Exhibit 10.62
SUNESIS PHARMACEUTICALS,
INC.
CHANGE OF CONTROL PAYMENT
PLAN
Section 1. I
NTRODUCTION
.
The Sunesis Pharmaceuticals, Inc.
Change of Control Payment Plan (the “ Plan
” ) is established effective April 3, 2009 (the
“ Effective Date ” ). The purpose of the
Plan is to provide for payments to certain eligible employees of
Sunesis Pharmaceuticals, Inc. (the “ Company
” ) in the event of a Change of Control (as such term is
defined below). Except as otherwise expressly provided herein, this
Plan shall supersede any change of control or severance benefit
plan, policy, or practice previously maintained by the Company,
other than the Sunesis Pharmaceuticals, Inc. Severance Benefit Plan
(hereinafter referred to as the “ Severance Plan
” ) and any individually negotiated contract or agreement
with the Company relating to change of control or severance
benefits that is in effect on the effective date of a Change of
Control or on an employee’s termination date (such
individually negotiated contract or agreement hereinafter referred
to as an “ Individual Agreement ” ). This
Plan shall not supersede any benefit provided pursuant to an equity
compensation plan or program maintained by the Company, including
any benefit provided pursuant to the Company’s 1998 Stock
Plan, 2001 Stock Plan, 2005 Equity Incentive Award Plan, 2005
Employee Stock Purchase Plan and 2006 Employment Commencement
Incentive Plan, and is intended to operate in tandem with the
Severance Plan and with Individual Agreements since payments
pursuant to the Plan shall reduce on a dollar-for-dollar basis
severance payments under the Severance Plan and Individual
Agreements, as hereinafter provided.
Section 2. D
EFINITIONS
.
For purposes of the Plan, the
following terms are defined as follows:
(a) “ Base Salary
” means the
Eligible Employee’s base salary or regular wage rate in
effect during the last regularly scheduled payroll period
immediately preceding the date of the Eligible Employee’s
Covered Termination. Base Salary does not include variable forms of
compensation such as but not limited to overtime, lead premiums,
shift differentials, bonuses, incentive compensation, commissions,
expenses or expense allowances.
(b) “ Board
” means the Board
of Directors of Sunesis Pharmaceuticals, Inc.
(c) “ Change of
Control ” means
and includes each of the following:
(i) the acquisition, directly or indirectly, by any
“person” or “group” (as those terms are
defined in Sections 3(a)(9), 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended, and the rules thereunder) of
“beneficial ownership” (as determined pursuant to
Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) of securities entitled to vote generally in the election
of directors ( “ voting securities ” ) of
the Company that represent fifty percent (50%) or more of the
combined voting power of the Company’s then outstanding
voting securities, other than:
(1) an acquisition by a trustee or other fiduciary
holding securities under any employee benefit plan (or related
trust) sponsored or maintained by the Company or any person
controlled by the Company or by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any person
controlled by the Company, or
1.
(2) an acquisition of voting securities by the
Company or a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions
as their ownership of the stock of the Company.
Notwithstanding the foregoing, the
following event shall not constitute an “acquisition”
by any person or group for purposes of this Section: an acquisition
of the Company’s securities by the Company that causes the
Company’s voting securities beneficially owned by a person or
group to represent fifty percent (50%) or more of the combined
voting power of the Company’s then outstanding voting
securities; provided, however, that if a person or group
shall become the beneficial owner of fifty percent (50%) or
more of the combined voting power of the Company’s then
outstanding voting securities by reason of share acquisitions by
the Company as described above and shall, after such share
acquisitions by the Company, become the beneficial owner of any
additional voting securities of the Company, then such acquisition
shall constitute a Change of Control; or
(ii) the consummation by the Company (whether
directly involving the Company or indirectly involving the Company
through one or more intermediaries) of (x) a merger,
consolidation, reorganization, or business combination or
(y) a sale or other disposition of all or substantially all of
the Company’s assets or (z) the acquisition of assets or
stock of another entity, in each case other than a
transaction:
(1) which results in the Company’s voting
securities outstanding immediately before the transaction
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the Company or the person
that, as a result of the transaction, controls, directly or
indirectly, the Company or owns, directly or indirectly, all or
substantially all of the Company’s assets or otherwise
succeeds to the business of the Company (the Company or such
person, the “ Successor Entity ” ))
directly or indirectly, at least a majority of the combined voting
power of the Successor Entity’s outstanding voting securities
immediately after the transaction, and
(2) after which no person or group beneficially owns
voting securities representing fifty percent (50%) or more of
the combined voting power of the Successor Entity; provided,
however, that no person or group shall be treated for purposes
of this clause (ii) as beneficially owning fifty percent
(50%) or more of combined voting power of the Successor Entity
solely as a result of the voting power held in the Company prior to
the consummation of the transaction; or
(iii) the Company’s stockholders approve a
liquidation or dissolution of the Company.
