Exhibit 10.1
SEPARATION AGREEMENT AND RELEASE OF CLAIMS
This Separation Agreement and Release of Claims ("Agreement") is entered into by and between Endocyte, Inc. ("Endocyte"), and David D. Meek ("Meek") (collectively, the "Parties").
Recitals
A. Endocyte and Meek are parties to a Change in Control and Severance Agreement ("Severance Agreement"), a copy of which is attached as Exhibit A, which, among other things, conditions Meek's receipt of certain severance benefits on execution of this Agreement.
B. Through this Agreement, Endocyte is offering special consideration to Meek that he would not otherwise be entitled to receive in exchange for Meek, among other things, agreeing to the terms by which his employment with Endocyte will terminate and agreeing to waive and release, to the fullest extent permitted by law, all claims he has or may have against Endocyte up through the date of his signature on this Agreement, including without limitation claims arising out of his employment with, and service as an officer of, Endocyte and the termination of that employment and service.
C. Meek's employment with Endocyte is at-will and is subject to various statutes, regulations, and common laws, including the Age Discrimination in Employment Act of 1967 ("Age Act"), as amended (29 U.S.C. §621,etseq.). If Meek does not revoke this Agreement by appropriate notice as defined below, this Agreement will be effective the eighth day after Meek executes this Agreement ("Effective Date").
Agreement
In consideration of the foregoing and the following mutual undertakings, and subject to the terms and conditions of this Agreement, Meek and Endocyte agree as follows:
1. Endocyte has decided to terminate Meek's employment as of the end of the day on a date (the "Termination Date") no later than August 29, 2014. Endocyte may determine that Meek's last day of employment with Endocyte is effective as of a date earlier than August 29, 2014, in which case the Termination Date will be that last day of employment. Meek agrees to tender his resignation as an officer of Endocyte effective as of his Termination Date. The Parties acknowledge and agree that the termination of Meek's employment with Endocyte is involuntary as to Meek. The Parties further acknowledge and agree that the termination of Meek's employment with Endocyte will be subject to Section 3(a) of the Severance Agreement.
2. Endocyte will continue to pay Meek's base salary through his Termination Date, and will pay Meek for his accrued but unused vacation time as of his Termination Date, in each case net of applicable tax withholdings in accordance with Endocyte’s normal payroll practices. These payments are not contingent upon Meek's execution of this Agreement and will not be considered severance compensation.
3. Contingent upon this Agreement becoming effective, enforceable, and irrevocable no later than the sixtieth (60th) day following the Termination Date (the "Effective Date Contingency") and the full satisfaction of any other Conditions to Receipt of Severance set forth in Section 4 of the Severance Agreement, Endocyte will:
(a) Pay Meek special severance compensation in the total gross amount of Two Hundred Sixty Thousand One Hundred Eighty-Six Dollars and No Cents ($260,186.00), minus applicable employment tax withholdings, which represents Seventy Five Percent (75%) of Meek's current base annual salary. This amount will be paid to Meek in a lump sum within thirty (30) days following the Termination Date (or, if the Effective Date Contingency is satisfied after that thirtieth (30th) day, then within five (5) days after it is satisfied). Meek acknowledges and agrees that the payment to be made pursuant to this Section 3(a) fully satisfies Endocyte's obligations under Section 3(a)(i) of the Severance Agreement.
(b) Accelerate vesting of stock option and restricted stock unit awards that have been granted to Meek under Endocyte's 2010 Equity Incentive Plan (the "2010 Plan"), as follows:
(i) The portion of the stock options that, but for the termination of Meek’s employment, would have vested with respect to Grant Nos. 2297168 and 2296613 dated August 3, 2012, during the period beginning on the Termination Date and ending on August 3, 2015 (the "Accelerated Vesting Period") will be accelerated and become exercisable as of the Termination Date, but exercise of the options with respect to those shares will be subject to the satisfaction of the Effective Date Contingency and to the terms of the 2010 Plan and the applicable stock option grant agreement.
(ii) The portion of the stock options that, but for the termination of Meek’s employment, would have vested with respect to Grant Nos. 2393001 and 2363376 dated February 19, 2013, during the Accelerated Vesting Period will be accelerated and become exercisable as of the Termination Date, but exercise of the options with respect to those shares will be subject to the satisfaction of the Effective Date Contingency and to the terms of the 2010 Plan and the applicable stock option grant agreement.
(iii) The portion of the stock options that, but for the termination of Meek’s employment, would have vested with respect to Grant Nos. 2538390 and 2532386 dated February 6, 2014, during the Accelerated Vesting Period will be accelerated and become exercisable as of the Termination Date, but exercise of the options with respect to those shares will be subject to the satisfaction of the Effective Date Contingency and to the terms of the 2010 Plan and the applicable stock option grant agreement.
(iv) With respect to Grant No. 2533532 dated February 6, 2014, restricted stock units (“RSUs”) that, but for the termination of Meek’s employment, would have vested on February 6, 2015 will instead become vested as of the Termination Date, and those RSUs will be settled and paid in the form of Endocyte common stock as soon as practicable after the Effective Date Contingency is satisfied, but in no event later than the 15th day of the third month following the Termination Date. As provided in the applicable RSU award agreement, unless Meek provides notice to Endocyte prior to the Termination Date that Meek desires to pay cash to satisfy all applicable tax withholding requirements and Meek makes such cash available to Endocyte prior to the Termination Date, Endocyte will withhold from the payment of common stock upon settlement and payment of the RSUs otherwise deliverable shares of common stock having a Fair Market Value equal to the minimum statutory amount required to be withheld.
Meek acknowledges and agrees that the actions Endocyte will take pursuant to this Section 3(b) fully satisfy Endocyte's obligations under Section 3(a)(ii) of the Severance Agreement, and that any deviation from the precise terms of Section 3(a)(ii) of the Severance Agreement has been made at Meek's request.
