EXHIBIT 10.59
The following is a Form of Change of Control Agreement to be entered into
between the Company and certain executives.
CHANGE OF CONTROL AGREEMENT
This agreement is made as of first day of January, 2000, between
Orphan Medical, Inc., a Minnesota corporation (the "Company"), and _____________
("Employee"), residing in ________.
WITNESSETH THAT:
WHEREAS, the Company believes that it is in the best interests of
the Company to maintain management capable of protecting and enhancing the best
interests of the Company and its shareholders; and
WHEREAS, in connection therewith, the Company believes that it is
important for Employee to be available to assist and advise the Company and its
board of directors in the event the Company or its shareholders receives a
proposal for transfer of control of the Company, without being influenced by any
uncertainties which may exist with regard to Employee's future employment.
NOW, THEREFORE, to assure the Company that it will have continued
access to the dedicated services of Employee notwithstanding the possibility,
threat or occurrence of a bid to take over control of the Company, and to induce
Employee to remain in the employ of the Company, the Company and Employee agree
as follows:
1. Definitions.
As used herein, the following terms shall have the meanings set
forth below:
(i) A "Change in Control" shall mean the occurrence of any of the
following events:
(a) a change in control of the Company of a nature required to
be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as
amended ("Exchange Act"), whether or not the Company is then subject
to such reporting requirement; or
(b) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 promulgated under the Exchange Act), directly
or indirectly, of securities of the Company representing (a) at
least 15% but no more than 50% of the combined voting power of the
Company's then outstanding securities unless the transaction is
approved by the Board of Directors of the Company in advance of the
event, or by a majority of the Continuing Directors within 30 days
after the event, or (b) more than 50% of the combined voting power
of the Company's then outstanding securities (regardless of any
approval of the Board of Directors); or
(c) individuals who at the date hereof constitute the Board of
Directors of the Company cease to constitute a majority thereof,
provided that such change is the direct or indirect result of a
proxy fight and contested election for positions on the Board; or
(d) the sale, lease, exchange or other transfer, directly or
indirectly, of all or substantially all of the assets of the
Company, in one transaction or in a series of related transactions;
or
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(e) a merger or consolidation to which the Company is a party
if the shareholders of the Company immediately prior to the
effective date of such merger or consolidation have "beneficial
ownership" (as defined in Rule 13d-3 promulgated under the Exchange
Act) immediately following the effective date of such merger or
consolidation of securities of the surviving company representing
(a) 50 percent or more, but not more than 85 percent, of the
combined voting power of the surviving corporation's then
outstanding securities, unless such merger or consolidation has been
approved in advance by the Board of Directors of the Company in
advance of the event, or by a majority of the Continuing Directors
within 30 days after the event or (b) less than 50 percent of the
combined voting power of the surviving corporation's then
outstanding securities (regardless of any approval by the continuity
directors); or
(f) the Board of Directors of the Company determines, in its
sole and absolute discretion, that there has been a change in
control of the Company.
(ii) "Continuing Directors" shall include only those directors of the
Company on the date hereof and those directors, as of a date 30 days prior to an
event that would otherwise be considered a "Change in Control," who were
nominated by Continuing Directors and duly elected by shareholders at an annual
meeting thereof or nominated and elected by directors who were "Continuing
Directors."
(iii) "Cause" shall mean termination by the Company of Employee's
employment based upon (a) the willful and continued failure by Employee
substantially to perform his duties and obligations (other than any such failure
resulting from his incapacity due to physical or mental illness) or (b) the
willful misconduct of Employee which is materially injurious to the Company or
any of its subsidiaries, monetarily or otherwise. For purposes of this
paragraph, an act, or failure to act, shall be considered "willful" if done, or
omitted to be done, by Employee in bad faith and without reasonable belief that
the action or omission was in the best interests of the Company.
(iv) "Disability" shall mean any physical or mental condition which would
qualify Employee for a disability benefit under the long-term disability plan of
the Company.
2. Term of Agreement.
This agreement shall commence on the date hereof and shall continue
in effect until (i) Employee and the Company mutually agree in writing to
terminate this agreement, (ii) termination of Employee's employment with the
Company in a manner other than as set forth in section 3(i) hereof, or (iii)
Employee reaches the age of sixty-five (65).
3. Termination of Employment.
(i) Employee shall be entitled to receive the cash payment and other
benefits provided in section 4 hereof if, during the term of this agreement, the
Company, within twelve (12) months of a Change in Control, shall have terminated
Employee without Cause, required the Employee to relocate or offered employee
continued employment at a lower pay level and lesser level of responsibility.
(ii) Nothing contained herein shall be deemed to constitute a guarantee of
employment or limit the Company's right to terminate Employee prior to a Change
in Control or for Cause following a Change in Control. Employee's rights upon
termination of employment prior to a Change in Control or after the expiration
of the term of this agreement or after the expiration of the prescribed periods
following a Change in Control set forth in section 3(i) shall be governed by the
standard employment termination policy applicable to Employee in effect at the
time of termination.
4. Benefits Upon Termination Under Section 3(i)
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Upon the termination of Employee pursuant to section 3(i) hereof, Employee
shall be entitled to receive the benefits specified in this section 4. The
amounts due to Employee under this section 4 shall be paid to Employee not later
than Employee's last day of employment. All payments to Employee pursuant to
this Section 4 shall be subject to any applicable payroll or other taxes
required by law to be withheld.
