Document:

Separation of Employment Agreement between registrant and David R. McGee

  Exhibit 10.2
  CONFIDENTIAL
  EXCEPTION LETTER
  June 17, 2003
  June 17, 2003
  Dr.
David R. McGee
 1990 Marshall Road
 Vacaville, CA 95687
  Re:  Separation of Employment Due to Reduction-in-Force Layoff 
  Dear
Dr. McGee
  I write to confirm that your position has been eliminated and your employment with Large Scale Biology Corporation (the “Company”) shall terminate effective at close of
business June 17, 2003.  As you have been informed, the Company is reducing its workforce due to the need to reduce operating costs.  While we regret the impact on you, enclosed you will find information and materials we hope will assist
you with your transition:

	   
 	  •
 	  Employment Separation Information which includes information on:
 
	   
 	  
 	  •
 	  Return of Company property and documents
 
	  
 	  
 	  •
 	  Final expense reimbursement requests
 
	   
 	  
 	  •
 	  Ongoing obligations under your Proprietary Information and Inventions Agreement
 
	   
 	  
 	  •
 	  Benefits status, including coverage continuation opportunities
 
	   
 	  
 	  •
 	  Stock options
 
	   
 	  
 	   
 
	   
 	  •
 	  Final paycheck for wages earned through June 17, 2003, including your balance of accrued but unused vacation.
 
	  
 	  
 	   
 
	   
 	  •
 	  2003 Severance Benefit Plan and related materials which describe the severance benefits available under the Plan, and the conditions that must be satisfied for you to
receive such benefits – a severance payment and Company-paid COBRA premiums due for group health insurance coverage for you and your dependents, less any shared cost for which you are currently responsible.
 
	   
 	  
 	   
 
	   
 	  
 	  Please be aware that the Plan Administrator is exercising discretion under the Plan and is making additional Severance Benefits available to you under the Plan compared to those
described in the Severance Guidelines, Sections III.B.1-2 of the Plan.  Rather than Severance Benefits under the Plan as described in Section III.B.1-2, you will receive the following severance benefits:
 
	   
 	  
 	   
 	   
 
	   
 	  
 	  1.
 	  Severance pay of $16,500 per month for 12 consecutive months less current withholdings for employment taxes.
 

  June 17, 2003
 Page 2 of 4

	   
 	  
 	  2.
 	  You will also receive LSBC Common Stock equal in market value to $42,000.00 based on the NASDAQ closing price of such stock on June 30, 2003 in accordance with the provisions of
the Stock Issuance Agreement as amended  June 17, 2003 between you and the Company.
 
	   
 	  
 	  3.
 	  Reimbursement of COBRA payment for you and your eligible dependents net of shared costs for 12 months (medical, dental and vision).
 
	   
 	  
 	  4.
 	  Reimbursement up to $59.40 per month for 12 consecutive months to pay life insurance premiums for term life insurance coverage on your life not to exceed $396,000 whether or not the
coverage results from an increase in coverage to an existing policy or results from the purchase of a separate insurance policy.
 
	  
 	  
 	  5.
 	  Immediate full vesting of all stock options and an extension of the exercise period for the remainder of the ten-year life of such options.
 
	   
 	  
 	  6.
 	  Transfer of ownership of laptop computer, printer and peripherals currently assigned to you after all Company information and specified Company-licensed software has been
removed.
 
	   
 	  
 	  7.
 	  Transfer of ownership of the cell phone currently assigned to you and continuance of cell phone use for 12 months from June 17, 2003 up to 700 minutes per month (500 minutes plus 200 bonus
minutes anytime) including weekends and after 9:00PM weekdays subject to the continuation of the Company’s current cell phone plan and any subsequent plan if the same usage does not result in any increased cost to the Company in the subsequent
plan over the cost of such usage under the current plan.
 
	   
 	  
 	  8.
 	  LSBC agrees that Kevin Ryan and Ron Artale will not, at any time, make any critical or disparaging statements about you, unless such statements are made truthfully to the  extent
required by a subpoena or other legal process.  In response to inquiries from prospective employers regarding you, LSBC will provide no information other than your date of employment and positions held with LSBC.
 
