Exhibit 10.11
CHANGE OF CONTROL SEVERANCE
BENEFITS AGREEMENT
This C HANGE OF C ONTROL S EVERANCE B ENEFITS A GREEMENT (this “ Agreement ”) is made
as of the 2nd day of February, 2009 by and between Medivation,
Inc., a Delaware Corporation, and David Hung, M.D. (“
Executive ”).
Background
WHEREAS, this Agreement provides the
terms and conditions for the severance benefits that the Company
will provide to Executive due to Executive’s Qualifying
Termination (as defined below) with the Company following a Change
of Control (as defined below).
NOW, THEREFORE, in consideration of
the premises and the mutual agreements contained herein and
intended to be legally bound hereby, the parties hereto agree as
follows:
Agreement
1. Definitions . The following words and
phrases shall have the meanings set forth below for the purposes of
this Agreement (unless the context clearly indicates
otherwise):
(a) “ Base Salary ” shall mean
Executive’s base salary or regular wage rate in effect
immediately prior to the Qualifying Termination (not giving effect
to any decrease in base salary providing Executive with Good Reason
for termination of his or her employment). Base Salary does not
include variable forms of compensation such as but not limited to
overtime, lead premiums, shift differentials, bonuses, incentive
compensation, commissions, expenses or expense
allowances.
(b) “ Board ” shall mean the
Board of Directors of Company, or any successor thereto.
(c) “ Cause ,” as determined by
the Board in good faith, shall mean Executive has:
(1) failed to perform his or her stated duties in
all material respects, which failure continues for fifteen
(15) days after Executive’s receipt of written notice of
the failure from the Company;
(2) intentionally and materially breached any
provision of this Agreement or any other written agreement with the
Company, and has not cured such breach within fifteen
(15) days after Executive’s receipt of written notice of
the breach from the Company (provided that, the Company’s
written notice is not required if Executive’s breach is not
reasonably capable of cure);
(3) demonstrated Executive’s personal
dishonesty in connection with Executive’s employment with the
Company;
(4) engaged in willful misconduct in connection with
Executive’s employment with the Company;
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(5) engaged in a breach of fiduciary duty in
connection with Executive’s employment with the Company;
or
(6) willfully violated any material law, rule or
regulation, or final cease-and-desist order (other than minor
traffic violations or similar offenses), been convicted or pled
guilty (including a no contest plea) to any felony, or engaged in
other serious misconduct of such a nature that Executive’s
continued employment may reasonably be expected to cause the
Company substantial economic or reputational injury.
(d) “ Change of Control ” shall
have the same definition as in the Company’s Amended and
Restated 2004 Equity Incentive Award Plan (the “ 2004
Equity Plan ”).
(e) “ Code ” shall mean the
Internal Revenue Code of 1986, as amended.
(f) “ Company ” shall mean
Medivation, Inc. or its successor, and any corporation, partnership
or other entity owned directly or indirectly, in whole or in part,
by Medivation, Inc.
(g) “ Disability ” shall have the
same definition as in the 2004 Equity Plan.
(h) “Good Reason ” shall
mean:
(1) a material breach of this Agreement by the
Company;
(2) the Company fails to obtain the assumption of
this Agreement by any successor to Company; or
(3) the Company, without Executive’s express
written consent: (i) materially reduces Executive’s Base
Salary or the aggregate fringe benefits provided to Executive
(except to the extent the decrease is pursuant to a general
compensation or benefits reduction applicable to all, or
substantially all, employees of the Company at the same position
level as Executive); (ii) materially diminishes
Executive’s authority, duties or responsibilities; or
(iii) requires Executive to be based more than twenty-five
(25) miles from Executive’s office location as of the
date of this Agreement (except for required travel on Company
business to an extent substantially consistent with
Executive’s business travel obligations of the date of this
Agreement).
(i) “ Retirement ” shall mean the
termination of Executive’s employment with the Company in
accordance with the retirement policies, including early retirement
policies, generally applicable to the Company’s salaried
employees.
