EXHIBIT 10.29
SEVERANCE AGREEMENT
This SEVERANCE AGREEMENT (the "AGREEMENT") is made and entered into
effective as of November 14, 2003 (the "EFFECTIVE DATE"), by and between ANADYS
PHARMACEUTICALS, INC., a Delaware corporation (the "COMPANY"), and XXXXXXXXX X.
XXXX (the "EXECUTIVE"). The Company and the Executive are hereinafter
collectively referred to as the "PARTIES", and individually referred to as a
"PARTY".
AGREEMENT
In consideration of the mutual promises and covenants herein contained,
and for other good and valuable consideration, the Parties, intending to be
legally bound, agree as follows:
1. LOYALTY; AT WILL EMPLOYMENT. During the Executive's employment
by the Company, the Executive shall devote Executive's full business energies,
interest, abilities and productive time to the proper and efficient performance
of Executive's duties as an officer of the Company. Executive's employment with
the Company is at-will and not for any specified period and may be terminated at
any time, with or without cause, by either Executive or Company, subject to the
provisions of section 2.2 below.
2. TERM; COMPENSATION UPON TERMINATION.
2.1 TERM. The term of this Agreement (the "TERM") shall
begin on the Effective Date and shall continue until Executive's employment with
the Company is terminated for any reason.
2.2 COMPENSATION UPON TERMINATION.
2.2.1 DEATH OR COMPLETE DISABILITY. If the
Executive's employment with the Company is terminated as a result of death or
Complete Disability, the Company shall pay to Executive, and/or Executive's
heirs, the Executive's base salary and accrued and unused vacation benefits
earned through the date of termination at the rate in effect at the time of
termination, less standard deductions and withholdings, and the Company shall
thereafter have no further obligations to the Executive and/or Executive's heirs
under this Agreement.
2.2.2 WITH CAUSE OR WITHOUT GOOD REASON. If the
Executive's employment with the Company is terminated by the Company for Cause
(as defined below) or if the Executive terminates his employment with the
Company without Good Reason (as defined below), the Company shall pay the
Executive's base salary and accrued and unused vacation benefits earned through
the date of termination at the rate in effect at the time of termination, less
standard deductions and withholdings, and the Company shall thereafter have no
further obligations to the Executive under this Agreement.
2.2.3 WITHOUT CAUSE OR WITH GOOD REASON. If the
Company terminates the Executive's employment without Cause or the Executive
resigns with Good Reason, the Company shall pay the Executive's base salary and
accrued and unused vacation
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earned through the date of termination, at the rate in effect at the time of
termination subject to standard deductions and withholdings. In addition,
subject to the limitations stated in Section 2.2.4 herein and upon the
Executive's furnishing to the Company an effective waiver and release of claims
("Waiver and Release") (a form of which is attached hereto as Exhibit A), the
Executive shall be entitled to:
(I) The equivalent of six (6) months of the
Executive's annual base salary in effect at the time of termination, less
standard deductions and withholdings;
(II) Reimbursement for continued health insurance
coverage under COBRA, provided that Executive elects such coverage, for the same
portion of Executive's COBRA health insurance premium that it paid during the
Executive's employment up until the earlier of either (i) nine (9) months after
the date of termination or, (ii) the date on which the Executive begins
full-time employment with another company or business entity, which provides
Executive with similar benefits; and
(III) Outplacement services for a period of six
(6) months to be provided by an outplacement firm mutually acceptable to the
Company and Executive.
2.2.4 COVENANT NOT TO COMPETE. Notwithstanding any
provisions in this Agreement to the contrary, including any provisions contained
in this Section 2.2, the Company's obligations, and the Executive's rights,
pursuant to Section 2.2.3 shall cease and be rendered a nullity immediately
should the Executive violate any provision of Section 1 herein, or should the
Executive violate the terms and conditions of the Executive's Agreement for
Employees dated October 15, 2001 (proprietary information and inventions
agreement) with the Company.
