5
EXECUTIVE SEVERANCE AGREEMENT
BETWEEN
EXECUTIVE NAME
AND
THE LIPOSOME COMPANY, INC.
CONTENTS
PAGE
Article 1. Definitions 1
Article 2. Severance Benefits 6
Article 3. Form and Timing of Severance Benefits 9
Article 4. Excise Tax Gross-Up 10
Article 5. The Company's Payment Obligations 11
Article 6. Term of Agreement 12
Article 7. Legal Remedies 12
Article 8. Successors 12
Article 9. Indemnification 13
Article 10. Miscellaneous 13
THE LIPOSOME COMPANY, INC.
EXECUTIVE SEVERANCE AGREEMENT
THIS AGREEMENT is made and entered into as of this 22nd day of
January, 1998, by and between The Liposome Company, Inc., a
Delaware corporation (hereinafter referred to as the "Company")
and ____________ (hereinafter referred to as the "Executive").
WITNESSETH:
WHEREAS, the Board of Directors of the Company has approved the
Company entering into severance agreements with certain key
executives of the Company and its subsidiaries; and
WHEREAS, the Executive is a key executive of the Company or of
its subsidiary; and
WHEREAS, should the possibility of a Change in Control of the
Company arise, the Board believes it imperative that the Company
and the Board should be able to rely upon the Executive to
continue in his or her position, and that the Company should be
able to receive and rely upon the Executive's advice, if
requested, as to the best interests of the Company and its
shareholders without concern that the Executive might be
distracted by the personal uncertainties and risks created by the
possibility of a Change in Control; and
WHEREAS, should the possibility of a Change in Control arise, in
addition to his or her regular duties, the Executive may be
called upon to assist in the assessment of such possible Change
in Control, advise management and the Board as to whether such
Change in Control would be in the best interests of the Company
and its shareholders, and to take such other actions as the Board
might determine to be appropriate;
NOW, THEREFORE, to assure the Company that it will have the
continued dedication of the Executive and the availability of his
or her advice and counsel notwithstanding the possibility,
threat, or occurrence of a Change in Control of the Company, and
to induce the Executive to remain in the employ of the Company,
and for other good and valuable consideration, the Company and
the Executive agree as follows:
ARTICLE 1. DEFINITIONS
Whenever used in this Agreement, the following terms shall have
the meanings set forth below and, when the meaning is intended,
the initial letter of the word is capitalized:
(a) "Agreement" means this Executive Severance Agreement.
(b)"Base Salary" means the salary of record paid to the
Executive as annual salary, excluding amounts received under
incentive or other bonus plans, whether or not deferred.
(c)"Beneficial Owner" has the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the
Exchange Act.
(d)"Beneficiary" means the persons or entities designated or
deemed designated by the Executive pursuant to Section 9.2
hereof.
(e)"Board" means the Board of Directors of the Company.
(f)"Cause" shall be determined by the Chairman of the Board and
the Executive's direct supervisor, in exercise of his or
their good faith and reasonable judgment, and shall mean the
occurrence of any one or more of the following:
(i)The willful and continued failure by the Executive to
substantially perform his or her duties (other than any
such failure resulting from the Executive's Disability),
after a written demand for substantial performance is
delivered by the Chairman of the Board to the Executive
that specifically identifies the manner in which the
Company believes that the Executive has not substantially
performed his duties, and the Executive has failed to
remedy the situation within thirty (30) calendar days of
receiving such notice; or
(ii) The Executive's conviction for committing an act of
fraud, embezzlement, theft, or other act constituting a
felony; or
(iii) The willful engaging by the Executive in gross
misconduct materially and demonstrably injurious to the
Company, as determined by the Chairman of the Board.
However, no act or failure to act on the Executive's part
shall be considered "willful" unless done, or omitted to
be done, by the Executive not in good faith and without
reasonable belief that his action or omission was in the
best interest of the Company.
(g)` "Chairman of the Board" shall mean the member of the
Board duly elected by the Board to serve as its chairman, as
prescribed in the Company's By-Laws.
(h)"Change in Control" of the Company shall be deemed to have
occurred as of the first day that any one or more of the
following conditions shall have been satisfied:
(i)When a "person," as defined in Sections 3(a)(9) and
13(d)(3) of the Exchange Act, becomes the beneficial
owner, directly or indirectly, of securities of the
Company representing (A) more than thirty-five percent
(35%) of the combined voting power of the Company's then
outstanding securities, unless such person is subject to
contractual restrictions that would preclude him or her
from voting such shares in a manner to influence or
control the management of the Company's business, provided
that in the event such contractual restrictions are
removed, a Change of Control will be deemed to have
occurred on the effective date of such removal or on such
later date as the Executive receives actual notice of such
removal, or (B) one hundred percent (100%) of the combined
voting power of the Company's then outstanding securities
regardless of any contractual restrictions. For purposes
of this provision, "person" shall not include the Company,
any subsidiary of the Company, any employee benefit plan
or employee stock plan of the Company, or any person
holding the Company's Common Stock by, for or pursuant to
the terms of such a plan; and "voting power" shall mean
the power under ordinary circumstances (and not merely
upon the happening of a contingency) to vote in the
election of directors. For the purpose of Section
(h)(i)(A) and (h)(iii)(B) of this Agreement, the right to
vote shares in a transaction for which stockholder
approval is required under Sections 251 through 258
(mergers), 271 (sale of assets), or 275 (dissolution) of
the Delaware General Corporation Law, as the same may be
amended from time to time, will not, in themselves, be
deemed, to constitute the right to vote such shares "in a
manner to influence or control the management of the
Company's business". Whether other voting rights may be
granted to a beneficial owner without enabling it to
influence or control the management of the Company's
business will depend on the totality of rights granted in
each case.
