Exhibit 10.20
SEVERANCE AND CHANGE OF CONTROL
AGREEMENT
T HIS S EVERANCE AND C HANGE O F C ONTROL A GREEMENT (“ Agreement ”) is
made by and between Alpha Innotech Corp. (the “
Company ”) and
(“
Executive ”). This Agreement will become
effective upon its execution by both parties hereto.
RECITALS
W HEREAS , it
is expected that another company may from time to time consider the
possibility of acquiring the Company or that a change in control
may otherwise occur, with or without the approval of the
Company’s Board of Directors (the “ Board
”). The Board recognizes that such consideration can be a
distraction to Executive and can cause Executive to consider
alternative employment opportunities. The Board has determined that
it is in the best interests of the Company and its stockholders to
assure that the Company will have the continued dedication and
objectivity of the Executive, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined below) of
the Company.
W HEREAS , the
Company’s Board believes it is in the best interests of the
Company and its stockholders to retain Executive and provide
incentives to Executive to continue in the service of the
Company.
W HEREAS , the
Board further believes that it is imperative to provide Executive
with certain benefits upon termination of Executive’
employment, in connection with a Change of Control and otherwise,
which benefits are intended to provide Executive with financial
security and provide sufficient income and encouragement to
Executive to remain with the Company, notwithstanding the
possibility of a Change of Control.
W HEREAS , to
accomplish the foregoing objectives, the Board has directed the
Company, upon execution of this Agreement by Executive, to agree to
the terms provided in this Agreement.
N OW ,
T HEREFORE
, in consideration of the foregoing,
the mutual covenants contained herein, and other good and valuable
consideration, the parties hereto hereby agree as
follows:
1. T ERMINATION OF E MPLOYMENT .
(a) At-Will
Employment. Executive’s employment is at-will, which
means that the Company may terminate Executive’s employment
at any time, with or without advance notice, and with or without
Cause. Similarly, Executive may resign his/her employment at any
time, with or without advance notice or Good Reason. Executive
shall not receive any compensation of any kind, including, without
limitation, severance benefits, following Executive’s last
day of employment with the Company (the “ Termination
Date ”), except as expressly provided herein, or as
provided in any plan documents governing the Stock Awards.
Executive shall devote all reasonable efforts to the performance of
Executive’s duties, and shall perform such duties in good
faith.
(b) Termination Related to a
Change of Control. If
Executive’s employment is terminated without Cause (and other
than as a result of death or disability as disability is defined
for purposes of the Company’s long-term disability policies)
or Executive resigns for Good Reason within ninety (90) days
prior to or twelve (12) months after a Change of Control, and
provided (1) such termination constitutes a “separation
from service” (within the meaning of Treasury Regulation
Section 1.409A-1(h)), (2) Executive signs and allows to
become effective a release substantially in the form attached
hereto as Exhibit A (the “ Release
”) pursuant to Section 2(a) of this Agreement and
(3) if requested by the Company in connection with the closing
of the Change of Control, Executive agrees to a fair and reasonable
transition plan, including continued employment or consultancy for
a period of up to [ninety (90) days with the Company or the
successor entity at a compensation rate equivalent to the rate at
which Executive was being compensated by the Company immediately
prior to the Change of Control, then the Company shall provide
Executive with the following severance benefits (the “
Severance Benefits ”):
(i) The Company shall make severance payments to
Executive in the form of continuation of Executive’s base
salary (at the rate in effect on the Termination Date, or if
higher, the rate in effect immediately prior to the Change of
Control) for six (6) months following the Termination Date
(the “ Severance Period ”). These
payments will be made on the Company’s ordinary payroll dates
and will be subject to standard payroll deductions and
withholdings.
(1) The Company will pay Executive an amount equal
to the Executive’s Target Annual Bonus (provided the
Executive is under a non-commission, Company bonus plan). For
purposes of this Agreement, the “ Target Annual
Bonus ” shall mean the Executive’s target bonus
amount as most recently determined for the year of termination by
the Company, calculated as if both Executive and the Company
achieved one hundred percent (100%) of their specified
performance objectives. This amount will be paid over the entire
Severance Period on the Company’s ordinary payroll dates, in
equal installments, and will be subject to standard payroll
deductions and withholdings.
(ii) Provided that Executive elects continued
coverage under COBRA, the Company will pay the premiums necessary
to continue Executive’s health insurance during the Severance
Period. No premium payments will be made by the Company pursuant to
this paragraph following the effective date of Executive’s
coverage by a health insurance plan of a subsequent employer or
such other date on which Executive (and Executive’s
dependents, as applicable) cease to be eligible for COBRA
coverage.
(iii) The Company will accelerate the vesting of all
outstanding options to purchase the Company’s common stock
and all unvested shares subject to restricted stock grants
(collectively, the “ Stock Awards ”) such
that within ten (10) days after the date Executive signs the
Release, 100% of unvested shares as of the Termination Date subject
to the Stock Awards shall vest. Except as expressly set forth
herein, the Stock Awards shall continue to be governed by the terms
of the applicable restricted stock agreement(s), stock option
agreements and equity incentive plan documents.
(c) Termination For Cause
Procedure. The Company
may not terminate Executive’s employment for Cause unless and
until Executive receives a copy of a resolution duly adopted by the
affirmative vote of at least a majority of the Board finding that
in the good faith opinion of the Board, Executive was guilty of the
conduct constituting “ Cause ” and
specifying the particulars thereof in detail. The Company shall
provide Executive with reasonable notice of the Board vote and an
opportunity for Executive, together with Executive’s counsel,
to be heard before the Board.
