EXHIBIT 10.4
HEMASURE INC.
Senior Management Retention Agreement
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Xx. Xxxxx X. Xxxxxx
c/o HemaSure Inc.
000 Xxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000
Dear Xx. Xxxxxx:
HemaSure Inc. (the "Company") recognizes that, as is the case with many
publicly-held corporations, the possibility of a change in control may exist and
that such possibility, and the uncertainty and questions which it may raise
among key personnel, may result in the departure or distraction of key personnel
to the detriment of the Company, its stockholders and its customers.
The Board of Directors of the Company (the "Board") has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of the Company's key personnel, including yourself, to
their assigned duties without distraction in the face of potentially disturbing,
circumstances arising from the possibility of a change in control of the
Company.
In order to induce you to remain in its employ, the Company agrees that
you shall receive the severance benefits set forth in this letter agreement (the
"Agreement") in the event your employment with the Company is terminated under
the circumstances described below subsequent to a "Change in Control" of the
Company (as defined below).
1. Certain Definitions. As used herein, the following terms shall have
the following respective meanings:
(a) A "Change in Control" shall occur or be deemed to have occurred
only if any of the following events occur: (i) any "person," as such term is
used in Sections 13 (d) and
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14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
(other than the Company, Sepracor Inc. ("Sepracor"), any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, or
any corporation owned directly or indirectly by the stockholders of the Company
in substantially the same proportion as their ownership of stock of the Company)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
more than 50% of the combined voting power of the Company's then outstanding
securities; (ii) individuals who, as of the date hereof, constitute the Board
(as of the date hereof, the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any person becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A under the Exchange Act) shall be, for purposes of this
Agreement, considered as though such person were a member of the Incumbent
Board; or (iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (A) 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) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
person (as hereinabove defined), other than a person holding more than 50% of
the combined voting power of the Company's then outstanding securities
immediately prior to such
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recapitalization, acquires more than 50% of the combined voting power of the
Company's then outstanding securities; or (iv) the stockholders of the Company
approve an agreement for the sale of all or substantially all of the business of
the Company through the disposition by the Company of all or substantially all
of the Company's assets.
(b) A "Potential Change in Control" shall be deemed to have occurred
if:
(A) the Company enters in an agreement, the consummation of
which would result in the occurrence of a Change in Control of the Company,
(B) any person (including the Company and Sepracor) publicly
announces an intention to take or to consider taking actions which if
consummated would constitute a Change in Control of the Company; or
(C) the Board of Directors of the Company adopts a resolution to
the effect that, for purposes of this Agreement, a Potential Change in Control
of the Company has occurred.
2. Term of the Agreement.
The term of this Agreement (the "Term") shall commence on as of the
date hereof and shall continue in effect through December 31, 1998; provided,
however, that commencing on January 1, 1999 and each January 1 thereafter, the
Term shall be automatically extended for one additional year unless, not later
than October 30 of the preceding calendar year, the Company shall have given you
written notice that the Term will not be extended; and provided further that, if
a Change in Control of the Company shall have occurred during the original or
extended Term, this Agreement shall continue in effect for as long as you remain
an employee of HemaSure or any acquirer or successor of HemaSure hereunder.
3. Change in Control; Potential Change in Control.
(a) No benefits shall be payable under this Agreement unless there
has been a
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Change in Control of the Company during the Term.
(b) You agree that, notwithstanding any provision to the contrary
in this Agreement, in the event of a Potential Change in
Control of the Company, you will not voluntarily resign as an
employee of the Company until the earliest of (A) a date
which is twelve (12) months after the occurrence of such
Potential Change in Control of the Company or (B) the
termination by you of your employment by reason of Disability
as defined in Section 4(b)(i) or for Good Reason as defined
in Section 4(b)(iii).
