CHANGE OF CONTROL AGREEMENT
Exhibit
99.3
THIS AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT
(this "Agreement") by and between HemaCare Corporation., a California
corporation (the "Company") and Xxxx Xxxxxxx (the "Executive"), is dated as of
this 31th day of December, 2008. This
Agreement amends and restates the Change of Control Agreement by and between the
Company and the Executive, dated as of October 17,
2007,
which must be amended to comply with the requirements of Section 409A of the
Internal Revenue Code of 1986, as amended.
The
Board of Directors of the Company (the "Board") has determined that it is in the
best interests of the Company and its shareholders to assure that the Company
will have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined in Section
2 below) of the Company. The Board believes it is imperative to
diminish the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the
Board has caused the Company to enter into this Agreement.
NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Definitions.
(a) "Cause"
means, as determined by the Board, a
willful act by the Executive which
constitutes Gross Misconduct and which had or will have a material injurious
effect on the Company's business or reputation.
(b) The
"Change of Control Period" shall mean the period commencing upon the Effective Date and ending on the first
anniversary of the date thereof.
(c) "Date of Termination" shall mean the date on which
the Company terminates the Executive's
Service without Cause or the Executive terminates Service for Good Reason, at
any time during the Change of Control Period; provided, however, that no payment of "nonqualified
deferred compensation" subject to Section 409A under this Agreement shall be
made, if at all, unless such termination of the Executive's Service also
constitutes a Separation from Service.
(d) "Disability" shall mean that, at the time your
employment is terminated, you have been unable to perform the duties of your
position for a period of one hundred eighty (180) consecutive days as the result
of your incapacity due to physical or mental illness.
Exhibit
99.3
(e) The "Effective Date" shall mean the date upon which a
Change of Control first
occurs. Anything in this Agreement to the contrary notwithstanding,
if a Change of Control occurs and if the Executive's Service is
terminated prior to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of Service (i) was at
the request of a third party who has taken steps reasonably calculated to effect
a Change of Control or (ii) otherwise arose in connection with or anticipation
of a Change of Control, then for all purposes of this Agreement the "Effective
Date" shall mean the date immediately prior to the date of such termination of
Service.
(f) "Good Reason" means, as determined by the Board, one or
more of the following conditions arising without the consent of the
Executive: (i) the Executive's position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities are
not at least commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the one hundred twenty
(120) day period immediately preceding the Change of Control,
(ii) the Executive's annual base salary and bonus compensation is
reduced by more than five percent (5%), unless such reduction is part of a
uniformly applied program of reductions reasonably adopted by the Board due to
the Company's then business condition, (iii) the Executive's services are
required to be performed at a location greater than thirty five (35) miles from
the location where the Executive was employed immediately preceding the
Effective Date or (iv) the Executive is required to engage in a
substantially increased amount of travel on Company business. In order to effect a termination of Service
for Good Reason: (1) the Executive must notify the Company in writing that
provides sufficient details about the existence of one (or more) of the
conditions set forth in (i) through (iv) above within thirty (30) days of the
initial existence of the condition, (2) the Company fails to remedy the
condition(s) within thirty (30) days of its receipt of the Executive's notice,
and (3) the Executive must terminate his Service upon the expiration of the
30-day remedy period specified in (2) above.
(g) "Gross
Misconduct" shall mean (i) theft or damage of Company property, (ii) use,
possession, sale or distribution of illegal drugs, (iii) being under the
influence of alcohol or drugs (except to the extent medically prescribed) while
on duty or on Company premises, (iv) improper disclosure of confidential
information, (v) conduct endangering, or likely to endanger, the health or
safety of another employee or (vi) falsifying or misrepresenting information on
Company records.
(h) "Section 409A" shall mean Section 409A of the Internal
Revenue Code of 1986, as amended, and any guidance promulgated
thereunder.
(i) "Separation from Service" shall mean a "separation from
service" within the meaning of Section 409A.
Exhibit
99.3
(j) "Service" shall mean the Executive's service as a common
law employee of the Company. The Board in its sole discretion
determines when Service commences and when Service terminates, and any such
determination by the Board shall be conclusive, final and
binding.
