EXHIBIT 10.11
MANNKIND CORPORATION
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement (this "Agreement"), dated and effective as of
August 1, 2003, is between MannKind Corporation, a Delaware corporation (the
"Company"), and Xxxxx Xxxxxxx (the "Executive").
WHEREAS 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 ensure 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 1 hereof) of the Company.
AND WHEREAS the Board believes it is imperative to diminish the inevitable
distraction of the Executive arising from the personal uncertainties and risks
created by a pending or threatened Change of Control, 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 reasonable compensation and benefit arrangements upon a Change of
Control.
NOW THEREFORE, in order to accomplish these objectives, the Board has caused the
Company to enter into this Agreement.
1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the respective
meanings:
(a) "Accrued Obligations" shall have the meaning set forth in
Section 8.1;
(b) "Change of Control" shall have the Definition set forth in
Appendix A hereto, which is hereby incorporated by reference;
(c) Change of Control Date" shall mean the first date on which a
Change of Control occurs;
(d) "Change of Control Period" shall mean the two (2) year period
commencing on the Change of Control Date and ending on the
second anniversary of such date;
(e) "Incumbent Directors" includes only those persons who are:
(i) serving as directors of the Company on the date of
this Agreement or,
(ii) elected by a majority of the directors who then
constitute Incumbent Directors or selected by a
majority of such directors to be nominated for
election by the stockholders and are elected.
In no event, however, shall any director whose election to
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 on behalf of a person or entity other than the Board
be an Incumbent Director
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(f) "Person", "Acquisition", "Beneficial Ownership" and "Group."
The term "person" shall have the meaning set forth in the
Securities Exchange Act of 1934 and the terms "beneficial
ownership," "acquisition," and "group" shall have the meanings
set forth in Rules 13d-3 and 13d-5 of the Rules of the
Security and Exchange Commission adopted under the Securities
Exchange Act of 1934 except that shares which a person or
group has the right to acquire shall not be deemed
beneficially owned until the right is exercised and the shares
are so acquired.
(g) "Three-Year Average Annual Bonus" shall have the meaning set
forth in Section 5.2.
2. TERM
The term of this Agreement ("Term") shall be for a period of two (2) years from
the date of this Agreement as first appearing; provided, however, that the Term
shall automatically renew for additional one (1) year periods, unless notice of
non-renewal is given by either party to the other party at least ninety (90)
days prior to the initial Term or any renewal Term. If such notice is given,
this Agreement shall terminate at the end of the Term or the then current
renewal Term without further action by either the Company or the Executive.
Notwithstanding the foregoing, if a Change of Control occurs during the Term,
the Term shall automatically extend for the duration of the Change of Control
Period and shall automatically terminate at the end of the Change of Control
Period.
3. EMPLOYMENT
3.1 CHANGE OF CONTROL PERIOD
During the Change of Control Period, the Company hereby agrees to continue the
Executive in its employ or in the employ of its affiliated companies, and the
Executive hereby agrees to remain in the employ of the Company or its affiliated
companies, in accordance with the terms and provisions of this Agreement;
provided, however, that either the Company or the Executive may terminate the
employment relationship during the Change of Control Period subject to the terms
of this Agreement.
3.2 POSITION AND DUTIES
During the Change of Control Period, the Executive's position, authority, duties
and responsibilities shall be at least commensurate in all material respects
with the most significant of those held immediately preceding the Change of
Control Date.
3.3 LOCATION
During the Change of Control Period, the Executive's services shall be performed
at the location of the Executive's assigned worksite as of the Change of Control
Date.
3.4 EMPLOYMENT AT WILL
The Executive and the Company acknowledge that, except as may otherwise be
provided under any other written agreement between the Executive and the
Company, the employment of the Executive by the Company or its affiliated
companies is "at will" and may be terminated by either the Executive or the
Company or its affiliated companies at any time with or without
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cause. Moreover, if prior to the Change of Control Date, the Executive's
employment with the Company or its affiliated companies terminates for any
reason, then the Executive shall have no further rights under this Agreement;
provided, however, that the Company may not avoid liability for any termination
payments that would have been required during the Change of Control Period
pursuant to Section 8 hereof by terminating the Executive prior to the Change of
Control Period where such termination is carried out in anticipation of a Change
of Control and the principal motivating purpose is to avoid liability for such
termination payments.
