Exhibit 10.6
RIGEL
PHARMACEUTICALS, INC.
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT
AGREEMENT (“ Agreement ”) is entered by and
between Dr. Donald G. Payan (“ Executive ”) and RIGEL
PHARMACEUTICALS, INC. (the “ Company ”), a Delaware
corporation on December 17, 2007 (the “ Effective Date ”).
WHEREAS , Executive has been providing
services to the Company under the terms of an offer letter dated
January 16, 1997, as amended (the “ Existing Agreement ”);
and
WHEREAS,
in connection with certain
changes to the Internal Revenue Code of 1986, as amended (the
“ Code ”), and
for other reasons, the Company and Executive wish to amend the
terms of the Existing Agreement as set forth herein, which terms
will expressly override the Existing Agreement.
NOW, THEREFORE
, in consideration of the
mutual promises and covenants contained herein, it is hereby agreed
by and between the parties hereto as follows, effective as of the
Effective Date:
1.
EMPLOYMENT BY THE
COMPANY.
1.1
Title
and Responsibilities . Subject to the terms set forth herein,
Executive will continue to be employed by the Company as the person
responsible for all of the Company’s scientific research;
currently, the Executive holds the title of Executive Vice
President, Chief Scientific Officer. Executive will report to
the Company’s Chief Executive Officer and the Company’s
Board of Directors (the “ Board ”). During his employment
with the Company, Executive will devote his best efforts and
substantially all of his business time and attention (except for
vacation periods and reasonable periods of illness or other
incapacity permitted by the Company’s general employment
policies) to the business of the Company.
1.2
At-Will Employment.
Executive’s
relationship with the Company is at-will. The Company will
have the right to terminate this Agreement and Executive’s
employment with the Company at any time with or without Cause (as
defined below), and with or without advance notice. In
addition, the Company retains the discretion to modify the terms of
Executive’s employment, including but not limited to
position, duties, reporting relationship, office location,
compensation, and benefits, at any time. Executive’s
at-will employment relationship may only be changed in a written
agreement approved by the Board and signed by Executive and a duly
authorized officer of the Company.
1.3
Company Employment
Policies . The employment relationship between the
parties will continue to be governed by the general employment
policies and procedures of the Company, including those relating to
the protection of confidential information and assignment of
inventions.
2.
COMPENSATION.
2.1
Salary. Executive will earn a base
salary in 2007 at an annualized rate of $420,000, payable on the
Company’s standard payroll dates. Executive will be
considered for annual increases in base salary in accordance with
Company policy.
2.2
Target
Bonus.
Subject to annual review by the Board or a duly authorized
committee thereof (either, the “ Committee ”), Executive will be
eligible to earn a target annual bonus of up to fifty percent (50%)
of Executive’s base salary (the “ Target Bonus ”). Whether Executive
earns a Target Bonus, and if so, in what amount, will be determined
solely by the Committee in its discretion. Executive must
remain an active employee through the time the Committee determines
bonus amounts for executives of the Company in order to earn any
bonus.
2.3
Equity
Awards. Executive’s current compensatory equity
awards are not affected by this Agreement and will remain in effect
in accordance with the terms of the applicable award agreements and
stock plan(s).
2.4
Standard Company
Benefits. Executive will be entitled to
participate in the Company’s employee benefits and
compensation plans which may be in effect from time to time and
provided by the Company to its executives, under the terms and
conditions of such benefit and compensation plans.
3.
CONFIDENTIAL
INFORMATION.
3.1
Intellectual
Property.
As a condition of his
continued employment, Executive must continue to comply with the
Employee Proprietary Information and Inventions Agreement (the
“ Proprietary
Agreement ”) he has executed previously.
Nothing in this Agreement is intended to modify in any respect the
Proprietary Agreement, and the Proprietary Agreement will remain in
full force and effect.
3.2
Solicitation.
As a condition of
receiving the Severance Benefits (as defined below), Executive
agrees that for one (1) year following the termination of
employment with the Company, Executive will not personally initiate
or participate in the solicitation of any employee of the Company
or any of its affiliates to terminate his or her relationship with
the Company or any of its affiliates in order to become an employee
for any other person or business entity.
4.
TERMINATION OF EMPLOYMENT;
CHANGE OF CONTROL
4.1
Termination Without Cause or
Resignation for Good Reason – No Change of
Control.
