Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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On May 2, 2017, the Compensation Committee of Audentes Therapeutics, Inc. (the
Company
) adopted a new form of
executive employment agreement for the Companys executive officers (the
Executive
) that provide for
at-will
employment (the
Employment
Agreement
). Pursuant to the Employment Agreement, the Executive will be entitled to receive his or her base salary, a discretionary annual incentive bonus opportunity and standard employee benefit plan participation. The
Employment Agreement also provides for severance benefits upon termination of employment or a change in control of the Company.
If an
Executive is terminated for cause or in the event of an Executives death, disability or voluntary separation at any time and for any reason, such Executive will be entitled to receive (i) any earned but unpaid base
salary and earned but unused vacation or paid time off, (ii) other unpaid and then vested amounts, including any amount payable to the Executive under the specific terms of any agreements, plans or awards in which the Executive participates,
unless otherwise specifically provided in the Employment Agreement, and (iii) reimbursement for all reasonable and necessary expenses incurred in connection with such Executives performance of services on behalf of the Company in
accordance with the Companys policies and guidelines, in each case as of the effective date of such termination of employment. The compensation referred to in (i)-(iii) above is collectively referred to as Accrued Compensation.
If the Companys Chief Executive Officer (
CEO
) is terminated without cause or resigns for good
reason, and the CEO delivers to the Company a signed settlement agreement and general release of claims (the
Release
), he will be entitled to receive (i) the Accrued Compensation, (ii) a lump sum cash
payment equal to 12 months of his base salary, (iii) a lump sum payment equal to 100% of his target bonus for the then current fiscal year and paid when annual bonuses are otherwise paid to active employees, but no later than March 15
th
of the year following the year in which he is terminated, and (iv) reimbursement for any monthly COBRA premium payments for 12 months, subject to certain limitations.
If a Senior Vice President of the Company (
SVP
) is terminated without cause or resigns for good reason and the SVP
delivers to the Company a Release, such SVP will be entitled to receive (i) the Accrued Compensation, (ii) a lump sum cash payment equal to nine months of such SVPs base salary, (iii) a lump sum payment equal to 75% of such
SVPs target bonus for the then current fiscal year and paid when annual bonuses are otherwise paid to active employees, but no later than March 15
th
of the year following the year in which
such SVP is terminated, and (iv) reimbursement for any monthly COBRA premium payments for 12 months, subject to certain limitations.
If the CEO is terminated without cause or resigns for good reason, in each case during the period of time commencing 90 days prior to the
execution of a definitive agreement providing for the consummation of a change in control and ending on the first anniversary of the consummation of such change in control, provided that the CEO delivers to the Company a signed Release,
he will be entitled to receive (i) Accrued Compensation, (ii) a lump sum cash payment in an amount equal to 18 months of his base salary, (iii) a lump sum payment equal to 150% of his target bonus for the then current fiscal year and
paid when annual bonuses are otherwise paid to active employees, but no later than March 15
th
of the year following the year in which the CEOs termination of employment occurs,
(iv) reimbursement for any monthly COBRA premium payments for 18 months, subject to certain limitations, and (v) accelerated vesting of 100% of the unvested stock or equity awards granted to the CEO pursuant to the terms of the Employment
Agreement, if any.
If an SVP is terminated without cause or resigns for good reason, in each case during the period of time commencing 90
days prior to the execution of a definitive agreement providing for the consummation of a change in control and ending on the first anniversary of the consummation of such change in control, provided that such SVP delivers to the Company a signed
Release, such SVP will be entitled to receive (i) Accrued Compensation, (ii) a lump sum cash payment in an amount equal to 12 months of such SVPs base salary, (iii) a lump sum payment equal to 100% of such SVPs target
bonus for the then current fiscal year and paid when annual bonuses are otherwise
paid to active employees, but no later than March 15
th
of the year following the year in which such SVPs termination of employment
occurs, (iv) reimbursement for any monthly COBRA premium payments for 12 months, subject to certain limitations, and (v) accelerated vesting of 100% of the unvested stock or equity awards granted to such SVP pursuant to the terms of the
Employment Agreement, if any.
Under the Employment Agreements, cause generally means (i) failure to satisfactorily
perform duties after there has been delivered to a written demand for performance which describes the specific deficiencies in performance and the specific manner in which performance must be improved, and which provides thirty (30) business
days from the date of notice to remedy such performance deficiencies; (ii) conviction of, or plea of nolo contendere to, a felony or a crime involving moral turpitude which the Companys Board of Directors believes has had or will have a
detrimental effect on the Companys reputation or business, (iii) engaging in an act of gross negligence or willful misconduct in the performance of employment obligations and duties, (iv) committing an act of fraud against, material
misconduct or willful misappropriation of property belonging to the Company; (v) engaging in any other misconduct that has had or will have a material adverse effect on the Companys reputation or business; or (vi) breach of any
material written Company policy, the Employee Invention Assignment and Confidentiality Agreement or other unauthorized misuse of the Companys trade secrets or proprietary information.
Under the Employment Agreements, change in control means (i) a sale, conveyance, exchange or transfer (excluding any
venture-backed or similar investments in the Company) in which any person or entity, other than persons or entities who as of immediately prior to such sale, conveyance, exchange or transfer own securities in the Company, either directly or
indirectly, becomes the beneficial owner, directly or indirectly, of securities of the Company representing more than fifty (50%) percent of the total voting power of all its then outstanding voting securities; (ii) a merger or consolidation of
the Company in which its voting securities immediately prior to the merger or consolidation do not represent, or are not converted into securities that represent, a majority of the voting power of all voting securities of the surviving entity
immediately after the merger or consolidation; or (iii) a sale of substantially all of the assets of the Company or a liquidation or dissolution of the Company.
Under the Employment Agreements, disability has the meaning set forth in Section 22(e)(3) of the Internal Revenue Code of 1983, as
amended.
Under the Employment Agreements, good reason means any of the following taken without the Executives written
consent and provided (a) the Company receives, within 30 days following the occurrence of any of the events set forth in clauses (i) through (iv) below, written notice from the Executive specifying the specific basis for the
Executives belief that the Executive is entitled to terminate employment for Good Reason, (b) the Company fails to cure the event constituting Good Reason within 30 days after receipt of such written notice thereof, and (c) the
Executive terminates employment within the earlier of 10 days following expiration of such cure period or receipt from the Company that such deficiencies will not be cured: (i) a material change, adverse to the Executive, in the
Executives position, titles, offices or duties; (ii) an assignment of any significant duties to the Executive that are inconsistent with the Executives positions or offices held under this Agreement; (iii) a decrease in base
salary by more than 10% (other than in connection with a general decrease in the base salary of all other officers); (iv) relocation to a facility or a location more than 50 miles from the then-current location.
The foregoing description of the Employment Agreement is a summary, is not complete, and is qualified in its entirety by the terms and
conditions of the actual Employment Agreement, which is filed as Exhibit 10.01 hereto.