(ii) When, as a result of a vote of stockholders for which
proxies are solicited by or on behalf of any person other
than the Company in accordance with the SEC rules issued
under Section 14 of the Exchange Act, or which is exempt
from the SEC proxy rules by reason of Rule 14a-2 under the
Exchange Act, or as a result of an action by written
consent of stockholders without a meeting, the "incumbent
directors" cease to constitute at least a majority of the
authorized number of members of the Board. For purposes
of this provision, "incumbent directors" shall mean the
persons who were members of the Board on January 22, 1998,
and the persons who were elected or nominated as their
successors or pursuant to increases in the size of the
Board by a vote of at least an absolute majority (and not
just the majority of a quorum) of the Board members who
were then Board members (or successors or additional
members so elected or nominated).
(iii) When the stockholders of the Company approve a
merger, consolidation, or reorganization, whether or not
the Company is the surviving entity in such transaction,
(A) other than a merger, consolidation, or reorganization
that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity)
at least sixty-five percent (65%) of the combined voting
power of the voting securities of the Company (or such
surviving entity) outstanding immediately after the
merger, consolidation, or reorganization; and (B) other
than a merger, consolidation or reorganization that would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent less
than sixty-five percent (65%) but more than one percent
(1%) of the combined voting power of the voting securities
of the Company (or such surviving entity) outstanding
immediately after the merger, consolidation or
reorganization if the holder or holders of the shares in
the surviving entity that do not represent the securities
of the Company outstanding prior to the merger,
consolidation or reorganization is or are subject to
contractual restrictions that would preclude such holder
or holders from voting such shares in a manner to
influence or control the management of the Company's (or
such surviving entity's) business, provided that in the
event such contractual restrictions are removed, a Change
of Control will be deemed to have occurred on the
effective date of such removal or on such later date as
the Executive receives actual notice of such removal.
(iv) When the stockholders of the Company approve (A) the
sale or other disposition of all or substantially all of
the assets the company or (B) a complete liquidation or
dissolution of the Company.
(v)When the Board adopts a resolution to the effect that any
person has acquired effective control of the business and
affairs of the Company.
However, in no event shall a Change in Control be deemed to
have occurred, with respect to the Executive, if the
Executive is part of a purchasing group which consummates the
Change-in-Control transaction. The Executive shall be deemed
"part of a purchasing group" for purposes of the preceding
sentence if the Executive is an equity participant in the
purchasing company or group (except for: (x) passive
ownership of less than three percent (3%) of the stock of the
purchasing company; or (y) ownership of equity participation
in the purchasing company or group which is otherwise not
significant, as determined prior to the Change in Control by
an absolute majority of the non-employee Directors who were
Directors prior to the transaction, and who continue as
Directors following the transaction).
(i)"Code" means the United States Internal Revenue Code of 1986,
as amended.
(j)"Company" means The Liposome Company, Inc., a Delaware
corporation (including any and all subsidiaries), or any
successor thereto as provided in Article 8 hereof.
(k)"Disability" means permanent and total disability, within the
meaning of Code Section 22(e)(3), as determined by the
Chairman of the Board in the exercise of good faith and
reasonable judgment, upon receipt of and in reliance on
sufficient competent medical advice from one or more
individuals, selected by the Company, who are qualified to
give professional medical advice.
(l)"Effective Date" is January 22, 1998.
(m)"Effective Date of Termination" means the date on which a
Qualifying Termination occurs that triggers the payment of
Severance Benefits hereunder.
(n)"Exchange Act" means the United States Securities Exchange
Act of 1934, as amended.
(o)"Executive" means the individual named in the opening
paragraph of this Agreement.