4. Employment Status; Termination Following Change in Control.
(a) You acknowledge that this Agreement does not constitute a
contract of employment or impose on the Company any obligation to retain you as
an employee and, except as set forth in Section 3(b), this Agreement does not
prevent you from terminating your employment at any time. If your employment
with the Company terminates for any reason and subsequently a Change in Control
shall have occurred, you shall not be entitled to any benefits hereunder. Any
termination of your employment by the Company or by you following a Change in
Control of the Company during the Term shall be communicated by written notice
of termination ("Notice of Termination") to the other party hereto in accordance
with Section 7. The "Date of Termination" shall mean the effective date of such
termination as specified in the Notice of Termination (provided that no such
Notice of Termination shall specify an effective date less than 10 days or more
than 120 days after the date of such Notice of Termination).
(b) Notwithstanding anything to the contrary herein, you shall be
entitled to the benefits provided in Section 5 only if a Change in Control shall
have occurred during the Term and your employment with the Company is
subsequently terminated or terminates after such Change in Control, unless such
termination is (A) because of your death, (B) by the
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Company for Disability, (as defined in Section 4(b)(i)) or Cause (as defined in
Section 4(b)(ii)), or (C) by you within 12 months after a Change in Control
other than for Good Reason (as defined in Section 4(b)(iii)).
(i) Disability. If, as a result of incapacity due to physical or
mental illness, you shall have been absent from the full-time performance of
your duties with the Company for six (6) consecutive months and, within thirty
(30) days after written notice of termination is given to you, you shall not
have returned to the full-time performance of your duties, your employment may
be terminated for "Disability."
(ii) Cause. Termination by the Company of your employment for
"Cause" shall mean termination (A) upon your willful and continued failure to
substantially perform your duties with the Company (other than any such failure
resulting from your incapacity due to physical or mental illness or any such
actual or anticipated failure after the issuance of a Notice of Termination by
you for Good Reason as defined in Section 4(b)(iii)), provided that a written
demand for substantial performance has been delivered to you by the Company
specifically identifying the manner in which the Company believes that you have
not substantially performed your duties and you have not cured such failure
within 30 days after such demand, or (B) by reason of your willful engaging in
conduct which is demonstrably and materially injurious to the Company.
(iii) Good Reason. For purposes of this Agreement, "Good Reason"
shall mean, without your written consent, the occurrence after a Change in
Control of the Company of any of the following circumstances unless, in the
case of paragraphs (A), (C), (D), (F) or (G), such circumstances are fully
corrected prior to the Date of Termination (as defined in Section 4(a))
specified in the Notice of Termination (as defined in Section 4(a)) given in
respect thereof:
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(A) any significant diminution in your position, duties,
responsibilities, power, title or office as in effect immediately prior to a
Change in Control;
(B) any reduction in your annual base salary as in effect on
the date hereof or as the same may be increased from time to time;
(C) the failure by the Company to (i) continue in effect any
material compensation or benefit plan in which vou participate immediately prior
to the Change in Control, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to such plan,
(ii) continue your participation therein (or in such substitute or alternative
plan) on a basis not materially less favorable, both in terms of the amount of
benefits provided and the level of your participation relative to other
participants, as existed at the time of the Change in Control or (iii) award
cash bonuses to you in amounts and in a manner substantially consistent with
past practice in light of the Company's financial performance;
(D) the failure by the Company to continue to provide you with
benefits substantially similar to those enjoyed by you under any of the
Company's life insurance, medical, health and accident, or disability plans in
which you were participating at the time of the Change in Control, the taking of
any action by the Company which would directly or indirectly materially reduce
any of such benefits, or the failure by the Company to provide you with the
number of paid vacation days to which you are entitled on the basis of years of
service with the Company in accordance with the Company's normal vacation policy
in effect at the time of the Change in Control;
(E) any requirement by the Company or of any person in control
of the Company that the location at which you perform your principal duties for
the Company be changed to a new location that is not at the United States
headquarters of the Company or the United States headquarters of the division
of the Company in which you
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perform your assigned duties;
(F) the failure of the Company to obtain a reasonably
satisfactory agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 6; or
(G) any purported termination of your employment which is not
effected pursuant to a Notice of Termination satisfying the requirements of
Section 7, which purported termination shall not be effective for purposes of
this Agreement.