4. ATTENTION AND EFFORT
During the Change of Control Period, and excluding any periods of paid time-off
to which the Executive is entitled, the Executive will devote all of his
productive time, ability, attention and effort to the business and affairs of
the Company and the discharge of the responsibilities assigned to him hereunder,
and will use his reasonable best efforts to perform faithfully and efficiently
such responsibilities. It shall not be a violation of this Agreement for the
Executive to (a) serve on corporate, civic or charitable boards or committees,
(b) deliver lectures, fulfill speaking engagements or teach at educational
institutions, (c) manage personal investments, or (d) engage in activities
permitted by the policies of the Company or as specifically permitted by the
Company, so long as such activities do not significantly interfere with the full
time performance of the Executive's responsibilities in accordance with this
Agreement. It is expressly understood and agreed that to the extent any such
activities have been conducted by the Executive prior to the Change of Control
Period, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) during the Change of Control Period shall
not thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
5. COMPENSATION
As long as the Executive remains employed by the Company during the Change of
Control Period, the Company agrees to pay or cause to be paid to the Executive,
and the Executive agrees to accept in exchange for the services rendered
hereunder by him, the following compensation:
5.1 SALARY
The Executive shall receive an annual base salary (the "Annual Base Salary"), at
least equal to the annual salary established by the Board or the Compensation
Committee of the Board (the "Compensation Committee") or the Chief Executive
Officer for the fiscal year in which the Change of Control Date occurs. The
Annual Base Salary shall be paid in substantially equal installments and at the
same intervals as the salaries of other executives of the Company are paid. The
Board or the Compensation Committee or the Chief Executive Officer shall review
the Annual Base Salary at least annually and shall determine in good faith and
consistent with any generally applicable Company policy any increases for future
years.
5.2 BONUS
In addition to the Annual Base Salary, the Executive shall be offered the
opportunity to earn, for each fiscal year ending during the Change of Control
Period, an annual bonus (the "Annual
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Bonus") payable, if the performance criteria for the bonus are satisfied, in
cash in an amount at least equal to the Three-Year Average Annual Bonus. The
performance criteria shall be set so that, in the good faith judgment of the
Board of Directors of the Company or a committee thereof, the Executive has
approximately the same probability of earning at least the same amount as the
Annual Bonus as his or her Three-Year Average Annual Bonus. "Three-Year Average
Annual Bonus" shall mean the average of bonuses paid or payable to the Executive
by the Company for each of the three fiscal years immediately preceding the year
in which the Change of Control occurs (including the annualized amount of any
such bonus paid or payable for any partial year, but not stock options or stock
awards, which became fully vested and any deferred compensation earned during
any of those years and excluding any sign-on or other one-time-only bonus). If
the Executive has not been an executive officer of the Company during the entire
three year period referred to above or was not offered a bonus during any of
those years, then the Three-Year Average Annual Bonus shall be calculated for
such shorter time that he or she was an executive officer of the Company and had
been offered a bonus. If the Executive had been offered an opportunity to earn a
bonus for the year in which the Change of Control occurs and not in anticipation
of the Change of Control, the Three-Year Average Annual Bonus shall exceed the
maximum he or she could have earned under that bonus arrangement if all
performance criteria were satisfied. Each Annual Bonus, if earned, shall be paid
no later than ninety (90) days after the end of the fiscal year for which the
Annual Bonus is awarded, unless the Executive and the Company agree to defer the
receipt of the Annual Bonus.
6. BENEFITS
6.1 INCENTIVE, RETIREMENT AND WELFARE BENEFIT PLANS; VACATION
During the Change of Control Period, the Executive shall be entitled to
participate, subject to and in accordance with applicable eligibility
requirements, in such fringe benefit programs as shall be generally made
available to other comparable executives of the Company and its affiliated
companies from time to time during the Change of Control Period by action of the
Board (or any person or committee appointed by the Board to determine fringe
benefit programs and other emoluments), including, without limitation, paid
vacations; any stock purchase, savings or retirement plan, practice, policy or
program; and all welfare benefit plans, practices, policies or programs
(including, without limitation, medical, prescription, dental, disability,
salary continuance, executive life, group life accidental death and travel
accident insurance plans or programs) to the extent such fringe benefits are
made available to other comparable executives of the Company.
6.2 EXPENSES
During the Change of Control Period, the Executive shall be entitled to receive
prompt reimbursement for all reasonable employment expenses incurred by him in
accordance with the policies, practice and procedures of the Company and its
affiliated companies in effect for the executives of the Company and its
affiliated companies during the Change of Control Period.
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7. TERMINATION
During the Change of Control Period, employment of the Executive may be
terminated as follows, but, in any case, the nondisclosure provisions set forth
in Section 10 hereof shall survive the termination of this Agreement and the
termination of the Executive's employment with the Company:
7.1 BY THE COMPANY OR THE EXECUTIVE
At any time during the Change of Control Period, the Company may terminate the
employment of the Executive with or without Cause (as defined below), and the
Executive may terminate his employment for Good Reason (as defined below) or for
any reason, upon giving the Notice of Termination (as defined below).
