Exhibit 10.1
CONFIDENTIAL
Execution Copy
EXECUTIVE EMPLOYMENT
AGREEMENT
This Executive
Employment Agreement is entered into as of this
(the “Effective Date”) by and between Acusphere,
Inc. (the “Company”), and
(the “Employee”).
WHEREAS, the
Company considers it consistent with the best interests of the
Company’s stockholders to foster the continuous at-will
employment of key management personnel in order to prevent the
departure or distraction of management personnel to the detriment
of the Company and its stockholders.
WHEREAS, the
Company desires to provide members of the Company’s
management, including the Employee, with an incentive to continue
their respective at-will employment and to maximize the value of
the Company for the benefit of the Company’s
stockholders.
NOW THEREFORE, in
consideration of the mutual covenants and agreements set forth
herein and for other good and valuable consideration, the Employee
and the Company agree as follows:
1.
Definitions
. As used in this
Agreement, the following terms shall have meanings set forth
herein:
(a)
A termination for “
Cause ” means a termination of the Employee’s
employment by the Company or any successor company for one or more
of the following reasons:
(i)
the substantial and
continuing failure or refusal of the Employee, after written notice
thereof, to reasonably attempt to perform his or her job duties and
responsibilities (other than failure or refusal resulting from
incapacity due to physical disability or mental illness) which
failure or refusal is committed in bad faith and is not in the best
interest of the Company;
(ii)
gross negligence, willful
misconduct or material breach of fiduciary duty to the
Company;
(iii)
the willful commission of
an act of embezzlement, misappropriation or fraud;
(iv)
deliberate and willful
disregard of the written rules or policies of the Company
which results in a material and substantial loss, damage or injury
to the Company;
(v)
the unauthorized,
deliberate and willful disclosure of any material confidential,
proprietary and/or trade secret information of the Company or its
customers which disclosure is committed in bad faith and is not in
the best interest of the Company;
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(vi)
the willful and deliberate
commission of an act which induces any customer, supplier, employee
or consultant to adversely and substantially amend or terminate
their relationship with the Company which act is committed in bad
faith and is not in the best interest of the Company; or
(vii)
the conviction of, or plea
of nolo contendere by the Employee, to a crime involving a felony
of moral turpitude.
(b)
“ Good Reason
” means:
(i)
a reduction in the
Employee’s then-current annual base salary or bonus
opportunity or benefits (other than in connection with a salary
adjustment generally applicable to similarly situated employees);
or
(ii)
any failure to offer the
Employee the same level of benefits offered to similarly situated
employees; or
(iii)
the failure to pay the
Employee any portion of his or her current base salary, bonus or
benefits within twenty (20) days of the date such compensation is
due, based upon the payment terms currently in effect;
or
(iv)
the material breach by the
Company of this Agreement or of the Offer Letter after receipt of
written notice from the Employee and the failure of Company to cure
the breach within (30) days of such notice.
(c)
“Good Reason
Following A Change Of Control” means and includes the actions
by the Company set out in Section 1
(b) (i)-(iv) above as well as the following additional
actions, one or more of which takes place within one year after a
Change of Control (as defined below) or within the period which
begins six months prior to the first public comment by the Company
regarding such Change of Control and ends upon a Change of
Control:
(i) a significant diminution in the
Employee’s duties, title, office, staff or responsibilities;
or
(ii) the relocation of the
Employee’s primary business location to a location that
increases the Employee’s commute by more than thirty miles
compared to the commute of the Employee to the Employee’s
then-current primary business location.
(d)
“ Permanent
Disability ” means that (i) the Employee has been
incapacitated by mental or physical injury or illness so as to be
prevented thereby from engaging in the performance of the
Employee’s duties, (ii) such incapacity has continued
for a period of six (6) consecutive months, and
(iii) such incapacity will, in the opinion of a
qualified
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physician, selected by
Company and approved by Employee, be permanent and continuous
during the remainder of the Employee’s life.
(e)
“ Change of
Control ” means (i) a sale by the Company of all or
substantially all of its business or assets or (ii) a
reorganization, merger or consolidation of the Company whereby the
stockholders of the outstanding voting stock of the Company
immediately prior to the transaction hold less than a majority of
votes of the outstanding stock of the entity surviving such
transaction, or (iii) the transfer, in a single transaction or
series of transactions, of a majority of the outstanding voting
stock of the Company to a single purchaser or group of related
purchasers, or (iv) individuals who, as of the date of this
Agreement, constitute the Board of Directors (the
“Board”) of the Company (the “Incumbent
Board”) cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a
director subsequent to the date of this Agreement 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
the purpose, any such individual whose initial assumption of office
is in connection with either an actual or threatened election
contest (as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a
person other than the Board; or (v) the Board determines that
a Change of Control has occurred.