2.2.5 TERMINATION OF OBLIGATIONS. In the event of
the termination of the Executive's employment with the Company, the Company
shall have no obligation to pay Executive any base salary, bonus or other
compensation or benefits, except as provided in this Section 2 or for benefits
due to the Executive (and/or the Executive's dependents) under the terms of the
Company's benefit plans. The Company may offset any amounts Executive owes it or
its subsidiaries against any amount it owes Executive pursuant to this Section
2.2.
2.3 DEFINITIONS. For purposes of this Agreement, the
following terms shall have the following meanings:
2.3.1 COMPLETE DISABILITY. "COMPLETE DISABILITY"
shall mean the inability of the Executive to perform the Executive's duties
under this Agreement because the Executive has become permanently disabled
within the meaning of any policy of disability income insurance covering
employees of the Company then in force. In the event the Company has no policy
of disability income insurance covering employees of the Company in force when
the Executive becomes disabled, the term "COMPLETE DISABILITY" shall mean the
inability of the Executive to perform the Executive's duties under this
Agreement by reason of any incapacity, physical or mental, which the Board,
based upon medical advice or an opinion provided by a licensed physician
acceptable to the Board, determines to have incapacitated the Executive from
satisfactorily performing all of the Executive's usual services for the Company
for a period of at
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least one hundred twenty (120) days during any twelve (12) month period (whether
or not consecutive). Based upon such medical advice or opinion, the
determination of the Board shall be final and binding and the date such
determination is made shall be the date of such Complete Disability for purposes
of this Agreement.
2.3.2 GOOD REASON. "GOOD REASON" for the Executive
to terminate the Executive's employment hereunder shall mean the occurrence of
any of the following events without the Executive's consent:
(I) a significant adverse change in the nature
or scope of Executive's job responsibilities, or in the case of a Change of
Control, the failure to be offered an equivalent position with the successor
entity;
(II) the relocation (or demand for relocation) of
Executive's place of employment to a point more than thirty (30) miles from
Executive's current place of employment; and
(III) a reduction in the annual base compensation
paid to Executive, without Executive's consent.
2.3.3 FOR CAUSE. "CAUSE" for the Company to
terminate Executive's employment hereunder shall mean the occurrence of any of
the following events:
(I) the Executive's failure to satisfactorily
perform Executive's assigned duties with the Company, or any successor thereof,
in the best interest of the Company and as directed by the Company's Board of
Directors (except for the failure resulting from Executive's incapacity due to
Complete Disability, or any such actual or anticipated failure resulting from a
Good Reason termination) which is not corrected within thirty (30) days of
receiving notice of such failure from the Company specifying in reasonable
detail the nature of such failure;
(II) the Executive's commission of an act that
materially injures the business of the Company;
(III) the Executive's conviction of a felony
involving moral turpitude; and
(IV) the Executive's engaging or in any manner
participating in any activity which is directly competitive with or injurious to
the Company or any of its Affiliates or which violates any material provisions
of the Executive's Agreement for Employees dated October 15, 2001 (proprietary
information and inventions agreement) with the Company.
2.3.4 CHANGE OF CONTROL. For purposes of this
Agreement, the term "CHANGE OF CONTROL" shall have the meaning set forth in the
Company's 2002 Equity Incentive Plan.
3.
2.4 INTEGRATION. The Parties agree that unless it is
determined that Executive shall be terminated for Cause under this Agreement,
there shall be no termination for Cause under Executive's Stock Option
Agreements dated December 20, 2001 and February 12, 2003.
3. CHANGE OF CONTROL.
3.1 BENEFITS.
3.1.1 Pursuant to the Executive's stock option
grant dated December 20, 2001 (the "Hire Grant"), upon a Change of Control of
the Company all shares under the Hire Grant shall be vested and fully
exercisable in accordance with the terms thereof.