7.2 AUTOMATIC TERMINATION
This Agreement and the Executive's employment during the Change of Control
Period shall terminate automatically upon the death or Disability of the
Executive. The term "Disability" as used herein shall mean the Executive's
inability (with such accommodation as may be required by law and which places no
undue burden on the Company) to perform the duties set forth in Section 3.2
hereof for a period or periods aggregating twelve (12) weeks in any three
hundred sixty-five (365) day period as result of physical or mental illness,
loss of legal capacity or any other cause. The Executive and the Company hereby
acknowledge that the duties specified in Section 3.2 hereof are essential to the
Executive's position and that the Executive's ability to perform those duties is
the essence of this Agreement.
7.3 NOTICE OF TERMINATION
Any termination by the Company or by the Executive during the Change of Control
Period shall be communicated by Notice of Termination to the other party given
in accordance with Section 11 hereof. The term "Notice of Termination" shall
mean a written notice that (a) indicates the specific termination provision in
this Agreement relied upon and (b) to the extent applicable, sets forth briefly
the facts and circumstances claimed to provide the basis for termination of the
Executive's employment under the provision so indicated. The failure by the
Executive or the Company to set forth in the Notice of Termination any fact or
circumstance that contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company hereunder to preclude the
Executive or the Company from asserting such fact or circumstance in connection
with any enforcement of the Executive's or the Company's rights hereunder.
7.4 DATE OF TERMINATION
During the Change of Control Period, "Date of Termination" means (a) if the
Executive's employment is terminated by reason of death, the date of death, (b)
if the Executive's employment is terminated by reason of Disability, immediately
upon a determination by the Company of the Executive's Disability, and (c) in
all other cases, upon the giving of the Notice of Termination. Notwithstanding
the foregoing, the party giving the notice in the case of (c) above will have
the right, but not the obligation, to have the termination of employment be
effective upon the expiration of any period specified in the Notice of
Termination. In that event, the Executive's employment and performance of
services will continue during such specified period unless the other party (the
Company in the event of a termination by the Executive or the
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Executive in the case of a termination by the Company) elects thereafter to
terminate the employment of the Executive pursuant to Section 3.4 and that
termination is effective as of an earlier date. Notwithstanding the foregoing,
the Company may, upon notice to the Executive and without reducing the
Executive's compensation during such period, excuse the Executive from any or
all of his duties during such period.
8. TERMINATION PAYMENTS
In the event of termination of the Executive's employment during the Change of
Control Period, all compensation and benefits set forth in this Agreement shall
terminate except as specifically provided in this Section 8.
8.1 TERMINATION BY THE COMPANY OTHER THAN FOR CAUSE OR BY THE EXECUTIVE FOR
GOOD REASON
If during the Change of Control Period the Company terminates the Executive's
employment other than for Cause or the Executive terminates his employment for
Good Reason, the Executive shall be entitled to:
(a) Payment of the following accrued obligations (the "Accrued
Obligations"):
(i) the Annual Base Salary through the Date of
Termination to the extent not theretofore paid;
(ii) if the performance criteria for earning the Annual
Bonus for the full fiscal year of termination have
been fully satisfied at the time of termination
(excluding any requirement that the Executive be
employed by the Company at the end of the fiscal
year), the product of (x) the amount of the Annual
Bonus for that year and (y) a fraction the numerator
of which is the number of days in the current fiscal
year through the Date of Termination and the
denominator of which is three hundred sixty-five
(365);
(iii) if the performance criteria for earning the Annual
Bonus for the full fiscal year of termination have
not been fully satisfied and the Board of Directors
of the Company determines that all such criteria
could not have been satisfied if the Executive
remained employed for the full fiscal year, no amount
for the Annual Bonus; and
(iv) if neither (ii) nor (iii) apply, the product of (x)
the Three-Year Average Annual Bonus and (y) a
fraction the numerator of which is the number of days
in the current fiscal year through the Date of
Termination and the denominator of which is three
hundred sixty-five (365); and
(v) any compensation previously deferred by the Executive
(together with accrued interest or earnings thereon,
if any) and any accrued paid time-off that would be
payable under the Company's standard policy, in each
case to the extent not theretofore paid.
(b) For eighteen (18) months after the Date of Termination or
until the Executive qualifies for comparable medical and
dental insurance benefits from another employer, whichever
occurs first, and subject to the satisfactory execution by the
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Executive (including the expiration of any revocation period)
of an agreement substantially in the form of Exhibit A hereof,
the Company shall pay the Executive's premiums for
(i) health insurance benefit continuation for the
Executive and his family members, if applicable,
which the Company provides to the Executive under the
provisions of the federal Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), to
the extent that the Company would have paid such
premium had the Executive remained employed by the
Company (such continued payment is hereinafter
referred to as "COBRA Continuation"); and
(ii) additional health coverage (such as Exec-U-Care),
life, accidental death and disability and other
insurance programs for the Executive and his family
members, if applicable, to the extent such programs
existed on the Change of Control Date.
