Exhibit 10.2

 

EXECUTION COPY

 

XCYTE THERAPIES, INC

 

ACQUISITION BONUS AND SEVERANCE AGREEMENT

 

This Acquisition Bonus and Severance Agreement (the “Agreement”) is made and
entered into by and between Robert Lawrence Kirkman, M.D. (the “Employee”) and
Xcyte Therapies, Inc, a Delaware Corporation (the “Company”), effective as of
October 4, 2005 (the “Effective Date”).

 

RECITALS

 

1. It is expected that the Company from time to time will consider the
possibility of a strategic combination with another company or other change of
control. The Board of Directors of the Company (the “Board”) recognizes that
such consideration can be a distraction to the Employee and can cause the
Employee to consider alternative employment opportunities. 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 and objectivity of
the Employee, notwithstanding the possibility, threat or occurrence of an
Acquisition (as defined herein) of the Company.

 

2. The Board believes that it is imperative to provide the Employee with certain
bonus benefits upon an Acquisition and certain severance benefits upon the
Employee’s termination of employment following an Acquisition. These benefits
will provide the Employee with enhanced financial security and incentive and
encouragement to remain with the Company notwithstanding the possibility of an
Acquisition.

 

3. Certain capitalized terms used in the Agreement are defined in Section 7
below.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereto agree as follows:

 

1. Term of Agreement. This Agreement shall terminate upon the date that all of
the obligations of the parties hereto with respect to this Agreement have been
satisfied or discharged.

 

2. At-Will Employment. The Company and the Employee acknowledge that the
Employee’s employment is and shall continue to be at-will, as defined under
applicable law, except as may otherwise be specifically provided under the terms
of any written formal employment agreement or offer letter between the Company
and the Employee (an “Employment Agreement”). If the Employee’s employment
terminates for any reason, including (without limitation) any termination prior
to the closing date of an Acquisition, the Employee shall not be entitled to any
payments, benefits, damages, awards or compensation other than as provided by
this Agreement or under his or her Employment Agreement, or as may otherwise be
available in accordance with the Company’s established employee plans.

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3. Acquisition Bonus.

 

(a) Bonus Payment Upon Acquisition. Subject to the terms and conditions set
forth in this Agreement, if (i) within sixty (60) days prior to the closing date
of an Acquisition (A) Employee terminates his employment with the Company (or
any parent or subsidiary of the Company) for “Good Reason” (as defined herein)
or (B) the Company (or any parent or subsidiary of the Company) terminates the
Employee’s employment for other than “Cause” (as defined herein) or
(ii) Employee remains employed by the Company (or any parent or subsidiary of
the Company) through the closing date of an Acquisition, in either case, without
duplication, Employee shall be entitled to receive a lump-sum bonus payment
(less applicable withholding taxes) equal to 50% of the Employee’s annual base
salary as in effect immediately prior to the closing date of such Acquisition.

 

(b) Timing of Bonus Payments. The bonus payment to which Employee is entitled
shall be paid by the Company to Employee in cash and in full, not later than ten
(10) calendar days after the closing date of the Acquisition. If the Employee
should die after he becomes entitled to the bonus payment, but before it has
been paid, such unpaid bonus payment (less any withholding taxes) shall be paid
to the Employee’s designated beneficiary, if living, or otherwise to the
personal representative of the Employee’s estate.

 

(c) Termination Apart from Acquisition. In the event the Employee’s employment
is terminated for any reason prior to the date that is sixty (60) days before
the closing date of an Acquisition, then the Employee shall not be entitled to
receive the bonus payment contemplated by this Agreement.

