|
Exhibit
10.2
Execution Copy
EMPLOYMENT AGREEMENT
This
EMPLOYMENT AGREEMENT (the “
Agreement ”)
is made this 11th day of May 2007, by and between
NILE THERAPEUTICS, INC .,
a Delaware corporation with principal executive offices at 2850
Telegraph Avenue, Suite 310, Berkeley, CA 94705, (the
“
Company ”),
and
PETER M. STRUMPH ,
residing at 585 Eureka Street, San Francisco, CA 94114 (the
“
Executive ”).
W I T N E S S E T H:
WHEREAS,
the Company desires to employ the Executive as Chief Executive
Officer of the Company; and
WEHERAS,
the Executive desires to serve the Company in such capacity,
upon the terms and subject to the conditions contained in this
Agreement;
NOW,
THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties hereto hereby agree
as follows:
1.
Employment .
The
Company agrees to employ the Executive, and the Executive
agrees to be employed by the Company, upon the terms and
subject to the conditions of this Agreement.
2.
Term .
The
employment of the Executive by the Company as provided in
Section 1 shall commence on June 4, 2007 (the “
Effective Date ”)
and continue for a period of three (3) years from the Effective
Date unless
terminated earlier as
set forth in Sections 9
and
10
below
or by mutual written agreement of the parties hereto (the
“
Term ”).
In the event that the Company does not intend to renew this
Agreement, the Company shall provide the Executive with a minimum
of 120 days written notice prior to the expiration of the
Term.
3.
Duties; Best Efforts; Place of Performance .
(a)
The
Executive shall serve as Chief Executive Officer of the
Company and shall, subject to the direction of the Board of
Directors of the Company, have such powers and perform such
duties as are customarily performed by the Chief Executive
Officer including, but not limited to developing Company
strategy and managing its implementation, overseeing Company
hiring, supervising the performance of the Company’s
management, and interfacing with investors, customers,
potential customers, media, analysts and the general public on
behalf of Company. The Executive shall also have such other
powers and duties as may be from time to time directed by the
Board of Directors of the Company, provided that the nature of
the Executive’s powers and duties so prescribed shall
not be inconsistent with the Executive’s position and
duties herein.
(b)
The
Executive shall devote substantially all of his business time,
attention and energies to the business and affairs of the
Company and
shall
use his best efforts to advance the interests of the Company
and shall not during the Term be actively engaged in any other
business activity, whether or not such business activity is
pursued for gain, profit or other pecuniary advantage, that
will interfere with the performance by the Executive of his
duties hereunder or the Executive’s availability to
perform such duties or that will adversely affect, or
negatively reflect upon, the Company.
(c)
The
duties to be performed by the Executive hereunder shall be
performed primarily at the office of the Company, which shall
be located in or within close proximity to Berkeley,
California, or such other location as the Company and
Executive may mutually agree; provided, however, that the
Executive understands that his duties will require periodic
travel, which may be substantial at times.
4.
Directorship . The Company shall use its best efforts to cause
the Executive to be elected as a member of its Board of Directors
throughout the Term and shall include him in the management slate
for election as a director at every stockholders meeting during the
Term at which his term as a director would otherwise expire. The
Executive agrees to accept election, and to serve during the Term,
as director of the Company, without any compensation hereto other
than as specified in this Agreement.
5.
Compensation . As full compensation for the performance by the
Executive of his duties under this Agreement, the Company shall pay
the Executive as follows:
(a)
Base Salary .
The Company shall pay the Executive a base salary (the
“
Base Salary ”)
equal to Three Hundred Ten Thousand Dollars ($310,000.00) per
annum, payable during the Term in accordance with the
Company’s normal payroll practices; provided, however, that
the Base Salary may be increased at the discretion of the Board of
Directors upon each anniversary of this Agreement.
(b)
Performance Bonus .