(c) Continuation of the payment of the Annual Base Salary for the
fiscal year in which the Date of Termination occurs for a
period of eighteen (18) months after the Date of Termination,
subject to the satisfactory execution by the Executive
(including the expiration of any revocation period) of an
agreement substantially in the form of Exhibit A hereof.
(d) An amount equal to one and one-half times the Three-Year
Average Annual Bonus, subject to the satisfactory execution by
the Executive (including the expiration of any revocation
period) of an agreement substantially in the form of Exhibit A
hereof.
(e) Immediate vesting of all outstanding stock options previously
granted to the Executive by the Company, subject to the
satisfactory execution by the Executive (including the
expiration of any revocation period) of an agreement
substantially in the form of Exhibit A hereof.
(f) The provision in any agreement evidencing any outstanding
stock option causing the option to terminate upon the
expiration of three months (or any other period relating to
termination of employment) after termination of employment
shall be of no force or effect, except that nothing herein
shall extend any such option beyond its original term or shall
affect its termination for any reason other than termination
of employment. The provisions of this clause (f) are subject
to the satisfactory execution by the Executive (including the
expiration of any revocation period) of an agreement
substantially in the form of Exhibit A.
8.2 TERMINATION FOR CAUSE OR OTHER THAN FOR GOOD REASON
If during the Change of Control Period the Executive's employment shall be
terminated by the Company for Cause or by the Executive for other than Good
Reason, this Agreement shall terminate without further obligation on the part of
the Company to the Executive, other than the Company's obligation to pay the
Executive the amounts in Section 8.1(a)(i) and (v).
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8.3 EXPIRATION OF TERM
In the event the Executive's employment is not terminated prior to expiration of
the Term and notice of nonrenewal is given pursuant to Section 2, this Agreement
shall terminate without further obligation on the part of the Company to the
Executive upon the expiration of the Term.
8.4 TERMINATION BECAUSE OF DEATH OR DISABILITY
Upon the Executive's death or Disability, this Agreement shall terminate
automatically without further obligation on the part of the Company to the
Executive or his legal representatives under this Agreement other than the
Company's obligation, if any, to pay the Executive the amounts specified in
Section 8.1(a) to (e).
8.5 PAYMENT SCHEDULE
All payments of Accrued Obligations, or any portion thereof payable pursuant to
this Section 8, shall be made to the Executive within ten (10) working days of
the Date of Termination except that
(a) any amount payable to the Executive pursuant to Section
8.1(a)(ii), (iii) or (iv) or Section 8.1(d) shall be paid to
Executive when his or her bonus would have been paid if he or
she were still employed; and
(b) any payments payable to the Executive pursuant to Section
8.1(c) hereof shall be made to the Executive in the form of
salary continuation payable at normal payroll intervals during
the eighteen (18) month severance period on the dates when the
Executive would have received his or her payments of salary if
he or she were still employed and in the amounts he or she
would have received.
8.6 CAUSE
For purposes of this Agreement, termination of Executive's employment shall be
for "Cause" if it is for any of the following:
(a) A refusal of the Executive to carry out any material lawful
duties of the Executive or any directions or instructions of
the Board or senior management of the Company which are
reasonably consistent with those duties;
(b) Failure to perform satisfactorily any lawful duties of the
Executive that are consistent with those duties hereof or any
directions or instructions of the Board or senior management
that are consistent with those duties, provided, however, that
the Executive has been given notice and has failed to correct
any such failure within ten (10) days thereafter (unless any
such correction by its nature cannot be done in 10 days, in
which event the Executive will have a reasonable time to
correct the failure) and provided further that the Company
shall have no such obligation to give notice and the Executive
shall have no such opportunity to correct failures more than
two times in any twelve calendar month period;
(c) Violation by the Executive of a local, state or federal law
involving the commission of a crime, other than minor traffic
violations, or any other criminal act involving moral
turpitude;
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(d) The Executive's gross negligence, willful misconduct, or
breach of his or her duty to the Company involving
self-dealing or personal profit;
(e) Current abuse by the Executive of alcohol or controlled
substances; deception, fraud, misrepresentation or dishonesty
by the Executive; or any incident materially compromising the
Executive's reputation or ability to represent the Company
with investors, customers or the public;
(f) Any other material violation of any provision of this
Agreement by the Executive not described in (a) or (b) above,
subject to the same notice and opportunity-to-correct
provisions as are set forth in (b) above or
(g) The Executive reaching a mandatory retirement age established
by the Company before the Change in Control and not in
anticipation thereof.
