the Change of Control, provided you
fulfill your obligations under this Agreement.
1.2 For purposes of this Agreement, the term "Change in Control" shall
mean (i) a sale of fifty percent (50%) or more of the outstanding shares of
common stock of the Company; (ii) a sale of all or substantially all of the
assets of the Company, or (iii) a merger, consolidation or reorganization
whereby the stockholders of the Company immediately prior to the consummation
of such merger, consolidation or reorganization own less than fifty percent
(50%) of the outstanding shares of common stock immediately following the
consummation of the merger, consolidation or reorganization.
1.3 For purposes of this Agreement, the term "Good Reason" shall mean any
of the following, if done without your consent:
1.3.1. A substantial diminution in your duties and
responsibilities to a level substantially beneath that of your duties and
responsibilities at the outset of your employment under this Agreement other
than actions that are not taken in bad faith and are remedied by the Company
within thirty days after written notice by you;
1.3.2. A reduction by the Company in your current annual base
salary unless such reduction is attributable to an across the board salary
reduction for all of management personnel of the Company and then only if the
percentage of your reduction is (i) not greater than 20%, and (ii) no greater
in percentage than that of the other management personnel;
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1.3.3. The company requires the relocation of your base of employment
outside the Seattle, Washington metropolitan area;
1.3.4. A material breach by the Company of any of the terms and
provisions of this Agreement, which is not cured within 30 days of written
notice by you of such breach; or
1.3.5 the failure of the Company to obtain a satisfactory agreement
from any successor in a Change of Control to assume and agree to perform this
Agreement, as contemplated in Section 6 hereof.
1.4 For purposes of this Agreement, the term "Cause" shall mean any of
the following: (i) your willful and continued failure or refusal to perform your
duties with the Company; (b) your willfully engaging in gross misconduct
injurious to the Company; (c) your being convicted or pleading guilty or nolo
contendere to any misdemeanor involving moral turpitude or to any felony; (d)
your having materially breached any provision of this Agreement, or any
agreement concerning confidentiality or ownership of inventions with the
Company and failed to cure such breach to the reasonable satisfaction of the
Company promptly after receiving written notice of breach if such cure is
possible.
1.5 For purposes of this Agreement, the term "Disability" shall mean your
inability to perform the essential functions of your position due to any
physical or mental illness even with reasonable accommodation to the extent
required by law, for any period of six months in the aggregate during any
twelve months, provided the Company has given you a written demand to return to
your fill time duties.
1.6 Any termination of employment by you or by the Company pursuant to
this Agreement shall be communicated by written Notice of Termination
indicating the termination provision in this Agreement relied upon, if any. For
purposes of this Agreement, the "Date of Termination" shall mean the date
specified in the Notice of Termination which shall not be earlier than ten (10)
business days after the date on the Notice of Termination is given and the
expiration of any time period given to cure a breach as provided in Section
1.4(d) of this Agreement.
2. COMPENSATION UPON TERMINATION
2.1 If your employment shall be terminated and you are entitled to
benefits under Section 1 of this Agreement then you shall receive the following
benefits:
2.1.1. the Company shall pay to you in a lump sum within ten days
following the Date of Termination (a) your base salary unpaid through the Date
of Termination at the rate in effect as of the time of Notice of Termination
and (b) an amount equal to the value as of the Date of Termination of the
deferred portion of any bonus which has been declared but is unpaid under any
incentive compensation plan or program of the Company then in effect;
2.1.2. the Company shall pay to you as severance pay in a lump sum
within thirty days following the Date of Termination an amount equal to the
product of (a) the sum of your highest annual base salary in effect any time
during the twelve (12) month period prior to the Date of Termination,
multiplied by 2.99; and
2.1.3. the Company shall maintain in full force and effect, for the
continued benefit of you for three years after the Date of Termination, or if
sooner, until you are employed in a full-time capacity by another employer, all
non-cash health and welfare plans and programs (excluding 401(k) or any
employee bonus plans and programs or retirement plans or programs) in which you
participated immediately prior to the Date of Termination provided that you
continued participation is permissible under the general terms and provisions
of such plans and programs. In the event that your participation in any such
plan or program is barred, the Company shall arrange to provide you with
benefits substantially similar to those which you are entitled to receive under
such plans and programs at no cost to you. At the end of the period of
coverage, you shall have the option to have assigned to you at no cost and with
no apportionment of prepaid premiums, any assignable insurance policy owned by
the Company and relating to specifically to you.
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2.2. Notwithstanding Section 1, the respective obligations of, and
benefits afforded to, the Company and you as provided in this Section 2, shall
survive termination of this Agreement.
2.3. No compensation or benefits shall be due under this Agreement in
the event your employment is terminated by you or the Company in circumstances
other than those described in Section 1.1, including but not limited to a
termination by you for any reason other than Good Reason, a termination by the
Company for Cause, Disability, or death, or any termination that does not occur
within twelve months following a Change in Control.
2.4. To the extent that any or all of the payments and benefits provided
for in this Agreement constitute "parachute payments" within the meaning of
Section 280G of the Internal Revenue Code (the "Code") and, but for this
Section 2.4 would be subject to the excise tax imposed by Section 4999 of the
Code, the aggregate amount of such payments and benefits shall be reduced such
that the present value thereof (as determined under the Code and applicable
regulations) is equal to 2.99 times the Executive's "base amount" (as defined
in the Code). The determination of any reduction of any payment or benefits
under Section 2 pursuant to the foregoing provision shall be made by a
nationally recognized public accounting firm chosen by the Company in good
faith, and such determination shall be conclusive and binding on the Company
and you.