(i) The Company shall pay to Employee (a) the full base salary earned by
him and unpaid through the effective date of Employee's termination, at the rate
in effect at the time notice of termination was given, plus (b) an amount
representing credit for any vacation earned by him in the current calendar year,
but not taken.
(ii) In lieu of any further base salary payments to Employee for periods
subsequent to the date that the termination of Employee's employment becomes
effective, the Company shall pay as severance pay to Employee a lump sum amount
in cash equal to the following: the highest annual salary and incentive payment
within the last two years divided by 12 multiplied by the number of months
listed below for the appropriate officer's responsibility:
CHIEF OPERATING OFFICER 18 MONTHS
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER 12 MONTHS
VICE PRESIDENT OF MARKETING AND SALES 12 MONTHS
VICE PRESIDENT REGULATORY AFFAIRS 12 MONTHS
(iii) All options to purchase the Company's Common Stock and all other
incentive awards granted to Employee under the Company's 1994 Long-Term
Incentive and Stock Option Plan or any other stock option or incentive
compensation plan adopted by the Company (each, a "Plan" and, together, the
"Plans") shall become immediately exercisable or vested, as the case may be;
provided, however, such options or awards shall be exercisable or payable, as
the case may be, only in a manner consistent with the terms of the Plans and
related stock option or other agreements, as applicable and as in effect upon
the date of termination.
(iv) In addition to all other amounts payable to Employee under this
section 4, Employee shall be entitled to receive all benefits payable or
distributable to Employee under any Company pension plan and any other plan or
agreement relating to retirement benefits in accordance with the policies in
respect thereof in effect as of the date of the Change in Control.
(v) The Company shall pay to Employee all legal fees and expenses incurred
by Employee in seeking to obtain or enforce any right or benefit provided to
Employee by this agreement.
(vi) Should the Employee refuse continued employment at a similar pay and
responsibility level, the Employee will not be eligible for the benefits as
described in 4. (ii) above.
Notwithstanding anything contained in this agreement to the contrary, the
maximum amount to be paid by Company to Employee pursuant to the terms of this
Agreement and this section 4 shall be limited to an amount which does not
constitute an "excess parachute payment" within the meaning of section 280G of
the Internal Revenue Code of 1954, as amended, or any successor provision or
regulations promulgated thereunder.
Employee shall not be required to mitigate the amount of any payment
provided for in this section 4 by seeking other employment or otherwise. The
amount of any payment or benefit provided in this section 4 shall not be reduced
by any compensation earned by Employee as a result of any employment by another
employer.
5. Successors; and Binding Agreement.
(i) The Company will use its best efforts to 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, by
written agreement in form and substance satisfactory to Employee, expressly to
assume
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and agree to perform the Company's obligations under this agreement arising out
of any such succession in the same manner and to the same extent that the
Company would be required to perform this agreement. As used in this agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which executes and delivers the
agreement provided for in this section 5(i) or which otherwise becomes bound by
all the terms and provisions of this agreement by operation of law.
(ii) This agreement is personal to Employee and Employee may not assign or
transfer any part of his rights or duties hereunder, or any compensation due to
him hereunder, to any other person. Notwithstanding the foregoing, this
agreement shall inure to the benefit of and be enforceable by Employee's
personal or legal representatives, executors, administrators, heirs,
distributees, devisees and legatees.
6. Modification; Waiver. No provision of this agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in a
writing signed by Employee and such officer as may be specifically designated by
the Board of Directors of the Company. No waiver by either party hereto at any
time of any breach by the other party hereto of any condition or provision shall
be deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time.
7. Notice. All notices, requests, demands and all other communications required
or permitted by either party to the other party by this agreement (including,
without limitation, any notice of termination of employment) shall be in writing
and shall be deemed to have been duly given when delivered personally or mailed
by regular, certified or registered mail, return receipt requested, at the
address of the other party, as follows:
If to the Company, to:
Orphan Medical, Inc.
Xxxxxxxxx Xxxxxx Xxxxxx
Xxxxx 000
00000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
If to Employee, to:
Name
Address
8. Severability. If any term or provision of this agreement or the application
hereof to any person or circumstances shall to any extent be invalid or
unenforceable, the remainder of this agreement or the application of such term
or provision to persons or circumstances other than those as to which it is held
invalid or unenforceable shall not be affected thereby, and each term and
provision of this agreement shall be valid and enforceable to the fullest extent
permitted by law.
9. Headings. The headings in this agreement are inserted for convenience or
reference only and shall not be a part of or control or affect the meaning of
this agreement.
10. Counterparts. This agreement may be executed in several counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
11. Governing Law. This agreement has been executed and delivered in the state
of Minnesota and shall in all respects be governed by, and construed and
enforced in accordance with, the laws of the state of Minnesota, including all
matters of construction, validity and performance, but without giving effect to
the choice of law provisions thereof.
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12. Entire Agreement. This agreement supersedes any and all other oral or
written agreements or policies made relating to the subject matter hereof;
provided that, this agreement shall not supersede or limit in any way Employee's
rights under any benefit plan, program or arrangements in accordance with their
terms.
IN WITNESS WHEREOF, the parties hereto have executed this agreement all as
of the date set forth in the first paragraph.
ORPHAN MEDICAL, INC.
By
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Xxxx Xxxxxx Bullion
Chief Executive Officer
EMPLOYEE
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(Employee)