Meek further acknowledges that the terms applicable to the foregoing options allow for exercise for a limited period of three (3) months following the Termination Date, which period will not be tolled pending the satisfaction of the Effective Date Contingency.
For the avoidance of doubt, Meek's rights with respect to option shares that were vested and exercisable prior to the Termination Date shall continue to be governed by the terms of the 2010 Plan and the applicable stock option grant agreement.
(c) Pay Meek within 30 days following the Termination Date (or, if the Effective Date Contingency is satisfied after the thirtieth (30th) day, then within five (5) days after it is satisfied) a gross lump sum amount of $13,920.21, which is subject to applicable tax withholdings.. This gross amount represents the amount required to pay nine months of COBRA premiums for health, dental, and vision insurance Meek had through Endocyte as of the Termination Date. Meek may use this amount to fund COBRA continuation coverage or for any other purpose of his choosing. Meek acknowledges and agrees that this payment fully satisfies Endocyte's obligations under Section 3(a)(iii) of the Severance Agreement and that any deviation from the precise terms of Section 3(a)(iii) of the Severance Agreement has been made at Meek's request.
4. Upon receipt of the payments, accelerated options and RSUs, and other consideration set forth in Sections 2 and 3 of this Agreement, Meek acknowledges and agrees that: a) Endocyte has paid him all salary, compensation, bonuses, benefits, stock options and awards, vacation and other paid time off, and remuneration of any kind that it owes him in connection with his service as an officer for Endocyte and his employment with Endocyte under any grant, award, agreement, policy, plan, practice, law, statute, regulation, or obligation of any kind or nature, b) Endocyte has satisfied all obligations it has or may have to Meek under the Severance Agreement, and c) Endocyte owes Meek nothing beyond that which is set forth in Sections 2 and 3 of this Agreement.
5. To the fullest extent permitted by law, Meekirrevocably and unconditionally releases, forever discharges, and covenants not to sue a) Endocyte, b) all of Endocyte's officers, directors, managers, employees, representatives, stockholders, benefit plans and programs, trusts, trustees, administrators, fiduciaries, insurers, attorneys, assigns, agents, both individually and in their representative capacities, and c) all persons acting by, through, under, or in concert with any of the foregoing entities or individuals (collectively "Releasees") as to all claims and actions (including for attorneys' fees and costs actually incurred), whether known or unknown, suspected or unsuspected, that have accrued as of the date Meek signs this Agreement, whether or not the claim has been asserted or could have been asserted in any forum, including but not limited to all claims i) arising from Meek's service as an officer of Endocyte, from Meek's employment with Endocyte, and/or from the termination of such service and/or employment, ii) arising under the Severance Agreement, iii) arising under the Age Act and its state and local law equivalents, the Older Worker Benefit Protection Act, Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, the Family and Medical Leave Act, the Employee Retirement Income Security Act of 1974, as amended, 42 U.S.C. 1981, and the Americans With Disabilities Act, as amended, iv) arising under any contract or agreement Meek may have with Endocyte, written, oral, or otherwise, v) arising under all federal, state, and local laws, and vi) based on contract, tort, common law, and other legal theories. This release shall be construed as broadly as lawfully possible and is intended, to the fullest extent permitted by law, to include all claims that Meek may have against any of the Releasees as of the date Meek signs this Agreement. Notwithstanding the foregoing, the Parties acknowledge and agree that the release does not extend to w) any of Meek's rights as a holder of stock, options or RSUs of Endocyte, including any of his rights under any Award Agreement (as defined in the 2010 Plan) entered into between Endocyte and Meek, x) any of Meek's rights under this Agreement, y) any rights Meek may have for indemnification of any third-party claim relating to Meek’s service as an employee or officer of Endocyte, or z) any claims that cannot by law be released through this Agreement.
Nothing in this Agreement shall constitute or be construed as a waiver of future claims or a waiver of Meek's right to file a charge with the U.S. Equal Employment Opportunity Commission or its state or local counterpart or to participate in an investigation of any such charge. However, Meek does release to the fullest extent permitted by law his right to file a court action and to seek or to accept individual remedies or damages in any action filed on his behalf, and this release shall apply with full force and effect to any proceeding arising from or relating to such recourse including, but not limited to, the right to monetary damages or other individual legal or equitable relief.
6. Meek represents, warrants, and agrees that he has not disclosed and will not disclose to any person or entity, either directly or indirectly, or by implication or innuendo, the terms of this Agreement or the amount Endocyte will pay pursuant to this Agreement unless explicitly required by law to the contrary. Meek further agrees that, unless explicitly required by law to the contrary, neither he nor anyone acting under his control or at his direction will disclose any information concerning the terms of this Agreement or the amount Endocyte will pay pursuant to this Agreement. Notwithstanding the foregoing, nothing in this Agreement prohibits Meek from disclosing its terms to (a) the EEOC or any comparable state or local agency, or (b) his counsel, present spouse, or professional financial adviser or tax preparer (any such disclosee under this clause (b) being referred to as a “disclosee”) if he first informs the disclosee of the foregoing confidentiality provisions and the disclosee agrees to abide by them. Meek understands that a breach by any disclosee will be deemed a breach by Meek.
7. Meek agrees not to seek employment or work in any other capacity with Endocyte, and Meek agrees that Endocyte has the right not to hire him or utilize his services. Meek further agrees that if he becomes employed by Endocyte, then Endocyte has the right to terminate his employment or cancel his services, and Meek releases all Releasees from all liability and waives all claims that may relate to such action.
8. Meek agrees to return promptly to Endocyte all Endocyte's property, documents, and materials in Meek's possession or subject to Meek's control, including equipment, computers and electronic devices, access cards, keys, manuals, and written literature (including electronically stored data in any form).