(p)"Good Reason" means, without the Executive's express written
consent, the occurrence after a Change in Control of the
Company of any one or more of the following:
(i)The assignment of the Executive to duties materially
inconsistent with the Executive's authorities, duties,
responsibilities, and status (including titles and
reporting requirements) as an officer of the Company, or a
material reduction or alteration in the nature or status
of the Executive's authorities, duties, or
responsibilities from those in effect as of ninety (90)
days prior to the Change in Control, other than an
insubstantial and inadvertent act that is remedied by the
Company promptly after receipt of notice thereof given by
the Executive;
(ii) The Company's requiring the Executive to be based at
a location in excess of thirty-five (35) miles from the
location of the Executive's principal job location or
office immediately prior to the Change in Control; except
for required travel on the Company's business to an extent
substantially consistent with the Executive's present
business obligations;
(iii) A reduction by the Company of the Executive's Base
Salary as in effect on the Effective Date, or as the same
shall be increased from time to time;
(iv) Any failure by the Company to pay a bonus at least
equal to the average of the bonuses paid to the Executive
during the three years prior to his/her Effective Date of
Termination;
(v)The failure of the Company to maintain the Executive's
relative level of coverage under the Company's employee
benefit or retirement plans, policies, practices, or
arrangements in which the Executive participates as of the
Effective Date, both in terms of the amount of benefits
provided and the relative level of the Executive's
participation. For this purpose, the Company may
eliminate and/or modify existing programs and coverage
levels; provided, however, that the Executive's level of
coverage under all such programs must be at least as great
as is such coverage provided to executives who have the
same or lesser levels of reporting responsibilities within
the Company's organization;
(vi) The failure of the Company to obtain a satisfactory
agreement from any successor to the Company to assume and
agree to perform the Company's obligations under this
Agreement, as contemplated in Article 8 hereof; and
(vii) Any purported termination by the Company of the
Executive's employment that is not effected pursuant to a
Notice of Termination satisfying the requirements of
Section 2.10 hereof, and for purposes of this Agreement,
no such purported termination shall be effective.
The Executive's right to terminate employment for Good Reason
shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued
employment shall not constitute consent to, or a waiver of
rights with respect to, any circumstance constituting Good
Reason herein.
(q)"Person" has the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and
14(d) thereof, including a "group" as defined in Section
13(d).
(r)"Qualifying Termination" means any of the events described in
Section 2.2 hereof, the occurrence of which triggers the
payment of Severance Benefits hereunder.
(s)"Severance Benefits" means the payment of severance
compensation as provided in Section 2.3 hereof.
(t)"Total Payments" means the sum of the Executive's Severance
Benefits and all other payments and benefits provided to the
Executive by the Company that constitute "excess parachute
payments" within the meaning of Code Section 280G(b)(1).
Without limiting the generality of the foregoing, Total
Payments shall include any and all excess parachute payments
associated with outstanding long-term incentive grants (to
include, but not be limited to, early vesting of stock
options or restricted stock).
(u)"Window Period" means the time period commencing ninety (90)
days prior to a Change in Control, as defined in Section (g)
of this Article 1, and ending eighteen months after the
latter to occur of: (i) any of the events defined as a Change
in Control in Section 1(h); or (ii) final consummation of the
liquidation, sale or disposition of assets, or the merger,
consolidation or reorganization of the Company as described
in Section 1(h)(iii) and (iv).
ARTICLE 2. SEVERANCE BENEFITS
2.1. Right to Severance Benefits. The Executive shall be
entitled to receive from the Company Severance Benefits as
described in Section 2.3 hereof, if there has been a Change
in Control of the Company and if, within the Window Period,
the Executive's employment with the Company ends for any
reason specified in Section 2.2 hereof. The Executive shall
not be entitled to receive Severance Benefits if he/she is
terminated for Cause, or if his/her employment with the
Company ends due to death, Disability, retirement on or after
early retirement age (as defined under the then established
rules of the Company's tax-qualified retirement plan
applicable to the Executive), or due to a voluntary
termination of employment by the Executive without Good
Reason, or if he/she fails to comply with the conditions set
forth in Section 2.7 hereof.
2.2. Qualifying Termination. The occurrence of any one or
more of the following events within the Window Period shall
constitute a Qualifying Termination and shall trigger the
payment of Severance Benefits to the Executive under this
Agreement:
(a)An involuntary termination of the Executive's employment
by the Company for reasons other than Cause;
(b)A voluntary termination of employment by the Executive for
Good Reason;
(c)A successor company's failure or refusal to assume the
Company's obligations under this Agreement, as required by
Article 8 hereof; or
(d)The breach by the Company or any successor company of any
of the provisions of this Agreement.
