Change in Control Agreement - CTI Molecular Imaging Inc. and R. Gregory Brophy
CHANGE IN CONTROL AGREEMENT
AGREEMENT by and between CTI Molecular Imaging, Inc., a Delaware
corporation (the "Company"), and R. Gregory Brophy ("Executive"), dated as of
the 17th day of December 2002.
The Board of Directors of the Company (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 of Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of Executive by virtue of the personal uncertainties
and risks created by a pending or threatened Change of Control and to encourage
Executive's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control, and to provide Executive
with compensation and benefits arrangements upon a Change of Control which
ensure that the compensation and benefits expectations of Executive will be
satisfied and which are competitive with those of other corporations. Therefore,
in order to accomplish these objectives, the Board has caused the Company to
enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions.
(a) The "Effective Date" shall mean the first date during
the Change of Control Period (as defined in Section l(b)) on which a Change of
Control (as defined in Section 2) occurs. Anything in this Agreement to the
contrary notwithstanding, if a Change of Control occurs and if Executive's
employment with the Company is terminated prior to the date on which the Change
of Control occurs, and if it is reasonably demonstrated by Executive that such
termination of employment (i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change of Control or (ii) otherwise
arose in connection with or anticipation of a Change of Control, then for all
purposes of this Agreement the "Effective Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period
commencing on the date hereof and ending on the third anniversary of the date
hereof; provided, however, that commencing on the date one year after the date
hereof, and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the "Renewal Date"),
unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate three years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company shall give notice
to Executive that the Change of Control Period shall not be so extended.
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2. Change of Control. For the purposes of this Agreement, a
"Change of Control" shall mean the occurrence of any of the following events but
shall specifically exclude a public offering of the Company's
common stock:
(a) individuals who, as of the date of this Agreement, constitute
the Board of Directors of the Company (the "Incumbent Directors") cease for any
reason to constitute at least a majority of such Board, provided that any person
becoming a director after the date of this Agreement and whose election or
nomination for election was approved by a vote of at least a majority of the
Incumbent Directors then on the Board shall be an Incumbent Director; provided,
however, that no individual initially elected or nominated as a director of the
Company as a result of an actual or threatened election contest with respect to
the election or removal of directors ("Election Contest") or other actual or
threatened solicitation of proxies or consents by or on behalf of any "person"
(such term for purposes of this definition being as defined in Section 3(a)(9)
of the Exchange Act and as used in Section 13(d)(3) and 14(d)(2) of the Exchange
Act) other than the Board ("Proxy Contest"), including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy Contest,
shall be deemed an Incumbent Director; or
(b) any person is or becomes a "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of either (A) 35% or
more of the then-outstanding shares of common stock of the Company ("Company
Common Stock") or (B) securities of the Company representing 35% or more of the
combined voting power of the Company's then outstanding securities eligible to
vote for the election of directors (the "Company Voting Securities"); provided,
however, that for purposes of this subsection (b), the following acquisitions
shall not constitute a Change of Control: (i) an acquisition directly from the
Company, (ii) an acquisition by the Company or a Subsidiary of the Company,
(iii) an acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any Subsidiary of the Company, or (iv) an
acquisition pursuant to a Non-Qualifying Transaction (as defined in subsection
(c) below); or
(c) the consummation of a reorganization, merger, consolidation,
statutory share exchange or similar form of corporate transaction involving the
Company or a Subsidiary (a "Reorganization"), or the sale or other disposition
of all or substantially all of the Company's assets (a "Sale") or the
acquisition of assets or stock of another corporation (an "Acquisition"), unless
immediately following such Reorganization, Sale or Acquisition: (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 Reorganization, Sale or
Acquisition 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 Reorganization, Sale or Acquisition
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(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
or stock either directly or through one or more subsidiaries, the "Surviving
Company") in substantially the same proportions as their ownership, immediately
prior to such Reorganization, Sale or Acquisition, of the outstanding Company
Common Stock and the outstanding Company Voting Securities, as the case may be,
and (B) no person (other than (i) the Company or any Subsidiary of the Company,
(ii) the Surviving Company or its ultimate parent corporation, (iii) any
employee benefit plan (or related trust) sponsored or maintained by any of the
foregoing, or (iv) any person acquiring Company Common Stock or Company Voting
Securities, as the case may be, directly from the Company) is the beneficial
owner, directly or indirectly, of 35% or more of the total common stock or 35%
or more of the total voting power of the outstanding voting securities eligible
to elect directors of the Surviving Company, and (C) at least a majority of the
members of the board of directors of the Surviving Company were Incumbent
Directors at the time of the Board's approval of the execution of the initial
agreement providing for such Reorganization, Sale or Acquisition (any
Reorganization, Sale or Acquisition which satisfies all of the criteria
specified in (A), (B) and (C) above shall be deemed to be a "Non-Qualifying
Transaction"); or
(d) approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company.
