Exhibit 10.14
PONIARD PHARMACEUTICALS, INC.
AMENDED AND RESTATED
KEY EXECUTIVE SEVERANCE AGREEMENT (CEO)
This Amended and Restated Key
Executive Severance Agreement (this “ Agreement
”), dated as of February 24, 2009, is entered into by
and between PONIARD PHARMACEUTICALS, INC., a Washington corporation
(formerly known as NeoRx Corporation and as supplemented by
Section 10 hereof, the “ Company ”),
and GERALD MCMAHON (the “ Executive ”) to
reflect amendments made in December, 2008.
The Board of Directors of the
Company (the “ Board ”) has determined
that it is in the best interests of the Company and its
shareholders to ensure that the Company will have the continued
dedication of the Executive, notwithstanding the fact that the
Executive does not have any form of assurance of job security in
his Offer Letter dated April 26, 2004 for employment with the
Company (the “ Offer Letter ”). The
Board believes it is imperative to diminish any distraction of the
Executive arising from the personal uncertainty and insecurity that
arises in the absence of any assurance of job security by providing
the Executive with reasonable compensation and benefit arrangements
in the event of termination of the Executive’s employment by
the Company under certain defined circumstances.
In order to accomplish these
objectives, the Board has caused the Company to enter into this
Agreement.
1.
Term
The initial term of this Agreement
(the “ Initial Term ”) shall be for a
period of two (2) years from the date of this Agreement as first
appearing above; provided, however, that this Agreement shall
automatically renew for successive additional two (2) year periods
(“ Renewal Terms ”) unless notice of
nonrenewal is given by either party to the other party at least
ninety (90) days prior to the end of the Initial Term or any
Renewal Term; and provided, further, that if a “ Change of
Control ” (as defined in the Change of Control Agreement
referenced in Section 16 hereof) occurs during the Term, the Term
shall automatically extend for the duration of the Employment
Period (as defined in the Change of Control Agreement). The
“ Term ” of this Agreement shall be the
Initial Term plus all Renewal Terms and, if applicable, the
duration of the Employment Period. At the end of the Term,
this Agreement shall terminate without further action by either the
Company or the Executive.
2.
Employment at Will
The Executive and the Company
acknowledge that, except as may otherwise be provided under any
other written agreement between the Executive and the Company, the
employment of the Executive by the Company or any affiliated
companies is “at will” and may be terminated by either
the Executive or the Company or its affiliated companies at any
time with or without cause, subject to the termination payments
prescribed herein.
3.
Attention and
Effort
During any period of time that the
Executive remains in the employ of the Company, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive will devote all of the Executive’s
productive time, ability, attention and effort to the business and
affairs of the Company and the discharge of the responsibilities
assigned to the Executive hereunder, and will seek to perform
faithfully and efficiently such responsibilities. It shall
not be a violation of this Agreement for the Executive to hold
board of director positions with outside civic organizations or to
spend a reasonable amount of time fulfilling the duties of those
positions, or to engage in other outside activities permitted by
the policies of the Company or as specifically permitted by the
Board, so long as such activities do not interfere with the
performance of the Executive’s duties hereunder.
Service on a board of directors for a commercial entity will be
subject to prior approval of the Board; however, the Company
acknowledges and agrees that Executive has previously disclosed his
appointment to the board of directors of Trellis
Bioscience, Inc. It is understood and agreed that
activities specifically approved or acquiesced in during the Term
shall not be deemed to interfere with the performance of the
Executive’s responsibilities to the Company.
4.
Termination
During the Term, employment of the
Executive may be terminated as follows, but, in any case, the
nondisclosure provisions set forth in Sections 7.1 and 7.2
hereof and certain obligations under the Invention Agreement (as
defined in Section 7.3 hereof) and the Offer Letter shall
survive the termination of this Agreement and the termination of
the Executive’s employment with the Company:
4.1
Termination by the Company or the
Executive
At any time during the Term, the
Company may terminate the employment of the Executive with or
without Cause (as defined below), and the Executive may terminate
the Executive’s employment for Good Reason (as defined below)
or for any reason, upon giving a Notice of Termination (as defined
below).
