EXHIBIT 10.1
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (this "Agreement") is by and between CTI
MOLECULAR IMAGING, INC., a Delaware corporation (the "Company"), and XXXXXX X.
XXXXXXX ("Executive"), dated as of the 1st day of February, 2005.
The Company and Executive previously have entered into an Employment
Agreement dated as of April 27, 2004 (the "Employment Agreement"), pursuant to
which the Company employs Executive. The Board of Directors of the Company (the
"Board"), has determined that it is in the best interests of the Company and its
stockholders to assure that the Company will have the continued dedication of
Executive, notwithstanding the possibility, threat or occurrence of a Change of
Control (as defined below) of the Company. The Board believes it is imperative
to diminish the inevitable distraction of Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage 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
Executive with compensation and benefits arrangements upon a Change of Control
which ensure that the compensation and benefits expectations of 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. Certain Definitions.
(a) The "Effective Date" shall mean the first date during the Change
of Control Period (as defined in Section 1(b)) on which a Change of Control (as
defined in Section 2) occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if Executive's employment
with the Company is terminated prior to the date on which the Change of Control
occurs, and if it is reasonably demonstrated by Executive that such termination
of employment (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 employment.
(b) The "Change of Control Period" shall mean the period commencing
on the date hereof and ending on the third anniversary of the date hereof;
provided, however, that commencing on the date one year after the date hereof,
and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the "Renewal Date"),
unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate three years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company shall give notice
to Executive that the Change of Control Period shall not be so extended.
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2. Change of Control. For the purposes of this Agreement, a "Change of
Control" shall mean the occurrence of any of the following events but shall
specifically exclude a public offering of the Company's common stock:
(a) individuals who, as of the date of this Agreement, constitute
the Board of Directors of the Company (the "Incumbent Directors") cease for any
reason to constitute at least a majority of such Board, provided that any person
becoming a director after the date of this Agreement and whose election or
nomination for election was approved by a vote of at least a majority of the
Incumbent Directors then on the Board shall be an Incumbent Director; provided,
however, that no individual initially elected or nominated as a director of the
Company as a result of an actual or threatened election contest with respect to
the election or removal of directors ("Election Contest") or other actual or
threatened solicitation of proxies or consents by or on behalf of any "person"
(such term for purposes of this definition being as defined in Section 3(a)(9)
of the Exchange Act and as used in Section 13(d)(3) and 14(d)(2) of the Exchange
Act) other than the Board ("Proxy Contest"), including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy Contest,
shall be deemed an Incumbent Director; or
(b) any person is or becomes a "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of either (i) 35% or
more of the then-outstanding shares of common stock of the Company ("Company
Common Stock") or (ii) securities of the Company representing 35% or more of the
combined voting power of the Company's then outstanding securities eligible to
vote for the election of directors (the "Company Voting Securities"); provided,
however, that for purposes of this Section 2(b), the following acquisitions
shall not constitute a Change of Control: (A) an acquisition directly from the
Company, (B) an acquisition by the Company or a Subsidiary of the Company, (C)
an acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary of the Company, or (D) an
acquisition pursuant to a Non-Qualifying Transaction (as defined in Section 2(c)
below); or
(c) the consummation of a reorganization, merger, consolidation,
statutory share exchange or similar form of corporate transaction involving the
Company or a Subsidiary (a "Reorganization"), or the sale or other disposition
of all or substantially all of the Company's assets (a "Sale") or the
acquisition of assets or stock of another corporation (an "Acquisition"), unless
immediately following such Reorganization, Sale or Acquisition: (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 Reorganization, Sale or
Acquisition beneficially own, directly or indirectly, more than 50% 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 Reorganization, Sale or Acquisition (including, without
limitation, a corporation which as a result of such transaction owns the Company
or all or substantially all of the Company's assets or stock either directly or
through one or more subsidiaries, the "Surviving Company") in substantially the
same proportions as their ownership, immediately prior to such Reorganization,
Sale or Acquisition, of the outstanding Company Common Stock and the outstanding
Company Voting Securities, as the case may be, and (ii) no person (other than
(A) the Company or any Subsidiary of the Company,
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(B) the Surviving Company or its ultimate parent corporation, (C) any employee
benefit plan (or related trust) sponsored or maintained by any of the foregoing,
or (D) any person acquiring Company Common Stock or Company Voting Securities,
as the case may be, directly from the Company) is the beneficial owner, directly
or indirectly, of 35% or more of the total common stock or 35% or more of the
total voting power of the outstanding voting securities eligible to elect
directors of the Surviving Company, and (iii) at least a majority of the members
of the board of directors of the Surviving Company were Incumbent Directors at
the time of the Board's approval of the execution of the initial agreement
providing for such Reorganization, Sale or Acquisition (any Reorganization, Sale
or Acquisition which satisfies all of the criteria specified in clauses (i),
(ii), and (iii) above shall be deemed to be a "Non-Qualifying Transaction"); or
(d) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
3. Employment Period. The Company hereby agrees to continue Executive in
its employ, and Executive hereby agrees to remain in the employ of the Company
subject to the terms and conditions of this Agreement, for the period commencing
on the Effective Date and ending on the second anniversary of such date (the
"Employment Period").
4. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) Executive's position
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be as set forth in the Employment Agreement,
and (B) Executive's services shall be performed at the location where Executive
was employed immediately preceding the Effective Date or any office or location
less than 35 miles from such location.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which Executive is entitled, Executive agrees to
devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to Executive hereunder, to use Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of Executive's
responsibilities to the Company.
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(b) Compensation.
(i) Base Salary. During the Employment Period, Executive shall
receive an annual base salary ("Annual Base Salary"), which shall be paid at a
monthly rate, at least equal to 12 times the highest monthly base salary paid or
payable, including any base salary which has been earned but deferred, to
Executive by the Company and its affiliated companies in respect of the 12-month
period immediately preceding the month in which the Effective Date occurs.
During the Employment Period, the Annual Base Salary shall be reviewed no more
than 12 months after the last salary increase awarded to Executive prior to the
Effective Date and thereafter at least annually. Any increase in Annual Base
Salary shall not serve to limit or reduce any other obligation to Executive
under this Agreement. Annual Base Salary shall not be reduced after any such
increase and the term Annual Base Salary as used in this Agreement shall refer
to Annual Base Salary as so increased. As used in this Agreement, the term
"affiliated companies" shall include any company controlled by, controlling or
under common control with the Company.
(ii) Incentive, Bonus, Savings and Retirement Plans. During
the Employment Period, Executive shall be entitled to participate in all
incentive, bonus, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and programs
provide Executive with incentive opportunities (measured with respect to both
regular and special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for
Executive under such plans, practices, policies and programs as in effect at any
time during the 120-day period immediately preceding the Effective Date or if
more favorable to Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies.
(iii) Welfare Benefit Plans. During the Employment Period,
Executive and/or Executive's eligible dependents, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and its
affiliated companies (including, without limitation, medical, prescription,
dental, disability, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide Executive with
benefits which are less favorable, in the aggregate, than the most favorable of
such plans, practices, policies and programs in effect for Executive at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to Executive, those provided generally at any time after the Effective
Date to other peer executives of the Company and its affiliated companies.
(iv) Expenses. During the Employment Period, Executive shall
be entitled to receive prompt reimbursement for all reasonable expenses incurred
by Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for Executive
at any time during the 120-day period immediately
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preceding the Effective Date or, if more favorable to Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
(v) Fringe Benefits. During the Employment Period, Executive
shall be entitled to fringe benefits in accordance with the most favorable
plans, policies, programs and practices of the Company and its affiliated
companies as in effect for Executive at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to Executive, as
in effect generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies. Such benefits shall include, but
shall not be limited to, the benefits specified in Section 3.3(e) of the
Employment Agreement, which provisions hereby are incorporated by reference into
this Agreement in their entirety.
(vi) Vacation. During the Employment Period, Executive shall
be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
5. Termination and Resignation. During the Employment Period, the Company
shall have the right to terminate Executive's employment hereunder at any time
and for any reason, and thereupon Executive shall be entitled to receive from
the Company payment of the amount determined pursuant to the applicable
provisions of Section 6 below. During the Employment Period, Executive shall
have the right to terminate his employment hereunder at any time and for any
reason, and thereupon Executive shall be entitled to receive from the Company
payment of the amount determined pursuant to the applicable provisions of
Section 6 below. In furtherance of the foregoing, and for the avoidance of
doubt, Executive and the Company agree to the following additional provisions
relating to termination of Executive's employment:
(a) Death or Disability. Executive's employment shall terminate
automatically upon Executive's death during the Employment Period. If the
Company determines in good faith that the Disability of Executive has occurred
during the Employment Period (pursuant to the definition of Disability set forth
below), it may give to Executive written notice in accordance with Section 14(b)
of this Agreement of its intention to terminate Executive's employment. In such
event, Executive's employment with the Company shall terminate effective on the
30th day after receipt of such notice by Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, Executive shall
not have returned to full-time performance of Executive's duties. For purposes
of this Agreement, "Disability" has the same meaning as provided in the
long-term disability plan or policy maintained by the Company or if applicable,
most recently maintained, by the Company or if applicable, an affiliated
company, for Executive, whether or not Executive actually receives disability
benefits under such plan or policy. If no long-term disability plan or policy
was ever maintained on behalf of Executive, "Disability" shall mean the absence
of Executive from Executive's duties with the Company on a full-time basis for
180 consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to Executive or
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Executive's legal representative. In the event of Executive's death or
Disability, any vested stock options shall become the property of Executive's
survivors or representatives.
