AMENDED AND RESTATED SENIOR MANAGEMENT EMPLOYMENT AGREEMENT
AMENDED
AND RESTATED SENIOR MANAGEMENT EMPLOYMENT AGREEMENT
AMENDED
AND RESTATED SENIOR MANAGEMENT EMPLOYMENT AGREEMENT, dated as of the 11th
day of March, 2008, between TARGETED GENETICS CORPORATION, a Washington
corporation (the “Company”), and H. Xxxxxxx Xxxxxx (“Executive”).
RECITALS
A. Executive
is currently employed by the Company or one of its Subsidiaries.
B. The
Board
of Directors of the Company (the “Board”) has determined that it is appropriate
to reinforce the continued attention and dedication of certain members of
the
Company’s management, including Executive, to their assigned duties without
distraction in potentially disturbing circumstances arising from the possibility
of a Change in Control of the Company, as defined in Schedule A attached
hereto.
AGREEMENTS
NOW,
THEREFORE, in consideration of the covenants and agreements hereinafter set
forth, the Company and Executive agree as follows:
1. DEFINITIONS
Terms
capitalized in this Agreement which are not otherwise defined shall have
the
meanings assigned to such terms in Schedule A attached hereto.
2. EFFECTIVENESS;
PRIOR AGREEMENT
Except
with respect to Sections 6 through 9 of this Agreement which shall be
effective immediately, this Agreement shall become effective immediately
upon
the occurrence of a Change in Control, provided that Executive is employed
by
the Company immediately prior to such Change in Control. This Agreement revokes
and supersedes the Senior Management Employment Agreement between Executive
and
Company dated October 18, 1996 which shall be of no further force and
effect.
3. TERM
Unless
earlier terminated as provided herein, the initial term of this Agreement
shall
be from the date hereof until the second anniversary date of this Agreement;
provided, however, that, unless terminated as provided herein or there shall
have occurred a Change in Control, on each annual anniversary date of this
Agreement this Agreement shall automatically be renewed for successive two-year
terms. In the event of a Change in Control, unless earlier terminated as
provided herein, this Agreement shall continue in effect until the second
anniversary date of the Change in Control at which time this Agreement shall
expire.
4. BENEFITS
UPON CHANGE IN CONTROL
Executive
shall be entitled to the following payments and benefits following a Change
in
Control, whether or not a Termination occurs:
(A) SALARY
AND BENEFITS.
While
employed by the Company or any Subsidiary, Executive shall (i) receive an
annual base salary no less than the Executive’s annual base salary in effect
immediately prior to the date that the Change in Control occurs, including
any
salary which has been earned but deferred, and an annual bonus equal to at
least
the average of the three annual bonuses paid to Executive in the three years
prior to the Change in Control (which bonus shall vest on the last day of
the
applicable bonus year and be paid no later than the 15th day of the third
month
following the later of the end of the calendar year or the Company’s taxable
year in which the bonus vests), and (ii) be entitled to participate in all
employee expense reimbursement, incentive, savings and retirement plans,
practices, policies and programs (including any Company plan qualified under
Section 401(a) of the Code) available to other peer executives of the
Company and its Subsidiaries, but in no event shall the benefits provided
to
Executive under this item (ii) be less favorable, in the aggregate, than
the
most favorable of those plans, practices, policies or programs in effect
immediately prior to the date that the Change in Control occurs.
(B) WELFARE
PLAN BENEFITS.
While
employed by the Company or any Subsidiary, the Company shall at the Company’s
expense (except for the amount, if any, of any required employee contribution
which would have been necessary for Executive to contribute as an active
employee under the plan or program as in effect on the date of the Change
in
Control) continue to cover Executive (and his or her dependents) under, or
provide Executive (and his or her dependents) with insurance coverage no
less
favorable than, the Company’s life, disability, health, dental and any other
employee welfare benefit plans or programs, as in effect on the date of the
Change in Control (such benefits, the “Welfare Benefits”).
(C) DEATH
OF EXECUTIVE.