The Company shall annually pay the Executive a proportionate share
(based on the assigned weight of each of the Performance Milestones
(as defined below) of One Hundred Twenty Five Thousand Dollars
($125,000.00) upon the successful completion of annual corporate or
individual performance milestones (the “
Performance Milestones ”)
at the “Baseline” metric. If Performance Milestones are
achieved at the “Exemplary” metric, the Company shall
pay Executive a proportionate share of One Hundred Fifty Thousand
Dollars ($150,000.00), and if achieved at the
“Pessimistic” metric, the Company will pay you a
proportionate share of One-Hundred Thousand Dollars
($100,000.00 ).
The
Performance Milestones and the metrics for the first year of the
Term are as set forth on
Schedule 5(b) .
The Performance Milestones shall be amended each subsequent year
during the Term upon the mutual agreement of the Company and the
Executive no later than 30 days following the beginning of such
year.
(c)
Change of Control Bonus .
The Company shall pay the Executive the applicable amount set forth
on
Schedule 5(c) upon
a Change of Control (as defined below) of the Company where the
Company is ascribed a valuation equal to or above those amounts set
forth on
Schedule 5(c) .
In the event of a Change of Control, the applicable bonus shall be
paid on the effective date of such Change of Control and all
unvested Employment and Performance Options shall vest and become
exercisable immediately and shall remain exercisable for a period
of not less than five (5) years, regardless of whether the
Executive’s employment is terminated.
(i)
For
purposes of this Agreement, a “
Change of Control ”
shall mean:
A.
a
private transaction (or series of related private
transactions) leading to a merger, acquisition, consolidation,
or sale of all or substantially all of the assets of the
Company; or
B.
any
transaction a result of which a single party (or group of
affiliated parties) acquires or holds capital stock of the
Corporation representing a majority of the Corporation’s
outstanding voting power.
C.
the
disposition by the Company (whether direct or indirect, by
sale of assets or stock, merger, consolidation or otherwise)
of all or substantially all of its business and/or assets in
one transaction or series of related transactions (other than
a merger effected exclusively for the purpose of changing the
domicile of the Company)
(ii)
Notwithstanding
Section 5
(c)
(i)A
and
5
(c)
(i)B
above,
no transaction shall be considered a Change of Control under
this Agreement, and no bonus shall be paid or options vest,
pursuant to this Section 5
(c)
:
A.
if
the stockholders existing prior to such transaction(s) hold in
the aggregate more than fifty percent (50%) of the securities
or assets of the surviving or resulting company;
B.
in
connection with a private placement of equity securities of
the Company in connection with a financing of the
Company’s on-going operations; or
C.
for
any transaction ascribing a valuation to the Company of less
than Seventy Five Million Dollars ($75,000,000); provided,
however, that such a transaction may be considered as part of
a series of transactions that gives rise to a Change of
Control pursuant to Section 5
(c)
(i)
.
(d)
Withholding .
The Company shall withhold all applicable federal, state and local
taxes and social security and such other amounts as may be required
by law from all amounts payable to the Executive under this
Section 5
.
(e)
Equity .
(i)
Employment Options .
The Company shall grant to the Executive stock options (the
“
Employment Options ”),
pursuant to the Company’s 2005 Stock Option Plan, to purchase
that number of shares of common stock of the Company, par value
$0.001 per share (the “
Common Stock ”)
representing four percent (4%) of the outstanding shares of Common
Stock of the Company on a Fully Diluted Basis (as defined below in
Section 5
(e)
(iii)
C
)
immediately following the closing of the first Company financing
subsequent to the Effective Date (the “
Financing ”).
The Employment Options shall vest and become exercisable in three
(3) equal installments on the day before each anniversary of this
Agreement at an exercise price equal to the Fair Market Value (as
determined under the Company’s 2005 Stock Plan) (the
“
Exercise Price ”)
of a share of Common Stock following the Financing.
(ii)
Performance Options .
