Exhibit 10.63
VIVUS, INC.
LELAND F. WILSON EMPLOYMENT
AGREEMENT
This Employment
Agreement (the “Agreement”) is entered into as of
December 20, 2007, by and between Vivus, Inc. (the
“Company”) and Leland F. Wilson
(“Executive”).
1.
Duties and Scope of
Employment .
(a)
Positions and
Duties .
As of June 1, 2007 (the “Effective Date”),
Executive will continue to serve as the Company’s President
and Chief Executive Officer reporting to the Company’s Board
of Directors (the “Board”). As of the Effective
Date, Executive will render such business and professional services
in the performance of his duties, consistent with Executive’s
position within the Company, as will reasonably be assigned to him
by the Board. The period Executive is employed by the Company
under this Agreement is referred to herein as the “Employment
Term”.
(b)
Board
Membership . Executive will continue to serve as a
member of the Board as of the Effective Date. Thereafter, at
each annual meeting of the Company’s stockholders during the
Employment Term, the Company will nominate Executive to serve as a
member of the Board. Executive’s service as a member of
the Board will be subject to any required stockholder
approval. Upon the termination of Executive’s
employment for any reason (other than a termination pursuant to
Section 8(d) of the Agreement), and unless otherwise
requested by the Board, Executive will be deemed to have resigned
from the Board (and all other positions held at the Company and its
affiliates) voluntarily, without any further required action by
Executive, as of the end of Executive’s employment and
Executive, at the Board’s request, will execute any documents
necessary to reflect his resignation.
(c)
Obligations
. During the
Employment Term, Executive will devote Executive’s full
business efforts and time to the Company and will use good faith
efforts to discharge Executive’s obligations under this
Agreement to the best of Executive’s ability and in
accordance with each of the Company’s corporate guidance and
ethics guidelines, conflict of interests policies and code of
conduct. For the duration of the Employment Term, Executive
agrees not to actively engage in any other employment, occupation,
or consulting activity for any direct or indirect remuneration
without the prior approval of the Board (which approval will not be
unreasonably withheld); provided, however, that Executive may,
without the approval of the Board, serve in any capacity with any
civic, educational, or charitable organization, provided such
services do not interfere with Executive’s obligations to the
Company.
(i)
Executive hereby
represents and warrants to the Company that Executive is not party
to any contract, understanding, agreement or policy, written or
otherwise, that would be breached by Executive’s entering
into, or performing services under, this Agreement. Executive
further represents that he has disclosed to the Company in writing
all threatened, pending, or actual claims that are unresolved and
still outstanding as of the Effective Date, in each case, against
Executive of which he is aware, if any, as a result of his
employment with his current employer (or any other previous
employer) or his membership on any boards of directors.
(d)
Other
Entities . Executive agrees to serve and will be
appointed, without additional compensation, as an officer and
director for each of the Company’s subsidiaries,
partnerships, joint ventures, limited liability companies and other
affiliates, including entities in which the Company has a
significant investment as determined by the Company. As used
in this Agreement, the term “affiliates” will include
any entity controlled by, controlling, or under common control of
the Company.
2.
At-Will
Employment . Executive and the Company agree that
Executive’s employment with the Company constitutes
“at-will” employment. Executive and the Company
acknowledge that this employment relationship may be terminated at
any time, upon written notice to the other party, with or without
good cause or for any or no cause, at the option either of the
Company or Executive. However, as described in this
Agreement, Executive may be entitled to severance benefits
depending upon the circumstances of Executive’s termination
of employment.
3.
Term of
Agreement . This Agreement will have an initial
term of two (2) years commencing on the Effective Date (the
“Initial Term”). On the second anniversary of the
Effective Date, this Agreement will renew for an additional one
(1) year term (the “Additional Term”) unless
either party provides the other party with written notice of
non-renewal at least ninety (90) days prior to the date of
automatic renewal. If the Company provides Executive with a
notice of non-renewal, and such non-renewal is for reasons other
than Cause, Executive will be entitled to the amounts and benefits
specified in Section 8 of the Agreement.
4.
Compensation
.
(a)
Base Salary
. As of the
Effective Date, the Company will pay Executive an annual salary of
$515,000 as compensation for his services (such annual salary, as
is then effective, to be referred to herein as “Base
Salary”). The Base Salary will be subject to annual
review by the Board or the Compensation Committee of the Board (the
“Committee”) and will be paid periodically in
accordance with the Company’s normal payroll practices and be
subject to the usual, required withholdings. The Base Salary
will be increased annually during the Employment Term at the same
time each year that the Board or Committee reviews and adjusts
salaries of other senior management (which has historically
occurred on or around February of each year) by an amount no
less than the percentage increase in the overall Consumer Price
Index for the San Francisco/Oakland/San Jose Metropolitan Area
(“CPI”) by comparing the CPI as of December of the
then current year to the CPI as of December of the immediately
prior year.
(b)
Annual
Incentive . Executive will be eligible to receive
an annual cash incentive payable upon the achievement of
performance goals established by the Board or by the
Committee. During the Employment Term, Executive’s
target annual incentive (“Target Annual Incentive”)
will be not less than 45% of Executive’s Base Salary.