2.3. Description of Severance Benefits. In the event that
the Executive becomes entitled to receive Severance Benefits,
as provided in this Article 2, the Company shall pay to the
Executive and provide him or her with the following:
(a)An amount equal to twelve (12) months' of the Executive's
annual Base Salary at the rate in effect at the
commencement of the Window Period or any higher rate that
may be in effect from that date until the Effective Date
of Termination;
(b)An amount equal to the Executive's average annual bonus
earned during the three (3) full fiscal years prior to the
Effective Date of Termination, or during such shorter
period as the Executive has received an annual bonus. For
a year in which any portion of the Executive's annual
bonus was paid in stock or other non-cash consideration,
the value of such stock or other non-cash consideration
will be included in calculating his/her average annual
bonus;
(c)A pro rata portion of the Executive's expected bonus for
the bonus plan year in which termination occurs (which
expected bonus will be at least equal to the Executive's
average annual bonus for the three prior bonus plan years,
determined as set forth in Subsection 2.3(b), or such
greater amount as the Board may determine is due), and
accrued salary and vacation pay through the Effective Date
of Termination;
(d)A continuation of all benefits pursuant to any and all
welfare benefit plans under which the Executive and/or the
Executive's family is eligible to receive benefits and/or
coverage, including, but not limited to, group life
insurance, hospitalization, disability, medical and dental
plans, at the same premium cost, and at the same coverage
level, as in effect as of the Executive's Effective Date
of Termination or as of the effective date of the Change
in Control, whichever the Executive may elect. The
welfare benefits described in this Subsection 2.3(d) shall
continue following the Effective Date of Termination for
twelve months; provided, however, that such benefits shall
be discontinued prior to the end of such period in the
event the Executive receives substantially similar
benefits from a subsequent employer;
(e)Reasonable Company-paid outplacement assistance,
commensurate with assistance normally provided to
executive-level personnel, for a period of up to twelve
(12) months following the Effective Date of Termination,
or for such longer period as the Company may agree;
(f)The immediate vesting and exercisability of all stock
options, restricted stock and other equity incentives
granted to the Executive that are not otherwise vested or
exercisable; and
(g)Any other accrued rights of the Executive.
2.4. Termination for Total and Permanent Disability.
Following a Change in Control of the Company, if the
Executive's employment is terminated due to Disability, the
Executive shall receive his or her Base Salary through the
Effective Date of Termination, at which point in time the
Executive's benefits shall be determined in accordance with
the Company's retirement, insurance, and other applicable
plans and programs then in effect.
2.5. Termination for Retirement or Death. Following a Change
in Control of the Company, if the Executive's employment is
terminated by reason of his or her retirement (as defined
under the then-established rules of the Company's tax-
qualified retirement plan), or death, the Executive's
benefits shall be determined in accordance with the Company's
retirement, survivor's benefits, insurance, and other
applicable programs of the Company then in effect.
2.6. Termination for Cause or by the Executive Other Than for
Good Reason. Following a Change in Control of the Company,
if the Executive's employment is terminated either: (i) by
the Company for Cause; or (ii) by the Executive other than
for Good Reason, the Company shall pay the Executive his or
her full Base Salary and accrued vacation through the
Effective Date of Termination, at the rate then in effect,
plus any other amounts to which the Executive is entitled
under any compensation or benefit plans of the Company at the
time such payments are due, and the Company shall have no
further obligations to the Executive under this Agreement.
2.7. Conditions to Severance Benefits. As conditions of the
Executive's entitlement and continued entitlement to the
Severance Benefits provided in Section 2.3, the Executive is
required to (i) honor in accordance with their terms the
provisions of Section 2.8 and 2.9 hereof and the provisions
of the confidential information agreement signed by the
Executive at the beginning of his/her employment (the
"Employee Confidentiality Agreement"), and (ii) execute and
honor the terms of a waiver and release of claims against the
Company substantially in the form attached hereto as Exhibit
A (and as may be modified consistent with the purposes of
such waiver and release to reflect changes in the law
following the Effective Date). In the event that the
Executive fails to abide by the foregoing, all payments and
benefits to which the Executive may otherwise have been
entitled under Section 2.3 shall immediately terminate and be
forfeited, and the Executive shall be entitled to no
severance benefits in excess of those provided in the
Company's standard severance policy in effect as of the
Executive's Effective Date of Termination, and the Executive
shall repay to the Company any payment received that is in
excess of such amount. For purposes of this Section, the
Executive shall be treated as having failed to honor the
provisions of Sections 2.8 or 2.9 hereof or the provisions of
the Employee Confidentiality Agreement only following written
notice by the Company or its successor of the alleged failure
and an opportunity for the Executive to cure the alleged
failure for a period of thirty (30) days from the date of
such notice.
2.8. Services During Certain Events. In the event a Person
begins a tender or exchange offer, circulates a proxy to
shareholders of the Company, or takes other steps seeking to
effect a Change in Control, the Executive agrees that he or
she will not voluntarily leave the employ of the Company and
will render services until such Person has abandoned or
terminated his or its efforts to effect a Change in Control,
or until six (6) months after a Change in Control has
occurred; provided, however, that the Company may terminate
the Executive's employment for Cause at any time, and the
Executive may terminate his or her employment any time after
the Change in Control for Good Reason.
2.9. Non-Competition. The Executive shall not, either during
the term of his/her employment with the Company or for a
period of twelve months after a Qualifying Termination,
become affiliated with or conduct, directly or indirectly,
any business involved in the research, development,
manufacture or sale of lipids or liposomes, or products or
services which use natural or artificial lipids or liposomes
to encapsulate, enhance or deliver any drug product (a
"Competitor"); provided, however, that, after his/her
Effective Date of Termination, the Executive may become
affiliated with a non-competing subsidiary, division or other
business unit of a Competitor if the Executive's services are
provided only to such separate business unit, and the
Executive may become affiliated with an entity that provides
goods or services to a Competitor if the Executive does not
personally participate in the provision of goods or services
to the Competitor.