	  
 	  
 	  9.
 	  The one-year service period through June 30, 2003 required under your Stock Issuance Agreement will be waived, and you will be issued stock under the Stock Issuance Agreement for the
portion of your cash salary reduced by 17.5% from April 1, 2003 through June 17, 2003 based on the NASDAQ closing price of LSBC stock on June 30, 2003.
 
	   
 	  
 	  10.
 	  The Company will indemnify you in accordance with the provisions of Section 6 of the  Company’s bylaws resulting from the litigation entitled Bonnie Skerkavich v. Large Scale
Biology et al. and any other potential litigation that may be brought related to the company in which you are named as a defendant by reason of the fact that you were an officer or employee of LSBC and you will cooperate with the Company in all
such litigation in accordance with paragraph 13 of the General Release of All Claims.
 
	   
 	  
 	  11.
 	  The right of the Company to amend or terminate the 2003 Severance Plan such that it will result in the cessation of your severance benefits will only apply in the event of the Company
becomes insolvent (the Company’s cash is insufficient to meet its current liabilities).
 
	   
 	  
 	  12.
 	  In the event of your death prior to your receipt of all severance benefits  provided to you under the Plan as described in the Exception Letter herein, any outstanding monthly cash
payments and COBRA reimbursements severance benefits at the time of your death shall be payable to your spouse, if living, otherwise, to your estate.
 
	  
 	  
 	   
 	   
 
	   
 	  
 	  Because the Plan Administrator is providing you the opportunity to receive Severance Benefits under the Plan that are more than those described in the Severance Guidelines,
Sections III.B.1-2 of the Plan, your receipt of such increased Severance Benefits under the Plan will be subject to a strict non-disclosure and confidentiality provision (regarding this 
 

   June 17, 2003
 Page 3 of 4

	   
 	  
 	  offer and your receipt of increased Severance Benefits) which is contained in paragraph 11 of the General Release of All Claims document.
 
	   
 	  
 	   
 
	   
 	  
 	  Be sure to carefully read the Plan and the General Release of All Claims document and comply with the conditions contained therein at all times even before you accept the severance
opportunity.  Paragraph 11 of the General Release of All Claims document contains a damages provision in the event you do not comply with the strict non-disclosure and confidentiality provision.  If you accept the increased
Severance Benefits offered under the Plan per this letter, you will need to sign and return the General Release of All Claims document within the time period specified in that document.  Since one of the benefits available to you is
Company-paid COBRA premiums, you may want to complete the COBRA Election Form and return it along with your signed General Release of All Claims document.
 
	  
 	  
 	   
 
	   
 	  •
 	  Notice of Right to Continue Group Health Coverage - COBRA and an Election Form – COBRA, the latter which must be completed if you and/or your eligible dependents
wish to continue coverage under any or all of the Company’s group health plans after your termination date.  If you wish to receive the COBRA premium benefits offered by the Severance Pay Plan, you must complete this form and return
it.  Preferably, you will return the completed COBRA Election Form with your General Release of All Claims document by the deadline noted in the General Release of All Claims document.
 
	   
 	  
 	   
 
	   
 	  
 	  If you have a Section 125 account balance LSBC’s plan states upon termination you have 30 days from the date of termination in which to submit your claims for reimbursement. If you
have a positive account balance you may be eligible for continuation coverage until the duration of the current calendar plan year. Continuation coverage would allow you to incur new medical, dental, or vision care expenses and zero-out your account
balance. You have 60 days to elect Section 125 continuation coverage. The continuation coverage amount you  pay will be 100% of your current contribution (per payroll period) and your contribution must be made with after-tax dollars. 
Please review the enclosed COBRA notice for more information and contact Human Resources if you would like to continue your Section 125 Plan.
 
	  
 	  
 	   
 
	   
 	  •
 	  Closing statement of your exercisable options of LSBC stock.  If you wish to exercise your option to purchase shares under the plan, please contact John Rakitan at (707)
469-2315.
 
	   
 	  
 	   
 
	   
 	  •
 	  Distribution Election Form for Biosource Technologies, Inc. 401(k) Plan.  Whatever your balance, this form must be completed if you wish to withdraw funds from the 401(k)
Plan.  If your balance is less than $5,000, you must withdraw your funds from the Plan.  If you do not return the Distribution Election Form within 60 days, a check for the full amount of your account balance, minus the mandatory
income tax withholding, will be sent to you (see Section III – Payment Made to You).  If your balance is greater than $5,000, you have your choice to either withdraw funds or leave them in the 401 (k) Plan.  You may withdraw them at
any time in the future if, for example, you find another investment vehicle.
 
