EXHIBIT 10.1
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT (this
“ Agreement ”) is entered into by and
between Cadence Pharmaceuticals, Inc., a Delaware corporation (the
“ Company ”), and Scott A. Byrd (“
Executive ”), and shall be effective as of
June 22, 2009 (the “ Effective Date
”).
WHEREAS, the Company desires to
employ Executive, and Executive desires to commence employment with
the Company, on the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of
the mutual promises herein contained, the parties agree as
follows:
1. Definitions . As used in
this Agreement, the following terms shall have the following
meanings:
(a) Board . “
Board ” means the Board of Directors of the
Company.
(b) Bonus . “
Bonus ” means an amount equal to (i) the bonus
awarded to Executive for the fiscal year prior to the date of
termination (which bonus shall be annualized to the extent
Executive was not employed for the entire fiscal year prior to the
date of termination), or (ii) if Executive has not received a
bonus because Executive was not employed by the Company for a
sufficient period of time, Executive’s target annual bonus
for the fiscal year in which the date of termination occurs. If any
portion of the bonuses awarded to Executive consisted of securities
or other property, the fair market value thereof shall be
determined in good faith by the Board.
(c) Cause . “
Cause ” means any of the following:
(i) the commission of an act of
fraud, embezzlement or dishonesty by Executive that has a material
adverse impact on the Company or any successor or affiliate
thereof;
(ii) a conviction of, or plea of
“guilty” or “no contest” to, a felony by
Executive;
(iii) any unauthorized use or
disclosure by Executive of confidential information or trade
secrets of the Company or any successor or affiliate thereof that
has a material adverse impact on any such entity;
(iv) Executive’s gross
negligence, insubordination or material violation of any duty of
loyalty to the Company or any other material misconduct on the part
of Executive;
(v) Executive’s ongoing and
repeated failure or refusal to perform or neglect of
Executive’s duties as required by this Agreement, which
failure, refusal or neglect continues for fifteen (15) days
following Executive’s receipt of written notice from the
Board or the Company’s President and Chief Executive Officer
(the “ CEO ”) stating with specificity the
nature of such failure, refusal or neglect; or
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(vi) Executive’s breach of any
material provision of this Agreement;
provided, however
, that prior to the determination
that “Cause” under this Section 1(c) has occurred,
the Company shall (w) provide to Executive in writing, in
reasonable detail, the reasons for the determination that such
“Cause” exists, (x) other than with respect to
clause (v) above which specifies the applicable period of time
for Executive to remedy his or her breach, afford Executive a
reasonable opportunity to remedy any such breach, (y) provide
the Executive an opportunity to be heard prior to the final
decision to terminate the Executive’s employment hereunder
for such “Cause” and (z) make any decision that
such “Cause” exists in good faith.
The foregoing definition shall not
in any way preclude or restrict the right of the Company or any
successor or affiliate thereof to discharge or dismiss Executive
for any other acts or omissions, but such other acts or omissions
shall not be deemed, for purposes of this Agreement, to constitute
grounds for termination for Cause.
(d) Change of Control .
“ Change of Control ” means (i) a merger or
consolidation of the Company with or into any other corporation or
other entity or person or (ii) a sale, lease, exchange or
other transfer in one transaction or a series of related
transactions of all or substantially all of the Company’s
outstanding securities or all or substantially all of the
Company’s assets; provided, however , that the
following events shall not constitute a “Change of
Control”: (A) a merger or consolidation of the Company
in which the holders of the voting securities of the Company
immediately prior to the merger or consolidation hold at least a
majority of the voting securities in the successor corporation
immediately after the merger or consolidation; (B) a sale,
lease, exchange or other transaction in one transaction or a series
of related transactions of all or substantially all of the
Company’s assets to a wholly-owned subsidiary corporation;
(C) a mere reincorporation of the Company; or (D) a
transaction undertaken for the sole purpose of creating a holding
company that will be owned in substantially the same proportion by
the persons who held the Company’s securities immediately
before such transaction.
(e) Code . “
Code ” means the Internal Revenue Code of 1986, as
amended from time to time, and the Treasury Regulations and other
interpretive guidance issued thereunder.