(f)
“ Monthly Base
Salary” means the amount calculated by multiplying the
employee’s then semi-monthly current gross salary by two (2),
or if paid more or less frequently than two times per month, the
amount of such current gross salary multiplied by the number of
payroll periods in a year divided by twelve (12). For purposes of
this calculation, the Employee’s current gross salary shall
be the highest amount of such gross salary paid to the Employee
during the twelve month period prior to termination of
employment.
(g)
“ Target
Bonus ”: means the greater of the potential bonus amount
defined in the Company’s management incentive compensation
plan at the time of a Change of Control Termination (as defined in
Section 2 below) or the potential bonus amount or other
financial incentive amount defined in any such management incentive
compensation plan applicable to the Employee during the twelve
month period preceding a Change of Control. For employees who
earn sales commissions, Target Bonus shall be deemed to equal the
average annualized (for any fiscal year consisting of less than
twelve months or with respect to which the Employee has been
employed by the Company for less than twelve full months)
commission paid or payable to the employee by the Company in
respect to the lesser of the three fiscal years immediately
preceding the Change of Control, or the number of fiscal years in
which the Company has instituted a commission plan or the number of
full fiscal years for which the Employee has been employed by the
Company immediately preceding the fiscal year in which the Change
of Control Termination occurs.
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2.
Benefits Upon
Termination after Change of Control . If at any time within twelve (12)
months after a Change of Control of the Company has occurred or
within the period which begins six (6) months prior to the
first public comment by the Company regarding the Change of Control
and ends upon a Change of Control, the Employee’s employment
is terminated either (i) by the Company or any successor
company for any reason other than for Cause or the Employee’s
Permanent Disability or death or (ii) by the Employee for Good
Reason Following A Change of Control, (such events of
termination referred to herein as a “Change of Control
Termination”), and subject to the Employee executing a
release in substantially the form attached hereto as
Exhibit 1 and the expiration of the applicable
revocation period, the Company shall pay or provide the Employee
with the following:
(i)
all base salary and
accrued but unused vacation up to and through the date of Change of
Control Termination shall be paid in accordance with the
Company’s normal payroll payment practices as currently in
effect;
(ii)
payments by the Company of
an aggregate amount equal to the product of the
Employee’s then-current Monthly Base Salary multiplied by six
(6), which amount shall be paid in a lump sum within 30 days
immediately following the date of the Employee’s Change of
Control Termination; provided that if in the opinion of the
Company, based on advice of counsel or its tax advisors, such
payments would be subject to the payment of excise tax under
Section 409 A of the Internal Revenue Code of 1986, as amended
(the “Code”), such payment shall be made six months and
one day after the date of the Employee’s Change of Control
Termination, together with interest on the amount so deferred
calculated at the prime rate of interest as reported in the Wall
Street Journal at the time of such payment (the “Prime
Rate”);
(iii)
payments by the Company of
an aggregate amount equal to the product of the
Employee’s then-current Monthly Base Salary multiplied by the
greater of (i) the number of full years (twelve month periods)
during which the Employee had been employed by the Company prior to
the Change of Control Termination or (ii) six, which amount
shall be paid in a lump sum within 30 days following the date of
the Employee’s Change of Control Termination;
(iv)
payment by the Company of
an amount equal to one times the Employee’s Target Bonus for
the year in which the Change of Control occurs, pro rated to cover
the portion of the year that elapsed from the start of the calendar
year through the date of the Change of Control Termination plus
such pro rated amount to cover six (6) months plus the greater
of (i) one month for each full year (twelve month
period) during which the Employee has been employed by the Company
prior to the Change of Control Termination or (ii) six months,
which amount shall be paid in a lump sum within 30 days immediately
following the date of the Employee’s Change of Control
Termination together with payment of all earned but unpaid bonuses
from prior years, if any ;
(v)
payment by the Company of
the portion of the Employee’s monthly health and dental
insurance premium payments customarily paid by the Company for its
employees for a period of eighteen (18) months from the date of
the
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Employee’s
termination, provided the Employee elects to continue such
health and dental insurance in accordance with the applicable
provisions of the Consolidated Omnibus Budget Reconciliation Act of
1985 (“COBRA”), has not accepted employment elsewhere
from which he or she is eligible to receive similar
employer-sponsored insurance and provided that if continuation is
not available under the terms and conditions of the Company’s
plans, the Company will substitute similar coverage;
(vi)
continuation of coverage