8.7 GOOD REASON
For purposes of this Agreement, "Good Reason" means:
(a) Any failure by the Company to comply with any of the
provisions of Section 5 or Section 6 hereof, other than
isolated and inadvertent failure not taken in bad faith and
that is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(b) Any material diminution in Executive's position, authority,
duties or responsibilities as contemplated by Section 3.2
hereof or any other action by the Company that results in a
material diminution in such position, authority, duties or
responsibilities;
(c) The Company's requiring the Executive to be based at any
office or location that is more than fifty (50) miles from the
location of the Executive's assigned worksite immediately
prior to the Change of Control Date and Executive's residence
at the time any such requirement is imposed;
(d) Any non-renewal by the Company of this Agreement; provided,
however, that the Executive may only utilize this paragraph
(d) during the 30-day period immediately following his receipt
of the notice of non-renewal given by the Company pursuant to
Section 2 hereof;
(e) Any failure by the Company to comply with and satisfy Section
12 hereof; provided, however, that the Company's successor has
received at least ten (10) days' prior written notice from the
Company or the Executive of the requirements of Section 12
hereof; or
(f) Any other material violation of any provision of this
Agreement by the Company.
Notwithstanding the foregoing, no basis for a termination for Good Reason will
be deemed to exist unless Executive notifies the Company in writing of any event
in (a) through (f) above and the Company or its successor fails to cure any such
event within 30 days after receipt of the notice.
8.8 WITHHOLDING TAXES
Any payments provided for in this Agreement shall be paid net of any applicable
withholding required under federal, state or local law.
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8.9 WARN ACT
Notwithstanding the provisions of Sections 8.1 through 8.5, in the event the
Executive is entitled, by operation of any act or law, to unemployment
compensation benefits or benefits under the Worker Adjustment and Retraining Act
of 1988 (known as the "WARN Act" in connection with the termination of his or
her employment in addition to those required to be paid to him or her under this
Agreement, then to the extent permitted by applicable law governing severance
payments or notice of termination of employment, the Company shall be entitled
to offset against the amounts payable hereunder the amounts of any such mandated
payments.
8.10 TERMINATION BEFORE CHANGE OF CONTROL
In the case of termination of employment prior to the Change of Control Date as
contemplated by Section 3.4, the Date of Termination shall be deemed to be the
Change of Control Date, except that, if any of the benefits referred to in
Section 8.1 have been paid or provided for all or any portion of the period
between the Date of Termination and the Change of Control Date, the amount of
benefits which would otherwise be paid or provided shall be reduced by the
amount of the benefits paid or provided for the period prior to the Change of
Control Date.
9. REPRESENTATIONS AND WARRANTIES
In order to induce the Company to enter into this Agreement, the Executive
represents and warrants to the Company that neither the execution nor the
performance of this Agreement by the Executive will violate or conflict in any
way with any other agreement by which the Executive may be bound.
10. NONDISCLOSURE; RETURN OF MATERIALS; NONSOLICITATION
10.1 NONDISCLOSURE
Except as required by his employment with the Company, the Executive will not,
at any time during the term of employment by the Company, or at any time
thereafter, directly, indirectly or otherwise, use, communicate, disclose,
disseminate, lecture upon or publish articles relating to any confidential,
proprietary or trade secret information without the prior written consent of the
Company. The Executive understands that the Company will be relying on this
Agreement in continuing the Executive's employment, paying him compensation,
granting him any promotions or raises, or entrusting him with any information
that helps the Company compete with others.
10.2 RETURN OF MATERIALS
All documents, records, notebooks, notes, memoranda, drawings, computer files or
other documents made or compiled by the Executive at any time, or in his
possession, including any and all copies thereof, shall be the property of the
Company and shall be held by the Executive in trust and solely for the benefit
of the Company, and shall be delivered to the Company by the Executive upon
termination of employment or at any other time upon request by the Company.
10.3 NONSOLICITATION
During the period that Executive is receiving payments described in Section
8.1(c), he or she will not actively solicit any employees of the Company or its
Affiliates to accept employment from
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any other person or entity. "Affiliate" is defined as any entity controlling,
controlled by or under common control with, the Company within the meaning of
Rule 405 of the Security and Exchange Commission under the Securities Act of
1933.
11. FORM OF NOTICE
Every notice required by the terms of this Agreement shall be given in writing
by serving the same upon the party to whom it was addressed personally or by
registered or certified mail, return receipt requested, at the address set forth
below or at such other address as may hereafter lie designated by notice given
in compliance with the terms hereof:
If to the Executive: 00000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
If to the Company: MannKind Corporation
ATTN: President
00000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
or such other address as shall be provided in accordance with the terms hereof.
Except as set forth in Section 7.4 hereof, if notice is mailed, such notice
shall be effective upon mailing. Notices sent in any other manner specified
above shall be effective upon receipt.
12. ASSIGNMENT
This Agreement is personal to the Executive and shall not be assignable by the
Executive.
