EXHIBIT 10.60
[Letterhead of Techniclone Corporation]
August 4, 1999
Dr. John N. Bonfiglio
Vice President of Technology and Business Development
Techniclone Corporation
14282 Franklin Avenue
Tustin, California 92780
Dear Dr. Bonfiglio:
Techniclone Corporation, for itself, its successors and assigns
(collectively, the "COMPANY") considers it essential to the best interests of
its shareholders to foster the continued employment of key management personnel
in a period of uncertainty regarding the business climate surrounding Company's
future. In this regard, the Board of Directors of the Company (the "BOARD")
recognizes that the possibility of a Change in Control (as defined below) of the
Company's ownership exists and that such possibility, and the uncertainty and
questions which it necessarily raises among management, may result in the
departure or distraction of management personnel to the detriment of the Company
and its shareholders in this period when their undivided attention and
commitment to the best interests of the Company and its shareholders are
particularly important.
Accordingly, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the Company's management, including yourself, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a Change in Control of the Company. This
Agreement is not intended to alter materially the compensation and benefits that
you could reasonably expect in the absence of a Change in Control of the Company
and, accordingly, this Agreement, though taking effect upon execution hereof,
will be operative only upon a Change in Control of the Company.
In order to induce you to remain in the employ of the
Company, the Company agrees that you shall receive the benefits set forth in
this letter agreement (the "AGREEMENT") in the event you are involuntarily or
constructively terminated from your position with the Company at any time during
a two year period (a "TERMINATION") following the date of a Change in Control of
the Company (as defined in SECTION 2 hereof) under the circumstances described
below. For the purposes of this Agreement, involuntary or constructive
Termination shall include, without limitation:
(i) a reduction by the Company in your base salary, bonus computation
or title, or a substantial reduction in your responsibilities as in
effect immediately prior to the Change in Control or as the same may be
increased from time to time or a change in employment conditions deemed
by you to be materially adverse from those in effect immediately prior
to the Change in Control;
Dr. John N. Bonfiglio
August 4, 1999
Page 2
(ii) a failure by the Company to continue any bonus plans in effect as
of the date of a Change in Control (the "BONUS PLANS") or a failure by
the Company to continue you as a participant in the Bonus Plans on at
least the same basis as you presently participate in accordance with
the Bonus Plans as of the date immediately prior to the Change in
Control;
(iii) without your express written consent, the Company's requiring you
to be based anywhere other than within 25 miles of your present office
location, except for required travel on the Company's business to an
extent substantially consistent with your recent business travel
obligations;
(iv) the failure by the Company to continue in effect any stock
ownership plan, stock purchase plan, stock option plan, life insurance
plan, health-and-accident plan or disability plan in which you are
participating at the time of a Change in Control of the Company (or
plans providing you with substantially similar benefits), or the taking
of any action by the Company which would materially and adversely
affect your participation in or materially reduce your benefits under
any of such plans;
(v) the taking of any action by the Company which would deprive you of
any material fringe benefit enjoyed by you at the time of the Change in
Control or the failure by the Company to provide you with the number of
paid vacation days to which you are then entitled in accordance with
the Company's normal vacation policy in effect on the date of the
Change in Control;
(vi) the failure by the Company to obtain the assumption or the
agreement to perform this Agreement by any successor of the Company;
and
(vii) any other involuntary Termination; and
none of the actions causing such Termination (including, without limitation,
those in the foregoing paragraphs (i) through (vii) above) is a result of (a) an
act or acts of dishonesty by you constituting a felony for which you are
convicted concerning your personal enrichment at the Company's expense, or (b)
refusal by you (except by reason of incapacity due to illness or accident) to
comply with the provisions of any confidentiality agreement between you and the
Company.
1. TERM OF AGREEMENT. This Agreement shall commence on the date hereof
and shall continue in effect through August 4, 2001. At the end of each full two
year term of this Agreement, this Agreement shall be automatically renewed for
an additional two year period, unless the Company, at its sole and absolute
discretion, notifies you of nonrenewal, such notice to be delivered in writing
at least ninety (90) days prior to the end of the two year period. Upon notice
of nonrenewal, you will be entitled to the protection afforded under this
Agreement for the remaining term of this Agreement.
