Full Press Release Details
EXECUTIVE SECURITY AGREEMENT
| Parties: | Delcath Systems, Inc. | ( Company ) | ||
| 810 Seventh Avenue, 35 th Floor | ||||
| New York, New York 10019 | ||||
| ( Executive ) | ||||
| Date: | , 2013 ( Effective Date ) |
Executive is employed by the Company, currently serves as [FULL POSITION TITLE] of the Company, and has extensive knowledge and experience relating to the Company s business.
2. The parties recognize that it is in the best interests of the Company and its stockholders to provide certain benefits payable in the event
of a Qualifying Termination (as defined below) of Executive to encourage Executive to continue in Executive s position, although no such termination is now contemplated or foreseen, and to ensure that Executive is bound by
reasonable confidentiality, noncompetition, and nonsolicitation restrictions.
3. The parties further acknowledge and agree that this
Agreement supersedes any and all prior agreements and policies relating to severance or termination pay or benefits payable upon Executive s termination of employment, including but not limited to any severance or termination pay or benefits
provisions contained in any employment agreement, offer letter, or otherwise.
1. Term of Agreement. This Agreement will commence on the Effective Date and will terminate upon the earlier of: (i) the date that
all obligations of the parties under this Agreement have been satisfied; (ii) the third anniversary of the Effective Date; or (iii) the date of termination by the mutual written agreement of the parties. This Agreement may be renewed upon
the written consent of the parties.
2. Qualifying Termination. For purposes of this Agreement, Qualifying
Termination will mean only the events described in Section 2(a) or 2(b):
(a) The involuntary termination of Executive s
employment by the Company for any reason, except for termination by the Company for Cause. For purposes of this Agreement, Cause will mean, as reasonably determined by the Company s Board of Directors (the
Board ) based on information then known to it, that one or more of the following has occurred: (i) Executive has committed a felony under the laws of the United States or any
relevant state, or a similar crime or offense under the applicable laws of any relevant foreign jurisdiction; (ii) Executive has committed an act or acts of fraud, material dishonesty, gross
negligence, or willful misconduct, including abuse of controlled substances, that is injurious to the Company, any affiliate, or any of its or their business partners, customers, clients, or employees, and which, if capable of being cured, is not
cured within thirty (30) calendar days after Executive receives written notice thereof from the Company; (iii) Executive fails to perform or uphold Executive s duties under any applicable employment agreement with the Company or any
affiliate and/or fails to comply with reasonable directives of the Company, any affiliate, or the Board, as applicable, which, if capable of being cured, is not cured within thirty (30) calendar days after Executive receives written notice
thereof from the Company; (iv) any material breach by Executive of the Employee Confidentiality and Restrictive Covenant Agreement described in Section 4 below or any other agreement between Executive and the Company or any affiliate
containing confidentiality, trade secret, noncompetition, nonsolicitation, inventions, and/or similar provisions, (v) any material breach by Executive of Executive s fiduciary duties to the Company or any affiliate, or (vi) any
material breach by Executive of (A) any contract between Executive and the Company or any affiliate, or (B) the Code of Ethics or any other material written policy.
(b) The termination of employment by Executive with the Company for Good Reason. Good Reason will mean a good faith
determination by Executive that any one or more of the following events has occurred; provided, however, that such event will not constitute Good Reason if Executive has expressly consented to such event in writing, if the Company has cured such
event within thirty (30) calendar days of receipt of written notice of such event, or if Executive fails to provide written notice of Executive s decision to terminate within ninety (90) calendar days of the occurrence of such event:
Notwithstanding the foregoing, in order to terminate for Good Reason, Executive must (A) provide written
notice to the Company within ninety calendar (90) days after the first occurrence of the event giving rise to Good Reason setting forth the basis for Executive s termination, (B) allow the Company at least thirty calendar
(30) days from receipt of such written notice to cure such event, and (C) if such event is not reasonably cured within such 30-day period, Executive s termination from all positions Executive then holds with the Company must be
effective not later than thirty calendar (30) days after the expiration of the cure period. Any actions taken by the Company to accommodate a disability of Executive or pursuant to the Family and Medical Leave Act will not be a Good Reason for
purposes of this Agreement.
(c) Qualifying Termination will not include termination for any other reason, including but not limited to
termination due to death or disability.