 

4. Severance Benefits.

 

(a) Involuntary Termination Other than for Cause or Voluntary Termination for
Good Reason Following an Acquisition. Subject to the terms and conditions set
forth in this Agreement, if within the sixty (60) days prior to, or twelve
(12) months following, the closing date of an Acquisition (i) the Employee
terminates his or her employment with the Company (or any parent or subsidiary
of the Company) for “Good Reason” or (ii) the Company (or any parent or
subsidiary of the Company) terminates the Employee’s employment for other than
“Cause” and, in either case, the Employee signs and does not revoke a standard
release of claims with the Company in a form acceptable to the Company (the
“Release”), then the Employee shall receive the following severance from the
Company:

 

(i) Severance Payment. The Employee shall be entitled to receive a lump-sum
severance payment (less applicable withholding taxes) equal to 50% of the
Employee’s annual base salary (as in effect immediately prior to (A) the closing
date of an Acquisition, or (B) the Employee’s termination, whichever is
greater);

 

(ii) COBRA Benefits. Upon Employee’s timely election for continued coverage
under the Company’s health plans pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1984, as amended (“COBRA”), the Company will pay one
hundred percent (100%) of Employee’s COBRA premium for himself and his
dependents who qualify for COBRA

 

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coverage, as applicable, for the period beginning on the date Employee’s
employment with the Company is terminated and ending on the earlier of (i) the
last day of the month following the month in which the Employee’s employment
with the Company is terminated, and (ii) the date upon which the Company is no
longer obligated to provide COBRA continuation coverage under the Consolidated
Omnibus Budget Reconciliation Act of 1984, as amended.

 

(iii) Payment for Vacation Pay. Payment for any vacation time, including any
vacation time accrued above the current 120 hour vacation accrual payout limit
(but below the 180 hour maximum), if applicable; and

 

(iv) Stock Option Vesting. Vesting of Employee’s option(s) to purchase shares of
Common Stock granted to Employee under the Company’s Amended and Restated 1996
Stock Option Plan, 2003 Stock Plan and/or 2003 Directors’ Stock Option Plan will
terminate upon the date that Employee’s employment with the Company is
terminated. No additional option shares shall vest after such date. In
accordance with the terms of the Stock Option Agreement, the vested options will
be exercisable until the date that is 3 months following the date that
Employee’s employment with the Company is terminated.

 

(v) Timing of Severance Payments. The severance payment to which Employee is
entitled shall be paid by the Company to Employee in cash and in full, not later
than ten (10) calendar days after the effective date of the Release. If the
Employee should die after he becomes entitled to the severance payment, but
before it has been paid, such unpaid severance payment (less any withholding
taxes) shall be paid to the Employee’s designated beneficiary, if living, or
otherwise to the personal representative of the Employee’s estate.

 

(b) Voluntary Resignation; Termination for Cause. If the Employee’s employment
with the Company terminates (i) voluntarily by the Employee other than for Good
Reason or (ii) for Cause by the Company, then the Employee shall not be entitled
to receive severance or other benefits except for those (if any) as may then be
established under the Company’s then existing severance and benefits plans and
practices or pursuant to other written agreements with the Company.

 

(c) Termination Apart from Acquisition. In the event the Employee’s employment
is terminated for any reason, either prior to the date that is sixty (60) days
before the closing date of an Acquisition or after the twelve (12)-month period
following the closing date of an Acquisition, then the Employee shall be
entitled to receive severance and any other benefits only as may then be
established under the Company’s existing written severance and benefits plans
and practices or pursuant to other written agreements with the Company.

 

(d) Exclusive Remedy. In the event of a termination of Employee’s employment
within twelve (12) months following the closing date of an Acquisition, the
provisions of this Section 4 are intended to be and are exclusive and in lieu of
any other rights or remedies to which the Employee or the Company may otherwise
be entitled, whether at law, tort or contract, in equity, or under this
Agreement. The Employee shall be entitled to no benefits, compensation or other
payments or rights upon termination of employment following the closing date of
an Acquisition other than those benefits expressly set forth in this Section 4.

 

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5. Non-Solicitation. In consideration for the bonus and severance benefits
Employee may receive herein, if any, Employee agrees that he or she will not, at
any time during the one year following his or her termination date, directly or
indirectly solicit any individuals to leave the Company’s (or any of its
subsidiaries’) employ for any reason or interfere in any other manner with the
employment relationships at the time existing between the Company (or any of its
subsidiaries) and its current or prospective employees.

