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EXHIBIT 10.34
EXECUTIVE SEVERANCE BENEFITS AGREEMENT
THIS EXECUTIVE SEVERANCE BENEFITS AGREEMENT (the "Agreement") is entered
into effective as of the 23rd day of October 2000, between XXXXX XXXXXXXXX,
("Executive") and AVIRON, a Delaware corporation (the "Company"). This Agreement
is intended to provide Executive with the severance benefits described herein
upon the occurrence of specific events. Certain capitalized terms used in this
Agreement are defined in Article 6.
The Company and Executive hereby agree as follows:
ARTICLE 1
EMPLOYMENT BY THE COMPANY
1.1 Upon execution of the offer letter of even date herewith (the "Offer
Letter"), Executive shall be employed as Senior Vice President and Chief
Scientific Officer.
1.2 The Company and Executive wish to set forth the severance benefits
which Executive shall be entitled to receive in the event Executive's employment
with the Company terminates under the circumstances described herein.
1.3 The duties and obligations of the Company to Executive under this
Agreement shall be in consideration for Executive's agreeing to the terms of the
Offer Letter with the Company, Executive's employment with the Company, and
Executive execution of the general waiver and release described in Section 4.2.
1.4 This Agreement shall remain in full force and effect so long as
Executive is employed by the Company; provided, however, that Executive's rights
to payments and benefits under Article 2 or Article 3 shall continue until the
Company's obligation to provide such payments and benefits is satisfied.
ARTICLE 2
SEVERANCE BENEFITS
2.1 TERMINATION EVENTS. If Executive's employment involuntarily terminates
for any reason other than for Cause, Executive shall be entitled to receive the
following benefits set forth in Sections 2.2, 2.3 and 2.4.
2.2 SALARY CONTINUATION. Executive shall receive Base Salary that has
accrued but is unpaid as of the date of a Covered Termination, and, within
thirty (30) days following such Covered Termination, Executive shall also
receive payments equal to six (6) months of Base Salary.
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2.3 HEALTH INSURANCE COVERAGE.
Provided that Executive makes a timely election to continue coverage
under the Company's group health plan pursuant to the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA") in connection with Executive's
Covered Termination, the Company will pay Executive's COBRA premiums for a
maximum period of six (6) months following the date of such Covered Termination
(the "COBRA Continuation Period"). In addition, if Executive's spouse and/or
dependents were enrolled in the Company's group health plan on the date of the
Covered Termination, the Company will pay the COBRA premiums for Executive's
dependents during the COBRA Continuation Period, but only to the same extent
that such dependents' premiums under such plan were paid by the Company prior to
the date of such Covered Termination. No provision of this Agreement will affect
the continuation coverage rules under COBRA, except that the Company's payment
of any applicable premiums during the COBRA Continuation Period will be credited
as payment by Executive for purposes of the Executive's payment required under
COBRA. Therefore, the period during which Executive must elect to continue the
Company's group health coverage at his or her own expense under COBRA, the
length of time during which COBRA coverage will be made available to Executive,
and all other rights and obligations of the Executive under COBRA (except the
obligation to pay premiums that the Company pays during the COBRA Continuation
Period) will be applied in the same manner that such rules would apply in the
absence of this Agreement. At the conclusion of the COBRA Continuation Period,
Executive will be responsible for the entire payment of premiums required under
COBRA for the remaining duration of eligibility for COBRA, if any.
Notwithstanding the foregoing, the Company's obligation to make COBRA
payments for Executive as described above shall cease immediately. if Executive
becomes eligible for other health insurance benefits at the expense of a new
employer. Executive agrees to notify a duly authorized officer of the Company,
in writing, Immediately upon acceptance of any employment following his
termination which provides Executive with eligibility for health insurance
benefits.
