EXECUTIVE SEVERANCE AGREEMENT
AGREEMENT, dated as of January 2, 1992, by and between Lifecodes
Corporation, a New York corporation having offices at 000 Xxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000 (the "Company"), and Xxxx Xxxxxx, whose residence address is
00 Xxxx Xxxxx Xxxxxx, Xxx Xxxxxxxx, Xxx Xxxx 00000 (the "Executive).
The Company's Board of Directors considers the continued services of key
executives of and consultants to the Company to be in the best interest of the
Company and its stockholders.
The Company's Board of Directors desires to assure and has determined that
it is appropriate and in the best interests of the Company and its stockholders
to reinforce and encourage the continued attention and dedication of key
executives of and consultants to the Company to their duties without personal
distraction of conflict of interest in circumstances arising from the
possibility or occurrence of a change in control of the Company.
In consideration of the premises and the covenants and agreements contained
herein, and other good and valuable consideration, the Company and the Executive
agree as follows:
1. Services During Certain Events. In the event a proposal is made to
effect a Change in Control (as defined in Section 3 hereof), the Executive
agrees that he will not voluntarily leave the employ of or cancel his
consultancy with the Company and will render the services contemplated in the
recitals of this Agreement until such proposal for a Change in Control is
terminated or abandoned or until six (6) months after a Change in Control has
occurred.
2. Termination. For purposes of this Agreement, a "Termination" shall be
deemed to have occurred in the event that the Executive's employment by or
consultancy with the Company is terminated at any time from six months prior to
a Change in Control to two years following a Change in Control;
(a) by the Company for reasons other than "cause" (as defined in Section 6
hereof), "disability" (as defined in Section 6 hereof), death or attainment of
age 65;
(b) by the Executive following the occurrence of any of the following
events without the Executive's consent:
(i) the assignment of the Executive to any duties or responsibilities that
are inconsistent with his position, duties, responsibilities or status
immediately preceding such change in Control, or a change in his reporting
responsibilities or
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titles within the Company in effect at such time resulting in a reduction of his
responsibilities or position at the Company;
(ii) a reduction of the Executive's annual salary unless it is part of a
general salary reduction plan affecting other Executives;
(iii) a material reduction in any year if the ratio of incentive
compensation or fringe benefits received by the Executive pursuant to any bonus,
incentive or fringe benefit plan (the "Benefit Plans") to his annual salary in
such year, which reduction is greater than the average reduction in the ratio of
such incentive compensation or fringe benefits to annual salary received by all
participants under the Benefit Plans; as used here, adjustments to incentive
compensation based upon personal or general business performance will not be
considered material;
(iv) a material increase in the amount of travel required of the Executive
in connection with his employment by the Company, or the transfer of the
Executive to a location requiring a change in his residence; or
(v) any failure by the Company to comply with and satisfy Section 8 of this
Agreement; or
(c) by the Executive, if he shall determine in good faith (and give written
notice to the Company's Board of Directors specifying what it is that prevents
him from performing his duties) that due to the Change in Control (including any
changes in circumstances at the Company that directly of indirectly affect the
Executive's position, duties, responsibilities or status immediately preceding
the change in Control) he is no longer able effectively to discharge his duties
and responsibilities and the situation is not remedied to the reasonable
satisfaction of the Executive within 30 days of receipt by the Company of
written notice from the Executive of such determination.
