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EXHIBIT (c)(8)
SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of , 1999, by and between
(the "Employee") and STERIGENICS INTERNATIONAL, INC., a Delaware
corporation (the "Company").
1. TERM OF AGREEMENT.
This Agreement shall remain in effect from the date hereof until the
earlier of:
(a) The date when the Company terminates the Employee's employment for
Cause or the date on which the Employee resigns without Good Reason; or
(b) The date when the Company has met all of its obligations under
this Agreement following a termination of the Employee's employment without
Cause or the Employee's resignation for Good Reason within 12 months
following a Change in Control.
2. DEFINITION OF CHANGE IN CONTROL.
For all purposes under this Agreement, "Change in Control" shall mean the
occurrence of any of the following events after the date of this Agreement:
(a) The consummation of a merger or consolidation of the Company with
or into another entity or any other corporate reorganization, if more than
50% of the combined voting power of the continuing or surviving entity's
securities outstanding immediately after such merger, consolidation or
other reorganization is owned by persons who were not stockholders of the
Company immediately prior to such merger, consolidation or other
reorganization;
(b) The sale, transfer or other disposition of all or substantially
all of the Company's assets;
(c) A change in the composition of the Board, as a result of which
fewer than two-thirds of the incumbent directors are directors who either
(i) had been directors of the Company on the date 24 months prior to the
date of the event that may constitute a Change in Control (the "original
directors") or (ii) were elected, or nominated for election, to the Board
with the affirmative votes of at least a majority of the aggregate of the
original directors who were still in office at the time of the election or
nomination and the directors whose election or nomination was previously so
approved; or
(d) Any transaction as a result of which any person is the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing at least 50% of the
total voting power represented by the Company's then outstanding voting
securities. For purposes of this Subsection (d), the term "person" shall
have the same meaning as when used in sections 13(d) and 14(d) of the
Exchange Act but shall exclude (i) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or of subsidiary
of the Company and (ii) a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as their
ownership of the common stock of the Company.
A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company's incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction.
3. DEFINITION OF GOOD REASON.
For all purposes under this Agreement, "Good Reason" shall mean that the
Employee:
(a) Has incurred a material reduction in his authority or
responsibilities as an employee of the Company, including (without
limitation) a material reduction or elimination of his authority to approve
expenditures or to hire, promote, demote or terminate subordinates;
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(b) Has incurred a reduction in his base salary or target bonus, other
than pursuant to a Company-wide reduction of salaries for employees of the
Company generally; or
(c) Has been notified that his principal place of work as an employee
of the Company will be relocated by a distance of 40 miles or more.
4. DEFINITION OF CAUSE.
For all purposes under this Agreement, "Cause" shall mean:
(a) The unauthorized use or disclosure of the confidential information
or trade secrets of the Company, which use or disclosure causes material
harm to the Company;
(b) Conviction of, or a plea of "guilty" or "no contest" to, a felony
under the laws of the United States or any state thereof;
(c) Gross negligence;
(d) Material failure to comply with Company policy after receiving
written notification from the Board of Directors; or
(e) Continued failure to perform assigned duties after receiving
written notification from the Board of Directors.
The foregoing, however, shall not be deemed an exclusive list of all acts or
omissions that the Company (or a subsidiary of the Company) may consider as
grounds for the discharge of the Employee.
5. CASH PAYMENT AND ACCELERATED VESTING OF STOCK OPTIONS AND SHARES.
(a) CASH PAYMENT. The Employee shall be entitled to a lump sum cash payment
equal to the Employee's most recent base salary amount for a one-year period if
one of the following events occurs:
(i) Within the first 12-month period after the occurrence of a Change
in Control, the Employee voluntarily resigns his employment for Good
Reason; or
(ii) Within the first 12-month period after the occurrence of a Change
in Control, the Company terminates the Employee's employment for any reason
other than Cause.
(b) ACCELERATED VESTING. Upon a Change in Control, to the extent that the
Employee's options do not otherwise provide for full vesting acceleration, the
Employee shall be entitled to the accelerated vesting of stock options described
below.
(i) All options to purchase shares of the Company's Common Stock held
by the Employee at the time of the Change in Control shall immediately
become exercisable and vested in full, whether such options were granted
before or after the date of this Agreement.
(ii) All shares of the Company's Common Stock held by the Employee at
the time of the Change in Control shall immediately vest in full and the
Company's right to repurchase such shares shall lapse, whether such shares
were issued before or after the date of this Agreement.
To the extent provided in this Section 5, this Agreement shall be deemed to
be an amendment of the exercisability and vesting provisions of all stock option
agreements, stock purchase agreements and similar instruments executed by the
Employee and the Company that did not otherwise provide for full vesting
acceleration.
