DocuSign Envelope ID: DE71458D-460C-4C40-8FB7-0CFDB7452F9B
PACIFIC BIOSCIENCES OF CALIFORNIA, INC. CHANGE IN CONTROL AND SEVERANCE AGREEMENT
This Change in Control and Severance Agreement (the “Agreement”) is made and entered into by and between Denis Zaccarin (“Executive”) and Pacific Biosciences of California, Inc., a Delaware corporation (the “Company”), effective as of November 4, 2020 (the “Effective Date”).
RECITALS
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto agree as follows:
(60) days prior to the date of automatic renewal. Notwithstanding the foregoing provisions of this paragraph, if a Change in Control occurs when there are fewer than twelve (12) months remaining during the Initial Term or an Additional Term, the term of this Agreement will extend automatically through the date that is twelve (12) months following the effective date of the Change in Control. If Executive becomes entitled to benefits under Section 3(a) or Section 3(b) during the term of this Agreement, the Agreement will not terminate until all of the obligations of the parties hereto with respect to this Agreement have been satisfied.
DocuSign Envelope ID: DE71458D-460C-4C40-8FB7-0CFDB7452F9B
(i) Base Salary Severance. Executive will receive continuing payments of Salary, less any applicable withholdings, for a period of six (6) months following the date of such termination of employment, to be paid periodically in accordance with the Company’s normal payroll policies. |
(ii) Continued Employee Benefits. If Executive elects continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) for Executive and Executive’s eligible dependents (as applicable), within the time period prescribed pursuant to COBRA, Executive will receive Company-paid group health, dental and vision coverage for Executive and Executive’s eligible dependents, as applicable, at the coverage levels in effect immediately prior to the termination of Executive’s employment (the “COBRA Severance”) until the earliest of: (A) a period of six (6) months from the last date of employment of the Executive with the Company, (B) the date upon which Executive and/or Executive’s eligible dependents becomes covered under similar plans, or (C) the expiration of Executive’s and Executive’s eligible dependents’ (as applicable) eligibility for continuation coverage under COBRA. |
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For the avoidance of doubt, in the event of Executive’s Qualifying Termination that occurs prior to a Change in Control, any then outstanding and unvested portion of Executive’s Awards will remain outstanding and unvested until the earlier of (x) three (3) months following the Qualifying Termination, solely so that any benefits due on a Qualifying Termination can be provided if the Qualifying Termination occurs during the Change in Control Period (provided that in no event will Executive’s stock option Awards or similar Awards remain outstanding beyond the Award’s maximum term to expiration). If no Change in Control occurs within three (3) months following the Qualifying Termination, any unvested portion of Executive’s Awards automatically and permanently will be forfeited on the date three (3) months following the date of the Qualifying Termination without having vested.
(iii) Executive will only be eligible for severance benefits in accordance with the Company’s established policies, if any, as then in effect.
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DocuSign Envelope ID: DE71458D-460C-4C40-8FB7-0CFDB7452F9B
severance or separation benefits similar to those provided under this Agreement, by operation of applicable law or under a plan, policy, contract, or arrangement sponsored by or to which the Company is a party other than this Agreement (“Other Benefits”), then the corresponding severance payments and benefits under this Agreement will be reduced by the amount of Other Benefits paid or provided to Executive.
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DocuSign Envelope ID: DE71458D-460C-4C40-8FB7-0CFDB7452F9B
Executive’s eligible dependents, as applicable, as in effect on the date of termination of Executive’s employment (which amount will be based on the premium for the first month of COBRA coverage for Executive and Executive’s eligible dependents), which payment will be made regardless of whether Executive elects COBRA continuation coverage (the “Taxable Payment”). For the avoidance of doubt, the Taxable Payment may be used for any purpose, including, but not limited to continuation coverage under COBRA, and will be subject to all applicable tax withholdings. Notwithstanding anything to the contrary under this Agreement, if the Company determines in its sole discretion at any time that it cannot provide the COBRA Severance or the Taxable Payment without violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act and the Employee Retirement Income Security Act of 1974, as amended), Executive will not receive any COBRA Severance or Taxable Amount under this Agreement.
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DocuSign Envelope ID: DE71458D-460C-4C40-8FB7-0CFDB7452F9B
Payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary, in the event of Executive’s death following Executive’s separation from service but prior to the six (6) month anniversary of Executive’s separation from service (or any later delay date), then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of Executive’s death and all other Deferred Payments will be payable in accordance with the payment schedule applicable to each payment or benefit. Each payment and benefit payable under the Agreement is intended to constitute a separate payment for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.
