Form of
Change of Control Agreement
This
Change of Control
Agreement (the “Agreement”), dated
, 20___, is made by and between Maxygen, Inc. , a Delaware
corporation (the “Company”), and
(the “Executive”), amending and restating in its
entirety the Change of Control Agreement previously entered into by
and between the Company and Executive (the “Prior
Agreement”).
Whereas , the Company
considers it essential to the best interests of its stockholders to
foster the continuous employment of key management
personnel;
Whereas , the Board of
Directors of the Company recognizes that, as is the case with many
publicly-held corporations, the possibility of a Change of Control
(as defined herein) exists and that such possibility, and the
uncertainty and questions that it may raise among management, may
result in the departure or distraction of management personnel to
the detriment of the Company and its stockholders; and
Whereas , the Board has
determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the
Company’s management, including the Executive, to their
assigned duties without distraction in the face of potentially
disturbing circumstances arising from the possibility of a Change
of Control.
Now, Therefore , in
consideration of the premises and the mutual covenants herein
contained, the Company and the Executive agree as
follows:
1.
Introduction; Purposes .
(a) The
purpose of this Agreement is to provide the Executive with
protection of certain benefits in case of a termination of his or
her employment with the Company in connection with a Change of
Control of the Company.
(b) The
Company, by means of the Agreement, seeks to (i) secure and/or
retain the services of the Executive and (ii) provide
incentives for the Executive to exert maximum efforts for the
success of the Company even in the face of a potential Change of
Control of the Company.
(a) “Accountants”
has the meaning given thereto in Section 4.
(b) “ADEA”
has the meaning given thereto in Section 5(c).
(c) “Agreement”
means this Change of Control Agreement.
(d) “Board”
means the Board of Directors of the Company.
(e) “Cause”
means the Executive’s: (i) willful and continued failure
to substantially perform the Executive’s duties with the
Company (other than as a result of physical or mental disability)
after a written demand for substantial performance is deliver to
the Executive by the Company, which demand specifically identifies
the manner in which the Company believes that the Executive has not
substantially performed the Executive’s duties and that has
not been cured within fifteen (15) days following receipt by
the Executive of the written demand; (ii) commission of a
felony (other than a traffic-related offense) that in the written
determination of the Company is likely to cause or has caused
material injury to the Company’s business;
(iii) dishonesty with respect to a significant matter relating
to the Company’s business; or (iv) material breach of
any agreement by and between the Executive and the Company, which
material breach has not been cured within fifteen (15) days
following receipt by the Executive of written notice from the
Company identifying such material breach.
(f) “Change
of Control” means: (i) a dissolution or liquidation of
the Company; (ii) a sale of all or substantially all the
assets of the Company; (iii) a merger, recapitalization,
reorganization, consolidation or other similar transaction (a
“Business Combination”) in which beneficial ownership
of securities of the Company representing at least thirty-five
percent (35%) of the combined voting power entitled to vote in the
election of directors has changed; (iv) a reverse merger in
which the Company is the surviving corporation but the shares of
the common stock of the Company outstanding immediately before the
merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise, and in which
beneficial ownership of securities of the Company representing at
least thirty-five percent (35%) of the combined voting power
entitled to vote in the election of directors has changed;
(v) an acquisition by any person, entity or group within the
meaning of Section 13(d) or 14(d) of the Exchange Act, or any
comparable successor provisions (excluding any employee benefit
plan, or related trust, sponsored or maintained by the Company or
subsidiary of the Company or other entity controlled by the
Company) of the beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act, or comparable
successor rule) of securities of the Company representing at least
thirty-five percent (35%) of the combined voting power entitled to
vote in the election of directors; (vi) in the event that the
individuals who are members of the Incumbent Board cease for any
reason to constitute at least fifty percent (50%) of the Board;
(vii) a sale of substantially all the assets of the
Company’s protein pharmaceutical business; or (viii) the
consummation by the Company of a Business Combination with respect
to which all or substantially all of the individuals and entities
who were the beneficial owners of the combined voting power of the
then outstanding securities of the Company entitled to vote
generally in the election of directors immediately prior to such
Business Combination do not, following consummation of all
transactions intended to constitute part of such Business
Combination, beneficially own, directly or indirectly, at least
sixty-five percent (65%) of the voting securities of the Company
(or the corporation, business trust or other entity resulting from
or being the surviving entity in such Business
Combination).
(g) “Code”
means the Internal Revenue Code of 1986, as amended.
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(h) “Committee”
means the Finance Committee of the Board or such other committee as
appointed by the Board to administer this Agreement.
(i) “Company”
means Maxygen, Inc., a Delaware corporation.
(j) “Company-Paid
Coverage” has the meaning given thereto in
Section 3(a).