9. Meek affirms thathe is not aware of any undisclosed or unresolved compliance issues arising under any federal, state or local law. Meek also affirms that he has not and will not alter, destroy, remove, or inappropriately limit Endocyte's access to its records or documents.
10. Meek agrees not to make comments about Endocyte's management, policies, practices, or services that may jeopardize or have a negative impact on the Releasees' economic interests or reputation; provided, however, that nothing in this Agreement shall limit Meek's right to communicate with the EEOC or a comparable state or local agency for purposes of filing a charge with such agency or participating or cooperating in the agency’s investigation of any charge. Subject to this provision, Meek and Endocyte agree not to make false, negative or disparaging statements about the other (or, in the case of Meek, about Endocyte's management, policies, practices or services) to any other person or entity, except as may be legally required.
11. Meek represents and warrants that he has not commenced an action of any kind in any forum against Endocyte or any of the other Releasees.
12. This Agreement does not constitute an admission by the Releasees that any has violated any law or committed any wrongful act, and each specifically denies having done so. This Agreement may not be introduced into evidence or relied upon by either Party in legal proceedings except proceedings regarding breach of the terms of this Agreement or by the Releasees in defending legal claims.
13. This Agreement contains the entire agreement between the Parties relating to the matters addressed in this Agreement and supersedes all prior written or oral negotiations, representations, or understandings relating to the matters addressed in this Agreement unless otherwise preserved in this Agreement. However, all intellectual property assignment, dispute resolution, restrictive stock transfer, voting, right of first refusal, lock up, confidentiality, nondisclosure, non-compete, non-solicitation and other post-employment restrictions and covenants that apply to Meek by virtue of his employment with Endocyte, Endocyte's plans, policies, and practices, or other prior agreements, statutes or common law remain in full force and effect and are not in any way affected, diminished or superseded by this Agreement. Furthermore, this Agreement does not affect Meek's legal obligation to protect the confidentiality of Endocyte's information, including but not limited to personnel and personal (including medical) information, research, trade secrets, proprietary information, business plans and models, and financial data thatMeek obtained in connection withhis employment with Endocyte. This Agreement can only be modified by a writing signed by both Parties.
14. Meek acknowledges that he is not relying on any oral or written representations, statements, promises, or other inducements made by Endocyte or its representatives except those expressly stated in this Agreement.
15. A court of competent jurisdiction's declaration that any portion of this Agreement is illegal or unenforceable will not affect the legality, enforceability, or validity of the remainder of this Agreement so long as the economic or legal substance this Agreement contemplates is not affected in any manner materially adverse to any Party.
16. This Agreement will be binding upon and inure to the benefit of the Parties' heirs, personal representatives, successors and assigns.
17. This Agreement will be construed and enforced in accordance with Indiana law without regard to conflict of laws principles. Endocyte and Meek agree that any legal action relating to this Agreement will be commenced and maintained exclusively before an appropriate state or federal court of record in Indiana. The Parties will submit to the jurisdiction of those courts and waive any right to challenge personal jurisdiction or venue in any action commenced or maintained in those courts.
18. This Agreement may be executed in counterparts or using facsimile or electronic signatures, each of which will have the same force and effect as original signatures.
19. The Parties agree that neither shall be deemed to be the drafter of this Agreement, which will be interpreted and construed without presumption or inference based upon or against the Party responsible for its drafting.
20. Meek acknowledges that he has had a reasonable opportunity to read and discuss all aspects of this Agreement with counsel, fully understands all provisions of it, and is entering into this Agreement voluntarily and entirely of his own free will under no duress or coercion.
21. Meek acknowledges that Endocyte (a) provided him this Agreement on June 17, 2014; (b) advised him at that time to consult an attorney prior to signing the Agreement; (c) informed Meek at the time he was provided this Release that he would have a minimum of twenty-one (21) days (i.e., until the later of (i) twenty-one (21) days from the date he is provided this Agreement or (ii) his Termination Date) to accept this offer by signing this Agreement; (d) informed him that the earliest date he may sign this Agreement for it to be effective is his Termination Date; and (e) informed him that this Agreement will not be effective or enforceable against Meek or Endocyte if Meek revokes it by written notice to Katherine Parker at Endocyte received not later than seven (7) days after Meek signs the Agreement. If not revoked, the Agreement will become binding and enforceable on the eighth day following Employee's signing the Agreement, i.e., on the "Effective Date."Meek agrees that changes to this Agreement do not restart the time period set forth above.
22. The Recitals are an integral part of this Agreement and specifically are incorporated by reference.
Meek and Endocyte have executed this Separation Agreement and Release of Claims on the date(s) stated below.
| "MEEK" | | "ENDOCYTE" |
| | | |
| DAVID D. MEEK | | ENDOCYTE, INC. |
| | | | |
| /s/ D. D. Meek | | By | /s/ Mike Sherman |
| [Signature] | | | |
| | | Title | CFO |
| | | | |
| Date | 7/13/2014 | | Date | July 13, 2014 |
Exhibit A
ENDOCYTE,INC.
CHANGE IN CONTROL AND SEVERANCE AGREEMENT
ThisChangein Control andSeveranceAgreement (the"Agreement")is made and entered into byandbetweenDavid D.Meek("Executive")and Endocyte,Inc.,a Delawarecorporation(the"Company"),effective as of August 3,2012(the"EffectiveDate").
RECITALS
1. It ispossiblethat theCompanycould te1minateExecutive's employmentwiththeCompany and itis expectedthattheCompanyfrom time to timewillconsiderthepossibility of anacquisitionbyanothercompany orother changein control. TheBoardofDirectors of theCompany (the"Board')recognizes thatsuch considerations canbeadistraction toExecutiveand can cause Executivetoconsideralternativeemploymentopportunities. The Boardhasdetermined that it isinthe bestinterestsof the Company andits stockholdersto assure that theCompany will have thecontinued dedication and objectivity ofExecutive,notwithstandingthe possibility,threat or occurrence ofsuchaterminationofemploymentortheoccurrence ofa Changein Control (as definedherein)oftheCompany.