4.2
Automatic Termination
This Agreement and the
Executive’s employment during the Term shall terminate
automatically upon the death or Total Disability of the
Executive. The term “ Total Disability
” as used herein shall mean the Executive’s inability
(with such accommodation as may be required by law and which places
no undue burden on the Company), as determined by a physician
selected by the Company and acceptable to the Executive, to perform
the Executive’s essential duties for a period or periods
aggregating twelve (12) weeks in any three hundred sixty-five (365)
day period as a result of physical or mental illness, loss of legal
capacity or any other cause beyond the Executive’s control,
unless the Executive is granted a leave of absence by the
Board.
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4.3
Notice of Termination
Any termination by the Company or by
the Executive during the Term shall be communicated by a Notice of
Termination to the other party given in accordance with
Section 9 hereof. The term “ Notice of
Termination ” shall mean a written notice that
(a) indicates the specific termination provision in this
Agreement relied upon and (b) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment
under the provision so indicated. The failure by the
Executive or the Company to set forth in the Notice of Termination
any fact or circumstance that contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the
Company hereunder or preclude the Executive or the Company from
asserting such fact or circumstance in enforcing the
Executive’s or the Company’s rights
hereunder.
4.4
Date of Termination
“ Date of
Termination ” means (a) if the Executive’s
employment is terminated by reason of death, the last day of the
calendar month in which the Executive’s death occurs,
(b) if the Executive’s employment is terminated by
reason of Total Disability, immediately upon a determination
by the Company of the Executive’s Total Disability, and
(c) in all other cases, ten (10) days after the date of
personal delivery or mailing of the Notice of Termination.
The Executive’s employment and performance of services will
continue during such ten (10) day period; provided, however,
that the Company may, upon notice to the Executive and without
reducing the Executive’s compensation during such period,
excuse the Executive from any or all of the Executive’s
duties during such period. Notwithstanding anything contained
in this Agreement to the contrary, the date on which a
“separation from service” (“ Separation
from Service ”) pursuant to Section 409A of the
Internal Revenue Code of 1986, as amended (“ Code
Section 409A ”), occurs shall be the “Date
of Termination” or termination of employment for purposes of
determining the timing of payments under this Agreement to the
extent necessary to have such payments and benefits under this
Agreement be exempt from the requirements of Code Section 409A
or comply with the requirements of Code
Section 409A.
5.
Termination
Payments
In the event of termination of the
Executive’s employment during the Term, all compensation and
benefits shall terminate, except as specifically provided in this
Section 5.
5.1
Termination by the Company Other
Than for Cause or by the Executive for Good Reason
If during the Term the Company
terminates the Executive’s employment other than for Cause or
the Executive terminates the Executive’s employment for Good
Reason, the Executive shall be entitled to:
(a)
receive payment of the following
accrued obligations (the “ Accrued Obligations
”):
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(i)
the Executive’s then current
annual base salary through the Date of Termination to the extent
not theretofore paid;
(ii)
any compensation previously deferred
by the Executive (together with accrued interest or earnings
thereon, if any); and
(iii)
any accrued vacation pay that would
be payable under the Company’s standard policy, in each case
to the extent not theretofore paid;
(b)
have the Company pay for one
(1) year after the Date of Termination or until the Executive
qualifies for comparable medical and dental insurance benefits from
another employer, whichever occurs first, the Executive’s
premiums for health insurance benefit continuation for the
Executive and the Executive’s family members, if applicable,
that the Company provides to the Executive under the provisions of
the federal Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended (“ COBRA ”), to the extent
that the Company would have paid such premiums had the Executive
remained employed by the Company (such continued payment is
hereinafter referred to as “ COBRA Continuation
”); and
(c)
an amount as severance pay equal to
one hundred percent (100%) of the Executive’s then current
annual base salary for the fiscal year in which the Date of
Termination occurs, subject to payment and potential reduction as
set forth in Sections 5.5 and 5.9 hereof.
5.2
Termination for Cause or Other Than
for Good Reason
If during the Term the
Executive’s employment shall be terminated by the Company for
Cause or by the Executive for other than Good Reason, this
Agreement shall terminate without further obligation on the part of
the Company to the Executive, other than the Company’s
obligation to pay the Executive the Accrued Obligations to the
extent theretofore unpaid.
5.3
Expiration of Term
In the event the Executive’s
employment is not terminated prior to expiration of the Term, this
Agreement shall terminate without further obligation on the part of
the Company to the Executive.