2.
Notwithstanding the foregoing, a
transaction shall not constitute a Change of Control if:
(i) it constitutes the Company’s initial public offering
of its securities; or (ii) it is a transaction effected
primarily for the purpose of financing the Company with cash (as
determined by the Board in its discretion and without regard to
whether such transaction is effectuated by a merger, equity
financing or otherwise). The Board shall have full and final
authority, which shall be exercised in its discretion, to determine
conclusively whether a Change of Control of the Company has
occurred pursuant to the above definition, and the date of the
occurrence of such Change of Control and any incidental matters
relating thereto.
(d) “ Change of Control
Proceeds ” means, with respect to any Change of Control and
without duplication, all cash and the fair market value on the
effective date of the Change of Control, as determined in good
faith by the Board, of all other property paid directly or
indirectly by a third party or the Company to the Company’s
stockholders (or to the Company in the case of a Change of Control
structured as an asset sale, exclusive license or similar
transaction) in consideration for their shares or any debt or
equity-linked securities ( e.g. , warrants and options) held
by the Company’s stockholders or any third party debt holders
or holders of equity-linked securities (or in consideration of the
assets of the Company in the case of a Change of Control structured
as an asset sale, exclusive license or similar transaction), but
expressly excluding amounts payable to financial brokers or
advisors in connection with any Change of Control or any other
legal, accounting, investment banking, advisory or other third
party fees or costs incurred by the Company or its affiliates in
connection with the Change of Control. The application of this Plan
to amounts described in the preceding sentence that are paid from
escrow or pursuant to earn-out or other contingencies that may be
established in connection with the negotiations pursuant to which
the Change of Control occurs shall be determined at a future date
in the sole discretion of the Board, recognizing that it is the
Board’s present intention to apply the Plan to such amounts
in the same manner as it applies to amounts payable immediately
upon the effective date of the Change of Control, subject, however,
to the requirements for either compliance with or exemption from
Section 409A of the Code. For avoidance of doubt, Change of
Control Proceeds shall not include (i) any amounts payable in
cash or other consideration under consulting, employment or other
arrangements between any acquirer and any employee, former
employee, director or consultant of the Company or any of its
affiliates for services rendered or to be rendered after the Change
of Control or (ii) the value of any Company debt repaid or
assumed by the acquirer in connection with the Change of
Control.
(e) “ Code
” means the
Internal Revenue Code of 1986, as amended.
(f) “ Company
” means Sunesis
Pharmaceuticals, Inc. or, following a Change of Control, the
surviving entity resulting from such transaction.
(g) “ Constructive
Termination ” shall have the meaning ascribed to such term in
the Individual Agreement or shall mean a voluntary termination of
employment with the Company (or any successor thereto) for Good
Reason (as such term is defined in the Severance Plan) as provided
in the Severance Plan, whichever is applicable to the Eligible
Employee on the effective date of a Change of Control.
3.
(h) “ Covered
Termination ” means (i) an Involuntary Termination
Without Cause or (ii) a Constructive Termination, provided
that either of which occurs during the period that is six
(6) months following the effective date of a Change of
Control.