(j) “ Qualifying Termination ”
shall mean the occurrence, on or within twelve (12) months
following the consummation of a Change of Control, of either
(y) a termination of Executive’s employment by the
Company without Cause (and for reasons other than death or
Disability), or (z) a termination of Executive’s
employment by Executive for Good Reason, and in either case such
termination is a “separation from service” as defined
in Treasury Regulations Section 1.409A-1(h)(1)(ii). The
following events shall not constitute a Qualifying Termination:
(i) Executive resigns his or her employment with the Company
for any reason that does not qualify as Good Reason at any time,
including but not limited to Executive’s Retirement; or
(ii) Executive’s employment is terminated for Cause, or
due to death or Disability.
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(k) “ Termination Notice ” shall
mean a dated notice which: (i) indicates the specific
termination provision in this Agreement relied upon (if any);
(ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for the termination of
Executive’s employment under such provision; and
(iii) specifies the anticipated date that termination of
Executive’s employment shall become effective; and
(iv) is given in the manner specified in
Section 11(j).
2. Term and Termination of Agreement. The
term of this Agreement shall commence on the date hereof as first
written above and shall continue through December 31, 2009;
provided that commencing on January 1, 2010 and each
January 1st thereafter, the term of this Agreement shall
automatically be extended for one additional year unless not later
than December 31 of the preceding year, the Company shall have
given written notice to Executive that it does not wish to extend
this Agreement. In addition, this Agreement will terminate
immediately if Executive’s employment terminates at any time
(at the Company’s request or Executive’s request) if
such termination is not a Qualifying Termination.
3. Termination of
Employment.
(a) At-Will Employment Relationship. During
the term of this Agreement, Executive’s employment
relationship is at-will and both the Company and Executive can
terminate employment at any time, with or without advance notice,
and with or without Cause.
(b) Termination By Company For Cause. During
the term of this Agreement, the Company shall have the right to
terminate Executive’s employment for Cause by providing
written notice to Executive specifying the particulars of the
conduct of Executive forming the basis for Cause to terminate
Executive’s employment. The Company also must comply with any
applicable advance notice and cure period requirement as specified
in the definition of Cause hereunder.
(c) Termination By Executive For
Good Reason. During the
term of this Agreement, Executive may terminate his or her
employment for Good Reason by written notice to the Company given
within sixty (60) days after the date of the occurrence of any
event that Executive knows or should reasonably have known
constitutes Good Reason for termination. Such notice must identify
Executive and set forth in reasonable detail the facts and
circumstances claimed by Executive to constitute Good Reason and
identify Executive’s planned termination date (which must be
at least thirty (30) days from the date that the written
notice is provided to the Company). Executive may terminate his or
her employment for Good Reason thereafter only if the Company fails
to cure the circumstances identified in Executive’s notice as
giving rise to Good Reason within thirty (30) days after its
receipt of Executive’s notice, and Executive’s
termination must become effective no later than sixty
(60) days after the date that the Company received
Executive’s notice provided hereunder.
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4. Severance
Benefits.
(a) Severance Benefits For Qualifying
Terminations. Subject to the terms and conditions of this
Agreement (including but not limited to the execution of an
effective release agreement as described in Section 6 below),
if Executive suffers a Qualifying Termination, the Company will
provide the following as Executive’s sole severance benefits
(the “ Severance Benefits ”):
(i) Cash Severance Benefit. The Company shall
pay in a lump sum an amount equal to twenty-four (24) months
of Executive’s Base Salary, to be paid within ten
(10) business days following the Release Effective Date (as
defined in Section 6).
(ii) COBRA Premium Benefit. If Executive was
enrolled in a group health plan ( i.e. , medical, dental, or
vision plan) sponsored by the Company immediately prior to
termination, Executive may be eligible to continue coverage under
such group health plan (or to convert to an individual policy)
following his or her last day of employment under the Consolidated
Omnibus Budget Reconciliation Act of 1985 (together with any state
law of similar effect, “ COBRA ”). If Executive
is eligible for continued coverage under COBRA and timely elects
such continued coverage, the Company shall pay the full amount of
the COBRA premiums for Executive and his or her eligible dependents
for the first twenty-four (24) months of such coverage or
until such earlier date as either (A) Executive and/or his or
her eligible dependents cease to be eligible for COBRA coverage or
(B) Executive becomes eligible for the group health plan
coverage of a subsequent employer. Following such period of
Company-paid COBRA coverage, Executive will be responsible for the
timely payment of the full amount of premiums required under COBRA
for the duration of the COBRA period (if any). Executive must
notify the Company immediately if he or she becomes eligible for
coverage by a group health plan of a subsequent
employer.