2.10. Notices. In the event of a transaction that would
constitute a Change of Control but for the provisions of
Section 1(h)(i)(A) or 1(h)(iii)(B) regarding contractual
restrictions on the acquiror, the Company will give written
notice to the Executive that no Change of Control has
occurred. Likewise, in the event that such contractual
restrictions are subsequently removed, the Company will give
written notice to the Executive that a Change of Control has
occurred or will occur as of the effective date of the
removal of such restrictions. Any termination by the Company
for Cause or by the Executive for Good Reason following a
Change of Control shall be communicated by Notice of
Termination to the other party. For purposes of this
Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination
provision in this Agreement relied upon, and shall set forth
in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment
under the provision so indicated.
ARTICLE 3. FORM AND TIMING OF SEVERANCE BENEFITS
3.1. Form and Timing of Severance Benefits. The Severance
Benefits described in Sections 2.3(a), 2.3(b), 2.3(c),
2.3(e), and 2.3(f) hereof shall be paid in cash to the
Executive in a single lump sum as soon as practicable
following the Effective Date of Termination, but in no event
beyond thirty (30) days from such date. Any payment required
under this Section 3.1, or any other provision of this
Agreement, that is not made in a timely manner will bear
interest at a rate equal to one hundred twenty percent (120%)
of the applicable federal rate, as in effect under Section
1274(d) of the Code for the month in which the payment is
required to be made.
3.2. Withholding of Taxes. The Company shall be entitled to
withhold from any amounts payable under this Agreement all
taxes as legally shall be required (including, without
limitation, any United States Federal taxes, and any other
state, city, or local taxes).
ARTICLE 4. EXCISE TAX GROSS-UP
4.1Equalization Payment. In the event that the Executive
becomes entitled to Severance Benefits, if any of the
Executive's Total Payments will be subject to the tax (the
"Excise Tax") imposed by Section 4999 of the Code (or any
similar tax that may hereafter be imposed), the Company shall
pay to the Executive in cash an additional amount (the "Gross-
up Payment") such that the net amount retained by the
Executive after deduction of any Excise Tax on the Total
Payments and any federal, state, and local income tax and
Excise Tax upon the Gross-up Payment provided for by this
Section 4.1, shall be equal to the Total Payments. Such
payment shall be made by the Company to the Executive as soon
as practicable following the Effective Date of Termination,
but in no event beyond thirty (30) days from such date.
4.2Tax Computation. For purposes of determining whether any of
the Total Payments will be subject to the Excise Tax and the
amounts of such Excise Tax:
(a)Any other payments or benefits received or to be received
by the Executive in connection with a Change in Control of
the Company or the Executive's termination of employment
(whether pursuant to the terms of this Agreement or any
other plan, arrangement, or agreement with the Company, or
with any Person whose actions result in a Change in
Control of the Company or any Person affiliated with the
Company or such Persons) shall be treated as "parachute
payments" within in the meaning of Section 280G(b)(2) of
the Code, and all "excess parachute payments" within the
meaning of Section 280G(b)(1) shall be treated as subject
to the excise tax, unless in the opinion of tax counsel
selected by the Company's independent auditors and
acceptable to the Executive, such other payments or
benefits (in whole or in part) do not constitute parachute
payments, or unless such excess parachute payments (in
whole or in part) represent reasonable compensation for
services actually rendered within the meaning of Section
280G(b)(4) of the Code in excess of the base amount within
the meaning of Section 280G(b)(3) of the Code, or are
otherwise not subject to the excise tax;
(b)The amount of the Total Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of:
(i) the total amount of the Total Payments; or (ii) the
amount of excess parachute payments within the meaning of
Section 280G(b)(1) (after applying clause (a) above); and
(c)The value of any noncash benefits or any deferred payment
or benefit shall be determined by the Company's
independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up
Payment, the Executive shall be deemed to pay Federal income
taxes at the highest marginal rate of Federal income taxation
in the calendar year in which the Gross-Up Payment is to be
made, and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the
Executive's residence on the Effective Date of Termination,
net of the maximum reduction in Federal income taxes which
could be obtained from deduction of such state and local
taxes.
4.3Subsequent Recalculation. In the event the Internal Revenue
Service adjusts the computation of the Company under Section
4.2 hereof, so that the Executive did not receive the
greatest net benefit, the Company shall reimburse the
Executive for the full amount necessary to make the Executive
whole, plus an appropriate market rate of interest, as
determined by the Company's independent auditors.