3. Change in Control. For purposes of this Agreement, a "Change in Control"
of the Company shall be deemed to have occurred if:
(a) the stockholders of the Company shall approve (i) any consolidation or
merger of the Company or any subsidiary of the Company where (A) the
stockholders of the Company, immediately prior to such consolidation or merger,
would not, immediately after such consolidation or merger, beneficially own,
directly or indirectly, Voting Securities (as defined below) representing in the
aggregate more than 50% of the combined voting power of the Voting Securities of
the surviving entity (or of its ultimate parent corporation, if any) or (B) the
members of the Board of Directors of the Company, immediately prior to the
consolidation or
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merger, would not, immediately after the consolidation or merger, constitute a
majority of the Board of Directors of the corporation issuing cash or securities
in the consolidation or merger (or of its ultimate parent corporation, if any)
or (ii) any sale, lease, exchange or other transfer (in one transaction or a
series of transactions contemplated or arranged by any party as a single plan)
of all or substantially all of the assets of the Company;
(b) individuals who, as of the date hereof, constitute the entire Board of
Directors of the Company (the "Incumbent Directors") cease for any reason to
constitute a majority of the Board, provided that any individual 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 then Incumbent Directors (other than an election or nomination
of an individual whose assumption of office is the result of an actual or
threatened election contest relating to the election of directors of the
Company, as such terms are used in Rule 14a-11 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), shall be, for purposes of this
Agreement, considered as though such individual were an Incumbent Director; or
Notwithstanding the foregoing, a "Change in Control" of the Company shall
not be deemed to have occurred for purposes of the foregoing clause (c) solely
as the result of an acquisition of securities by the Company which, by reducing
the number of Common Shares of other Voting Securities outstanding increases (i)
the proportionate number of Common Shares beneficially owned by any person to
more than 50% of the Common Shares then outstanding or (ii) the proportionate
voting power represented by more than 50% of the combined voting power of all
then outstanding Voting Securities beneficially owned by any person to more than
50% of the combined voting power of all then outstanding Voting Securities;
As used herein, the term "Voting Securities" when used with respect to a
corporation shall mean all then outstanding securities of such corporation
entitled under ordinary circumstances to vote in the election of the directors
of such corporation.
4. Rights and Benefits upon Termination or Change in Control.
(a) Severance Payment. Subject to Sections 6 and 11(a) hereof, in the event
of a Termination the Company shall pay the Executive, in twelve equal monthly
installments, or, at the Executive's option, in twenty-four (24) equal monthly
installments, beginning no later than 30 days following the Executive's
Termination, the greater of the Executive's annual salary or annual consultancy
payment as in effect immediately prior to (i) the Termination or (ii) a Change
in Control. The Company agrees to pay a minimum of four (4) monthly
installments.
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(b) Stock Options. Immediately prior to a change in Control, all
outstanding options to buy Company stock held by the Executive shall become
fully vested and immediately exercisable.
(c) Restricted Stock. Immediately prior to Change in Control, any (i)
repurchase agreement or (ii) right first refusal agreement between the Executive
and the Company with respect to the Company stock shall terminate and the
Executive's ownership of all shares of company stock shall fully vest.
5. Certain Additional Payments by the Company. The Company covenants that
all material facts concerning the payments provided under this Agreement will be
adequately disclosed to the stockholders of the company and that it will use its
best efforts to obtain stockholder approval of the Agreement.
6. Conditions to the Obligations of the Company. The rights and benefits
provided in Section 4 hereof shall not accrue to the Executive if any of the
following events shall occur:
(a) The Company shall terminate the Executive's employment or consultancy
for "cause". For purposes of this Agreement, termination of employment or
consultancy for "cause" shall mean (i) the Executive's conviction for, or plea
of nolo contendere to, a crime involving moral turpitude or a felony, (ii) the
Executive's commission of an act of personal dishonesty or breach of fiduciary
duty resulting in substantial personal profit in connection with the Executive's
employment by the company, (iii) willful and gross misconduct by the Executive
in the course of his duties, or (iv) deliberate and intentional continuing
refusal by the Executive to perform duties or responsibilities that are properly
assigned to the Executive (except for nonperformance because of incapacity due
to illness or accident).
(b) Following a Termination, the Executive shall not, upon receiving a
written request to do so, resign as a director and/or officer of the Company and
of each subsidiary and affiliate of the Company of which he is then serving as a
director and/or officer.
(c) The Company shall terminate the Executive's employment or consultancy
for "disability". For purposes of this Agreement, "disability" shall mean a
physical or psychological condition of the Executive which renders him unable to
perform his duties for the Company for a period for six months or longer, as
confirmed in writing by the Executive's independent physician.