(i) “ Eligible
Employee ” means an individual who is a full-time regular
U.S. employee of the Company and is designated in writing by the
Board as an Eligible Employee. Such written designation shall set
forth the Pro Rata Amount of such Eligible Employee or the formula
by which such Pro Rata Amount is to be determined. For purposes of
this Plan, full-time employees are those regular hire employees who
are regularly scheduled to work at least thirty (30) hours per
week. Notwithstanding the foregoing, no individual who is a party
to any Individual Agreement shall be an Eligible Employee unless
such individual consents to the provisions of this Plan superseding
his or her Individual Agreement. For purposes of this Plan, the
Chairman of the Board shall be considered an Eligible
Employee.
(j) “ Entity
” means a
corporation, partnership or other entity.
(k) “ ERISA
” means the
Employee Retirement Income Security Act of 1974, as
amended.
(l) “ Involuntary
Termination Without Cause ” shall, in the case of an Eligible Employee
covered by an Individual Agreement, have the meaning ascribed to
that term in such Individual Agreement and, in the case of an
Eligible Employee covered by the Severance Plan, have the meaning
ascribed by such Plan to a termination of employment by the Company
without Cause (as such term is defined in the Severance Plan) and
for reasons other than unsatisfactory performance.
(m) “ Own, ”
“ Owned, ” “ Owner, ” “
Ownership ” A person or Entity shall be deemed to
“Own,” to have “Owned,” to be the
“Owner” of, or to have acquired “Ownership”
of securities if such person or Entity, directly or indirectly,
through any contract, arrangement, understanding, relationship or
otherwise, has or shares voting power, which includes the power to
vote or to direct the voting, with respect to such
securities.
(n) “ Plan
Administrator ” means the Board or any committee duly authorized
by the Board to administer the Plan. The Plan Administrator may,
but is not required to be, the Compensation Committee of the Board.
The Board may at any time administer the Plan, in whole or in part,
notwithstanding that the Board has previously appointed a committee
to act as the Plan Administrator.
(o) “ Pro Rata
Amount ” means
the percentage of Change of Control Proceeds for each Eligible
Employee designated by the Board, as set forth in, or determined in
accordance with, Exhibit A .
(p) “ Subsidiary
” means, with
respect to the Company, (A) any corporation of which more than
fifty percent (50%) of the outstanding capital stock having
ordinary voting power to elect a majority of the board of directors
of such corporation (irrespective of whether, at the time, stock of
any other class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency) is
at the time, directly or indirectly, Owned by the Company, and
(B) any partnership in which the Company has a direct or
indirect interest (whether in the form of voting or participation
in profits or capital contribution) of more than fifty percent
(50%).
4.
Section 3. E LIGIBILITY F OR B ENEFITS .
(a) General Rules.
Subject to the limitations set forth
in Sections 5 and 6, in the event of a Change of Control, the
Company shall provide the payment described in Section 4 to
each Eligible Employee.
(b) Possible Reduction of Cash
Severance Payments under Other Arrangements.
An Eligible Employee will receive
payments under this Plan in the following circumstances, as
determined by the Plan Administrator in its sole
discretion:
(i) With respect to the payments provided pursuant
to Section 4(a)(i), the Eligible Employee is either subject to
an Individual Agreement or covered by the Severance Plan as of the
effective date of a Change of Control but has not experienced a
Covered Termination as of the date that the payment pursuant to
this Plan is scheduled to be made or commence. In such case, the
payment pursuant to this Plan shall be made in full, and the cash
severance payment pursuant to such Individual Agreement or the
Severance Plan, as applicable, shall, in the event of a later
Covered Termination, be reduced on a dollar-for-dollar basis by the
payment made pursuant to this Plan.
(ii) With respect to the payment provided pursuant to
Section 4(a)(ii), the Eligible Employee is either subject to
an Individual Agreement or covered by the Severance Plan as of the
effective date of the Change of Control and has experienced a
Covered Termination as of the date that the payment pursuant to
this Plan is scheduled to be made or commence. In such case, the
payment pursuant to this Plan shall be made in full and shall
reduce on a dollar-for-dollar basis the cash severance payment that
is to be made pursuant to such Individual Agreement or the
Severance Plan, as applicable.