2. Change
of Control. For the purpose of this Agreement, a "Change of Control"
shall mean:
(a) The
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (a "Person") of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of thirty percent (30%) or more
of either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for
purposes of this subsection (a), the following acquisitions of stock shall not
constitute a Change of Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company, (iv) any transaction, the sole
purpose of which is to change the state of incorporation or (v) any acquisition
by any corporation pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of subsection (c) of this Section 2;
(b) Individuals
who, as of the date hereof, 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 director subsequent to the date hereof
whose election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall 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
(c) Consummation
of a reorganization, merger or consolidation or sale or other disposition of all
or substantially all of the assets of the Company (a "Business Combination"), in
each case, unless, following such Business Combination, (i) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than sixty percent (60%) 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
Exhibit
99.3
corporation
which as a result of such transaction owns the Company or all or substantially
all of the Company'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 Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no Person
(excluding any employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, thirty percent (30%) 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 (iii) at least a majority of the members
of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or
(d) Approval
by the shareholders of the Company of a complete liquidation or dissolution of
the Company.
3. Compensation
Upon Certain Terminations of Service
Following a Change of Control. During
a Change of Control Period, in the event the Company terminates the Executive's Service without Cause or the Executive terminates
Service for Good Reason, the following shall be applicable:
(a) The
Executive shall be entitled to receive a lump sum cash payment equal to one (1)
times the Executive's annual base salary, which shall be due within thirty (30)
days after the Date of Termination. For purposes of this Agreement,
"annual base salary" shall mean one (1) year of base salary, at the highest base
salary rate that Executive was paid by the Company in the twelve (12) months
prior to the Date of Termination (the "Look Back Period").
(b)
The Company shall continue to pay any health insurance benefits as were provided
to Executive and his family under the plans of the Company as of the Change of
Control for a period of twelve (12) months following the Date of
Termination.
(c) All
outstanding stock options previously granted under any Company stock option
plan, whether vested or unvested, shall be accelerated and become immediately
exercisable for a period not exceeding the lesser
of (i) six (6) months after the Date of Termination, or (ii) the expiration date of the original option
term.
(d) The Company shall have no obligation to make any
payment or offer any benefits upon the Executive's
termination of Service except, and to the extent, as provided for in this
Section 3. Thus, for the avoidance of doubt, the Company shall have
no obligations under this Agreement if during a Change of Control Period, the
Executive terminates Service without Good Reason or if the Executive's Service
is terminated with Cause or due to death or Disability.
Exhibit
99.3
(e) Notwithstanding any provision in this Agreement to the
contrary, if the Executive is paid severance and/or severance-related benefits
under this Agreement, then the Executive shall not be paid any severance and/or
severance-related benefits under any other agreement with the Company,
including, without limitation, the Executive's amended and restated employment
letter agreement with the Company, dated December 31, 2008 (the "Employment
Letter"). For the avoidance of doubt, if the Executive is eligible to
receive severance and/or severance-related benefits under this Agreement and the
Employment Letter, then the Executive shall only receive severance and/or
severance-related benefits under this Agreement.
4. Non-Exclusivity
of Rights. Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, practice, policy or
program provided by the Company or any of its affiliated companies and for which
the Executive may qualify, nor shall anything herein limit or otherwise affect
such rights as the Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan,
policy, practice or program of or any contract or agreement with the Company or
any of its affiliated companies at or subsequent to the Date of Termination
shall be payable in accordance with such plan, practice, policy or program or
contract or agreement except as explicitly modified by this
Agreement.
5. Full
Settlement. The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others.
6. Duty
to Mitigate. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and such
amounts shall not be reduced whether or not the Executive obtains
other employment.
7. Fees
and Expenses. The Company agrees to pay as incurred, to the full
extent permitted by law, all legal fees and expenses which the Executive may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by the Company, the Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the amount
of any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the
"Code").
Exhibit
99.3
8. Tax.
(a) The
Company shall have no liability for any tax liability of Executive attributable
to any payments made under this Agreement. The Company may withhold
from any amounts payable under this Agreement such Federal, state, local or
foreign taxes as shall be required to be withheld pursuant to any applicable law
or regulation.