(b) Cause. The Company may terminate Executive's employment during
the Employment Period for Cause. For purposes of this Agreement, "Cause" shall
have the meaning given thereto in Section 6.3 of the Employment Agreement, which
provisions hereby are incorporated by reference into this Agreement in their
entirety.
(c) Good Reason. Executive's employment may be terminated by
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:
(i) "Good Reason", as that term is defined in Section 6.4 of
the Employment Agreement, which provisions hereby are incorporated by reference
into this Agreement in their entirety;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by
Executive;
(iii) any purported termination by the Company of Executive's
employment otherwise than as expressly permitted by this Agreement;
(iv) any failure by the Company to comply with and satisfy
Section 12(c) of this Agreement;
(v) any other material breach by the Company of any provision
of this Agreement.
Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstance constituting Good Reason
hereunder. For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company or
Executive shall be communicated by Notice of Termination to the other party
hereto given in accordance with Section 14(b) of this Agreement. For purposes of
this Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon, (ii)
to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated, and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such notice,
specifies the termination date. If a dispute exists concerning the provisions of
this Agreement that apply to Executive's termination of employment, the parties
shall pursue the resolution of such dispute with reasonable diligence. Within
five (5) days of such a resolution, any party owing any payments pursuant to the
provisions of this Agreement shall make all such payments together with interest
accrued thereon at the rate provided in Section 1274(b)(2)(B) of the Internal
Revenue Code of 1986, as amended (the "Code"). The
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failure by Executive or the Company to set forth in the Notice of Termination
any fact or circumstance which contributes to a showing of Good Reason or Cause
shall not waive any right of Executive or the Company, respectively, hereunder
or preclude Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if
Executive's employment is terminated other than by reason of death or
Disability, the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be, or (ii) if Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of Executive or the Disability Effective Date, as the case may
be.
6. Obligations of the Company upon Termination.
(a) Termination by Executive for Good Reason; Termination by the
Company Other Than for Cause or Disability. If, during the Employment Period,
the Company shall terminate Executive's employment other than for Cause or
Disability, or Executive shall terminate employment for Good Reason:
(i) the Company shall pay to Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the following
amounts:
(A) the sum of (I) Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid, (II) any
accrued vacation pay to the extent not theretofore paid, and (III) unless
Executive has elected a different payout date in a prior deferral election, any
compensation previously deferred by Executive (together with any accrued
interest or earnings thereon) to the extent not theretofore paid (the sum of the
amounts described in clauses (I), (II), and (III) shall be hereinafter referred
to as the "Accrued Obligations"); and
(B) the amount equal to the product of (I) two and (II)
the sum of (x) Executive's Annual Base Salary and (y) Executive's target annual
bonus for the year in which the Date of Termination occurs; and
(ii) for two years after the Date of Termination, or such
longer period as may be provided by the terms of the appropriate plan, program,
practice or policy, the Company shall continue benefits to Executive and/or
Executive's eligible dependents at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and policies
described in Section 4(b)(iii) of this Agreement if Executive's employment had
not been terminated or, if more favorable to Executive, as in effect generally
at any time thereafter with respect to other peer executives of the Company and
its affiliated companies and their families, provided, however, that if
Executive becomes re-employed with another employer and is eligible to receive
medical or other welfare benefits under another employer provided plan, the
Company's obligations under this Section 6(a)(ii) shall cease; and
(iii) as of the Date of Termination, all of Executive's
outstanding options to acquire common stock of the Company and other
compensatory awards from the
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Company in the nature of rights that may be exercised shall become fully vested
and exercisable, and all restrictions on Executive's outstanding shares of
restricted stock of the Company shall lapse; and
(iv) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to Executive any other amounts or benefits
required to be paid or provided or which Executive is eligible to receive under
any plan, program, policy or practice or contract or agreement of the Company
and its affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
(b) Termination by Executive without Good Reason after One Year. If
Executive resigns without Good Reason after the first anniversary of the
Effective Date and before the expiration of the Employment Period:
(i) the Company shall pay to Executive in a lump sum in cash
within 30 days after the Date of Termination:
(A) the Accrued Obligations; and
(B) the amount equal to the product of (I) a fraction,
the numerator of which is the number of full months remaining in the Employment
Period from and after the Date of Termination and the denominator of which is
24, and (II) the sum of Executive's Annual Base Salary and Executive's target
annual bonus for the year in which the Date of Termination occurs; and
(ii) for the remaining term of the Employment Period, or such
longer period as may be provided by the terms of the appropriate plan, program,
practice or policy, the Company shall continue benefits to Executive and/or
Executive's eligible dependents at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and policies
described in Section 4(b)(iii) of this Agreement if Executive's employment had
not been terminated or, if more favorable to Executive, as in effect generally
at any time thereafter with respect to other peer executives of the Company and
its affiliated companies and their families, provided, however, that if
Executive becomes re-employed with another employer and is eligible to receive
medical or other welfare benefits under another employer provided plan, the
Company's obligations under this Section 6(b)(ii) shall cease; and
(iii) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to Executive any Other Benefits.