2. The Board believes that it isinthe bestinterestsof theCompanyanditsstockholders to provideExecutivewithanincentiveto continuehisemployment and to motivateExecutiveto maximizethevalueof theCompany forthe benefitofitsstockholders.
3. The Board believes that itisimperative to provideExecutive withcertain severancebenefitsuponExecutive'stermination ofemployment and with certainadditionalbenefits upona ChangeinControl.These benefitswillprovideExecutive withenhancedfinancialsecurity,incentiveand encouragementto remainwiththeCompany.
4. Certain capitalizedtermsusedin the Agreementare defined in Section6below.
AGREEMENT
NOW,THEREFORE,inconsideration of the mutual covenantscontainedherein,the parties heretoagreeas follows:
1.This Agreement will haveaninitial term of three (3)yearscommencing ontheEffectiveDate (the"Initial Term").On the thirdanniversaryof theEffectiveDate,thisAgreementwillrenewautomaticallyfor additionalone (1)year terms (eachan"Additional Term"),unlesseither party providesthe other partywith writtennoticeofnon-renewalatleastsixty(60)days prior to the dateof automaticrenewal.Notwithstanding theforegoingprovisionsofthisparagraph,if a ChangeinControloccurs whenthereare fewerthan twelve(12)monthsremaining duringtheInitial Term or an AdditionalTerm,theterm of thisAgreement willextend automatically throughthe date that istwelve (12)monthsfollowingtheeffectivedateoftheChangeinControl. IfExecutive becomesentitledto benefitsunderSection3duringthe term ofthis Agreement,theAgreement willnotterminateuntil alloftheobligations ofthepartiesheretowith respect tothisAgreementhavebeensatisfied.
2. At-Will Employment.The Company andExecutiveacknowledgethatExecutive's employmentis andwillcontinuetobe at-will,asdefinedunderapplicablelaw.
3. Severance Benefits.
(a) TerminationWithoutCauseor Otherthan Deathor Disability,orResignation for GoodReasonPriorto aChangeinControlor After TwelveMonthsFollowing a ChangeinControl.If theCompanyterminatesExecutive's employmentwiththeCompany for areasonotherthanCause or Executive'sdeath orDisability,orifExecutiveresignsfor GoodReason,andsuch terminationoccurs priortoaChangeinControlor aftertwelve(12)months following a Change inControl,then,ineachcasesubjecttoSection 4, Executive will receivethefollowing severancebenefitsfrom the Company:
SeverancePayment.The Company willpayExecutivealumpsumpayment in anamount equal to seventy-five(75%)of Executive'sbase salary,asin effectimmediatelyprior toExecutive'sterminationof employment(unlesssuchtermination occursas aresult ofclause (ii)ofthegoodreasondefinition.
(i) ofthedefinitionof "GoodReason"underSection6(d) below,inwhich casetheamountwill be equalto Executive'sbasesalaryasineffectimmediately priorto suchreduction),less applicable withholdings,payable withinthirty(30)daysfollowingthe date ofExecutive'sterminationof employment.
(ii) Equity.Theunvestedportionof Executive'sthenoutstanding equity awards(the"Awards")coveringsharesof theCompany'scommon stockthat otherwise wouldhavevestedover anine (9)month periodfollowingsuch termination pursuant tothe vestingschedulesetforthinthe awardagreement willimmediatelyvest and,ifapplicable,become exercisable.
If,however,an Awardis tovest,and/ortheamount oftheAwardtovest,isto bedetermined,in partor inwhole,basedontheachievementof performance criteria,thentheAward willvest asto theamount oftheAwardthatwouldhavevestedhad Executiveremained employedthroughsuch nine (9)monthperiod subject tothe determinationoftheachievementof the performancecriteria (withtheamount oftheAward vestingbasedupon theextent to whichtheperformance criteria was sodeterminedtohave beenachieved).Thesettlementof any Awardsthatvest pursuanttothe precedingsentenceshalltakeplaceat thetimeofthe determinationastowhat extentthe performancecriteria fortheperformanceperiodhavebeenachieved.
TheAwardswillremain exercisable,totheextent applicable,followingExecutive'sterminationforthe periodprescribedin the respectiveequity plan andagreementforeachAward.
(iii) ContinuedEmployee Benefits. IfExecutiveelectscontinuation coverage pursuantto theConsolidated OmnibusBudgetReconciliationAct of1985,as amended("COBRA")forExecutive and Executive'seligibledependents(as applicable),withinthetimePeriod prescribed pursuant to COBRA,theCompanywillreimburse Executivefor, or paydirectly on Executive'sbehalf, the COBRA premiumsfor suchcoverage (at thecoveragelevelsineffectimmediately prior to Executive'stermination ofemployment) untilthe earlier of(A) aperiod ofnine(9)months fromthelastdate of employmentofthe Executive with theCompany,or(B)the date uponwhichExecutiveand/or Executive'seligibledependentsbecomescovered undersimilar plans.
(b) Termination withoutCauseor Resignation for Good Reason Within Twelve Months Following a ChangeinControl. If withintwelve (12) monthsfollowing a ChangeinControl,theCompany terminates Executive's employmentwith the CompanyforareasonotherthanCause or Executive'sdeath or Disabilityor Executive resignsfor GoodReason,then,ineach casesubjectto Section4,Executive will receive thefollowingseverancefrom theCompany:
Base Salary Severance. Executive willreceivea lumpsum severancepayment equaltoone hundred percent (100%)ofExecutive'sbasesalary asineffectimmediatelyprior toExecutive'stermination ofemployment (unlessthe termination occurs as a result ofclause (ii) ofthegoodreason definition.
