Exhibit 10.15
PONIARD PHARMACEUTICALS, INC.
AMENDED AND RESTATED
CHANGE OF CONTROL AGREEMENT (CEO)
This Amended and Restated Change of
Control Agreement (CEO) (this “ Agreement
”), dated as of February 24, 2009, is entered into by
and between PONIARD PHARMACEUTICALS, INC., a Washington corporation
(formerly known as NeoRx Corporation and as supplemented by
Section 13 hereof, the “ Company ”),
and GERALD MCMAHON (the “ Executive ”) to
reflect amendments made in December, 2008.
The Board of Directors of the
Company (the “ Board ”) has determined
that it is in the best interests of the Company and its
shareholders to ensure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined in
Section 1 hereof) of the Company. The Board believes it
is imperative to diminish the inevitable distraction of the
Executive arising from the personal uncertainties and risks created
by a pending or threatened Change of Control, to encourage the
Executive’s full attention and dedication to the Company
currently and in the event of any threatened or pending Change of
Control, and to provide the Executive with reasonable compensation
and benefit arrangements upon a Change of Control.
In order to accomplish these
objectives, the Board has caused the Company to enter into this
Agreement.
1.
Definitions
1.1
“ Change of
Control ” shall have the definition set forth in
Appendix A hereto, which is hereby incorporated by
reference.
1.2
“ Change of Control
Date ” shall mean the first date on which a Change of
Control occurs.
1.3
“ Employment
Period ” shall mean the two (2) year period
commencing on the Change of Control Date and ending on the second
anniversary of such date.
1.4
“ Offer Letter
” shall mean the offer letter dated April 26, 2004
establishing Executive’s employment with the
Company.
1.5
“ Original
Agreement ” shall mean the Change of Control
Agreement, dated as of May 11, 2004, between the parties, as
attached to the Offer Letter as well as the Amended and Restated
Change of Control Agreement dated March 3, 2008 and the
amendment thereto.
1.6
“ Severance
Agreement ” shall mean the Amended and Restated Key
Executive Severance Agreement, dated as of the date hereof, between
the parties, as it may be amended from time to time, that provides
for certain benefits related to termination of the
Executive’s employment that are unrelated to a Change of
Control.
2.
Term
The initial term of this Agreement
(“ Initial Term ”) shall be for a period
of two (2) years from the date of this Agreement as first
appearing above; provided, however, that this Agreement shall
automatically renew for successive additional two (2) year
periods (“ Renewal Terms ”) unless notice
of nonrenewal is given by either party to the other at least ninety
(90) days prior to the end of the Initial Term or any Renewal Term;
and provided, further, that if a Change of Control occurs during
the Term, the Term shall automatically extend for the duration of
the Employment Period. The “ Term ”
of this Agreement shall be the Initial Term plus all Renewal Terms
and, if applicable, the duration of the Employment Period. At
the end of the Term, this Agreement shall terminate without further
action by either the Company or the Executive.
3.
Employment
3.1
Employment Period
During the Employment Period, the
Company hereby agrees to continue the Executive in its employ or in
the employ of its affiliated companies, and the Executive hereby
agrees to remain in the employ of the Company or its affiliated
companies, in accordance with the terms and provisions of this
Agreement; provided, however, that either the Company or the
Executive may terminate the employment relationship subject to the
terms of this Agreement.
3.2
Position and Duties
During the Employment Period, the
Executive’s position, authority, duties and responsibilities
shall be at least commensurate in all material respects with the
most significant of those held, exercised and assigned at any time
during the ninety (90) day period immediately preceding the Change
of Control Date.
3.3
Location
During the Employment Period, the
Executive’s services shall be performed at the
Company’s offices on the Change of Control Date at which the
Executive was employed or any office that is subsequently
designated by the Company and is less than thirty (30) miles from
such location.