ARTICLE 5. THE COMPANY'S PAYMENT OBLIGATION
5.1Payment Obligations Absolute. The Company's obligation to
make the payments and the arrangements provided for herein
shall be absolute and unconditional, and shall not be
affected by any circumstances, including, without limitation,
any offset, counterclaim, recoupment, defense, or other right
which the Company may have against the Executive or anyone
else, except those arising under this Agreement. All amounts
payable by the Company hereunder shall be paid without notice
or demand. Each and every payment made hereunder by the
Company shall be final, and the Company shall not seek to
recover all or any part of such payment from the Executive or
from whomsoever may be entitled thereto, for any reasons
whatsoever, except as provided in Section 2.7. The Executive
shall not be obligated to seek other employment in mitigation
of the amounts payable or arrangements made under any
provision of this Agreement, and the obtaining of any such
other employment shall in no event effect any reduction of
the Company's obligations to make the payments and
arrangements required to be made under this Agreement, except
to the extent provided in Sections 2.3(d) and 2.9 hereof.
5.2Contractual Rights to Benefits. This Agreement establishes
and vests in the Executive a contractual right to the
benefits to which he or she is entitled hereunder. However,
nothing herein contained shall require or be deemed to
require, or prohibit or be deemed to prohibit, the Company to
segregate, earmark, or otherwise set aside any funds or other
assets, in trust or otherwise, to provide for any payments to
be made or required hereunder.
ARTICLE 6. TERM OF AGREEMENT
This Agreement will commence on the Effective Date and will
terminate on January 22, 2003; provided however that this
Agreement will be extended automatically for one (1) additional
year at the end of this initial term and at the end of each
additional year thereafter, unless the Chairman of the Board
delivers written notice twelve (12) months prior to the end of
such term, or extended term, to the Executive, that the Agreement
will not be extended. In such case, the Agreement will terminate
at the end of the term, or extended term, then in progress.
However, in the event a Change in Control occurs during the
original or any extended term, this Agreement will remain in
effect for the longer of: (i) the duration of the Window Period;
or (ii) until all obligations of the Company hereunder have been
fulfilled, and until all benefits required hereunder have been
paid to the Executive.
ARTICLE 7. LEGAL REMEDIES
7.1Payment of Legal Fees. To the extent permitted by law, the
Company shall pay all legal fees, costs, including costs of
litigation, prejudgment interest, and other expenses,
incurred in good faith by the Executive as a result of the
Company's wrongful refusal to provide the Severance Benefits
to which the Executive becomes entitled under this Agreement,
or as a result of the Company's unsuccessfully contesting the
validity, enforceability, or interpretation of this
Agreement, or as a result of any conflict between the parties
pertaining to this Agreement in which the Executive is the
prevailing party, or which is settled prior to the entry of a
final judgment from which no appeal can be taken.
7.2Arbitration. The Executive shall have the right and option
to elect (in lieu of litigation) to have any dispute or
controversy arising under or in connection with this
Agreement settled by final and binding arbitration, conducted
before a panel of three (3) arbitrators sitting in a location
selected by the Executive within fifty (50) miles from the
location of his or her job with the Company, in accordance
with the rules of the American Arbitration Association then
in effect. Judgment may be entered on the award of the
arbitrator in any court having proper jurisdiction. All
expenses of any such arbitration in which the Executive is
the prevailing party, as determined by the arbitrators,
including the fees and expenses of the counsel for the
Executive, shall be borne by the Company.
ARTICLE 8. SUCCESSORS
8.1Assumption of Company's Obligations. 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 expressly assume and agree to perform the
Company's obligations under this Agreement in the same manner
and to the same extent that the Company would be required to
perform them if no such succession had taken place. Failure
of the Company to obtain such assumption and agreement prior
to the effective date of any such succession shall entitle
the Executive to compensation from the Company in the same
amount and on the same terms as he or she would be entitled
to hereunder if he or she had terminated his or her
employment with the Company voluntarily for Good Reason. The
date on which any such succession becomes effective shall be
deemed the Effective Date of Termination.
8.2Payment to Beneficiary. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators, successors,
heirs, distributees, devisees, and legatees. If the
Executive should die while any amount would still be payable
to him or her hereunder had he or she continued to live, all
such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement, to the
Executive's Beneficiary. If the Executive has not named a
Beneficiary, then such amounts shall be paid to the
Executive's devisee, legatee, or other designee, or if there
is no such designee, to the Executive's estate.
ARTICLE 9. INDEMNIFICATION
9.1Prior Agreement. The Indemnification Agreement previously
entered into between the Executive and the Company is hereby
reaffirmed and is not in any way canceled, superseded,
modified, or amended by this Agreement, and such
Indemnification Agreement shall remain in effect after a
Change in Control and after the Executive's Effective Date of
Termination and shall be binding on the Company and any of
its successors according to its terms.
9.2Additional Commitments. Without limiting the parties' rights
and obligations set forth in the above-referenced
Indemnification Agreement, and in addition thereto, the
Company shall indemnify the Executive to the fullest extent
permitted by applicable law, and the Company (or its
successor) shall maintain in full force and effect, for the
duration of all applicable statute of limitation periods,
insurance policies at least as favorable to the Executive as
those maintained by the Company for the benefit of its
directors and officers at the time of the Change in Control,
with respect to all costs, charges and expenses whatsoever
(including payment of expenses in advance of final
disposition of a proceeding) incurred or sustained by the
Executive in connection with any action, suit or proceeding
to which he/she may be made a party by reason of being or
having been a director, officer or employee of the Company.