The
Company shall grant to the Executive stock options (the
“
Performance Options ”),
pursuant to the Company’s 2005 Stock Option Plan, to purchase
that number of shares of Common Stock representing three and six
tenths percent (3.6%) of the outstanding Common Stock on a Fully
Diluted Basis immediately following the Financing.
On
the last day of each year during the Term, a proportionate share
(based on the assigned weights of each of the Performance
Milestones) of that portion of the Performance Options representing
1.2% of the outstanding Common Stock on the date of grant shall
become vested and immediately exercisable for Performance
Milestones that are achieved during that year at the
“Exemplary” metric. Performance Options to purchase a
proportionate share of 1% of the outstanding shares of Common Stock
on the grant date shall become vested and immediately exercisable
for Performance Milestones that are achieved during the year at the
“Baseline” metric. Performance Options to purchase a
proportionate share of 0.8% of the outstanding shares of Common
Stock on the grant date for Performance Milestones shall become
vested and immediately exercisable for Performance Milestones that
are achieved at the “Pessimistic” metric.
(iii)
Technology Options .
In the event that the Company acquires by license, acquisition or
otherwise, an additional biotechnology product or series of
biotechnology products (a “
Technology ”)
for development that is first identified by the Executive, then the
Company shall grant to the Executive options (the “
Technology Options ”)
to purchase a number of shares of Common Stock, as
follows:
A.
One
percent (1%) of the then outstanding shares of Common Stock of
the Company on a Fully Diluted Basis for a Technology that is
in pre-clinical development; and
B.
Two
Percent (2%) of the shares of Common Stock of the Company on a
Fully Diluted Basis for a Technology that is in human clinical
trials.
C.
For
purposes of this Agreement, “
Fully Diluted Basis ”
shall mean the number of shares of Common Stock that would be
outstanding upon the conversion of all outstanding shares of
Preferred Stock outstanding from time to time, plus the shares of
Common Stock issuable upon conversion or exercise, as the case may
be, of all issued and outstanding securities of the Company
convertible into, exercisable for, or exchangeable for, directly or
indirectly, shares of Common Stock of the Company, including but
not limited to, options and warrants to purchase Common Stock that
are currently exercisable by the holder thereof or which will
become exercisable within 90 days of determining event
D.
Any
such Technology Options issued to the Executive shall vest
immediately upon the date of grant and shall be exercisable
for a period of five (5) years at an exercise price equal to
the Fair Market Value (as determined under the Company’s
2005 Stock Plan) of the Common Stock on the date of the grant
of such Technology Options.
(f)
Expenses .
The Company shall reimburse the Executive for all normal, usual and
necessary expenses incurred by the Executive in furtherance of the
business and affairs of the Company, including reasonable travel
and entertainment, upon timely receipt by the Company of
appropriate vouchers or other proof of the Executive’s
expenditures and otherwise in accordance with any expense
reimbursement policy as may from time to time be adopted by the
Company.
(g)
Insurance .
The Company shall pay the premiums relating to personal life
insurance coverage for Executive in an amount equal to One Million
Dollars ($1,000,000.00), naming Executive’s heirs as
beneficiaries. In the event that the Company does not have
appropriate medical, dental and vision plans in place on the
Effective Date, the Company shall reimburse the Executive for the
cost of COBRA premiums associated with his continued coverage under
the plans of his prior employer.
(h)
Other Benefits .
The Executive shall be entitled to all rights and benefits for
which he shall be eligible under any benefit or other plans
(including, without limitation, dental, medical, vision, medical
reimbursement and hospital plans, pension plans, employee stock
purchase plans, profit sharing plans, bonus plans and other
so-called “fringe benefits”) as the Company shall make
available to its senior executives from time to time.
(i)
Vacation .
The Executive shall, during the Term, be entitled to four (4) weeks
of vacation per annum ,
in addition to holidays observed by the Company .
The parties agree that Executive shall not take a vacation in
excess of two consecutive weeks without the express consent of the
Board .