3. Employment Period. The Company hereby agrees to continue
Executive in its employ, and Executive hereby agrees to remain in the employ of
the Company subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the second anniversary of
such date (the "Employment Period").
4. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) Executive's
position (including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least commensurate in all
material respects with the most significant of those held, exercised and
assigned at any time during the 120-day period immediately preceding the
Effective Date, and (B) Executive's services shall be performed at the location
where Executive was employed immediately preceding the Effective Date or any
office or location less than 35 miles from such location.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which Executive is entitled, Executive
agrees to devote reasonable attention and time during normal business hours to
the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to
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Executive hereunder, to use Executive's reasonable best efforts to perform
faithfully and efficiently such responsibilities. During the Employment Period
it shall not be a violation of this Agreement for Executive to (A) serve on
corporate, civic or charitable boards or committees, (B) deliver lectures,
fulfill speaking engagements or teach at educational institutions and (C) manage
personal investments, so long as such activities do not significantly interfere
with the performance of Executive's responsibilities as an employee of the
Company in accordance with this Agreement. It is expressly understood and agreed
that to the extent that any such activities have been conducted by Executive
prior to the Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the performance
of Executive's responsibilities to the Company.
(b) Compensation.
(i) Base Salary. During the Employment Period,
Executive shall receive an annual base salary ("Annual Base Salary"), which
shall be paid at a monthly rate, at least equal to 12 times the highest monthly
base salary paid or payable, including any base salary which has been earned but
deferred, to Executive by the Company and its affiliated companies in respect of
the 12-month period immediately preceding the month in which the Effective Date
occurs. During the Employment Period, the Annual Base Salary shall be reviewed
no more than 12 months after the last salary increase awarded to Executive prior
to the Effective Date and thereafter at least annually. Any increase in Annual
Base Salary shall not serve to limit or reduce any other obligation to Executive
under this Agreement. Annual Base Salary shall not be reduced after any such
increase and the term Annual Base Salary as used in this Agreement shall refer
to Annual Base Salary as so increased. As used in this Agreement, the term
"affiliated companies" shall include any company controlled by, controlling or
under common control with the Company.
(ii) Incentive, Bonus, Savings and Retirement Plans.
During the Employment Period, Executive shall be entitled to participate in all
incentive, bonus, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and programs
provide Executive with incentive opportunities (measured with respect to both
regular and special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for
Executive under such plans, practices, policies and programs as in effect at any
time during the 120-day period immediately preceding the Effective Date or if
more favorable to Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies.
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(iii) Welfare Benefit Plans. During the Employment
Period, Executive and/or Executive's eligible dependents, as the case may be,
shall be eligible for participation in and shall receive all benefits under
welfare benefit plans, practices, policies and programs provided by the Company
and its affiliated companies (including, without limitation, medical,
prescription, dental, disability, employee life, group life, accidental death
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs provide
Executive with benefits which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and programs in effect for
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to Executive, those provided generally at
any time after the Effective Date to other peer executives of the Company and
its affiliated companies.
(iv) Expenses. During the Employment Period,
Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by Executive in accordance with the most favorable policies,
practices and procedures of the Company and its affiliated companies in effect
for Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to Executive, as in effect generally at any
time thereafter with respect to other peer executives of the Company and its
affiliated companies.
(v) Fringe Benefits. During the Employment Period,
Executive shall be entitled to fringe benefits in accordance with the most
favorable plans, policies, programs and practices of the Company and its
affiliated companies as in effect for Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(vi) Vacation. During the Employment Period,
Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of the Company and its
affiliated companies as in effect for Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