ARTICLE 10. MISCELLANEOUS
10.1 Employment Status. The Executive and the Company
acknowledge that, except as may be provided under any other
agreement between the Executive and the Company, the
employment of the Executive by the Company is "at will," and,
prior to the effective date of a Change in Control, may be
terminated by either the Executive or the Company at any
time, subject to applicable law. Upon a termination of the
Executive's employment prior to the effective date of a
Change in Control, there shall be no further rights under
this Agreement; provided, however, that if such an employment
termination shall occur within ninety (90) days prior to a
Change in Control, then the Executive's rights shall be the
same as if the termination had occurred within eighteen (18)
months following a Change in Control.
10.2 Designation of Beneficiaries. The Executive may
designate one or more persons or entities as the primary
and/or contingent Beneficiaries of any Severance Benefits
owing to the Executive under this Agreement. Such
designation must be in the form of a signed writing
acceptable to the Chairman of the Board. The Executive may
make or change such designation at any time.
10.3 Confidentiality of this Agreement. The Executive shall
treat the terms and conditions of this Agreement as
confidential information subject to the provisions of his/her
Employee Confidentiality Agreement, except that the Executive
may disclose them on a privileged and confidential basis to
his/her legal counsel.
10.4 Entire Agreement. This Agreement, together with the
Indemnification Agreement referred to in Section 9.1, contain
the entire understanding of the Company and the Executive
with respect to the subject matter hereof.
10.5 Severability. In the event any provision of this
Agreement shall be held illegal or invalid for any reason,
the illegality or invalidity shall not affect the remaining
parts of the Agreement, and the Agreement shall be construed
and enforced as if the illegal or invalid provision had not
been included. Further, the captions of this Agreement are
not part of the provisions hereof and shall have no force and
effect.
10.6 Modification. No provision of this Agreement may be
modified, waived, or discharged unless such modification,
waiver, or discharge is agreed to in writing and signed by
the Executive and by an authorized representative of the
Company, or by the respective parties' legal representatives
and successors.
10.7 Applicable Law. To the extent not preempted by the laws
of the United States, the laws of the state of New Jersey shall
be the controlling law in all matters relating to this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of this 22nd day of January, 1998.
THE LIPOSOME COMPANY, INC. EXECUTIVE
By:
Xxxxxxx X. Xxxxx
Chairman of the Board, President and
Chief Executive Officer
EXHIBIT A
GENERAL RELEASE AND COVENANT NOT TO XXX
THIS AGREEMENT AFFECTS IMPORTANT LEGAL RIGHTS. TAKE IT HOME AND
READ IT CAREFULLY BEFORE YOU SIGN IT. YOU ARE ENCOURAGED TO
CONSULT AN ATTORNEY OF YOUR CHOICE TO REVIEW THE DOCUMENT.
This is an Agreement between The Liposome Company, Inc., and
First_Name Last_Name. In the remainder of this document,
First_Name Last_Name will be called the "Executive" and The
Liposome Company, Inc., will be called the "Company".
IN CONSIDERATION OF the severance benefits to be provided by
the Company under the Executive Severance Agreement dated January
22, 1998 (the "Severance Agreement"), the Executive hereby agrees
as follows:
1. The General Release Provided by the Executive
The Executive agrees to release the Company, its officers,
employees and directors, from all claims or demands the Executive
may have based on the Executive's employment with the Company.
This General Release includes a release of claims of which the
Executive is unaware and of claims that are not specifically
identified below. The claims released by the Executive include,
but are not limited to, claims arising under:
(1) The Constitution of the United States;
(2) The Age Discrimination in Employment Act of 1967, as
amended, 29 U.S.C.
621 et seq., which prohibits age discrimination in
employment;
(3) Title VII of the Civil Rights Act of 1964, as amended,
42 U.S.C. 2000(e) et seq., which prohibits
discrimination in employment based on race, color,
national origin, religion or sex;
(4) The Civil Rights Act of 1866, 42 U.S.C. 1981 et seq.;
(5) The Equal Pay Act, which prohibits paying men and women
unequal pay for equal work;
(6) Any other federal, state or local law or regulation
prohibiting employment discrimination;
(7) The Employee Retirement Income Xxxxxxxx Xxx, 00 X.X.X.
00000 et seq.;
(8) Executive Orders 11246 and 11141;
(9) The Americans with Disabilities Act of 1990, 42 U.S.C.
12101 et seq.;
(10) The Family and Medical Leave Act., 29 U.S.C. 2601 et
seq.;
(11) The New Jersey Family Leave Act, N.J.S.A. 34:11B-1 et
seq.;
(12) The Constitution of the State of New Jersey
(13) The New Jersey Law Against Discrimination, N.J.S.A.
10:5-1 et seq.;
(14) The Conscientious Employee Protection Act., N.J.S.A.
34:19-2 et seq.;
(15) Any express or implied contracts with the Company;
(16) Any federal or state Common Law and any federal, state
or local statutes, ordinances and regulations.
