EMPLOYMENT
AGREEMENT
EMPLOYMENT AGREEMENT (this
“Agreement”), effective as of August 6, 2008
(“Effective Date”), between Urigen Pharmaceuticals,
Inc., a Delaware corporation (the “Company”), and
Martin E. Shmagin (the “Employee”).
WHEREAS, the Board of Directors of
the Company (the “Board”) has determined that it is in
the best interests of the Company and its shareholders to employ
the Employee in the position set forth below, and the Employee
desires to serve in that capacity.
NOW, THEREFORE, in consideration of the
foregoing premises, the Company and Employee hereby agree as
follows:
1.
Employment Period.
The Company shall employ the
Employee, and the Employee shall serve the Company, on the terms
and conditions set forth in this Agreement, for a term of two years
commencing on the date hereof, unless earlier terminated in
accordance with Section 4 hereof (the “Initial Term”
and, together with any subsequent term of Employment, the
“Employment Period”); provided that the term of
employment hereunder will automatically be renewed for successive
one-year terms (each such term a “Renewal Term”) unless
either party shall, at least 30 days before such date, provide
written notice to the other party that the Employment Period will
not be extended.
(a)
The Employee shall serve as Chief
Financial Officer of the Company, reporting to the Chief Executive
Officer, with such duties and responsibilities as are customarily
assigned to such position, and such other duties and
responsibilities not inconsistent therewith as may be assigned to
him from time to time by the Board.
(b)
During the Employment Period, and
excluding any periods of vacation and sick leave to which the
Employee is entitled, the Employee shall devote his full-time
efforts to the business and affairs of the Company and use his best
efforts to carry out such responsibilities faithfully and
efficiently. It shall not be considered a violation of the
foregoing for the Employee to (i) serve on corporate, civic or
charitable boards or committees, (ii) deliver lectures or fulfill
speaking engagements, (iii) manage personal investments, (iv)
engage in other business activities, so long as such activities do
not materially interfere with the performance of his
responsibilities as an employee of the Company in accordance with
this Agreement or violate the provisions of Section 8 of this
Agreement.
(c)
Employee shall not be required to
change his domicile to perform his duties. Employee
agrees to perform a reasonable amount of travel in order to perform
his duties hereunder.
(a)
Base Salary.
During the first contract year of
the Initial Term, the Employee shall receive an annual base salary
(the “Annual Base Salary”) of
$225,000. Employee will receive an annual salary review
by the Board, or an authorized committee thereof, on each
anniversary of the Effective Date. The Annual Base Salary shall be
payable in accordance with the Company’s payroll practices as
in effect from time to time. The Board or an authorized committee
thereof may increase the Annual Base Salary above the foregoing
amounts at its discretion.
(b)
Bonus. In addition to the Annual Base Salary, the
Employee shall be entitled to an annual bonus based upon the
discretion of the Board of Directors.
(c)
Benefits. During the Employment Period, the Employee and
the Employee’s direct family shall be entitled to participate
in all benefit programs of the Company provided to executives of
similar rank, including, but not limited to, health insurance
coverage, as well as all welfare benefit plans, practices, policies
and programs provided by the Company or Parent, including, but not
limited to any comprehensive dental plan, retirement plans and
profit sharing programs the Company or Parent may provide to other
employees from time to time.
(d)
Expenses. During the Employment Period, the Employee shall
be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Employee in carrying out the
Employee’s duties under this Agreement, provided that the
Employee complies with the policies, practices and procedures of
the Company for submission of expense reports, receipts and similar
documentation of such expenses.
(e)
Vacation. During the Employment Period, the Employee shall
be entitled to a paid annual vacation of four weeks and other
fringe benefits on such terms and conditions as may be determined
by the Board or authorized committee thereof from time to
time.
4.
Termination of
Employment.
(a)
Death or Disability.
The Employee’s employment
shall terminate automatically upon the Employee’s death
during the Employment Period. The Company shall be entitled to
terminate the Employee’s employment because of the
Employee’s Disability during the Employment Period.