	   
 	  
 	   
 
	  
 	  •
 	  Special Tax Notice Regarding Plan Payments (IRS Safe Harbor Notice).  This notice provides important information regarding how your decision regarding your 401(k) account
will affect your taxes. Questions about specific impact of your choices should be discussed with the appropriate tax or investment professional.  This notice is for your records and should be kept with copies of any other forms you may
complete at this time
 

	   
 	  •
 	  Information on unemployment insurance benefits.  Because your employment is being terminated due to a layoff, you have the right to apply for unemployment insurance
benefits.  In order to apply for such government-sponsored benefits, you should inquire at your local office of the California Employment Development Department (“EDD”) whose addresses and telephone numbers can be found by consulting
the “blue” government pages of your local telephone book under “California, State of.”  Once you apply, the EDD will determine your eligibility for such benefits which are described in the enclosed pamphlet,
California’s Program for the Unemployed.
 

  June 17, 2003
 Page 4 of 4
  On behalf of the Company, I
thank you for your past contributions as its employee and wish you the very best in your future endeavors.  You should carefully review all of the enclosed materials, and call Human Resources at 707-469-2351 if you have any
questions.

	  Very truly yours,
 	   
 
	   
 	   
 
	  LARGE SCALE BIOLOGY CORPORATION
 	   
 
	   
 	   
 
	   /s/ RONALD J. ARTALE
 	   
 
	 
 	   
 
	  Ronald J. Artale
 Sr. Vice President and Chief Operating Officer
 	   
 
	   
 	   
 
	  KP/jmb
 	   
 
	  
 	  
 
	 EnclosuresSECOND AMENDMENT TO AND WAIVER UNDER SECURITY AGREEMENT

 EXHIBIT 10.49 
  
 SECOND AMENDMENT TO, AND WAIVER UNDER, 
 LOAN AND SECURITY AGREEMENT 
  
 THIS SECOND AMENDMENT TO, AND WAIVER UNDER, LOAN AND SECURITY AGREEMENT (this “Second Amendment”) is made and entered into as of July 18, 2003, by and among Mercator Software, Inc., a Delaware corporation
(“Parent”), Mercator Software Limited, a company incorporated under the laws of England and Wales (“Mercator UK,” and, collectively with Parent, the “Borrowers”), and Wells Fargo Foothill, Inc.
(formerly known as Foothill Capital Corporation), a California corporation, in its capacity as the sole Lender under the Loan Agreement referenced below and in its capacity as the administrative agent (the “Agent”) for such sole
Lender. 
  
 WITNESSETH: 
  
 WHEREAS, the Borrowers, the Lenders and the Agent are parties to that certain
Loan and Security Agreement, dated as of December 24, 2002 (as amended, supplemented or modified to date, the “Loan Agreement”), among the Borrowers, the Agent and the Lenders listed on the signature pages thereof; 
  
 WHEREAS, pursuant to Section 6.17 of the Loan Agreement (in
conjunction with Section 2.7 of the Loan Agreement), the Borrowers were required to enter into Cash Management Agreements and Control Agreements, in each case in form and substance satisfactory to Agent in its Permitted Discretion (the
“Section 6.17 Agreements”), on or prior to the earlier of (i) January 31, 2003 and (ii) the first date that Lenders make an Advance to Borrowers pursuant to Section 2.1 of the Loan Agreement; 
  
 WHEREAS, the Borrowers have not yet entered into all such Section 6.17
Agreements and, accordingly, absent an effective waiver, a default would exist with respect to the provisions of Section 6.17 of the Loan Agreement (the “Applicable Default”); 
  
 WHEREAS, pursuant to a series of waivers, the Agent agreed, subject to the
terms and conditions therein, to waive the Applicable Default until June 30, 2003 (the “Initial Extended Date”); 
  
 WHEREAS, the Borrowers have not yet entered into all such Section 6.17 Agreements, and the Borrowers have requested, and the Agent has agreed, subject to
the terms and conditions herein, to extend the Initial Extended Date and waive the Applicable Default until August 15, 2003 (the “Revised Extended Date”); and 
  
 WHEREAS, the Borrowers, the Lenders and the Agent wish to amend the Loan Agreement as herein provided; 
  
 NOW, THEREFORE, in consideration of the agreements and provisions herein
contained, the parties hereto do hereby agree as follows: 

 Section 1. Definitions. Any capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to such terms in the Loan Agreement. 
  
