EXHIBIT 10.2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is
entered into by and between CancerVax Corporation, a Delaware corporation (the
"Company"), and Xxxxx X. Xxxx ("Executive"), and shall be effective as of
November 15, 2004 (the "Effective Date").
WHEREAS, the Company and Executive desire to amend and restate that
certain Employment Agreement dated as of October 23, 2000, between the Company
and Executive, as amended by that certain First Amendment to Employment
Agreement dated as of April 29, 2003, between the Company and Executive (as so
amended, the "Original Agreement"), to provide Executive with enhanced severance
benefits in the event of a qualifying termination of Executive's employment.
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties agree as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the following meanings:
(a) Board. "Board" means the Board of Directors of the Company.
(b) Bonus. "Bonus" means an amount equal to the average of the
bonuses awarded to Executive for each of the three (3) fiscal years prior to the
date of termination, or such lesser number of years as may be applicable if
Executive has not been employed for three (3) full years on the date of
termination. For purposes of determining Executive's "Bonus," to the extent
Executive received no bonus in a year due to a failure to meet the applicable
performance objectives, such year will still be taken into account (using zero
(0) as the applicable bonus) in determining Executive's "Bonus" for purposes of
Section 5. If any portion of the bonuses awarded to Executive consisted of
securities or other property, the fair market value thereof shall be determined
in good faith by the Board.
(c) Cause. "Cause" means any of the following:
(i) a willful act by Executive which constitutes fraud,
embezzlement or dishonesty by Executive that has a material adverse impact on
the Company or any successor or affiliate thereof;
(ii) a conviction of, or plea of "guilty" or "no contest" to,
a felony by Executive;
(iii) any unauthorized use or disclosure by Executive of
confidential information or trade secrets of the Company or any successor or
affiliate thereof that has a material adverse impact on any such entity;
(iv) Executive's gross negligence, insubordination or
material violation of any duty of loyalty to the Company or any other material
misconduct on the part of Executive;
(v) Executive's ongoing willful and repeated failure or
refusal to perform or neglect of Executive's duties as required by this
Agreement, which failure, refusal or neglect continues for fifteen (15) days
following Executive's receipt of written notice from the Board stating with
specificity the nature of such failure, refusal or neglect; or
(vi) Executive's breach of any material provision of this
Agreement;
provided, however, that no act, or failure to act, by Executive shall be
considered "willful" unless committed without good faith and without a
reasonable belief that the act or omission was in the Company's best interest;
provided, further, that prior to the determination that "Cause" under this
Section 1(c) has occurred, the Company shall (w) provide to Executive in
writing, in reasonable detail, the reasons for the determination that such
"Cause" exists, (x) other than with respect to clause (v) above which specifies
the applicable period of time for Executive to remedy his breach, afford
Executive a reasonable opportunity to remedy any such breach, (y) provide the
Executive an opportunity to be heard prior to the final decision to terminate
the Executive's employment hereunder for such "Cause" and (z) make any decision
that such "Cause" exists in good faith.
The foregoing definition shall not in any way preclude or restrict
the right of the Company or any successor or affiliate thereof to discharge or
dismiss Executive for any other acts or omissions, but such other acts or
omissions shall not be deemed, for purposes of this Agreement, to constitute
grounds for termination for Cause.
(d) Change of Control. "Change of Control" means and includes each
of the following:
(i) the acquisition, directly or indirectly, by any "person"
or "group" (as those terms are defined in Sections 3(a)(9), 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules thereunder) of "beneficial ownership" (as determined pursuant to Rule
13d-3 under the Exchange Act) of securities entitled to vote generally in the
election of directors ("voting securities") of the Company that represent forty
percent (40%) or more of the combined voting power of the Company's then
outstanding voting securities, other than:
(A) an acquisition by a trustee or other fiduciary
holding securities under any employee benefit plan (or related trust)
sponsored or maintained by the Company or any person controlled by the
Company or by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any person controlled by the Company, or
(B) an acquisition of voting securities by the Company
or a corporation owned, directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of the
stock of the Company, or
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(C) an acquisition of voting securities pursuant to a
transaction described in clause (iii) below that would not be a Change of
Control under clause (iii);
Notwithstanding the foregoing, the following event shall not
constitute an "acquisition" by any person or group for purposes of this Section
1(d): an acquisition of the Company's securities by the Company which causes the
Company's voting securities beneficially owned by a person or group to represent
forty percent (40%) or more of the combined voting power of the Company's then
outstanding voting securities; provided, however, that if a person or group
shall become the beneficial owner of forty percent (40%) or more of the combined
voting power of the Company's then outstanding voting securities by reason of
share acquisitions by the Company as described above and shall, after such share
acquisitions by the Company, become the beneficial owner of any additional
voting securities of the Company, then such acquisition shall constitute a
Change of Control; or
(ii) during any period of two (2) consecutive years,