If the Company terminates Executive’s employment at any time
without Cause (and other than as a result of death or disability),
or if Executive resigns from all positions he then holds with the
Company for Good Reason, and such termination is not a
“Qualifying Termination” (as defined below), Executive
will be eligible for the following severance benefits (the “
Severance Benefits
”): (i) the Company will make a lump sum severance
payment to Executive in an amount equal to two (2) years
of
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Executive’s then-current base salary plus
200% of the Eligible Bonus, where the Eligible Bonus is an average
of the percent earned of the Target Bonus for performance for the
last two year multiplied by the current Target Bonus, subject to
withholdings and deductions, (ii) if Executive timely elects
continued health insurance coverage pursuant to the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended (together
with any applicable state law of similar effect, “
COBRA ”), the Company
will reimburse Executive for the COBRA premiums for himself and his
eligible dependents for eighteen (18) months following the date his
employment terminates or until such earlier date as he becomes
eligible for health insurance coverage from another source
(provided that Executive must promptly inform the Company, in
writing, if he becomes eligible for health insurance coverage from
another source within eighteen (18) months after the termination),
(iii) acceleration of all then-outstanding compensatory equity
awards, and (iv) a modification of the post-termination
exercise period of such equity awards until the earlier of
(a) the original end of the term of each such award (generally
10 years from the date of grant) or (b) the one (1) year
anniversary of the date of the Qualifying Termination.
Executive will not be entitled to the Severance Benefits unless and
until the requirements set forth in Section 5 of this
Agreement are satisfied.
(a)
Definition of
Cause.
For purposes of this Agreement, “ Cause ” will mean: (1) an
intentional action or intentional failure to act by Executive that
was performed in bad faith and to the material detriment of the
business of the Company; (2) Executive’s intentional
refusal or intentional failure to act in accordance with any lawful
and proper direction or order of his or her superiors that
has not been cured within ten (10) days after written notice
from the Company, or that has caused irreparable damage incapable
of cure; (3) Executive’s habitual or gross neglect
of the duties of employment that has not been cured within ten
(10) days after written notice from the Company, or that has
caused irreparable damage incapable of cure;
(4) Executive’s indictment, charge, or conviction of a
felony or any crime involving moral turpitude, or participation in
any act of theft or dishonesty, in each case, that has had or could
reasonably be expected to have a material detrimental effect on the
business of the Company; or (5) Executive’s violation of
any material provision of the Proprietary Agreement or violation of
any material provision of any other written Company policy or
procedure.
(b)
Definition of Change of
Control. For purposes of this Agreement, a “
Change of Control ”
has the meaning set forth in the Severance Plan (as defined
below).
(c)
Definition of Resignation for
Good Reason. For purposes of this Agreement, a
“ Resignation for Good
Reason ” means Executive has resigned from all
positions he then-holds with the Company (or any successor thereto)
if (1): (i) there is a material diminution of
Executive’s authority, including but not
limited to decision-making authority, duties,
or responsibilities; (ii) there is a material reduction in the
Executive’s annual base compensation (including the base
salary and target bonus opportunity), where material is
considered greater than 5%; (iii)
the Executive is required
to relocate his or her primary work location to a facility or
location that would increase the Executive’s one way commute
distance by more than twenty (20)
miles from the
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Executive’s
primary work location as of immediately prior to such change;
(iv) A
material diminution in the authority, duties, or responsibilities
of the supervisor to whom the Executive is
required to report , including a requirement
that the Executive report to a corporate officer or employee
instead of reporting directly to the board of directors of a
corporation (or similar governing body with respect to an entity
other than a corporation); (v) a material diminution in
the budget over which the
Executive retains authority; (vi) the Executive is
required, as a condition to continued service, to enter into any
agreement with the Company or a successor thereto regarding
confidentiality, non-competition, non-solicitation or other similar
restrictive covenant that is materially more restrictive than under
the Proprietary Agreement; (vii) the Company materially
breaches its obligations under this Plan or any then-effective
written employment agreement with the Executive; or
(viii) any
acquirer, successor or assign of the Company fails to assume and
perform, in all material respects, the obligations of the Company
hereunder; and (2) the Executive provides written notice to
the Company’s General Counsel within the 60-day period
immediately following such action; and (3) such action is not
remedied by the Company within thirty (30) days following the
Company’s receipt of such written notice; and (4) the
Executive’s resignation is effective not later than sixty
(60) days after the expiration of such thirty (30) day cure
period.
4.2
Qualifying Termination Upon
Change of Control. Executive will be an “Eligible
Employee” under the Company’s Change of Control
Severance Plan (the “ Severance Plan ”). Upon a
“Qualifying Termination” (as defined in the Severance
Plan), Executive will not receive any part of the Severance
Benefits and instead Executive’s rights to receive any
severance pay or post-termination benefit continuation will be only
as set forth in the Severance Plan and as otherwise required by
applicable law.
4.3
Other
Terminations .
If, at any time, the Company terminates Executive’s
employment at any time for Cause or as a result of death or
disability, or if Executive resigns other than for Good Reason,
Executive’s salary will cease on the date of termination, and
Execu
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