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Exhibit
10.1
A RROWHEAD
R ESEARCH C ORPORATION
Employment
Agreement
This Employment Agreement
(the “ Agreement ”) is made and entered into as
of the last date written below by Dr. Christopher Anzalone
(“ Executive ”) and Arrowhead Research
Corporation, a Delaware corporation (the “ Company
”) with respect to the terms of Executive’s employment
by the Company.
WHEREAS, the Company and
Executive have previously entered into a letter agreement, dated as
of November 19, 2007 (the “ Term Letter ”),
outlining the terms of Executive’s employment with the
Company;
WHEREAS, the Company and
Executive desire to enter into this formal employment agreement and
to terminate the Term Letter in its entirety.
NOW THEREFORE, in
consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as
follows:
1. Employment .
The Company shall employ Executive, and Executive hereby accepts
employment with the Company, upon the terms and conditions set
forth in this Agreement for the period beginning on
December 1, 2007 and ending as provided in
Section 5 hereof (the “ Employment Period
”).
2. Position and
Duties . During Executive’s employment, he shall
serve as President and Chief Executive Officer of the Company and
shall have the duties, responsibilities, functions and authority of
the President and Chief Executive Officer, consistent with the
Bylaws of the Company. During Executive’s employment, he
shall report to the Board of Directors (the “ Board
”) and shall devote his best efforts and his full business
time and attention (except for permitted vacation periods and
reasonable periods of illness or other incapacity) to the business
and affairs of the Company and its subsidiaries. Executive shall
perform his duties, responsibilities and functions to the Company
and its subsidiaries hereunder to the best of his abilities in a
diligent, trustworthy, businesslike and efficient
manner.
3. Board
Membership . The Board has appointed Executive to fill a
vacancy on the Board and Executive has been appointed as a director
on the Board. Upon the termination Executive’s employment by
the Company, Executive shall resign as a director of the Company
and its subsidiaries, as the case may be.
4. Compensation and
Benefits .
(a) Base Salary
. For all services to be rendered by Executive pursuant to this
Agreement, the Company shall pay Executive Four Hundred Thousand
Dollars ($400,000) per annum or such higher rate as the Board may
determine from time to time (as adjusted from time to time, the
“ Base Salary ”), which salary shall be payable
by the Company in regular installments in accordance with the
Company’s general payroll practices. The Base Salary will be
evaluated at least annually by the Company’s Compensation
Committee commencing at the 2008 meeting to evaluate compensation
of the Company’s management level employees.
(b) Bonus .
Executive shall also be eligible to receive bonuses (each a “
Bonus ”), based on performance of the Company and
Executive’s individual performance, as measured against
performance targets set by the Board’s Compensation Committee
no later than October 1 st of each calendar year.
(c) Equity
Grants . The Board has approved the Stock Option Agreement,
attached to this Agreement as Exhibit A for the grant to
Executive of an option (the “ Option ”) to
purchase Two Million (2,000,000) shares of the Company’s
common stock. The Option vests over four (4) years, with
options to purchase the first Two Hundred Fifty Thousand
(250,000) shares vesting on the sixth month anniversary of the
grant, and options to purchase Forty-One Thousand Six Hundred
Sixty-Seven (41,667) shares vesting on the first day of each
successive forty-two (42) calendar months. The other terms,
including pricing, are set forth in the Option.
(d) Expense
Reimbursement . During the Employment Period, the Company
shall reimburse Executive for all reasonable expenses incurred by
him in the course of performing his duties and responsibilities
under this Agreement, consistent with the Company’s policies
in effect from time to time with respect to travel, entertainment
and other business expenses, subject to the Company’s
requirements with respect to reporting and documentation of such
expenses. The Company shall reimburse Executive for up to One
Hundred Thousand Dollars ($100,000) in relocation expenses related
to the transition of Executive and his family to the Pasadena area
in connection with Executive’s employment with the Company,
subject to the Company’s requirements with respect to
reporting and documentation of such expenses.
