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Exhibit 10.2
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 Evelyn Graham
(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:
1.1 Title
. The Executive shall serve as the Parent’s Chief
Operating Officer 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 Company’s Chief Executive
Officer.
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 Parent’s Board of Directors (the
"Board" ), the Executive shall continue to perform
the services required pursuant to this Agreement by telecommuting
from her residence in Connecticut, provided, that if and to the
extent requested by the Company’s Chief Executive Officer,
she will work at least 80 hours per month at the Company’s
headquarters in San Diego, California, and provided,
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further that the Company may require the
Executive to travel temporarily to other locations in connection
with the Company’s business.
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 devote a
reasonable amount of time and energies for personal investment and
civic and charitable duties.
3.1 Base
Salary . Effective October 4, 2006, the Company shall pay the
Executive a base salary of Two Hundred Sixty Thousand Dollars
($260,000) 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 thirty percent (30%)
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
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 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.
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3.6
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.
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 or
resignation of the Executive equal to nine (9) months (the
"Compensation 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 Compensation 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 Compensation 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
until the end of the period following the termination or
resignation of the Executive equal to twelve (12) months (the
"Benefit Severance Period" ), and, during the Benefit
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 Benefit
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
Benefit 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 No Mitigation.
Amounts payable to the Executive under Section 4.4.2.1 and Section
4.4.2.2 shall not be reduced by any amount of the Executive’s
earnings from other employment during the Benefit Severance Period,
if applicable, and, during the Benefit Severance Period, the
Executive shall not have an affirmative duty to seek other
employment or otherwise mitigate the amount of any payment
contemplated by this Agreement.
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
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