individuals who, at the beginning of such period, constitute the Board together
with any new director(s) (other than a director designated by a person who shall
have entered into an agreement with the Company to effect a transaction
described in clauses (i) or (iii) of this Section 1(d) whose election by the
Board or nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the two (2) year period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof; or
(iii) the consummation by the Company (whether directly
involving the Company or indirectly involving the Company through one or more
intermediaries) of (x) a merger, consolidation, reorganization, or business
combination or (y) a sale or other disposition of all or substantially all of
the Company's assets or (z) the acquisition of assets or stock of another
entity, in each case other than a transaction:
(A) which results in the Company's voting securities
outstanding immediately before the transaction continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the Company or the person that, as a result of the
transaction, controls, directly or indirectly, the Company or owns,
directly or indirectly, all or substantially all of the Company's assets
or otherwise succeeds to the business of the Company (the Company or such
person, the "Successor Entity") directly or indirectly, at least a
majority of the combined voting power of the Successor Entity's
outstanding voting securities immediately after the transaction, and
(B) after which no person or group beneficially owns
voting securities representing forty percent (40%) or more of the combined
voting power of the Successor Entity; provided, however, that no person or
group shall be treated for purposes of this clause (B) as beneficially
owning forty percent (40%) or more of combined voting power of the
Successor Entity solely as a result of the voting power held in the
Company prior to the consummation of the transaction; or
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(iv) the Company's stockholders approve a liquidation or
dissolution of the Company.
(e) Good Reason. "Good Reason" means the occurrence of any of the
following events or conditions without Executive's written consent and the
failure of the Company or any successor or affiliate to cure such event or
condition within thirty (30) days after receipt of written notice from
Executive:
(i) a change in Executive's status, position or
responsibilities (including reporting responsibilities) that, in Executive's
reasonable judgment, represents a substantial reduction in the status, position
or responsibilities as in effect immediately prior thereto; the assignment to
Executive of any duties or responsibilities that, in Executive's reasonable
judgment, are materially inconsistent with such status, position or
responsibilities; or any removal of Executive from or failure to reappoint or
reelect Executive to any of such positions, except in connection with the
termination of Executive's employment for Cause, as a result of his Permanent
Disability or death, or by Executive other than for Good Reason;
(ii) a material reduction in Executive's annual base salary,
except in connection with a general reduction in the compensation of the
Company's or any successor's or affiliate's personnel with similar status and
responsibilities;
(iii) the Company's or any successor's or affiliate's
requiring Executive (without Executive's consent) to be based at any place
outside a 50-mile radius of his place of employment as of the Effective Date,
except for reasonably required travel on the Company's or any successor's or
affiliate's business that is not materially greater than such travel
requirements prior to the Effective Date;
(iv) the Company's or any successor's or affiliate's failure
to provide Executive with compensation and benefits substantially equivalent (in
terms of benefit levels and/or reward opportunities) to those provided for under
each material employee benefit plan, program and practice as in effect
immediately prior to the Effective Date;
(v) Executive has not received a contemporaneous increase in
his total compensation (including benefits) which is commensurate with increases
in total compensation (including benefits) received by a majority of other
officers of the Company or any successor or affiliate;
(vi) Executive has earned, but not been paid, a bonus for any
period under any management incentive compensation plan adopted by the Company,
but a majority of other officers of the Company or any successor or affiliate
have been paid bonuses for such period under such management incentive
compensation plan;
(vii) any material breach by the Company or any successor or
affiliate of its obligations to Executive under this Agreement; or
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(viii) any purported termination of Executive's employment or
service relationship for Cause by the Company or any successor or affiliate that
is not in accordance with the definition of Cause set forth in this Agreement.
(f) Permanent Disability. Executive's "Permanent Disability" shall
be deemed to have occurred if Executive shall become physically or mentally
incapacitated or disabled or otherwise unable fully to discharge his duties
hereunder for a period of ninety (90) consecutive calendar days or for one
hundred twenty (120) calendar days in any one hundred eighty (180) calendar-day
period. The existence of Executive's Permanent Disability shall be determined by
the Company on the advice of a physician chosen by the Company and the Company
reserves the right to have the Executive examined by a physician chosen by the
Company at the Company's expense.
(g) Stock Awards. "Stock Awards" means all stock options,
restricted stock and such other awards granted pursuant to the Company's stock
option and equity incentive award plans or agreements and any shares of stock
issued upon exercise thereof.
2. Employment Period. Subject to the provisions for earlier termination
hereinafter provided, Executive's employment hereunder shall be for a term (the
"Employment Period") commencing on the Effective Date and ending on October 22,
2005, or such longer period as Executive and the Board shall otherwise mutually
agree.