The actual earned annual cash incentive, if any, payable to
Executive for any performance period will depend upon the extent to
which the applicable performance goal(s) specified by the
Board or the Committee are achieved or exceeded and will be
adjusted for under- or over-performance (the “Earned Annual
Incentive”).
(c)
Stock
Options .
Executive will be eligible to receive annual performance grants
under the Company’s stock option performance program.
Any determinations relating to such grants will be made in the sole
discretion of the Board or the Committee.
5.
Employee
Benefits .
(a)
Generally
. Executive will be
eligible to participate in accordance with the terms of all Company
employee benefit plans, policies and arrangements that are
applicable to other senior managers of the Company, as such plans,
policies and arrangements may exist from time to time.
(b)
Vacation and Sick
Leave .
Executive will be entitled to receive paid annual vacation and sick
leave in accordance with Company policy for other senior
managers. In no event will Executive receive less than four
(4) weeks of paid vacation time per calendar year, pursuant to
the Company’s policies relating to vacation accrual and
use.
6.
Expenses
. The Company will
reimburse Executive for reasonable travel, entertainment and other
expenses incurred by Executive in the furtherance of the
performance of Executive’s duties hereunder, in accordance
with the Company’s expense reimbursement policy as in effect
from time to time.
7.
Termination of
Employment . In the event Executive’s
employment with the Company terminates for any reason, Executive
will be entitled to any (a) unpaid Base Salary accrued up to
the effective date of termination; (b) unpaid, but earned and
accrued annual incentive for any completed fiscal year as of his
termination of employment; (c) pay for accrued but unused
vacation; (d) benefits or compensation as provided under the
terms of any employee benefit and compensation agreements or plans
applicable to Executive; (e) unreimbursed business expenses
required to be reimbursed to Executive; and (f) rights to
indemnification Executive may have under the Company’s
Articles of Incorporation, Bylaws, the Agreement, or separate
indemnification agreement, as applicable. In addition, if the
termination is by the Company without Cause, is due to
Executive’s Retirement, or if Executive resigns for Good
Reason, Executive will be entitled to the amounts and benefits
specified in Section 8.
8.
Severance
.
(a)
Termination Following
Notice of Non-Renewal . If the Company notifies Executive that
it will not renew the Agreement for the Additional Term, and such
non-renewal is for reasons other than Cause, then, Subject to
Section 9 and Section 10, Executive will receive:
(i) a lump sum payment (less applicable tax withholdings)
equal to fifteen (15) months of Executive’s Base Salary, as
is in effect at the time of Executive’s Termination, to be
paid in accordance with the Company’s normal payroll
policies, but no later than thirty (30) days following
Executive’s termination date; (ii) a lump sum payment
(less applicable tax withholdings) equal to the pro-rated amount of
Executive’s Earned Annual Incentive for the fiscal year in
which the termination occurs, with such pro-rated amount to be
calculated by multiplying Executive’s Earned Annual Incentive
by a fraction with a numerator equal to the number of completed
months inclusive between the start of the current fiscal year in
which Executive was employed by the Company (or a successor
corporation) and the date of termination and a denominator equal to
12, to be paid in accordance with
the
Company’s normal payroll policies within five (5) days
of the date bonuses would otherwise be payable for such year (but
in no event paid later than the 15 th
day of the third
month following the end of the calendar year in which the
termination occurs); (iii) reimbursement for premiums paid for
continued health benefits for Executive (and any eligible
dependents) under the Company’s health plans until the
earlier of (A) twelve (12) months, payable when such premiums
are due (provided Executive validly elects to continue coverage
under the Consolidated Omnibus Budget Reconciliation Act
(“COBRA”), or (B) the date upon which Executive
and Executive’s eligible dependents become covered under
similar plans, and (iv) full vesting with respect to
Executive’s then outstanding unvested equity awards with a
post-termination exercise period equal to the later of twelve
(12) months from the date of Executive’s termination of
employment or from the date of Executive’s termination of
service from the Board (as applicable), but in no event later
than the scheduled expiration date of such awards as set forth
in the applicable award agreement. Notwithstanding the
foregoing, the timing of the payment of the severance payments
specified in this Section 8(a) will be subject to the
provisions of Section 10 of this Agreement. In the event
of a Change of Control that occurs during the period commencing on
the date that the Company notifies Executive that it will not renew
the Agreement for the Additional Term and ending on
Executive’s termination date, then, in lieu of the benefits
provided in this Section 8(a), Executive will be entitled to
receive the benefits set forth in Section 8(c).