In the
event of Executive’s death prior to Termination, but while employed by the
Company or any Subsidiary, his or her spouse, if any, or otherwise the personal
representative of his or her estate shall be entitled to receive
(i) Executive’s salary at the rate then in effect through the date of
death, as provided under the Company’s pay policy, (ii) any Accrued
Benefits for the periods of service prior to the date of death, and
(iii) payment of the applicable COBRA premiums, if any, for
Executive’s dependents, provided the Company receives adequate substantiation of
such COBRA coverage.
(D) DISABILITY
OF EXECUTIVE.
In the
event of Executive’s Disability prior to Termination, but while employed by the
Company or any Subsidiary, Executive shall be entitled to receive (i) his
or her salary at the rate then in effect through the date of the determination
of Disability, as provided under the Company’s pay policy, (ii) any Accrued
Benefits for the periods of service prior to the date of the determination
of
Disability, (iii) payments under the Company’s short and long term
disability plans following the determination of Disability, and
(iv) payment of the applicable COBRA premiums, if any, for Executive
and Executive’s dependents, provided the Company receives adequate
substantiation of such COBRA coverage.
2
(E) CAUSE;
UPON EXPIRATION OF THIS AGREEMENT; OTHER THAN FOR GOOD
REASON.
If,
prior to Termination, Executive’s employment shall be terminated by the Company
for Cause or upon expiration of this Agreement or by Executive other than
for
Good Reason, Executive shall be entitled to receive (i) his or her salary
at the rate then in effect through the date of such termination, as provided
under the Company’s pay policy, and (ii) any Accrued Benefits for the
periods of service prior to the date of such termination.
(F) WITHHOLDING.
All
payments under this Section 4 are subject to applicable federal and state
payroll withholding or other applicable taxes.
5. PAYMENTS
AND BENEFITS UPON TERMINATION
Executive
shall be entitled to the following payments and benefits following
Termination:
(A) TERMINATION
PAYMENT.
In
recognition of past services to the Company by Executive, the Company shall
make
a lump sum payment in cash to Executive as severance pay equal to two (2)
times
the sum of: (i) Executive’s annual base salary in effect immediately prior
to the date that either a Change in Control shall occur or such date of
Termination, whichever salary is higher, provided that if Executive is a
part-time employee on the date of Termination then Executive’s base salary in
effect immediately prior to the date of Termination shall be used in calculating
the payment to which Executive may be entitled under this Section 5(a);
plus (ii) a percentage of Executive’s annual base salary specified in
subparagraph (i) above, which percentage is equal to the percentage bonus
paid
to Executive for the fiscal year ended immediately prior to the Change in
Control; provided, however, that if Termination occurs prior to the
determination of such percentage for a fiscal year that has ended or if
Executive has not received a percentage bonus in the previous year, such
percentage shall be ten percent (10%). All payments under this Section 5(a)
(the “Termination Payments”) shall be paid within ten (10) business days
following the date of Executive’s separation from service (within the meaning of
Section 409A of the Internal Revenue Code (the “Code”)).
(B) CERTAIN
ADDITIONAL PAYMENTS BY THE COMPANY.
Notwithstanding the foregoing, if all or any portion of the Termination Payments
either alone or together with all other payments and benefits which Executive
receives or is then entitled to receive (pursuant to this Agreement or
otherwise) from the Company or any Subsidiary (all such payments and benefits,
including the Termination Payments, the “Termination Benefits”), would
constitute a Parachute Payment, then the Payments to Executive under
Section 5(a) shall be increased (such increase, a “Gross-Up Payment”), but
only to the extent necessary to ensure that, after payment by Executive of
all
taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes and Excise Tax imposed upon
the
Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal
to
the Excise Tax imposed upon the Termination Benefits. The foregoing calculations
shall be made, at the Company’s expense, by the Company and Executive. If no
agreement on the calculations is reached within thirty (30) business days
after
the date of Termination, then the accounting firm which regularly audits
the
financial statements of the Company (the “Auditors”) shall review the
calculations. The determination of such firm shall be conclusive and binding
on
all parties and the expense for such accountants shall be paid by the Company.
Pending such determination, the Company shall continue to make all other
required payments to Executive at the time and in the manner provided herein.
The Gross-Up Payment shall be made as soon as reasonably practicable and
shall
in no event be made later than the end of the calendar year next following
the
calendar year in which Executive remits the related taxes.