(f) Good Reason . “
Good Reason ” means the occurrence of any of the
following events or conditions without Executive’s written
consent:
(i) a material diminution in
Executive’s authority, duties or responsibilities;
(ii) a material diminution in
Executive’s base compensation, except in connection with a
general reduction in the base compensation of the Company’s
or any successor’s or affiliate’s personnel with
similar status and responsibilities;
(iii) a material change in the
geographic location at which Executive must perform his duties;
or
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(iv) any other action or inaction
that constitutes a material breach by the Company or any successor
or affiliate of its obligations to Executive under this
Agreement.
Executive must provide written
notice to the Company of the occurrence of any of the foregoing
events or conditions without Executive’s written consent
within ninety (90) days of the occurrence of such event. The
Company or any successor or affiliate shall have a period of thirty
(30) days to cure such event or condition after receipt of
written notice of such event from Executive. Any voluntary
termination of Executive’s employment for “Good
Reason” following such thirty (30) day cure period must
occur no later than the date that is six (6) months following
the initial occurrence of one of the foregoing events or conditions
without Executive’s written consent and such voluntary
termination of Executive’s employment shall be treated as an
involuntary termination of employment.
(g) Permanent Disability .
Executive’s “ Permanent Disability ” shall
be deemed to have occurred if Executive shall become physically or
mentally incapacitated or disabled or otherwise unable fully to
discharge his or her duties hereunder for a period of ninety
(90) consecutive calendar days or for one hundred twenty
(120) calendar days in any one hundred eighty
(180) calendar-day period. The existence of Executive’s
Permanent Disability shall be determined by the Company on the
advice of a physician chosen by the Company and the Company
reserves the right to have the Executive examined by a physician
chosen by the Company at the Company’s expense.
(h) Stock Awards . “
Stock Awards ” means all stock options, restricted
stock and such other awards granted pursuant to the Company’s
stock option and equity incentive award plans or agreements and any
shares of stock issued upon exercise thereof.
2. Services to Be Rendered
.
(a) Duties and
Responsibilities . Executive shall serve as Senior Vice
President and Chief Commercial Officer of the Company. In the
performance of such duties, Executive shall report directly to the
CEO and shall be subject to the direction of the CEO and to such
limits upon Executive’s authority as the Board or the CEO may
from time to time impose. In the event of the CEO’s
incapacity or unavailability, Executive shall be subject to the
direction of the Board or its designee. Executive hereby consents
to serve as an officer and/or director of the Company or any
subsidiary or affiliate thereof without any additional salary or
compensation, if so requested by the CEO. Executive shall be
employed by the Company on a full time basis. Executive’s
primary place of work shall be the Company’s facility in San
Diego, California, or such other location within San Diego County
as may be designated by the CEO from time to time. Executive shall
also render services at such other places within or outside the
United States as the CEO may direct from time to time. Executive
shall be subject to and comply with the policies and procedures
generally applicable to senior executives of the Company to the
extent the same are not inconsistent with any term of this
Agreement.
(b) Exclusive Services .
Executive shall at all times faithfully, industriously and to the
best of his or her ability, experience and talent perform to the
satisfaction of the Board and the CEO all of the duties that may be
assigned to Executive hereunder and shall devote substantially all
of his or her productive time and efforts to the performance of
such duties.
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Subject to the terms of the Employee Proprietary
Information and Inventions Agreement referred to in
Section 5(b), this shall not preclude Executive from devoting
time to personal and family investments or serving on community and
civic boards, or participating in industry associations, provided
such activities do not interfere with his or her duties to the
Company, as determined in good faith by the CEO. Executive agrees
that he or she will not join any boards, other than community and
civic boards (which do not interfere with his or her duties to the
Company), without the prior approval of the CEO.
3. Compensation and Benefits
. The Company shall pay or provide, as the case may be, to
Executive the compensation and other benefits and rights set forth
in this Section 3.
(a) Base Salary . The Company
shall pay to Executive a base salary of Three Hundred Twenty-Five
Thousand Dollars ($325,000.00) per year, payable in accordance with
the Company’s usual pay practices (and in any event no less
frequently than monthly). Executive’s base salary shall be
subject to review annually by and at the sole discretion of the
Compensation Committee of the Board or its designee.