3.4
Employment at Will
The Executive and the Company
acknowledge that, except as may otherwise be provided under any
other written agreement between the Executive and the Company, the
employment of the Executive by the Company or its affiliated
companies is “at will” and may be terminated by either
the Executive or the Company or its affiliated companies at any
time with or without cause. Moreover, if prior to the Change
of Control Date, the Executive’s employment with the Company
or its affiliated companies terminates for any reason, then the
Executive shall have no further rights under this Agreement;
provided, however, that the Company may not avoid liability for any
termination payments that would have been required during the
Employment Period pursuant to Section 8 hereof by terminating
the Executive prior to the Employment Period
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where such termination is carried
out in anticipation of a Change of Control and the principal
motivating purpose is to avoid liability for such termination
payments.
4.
Attention and
Effort
During the Employment Period, and
excluding any periods of vacation and sick leave to which the
Executive is entitled, the Executive will devote all of the
Executive’s productive time, ability, attention and effort to
the business and affairs of the Company and the discharge of the
responsibilities assigned to the Executive hereunder, and will use
the Executive’s reasonable best efforts to perform faithfully
and efficiently such responsibilities. It shall not be a
violation of this Agreement for the Executive to hold board of
director positions with outside civic organizations or to spend a
reasonable amount of time fulfilling the duties of those positions,
or to engage in other outside activities permitted by the policies
of the Company or as specifically permitted by the Board, so long
as such activities do not interfere with the performance of the
Executive’s duties hereunder. Service on a board of
directors for a commercial entity will be subject to prior approval
of the Board; however, the Company acknowledges and agrees that the
Executive has previously disclosed the Executive’s
appointment to the board of directors of Trellis
Bioscience, Inc. It is expressly understood and agreed
that such activities specifically approved or acquiesced in during
the Employment Period shall not be deemed to interfere with the
performance of the Executive’s responsibilities to the
Company.
5.
Compensation
As long as the Executive remains
employed by the Company during the Employment Period, the Company
agrees to pay or cause to be paid to the Executive, and the
Executive agrees to accept in exchange for the services rendered
hereunder by the Executive, the following compensation:
5.1
Salary
The Executive shall receive an
annual base salary (the “ Annual Base Salary
”), at least equal to the annual salary established by the
Board or the Compensation Committee of the Board (the “
Compensation Committee ”) for the fiscal year
in which the Change of Control Date occurs. The Annual Base
Salary shall be paid in substantially equal installments and at the
same intervals as the salaries of other executives of the Company
are paid. The Board or the Compensation Committee shall
review the Annual Base Salary at least annually and shall determine
in good faith and consistent with any generally applicable Company
policy any increases for future years.
5.2
Bonus
In addition to the Annual Base
Salary, the Executive shall be awarded, for each fiscal year ending
during the Employment Period, an annual performance bonus (the
“ Annual Performance Bonus ”) in cash at
least equal to the average annualized (for any fiscal year
consisting of less than twelve (12) full months) bonus paid or
payable to the Executive by the Company and its affiliated
companies in respect of the Executive’s performance during
the three fiscal years (or such shorter period of employment)
immediately preceding the fiscal year in which the Change of
Control Date occurs. Each Annual Performance Bonus shall be
paid in the
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fiscal year following the fiscal
year for which the Annual Performance Bonus is awarded, but no
later than the fifteenth day of the third month of such subsequent
fiscal year, unless the Executive shall elect to defer the receipt
of the Annual Performance Bonus in accordance with the terms of the
Company’s deferred compensation program.
6.
Benefits
6.1
Incentive, Retirement and Welfare Benefit Plans;
Vacation
As long as the Executive remains
employed by the Company during the Employment Period, the Executive
shall be entitled to participate, subject to and in accordance with
applicable eligibility requirements, in such fringe benefit
programs as shall be generally made available to other executives
of the Company and its affiliated companies from time to time
during the Employment Period by action of the Board (or any person
or committee appointed by the Board to determine fringe benefit
programs and other emoluments), including, without limitation, paid
vacations; any stock purchase, savings or retirement plan,
practice, policy or program; and all welfare benefit plans,
practices, policies or programs (including, without limitation,
medical, prescription, dental, disability, salary continuance,
employee life, group life, accidental death and travel accident
insurance plans or programs).
6.2
Expenses
As long as the Executive remains
employed by the Company during the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all
reasonable employment expenses incurred by the Executive in
accordance with the policies, practices and procedures of the
Company and its affiliated companies in effect for the executives
of the Company and its affiliated companies during the Employment
Period. Without limitation on the foregoing, reimbursement
shall be made no later than the end of the fourth month of the year
following the year in which the expense was incurred.