2.4 VESTING OF OUTSTANDING OPTIONS. Outstanding, unvested stock options to
purchase common stock of the Company granted to Executive prior to the date of
the Covered Termination, either pursuant to the terms of the Offer Letter or
under the Company's discretionary stock compensation plans shall continue to
vest according the vesting schedule(s) in effect immediately prior to the date
of the Covered Termination for a period of up to six (6) months. Any stock
options that remain unvested six (6) months after the date of the Covered
Termination shall terminate. Options vesting through the "continuation" period
shall remain exercisable for up to 90 days after its conclusion.
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ARTICLE 3
CHANGE OF CONTROL
3.1 TERMINATION EVENTS. If Executive's employment terminates under
circumstances constituting a Covered Termination upon or within eighteen (18)
months following a Change of Control of the ownership of the Company, Executive
shall be entitled to receive the following benefits set forth in Sections 3.2,
3.3 and 3.4 and shall not receive any benefits under Article 2.
3.2 SALARY CONTINUATION. Executive shall receive Base Salary that has
accrued but is unpaid as of the date of such Covered Termination, and, within
thirty (30) days following such Covered Termination, Executive also shall
receive a lump sum payment equal to one year of the base salary which Executive
was receiving immediately prior to the Change of Control Executive's targeted
bonus for the fiscal year in which the Change of Control occurs.
3.3 HEALTH INSURANCE COVERAGE IN THE EVENT OF CHANGE OF CONTROL:
Provided that Executive makes a timely election to continue coverage
under the Company's group health plan pursuant to the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA") in connection with Executive's
Covered Termination, the Company will pay Executive's COBRA premiums for a
maximum period of one (1) year following the date of such Covered Termination
(the "COBRA Continuation Period"). In addition, if Executive's spouse and/or
dependents were enrolled in the Company's group health plan on the date of the
Covered Termination, the Company will pay the COBRA premiums for Executive's
dependents during the COBRA Continuation Period, but only to the same extent
that such dependents' premiums under such plan were paid by the Company prior to
the date of such Covered Termination. No provision of this Agreement will affect
the continuation coverage rules under COBRA, except that the Company's payment
of any applicable premiums during the COBRA Continuation Period will be credited
as payment by Executive for purposes of the Executive's payment required under
COBRA. Therefore, the period during which Executive must elect to continue the
Company's group health coverage at his or her own expense under COBRA, the
length of time during which COBRA coverage will be made available to Executive,
and all other rights and obligations of the Executive under COBRA (except the
obligation to pay premiums that the Company pays during the COBRA Continuation
Period) will be applied in the same manner that such rules would apply in the
absence of this Agreement. At the conclusion of the COBRA Continuation Period,
Executive will be responsible for the entire payment of premiums required under
COBRA for the remaining duration of eligibility for COBRA, if any.
Notwithstanding the foregoing, the Company's obligation to make COBRA
payments for Executive shall cease immediately if Executive becomes eligible for
other health insurance benefits at the expense of a new employer. Executive
agrees to notify a duly authorized officer of the Company, in writing,
immediately upon acceptance of any employment following the Covered Termination
which provides Executive with eligibility for health insurance benefits.
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3.4 ACCELERATION OF VESTING OF OUTSTANDING OPTIONS. In the event of a
Covered Termination where the Company has assumed or substituted the Employee's
options in connection with the Change of Control, the vesting of outstanding
stock options to purchase common stock of the Company granted to Employee prior
to the date of termination of employment shall accelerate as of the date of such
Covered Termination so that all outstanding options are one hundred percent
(100%) vested and immediately exercisable. Such acceleration of vesting of
outstanding options also shall apply to any unvested option shares that were
acquired by Employee on or before the date of the Covered Termination and that
were subject to a repurchase option by the Company as of such date. Where the
Company does not assume or substitute the Employee's options in connection with
a Change of Control, one hundred percent (100%) of options will vest immediately
prior to a Change of Control.