(b) Bonus . Executive shall
participate in any bonus plan that the Board or its designee may
approve for the senior executives of the Company.
(c) Employment Bonus and
Relocation Benefits .
(i) Employment Bonus. Executive
shall be eligible to receive a one-time employment bonus of Thirty
Thousand Dollars ($30,000.00), less applicable withholding, payable
within thirty (30) days after the Effective Date (the
“Employment Bonus”).
(ii) Relocation Benefits .
Executive agrees to relocate to the San Diego, California area, and
commence working from the Company’s San Diego headquarters,
as soon as practicable, but not later than August 3, 2009. In
order to assist Executive with the relocation of Executive’s
family and personal effects to San Diego, California, the Company
hereby agrees to pay or reimburse to Executive, as the case may be,
or cause to be paid to third parties providing relocation services
to Executive, certain expenses incurred by Executive in connection
therewith, as follows:
(A) Moving expenses for
Executive’s household goods and two vehicles (excluding
extraordinary or unusual moving costs), to be paid by the Company
to the moving company;
(B) Transportation, lodging and meal
costs actually incurred by Executive within four (4) months
after the Effective Date for two house hunting trips for Executive
and his spouse and children between Executive’s current
residence and San Diego, California, to be reimbursed to
Executive;
(C) Transportation costs actually
incurred by Executive within four (4) months after the
Effective Date for the relocation of Executive and his spouse and
children between Executive’s current residence and San Diego,
California, to be reimbursed to Executive;
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(D) Rental expenses actually
incurred by Executive for temporary housing in the San Diego,
California area for up to four months following the Effective Date,
not to exceed Five Thousand Dollars ($5,000.00) per month, to be
reimbursed to Executive;
(E) A payment of Twenty-Five
Thousand Dollars ($25,000.00) to assist Executive with any
incidental expenses associated with Executive’s relocation,
to be paid to Executive within thirty (30) days after the
Effective Date;
(F) Reasonable and customary
realtor’s commissions actually incurred by Executive as
required to sell Executive’s existing home and purchase a new
home in the San Diego, California area, to be reimbursed to
Executive upon the closing of escrow of each transaction
provided that such escrow closing occurs within twelve
(12) months after the Effective Date;
(G) A home purchase assistance
payment of Fifty Thousand Dollars ($50,000.00), to be paid to
Executive upon the closing of escrow for the purchase a home in the
San Diego, California, area , provided that such escrow
closing occurs within twelve (12) months after the Effective
Date;
(H) Housing assistance payments to
be paid to Executive monthly, in arrears, commencing upon
Executive’s execution of a lease or purchase agreement for a
home in the San Diego, California area (the date of such execution,
the “ Commencement Date ”), provided that
such agreement is executed within twelve (12) months after the
Effective Date, and provided, further , that Executive
remains employed with the Company on the date each such payment is
made, as follows:
i. One Thousand Five Hundred Dollars
($1,500.00) per month for a period of twelve (12) calendar
months following the Commencement Date;
ii. One Thousand Dollars ($1,000.00)
per month for the twelve (12) calendar month period commencing
on the first anniversary of the Commencement Date; and
iii. Five Hundred Dollars ($500.00)
per month, for the twelve (12) calendar month period
commencing on the second anniversary of the Commencement
Date.
The total of the amounts actually
paid or reimbursed to Executive pursuant to
Section 3(c)(ii)(B) through Section 3(c)(ii)(H) (i.e.,
excluding the amount paid to a moving company pursuant to
Section 3(c)(ii)(A)) is referred to herein as the “
Relocation Assistance Amount .” With respect to any
portions of the Relocation Assistance Amount that are taxable to
Executive, and in addition thereto, the Company shall pay to
Executive (or make a contribution on Executive’s behalf into
Executive’s withholding account), an amount equal to the sum
of any federal
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and state income and employment
taxes incurred by Executive with respect to his receipt of such
amounts (the “ Gross-Up Payment ”). The Gross-Up
Payment shall be calculated by reference to standard U.S. and
applicable state tax rates and shall be paid in accordance with
Treasury Regulation Section 1.409A-3(i)(1)(v).