Dr. John N. Bonfiglio
August 4, 1999
Page 3
2. CHANGE IN CONTROL. All benefits set forth hereunder shall be payable
to you in the event (i) a Change in Control of the Company (as defined below)
shall take place during the term of this Agreement, AND (ii) a Termination shall
occur at any time within the two year period immediately following the Change in
Control. For purposes of this Agreement a Change in Control of the Company shall
mean 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"), whether or not
the Company is then subject to such reporting requirement; provided that,
without limitation, such a Change in Control shall be deemed to have occurred if
(i) any "person" (as such term is used in Section 13(d) and 14(d) of the
Exchange Act), other than a trustee or other fiduciary holding securities under
an employee benefit plan of the Company, is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing thirty-five percent (35%) or more of the
combined voting power of the Company's then outstanding voting securities; (ii)
there is a merger or consolidation of the Company in which the Company does not
survive as an independent public company; (iii) the primary business or
businesses of the Company for which your services are principally performed are
disposed of by the Company pursuant to a liquidation of the Company, a sale of
substantially all the assets (including stock of a subsidiary) of the Company or
such primary business, or otherwise; or (iv) during any period of two (2)
consecutive years during the term of this Agreement, individuals who, at the
beginning of such period constitute the Board, cease for any reason to
constitute at least a majority thereof, unless the election of each director who
was not a director at the beginning of such period has been approved in advance
by directors representing at least two-thirds of the directors then in office
who were directors at the beginning of the period.
3. COMPENSATION FOLLOWING TERMINATION.
(a) Subject to the terms and conditions of this Agreement,
after a Change in Control of the Company which occurs during the term
of this Agreement, followed by your termination of employment at any
time during the two-year period immediately following the Change in
Control, and if such termination is a "Termination" as defined above,
you shall be entitled to (A) a lump sum payment, within fifteen (15)
days following your Termination, in an amount equal to one (1.0) times
the highest annual level of total cash compensation (including any and
all bonus amounts) paid to you by the Company (as reported on Form W-2)
during the three calendar years ended immediately prior to your
Termination, (B) the immediate vesting of all previously granted but
unvested stock options to acquire securities from the Company and
outstanding on the date of the Termination, and (C) continuing health
coverage for a period of twelve (12) months, at a level commensurate
with that which you enjoyed with the Company immediately prior to such
Change in Control.
Dr. John N. Bonfiglio
August 4, 1999
Page 4
(b) You shall not be required to mitigate the amount of any payment provided for
in this SECTION 3 by seeking other employment or otherwise, nor shall the amount
of any payment or benefit provided for in this SECTION 3 be reduced by any
amounts to which you shall be entitled by law (nor shall payment hereunder be
deemed in lieu of such amounts), any compensation earned by you as the result of
employment by another employer or by retirement benefits after the date of
Termination or voluntary termination, or otherwise, PROVIDED, HOWEVER, without
otherwise diminishing your rights, any benefits or amounts payable hereunder,
any amount payable under this SECTION 3 shall be reduced by the amount of any
severance payment to which you may be entitled under any agreement of employment
with the Company which is payable as a result of your termination of employment
with the Company and, PROVIDED FURTHER, you shall first look to any such other
agreement providing for payment upon your termination of employment with the
Company prior to payment hereunder.
4. TAX TREATMENT. It is the intention that no portion of the payment
made under SECTION 3 hereof (the "TERMINATION PAYMENT") or any other payment
under this Agreement, or payments to or for your benefit under any other
agreement or plan be deemed to be an excess parachute payment as defined in
Section 280G of the Internal Revenue Code of 1986, as amended (the "CODE"), or
its successors. It is agreed that the present value of the Termination Payment
and any other payment to or for your benefit in the nature of compensation,
receipt of which is contingent on the Change in Control of the Company, and to
which Section 280G of the Code or any successor provision thereto applies (in
the aggregate "TOTAL PAYMENTS") shall not exceed an amount equal to one dollar
less than the maximum amount which you may receive without becoming subject to
the tax imposed by Section 4999 of the Code or any successor provision or which
the Company may pay without loss of deduction under Section 280G of the Code or
any successor provision. Present value for purposes of this Agreement shall be
calculated in accordance with Section 1274(b)(2) the Code or any successor
provision.