3. Severance Benefits. Subject to the limitations contained in this Agreement, in the
event of a Qualifying Termination, the Company will pay or provide the following amounts or benefits to the Executive:
but unpaid annual base salary and any other form or type of compensation, benefit or perquisite that was approved by the Board of Directors that is vested or accrued on the date of the Qualifying Termination for services rendered to such date, to be
paid in cash in a lump sum within ten calendar (10) days following the date of the Qualifying Termination; payment for any accrued paid time off in accordance with Company policy, to be paid in cash in a lump sum within ten calendar
(10) days following the date of the Qualifying Termination; and, if any employee participant of the Company receives a payment pursuant to Delcath Systems, Inc. Annual Incentive Plan ( AIP ) for the fiscal year in which the Qualifying
Termination occurs, then Executive will be entitled to receive a prorated AIP payment (based on the portion of fiscal year Executive was employed by the Company) pursuant to the AIP for that fiscal year, subject and according to the terms and
conditions of the AIP, with payment to be made at the time the Company pays that fiscal year s AIP payments to its other executives but in no event later than March 15 of the subsequent fiscal year;
(b) A severance payment equal to twelve (12) months of Executive s base salary, based
upon the Executive s annual base salary in effect on the date of the Qualifying Termination, [provided, however, that if Executive is still serving as the Interim Co-President and Co-Chief Executive Officer on the date of the Qualifying
Termination, the monthly stipend of $6,000 will be included for purposes of calculating the Executive s annual base salary for severance payments under this sub section] (without regard to any reduction that is in breach of this Agreement),
to be paid in cash, less all applicable withholdings and deductions, paid in approximately equal installments according to the Company s regular payroll schedule over such 12-month period following the date of the Qualifying Termination;
provided, however, that no payments will be made prior to the sixtieth (60th) calendar day following the date of the Qualifying Termination. On the sixtieth (60th) calendar day following the date of the Qualifying Termination, the Company will pay Executive in a lump sum the amount of the severance payments that Executive would have received during such
60-day period under the Company s regular payroll schedule, and the balance of such severance will be paid in approximately equal installments over the remainder of such 12-month period according to the original payment schedule;
(c) If Executive has not already earned Executive s cash retention bonus pursuant to the Delcath Systems, Inc. Executive Retention Bonus
Plan adopted by the Compensation Committee on November 14, 2013, payment of such cash retention bonus, to be paid on the first payroll period following the sixtieth (60th) calendar day
following the date of the Qualifying Termination; and
(d) If Executive timely elects continuation coverage under COBRA for
himself/herself and Executive s covered dependents under the Company s group health and/or dental plans following the Qualifying Termination, then the Company will pay the COBRA premiums necessary to continue Executive s group health
and/or dental coverage in effect for himself/herself and Executive s eligible dependents until the earliest of (i) the close of the 12-month period following the date of the Qualifying Termination, (ii) the date Executive ceases to
participate, for whatever reason, in the Company s group health and/or dental plans, or (iii) the date on which Executive is covered or is eligible to be covered under another group health and/or dental plan (such period from the date of
Qualifying Termination through the earliest of (i) through (iii) referred to as the COBRA Payment Period ). Notwithstanding the foregoing, if the Company determines, in its sole discretion, that the payment of the COBRA premiums
would result in a violation of the nondiscrimination rules of Section 105(h)(2) of the Code or any statute or regulation of similar effect (including but not limited to the 2010 Patient Protection and Affordable Care Act, as amended by the 2010
Health Care and Education Reconciliation Act), then in lieu of providing the COBRA premiums, the Company, in its sole discretion, may elect to instead pay Executive on the first day of each month of the COBRA Payment Period, a fully taxable cash
payment equal to the COBRA premiums for that month, subject to applicable tax withholdings (such amount, the Special Severance Payment ), for the remainder of the
COBRA Payment Period. Executive may, but is not obligated to, use such Special Severance Payment toward the cost of COBRA premiums. No payments will be made under this Section prior to sixtieth
(60th) calendar day following the date of the Qualifying Termination. On the 60th calendar day following the date of the Qualifying Termination, the Company will make the first payment under
this clause (and, in the case of the Special Severance Payment, such payment will be made to Executive in a lump sum) equal to the aggregate amount of payments that the Company would have paid through such date had such payments commenced on the
date of the Qualifying Termination, with the balance of the payments paid thereafter on the schedule described above. If Executive participates in another group health plan or otherwise ceases to be eligible for COBRA during COBRA Payment Period
Executive must immediately notify the Company of such event, and all payments and obligations under this Section 3(d) will cease.
(e) Notwithstanding the foregoing provisions of this Section 3, Executive will not receive any of the payments described in Sections 3(b)
through 3(d) unless (i) Executive delivers to the Company an effective, general release of claims in favor of the Company in a form acceptable to the Company substantially in the form attached as Exhibit A, (ii) does not revoke such
release and all applicable rescission periods have expired within sixty (60) calendar days following the date of the Qualifying Termination; and (iii) Executive returns all Company property and complies with the confidentiality and other
post-termination obligations set forth in the Delcath Systems, Inc. Employee Confidentiality and Restrictive Covenant Agreement and any other employment agreements between the Company and Executive.
