Exhibit 10.3
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Second Amended and Restated
Employment Agreement (this “Agreement”), by and between
TPTX, Inc., a Delaware corporation (the “Company”),
Paul Schneider (the “Employee”) and for purposes of its
obligations solely which are set forth in Section 2.2,
TorreyPines Therapeutics, Inc., a Delaware corporation
(“TorreyPines”), is entered into as of July 27,
2009 and shall become effective automatically and without further
action by any Party hereto immediately after the Effective Time of
the Merger Agreement (as defined below) (provided that
(i) Employee is employed by the Company at the Effective Time
(as defined in the Merger Agreement) and (ii) Employee has
been continuously employed by the Company pursuant to the Prior
Agreements (as defined below) from the date of this Agreement to
the Effective Time). This Agreement shall replace and supersede all
prior employment agreements between Employee and the Company and/or
TorreyPines including, but not limited to, that certain Employment
Agreement entered into effective as of February 1, 2007, as
amended and restated pursuant to that certain Amended and Restated
Employment Agreement entered into effective as of November 12,
2008, as amended by that certain Amendment to Employment Agreement
made and entered into as of February 3, 2009 (collectively,
the “Prior Agreements”). The Company, TorreyPines and
the Employee are hereinafter collectively referred to as the
“Parties,” and individually referred to as a
“Party.”
RECITALS
A. The Company and/or the
Company’s parent, TorreyPines, and Employee previously
entered into the Prior Agreements and desire to amend and restate
the Prior Agreements in their entirety as set forth herein,
effective as of the Effective Time, in order to induce the Company
and Raptor Pharmaceuticals, Corp. (“Raptor”) to
consummate the transactions contemplated by that certain Agreement
and Plan of Merger and Reorganization, dated July 27, 2009
(the “Merger Agreement”).
B. The Company desires to retain the
Employee’s experience, skills, abilities, background and
knowledge and is willing to engage the Employee’s services on
the terms and conditions set forth in this Agreement.
C. The Employee has agreed to reduce
the severance payment obligation set forth in the Prior Agreements
and desires to be in the employ of the Company and is willing to
accept such employment on the terms and conditions set forth in
this Agreement.
AGREEMENT
In consideration of the foregoing
Recitals and the mutual promises and covenants herein contained,
and for other good and valuable consideration, the Parties,
intending to be legally bound, agree as follows:
1. EMPLOYMENT
1.1 Title . The Employee
shall serve as the Company’s Vice President and General
Counsel. The Employee shall report solely and directly to the
President of the Company (the “President”).
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1.2 Obligations . Employee is
required to read, review and observe all of the Company’s
policies, procedures, rules and regulations in effect from time to
time.
1.3 Term . This Agreement and
the Employee’s employment shall terminate on the earlier of
(i) February 28, 2010 or (ii) such other date this
Agreement and Employee’s employment is terminated under
Section 3 (the “Expiration Date”). Except as set
forth in Section 3.10, upon the Expiration Date, all of the
Company’s obligations and each such Party’s respective
rights under this Agreement shall immediately lapse.
2. COMPENSATION OF THE
EMPLOYEE
2.1 Base Salary . The Company
shall pay the Employee a base salary of Eighteen Thousand One
Hundred Forty-Two Dollars ($18,142) per month, payable in regular
periodic payments in accordance with Company policy. Such base
salary shall be prorated for any partial month of employment on the
basis of a 31-day month.
