VERMILLION, INC. SEVERANCE AGREEMENT
Exhibit 10.1
XXXXXXXXXX, INC.
XXXXXXXXX AGREEMENT
XXXXXXXXX AGREEMENT
SEVERANCE AGREEMENT (“Agreement”) made this ___day of ___, 2008 (the “Effective Date”),
between Xxxxxxxxxx, Inc. (“Company”) and [ ] (“Executive,” and together with the Company,
the “Parties”).
WHEREAS, Executive is a key executive of the Company and the Company’s Board of Directors (the
“Board”), or a duly-authorized committee thereof, has determined that it is in the best interests
of the Company to encourage Executive’s continued employment with, and dedication to, the Company
in the face of potentially distracting circumstances arising from the possibility of a future,
though presently unanticipated, “Change in Control” (as defined below), or upon a termination
without “Cause” (as defined below) or for “Good Reason” (as defined below);
NOW, THEREFORE, the Parties agree as follows:
1. Term. The term of this Agreement shall be for a period commencing on the Effective
Date and ending on the earlier of (a) the date twelve (12) months after the Effective Date,
including any extensions provided for herein, and (b) the date of Executive’s “Separation from
Service” (as defined in Section 2(e)) for any reason. If Executive has not incurred a Separation
from Service before the date determined by Section 1(a) hereof, this Agreement shall be
automatically renewed for one additional year on such date, and each annual anniversary thereof to
follow, unless the Company gives contrary written notice to Executive at least thirty (30) days
before any such renewal date. References herein to the term of this Agreement shall include the
initial term and any additional years for which this Agreement is renewed.
2. Definitions. For purposes of this Agreement, the terms below that begin with
initial capital letters within this Agreement shall have the specially defined meanings set forth
below (unless the context clearly indicates a different meaning).
(a) “Cause” means termination of employment by reason of Executive’s:
(i) material breach of this Agreement, the Proprietary Information and Inventions Agreement
(the “PIIA”), or any other confidentiality, invention assignment or similar agreement with the
Company;
(ii) repeated negligence in the performance of Executive’s duties or nonperformance or
misperformance of such duties that in the good faith judgment of the Company’s Board of Directors
adversely affects the operations or reputation of the Company;
(iii) refusal to abide by or comply with the good faith directives of the Company’s CEO or
Board of Directors or the Company’s standard policies and procedures, which actions continue for a
period of at least ten (10) days after written notice from the Company;
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(iv) violation or breach of the Company’s Code of Ethics, Financial Information Integrity
Policy, Xxxxxxx Xxxxxxx Compliance Program, or any other similar code or policy adopted by the
Company and generally applicable to the Company’s employees, as then in effect;
(v) willful dishonesty, fraud, or misappropriation of funds or property with respect to the
business or affairs of the Company;
(vi) conviction by or entry of a plea of guilty or nolo contendere, in a court of competent
and final jurisdiction, which constitutes a felony in the jurisdiction involved; or
(vii) abuse of alcohol or drugs (legal or illegal) that in the Board of Director’s reasonable
judgment, materially impairs Executive’s ability to perform Executive’s duties.
(b) “Change in Control” means:
(i) after the date hereof, any “person” (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 50% or more of the total voting power represented by the Company’s then
outstanding voting securities; or
(ii) the date of the consummation of a merger or consolidation of the Company with any other
corporation or entity that has been approved by the stockholders of the Company, other than a
merger or consolidation that would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent more than fifty percent (50%) of the total voting
power represented by the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or
(iii) the date of the consummation of the sale or disposition of all or substantially all of
the Company’s assets.
(c) “Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
(d) “Good Reason” means the occurrence of any one or more of the following events,
without Executive’s consent, which continues uncured for a period of not less than thirty (30))
days following written notice given by Executive to the Company within thirty (30) days following
the occurrence of such event:
(i) a material and adverse change in Executive’s title or duties, including a change in
reporting relationship; or
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(ii) the Company requiring Executive to relocate to a location that is more than fifty (50)
miles away from Executive’s current principal location in Fremont, California.