The Company shall assign to and require any successor (whether by purchase of
assets, merger or consolidation) to all or substantially all 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 MannKind Corporation and any successor to its business
and/or assets as aforesaid that assumes and agrees to perform this Agreement by
operation of law, or otherwise. All the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
parties hereto and their respective successors and permitted assigns.
13. WAIVERS
No delay or failure by any party hereto in exercising, protecting or enforcing
any of its rights, titles, interests or remedies hereunder, and no course of
dealing or performance with respect thereto, shall constitute a waiver thereof.
The express waiver by a party hereto of any right, title, interest or remedy in
a particular instance or circumstance shall not constitute a waiver thereof in
any other instance or circumstance. All rights and remedies shall be cumulative
and not exclusive of any other rights or remedies.
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14. AMENDMENTS IN WRITING
No amendment, modification, waiver, termination or discharge of any provision of
this Agreement, or consent to any departure therefrom by either party hereto,
shall in any event be effective unless the same shall be in writing,
specifically identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by the President
or Chief Executive Officer of the Company and the Executive, and each such
amendment, modification, waiver, termination or discharge shall be effective
only in the specific instance and for the specific purpose for which given. No
provision of this Agreement shall be varied, contradicted or explained by any
oral agreement, course of dealing or performance or any other matter not set
forth in an agreement in writing and signed by the Company and the Executive.
15. APPLICABLE LAW
This Agreement shall in all respects, including all matters of construction,
validity and performance, be governed by, and construed and enforced in
accordance with, the laws of the State of California, without regard to any
rules governing conflicts of laws.
16. ARBITRATION; ATTORNEYS' FEES
Except in connection with enforcing Section 10 hereof, for which legal and
equitable remedies may be sought in a court of law, any dispute arising under
this Agreement shall be subject to arbitration. The arbitration proceeding shall
be conducted in accordance with the Employment Arbitration Rules of the American
Arbitration Association (the "AAA Rules") then in effect, conducted by one
arbitrator either mutually agreed upon or selected in accordance with the AAA
Rules. The arbitration shall be conducted in Los Angeles County, California,
under the jurisdiction of the Los Angeles office of the American Arbitration
Association. The arbitrator shall have authority only to interpret and apply the
provisions of this Agreement, and shall have no authority to add to, subtract
from or otherwise modify the terms of this Agreement. Any demand for arbitration
must be made within sixty (60) days of the event(s) giving rise to the claim
that this Agreement has been breached. The arbitrator's decision shall be final
and binding, and each party agrees to be bound to by the arbitrator's award,
subject only to an appeal therefrom in accordance with the laws of the State of
California. Either party may obtain judgment upon the arbitrator's award in the
Superior Court of Los Angeles County, California.
If it becomes necessary to pursue or defend any legal proceeding, whether in
arbitration or court, in order to resolve all disputes arising under this
Agreement, the prevailing party in any such proceeding shall be entitled to
recover its reasonable costs and attorneys' fees.
17. SEVERABILITY
If any provision of this Agreement shall be held invalid, illegal or
unenforceable in any jurisdiction, for any reason, including, without
limitation, the duration of such provision, its geographical scope or the extent
of the activities prohibited or required by it, then, to the full
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extent permitted by law, (a) all other provisions hereof shall remain in full
force and effect in such jurisdiction and shall be liberally construed in order
to carry out the intent of the parties hereto as nearly as may be possible, (b)
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of any other provision hereof, and (c) any court or
arbitrator having jurisdiction thereover shall have the power to reform such
provision to the extent necessary for such provision to be enforceable under
applicable law.
18. COORDINATION WITH SEVERANCE AGREEMENT
The agreement regarding the Executive's employment with the Company that the
parties are entering into contemporaneously with this Agreement provides for
certain forms of severance and benefit payments in the event of termination of
the Executive's employment under certain conditions (the "Severance Agreement").
This Agreement is in addition to the Severance Agreement and in no way
supersedes or nullifies the that agreement. Nevertheless, it is possible for
termination of employment to fall within the scope of both agreements. In such
event, payments made to the Executive under Section 8.1 hereof shall be
coordinated with payments made to the Executive under the Severance Agreement as
follows:
(a) the obligations under Section 5.1(a) of the Severance
Agreement shall be paid first, in which case the Accrued
Obligations under this Agreement need not be paid;
(b) COBRA Contribution under this Agreement need not be provided
to the extent COBRA continuation is provided under the
Severance Agreement; and
(c) the severance payments required under Sections 8.1(c) and
8.1(d) hereof shall be paid first, in which case any severance
payments required under Sections 5.1(c) and 5.1(d) of the
Severance Agreement need not be provided.