under the Company’s life and disability insurance plans, if
any, to the extent permitted by applicable law, for a period of
eighteen (18) months from the date of the Employee’s
termination; provided, however , that in the event such
continuation of coverage is not so permitted by applicable law, the
Employee acknowledges and agrees that he or she shall not be
entitled to any payments in lieu thereof and provided that if
continuation is not available under the terms and conditions of the
Company’s plans, the Company will substitute similar
coverage;
(vii)
the amount of any Company
contribution, premium payment or other consideration paid by the
Company to, or for, any other welfare plan, retirement plan or
profit sharing plan supported by the Company on behalf of
its employees in an
amount equal to the amount that the Employee would have been
eligible to receive or which the Company would have paid on behalf
of the Employee had the Employee remained in the employ of the
Company for twelve months after the Change of Control;
(viii)
outplacement services from
a service provider of Employee’s choice to the Employee at
the Company’s expense, up to a maximum expense of $15,000;
and
(ix)
the amount of federal,
state and local income tax to which the Employee is subject as a
result of the Company paying for any insurance premium,
outplacement service or retirement benefit hereunder in a form which
is judged to be taxable as income to the Employee but would likely
not have been subject to taxation had the Employee been in the
continued employ of the Company such that the Employee remains
“whole” on such payments (including the payments per
this paragraph).
In addition to the
foregoing, upon any Change of Control Termination, unless at that
time Employee elects to forego all or a part of the following
described amendments to his/her stock option agreements, all
unvested options for Company common stock or unvested restricted
stock held by the Employee pursuant to any stock plan or
arrangement with the Company shall become immediately vested, and
any options held by the Employee under any such plan or arrangement
shall be deemed amended so that they are exercisable at any time
after the Change of Control Termination and prior to termination of
the option agreement in accordance with its terms.
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The Employee shall
not be required to mitigate the amount of any payment to be paid or
provided in this Section 2 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided
by this Section 2 be reduced by any compensation earned by the
Employee as a result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be
owed by the Employee to the Company, or otherwise.
Notwithstanding
the foregoing, if in the opinion of the Company, based on advice
of counsel or its tax advisors, any payments owed to the Employee
under this Section 2 would be subject to the payment of excise
tax under Section 409 A of the Code if paid at the times set
forth herein, such payments shall be made six months and one day
after the date of the Employee’s termination hereunder,
provided that any payments so deferred shall earn interest
calculated at the Prime Rate.
3.
Benefits Upon Not For
Cause Termination or For Termination With Good Reason. If
at any time the Employee’s employment is terminated by the
Company or any successor company for any reason other than
for Cause or the Employee’s Permanent Disability or death or
by Employee for Good Reason, and such termination does not
constitute a Change of Control Termination under Section 2
above or a Management Buy-Out, (such events of termination referred
to herein as a “Not For Cause Termination”), , and
subject to the Employee executing a release in substantially the
form attached hereto as Exhibit 1 and the expiration of
the applicable revocation period, the Company shall pay or provide
the Employee with the following:
(i)
all base salary and
accrued but unused vacation up to and through the date of Not For
Cause Termination shall be paid in accordance with the
Company’s normal payroll payment practices as currently in
effect;
(ii)
payments by the Company of
an aggregate amount equal to the product of the
Employee’s then-current Monthly Base Salary, multiplied by
six, which amount shall be paid in equal monthly installments on a
monthly basis for the six months immediately following the date of
the Employee’s Not For Cause Termination; provided that in
any event such amount shall be fully paid no later than two and
one-half months following the calendar year in which the
Employee’s Not For Cause Termination occurs;
(iii)
payments by the Company of
an amount equal to the product of the Employee’s
then-current Monthly Base Salary, multiplied by the number of full
years (twelve month periods) during which the Employee had been
employed by the Company prior to the Not For Cause Termination,
which amount shall be paid on a monthly basis for the six months
immediately following the date of the Employee’s Not For
Cause Termination; provided that in any event such amount shall be
fully paid no later than thirty (30) days following
Employee’s Not For Cause Termination;
(iv)
payment by the Company
earned but unpaid bonuses, including commissions, up to the date of
Not For Cause Termination ;
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(v)
payment by the Company of
the portion of the Employee’s monthly health and dental
insurance premium payments customarily paid by the Company for its
employees fo
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