(k) “Confidential
Information, Secrecy and Invention Agreement” has the meaning
given thereto in Section 5(b).
(l) “Disability”
means Executive (i) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or
can be expected to last for a continuous period of not less than
twelve (12) months, or (ii) is, by reason of any medically
determinable physical or mental impairment which can be expected to
last for a continuous period of not less than twelve
(12) months, receiving income replacement benefits for a
period of not less than three (3) months under an accident and
health plan covering Company employees.
(m) “Effective
Date” means the date first above written.
(n) “Employee
Agreement and Release” has the meaning given thereto in
Section 5(c).
(o) “Exchange
Act” means the Securities Exchange Act of 1934, as
amended.
(p) “Excise
Tax” has the meaning given thereto in
Section 4.
(q) “Executive”
means the person identified in the introductory paragraph of this
Agreement.
(r) “Good
Reason” means: (i) any material reduction of the
Executive’s duties, authority or responsibilities relative to
the Executive’s duties, authority, or responsibilities as in
effect immediately before such reduction, except if agreed to in
writing by the Executive; (ii) a reduction by the Company in
the base salary of the Executive, or of twenty-five percent (25%)
or more in the Target Bonus opportunity of such Executive, as in
effect immediately before such reduction, except if agreed to in
writing by the Executive; (iii) the relocation of the
Executive to a facility or a location more than thirty
(30) miles from the Executive’s then present business
location, except if agreed to in writing by the Executive;
(iv) a material breach by the Company of any provision of this
Agreement or (v) any failure of the Company to obtain the
assumption of this Agreement by any successor or assign of the
Company; provided, however, that such events shall not constitute
grounds for a Good Reason termination unless the Executive has
provided notice to the Company of the existence of the one or more
of the above conditions within ninety (90) days of its initial
existence and the Company has been provided at least thirty
(30) days to remedy the condition.
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(s) “Incumbent
Board” means the individuals who, as of the Effective Date,
are members of the Board. If the election, or nomination for
election by the Company’s stockholders, of any new director
is approved by a vote of at least fifty percent (50%) of the
Incumbent Board, such new director shall be considered as a member
of the Incumbent Board.
(t) “Section 16
Officer” means an “officer” of the Company, as
defined in Rule 16a-1(f) promulgated under the Exchange Act,
designated as such by action of the Board.
(u) “Target
Bonus” means the Executive’s target bonus for the then
current fiscal year, as set by the Board or the appropriate
committee thereof.
3. Severance
Benefits in the Event of a Change of Control .
(a) If within
eighteen (18) months following the date of a Change of Control
of the Company either (A) the Company terminates the
Executive’s employment other than for Cause, death or
Disability or (B) the Executive terminates his or her
employment with the Company voluntarily with Good Reason, then in
each case, subject to Section 4 and Section 5:
(i) the Executive shall be entitled to receive, within ten
(10) days following the effectiveness of the release of claims
referred to in Section 5, a lump sum payment equal to three
times the Executive’s yearly base salary in effect on the
date of termination (without giving effect to any reduction in base
salary subsequent to a Change of Control that constitutes Good
Reason), (ii) each of the Executive’s outstanding stock
options, all stock subject to repurchase or forfeiture, including
without limitation, restricted stock, restricted stock units and
performance shares awards, and any options, stock subject to
repurchase or forfeiture, awards or purchases held in the name of
an estate planning vehicle for the benefit of the Executive or his
or her immediate family, shall have their vesting and
exercisability schedule accelerate in full (or, as applicable, the
corresponding repurchase or forfeiture right shall lapse in full)
as of the date of termination; (iii) if on the date of
termination the Executive is covered by any Company-paid health,
disability, accident and/or life insurance plans or programs, the
Company shall provide to the Executive benefits substantially
similar to those that the Executive was receiving immediately prior
to the date of termination (the “Company-Paid
Coverage”), with any premiums related to such coverage paid
by the Company no later than thirty (30) days following the
premium due date; and (iv) the post-termination exercise
period of Executive’s outstanding stock option and stock
appreciation right awards shall automatically be extended to the
later of (A) the fifteenth day of the third month following
the date at which the stock option or stock appreciation right
would otherwise have expired but for this extension, based on the
terms of the stock option or stock appreciation right on its grant
date, or (B) December 31 of the calendar year in which
the stock option or stock appreciation right would otherwise have
expired but for this extension, based on the terms of the stock
option or stock appreciation right on its grant date; provided,
however, that in the event Code Section 409A permit a longer
extension without resulting in the imposition of an additional tax
under Code Section 409A, the stock option or stock
appreciation right shall provide for such greater post-termination
exercise period; provided, further, that in no event shall the term
of the stock option or stock appreciation right be extended longer
than its original maximum term. If such
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