Exhibit 10.18
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TERMINATION AGREEMENT
This Agreement is made as of the 14th day of September, 1999, between
MGI PHARMA, INC., a Minnesota corporation, with its principal offices at Suite
300E Opus Center, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Company") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("Employee"), residing at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
WITNESSETH THAT:
WHEREAS, this Agreement is intended to specify the financial
arrangements that the Company will provide to the Employee upon Employee's
separation from employment with the Company under any of the circumstances
described herein; and
WHEREAS, this Agreement is entered into by the Company in the belief
that it is in the best interests of the Company and its shareholders to provide
stable conditions of employment for Employee notwithstanding the possibility,
threat or occurrence of certain types of change in control, thereby enhancing
the Company's ability to attract and retain highly qualified people.
NOW, THEREFORE, to assure the Company that it will have the continued
dedication 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, and for other good and valuable consideration, the
Company and Employee agree as follows:
1. Term of Agreement. The term of this Agreement shall commence on
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the date hereof as first written above and shall continue through December 31,
1999; provided that commencing on January 1, 2000 and each January 1 thereafter,
the term of this Agreement shall automatically be extended for one additional
year unless not later than twelve months prior to such January 1, the Company
shall have given notice that it does not wish to extend this Agreement (which
notice may not, in any event, be given sooner than January 1, 2000); and
provided, further, that notwithstanding any such notice by the Company not to
extend, this Agreement shall continue in effect for a period of 24 months beyond
the term provided herein if a Change in Control (as defined in Section 3(i)
hereof) shall have occurred during such term.
2. Termination of Employment
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(i) Prior to a Change in Control. Prior to a Change in Control (as
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defined in Section 3(i) hereof), the Company may terminate Employee from
employment with the Company at will, with or without Cause (as defined in
Section 3(iii) hereof), at any time.
(ii) After a Change in Control
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(a) From and after the date of a Change in Control (as defined in Section
3(i) hereof) during the term of this Agreement, the Company shall not terminate
Employee from employment with the Company except as provided in this Section
2(ii) or as a result of Employee's Disability (as defined in Section 3(iv)
hereof) or his death.
(b) From and after the date of a Change in Control (as defined in Section
3(i) hereof) during the term of this Agreement, the Company shall have the right
to terminate Employee from employment with the Company at any time during the
term of this Agreement for Cause (as defined in Section 3(iii) hereof), by
written notice to the Employee, specifying the particulars of the conduct of
Employee forming the basis for such termination.
(c) From and after the date of a Change in Control (as defined in Section
3(i) hereof) during the term of this Agreement: (x) the Company shall have the
right to terminate Employee's employment without Cause (as
defined in Section 3(iii) hereof), at any time; and (y) the Employee shall, upon
the occurrence of such a termination by the Company without Cause, or upon the
voluntary termination of Employee's employment by Employee for Good Reason (as
defined in Section 3(ii) hereof), be entitled to receive the benefits provided
in Section 4 hereof. Employee shall evidence a voluntary termination for Good
Reason by written notice to the Company given within 60 days after the date of
the occurrence of any event that Employee knows or should reasonably have known
constitutes Good Reason for voluntary termination. Such notice need only
identify the Employee and set forth in reasonable detail the facts and
circumstances claimed by Employee to constitute Good Reason.
Any notice given by Employee pursuant to this Section 2 shall be effective five
business days after the date it is given by Employee.
3. Definitions
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(i) A "Change in Control" shall mean:
(a) a change in control of a nature that would be 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 (the "Exchange Act"), or successor
provision thereto, whether or not the Company is then subject to such reporting
requirement;
(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 35% or more of the combined voting power of the
Company's then outstanding securities;
(c) the Continuing Directors (as defined in Section 3(v) hereof) cease to
constitute a majority of the Company's Board of Directors; provided that such
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change is the direct or indirect result of a proxy fight and contested election
or elections for positions on the Board of Directors; or
(d) the majority of the Continuing Directors (as defined in Section 3(v)
hereof) determine in their sole and absolute discretion that there has been a
change in control of the Company.
