EXHIBIT 10.12
EXECUTIVE CHANGE OF CONTROL AGREEMENT
This Agreement is made as of August 16, 2001, between Angiotech Pharmaceuticals
(U.S.), Inc., a Washington corporation having an office at Xxxxx 0000, 000 0xx
Xxxxxx, Xxxxxxx, Xxxxxxxxxx, 00000 ("Angiotech U.S."), Angiotech
Pharmaceuticals, Inc., a British Columbia corporation having an office at 0000
X.X. Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0 (the "Company") and
Xxxxxx X. Xxxxxxxxxxx of 3B 000 X Xxxxxx, Xxxxxx, Xxxxxxxxxx, 00000 ("the
"Employee").
THIS AGREEMENT WITNESSES:
1. Definitions - In this Agreement, the following terms shall have the
meanings ascribed below:
(a) "Change of Control" means:
(i) a change in the composition of the board of directors of the Company,
as a result of which fewer than one-half of the incumbent directors are
directors who had been directors of the Company 12 months prior to such
change, with the exception of any such change in the composition of the
board made with the approval of the board as it was constituted immediately
prior to such change; or
(ii) the acquisition or aggregation of securities by any Person pursuant to
which such Person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding base capital stock
(meaning the securities of the company ordinarily, and apart from rights
accruing under special circumstances, having the right to vote at elections
of directors of the Company), except that any change in the relative
beneficial ownership of the Company's securities by any Person resulting
solely from a reduction in the aggregate number of outstanding shares of
base capital stock, and any decrease thereafter in such Person's ownership
of securities shall be disregarded until such Person increases in any
manner, directly or indirectly, his, her or its beneficial ownership of any
securities of the Company; or
(iii) the acquisition of all or substantially all the capital stock or
assets of Angiotech U.S. by a Person other than (i) the Company, or (ii) an
affiliated or related entity of the Company in which a majority of the
voting stock of such affiliated or related entity is beneficially owned or
controlled by the Company.
(b) "Employee Benefit Plans" means such medical, dental, eye care,
disability, life and other health insurance benefit plans maintained, in whole
or in part, by Angiotech U.S. on behalf of employees generally or executive
employees over a certain grade level.
(c) "Employee Option Plans" means stock option, stock appreciation rights,
restricted stock, phantom stock or similar plans or agreements maintained, in
whole or in part, by the Company on behalf of either employees generally or
executive employees over a certain grade level.
(d) "Executive Compensation Programs" means, any compensation programs
maintained, in whole or in part, by Angiotech U.S. on behalf of executive
employees over a certain grade level, including without limitation bonus or
incentive programs tied to the performance of Angiotech U.S.
(e) "Good Reason" means a material reduction in the authority or
responsibility of the Employee, one or more reductions, in the cumulative amount
of 5 percent or more, in the Base compensation of the Employee or any
notification to the Employee that his or her principal place of work will be
relocated by a distance of 50 miles or more.
(f) "Person" means any individual, partnership, unincorporated
organization or association, trust, body corporate, government or government
agency or authority, trustee, executor, administrator or other legal
representative or other legal entity whatsoever.
(g) "Term" means the time period from the effective date of this Agreement
until the employment of the Employee is terminated.
2. Change of Control - If a Change of Control occurs during the Term,
then the Employee shall become fully vested and receive the maximum of all
awards (stock options and cash bonuses) heretofore or hereafter granted to the
Employee under all employee Option Plans and Executive Compensation Programs,
regardless of any provision in such plans or agreements that do not provide for
full vesting.
3. Rights Upon Termination Due to Change of Control - In addition to any
other rights the Employee may have against Angiotech U.S. and/or the Company, if
at the time of a Change of Control or within twelve (12) months after the
occurrence of a Change of Control, either:
(a) the employee voluntarily resigns his or her employment for Good Reason;
or
(b) the Company terminates the employee's employment for any reason;
then the Employee shall be entitled to the following payments and benefits:
(c) an amount equal to two times the Employee's base annual compensation,
payable in one lump sum within five (5) business days from the termination of
the Employee's employment unless Angiotech U.S. and the Employee agree otherwise
in writing;
(d) an amount equal to two times the maximum of all awards payable to the
employee under all Executive Compensation Programs pursuant to Section 2,
payable in one lump sum within five (5) business days from the termination of
the Employee's employment unless Angiotech U.S. and the Employee agree otherwise
in writing; and
(e) during the period commencing on the date when the termination of the
employee's employment is effective and ending on the date twenty-four (24)
months after such date, the Employee (and, where applicable, the Employee's
dependents) shall be entitled to continue participation in all Employee Benefit
Plans maintained by Angiotech U.S., including without limitation life,
disability and health insurance programs, as if the Employee were still an
employee of Angiotech U.S. Where applicable, the Employee's salary for purposes
of such plans shall be deemed to be equal to the Employee's base annual
compensation and to the extent that Angiotech U.S. finds it impossible to cover
the Employee under its Employee Benefit Plans during the period set out
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above, Angiotech U.S. shall provide the Employee with individual policies which
offer at least the same level of coverage and which impose not more than the
same costs on the Employee. In the event the Employee becomes eligible for
comparable coverage to that set out in the Employee Benefit Plans during the
period set out above, the coverage provided under this Paragraph (e) shall
terminate immediately.
4. Gross-Up of Excise Tax Payable by Employee.
(a) If any payment to or for the benefit of the Employee paid or payable or
distributed or distributable pursuant to the terms of this Agreement (a
"Payment" or "Payments") will be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or any
interest or penalties are incurred by the Employee with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Employee
will be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount equal to the Excise Tax imposed upon the Payments and any Excise Tax
imposed upon the Gross-Up Payment.