19. EXCESS PARACHUTE LIMITATION
If any portion of the payments or benefits for the Executive under this
Agreement, taken together with any other agreement or benefit plan of the
Company (including stock options), would be characterized as an "excess
parachute payment" to the Executive under Section 280G of the Internal Revenue
Code of 1986, amended (the "Code"), the payments and benefits shall be reduced
to the extent necessary to avoid the imposition of any tax that would otherwise
be owed under Section 4999 of the Code. Such reductions shall first be made to
the bonus payments referred to in Section 8.1(d) and Section 8.1(a)(ii), (iii)
or (iv), whichever is applicable, then to the salary payments referred to in
Section 8.1(c), then to the salary payments under Section 8.1(a)(i) and finally
to the number of shares subject to options that are accelerated pursuant to
Section 8.1(e) in the reverse order of grant of those options. The determination
of whether and the extent to which payments and benefits are to be reduced
pursuant to this Section 19 shall be made in writing by tax accountants and/or
tax lawyers selected by the Company and reasonably acceptable to the Executive.
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20. ENTIRE AGREEMENT
Except as described in Section 18 hereof, this Agreement constitutes the entire
agreement between the Company and the Executive with respect to the subject
matter hereof, and all prior or contemporaneous oral or written communications,
understandings or agreements between the Company and the Executive with respect
to such subject matter are hereby superseded and nullified in their entireties,
except that the agreement relating to proprietary information and inventions
between the Company and the Executive shall continue in full force and effect.
21. COUNTERPARTS
This Agreement may be executed in counterparts, each of which counterpart shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties have executed and entered into this Agreement
effective on the date first set forth above.
MANNKIND CORPORATION EXECUTIVE
By: /s/ Xxxxxxx Page /s/ Xxxxx Xxxxxxx
--------------------- ----------------------
Its: Vice Chairman & CEO Xxxxx Xxxxxxx
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APPENDIX A
For purposes of this Agreement, a "Change of Control" shall be deemed to have
occurred, if any one of the following events occurs:
(a) the acquisition by any person or group of beneficial ownership
of more than 50% of the outstanding shares of Common Stock of
the Company, or, if there are then outstanding any other
voting securities of the Company, such acquisition of more
than 50% of the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in
the election of directors, except for any of the following
acquisitions of beneficial ownership of Common Stock or other
voting securities of the Company:
(i) by the Company or any Employee benefit plan (or
related trust) sponsored or maintained by the Company
or any entity controlled by the Company;
(ii) by Xxxxxx X. Xxxx; or
(iii) by any person or entity during Xx. Xxxx'x lifetime if
the shares acquired were beneficially owned by Xx.
Xxxx immediately prior to their acquisition and the
acquisition is a transfer to a trust, partnership,
corporation or other entity in which Xx. Xxxx owns a
majority of the beneficial interests;
(b) the Company sells all or substantially all of its assets (or
consummates any transaction having a similar effect) or the
Company merges or consolidates with another entity or
completes a reorganization unless the holders of the voting
securities of the Company outstanding immediately prior to the
transaction own immediately after the transaction in
approximately the same proportions 50% or more of the combined
voting power of the voting securities of the entity purchasing
the assets or surviving the merger or consolidation or the
voting securities of its parent company, or, in the case of a
reorganization, 50% or more of the combined voting power of
the voting securities of the Company;
Notwithstanding the foregoing, any purchase or redemption of
outstanding shares of Common Stock or other voting securities
by the Company resulting in an increase in the percentage of
outstanding shares or other voting securities beneficially
owned by any person or group shall be deemed to constitute a
reorganization; however, no increase in the percentage of
outstanding shares or other voting securities beneficially
owned by Xxxxxx X. Xxxx or any person or entities referred to
in (a)(i) or (iii) above resulting from any redemption of
shares or other voting securities by the Company shall result
in a Change of Control;
(c) the Company is liquidated; or
(d) the Board (if the Company continues to own its business) or
the board of directors or comparable governing body of any
successor owner of its business (as a result of a transaction
which is not itself a Change of Control) consists of a
majority of directors or members who are not Incumbent
Directors.
For purposes of this Agreement, (A) "voting securities" means securities whose
holders are entitled to vote in the election of all or a majority of the
authorized number of directors at the
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time the determination of 'voting securities" status is being made and (B) 50%
or more of the combined voting power shall refer to the voting power to elect a
majority of the authorized number of directors determined at that time. "Voting
securities" shall not include preferred stock or other securities whose holders
are entitled to vote in the election of all or a majority of the authorized
number of directors upon the occurrence of some event or circumstance which has
not occurred and such rights to vote are not in effect at the time of the
determination of "voting securities" status. Preferred stock and other
securities whose holders are then entitled to vote for less than a majority of
the authorized number of directors, shall not be considered "voting securities."
