Exhibit 10.12
NEUROGESX, INC.
RESTATED EXECUTIVE EMPLOYMENT
AGREEMENT
This Restated Executive Employment
Agreement (the “Agreement”) is made and entered into by
and between Jeffrey Tobias (the “Executive”) and
NeurogesX, Inc., a Delaware Corporation (the
“Company”), effective as of December 31, 2008 (the
“Effective Date”).
RECITALS
WHEREAS, the Company and Executive
entered into an employment agreement dated November 30, 2005
(the “Prior Employment Agreement”); and
WHEREAS, the Company and Executive
wish to restate the terms of Executive’s employment and
replace in its entirety the Prior Employment Agreement, in order to
come into compliance with Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”), and any final
regulations and official guidance promulgated thereunder
(“Section 409A”), as set forth below.
AGREEMENT
NOW THEREFORE, in consideration of
the mutual covenants contained herein, the Company and Executive
agree that the Prior Employment Agreement is restated and replaced
in its entirety as follows:
1. Term of Agreement . This
Agreement shall terminate upon the date that all of the obligations
of the parties hereto with respect to this Agreement have been
satisfied.
2. At-Will Employment . The
Company and Executive acknowledge that Executive’s employment
is and shall continue to be at-will, as defined under applicable
law. If Executive’s employment terminates for any reason,
including (without limitation) any termination prior to a Change of
Control, Executive shall not be entitled to any payments, benefits,
damages, awards or compensation other than as provided by this
Agreement, or by law.
3. Duties and Scope of
Employment .
(a) Positions and Duties .
Executive will continue to serve as Chief Medical Officer of the
Company. Executive will continue to 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 Company’s
Board.
(b) Obligations . Executive
will continue to perform his duties faithfully and to the best of
his ability and will continue to devote his full business efforts
and time to the Company. During such time as the Executive is
employed by the Company, Executive agrees not to actively engage in
any other employment, occupation or consulting activity for any
material direct or indirect remuneration without the prior approval
of the Board.
4. Compensation .
(a) Base Salary . The Company
will continue to pay Executive an annual salary as determined in
the discretion of the Board or any committee thereof. The base
salary will be paid periodically in accordance with the
Company’s normal payroll practices and will be subject to the
usual, required withholding. Executive’s salary will be
subject to review and adjustments will be made based upon the
Company’s normal performance review practices.
(b) Performance Bonus .
Executive will continue to be eligible to receive an annual bonus
and other bonuses, less applicable withholding taxes, as determined
by the Board or any committee thereof in the Board’s or such
committee’s sole discretion.
(c) Equity Compensation .
Executive will continue to be eligible to receive stock and option
grants, and other equity compensation awards
(“Awards”), as determined by the Board or any committee
thereof in the Board’s or such committee’s sole
discretion.
5. Employee Benefits .
Executive will continue to be entitled to participate in the
Benefit Plans currently and hereafter maintained by the Company of
general applicability to other senior executives of the Company.
The Company reserves the right to cancel or change the Benefit
Plans it offers to its employees at any time.
6. Vacation . Executive will
continue to be entitled to vacation in accordance with the
Company’s vacation policy, with the timing and duration of
specific vacations mutually and reasonably agreed to by the parties
hereto.
7. Expenses . The Company
will reimburse Executive for reasonable travel, entertainment or
other expenses incurred by Executive in the furtherance of or in
connection with the performance of Executive’s duties as an
employee of the Company, in accordance with the Company’s
expense reimbursement policy as in effect from time to
time.
8. Acceleration of Vesting Upon a
Change of Control . Upon a Change of Control of the
Company:
(a) The vesting of each of
Executive’s then outstanding options to purchase shares of
the Company’s Common Stock (each, an “Option
Grant”) shall immediately be accelerated by a number of
months equal to (i) the number of months over which such
Option Grant would continue vesting as of the date of the Change of
Control if the Executive remained a service provider to the Company
during such period (the “Vesting Months”), minus
(ii) the lower of (A) eighteen months or (B) the
Vesting Months; and
(b) The lapse of the Company’s
right of repurchase with respect to each restricted stock grant
pursuant to which the Executive holds shares of the Company’s
Common Stock (each, a “Restricted Stock Grant”) shall
immediately be accelerated by a number of months equal to
(i) the number of months over which the Company’s right
of repurchase would continue to lapse with respect to any such
Restricted Stock Grant as of the date of the Change of Control if
the Executive remained a service provider to the Company during
such period (the “Lapsing Months”), minus (ii) the
lower of (A) eighteen months or (B) the Lapsing
Months.