(c) Value of
Reduction. If the Change
of Control Proceeds are subject to an escrow for purposes of
contingent claims, an earn-out or a similar arrangement by which
additional Change of Control Proceeds may become payable in the
future, the reduction in cash severance payments provided in
Section 3(b) shall be based solely on the Change of Control
Proceeds actually payable upon the effective date of the Change of
Control.
(d) Termination of
Payments. An Eligible
Employee’s right to receive payments under this Plan shall
terminate immediately if, at any time prior to or during the period
within which the Eligible Employee is receiving payments hereunder,
the Eligible Employee, without the prior written approval of the
Plan Administrator:
(i) willfully breaches a material provision of the
Eligible Employee’s proprietary information or
confidentiality agreement with the Company.
(ii) encourages or solicits any of the
Company’s then current employees to leave the Company’s
employ for any reason or interferes in any other manner with
employment relationships at the time existing between the Company
and its then current employees; or
5.
(iii) induces any of the Company’s then current
clients, customers, suppliers, vendors, distributors, licensors,
licensees or other third party to terminate their existing business
relationship with the Company or interferes in any other manner
with any existing business relationship between the Company and any
then current client, customer, supplier, vendor, distributor,
licensor, licensee or other third party.
Section 4. A
MOUNT OF P AYMENTS .
(a) Payments.
The Company shall provide payments
to each Eligible Employee in an amount equal to the amount set
forth below, as applicable.
(i) Payment in Connection with a
Change of Control. If a
Change of Control occurs but the Eligible Employee has not
experienced a Covered Termination as of the time that the payment
pursuant to this Plan is scheduled to be made or commence, the
Company shall provide the payments set forth in this
Section 4(a)(i).
(1) If Change of Control Proceeds are less than or
equal to $30,000,000, such Eligible Employee’s Pro Rata
Amount of an aggregate of 10.5% of the Change of Control
Proceeds;
(2) If Change of Control Proceeds are greater than
$30,000,000 but less than $45,000,000, such Eligible
Employee’s Pro Rata Amount of an aggregate of 11% of the
Change of Control Proceeds;
(3) If Change of Control Proceeds are equal to or
greater than $45,000,000 but less than $60,000,000, such Eligible
Employee’s Pro Rata Amount of an aggregate of 11.5% of the
Change of Control Proceeds; or
(4) If Change of Control Proceeds are equal to or
greater than $60,000,000, such Eligible Employee’s Pro Rata
Amount of an aggregate of 12% of the Change of Control
Proceeds.
(ii) Payment in Connection with a
Change of Control and Covered Termination. If an Eligible Employee’s employment with
the Company has terminated due to a Covered Termination as of the
time payments pursuant to Section 4(a)(i) are scheduled to be
made or commence, the Company shall provide such Eligible Employee
with the payment set forth in Section 4(a)(i) but shall reduce
on a dollar-for-dollar basis the cash severance payment otherwise
payable pursuant to the Individual Agreement or the Severance Plan,
as applicable to the Eligible Employee, by the amount of such
payment pursuant to Section 4(a)(i).
(b) Medium of Payment.
Payments pursuant to
Section 4(a)(i) shall be in the same medium as payments of
Change of Control Proceeds received by the Company’s
stockholders. Payments pursuant to Section 4(a)(ii) shall be
in cash, to the extent of the cash severance payments reduced on a
dollar-for-dollar basis by such payments, and to any greater extent
shall be in the same medium as payments of Change of Control
Proceeds received by the Company’s stockholders.
6.
Section 5. L IMITATIONS ON P AYMENTS .
(a) Release.
In order to be eligible to receive
payments under Section 4, an Eligible Employee must execute a
general waiver and release in substantially the form attached
hereto as Exhibit B , Exhibit C , or Exhibit D
, as appropriate, and such release must become effective in
accordance with its terms. Unless a Change of Control has occurred,
the Plan Administrator, in its discretion, may modify the form of
the required release to comply with applicable law and shall
determine the form of the required release, which may be
incorporated into a termination agreement or other agreement with
the Eligible Employee.