(b) Other Terminations . In the event
Executive’s employment terminates other than a Qualifying
Termination, Executive’s rights upon termination shall be
governed by applicable law and by the Company’s standard
employment termination policy applicable to Executive in effect at
the time of termination or, if applicable, any written employment
agreement between the Company and Executive other than this
Agreement in effect at the time of termination.
(c) Certain Reductions. The Company shall
reduce the Severance Benefits by any other severance benefits, pay
in lieu of notice, or other similar benefits payable to Executive
by the Company that become payable in connection with the
Qualifying Termination or termination of employment pursuant to
(i) any applicable legal requirement, including, without
limitation, the Worker Adjustment and Retraining Notification Act,
the California Plant Closing Act, or any other similar state law
(collectively, “ WARN ”), (ii) a written
employment or severance agreement with the Company, or
(iii) any Company policy or practice providing for severance,
termination pay, or otherwise allowing Executive to remain on the
payroll for a limited period of time after being given notice of
the termination of employment. In the Company’s sole
discretion, such reductions may be applied on a retroactive basis,
with severance benefits previously paid being re-characterized as
payments pursuant to the Company’s statutory
obligation.
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5. Deductions and
Withholdings . All
payments under this Agreement will be subject to applicable
withholding for federal, state and local taxes. If Executive is
indebted to the Company as of his or her last day of employment,
the Company reserves the right to offset the Severance Benefits by
the amount of such indebtedness. Additionally, if Executive is
subject to withholding for taxes related to any payments or
benefits, including but not limited to any imputed income related
to perquisites or withholding taxes due in connection with the
vesting or exercise of equity awards, the Company may offset
against the Severance Benefits the amount of such withholding
taxes. However, Severance Benefits payments will not be subject to
any deductions for other benefit plan purposes such as 401(k) plan
contributions and/or 401(k) loan repayments or other employee
benefit plan contributions.
6. Release of Claims
. In order to be eligible to receive
the Severance Benefits, Executive must execute and allow to become
effective a general waiver and release in substantially the form
attached hereto as Exhibits A , B or
C (as applicable) within the time frame set forth
therein, but in no event may such release be effective later than
sixty (60) days following the date of Executive’s
Qualifying Termination. The date Executive’s release
agreement becomes effective, as further described in the applicable
release form, is referred to herein as the “ Release
Effective Date ”. The Company, in its discretion, may
modify the form of the required release to comply with applicable
law and shall determine the form of the required release, which may
be incorporated into a termination agreement or other agreement
with Executive.
7. Additional Eligibility and
Transition Matters.
(a) Return of Company Property. Executive
will not be entitled to the Severance Benefits unless and until
Executive returns all Company Property upon his or her termination
(or earlier if so requested by the Company). For this purpose,
“ Company Property ” means all paper and
electronic Company documents (and all copies thereof) created
and/or received by Executive during his or her period of employment
with the Company and other Company property which Executive had in
his or her possession or control including, but not limited to,
Company files, notes, lab notebooks, drawings, records, plans,
forecasts, reports, studies, analyses, proposals, agreements,
financial information, research and development information, sales
and marketing information, operational and personnel information,
specifications, code, software, databases, computer-recorded
information, tangible property and equipment (including, but not
limited to, leased vehicles, computers, computer equipment,
software programs, facsimile machines, mobile telephones, servers),
credit and calling cards, entry cards, identification badges and
keys; and any materials of any kind which contain or embody any
proprietary or confidential information of the Company (and all
reproductions thereof in whole or in part). As a condition to
receiving the Severance Benefits, Executive must not make or retain
copies, reproductions or summaries of any such Company Property.
However, Executive is not required to return his or her personal
copies of documents evidencing Executive’s hire, termination,
compensation, benefits and stock options and any other
documentation received as a shareholder of the Company.
