ABAXIS, INC.
EXECUTIVE CHANGE OF CONTROL SEVERANCE PLAN
The Board of Directors of Abaxis, Inc.
recognizes that, as is the case with many publicly held
corporations, there exists the possibility of a Change of Control
of the Company. This possibility and the potential uncertainty it
creates may result in the loss or distraction of executives of the
Company to the detriment of the Company and its
shareholders.
The Board considers the avoidance of such loss
and distraction to be essential to protecting and enhancing the
best interests of the Company and its shareholders. The Board also
believes that when a Change of Control is perceived as imminent, or
is occurring, the Board should be free from concern that executives
might be distracted by the personal uncertainties and risks created
by the perception of an imminent or occurring Change of
Control.
Further, the Board believes that it is
consistent with the employment practices and policies of the
Company and in the best interests of the Company and its
shareholders to treat its executives whose employment terminates in
connection with or following a Change of Control fairly.
Accordingly, the Board has determined that
appropriate steps should be taken to assure the Company of the
continued employment and dedication to duty of its executives and
to seek to ensure the availability of their continued service,
notwithstanding the possibility, threat or occurrence of a Change
of Control.
Therefore, in
order to fulfill the above purposes, the following plan is hereby
adopted.
As of the Effective Date, the Company hereby
establishes a separation compensation plan known as the Abaxis,
Inc. Executive Change of Control Severance Plan, as set forth in
this document.
As used herein the following words and phrases
shall have the following respective meanings unless the context
clearly indicates otherwise.
2.1 Affiliate. Any entity which controls, is controlled by or
is under common control with the Company.
2.2 Annual Salary. The Participant’s regular annual base
salary immediately prior to his or her termination of employment,
including compensation converted to other benefits under a flexible
pay arrangement maintained by the Company or any Affiliate or
deferred pursuant to a written plan or agreement with the Company
or any Affiliate, but excluding overtime pay, allowances, premium
pay, compensation paid or payable under any bonus or incentive plan
of the Company or any Affiliate or any similar payment.
2.3
Board. The Board of
Directors of Abaxis, Inc.
2.4 Cause. With respect to any Participant, (i) the
willful engaging in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise or (ii) the
conviction of any felony or conviction of a misdemeanor which
impairs the Participant’s ability substantially to perform
the Participant’s duties with the Company. For purposes of
this subsection, no act, or failure to act, on the
Participant’s part shall be deemed “willful”
unless done, or omitted to be done, by the Participant not in good
faith and without reasonable belief that Participant’s action
or omission was in the best interest of the Company.
2.5 Change
of Control. The
occurrence of any of the following events:
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 50% or more of either (x) the then
outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (y) the
combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors
(the “Outstanding Company Voting Securities”);
provided, however, that for purposes of this subsection (i), the
following acquisitions shall not constitute a Change of Control:
(A) any acquisition directly from the Company, (B) any
acquisition by the Company, (C) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by
the Company or any corporation controlled by the Company or
(D) any acquisition by any corporation pursuant to a
transaction which complies with clauses (A), (B) and
(C) of paragraph (iii) below; or
(b) Individuals who, as of the Effective Date,
constitute the Board (the “Incumbent Board”) cease for
any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to the Effective Date whose election, or nomination for
election by the Company’s shareholders, was approved by a
vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were
a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a person
other than the Board; or
2.
(c) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially
all of the assets of the Company or an acquisition of assets of
another corporation (a “Business Combination”), in each
case, unless, following such Business Combination, (A) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case
may be, (B) no person (excluding any corporation resulting
from such Business Combination or any employee benefit plan (or
related trust) beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common stock
of the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of
such corporation, except to the extent that such ownership existed
prior to the Business Combination and (C) at least a majority
of the members of the board of directors of the corporation
resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
Business Combination; or
(d) Approval by the shareholders of the Company of a
plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all of
the Company’s assets.
Notwithstanding
the foregoing, to the extent necessary to satisfy the requirements
of Section 409A(a)(2)(A)(v) of the Code, any Change of Control
that does constitute a change in the ownership or effective control
of the Company or a change in the ownership of a substantial
portion of the assets of the Company within the meaning of
Section 409A shall not constitute a Change of
Control.
2.6 Code. The Internal Revenue Code of 1986, as amended
from time to time, and all applicable guidance promulgated
thereunder.
2.7
Committee. The
Compensation Committee of the Board.
2.8
Company. Abaxis, Inc. and
any successor thereto.
2.9 Date of Termination. The date that is both (i) the date on which
a Participant’s employment with the Company or an Affiliate
terminates and (ii) a separation from service for the
Participant.
2.10 Disability. A condition such that the Employee has
terminated employment with the Company or an Affiliate with a
qualifying disability and has immediately began receiving benefits
from a long-term disability plan of the Company or any
participating Employer.
2.11
Effective Date. July 25, 2006.