(b) An initial determination (the "Determination") as to whether a Gross-Up
Payment is required pursuant to this Agreement and the amount of such Gross-Up
Payment shall be made at the Company's expense by an accounting firm selected by
the Company (the "Accounting Firm"). The Accounting Firm shall provide its
Determination, together with detailed supporting calculations and documentation
to the Company and the Employee within thirty (30) days of the effective date of
the Employee's termination of employment by the Company if applicable, or such
other time as requested by the Company or by the Employee if the Employee
reasonably believes that any of the Payments may be subject to the Excise Tax.
If the Accounting Firm determines that no Excise Tax is payable by the Employee
with respect to a Payment or Payments, it shall furnish the Employee with an
opinion reasonably acceptable to the Employee that no Excise Tax will be imposed
with respect to any such Payment or Payments. The Employee shall have thirty
(30) days to dispute the Determination. The Company shall pay the Gross-Up
Payment, if any, to the Employee within ten (10) days of the receipt of the
Determination, regardless of whether the Employee has disputed the
Determination. Upon the final resolution of a dispute, the Company shall
promptly pay to the Employee any additional amount required by such resolution
and such resolution shall be binding, final and conclusive upon the Company and
the Employee. If there is no dispute, the Determination shall be binding, final
and conclusive upon the Company and the Employee.
(c) Notwithstanding anything contained in this Agreement to the contrary,
in the event that, according to the Determination, an Excise Tax will be imposed
on any Payment or Payments, the Company shall pay to the applicable government
taxing authorities, as Excise Tax withholding, the amount of the Excise Tax that
the Company withholds from the Payment or Payments.
5. Miscellaneous Provisions - The following miscellaneous provisions shall
apply to this Agreement:
(a) Company's Successors. The Company and/or Angiotech U.S., as applicable,
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 and/or Angiotech U.S.'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 Angiotech U.S. and/or the Company would be required to
perform it in the
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absence of a succession. The failure of the Company and/or Angiotech U.S., as
applicable, to obtain such agreement prior to the effectiveness of a succession
shall be a breach of this Agreement and shall entitle the employee to all of the
compensation, benefits and reimbursements to which he or she would have been
entitled hereunder as if there had been a Change of Control and a termination
due to a Change of Control. For all purposes under this Agreement, the term
"Company" and "Angiotech U.S." shall include any successor(s) to the Company's
and/or Angiotech U.S.'s, as applicable, business and/or assets which executes
and delivers the assumption agreement described in this subsection 5(a) or which
becomes bound by this Agreement by operation of law.
(b) No Assignment. The rights of any person to payments or benefits under
this Agreement shall not be made subject to option or assignment, either by
voluntary or involuntary assignment or by operation of law, including without
limitation by bankruptcy, garnishment, attachment or other creditor's process,
and any action in violation of this Subsection 5(b) shall be void.
(c) Amendment and Waiver. This Agreement may be amended, modified or
supplemented only by a writing executed by each of the parties. Either party may
in writing waive any provision of this Agreement to the extent such provision is
for the benefit of the waiving party. No waiver by either party of a breach of
any provision of this Agreement shall be construed as a waiver of any subsequent
or different breach, and no forbearance by a party to seek a remedy for
noncompliance or breach by the other party shall be construed as a waiver of any
right or remedy with respect to such noncompliance or breach.
(d) Employee's Successors. This Agreement and all rights of Employee
hereunder shall inure to the benefit of and be binding upon the Employee's heirs
and legal personal representatives.
(e) Governing Law, Venue. This Agreement shall be governed by the laws of
the State of Washington without regard to its conflicts of laws rules. The
parties hereby agree the venue for all matters and actions arising under this
Agreement shall be and remain exclusivity in the state and federal courts
sitting in King County, Washington, and the parties hereby irrevocably consent
to the personal jurisdiction of such courts. The prevailing party shall be
entitled to reasonable attorneys' fees and costs incurred in connection with any
such litigation arising under or related to this Agreement.
(f) Severability. If any provision of this Agreement is held to be invalid
or unenforceable to any extent in any context, it shall nevertheless be enforced
to the fullest extent allowed by law in that and other contexts, and the
validity and force of the remainder of this Agreement shall not be affected
thereby.
(g) Notice. All notices and other communications under this Agreement shall
be in writing and shall be given by personal or courier delivery, facsimile or
first class mail, certified or registered with return receipt requested, and
shall be deemed to have been duly given upon receipt if personally delivered or
delivered by courier, on the date of transmission if transmitted by facsimile,
or three days after mailing if mailed, to the addresses of the Company and the
Employee contained in the records of the Company at the time of such notice. Any
party may change such party's address for notices by notice duly given pursuant
to this Section 5(g).
(h) Headings, Pronouns. The Section and other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Any and all uses of masculine or
feminine pronouns herein are solely to aid in the ease
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of reading this Agreement and any such pronoun usage shall have equal
application to the members of the opposite gender.
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
stated above.
ANGIOTECH PHARMACEUTICALS (U.S.), INC. EMPLOYEE:
By: /s/ Xxxxx X. Xxxx /s/ Xxxxxx X. Xxxxxxxxxxx
------------------------------------- --------------------------------
Xxxxx X. Xxxx Xxxxxx X. Xxxxxxxxxxx
Dated: August 16, 2001 Dated: August 16, 2001
ANGIOTECH PHARMACEUTICALS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxx
Dated: August 16, 2001
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