(b)
Termination Without
Cause or Resignation for Good Reason Not in Connection with a
Change of Control . If Executive’s employment is
terminated by the Company without Cause or is terminated by
Executive for Good Reason, and such termination is not in
Connection with a
Change of Control, then, subject to Section 9 and
Section 10, Executive will receive: (i) a lump sum payment (less
applicable tax withholdings) equal to fifteen (15) months of
Executive’s Base Salary, as is in effect at the time of
Executive’s Termination, to be paid in accordance with the
Company’s normal payroll policies, but no later than thirty
(30) days following Executive’s termination date;
(ii)
a lump sum payment (less
applicable tax withholdings) equal to the pro-rated amount of
Executive’s Earned Annual Incentive for the fiscal year in
which the termination occurs, with such pro-rated amount to be
calculated by multiplying Executive’s Earned Annual Incentive
by a fraction with a numerator equal to the number of completed
months inclusive between the start of the current fiscal year in
which Executive was employed by the Company (or a successor
corporation) and the date of termination and a denominator equal to
12, to be paid in accordance with the Company’s normal
payroll policies within five (5) days of the date bonuses
would otherwise be payable for such year (but in no event paid
later than the 15 th
day of the third
month following the end of the calendar year in which the
termination occurs) ; (iii) reimbursement for premiums paid
for continued health benefits for Executive (and any eligible
dependents) under the Company’s health plans until the
earlier of (A) twelve (12) months, payable when such premiums
are due (provided Executive validly elects to continue coverage
under COBRA), or (B) the date upon which Executive and
Executive’s eligible dependents become covered under similar
plans, and (iv) full vesting with respect to
Executive’s then outstanding unvested equity awards with a
post-termination exercise period equal to the later of twelve (12) months
from the date of Executive’s termination of employment, or
from the date of Executive’s termination of service from the
Board (as applicable), but in no event later than the
scheduled expiration date of such awards as set forth in the
applicable award agreement. Notwithstanding the foregoing,
the timing of the payment of the severance payments or benefits
specified in this Section 8(b) will be subject to the
provisions of Section 10 of this Agreement.
(c)
Termination Without
Cause or Resignation for Good Reason in Connection with a Change of
Control .
If Executive’s employment is terminated by the Company
without Cause or is terminated by Executive for Good Reason, and
such termination is in Connection with a Change of Control, then,
subject to Section 9 and Section 10, Executive will be
entitled to receive the following benefits: (i) a lump sum
payment (less applicable tax withholdings) equal to twenty-four
(24) months of Executive’s Base Salary, as is in effect at
the time of Executive’s termination, to be paid in accordance with the
Company’s normal payroll policies, but no later than thirty
(30) days following Executive’s termination date;
(ii) a lump
sum payment (less applicable tax withholdings) equal to 200% of
Executive’s Target Annual Incentive, as is in effect at the
time of Executive’s termination, to be paid in accordance with the
Company’s normal payroll policies, but no later than thirty
(30) days following Executive’s termination date;
(iii) reimbursement for premiums paid for continued health
benefits for Executive (and any eligible dependents) under the
Company’s health plans until the earlier of
(A) twenty-four (24) months, payable when such premiums are
due (provided Executive validly elects to continue coverage under
COBRA), or (B) the date upon which Executive and
Executive’s eligible dependents become covered under similar
plans; (iv) outplacement services with a total value not to
exceed $20,000; and (v) full vesting with respect to
Executive’s then outstanding unvested equity awards
with a post-termination
exercise period equal to the later of twelve (12) months from
the date of Executive’s termination of employment, or from
the date of Executive’s termination of service from the Board
(as applicable), but in no event later than the scheduled
expiration date of such awards as set forth in the applicable award
agreement .
Notwithstanding the
foregoing, the timing of the payment of the severance payments or
benefits specified in this Section 8(c) will be subject
to the provisions of Section 10 of this Agreement.
(d)
Termination due to
Executive’s Retirement . If Executive terminates his employment
voluntarily due to his Retirement and such termination is without
Cause, and provided Executive provides the Company with written
notice of his Retirement at least ninety (90) days prior to his
Retirement, then, subject to Section 8(d)(1), Section 9
and Section 10, Executive will be entitled to receive the
following benefits: (i) a lump sum payment (less applicable
tax withholdings) equal to twenty-one (21) months of
Executive’s Base Salary, as is in effect at the time of
Executive’s Retirement, to be paid in accordance with the
Company’s normal payroll policies, but no later than thirty
(30) days following Executive’s termination date;
(ii) a lump
sum payment (less applicable tax withholdings) equal to 100% of the
average annual incentive Executive has received over the three
(3) year period prior to his termination, to be paid in accordance with the
Company’s normal payroll policies, but no later than thirty
(30) days following Executive’s termination date;
(iii) reimbursement
for premiums paid for continued health benefits for Executive (and
any eligible dependents) under the Company’s health plans
until the earlier of (A) twelve (12) months, payable when such premiums
are due (provided Executive validly elects to continue coverage
under COBRA), or (B) the date upon which Executive and
Executive’s eligible dependents become covered under similar
plans, and (iv) full vesting with respect to
Executive’s then outstanding unvested equity awards
with a post-termination
exercise period equal to the later of twelve (12) months from
the date of Executive’s termination of employment, or from
the date of Executive’s termination of service from the Board
(as applicable), but in no event later than the scheduled
expiration date of such awards as set forth in the applicable award
agreement .
Notwithstanding the
foregoing, the timing of the payment of the severance p
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