Exhibit 10.5
COUGAR BIOTECHNOLOGY,
INC.
SEVERANCE PLAN
Cougar Biotechnology, Inc., a
Delaware corporation (the “ Company ”), has
adopted this Cougar Biotechnology, Inc. Severance Plan (the “
Plan ”), dated as of May 21, 2009, and effective
upon the consummation of a Corporate Transaction (as defined
herein), for the benefit of certain of its employees, on the terms
and conditions hereinafter stated. The Plan, as set forth herein,
is intended to reinforce and encourage the continued attention and
dedication of such employees to their duties without distraction in
light of the contemplated Corporate Transaction.
1. Defined Terms . For
purposes of the Plan, the following terms shall have the meanings
indicated below:
1.1 “ Annual Base
Salary ” means a Participant’s annual base salary
at the rate in effect immediately prior to a Qualifying Termination
or, if higher, at the rate in effect immediately prior to a
Corporate Transaction.
1.2 “ Board ”
means the Board of Directors of the Company.
1.3 “ Cash Payment
” shall have the meaning provided in Section 4.1(a)
hereof.
1.4 “ Cause ” for
termination of a Participant’s service relationship means
“Cause” as defined in the Participant’s
employment agreement with the Company, if such an agreement exists
and contains a definition of Cause, or, if no such agreement exists
or such agreement does not contain a definition of Cause, then
Cause means (i) any material failure or neglect by the
Participant to perform his or her duties or responsibilities to the
Company; (ii) any act of fraud, embezzlement, theft,
misappropriation, or dishonesty by the Participant relating to the
Company or its business or assets; (iii) the
Participant’s commission of a felony or other crime involving
moral turpitude; (iv) any gross negligence or intentional
misconduct on the part of the Participant in the conduct of his or
her duties and responsibilities or services, as applicable, with
the Company or which adversely affects the image, reputation or
business of the Company; or (v) any material breach by the
Participant of any written agreement between the Company and the
Participant.
1.5 “ COBRA Coverage
” shall have the meaning provided in Section 4.1(b)
hereof.
1.6 “ COBRA Period
” means a period beginning on the applicable Date of
Termination and continuing until the earliest to occur of
(i) eighteen (18) calendar months immediately following
the Date of Termination, (ii) the expiration of the
Participant’s (or his or her legal dependent’s, as
applicable) eligibility for benefits under COBRA, or
(iii) such time as the Participant becomes eligible to receive
medical benefits under a “group health plan” (within
the meaning of COBRA) maintained by a subsequent employer of the
Participant.
1.7 “ Code ”
means the Internal Revenue Code of 1986, as amended from time to
time.
1.8 “ Committee ”
means the Compensation Committee of the Board or such other
committee as may be appointed by the Board to administer the
Plan.
1.9 “ Company ”
means Cougar Biotechnology, Inc., a Delaware
corporation.
1.10 “ Corporate
Transaction ” means any of the following transactions to
which the Company is a party:
(a) a transaction or series of
transactions whereby any “person” or related
“group” of “persons” (as such terms are
used in Sections 13(d) and 14(d)(2) of the Exchange Act) (other
than the Company, any of its subsidiaries, an employee benefit plan
maintained by the Company or any of its subsidiaries or a
“person” that, prior to such transaction, directly or
indirectly controls, is controlled by, or is under common control
with, the Company) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act)
of securities of the Company possessing more than 50% of the total
combined voting power of the Company’s voting securities
outstanding immediately after such acquisition; or
(b) 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, (y) a
sale or other disposition of all or substantially all of the
Company’s assets in any single transaction or series of
related transactions, or (z) the acquisition of assets or
stock of another entity, in each case other than a
transaction:
(i) 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) 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
(ii) After which no person or group
beneficially owns voting securities representing 50% or more of the
combined voting power of the Successor Entity; provided,
that no person or group shall be treated for purposes of this
paragraph (b)(ii) as beneficially owning 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.
1.11 “ Date of
Termination ” shall have the meaning provided in
Section 7 hereof.
1.12 “ Employee ”
means an individual who is an employee of the Company or any
Successor Entity at any time on or after the adoption of this
Plan.
1.13 “ Exchange Act
” means the Securities Exchange Act of 1934, as amended from
time to time.
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1.14 “ Good Reason
” means the occurrence of any one or more of the following
events without the Participant’s written consent:
(a) a material diminution in the
Participant’s Annual Base Salary; or
(b) a change in the geographic
location at which the Participant must perform services to a
location that is greater than twenty-five (25) miles from
10990 Wilshire Boulevard, Los Angeles, CA 90024.
provided , however , that no termination shall be
deemed a termination by the Executive for Good Reason unless such
termination is effected pursuant to a Notice of Termination
satisfying the requirements of Section 7 hereof.
1.15 “ Participant
” means an Employee of the Company who holds the title of
Vice President or above as of the date hereof, as identified on
Schedule A attached hereto.
1.16 “ Plan ”
means this Cougar Biotechnology, Inc. Severance Plan.
1.17 “ Qualifying
Termination ” shall have the meaning provided in
Section 4.3 hereof.
1.18 “ Release ”
shall have the meaning provided in Section 4.2
hereof.
1.19 “ Severance
” means either or both of the Cash Payment or the COBRA
Coverage.
1.20 “ Successor Entity
” means any entity that acquires or otherwise succeeds to all
or substantially all of the business or assets of the Company
following a Corporate Transaction.