3.1.2 In the event that Executive's employment
with the Company is terminated without Cause or for Good Reason within the sixty
(60) day period immediately preceding or the thirteen (13) month period
immediately following a Change of Control of the Company, then upon the
Executive's delivery to the Company of an effective Waiver and Release, the
Executive shall be entitled to the benefits set forth in Section 2.2.3 and
accelerated vesting of all unvested shares subject to any outstanding stock
options, such that all shares shall be vested and fully exercisable as of the
date of Executive's termination.
3.2 PARACHUTE PAYMENT. If any payment or benefit
Executive would receive pursuant a Change of Control or otherwise ("Payment")
would (i) constitute a "parachute payment" within the meaning of Section 280G of
the Code, and (ii) but for this sentence, be subject to the excise tax imposed
by Section 4999 of the Code (the "Excise Tax"), then such Payment shall be
reduced to the Reduced Amount. The "Reduced Amount" shall be either (x) the
largest portion of the Payment that would result in no portion of the Payment
being subject to the Excise Tax or (y) the largest portion, up to and including
the total, of the Payment, whichever amount, after taking into account all
applicable federal, state and local employment taxes, income taxes, and the
Excise Tax (all computed at the highest applicable marginal rate), results in
Executive's receipt, on an after-tax basis, of the greater amount of the Payment
notwithstanding that all or some portion of the Payment may be subject to the
Excise Tax. 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 unless Executive elects in writing a
different order (provided, however, that such election shall be subject to
Company approval if made on or after the effective date of the event that
triggers the Payment): reduction of cash payments; cancellation of accelerated
vesting of stock awards; reduction of employee benefits. In the event that
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 Executive's stock awards unless Executive elects in writing a different
order for cancellation.
The accounting firm engaged by the Company for general audit purposes
as of the day prior to the effective date of the Change of Control shall perform
the foregoing calculations. If the accounting firm so engaged by the Company is
serving as accountant or auditor for the individual, entity or group effecting
the Change of Control, then the Company shall appoint a nationally recognized
accounting firm to make the determinations required hereunder. The
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Company shall bear all expenses with respect to the determinations by such
accounting firm required to be made hereunder.
The accounting firm engaged to make the determinations hereunder shall
provide its calculations, together with detailed supporting documentation, to
Executive and the Company within fifteen (15) calendar days after the date on
which Executive's right to a Payment is triggered (if requested at that time by
Executive or the Company) or such other time as requested by Executive or the
Company. If the accounting firm determines that no Excise Tax is payable with
respect to a Payment, either before or after the application of the Reduced
Amount, it shall furnish Executive and the Company with an opinion reasonably
acceptable to Executive that no Excise Tax will be imposed with respect to such
Payment. Any good faith determinations of the accounting firm made hereunder
shall be final, binding and conclusive upon Executive and the Company.
4. GENERAL. This Agreement is made in San Diego, California. This
Agreement shall be construed and interpreted in accordance with the internal
laws of the State of California. This Agreement supercedes and replaces any
other agreement between Executive and the Company regarding severance benefits
and cannot be amended or modified except by written agreement between Executive
and the Company. This Agreement may be executed in two counterparts, each of
which shall be deemed an original, all of which together shall contribute one
and the same instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
ANADYS PHARMACEUTICALS, INC.
BY: /s/ Xxxxxxxxx X. Xxxxxxxxxxxx, Ph.D.
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NAME: XXXXXXXXX X. XXXXXXXXXXXX, PH.D.
ITS: PRESIDENT AND CHIEF EXECUTIVE OFFICER
Dated: November 14, 2003
EXECUTIVE:
/s/ Xxxxxxxxx X. Xxxx
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XXXXXXXXX X. XXXX
Dated: November 14, 2003
5.
EXHIBIT A
RELEASE AND WAIVER OF CLAIMS
In consideration of the payments and other benefits set forth in
Section 2.2 of the Severance Agreement dated November 14, 2003, to which this
form is attached, I, XXXXXXXXX X. XXXX, hereby furnish ANADYS PHARMACEUTICALS,
INC. (the "COMPANY"), with the following release and waiver ("RELEASE AND
WAIVER").
