EXHIBIT NO. 10.45
October 28, 1998
William V. (Bix) Moding
14282 Franklin Avenue
Tustin, CA 92780
Re: Severance Agreement
Dear Bix:
This letter will serve to document our agreement on the terms and
conditions of your resignation as an executive officer and employee of
Techniclone Corporation ("Techniclone" or the "Company") and your
continued compensation as a consultant to the Company. Once this letter is
signed by you it will constitute a legally binding contract on the
following terms:
1. In consideration of this Severance Agreement ("Severance Agreement"), you
confirm that you will voluntarily resign as an executive officer (Vice
President, Operations and Administration) and employee of Techniclone
effective on October 4, 1998.
2. Techniclone will engage you as an independent consultant for a fixed and
non-cancelable period of sixteen (16) months commencing on October 4, 1998
and continuing until January 31, 2000. You will be paid a fixed and
non-cancelable monthly consulting fee of Twelve Thousand and Five Hundred
Dollars ($12,500), payable on the last business day of each month (first
payment to be made on October 30, 1998) during the sixteen month
consulting period. Upon your death or disability during the term of this
consultancy, all remaining payments will be made, when due, to your
estate. You agree that you will be available for up to ten (10) hours per
month by phone or in person to consult with the Company or its employees
with the advance approval of the Company's C.E.O. The Company agrees to
provide you with at least three days notice of any requirement to render
consulting services in person.
3. Pursuant to the Company's 1996 Stock Incentive Plan, you have unexercised
and vested stock options amounting to 240,000 shares as of this date; and
an additional 80,000 stock options that vest in January 2000, which will
now all become immediately vested. The resulting total of 320,000 vested
option shares will be distributed to you free of any restrictive legend
and free of payment of any exercise price as follows: 240,000 option
shares to be exercised and delivered to you as of January 1, 1999, and the
remaining 80,000 option shares to be exercised and delivered to you on
January 31, 2000. The non-payment by you of the $.60 per share exercise
price for these options will result in income to you at the rate of $.60
per share as each group of shares is delivered to you. Upon your death or
disability, the stock option shares will be distributed, when due, to your
estate.
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William V. (Bix) Moding
September 25, 1998
Page 2
4. In addition to the Company vesting and issuing the stock option shares to
you on the dates set forth above, the Company will make the appropriate
tax payments to the proper federal and state taxing authorities at the
bonus tax rates (federal- 28%, Calif. State - 6%), applied to the income
amount of $.60 per share, as each group of options is delivered to you.
Specifically, we will deliver to you as of January 1, 1999, a check in the
amount of $40,320 (28%) made payable to the Internal Revenue Service on
your behalf, and a check in the amount of $8,640 (6%) made payable to the
Franchise Tax Board on your behalf. Additionally, on January 31, 2000, we
will deliver to you a check in the amount of $13,440 (28%) made payable to
the Internal Revenue Service on your behalf, and a check in the amount of
$2,880 (6%) made payable to the Franchise Tax Board on your behalf.
5. Effective on October 4, 1998, your inclusion in Techniclone's employee
benefit plans will be terminated. Effective on such date, you will no
longer be included in the health and dental insurance, $5,000 executive
health benefit program, life insurance, accidental death and dismemberment
insurance, or long-term disability insurance benefits paid for by
Techniclone. You will be eligible at your expense to participate under the
COBRA benefit rules for your discontinued medical and dental insurance
coverages for a period of up to 18 months beginning on October 4, 1998, as
provided by law. A letter explaining these COBRA benefits will be provided
to you separately by the Company.
6. All monthly consulting payments, delivery of stock option shares and
related payment of withholding taxes shall be immediately due and payable
in the event there has been a Change in Control of the Company while this
Severance Agreement is in effect. For purposes of this Agreement, a
"Change in Control" of the Company shall be deemed to have occurred if:
(i) there shall be consummated: (a) any consolidation or merger of the
Company in which the Company is not the continuing or surviving
corporation or pursuant to which the shares of the Company's Common Stock
would be converted into cash, securities or other property, other than a
merger of the Company in which the holders of the Company's Common Stock
immediately prior to the merger have substantially the same proportionate
ownership of at least 50% of common stock of the surviving corporation
immediately after the merger, or (b) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all,
or substantially all, of the assets of the Company other than to a
corporation in which the holders of the Company's Common Stock immediately
prior to such transaction have substantially the same proportionate
ownership of at least 50% of the common stock of such corporation, or (ii)
the stockholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company, or (iii) any person (as such
term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), shall become
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William V. (Bix) Moding
September 25, 1998
Page 3
the beneficial owner (within the meaning of Rule 13d-3 under the Exchange
Act) of 50% or more of the Company's outstanding shares of Common Stock
(other than any such person who had record or beneficial ownership of at
least 10% of the Company's outstanding shares of Common Stock on the date
hereof).
7. You acknowledge that you owe the Company two stock option exercise notes
with a current combined principal balance of $179,379.77. You agree to
make the next scheduled payment of $36,671.66 (including principal and
interest) on or before April 30, 1999. Additionally, the Company and you
agree that the notes will mature in full as to principal and interest on
the January 31, 2000, date of the termination of your consulting
arrangement with the Company. Accordingly, you agree that a final payment
of $160,831.62 (including principal of $153,771.86 and accrued interest of
$7,059.76) will be made no later than January 31, 2000. You also agree to
execute a standard form security agreement relating to the stock option
notes for recording by the Company to formalize your pledge of personal
assets as backup collateral for the outstanding notes in addition to the
original pledge of 50,875 shares of Techniclone common stock as primary
collateral.