In addition, Executive must actually terminate Executive’s employment with the Company within two
years following the initial existence of the condition described above in (i) or (ii) giving rise
to Good Reason.
(e) “Separation from Service” or “Separates from Service” shall mean
Executive’s termination of employment, as determined in accordance with Treas. Reg. § 1.409A-1(h).
Executive shall be considered to have experienced a termination of employment when the facts and
circumstances indicate that Executive and the Company reasonably anticipate that either (i) no
further services will be performed for the Company after a certain date, or (ii) that the level of
bona fide services Executive will perform for the Company after such date (whether as an employee
or as an independent contractor) will permanently decrease to no more than twenty percent (20%) of
the average level of bona fide services performed by Executive (whether as an employee or
independent contractor) over the immediately preceding thirty-six (36) month period (or the full
period of services to the Company if Executive has been providing services to the Company for less
than thirty six (36) months). If Executive is on military leave, sick leave, or other bona fide
leave of absence, the employment relationship between Executive and the Company shall be treated as
continuing intact, provided that the period of such leave does not exceed six months, or if longer,
so long as Executive retains a right to reemployment with the Company under an applicable statute
or by contract. If the period of a military leave, sick leave, or other bona fide leave of absence
exceeds six months and Executive does not retain a right to reemployment under an applicable
statute or by contract, the employment relationship shall be considered to be terminated for
purposes of this Agreement as of the first day immediately following the end of such six-month
period. In applying the provisions of this paragraph, a leave of absence shall be considered a
bona fide leave of absence only if there is a reasonable expectation that Executive will return to
perform services for the Company.
3. Severance Benefits and Conditions.
(a) Termination without Cause or for Good Reason. In the event the Company
terminates Executive’s employment for reasons other than for Cause or for Good Reason, and
provided that Executive signs and does not revoke a standard release of all claims against the
Company, in a form reasonably satisfactory to the Company, and does not breach any material
surviving provision of this Agreement or the PIIA, Executive shall receive, subject to Section 5:
(i) continued payment of Executive’s base salary, as then in effect, payable over a period of
[ ] months following the date of termination (the “Severance Period”), to be paid periodically
in accordance with the Company’s standard payroll practices;
(ii) immediate, accelerated vesting of twenty four (24) months of any options previously
granted by the Company to Executive; and
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(iii) continuation of Company health and dental benefits through COBRA premiums paid by the
Company directly to the COBRA administrator during the Severance Period; provided, however, that
such premium payments shall cease prior to the end of the Severance Period if Executive commences
other employment and receives reasonably comparable or greater health and dental benefits.
Executive will not be eligible for any salary, bonus, vesting of stock options or
other benefits not described above after termination of employment, except as may be required by
law.
(b) Termination after Change in Control. If Executive’s employment is terminated by
the Company for reasons other than for Cause or by Executive for Good Reason within the twelve (12)
month period following a Change in Control, then, in addition to the severance obligations due to
Executive under Section 3 above, one-hundred percent (100%) of any then-unvested shares under
Company stock options then held by Executive will vest upon the date of such termination.
4. Employment, Confidential Information and Invention Assignment Agreement. As a
condition of this Agreement, Executive shall complete, sign and return the Company’s PIIA.
5. Taxes. All payments made pursuant to this Agreement will be subject to withholding
of applicable taxes. Notwithstanding the foregoing, Executive is solely responsible and liable for
the satisfaction of any federal, state, province or local taxes that may arise with respect to this
Agreement (including any taxes arising under Section 409A of the Internal Revenue Code (the “IRC”),
except to the extent otherwise specifically provided in a written agreement with the Company.