(c) Death or Disability. If Executive's employment is terminated by
reason of Executive's death or Disability during the Employment Period, this
Agreement shall terminate without further obligations to Executive or
Executive's estate, beneficiaries or legal representatives under this Agreement,
other than for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to Executive or
Executive's estate, beneficiaries or legal representatives, as applicable, in a
lump sum in cash within 30 days of the Date of Termination. The term "Other
Benefits" as used in this
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Section 6(c) shall include without limitation, and Executive or Executive's
estate, beneficiaries and/or legal representatives shall be entitled to receive,
benefits under the plans, programs, practices and policies of the Company or any
affiliated company as in effect with respect to Executive on the Date of
Termination.
(d) Resignation without Good Reason within One Year; Termination for
Cause. If Executive resigns without Good Reason prior to the first anniversary
of the Effective Date, this Agreement shall terminate without further
obligations to Executive, other than for Accrued Obligations and the timely
payment or provision of Other Benefits. If Executive's employment is terminated
for Cause during the Employment Period, this Agreement shall terminate without
further obligations to Executive other than the obligation to pay to Executive
(i) his Annual Base Salary through the Date of Termination, (ii) the amount of
any compensation previously deferred by Executive, and (iii) Other Benefits, in
each case to the extent theretofore unpaid. In either such case, all Accrued
Obligations shall be paid to Executive in a lump sum in cash within 30 days of
the Date of Termination.
(e) Expiration of Employment Period. If Executive's employment shall
be terminated due to the normal expiration of the Employment Period, this
Agreement shall terminate without further obligations to Executive, other than
for payment of Accrued Obligations and the timely payment or provision of Other
Benefits; provided, that the provisions of the Employment Agreement shall apply
to any termination of Executive's employment at the end of the Employment
Period, and to any continued employment of Executive thereafter as provided in
Section 13 below.
7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies
and for which Executive may qualify, nor, subject to Section ERROR! REFERENCE
SOURCE NOT FOUND., shall anything herein limit or otherwise affect such rights
as Executive may have under any contract or agreement with the Company or any of
its affiliated companies. Amounts which are vested benefits or which 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, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
8. Full Settlement; No Mitigation. 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
Executive or others. In no event shall Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to Executive under any of the provisions of this Agreement and, except as
provided in Section 6(a)(ii) and 6(b)(ii), such amounts shall not be reduced
whether or not Executive obtains other employment.
9. Costs of Enforcement. Each party hereto shall pay its own legal fees
and expenses incurred as a result of any contest (regardless of the outcome
thereof) by the Company,
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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 Executive about the amount of any
payment pursuant to this Agreement).
10. Mandatory Reduction of Payments in Certain Events.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution by the Company
to or for the benefit of Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise) (a
"Payment") would be subject to the excise tax imposed by Section 4999 of the
Code (the "Excise Tax"), then, prior to the making of any Payment to Executive,
a calculation shall be made comparing (i) the net after-tax benefit to Executive
of the Payment after payment of the Excise Tax, to (ii) the net after-tax
benefit to Executive if the Payment had been limited to the extent necessary to
avoid being subject to the Excise Tax. If the amount calculated under clause (i)
above is less than the amount calculated under clause (ii) above, then the
Payment shall be limited to the extent necessary to avoid being subject to the
Excise Tax (the "Reduced Amount"). In that event, Executive shall direct which
Payments are to be modified or reduced.