7.
Termination
During the Employment Period,
employment of the Executive may be terminated as follows, but, in
any case, the nondisclosure provisions set forth in Section 10
hereof and certain obligations under the Invention Agreement (as
defined in Section 10.3 hereof) and the Offer Letter shall
survive the termination of this Agreement and the termination of
the Executive’s employment with the Company:
7.1
Termination by the Company or the Executive
At any time during the Employment
Period, the Company may terminate the employment of the Executive
with or without Cause (as defined below), and the Executive may
terminate the Executive’s employment for Good Reason (as
defined below) or for any reason, upon giving a Notice of
Termination (as defined below).
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7.2
Automatic Termination
This Agreement and the
Executive’s employment during the Employment Period shall
terminate automatically upon the death or Total Disability of the
Executive. The term “ Total Disability
” as used herein shall mean the Executive’s inability
(with such accommodation as may be required by law and which places
no undue burden on the Company), as determined by a physician
selected by the Company and acceptable to the Executive, to perform
the duties set forth in Section 3.2 hereof for a period or
periods aggregating twelve (12) weeks in any three hundred
sixty-five (365) day period as a result of physical or mental
illness, loss of legal capacity or any other cause beyond the
Executive’s control, unless the Executive is granted a leave
of absence by the Board. The Executive and the Company hereby
acknowledge that the duties specified in Section 3.2 hereof
are essential to the Executive’s position and that the
Executive’s ability to perform those duties is the essence of
this Agreement.
7.3
Notice of Termination
Any termination by the Company or by
the Executive during the Employment Period shall be communicated by
a Notice of Termination to the other party given in accordance with
Section 12 hereof. The term “ Notice of
Termination ” shall mean a written notice that
(a) indicates the specific termination provision in this
Agreement relied upon and (b) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment
under the provision so indicated. The failure by the
Executive or the Company to set forth in the Notice of Termination
any fact or circumstance that contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the
Company hereunder or preclude the Executive or the Company from
asserting such fact or circumstance in enforcing the
Executive’s or the Company’s rights
hereunder.
7.4
Date of Termination
During the Employment Period,
“ Date of Termination ” means (a) if
the Executive’s employment is terminated by reason of death,
the last day of the calendar month in which the Executive’s
death occurs, (b) if the Executive’s employment is
terminated by reason of Total Disability, immediately upon a
determination by the Company of the Executive’s Total
Disability, and (c) in all other cases, ten (10) days
after the date of personal delivery or mailing of the Notice of
Termination. The Executive’s employment and performance
of services will continue during such ten (10) day period;
provided, however, that the Company may, upon notice to the
Executive and without reducing the Executive’s compensation
during such period, excuse the Executive from any or all of the
Executive’s duties during such period. Notwithstanding
anything contained in this Agreement to the contrary, the date on
which a “separation from service” (“
Separation from Service ”) pursuant to
Section 409A of the Internal Revenue Code of 1986, as amended
(“ Code Section 409A ”), occurs
shall be the “Date of Termination” or termination of
employment for purposes of determining the timing of payments under
this Agreement to the extent necessary to have such payments and
benefits under this Agreement be exempt from the requirements of
Code Section 409A or comply with the requirements of Code
Section 409A.
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8.
Termination
Payments
In the event of termination of the
Executive’s employment during the Employment Period, all
compensation and benefits set forth in this Agreement shall
terminate except as specifically provided in this
Section 8.