5. Compensation Upon Termination. Following a Change in Control of the
Company, you shall be entitled to the following benefits during a period of
disability, or upon termination of your employment, as the case may be, provided
that such period or termination occurs during the Term:
(a) During any period that you fail to perform your full-time duties
with the Company as a result of incapacity due to physical or mental illness,
you shall continue to receive base salary and all other earned compensation at
the rate in effect at the commencement of any such period (offset by all
compensation payable to you under the Company's disability plan or program or
other similar plan during such period) until your employment is terminated
pursuant to Section 4(b)(i) hereof. Thereafter, or in the event your employment
is terminated by reason of death, your benefits shall be determined under the
Company's long-term disability, retirement, insurance and other compensation
programs then in effect in accordance with the terms of such programs.
(b) If your employment shall be terminated by the Company for Cause
or by you other than for Good Reason within 12 months after a Change in Control,
the Company shall pay you your full base salary and all other compensation
through the Date of Termination at the rate in effect at the time the Notice of
Termination is given, plus all other amounts to which you
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are entitled under any compensation plan of the Company at the time such
payments are due, and the Company shall have no further obligations to you under
this Agreement.
(c) You shall be entitled to the benefits listed below in
Subsections (c)(i) through (c)(iii) below if your employment with the Company is
terminated (x) by the Company (other than for Cause, Disability or your death)
after a Change in Control, (y) by you for Good Reason within 12 months after a
Change in Control or (z) by you for any reason or no reason more than 12 months
after a Change in Control. Notwithstanding any provision to the contrary herein,
in the event a Change in Control occurs as a result of a sale of all or
substantially all of the business of the Company pursuant to a merger, sale of
assets or otherwise and you are entitled to the Severance Payments (as defined
below), the Severance Payments payable to you shall be reduced to the extent
that the net present value of the Severance Payments (as then reasonably
determined by the Board of Directors of the Company) are greater than 5% of the
Gross Proceeds. For purposes of this Agreement "Gross Proceeds" shall equal the
gross consideration paid by an acquirer or acquirers of the Company in
connection with the sale of all or substantially all of the business of the
Company pursuant to a merger, sales of assets or otherwise.
(i) the Company shall pay to you (A) your full base salary and all
other compensation through the Date of Termination at the rate in effect at the
time the Notice of Termination is given, no later than the full fifth day
following the Date of Termination, plus all other amounts to which you are
entitled under any compensation plan of the Company at the time such payments
are due and (B) if you so elect, in lieu of your right to continue to receive
deferred compensation under any deferred compensation plan of the Company then
in effect, no later than the fifth full day following the Date of Termination, a
lump-sum amount, in cash, equal to the deferred amounts together with any
earnings credited on such amounts under such plan;
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(ii) the Company will pay as severance pay to you, in
twenty-four (24) equal monthly installments, beginning at the end of the first
full month subsequent to the Date of Termination, an aggregate amount equal to
the sum of (A) 200% of the higher of (x) your annual base salary in effect on
the Date of Termination or (y) your annual base salary in effect immediately
prior to the Change in Control, plus (B) 200% of the aggregate cash bonuses paid
or awarded to you in respect of the four fiscal quarters preceding the Date of
Termination (together with the payments provided in paragraph (iii) below, the
"Severance Payments"); and
(iii) for a thirty-six (36) month period after such termination,
the Company shall arrange to provide you with life, disability, dental, accident
and group health insurance benefits substantially similar to those which you
were receiving immediately prior to the Notice of Termination. Notwithstanding
the foregoing, the Company shall not provide any benefit otherwise receivable by
you pursuant to this paragraph (iii) if an equivalent benefit is actually
received by you during the thirty-six (36) month period following your
termination, and any such benefit actually received by you shall be reported to
the Company.