3.5 PARACHUTE PAYMENTS. In the event that the acceleration of the vesting
provided for in Section 3.4 and benefits otherwise payable to Executive (i)
constitute "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended, (the "Code"), or any comparable
successor provision, and (ii) but for this Section would be subject to the
excise tax imposed by Section 4999 of the Code, or any comparable successor
provision (the "Excise Tax"), then Executive's benefits hereunder shall be
either
(i) provided to Executive in full, or
(ii) provided to Executive 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 Executive, 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. Unless the Company
and Executive otherwise agree in writing, any determination required under this
Section shall be made in writing in good faith by the Accountants. In the event
of a reduction of benefits hereunder, benefits payable in cash shall be reduced
first. For purposes of making the calculations required by this section, 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 Executive shall furnish to the Accountants such information and
documents as the Accountants may reasonably request in order to make a
determination under this section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this section.
If, notwithstanding any reduction described in this section, the IRS
determines that Executive is liable for the Excise Tax as a result of the
receipt of the payment of benefits as described above, then Executive shall be
obligated to pay back to the Company, within thirty (30) days after a final IRS
determination or in the event that Executive 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 Executive's net after tax proceeds with respect to
any payment of benefits (after taking into account the payment of
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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 Executive'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, Executive shall
pay the Excise Tax.
Notwithstanding any other provision of this Section 3.5, if (i) there
is a reduction in the payment of benefits as described in this section, (ii) the
IRS later determines that Executive is liable for the Excise Tax, the payment of
which would result in the maximization of Executive's net after-tax proceeds
(calculated as if Executive's benefits had not previously been reduced), and
(iii) Executive pays the Excise Tax, then the Company shall pay to Executive
those benefits which were reduced pursuant to this Section contemporaneously or
as soon as administratively possible after Executive pays the Excise Tax so that
Executive's net after-tax proceeds with respect to the payment of benefits is
maximized.
ARTICLE 4
LIMITATIONS AND CONDITIONS ON BENEFITS
4.1 WITHHOLDING OF TAXES. The Company shall withhold appropriate federal,
state, local (and foreign, if applicable) income and employment taxes from any
payments hereunder.
4.2 RELEASE PRIOR TO RECEIPT OF BENEFITS. Upon the occurrence of a Covered
Termination, and prior to the receipt of any benefits under this Agreement on
account of the occurrence of such Covered Termination, Executive shall execute a
release (the "Release") in the form incorporated herein and attached hereto as
Attachment I. Such Release shall specifically relate to all of Executive's
rights and claims in existence at the time of such execution and shall confirm
Executive's obligations under the Company's standard form of proprietary
information agreement. It is understood that Executive has twenty-one (21) days
to consider whether to execute such Release, and Executive may revoke such
Release within seven (7) business days after execution. In the event Executive
does not execute such Release within the twenty-one (2l)-day period, or if
Executive revokes such Release within the subsequent seven (7) business day
period, no benefits shall be payable under this Agreement and this Agreement
shall be null and void. Notwithstanding the foregoing, in addition to or in lieu
of the release contained in Attachment I, Executive may be required to execute
and deliver an effective release in such other form as the Company may, in its
sole discretion, determine to be necessary or appropriate in order to comply
with the requirements of the laws of any jurisdiction applicable to Executive in
order to make a general release of claims effective and enforceable.
ARTICLE 5
OTHER RIGHTS AND BENEFITS
5.1 NONEXCLUSIVITY. Except as otherwise expressly provided herein, nothing
in the Agreement shall prevent or limit Executive's continuing or future
participation in any benefit, bonus, incentive or other plans, programs,
policies or practices provided by the Company and for which Executive may
otherwise qualify, nor shall anything herein limit or otherwise affect such
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rights as Executive may have under other agreements with the Company. Except as
otherwise expressly provided herein, amounts which are vested benefits or which
Executive is otherwise entitled to receive under any plan, policy, practice or
program of the Company at or subsequent to the date of a Covered Termination
shall be payable in accordance with such plan, policy, practice or program.
