SEVERANCE AND CHANGE IN CONTROL
AGREEMENT
This Severance and Change in Control
Agreement (the “Agreement” ) is made
and entered into effective as of July 1, 2009, (the
“Effective Date” ), by and between
Anadys Pharmaceuticals,
Inc. , a Delaware corporation (the
“Company” ), and Peter T. Slover (the
“Executive” ). The Company and the Executive are
hereinafter collectively referred to as the
“Parties” , and individually referred to as a
“Party” . This Agreement shall replace and
supersede that certain Change in Control Agreement between
Executive (then a senior employee) and the Company entered into as
of March 4, 2008 (the “Original
Agreement”).
Whereas , Executive and the
Company are currently parties to the Original Agreement that is
superseded and replaced in its entirety by this Agreement;
and
Whereas , the Company desires
to continue to employ Executive to provide personal services to the
Company in that capacity, and wishes to provide Executive with
certain severance benefits in return for his services, and
Executive wishes to be so employed and to receive such benefits;
and
Whereas , the Company and
Executive wish to enter into this Agreement to define their mutual
rights and duties with respect to Executive’s severance
benefits;
Now, Therefore , in
consideration of the mutual promises and covenants contained
herein, and for other good and valuable consideration, the Parties,
intending to be legally bound, agree as follows:
1.1 Loyalty; At Will Employment. During the
Executive’s employment by the Company, the Executive shall
devote Executive’s full business energies, interest,
abilities and productive time to the proper and efficient
performance of Executive’s duties as an officer of the
Company unless otherwise approved in writing by the Board of
Directors or a committee of the Board of Directors.
Executive’s employment with the Company is at will and not
for any specified period and may be terminated at any time, with or
without cause, by either Executive or Company, subject to the
provisions of Sections 3 and 4 below.
1.2 Termination of Obligations. In the event of the
termination of the Executive’s employment with the Company,
the Company shall have no obligation to pay Executive any base
salary, bonus or other compensation or benefits, except as earned
prior to the date of termination or as provided in Section 3
or for benefits due to the Executive (and/or the Executive’s
dependents) under the terms of the Company’s benefit plans.
To the extent permitted by applicable laws, the Company may offset
any amounts Executive owes it or its subsidiaries against any
amount it owes Executive pursuant to Section 3.
1 .
1.3 The term of this Agreement shall begin on the Effective
Date and shall continue until Executive’s employment with the
Company is terminated for any reason.
For
purposes of this Agreement, the following terms shall have the
following meanings:
2.1 Cause. “ Cause ” for the Company to
terminate Executive’s employment hereunder shall mean the
occurrence of any of the following events:
(i) the Executive’s willful or negligent
failure, as determined in good faith by the Company’s Board
of Directors, to satisfactorily perform the Executive’s
assigned duties with the Company, or any successor thereof, in the
best interests of the Company and as directed by the
Company’s Board of Directors or the Chief Executive Officer
(except for the failure resulting from Executive’s incapacity
due to Complete Disability, or any such actual or anticipated
failure resulting from a Good Reason termination), which is not
corrected within thirty (30) days of Executive receiving
notice of such failure from the Company specifying in reasonable
detail the nature of such failure;
(ii) the Executive’s commission of a willful act
that materially injures the business of the Company;
(iii) the Executive’s conviction of a felony
involving moral turpitude; and
(iv) the Executive’s engaging or in any manner
participating in any activity that is directly competitive with or
injurious to the Company or any of its affiliates or which violates
any material provisions of the Executive’s Agreement for
Employees dated April 19, 2004 (“ Proprietary
Information and Inventions Agreement ”) with the
Company.
2.2 Change in Control. For purposes of this Agreement,
“Change in Control” means:
(i) 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 more than
fifty percent (50%) of the combined voting power of the
Company’s then outstanding securities other than by virtue of
a merger, consolidation or similar transaction. Notwithstanding the
foregoing, a Change in Control shall not be deemed to occur solely
because the level of ownership held by a person, entity or group
exceeds the designated percentage threshold of the outstanding
voting securities as a result of a repurchase or other acquisition
of voting securities by the Company reducing the number of shares
outstanding, provided that if a Change in Control would occur (but
for the operation of this sentence) as a result of the acquisition
of voting securities by the Company, and after such share
acquisition, a person, entity or group becomes the owner of any
additional voting securities that, assuming the repurchase or other
acquisition had not occurred,
2 .