(d) Severance Payments under this Agreement shall be made without
regard to whether the deductibility of such payments (or any other payments to
or for your benefit) would be limited or precluded by Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code") and without regard to
whether such payments (or any other payments) would subject you to the federal
excise tax levied on certain "excise parachute payments" under Section 4999 of
the Code; provided, that if the total of all payments to or for your benefit,
after deduction of all federal taxes (including the tax set forth in Section
4999 of the Code, if applicable) with respect to Such payments (the "total
after-tax payments"), would be increased by the limitation or elimination of any
payment under this Agreement, amounts payable under this Agreement shall be
reduced to the extent, and only to the extent, necessary to maximize the total
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after-tax payments. The determination as to whether and to what extent payments
under this agreement are required to be reduced in accordance with the preceding
sentence shall be made by agreement between you and the independent public
accounting firm of the Company. To the extent that any elimination or reduction
of payments is made in accordance with this Section 5(d), the determination as
to which payments shall be eliminated or reduced shall be made by you.
(e) The payments provided for in Subsections 5(b) and (c) shall be
made not later than the fifth day following the Date of Termination, unless
otherwise specified; provided, however, that, if the amounts of such payments
cannot be finally determined on or before such day, the Company shall pay you on
such day an estimate, as determined in good faith by the Company, of the minimum
amount of such payments and shall pay the remainder of such payments (together
with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon
as the amount thereof can be determined but in no event later than the thirtieth
day after the Date of Termination. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been due, such
excess shall constitute a loan by the Company to you, payable on the fifth day
after demand by the Company (together with interest at the rate in Section
1274(b)(2)(B) of the Code).
(f) Except as provided in the second sentence of Subsection
5(c)(iii) hereof, you shall not be required to mitigate the amount of any
payment provided for in this Section 5 by seeking other employment or otherwise,
nor shall the amount of any payment or benefit provided for in this Section 5 be
reduced by any compensation earned by you as a result of employment by another
employer, by retirement benefits or by offset against any amount claimed to be
owed by you to the Company or otherwise.
6. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or
indirect, by
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purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of the Company expressly to assume and agree to perform this
Agreement to the same extent that the Company would be required to perform it if
no such succession had taken place. Failure of the Company to obtain an
assumption of this Agreement at or prior to the effectiveness of any succession
shall be a breach of this Agreement and shall constitute Good Reason if you
elect to terminate your employment, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, Company shall mean
the Company as defined above and any successor to its business or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable
by your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount 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 is no such designee, to your estate.
7. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
duly given when delivered or when mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed to the
Chairman of the Board of Directors of the Company, at 000 Xxxxx Xxxxx,
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000, and to you at the address shown above or to
such other address as either the Company or you may have furnished to the other
in writing in accordance herewith, except that notice of change of address shall
be effective only upon receipt.
8. Miscellaneous.
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(a) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
(b) The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the Commonwealth of
Massachusetts.
(c) No waiver by you at any time of any breach of, or compliance
with, any provision of this Agreement to be performed by the Company shall be
deemed a waiver of that or any other provision at any subsequent time.
(d) This Agreement may be executed in counterparts, each of which
shall be deemed to be an original but both of which together will constitute one
and the same instrument.
(e) Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law.
(f) This Agreement sets forth the entire agreement of the parties
hereto in respect of the subject matter contained herein and supersedes all
prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto; and any prior agreement of the parties
hereto in respect of the subject matter contained herein is hereby terminated
and cancelled.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter, which
will then constitute our agreement on this subject.
Sincerely,
HEMASURE INC.
By: /s/Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx
Chairman of the Board of Directors
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Agreed to as of this 15th day of December, 1998
/s/Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Address:
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