ABGENIX, INC. AMENDED AND RESTATEDCHANGE OF CONTROL SEVERANCE AGREEMENT
Exhibit 10.84
ABGENIX, INC.
AMENDED AND RESTATED CHANGE OF CONTROL SEVERANCE AGREEMENT
This Change of Control Severance Agreement (the Agreement) is made and entered into effective as of April 24, 2003 (the Effective Date), by and between Raymond M. Withy, Ph.D. (the Employee) and Abgenix, Inc., a Delaware corporation (the Company). Certain capitalized terms used in this Agreement are defined in Section 1 below.
R E C I T A L S
A. It is expected that the Company from time to time will consider the possibility of a Change of Control. The Board of Directors of the Company (the Board) recognizes that such consideration can be a distraction to the Employee and can cause the Employee to consider alternative employment opportunities.
B. The Board believes that it is in the best interests of the Company and its shareholders to provide the Employee with an incentive to continue his employment and to maximize the value of the Company upon a Change of Control for the benefit of its shareholders.
C. In order to provide the Employee with enhanced financial security and sufficient encouragement to remain with the Company notwithstanding the possibility of a Change of Control, the Board believes that it is imperative to provide the Employee with certain severance benefits upon the Employees termination of employment following a Change of Control.
D. Dr. Withy succeeded Mr. Greer as Chief Executive Officer of the Company in 2002 and the Board believes that the Change of Control Severance Agreement between Dr. Withy and the Company, dated July 1, 1999, should be amended to reflect Dr. Withys current position by extending the Compensation Continuation Period.
AGREEMENT
In consideration of the mutual covenants herein contained and the continued employment of Employee by the Company, the parties agree as follows:
1. Definition of Terms. The following terms referred to in this Agreement shall have the following meanings:
(a) Cause. Cause shall mean (i) any act of personal dishonesty taken by the Employee in connection with his responsibilities as an employee which is intended to result in substantial personal enrichment of the Employee, (ii) Employees conviction of a felony which the Board reasonably believes has had or will have a material detrimental effect on the Companys reputation or business, (iii) a willful act by the Employee which constitutes misconduct and is injurious to the Company, and (iv) continued willful violations by the Employee of the Employees obligations to the Company after there has been delivered to the Employee a written demand for
performance from the Company which describes the basis for the Companys belief that the Employee has not substantially performed his duties.
(b) Change of Control. Change of Control shall mean the occurrence of any of the following events:
(i) the approval by shareholders of the Company of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which 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) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation;
(ii) any approval by the shareholders of the Company of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Companys assets;
(iii) any person (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becoming the beneficial owner (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Companys then outstanding voting securities; or
(iv) a change in the composition of the Board, as a result of which fewer than a majority of the directors are Incumbent Directors. Incumbent Directors shall mean directors who either (A) are directors of the Company as of the date hereof, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of those directors whose election or nomination was not in connection with any transaction described in subsections (i), (ii) or (iii) or in connection with an actual or threatened proxy contest relating to the election of directors of the Company.
(c) Compensation Continuation Period. Compensation Continuation Period shall mean the period of time commencing with termination of the Employees employment as a result of Involuntary Termination at any time within twenty four (24) months after a Change of Control and ending with the date twenty-four (24) months following the date of the Employees termination.
(d) Involuntary Termination. Involuntary Termination shall mean (i) without the Employees express written consent, a significant reduction of the Employees duties, position or responsibilities relative to the Employees duties, position or responsibilities in effect immediately prior to such reduction, or the removal of the Employee from such position, duties and responsibilities, unless the Employee is provided with comparable duties, position and responsibilities; (ii) without the Employees express written consent, a substantial reduction, without good business reasons, of the facilities and perquisites (including office space and location) available to the Employee immediately prior to such reduction; (iii) a reduction by the Company of the Employees base salary or target bonus as in effect immediately prior to such reduction; (iv) a material reduction by the Company in the kind or level of employee benefits to which the Employee
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is entitled immediately prior to such reduction with the result that the Employees overall benefits package is significantly reduced; (v) without the Employees express written consent, the relocation of the Employee to a facility or a location more than thirty-five (35) miles from his current location; (vi) any purported termination of the Employee by the Company which is not effected for Cause or for which the grounds relied upon are not valid; or (vii) the failure of the Company to obtain the assumption of this Agreement by any successors contemplated in Section 6 below.