(i) of the definition of"Good Reason"under Section 6(d) below,inwhichcasetheamountwill beequal toExecutive'sannualbasesalaryineffectprior tosuchreduction) or,ifgreater, atthe level ineffectimmediatelyprior totheChangeinControl,lessapplicable withholdings,payablewithin thirty (30)daysfollowingthedate ofExecutive'stermination of employment.
(ii) BonusSeverance. Executive willreceive alumpsumseverancepaymentequalto onehundredpercent (100%)of Executive'starget bonusasineffectfor thefiscalyearinwhich Executive'sterminationof employmentoccurs or,ifgreater,for thefiscalyearin whichthe Changein Control occurs,lessapplicable withholdings,payablewithinthirty(30)daysfollowingthe date ofExecutive'stermination ofemployment.
(iii) Equity.onehundred percent(100%)of the unvested portion of theAwardswillimmediately vest and,ifapplicable,becomeexercisable asofthedateof such termination.
If,however,anAward istovestand/orthe amountofthe Award tovestistobedeterminedbased,inpartorin whole,on the achievement of performancecriteria,then theequity awardwillvestas to one hundred percent(100%)oftheunvested portion oftheAwardassumingthe performancecriteriahad beenachievedattargetlevelsfortherelevantperformance period(s).
The Awards willremain exercisable,to theextent applicable,following Executive'stermination forthe periodprescribedin the respectiveequityplanand agreementforeach Award.
(iv) ContinuedEmployeeBenefits.IfExecutiveelectscontinuation coveragepursuantto COBRA for Executive andExecutive's eligibledependents(as applicable), withinthe time period prescribedpursuanttoCOBRA,theCompany willreimburseExecutive for,or pay directlyon Executive'sbehalf, theCOBRApremiumsfor such coverage (at the coveragelevelsineffectimmediatelypriortoExecutive'sterminationof employment)until theearlier of (A) aperiodoftwelve(12) months from the last dateof employmentofthe Executive withtheCompany,or (B)thedateuponwhichExecutiveand/orExecutive'seligible dependentsbecomes coveredundersimilarplans.
(c) Voluntary Resignation Without GoodReason;Termination for Cause;DeathorDisability. If Executive'semploymentwiththeCompanyterminatesvoluntarilybyExecutive (except uponresignationfor GoodReason),for Causeby theCompany ordue toExecutive'sdeathor Disability,then(i)allvesting willterminate immediatelywithrespect toExecutive's outstanding Awards, (ii) allpaymentsof compensationby theCompanytoExecutive hereunderwillterminate immediately (except as toamounts already earned),and (iii)Executive will only be eligible for severancebenefits inaccordance withtheCompany's establishedpolicies, if any,as thenin effect.
(d) Exclusive Remedy.In theevent of aterminationof Executive's employment as set forthinSections 3(a) and 3(b) ofthisAgreement,the provisionsof Section 3are intended to beand are exclusive andin lieu ofand supersedeanyotherrightsor remediestowhich Executiveor theCompany otherwisemay be entitled,whetherat law, tortorcontract or inequity,or under this Agreement (other than the payment ofaccruedbut unpaidwages, asrequired by law,and anyunreimbursed reimbursable expenses). Executive willbeentitledto no benefits,compensation orotherpayments or rights upon termination ofemploymentotherthanthose benefitsexpressly set forthinSection3of this Agreement.
4. Conditions toReceipt of Severance
(a) Release ofClaimsAgreement. Thereceiptof any severancepaymentsor benefits pursuant tothisAgreement is subjecttoExecutive signingandnot revokingaseparationagreement andreleaseofclaims ina form acceptableto theCompany (the"Release" ),whichmust becomeeffective andirrevocable no later thanthesixtieth (60th)dayfollowingExecutive's termination of employment (the"ReleaseDeadline ").If theReleasedoes not becomeeffective andirrevocableby the Release Deadline,Executive willforfeit any right toseverance payments or benefitsunderthisAgreement.Innoeventwillseverance paymentsor benefitsbe paidorprovided until the Release actuallybecomes effective andirrevocable.
(i) In theeventtheterminationoccurs at atime during thecalendaryearwhentheRelease couldbecome effectiveinthecalendar year followingthecalendar yearinwhichExecutive'sterminationofemploymentoccurs (whether ornot itactuallybecomeseffectivein thefollowingyear),then anyseverance paymentsandbenefitsunder Section3ofthisAgreement thatwouldbeconsideredDeferred Payments (asdefinedin Section4(b)below)willbe paid onthefirst payroll datetooccurduringthecalendaryearfollowingthecalendaryearinwhichsuchtermination occurs, or,if later,(A)thedate the Release actually becomes effective,(B) suchtimeasrequired bythe paymentscheduleapplicabletoeachpayment orbenefitas set forthinSection 4(a)(ii), or (C) such time asrequiredby Section 4(b).
(ii) No severancepaymentsand benefitsunder Section3of this Agreement willbe paid or provideduntilthe Release becomes effective andirrevocable,and anysuch severance payments andbenefitsotherwise payablebetweenthedateof Executive'sterminationof employment and the datetheReleasebecomeseffective andirrevocablewill be paid onthedate the Release becomes effective andirrevocable.
(b) ConfidentialInformationandInventionAssignment Agreements. Executive'sreceiptof anypaymentsorbenefitsunder Section 3 willbesubjecttoExecutivecontinuingto comply withthe termsof any confidential information andinventionassignmentagreementexecutedbyExecutiveinfavorof theCompany andthe provisionsofthisAgreement.
(c) Section409A.