(c) POOLING OF INTERESTS. If the Company and the other party to the
transaction constituting a Change in Control agree that such transaction is to
be treated as a "pooling of interests" for financial reporting purposes, and if
such transaction in fact is so treated, then the accelerated vesting of stock
options and shares described in this Section 5 and the cash payment described in
this Section 5 shall not occur to the extent that the Company's independent
public accountants and such other party's independent public accountants
separately determine in good faith that such cash payment or acceleration would
preclude the use of "pooling of interests" accounting.
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6. LIMITATION ON PAYMENTS.
(a) APPLICATION OF LIMITATION. This Section 6 shall apply only if the
Employee, on an after-tax basis, would receive more value under this Agreement
after the application of this Section 6 than before the application of this
Section 6. For this purpose, "after-tax basis" shall mean a calculation taking
into account all federal and state income and excise taxes imposed on the
Employee, including (without limitation) the excise tax described in section
4999 of the Internal Revenue Code of 1986, as amended (the "Code"). If this
Section 6 is applicable, it shall supersede any conflicting provision of this
Agreement. The rules set forth in this Section 6 supersede all other agreements
between the Employee and the Company with respect to whether the Company shall
make a payment or property transfer to, or for the benefit of, the Employee that
would subject the Employee to the excise tax described in section 4999 of the
Code, and Section 6 of this Agreement shall be deemed to be an amendment of such
agreements.
(b) BASIC RULE. The Company shall not make any payment or property transfer
to, or for the benefit of, the Employee (under this Agreement or otherwise) that
would subject the Employee to the excise tax described in section 4999 of the
Code. All calculations required by this Section 6 shall be performed by the
independent auditors retained by the Company most recently prior to the Change
in Control (the "Auditors"), based on information supplied by the Company and
the Employee, and shall be binding on the Company and the Employee. All fees and
expenses of the Auditors shall be paid by the Company.
(c) REDUCTIONS. If the amount of the aggregate payments or property
transfers to the Employee must be reduced under this Section 6, then the
Employee shall direct in which order the payments or transfers are to be
reduced, but no change in the timing of any payment or transfer shall be made
without the Company's consent. As a result of uncertainty in the application of
section 4999 of the Code at the time of an initial determination by the Auditors
hereunder, it is possible that a payment will have been made by the Company that
should not have been made (an "Overpayment") or that an additional payment that
will not have been made by the Company could have been made (an "Underpayment").
In the event that the Auditors, based upon the assertion of a deficiency by the
Internal Revenue Service against the Employee that the Auditors believe has a
high probability of success, determine that an Overpayment has been made, such
Overpayment shall be treated for all purposes as a loan to the Employee that he
shall repay to the Company, together with interest at the applicable federal
rate specified in section 7872(f)(2) of the Code; provided, however, that no
amount shall be payable by the Employee to the Company if and to the extent that
such payment would not reduce the amount that is subject to an excise tax under
section 4999 of the Code. In the event that the Auditors determine that an
Underpayment has occurred, such Underpayment shall promptly be paid or
transferred by the Company to, or for the benefit of, the Employee, together
with interest at the applicable federal rate specified in section 7872(f)(2) of
the Code.
7. SUCCESSORS.
(a) COMPANY'S SUCCESSORS. The Company shall require any successor (whether
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and/or assets, by an agreement in substance and form satisfactory to the
Employee, to assume this Agreement and to agree expressly to perform this
Agreement in the same manner and to the same extent as the Company would be
required to perform it in the absence of a succession. For all purposes under
this Agreement, the term "Company" shall include any successor to the Company's
business and/or assets which executes and delivers the assumption agreement
described in this Subsection (a) or which becomes bound by this Agreement by
operation of law.
(b) EMPLOYEE'S SUCCESSORS. This Agreement and all rights of the Employee
hereunder shall inure to the benefit of, and be enforceable by, the Employee's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
8. MISCELLANEOUS PROVISIONS.
(a) NOTICE. 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
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be addressed to him at the home address which 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) WAIVER. No provision of this Agreement shall 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 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) 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.
(d) NO RETENTION RIGHTS. Nothing in this Agreement shall confer upon the
Employee any right to continue in service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Company or any
subsidiary of the Company or of the Employee, which rights are hereby expressly
reserved by each, to terminate his or her service at any time and for any
reason, with or without Cause.
(e) CHOICE OF LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California (other than their choice-of-law provisions).
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.
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Employee
STERIGENICS INTERNATIONAL, INC.
By:
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Title:
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