(b) | delivered as to such lesser extent which would result in no portion of such Payments being subject to excise tax under Section 4999 of the Code, |
whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by Executive on an after-tax basis, of the greatest amount of Payments, notwithstanding that all or some portion of such Payments may be taxable under Section 4999 of the Code. If a reduction in severance and other benefits constituting “parachute payments” is necessary so that benefits are delivered to a lesser extent, reduction will occur in the following order: (i) reduction of cash payments in reverse chronological
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order (that is, the cash payment owed on the latest date following the occurrence of the event triggering the excise tax under Code Section 4999 will be the first cash payment to be reduced); (ii) cancellation of equity awards granted “contingent on a change in ownership or control” (within the meaning of Code Section 280G) in the reverse order of date of grant of the equity awards (that is, the most recently granted equity awards will be cancelled first), (iii) reduction of accelerated vesting of equity awards in the reverse order of date of grant of the equity awards (that is, the vesting of the most recently granted equity awards will be cancelled first); (iv) reduction of employee benefits in reverse chronological order (that is, the benefit owed on the latest date following the occurrence of the event triggering such excise tax will be the first benefit to be reduced). In no event will Executive have any discretion with respect to the ordering of Payment reductions. Executive will be solely responsible for the payment of all personal tax liability that is incurred as a result of the payments and benefits received under this Agreement, and neither the Company nor any parent, subsidiary or other affiliate of the Company will have any responsibility, liability or obligation to reimburse, indemnify or hold harmless Executive for any of those payments of personal tax liability.
Unless the Company and Executive otherwise agree in writing, any determination required under this Section 5 will be made in writing by a nationally recognized accounting or valuation firm (the “Firm”) selected by the Company, whose determination will be conclusive and binding upon Executive and the Company for all purposes. For purposes of making the calculations required by this Section 5, the Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and Executive will furnish to the Firm such information and documents as the Firm may reasonably request in order to make a determination under this Section. The Company will bear all costs and make all payments required to be made to the Firm for the Firm’s services that are rendered in connection with any calculations contemplated by this Section 5. The Company will have no liability to Executive for the determinations of the Firm.
6. Definition of Terms. For purposes of this Agreement, the following terms referred to in this Agreement will have the following meanings: |
(b) Change in Control. “Change in Control” means the first occurrence of any of the following on or after the Effective Date: |
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DocuSign Envelope ID: DE71458D-460C-4C40-8FB7-0CFDB7452F9B
Control. Further, if the stockholders of the Company immediately before such change in ownership continue to retain immediately after the change in ownership, in substantially the same proportions as their ownership of shares of the Company’s voting stock immediately prior to the change in ownership, direct or indirect beneficial ownership of fifty percent (50%) or more of the total voting power of the stock of the Company or of the ultimate parent entity of the Company, such event will not be considered a Change in Control under this subsection (i). For this purpose, indirect beneficial ownership will include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company, as the case may be, either directly or through one or more subsidiary corporations or other business entities; or
For purposes of this definition of Change in Control, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.
Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Section 409A.
Further and for the avoidance of doubt, a transaction will not constitute a Change in Control if: (i) its sole purpose is to change the jurisdiction of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.
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DocuSign Envelope ID: DE71458D-460C-4C40-8FB7-0CFDB7452F9B
(12) months.
(f) Qualifying Termination. “Qualifying Termination” means either (i) the Company terminates Executive’s employment with the Company for a reason other than (A) Cause, |
(B) Executive’s death, or (C) Executive’s Disability or (ii) Executive resigns for Good Reason.
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DocuSign Envelope ID: DE71458D-460C-4C40-8FB7-0CFDB7452F9B
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and at the Board’s request, Executive will execute any documents reasonably necessary to reflect the resignations.
(c) Headings. All captions and section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement. |
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DocuSign Envelope ID: DE71458D-460C-4C40-8FB7-0CFDB7452F9B
Neither the Company nor any parent, subsidiary or other affiliate of the Company will have any responsibility, liability or obligation to pay Executive’s taxes arising from or relating to any payments or benefits under this Agreement.
(h) Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. |
o O o
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DocuSign Envelope ID: DE71458D-460C-4C40-8FB7-0CFDB7452F9B
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the Effective Date set forth above.
COMPANYPACIFIC BIOSCIENCES OF CALIFORNIA, INC.
By:
Name:
Natalie Welch
Title:
Vice President, Human Resources and Organization Dev
EXECUTIVEBy:
Name: Denis Zaccarin
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