Exhibit 99.1
OPTIMER PHARMACEUTICALS,
INC.
SEVERANCE BENEFIT
PLAN
Section 1.
INTRODUCTION.
The Optimer
Pharmaceuticals, Inc. Severance Benefit Plan (the “
Plan ”) was established effective
October 2, 2008 (the “ Effective Date
”). The purpose of the Plan is to provide for the
payment of severance benefits to certain eligible employees of
Optimer Pharmaceuticals, Inc. (the “
Company ”) whose employment with the Company is
terminated in a covered termination and who meet the eligibility
criteria set forth in Section 2(a) below. This
document constitutes the written instrument under which the Plan is
maintained and supersedes any prior plan or practice of the Company
or any written agreement between the Company and any employee that
provides for payments or benefits in the event of termination of
employment or a change in control of the Company, except to the
extent such written agreement expressly contemplates that such
persons are eligible to receive benefits additional to or in lieu
of those provided under the Plan. This Plan document also is
the Summary Plan Description for the Plan.
Section 2.
ELIGIBILITY FOR
BENEFITS.
(a)
General Rules.
Subject to the requirements
set forth in this Section, the Company will grant severance
benefits under the Plan to Eligible Employees.
(1)
Definition of “Eligible
Employee.” For purposes of this Plan, an Eligible
Employee is a full-time or a part-time regular hire employee of the
Company who is notified by the Company in writing that he or she is
eligible for participation in the Plan and (i) whose
employment is involuntarily terminated by the Company in a Covered
Termination (as defined further in Section 2(c) below)
provided that the employee has been continuously employed by the
Company for at least one hundred eighty (180) days; or
(ii) who is selected by the Plan Administrator in its sole
discretion to receive the benefits set forth herein. The
determination of whether an employee is an Eligible Employee shall
be made by the Company, in its sole discretion, and such
determination shall be binding and conclusive on all persons.
For purposes of this Plan, part-time employees are those regular
hire employees who are regularly scheduled to work more than twenty
(20) hours per week but less than a full-time work schedule.
Regular hire employees working twenty (20) hours per week or less
and temporary employees are not eligible for severance benefits
under the Plan.
(2)
In order to be eligible to receive
any benefits under the Plan, an Eligible Employee who is terminated
in a Covered Termination must remain on the job until his or her
date of termination as scheduled by the Company, which may not
exceed thirty (30) days from the date of any notification of
termination.
(3)
In order to be eligible to receive
any benefits under the Plan, an Eligible Employee also must execute
a general waiver and release in substantially the form attached
hereto as Exhibit A, Exhibit B or Exhibit C, as
appropriate, and such release must become effective in accordance
with its terms. The Company, in its discretion, may modify
the
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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)
Exceptions to Benefit
Entitlement. An
employee, including an employee who otherwise is an Eligible
Employee, will not receive benefits under the Plan (or will receive
reduced benefits under the Plan) in the following circumstances, as
determined by the Company in its sole discretion:
(1)
The employee has executed an
individually negotiated employment contract or agreement with the
Company relating to severance benefits that is in effect on his or
her termination date, in which case such employee’s severance
benefit, if any, shall be governed by the terms of such
individually negotiated employment contract or agreement and shall
be governed by this Plan only to the extent that the reduction
pursuant to Section 3(c) below does not entirely
eliminate benefits under this Plan.
(2)
The employee voluntarily terminates
employment with the Company for any reason. Voluntary
terminations include, but are not limited to, resignation,
retirement or failure to return from a leave of absence on the
scheduled date.
(3)
The employee is offered an identical
or substantially equivalent or comparable position with the Company
or an affiliate of the Company. For purposes of the
foregoing, a “substantially equivalent or comparable
position” is one that offers the employee substantially the
same level of responsibility and compensation and does not require
a relocation of the employee’s place of employment by more
than thirty (30) miles from its previous location.