All expenses comprising a portion of
the Relocation Assistance Amount must be incurred by and paid to
Executive during the term of his employment with the Company. All
travel expenses eligible for reimbursement must be consistent with
the Company’s then-current travel policies, and the
Company’s payment of any portions of the Relocation
Assistance Amount indicated as being reimbursable to Executive
shall be subject to the Company’s receipt on or before the
date of payment of documentation supporting such expenses (the
“ Supporting Documentation ”).
If Executive resigns from the
Company’s employment for any reason on or before the first
anniversary of the Effective Date, Executive shall repay to the
Company the total Relocation Assistance Amount and Gross-Up Payment
paid by the Company pursuant to this Section 3(c)(ii) as of
the date of termination. The Company shall have the right to offset
such amounts against any compensation otherwise payable to
Executive on the date of termination.
To the extent that any payments or
reimbursements provided to Executive under this
Section 3(c)(ii) are deemed to constitute compensation to
which Treasury Regulation Section 1.409A-3(i)(1)(iv) would
apply, such amounts shall be paid or reimbursed to Executive within
thirty (30) days after the Company’s receipt of the
Supporting Documentation, but in no event later than the last day
of Executive’s taxable year following the taxable year in
which Executive incurred the expenses. The amounts provided under
this Section 3(c)(ii) during any taxable year of
Executive’s will not affect such amounts provided in any
other taxable year of Executive’s, and Executive’s
right to payment of or reimbursement for such amounts shall not be
subject to liquidation or exchange for any other
benefit.
(d) Benefits . Executive
shall be entitled to participate in benefits under the
Company’s benefit plans and arrangements, including, without
limitation, any employee benefit plan or arrangement made available
in the future by the Company to its senior executives, subject to
and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements. The Company shall
have the right to amend or delete any such benefit plan or
arrangement made available by the Company to its senior executives
and not otherwise specifically provided for herein.
(e) Expenses . The Company
shall reimburse Executive for reasonable out-of-pocket business
expenses incurred in connection with the performance of his or her
duties hereunder, subject to (i) such policies as the Company
may from time to time establish, (ii) Executive furnishing the
Company with evidence in the form of receipts satisfactory to the
Company substantiating the claimed expenditures,
(iii) Executive receiving advance approval from the CEO in the
case of expenses for travel outside of North America, and
(iv) Executive receiving advance approval from the CEO in the
case of expenses (or a series of related
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expenses) in excess of Ten Thousand Dollars
($10,000.00). Any amounts payable under this Section 3(d)
shall be made in accordance with Treasury Regulation
Section 1.409A-3(i)(1)(iv) and shall be paid in accordance
with Company policy but in no event later than the last day of
Executive’s taxable year following the taxable year in which
Executive incurred the expenses. The amounts provided under this
Section 3(d) during any taxable year of Executive’s will
not affect such amounts provided in any other taxable year of
Executive’s, and Executive’s right to reimbursement for
such amounts shall not be subject to liquidation or exchange for
any other benefit. The two preceding sentences shall only apply
with respect to expense reimbursements that are taxable to
Executive.
(f) Paid Time Off . Executive
shall be entitled to such periods of paid time off (“
PTO ”) each year as provided from time to time under
the Company’s PTO guidelines; provided that Executive
shall be entitled to at least four (4) weeks of PTO per
year.
(g) Equity Plans . Executive
shall be entitled to participate in any equity or other employee
benefit plan that is generally available to senior executive
officers, as distinguished from general management, of the Company.
Except as otherwise provided in this Agreement, Executive’s
participation in and benefits under any such plan shall be on the
terms and subject to the conditions specified in the governing
document of the particular plan.
(h) Stock Award Acceleration
.
(i) If Executive’s employment
is terminated by the Company without Cause, by Executive for Good
Reason, or as a result of Executive’s death or Permanent
Disability, the vesting and/or exercisability of each of
Executive’s outstanding Stock Awards shall be automatically
accelerated on the date of termination as to the number of Stock
Awards that would vest over the twelve (12) month period
following the date of termination had Executive remained
continuously employed by the Company during such period.