Neither the Company nor any of its employees, officers, directors, or service providers shall have
any obligation whatsoever to pay such taxes, to prevent Executive from incurring them, or to
mitigate or protect Executive from any such tax liabilities. Notwithstanding anything in this
Agreement to the contrary, if any amounts that become due under this Agreement on account of
Executive’s termination of employment constitute “nonqualified deferred compensation” within the
meaning of IRC Section 409A, payment of such amounts shall not commence until Executive incurs a
Separation from Service. If, at the time of Executive’s Separation from Service under this
Agreement, Executive is a “specified employee” (within the meaning of IRC Section 409A), any
amounts that constitute “nonqualified deferred compensation” within the meaning of IRC Section 409A
that become payable to Executive on account of Executive’s Separation from Service (including any
amounts payable pursuant to the preceding sentence) will not be paid until after the end of the
sixth calendar month beginning after Executive’s Separation from Service (the “409A Suspension
Period”). Within 14 calendar days after the end of the 409A Suspension Period, Executive shall be
paid a lump sum payment in cash equal to any payments delayed because of the preceding sentence.
Thereafter, Executive shall receive any remaining benefits as if there had not been an earlier
delay.
6. Arbitration and Equitable Relief
(a) In consideration of Executive’s employment with the Company, its promise to arbitrate all
employment-related disputes and Executive’s receipt of compensation
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and other benefits paid to Executive by the Company, at present and in the future, Executive
aggress that any and all controversies, claims, or disputes with anyone (including the Company and
any employee, officer, director, or benefit plan of the Company in their capacity as such or
otherwise) arising out of, relating to, or resulting from Executive’s employment with the Company
or the termination of Executive’s employment with the Company, including any breach of this
Agreement, shall be subject to binding arbitration pursuant to California law. Disputes which
Executive agrees to arbitrate, and thereby agree to waive any right to a trial by jury, include any
statutory claims under state or federal law, including, but not limited to, claims under Title VII
of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Age
Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, the California
Fair Employment and Housing Act, the California Labor Code, claims of harassment, discrimination of
wrongful termination and any statutory claims. Executive further understands that this agreement
to arbitrate also applies to any disputes that the Company may have with the Executive.
(b) Executive aggress that any arbitration will be administered by the American Arbitration
Association (“AAA”) and that the neutral arbitrator will be selected in a manner consistent with
its National Rules for the Resolution of Employment Disputes. Executive aggress that the parties
are entitled to adequate discovery and the arbitrator shall have the power to decide any motions
brought by any party to the arbitration, including motions for summary judgment and/or adjudication
and motions to dismiss and demurrers, prior to any arbitration hearing. Executive also agrees that
the arbitrator shall have the power to award any remedies, including attorneys’ fees and costs,
available under applicable law. Executive understands the Company will pay for any administrative
or hearing fees charged by the arbitrator or AAA except that Executive shall pay the first $125.00
of any filing fees associated with any arbitration Executive initiates, unless such would cause
undue hardship to the Executive. Executive agrees that the arbitrator shall administer and conduct
any arbitration in a manner consistent with the Rules and that to the extent that the AAA’s
National Rules for the Resolution of Employment Disputes conflict with the Rules, the Rules shall
take precedence. Executive agrees that the decision of the arbitrator shall be in writing and
subject to limited judicial review where provided by law.
(c) Except as provided by the Rules and this Agreement, arbitration shall be the sole,
exclusive and final remedy for any dispute between Executive and the Company. Accordingly, except
as provided for by the Rules and this Agreement, neither Executive nor the Company will be
permitted to pursue court action regarding claims that are subject to arbitration.
Notwithstanding, the arbitrator will not have the authority to disregard or refuse to enforce any
reasonable and lawful company policy, and the arbitrator shall not order or require the Company to
adopt a policy not otherwise required by law which the Company has not adopted.
(d) In addition to the right under the Rules to petition the court for provisional relief,
Executive agrees that any party may also petition the court for injunctive relief where either
party alleges or claims a violation of the PIIA between Executive and the Company or any other
agreement regarding trade secrets, confidential information, nonsolicitation or Labor Code §2870.
