Exhibit 10.38
DYNAVAX TECHNOLOGIES
CORPORATION
MANAGEMENT CONTINUITY AND
SEVERANCE AGREEMENT
Amended October 3,
2008
This Management Continuity and
Severance Agreement (the “ Agreement ”) is dated
as of [D ATE
], by and between [N
AME OF E XECUTIVE O FFICER ],
[T ITLE OF E
XECUTIVE O FFICER ],
Dynavax Technologies Corporation (“Employee”), and
Dynavax Technologies Corporation, a Delaware corporation (the
“ Company ” or “ Dynavax
”).
RECITALS
A. It is expected that another company may from
time to time consider the possibility of acquiring the Company or
that a change in control may otherwise occur, with or without the
approval of the Company’s Board of Directors. The Board of
Directors recognizes that such consideration can be a distraction
to Employee and can cause Employee to consider alternative
employment opportunities. The Board of Directors has determined
that it is in the best interests of the Company to assure that the
Company will have the continued dedication and objectivity of the
Employee, notwithstanding the possibility, threat, or occurrence of
a Change of Control (as defined below) of the Company.
B. The Company’s Board of Directors believes
it is in the best interests of the Company to retain Employee and
provide incentives to Employee to continue in the service of the
Company.
C. The Board of Directors further believes that it
is imperative to provide Employee with certain benefits upon a
Change of Control and, under certain circumstances, upon
termination of Employee’s employment in connection with a
Change of Control and independent of a Change of Control, which
benefits are intended to provide Employee with encouragement to
Employee to remain with the Company, notwithstanding the
possibility of a Change of Control or an employment
termination.
D. To accomplish the foregoing objectives, the
Board of Directors has directed the Company, upon execution of this
Agreement by Employee, to agree to the terms provided in this
Agreement.
Now therefore, in consideration of
the mutual promises, covenants, and agreements contained herein,
and in consideration of the continuing employment of Employee by
the Company, the parties hereto agree as follows:
1. At-Will
Employment . The
Company and Employee acknowledge that Employee’s employment
is and shall continue to be at-will, as defined under applicable
law, and that Employee’s employment with the Company may be
terminated by either party at any time for any or no reason. If
Employee’s employment terminates for any reason, Employee
shall not
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be entitled to any payments,
benefits, damages, award, or compensation other than as provided in
this Agreement, and as may otherwise be available in accordance
with the terms of the Company’s established employee plans
and written policies at the time of termination. The terms of this
Agreement shall terminate upon the earlier of: (i) the date on
which Employee ceases to be employed by the Company, other than as
a result of an Involuntary Termination by the Company without
Cause; or (ii) the date that all obligations of the parties
hereunder have been satisfied. A termination of the terms of this
Agreement pursuant to the preceding sentence shall be effective for
all purposes, except that such termination shall not affect the
payment or provision of compensation or benefits on account of a
termination of employment occurring prior to the termination of the
terms of this Agreement. The rights and duties created by this
Section 1 may not be modified in any way except by a written
agreement executed by the Chief Executive Officer
(“CEO”) of the Company upon direction from the Board of
Directors, or by the Chairman of the Board in the case of the
CEO.
2. Benefits upon Termination
of Employment .
(a) Termination for
Cause . If
Employee’s employment is terminated for Cause at any time,
then Employee shall not be entitled to receive payment of any
severance benefits. Employee will receive payment for all salary as
of the date of Employee’s termination of employment and
Employee’s benefits will be continued under the
Company’s then existing benefit plans and policies in
accordance with such plans and policies in effect on the date of
termination and in accordance with applicable law.
(b) Voluntary
Resignation . If
Employee voluntarily resigns from the Company (the Employee’s
employment does not end by reason of Involuntary Termination), then
Employee shall not be entitled to receive payment of any severance
benefits. Employee will receive payment for all salary as of the
date of Employee’s termination of employment and
Employee’s benefits will be continued under the
Company’s then existing benefit plans and policies in
accordance with such plans and policies in effect on the date of
termination and in accordance with applicable law.