3
As
a
result of the uncertainty in the application of Section 4999 of the Code,
it is possible that Gross-Up Payments will have been made by the Company
which
should not have been made (an “Overpayment”) or that additional Gross-Up
Payments which will not have been made by the Company should have been made
(an
“Underpayment”). If it is determined by the Company and Executive, or, if no
agreement is reached by the Company and Executive, the Auditors, that an
Overpayment has been made, such Overpayment shall be treated for all purposes
as
a loan to Executive which Executive shall repay to the Company, together
with
interest at the applicable federal rate provided for in section 7872(f)(2)
of
the Code. In the event that the Company and Executive, or, if no agreement
is
reached by the Company and Executive, the Auditors, determine that an
Underpayment has occurred, such Underpayment shall promptly be paid by the
Company to or for the benefit of Executive, together with interest at the
applicable federal rate provided for in section 7872(f)(2)(A) of the Code.
The
Company and Executive shall give each other prompt written notice of any
information that could reasonable result in the determination that an
Overpayment or Underpayment has been made. Any Underpayment shall be made
as
soon as reasonably practicable and shall in no event be made later than the
end
of the calendar year next following the calendar year in which Executive
remits
the related taxes.
(C) ACCRUED
BENEFITS.
The
Company shall make a lump sum payment in cash to Executive in the amount
of any
Accrued Benefits for the periods of service prior to the date of
Termination.
(D) WELFARE
PLAN BENEFITS.
For a
period of one year following the date of Termination, the Company shall pay
a
portion of the applicable COBRA premiums, if any, for Executive and
Executive’s dependents equal to the Company-paid portion of comparable active
employee coverage as in effect on the date of Termination,
provided the Company receives adequate substantiation of
such COBRA coverage. Notwithstanding the foregoing, if Executive is
provided by another employer during such one-year period with health benefits
that are substantially comparable to the active employee coverage as
in effect on the date of Termination (including with respect to the
amount of employer premium subsidy), the Company’s obligation under this
paragraph shall cease.
(E) DEATH
OF EXECUTIVE.
In the
event of Executive’s death subsequent to Termination and prior to receiving all
benefits and payments provided for by this Section 5, such benefits shall
be
paid to his or her spouse, if any, or otherwise to the personal representative
of his or her estate, in accordance with the payment terms described above,
unless Executive has otherwise directed the Company in writing prior to his
or
her death.
(F) EXCLUSIVE
SOURCE OF SEVERANCE PAY.
Benefits
provided hereunder shall replace the amount of any severance payments to
which
Executive would otherwise be entitled under any severance plan or policy
generally available to employees of the Company.
4
(G) NONSEGREGATION.
No
assets of the Company need be segregated or earmarked to represent the liability
for benefits payable hereunder. The rights of any person to receive benefits
hereunder shall be only those of a general unsecured creditor.
(H) WITHHOLDING.
All
payments under this Section 5 are subject to applicable federal and state
payroll withholding or other applicable taxes.
6. ARBITRATION
Any
dispute or controversy arising under or in connection with this Agreement
shall
be settled exclusively by arbitration in Seattle, Washington, in accordance
with
the Rules of the American Arbitration Association then in effect. Judgment
may
be entered on the arbitrator’s award in any jurisdiction.
7. CONFLICT
IN BENEFITS
Except
for the amount of any severance payments to which Executive would otherwise
be
entitled under any severance plan or policy generally available to employees
of
the Company, this Agreement is not intended to and shall not adversely affect,
limit or terminate any other agreement or arrangement between Executive and
the
Company presently in effect or hereafter entered into, including any employee
benefit plan under which Executive is entitled to benefits.
8. TERMINATION
(A) TERMINATION
PRIOR TO A CHANGE IN CONTROL.
(i) At
any
time prior to a Change in Control, the Company may terminate this Agreement
upon
nine (9) months’ prior written notice in the form of a Notice of Termination,
and this Agreement shall terminate upon the effective date specified in such
Notice of Termination; provided, however, such Notice of Termination shall
have
no force or effect in the event of the occurrence of a Change in Control
prior
to such effective date.
(ii) At
any
time prior to a Change in Control, Executive may terminate this Agreement
upon
thirty (30) days’ prior written notice in the form of a Notice of Termination,
and this Agreement shall terminate upon the effective date specified in such
Notice of Termination notwithstanding the occurrence of a Change in Control
prior to such effective date.