Executive shall
not be entitled to accrue more than eight (8) weeks of
vacation at any time during his employment with the
Company.
6.
Confidential Information and Inventions .
(a)
The
Executive recognizes and acknowledges that in the course of
his duties he is likely to receive confidential or proprietary
information owned by the Company, its affiliates or third
parties with whom the Company or any such affiliates has an
obligation of confidentiality. Accordingly, during and after
the Term, the Executive agrees to keep confidential and not
disclose or make accessible to any other person or use for any
other purpose other than in connection with the fulfillment of
his duties under this Agreement, any Confidential and
Proprietary Information (as defined below) owned by, or
received by or on behalf of, the Company or any of its
affiliates. “
Confidential and Proprietary Information
”
shall include, but shall not be limited to, confidential or
proprietary scientific or technical information, data, formulas and
related concepts, business plans (both current and under
development), client lists, promotion and marketing programs, trade
secrets, or any other confidential or proprietary business
information relating to development programs, costs, revenues,
marketing, investments, sales activities, promotions, credit and
financial data, manufacturing processes, financing methods, plans
or the business and affairs of the Company or of any affiliate or
client of the Company. The Executive expressly acknowledges the
trade secret status of the Confidential and Proprietary Information
and that the Confidential and Proprietary Information constitutes a
protectable business interest of the Company. The Executive agrees
not to:
(i)
use
any such Confidential and Proprietary Information for strictly
personal use or for others; and
(ii)
permanently
remove any Company material or reproductions (including but
not limited to writings, correspondence, notes, drafts,
records, invoices, technical and business policies, computer
programs or disks) thereof from the Company’s offices at
any time during his employment by the Company, except as
required in the execution of the Executive’s duties to
the Company, provided; however, that the Executive shall not
be prevented from using or disclosing any Confidential and
Proprietary Information:
A.
that
Executive can demonstrate was known to him prior to the
effective date of that certain Confidential Disclosure
Agreement entered into between the Parties dated December 12,
2006;
B.
that
is now, or becomes in the future, available to persons who are
not legally required to treat such information as confidential
unless such persons acquired the Confidential and Proprietary
Information through acts or omissions of Executive; or
C.
that
he is compelled to disclose pursuant to the order of a court
or other governmental or legal body having jurisdiction over
such matter.
(b)
The
Executive agrees to return immediately all Company material
and reproductions (including but not limited, to writings,
correspondence, notes, drafts, records, invoices, technical
and business policies, computer programs or disks) thereof in
his possession to the Company upon request and in any event
immediately upon termination of employment.
(c)
Except
with prior written authorization by the Company, the Executive
agrees not to disclose or publish any of the Confidential and
Proprietary Information, or any confidential, scientific,
technical or business information of any other party to whom
the Company or any of its affiliates owes a legal duty of
confidence, at any time during or after his employment with
the Company.
(d)
The
Executive agrees that all inventions, discoveries,
improvements and patentable or copyrightable works, relating
to the Company’s Business (as defined below).
(“
Inventions ”)
initiated, conceived or made by him, either alone or in conjunction
with others, during the Term shall be the sole property of the
Company to the maximum extent permitted by applicable law and, to
the extent permitted by law, shall be “works made for
hire” as that term is defined in the United States Copyright
Act (17 U.S.C.A., Section 101). For purposes of this Agreement,
“
Company’s Business ”
shall be the development of novel therapeutics for the treatment of
human disease, and which are listed on the attached
Schedule 6(d) (which
Schedule 6(d) may
be amended from time to time to include additional therapeutics),
and in the future, any other business in which it actually devotes
substantive resources to study, develop or pursue. The Company
shall be the sole owner of all patents, copyrights, trade secret
rights, and other intellectual property or other rights in
connection therewith. The Executive hereby assigns to the Company
all right, title and interest he may have or acquire in all such
Inventions; provided; however, that the Board of Directors of the
Company may in its sole discretion agree
| 