2. Effectiveness of the Plan
. This Plan shall become effective upon the consummation of a
Corporate Transaction and shall be of no force or effect prior to a
Corporate Transaction. In the event that a Corporate Transaction
does not occur on or prior to the first anniversary of the date on
which this Plan is adopted, the Plan shall thereupon automatically
terminate and have no force or effect.
3. Administration . Subject
to Section 12.3 hereof, the Plan shall be interpreted,
administered and operated by the Committee, which shall have
complete authority, subject to the express provisions of the Plan,
to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to the Plan, and to make all other
determinations necessary or advisable for the administration of the
Plan. The Committee may delegate any of its duties hereunder to a
subcommittee, or to such person or persons from time to time as it
may designate. All decisions, interpretations and other actions of
the Committee shall be final, conclusive and binding on all parties
who have an interest in the Plan.
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4. Severance .
4.1 Payments and Benefits
.
(a) Cash Payment . If a
Participant experiences a Qualifying Termination and the
Participant executes and does not revoke a Release in accordance
with Section 4.2 below, then, subject to Section 6.2
below, the Company shall pay to the Participant, within eight
(8) days after the Date of Termination, a lump-sum payment
(the “ Cash Payment ”) equal to the sum of
(x) eighteen (18) months of the Participant’s
Annual Base Salary, and (y) a pro ration of the
Participant’s target bonus as set forth on Schedule A
attached hereto, with such pro ration determined by multiplying
such target bonus amount by a fraction, the numerator of which is
the number of days during which the Participant was employed by
Company in the fiscal year of his termination and the denominator
of which is 365.
(b) COBRA Coverage . If a
Participant experiences a Qualifying Termination and the
Participant executes and does not revoke a Release in accordance
with Section 4.2 below, then, subject to Section 6.2
below, the Company shall provide to such Participant and the
Participant’s legal dependents during the COBRA Period, at
the same premium cost to such Participant as in effect for
similarly situated active employees of the Company (subject to plan
changes affecting plan participants generally), continuation of
group healthcare coverage (“ COBRA Coverage ”)
under a “group health plan” (within the meaning of
Section 4980B of the Code and the regulations thereunder
(“ COBRA ”)) of the Company, provided ,
in any case, that such Participant properly elects continuation
healthcare coverage under COBRA. Following such continuation
period, any further continuation of such coverage under applicable
law (if any) shall be at the Participant’s sole
expense.
4.2 Release . Notwithstanding
anything herein to the contrary, no Participant shall be eligible
to receive any component of the Severance unless he or she first
executes a general release of claims substantially in the form
attached as Exhibit A hereto (the “ Release
”) within twenty-one (21) days (or forty-five
(45) days if necessary to comply with applicable law) after
the Date of Termination and does not revoke such Release within
seven (7) days thereafter.
4.3 Qualifying Termination .
“Qualifying Termination” means the Participant’s
termination of employment with the Company either by the Company
without Cause or by the Participant for Good Reason, in each case,
within twelve (12) months after the effective date of such
Corporate Transaction. For the avoidance of doubt, in no event
shall a Participant be deemed to have experienced a Qualifying
Termination as a result of the Participant’s death or
disability.
5. Limitations . The
limitations contained in this Section 5 shall apply,
notwithstanding any provision of this Plan to the
contrary.
5.1 Non-Qualifying
Termination . If a Participant’s status as an Employee is
terminated for any reason other than due to a Qualifying
Termination, the Participant shall not be entitled to receive any
Severance or other payment under this Plan, and the neither the
Company nor any Successor Entity shall have any obligation to such
Participant under this Plan.
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5.2 No Duplication of
Benefits . No Employee who is or may become entitled to cash
separation payments or benefits (other than with respect to
compensation accrued prior to termination) under any employment,
consulting or severance agreement or other plan, program or
arrangement of the Company, including, without limitation, the
Company’s Chief Executive Officer with respect to any such
amounts payable pursuant to his employment agreement with the
Company, shall be entitled to any Severance or other benefits under
this Plan.
6. Section 409A
.
6.1 General . To the extent
applicable, this Plan shall be interpreted and applied consistent
and in accordance with Section 409A of the Code and Department
of Treasury regulations and other interpretive guidance issued
thereunder. Notwithstanding any provision of this Plan to the
contrary, to the extent that the Committee determines that any
payments or benefits under this Plan may not be either compliant
with or exempt from Section 409A of the Code and related
Department of Treasury guidance, the Committee may in its sole
discretion adopt such amendments to this Plan or take such other
actions that the Committee determines are necessary or appropriate
to (i) exempt the compensation and benefits payable under this
Plan from Section 409A of the Code and/or preserve the
intended tax treatment of such compensation and benefits, or
(ii) comply with the requirements of Section 409A of the
Code and related Department of Treasury guidance; provided ,
however , that this Section 6.1 shall not create any
obligation on the part of the Committee to adopt any such amendment
or take any other action.
6.2 Potential Six-Month Delay
. Notwithstanding anything to the contrary in this Plan, no amounts
shall be paid to any Participant under this Plan during the
six-month period following such Participant’s
“separation from service” (within the meaning of
Section 409A(a)(2)(A)(i) of the Code and Treasury Regulation
Section 1.409A-1(h)) to the extent that the Committee
reasonably determines that paying such amounts at the time or times
indicated in this Plan would result in a prohibited distribution
under Section 409A(a)(2)(b)