(4)
The employee is offered immediate
reemployment by a successor to the Company or an affiliate of the
Company or by a purchaser of its assets, as the case may be,
following a change in ownership of the Company or a sale of
substantially all of the assets of a division or business unit of
the Company. For purposes of the foregoing, “immediate
reemployment” means that the employee’s employment with
the successor to the Company or an affiliate of the Company or the
purchaser of its assets, as the case may be, results in
uninterrupted employment such that the employee does not incur a
lapse in pay as a result of the change in ownership of the Company
or the sale of its assets.
(5)
The employee is rehired by the
Company or an affiliate of the Company prior to the date benefits
under the Plan are scheduled to commence.
(6)
The employee does not confirm in
writing that he or she is and shall remain subject to the
Company’s Proprietary Information and Inventions Agreement,
including the failure to sign a termination statement under such
Agreement;
(7)
Following notification of
involuntary termination by the Company, the employee does not
satisfactorily perform his or her assigned job duties until the
date set by the Company for the termination of
employment;
(8)
The employee terminates employment
due to the employee’s death or Disability.
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(c)
Definitions:
For purposes of this Plan, the
following terms shall have the meanings set forth below:
(1)
“ Base Salary
” means the Eligible Employee’s base pay (excluding
incentive pay, premium pay, commissions, overtime, bonuses and
other forms of variable compensation), at the rate in effect during
the last regularly scheduled payroll period immediately preceding
the Eligible Employee’s termination date. For any
Eligible Employees that are regular part-time employees,
“Base Salary” shall mean the pro-rata equivalent of the
Eligible Employee’s base pay which reflects the part-time
status of the Eligible Employee.
(2)
“ Cause ”
for termination of employment means a termination resulting from
the occurrence of any of the following events that has a material
negative impact on the business or reputation of the
Company:
(i)
the employee’s attempted
commission of, or participation in, a fraud or act of dishonesty
against the Company;
(ii)
the employee’s intentional,
material violation of any contract or agreement between the
employee and the Company or of any statutory duty owed to the
Company;
(iii)
the employee’s unauthorized
use or disclosure of the Company’s confidential information
or trade secrets;
(iv)
an employee’s intentional
refusal or intentional failure to act in accordance with any lawful
and proper direction or order of his or her superiors;
(v)
an employee’s habitual neglect
of the duties of employment;
(vi)
an employee’s indictment,
charge, or conviction of a felony or any crime involving moral
turpitude, or participation in any act of theft or dishonesty;
or
(vii)
the employee’s gross
misconduct.
(3)
“ Change of
Control ” means any of the following
events:
(i)
a sale, lease or disposition of all
or substantially all of the assets of the Company; or;
(ii)
a merger or consolidation (in a
single transaction or a series of related transactions) of the
Company with or into any other corporation or corporations or other
entity, or any other corporate reorganization, where the
stockholders of the Corporation immediately prior to such event do
not retain more than fifty percent (50%) of the voting power of and
interest in the successor entity (excluding any transactions if the
primary purpose of the transaction is to obtain financing from new
or existing investors).
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The Board shall have the right to determine
whether a Change of Control has occurred in accordance with the
foregoing definition, and its determination shall be final, binding
and conclusive on all persons.
(4)
“ Covered
Termination ” means an involuntary termination of an
employee’s employment by the Company other than for
Cause. A Covered Termination does not include a termination
of employment resulting from such Eligible Employee’s
resignation for any reason, or due to the Eligible Employee’s
death or Disability.
(5)
“Disability”
means the employee is prevented from
performing his duties hereunder by reason of any physical or mental
incapacity that results in the employee’s satisfaction of all
requirements necessary to receive benefits under the
Company’s long-term disability plan due to a total
disability. If the Company has no long-term disability plan
in place, “Disability” shall mean a physical or mental
disability or infirmity of the employee, as determined by a
physician of recognized standing selected by the Company, that
prevents (or, in the opinion of such physician, is reasonably
expected to prevent) the normal performance of his duties as an
employee of the Company for any continuous period of 180 days, or
for 180 days during any one 12-month period.