5.2 NON-DUPLICATION OF BENEFITS. Notwithstanding any other provision of the
Agreement to the contrary, any benefits payable to Executive under this
Agreement shall be in lieu of any severance benefits payable by the Company to
such individual under any other arrangement covering the individual, unless
expressly otherwise agreed to by the Company in writing.
ARTICLE 6
DEFINITIONS
For purposes of the Agreement, the following terms are defined as follows:
6.1 "ACCOUNTANTS" means the independent public accountants of the Company.
6.2 DEFINITION OF BASE SALARY: Base Salary means the Executive's base
salary (exclusive of bonuses and other forms of supplemental compensation) at
the rate in effect during the last regularly scheduled payroll period
immediately preceding the date of Executive's Covered Termination or prior to
the Change of Control, unless a different time period for establishing Base
Salary is expressly set forth in this Agreement.
6.3 "CAUSE" Executive's dismissal or discharge for fraud, misappropriation,
embezzlement or intentional misconduct on the part of Executive which resulted
in material loss, damage or injury to the Company,
6.4 "CHANGE OF CONTROL" means a (i) dissolution or liquidation of the
Company; (ii) a sale, lease or other disposition of all or substantially all of
the assets of the Company; (iii) a merger or consolidation in which the Company
is not the surviving corporation and in which beneficial ownership of securities
of the Company representing at least forty percent (40%) of the combined voting
power entitled to vote in the election of the members of the Board of Directors
has changed; (iv) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise, and in which beneficial
ownership of securities of the Company representing at least forty percent (40%)
of the combined voting power entitled to vote in the election of the member of
the Board of Directors has changed, (v) an acquisition by any entity (other than
(A) a controlled affiliate of the Company, (B) any employee benefit plan, or
related trust, sponsored or maintained by the Company or subsidiary of the
Company or other entity controlled by the Company, or (C) any company owned
directly or indirectly by stockholders of the Company in substantially the same
proportions as their ownership of Common Stock interest of the Company,
immediately prior to the occurrence with respect to which the evaluation of the
Change in Control is being made) of the beneficial ownership, directly or
indirectly, of securities of the
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Company representing at least forty percent (40%) of the combined voting power
of the Company's then outstanding securities; or (vi) in the event that the
individuals who, as of the date of adoption of the Plan, are members of the
Company's Board of Directors (the "Incumbent Board"), cease for any reason to
constitute at least forty percent (40%) of the Board of Directors. (If the
election, or nomination for election by the Company's stockholders, of any new
Director is approved by a vote of at least forty percent (40%) of the Incumbent
Board, such new Director shall be considered to be a member of the Incumbent
Board in the future.)
6.5 "CODE" means the Internal Revenue Code of 1986, as amended.
6.6 "COVERED TERMINATION" means involuntary termination by the Company of
Executive's employment with the Company for any reason other than death,
disability or for Cause or upon or within eighteen (18) months following a
Change of Control of the ownership of the Company, Executive voluntarily
terminates employment after any of the following are, undertaken without
Executive's express written consent:
(a) the assignment to Executive of any duties or responsibilities
which result in a material diminution or adverse change of Executive's position,
status or circumstances of employment;
(b) a reduction by the Company in Executive's Base Salary;
(c) any failure by the Company to continue in effect any benefit plan
or arrangement, including incentive plans or plans to receive securities of the
Company, in which Executive is participating (hereinafter referred to as
"Benefit Plans"), or the taking of any action by the Company which would
adversely affect Executive's participation in or reduce Executive's benefits
under any Benefit Plans or deprive Executive of any fringe benefit then enjoyed
by Executive; provided, however, a Covered Termination shall not exist under
this subSection 6.6(c) if the Company offers a range of benefit plans and
programs which, taken as a whole, are comparable to the Benefit Plans provided
to Executive as of the date of this Agreement, as determined in good faith by
the Company;
(d) a relocation of Executive or the Company's principal business
offices to a location more than twenty-five (25) miles from Mountain View,
California, at which Executive has performed duties, except for required travel
by Executive on the Company's business to an extent substantially consistent
with Executive's business travel obligations as of the date of this Agreement;
(e) any material breach by the Company of any provision of this
Agreement which is not cured by the Company within twenty (20) days of delivery
of written notice from Executive of such breach; or
(f) any failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company.