8.1
Termination by the Company Other Than for Cause or by the Executive
for Good Reason
If during the Employment Period the
Company terminates the Executive’s employment other than for
Cause or the Executive terminates the Executive’s employment
for Good Reason, the Executive shall be entitled to:
(a)
receive payment of the following accrued obligations (the “
Accrued Obligations ”):
(i)
the Annual Base Salary through the Date of Termination to the
extent not theretofore paid;
(ii)
the product of (x) the Annual Performance Bonus payable with
respect to the fiscal year in which the Date of Termination occurs
and (y) a fraction the numerator of which is the number of
days in the current fiscal year through the Date of Termination,
and the denominator of which is three hundred sixty-five
(365);
(iii)
any compensation previously deferred by the Executive (together
with accrued interest or earnings thereon, if any); and
(iv)
any accrued vacation pay that would be payable under the
Company’s standard policy, in each case to the extent not
theretofore paid;
(b)
have the Company pay for eighteen (18) months after the Date of
Termination or until the Executive qualifies for comparable medical
and dental insurance benefits from another employer, whichever
occurs first, the Executive’s premiums for health insurance
benefit continuation for the Executive and the Executive’s
family members, if applicable, that the Company provides to the
Executive under the provisions of the federal Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended (“
COBRA ”), to the extent that the Company would
have paid such premiums had the Executive remained employed by the
Company (such continued payment is hereinafter referred to as
“ COBRA Continuation ”);
(c)
an amount as severance pay equal to one (1) times the Annual
Performance Bonus payable with respect to the fiscal year in which
the Date of Termination occurs;
(d)
an amount as severance pay equal to two (2) times the Annual
Base Salary for the fiscal year in which the Date of Termination
occurs; and
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(e)
immediate vesting of all outstanding stock options previously
granted to the Executive by the Company.
8.2
Termination for Cause or Other Than for Good Reason
If during the Employment Period the
Executive’s employment shall be terminated by the Company for
Cause or by the Executive for other than Good Reason, this
Agreement shall terminate without further obligation on the part of
the Company to the Executive, other than the Company’s
obligation to pay the Executive (a) the Annual Base Salary
through the Date of Termination, (b) the amount of any
compensation previously deferred by the Executive in accordance
with the terms of the Company’s deferred compensation
program, and (c) any accrued vacation pay that would be
payable under the Company’s standard policy, in each case to
the extent theretofore unpaid.
8.3
Expiration of Term
In the event the Executive’s
employment is not terminated prior to expiration of the Term, this
Agreement shall terminate without further obligation on the part of
the Company to the Executive, other than the Company’s
obligation to pay the Executive the product of (a) the Annual
Performance Bonus payable with respect to the fiscal year in which
the Term expired and (b) a fraction the numerator of which is
the number of days in the current fiscal year through the end of
the Term and the denominator of which is three hundred sixty-five
(365). Such payment will be made in the fiscal year following
the fiscal year in which the Term expired no later than the
fifteenth day of the third month of such subsequent fiscal
year.
8.4
Termination Because of Death or Total Disability
If during the Employment Period the
Executive’s employment is terminated by reason of the
Executive’s death or Total Disability, this Agreement shall
terminate automatically without further obligation on the part of
the Company to the Executive or the Executive’s legal
representatives under this Agreement, other than the
Company’s obligation to pay the Executive the Accrued
Obligations (which shall be paid to the Executive’s estate or
beneficiary, as applicable in the case of the Executive’s
death) and to provide COBRA Continuation.
8.5
Payment Schedule
All payments of Accrued Obligations,
or any portion thereof payable pursuant to this Section 8,
other than deferred compensation pursuant to
Section 8.1(a)(iii) hereof, shall be made to the
Executive within ten (10) working days of the Date of
Termination. Deferred compensation pursuant to
Section 8.1(a)(iii) hereof shall be payable pursuant to
the terms of the deferred compensation program. Any severance
payments payable to the Executive pursuant to Sections
8.1(c) and 8.1(d) hereof shall be made to the Executive
in a lump sum within ten (10) working days of the Date of
Termination. Notwithstanding the preceding provisions of this
Section 8, if any payment or benefit pursuant to this
Agreement constitutes a “deferral of compensation”
subject to Code Section 409A (after taking into account, to
the maximum extent possible, any applicable exemptions) (a “
409A Payment ”) treated as payable to a
Specified Employee (as defined in Section 21.1 hereof) upon
Separation from Service, the provisions of
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Section 21.1 hereof shall
apply. Section 8.9 hereof must be satisfied to receive
payments and benefits under this Agreement.
8.6
Cause
For purposes of this Agreement,
“ Cause ” means cause given by the
Executive to the Company and shall include, without limitation, the
occurrence of one (1) or more of the following
events:
(a) &nbs