2. L IMITATIONS A ND C ONDITIONS O N B ENEFITS
(a) Release Prior to Payment of
Benefits. Upon the
occurrence of a termination of employment pursuant to
Section 1(b), and prior to the payment of any Severance
Benefits, Executive shall execute, and allow to become effective,
the Release not later than forty-five (45) days following
Executive’s “separation from service” (as defined
above) (such latest permitted date, the “ Separation
Agreement Deadline ”). Unless the Release is timely
signed by Executive, delivered to the Company, and becomes
effective within the required period (the date on which the Release
becomes effective, the “ Release Date ”),
Executive will receive none of the Severance Benefits. If the
Severance Benefits are not covered by one or more exemptions from
the application of Section 409A of the Internal Revenue Code
of 1986, as amended (the “ Code ”) and
the regulations and other guidance thereunder and any state law of
similar effect (collectively “ Section 409A
”) and the Release Date could occur in the calendar year
following the calendar year in which Executive’s separation
from service occurs, the payment of the Severance Benefits will
commence no earlier than the Separation Agreement
Deadline
(b) Compliance with
Section 409A. It is
intended that each installment of the payments and benefits
provided for in this Agreement is a separate “payment”
for purposes of Treasury Regulation Section 1.409A-2(b)(2)(i).
For the avoidance of doubt, it is intended that payments of the
amounts set forth in this Agreement satisfy, to the greatest extent
possible, the exemptions from the application of Section 409A
of the Code provided under Treasury Regulations 1.409A-1(b)(4),
1.409A-1(b)(5) and 1.409A-1(b)(9). However, if the Company (or, if
applicable, the successor entity thereto) determines that the
severance payments and benefits provided under this Agreement (the
“ Agreement Payments ”) constitute
“deferred compensation” under Section 409A and
Executive is, on the Termination Date, a “specified
employee” of the Company or any successor entity thereto, as
such term is defined in Section 409A(a)(2)(B)(i) of the Code
(a “ Specified Employee ”), then, solely
to the extent necessary to avoid the incurrence of the adverse
personal tax consequences under Section 409A, the timing of
the Agreement Payments shall be delayed as follows: on the earlier
to occur of (i) the date that is six (6) months and one
(1) day after Executive’s “separation from
service” (as defined above) or (ii) the date of
Executive’s death (such earlier date, the “
Delayed Initial Payment Date ”), the Company
(or the successor entity thereto, as applicable) shall (A) pay
to Executive a lump sum amount equal to the sum of the Agreement
Payments that Executive would otherwise have received through the
Delayed Initial Payment Date if the commencement of the payment of
the Agreement Payments had not been so delayed pursuant to this
Section 2(b) and (B) commence paying the balance of the
Agreement Payments in accordance with the applicable payment
schedules set forth in this Agreement.
3. D EFINITIONS .
(a) Definition of
Cause. For purposes of
this Agreement, “ Cause ” shall mean that
Executive has committed, or there has occurred, one or more of the
following events: (1) conviction of any felony or misdemeanor
involving moral turpitude, fraud or act of dishonesty against the
Company; (2) a finding by the Board, after a good faith and
reasonable factual investigation, that Executive has engaged in
gross misconduct; or (3) material violation or material breach
of any Company policy or statutory, fiduciary, or contractual duty
of Executive to the Company; provided, however, that in the event
that any of the foregoing events occurs, the Company shall provide
notice to Executive describing the nature of such event and
Executive shall thereafter have thirty (30) days to cure such
event if such event is capable of being cured.
(b) Definition of Good
Reason. For purposes of
this Agreement, “ Good Reason ” shall
mean that any one of the following events occurs during the
Executive’s employment with the Company without
Executive’s consent: (i) any material reduction of
Executive’s annual base salary (including bonus) as of the
time period immediately preceding the Change of Control;
(ii) any change in Executive’s authority, duties or
responsibilities (including the person or persons to whom Executive
has reporting responsibilities) that represents a material adverse
change from Executive’s authority, duties or responsibilities
as in effect at any time within ninety (90) days preceding the
date of the Change of Control or at any time thereafter, excluding
for this purpose an isolated, insubstantial and inadvertent action
not taken in bad faith that is remedied by the Company promptly
after notice thereof is given by Executive; (iii) the
Company’s requiring Executive to relocate to any place
outside of a twenty (20) mile driving distance of
Executive’s current work site, except for reasonably required
travel on the business of the Company or its affiliates that is not
materially greater than such travel requirements prior to the
Change in Control or unless Executive accepts such relocation
opportunity; or (iv) the Company materially breaches its
obligations under this Agreement or any other then-effective
employment agreement with Executive. Executive may terminate his or
her employment for Good Reason so long as Executive tenders his
resignation to the Company within thirty (30) days after the
occurrence of the event which forms the basis for his resignation
for Good Reason. Executive shall provide written notice to the
Company describing the nature of the event which forms the basis
for Executive’s resignation for Good Reason, and the Company
shall thereafter have thirty (30) days to cure such event.
Executive’s resignation must be effective not later than
sixty (60) days after the expiration of such thirty
(30) day cure period.
(c) Definition of Change of
Control. For purposes of
this Agreement, a “ Change of Control ”
means: (i) a dissolution, liquidation or sale of all or
substantially all of the assets of the Company; (ii) a merger
or consolidation in which the Company is not the surviving
corporation; (iii) a reverse merger in which the Company is
the surviving corporation but the shares of the Company’s
common stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in
the form of securities, cash or otherwise; (iv) the
acquisition by any person, entity or group within the meaning of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934,
as amended (the “ Exchange Act ”), or any
comparable successor provisions (excluding any employee benefit
plan, or relate
