Exhibit 10.3
May 21, 2009
Alan Auerbach
c/o Cougar Biotechnology, Inc.
10990 Wilshire Blvd, Suite 1200
Los Angeles, CA 90024
Dear Alan:
This letter agreement is in
reference to the amended and restated employment agreement between
you and Cougar Biotechnology, Inc. (the “Company”),
dated as of May 21, 2009 and as amended and restated as of the
date hereof (as amended through the date hereof, the
“Employment Agreement”). As you know,
Johnson & Johnson, a New Jersey corporation
(“Parent”), Kite Merger Sub, Inc., a wholly owned
subsidiary of Parent (“Purchaser”), and the Company
propose to enter into a merger agreement, dated as of the date
hereof (the “Merger Agreement”) that will (subject to
the satisfaction of the terms and conditions of the Merger
Agreement) result in the Company becoming wholly-owned by Parent
upon the Closing (as defined in the Merger Agreement) as a result
of the Merger (as defined in the Merger Agreement). As a condition
to the willingness of Parent and Purchaser to enter into the Merger
Agreement, Parent has requested that you enter into this letter
agreement setting forth certain modifications to your rights and
obligations under the Employment Agreement and any other agreement
between you and the Company that provides for severance or
separation benefits and certain other matters. Capitalized terms
used but not otherwise defined herein will have the meanings
assigned thereto under the Employment Agreement, unless otherwise
expressly noted.
In consideration of the benefits
provided under Section 4 of this letter agreement and for
other good and valuable consideration, which is hereby acknowledged
and agreed by the undersigned, each of the Company, Parent and you
(each, a “party”) agrees as follows:
1. Effectiveness. This letter
agreement will become effective upon its execution by each of the
parties hereto; provided , however , that this letter
agreement will be null and void ab initio and of no further force
or effect if the Merger Agreement is terminated prior to the
Closing (it being understood that Parent and Purchaser shall have
no liabilities or obligations hereunder unless and until the
Closing occurs).
2. Entitlement to Severance;
Miscellaneous. (a) You hereby agree that you shall be
entitled to the severance compensation and benefits described in
Sections 10(c)(i) and (iii) of the Employment Agreement (the
“Termination Compensation”) only in the event
that,
within six months after the occurrence of the
Closing, your employment is terminated for any reason other than
(i) by the Company for Cause, (ii) by you other than for
Good Reason (as defined in the Employment Agreement, except that
Section 9(d)(ii) of the Employment Agreement (relating to a
diminution in authorities, duties or responsibilities) shall not
apply and be deemed for purposes of this letter agreement to have
been deleted), or (iii) due to your Death or Disability;
provided , that your entitlement to such severance
compensation and benefits will remain subject to Section 10(f)
of the Employment Agreement; provided , further ,
that for all purposes of the Employment Agreement and this letter
agreement, “Base Salary” shall equal a rate of $470,000
per annum. In addition, you further acknowledge and agree that in
the event that you receive the Termination Compensation, you shall
not be entitled to the Retention Bonus (as defined below), and such
severance compensation and benefits shall be in lieu of, and not in
addition to, (1) any payments and benefits under any other
severance, separation or other termination plan, program, policy or
arrangement maintained by the Company (including the Cougar
Biotechnology, Inc. Severance Plan), Parent or any of their
respective subsidiaries and (2) under any other individual
agreement between you and the Company.
(b) You hereby agree that, except as
expressly provided herein, the provisions of Sections 3, 4, 5,
10(c) and 10(d) of the Employment Agreement shall cease to apply to
you from and after the Closing, and you shall instead be eligible
to receive the payments and benefits described herein and to
participate in all plans and programs of Parent applying to
employees with your duties and responsibilities.
(c) You hereby agree that your
outstanding stock options will be treated upon the Closing in
accordance with Section 2.5 of the Merger
Agreement.
3. Stock Awards. You hereby
agree that no stock option or other equity-based or equity-related
award granted to you on or after the Closing will be subject to the
provisions in the Employment Agreement regarding accelerated
vesting in connection with a termination of your
employment.
4. Retention
Bonus. Subject to your compliance with Sections 6 and 7 of this
letter agreement, if you remain an active full-time employee of the
Company, Parent or any of their respective subsidiaries through the
expiration of the six-month period following the Closing, you will
receive a lump-sum cash payment equal to the aggregate amount
described in Section 10(c)(i) of the Employment Agreement (the
“Retention Bonus”), which will be paid to you on the
3 rd business day following the
Release Effective Date (as defined below). You hereby agree to
amend the Employment Agreement and any other agreement between you
and the Company providing for severance or separation benefits to
provide that, if you become entitled to payment of the Retention
Bonus, you will not be entitled to the Termination Compensation or
any severance payments or benefits under the Employment Agreement
(including under Sections 10(c)(i), 10(c)(ii) and 10(d)) or under
any other agreement, plan, program, policy or arrangement
(including the Cougar Biotechnology, Inc. Severance Plan), and all
of your rights under the Employment Agreement and any such other
plan, program, policy or arrangement will immediately terminate;
provided , that Sections 10(c)(iii) (relating to COBRA) and
10(e) (relating to a Gross-Up Payment) of the Employment Agreement,
each as in effect on
2
the date hereof, shall survive such termination;
provided , further , that the benefits under
Section 10(c)(iii) shall be provided to you upon your
termination of employment for any reason other than by the Company
for Cause. In no event will you receive the Retention Bonus if your
employment is terminated for any reason prior to the expiration of
the six-month period following the Closing.
5. Restrictions on Termination of
Employment Prior to Closing. During the period following the
signing of this letter agreement and prior to the Closing (the
“Pre-Closing Period”), (a) the Company agrees that
it shall not terminate your employment other than for Cause and
(b) you hereby agree that you will not terminate your
employment for any reason other than Good Reason, as modified
hereby. You and the Company also agree that, during the Pre-Closing
Period, the Employment Agreement will not be amended, modified,
replaced or terminated without Parent’s prior written
consent.
6. Employee Covenants. You
acknowledge that as a result of your employment with the Company,
you have been given access to various trade secrets and
confidential customer lists of the Company. In addition, you
further acknowledge and agree that a material aspect of
Parent’s decision to enter into the Merger Agreement is the
acquisition of the Company’s goodwill for the purpose of
Parent’s carrying on a business that is similar to the
business of the Company. Therefore, in consideration for
(i) the offer to purchase each share of the Company’s
common stock that you hold as of the Closing for the Offer Price
(as defined in