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9. Severance Benefits
.
(a) Involuntary Termination
Following a Change of Control . If within eighteen
(18) months following a Change of Control, (X)(i) Executive
terminates his or her employment with the Company (or any parent or
subsidiary of the Company) for Good Reason or (ii) the Company
(or any parent or subsidiary of the Company) terminates
Executive’s employment for other than Cause, and
(Y) subject to Section 9(b) providing that Executive
signs and does not revoke a standard release of claims with the
Company in a form reasonably acceptable to the Company, and then,
subject to Section 9(c) and Section 9(h), Executive shall
receive the following severance from the Company:
(i) Severance Payment .
Executive will be entitled to receive: (A) continuing payments
of severance pay (less applicable withholding taxes) at a rate
equal to his base salary rate, as then in effect, for a period of
nine (9) months from the date of such termination, to be paid
periodically in accordance with the Company’s normal payroll
policies; and (B) a lump-sum payment equal to 100% of
Executive’s target annual bonus as of the date of such
termination.
(ii) Options; Restricted
Stock . All of Executive’s then outstanding options to
purchase shares of the Company’s Common Stock (the
“Options”) shall immediately vest and become
exercisable (that is, in addition to the shares subject to the
Options which have vested and become exercisable as of the date of
such termination), but in no event shall the number of shares
subject to such Options which so vest exceed the total number of
shares subject to such Options. Additionally, all of the shares of
the Company’s Common Stock then held by Executive subject to
a Company right of repurchase (the “Restricted Stock”)
shall immediately vest and have such Company right of repurchase
with respect to such shares of Restricted Stock lapse (that is, in
addition to the shares of Restricted Stock which have vested as of
the date of such termination), but in no event shall the number of
shares which so vest exceed the number of shares of Restricted
Stock outstanding immediately prior to such termination.
(iii) Continued Employee
Benefits . Executive shall receive Company-paid coverage for
Executive and Executive’s eligible dependents under the
Company’s Benefit Plans for a period equal to the shorter of
(i) nine (9) months or (ii) such time as Executive
secures employment with benefits generally similar to those
provided in the Company’s Benefit Plans.
(b) Timing of Severance Payments
After Death . If Executive should die before all amounts have
been paid, such unpaid amounts shall be paid in a lump-sum payment
to Executive’s designated beneficiary, if living, or
otherwise to the personal representative of Executive’s
estate.
(c) Voluntary Resignation;
Termination for Cause . If Executive’s employment
with the Company terminates (i) voluntarily by Executive other
than for Good Reason or (ii) for Cause by the Company, then
Executive shall not be entitled to receive severance or other
benefits except for those as may then be established under the
Company’s then existing severance and Benefits Plans or
pursuant to other written agreements with the Company.
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(d) Disability; Death . If
the Company terminates Executive’s employment as a result of
Executive’s Disability, or Executive’s employment
terminates due to his or her death, then Executive shall not be
entitled to receive severance or other benefits except for
severance amounts paid to Executive prior to the date of such
termination and except for those as may then be established under
the Company’s then existing written severance and Benefit
Plans or pursuant to other written agreements with the
Company.
(e) Termination Apart from a
Change of Control . In the event Executive’s employment
is terminated for any reason, either prior to the occurrence of a
Change of Control or after the eighteen (18) month period
following a Change of Control, then Executive shall be entitled to
receive severance and any other benefits only as may then be
established under the Company’s existing written severance
and Benefit Plans, if any, or pursuant to any other written
agreements with the Company.
(f) Exclusive Remedy . In the
event of a termination of Executive’s employment within
eighteen (18) months following a Change of Control, the
provisions of this Section 9 are intended to be and are
exclusive and in lieu of any other rights or remedies to which
Executive or the Company may otherwise be entitled, whether at law,
tort or contract, in equity, or under this Agreement. Executive
shall be entitled to no benefits, compensation or other payments or
rights upon termination of employment following a Change in Control
other than those benefits expressly set forth in this
Section 9.