increases the
percentage of the then outstanding voting securities owned by such
person, entity or group over the designated percentage threshold,
then a Change in Control shall be deemed to occur;
(ii) there is consummated a merger, consolidation or
similar transaction involving (directly or indirectly) the Company
and, immediately after the consummation of such merger,
consolidation or similar transaction, the stockholders of the
Company immediately prior thereto do not own, directly or
indirectly, outstanding voting securities representing more than
fifty percent (50%) of the combined outstanding voting power of the
surviving entity in such merger, consolidation or similar
transaction or more than fifty percent (50%) of the combined
outstanding voting power of the parent of the surviving entity in
such merger, consolidation or similar transaction; or
(iii) there is consummated a sale or other disposition
of all or substantially all of the consolidated assets of the
Company and its subsidiaries, other than a sale, lease, license or
other disposition of all or substantially all of the consolidated
assets of the Company and its subsidiaries to an entity, more than
fifty percent (50%) of the combined voting power of the voting
securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the
Company immediately prior to such sale, lease, license or other
disposition.
2.3 Complete Disability. “ Complete Disability
” shall mean the inability of the Executive to perform
the Executive’s duties under this Agreement because the
Executive has become permanently disabled within the meaning of any
policy of disability income insurance covering employees of the
Company then in force. In the event the Company has no policy of
disability income insurance covering employees of the Company in
force when the Executive becomes disabled, the term “
Complete Disability ” shall mean the inability of
the Executive to perform the Executive’s duties under this
Agreement by reason of any incapacity, physical or mental, which
the Board, based upon medical advice or an opinion provided by a
licensed physician acceptable to the Board, determines to have
incapacitated the Executive from satisfactorily performing all of
the Executive’s usual services for the Company for a period
of at least one hundred twenty (120) days during any twelve
(12) month period (whether or not consecutive). Based upon
such medical advice or opinion, the determination of the Board
shall be final and binding and the date such determination is made
shall be the date of such Complete Disability for purposes of this
Agreement.
2.4 Good Reason. “ Good Reason ” means
that Executive voluntarily terminates employment with the Company
(A) after (1) any of the following are undertaken without
Cause and without Executive’s express written consent;
(2) Executive notifies the Company in writing, within thirty
(30) days after the occurrence of one of the following events,
which notice specifies the condition giving rise to a right to
resign for Good Reason and that Executive intends to terminate his
employment no earlier than thirty (30) days after the
Company’s receipt of such notice; and (3) the Company
does not cure such condition within thirty (30) days following
its receipt of such notice or states unequivocally in writing that
it does not intend to attempt to cure such condition; and
(B) such voluntary termination occurs within ten
(10) days following the end of the period within which the
Company was entitled to remedy the condition giving rise to a right
to resign for Good Reason but failed to do so:
3 .
(i) a material adverse change in the nature or scope
of Executive’s job responsibilities;
(ii) the relocation (or demand for relocation) of
Executive’s place of employment to a point more than thirty
(30) miles from Executive’s then current place of
employment;
(iii) a material reduction in the annual base
compensation paid to Executive; or
(iv) in the case of a Change of Control, the failure
to be offered comparable employment with the successor entity,
provided that “comparable employment” shall mean
employment with job responsibilities not violative of
Section 2.4(i), base salary in an amount not violative of
Section 2.4(iii), and at a business office the location of which is
not violative of Section 2.4(ii).
2.5 Integration . The parties acknowledge that the
definition of “for Cause” contained within this
Agreement may differ from the definitions of “for
Cause” contained within Executive’s stock option
agreement or agreements. The Parties agree that unless it is
determined that Executive shall be terminated for
“Cause” as defined in this Agreement, there shall be no
termination for “Cause” under any of Executive’s
stock option agreements or other equity award agreements.
Therefore, unless otherwise expressly provided such equity award
agreement, the definition of “Cause” in this Agreement
shall supersede and replace in its entirety any definition of
“Cause” that may be included in Executive’s
equity award agreements.
3. Compensation Upon
Termination.
3.1 Death Or Complete Disability. If the Executive’s
employment with the Company is terminated as a result of death or
Complete Disability, the Company shall pay to Executive, and/or
Executive’s heirs, the Executive’s base salary and
accrued and unused vacation benefits earned through the date of
termination at the rate in effect at the time of termination, less
standard deductions and withholdings, and the Company shall
thereafter have no further obligations to the Executive and/or
Executive’s heirs under this Agreement.
3.2 With Cause or Without Good Reason. If the
Executive’s employment with the Company is terminated by the
Company for Cause or if the Executive terminates employment with
the Company without Good Reason, the Company shall pay the
Executive’s base salary and accrued and unused vacation
benefits earned through the date of termination at the rate in
effect at the time of termination, less standard deductions and
withholdings, and the Company shall thereafter have no further
obligations to the Executive under this Agreement.
3.3 Without Cause or for Good Reason.
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