In exchange for the consideration provided to me by the Severance
Agreement that I am not otherwise entitled to receive, I hereby generally and
completely release the Company and its directors, officers, employees,
shareholders, partners, agents, attorneys, predecessors, successors, parent and
subsidiary entities, insurers, Affiliates, and assigns from any and all claims,
liabilities and obligations, both known and unknown, that arise out of or are in
any way related to events, acts, conduct, or omissions occurring prior to my
signing this Release and Waiver. This general release includes, but is not
limited to: (1) all claims arising out of or in any way related to my employment
with the Company or the termination of that employment; (2) all claims related
to my compensation or benefits from the Company, including, but not limited to,
salary, bonuses, commissions, vacation pay, expense reimbursements, severance
pay, fringe benefits, stock, stock options, or any other ownership interests in
the Company; (3) all claims for breach of contract, wrongful termination, and
breach of the implied covenant of good faith and fair dealing; (4) all tort
claims, including, but not limited to, claims for fraud, defamation, emotional
distress, and discharge in violation of public policy; and (5) all federal,
state, and local statutory claims, including, but not limited to, claims for
discrimination, harassment, retaliation, attorneys' fees, or other claims
arising under the federal Civil Rights Act of 1964 (as amended), the federal
Americans with Disabilities Act of 1990, the federal Age Discrimination in
Employment Act of 1967 (as amended) ("ADEA"), and the California Fair Employment
and Housing Act (as amended).
I also acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR." I hereby expressly waive and
relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to any claims I may have against the
Company.
I acknowledge that, among other rights, I am waiving and releasing any
rights I may have under ADEA, that this Release and Waiver is knowing and
voluntary, and that the consideration given for this Release and Waiver is in
addition to anything of value to which I was already entitled as an executive of
the Company. If I am 40 years of age or older upon execution of this Release and
Waiver, I further acknowledge that I have been advised, as required by the Older
Workers Benefit Protection Act, that: (a) the release and waiver granted herein
does not relate to claims under the ADEA which may arise after this Release and
Waiver is executed; (b) I have the right to consult with an attorney prior to
executing this Release and Waiver (although I may choose voluntarily not to do
so); and (c) I have twenty-one (21) days from the date of termination of my
employment with the Company in which to consider this Release and Waiver
(although I may choose voluntarily to execute this Release and Waiver earlier);
(d) I have seven (7) days
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following the execution of this Release and Waiver to revoke my consent to this
Release and Waiver; and (e) this Release and Waiver shall not be effective until
the seven (7) day revocation period has expired.
If I am less than 40 years of age upon execution of this Release and
Waiver, I acknowledge that I have the right to consult with an attorney prior to
executing this Release and Waiver (although I may choose voluntarily not to do
so); and (c) I have five (5) days from the date of termination of my employment
with the Company in which to consider this Release and Waiver (although I may
choose voluntarily to execute this Release and Waiver earlier).
I acknowledge my continuing obligations under my Agreement for
Employees dated October 15, 2001 (proprietary information and inventions
agreement), a copy of which is attached hereto as Exhibit B. Pursuant to the
Agreement for Employees I understand that among other things, I must not use or
disclose any confidential or proprietary information of the Company and I must
immediately return all Company property and documents (including all embodiments
of proprietary information) and all copies thereof in my possession or control.
I understand and agree that my right to the severance pay I am receiving in
exchange for my agreement to the terms of this Release and Waiver is contingent
upon my continued compliance with my Agreement for Employees.
This Release and Waiver, including Exhibit B hereto, constitutes the
complete, final and exclusive embodiment of the entire agreement between the
Company and me with regard to the subject matter hereof. I am not relying on any
promise or representation by the Company that is not expressly stated herein.
This Release and Waiver may only be modified by a writing signed by both me and
a duly authorized officer of the Company.
Date: __________________ By:_____________________________________
2.