(6)
“ Equity Award
” means any stock option, restricted stock, restricted stock
unit, or other equity award to acquire shares of the
Company’s stock. Notwithstanding the foregoing, for all
purposes of the Plan “Equity Award” does not include
any equity award issued under or held in any plan that is intended
to be qualified under Section 401(a) of the Internal
Revenue Code.
(7)
“ Year of Service
” means each
complete year of employment in which an Eligible Employee has been
employed by the Company. For purposes of this definition, a
year of employment shall be a 365 day period (or 366 day period in
case of a leap year) that, for the first year of employment,
commences on the Eligible Employee’s date of hire and that,
for any subsequent year, commences on an anniversary of that hire
date. A Year of Service shall include any leave of absence
period that was approved by the Company.
Section 3.
AMOUNT OF BENEFIT.
(a)
Severance Benefits.
Subject to the exceptions set
forth in Section 2(b), Severance benefits under the Plan, if
any, shall be provided to Eligible Employees described in
Section 2(a) as follows:
(i)
Eligible Employees that have less
than three (3) Years of Service at the time of the Covered
Termination shall receive the severance benefits described on
Appendix A attached hereto.
(ii)
Eligible Employees that have three
(3) or more Years of Service at the time of the Covered
Termination shall receive the severance benefits described on
Appendix B attached hereto.
(iii)
Severance benefits shall be provided
to an Eligible Employee either under Appendix A or Appendix B, as
applicable, but not both.
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(b)
Additional
Benefits. Notwithstanding the foregoing, the Company may,
in its sole discretion, provide benefits in addition to those
benefits set forth in Section 3(a) to Eligible Employees
and the provision of any such benefits to an Eligible Employee
shall in no way obligate the Company to provide such benefits to
any other Eligible Employee or to any other employee, even if
similarly situated.
(c)
Certain
Reductions. The
Company, in its sole discretion, shall have the authority to reduce
an Eligible Employee’s severance benefits, in whole or in
part, by any other severance benefits, pay in lieu of notice, or
other similar benefits payable to the Eligible Employee by the
Company or an affiliate of the Company that become payable in
connection with the Eligible Employee’s termination of
employment pursuant to (i) any applicable legal requirement,
including, without limitation, the Worker Adjustment and Retraining
Notification Act, the California Plant Closing Act, or any other
similar state law, (ii) a written employment or severance
agreement with the Company, or (iii) any Company policy or
practice providing for the Eligible Employee to remain on the
payroll for a limited period of time after being given notice of
the termination of the Eligible Employee’s employment, and
the Plan Administrator shall so construe and implement the terms of
the Plan; provided, however, that notwithstanding the foregoing and
any other provision in the Plan to the contrary, such reductions
shall in no event reduce the cash severance benefits provided under
this Plan to less than two (2) weeks of Base Salary. The
Company’s decision to apply such reductions to the severance
benefits of one Eligible Employee and the amount of such reductions
shall in no way obligate the Company to apply the same reductions
in the same amounts to the severance benefits of any other Eligible
Employee, even if similarly situated. In the Company’s
sole discretion, such reductions may be applied on a retroactive
basis, with severance benefits previously paid being
re-characterized as payments pursuant to the Company’s
statutory obligation.
(d)
Non-Duplication of
Benefits. No
Eligible Employee is eligible to receive benefits under this Plan
more than one time.
(e)
Termination of
Benefits. With
respect to each Eligible Employee, benefits under this Plan shall
terminate immediately if such Eligible Employee, at any time,
violates any material proprietary information, non-disparagement,
confidentiality or non-solicitation obligation to the
Company.
Section 4.
SECTION 409A
COMPLIANCE.