(B) TERMINATION
AFTER A CHANGE IN CONTROL.
After a
Change in Control, either party may terminate this Agreement upon thirty
(30)
days’ prior written notice in the form of a Notice of Termination.
(C) EFFECT
OF TERMINATION.
Notwithstanding the termination or expiration of this Agreement, the Company
shall remain liable for any rights or payments arising prior to such termination
to which Executive is entitled under this Agreement.
5
9. MISCELLANEOUS
(A) AMENDMENT.
This
Agreement may not be amended except by written agreement between Executive
and
the Company.
(B) NO
MITIGATION.
All
payments and benefits to which Executive is entitled under this Agreement
shall
be made and provided without offset, deduction or mitigation on account of
income Executive could or may receive from other employment or otherwise,
except
as provided in Section 5(d) hereof.
(C) EMPLOYMENT
NOT GUARANTEED.
Nothing
contained in this Agreement, and no decision as to the eligibility for benefits
or the determination of the amount of any benefits hereunder, shall give
Executive any right to be retained in the employ of the Company or rehired,
and
the right and power of the Company to dismiss or discharge any employee for
any
reason is specifically reserved. Except as expressly provided herein, no
employee or any person claiming under or through him or her shall have any
right
or interest herein, or in any benefit hereunder.
(D) LEGAL
EXPENSES.
In
connection with any litigation, arbitration or similar proceeding, whether
or
not instituted by the Company or Executive, with respect to the interpretation
or enforcement of any provision of this Agreement, the prevailing party shall
be
entitled to recover from the other party all costs and expenses, including
reasonable attorneys’ fees and disbursements, in connection with such
litigation, arbitration or similar proceeding. The Company shall pay prejudgment
interest on any money judgment obtained by Executive as a result of such
proceedings, calculated at the published commercial interest rate of Seafirst
Bank for its best customers, as in effect from time to time from the date
that
payment should have been made to Executive under this Agreement.
(E) NOTICES.
Any
notices required under the terms of this Agreement shall be effective when
mailed, postage prepaid, by certified mail and addressed to, in the case
of the
Company:
Targeted
Genetics Corporation
0000
Xxxxx Xxx, Xxxxx 000
Xxxxxxx,
XX 00000
Attention:
Chief Financial Officer
and
to,
in the case of Executive:
H.
Xxxxxxx Xxxxxx
0000
-
00xx
Xxxxxx
Xxxxxxx,
XX 00000
Either
party may designate a different address by giving written notice of change
of
address in the manner provided above.
6
(F) WAIVER;
CURE.
No
waiver or modification in whole or in part of this Agreement, or any term
or
condition hereof, shall be effective against any party unless in writing
and
duly signed by the party sought to be bound. Any waiver of any breach of
any
provision hereof or any right or power by any party on one occasion shall
not be
construed as a waiver of, or a bar to, the exercise of such right or power
on
any other occasion or as a waiver of any subsequent breach. Any breach of
this
Agreement may be cured by the breaching party within ten (10) days of the
date
that such breaching party shall have received written notice of such breach
from
the party asserting such breach.
(G) BINDING
EFFECT; SUCCESSORS.
Subject
to the provisions hereof, nothing in this Agreement shall prevent the
consolidation of the Company with, or its merger into, any other corporation,
or
the sale by the Company of all or substantially all of its properties and
assets, or the assignment of this Agreement by the Company in connection
with
any of the foregoing actions. This Agreement shall be binding upon, inure
to the
benefit of and be enforceable by the Company and Executive and their respective
heirs, legal representatives, successors and assigns. If the Company shall
be
merged into or consolidated with another entity, the provisions of this
Agreement shall be binding upon and inure to the benefit of the entity surviving
such merger or resulting from such consolidation. The Company shall require
any
successor (whether direct or indirect, by purchase, merger, consolidation
or
otherwise) to all or substantially all of the business or assets of the Company,
including the successor to all or substantially all of the business or assets
of
any Subsidiary, division or profit center of the Company, to expressly assume
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. The provisions of this Section 10(g) shall continue to apply to each
subsequent employer of Executive hereunder in the event of any subsequent
merger, consolidation or transfer of assets of such subsequent
employer.