 Section 2.
Waiver. Subject to the terms and conditions herein, the Agent and the Required Lenders hereby waive the Applicable Default so long as the Borrowers enter into all Section 6.17 Agreements on or before the Revised Extended Date;
provided, that, notwithstanding such waiver, the Lenders shall have no obligation to make any Advances to the Borrowers pursuant to Section 2.1 of the Loan Agreement until the Borrowers have entered into all Section 6.17 Agreements.

  
 Section 3. Amendments to Loan Agreement. The Loan
Agreement is hereby amended, effective as of the date this Second Amendment becomes effective in accordance with Section 5 hereof, as follows: 
  
 3.01 Amendment to Section 1.1. The definition of Permitted Investments is hereby amended by deleting clause (f) thereof in its
entirety and inserting the following in replacement thereof: 
  
 “(f) investments made after the Closing Date by any Borrower or Restricted Subsidiary in any Unrestricted Subsidiary, provided that (i) the aggregate amount of all investments made pursuant to this clause (f) shall not exceed,
at any one time outstanding on a net basis, during any fiscal year, $1,000,000 (it being understood and agreed that for purposes of determining the aggregate amount outstanding on a net basis of such investments, the aggregate outstanding amount of
investments made by Borrowers and Restricted Subsidiaries in Unrestricted Subsidiaries shall be reduced solely by the aggregate amount of transfers made by Unrestricted Subsidiaries to Borrowers and Restricted Subsidiaries in the form of periodic
settlements of costs on a quarterly basis), (ii) no Default or Event of Default shall have occurred and be continuing, both before and immediately after giving effect to any such investment, (iii) the aggregate amount of unrestricted cash and Cash
Equivalents of the Borrowers equals or exceeds $10,000,000 after giving effect to such investment, and (iv) the Person making such investment is Solvent, both before and immediately after giving effect to any such investment,” 
  
 Section 4. Representations and Warranties. In order to induce the Agent
and the Lenders to enter into this Second Amendment, each Borrower hereby represents and warrants that: 
  
 4.01 No Default. At and as of the date of this Second Amendment and at and as of the Effective Date: (x) prior to giving effect to
this Second Amendment, no Default or Event of Default exists except with regard to the Applicable Default and (y) after giving effect to this Second Amendment, no Default or Event of Default exists. 
  

 2 

 4.02 Representations and Warranties True and Correct. At and as of the date of this
Second Amendment and at and as of the Effective Date and both prior to and after giving effect to this Second Amendment, each of the representations and warranties contained in the Loan Agreement and the other Loan Documents is true and correct in
all material respects, except as described in Section 4.01. 
  
 4.03 Corporate Power, Etc. Such Borrower (a) has all requisite corporate power and authority to execute and deliver this Second Amendment and to consummate the transactions contemplated hereby and (b) has taken all
action, corporate or otherwise, necessary to authorize the execution and delivery of this Second Amendment and the consummation of the transactions contemplated hereby. 
  
 4.04 No Conflict. The execution, delivery and performance by such Borrower of this Second Amendment
will not (i) violate any provision of federal, state, or local law or regulation applicable to such Borrower, the Governing Documents of such Borrower, or any order, judgment, or decree of any court or other Governmental Authority binding on such
Borrower, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of such Borrower, (iii) result in or require the creation or imposition of any Lien of
any nature whatsoever upon any properties or assets of such Borrower, other than Permitted Liens, or (iv) require any unobtained approval of such Borrower’s interestholders or any unobtained approval or consent of any Person under any material
contractual obligation of such Borrower. 
  
 4.05
Binding Effect. This Second Amendment has been duly executed and delivered by such Borrower and constitutes the legal, valid and binding obligation of such Borrower, enforceable against such Borrower in accordance with its terms,
except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, relating to or affecting the enforcement of creditors’ rights generally, and
(b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 
  
 Section 5. Conditions. This Second Amendment shall be effective as of July 18, 2003 (the “Effective Date”) upon the fulfillment by
the Borrowers, in a manner satisfactory to the Agent and the Lenders, of all of the following conditions precedent set forth in this Section 5: 
  
 5.01 Execution of the Second Amendment. Each of the parties hereto shall have executed and delivered an original counterpart of this
Second Amendment. 
  