(c) Involuntary
Termination . If
Employee’s employment is terminated in an Involuntary
Termination except following a Change of Control, then Employee
shall be entitled to: (1) a lump-sum cash severance payment
equal to six (6) months of Employee’s then current
annual base salary (less appropriate withholding deductions);
(2) six (6) months of COBRA Continuation paid by the
Company if COBRA Continuation is elected; (3) an additional
six (6) months vesting of Employee’s stock options to
purchase the Company’s Common Stock; and (4) pursuant to
the Dynavax Technologies Corporation 2004 Stock Incentive Plan,
ninety (90) days to exercise vested options.
(d) Termination for Death or
Disability . If
Employee’s employment terminates due to Employee’s
death, then Employee’s beneficiary will receive any salary
earned (less appropriate withholding deductions) through the date
of termination of employment. If Employee’s employment
terminates due to becoming disabled, all salaries due to Employee
will be paid through the date of inception of Employee’s
disability.
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In the event of termination for
either death or disability, the exercise period of all vested
options granted to Employee by the Company is extended to twelve
(12) months from the date of termination of
employment.
3. Benefits upon a Change of
Control .
(a) Treatment of Stock
Options . In the
event of a Change of Control and the Employee: (i) is offered
and accepts a position with the New Company, or (ii) is not
offered a position with the New Company that is comparable to the
Employee’s position with the Company, then immediately prior
to the effective date of the Change of Control an additional two
(2) years vesting of Employee’s stock options to
purchase the Company’s Common Stock granted to Employee over
the course of his employment with the Company and held by Employee
on the effective date of a Change of Control shall immediately vest
on such date as to that number of shares that would have vested in
accordance with the terms of the Stock Incentive Plan, as amended.
“New Company,” as used in this Section 3(a), shall
mean: (a) in the case of a Change of Ownership (as defined in
Section 4(a)(i) below), the Company; (b) in the case of a
Merger (as defined in Section 4(a)(ii) below), the surviving
entity; or (c) in the case of a Sale of Assets (as described
in section 4(a)(ii) below), the purchaser of all or substantially
all of the Company’s assets. For purposes of this
Section 3(a), a position with the New Company shall be
considered “comparable” to the Employee’s
position with the Company if such position would not form the basis
for Employee’s voluntary termination of employment that would
constitute an Involuntary Termination; provided, however, that for
purposes of this Section 3(a) only, Section 4(c)(ii)(A)
shall be applied in a manner that presumes that there is a material
reduction of job duties or responsibilities if Employee’s
position with the New Company is as part of a subsidiary or
division of the New Company and the scope of such duties or
responsibilities is limited to such subsidiary or division and does
not include the entire business operations of the New
Company.
(b) Severance
. In the event of a Change of
Control and Employee’s employment is terminated for any
reason, including voluntary resignation, and such termination
results in a “separation from service” within the
meaning of Treasury Regulation Section 1.409A-1(h) without
regard to any permissible alternative definition thereunder (a
“Termination”) within twenty-four (24) months
following such Change of Control, Employee shall be entitled to:
(1) a lump-sum cash severance payment equal to twelve
(12) months of Employee’s then current annual base
salary, less applicable withholding deductions, payable six
(6) months after the date of the Termination; (2) a
lump-sum cash payment equal to the Employee’s target
incentive bonus of fifty percent (50%) (or such higher
percentage then in effect under the management incentive program or
other similar bonus program) of the Employee’s then current
annual base salary, less applicable withholding deductions, payable
six (6) months after the date of the Termination;
(3) twelve (12) months Company-paid COBRA continuation
coverage upon Employee’s election of COBRA Continuation
Coverage; and (4) the extension of exercisability of all stock
options to purchase the Company’s Common Stock for a period
of three (3) years following termination of employment (but in
any event not beyond each option’s expiration
date).
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4.
