Item 1.01. Entry into a Material Definitive Agreement.
On, April 6, 2005, the compensation committee of the board of directors of Cell Therapeutics, Inc. (the “Corporation”) approved a form of strategic management team severance agreement. Effective April 12, 2005, Stephen Aselage, Louis A. Bianco, Richard E. Leigh, Jr. and Jack W. Singer, all executives of the Corporation, entered into severance agreements (collectively, the “Severance Agreements”) with the Corporation in the form approved by the compensation committee. The Severance Agreements replace existing severance agreements each of Mr. Aselage, Mr. Bianco, Mr. Leigh and Dr. Singer had entered into with the Corporation effective February 3, 2004, September 23, 1997, September 29, 2004 and February 1, 1998, respectively.
The Severance Agreements provide that in the event the executive is discharged from employment by the Corporation without cause or resigns for good reason (including upon a change of control) (each as defined in the Severance Agreements), he will be entitled to receive (i) acceleration of all then existing unvested stock based compensation (options shall remain exercisable for a period of twenty-one months following the severance date), (ii) severance pay based on the executive’s base salary in effect immediately prior to the severance date for a period of eighteen months, (iii) bonus pay equal to the greater of the average of the three prior years bonuses or 30% of base salary, (iv) continuation of or reimbursement for certain health benefits for a period of up to eighteen months, and (v) all accrued but unused vacation and certain other benefits for a severance period of eighteen months. The Severance Agreements further provide that if the executive is discharged from employment by the Corporation for cause, as a result of death or disability, or resigns without good reason, the executive is entitled only to (i) his base salary through and including the severance date and (ii) pay for all accrued but unused vacation as of the severance date. Under the Severance Agreements, if any severance payments are subject to the excise tax on parachute payments, the Corporation will make a gross up payment in an amount that covers the excise tax due plus the excise and income taxes payable on the gross up payment. The severance payments are conditioned upon the executive not breaching his inventions and proprietary information agreement with the Corporation.
The foregoing description of the Severance Agreements is qualified in its entirety by reference to the form of severance agreement attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference. |