(a)
Notwithstanding anything to the
contrary set forth herein, any payments and benefits provided under
the Plan (the “ Severance Benefits ”)
that constitute “deferred compensation” within the
meaning of Section 409A of the Internal Revenue Code of 1986,
as amended (the “ Code ”) and the
regulations and other guidance thereunder and any state law of
similar effect (collectively “
Section 409A ”) shall not commence in
connection with Eligible Employee’s termination of employment
unless and until Eligible Employee has also incurred a
“separation from service” (as such term is defined in
Treasury Regulation Section 1.409A-1(h) (“
Separation From Service ”), unless the Company
reasonably determines that such amounts may be provided to Eligible
Employee without causing Eligible Employee to incur the additional
20% tax under Section 409A.
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(b)
It is intended that each installment
of the Severance Benefits payments provided for in this Plan is a
separate “payment” for purposes of Treasury Regulation
Section 1.409A-2(b)(2)(i). For the avoidance of doubt,
it is intended that payments of the Severance Benefits set forth in
this Plan satisfy, to the greatest extent possible, the exemptions
from the application of Section 409A provided under Treasury
Regulation Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and
1.409A-1(b)(9). However, if the Company (or, if applicable,
the successor entity thereto) determines that the Severance
Benefits constitute “deferred compensation” under
Section 409A and the Eligible Employee is, on the termination
of service, a “specified employee” of the Company or
any successor entity thereto, as such term is defined in
Section 409A(a)(2)(B)(i) of the Code, then, solely to the
extent necessary to avoid the incurrence of the adverse personal
tax consequences under Section 409A, the timing of the
Severance Benefit payments shall be delayed until the earlier to
occur of: (i) the date that is six months and one day after
the Eligible Employee’s Separation From Service, or
(ii) the date of the Eligible Employee’s death (such
applicable date, the “ Specified Employee 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 Severance Benefit
payments that the Eligible Employee would otherwise have received
through the Specified Employee Initial Payment Date if the
commencement of the payment of the Severance Benefits had not been
so delayed pursuant to this Section and (B) commence
paying the balance of the Severance Benefits in accordance with the
applicable payment schedules set forth in this Plan.
(c)
Notwithstanding anything to the
contrary set forth herein, the Eligible Employee shall receive the
Severance Benefits described above, if and only if the Eligible
Employee duly executes and returns to the Company within the
applicable time period set forth therein, but in no event more than
forty-five days following Separation From Service, a separation
agreement containing the Company’s standard form of release
of claims in favor of the Company (attached to this Agreement as
Exhibits A, B and C ) and other standard provisions,
including without limitation, those relating to non-disparagement
and confidentiality (the “ Separation Agreement
”), and permits the release of claims contained therein to
become effective in accordance with its terms.
Notwithstanding any other payment schedule set forth in this Plan,
none of the Severance Benefits will be paid or otherwise delivered
prior to the effective date of the Separation Agreement.
Except to the extent that payments may be delayed until the
Specified Employee Initial Payment Date pursuant to the preceding
paragraph, on the first regular payroll pay day following the
effective date of the Separation Agreement, the Company will pay
the Eligible Employee the Severance Benefits the Eligible Employee
would otherwise have received under the Plan on or prior to such
date but for the delay in payment related to the effectiveness of
the Separation Agreement, with the balance of the Severance
Benefits being paid as originally scheduled.
Section 5.