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EXHIBIT A
GENERAL RELEASE AND SETTLEMENT AGREEMENT
The parties to this General Release and Settlement Agreement ("Release") between
________________________________ ("Employee") and MannKind Corporation ("the
Company") state that:
The parties desire to terminate their employment relationship. Both parties
desire to fully and finally resolve all differences and disputes without further
costs;
THEREFORE, the parties agree:
1. In consideration of the payments to Employee as provided in the Change of
Control Agreement between the Employee and the Company dated August 1,
2003, Employee does forever release and discharge the Company and all its
parent, subsidiary and affiliated entities and all their past, present and
future directors, officers, agents, employees, or representatives from all
claims, damages, liabilities, and demands of whatever kind and character up
to the date she/he signs below ("disputes"), including, but not limited to,
arising out of or in any way related to any of the circumstances of
Employee's employment or termination of employment with the Company.
Employee releases all disputes relating to or arising out of any state,
municipal, or federal statute, ordinance, regulation, order, contract,
tort, or common law, including, but not limited to, the Age Discrimination
in Employment Act. The parties intend that the disputes released herein be
construed as broadly as possible.
2. This Release also extends to all disputes by Employee against the Company
whether known or unknown, suspected or unsuspected, past or present, and
whether or not they arise out of or are attributable to the circumstances
of Employee's employment or termination of employment with the Company.
Specifically, Employee hereby expressly waives any and all rights under
Section 1542 of the California Civil Code, which reads in full as follows:
SECTION 1542. GENERAL RELEASE. A GENERAL RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS
FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST
HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
3. Employee further understands and agrees that neither the payment nor the
execution of this Release, or any part of it, shall constitute or be
construed as an admission of any alleged liability or wrongdoing whatsoever
by the Company. The Company expressly denies it has committed any alleged
liability or wrongdoing.
4. All films, files, books, computer files, correspondence, lists, equipment,
manuals, other written and graphic records and the like and all copies
thereof, affecting or relating to the business of Company which Employee
shall have prepared, used, constructed, observed, possessed or controlled,
shall be and remain the Company's sole property. Employee agrees to deliver
promptly to the Company all such property relating to the Company, which
are or have been in his possession or under his control. Employee also
agrees to continue to abide by his confidentiality of information and
inventions agreement with the Company.
5. Employee agrees not to seek reemployment with the Company or any of its
affiliates.
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6. This Release shall be governed by the substantive law of the State of
California. In the event of any dispute concerning the interpretation of
this Release or in any way related to Employee's employment or termination
of employment, the dispute shall be resolved by arbitration within the
County of Los Angeles, California, in accordance with the then existing
rules for employment dispute arbitration of the American Arbitration
Association, and judgment upon any arbitration award may be entered by any
state or federal court having jurisdiction thereof. The parties intend this
arbitration provision to be valid and construed as broadly as possible. The
prevailing party in such arbitration shall recover its reasonable costs and
attorneys' fees.
7. If any provision of this General Release and Settlement Agreement is
determined to be invalid or unenforceable, all of the other provisions
shall remain valid and enforceable notwithstanding, unless the provision
found to be unenforceable is of such material effect that this Release
cannot be performed in accordance with the intent of the parties in the
absence thereof.
8. No promise or agreement other than that expressed herein has been made.
This General Release and Settlement Agreement constitutes a single
integrated contract expressing the entire agreement of the parties hereto.
There are no other agreements, written or oral, express or implied, between
the parties concerning the subject matter hereof, except the provisions set
forth in this Release. This Release supersedes all previous agreements and
understandings, whether written or oral. This Release can be amended,
modified or terminated only by a writing executed by both Employee and the
President of the Company.
9. In compliance with the Olders Workers Benefit Protection Act, Employee has
been given twenty-one (21) days to review this Release before signing it.
Employee also understands that he may revoke this General Release and
Settlement Agreement within seven (7) days after it has been signed and
that it is not enforceable or effective until the seven (7) day revocation
period has expired. Additionally, employee has been advised in this writing
to consult with an attorney before executing this General Release and
Settlement Agreement.
10. THE EMPLOYEE STATES THAT HE/SHE IS IN GOOD HEALTH AND FULLY COMPETENT TO
MANAGE HIS/HER BUSINESS AFFAIRS, THAT HE/SHE HAS CAREFULLY READ THIS
GENERAL RELEASE AND SETTLEMENT AGREEMENT, THAT HE/SHE FULLY UNDERSTANDS ITS
FINAL AND BINDING EFFECT, THAT THE ONLY PROMISES MADE TO HIM/HER TO SIGN
THIS RELEASE ARE THOSE STATED AND CONTAINED IN THIS RELEASE, AND THAT
HE/SHE IS SIGNING THIS AGREEMENT KNOWINGLY AND VOLUNTARILY.
AGREED AND ACCEPTED this _______ day of __________, _______:
MANNKIND CORPORATION EXECUTIVE
By:___________________________ _______________________________
Its:___________________________
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