 

6. Golden Parachute Excise Tax Best Results. In the event that the severance and
other benefits provided for in this agreement or otherwise payable to Employee
(a) constitute “parachute payments” within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the “Code”) and (b) would be subject
to the excise tax imposed by Section 4999 of the Code, then such benefits shall
be either:

 

(i) delivered in full, or

 

(ii) delivered as to such lesser extent which would result in no portion of such
severance benefits being subject to excise tax under Section 4999 of the Code,

 

whichever of the foregoing amounts, taking into account the applicable federal,
state and local income and employment taxes and the excise tax imposed by
Section 4999, results in the receipt by Employee, on an after-tax basis, of the
greatest amount of benefits, notwithstanding that all or some portion of such
benefits may be taxable under Section 4999 of the Code. Unless the Company and
the Employee otherwise agree in writing, the determination of Employee’s excise
tax liability and the amount required to be paid under this Section 6 shall be
made in writing by the Company’s independent auditors who are primarily used by
the Company immediately prior to the Acquisition (the “Accountants”). For
purposes of making the calculations required by this Section 6, the Accountants
may make reasonable assumptions and approximations concerning applicable taxes
and may rely on reasonable, good faith interpretations concerning the
application of Sections 280G and 4999 of the Code. The Company and the Employee
shall furnish to the Accountants such information and documents as the
Accountants may reasonably request in order to make a determination under this
Section. The Company shall bear all costs the Accountants may reasonably incur
in connection with any calculations contemplated by this Section 6.

 

7. Definition of Terms. The following terms referred to in this Agreement shall
have the following meanings:

 

(a) Cause. “Cause” shall mean (i) an act of personal dishonesty taken by the
Employee in connection with his responsibilities as an employee and intended to
result in substantial personal enrichment of the Employee, (ii) Employee being
convicted of a felony, (iii) a willful act by the Employee which constitutes
intentional misconduct and which is injurious to the Company, (iv) following
delivery to the Employee of a written demand for performance from the Company
which describes the basis for the Company’s reasonable belief that the Employee
has not substantially performed his duties, continued violations by the Employee
of the Employee’s obligations to the Company which are demonstrably willful and
deliberate on the Employee’s part.

 

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(b) Acquisition. “Acquisition” means the occurrence of any of the following:

 

(i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becomes the “beneficial owner” (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of the total voting power
represented by the Company’s then outstanding voting securities; or

 

(ii) Any action or event occurring within two years from the date hereof, as a
result of which fewer than a majority of the directors are Incumbent Directors.
“Incumbent Directors” shall mean directors who either (A) are directors of the
Company as of the date hereof, or (B) are elected, or nominated for election, to
the Board with the affirmative votes of at least a majority of the Incumbent
Directors at the time of such nomination or election;

 

(iii) The consummation of a merger, consolidation or similar transaction between
the Company and any other entity, other than a merger or consolidation or
similar transaction which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; or

 

(iv) The consummation of a merger or consolidation or similar transaction
between the Company and the entity (or entities) set forth on the letter
delivered to you by the Company on the date hereof which letter references this
provision and identifies such entity (or entities).

 

(c) Good Reason. “Good Reason” means without the Employee’s express written
consent (i) a material reduction of the Employee’s duties, title, authority or
responsibilities, relative to the Employee’s duties, title, authority or
responsibilities as in effect when the Employee was employed by the Company as
its Chief Business Officer and Vice President; provided, however, that a
reduction in duties, title, authority or responsibilities solely by virtue of
the Company being acquired and made part of a larger entity (as, for example,
when the Chief Financial Officer of the Company remains the Chief Financial
Officer of the subsidiary or business unit substantially containing the
Company’s business following an Acquisition) shall not by itself constitute
grounds for a “Voluntary Termination for Good Reason”; (ii) a reduction by the
Company in the base compensation of the Employee as in effect immediately prior
to such reduction; (iv) the relocation of the Employee to a facility or a
location more than thirty-five (35) miles from such Employee’s then present
location.