Within six (6) days following delivery of written notice by the Company
to you of the Company's belief that there is a payment due or benefit due which
will result in an excess parachute payment as defined in Section 280G of the
Code or any successor provision, the Company and you, at the Company's expense,
shall obtain the opinion of legal counsel and certified public accountants, as
the Company and you may mutually agree upon, which opinions need not be
unqualified, which sets forth (i) the amount of your Base Period Income, as
defined in Section 280G of the Code, (ii) the present value of Total Payments,
and (iii) the amount and present value of any excess parachute payments.
In the event such opinions determine that there would be an excess
parachute payment, the Termination Payment hereunder or any other payment
determined by such counsel to be includable in Total Payments shall be reduced
or eliminated in the following order: (i) by the amount of any options to
purchase shares of the Company's capital stock which have had their vesting
rights accelerated hereunder, and then (ii) by the amount of any cash received
hereunder, so that under the bases of calculation set forth in such opinions
there will be no excess parachute payment. The provisions of this Section,
including the calculations, notices, and opinions provided for herein shall be
Dr. John N. Bonfiglio
August 4, 1999
Page 5
based upon the conclusive presumption that (X) the compensation and benefits
provided herein and (Y) any other compensation, including but not limited to any
accrued benefits, earned by you prior to the Change in Control of the Company
pursuant to the Company's compensation programs if such payments would have been
made in the future in any event, even though the timing of such payment is
triggered by the Change in Control of the Company, is reasonable, provided,
however, that in the event such legal counsel so requests in connection with the
Section 280G opinion required by this Section, the Company and you shall obtain,
at the Company's expense, and the legal counsel may rely on in providing the
opinion, the advice of a firm of recognized executive compensation consultants
as to the reasonableness of any item of compensation to be received by you. In
the event that the provisions of Sections 280G and 4999 of the Code or any
successor provision are repealed without succession this Section shall be of no
further force or effect.
5. SUCCESSORS; BINDING AGREEMENT.
(a) 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 to
assume expressly and agree in writing to perform this Agreement.
Failure of the Company to obtain such assumption and agreement prior to
the effectiveness of any such succession shall be a breach of this
Agreement and shall require the Company to pay to you compensation from
the Company in the same amount and on the same terms as you would be
entitled hereunder following a Change in Control of the Company coupled
with a Termination, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective
shall be deemed the date on which you shall receive such compensation
from the Company. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
(b) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisee and legatees.
If you should die while any amount would still be payable to you
hereunder if you had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms
of this Agreement to your devises, legatee or other designee or, if
there is no such designee to your estate.
6. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
Registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the Board
with a copy to the Secretary of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of a change of address shall be effective only upon receipt.
Dr. John N. Bonfiglio
August 4, 1999
Page 6
7. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by you and such officer as may be specifically designated
by the Board. 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. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of California.
8. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
9. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
10. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
of the Parties with respect to the subject matter hereof and supersedes any
prior or contemporaneous agreements or understandings relating to the subject
matter hereof.
11. HEADINGS. The headings of the Articles and Paragraphs of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
12. SEVERABILITY. The provisions of this Agreement are severable. The
invalidity, in whole or in part, of any provision of this Agreement shall not
affect the validity or enforceability of any other of its provisions. If one or
more provisions hereof shall be so declared invalid or unenforceable, the
remaining provisions shall remain in full force and effect and shall be
construed in the broadest possible manner to effectuate the purposes hereof. The
parties further agree to replace such void or unenforceable provisions with
provisions which will achieve, to the extent possible, the economic, business
and other purposes of the void or unenforceable provisions.
13. ATTORNEYS' FEES. In the event any party to this Agreement initiates
any action, suit, motion, application, arbitration or other proceeding which
concerns the interpretation or enforcement of this Agreement, the prevailing
party in such action, suit, motion, application, arbitration or other
proceeding, or judgment creditor, shall be entitled to recover its costs and
attorneys' fees from the nonprevailing party or judgment debtor, including costs
and fees on appeal, if any.
Dr. John N. Bonfiglio
August 4, 1999
Page 7
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our agreement on this subject.
Sincerely,
TECHNICLONE CORPORATION
a Delaware corporation
By: /s/ Larry O. Bymaster
-------------------------------------
Larry O. Bymaster, President and
Chief Executive Officer
AGREED TO THIS 4th
day of August, 1999
/s/ John N. Bonfiglio
- --------------------------------
Dr. John N. Bonfiglio
Approved by the Board of Directors of Techniclone Corporation on July 28, 1999.