AMENDED AND RESTATED CHANGE OF
CONTROL
SEVERANCE BENEFIT PLAN
PLAN DOCUMENT AND SUMMARY PLAN
DESCRIPTION
NEKTAR THERAPEUTICS
AMENDED AND RESTATED
CHANGE OF CONTROL SEVERANCE BENEFIT PLAN
PLAN DOCUMENT AND SUMMARY PLAN
DESCRIPTION
The Nektar
Therapeutics Amended and Restated Change of Control Severance
Benefit Plan (the “Plan”) is designed to provide
severance benefits to eligible employees of Nektar Therapeutics
(the “Company” or “Nektar”) whose
employment is involuntarily terminated by the Company following a
Change of Control (as defined below). The Plan was initially
approved by the Board of Directors on December 6, 2006 and
subsequently amended and restated and approved by the Board of
Directors on February 14, 2007 and on October 21, 2008.
The Plan supersedes any prior plan, policy or practice involving
the payment of severance benefits by Nektar in the event of an
involuntary termination that occurs in connection with or following
a Change of Control. While the Plan is in effect, any severance
benefits provided to an employee by the Company with respect to an
employee’s involuntary termination in connection with or
following a Change of Control must be paid pursuant to the Plan or
pursuant to an express written agreement between Nektar and the
individual employee.
The Plan is
designed to be an “employee welfare benefit plan,” as
defined in Section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”) and,
accordingly, this Plan is governed by ERISA. This document
constitutes both the official plan document and the required
summary plan description under ERISA.
Section 2. Eligibility For Participation
in the Plan
Each employee
of the Company is eligible to participate in the Plan; provided,
however, that an employee who has an individual agreement with the
Company providing for severance benefits with respect to
termination of employment with the Company in connection with or
following a Change of Control that would otherwise be covered by
this Plan shall not be eligible to participate in this Plan (i.e.
an eligible employee cannot receive severance benefits both under
their individual agreement and this Plan), and an individual who is
not treated as an employee of the Company for payroll and income
tax withholding purposes or who is treated as a consultant or
independent contractor, regardless of a court or agency’s
determination of employee status of such person during any period
for any purpose, shall not be eligible to participate in this
Plan.
Section 3. Eligibility For Severance
Benefits
3.1
Conditions for Eligibility . To be eligible to receive
severance benefits under the Plan, in addition to meeting the
requirements for eligibility to participate in the Plan, the
participant must terminate employment with the Company under
circumstances that the Plan Administrator determines constitute a
Covered Termination, and the participant must meet the following
conditions:
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The participant must execute and
deliver to the Company a Separation and General Release Agreement
in substantially the form attached hereto as Exhibit A
and must not revoke such agreement within any revocation period
provided under applicable law.
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If the participant is notified by
the Company or Successor Company that his or her employment will be
terminated following a Change of Control in advance of his or her
termination date, the participant must not voluntarily terminate
his or her employment or fail to perform his or her assigned duties
prior to the termination date established by the Company or
Successor Company.
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The participant must not at any
time have engaged in conduct that would be Cause for termination,
as defined in Section 3.3 below, as determined by the Plan
Administrator in its sole discretion. The Plan Administrator shall
have the discretion to terminate any and all severance benefits
provided under this Plan to a participant who is discovered to have
engaged in such conduct, regardless of when such discovery
occurs.
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3.2 Covered
Termination . For purposes of this Plan, a Covered Termination
is an involuntary termination of the participant’s employment
with the Company or Successor Company in conjunction with a Change
of Control under the circumstances described below applicable to
the participant, as follows:
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Officer Participants
. For a participant who
is an officer holding a position of Executive Chairman, Chief
Executive Officer, President, Chief Operating Officer, Business
Unit Head, Chief Scientific Officer, Chief Development Officer,
Chief Technical Officer, Chief Financial Officer, Senior Vice
President, Vice President or Principal Fellow (an “Officer
Participant”), a Covered Termination is the involuntary
termination of the participant’s employment by the Company or
Successor Company without Cause, other than on account of the
participant’s death or disability, or the participant’s
Good Reason Resignation, which (i) termination occurs at the
request of a third party in the context of discussions regarding a
Change of Control or (ii) termination or resignation occurs
within the period beginning with the execution of an agreement
providing for a Change of Control (and such Change of Control is
consummated) and ending 12 months following the Change of
Control.