3. Services to Be Rendered.
(a) Duties and Responsibilities. Executive shall serve as
President and Chief Executive Officer of the Company. In the performance of such
duties, Executive shall report directly to the Board and shall be subject to the
direction of the Board. Executive hereby consents to serve as an officer and/or
director of the Company or any subsidiary or affiliate thereof without any
additional salary or compensation, if so requested by the Board. Executive shall
be employed by the Company on a full time basis. Executive's primary place of
work shall be the Company's facility in Carlsbad, California, or such other
location within San Diego County as may be designated by the Board time to time.
Executive shall also render services at such other places within or outside the
United States as the Board may direct from time to time. Executive shall be
subject to and comply with the policies and procedures generally applicable to
senior executives of the Company to the extent the same are not inconsistent
with any term of this Agreement.
(b) Exclusive Services. Executive shall at all times faithfully,
industriously and to the best of his ability, experience and talent perform to
the satisfaction of the Board all of the duties that may be assigned to
Executive hereunder and shall devote substantially all of his productive time
and efforts to the performance of such duties. Subject to the terms of the
Employee Confidentiality and Invention Assignment Agreement referred to in
Section 7(b), this shall not preclude Executive from devoting time to personal
and family investments or serving on community and civic boards or the corporate
boards on which Executive currently serves, or participating in industry
associations, provided such activities do not interfere with his duties to the
Company. Executive agrees that he will not join any additional corporate boards
without the prior approval of the Board.
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(c) Support Services. Executive shall be entitled to all of the
administrative, operational and facility support customary for a
similarly-situated executive. This support shall include an executive assistant.
4. Compensation and Benefits. The Company shall pay or provide, as the
case may be, to Executive the compensation and other benefits and rights set
forth in this Section 4.
(a) Base Salary. The Company shall pay to Executive a base salary
of $515,000 per year, payable in accordance with the Company's usual pay
practices (and in any event no less frequently than monthly). Executive's base
salary shall be subject to review annually by and at the sole discretion of the
Compensation Committee of the Board and as approved by the Board.
(b) Bonus. Executive shall participate in the CancerVax
Corporation Management Incentive Compensation Plan adopted by the Company or in
such other bonus plan as the Board may approve for the senior executives of the
Company.
(c) Benefits. Executive shall be entitled to participate in
benefits under the Company's benefit plans and arrangements, including, without
limitation, any employee benefit plan or arrangement made available in the
future by the Company to its senior executives, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans
and arrangements. The Company shall have the right to amend or delete any such
benefit plan or arrangement made available by the Company to its senior
executives and not otherwise specifically provided for herein. In addition, the
Company will pay the annual premiums on Executive's disability insurance
policies currently in effect from New York Life and Xxxx Xxxxxx and the $1
million whole life insurance policy from Connecticut Mutual Life Insurance
Company (now Mass Mutual) naming Executive's trust as the beneficiary.
(d) Expenses. The Company shall reimburse Executive for reasonable
business entertainment expenses and any other out-of-pocket business expenses
incurred in connection with the performance of his duties hereunder, subject to
(i) such policies as the Company may from time to time establish, and (ii)
Executive furnishing the Company with evidence in the form of receipts
satisfactory to the Company substantiating the claimed expenditures. In
addition, the Company shall pay for the lease of an automobile for Executive's
use in the performance of his services hereunder as determined by the
Compensation Committee of the Board. The Company will reimburse Executive for
reasonable gas and maintenance expenses incurred in the performance of his
services hereunder. Executive agrees to provide documentation of these expenses
as may be reasonably required.
(e) Paid Time Off; Vacation. Executive shall be entitled to such
periods of paid time off ("PTO") each year as provided under the Company's PTO
policy and as otherwise provided for senior executive officers; provided that
Executive shall be entitled to at least twenty (20) days paid vacation per year.
(f) Equity Plans; Terms of Initial Option. Executive shall be
entitled to participate in any equity or other employee benefit plan that is
generally available to senior
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executive officers, as distinguished from general management, of the Company.
Except as otherwise provided in this Agreement, Executive's participation in and
benefits under any such plan shall be on the terms and subject to the conditions
specified in the governing document of the particular plan. As set forth in the
Original Agreement, the exercise period of the stock option granted to Executive
on December 19, 2000, pursuant to the Company's 2000 Stock Incentive Plan shall
continue for one (1) year following any termination of Executive's employment,
regardless of the grounds for such termination.
(g) Acceleration In Connection With a Change of Control. Subject
to any additional acceleration of exercisability described in Sections 5(b), (c)
and (d) below, in connection with a Change of Control (as defined in Section 1
above):
(i) The vesting and exercisability of fifty percent (50%) of
Executive's outstanding Stock Awards shall be automatically accelerated on the
date of such Change of Control.