(H) SEPARABILITY.
Any
provision of this Agreement which is held to be unenforceable or invalid
in any
respect in any jurisdiction shall be ineffective in such jurisdiction to
the
extent that it is unenforceable or invalid without affecting the remaining
provisions hereof, which shall continue in full force and effect. The
enforceability or invalidity of any provision of this Agreement in one
jurisdiction shall not invalidate or render unenforceable such provision
in any
other jurisdiction.
(I) SECTION
409A. This
Agreement is not intended to constitute a “nonqualified deferred compensation
plan” within the meaning of Section 409A of the Code. Notwithstanding the
foregoing, in the event this Agreement or any compensation or benefit paid
to
Executive hereunder is deemed to be subject to Section 409A of the Code,
Executive and the Company agree to negotiate in good faith to adopt such
amendments that are necessary to comply with Section 409A of the Code or to
exempt such compensation or benefits from Section 409A of the Code. In
addition, to the extent (i) any compensation or benefits to which Executive
becomes entitled under this agreement, or any agreement or plan referenced
herein, in connection with Executive’s termination of employment with the
Company constitute deferred compensation subject to Section 409A of the
Code and (ii) Executive is deemed at the time of such termination of
employment to be a “specified employee” under Section 409A of the Code,
then such compensation or benefits shall not be made or commence until the
date
that is six months after the date of Executive’s “separation from service” (or,
if earlier, the date of the Executive’s death); provided, however, that such
deferral shall only be effected to the extent required to avoid adverse tax
treatment to Executive, including (without limitation) the additional twenty
percent (20%) tax for which Executive would otherwise be liable under
Section 409A(a)(1)(B) of the Code in the absence of such deferral. During
any period compensation or benefits to Executive are deferred pursuant to
the
foregoing, Executive shall be entitled to interest on such deferral at a
per
annum rate equal to the highest rate of interest applicable to six (6)-month
money market accounts offered by the following institutions: Citibank N.A.,
Xxxxx Fargo Bank, N.A. or Bank of America, on the date of such “separation from
service.” Upon the expiration of the applicable deferral period, any
compensation or benefits which would have otherwise been paid during that
period
(whether in a single sum or in installments) in the absence of this section
shall be paid to Executive or Executive’s beneficiary, if applicable, in one
lump sum.
(J) GOVERNING
LAW.
This
Agreement shall be governed by and construed in accordance with the laws of the
state of Washington applicable to contracts made and to be performed
therein.
7
IN
WITNESS WHEREOF, the Company and Executive have executed this Agreement as
of
the day and year first above written.
| TARGETED GENETICS CORPORATION | ||
| |
|
|
| By: | /s/ Xxxxxx X. Xxxxxxx Xxxx | |
|
Xxxxxx X. Xxxxxxx Xxxx |
||
| Title: Chairman of the Board | ||
| EXECUTIVE: | ||
| |
|
|
| By: | /s/ H. Xxxxxxx Xxxxxx | |
|
H. Xxxxxxx Xxxxxx |
||
| Title: President and Chief Executive Officer | ||
8
Schedule
A
CERTAIN
DEFINITIONS
As
used
in this Agreement, and unless the context requires a different meaning, the
following terms have the meanings indicated:
“Accrued
Benefits” means the aggregate of any compensation previously deferred by
Executive (together with any accrued interest or earnings thereon), any accrued
vacation pay and, in the case of Termination, if the date of Termination
occurs
after the end of a Fiscal Year for which a bonus is payable to Executive,
such
bonus, in each case to the extent previously earned and not paid, plus an
amount
equal to the product of the bonus paid to Executive the prior Fiscal Year
and a
fraction, the numerator of which is the number of days since the end of the
prior Fiscal Year, and the denominator of which is 365. Accrued Benefits
payable
under this Agreement shall be paid within ten (10) business days following
the
Executive’s separation from service, provided that any compensation previously
deferred by Executive (together with any accrued interest or earnings thereon)
shall be paid in accordance with the terms of such deferred compensation.
“Beneficial
Owner” and “Beneficial Ownership” have the meanings set forth in Rules 13d-3 and
13d-5 of the General Rules and Regulations promulgated under the Exchange
Act.