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Non-Officer Participants
. For any other
participant (a “Non-Officer Participant”), a Covered
Termination is the involuntary termination of the
participant’s employment by the Company or Successor Company
without Cause, other than on account of the participant’s
death or disability, which termination occurs within the period
beginning on the date of the Change of Control and ending
12 months following the Change of Control.
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Termination of Employment —
Asset Sale .
Notwithstanding anything else contained in this Plan to the
contrary, a participant shall not be entitled to benefits under
this Plan as a result of a termination of the participant’s
employment with the Company or Successor Company if such
termination of employment occurs in connection with a sale of
assets by the Company or Successor Company and each of the
following conditions is satisfied in connection with such sale:
(1) the participant becomes employed by the purchaser (which
term shall include for these purposes a parent, subsidiary, or
other affiliated entity of such purchaser) of such assets upon or
within sixty (60) days following such sale or such purchaser
offers the participant employment effective upon or within sixty
(60) days following such sale (regardless of whether the
participant actually accepts or commences such employment) on
substantially the same terms; and (2) such purchaser adopts
this Plan (or a substantially similar severance plan) to provide
the participant with substantially the same severance protections
afforded by this Plan had this Plan continued in effect as to the
participant after such sale on its terms (subject, without
limitation, to any such entity’s right to terminate this Plan
as provided herein). Whether employment is on “substantially
the same terms” for this purpose shall be determined by
comparing the relevant aspects of the terms of the
participant’s employment before giving effect to such asset
sale to the relevant aspects of the terms of the
participant’s employment (or offer of employment, as the case
may be) with the purchaser after giving effect to such asset sale
(in each case relative to the Company and its subsidiaries, or the
purchaser and its parent, subsidiary, and other affiliated
entities, as the case may be, on a consolidated basis, not simply
with reference to the participant’s employer).
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3.3
Cause . For purposes of this Plan, Cause shall mean, as
determined by the Plan Administrator:
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An employee’s conviction of
any felony or any crime involving fraud, dishonesty or moral
turpitude;
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An employee’s commission of,
or participation in, a fraud or act of dishonesty against the
Company or Successor Company that materially benefits the
employee;
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An employee’s intentional,
material violation of any contract or agreement between the
employee and the Company or Successor Company or of any statutory
or fiduciary duty owed to the Company or Successor
Company;
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An employee’s intentional
unauthorized use of Company or Successor Company property that
materially benefits the employee or intentional unauthorized use or
disclosure of Company or Successor Company confidential information
or trade secrets;
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An employee’s intentional
gross misconduct or intentional material failure to comply with the
Company’s or Successor Company’s written policies;
or
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An employee’s intentional
material failure or refusal to perform his or her position
responsibilities, other than on account of a mental or physical
disability.
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No act or
failure to act on the part of an individual shall be considered
“intentional” unless done, or omitted to be done, by
that individual not in good faith and without reasonable belief
that such individual’s action or omission was in the best
interest of the Company. In no event shall mere failure to achieve
desired strategic, operational, financial or other results
constitute Cause.
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3.4 Good
Reason Resignation . For purposes of this Plan, an Officer
Participant’s Good Reason Resignation shall mean a voluntary
resignation by the Officer Participant following the occurrence of
any of the following conditions without the Officer
Participant’s express written consent:
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Assignment of any authority, duties
or responsibilities that results in a material diminution in the
participant’s authority, duties or responsibilities as in
effect immediately prior to the Change of Control.
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Assignment to a work location more
than 50 miles from the participant’s immediately previous
work location, unless such reassignment of work location decreases
the participant’s commuting distance from his or her
residence to his or her assigned work location.
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A material diminution in the
participant’s monthly base salary as in effect on the date of
the Change of Control or as increased thereafter.
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Notice to the participant by the
Company or Successor Company during the 12-month period following
the Change of Control that the participant’s employment will
be terminated under circumstances that would be a Covered
Termination but for the designation of a date for termination that
is greater than 12 months following the Change of Control
(provided that such participant does in fact terminate his or her
employment within the time period prescribed below).
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In the case of the Chief Executive
Officer and President, such individual does not serve in that
position in the Successor Company (as defined below) and/or is not
appointed to the board of directors of the Successor
Company.