(ii) If Executive's employment is terminated by the Company
without Cause, by Executive for Good Reason, or as a result of Executive's death
or Permanent Disability, the vesting and/or exercisability of each of
Executive's outstanding Stock Awards shall be automatically accelerated on the
date of termination as to the number of Stock Awards that would vest over the
twelve (12) month period following the date of termination had Executive
remained continuously employed by the Company during such period.
(iii) With respect to Stock Awards granted prior to the
Effective Date, if Executive's employment is terminated by the Company without
Cause, by Executive for Good Reason, or as a result of Executive's death or
Permanent Disability, in each case within six (6) months following a Change of
Control, the vesting and/or exercisability of any outstanding unvested portions
of such Stock Awards shall be automatically accelerated on the date of
termination.
(iv) With respect to Stock Awards granted on or after the
Effective Date, if Executive's employment is terminated by the Company without
Cause, by Executive for Good Reason, or as a result of Executive's death or
Permanent Disability, in each case within six (6) months prior to or six (6)
months following a Change of Control, the vesting and/or exercisability of any
outstanding unvested portions of such Stock Awards shall be automatically
accelerated on the later of (A) the date of termination or (B) the date of the
Change of Control.
(v) If Executive is still employed by or providing services
to the Company on the six (6) month anniversary of a Change of Control, the
vesting and/or exercisability of all of Executive's outstanding unvested Stock
Awards shall be automatically accelerated on such date.
(vi) The vesting pursuant to clauses (i), (ii), (iii), (iv)
and (v) of this Section 4(g) shall be cumulative. The foregoing provisions are
hereby deemed to be a part of each Stock Award and to supersede any less
favorable provision in any agreement or plan regarding such Stock Award.
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5. Termination and Severance. Executive shall be entitled to receive
benefits upon termination of employment only as set forth in this Section 5:
(a) At-Will Employment; Termination. The Company and Executive
acknowledge that Executive's employment is and shall continue to be at-will, as
defined under applicable law, and that Executive's employment with the Company
may be terminated by either party at any time for any or no reason, with or
without notice. If Executive's employment terminates for any reason, Executive
shall not be entitled to any payments, benefits, damages, awards or compensation
other than as provided in this Agreement. Executive's employment under this
Agreement shall be terminated immediately on the death of Executive.
(b) Termination by Death. If Executive's employment is terminated
by death, Executive's estate shall be entitled to receive (i) Executive's fully
earned but unpaid base salary, through the date of death at the rate then in
effect, plus all other amounts to which Executive is entitled under any
compensation plan or practice of the Company at the time of Executive's death,
(ii) Executive's annual base salary as in effect immediately prior to the date
of death, payable over the twelve (12) month period commencing on the date of
death in equal monthly installments, (iii) an amount equal to Executive's Bonus
for the year in which Executive's death occurs, payable over the twelve (12)
month period commencing on the date of death in equal monthly installments, (iv)
for the period beginning on the date of death and ending on the date which is
twelve (12) full months following the date of death (or, if earlier, the date on
which the applicable continuation period under COBRA expires), the Company shall
reimburse Executive's eligible dependents for the costs associated with
continuation coverage for such eligible dependents pursuant to the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") (provided that
Executive's dependents shall be solely responsible for all matters relating to
such continuation of coverage pursuant to COBRA, including, without limitation,
election of such coverage and his timely payment of premiums), and (v) life
insurance benefits pursuant to any life insurance purchased by the Company for
the benefit of Executive and the life insurance policy referred to in Section
4(c) above.
(c) Termination for Permanent Disability. If Executive's
employment is terminated by the Company for Permanent Disability, Executive
shall be entitled to receive (i) Executive's fully earned but unpaid base
salary, through the date of termination at the rate then in effect, plus all
other amounts to which Executive is entitled under any compensation plan or
practice of the Company at the time such payments are due, (ii) Executive's
annual base salary as in effect immediately prior to the date of termination,
payable over the twelve (12) month period commencing on the date of termination
in equal monthly installments, (iii) an amount equal to Executive's Bonus for
the year in which the date of termination occurs, payable over the twelve (12)
month period commencing on the date of termination in equal monthly
installments, and (iv) for the period beginning on the date of termination and
ending on the date which is twelve (12) full months following the date of
termination (or, if earlier, the date on which the applicable continuation
period under COBRA expires), (A) reimburse Executive for the costs associated
with continuation coverage pursuant to COBRA for Executive and his eligible
dependents who were covered under the Company's health plans as of the date of
Executive's termination (provided that Executive shall be solely responsible for
all matters relating to his continuation of coverage pursuant to COBRA,
including, without limitation, his election of such coverage and
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his timely payment of premiums), and (B) pay for and provide Executive and such
eligible dependents with life insurance benefits coverage to the extent such
Executive and/or such dependents were receiving such benefits prior to the date
of Executive's termination.