(b) Prepayment of Advanced Amounts. Executive
will not be entitled to the Severance Benefits if he or she
previously received an advance(s) for business travel and
entertainment expenses unless and until Executive (i) properly
completes and submits an expense reimbursement form(s) and
supporting receipts to his or her manager no later than the
effective date of the Qualifying Termination and (ii) repays
any amounts advanced but not used and approved for
reimbursement.
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(c) Transition of
Work. Executive will not
be entitled to any Severance Benefits unless and until he or she
(i) has satisfactorily transitioned his or her work and
information concerning his or her work to the Company to the extent
requested by the Company (including but not limited to completion
of exit checklists and properly signed and witnessed lab
notebooks), and (ii) has provided the Company with all logins,
passwords, passcodes and similar information created by Executive
for documents, email and electronic files that Executive created or
used on Company systems.
(d) Proprietary Information
Obligations. Executive is
not eligible for the Severance Benefits if he or she has not signed
the Company’s standard form of confidential information and
inventions assignment agreement (“ Proprietary
Agreement ”) covering Executive’s entire period of
employment with the Company (and with any predecessor) and/or if
Executive does not confirm in writing that he or she is and shall
remain subject to the terms of the Proprietary
Agreement.
(e) Resignation From
Board. If Executive is a
member of the Board as of the Qualifying Termination, Executive
will not be eligible for the Severance Benefits unless he or she
promptly resigns from the Board if requested to do so by a majority
of the Board.
8. Death of Executive . Any amounts due
Executive under this Agreement (not including any Base Salary not
yet earned by Executive) unpaid as of the date of Executive’s
death shall be paid in a single sum as soon as practicable after
Executive’s death to Executive’s surviving spouse, or
if none, to the duly appointed personal representative of
Executive’s estate, provided that all conditions for receipt
of such amounts have been satisfied.
9. Treatment of Parachute
Payments.
(a) In the event that it shall be determined (as
hereafter provided) that any payment by the Company to or for the
benefit of Executive, whether paid or payable pursuant to the terms
of this Agreement or otherwise pursuant to or by reason of any
other agreement, policy, plan, program or arrangement, including
without limitation any stock option, or the lapse or termination of
any restriction on or the vesting or exercisability of any of the
foregoing (collectively, a “ Payment ”), would
be subject to the excise tax imposed by Section 4999 of the
Code (or any successor provision thereto) by reason of being
considered “contingent on a change in ownership or
control” of the Company, within the meaning of
Section 280G of the Code (or any successor provision thereto)
or to any similar tax imposed by state or local law, or any
interest or penalties with respect to such tax (such tax or taxes,
together with any such interest and penalties, being hereafter
collectively referred to as the “ Excise Tax ”),
then the amount of the cash Severance Benefits payable to Executive
hereunder shall be reduced and then the noncash payments and
benefits hereunder shall be reduced, to the extent necessary so
that no portion of the Payments is subject to the Excise Tax;
provided, however, that Executive may elect (at any time prior to
the payment of any Payments under this Agreement) to have the
noncash payments and benefits reduced (or eliminated) prior to any
reduction of the cash
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payments under this Agreement.
Notwithstanding the foregoing, payments or benefits under this
Agreement will not be reduced unless: (i) the net amount of
the Payments, as so reduced (and after subtracting the net amount
of federal, state and local income taxes on such reduced Payments)
is greater than (ii) (A) the net amount of such Payments,
without reduction (but after subtracting the net amount of federal,
state and local income taxes on such Payments), minus (B) the
amount of Excise Tax to which Executive would be subject in respect
of such unreduced Payments.
(b) All determinations required to be made under
this Section 9, including whether an Excise Tax is payable by
Executive and the amount of such Excise Tax, shall be made in good
faith by a nationally recognized accounting firm (the “
Accounting Firm ”) selected by the Company. For
purposes of the computations required by this Section 9 to the
extent not otherwise specified here, reasonable assumptions and
approximations may be made with respect to applicable taxes and
reasonable, good faith interpretations of the Code may be relied
upon and Executive shall be deemed to pay federal, state and local
income and payroll taxes at the highest marginal rate of taxation.
The Company and Executive shall each provide the Accounting Firm
access to and copies o