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provided,
however, that any such condition shall not constitute grounds for a
Good Reason Resignation unless both (x) the Officer
Participant provides written notice to the Company of the condition
claimed to constitute grounds for the Good Reason Resignation
within sixty (60) days of the initial existence of such
condition, and (y) the Company fails to remedy such condition
within thirty (30) days of receiving such written notice
thereof; and provided, further, that in all events the termination
of the Officer Participant’s employment with the Company
shall not be treated as a Good Reason Resignation unless such
termination occurs not more than six (6) months following the
initial existence of the condition claimed to constitute
“Good Reason.”
3.5 Change
of Control . A Change of Control with respect to the Company
shall mean any of the following events or circumstances:
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The sale, lease or other
disposition of all or substantially all of the Company’s
assets;
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The acquisition of securities of
the Company representing more than 50% of the combined voting power
of the Company’s then outstanding securities, other than by
virtue of a merger, consolidation or similar
transaction;
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The merger, consolidation or
similar transaction involving the Company, immediately after which
the stockholders of the Company immediately prior thereto do not
own either (i) outstanding voting securities representing more
than 50% of the combined outstanding voting power of the surviving
entity in such merger, consolidation or similar transaction or
(ii) more than 50% of the combined outstanding voting power of
the parent of the surviving entity in such merger, consolidation or
similar transaction, in each case in substantially the same
proportions as their ownership of the outstanding voting securities
of the Company immediately prior to such transaction; or
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Individuals who, on the date the
Plan is adopted by the Board, are members of the Board (the
“Incumbent Board”) cease for any reason to constitute
at least a majority of the members of the Board, provided, however,
that if the appointment or election of any new Board member was
approved or recommended by a majority vote of the members of the
Incumbent Board then still in office, such new member will, for
purposes of the Plan, be considered as a member of the Incumbent
Board.
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In the event of
a Change of Control following which Nektar is not the surviving
entity, the surviving entity for purposes of this Plan is the
“Successor Company.”
Section 4. Severance
Benefits
A participant
who is eligible to participate in this Plan in accordance with
Section 2 and who becomes eligible to receive severance
benefits under this Plan as determined under Section 3 shall
be entitled to receive, subject to the terms and conditions herein,
the following severance benefits set forth in this
Section 4:
4.1 Cash
Severance Pay; Amount . The amount of a participant’s
Cash Severance Pay benefit under this Plan shall be determined
based on position title as follows, and then reduced as specified
below:
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Executive Chairman: Cash Severance
Pay shall equal 24 months of monthly base salary plus annual
target incentive pay as in effect immediately prior to the Covered
Termination or for the immediately preceding calendar year,
whichever is greater.
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Chief Executive Officer and
President: Cash Severance Pay shall equal 24 months of monthly
base salary plus annual target incentive pay as in effect
immediately prior to the Covered Termination or for the immediately
preceding calendar year, whichever is greater.
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Chief Scientific Officer, Chief
Development Officer, Chief Financial Officer, Chief Technical
Officer, Chief Operating Officer and Business Unit Head: Cash
Severance Pay shall equal 12 months of monthly base salary
plus annual target incentive pay as in effect immediately prior to
the Covered Termination or for the immediately preceding calendar
year, whichever is greater.
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Senior Vice Presidents, Vice
Presidents and Principal Fellows: Cash Severance Pay shall equal
12 months of monthly base salary plus annual target incentive
pay as in effect immediately prior to the Covered Termination or
for the immediately preceding calendar year, whichever is
greater.
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All Other Participants: Cash
Severance Pay shall equal 6 months of monthly base salary plus
annual target incentive pay as in effect immediately prior to the
Covered Termination or for the immediately preceding calendar year,
whichever is greater.