(d) Termination without Cause or for Good Reason.
(i) Termination Apart From Change of Control. If Executive's
employment is terminated by the Company without Cause or by Executive for Good
Reason more than six (6) months prior to a Change of Control or more than twelve
(12) months following a Change of Control, Executive shall be entitled to
receive, in lieu of any severance benefits to which Executive may otherwise be
entitled under any severance plan or program of the Company, the benefits
provided below:
(A) the Company shall pay to Executive his fully
earned but unpaid base salary, when due, through the date of termination
at the rate then in effect, plus all other amounts to which Executive is
entitled under any compensation plan or practice of the Company at the
time of termination;
(B) Executive shall be entitled to receive severance
pay in an amount equal to the sum of:
(1) Executive's monthly base salary as in effect
immediately prior to the date of termination for the twelve (12)
month period following the date of termination, payable over the
twelve (12) month period commencing on the date of termination in
equal monthly installments, plus
(2) an amount equal to Executive's Bonus for
the year in which the date of termination occurs, payable over the
twelve (12) month period commencing on the date of termination in
equal monthly installments;
(C) for the period beginning on the date of
termination and ending on the date which is twelve (12) full months
following the date of termination (or, if earlier, the date on which the
applicable continuation period under COBRA expires), (1) reimburse
Executive for the costs associated with continuation coverage pursuant to
COBRA for Executive and his eligible dependents who were covered under the
Company's health plans as of the date of Executive's termination (provided
that Executive shall be solely responsible for all matters relating to his
continuation of coverage pursuant to COBRA, including, without limitation,
his election of such coverage and his timely payment of premiums), and (2)
pay for and provide Executive and such eligible dependents with life
insurance benefits coverage to the extent such Executive and/or such
dependents were receiving such benefits prior to the date of Executive's
termination; and
(D) Executive shall be entitled to executive-level
outplacement services at the Company's expense, not to exceed $15,000.
Such services shall be provided by a firm selected by Executive from a
list compiled by the Company.
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(ii) Termination In Connection With Change of Control. If
Executive's employment is terminated by the Company without Cause or by
Executive for Good Reason within six (6) months prior to or twelve (12) months
following a Change of Control, Executive shall be entitled to receive, in lieu
of any severance benefits to which Executive may otherwise be entitled under any
severance plan or program of the Company, the benefits provided below:
(A) the Company shall pay to Executive his fully
earned but unpaid base salary, when due, through the date of termination
at the rate then in effect, plus all other amounts to which Executive is
entitled under any compensation plan or practice of the Company at the
time of termination;
(B) Executive shall be entitled to receive severance
pay in an amount equal to the sum of:
(1) Executive's monthly base salary as in effect
immediately prior to date of termination for the eighteen (18) month
period following the date of termination, payable over the eighteen
(18) month period commencing on the date of termination in equal
monthly installments, plus
(2) an amount equal to Executive's Bonus for the
year in which the date of termination occurs, payable over the
eighteen (18) month period commencing on the date of termination in
equal monthly installments;
(C) For the period beginning on the date of
termination and ending on the date which is eighteen (18) full months
following the date of termination (or, if earlier, the date on which the
applicable continuation period under COBRA expires), (1) reimburse
Executive for the costs associated with continuation coverage pursuant to
COBRA for Executive and his eligible dependents who were covered under the
Company's health plans as of the date of Executive's termination (provided
that Executive shall be solely responsible for all matters relating to his
continuation of coverage pursuant to COBRA, including, without limitation,
his election of such coverage and his timely payment of premiums), and (2)
pay for and provide Executive and such eligible dependents with life
insurance benefits coverage to the extent such dependents were receiving
such benefits prior to the date of Executive's termination;
(D) Executive shall be entitled to executive-level
outplacement services at the Company's expense, not to exceed $15,000.
Such services shall be provided by a firm selected by Executive from a
list compiled by the Company; and
(E) The payments and benefits provided for in this
Section 5(d)(ii) shall only be payable in the event Executive's employment
is terminated by the Company without Cause or by Executive for Good Reason
within six (6) months prior to or twelve (12) months following a Change of
Control. If Executive's employment is terminated by the Company without
Cause or by Executive for Good Reason prior to a Change of Control and
such Change of Control is not consummated within six (6) months following
such termination, then Executive shall receive the payments and benefits
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described in Section 5(d)(i) and shall not be eligible to receive any of
the payments and benefits described in this Section 5(d)(ii).
