Exhibit
10.1
EMPLOYMENT
AGREEMENT
This
EMPLOYMENT AGREEMENT (the “ Agreement
” ) is entered into effective as of December 14, 2006
(the “ Effective Date ” ), by and
between TorreyPines
Therapeutics, Inc. (the
“ Parent ” ), Parent’s subsidiary,
TPTX, Inc. ( “TPTX” ) and Neil Kurtz (the
“ Executive ” ). As used in this
Agreement, references to the “Company”
shall include the Parent and TPTX, as appropriate. The
Company and the Executive are hereinafter collectively referred to
as the “ Parties, ” and individually
referred to as a “ Party .
”
RECITALS
A.
The Company desires to retain the
Executive’s experience, skills, abilities, background and
knowledge and is willing to engage the Executive’s services
on the terms and conditions set forth in this Agreement.
B.
The Executive 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.
C.
The Parties contemplate that
Executive will be an employee of both the Parent and TPTX, and all
amounts required to be paid to Executive pursuant to this Agreement
will be paid by TPTX.
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
Executive shall serve as the Parent’s Chief Executive Officer
and President and shall serve in such other capacities as the
Company may from time to time prescribe. The Executive shall
report solely and directly to the Parent’s Board of Directors
(the “Board” ).
1.2
Duties .
The Executive shall perform all services and actions necessary or
advisable to conduct the business of the Company and which are
normally associated with the position(s) the Executive holds in a
corporation of the size and nature of the Company.
1.3
Location . Except
as otherwise specifically permitted by the Board, the Executive
shall perform the services required pursuant to this Agreement at
the Company’s offices located in San Diego, California;
provided, however, that the Company may require the Executive to
travel temporarily to other locations in connection with the
Company’s business.
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2.
LOYAL AND CONSCIENTIOUS
PERFORMANCE; NONCOMPETITION.
2.1
Loyalty . Except as
otherwise specifically permitted by the Board, during the
Executive’s employment with the Company, the Executive shall
devote the Executive’s full business energies, interest,
abilities and productive time to the proper and efficient
performance of the Executive’s duties under this Agreement;
provided, however, that Executive may (a) devote a
reasonable amount of time and energies for personal investment and
civic and charitable duties, and (b) serve as a member of the
boards of directors of NeurogesX Inc. and Medidata Solutions,
Inc.
3.
COMPENSATION OF THE
EXECUTIVE.
3.1
Base Salary .
Effective October 4, 2006, the Company shall pay the Executive a
base salary of Four Hundred Thousand Dollars ($400,000) per year,
payable in regular periodic payments in accordance with Company
policy. Such base salary shall be prorated for any partial
year of employment on the basis of a 365-day fiscal
year.
3.2
Annual Incentive Bonus. In addition to the
Executive’s base salary, the Executive will be eligible to
receive an annual performance bonus. The bonus amount
Executive may receive¸ if any, shall be based upon the
Executive’s and the Company’s performance as measured
against agreed-upon targets during the previous year as evaluated
by the Board in its sole and absolute discretion. The bonus
amount payable for performance that meets the targets shall be a
percentage of the Executive’s annual base salary (the
“Target Bonus Amount” ). For 2007,
the Executive’s Target Bonus Amount shall be forty percent
(40%) of the Executive’s annual base salary. Annual
performance bonus pay will vary according to the Executive’s
and the Company’s performance against the targets and will be
capped at one hundred fifty percent (150%) of the Target Bonus
Amount. In the event the Company and the Executive do not
agree upon the performance targets, the Board shall establish the
applicable performance targets in its sole and absolute
discretion.
3.3
Changes to Compensation . The Executive’s compensation shall
be reviewed from time to time by the Board or the Compensation
Committee thereof as it deems appropriate and may be increased at
any time by the Board or the Compensation Committee thereof or may
be reduced only upon mutual written agreement between the Executive
and the Board or the Compensation Committee thereof.
3.4
Employment Taxes .
All of the Executive’s compensation (in any form) shall be
subject to all required withholding taxes, employment taxes and
other deductions required by law.