2.12 Employee. Any full-time, regular-benefit, non-bargaining
employee of an Employer.
3.
2.13 Employer. The Company or any Subsidiary which participates
in the Plan pursuant to Article VI hereof or, under the
circumstances set forth in the third sentence of Section 3.1
hereof, any Subsidiary or Affiliate described in such
sentence.
2.14 ERISA. The Employee Retirement Income Security Act of
1974, as amended from time to time.
2.15 Good Reason. With respect to any Participant, without such
Participant’s written consent, (i) the assignment to the
Participant of any duties inconsistent in any respect with the
Participant’s position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities
immediately before the Change of Control, or any other action by
the Company which results in a significant diminution in such
position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken
in bad faith and which is remedied by the Company or the Employer
promptly after receipt of notice thereof given by the Participant;
(ii) any reduction in the Participant’s Annual Salary,
or annual target bonus opportunity, or any material reduction in
other compensation or employee benefits, as in effect during the
120-day period immediately preceding the Change of Control (or as
such amounts may be increased from time to time), other than as a
result of an isolated and inadvertent action not taken in bad faith
and which is remedied by the Company promptly after receipt of
notice thereof given by the Participant; or (iii) the Company
or the Employer requiring the Participant to relocate his or her
principal place of business to a location which is more than fifty
(50) miles from his or her previous principal place of
business. For purposes of the Plan, any good faith determination of
“Good Reason” made by the Participant shall be
conclusive.
2.16 Participant. An individual who is designated as such by the
Board pursuant to Section 3.1.
2.17
Plan. The Abaxis, Inc.
Executive Change of Control Severance Plan.
2.18 Section 409A. Section 409A of the Internal Revenue Code
of 1986, as amended, and all applicable guidance promulgated
thereunder.
2.19 Separation Benefits.
The benefits described in
Section 5.2 that are provided to qualifying Participants under
the Plan.
2.20 Separation From Service.
A “separation from
service” has the meaning set forth in Treasury
Regulation Section 1.409A-1(h).
2.21 Specified Employee. This term shall have the same meaning as is
ascribed to such term under Section 409A.
2.22 Subsidiary. Any corporation in which the Company, directly
or indirectly, holds a majority of the voting power of such
corporation’s outstanding shares of capital stock.
2.23 Target Annual Bonus Amount.
The annual bonus that the
Participant would have received for the year in which his or her
Date of Termination occurs, if the target goals had been achieved
at 100%.
4.
3.1 Participation. Each of the individuals listed on
Appendix A hereto shall be a Participant in the Plan.
Appendix A may be amended by a majority vote of the Board from
time to time to add or delete individuals as Participants. If a
Participant’s employment is transferred from an Employer to
an Affiliate of the Company (including a Subsidiary) which is not a
participating Employer under the Plan, the provisions of the Plan
will continue to apply to such Participant while employed by such
Affiliate.
3.2 Duration of Participation.
A Participant shall only cease to be
a Participant in the Plan as a result of an amendment or
termination of the Plan complying with Article VII of the
Plan, or when he ceases to be an Employee of any Employer, unless,
at the time he ceases to be an Employee, such Participant is
entitled to payment of a Separation Benefit as provided in the Plan
or there has been an event or occurrence constituting Good Reason
that would enable the Participant to terminate his employment and
receive a Separation Benefit. A Participant entitled to payment of
a Separation Benefit or any other amounts under the Plan shall
remain a Participant in the Plan until the full amount of the
Separation Benefit and any other amounts payable under the Plan
have been paid to the Participant.
CHANGE OF CONTROL
BENEFITS
Upon the occurrence of a Change of Control, the
vesting and exercisability of one hundred percent (100%) of any
unvested options and other unvested equity-based instruments
granted to the Participant by the Company under the Abaxis, Inc.
2005 Equity Incentive Plan and any other equity programs sponsored
by the Company or any Affiliate shall immediately become vested and
exercisable. The terms of this Article IV shall amend and
supersede the terms of any other agreement or instrument relating
to the treatment of such outstanding options and other unvested
equity-based instruments upon or following a Change of
Control.
5.1 Terminations of Employment Which Give Rise
to Separation Benefits Under This Plan. A Participant shall be entitled to Separation
Benefits as set forth in Section 5.2 below if, at any time
following a Change of Control and prior to eighteen months
following the Change of Control, the Participant’s Employment
is terminated and such termination (a) constitutes a
separation from service and (b) is either (i) by the
Company for any reason other than Cause, death, or Disability or
(ii) by the Participant within 90 days after the
Participant has knowledge of the occurrence of Good Reason. Payment
of any benefit contained in this Article V shall not be made
unless the Participant executes a release as described in
Section 5.5.
5.
5.2 Separation Benefits. If a Participant’s employment is
terminated in circumstances entitling such Participant to
Separation Benefits pursuant to Section 5.1, and subject to
the effectiveness of the release described in Section 5.5, the
Company shall provide to such P
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