“Disability” means that (i) the Employee is unable to
perform the job with or without a reasonable accommodation pursuant
to the state and federal disability discrimination laws or (ii) a
physician selected by the Company or its insurers, and acceptable
to the Employee or the Employee’s guardian or legal
representative, made a finding of permanent physical or mental
disability and such disability is expected to result in death or to
be of a continuous duration of no less than twelve (12) months. A
termination of the Employee’s employment by the Company for
Disability shall be communicated to the Employee by written notice,
and shall be effective on the 30th day after receipt of such notice
by the Employee (the “Disability Effective Date”),
unless the Employee is able to, and does, return to full-time
performance of the Employee’s duties before the Disability
Effective Date or the employee establishes that he is not disabled
under this definition of Disability.
(A)
The Company may terminate the
Employee’s employment during the Employment Period for Cause
or without Cause. “Cause” means:
(i)
Employee having, in the reasonable
judgment of the Company, committed an act which if prosecuted and
resulting in a conviction would constitute a fraud, embezzlement,
or any felonious offense (specifically excepting simple
misdemeanors not involving acts of dishonesty and all traffic
violations);
(ii)
the Employee’s theft,
embezzlement, misappropriation of or intentional and malicious
infliction of damage to the Company’s property or business
opportunity;
(iii)
the Employee’s repeated abuse
of alcohol, drugs or other substances as determined by an
independent medical physician; or
(iv)
the Employee’s engagement in
gross dereliction of duties, refusal to perform assigned duties
consistent with his position, his knowing and willful breach of any
material provision of this Agreement continuing after written
notice from the Company or repeated violation of the
Company’s written policies after written notice.
(B)
A termination of the
Employee’s employment by the Company for Cause shall be
effectuated by giving the Employee written notice (“Notice of
Termination for Cause”) of the termination, setting forth the
conduct of the Employee that constitutes Cause. Termination of
employment by the Company for Cause shall be effective on the date
when the Notice of Termination for Cause is given, unless the
notice sets forth a later date (which date shall in no event be
later than 60 days after the notice is given). Employee
will be immediately advised of any allegations of conduct covered
by clause (A) above and will be provided a period of thirty (30)
days from the date of the written notice to defend himself against
such allegations and to take any appropriate remedial action. If
Employee shows that the allegations are untrue or takes appropriate
remedial action to address the allegations, the Company will not
terminate the Employee’s employment for Cause.
(C)
A termination of the
Employee’s employment by the Company without Cause shall be
effected by giving the Employee written notice of the termination
at least 6 months (180 days) prior to the termination date or by
providing the employee with compensation that would have been
earned by Employee during the six months period, in lieu of such
notice and the severance benefits in section 5(a) below.
(A)
The Employee may terminate
employment with or without Good Reason. “Good
Reason” means:
(i)
a material reduction in the
Employee's responsibilities, compensation, or title;
(ii)
any act of the Company requiring
that the Employee relocate
Employee's living residence outside of the San
Francisco Bay Area;
(iii)
the assignment to the Employee of
any duties inconsistent in any respect with paragraph (a) of
Section 2 of this Agreement, other than actions that are not taken
in bad faith and are remedied by the Company within thirty (30)
days after receipt of notice thereof from the Employee;
(iv)
any failure by the Company to comply
with any provision of Section 3 of this Agreement, other than
failures that are not taken in bad faith and are remedied by the
Company within thirty (30) days after receipt of notice thereof
from the Employee;
(v)
the occurrence of a Non-Negotiated
Change in Control of the Company (as defined below); or
(vi)
the Company’s material breach
of this Agreement.
For purposes of
this Agreement, “Non-Negotiated Change in Control”
means any one or more of the following occurrences:
(x) Any
individual, corporation (other than the Company, any trustees or
other beneficiary holding securities under any employee benefit
plan of the Company, or any Company owned, directly or indirectly,
by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company),
partnership, trust, association, pool, syndicate, or any other
entity or any group of persons acting in concert becomes
th