3.5
Equity Compensation . The Compensation Committee of the Board
will periodically evaluate the equity position of Executive and
determine changes, if any, at its annual meeting addressing
executive compensation in general.
3.6
Benefits . The
Executive shall, in accordance with Company policy and the terms of
the applicable plan documents, be eligible to participate in
benefits under any benefit plan or arrangement which may be in
effect from time to time and made available to the
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Company’s employees. In
addition, the Executive shall be eligible for paid vacation, in
accordance with Company policy as in effect from time to
time.
4.
TERMINATION.
4.1
Termination By the Company . The Executive’s employment with
the Company may be terminated under the following
conditions:
4.1.1
Termination for Death or Disability . The Executive’s employment with
the Company shall terminate effective upon the date of the
Executive’s death or Complete Disability (as defined
below).
4.1.2
Termination by the Company For Cause . The Company may terminate the
Executive’s employment under this Agreement for Cause (as
defined below). A notice of termination given pursuant to this
Section 4.1.2 shall effect termination as of the date specified,
or, in the event no such date is specified, on the date upon which
the notice is given.
4.1.3
Termination by the Company For Any Reason Other Than
Cause . The
Executive’s employment by the Company shall be “at
will.” The Company may terminate the Executive’s
employment under this Agreement at any time, for any or no reason
and with or without cause or advance notice. This is the full
and complete agreement between the Executive and the Company on
this term. Although the Executive’s duties, title,
compensation and benefits may change, the “at will”
nature of the Executive’s employment relationship with the
Company may only be modified in an express written agreement signed
by the Executive and the Board.
4.2
Termination by Mutual Agreement of the Parties
. The Executive’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.
4.3
Termination by the Executive . The Executive’s employment by the
Company shall be “at will.” The Executive shall
have the right to resign or terminate the Executive’s
employment at any time, with or without cause, notice or Good
Reason.
4.4
Compensation Upon Termination .
4.4.1
Termination Payments .
Upon Executive’s termination or resignation
with Good Reason, the Company shall pay the Executive’s base
salary and any accrued and unused vacation benefits earned through
the date of such termination or resignation. Except as
expressly provided herein, the Company shall thereafter have no
further obligations to the Executive under this
Agreement.
4.4.2
Severance Payments. In addition to the payments provided in
Section 4.4.1, if the Executive’s employment is terminated by
the Company without Cause or if, within three months before, or 12
months following, a Change in Control (as defined below), the
Executive resigns for Good Reason, then the Company shall provide
the following benefits:
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4.4.2.1
The Company shall continue to pay
the Executive’s base salary until the end of the period
following the termination of the Executive’s employment equal
to eighteen (18) months (the “ Severance Period
”). 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 4.4.2.1, the Company shall use the Executive’s base
compensation in effect on the date of such termination or
resignation.
4.4.2.2
Each month during the Severance
Period, the Company shall pay the Executive an amount equal to
one-twelfth (1/12 th
) of the greater of (i) the average
of the three annual bonuses paid to the Executive by the Company
prior to the date of termination or resignation, (ii) the last
annual bonus paid to the Executive by the Company prior to the date
of termination or resignation, or (iii) if the termination occurs
within the first twelve 12 months following the Effective Date of
this Agreement, then the Target Bonus Amount. Such payment
shall be subject to standard deductions and withholdings and paid
in equal monthly installments over the Severance Period in
accordance with the Company’s regular payroll policies and
practices.
4.4.2.3
The vesting of each Company equity
award held by Executive shall accelerate on such date of
termination by the number of shares that would have vested had
Executive remained employed by the Company during the Severance
Period, and, during the Severance Period, Executive shall have
continued exercisability of each Company stock option and stock
appreciation right held by the Executive (if any). Notwithstanding
the foregoing, if a stock option or stock appreciation right was
held by the Executive on the Effective Date and counsel for the
Company has not advised the Company that such continued stock
option exercisability would not cause such stock option to be
treated as covered by Section 409A of the Code or would not cause
the Executive to become subject to the immediate taxation prior to
the date of exercise, additional tax and interest under Section
409A of the Code, then any such stock option or stock appreciation
right then held by Executive shall remain exercisable until the
earlier of (1) the end of the Severance Period or (2) the later of
the 15 th day of the third month following the date
at which, or December 31 of the calendar year in which, the stock
option would otherwise have expired if the stock option had not
been extended pursuant to this Section 4.4.2.3 (based on the terms
of the stock option at the original grant date); provided,
however , that such stock options shall not be exercisable
after the expiration of its maximum term. Nothing in
this Section 4.4.2.3 prohibits the Company or a successor
organization (or its parent) from causing such awards to terminate
in connection with a merger, consolidation or other corporate
transaction pursuant to the terms of the applicable equity plan or
award agreements.
