Exhibit 10.23
PONIARD PHARMACEUTICALS, INC.
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement
(VP) (this “Agreement” ), dated as of May
7, 2007, is entered into by and between PONIARD PHARMACEUTICALS,
INC., a Washington corporation (as supplemented by Section 13,
the “Company” ), and Ronald A. Martell
(the “ Executive ”).
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
“ Severance Agreement ” shall mean the
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 one (1) year from the date of this Agreement as first appearing
above; provided, however, that this Agreement shall automatically
renew for successive additional one (1) 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 in 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 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.
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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 his
productive time, ability, attention and effort to the business and
affairs of the Company and the discharge of the responsibilities
assigned to his hereunder, and will use his reasonable best efforts
to perform faithfully and efficiently such responsibilities.
It shall not be a violation of this Agreement for the Executive to
(a) serve on corporate, civic or charitable boards or
committees, (b) deliver lectures, fulfill speaking engagements
or teach at educational institutions, (c) manage personal
investments, or (d) engage in activities permitted by the
policies of the Company or as specifically permitted by the
Company, so long as such activities do not significantly interfere
with the performance of the Executive’s responsibilities in
accordance with this Agreement. It is expressly understood
and agreed that to the extent any such activities have been
conducted by the Executive prior to the Employment Period, the
continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) during the Employment Period
shall not thereafter 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 him, 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 ”) or the Chief
Executive Officer 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 or the Chief Executive Officer
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 bonus (the “
Annual 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 (including by reason
of any deferral and including the value of any stock awards and the
compensation expense disclosed in the Company’s financial
statements for the grant of any stock options) to the Executive by
the Company and its affiliated companies in respect of the three
fiscal years immediately preceding the fiscal year in which the
Change of Control Date occurs. Each Annual Bonus shall be
paid no later
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than ninety (90) days after the end
of the fiscal year for which the Annual Bonus is awarded, unless
the Executive shall elect to defer the receipt of the Annual
Bonus.
6.
Benefits
6.1
Incentive, Retirement and Welfare Benefit Plans;
Vacation
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
During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable employment expenses incurred by him 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.
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 shall survive the termination of this Agreement and the
termination of the Executive’s employment with the
Company:
7.1
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 his employment for Good Reason (as defined below) or for
any reason, upon giving the Notice of Termination (as defined
below).
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
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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 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
the 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,
at the end 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 his
duties during such period.
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 his employment for Good Reason,
the Executive shall be entitled to:
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(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 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); provided
that, in the event that the Executive is entitled to an amount in
respect of the Annual Bonus under Section 8.1(c), he shall
receive the amount payable under Section 8.1(c) first and the
amount payable under this Section 8.1(a)(ii) only to the
extent it exceeds the amount payable under Section 8.1(c);
and
(iii)
any compensation previously deferred by the Executive (together
with accrued interest or earnings thereon, if any) and any accrued
vacation pay that would be payable under the Company’s
standard policy, in each case to the extent not theretofore
paid;
(b)
for one year after the Date of Termination or until the Executive
qualifies for comparable medical and dental insurance benefits from
another employer, whichever occurs first, the Company shall pay the
Executive’s premiums for health insurance benefit
continuation for the Executive and his family members, if
applicable, which 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 equal to fifty percent (50%) of the Annual Bonus that
would have been paid to the Executive for the fiscal year in which
the Date of Termination falls but for the termination of the
Executive’s employment;
(d)
an amount as severance pay equal to fifty percent (50%) of the
Annual Base Salary for the fiscal year in which the Date of
Termination occurs; and
(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
Com