5. Termination of Employment.
(a) Death or Disability. Executive's employment shall
terminate automatically upon Executive's death during the Employment Period. If
the Company determines in good faith that the Disability of Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to Executive written notice in accordance with
Section 13(b) of this Agreement of its intention to terminate Executive's
employment. In such event, Executive's employment
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with the Company shall terminate effective on the 30th day after receipt of such
notice by Executive (the "Disability Effective Date"), provided that, within the
30 days after such receipt, Executive shall not have returned to full-time
performance of Executive's duties. For purposes of this Agreement, "Disability"
has the same meaning as provided in the long-term disability plan or policy
maintained by the Company or if applicable, most recently maintained, by the
Company or if applicable, an affiliated company, for Executive, whether or not
Executive actually receives disability benefits under such plan or policy. If no
long-term disability plan or policy was ever maintained on behalf of Executive,
"Disability" shall mean the absence of Executive from Executive's duties with
the Company on a full-time basis for 180 consecutive business days as a result
of incapacity due to mental or physical illness which is determined to be total
and permanent by a physician selected by the Company or its insurers and
acceptable to Executive or Executive's legal representative.
(b) Cause. The Company may terminate Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean:
(i) the willful and continued failure of Executive to
perform substantially Executive's reasonably assigned duties with the Company or
one of its affiliates (other than any such failure resulting from incapacity due
to physical or mental illness or from the assignment to Executive of duties that
would constitute Good Reason under Section 5(c)(i), and specifically excluding
any failure by Executive, after reasonable efforts, to meet performance
expectations), which failure continues for a period of at least 30 days after a
written demand for substantial performance, signed by a duly authorized officer
of the Company, has been delivered to Executive which specifically identifies
the manner in which Executive has failed to substantially performed his duties;
provided, however, that no failure to perform by Executive after a Notice of
Termination is given to the Company by Executive shall constitute Cause for
purposes of this Agreement, or
(ii) the willful engaging by Executive in illegal
conduct or gross misconduct which is materially and demonstrably injurious to
the Company.
For purposes of this provision, no act or failure to act, on the part of
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by Executive in bad faith or without reasonable belief that Executive's
action or omission was in the best interests of the Company. Any act, or failure
to act, based upon authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of a superior officer of the Company or based
upon the advice of counsel for the Company shall be conclusively presumed to be
done, or omitted to be done, by Executive in good faith and in the best
interests of the Company. The cessation of employment of Executive shall not be
deemed to be for Cause unless and until there shall have been delivered to
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of
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the entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to Executive and Executive is
given an opportunity, together with counsel, to be heard before the Board),
finding that, in the good faith opinion of the Board, Executive is guilty of the
conduct described in subparagraph (i) or (ii) above, and specifying the
particulars thereof in detail.
(c) Good Reason. Executive's employment may be terminated
by Executive for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean:
(i) the assignment to Executive of any duties
inconsistent in any respect with Executive's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or any other
action by the Company which results in a 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 promptly after receipt of notice thereof given by
Executive;
(ii) any failure by the Company to comply with any of
the provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by
Executive;
(iii) the Company's requiring Executive to be based
at any office or location other than as provided in Section 4(a)(i)(B) hereof or
the Company's requiring Executive to travel on Company business to a
substantially greater extent than required immediately prior to the Effective
Date;
(iv) any purported termination by the Company of
Executive's employment otherwise than as expressly permitted by this Agreement;
(v) any failure by the Company to comply with and
satisfy Section 12(c) of this Agreement;
(vi) any other material breach by the Company of any
provision of this Agreement.
Good Reason shall not include Executive's death or Disability.
Executive's continued employment shall not constitute consent to, or a waiver of
rights with respect to, any circumstance constituting Good Reason hereunder. For
purposes of this Section 5(c), any good faith determination of "Good Reason"
made by Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company
or Executive shall be communicated by Notice of Termination to the other party
hereto
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given in accordance with Section 13(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, (ii) to the
extent applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated, and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination
date. If a dispute exists concerning the provisions of this Agreement that apply
to Executive's termination of employment, the parties shall pursue the
resolution of such dispute with reasonable diligence. Within five (5) days of
such a resolution, any party owing any payments pursuant to the provisions of
this Agreement shall make all such payments together with interest accrued
thereon at the rate provided in Section 1274(b)(2)(B) of the Internal Revenue
Code of 1986, as amended (the "Code"). The failure by Executive or the Company
to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
Executive or the Company, respectively, hereunder or preclude Executive or the
Company, respectively, from asserting such fact or circumstance in enforcing
Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i)
if Executive's employment is terminated other than by reason of death or
Disability, the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be, or (ii) if Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of Executive or the Disability Effective Date, as the case may
be.