 

8. Successors.

 

(a) The Company’s Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company’s business shall (and the
Company shall cause such successor to) assume the obligations under this
Agreement and agree expressly to perform the obligations of the

 

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Company under this Agreement. For all purposes under this Agreement, the term
“Company” shall include any successor to the Company’s business which executes
and delivers the assumption agreement described in this Section 8(a) or which
becomes bound by the terms of this Agreement by operation of law.

 

(b) The Employee’s Successors. The terms of this Agreement and all rights of the
Employee hereunder shall inure to the benefit of, and be enforceable by, the
Employee’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.

 

9. Notice.

 

(a) General. All notices and other communications required or permitted
hereunder shall be in writing, shall be effective when given, and shall in any
event be deemed to be given upon the earlier of receipt or (a) five (5) days
after deposit with the U.S. Postal Service or other applicable postal service,
if delivered by first class mail, postage prepaid, (b) upon delivery hand,
(c) one (1) business day after the business day of deposit with Federal Express
or similar overnight courier, freight prepaid or (d) one (1) business day after
the business day of facsimile transmission, if delivered by facsimile
transmission with copy by first class mail, postage prepaid, and shall be
addressed (i) if to Employee, at his last known residential address and (ii) if
to the Company, at the address of its principal corporate offices (attention:
Secretary), or in any such case at such other address as a party may designate
by ten (10) days’ advance written notice to the other party pursuant to the
provisions above.

 

(b) Notice of Termination. Any termination of Employee by the Company for Cause
or by the Employee for Good Reason or as a result of a voluntary resignation
shall be communicated by a notice of termination to the other party hereto given
in accordance with Section 9(a) of this Agreement. Such notice shall indicate
the specific termination provision in this Agreement relied upon, shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination under the provision so indicated, and shall specify the
termination date (which shall be not more than thirty (30) days after the giving
of such notice). The failure by the Employee to include in the notice any fact
or circumstance which contributes to a showing of Good Reason shall not waive
any right of the Employee hereunder or preclude the Employee from asserting such
fact or circumstance in enforcing his or her rights hereunder.

 

10. Miscellaneous Provisions.

 

(a) No Duty to Mitigate. The Employee shall not be required to mitigate the
amount of any payment contemplated by this Agreement, nor shall any such payment
be reduced by any earnings that the Employee may receive from any other source.

 

(b) Waiver. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by the Employee and by an authorized officer of the Company (other
than the Employee). No waiver by either party of any breach of, or of compliance
with, any condition or provision of this Agreement by

 

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the other party shall be considered a waiver of any other condition or provision
or of the same condition or provision at another time.

 

(c) Headings. All captions and section headings used in this Agreement are for
convenient reference only and do not form a part of this Agreement.

 

(d) Entire Agreement. This Agreement constitutes the entire agreement of the
parties hereto and supersedes in their entirety all prior representations,
understandings, undertakings or agreements (whether oral or written and whether
expressed or implied) of the parties with respect to the subject matter hereof.

 

(e) Choice of Law. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Washington. The
Superior Court of King County, Seattle, Washington shall have exclusive
jurisdiction and venue over all controversies in connection with this Agreement.

 

(f) Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.

 

(g) Withholding. All payments made pursuant to this Agreement will be subject to
withholding of applicable income and employment taxes.

 

(h) Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together will constitute one and
the same instrument.

 

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the day and year set forth
below.

 

COMPANY

     

XCYTE THERAPIES, INC

           

By:

 

Kathi L. Cordova

               

(Print)

           

Signature:

 

/S/    KATHI L. CORDOVA

           

Title:

 

Senior Vice President of Finance and Treasurer

EMPLOYEE

     

Robert Lawrence Kirkman, M.D.

           

Signature:

 

/S/    ROBERT L. KIRKMAN

           

Title:

 

Acting President and Chief Executive Officer

 

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