7. Arbitration and Expenses.
(a) Any dispute or controversy arising under or in connection with this
Agreement shall be settled by arbitration,
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conducted before a panel of three arbitrators in Stamford, Connecticut, in
accordance with the rules of the American Arbitration Association then in
effect. The arbitrators shall be approved by both the Company and the Executive
and their decision shall be binding on the parties and conclusive for all
purposes. Judgment may be entered on the arbitrators' award in any court having
jurisdiction. The expense of such arbitration shall be borne by the Company.
(b) The Company shall pay or reimburse the Executive for all reasonable
costs and expenses (including, without limitation, attorneys' fees) incurred by
the Executive as a result of any claim, action or proceeding (including a claim,
action or proceeding in which the Executive prevails against the Company)
arising out of, or challenging the validity, advisability or enforceability of,
this Agreement or any provision hereof.
8. Successors. The Company shall use its reasonable best efforts to cause
any successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Company,
to assume 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. Upon transfer of the business the new entity will be
responsible for execution of this contract. As used herein, "the Company" shall
include any successor to all or substantially all of the Company's business or
assets which executes and delivers an agreement provided for in this Section 8
or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
9. Notice of Termination. Any termination of the Executive's employment by
or consultancy with the Company shall be communicated to the Executive at the
address set forth above (or such other address as the Executive shall have
notified the Company in writing for purposes of this Agreement) in a written
notice and, except for termination of "cause", shall specify a termination date
no sooner than 15 days after the giving of such notice.
10. Term of Agreement. This Agreement shall terminate on December 31, 1994;
provided, however, that this Agreement shall automatically renew upon the
anniversary date for successive one-year terms unless the Company's Board of
Directors notifies the Executive in writing at least 30 days prior to a December
31st expiration date that it does not wish to renew the Agreement for an
additional term; and provided further that if a Change in Control occurs during
the term of an additional term of this Agreement, the Agreement shall continue
in effect for two years following such Change in Control.
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11. Miscellaneous.
(a) Duty to Mitigate; Other Severance Payments. If a Termination is deemed
to occur, the Executive shall during the one-year period subsequent to his
termination notify the Company of any employment when obtained, and the
severance payment provided under Section 4(a) hereof shall be offset by any
compensation which he receives from such employment during the one-year period
subsequent to his Termination. Furthermore, the severance payment provided under
Section 4(a) hereof shall also be offset by any other severance payment which
the Executive receives under any employment agreement with the Company,
including damages for breach of any such agreement. Such mitigation shall not
reduce the minimum four (4) month severance as described in paragraph 4(a).
(b) Assignment. No right, benefit or interest hereunder shall be subject to
assignment, anticipation, alienation, sale, encumbrance, charge, pledge,
hypothecation or set-off in respect of any claim, debt or litigation, or to
execution, attachment, levy or similar process; provided, however, that the
Executive may assign any right, benefit or interest hereunder if such assignment
is permitted under the terms of any plan or policy of insurance or annuity
contract governing such right, benefit or interest.
(c) Construction of Agreement. Nothing in this Agreement shall be construed
to amend any provision of any plan or policy of the Company. This Agreement is
not, and nothing herein shall be deemed to create, a commitment of continued
employment or consultancy of the Executive by the Company.
(d) Amendment. This agreement may not be amended, modified or canceled
except by written agreement of the parties.
(e) Waiver. No provision of this Agreement may be waived except by a
writing signed by the party to be bound thereby.
(f) Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall remain in full force and effect to
the fullest extent permitted by law.
(g) Taxes. Any payment or delivery required under this Agreement shall be
subject to all requirements of the law with regard to withholding of taxes,
filing, making of reports and the like, and the Company shall use its best
efforts to satisfy promptly all such requirements.
(h) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of
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Connecticut.
(i) Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties hereto with respect to the matters covered hereby.
LIFECODES CORPORATION
By: /s/ Xxxxxx Xxxxxxxxxx
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President, CEO