4.4.2.4
Assuming the Executive timely and
accurately elects to continue his health insurance benefits under
the Consolidated Omnibus Budget Reconciliation Act of 1985 (“
COBRA ”), the Company shall pay the COBRA
premiums for the Executive and his or her qualified beneficiaries
until the earliest of (i) the end of the Severance Period, (ii) the
expiration of the Executive’s continuation coverage under
COBRA and any applicable state COBRA-like statute that provides
mandated continuation coverage or (iii) the date the Executive
becomes eligible for health insurance benefits of a subsequent
employer.
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4.4.2.5
In the event the Executive resigns
with Good Reason prior to a Change in Control, the payments
described in Sections 4.4.2.1, 4.4.2.2 and 4.4.2.4 will commence as
soon as administratively practicable following the Change in
Control; otherwise the payments will commence as soon
administratively practicable following the Executive’s
termination or resignation.
4.4.3
Release .
Notwithstanding the foregoing, the Executive shall not receive any
of the severance payments or benefits set forth under Section
4.4.2, unless upon Executive’s termination of employment the
Executive furnishes the Company with an effective waiver and
release of claims (the “Release” ) in a
form acceptable to the Parties and substantially as attached hereto
as Exhibit A . If a majority of the Board determines in
good faith that the Executive has breached any provision of this
Agreement or the Release, the Company shall be excused from the
obligation to provide any severance payment under Section 4.4.2;
provided, however, that the Company shall not be entitled to
recovery of any severance payment already provided to the Executive
under Section 4.4.2.
4.4.4
Mitigation.
Any amounts payable to the Executive under Section
4.4.2.1 and Section 4.4.2.2 shall be reduced by the amount of the
Executive’s earnings from other employment during the
Severance Period, if applicable (which employment the Executive
shall have an affirmative duty to seek; provided, however, that the
Executive shall not be obligated to accept a new position which is
not reasonably comparable to his employment with the
Company).
4.5
Definitions . For
purposes of this Agreement, the following terms shall have the
following meanings:
4.5.1
Complete Disability . “Complete Disability”
shall mean the inability of the Executive to perform the
Executive’s duties under this Agreement because the Executive
has become permanently disabled within the meaning of any policy of
disability income insurance covering employees of the Company then
in force. In the event the Company has no policy of
disability income insurance covering employees of the Company in
force when the Executive becomes disabled, the term
“Complete Disability” shall mean the inability
of the Executive to perform the Executive’s duties under this
Agreement by reason of any incapacity, physical or mental, which
the Board, based upon medical advice or an opinion provided by a
licensed physician acceptable to the Board, determines to have
incapacitated the Executive from satisfactorily performing all of
the Executive’s usual services for the Company for a period
of at least one hundred twenty (120) days during any twelve (12)
month period (whether or not consecutive). Based upon such
medical advice or opinion, the determination of the Board shall be
final and binding and the date such determination is made shall be
the date of such Complete Disability for purposes of this
Agreement.
4.5.2
Cause. “Cause” for the Company to terminate Executive’s
employment hereunder shall mean the occurrence of one or more of
the following events if such event results in a demonstrably
harmful impact on the Company’s business or reputation, or
that of any of its subsidiaries, as reasonably determined by the
Board:
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(i)
Executive’s conviction of, or
plea of guilty or no contest to, any felony or any crime involving
fraud, dishonesty or moral turpitude under the laws of the United
States or any state thereof;
(ii)
Executive’s commission of
(or