 5.02 Delivery of Other
Documents. The Agent shall have received all such instruments, documents and agreements as the Agent may reasonably request, in form and substance reasonably satisfactory to the Agent. 
  
 5.03 Representations and Warranties. As of the Effective
Date, the representations and warranties set forth in Section 4 hereof shall be true and correct. 
  

 3 

 5.04 Compliance with Terms. The Borrowers shall have complied in all respects with
the terms hereof and of any other agreement, document, instrument or other writing to be delivered by the Borrowers in connection herewith. 
  
 Section 6. Covenants. Each Borrower covenants and agrees that on or before the Revised Extended Date, the Borrowers shall have entered into the
Section 6.17 Agreements. 
  
 Section 7. Miscellaneous. 

 
 7.01 Continuing Effect. Except as specifically
provided herein, the Loan Agreement and the other Loan Documents shall remain in full force and effect in accordance with their respective terms and are hereby ratified and confirmed in all respects. 
  
 7.02 No Waiver. This Second Amendment is limited as
specified and the execution, delivery and effectiveness of this Second Amendment shall not operate as a modification, acceptance or waiver of any provision of the Loan Agreement or any other Loan Document, except as specifically set forth herein.

  
 7.03 References. 
  
 (a) From and after the Effective Date, the Loan Agreement, the other Loan
Documents and all agreements, instruments and documents executed and delivered in connection with any of the foregoing shall each be deemed amended hereby to the extent necessary, if any, to give effect to the provisions of this Second Amendment.

  
 (b) From and after the Effective Date, (i) all references in
the Loan Agreement to “this Agreement”, “hereto”, “hereof”, “hereunder” or words of like import referring to the Loan Agreement shall mean the Loan Agreement as amended hereby and (ii) all references in the
Loan Agreement, the other Loan Documents or any other agreement, instrument or document executed and delivered in connection therewith to “Loan Agreement”, “thereto”, “thereof”, “thereunder” or words of like
import referring to the Loan Agreement shall mean the Loan Agreement as amended hereby. 
  
 7.04 Governing Law. THIS SECOND AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 
  
 7.05 Severability. The provisions of this Second Amendment are severable, and if any clause or
provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction and shall not in any manner affect
such clause or provision in any other jurisdiction, or any other clause or provision in this Second Amendment in any jurisdiction. 
  
 7.06 Counterparts. This Second Amendment may be executed in any number of counterparts, each of which counterparts when executed and
delivered shall be an original, but 

  

 4 

 
all of which shall together constitute one and the same instrument. A complete set of counterparts shall be lodged with the Borrowers and the Agent.

  
 7.07 Headings. Section headings in this
Second Amendment are included herein for convenience of reference only and shall not constitute a part of this Second Amendment for any other purpose. 
  
 7.08 Binding Effect; Assignment. This Second Amendment shall be binding upon and inure to the benefit of the Borrowers, the Lenders
and the Agent and their respective successors and assigns; provided, however, that the rights and obligations of the Borrowers under this Second Amendment shall not be assigned or delegated without the prior written consent of the
Agent. 
  
 7.09 Expenses. The Borrowers agree
to pay the Agent upon demand for all reasonable expenses, including reasonable fees of attorneys and paralegals for the Agent (who may be employees of the Agent), incurred by the Agent in connection with the preparation, negotiation and execution of
this Second Amendment and any document required to be furnished herewith. 
  
 [Signature page to follow] 
  

 5 

 IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be executed by their
respective officers thereunto duly authorized, as of the date first above written. 
  

	 MERCATOR SOFTWARE, INC.,
 a Delaware corporation, as Parent and Borrower,

		
	 By:
	 	 /s/ Kenneth J. Hall

	 Title:
	 	 EVP, CFO & Treasurer

	
	 MERCATOR SOFTWARE LIMITED,
 a company incorporated under the laws of England and Wales, as Borrower,

		
	 By:
	 	 /s/ Roy C. King

	 Title:
	 	 
	
	 WELLS FARGO FOOTHILL, INC.,
 a California corporation, as Agent and as Lender,

		
	 By:
	 	 /s/ Andrew T. Furlong III

	 Title:
	 	 Vice President

  

 6

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