(i) Notwithstanding anythingto thecontrary inthisAgreement,noseverancepayments orbenefitspayable toExecutive,if any,pursuantto thisAgreement that, when consideredtogetherwithanyother severance paymentsorseparationbenefits,is considereddeferredcompensationunder InternalRevenue Code Section409A(together, the"Deferred Payments")willbe payable untilExecutivehasa"separationfrom service" withinthe meaningof Section409A("Section 409A")ofthe InternalRevenue Codeof 1986,asamended(the"Code").Similarly,noseverancepayable toExecutive,if any,pursuant to thisAgreementthat otherwisewouldbe exempt fromSection409A pursuant to Treasury Regulation Section 1.409A-l (b)(9)willbepayableuntilExecutivehasa"separation fromservice" withinthe meaningof Section409A.
(ii) Further, if Executive is a"specifiedemployee"within themeaningof Section 409Aatthe time ofExecutive'sseparationfromservice (other than due to death), any Deferred Payments that otherwise are payablewithin the first six(6) months following Executive's separationfrom service will becomepayableon thefirstpayrolldate thatoccurs on or afterthedatesix(6) months and one (1)dayfollowingthe dateof Executive's separationfromservice.Allsubsequent Deferred Payments,ifany,will be payable in accordance with the payment schedule applicabletoeach payment orbenefit.Notwithstandinganythingherein tothe contrary,in theevent ofExecutive'sdeath following Executive's separation fromservicebutprior to thesix(6)monthanniversary of Executive'sseparationfromservice(or anylaterdelay date),thenany payments delayed inaccordancewith this paragraphwillbe payableinalumpsumassoonas administratively practicable after the date of Executive'sdeath and all otherDeferredPayments will be payableinaccordance with the paymentscheduleapplicable to eachpaymentor benefit.Eachpayment and benefitpayableundertheAgreementisintended toconstitutea separatepayment for purposes of Section1.409A-2(b)(2)oftheTreasury Regulations.
(iii) Any amountpaidunderthisAgreement thatsatisfiesthe requirements ofthe"short-termdeferral" rulesetforthinSection1.409A- l (b)(4)oftheTreasury Regulations willnotconstitute Deferred Payments forpurposesofclause(i) above. Anyamount paid under thisAgreement that qualifies as a paymentmadeas aresultof an involuntary separation fromservicepursuant to Section1.409A-l (b)(9)(iii)of the Treasury Regulationsthatdoesnotexceed the Section 409A Limit (as definedbelow)will notconstituteDeferredPayments forpurposesofclause (i)above.
(iv) The foregoingprovisionsareintendedto complywith,or beexemptfrom,the requirements of Section 409Asothat noneofthe severancepaymentsandbenefits to beprovided under the Agreementwillbesubjectto the additional tax imposed underSection409A,and any ambiguitieshereinwill be interpreted tosocomply or beexempt. ExecutiveandtheCompanyagree toworktogetheringood faith to consider amendments to the Agreement andtotake such reasonableactionswhicharenecessary,appropriate or desirable to avoidimpositionof any additional tax or income recognition priortoactual paymenttoExecutive under Section 409A.Inno event will theCompanyreimburseExecutivefor anytaxes that maybeimposedon Executive asresultofSection409A.
5. Limitation on Payments. In theeventthat theseveranceand other benefits provided for in this Agreementorotherwise payable to Executive (i) constitute"parachutepayments"withinthemeaningof Section 2800 of theCodeand (ii) but for this Section 5, wouldbesubject to theexcisetaximposed by Section 4999 of theCode,thenExecutive'sseverance benefits under Section3will be either:
(a) deliveredinfull,or
(b) delivered astosuchlesserextentwhichwouldresultin noportionof suchseverancebenefits beingsubjecttoexcisetaxunderSection 4999 of the Code,
whicheverof the foregoing amounts, taking intoaccountthe applicablefederal, stateandlocalincometaxesand the excise tax imposed bySection4999, resultsinthereceiptby Executive on anafter-taxbasis, ofthegreatest amount ofseverancebenefits,notwithstanding thatallor someportionof such severancebenefitsmay betaxable underSection4999of the Code. If areduction inseverance and otherbenefitsconstituting"parachute payments"is necessarysothat benefitsaredelivered toalesserextent,reductionwilloccur in thefollowingorder:(i)reduction ofcashpayments; (ii)cancellationofawardsgranted"contingenton a changeinownershiporcontrol"(withinthe meaningof CodeSection2800), (iii)cancellation of accelerated vesting of equity awards; (iv)reductionofemployee benefits.Intheevent thatacceleration of vestingofequity award compensationisto bereduced, suchacceleration ofvestingwillbecancelledin the reverse order of the dateof grantofExecutive's equity awards.
UnlesstheCompany andExecutiveotherwise agreeinwriting, anydeterminationrequiredunderthis Section 5 willbe made inwritingby theCompany'sindependentpublic accountantsimmediatelyprior to the ChangeinControl(the"Accountants"),whosedeterminationwillbeconclusive andbindingupon Executive andtheCompanyforallpurposes.Forpurposesofmaking thecalculationsrequired bythis Section 5,the Accountantsmaymake reasonableassumptions and approximations concerning applicabletaxesandmay relyonreasonable,good faithinterpretationsconcerning the application of Sections 2800 and4999of the Code.TheCompanyand Executivewillfurnish to theAccountants such informationand documentsas the Accountantsmay reasonablyrequest inorder tomakeadetermination under thisSection.TheCompany willbearallcoststheAccountantsmayreasonablyincurinconnection withany calculationscontemplated bythis Section 5.Ifareduction inseverance andother benefitsconstituting"parachute payments"isnecessary sothatbenefitsare deliveredtoalesser extent,reductionwilloccurin thefollowingorder:
(1) reduction of the cash severancepayments;(2)cancellation of accelerated vestingof equity awards; and(3)reductionof continued employee benefits.Inthe eventthatthe acceleratedvestingof equity awardsis to becancelled, such vesting acceleration willbecancelledin thereverse chronological order oftheExecutive's equity awards' grantdates.