(ii) "Good Reason" shall mean the occurrence of any of the following
events, except for the occurrence of such an event in connection with the
termination or reassignment of Employee's employment by the Company for Cause
(as defined in Section 3(iii) hereof), for Disability (as defined in Section
3(iv) hereof) or for death:
(a) the assignment to Employee of employment responsibilities which are
not of comparable responsibility and status as the employment responsibilities
held by Employee immediately prior to a Change in Control;
(b) a reduction by the Company in Employee's base salary as in effect
immediately prior to a Change in Control;
(c) an amendment or modification of the Company's incentive compensation
program (except as may be required by applicable law) which affects the terms or
administration of the program in a manner adverse to the interest of Employee as
compared to the terms and administration of such program immediately prior to a
Change in Control;
(d) the Company's requiring Employee to be based anywhere other than
within 50 miles of Employee's office location immediately prior to a Change in
Control, except for requirements of temporary travel on the Company's business
to an extent substantially consistent with Employee's business travel
obligations immediately prior to a Change in Control;
(e) except to the extent otherwise required by applicable law, the failure
by the Company to continue in effect any benefit or compensation plan, stock
ownership plan, stock purchase plan, bonus plan, life insurance plan,
health-and-accident plan or disability plan in which Employee is participating
immediately prior to a Change in Control (or plans providing Employee with
substantially similar benefits), the taking of any action by the Company which
would adversely affect Employee's participation in, or materially reduce
Employee's benefits under, any of such plans or deprive Employee of any material
fringe benefit enjoyed by Employee immediately prior to such Change in Control,
or the failure by the Company to provide Employee with the number of paid
vacation days to which Employee is entitled immediately prior to such Change in
Control in accordance with the Company's vacation policy as then in effect; or
(f) the failure by the Company to obtain, as specified in Section 5(i)
hereof, an assumption of the obligations of the Company to perform this
Agreement by any successor to the Company.
(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 any such
actual or anticipated failure resulting from Employee's termination for Good
Reason) or (b) the willful engaging by Employee in misconduct which is
materially injurious to the Company, monetarily or otherwise. For purposes of
this Section 3(iii), no action or failure to act on Employee's part shall be
considered "willful" unless done, or omitted to be done, by Employee in bad
faith and without reasonable belief that his 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 Company's long-
term disability plan.
(v) "Continuing Director" shall mean any person who is a member
of the Board of Directors of the Company, while such person is a member of the
Board of Directors, who is not an Acquiring Person (as hereinafter defined) or
an Affiliate or Associate (as hereinafter defined) of an Acquiring Person, or a
representative of an Acquiring Person or of any such Affiliate or Associate, and
who (a) was a member of the Board of Directors on the date of this Agreement as
first written above or (b) subsequently becomes a member of the Board of
Directors, if such person's initial nomination for election or initial election
to the Board of Directors is recommended or approved by a majority of the
Continuing Directors. For purposes of this Section 3(v): "Acquiring Person"
shall mean any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) who or which, together with all Affiliates and Associates of such
person, is the "beneficial owner" (as defined in Rule 13d-3 promulgated under
the Exchange Act) of 20% or more of the shares of Common Stock of the Company
then outstanding, but shall not include the Company, any subsidiary of the
Company or any employee benefit plan of the Company or of any subsidiary of the
Company or any entity holding shares of Common Stock organized, appointed or
established for, or pursuant to the terms of, any such plan; and "Affiliate" and
"Associate" shall have the respective meanings ascribed to such terms in Rule
12b-2 promulgated under the Exchange Act.
4. Benefits upon Termination under Section 2(ii)(c)
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(i) Upon the termination (voluntary or involuntary) of the
employment of Employee pursuant to Section 2(ii)(c) hereof, Employee shall be
entitled to receive the benefits specified in this Section 4. The amounts due to
Employee under subparagraphs (a), (b) and (c) of this Section 4(i) shall be paid
to Employee not later than one business day prior to the date that the
termination of Employee's employment becomes effective (the "Employment
Termination Date"). All benefits to Employee pursuant to this Section 4(i) shall
be subject to any applicable payroll or other taxes required by law to be
withheld.
(a) The Company shall pay to Employee any and all amounts payable to
Employee pursuant to any standard or general severance policy of the Company or
its Board of Directors;
(b) In lieu of any further base salary payments to Employee for
periods subsequent to the Employment Termination Date, the Company shall pay as
severance pay to Employee a lump-sum cash amount equal to twenty-four (24) times
the Employee's monthly base salary (as in effect in the month preceding the
month,
in which the termination becomes effective or as in effect in the month
preceding the Change in Control, whichever is higher);
(c) The Company shall also pay to Employee all legal fees and expenses
incurred by Employee as a result of such termination of employment (including
all fees and expenses, if any, incurred by Employee in seeking to obtain or
enforce any right or benefit provided to Employee by this Agreement whether by
arbitration or otherwise); and
(d) Any and all contracts, agreements or arrangements between
the Company and Employee prohibiting or restricting the Employee from owning,
operating, participating in, or providing employment or consulting services to,
any business or company competitive with the Company at any time or during any
period after the Employment Termination Date, shall be deemed terminated and of
no further force or effect as of the Employment Termination Date, to the extent,
but only to the extent, such contracts, agreements or arrangements so prohibit
or restrict the Employee; provided that the foregoing provisions shall not
constitute a license or right to use any proprietary information of the Company
and shall in no way affect any such contracts, agreements or arrangements
insofar as they relate to nondisclosure and nonuse of proprietary information of
the Company notwithstanding the fact that such nondisclosure and nonuse may
prohibit or restrict the Employee in certain competitive activities.
