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Exhibit 10.31
THRESHOLD PHARMACEUTICALS, INC.
CHANGE OF CONTROL SEVERANCE AGREEMENT
The Change of Control Severance Agreement (the "
Agreement ") is made and entered into effective as of
November 3, 2006 (the " Effective Date "), by and
between Michael K. Brawer (the " Employee ") and Threshold
Pharmaceuticals, Inc., a Delaware corporation (the " Company
"). Certain capitalized terms used in this Agreement are defined in
Section 1 below.
RECITALS
A. It is expected that the Company from time to time will
consider the possibility of a Change of Control. The Board of
Directors of the Company (the " Board ") recognizes that
such consideration can be a distraction to the Employee and can
cause the Employee to consider alternative employment
opportunities.
B. The Board believes that it is in the best interests of the
Company and its stockholders to provide the Employee with an
incentive to continue Employee’s employment and to maximize
the value of the Company upon a Change of Control for the benefit
of its stockholders.
C. In order to provide the Employee with enhanced financial
security and sufficient encouragement to remain with the Company
notwithstanding the possibility of a Change of Control, the Board
believes that it is imperative to provide the Employee with certain
severance benefits upon the Employee’s termination of
employment following a Change of Control.
AGREEMENT
In consideration of the mutual covenants herein contained and
the continued employment of Employee by the Company, the parties
agree as follows:
1. Definition of Terms . The following terms referred to
in this Agreement shall have the following meanings:
(a) Cause . "Cause" shall mean (i) Employee’s
gross negligence or willful failure substantially to perform his or
her duties and responsibilities to the Company or deliberate
violation of a Company policy; (ii) Employee’s
commission of any act of fraud, embezzlement, dishonesty or any
other willful misconduct that has caused or is reasonably expected
to result in material injury to the Company;
(iii) unauthorized use or disclosure by Employee of any
proprietary information or trade secrets of the Company or any
other party to whom the Employee owes an obligation of
nondisclosure as a result of his or her relationship with the
Company; or (iv) Employee’s willful breach of any of his
or her obligations under any written agreement or covenant with the
Company. The determination as to whether a Employee is being
terminated for Cause shall be made in good faith by the Company and
shall be final and binding on the Employee.
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(b) Change of Control . "Change of
Control" shall mean the occurrence of any of the following
events:
(i) the approval by stockholders of the Company of a merger or
consolidation of the Company with any other corporation, other than
a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation;
(ii) the approval by the stockholders of the Company of a plan
of complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the
Company’s assets; or
(iii) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) becoming
the "beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing
50% or more of the total voting power represented by the
Company’s then outstanding voting securities.
(c) Involuntary Termination . "Involuntary Termination"
shall mean (i) without the Employee’s express written
consent, a significant reduction of the Employee’s duties,
position or responsibilities relative to the Employee’s
duties, position or responsibilities in effect immediately prior to
such reduction, or the removal of the Employee from such position,
duties and responsibilities, unless the Employee is provided with
comparable or greater duties, position and responsibilities;
(ii) without the Employee’s express written consent, a
substantial reduction, without good business reasons, of the
facilities and perquisites (including office space and location)
available to the Employee immediately prior to such reduction;
(iii) without the Employee’s express written consent, a
reduction by the Company of the Employee’s base salary as in
effect immediately prior to such reduction; (iv) without the
Employee’s express written consent, a material reduction by
the Company in the kind or level of employee benefits to which the
Employee is entitled immediately prior to such reduction, with the
result that the Employee’s overall benefits package is
significantly reduced; (v) without the Employee’s
express written consent, the imposition of a requirement for the
relocation of the Employee to a facility or a location more than
fifty (50) miles from the Employee’s current work
location; (vi) any purported termination of the
Employee’s employment by the Company which is not effected
for Cause or for which the grounds relied upon are not valid; or
(vii) the failure of the Company to obtain the assumption of
this Agreement by any successors contemplated in Section 6
below.
(d) Termination Date . "Termination Date" shall mean the
effective date of any notice of termination delivered by one party
to the other hereunder.
2. Term of Agreement . Other than Section 4(b) of
this Agreement which shall survive indefinitely until all
obligations under such Section have been satisfied, this Agreement
shall terminate upon the earlier of (i) two (2) years
after a Change of Control, or (ii) the date that all
obligations of the parties hereto under this Agreement have been
satisfied.
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3. At-Will Employment . The Company and
the Employee acknowledge that the Employee’s employment is
and shall continue to be at-will, as defined under applicable law.
If the Employee’s employment terminates for any reason, the
Employee shall not be entitled to any payments, benefits, damages,
awards or compensation other than as provided by this Agreement, or
as may otherwise be established under the Company’s then
existing employee benefit plans or policies at the time of
termination.
4. Severance Benefits .
(a) Termination Following a Change of Control . If the
Employee’s employment with the Company terminates as a result
of an Involuntary Termination at any time within eighteen
(18) months after a Change of Control, and the Employee signs
the release of claims pursuant to Section 7 hereto, Employee
shall be entitled to the following severance benefits:
(1) Twelve months of Employee’s base salary and any
applicable allowances as in effect as of the date of the
termination or, if greater, as in effect in the year in which the
Change of Control occurs, less applicable withholding, payable in a
lump sum within thirty (30) days of the Involuntary
Termination;
(2) all stock options or other awards granted by the Company to
the Employee prior to the Change of Control shall accelerate and
become vested under the applicable option agreements to the extent
such stock options or other awards are outstanding and
unexercisable at the time of such termination and all stock subject
to a right of repurchase by the Company (or its successor) that was
purchased prior to the Change of Control shall have such right of
repurchase lapse;
(3) the Employee shall be permitted to exercise all vested
(including shares that vest as a result of this Agreement) stock
options or other awards granted by the Company to the Employee
prior to the Change of Control for a period of two (2) years
following the Termination Date; and
(4) the same level of Company-paid health (i.e., medical, vision
and dental) coverage and benefits for such coverage as in effect
for the Employee (and any eligible dependents) on the day
immediately preceding the Employee’s Termination Date;
provided , however , that (i) the Employee
constitutes a qualified beneficiary, as defined in
Section 4980B(g)(1) of the Internal Revenue Code of 1986, as
amended; and (ii) Employee elects continuation coverage
pursuant to the Consolidated Omnibus Budget Reconciliation Ac
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