EXHIBIT 10.2
SEVERANCE AGREEMENT
This
Severance Agreement (the “Agreement”), entered into
effective July 8, 2008, is between American Pacific
Corporation, a Delaware corporation having its principal place of
business at 3883 Howard Hughes Parkway, Suite 700, Las Vegas,
Nevada 89169 (the “Company”), and Dana M. Kelley, an
individual residing at the address set forth below her signature at
the end of this Agreement and currently the Company’s Vice
President, Chief Financial Officer and Treasurer
(“Executive”) (collectively, “the
parties”).
1. Severance Benefits
Unless
Executive’s employment is terminated for Cause or by death or
Disability (as defined below), if the Company terminates
Executive’s employment:
(a) The
Company, in an attempt to ease Executive’s transition, and
upon receipt of a mutually satisfactory release of potential claims
against the Company, shall pay Executive all compensation due and
owing through the last day actually worked, and shall continue to
pay to Executive, in accordance with the Company’s then
effective payroll practices, Executive’s then effective base
salary (but not any employee benefits), less applicable
withholding, for a period of three (3) years from the date the
employment relationship with the Company terminates (the
“Termination Date”); provided, however, that such
payments by the Company shall be offset, during the third year
following the Termination Date, by income paid to Executive by
another employer other than the Company, which income Executive
shall promptly report to the Company. For the avoidance of doubt,
for purposes of this Section 1(a), base salary shall not
include any perquisites or similar benefits provided to Executive
prior to the Termination Date, including, without limitation, any
automobile allowance, club membership or right to use aircraft
otherwise provided by the Company for the use by the
Company’s executives.
(b) If
Executive elects to convert her Company group health coverage under
COBRA, the Company will pay Executive’s COBRA premiums until
the earlier of (1) the eighteenth (18th) month anniversary of
the Termination Date or (2) Executive becomes covered by
another employer’s group health plans.
(c) All
shares of restricted stock granted to Executive, all unexercised
options to purchase Company common stock and any other equity
awards of the Company, in each case that are unvested at the time
of such termination of employment of Executive, shall become,
immediately prior to the Termination Date, fully vested and, as
applicable, exercisable.
(d) The
payments and benefits described in this Section 1 shall be
conditioned upon Executive’s continued compliance with the
material obligations described in this Agreement. Should Executive
violate any such obligations, as determined by the Company in good
faith, all further payment obligations shall cease.
2. Other Terminations
(a)
Termination by Company for Cause. At any time, and without
prior notice, the Company may terminate Executive’s
employment for Cause (as defined below). In such case, the Company
shall pay Executive all compensation then due and owing;
thereafter, all of the Company’s obligations under this
Agreement shall cease. Termination for “Cause” shall
mean termination of Executive’s employment because of
Executive’s (i) involvement in fraud, misappropriation
or embezzlement related to the business or property of the Company
and/or its subsidiaries or affiliates; (ii) conviction for, or
guilty or “no contest” plea to, a felony; and/or
(iii) a pattern of failure to substantially perform her duties
to the Company, provided, however, that if such Cause is reasonably
curable, the Company shall not terminate Executive’s
employment unless the Company first gives notice of its intention
to terminate and the grounds of such termination, and Executive has
not, within thirty (30) days following receipt of such notice,
cured such Cause, to the satisfaction of the Company.
(b)
Termination by Executive. At any time, Executive may
terminate her employment with the Company for any reason, for any
or no reason, by providing the Company thirty (30) days’
advance written notice. The Company shall have the option, in its
complete discretion, to make such termination of employment
effective at any
time
prior to the end of such notice period, provided that the Company
pays Executive all compensation due and owing through the last day
actually worked, plus an amount equal to the then effective base
salary, less applicable withholding, Executive would have earned
through the balance of the above notice period; thereafter, all of
the Company’s obligations under this Agreement shall
cease.
(c)
Termination by Death . If Executive shall die while still an
employee of the Company, Executive’s employment with the
Company shall be deemed to have terminated upon the date of death
of Executive. The Company shall pay to Executive’s
beneficiaries or estate, as appropriate, compensation then due and
owing as of the date of death, and shall continue to pay
Executive’s salary and benefits (to the extent consistent
with the terms of the relevant benefit plan), through the second
full month after Executive’s death. As of the date of death,
all unvested stock options or other equity awards granted to
Executive to the date of death shall become fully vested and, as
applicable, exercisable, and may be exercised by the appropriate
representative of Executive’s estate. Thereafter, all
obligations of the Company under this Agreement shall cease.
Nothing in this Section 2(c) shall affect any entitlement of
Executive’s heirs to the benefits of any life insurance,
vested funds in plans governed by provisions of state or federal
laws, including but not limited to 401(k), deferred compensation,
pension, or other similar employee benefit plans.
(d)
Termination by Disability . If, in the sole opinion of the
Company, Executive shall suffer a Disability (as defined below),
and, to the extent permitted by law, the Company shall terminate
Executive’s employment, the Company shall pay to Executive
all compensation to which Executive is entitled through the last
day of the month in which Executive has been determined to have a
Disability, and, thereafter, there shall be no other obligations of
the Company under this Agreement. Nothing in this Section 2(d)
shall affect Executive’s rights under any disability plan in
which she is a participant. For purposes of this Agreement,
“Disability” shall mean (i) Executive’s inability
to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months, or
(ii) Executive’s receipt, by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period
of not less than twelve (12) months, of income replacement
benefits for a period of not less than three (3) months under
an accident and health plan covering employees of the
Company.
3. Termination of Employment
Following Corporate Transition
(a)
Corporate Transition Defined . For purposes of this
Agreement, a “Corporate Transition” shall include any
of the following transactions to which the Company is a party:
(A) a merger or consolidation in which the Company is not the
surviving entity and securities representing more than fifty
percent (50%) of the total combined voting power of the
Company’s outstanding securities are transferred to a holder
different from those who held such securities immediately prior to
such merger; (B) the sale, transfer or other disposition of
all or substantially all of the assets of the Company in
liquidation or dissolution of the Company; (C) any reverse
merger in which the Company is the surviving entity but in which
securities representing more than fifty percent (50%) of the total
combined voting power of the Company’s outstanding securities
are transferred to a holder(s) different from those who held such
securities immediately prior to such merger; or (D) any cash
dividend paid by the Company that, in the aggregate with all other
dividends paid in any twelve month period, is greater than the
combined earnings of the Company for the Company’s two fiscal
years prior to such dividend payment date. In addition, a Corporate
Transition shall also include a “Change in Control” as
such term is defined in the Company’s 2008 Stock Incentive
Plan. None of the foregoing events, however, shall be considered a
Corporate Transition under this Agreement unless the event also
qualifies as 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, under Section 409A(a)(2)(A)(v) of
the Internal Revenue Code of 1986, as amended, the regulations
thereunder, and any other published interpretive authority, as
issued or amended from time to time. Except as provided otherwise
in this Section 3, in the event of a Corporate Transition, the
provisions of Section 1 and Section 2(b) above shall not
apply.
(b)
Acceleration of Vesting at Time of Corporate Transition .
Should a Corporate Transition take place, all unvested shares of
restricted stock granted to Executive, all unvested and unexercised
options to purchase Company stock granted to Executive, and all
other unvested equity awards under the 2008 Stock Incentive Plan
or
Page 2 of Exhibit 10.2
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