3. OTHER BENEFITS.
In the event you are entitled to any compensation or benefits under this
Agreement, you shall not be entitled to any other severance compensation or
benefits under any other policy or agreement with the Company.
4. PROPRIETARY INFORMATION AND UNFAIR COMPETITION
4.1. You acknowledge that in the course of your employment with the
Company, you will be entrusted with access to extensive confidential
information of the Company concerning its products and service, methods of
manufacture, research and development, know-how, patents, copyrights,
trademarks, and other proprietary data, as well as the identity, needs, and
preferences of its customers and prospects, all of which the Company considers
its legally protected trade secrets and intellectual property. You further
acknowledge the highly competitive nature of the business of the Company, and
the fact that unauthorized disclosure or use of such trade secrets and
intellectual property would be inevitable if you were to compete with the
Company or solicit competing business from its prospects and customers. You
therefore agree that in the event of a termination following a Change of
Control as described in this Agreement, the following provisions shall apply:
4.2. Commencing on the Date of Termination, and ending two years
thereafter (the "Non-Compete Period"), you will not provide goods or services
to or become an employee, owner (except for passive investments of not more
than three percent of the outstanding shares of, or any other equity interest
in, any company or entity listed or traded on a national securities exchange or
in an over-the-counter securities market), officer, agent, consultant, advisor
or director of any firm or person in any geographic area which competes in the
"Business". For purposes of this Agreement, the term "Business" shall mean the
research, design, development, manufacture, sale or distribution of ultrasound
contrast agents.
4.3. During the Non-Compete Period, you will not directly or indirectly
induce any employee of the Company or any of its affiliates to engage in any
activity in which you are prohibited from engaging by paragraph 4.1 above, or
to terminate such employee's employment with the Company, or any of its
affiliates, and will not directly or indirectly employ or offer employment to
any person who was employed by the Company or any of its affiliates unless such
person shall cease to be employed by the Company or any of its affiliates for a
period of at least 12 months; provided, however, that this provision shall not
apply to any person who is no longer an employee of the Company or any of its
affiliates as of a result of actions taken by the Company or its affiliates.
4.4. During the Non-Compete Period, you will refrain from making any
statement which has the effect of demeaning the name or the business reputation
of the Company or its subsidiaries or affiliates, or any officer of employee
thereof, or which materially adversely effects the best interests (economic or
otherwise) of the Company, its subsidiaries or affiliates.
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4.5. It is expressly understood and agreed that although you and the
Company consider the restrictions contained in this Section 4 to be reasonable,
if a final judicial determination is made by a court of jurisdiction that the
time or territory or any other restriction contained in this Agreement is an
unenforceable restriction against you, provisions of this Agreement shall not
be rendered void, but shall be deemed amended to apply to such maximum time and
territory and to such maximum extent as such court may judicially determine or
indicate to be enforceable. Alternatively, if any court of competent
jurisdiction finds that any restriction contained in this Agreement is
unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding shall not effect the enforceability of any of the
other restriction contained herein.
5. MISCELLANEOUS.
Any payment required under this Agreement shall be subject to all
requirements of the law with regard to withholding, filing, making of reports
and the like, and the Company shall use its commercially reasonable best
efforts to satisfy promptly all such requirements. No provisions of this
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in a writing signed by both parties. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the law of the State of Delaware.
6. SUCCESSORS AND ASSIGNMENT.
This agreement and all of your rights thereunder shall inure to the
benefit of and be enforceable by your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. Except as expressly provided in this Agreement, this Agreement is
personal to you and may not be assigned to you. If you should die while any
amounts would still be payable to you hereunder if you had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee, or other designee
or, if there be no such designee, to your estate. This Agreement shall be
binding upon any successor to the Company (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company.
7. TERM OF AGREEMENT.
This Agreement shall commence as of the date of this Agreement and shall
terminate on the earliest of (i) three (3) years from the date of this
Agreement, (ii) the termination of your employment by the Company for Cause,
Disability or death; (iii) your termination of employment other than for Good
Reason or (iv) your reaching age 65.
8. NO GUARANTEE OF CONTINUED EMPLOYMENT.
This Agreement is intended solely to provide you with certain
compensation and benefits in the event your employment terminates in the
circumstances described in Section 1.1. Nothing in this Agreement constitutes
or implies any specific term of employment. You acknowledge and agree that your
employment with the Company can be terminated by you or the Company at any
time with or without cause or prior warning, as provided in your written offer
of employment dated May 7, 1999. Nothing in this Agreement limits or supercedes
any other agreements between you and the Company concerning confidentiality or
ownership of intellectual property.
9. MEDIATION.
In the event that the Company terminates you for Cause and you dispute
its right to do so or you claim that you are entitled to terminate your
employment for Good Reason and the Company disputes your right to do so, a
mediator acceptable to you and the Company will be appointed within ten (10)
days to assist in reaching a mutually satisfactory resolution but will have no
authority to issue a binding decision. Such mediation must be concluded within
60 days of the date of termination or claim to termination. Should such
mediation fail to reach an acceptable conclusion and you are successful in any
litigation or settlement that issues from such dispute, you shall be entitled
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to receive from the Company all of the expenses incurred to you in connection
with any such dispute including reasonable attorney's fees.
If this Agreement is acceptable to you, kindly sign and return to the
Company the enclosed copy of this letter.
Sincerely,
SONUS Pharmaceuticals, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx
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AGREED AND ACCEPTED:
/s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx, M.D.
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Dated: May 10, 1999
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