PARACHUTE PAYMENTS
(a)
In the event that the payments
provided herein and benefits otherwise payable to an Eligible
Employee (i) constitute “parachute payments”
within the meaning of Section 280G of the Code, or any
comparable successor provisions, and (ii) but for this
Section 5 would be subject to the excise tax imposed by
Section 4999 of the Code, or any comparable successor
provisions (the “ Excise Tax ”), then
such Eligible Employee’s benefits hereunder shall be
either:
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(i)
provided to such Eligible Employee
in full, or
(ii)
provided to such Eligible Employee
as to such lesser extent which would result in no portion of such
benefits being subject to the Excise Tax,
whichever of the foregoing amounts,
when taking into account applicable federal, state, local and
foreign income and employment taxes, the Excise Tax, and any other
applicable taxes, results in the receipt by such Eligible Employee,
on an after-tax basis, of the greatest amount of benefits,
notwithstanding that all or some portion of such benefits may be
taxable under the Excise Tax (the “ Reduced
Amount ”). If a reduction in payments or
benefits constituting “parachute payments” is necessary
so that the Payment equals the Reduced Amount, reduction shall
occur in the following order: reduction of cash payments;
cancellation of accelerated vesting of stock awards; reduction of
employee benefits. If acceleration of vesting of stock award
compensation is to be reduced, such acceleration of vesting shall
be cancelled in the reverse order of the date of grant of the
Eligible Employee’s stock awards.
(b)
Unless the Company and such Eligible
Employee otherwise agree in writing, any determination required
under this Section 5 shall be made in writing in good faith by
the Company’s independent certified public accountants (the
“ Accountants ”). For purposes of
making the calculations required by this Section 5, the
Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of the Code, and other
applicable legal authority. The Company and such Eligible
Employee shall furnish to the Accountants such information and
documents as the Accountants may reasonably request in order to
make a determination under this Section 5. The Company
shall bear all costs the Accountants may reasonably incur in
connection with any calculations contemplated by this
Section 5.
(c)
If, notwithstanding any reduction
described in this Section 5, the IRS determines that such
Eligible Employee is liable for the Excise Tax as a result of the
receipt of the payment of benefits as described above, then such
Eligible Employee shall be obligated to pay back to the Company,
within thirty (30) days after a final IRS determination or in the
event that such Eligible Employee challenges the final IRS
determination, a final judicial determination, a portion of the
payment equal to the “Repayment Amount.” The
Repayment Amount with respect to the payment of benefits shall be
the smallest such amount, if any, as shall be required to be paid
to the Company so that such Eligible Employee’s net after-tax
proceeds with respect to any payment of benefits (after taking into
account the payment of the Excise Tax and all other applicable
taxes imposed on such payment) shall be maximized. The
Repayment Amount with respect to the payment of benefits shall be
zero if a Repayment Amount of more than zero would not result in
such Eligible Employee’s net after-tax proceeds with respect
to the payment of such benefits being maximized. If the
Excise Tax is not eliminated pursuant to this paragraph, such
Eligible Employee shall pay the Excise Tax.
(d)
Notwithstanding any other provision
of this Section 5, if (i) there is a reduction in the
payment of benefits as described in this Section 5,
(ii) the IRS later determines that such Eligible Employee is
liable for the Excise Tax, the payment of which would result in the
maximization of such Eligible Employee’s net after-tax
proceeds (calculated as if such
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Eligible Employee’s benefits had not
previously been reduced), and (iii) such Eligible Employee
pays the Excise Tax, then the Company shall pay to such Eligible
Employee those benefits which were reduced pursuant to this
Section 5 contemporaneously or as soon as administratively
possible after such Eligible Employee pays the Excise Tax so that
such Eligible Employee’s net after-tax proceeds with respect
to the payment of benefits is maximized.
(e)
If a Eligible Employee either
(i) brings any action to enforce such Eligible
Employee’s rights pursuant to this Section 5, or
(ii) defends any legal challenge to such Eligible
Employee’s rights hereunder, such Eligible Employee shall be
entitled to recover attorneys’ fees and costs incurred in
connection with such action, regardless of the outcome of such
action; provided, however, that in the event such action is
commenced by such Eligible Employee, the court finds the claim was
brought in good faith.
Section 6.