2.2 Additional Compensation .
If, following the Effective Time and prior to February 28,
2010, the Company (i) sells to a Buyer (as defined below) any
equity securities of the Company and the proceeds from such Sale
(as defined below) are used primarily for the development of the
Company’s product designated NGX426, (ii) completes a
Change of Control Transaction or (iii) enters into a
partnership, option, or similar arrangement (any transaction
described in clauses (i), (ii) or (iii), the
“Sale”), and the Sale described in clauses (i),
(ii) or (iii) is approved by the board of directors of
the Company (the “Board”) and is for aggregate cash
consideration (net of all costs and expenses associated with the
Sale) received by the Company on or before February 28, 2010
of not less than $10 million, then promptly following the closing
of the Sale, (A) the Company shall pay to the Employee an
amount equal to (x) 3.0% of the aggregate cash consideration
(net of all costs and expenses associated with the Sale) received
by the Company in the Sale multiplied by (y) 26%, and
(B) TorreyPines shall pay to the Employee an amount equal to
(x) 2.0% of the aggregate cash consideration (net of all costs
and expenses associated with the Sale) received by the Company in
the Sale multiplied by (y) 26%. As used herein,
“Buyer” means any third party other than TorreyPines or
any of its subsidiaries. The amount described in clause (A) of
this Section 2.2 shall be payable in cash by the delivery of a
Company check to the Employee, and the amount described in clause
(B) of this Section 2.2 shall be payable in shares of the
TorreyPines’ common stock. The number of shares of
TorreyPines’ common stock issuable pursuant to clause
(B) of this Section 2.2 shall equal the amount described
in clause (B) of this Section 2.2, divided by the Per
Share Price. As used herein, the “Per Share Price”
means the average closing sales price of the TorreyPines’
common stock on the NASDAQ Capital Market for the five
(5) consecutive trading days immediately prior to the date of
the issuance of TorreyPines’ common stock pursuant to this
Section 2.2. No fractional shares of TorreyPines’ common
stock shall be issued pursuant to this Section 2.2. In lieu of
fractional shares, Employee shall receive, without interest, an
amount in cash (rounded to the nearest whole cent) determined by
multiplying such fraction by the Per Share Price. The Parties
understand, acknowledge and agree that any TorreyPines’
common stock issued pursuant to this Section 2.2 shall not,
when issued, be registered under the Securities Act of 1933, as
amended, or the securities laws of any state or other jurisdiction.
As used herein “Change of Control Transaction” means
(i) a merger, consolidation, amalgamation, share exchange,
business combination, issuance of securities, acquisition of
securities, reorganization, recapitalization, tender offer,
exchange offer or other similar transaction as a result of which
either (A) the Company’s
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stockholders immediately prior to such
transaction in the aggregate cease to own directly or indirectly at
least 50% of the voting securities of the entity surviving or
resulting from such transaction (or the ultimate parent entity
thereof) or (B) in which a Person or “group” (as
defined in the Exchange Act and the rules promulgated thereunder)
directly acquires beneficial or record ownership of securities
representing 50% or more of the Company’s capital stock or
(ii) a sale, lease, exchange, transfer, license or disposition
of any business or other disposition of at least 50% of the assets
(on a book value or fair market value basis) of the Company, taken
as a whole, as applicable, in a single transaction or a series of
related transactions.
2.3 Employment Taxes . All of
the Employee’s compensation (in any form) shall be subject to
all required withholding taxes, employment taxes and other
deductions required by law.
2.4 Benefits . The Employee
shall, in accordance with Company policy and the terms of the
applicable plan documents, be eligible to participate in health
benefits under any health benefit plan or arrangement which may be
in effect from time to time and made available to the
Company’s employees. The Employee shall not be eligible for
any paid vacation.
2.5 Annual Incentive Bonus .
Employee agrees that Employee shall not be entitled to any bonus
with respect to any period of time, whether prior to, on, or after
the Effective Time.
3. TERMINATION
3.1 Termination . The
Employee’s employment with the Company may be terminated
under the conditions set forth below. The Employee’s
employment by the Company shall be “at
will.”
3.2 Termination for Death .
The Employee’s employment with the Company shall terminate
effective upon the date of the Employee’s death.
3.3 Termination by the Company
For Any Reason or No Reason . The Company may terminate the
Employee’s employment under this Agreement at any time, for
any or no reason and with or without cause or advance notice and
such termination shall not be deemed a breach by the Company of any
term of this Agreement or any other duty or obligation, expressed
or implied, which the Company may owe to Employee pursuant to any
principle or provision of law. This is the full and complete
agreement between the Employee and the Company on this term.
Although the Employee’s duties, title, compensation and
benefits may change, the “at will” nature of the
Employee’s employment relationship with the Company may only
be modified in an express written agreement signed by the Employee
and a member of the Board on behalf of the Company.