2. Term of Agreement. This Agreement shall terminate upon the date that all obligations of the parties hereto under this Agreement have been satisfied.
3. At-Will Employment. The Company and the Employee acknowledge that the Employees employment is and shall continue to be at-will, as defined under applicable law. If the Employees employment terminates for any reason, the Employee shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Agreement, or as may otherwise be established under the Companys then existing employee benefit plans or policies at the time of termination.
4. Change of Control and Severance Benefits.
(a) Termination Following A Change of Control.
(i) Severance Payments. If the Employees employment with the Company terminates as a result of an Involuntary Termination at any time within twenty four (24) months after a Change of Control, then the Employee shall be entitled to receive continuing payments of severance pay during the Compensation Continuation Period at a rate equal to one hundred (100)% of the Employees base salary and target bonus (as in effect immediately prior to the Change of Control). Such severance payments shall be paid bi-weekly in accordance with the Companys normal payroll practices. In addition, during the Compensation Continuation Period, the Company shall continue to make available to the Employee and Employees spouse and dependents covered under any group health plans or life insurance plans of the Company on the date of such termination of employment, all group health, life and other similar insurance plans in which Employee or such Covered Dependents participate on the date of the Employees termination.
(ii) Option Acceleration. If the Employees employment with the Company terminates as a result of an Involuntary Termination at any time within twenty four (24) months after a Change of Control, then each option granted to the Employee by the Company (the Options) shall immediately become vested and exercisable in full.
(iii) Other Termination. If the Employees employment with the Company terminates other than as a result of an Involuntary Termination at any time within twenty four (24) months after a Change of Control, then the Employee shall not be entitled to receive severance or other benefits hereunder, but may be eligible for those benefits (if any) as may then be established under the Companys then existing severance and benefits plans and policies at the time of such termination.
(b) Termination Apart from a Change of Control. If the Employees employment with the Company terminates for any or no reason other than within twenty four (24) months following a Change of Control, then the Employee shall not be entitled to receive severance or other
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benefits hereunder, but may be eligible for those benefits (if any) as may then be established under the Companys then existing severance and benefits plans and policies at the time of such termination.
(c) Accrued Wages and Vacation; Expenses. Without regard to the reason for, or the timing of, Employees termination of employment: (i) the Company shall pay the Employee any unpaid base salary due for periods prior to the date of termination; (ii) the Company shall pay the Employee all of the Employees accrued and unused vacation through the date of termination; and (iii) following submission of proper expense reports by the Employee, the Company shall reimburse the Employee for all expenses reasonably and necessarily incurred by the Employee in connection with the business of the Company prior to the date of termination. These payments shall be made promptly upon termination and within the period of time mandated by law.
5. Golden Parachute Excise Tax Gross-Up. In the event that the severance and other benefits provided for in this Agreement or otherwise payable to Employee constitute excess parachute payments within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the Code), and will be subject to the excise tax imposed by Section 4999 of the Code (the Excise Tax), then Employee shall receive (i) a payment from the Company sufficient to pay the Excise Tax, and (ii) an additional payment from the Company sufficient to pay the Excise Tax arising from the payments made by the Company to Employee pursuant to this sentence. Unless the Company and Employee otherwise agree in writing, the determination of Employees Excise Tax liability and the amount required to be paid under this Section 5 shall be made in writing by the Companys independent public accountants (the Accountants). In the event that the Excise Tax incurred by Employee is determined by the Internal Revenue Service to be greater or lesser than the amount determined by the Accountants, the Company and Employee agree to promptly make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate to ensure that the net economic effect to Employee under this Section 5, on an after-tax basis, is as if the Excise Tax did not apply to Employee. For purposes of making the calculations required by this Section 5, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations of the Code. The Company and Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 5.
