Exhibit 10.5
FORM OF STRATEGIC MANAGEMENT
TEAM
SEVERANCE
AGREEMENT
This SEVERANCE AGREEMENT (the
“ Agreement ”) is entered into by and
between Cell Therapeutics, Inc. , a Washington corporation
(“ CTI ” or the “
Company ”), and _____________ (the
“Executive” ).
WHEREAS , CTI recognizes the Executive’s expertise
in connection with Executive’s employment by CTI;
WHEREAS , CTI desires to provide certain severance pay
to Executive upon the terms and conditions below, if the
Executive’s employment is terminated for the reasons set
forth herein; and
NOW , THEREFORE , in consideration of the
following promises, mutual agreements and covenants and other good
and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties, intending to be legally bound
hereby, agree as follows:
Definition of
Terms .
For purposes of this Agreement
“ Cause ” is defined as (i) an act
of material dishonesty made by Executive in connection with
Executive’s responsibilities as an employee,
(ii) Executive’s conviction of, or pleas of nolo
contendere to, a felony, (iii) Executive’s gross
misconduct, or (iv) Executive’s continued substantial
violations of his employment duties after Executive has received a
written demand for performance from the Company which specifically
sets forth the factual basis for the Company’s belief that
the Executive has not substantially performed his duties and
provides Executive thirty (30) days to cure any such
violation(s).
“Change in
Control” shall
mean the acquisition, directly or indirectly, by any individual,
entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1933 (the
“Exchange Act” )) of beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act) of
securities representing fifty point one percent (50.1%) or
more of either (a) the then outstanding shares of Common Stock
(the “Outstanding Company Common Stock” )
or (b) 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
the following acquisitions shall not constitute a Change in
Control: (A) any acquisition directly from the Company
(excluding an acquisition by virtue of the exercise of a conversion
privilege), (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 reorganization, merger or consolidation
which does not substantially change the proportional ownership in
the Outstanding Company Common Stock and Outstanding Company Voting
Securities prior to the reorganization.
Resignation for “ Good
Reason ” shall mean the resignation of the Executive
after the following: (A) notice in writing is given to
Executive of Executive’s relocation, without the
Executive’s consent, to a place of business outside the
Greater Puget Sound area, (B) a substantial diminution of the
Executive’s responsibilities and benefits in effect on the
date hereof, (C) knowledge of an
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act or intent to commit an act in violation of
the Sarbanes-Oxley Act of 2002, the federal securities laws and any
other law applicable to the conduct of the Company’s
business; provided, however, that “Good Reason”
shall not exist if Executive knowingly participated in such act or
was aware of its commission or intended commission and did not take
reasonable steps to prevent or report it, or (D) the
occurrence of a Change in Control. A change in title and any
alterations in Executive’s responsibilities which CTI imposes
in response to any unsatisfactory or unacceptable work performance
by Executive after Executive has received a written demand for
performance from the Company which specifically sets forth the
factual basis for the Company’s belief that the Executive has
not substantially performed his duties and provides Executive
thirty (30) days to cure any such violation(s) shall not
constitute a basis for “resignation for Good
Reason” under this Agreement.
“ Severance Date
” shall mean the
date specified in a written notice of termination from CTI to the
Executive or the date which is the later of CTI’s actual
receipt of Executive’s written notice of resignation or the
effective date of resignation.
“ Severance End Date
” shall mean a date
eighteen (18) months from the Executive’s Severance
Date.
“ Severance Pay
” shall only mean
the Executive’s base salary at the Severance Rate.
“ Severance Rate
” shall mean only
the Executive’s base salary in effect immediately prior to
the Severance Date and shall not include any commissions (unless
already determined and awarded prior to the Severance Date),
vacation pay, sick leave, or the like whatsoever.
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Termination
of Employment . Subject
to the Executive’s continuing obligations under the
parties’ Employment Agreement (attached):
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(a)
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Termination
for Cause; Death; Disability; Resignation Without Good
Reason . If the
Executive’s employment is terminated by CTI for Cause, or if
the Executive resigns from employment hereunder, other than for
Good Reason or as a result of such Executive’s death or
disability (as defined in CTI’s disability plan applicable to
the Executive), the Executive shall be entitled only to receive: i)
Severance Pay through and including the Severance Date; and ii) pay
for all vacation time accrued as of the Severance Date.
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(b)
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Termination Without Cause;
Resignation for Good Reason . If the Executive’s employment is
terminated by CTI without Cause, or if the Executive resigns from
Executive’s employment for Good Reason and provided that such
termination constitutes a “separation from service” as
defined in Treasury Regulation Section 1.409A-1(h) (
“Separation” ) and Executive executes and
does not revoke a general release of all claims in the form
prescribed by the Company and such release becomes effective within
sixty (60) days of Executive’s Separation (the
“Deadline” ), the Executive shall be
entitled to receive: (i) eighteen (18) months of
Severance Pay; (ii) an amount equal to the greater of the
average of the three (3) prior years’ bonuses or thirty
percent (30%) of base salary in effect upon Executive’s
Severance Date; (iii) pay for all vacation time accrued as of
the
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Severance Date; and (iv) CTI
shall continue to pay premiums to maintain any life insurance for
Executive, existing and paid for by CTI as of the Severance Date,
for eighteen (18) months following the Severance Date. The
parties agree that the foregoing shall be paid as follows:
(w) the Severance Pay provided in (i) above shall be paid
in eighteen (18) equal installments pursuant to CTI’s
regular payroll procedures commencing on the Company’s first
normal payroll date that occurs on or after the Deadline,
(x) the severance provided in (ii) above shall be paid on
the first normal payroll date on or after the Deadline,
(y) the accrued but unused vacation shall be paid on the
Severance Date and (z) premium payments for life insurance
shall be made on each regularly scheduled due date for such
payments beginning with the first regularly scheduled due date that
occurs on or after the Deadline Date (with any payments due prior
to such time being made on such date). In addition, CTI shall
reimburse the Executive for any premium payments for COBRA
continuation coverage for the Executive and Executive’s
covered dependents under CTI’s medical plan only for the
period from the Severance Date until the earlier of: (1) a
date eighteen (18) months after the Severance Date; or
(2) a date on which the Executive is covered under the medical
plan of another employer, which does not exclude pre-existing
conditions. At Executive’s sole cost and expense, Executive
may elect to exercise any disability insurance conversion
originally available to Executive under the then existing
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