“Board
Change” means that a majority of the seats (other than vacant seats) on the
Board have been occupied by individuals who were neither (a) nominated or
appointed by a majority of the Incumbent Directors nor (b) nominated or
appointed by directors so nominated or appointed.
“Business
Combination” means a reorganization, merger or consolidation or sale of
substantially all of the assets of the Company.
“Cause”
means (a) willful misconduct on the part of Executive that has a materially
adverse effect on the Company and its Subsidiaries, taken as a whole,
(b) Executive’s engaging in conduct which could reasonably result in his or
her conviction of a felony or a crime against the Company or involving substance
abuse, fraud or moral turpitude, or which would materially compromise the
Company’s reputation, as determined in good faith by a written resolution duly
adopted by the affirmative vote of not less than two-thirds of all of the
directors who are not employees or officers of the Company, or
(c) unreasonable refusal by Executive to perform the duties and
responsibilities of his or her position in any material respect. No action,
or
failure to act, shall be considered willful or unreasonable if it is done
by
Executive in good faith and with reasonable belief that his or her action
or
omission was in the best interests of the Company.
“Change
in Control” means, and shall be deemed to occur upon the happening of, any one
of the following:
(a) A
Board
Change; or
(b) The
acquisition (whether directly or indirectly, beneficially or of record) by
any
Person of (i) fifteen percent (15%) or more of the combined voting power of
the then outstanding voting securities of the Company entitled to vote generally
in the election of directors, which acquisition is not approved in advance
by a
majority of the Incumbent Directors; or (ii) thirty-three percent (33%) or
more of the combined voting power of the then outstanding voting securities
of
the Company entitled to vote generally in the election of directors, which
acquisition has been approved in advance by a majority of the Incumbent
Directors; provided, however, that the following acquisitions shall not
constitute a Change in Control: (x) any acquisition by the Company,
(y) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any company controlled by the Company,
or (z) any acquisition by any company pursuant to a reorganization, merger
or consolidation, if, following such reorganization, merger or consolidation,
the conditions described in clauses (i), (ii) and (iii) of the following
subsection (c) are satisfied; or
A-1
(c) Approval
by the shareholders of the Company of a reorganization, merger or consolidation
in which the Company is not the continuing or surviving corporation, or pursuant
to which shares of the Company’s Common Stock are converted into cash,
securities or other property, unless following such reorganization, merger
or
consolidation (i) at least sixty-six and two-thirds percent (66-2/3%) of
the then outstanding shares of common stock of the company resulting from
such
reorganization, merger or consolidation and the combined voting power of
the
then outstanding voting securities of such company entitled to vote generally
in
the election of directors is then beneficially owned, directly or indirectly,
by
all or substantially all of the individuals and entities who were the beneficial
owners of the Company’s voting securities immediately prior to such
reorganization, merger or consolidation, (ii) no Person (excluding the
Company, any employee benefit plan (or related trust) of the Company or such
company resulting from such reorganization, merger or consolidation and any
Person beneficially owning, immediately prior to such reorganization, merger
or
consolidation, directly or indirectly, thirty-three percent (33%) or more
of the
Company’s voting securities) beneficially owns, directly or indirectly,
thirty-three percent (33%) or more of, respectively, the then outstanding
shares
of common stock of the company resulting from such reorganization, merger
or
consolidation or the combined voting power of the then outstanding voting
securities of such company entitled to vote generally in the election of
directors, and (iii) at least a majority of the members of the board of
directors of the company resulting from such reorganization, merger or
consolidation were members of the Incumbent Board at the time of the execution
of the initial agreement providing for such reorganization, merger or
consolidation; or
(d) Approval
by the shareholders of the Company of (i) any plan or proposal for
liquidation or dissolution of the Company or (ii) any sale, lease, exchange
or other transfer in one transaction or a series of transactions of all or
substantially all of the assets of the Company other than to a company with
respect to which following such sale or other disposition (A) at least
sixty-six and two-thirds percent (66-2/3%) of the then outstanding shares
of
common stock of such company and the combined voting power of the then
outstanding voting securities of such company entitled to vote generally
in the
election of directors is then beneficially owned, directly or indirectly,
by all
or substantially all of the individuals and entities who were the beneficial
owners of the Company’s voting securities immediately prior to such sale or
other disposition, (B) no Person (excluding the Company and any employee
benefit plan (or related trust) of the Company or such company and any Person
beneficially owning, immediately prior to such sale or other disposition,
directly or indirectly, thirty-three percent (33%) or more of the Company’s
voting securities) beneficially owns, directly or indirectly, thirty-three
percent (33%) or more of, respectively, the then outstanding shares of common
stock of such company and the combined voting power of the then outstanding
voting securities of such company entitled to vote generally in the election
of
directors, and (C) at least a majority of the members of the board of
directors of such company were approved by a majority of the Incumbent Board
at
the time of the execution of the initial agreement or action of the Board
providing for such sale or other disposition of assets of the
Company.