(b) Anything
in this Agreement to the contrary notwithstanding, (1) in the event that any
payment to or for the Executive's benefit (whether payable pursuant to the terms
of this Agreement or otherwise) would not be deductible by the Company as a
result of Section 280G of the Code then the aggregate amount payable under
Section 3 shall be reduced (but not below zero dollars), so that after giving
effect to such reduction, no payment made to or for the Executive's benefit will
fail to be deductible because of Section 280G, and (2) if the Executive
establishes (in accordance with Section 280G) that all or any portion of the
aggregate "parachute payments" (as defined in Section 280G) payable to or for
the Executive's benefit constitute reasonable compensation for services actually
rendered, and if the present value of all such "parachute payments" which
constitute reasonable compensation exceeds two hundred ninety-nine percent
(299%) of the Executive's "base amount" (as defined in Section 280G), then the
Executive shall be entitled to receive an amount equal to (but not greater than)
the present value of all such "parachute payments" which constitute reasonable
compensation. For purposes of this Section 8(b), the "present value"
of any payment shall be determined in accordance with Section 1274(b)(2) of the
Code. If it is established that, notwithstanding the good faith of
the Executive and the Company in applying the terms of this Section 8(b), the
aggregate "parachute payments" paid to or for the Executive's benefit are in an
amount that would result in any portion of such "parachute payments" not being
deductible, then the Executive shall have an obligation to pay the Company upon
demand an amount equal to the sum of (1) the excess of the aggregate "parachute
payments" paid to or for the Executive's benefit over the aggregate "parachute
payments" that could have been paid to or for the Executive's benefit without
any portion of such "parachute payments" not being deductible; and (2) interest
on the amount set forth in clause (1) of this sentence at the applicable federal
rate (as defined in Section 1274(d) of the Code) from the date of the receipt of
such excess by or for the Executive's behalf until the date of such
payment.
(c) Notwithstanding any provision in this Agreement to the
contrary, the Agreement is intended to comply with the requirements of Section
409A and shall be interpreted in a manner consistent with such
intention. If, upon a Separation from Service, the Executive is then
a "specified employee" (as defined in Section 409A), the Company shall defer
payment of "nonqualified deferred compensation" subject to Section 409A payable
as a result of and within six (6) months following the Executive's Separation
from Service under this Agreement until the earlier of (i) ten (10) days after
the Company receives notification of the Executive's death, or (ii) the first
business day of the seventh month following the Executive's Separation from
Service. Any such delayed payments shall be made without
interest.
Exhibit
99.3
9. Successors.
(a) This
Agreement is personal to the Executive and without the prior written consent of
the Company shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by the Executive's legal
representatives.
(b) This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.
(c) The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used
in this Agreement, "Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid.
10. Miscellaneous.
(a) Choice
of Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without reference to
principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified otherwise than
by a written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) Notices.
All notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If
to the Executive:
Xxxx
Xxxxxxx
00
Xxxxxxxxx Xxxx
Xxxx
Xxxxxx, XX 00000
If
to the Company:
HemaCare
Corporation
00000
Xxxxxxx Xxx, Xxxxx 000
Xxx
Xxxx, XX 00000
Phone:
000-000-0000 • Fax: 000-000-0000
or
to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
Exhibit
99.3
(c) Validity. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this
Agreement.
(d) Headings. All
captions and section headings used in this Agreement are for convenient
reference only and do not forma part of this Agreement.
(e) Waiver. No
provision of this Agreement shall be modified, waived or discharged unless such
modification, waiver or discharge is agreed to and signed in writing by
Executive and an authorized officer of the Company (other than
Executive).
(f) 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.
IN
WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
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HemaCare
Corporation
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By:
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/s/ Xxxxxx
Xxxxxxxxxxxx
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Name:
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Xxxxxx Xxxxxxxxxxxx
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Title:
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Chairman
of the Board
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Executive
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By:
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/s/ Xxxx
Xxxxxxx
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Name:
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Xxxx
Xxxxxxx
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Title:
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Chief
Executive Officer, General Manager – Transfusable
Products
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