(e) Regular
Benefits . Executive shall also be entitled to participate
in any employee benefit plans and programs, such as vacation and
sick leave, health, dental, life and disability insurance, and any
retirement plans, such as the Company’s 401(k) plan,
(collectively, the “ Plans ,” or individually,
the “ Plan ”) generally available to the
Company’s employees. Such participation shall be subject to
the terms, eligibility and qualification requirements of the
applicable Plan documents, generally applicable policies of the
Company, applicable law and the discretion of the Board and its
Compensation Committee. A summary of the Company’s benefits
is attached to this Agreement as Exhibit B . Other than as
specified in paragraph (f) of this section, nothing contained
in this Agreement shall be construed to: (i) create any
obligation on the part of the Company to establish any such Plan or
to maintain the effectiveness of any such Plan, which may be in
effect from time to time, or (ii) prevent the Company from
changing the Plans, including the terms thereof, it offers to its
senior executives at any time.
(f) Insurance
Benefits . Executive shall be entitled to participate in
the Company’s existing (and replacement) short and long term
disability programs. During the first ten years of the Employment
Period, the Company shall pay premiums to bring Executive’s
total life insurance benefit for Executive to Two Million Dollars
($2,000,000) under the Company’s then standard life insurance
plans or any similar plan with terms no less favorable to
Executive.
5. Term
.
(a) At-Will
Employment . Executive’s employment with the Company
shall be “at-will” employment under the laws of
California, which means employment may be terminated by either the
Company or Executive at any time and for any reason or for no
reason, with or without notice. Without limiting the effect of the
foregoing, the Employment Period shall continue until
terminated:
(i) by Executive’s
resignation (with or without Good Reason (as defined
below));
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(ii) by Executive’s
death or his mental or physical disability or incapacity (each as
determined by the Board in its good faith judgment); or
(iii) by the Company at any
time (with or without Cause (as defined below)).
(b) Termination of
Employment . If the Employment Period is terminated by the
Company without Cause or by Executive with Good Reason, Executive
shall be entitled to continue to receive (i) his Base Salary
payable in regular installments as special severance payments from
the date of termination and (ii) medical and dental benefits
on the same terms as such benefits were provided as of immediately
before such termination, in each case through the one (1) year
anniversary of the date of termination. Notwithstanding anything
herein to the contrary, no amounts shall be payable pursuant to
this Section 5(b) unless and until Executive has
executed and delivered to the Company a general release in favor of
the Company in form and substance reasonably satisfactory to the
Board and only so long as Executive has not breached the provisions
of Sections 7, 8 and 9 hereof. Except as provided in this
Section 5(b) , Executive shall not be entitled to any
other salary, compensation or benefits after termination of the
Employment Period. Notwithstanding the foregoing, if Executive is a
“specified employee” of the Company (as defined in
Treasury Regulation Section 1.409A-1(i)), any severance
payments that would otherwise be paid within six months after the
last day of the Employment Period that exceed the lesser of
(x) two times the compensation limit under
Section 401(a)(17) of the Internal Revenue Code of 1986, as
amended, for the calendar year of the last day of the Employment
Period, and (y) two times Executive’s annual
compensation for the calendar year prior to the calendar year of
the last day of termination shall instead be paid on the six month
anniversary of the last day of the Employment Period.
(c) If the Employment Period
is terminated by the Company for Cause, by Executive’s
resignation without Good Reason, or due to Executive’s death
or his mental or physical disability for a period of ninety
(90) consecutive days in which Executive is incapable, after
reasonable accommodation, of performing Executive’s duties,
Executive shall only be entitled to receive his Base Salary through
the date of termination or expiration and shall not be entitled to
any other salary, compensation or benefits from the Company or its
subsidiaries thereafter.
(d) Except as otherwise
expressly provided herein, all of Executive’s rights to
salary, bonuses, fringe benefits and other compensation hereunder
which accrue or become payable after the termination or expiration
of the Employment Period shall cease upon such termination or
expiration, other than those expressly required under applicable
law (such as COBRA). The Company may offset any amounts Executive
owes it or its subsidiaries against any amounts it or its
subsidiaries owes Executive hereunder.
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(e) For purposes of this
Agreement, “ Cause ” shall mean (i) the
conviction (by trial or upon a plea of nolo contendere) of a felony
or other crime involving moral turpitude or the commission of any
other material act or omission involving dishonesty, disloyalty or
fraud with respect to the Company or any of its subsidiaries or any
of their customers or suppliers, (ii) reporting to work under
the influ
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