3.4 Termination by Mutual
Agreement of the Parties . The Employee’s employment
pursuant to this Agreement may be terminated at any time upon the
mutual written agreement of the Parties. Any such termination of
employment shall have the consequences specified in such
writing.
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3.5 Termination by the
Employee . The Employee shall have the right to resign or
terminate the Employee’s employment at any time, with or
without cause or notice.
3.6 Compensation Upon
Termination .
3.6.1 Termination . Upon
Employee’s termination for whatever reason, the Company shall
pay:
3.6.1.1 Employee’s base salary
earned through the date of such termination or resignation, less
standard deductions and withholdings. Except as specifically
provided in subsections 3.6.1.2 and 3.6.1.3, below, the Company
shall thereafter have no further obligation to the Employee under
this Agreement.
3.6.1.2 assuming the Employee timely
and accurately elects to continue Employee’s health insurance
benefits under the Consolidated Omnibus Budget Reconciliation Act
of 1985 (“COBRA”), the Company shall pay the COBRA
premiums for the Employee and Employee’s qualified
beneficiaries under any Company-sponsored group health plan that
the Company does not treat as self insured (e.g., it will not pay
the COBRA premiums with respect to any Flexible Spending Account),
until the earliest of (i) August 31, 2010, (ii) the
expiration of the Employee’s continuation coverage under
COBRA and any applicable state COBRA-like statute that provides
mandated continuation coverage or (iii) the date the Employee
becomes eligible for health insurance benefits of a subsequent
employer. Employee agrees to immediately notify the Company in
writing of any such eligibility.
3.6.1.3 Employee’s base salary
during the period following the termination or resignation of the
Employee for a period between the date of employment termination
and February 28, 2010. Such severance payments shall be
subject to standard deductions and withholdings and paid in
accordance with the Company’s regular payroll policies and
practices. For purposes of calculating the amount to be paid
pursuant this Section 3.6.1.3 the Company shall use the
Employee’s base salary in effect on the date of such
termination or resignation.
3.6.2 Release and Agreement
Release . Notwithstanding the foregoing, the Employee shall not
receive any of the additional compensation, severance payments or
benefits set forth under Sections 2.2, 3.6.1.1, 3.6.1.2 or
3.6.1.3, unless within the time period set forth therein, but in no
event later than forty-five (45) days following termination of
employment, the Employee furnishes the Company with a waiver and
release of claims in a form acceptable to the Parties and
substantially as attached hereto as Exhibit A, including such
changes as may be made by the Board as necessary to comply with
applicable laws (the “Release”), and such Release
becomes effective in accordance with its terms. Notwithstanding
anything herein to the contrary, the Employee acknowledges,
understands and agrees that the Company shall not be obligated to
pay, and the Employee shall not receive, any of the base salary
payments, additional compensation, severance payments or benefits
set forth under Sections 2.1, 2.2, 3.6.1.1, 3.6.1.2 or
3.6.1.3, if that certain Release and Waiver of Claims executed by
the Employee in favor of the Company and TorreyPines and other
released parties as described therein, a form of which is attached
to the Merger Agreement as Exhibit E thereto (the
“Agreement Release”), is timely revoked by the Employee
as permitted therein. Notwithstanding the foregoing, under no
circumstances shall the foregoing Release or Agreement Release or
the conditions precedent to the Company’s obligations
hereunder affect the effectiveness of this Agreement (or the
cancellation of the Prior Agreements) as set forth in preamble to
this Agreement.
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3.7 Parachute Payments .
Anything in this Agreement to the contrary notwithstanding, if any
payment or benefit the Employee would receive from the Company or
an affiliate of the Company pursuant to this Agreement or otherwise
(a “Payment”) would (i) constitute a
“parachute payment” within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended
(the “Code”), and (ii) but for this sentence, be
subject to the excise tax imposed by Section 4999 of the Code
(the “Excise Tax”), then such Payment shall be equal to
the Reduced Amount. The “Reduced Amount” shall be
either (x) the largest portion of the Payment that would
result in no portion of the Payment being subject to the Excise Tax
or (y) the largest portion of the Payment, up to and including
the total Payment, whichever amount, after taking into account all
applicable federal, state and local employment taxes, income taxes,
and the Excise Tax (all computed at the highest applicable marginal
rate),