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Cash Severance
Pay shall be reduced by each of the following:
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any severance benefits (including,
without limitation, any other change-in-control severance benefits
and any other severance benefits generally) that the participant
may be entitled to under any other plan or program with the
Company. For purposes of the foregoing, any cash severance benefits
payable to the participant under any other plan or program with the
Company (including, without limitation, the Company’s
Severance Benefit Plan or any similar successor plan) shall offset
the Cash Severance Pay otherwise payable to the participant under
this Plan on a dollar-for-dollar basis. For purposes of the
foregoing, non-cash severance benefits to be provided to the
participant under any other plan or program with the Company shall
offset any corresponding benefits otherwise to be provided to the
participant under this Plan or, if there are no corresponding
benefits otherwise to be provided to the participant under this
Plan, the value of such benefits shall offset the cash severance
benefits otherwise payable to the participant under this Plan on a
dollar-for-dollar basis. If the amount of other benefits to be
offset against the Cash Severance Pay otherwise payable to the
participant under this Plan in accordance with the preceding two
sentences exceeds the amount of Cash Severance Pay otherwise
payable to the participant under this Plan, then the excess may be
used to offset other non-cash severance benefits otherwise to be
provided to the participant under this Plan on a dollar-for-dollar
basis. For purposes of this paragraph, the Plan Administrator shall
reasonably determine the value of any non-cash benefits;
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any wages or wage replacement
benefits paid or payable to the participant with respect to any
applicable notice period (including any pay in lieu of notice) in
connection with the participant’s termination of employment,
whether such notice period is required under the Worker Adjustment
and Retraining Notification Act or any state law with respect to
notice, if applicable, or any Company policy, or any written
agreement between the participant and the Company;
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the amount of any wages or other
compensation the participant has received during a leave of absence
in excess of his or her accrued paid time off (other than
disability plan income replacement benefits); and
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to the extent permitted by law, by
any debt that the participant owes the Company at the time the Cash
Severance Pay becomes payable.
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4.2 Cash
Severance Pay: Time of Payment . The Cash Severance Pay for
which a participant is eligible under this Plan will be paid to the
participant in a lump sum cash payment no later than sixty
(60) days following the date on which the participant’s
Separation from Service (as defined below) occurs, subject to the
provisions of Section 3.1. Notwithstanding the foregoing
sentence or any other provision of this Plan to the contrary, if
the participant is an Officer Participant or is otherwise a
“specified employee” within the meaning of Treasury
Regulation Section 1.409A-1(i) as of the date of the
participant’s Separation from Service, the participant shall
not be entitled to any payment of Cash Severance Pay until the
earlier of (i) the date which is six (6) months after the
participant’s Separation from Service for any reason other
than death, or (ii) the date of the participant’s death.
Any amounts otherwise payable to the participant upon or in the six
(6) month period following the participant’s Separation
from Service that are not so paid by reason of this paragraph shall
be paid (without interest) as soon as practicable (and in all
events within thirty (30) days) after the date that is six
(6) months after the participant’s Separation from
Service (or, if earlier, as soon as practicable, and in all events
within thirty (30) days, after the date of the
participant’s death). The provisions of this paragraph shall
only apply if, and to the extent, required to avoid the imputation
of any tax, penalty or interest pursuant to Section 409A of the
U.S. Internal Revenue Code of 1986, as amended (the
“Code”).
As used herein,
a participant’s “Separation from Service” occurs
when the participant dies, retires, or otherwise has a termination
of employment with the Company that constitutes a “separation
from service” within the meaning of Treasury
Regulation Section 1.409A-1(h)(1), without regard to the
optional alternative definitions available thereunder.
4.3 COBRA
Premiums . For an eligible participant who is covered by one or
more of the Company’s group health plans on the date of
termination of employment and who makes a timely election to
continue such coverage under the Consolidated Omnibus Budget
Reconciliation Act (“COBRA”), the Company will pay the
portion of such participant’s COBRA premium equal to the
portion of such group health plan premium cost the Company pays for
active employees for the number of months base salary represented
by the participant’s Cash Severance Pay determined under
Section 4.1; provided that such payment of a portion of the COBRA
premium by the Company shall cease earlier on the date the
participant becomes eligible for group medical, dental or vision
coverage through a subsequent employer. To the extent that the
payment of any COBRA premiums pursuant to this Section 4.3 is
taxable to the participant, any such payment shall be paid to the
participant on or before the last day of the participant’s
taxable year following the taxable year in which the related
expense was incurred. The participant’s right to payment of
such premiums is not subject to liquidation or exchange for another
benefit and the amount of such benefits that the participant
receives in one taxable year shall not affect the amount of such
benefits that the participant receives in any other taxable
year.
4.4
Outplacement Program . An eligible participant shall receive
reimbursement for reasonable outplacement services up to a maximum
of $5,000 for services received within 12 months following
termination, any such reimbursement to be made in accordance with
the Company’s reimbursement policies generally and in all
events not later than the end of the calendar year following the
year in which the related expense was incurred. The
participant’s right to benefits under this Section 4.4
is not subject to liquidation or exchange for another benefit and
the amount of such benefits that the part
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