This General Release also includes a release by the Executive of
any claims for wrongful discharge and/or defamation arising out
of employment or otherwise.
By signing this Agreement, the Executive waives any right the
Executive has or ever had to bring or maintain any claim or
action in law or in equity against the Company involving any
matter arising prior to the signing of this Agreement. This
General Release does not include, however, a release of (a) the
Executive's right, if any, to pension, retiree, health or similar
benefits under the Company's existing plans; (b) the Executive's
rights under the Severance Agreement; (c) the Executive's rights
under his/her indemnification agreement with the Company, or (d)
the Executive's right to claim COBRA benefits, if any, under
applicable law.
2. The Executive Does Not Release Future Claims
This Agreement does not require the Executive to waive or release
any rights or claims arising out of events that take place after
the Effective Date of this Agreement.
3. The Executive Retains Certain Administrative Rights
This Agreement does not require the Executive to waive or release
the right to file a charge or participate in a proceeding before
the Equal Employment Opportunity Commission; provided, however,
that the Executive does give up the right to recover damages from
such a proceeding.
4. Consequences of Initiating an Action Released by this
Agreement
In the event the Executive initiates any legal action
inconsistent with the General Release provided in this Agreement,
the Company shall be released from further obligation under the
Severance Agreement. The Executive agrees that, prior to
proceeding with any claim or legal action released by this
Agreement, the Executive shall return all additional severance
benefits received under the Severance Agreement. The Executive
further agrees that the repayment of those benefits shall not
revoke the General Release, but is rather a condition the
Executive must satisfy before seeking its revocation. The
Executive agrees that if the legal action is withdrawn,
dismissed, or otherwise unsuccessful, the Executive shall
reimburse the Company, and any of its officers, directors or
employees, for all costs, including attorneys' fees, incurred as
a consequence of the Executive's legal action.
5. The Company Admits No Liability to the Executive
The use of this Agreement by the Company does not signify any
admission of wrongdoing by the Company.
6. The Date on Which this Agreement Becomes Effective
This Agreement will not become effective or enforceable until the
later of (a) the eighth day following the date the Executive
signs it or (b) the day it is signed by the Company. In this
Agreement, the date on which this Agreement becomes effective is
called the "Effective Date".
7. The Executive Has 21 Days to Review this Agreement
The Executive acknowledges that he or she has twenty-one (21)
days after receiving this Agreement to review and consider it.
The Executive may accept the terms of this Agreement at any time
during the review period by signing, notarizing and returning it
to The Liposome Company, Inc., Xxx Xxxxxxxx Xxx, Xxxxxxxxx, Xxx
Xxxxxx 00000. The period in which the Company is required to
make payment of severance benefits under Section 3.1 of the
Severance Agreement will not begin until the Company receives a
signed copy of this Agreement, but the Executive's Effective Date
of Termination for purposes of the Severance Agreement will not
be postponed during such review period.
8. The Executive Is Encouraged to Consult an Attorney
The Executive is encouraged to consult with an attorney before
signing this Agreement. The Executive understands that whether
or not to do so is the Executive's decision.
9. The Executive Has the Right to Revoke this Agreement
The Executive may revoke this Agreement within seven (7) days
after signing it. If this Agreement is not revoked within such
seven (7) days, it becomes effective on the eight (8th) day. If
the Executive wishes to revoke this Agreement, the Executive must
deliver a written Notice of Revocation to The Liposome Company,
Inc., Xxx Xxxxxxxx Xxx, Xxxxxxxxx, XX 00000. The Notice of
Revocation will not be effective unless it is received by the
Company no later than 5:00 P.M. on the seventh (7th) day after
the Executive signs this Agreement. If the Executive fails to
sign this Agreement or revokes this Agreement, it shall not be
effective or enforceable, and the Executive will not receive the
additional severance benefits provided by the Severance
Agreement.
10. New Jersey Law Applies to this Agreement
The Executive and the Company agree that this Agreement and any
interpretation of it shall be governed by the laws of the State
of New Jersey to the extent not inconsistent with the Employee
Retirement Income Security Act of 1974, and that this Agreement
shall be enforceable in the Superior Court of New Jersey.
THE EXECUTIVE ACKNOWLEDGES THAT HE/SHE HAS READ THIS AGREEMENT,
UNDERSTANDS IT, AND IS VOLUNTARILY ENTERING INTO IT. THE
EXECUTIVE FURTHER ACKNOWLEDGES THAT THE COMPANY HAS PROVIDED THE
EXECUTIVE A PERIOD OF TWENTY-ONE (21) DAYS TO REVIEW THIS
AGREEMENT WITH THE ADVICE OF COUNSEL SHOULD THE EXECUTIVE SO
CHOOSE.
____________________________
Signed and sworn before me this
______ day of ____________________, ____
__________________________________
NOTARY PUBLIC
Received and Accepted by The Liposome
Company, Inc.
By:
___________________________________________
Title:
___________________________________________
Date:
___________________________________________