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ARTICLE 7
GENERAL PROVISIONS
7.1 EMPLOYMENT STATUS. This Agreement, the Offer Letter, nor any
Attachment or exhibit to the Offer Letter do not constitute a contract of
employment or impose on Executive any obligation to remain as an employee, or
impose on the Company any obligation (i) to retain Executive as an employee,
(ii) to change the status of Executive as an at-will employee, or (iii) to
change the Company's policies regarding termination of employment; or (iv) to be
unable to terminate Executive's employment with the Company at any time, with or
without notice, for any reason or no reason.
7.2 NOTICES. Any notices provided hereunder must be in writing and such
notices or any other written communication shall be deemed effective upon the
earlier of personal delivery (including delivery by facsimile) or the third day
after mailing by first class mail, to the Company at its primary office location
and to Executive at Executive's address as listed in the Company's payroll
records. Any payments made by the Company to Executive under the terms of this
Agreement shall be delivered to Executive either in person or at the address as
listed in the Company's payroll records.
7.3 SEVERABILITY. If a legal authority of competent jurisdiction
determines that any term or provision of this Agreement is invalid or
unenforceable, in whole or in part, then the remaining terms and provisions
hereof shall be unimpaired. Such legal authority will have the authority to
modify or replace the invalid or unenforceable term or provision with a valid
and enforceable term or provision that most accurately embodies the parties'
intention with respect to the invalid or unenforceable term or provision.
7.4 WAIVER. If either party should waive any breach of any provisions of
this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
7.5 COMPLETE AGREEMENT. This Agreement, including Attachment I, and any
other written agreements referred to in this Agreement, constitutes the entire
agreement between Executive and the Company and it is the complete, final, and
exclusive embodiment of their agreement with regard to this subject matter. It
is entered into without reliance on any promise or representation other than
those expressly contained herein.
7.6 AMENDMENT OR TERMINATION OF AGREEMENT. This Agreement may be changed
or terminated only upon the mutual written consent of the Company and Executive.
The written consent of the Company to a change or termination of this Agreement
must be signed by an executive officer of the Company after such change or
termination has been approved by the Company's Board of Directors.
7.7 COUNTERPARTS. This Agreement may be executed in separate counterparts,
any one of which need not contain signatures of more than one party, but all of
which taken together will constitute one and the same Agreement.
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7.8 HEADINGS. The headings of the Articles and Sections hereof are
inserted for convenience only and shall not be deemed to constitute a part
hereof nor to affect the meaning hereof.
7.9 SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive and the Company, and their
respective successors, assigns, heirs, executors and administrators, except that
Executive may not assign any duties hereunder and may not assign any rights
hereunder without the written consent of the Company, which consent shall not be
withheld unreasonably.
7.10 ATTORNEYS' FEES. If either party hereto brings any action to enforce
his or its rights hereunder, the prevailing party in any such action shall be
entitled to recover his or its reasonable attorneys' fees and costs incurred in
connection with such action.
7.11 CHOICE OF LAW. All questions concerning the construction, validity and
interpretation of this Agreement will be governed by the law of the State of
California, without regard to such state's conflict of laws rules.
7.12 NON-PUBLICATION. The parties mutually agree not to disclose publicly
the terms of this Agreement except to the extent that disclosure is mandated by
applicable law or to respective personal advisors.
7.13 CONSTRUCTION OF AGREEMENT. In the event of a conflict between the text
of this Agreement and any summary, description or other information regarding
this Agreement, the text of this Agreement shall control.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year written above.
AVIRON XXXXX XXXXXXXXX
By: /s/ C. Xxxx Xxxxxx /s/ Xxxxx Xxxxxxxxx
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Name: C. Xxxx Xxxxxx
Title: CEO and President