6. Obligations of the Company upon Termination.
(a) Termination by Executive for Good Reason; Termination
by the Company Other Than for Cause or Disability. If, during the Employment
Period, the Company shall terminate Executive's employment other than for Cause
or Disability, or Executive shall terminate employment for Good Reason:
(i) the Company shall pay to Executive in a lump sum
in cash within 30 days after the Date of Termination the aggregate of the
following amounts:
A. the sum of (1) Executive's Annual
Base Salary through the Date of Termination to the extent not theretofore paid,
(2) any accrued vacation pay to the extent not theretofore paid, and (3) unless
Executive has elected a different payout date in a prior deferral election, any
compensation previously deferred by Executive (together with any accrued
interest or earnings thereon) to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2) and (3) shall be hereinafter referred to
as the "Accrued Obligations"); and
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B. the amount equal to the product of
(1) two and (2) the sum of (x) Executive's Annual Base Salary and (y)
Executive's target annual bonus for the year in which the Date of Termination
occurs; and
(ii) for two years after the Date of Termination, or
such longer period as may be provided by the terms of the appropriate plan,
program, practice or policy, the Company shall continue benefits to Executive
and/or Executive's eligible dependents at least equal to those which would have
been provided to them in accordance with the plans, programs, practices and
policies described in Section 4(b)(iii) of this Agreement if Executive's
employment had not been terminated or, if more favorable to Executive, as in
effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies and their families, provided, however,
that if Executive becomes re-employed with another employer and is eligible to
receive medical or other welfare benefits under another employer provided plan,
the Company's obligations under this Section 6(a)(ii) shall cease; and
(iii) as of the Date of Termination, all of
Executive's outstanding options to acquire common stock of the Company and other
compensatory awards from the Company in the nature of rights that may be
exercised shall become fully vested and exercisable, and all restrictions on
Executive's outstanding shares of restricted stock of the Company shall lapse;
and
(iv) to the extent not theretofore paid or provided,
the Company shall timely pay or provide to Executive any other amounts or
benefits required to be paid or provided or which Executive is eligible to
receive under any plan, program, policy or practice or contract or agreement of
the Company and its affiliated companies (such other amounts and benefits shall
be hereinafter referred to as the "Other Benefits").
(b) Termination by Executive without Good Reason after
One Year. If Executive resigns without Good Reason after the first anniversary
of the Effective Date and before the expiration of the Employment Period:
(i) the Company shall pay to Executive in a lump sum
in cash within 30 days after the Date of Termination:
A. the Accrued Obligations; and
B. the amount equal to the product of
(1) a fraction, the numerator of which is the number of full months remaining in
the Employment Period from and after the Date of Termination and the denominator
of which is 24, and (2) the sum of Executive's Annual Base Salary and
Executive's target annual bonus for the year in which the Date of Termination
occurs; and
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(ii) for the remaining term of the Employment Period,
or such longer period as may be provided by the terms of the appropriate plan,
program, practice or policy, the Company shall continue benefits to Executive
and/or Executive's eligible dependents at least equal to those which would have
been provided to them in accordance with the plans, programs, practices and
policies described in Section 4(b)(iii) of this Agreement if Executive's
employment had not been terminated or, if more favorable to Executive, as in
effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies and their families, provided, however,
that if Executive becomes re-employed with another employer and is eligible to
receive medical or other welfare benefits under another employer provided plan,
the Company's obligations under this Section 6(b)(ii) shall cease; and
(iii) to the extent not theretofore paid or provided,
the Company shall timely pay or provide to Executive any Other Benefits.
(c) Death or Disability. If Executive's employment is
terminated by reason of Executive's death or Disability during the Employment
Period, this Agreement shall terminate without further obligations to Executive
or Executive's estate, beneficiaries or legal representatives under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to Executive
or Executive's estate, beneficiaries or legal representatives, as applicable, in
a lump sum in cash within 30 days of the Date of Termination. The term Other
Benefits as used in this Section 6(c) shall include without limitation, and
Executive or Executive's estate, beneficiaries and/or legal representatives
shall be entitled to receive, benefits under the plans, programs, practices and
policies of the Company or any affiliated company as in effect with respect to
Executive on the Date of Termination.
(d) Resignation without Good Reason within One Year;
=Termination for Cause. If Executive resigns without Good Reason prior to the
first anniversary of the Effective Date, this Agreement shall terminate without
further obligations to Executive, other than for Accrued Obligations and the
timely payment or provision of Other Benefits. If Executive's employment is
terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to Executive other than the obligation to
pay to Executive (x) his Annual Base Salary through the Date of Termination, (y)
the amount of any compensation previously deferred by Executive, and (z) Other
Benefits, in each case to the extent theretofore unpaid. In either such case,
all Accrued Obligations shall be paid to Executive in a lump sum in cash within
30 days of the Date of Termination.