(ii) 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 or from any other source.
(iii) In the event that any payment or benefit received or to be
received by Employee in connection with a Change in Control of the Company or
termination of Employee"s employment (whether payable pursuant to the terms of
this Agreement or any other plan, contract, agreement or arrangement with the
Company, with any person whose actions result in a Change in Control of the
Company or with any person constituting a member of an "affiliated group" as
defined in Section 280G(d)(5) of the Internal Revenue Code of 1986, as amended
(the "Code"), with the Company or with any person whose actions result in a
Change in Control of the Company (collectively, the "Total Payments")) would be
subject to the excise tax imposed by Section 4999 of the Code or any interest,
penalties or additions to tax with respect to such excise tax (such excise tax,
together with any such interest, penalties or additions to tax, are collectively
referred to as the "Excise Tax"), then Employee shall be entitled to receive
from the Company an additional cash payment (a "Gross-Up Payment") within thirty
business days of such determination in an amount such that after payment by
Employee of all taxes (including such interest, penalties or additions to tax
imposed with respect to such taxes), including any Excise Tax, imposed upon the
Gross-Up Payment, Employee retains an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon the Total Payments. All determinations required to
be made under this Section 4(iii), including whether a Gross-Up Payment is
required and the amount of such Gross-Up Payment, shall be made by the
independent accounting firm retained by the Company on the date of the Change in
Control (the "Accounting Firm"), which shall provide detailed supporting
calculations both to the Company and Employee within 15 business days of the
Employment Termination Date, or such earlier time as is requested by the
Company. If the Accounting Firm determines that no Excise Tax is payable by
Employee, it shall furnish Employee with an opinion that Employee has
substantial authority not to report any Excise Tax on his or her federal income
tax return.
Any uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder shall be
resolved in favor of Employee. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that at a later time there will be a
determination that the Gross-Up Payments made by the Company were less than the
Gross-Up Payments that should have been made by the Company ("Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that Employee is required to make a payment of any Excise Tax, the Accounting
Firm shall determine the amount of the Underpayment, if any, that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of Employee. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting
Firm hereunder, it is possible that at a later time there will be a
determination that the Gross-Up Payments made by the Company were more than the
Gross-Up Payments that should have been made by the Company ("Overpayment"),
consistent with the calculations required to be made hereunder. Employee agrees
to refund to the Company the amount of any Overpayment that the Accounting Firm
shall determine has occurred hereunder. Any determination by the Accounting Firm
as to the amount of any Gross-Up Payment, including the amount of any
Underpayment or Overpayment, shall be binding upon the Company and Employee.
5. Successors and Binding Agreement
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(i) The Company will 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 agreement in
form and substance satisfactory to Employee, to expressly assume and 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.
Failure of the Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle
Employee to compensation from the Company in the same amount and on the same
terms as Employee would be entitled hereunder if employee terminated Employee's
employment after a Change in Control for Good Reason, except that for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the date that the termination of Employee's employment
becomes effective. As used in this Agreement, "Company" shall mean the Company
and any successor to its business and/or assets 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 Employee's rights or duties hereunder, or any
compensation due to Employee 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. Arbitration. Any dispute or controversy arising under or in
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connection with this Agreement shall be settled exclusively by arbitration in
the Minneapolis-St. ▇▇▇▇ metropolitan area, in accordance with the applicable
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction.
7. Modification; Waiver. No provisions of this Agreement may be
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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, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
8. Notice. All notices, requests, demands and all other
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communications required or permitted by either party to the other party by
this Agreement (including, without limitation, any notice of termination of
employment and any notice of intention to arbitrate) shall be in writing and
shall be deemed to have been duly given when delivered personally or received by
certified or registered mail, return receipt requested, postage prepaid, at the
address of the other party, as first written above (directed to the attention of
the Board of Directors and Corporate Secretary in the case of the Company).
Either party hereto may change its address for purposes of this Section 8 by
giving 15 days' prior notice to the other party hereto.
9. Severability. If any term or provision of this Agreement or
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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.
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
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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, and without
taking into consideration the conflict of law provisions of such state.
12. Effect of Agreement; Entire Agreement. The Company and the
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Employee understand and agree that this Agreement is intended to reflect
their agreement only with respect to payments and benefits upon termination in
certain cases and is not intended to create any obligation on the part of either
party to continue employment. This Agreement supersedes any and all other oral
or written agreements or policies made relating to the subject matter hereof and
constitutes the entire agreement of the parties 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 caused this Agreement to
be executed, all as of the date first written above.
MGI PHARMA, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Its CEO & President
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EMPLOYEE
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