(g) Section 409A
.
(i) Notwithstanding anything to the
contrary in this Agreement, if Executive is a “specified
employee” within the meaning of Section 409A at the time
of Executive’s termination (other than due to death), then
the severance payable to Executive, if any, pursuant to this
Agreement, together with any other severance payments or separation
benefits that are considered deferred compensation under
Section 409A (together, the “Deferred Compensation
Separation Benefits”) that would otherwise be payable within
the first six (6) months following Executive’s
termination of employment, will instead become payable in a lump
sum on the first payroll date that occurs on or after the date six
(6) months and one (1) day following the date of
Executive’s termination of employment or the date of
Executive’s death, if earlier. All subsequent Deferred
Compensation Separation Benefits, if any, will be payable in
accordance with the payment schedule applicable to each payment or
benefit. Each payment and benefit payable under this Agreement is
intended to constitute separate payments for purposes of
Section 1.409A-2(b)(2) of the Treasury Regulations.
(ii) Any amount paid under this
Agreement that qualifies as a payment made as a result of an
involuntary separation from service pursuant to
Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that
does not exceed the Section 409A Limit (as defined below) will
not constitute Deferred Compensation Separation Benefits for
purposes of clause (i) above.
The foregoing provisions are
intended to comply with the requirements of Section 409A so
that none of the severance payments and benefits to be provided
hereunder will be subject to the additional tax imposed under
Section 409A, and any ambiguities herein will be interpreted
to so comply. Executive and the Company agree to work together in
good faith to consider amendments to this Agreement and to take
such reasonable actions which are necessary, appropriate or
desirable to avoid imposition of any additional tax or income
recognition prior to actual payment to Executive under
Section 409A.
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10. Limitation of Option Vesting
Acceleration . Notwithstanding the provisions of Sections 8 and
9 (a)(ii), if a Change of Control occurs within the first 12 months
of the Employees full time employment with the company, the vesting
acceleration provided by Sections 8 and 9(a)(ii) shall be limited
to 50% of the shares under option.
11. Conditional Nature of
Severance Payments .
(a) Non-Solicitation . Until
the date one (1) year after the termination of
Executive’s employment with the Company for any reason,
Executive agrees not, either directly or indirectly, to solicit,
induce, attempt to hire, recruit, encourage, take away, hire any
employee of the Company or any successor entity or cause an
employee to leave his or her employment either for Executive or for
any other entity or person. Additionally, Executive acknowledges
that Executive’s right to receive the severance payments set
forth in Section 9 (to the extent Executive is otherwise
entitled to such payments) are contingent upon Executive complying
with this Section 10 and upon any breach by Executive of this
Section 10: (i) Executive shall refund to the Company all
cash paid to Executive pursuant to Section 9 of this
Agreement; and (ii) all severance benefits pursuant to this
Agreement shall immediately cease.
(b) Understanding of
Obligations . Executive represents that he (i) is familiar
with the foregoing covenant not to solicit, and (ii) is fully
aware of his obligations hereunder, including, without limitation,
the reasonableness of the length of time, scope and geographic
coverage of such covenant.
12. Limitation of Payments .
In the event that the severance and other benefits provided for in
this Agreement or otherwise payable to Executive
(i) constitute “parachute payments” within the
meaning of Section 280G of the Code and (ii) but for this
Section 12, would be subject to the excise tax imposed by
Section 4999 of the Code, then Executive’s benefits
hereunder shall be either:
(a) delivered in full, or
(b) delivered as to such lesser
extent which would result in no portion of such severance benefits
being subject to excise tax under Section 4999 of the
Code,
whichever of the foregoing amounts,
taking into account the applicable federal, state and local income
taxes and the excise tax imposed by Section 4999, results in
the receipt by Executive on an after-tax basis, of the greatest
amount of severance benefits, notwithstanding that all or some
portion of such severance benefits may be taxable under
Section 4999 of the Code. If a reduction in the severance and
other benefits constituting “parachute payments” is
necessary so that no portion of such severance benefits is subject
to the excise tax under Section 4999 of the Code, the
reduction shall occur in the following order unless the Company
determines in writing a different order: (1) reduction of cash
payments under this Agreement; (2) cancellation of some or all
accelerated vesting of stock awards; and (3) r