(e) Termination for Cause, Voluntary Resignation Without Good
Reason or Expiration of Employment Period. If Executive's employment is
terminated by the Company for Cause or by Executive without Good Reason (other
than as a result of Executive's death or Permanent Disability), or if the
Employment Period expires, the Company shall not have any other or further
obligations to Executive under this Agreement (including any financial
obligations) except that Executive shall be entitled to receive (i) Executive's
fully earned but unpaid base salary, through the date of termination at the rate
then in effect, and (ii) all other amounts or benefits to which Executive is
entitled under any compensation, retirement or benefit plan or practice of the
Company at the time of termination in accordance with the terms of such plans or
practices, including, without limitation, any continuation of benefits required
by COBRA or applicable law. In addition, if Executive's employment is terminated
by the Company for Cause or by Executive without Good Reason (other than as a
result of Executive's death or Permanent Disability), or if the Employment
Period expires, all vesting of Executive's unvested Stock Awards previously
granted to him by the Company shall cease and none of such unvested Stock Awards
shall be exercisable following the date of such termination. The foregoing shall
be in addition to, and not in lieu of, any and all other rights and remedies
which may be available to the Company under the circumstances, whether at law or
in equity.
(f) Release. As a condition to Executive's receipt of any
post-termination benefits described in this Agreement, Executive shall execute a
Release (the "Release") in a form reasonably acceptable to the Company. Such
Release shall specifically relate to all of Executive's rights and claims in
existence at the time of such execution, including any claims related to
Executive's employment by the Company and his termination of employment, and
shall exclude any continuing obligations the Company may have to Executive
following the date of termination under this Agreement or any other agreement
providing for obligations to survive Executive's termination of employment.
(g) Exclusive Remedy. Except as otherwise expressly required by
law (e.g., COBRA) or as specifically provided herein, all of Executive's rights
to salary, severance, benefits, bonuses and other amounts hereunder (if any)
accruing after the termination of Executive's employment shall cease upon such
termination. In the event of a termination of Executive's employment with the
Company, Executive's sole remedy shall be to receive the payments and benefits
described in this Section 5. In addition, Executive acknowledges and agrees that
he is not entitled to any reimbursement by the Company for any taxes payable by
Executive as a result of the payments and benefits received by Executive
pursuant to this Section 5, including, without limitation, any excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended.
(h) No Mitigation. Executive shall not be required to mitigate the
amount of any payment provided for in this Section 5 by seeking other employment
or otherwise, nor shall the amount of any payment or benefit provided for in
this Section 5 be reduced by any compensation earned by Executive as the result
of employment by another employer or self-employment or by retirement benefits;
provided, however, that loans, advances or other amounts owed by Executive to
the Company may be offset by the Company against amounts
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payable to Executive under this Section 5; provided, further, that, as provided
in Sections 5(c) or (d), Executive's right to continued healthcare and life
insurance benefits following his termination of employment will terminate on the
date on which the applicable continuation period under COBRA expires.
(i) Return of the Company's Property. If Executive's employment is
terminated for any reason, or if the Employment Period expires, the Company
shall have the right, at its option, to require Executive to vacate his offices
prior to or on the effective date of termination and to cease all activities on
the Company's behalf. Upon the termination of his employment in any manner, as a
condition to the Executive's receipt of any post-termination benefits described
in this Agreement, Executive shall immediately surrender to the Company all
lists, books and records of, or in connection with, the Company's business, and
all other property belonging to the Company, it being distinctly understood that
all such lists, books and records, and other documents, are the property of the
Company. Executive shall deliver to the Company a signed statement certifying
compliance with this Section 5(i) prior to the receipt of any post-termination
benefits described in this Agreement.
(j) Waiver of the Company's Liability. Executive recognizes that
his employment is subject to termination with or without Cause for any reason
and therefore Executive agrees that Executive shall hold the Company harmless
from and against any and all liabilities, losses, damages, costs and expenses,
including but not limited to, court costs and reasonable attorneys' fees, which
Executive may incur as a result of the termination of Executive's employment.
Executive further agrees that Executive shall bring no claim or cause of action
against the Company for damages or injunctive relieve based on a wrongful
termination of employment. Executive agrees that the sole liability of the
Company to Executive upon termination of this Agreement shall be that determined
by this Section 5. In the event this covenant is more restrictive than permitted
by laws of the jurisdiction in which the Company seeks enforcement thereof, this
covenant shall be limited to the extent permitted by law.
6. Certain Covenants.
(a) Noncompetition. Except as may otherwise be approved by the
Board, during the term of Executive's employment, Executive shall not have any
ownership interest (of record or beneficial) in, or have any interest as an
employee, salesman, consultant, officer or director in, or otherwise aid or
assist in any manner, any firm, corporation, partnership, proprietorship or
other business that engages in any county, city or part thereof in the United
States and/or any foreign country in a business which competes directly or
indirectly (as determined by the Board) with the Company's business in such
county, city or part thereof, so long as the Company, or any successor in
interest of the Company to the business and goodwill of the Company, remains
engaged in such business in such county, city or part thereof or continues to
solicit customers or potential customers therein; provided, however, that
Executive may own, directly or indirectly, solely as an investment, securities
of any entity which are traded on any national securities exchange if Executive
(x) is not a controlling person of, or a member of a group which controls, such
entity; or (y) does not, directly or indirectly, own one percent (1%) or more of
any class of securities of any such entity.