(f) Notwithstanding the foregoing provisions of this Section 3, if Executive breaches his or her obligations under the Employee
Confidentiality and Restrictive Covenant Agreement described in Section 4 below or any other agreement between Executive and the Company containing confidentiality, trade secret, noncompetition, nonsolicitation, inventions, cooperation, and/or
similar provisions, from and after the date of such breach and not in any way in limitation of any right or remedy otherwise available to the Company, Executive will no longer be entitled to, and the Company will no longer be obligated to pay, any
remaining unpaid portion of the severance pay or benefits described in Sections 3(b) through 3(d) above; provided that, if Executive provides the release contemplated in Section 3(e) above, in no event will Executive be entitled to a severance
payment of less than $5,000.00, which amount the parties agree is good and adequate consideration, standing alone, for Executive s release contemplated in Section 3(e).
(g) In the event a Qualifying Termination occurs within twelve (12) months immediately following the effective date of a Change in
Control, then the payments described in Sections 3(b) and 3(c) will be paid to Executive in a lump sum on the sixtieth (60th) calendar day following the date of the Qualifying Termination;
provided, however, that such payment will not occur unless Executive has duly executed and delivered to the Company the general release of claims described in Section 3(e) above and the general release of claims has not been rescinded (in whole
or in part) and has become irrevocable on or before the 60th calendar day.
4. Confidentiality, Noncompetition, and Nonsolicitation. As a term and condition of being
eligible to receive the severance pay and benefits described in Sections 3(b) through 3(d) of this Agreement, Executive must, contemporaneous with the signing of this Agreement, execute the Delcath Systems, Inc. Employee Confidentiality and
Restrictive Covenant Agreement, a copy of which is attached hereto as Exhibit B.
5. Limitation on Change of Control
Payments. In the event that Executive would, except for this sentence, be subject to a tax pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended, (the Code ) or any successor provision that may be in effect,
as a result of parachute payments (as that term is defined in Section 280G(b)(2)(A) of the Code) made pursuant to this Agreement and/or any other agreement, plan, program or arrangement, or a deduction would not be allowed to the
Company for all or any part of such payments by reason of Section 280G(a) of the Code, or any successor provision that may be in effect, such payments/benefits due under this Agreement will be reduced to reduce the aggregate present
value (as that term is defined in Section 280G(d)(4) of the Code) of such payments to $1.00 less than an amount equal to three times Executive s base amount (as that term is defined in Section 280G(b)(3) and (d)(1)
and (2) of the Code) to the end that Executive is not subject to tax pursuant to Section 4999 and no deduction is disallowed by reason of Section 280G(a). However, the preceding sentence will not apply (i.e., no payments/benefits due
under this Agreement will be reduced) if reducing the payments/benefits due under this Agreement would yield Executive more than $10,000 less of the aforementioned parachute payments after taxes (including, without limitation, all federal, state and
local income taxes and excise taxes) than not reducing such payments/benefits.
6. Withholding Taxes. The Company will be
entitled to deduct from all payments or benefits provided for under this Agreement any federal, state or local income and employment-related taxes required by law to be withheld with respect to such payments or benefits.
7. No Mitigation Required; No Other Severance. Executive will not be obligated to seek other employment nor will Executive s
payments described in Section 3(b) through (d) be reduced by any income from other sources received by Executive. Amounts payable and benefits being provided pursuant to this Agreement will be in lieu of any severance pay and severance
benefits to which Executive is or may be entitled under any other severance pay plan, arrangement or agreement of the Company with respect to the termination of Executive s employment; provided, however, that Executive s rights under the
Company s 2009 Stock Incentive Plan (the 2009 Plan ) and the granting agreements thereunder between the Company and Executive (the Grant Agreements ) will not be affected by this Agreement.
8. Successors and Assigns. This Agreement is personal to Executive and may not be assigned by Executive without the written consent of
the Company; provided, however, that if Executive is entitled to the payments described in Sections 3(a), 3(b), and 3(c) of this Agreement and Executive dies before Executive has received all such payments, the unpaid payments will be paid to
Executive s estate on the same terms and conditions as described in this Agreement.
This Agreement will be binding upon and inure to the benefit of the Company and its successors and assigns. The Company will not permit a Change of Control unless the transferee(s) or
successor(s) (individually and collectively, a Transferee ) expressly agree(s) in writing, prior to or at the time of the Change of Control, to assume and perform this Agreement in the same manner and to the same extent that the Company
is required to perform it. Furthermore, whether or not the Company so assigns its obligations hereunder to a Transferee, the Transferee will be deemed to have assumed and will be bound by the Company s obligations hereunder. Except as provided
in this Section 8, the Company will not be entitled to assign its obligations hereunder and any such purported assignment will be null and void, without force or effect. Any provision above of this Section 8 to the contrary