5.4
Termination Because of Death or
Total Disability
If during the Term the
Executive’s employment is terminated by reason of the
Executive’s death or Total Disability, this Agreement shall
terminate automatically without further obligation on the part of
the Company to the Executive or the Executive’s legal
representatives under this Agreement, other than the
Company’s obligation to pay the Executive the Accrued
Obligations (which shall be paid to the Executive’s estate or
beneficiary, as applicable in the case of the Executive’s
death) and to provide COBRA Continuation.
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5.5
Payment Schedule and Offset for
Other Earnings
All payments of Accrued Obligations,
or any portion thereof payable pursuant to this Section 5,
other than deferred compensation pursuant to
Section 5.1(a)(ii) hereof, shall be made to the Executive
within ten (10) working days of the Date of Termination.
Deferred compensation pursuant to
Section 5.1(a)(ii) hereof shall be payable pursuant to
the terms of the deferred compensation program. Any severance
payments payable to the Executive pursuant to
Section 5.1(c) hereof shall be made to the Executive in
the form of salary continuation, payable at normal payroll
intervals during the one year period following the Date of
Termination. Notwithstanding the preceding provisions of this
Section 5, if any payment or benefit pursuant to this
Agreement constitutes a “deferral of compensation”
subject to Code Section 409A (after taking into account, to
the maximum extent possible, any applicable exemptions) (a “
409A Payment ”) treated as payable to a
Specified Employee (as defined in Section 20.1 hereof) upon
Separation from Service, the provisions of Section 20.1 hereof
shall apply. Section 5.8 hereof must be satisfied to
receive payments and benefits under this Agreement. Any
severance payments payable to the Executive pursuant to
Section 5.1(c) hereof on or after the date of nine
(9) months after the Date of Termination (“ Offset
Period ”) shall be subject to offset for other
earnings received by the Executive as follows:
(a)
The Executive shall have no
affirmative duty to seek other employment or otherwise mitigate
lost earnings during any part of the Payment Period.
(b)
The Executive shall disclose to the
Company any earnings received (or that the Executive had the right
to receive) from employment, consulting or performance of other
personal services during the Offset Period, and the
source(s) of such earnings.
(c)
The Company, in each payroll period
during the Offset Period that a severance payment is due, shall
have the right to offset on a dollar-for-dollar basis all such
earnings that the Executive received during that payroll
period.
5.6
Cause
For purposes of this Agreement,
“ Cause ” means cause given by the
Executive to the Company and shall include, without limitation, the
occurrence of one (1) or more of the following
events:
(a)
a clear refusal to carry out any
material lawful duties of the Executive or any directions of the
Board reasonably consistent with those duties;
(b)
persistent failure to carry out any
lawful duties of the Executive or any directions of the Board
reasonably consistent with those duties; provided, however, that
the Executive has been given reasonable notice and opportunity to
correct any such failure;
(c)
violation by the Executive of a
state or federal criminal law involving the commission of a crime
against the Company or any other criminal act involving moral
turpitude;
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(d)
current abuse by the Executive of
alcohol or controlled substances; deception, fraud,
misrepresentation or dishonesty by the Executive; or any incident
materially compromising the Executive’s reputation or ability
to represent the Company with investors, customers or the public;
or
(e)
any other material violation of any
provision of this Agreement by the Executive, subject to the notice
and opportunity-to-cure requirements of Section 8
hereof.
5.7
Good Reason
For purposes of this Agreement,
“ Good Reason ” means:
(a)
material reduction of the
Executive’s annual base salary to a level below the level in
effect on the date of this Agreement, regardless of any change in
the Executive’s duties or responsibilities;
(b)
the assignment to the Executive of
any duties materially inconsistent with the Executive’s
position, authority, duties or responsibilities or any other action
by the Company that results in a material diminution in such
position, authority, duties or responsibilities, excluding for this
purpose an isolated and inadvertent action not taken in bad faith
and that is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(c)
the Company’s requiring the
Executive to be based at any office or location more than thirty
(30) miles from the Company’s current location in Seattle,
Washington or from the city of San Francisco,
California;
(d)
any failure by the Company to comply
with and satisfy Section 10 hereof; provided, however,
that