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(b) Confidential Information. Executive and the Company have
entered into the Company's standard employee confidentiality and invention
assignment agreement (the "Employee Confidentiality and Invention Assignment
Agreement"). Executive agrees to perform each and every obligation of Executive
therein contained.
(c) Rights and Remedies Upon Breach. If Executive breaches or
threatens to commit a breach of any of the provisions of this Section 6 (the
"Restrictive Covenants"), the Company shall have the following rights and
remedies, each of which rights and remedies shall be independent of the other
and severally enforceable, and all of which rights and remedies shall be in
addition to, and not in lieu of, any other rights and remedies available to the
Company under law or in equity:
(i) Specific Performance. The right and remedy to have the
Restrictive Covenants specifically enforced by any court having equity
jurisdiction, all without the need to post a bond or any other security or to
prove any amount of actual damage or that money damages would not provide an
adequate remedy, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Company and that money
damages will not provide adequate remedy to the Company; and
(ii) Accounting and Indemnification. The right and remedy to
require Executive (i) to account for and pay over to the Company all
compensation, profits, monies, accruals, increments or other benefits derived or
received by Executive or any associated party deriving such benefits as a result
of any such breach of the Restrictive Covenants; and (ii) to indemnify the
Company against any other losses, damages (including special and consequential
damages), costs and expenses, including actual attorneys' fees and court costs,
which may be incurred by them and which result from or arise out of any such
breach or threatened breach of the Restrictive Covenants.
(d) Severability of Covenants/Blue Pencilling. If any court
determines that any of the Restrictive Covenants, or any part thereof, is
invalid or unenforceable, the remainder of the Restrictive Covenants shall not
thereby be affected and shall be given full effect, without regard to the
invalid portions. If any court determines that any of the Restrictive Covenants,
or any part thereof, are unenforceable because of the duration of such provision
or the area covered thereby, such court shall have the power to reduce the
duration or area of such provision and, in its reduced form, such provision
shall then be enforceable and shall be enforced. Executive hereby waives any and
all right to attack the validity of the Restrictive Covenants on the grounds of
the breadth of their geographic scope or the length of their term.
(e) Enforceability in Jurisdictions. The Company and Executive
intend to and do hereby confer jurisdiction to enforce the Restrictive Covenants
upon the courts of any jurisdiction within the geographical scope of such
covenants. If the courts of any one or more of such jurisdictions hold the
Restrictive Covenants wholly unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of the Company and Executive that such
determination not bar or in any way affect the right of the Company to the
relief provided above in the courts of any other jurisdiction within the
geographical scope of such covenants, as to breaches of such covenants in such
other respective jurisdictions, such covenants as they
13
relate to each jurisdiction being, for this purpose, severable into diverse and
independent covenants.
(f) Definitions. For purposes of this Section 6, the term
"Company" means not only CancerVax Corporation, but also any company,
partnership or entity which, directly or indirectly, controls, is controlled by
or is under common control with CancerVax Corporation.
7. Insurance. The Company shall have the right to take out life,
health, accident, "key-man" or other insurance covering Executive, in the name
of the Company and at the Company's expense in any amount deemed appropriate by
the Company. Executive shall assist the Company in obtaining such insurance,
including, without limitation, submitting to any required examinations and
providing information and data required by insurance companies.
8. Arbitration. Except as provided in Section 6, any claim or
controversy arising out of or relating to this Agreement shall be settled by
arbitration in San Diego, California, in accordance with the Employment
Arbitration Rules of the American Arbitration Association, and judgment on the
award rendered by the arbitrator may be entered in any court having
jurisdiction. Each party shall select one arbitrator and the two arbitrators so
chosen will select a third arbitrator who shall act as the sole arbitrator of
any dispute. Each party shall pay the fees of its own attorneys, the expenses of
its witnesses and all other expenses connected with presenting its case;
however, Executive and the Company agree that, to the extent permitted by law,
the arbitrator may, in his discretion, award reasonable attorneys' fees to the
prevailing party. Other costs of the arbitration, including the cost of any
record or transcripts of the arbitration, administrative fees, the fee of the
sole arbitrator, and all other fees and costs, shall be borne by the Company.
9. General Relationship. Executive shall be considered an employee of
the Company within the meaning of all federal, state and local laws and
regulations including, but not limited to, laws and regulations governing
unemployment insurance, workers' compensation, industrial accident, labor and
taxes.