The gross-up payment to which Employee is entitled hereunder shall be paid by the Company to Employee, in cash and in full, not later than thirty (30) calendar days following the date Employee becomes subject to the Excise Tax.
6. Successors.
(a) Companys Successors. Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Companys business and/or assets shall assume the Companys obligations under this Agreement and agree expressly to perform the Companys obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term
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Company shall include any successor to the Companys business and/or assets which executes and delivers the assumption agreement described in this subsection (a) or which becomes bound by the terms of this Agreement by operation of law.
(b) Employees Successors. Without the written consent of the Company, Employee shall not assign or transfer this Agreement or any right or obligation under this Agreement to any other person or entity. Notwithstanding the foregoing, the terms of this Agreement and all rights of Employee hereunder shall inure to the benefit of, and be enforceable by, Employees personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
7. Notices.
(a) General. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of the Employee, mailed notices shall be addressed to him at the home address that he most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.
(b) Notice of Termination. Any termination by the Company for Cause or by the Employee as a result of a voluntary resignation or an Involuntary Termination shall be communicated by a notice of termination to the other party hereto given in accordance with this Section. Such notice shall indicate the specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated. The failure by the Employee to include in the notice any fact or circumstance which contributes to a showing of Involuntary Termination shall not waive any right of the Employee hereunder or preclude the Employee from asserting such fact or circumstance in enforcing his rights hereunder.
8. Arbitration.
(a) Except as provided in Section 8(d) below, any dispute or controversy arising out of, relating to, or in connection with this Agreement, or the interpretation, validity, construction, performance, breach, or termination thereof, shall be settled by binding arbitration to be held in Palo Alto, California, in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association (the Rules). The arbitrator may grant injunctions or other relief in such dispute or controversy. The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrators decision in any court having jurisdiction.
(b) The arbitrator(s) shall apply California law to the merits of any dispute or claim, without reference to conflicts of law rules. The arbitration proceedings shall be governed by federal arbitration law and by the Rules, without reference to state arbitration law. Employee hereby consents to the personal jurisdiction of the state and federal courts located in California for any
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action or proceeding arising from or relating to this Agreement or relating to any arbitration in which the parties are participants.
(c) Employee understands that nothing in this Section modifies Employees at-will employment status. Either Employee or the Company can terminate the employment relationship at any time, with or without cause.
(d) EMPLOYEE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION. EMPLOYEE UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION TO THE EXTENT PERMITTED BY LAW, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EMPLOYEES RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:
(i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR INTENTIONAL INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.
(ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION 201, et seq;
(iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.
9. Miscellaneous Provisions.
(a) No Duty to Mitigate. The Employee shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that the Employee may receive from any other source.
(b) Waiver. No provision of this Agreement may be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Employee and by an authorized officer of the Company (other than the Employee). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by
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the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.
(c) Integration. This Agreement and the stock option agreements representing the Options represent the entire agreement and understanding between the parties as to the subject matter herein and supersede all prior or contemporaneous agreements, whether written or oral, including the Change of Control Severance Agreement between Dr. Withy and the Company, dated July 1, 1999.
(d) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the internal substantive laws, but not the conflicts of law rules, of the State of California.
(e) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.
(f) Employment Taxes. All payments made pursuant to this Agreement shall be subject to withholding of applicable income and employment taxes.
(g) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.
COMPANY: |
| ABGENIX, INC. | |||
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| By: | /s/ R. Scott Greer | ||
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| Title: | Chairman | ||
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EMPLOYEE: |
| RAYMOND M. WITHY, PH.D. | |||
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| /s/ Raymond M. Withy | |||
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