8. On October 2, 1998, the Company agrees to pay you all accrued and unused
vacation pay (estimated at 80 hours, subject to final calculation) and
accrued back pay relating to your 1998 salary deferral for the period from
March 21, 1998 through October 3, 1998 (estimated at $14,000, subject to
final calculation).
9. Effective immediately, your auto allowance will be terminated.
10. In consideration of consulting services that are contemplated to be
rendered under the terms of this Agreement, you will be able to
permanently keep the Company-furnished computer and fax machine which are
located at your residence.
11. You understand and agree that the terms of this Severance Agreement are
required to be disclosed by law and that the Severance Agreement may be
filed as an Exhibit with the Company's SEC filings. Additionally, you
understand that as a current executive officer of the Company, your
resignation will be required to be disclosed in a press release by the
Company. We mutually agree to cooperate in developing and approving the
content of this press release which will be released to the public on
Monday October 5, 1998.
12. Each of the parties hereto shall "speak well" of the other. Neither you
nor any of your representatives shall make any statements that are
critical of the Company or its personnel or give any reason for your
separation from the Company other than,
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William V. (Bix) Moding
September 25, 1998
Page 4
"You have left to pursue other personal and business interests." The
prohibition contained in the previous sentence shall not apply to
privileged communications between you and your attorneys. No officer or
director of the Company shall state to any person, whether an employee of
the Company or not, anything critical of you or give any reason for your
separation from the Company other than the quotation noted above. The
prohibition contained in the previous sentence shall not apply to
privileged communications with the Company's attorneys or to private
meetings attended only by officers and directors of the Company or
otherwise as required by legal process. The Company shall use its best
efforts to ensure that no employee of the Company does anything or states
anything which reflects unfavorably upon you or your separation from the
Company.
13. This Severance Agreement embodies a mutual compromise that we have made in
order to achieve peace, and is not to be construed as an admission of
liability or wrongdoing by either party. In consideration of this
Severance Agreement and for other valuable consideration, you, on the one
hand, and the Company, on the other hand, fully and forever releases and
discharges the other, its representatives, agents, successors and assigns,
from any and all claims, charges, causes of actions, rights or liabilities
that each party now holds or has held, or may hereafter hold, whether
known or unknown, relating to your employment, including but not limited
to, any claims for age discrimination under the Age Discrimination in
Employment Act of 1967, as amended, and you agree not to bring any legal
or administrative action based on any such claim. The Company and you
specifically intend that the above releases shall bar all claims relating
to your employment, including those which are currently unknown by either
party. Pursuant thereto each party hereby waives the protection of Civil
Codess.1542 which reads as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
THE RELEASE, IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
A. This Severance Agreement is being given to you on September 25,
1998. You acknowledge that you are entitled to take 21 days to
consider whether to accept this Agreement.
B. After signing this Agreement, you shall have a period of seven (7)
calendar days to revoke this Severance Agreement by providing the
Company with written notice of your revocation. To be effective,
such revocation must be in writing,
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William V. (Bix) Moding
September 25, 1998
Page 5
must specifically revoke this Severance Agreement, and must be received by
the Company prior to the eighth calendar day following your execution of
this Agreement. This Agreement shall become effective, enforceable, and
irrevocable on the eighth calendar day following your execution of this
Severance Agreement. Any revocation of this Severance Agreement, however,
shall not affect the finality of your voluntary resignation of employment
from the Company as of October 4, 1998, and in the event of such
revocation you shall receive no compensation or other benefits under this
Severance Agreement or under your January 1, 1997 Employment Agreement.
14. The Company and you acknowledge that each party is entering into this
Severance Agreement freely and voluntarily, with a full understanding of
its terms including the release of claims. We suggest that you confer with
your attorney before signing this Severance Agreement. You also agree that
all of your employment agreements with Techniclone are terminated and that
this Severance Agreement sets forth all the terms of your agreement with
the Company regarding your resignation, severance and related benefits and
supersedes your Employment Agreement and amendments thereto, and any prior
negotiations or dealings in this regard, but that the terms in your
Employment Agreement or in any other agreement that you have signed with
the Company concerning confidential information or assignment of
inventions shall remain in effect in accordance with the terms thereof.
15. Notwithstanding the release of claims outlined in paragraph 13. above, you
reserve the right to bring legal or administrative action to enforce the
collection of amounts that will become due under your consulting
arrangement or the agreement for Techniclone to deliver stock option shares
to you and pay withholding taxes related thereto. Also, the Company
reserves the right to pursue legal or administrative action to enforce
collection of principal and interest due under the stock option notes if
scheduled payments are not made by you when due.
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William V. (Bix) Moding
September 25, 1998
Page 6
Please contact me if you have any questions or comments. I wish you the
best in your future endeavors.
To confirm that you agree to these terms, please sign and date the
enclosed copy of this letter and return it to me as soon as possible. In
the event you decline to sign this letter, it may not be used as evidence
against the Company for any purpose.
Very truly yours,
/s/ Larry O. Bymaster
--------------------------------
Larry O. Bymaster
President and Chief Executive Officer
I agree to the terms stated in this letter.
/s/ William V. Moding
--------------------------------
William V. Moding
/s/ October 2, 1998
--------------------------------
Date
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