10. Miscellaneous.
(a) Modification; Prior Claims. This Agreement sets forth the
entire understanding of the parties with respect to the subject matter hereof,
supersedes all existing agreements between them concerning such subject matter,
including the Original Agreement, and may be modified only by a written
instrument duly executed by each party.
(b) Assignment; Assumption by Successor. The rights of the Company
under this Agreement may, without the consent of Executive, be assigned by the
Company, in its sole and unfettered discretion, to any person, firm, corporation
or other business entity which at any time, whether by purchase, merger or
otherwise, directly or indirectly, acquires all or substantially all of the
assets or business of the Company. The Company will require any successor
(whether direct or indirect, by purchase, merger or otherwise) to all or
substantially all of the business or assets of the Company expressly to assume
and to 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; provided, however, that no such assumption
14
shall relieve the Company of its obligations hereunder. As used in this
Agreement, the "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law or otherwise.
(c) Survival. The covenants, agreements, representations and
warranties contained in or made in Sections 5, 6, 8 and 10 of this Agreement
shall survive any termination of Executive's employment.
(d) Third-Party Beneficiaries. This Agreement does not create, and
shall not be construed as creating, any rights enforceable by any person not a
party to this Agreement.
(e) Waiver. The failure of either party hereto at any time to
enforce performance by the other party of any provision of this Agreement shall
in no way affect such party's rights thereafter to enforce the same, nor shall
the waiver by either party of any breach of any provision hereof be deemed to be
a waiver by such party of any other breach of the same or any other provision
hereof.
(f) Section Headings. The headings of the several sections in this
Agreement are inserted solely for the convenience of the parties and are not a
part of and are not intended to govern, limit or aid in the construction of any
term or provision hereof.
(g) Notices. All notices, requests and other communications
hereunder shall be in writing and shall be delivered by courier or other means
of personal service (including by means of a nationally recognized courier
service or professional messenger service), or sent by telex or telecopy or
mailed first class, postage prepaid, by certified mail, return receipt
requested, in all cases, addressed to:
If to the Company or the Board:
CancerVax Corporation
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Legal Affairs Department
If to Executive:
Xxxxx X. Xxxx
Post Office Box 8925
00000 Xxxxx xxx Xxx
Xxxxxx Xxxxx Xx, Xxxxxxxxxx 00000
All notices, requests and other communications shall be deemed given on the date
of actual receipt or delivery as evidenced by written receipt, acknowledgement
or other evidence of actual receipt or delivery to the address. In case of
service by telecopy, a copy of such notice shall be personally delivered or sent
by registered or certified mail, in the manner set forth above, within three
business days thereafter. Any party hereto may from time to time by notice
15
in writing served as set forth above designate a different address or a
different or additional person to which all such notices or communications
thereafter are to be given.
(h) Severability. All Sections, clauses and covenants contained in
this Agreement are severable, and in the event any of them shall be held to be
invalid by any court, this Agreement shall be interpreted as if such invalid
Sections, clauses or covenants were not contained herein.
(i) Governing Law and Venue. This Agreement is to be governed by
and construed in accordance with the laws of the State of California applicable
to contracts made and to be performed wholly within such State, and without
regard to the conflicts of laws principles thereof. Except as provided in
Sections 6 and 8, any suit brought hereon shall be brought in the state or
federal courts sitting in San Diego, California, the parties hereto hereby
waiving any claim or defense that such forum is not convenient or proper. Each
party hereby agrees that any such court shall have in personam jurisdiction over
it and consents to service of process in any manner authorized by California
law.
(j) Non-transferability of Interest. None of the rights of
Executive to receive any form of compensation payable pursuant to this Agreement
shall be assignable or transferable except through a testamentary disposition or
by the laws of descent and distribution upon the death of Executive. Any
attempted assignment, transfer, conveyance, or other disposition (other than as
aforesaid) of any interest in the rights of Executive to receive any form of
compensation to be made by the Company pursuant to this Agreement shall be void.
(k) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
(l) Construction. The language in all parts of this Agreement
shall in all cases be construed simply, according to its fair meaning, and not
strictly for or against any of the parties hereto. Without limitation, there
shall be no presumption against any party on the ground that such party was
responsible for drafting this Agreement or any part thereof.
(m) Withholding and other Deductions. All compensation payable to
Executive hereunder shall be subject to such deductions as the Company is from
time to time required to make pursuant to law, governmental regulation or order.
(Signature Page Follows)
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
CANCERVAX CORPORATION
By: /s/ Xxxxxxx X. XxXxx
----------------------------
Xxxxxxx X. XxXxx
Senior Vice President and
Chief Financial Officer
EXECUTIVE
/s/ Xxxxx X. Xxxx
--------------------------------
Xxxxx X. Xxxx