A-2
“Code”
means the Internal Revenue Code of 1986, as amended.
“Disability”
means that (a) a person has been incapacitated by bodily injury or physical
or mental disease so as to be prevented thereby from performance of his or
her
duties with the Company for one hundred twenty (120) days in any twelve (12)
month period, and (b) such person is disabled for purposes of any and all
of the plans or programs of the Company or any Subsidiary that employs Executive
under which benefits, compensation or awards are contingent upon a finding
of
disability. The determination with respect to whether Executive is suffering
from such a Disability will be determined by a mutually acceptable physician
or,
if there is no physician mutually acceptable to the Company and Executive,
by a
physician selected by the then Xxxx of the University of Washington Medical
School.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“Excise
Tax” means the excise tax, including any interest or penalties thereon, imposed
by Section 4999 of the Code.
“Fiscal
Year” means the twelve (12) month period ending on December 31 in each year
(or such other fiscal year period established by the Board).
“Good
Reason” means, without Executive’s express written consent:
(a) the
assignment to Executive of duties, or limitation of Executive’s
responsibilities, materially inconsistent with Executive’s duties and
responsibilities with the Company or any Subsidiary that employs Executive
as
such duties and responsibilities existed immediately prior to the date of
the
Change in Control, or
(b) failure
by the Company to pay in any material respect, or material reduction by the
Company of, Executive’s annual base salary, as reflected in the Company’s
payroll records for Executive’s last pay period immediately prior to the Change
in Control;
(c) the
Company materially reduces Executive’s bonus described in Section 4(A)(i);
(d) the
Company requires that Executive relocate to a distance more than thirty (30)
miles from the Company’s present location in Seattle, Washington or such other
location where Executive is employed by the Company prior to being asked
to
relocate; or
(e) the
material breach of any material provision of this Agreement by the Company,
including, without limitation, failure by the Company to bind any successor
to
the Company to the terms and provisions of this Agreement in accordance with
Section 9(g) of this Agreement.
A-3
To
have
Good Reason to resign, Executive must first notify the Company in writing
of the
reason(s) Executive believes Good Reason exists within 90 days of the initial
existence thereof and provide (30) days for the Company to cure. The parties
intend that this “Good Reason” trigger qualify as an involuntary trigger under
Treasury Regulation Section 1.409A-1(n)(2)(i).
“Incumbent
Director” means a member of the Board who has been either (a) nominated by
a majority of the directors of the Company then in office or (b) appointed
by directors so nominated, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of either an actual
or
threatened election contest (as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the
Board.
“Notice
of Termination” means a written notice to Executive or to the Company, as the
case may be, which shall indicate those specific provisions in this Agreement
relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for the termination of Executive’s
employment constituting a Termination, if any, under the provision so
indicated.
“Parachute
Payment” means any payment deemed to constitute a “parachute payment” as defined
in Section 280G of the Code.
“Person”
means any individual, entity or group within the meaning of Section 3(a)(9)
or
of Section 13(d)(3) (as in effect on the date of this Agreement) of the Exchange
Act.
“Subsidiary”
with respect to the Company has the meaning set forth in Rule 12b-2 of the
General Rules and Regulations promulgated under the Exchange Act.
“Termination”
means, following the occurrence of any Change in Control by the Company,
(a) the involuntary termination of the employment of Executive for any
reason other than death, Disability or for Cause or (b) the termination of
employment by Executive for Good Reason.
“Voting
Securities” means the voting securities of the Company entitled to vote
generally in the election of directors.
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