6. Definitionof Terms. Forpurposes of thisAgreement,the following termsreferredto in thisAgreement willhave thefollowingmeanings:
(a) Cause."Cause"means(i) an act ofpersonal dishonestytakenbyExecutiveinconnection withhis or her responsibilities as anemployee andintended to result in Executive'ssubstantialpersonal enrichment;(ii) Executivebeingconvicted of,or pleading no contestor guilty to,afelony ormisdemeanor that theCompanyreasonably believes has hador willhave a material detrimentaleffecton theCompany; (iii) a willfulact by Executive thatconstitutes grossmisconduct and that is injurious to theCompany;(iv) following delivery toExecutive of a writtendemandforperformance that describes the basisfortheCompany'sreasonable belief thatExecutivehas notsubstantiallyperformed his or her duties,Executive'scontinuedviolations ofhis or herobligationsto theCompanythat are demonstrablywillful anddeliberate onExecutive'spart;and (v) Executive'smaterialviolationof anywritten employmentpolicy orstandard of conductof theCompany.
(b) ChangeinControl."Change in Control"means the occurrence of anyofthe following:
(i) A changein the ownershipoftheCompany whichoccurson thedate thatany oneperson,ormorethan one person acting as agroup("Person"), acquires ownership ofthestockof the Company that, together withthestockheld bysuchPerson,constitutes more than 50% of the totalvoting powerofthestockof the Company;provided,however,that forpurposesof thissubsection (i), the acquisition of additionalstockby any one Person, whoisconsideredto own morethan 50% ofthe totalvoting powerof thestockof the Company willnot beconsidered a ChangeinControl; or
(ii) A changein theeffective control oftheCompany which occurs onthedate that amajorityofmembersof theBoard(each, a"Director") isreplacedduring any twelve (12) month period by Directorswhoseappointment or electionisnotendorsedbyamajority of themembersoftheBoard priorto thedate ofthe appointment or election.For purposesofthissubsection (ii),ifanyPersonis consideredto be ineffective control oftheCompany, theacquisitionof additional control of the Companybythe same Person willnot beconsidered a ChangeinControl; or
(iii) A changeinthe ownership of asubstantialportion ofthe Company'sassetswhichoccurs on the date that any Person acquires (orhasacquired duringthetwelve (12)monthperiod ending onthedateofthe most recentacquisitionbysuch person or persons) assets from the Company thathavea total gross fair marketvalueequal to ormorethan 50% of the total gross fairmarketvalueof all of the assets of the Companyimmediatelyprior tosuch acquisitionoracquisitions;provided,however,that for purposes of this subsection (iii),thefollowing willnotconstitute a changein theownership of asubstantial portionof theCompany'sassets: (A) a transfertoan entitythat iscontrolled bytheCompany'sstockholdersimmediatelyafter the transfer,or(B) a transfer of assets by the Company to:(I)astockholderoftheCompany(immediately beforetheasset transfer) inexchangefor or withrespecttothe Company'sstock,(2) anentity,50% or more ofthetotal value or voting power of which is owned,directlyorindirectly,bythe Company, (3) a Person,thatowns,directlyorindirectly,50% or more of the totalvalueor votingpowerof all the outstandingstockof the Company,or (4)anentity,atleast50% ofthe totalvalueorvotingpower of whichisowned,directlyorindirectly,by aPersondescribedin thissubsection (iii)(B)(3). For purposes of thissubsection(iii), gross fairmarketvaluemeans thevalueoftheassets oftheCompany,or the value of the assetsbeing disposedof,determinedwithout regardtoanyliabilitiesassociated with such assets.
For purposes of thisdefinitionof Change in Control,persons will beconsidered tobeactingasagroupif theyare owners of a corporationthatentersintoamerger,consolidation,purchaseoracquisition of stock,orsimilarbusinesstransactionwith theCompany.
(c) Disability."Disability"meansExecutiveis unable to engage inany substantial gainful activitybyreason ofany medically determinablephysicalor mentalimpairmentthat can beexpectedtoresult in deathor canbeexpected to lastfor a continuousperiodofnot lessthantwelve(12) months.
(d) Good Reason."GoodReason"meansExecutive'sterminationofemploymentwithinninety (90) days following the expirationof anycure period (discussedbelow)following the occurrence of one or more ofthefollowing, without Executive's expresswrittenconsent: (i) amaterial reductionof Executive'sduties,position,or responsibilities,relativetoExecutive'sduties,position,or responsibilitiesineffectimmediatelyprior tosuch reduction,unlessExecutiveisprovided witha comparableposition (i.e.,apositionofequal or greater organizationallevel,duties,authority, compensation andstatus),provided, however, thatareduction induties,position,or responsibilitiessolelybyvirtueoftheCompanybeingacquired andmadepart of alargerentity (as, forexample, whenthe Chief Executive Officer of the Companyremainsassuchfollowing aChange ofControl but is not theChiefExecutiveOfficerof the acquiringcorporation)willnotconstitute "GoodReason";(ii) amaterialreduction by theCompanyinExecutive'sannualized basepayas ineffectimmediately prior tosuch reduction;(iii) therelocationof Executive'sprincipal placeof performinghisorherdutiesasanemployeeofthe Companyby more than fifty (50)miles;or (iv) thefailureoftheCompanyto obtain theassumptionof thisAgreementby asuccessor.In order foranevent to qualify asGoodReason, Executivemustnotterminate employmentwiththeCompany without firstproviding theCompany withwrittennoticeofthe acts oromissions constitutingthe groundsfor"Good Reason"within ninety (90)days oftheinitialexistenceof thegroundsfor"GoodReason"and a reasonable cureperiodofnotless than thirty (30) daysfollowingthedate ofsuch notice.
