Exhibit 10.32
THRESHOLD PHARMACEUTICALS,
INC.
CHANGE OF CONTROL SEVERANCE
AGREEMENT
The Change of Control Severance
Agreement (the “ Agreement ”) is made and
entered into effective as of April 2, 2007 (the “
Effective Date ”), by and between Kevin R. Kaster (the
“ Employee ”) and Threshold Pharmaceuticals,
Inc., a Delaware corporation (the “ Company ”).
Certain capitalized terms used in this Agreement are defined in
Section 1 below.
RECITALS
A. It is expected that the Company
from time to time will consider the possibility of a 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.
B. The Board believes that it is in
the best interests of the Company and its stockholders to provide
the Employee with an incentive to continue Employee’s
employment and to maximize the value of the Company upon a Change
of Control for the benefit of its stockholders.
C. In order to provide the Employee
with enhanced financial security and sufficient encouragement to
remain with the Company notwithstanding the possibility of a Change
of Control, the Board believes that it is imperative to provide the
Employee with certain severance benefits upon the Employee’s
termination of employment following a Change of Control.
AGREEMENT
In consideration of the mutual
covenants herein contained and the continued employment of Employee
by the Company, the parties agree as follows:
1. Definition of Terms . The
following terms referred to in this Agreement shall have the
following meanings:
(a) Cause .
“Cause” shall mean (i) Employee’s gross
negligence or willful failure substantially to perform his or her
duties and responsibilities to the Company or deliberate violation
of a Company policy; (ii) Employee’s commission of any
act of fraud, embezzlement, dishonesty or any other willful
misconduct that has caused or is reasonably expected to result in
material injury to the Company; (iii) unauthorized use or
disclosure by Employee of any proprietary information or trade
secrets of the Company or any other party to whom the Employee owes
an obligation of nondisclosure as a result of his or her
relationship with the Company; or (iv) Employee’s
willful breach of any of his or her obligations under any written
agreement or covenant with the Company. The determination as to
whether a Employee is being terminated for Cause shall be made in
good faith by the Company and shall be final and binding on the
Employee.
(b) Change of Control .
“Change of Control” shall mean the occurrence of any of
the following events:
(i) the approval by stockholders of
the Company of a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation 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) more than 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;
(ii) the approval by the
stockholders of the Company of a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company’s assets;
or
(iii) any “person” (as
such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) becoming the “beneficial
owner” (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 50% or more
of the total voting power represented by the Company’s then
outstanding voting securities.
(c) Involuntary Termination .
“Involuntary Termination” shall mean (i) without
the Employee’s express written consent, a significant
reduction of the Employee’s duties, position or
responsibilities relative to the Employee’s duties, position
or responsibilities in effect immediately prior to such reduction,
or the removal of the Employee from such position, duties and
responsibilities, unless the Employee is provided with comparable
or greater duties, position and responsibilities; (ii) without
the Employee’s express written consent, a substantial
reduction, without good business reasons, of the facilities and
perquisites (including office space and location) available to the
Employee immediately prior to such reduction; (iii) without
the Employee’s express written consent, a reduction by the
Company of the Employee’s base salary as in effect
immediately prior to such reduction; (iv) without the
Employee’s express written consent, a material reduction by
the Company in the kind or level of employee benefits to which the
Employee is entitled immediately prior to such reduction, with the
result that the Employee’s overall benefits package is
significantly reduced; (v) without the Employee’s
express written consent, the imposition of a requirement for the
relocation of the Employee to a facility or a location more than
fifty (50) miles from the Employee’s current work
location; (vi) any purported termination of the
Employee’s employment by the Company which is not effected
for Cause or for which the grounds relied upon are not valid; or
(vii) the failure of the Company to obtain the assumption of
this Agreement by any successors contemplated in Section 6
below.
(d) Termination Date .
“Termination Date” shall mean the effective date of any
notice of termination delivered by one party to the other
hereunder.
2. Term of Agreement . Other
than Section 4(b) of this Agreement which shall survive
indefinitely until all obligations under such Section have been
satisfied, this Agreement shall terminate upon the earlier of
(i) two (2) years after a Change of Control, or
(ii) the date that all obligations of the parties hereto under
this Agreement have been satisfied.
3. 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. If the Employee’s employment terminates for
any reason, the Employee shall not be entitled to any payments,
benefits, damages, awards or compensation other than as provided by
this Agreement, or as may otherwise be established under the
Company’s then existing employee benefit plans or policies at
the time of termination.
4. Severance Benefits
.
(a) Termination Following a
Change of Control . If the Employee’s employment with the
Company terminates as a result of an Involuntary Termination at any
time within eighteen (18) months after a Change of Control,
and the Employee signs the release of claims pursuant to
Section 7 hereto, Employee shall be entitled to the following
severance benefits:
(1) Twelve months of
Employee’s base salary and any applicable allowances as in
effect as of the date of the termination or, if greater, as in
effect in the year in which the Change of Control occurs, less
applicable withholding, payable in a lump sum within thirty
(30) days of the Involuntary Termination;
(2) all stock options granted by the
Company to the Employee prior to the Change of Control shall
accelerate and become vested under the applicable option agreements
to the extent
such stock options are outstanding and
unexercisable at the time of such termination and all stock subject
to a right of repurchase by the Company (or its successor) that was
purchased prior to the Change of Control shall have such right of
repurchase lapse;
(3) the Employee shall be permitted
to exercise all vested (including shares that vest as a result of
this Agreement) stock options granted by the Company to the
Employee prior to the Change of Control for a period of two
(2) years following the Termination Date; and
(4) the same level of Company-paid
health (i.e., medical, vision and dental) coverage and benefits for
such coverage as in effect for the Employee (and any eligible
dependents) on the day immediately preceding the Employee’s
Termination Date; provided , however , that
(i) the Employee constitutes a qu