(e) Expiration of Employment Period. If Executive's
employment shall be terminated due to the normal expiration of the Employment
Period, this Agreement shall terminate without further obligations to Executive,
other than for payment of Accrued Obligations and the timely payment or
provision of Other Benefits.
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7. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which Executive may qualify, nor, subject to Section 13(f),
shall anything herein limit or otherwise affect such rights as Executive may
have under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any
contract or agreement with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with such
plan, policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
8. Full Settlement; No Mitigation. The Company's obligation to
make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against Executive or others. In no event shall Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to Executive under any of the provisions of this Agreement and, except
as provided in Section 6(a)(ii) and 6(b)(ii), such amounts shall not be reduced
whether or not Executive obtains other employment.
9. Costs of Enforcement. Each party hereto shall pay its own
legal fees and expenses incurred as a result of any contest (regardless of the
outcome thereof) by the Company, Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by
Executive about the amount of any payment pursuant to this Agreement).
10. Mandatory Reduction of Payments in Certain Events.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of Executive (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Code (the "Excise Tax"), then, prior to the making of any
Payment to Executive, a calculation shall be made comparing (i) the net
after-tax benefit to Executive of the Payment after payment of the Excise Tax,
to (ii) the net after-tax benefit to Executive if the Payment had been limited
to the extent necessary to avoid being subject to the Excise Tax. If the amount
calculated under (i) above is less than the amount calculated under (ii) above,
then the Payment shall be limited to the extent necessary to avoid being subject
to the Excise Tax (the "Reduced Amount"). In that event, Executive shall direct
which Payments are to be modified or reduced.
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(b) The determination of whether an Excise Tax would be
imposed, the amount of such Excise Tax, and the calculation of the amounts
referred to Section 10(a)(i) and (ii) above shall be made by the Company's
regular independent accounting firm at the expense of the Company or, at the
election and expense of Executive, another nationally recognized independent
accounting firm (the "Accounting Firm") which shall provide detailed supporting
calculations. Any determination by the Accounting Firm shall be binding upon the
Company and Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Payments which Executive was
entitled to, but did not receive pursuant to Section 10(a), could have been made
without the imposition of the Excise Tax ("Underpayment"). In such event, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of Executive.
(c) In the event that the provisions of Code Section 280G
and 4999 or any successor provisions are repealed without succession, this
Section 10 shall be of no further force or effect.
11. Confidential Information. Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by Executive
during Executive's employment by the Company or any of its affiliated companies
and which shall not be or become public knowledge (other than by acts by
Executive or representatives of Executive in violation of this Agreement). After
termination of Executive's employment with the Company, Executive shall not,
without the prior written consent of the Company or as may otherwise be required
by law or legal process, communicate or divulge any such information, knowledge
or data to anyone other than the Company and those designated by it. In no event
shall an asserted violation of the provisions of this Section 11 constitute a
basis for deferring or withholding any amounts otherwise payable to Executive
under this Agreement.
12. Successors.
(a) This Agreement is personal to Executive and without
the prior written consent of the Company shall not be assignable by Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
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(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
13. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than-by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to Executive: R. Gregory Brophy
12312 North Fox Den Drive
Knoxville, Tennessee 37922
If to the Company: CTI Molecular Imaging, Inc.
810 Innovation Drive
Knoxville, Tennessee 37932
Attention: President
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
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(e) Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right Executive or the Company may have hereunder, including, without
limitation, the right of Executive to terminate employment for Good Reason,
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
(f) Executive and the Company acknowledge that, except as
may otherwise be provided under any other written agreement between Executive
and the Company, the employment of Executive by the Company is "at will" and,
subject to Section 1(a) hereof, Executive's employment and/or this Agreement may
be terminated by either Executive or the Company at any time prior to the
Effective Date, in which case Executive shall have no further rights under this
Agreement. From and after the Effective Date this Agreement shall supersede any
other agreement between the parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, Executive has hereunto set Executive's hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
/s/ R. Gregory Brophy
----------------------------------------
R. Gregory Brophy
CTI MOLECULAR IMAGING, INC.
By: /s/ Terry D. Douglass
-------------------------------------
Terry D. Douglass, Ph.D.
President and Chief Executive Officer
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