(b) Parachute
Payments. Except as
otherwise provided in an agreement between an Eligible Employee and
the Company, if any payment or benefit the Eligible Employee would
receive in connection with a Change of Control from the Company or
otherwise ( “ Payment ” ) would
(i) constitute a “parachute payment” within the
meaning of Section 280G of the Code, and (ii) but for
this sentence, be subject to the excise tax imposed by
Section 4999 of the Code (the “ Excise Tax
” ), then such Payment shall be equal to the Reduced
Amount. The “Reduced Amount” shall be either
(x) the largest portion of the Payment that would result in no
portion of the Payment being subject to the Excise Tax, or
(y) the largest portion, up to and including the total, of the
Payment, whichever amount, after taking into account all applicable
federal, state and local employment taxes, income taxes, and the
Excise Tax (all computed at the highest applicable marginal rate),
results in the Eligible Employee’s receipt of the greatest
economic benefit notwithstanding that all or some portion of the
Payment may be subject to the Excise Tax. If a reduction in
payments or benefits constituting “parachute payments”
is necessary so that the Payment equals the Reduced Amount,
reduction shall occur in a manner necessary to provide the Eligible
Employee with the greatest economic benefit. If more than one
manner of reduction of payments or benefits necessary to arrive at
the Reduced Amount yields the greatest economic benefit, the
payments and benefits shall be reduced pro rata.
(c) Mitigation.
Except as otherwise specifically
provided herein, an Eligible Employee shall not be required to
mitigate damages or the amount of any payment provided under this
Plan by seeking other employment or otherwise, nor shall the amount
of any payment provided for under this Plan be reduced by any
compensation earned by an Eligible Employee as a result of
employment by another employer or any retirement benefits received
by such Eligible Employee after the date of the Eligible
Employee’s termination of employment with the
Company.
(d) Non-Duplication of
Payments. Except as
otherwise specifically provided for herein, no Eligible Employee is
eligible to receive payments under this Plan more than one time.
This Plan is designed to provide certain change of control payments
to Eligible Employees pursuant to the terms and conditions set
forth in this Plan. The payments pursuant to this Plan are in
addition to, and not in lieu of, any unpaid salary, bonuses or
benefits to which an Eligible Employee may be entitled for the
period ending with the Eligible Employee’s Covered
Termination.
7.
Section 6. T IME OF AND M ANNER OF P AYMENTS .
(a) General Rules.
Payments pursuant to
Section 4(a) shall be paid on the same schedule and under the
same terms and condition as apply to payments to secured
debtholders and stockholders of the Company pursuant to the Change
of Control.
(b) Code
Section 409A. If the
Company (or, if applicable, the successor entity thereto)
determines that the payments provided under the Plan (the
“ Plan Payments ” ) constitute
“deferred compensation” under Code Section 409A
(Section 409A, together, with any state law of similar effect,
“ Section 409A ” ) and an Eligible
Employee is, at the time of a “separation from service”
(as defined under Section 409A), a “specified
employee” of the Company (or any successor entity thereto),
as such term is defined in Section 409A(a)(2)(B)(i) (a
“ Specified Employee ” ), then, solely to
the extent necessary to avoid the imposition of the adverse
personal tax consequences under Section 409A, the timing of
the Plan Payments shall be delayed as follows: on the earlier to
occur of (i) the date that is six months and one day after the
individual’s separation from service and (ii) the date
of the Eligible Employee’s death (such earlier date, the
“ Delayed Initial Payment Date ” ), the
Company (or the successor entity thereto, as applicable) shall
(A) pay to the Eligible Employee a lump sum amount equal to
the sum of the Plan Payments that the Eligible Employee would
otherwise have received through the Delayed Initial Payment Date if
the commencement of the payment of the Plan Payments had not been
delayed pursuant to this Section&n
