Exhibit 10.27
January 30, 2003
Xxxxxx XxXxxxx
0 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
Dear Xxx:
Re: Severance Agreement
Cambridge Heart, Inc. (the "Company") recognizes that, as is the case with
many publicly-held corporations, the possibility of a change in control of the
Company exists and that such possibility, and the uncertainty and questions it
may raise among key personnel, may result in the departure or distraction of key
personnel to the detriment of the Company and its stockholders. The Board of
Directors has determined that, while there are no current plans for the Company
to engage in a change of control transaction, appropriate steps be taken to
reinforce and encourage the continued employment and dedication of the Company's
key personnel without distraction from the possibility of a change of control
and related events and circumstances.
Accordingly, the Company agrees as follows:
1. In the event that the Company terminates your employment without
Cause, then the following shall apply:
- You will continue to be paid your salary for six (6) months after
termination at the rate in effect on the termination date.
- You will continue for six (6) months to be enrolled in the health
insurance program you were enrolled in as of the termination
date.
- The vesting of all stock options you hold as of the termination
date will be accelerated as follows: the number of shares under
all such options that would have become vested (i.e.,
exercisable) during the twelve (12) month period following the
termination date shall become exercisable; you must exercise all
options (including the accelerated portion) within the time
periods set forth in your option agreement(s) and the applicable
option plan.
2. In the event that a Change in Control occurs, the following shall
apply:
- The vesting of all stock options you hold as of the Change in
Control Date will be accelerated as follows: fifty percent (50%)
of the number of shares under all such options that were not
vested (i.e., exercisable) as of the Change in Control Date shall
become exercisable as of the Change in Control Date; you must
exercise all options (including the accelerated portion) within
the time periods set forth in your options agreement(s) and the
applicable option plan.
3. In the event that a Change in Control occurs and, within twelve (12)
months after the Change in Control Date, your employment (either with the
Company or the successor/acquiror) is terminated without Cause or you terminate
your employment for Good Reason, then the following shall apply:
- You will continue to be paid your salary for twelve (12) months
after termination at the rate in effect on the termination date.
- You will continue for twelve (12) months to be enrolled in the
health insurance program you were enrolled in as of the
termination date.
- The vesting of all stock options you hold as of the Change in
Control Date will be accelerated as follows: one hundred percent
(100%) of the number of shares under all such options that were
not vested (i.e., exercisable) as of the termination date shall
become exercisable as of the termination date; you must exercise
all options (including the accelerated portion) within the time
periods set forth in your options agreement(s) and the applicable
option plan.
All capitalized terms used in this letter agreement have the meanings set
forth in EXHIBIT A.
This agreement supercedes all other agreements concerning severance.
Sincerely yours,
CAMBRIDGE HEART, INC.
By: /s/ Xxxxx X. Xxxxxxxxxxx
Title: President and CEO
AGREED
/s/ Xxxxxx XxXxxxx
Employee
EXHIBIT A
1. "CHANGE IN CONTROL" means an event or occurrence set forth in any
one or more of subsections (a) through (c) below (including an event or
occurrence that constitutes a Change in Control under one of such subsections
but is specifically exempted from another such subsection):
(a) the acquisition by an 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 of
any capital stock of the Company if, after such acquisition, such Person
beneficially owns (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) 50% 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 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 shall not constitute a Change in Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the Company or
(iii) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company; or
(b) such time as the Continuing Directors (as defined below) do
not constitute a majority of the Board (or, if applicable, the Board of
Directors of a successor corporation to the Company), where the term "Continuing
Director" means at any date a member of the Board (i) who was a member of the
Board on the date of the execution of this Agreement or (ii) who was nominated
or elected subsequent to such date by at least a majority of the directors who
were Continuing Directors at the time of such nomination or election or whose
election to the Board was recommended or endorsed by at least a majority of the
directors who were Continuing Directors at the time of such nomination or
election; or
(c) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving the Company or a sale or
other disposition of all or substantially all of the assets of the Company (a
"Business Combination"), unless, immediately following such Business
Combination, all or substantially all of the individuals and entities who were
the beneficial owners of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the then-outstanding
shares of common stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such Business
Combination 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, respectively.
2. "CHANGE IN CONTROL DATE" means the first date on which a Change
in Control occurs.
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3. "CAUSE" means:
(a) the Employee's willful and continued failure to
substantially perform [his/her] reasonable assigned duties (other than any such
failure resulting from incapacity due to physical or mental illness or any
failure after the Employee gives notice of termination for Good Reason), which
failure is not cured within 30 days after a written demand for substantial
performance is received by the Employee from the Board of Directors of the
Company which specifically identifies the manner in which the Board of Directors
believes the Employee has not substantially performed the Employee's duties; or
(b) the Employee's willful engagement in illegal conduct or
gross misconduct which is materially and demonstrably injurious to the Company.
For purposes of this Section 3, no act or failure to act by the Employee
shall be considered "willful" unless it is done, or omitted to be done, in bad
faith and without reasonable belief that the Employee's action or omission was
in the best interests of the Company.
4. "GOOD REASON" means the occurrence, without the Employee's
written consent, of any of the events or circumstances set forth in clauses (a)
through (d) below. Notwithstanding the occurrence of any such event or
circumstance, such occurrence shall not be deemed to constitute Good Reason if,
prior to the notice of termination given by the Employee in respect thereof,
such event or circumstance has been fully corrected and the Employee has been
reasonably compensated for any losses or damages resulting therefrom (provided
that such right of correction by the Company shall only apply to the first
notice of termination for Good Reason given by the Employee).
(a) the assignment to the Employee of duties inconsistent in any
material respect with the Employee's position (including status, offices, titles
and reporting requirements), authority or responsibilities in effect immediately
prior to the earliest to occur of (i) the Change in Control Date, (ii) the date
of the execution by the Company of the initial written agreement or instrument
providing for the Change in Control or (iii) the date of the adoption by the
Board of Directors of a resolution providing for the Change in Control (with the
earliest to occur of such dates referred to herein as the "Measurement Date"),
or any other action or omission by the Company which results in a diminution in
such position, authority or responsibilities;
(b) a reduction in the Employee's annual base salary as in
effect on the Measurement Date or as the same was or may be increased from time
to time;
(c) the failure by the Company to (i) continue in effect any
material compensation or benefit plan or program (including without limitation
any life insurance, medical, health and accident or disability plan and any
vacation program or policy) (a "Benefit Plan") in which the Employee
participates or which is applicable to the Employee immediately prior to the
Measurement Date, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan or
program, (ii) continue the Employee's 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 the Employee's
participation relative to other participants, than the basis existing
immediately prior to the Measurement Date or (iii) award cash bonuses to the
Employee in amounts and in a manner substantially consistent with past practice
in light of the Company's financial performance;
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(D) any failure of the Company to pay or provide to the Employee
any portion of the Employee's compensation or benefits due under any Benefit
Plan within seven days of the date such compensation or benefits are due, or any
material breach by the Company of any employment agreement with the Employee.
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