Executive understands that any breach or threatened breach of such an agreement will cause
irreparable injury and that money damages will not provide an adequate remedy
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therefore and both parties hereby consent to the issuance of an injunction. In the event
either party seeks injunctive relief, the prevailing party shall be entitled to recover reasonable
costs and attorneys’ fees, consistent with applicable law.
(e) Executive understands that this Agreement does not prohibit Executive from pursuing an
administrative claim with a local, state or federal administrative body such as the Department of
Fair Employment and Housing, the Equal Employment Opportunity Commission or the Workers’
Compensation Board. This Agreement does, however, preclude Executive from pursuing court action
regarding any such claim.
(f) Executive acknowledges and agrees that Executive is executing this Agreement voluntarily
and without any duress or undue influence by the Company or anyone else. Executive further
acknowledges and agrees that Executive has carefully read this Agreement and that Executive has
asked any questions needed for Executive to understand the terms, consequences and binding effect
of this Agreement and fully understand it, including that Executive is waiving Executive’s right to
a jury trial. Finally, Executive agrees that Executive has been provided an opportunity to seek
the advice of an attorney of Executive’s choice before signing this Agreement.
7. Entire Agreement. All oral or written agreements or representations express or
implied, with respect to the subject matter of this Agreement are set forth in this Agreement.
This Agreement contains the entire understanding between the parties hereto and supersedes any
prior employment or change-in-control protective agreement between the Company or any predecessor
and Executive, except that this Agreement shall not affect or operate to reduce any benefit or
compensation inuring to Executive of a kind elsewhere provided. No provision of this Agreement
shall be interpreted to mean that Executive is subject to receiving fewer benefits than those
available to him without reference to this Agreement.
8. Notices. All notices made pursuant to this Agreement shall be given in writing,
delivered by a generally recognized overnight express delivery service, and shall be made to the
following addresses, or such other addresses as the Parties may later designate in writing:
If to the Company:
Xxxxxxxxxx, Inc.
00000 Xxxxxxx Xxxx.
Xxxxxxx, Xxxxxxxxxx 00000
00000 Xxxxxxx Xxxx.
Xxxxxxx, Xxxxxxxxxx 00000
If to the Executive:
[ ]
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9. No Waiver. No waiver of any term of this Agreement constitutes a waiver of any
other term of this Agreement.
10. Amendment to this Agreement. This Agreement may be amended only in writing by an
agreement specifically referencing this Agreement, which is signed by both Executive and an
executive officer or member of the Board of Directors of the Company authorized to do so by the
Board by Resolution.
11. Non-Disclosure. Unless required by law or to enforce this Agreement, the parties
hereto shall not disclose the existence of this Agreement or the underlying terms to any third
party, other than their representatives who have a need to know such matters.
12. Enforceability; Severability. If any provision of this Agreement shall be invalid
or unenforceable, in whole or in part, such provision shall be deemed to be modified or restricted
to the extent and in the manner necessary to render the same valid and enforceable, or shall be
deemed exercised from this Agreement, as the case may require, and this Agreement shall be
construed and enforced to the maximum extent permitted by law as if such provision had been
originally incorporated herein as so modified or restricted, or as if such provision had not been
originally incorporated herein, as the case may be.
13. Governing Law. This Agreement shall be construed and enforced in accordance with
the law of the State of California without giving effect to California’s choice of law rules. This
Agreement is deemed to be entered into entirely in the State of California. This Agreement shall
not be strictly construed for or against either party.
14. Successors of the Company. The rights and obligations of the Company under this
Agreement shall inure to the benefit of, and shall be binding upon, the successors and assigns of
the Company. This Agreement shall be assignable by the Company in the event of a merger or similar
transaction in which the Company is not the surviving entity, or a sale of all or substantially all
of the Company’s assets.
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IN WITNESS WHEREOF, the Company and Executive have executed and entered into this Agreement
effective as of the date first shown above.
Date: _________________, 2008 | XXXXXXXXXX, INC. |
|||
By: | ||||
Name: | Xxxx Page | |||
Title: | President | |||
Date: _________________, 2008 | ||||
[ ] | ||||
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