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EXHIBIT 10.2
SEVERANCE COMPENSATION AGREEMENT
SEVERANCE COMPENSATION AGREEMENT dated as of August 15, 1997, between
XXXX BIOMEDICAL, INC. a California corporation ("Company"), and Xxxxxx Xxxxxx
("Executive").
The Company's Board of Directors has determined that it is appropriate
to reinforce and encourage the continued attention and dedication of Executive
to her assigned duties and to provide to Executive fixed severance compensation
in the event of termination under certain circumstances.
This Agreement sets forth the severance compensation that the Company
agrees it will pay to Executive if Executive's employment with the Company
terminates under one of the circumstances described herein.
1. Term. The term of this Agreement shall commence on the date hereof
and shall end on the later of (i) the second anniversary of the date of this
Agreement or (ii) two (2) years following the date on which notice of
non-renewal or termination of this Agreement is given by either the Company or
Executive to the other. Thus, this Agreement shall be renewable automatically on
a daily basis so that the outstanding term is always two (2) years following any
effective notice of non-renewal or of termination given by the Company or
Executive.
2. Severance Payment. In the event that Executive's employment is
terminated for any reason other than (i) death, (ii) Disability (as defined in
Section 3(a)) or (iii) a Voluntary Termination of Employment Without Good Reason
(as defined in Section 3(b)):
(a) Subject to Section 2(b) below, Executive shall be entitled to
a severance payment equal to 299% of her "base amount" as such term is defined
in Internal Revenue Code ("Code") Section 280G ("Base Amount"), payable in a
lump sum within thirty (30) days of the date of termination. In the event that
Executive's employment is terminated for death, Disability or a Voluntary
Termination of Employment Without Good Reason or in the event of a "Qualified
Rehire" as such term is defined in Section 3(d), Executive shall not be entitled
to a severance payment.
(b) Limitation. To the extent that any or all of the payments and
benefits provided for in this Agreement constitute "parachute payments" within
the meaning of Section 280G of the Code and, but for this Section 2(b), would be
subject to the excise tax imposed by Section 4999 of the Code, the aggregate
amount of such payments and benefits shall be reduced such that the present
value thereof (as determined under the Code and applicable regulations) is equal
to 2.99 times Executive's Base Amount. The determination of any reduction of any
payment or benefits under this Section 2 pursuant to the foregoing provision
shall be made by a nationally recognized public accounting firm chosen by the
Company in good faith, and such determination shall be conclusive and binding on
the Company and Executive.
3. Definitions.
(a) The term "Disability" as used in this agreement shall mean
three (3) months of substantially continuous disability. Disability shall be
deemed "substantially continuous" if, as a
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practical matter, Executive, by reason of mental or physical health, is unable
to sustain reasonably long periods of substantial performance of her duties.
(b) The term "Voluntary Termination of Employment Without Good
Reason" shall mean Executive's termination of employment by the action of
Executive, other than a voluntary termination following a Change in Control (as
defined in Section 3(c)) or a voluntary termination due to (i) material breach
by the Company of any representation, covenant or agreement contained in this
Agreement, (ii) a change in Executive's title or a reduction or alteration of
the duties of Executive which are materially consistent with the duties
generally performed by a chief financial officer, (iii) a reduction in
Executive's base salary or (iv) a requirement that Executive relocate outside
Orange County California.
(c) A "Change in Control" shall be deemed to have occurred if (i)
there shall be consummated (x) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to
which shares of the Company's Common Stock would be converted into cash,
securities or other property, other than a merger of the Company in which the
holders of the Company's Common Stock immediately prior to the merger have
substantially the same proportionate ownership of at least 80% of common stock
of the surviving corporation immediately after the merger, or (y) any sale,
lease, exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company, (ii)
the stockholders of the Company approve any plan or proposal for the liquidation
or dissolution of the Company, (iii) any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), shall become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of 20% or more of the Company's outstanding
shares of Common Stock (other than any such person who had record or beneficial
ownership of at least 20% of the Company's outstanding shares of Common Stock on
the date hereof), or (iv) during any period of two consecutive years during the
term of this Agreement, individuals who at the beginning of the two year period
constituted the entire Board of Directors do not for any reason constitute a
majority thereof unless the election, or the nomination for election by the
Company's stockholders, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period.
(d) A "Qualified Rehire" shall have occurred, effective upon
consummation of a Change in Control, when the respective successor or surviving
entity to the Company employs Executive with such duties and compensation terms
as are materially consistent with those duties and compensation terms as were in
effect between the Company and Executive prior to the consummation of such
Change in Control.
4. Notice of Termination. Any termination by the Company pursuant to
which the Company asserts that a severance payment is not due Executive under
Section 2 shall be communicated by a Notice of Termination. For purposes of this
Agreement, a "Notice of Termination" shall mean a written notice which shall
indicate those specific provisions in this Agreement relied upon and which set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Executive's employment without a severance payment. For
purposes of this Agreement, no such purported termination by the Company shall
be effective without such Notice of Termination.
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5. No Obligation to Mitigate Damages; No Effect on Other Contractual
Rights; No Employment Contract.
(a) Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by Executive as the result
of employment by another employer after the date of termination, or otherwise.
(b) The provisions of this Agreement, and any payment provided
for hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish Executive's existing rights, or rights which would accrue solely as a
result of the passage of time, under any benefit plan, incentive plan,
employment agreement or other contract, plan or arrangement.
(c) Nothing herein shall be deemed to give Executive any right to
continue as an Employee of the Company, and the Company shall have the right,
subject to compliance with this Agreement, to terminate Executive at any time.
6. Successors. This Agreement shall inure to the benefit of and be
enforceable by Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive should die while any amounts are still payable to [him/her] hereunder,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to Executive's devisee, legatee, or other
designee or, if there be no such designee, to Executive's estate.
7. Notice. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
If to the Company:
Xxxx Biomedical, Inc.
Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000-0000
Attention: Secretary
If to Executive:
Xxxxxx Xxxxxx
000 Xxxx 00xx Xxxxxx
Xxxxx Xxxx, XX 00000
or such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
8. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by Executive and the Company. No waiver by either party hereto
at any time of any breach by
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the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. This Agreement shall
be governed by and construed in accordance with the laws of the State of
California.
9. Validity. The invalidity or unenforceability of any provisions of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
11. Entire Agreement. This Agreement contains all of the terms agreed
upon between Executive and the Company with respect to the subject matter hereof
and replaces and supersedes all prior Severance Compensation Agreements between
Executive and the Company. Executive and the Company agree that no term,
provision or condition of this Agreement shall be held to be altered, amended,
changed or waived in any respect except by subsequent written agreement of
Executive and the Company.
12. Arbitration, Legal Fees and Expenses. In the event of any
controversy, claim or dispute between the parties hereto arising out of or
relating to this Agreement, the matter shall be determined by arbitration, which
shall take place in Orange County, California, under the rules of the American
Arbitration Association; and a judgment upon such award may be entered in any
court having jurisdiction thereof. Any decision or award of such arbitrator
shall be final and binding upon the parties and shall not be appealable. The
parties hereby consent to the jurisdiction of such arbitrator and of any court
having jurisdiction to enter judgment upon and enforce any action taken by such
arbitrator. The Company shall pay all legal fees and expenses which Executive
may incur as a result of the Company's contesting the validity, enforceability
or Executive's interpretation of, or determinations under, this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
"COMPANY" "EXECUTIVE"
XXXX BIOMEDICAL, INC.
By: /S/ Xxxx Xxxxxxxx /S/ Xxxxxx Xxxxxx
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Its: Authorized Agent Xxxxxx Xxxxxx
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