(b) The determination of whether an Excise Tax would be imposed, the
amount of such Excise Tax, and the calculation of the amounts referred to in
clauses (i) and (ii) of Section 10(a) above shall be made by the Company's
regular independent accounting firm at the expense of the Company or, at the
election and expense of Executive, another nationally recognized independent
accounting firm (the "Accounting Firm") which shall provide detailed supporting
calculations. Any determination by the Accounting Firm shall be binding upon the
Company and Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Payments which Executive was
entitled to, but did not receive pursuant to Section 10(a), could have been made
without the imposition of the Excise Tax ("Underpayment"). In such event, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of Executive.
(c) In the event that the provisions of Code Section 280G and 4999
or any successor provisions are repealed without succession, this Section 10
shall be of no further force or effect.
11. Confidential Information. Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential information, knowledge
or data relating to the Company or any of its affiliated companies, and their
respective businesses, which shall have been obtained by Executive during
Executive's employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by Executive
or representatives of Executive in violation of this Agreement). After
termination of Executive's employment with the Company, Executive shall not,
without the prior written consent of the Company or as may otherwise be required
by law or legal process, communicate or divulge any such information, knowledge
or data to anyone other than the Company and those designated by it. In no event
shall an asserted violation of the provisions of this Section 11
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constitute a basis for deferring or withholding any amounts otherwise payable to
Executive under this Agreement.
12. Successors.
(a) This Agreement is personal to Executive and without the prior
written consent of the Company shall not be assignable by Executive otherwise
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by 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 which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
13. Effect on Employment Agreement.
(a) From the date hereof to the Effective Date, the Employment
Agreement shall remain in full force and effect between the Company and
Executive. During such period, in the event of any conflict between the
provisions of the Employment Agreement and the provisions of this Agreement, the
provisions of the Employment Agreement shall be deemed to control.
(b) Effective as of the Effective Date, and continuing throughout
the Employment Period, the rights, privileges, and obligations of the Company
and Executive under the Employment Agreement shall be tolled in their entirety
except to the extent that such provisions are expressly incorporated by
reference into this Agreement, and the provisions of this Agreement alone shall
determine the employment of Executive and the rights and obligations of the
parties upon any termination of such employment. Executive and the Company
hereby waive their respective rights under Section 4 of the Employment Agreement
to give notice of intent to not renew the Employment Agreement, for all periods
during the Employment Period, and agree that the Term of the Employment
Agreement (the "Term") shall be deemed to have been extended, in accordance with
Section 4 of the Employment Agreement, by as many one-year renewal periods as
necessary to ensure that the last day of the Term is at least one day later than
the last day of the Employment Period. (By way of example and for the avoidance
of doubt, if the last day of the Term would be April 27, 2007 and the last day
of the Employment Period would be April 27, 2007, then the shall be deemed by
this Section 13(b) to have been extended for an additional one-year period, to
April 27, 2008.) During the Employment Period, in the event of any conflict
between the provisions of the Employment Agreement and the provisions of this
Agreement, the provisions of this Agreement shall be deemed to control.
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(c) If the Company continues to employ Executive after the last day
of the Employment Period, then the tolling of the provisions of the Employment
Agreement pursuant to Section 13(b) shall cease and such provisions shall
continue to apply to the employment of Executive by the Company for the
remainder of the Term as extended pursuant to Section 13(b) or as subsequently
extended by the Company and Executive in accordance with the provisions of
Section 4 of the Employment Agreement.
14. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, 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) 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 Executive: XXXXXX X. XXXXXXX
__________________
__________________
If to the Company: CTI MOLECULAR IMAGING, INC.
Attention: President and CEO
000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
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.
(c) 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) 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.
(e) Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right Executive or the Company may have hereunder, including, without
limitation, the right of Executive to terminate employment for Good Reason,
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
* SIGNATURE PAGE FOLLOWS *
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SIGNATURES
IN WITNESS WHEREOF, Executive has hereunto set 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.
XXXXXX X. XXXXXXX
Signed: /s/ Xxxxxx X. Xxxxxxx
------------------------
CTI MOLECULAR IMAGING, INC.
By: /s/ Xxxxxx Xxxx, Ph.D.
----------------------------
Xxxxxx Xxxx, Ph.D.
President and CEO
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