IMPACT ON OTHER EMPLOYEE
BENEFITS
(a)
Continued Group Health Plan
Benefits. If the
Eligible Employee was enrolled in a group health plan ( e.g
., medical, dental, or vision plan) sponsored by the Company or an
affiliate immediately prior to termination, the Eligible Employee
may be eligible to continue coverage under such group health plan
(or to convert to an individual policy), at the time of the
Eligible Employee’s termination of employment, under the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“
COBRA ”). The Company will notify the
Eligible Employee of any such right to continue such coverage at
the time of termination pursuant to COBRA. No provision of
this Plan will affect the continuation coverage rules under
COBRA.
(b)
Other Employee
Benefits. All other
benefits (such as life insurance, disability coverage, and
401(k) plan coverage) terminate as of the Eligible
Employee’s termination date (except to the extent that a
conversion privilege may be available thereunder).
Section 7.
COMPANY PROPERTY.
(a)
Return of Company
Property. Except
as provided in Section 7(b) below, an Eligible Employee
will not be entitled to any severance benefit under the Plan unless
and until the Eligible Employee returns all Company Property.
For this purpose, “ Company Property ”
means all Company documents (and all copies thereof) and other
Company property which the Eligible Employee had in his or her
possession at any time, including, but not limited to, Company
files, notes, drawings records, plans, forecasts, reports, studies,
analyses, proposals, agreements, financial information, research
and development information, sales and marketing information,
operational and personnel information, specifications, code,
software, databases, computer-recorded information, tangible
property and equipment (including, but not limited to, leased
vehicles, computers, facsimile machines, mobile telephones,
servers), credit cards, entry cards, identification badges and
keys; and any materials of any kind which contain or embody any
proprietary or confidential information of the Company (and all
reproductions thereof in whole or in part). As a condition to
receiving benefits under the Plan, Eligible Employees must not make
or retain copies, reproductions or summaries of any such Company
property.
(b)
Retention of Certain Company
Equipment.
Notwithstanding the provisions of Section 7(a), the Company
and an Eligible Employee may agree to allow the
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Eligible Employee to retain certain Company
equipment ( e.g ., laptops, printers, facsimile machines,
copiers, etc. ) (“ Company Equipment
”) for his or her personal use following the Eligible
Employee’s termination of employment. As a condition to
retaining any Company Equipment, the Eligible Employee must execute
a general waiver and release in substantially the form attached
hereto as Exhibit A, Exhibit B or Exhibit C, as
appropriate, and such release must become effective in accordance
with its terms. The Eligible Employee acknowledges that the
Eligible Employee will have imputed income related to the retention
of any Company Equipment. The Eligible Employee will follow
all Company instructions as to the return and/or deletion of any
Company information contained on the Company Equipment.
Section 8.
WITHHOLDING TAXES AND OFFSETS FOR
INDEBTEDNESS.
All payments under the Plan will be
subject to applicable withholding for federal, state and local
taxes. If an Eligible Employee is indebted to the Company at
his or her termination date, the Company reserves the right to
offset any severance payments under the Plan by the amount of such
indebtedness to the extent permitted by applicable laws.
Additionally, if an Eligible Employee is subject to withholding for
taxes related to any non-Plan benefits, the Company may offset any
severance payments under the Plan by the amount of such withholding
taxes.
Section 9.
REEMPLOYMENT.
In the event of an Eligible
Employee’s reemployment by the Company or an affiliate of the
Company during the period of time in respect of which severance
benefits pursuant to Sections 3(a) and 3(b) have been
paid, the Company, in its sole and absolute discretion, may require
such Eligible Employee to repay to the Company all or a portion of
such severance benefits as a condition of reemployment.
Section 10.
RIGHT TO INTERPRET PLAN;
AMENDMENT AND TERMINATION.
(a)
Exclusive Discretion.
The Plan Administrator (as
defined in Section 13(a) herein) shall have the exclusive
discretion and authority to establish rules, forms, and procedures
for the administration of the Plan and to construe and interpret
the Plan and to decide any and all questions of fact,
interpretation,