(e) Section 409A Limit."Section409A Limit "meansthelesseroftwo (2)times: (i)Executive'sannualizedcompensationbasedupon theannualrateof paypaidto Executive during theExecutive'staxableyearpreceding the Executive'staxableyearof Executive'sterminationof employmentasdeterminedunder, andwithsuchadjustments as areset forth in,TreasuryRegulation1.409A-l(b)(9)(iii)(A)(l )andanyInternalRevenue Serviceguidanceissuedwithrespect thereto;or (ii)the maximumamount thatmay betaken intoaccount underaqualifiedplan pursuant toSection401(a)(l7) of theCode forthe yearinwhichExecutive's employmentis terminated.
7. Successors.
(a) The Company's Successors. Anysuccessor totheCompany(whether direct orindirectand whetherbypurchase,merger,consolidation,liquidationor otherwise) to all orsubstantiallyall of the Company's business and/orassets will assumetheobligationsunder thisAgreement and agree expressly toperformthe obligationsunderthis Agreement in thesamemannerandto thesame extent as the Company wouldbe required to performsuchobligationsin theabsenceofa succession. For allpurposesunder this Agreement,theterm"Company"will include any successortotheCompany'sbusinessand/or assets which executes anddeliversthe assumption agreement describedinthis Section 7(a) orwhich becomesboundby thetermsof thisAgreementby operationof law.
(b) Executive's Successors. Thetermsof this Agreementandallrightsof Executivehereunderwill inure tothebenefitof, andbeenforceableby,Executive'spersonalorlegal representatives,executors,administrators,successors,heirs,distributees, devisees andlegatees.
8. Notice.
(a) General. Noticesand all other communications contemplatedbythisAgreementwillbein writing and willbe deemed to havebeen dulygivenwhen personallydeliveredorwhen mailed byU.S.registeredor certifiedmail,return receiptrequested and postage prepaid. In thecase ofExecutive,mailed noticeswillbeaddressedto himorheratthehomeaddress which he or she mostrecently communicated to theCompanyinwriting. In the caseof the Company,mailednoticeswill be addressedtoitscorporateheadquarters,andallnoticeswill bedirectedto the GeneralCounselof theCompany.
(b) Notice ofTermination. Anyterminationbythe Companyfor Cause or byExecutiveforGoodReason or asaresultof a voluntaryresignationwillbe communicatedby anoticeof termination to the other partyhereto giveninaccordancewithSection 8(a) ofthisAgreement.Such noticewillindicatethespecific terminationprovisioninthisAgreementrelied upon,willsetforth inreasonabledetailthefactsand circumstancesclaimedtoprovide abasis fortermination under theprovisionsoindicated,andwillspecifythe termination date(whichwill benotmorethanthirty (30) days afterthe giving of suchnotice). ThefailurebyExecutiveto includeinthe noticeanyfactorcircumstancewhichcontributes toa showingof Good Reasonwillnotwaiveany rightof Executivehereunderor precludeExecutivefromassertingsuchfact or circumstanceinenforcingExecutive'srightshereunder.
9. MiscellaneousProvisions.
(a) NoDuty toMitigate. Executive will notberequiredto mitigate theamountofanypaymentcontemplatedby thisAgreement,norwillany suchpaymentbereduced byany earningsthatExecutive mayreceive fromany othersource.
(b) Waiver. Noprovisionof thisAgreementwillbemodified, waived ordischargedunlessthemodification,waiverordischargeisagreedto inwriting andsigned byExecutive and by anauthorized officeroftheCompany (otherthanExecutive).No waiverbyeitherparty of anybreachof, or of compliance with, any condition orprovisionofthisAgreementbythe otherpartywill be considered a waiverofany other condition or provision orof thesame condition orprovisionat anothertime.
(c) Headings.All captions and sectionheadings used in thisAgreement are for convenientreferenceonly and do not form apartofthisAgreement.
(d) Entire Agreement.ThisAgreement constitutestheentire agreement of theparties hereto andsupersedesintheir entirety all prior representations, understandings,undertakingsor agreements (whether oralorwritten and whether expressed orimplied)ofthe partieswithrespect to thesubjectmatter hereof.No waiver, alteration, ormodificationof anyof the provisionsof this Agreement will be bindingunless inwriting and signedbyduly authorized representatives ofthe parties heretoand whichspecifically mention thisAgreement.
(e) Choice of Law. The validity,interpretation,construction, and performance ofthisAgreement willbegovernedby the lawsof the State of Indiana (withtheexception ofitsconflict oflawsprovisions).Any claims or legalactionsbyonepartyagainsttheother arising out ofthe relationship betweenthe parties contemplatedherein(whether ornotarisingunderthis Agreement) willbe commencedor maintainedinany state or federalcourt located inTippecanoe County,Indiana,and Executive andtheCompanyherebysubmitto the jurisdictionandvenueof any suchcourt.
(f) Severability. Theinvalidityor unenforceability of any provision orprovisionsof this Agreement willnotaffect the validity orenforceabilityof any other provisionhereof, whichwill remain infull force and effect.
(g) Withholding. All payments made pursuant to thisAgreementwill besubjectto withholding of applicable income andemploymenttaxes.
(h) Counterparts. This Agreement may be executedincounterparts, each ofwhichwillbe deemedanoriginal,but all ofwhichtogetherwillconstituteoneandthe sameinstrument.
o O o
INWITNESS WHEREOF,each ofthe parties hasexecutedthisAgreement,in the case of theCompanyby its dulyauthorized officer, as ofthe day andyear setforth below.
| COMPANY | ENDOCYTE,INC. |
| | |
| | By: | /s/ P. Ron Ellis |
| | Title: | CEO |
| | | |
| EXECUTIVE | By: | /s/ D. D. Meek |
| | Title: | Chief Commercial Officer |