(ii) The vesting and exercisability
of fifty percent (50%) of Executive’s outstanding Stock
Awards shall be automatically accelerated on the date of a Change
of Control.
(iii) If Executive’s
employment is terminated by the Company without Cause or by
Executive for Good Reason within three (3) months prior to or
twelve (12) months following a Change of Control, the vesting
and/or exercisability of any outstanding unvested portions of
Executive’s Stock Awards shall be automatically accelerated
on the later of (A) the date of termination or (B) the
date of the Change of Control. In addition, Executive’s Stock
Awards may be exercised by Executive (or Executive’s guardian
or legal representative) until the latest of (A) three
(3) months after the date of termination, (B) with
respect to any portion of the Stock Awards that become exercisable
on the date of a Change of Control pursuant to this
Section 3(g)(iii), three (3) months after the date of the
Change of Control, or (C) such longer period as may be
specified in the applicable Stock Award agreement; provided,
however , that in no event shall any Stock Award remain
exercisable beyond the original outside expiration date of such
Stock Award.
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(iv) The vesting pursuant to clauses
(i), (ii) and (iii) of this Section 3(g) shall be
cumulative. The foregoing provisions are hereby deemed to be a part
of each Stock Award and to supersede any less favorable provision
in any agreement or plan regarding such Stock Award.
4. Termination and Severance
. Executive shall be entitled to receive benefits upon termination
of employment only as set forth in this Section 4:
(a) At-Will Employment;
Termination . The Company and Executive acknowledge that
Executive’s employment is and shall continue to be at-will,
as defined under applicable law, and that Executive’s
employment with the Company may be terminated by either party at
any time for any or no reason, with or without notice. If
Executive’s employment terminates for any reason, Executive
shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided in this Agreement.
Executive’s employment under this Agreement shall be
terminated immediately on the death of Executive.
(b) Termination by Death . If
Executive’s employment is terminated by death,
Executive’s estate shall be entitled to receive
(i) Executive’s fully earned but unpaid base salary for
days worked prior to the date of Executive’s death at the
rate then in effect, plus all other amounts to which Executive is
entitled under any compensation plan or practice of the Company at
the time of Executive’s death, (ii) a lump sum cash
payment equal to Executive’s annual base salary as in effect
immediately prior to the date of death (plus all accrued and unpaid
expenses reimbursable in accordance with Section 3(c)),
payable within thirty (30) days following the date of
Executive’s death, (iii) a lump sum cash payment equal
to Executive’s Bonus for the year in which Executive’s
death occurs prorated for the period during such year Executive was
employed prior to his or her death, payable within thirty
(30) days following the date of Executive’s death, and
(iv) for the period beginning on the date of death and ending
on the date which is twelve (12) full months following the
date of death (or, if earlier, the date on which the applicable
continuation period under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“ COBRA
”) expires), the Company shall reimburse Executive’s
eligible dependents for the costs associated with continuation
coverage for such eligible dependents pursuant to COBRA (provided
that Executive’s dependents shall be solely responsible for
all matters relating to such continuation of coverage pursuant to
COBRA, including, without limitation, election of such coverage and
his or her timely payment of premiums).
(c) Termination for Permanent
Disability . If Executive’s employment is terminated by
the Company as a result of Executive’s Permanent Disability,
Executive shall be entitled to receive (i) Executive’s
fully earned but unpaid base salary for days worked prior to the
commencement of Executive’s disability leave at the rate then
in effect, plus all other amounts to which Executive is entitled
under any compensation plan or practice of the Company at the time
such payments are due (plus all accrued and unpaid expenses
reimbursable in accordance with Section 3(c)),
(ii) subject to Executive’s continued compliance with
Section 5, a lump sum cash payment equal to Executive’s
annual base salary as in effect immediately prior to the date of
termination, payable within ten (10) days following the
effective date of Executive’s Release (as defined below),
(iii) subject to Executive’s continued compliance with
Section 5, a lump sum cash payment equal to Executive’s
Bonus for the year in which the date of termination occurs prorated
for the period during such year Executive was employed prior to the
date of termination, within ten
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(10) days following the effective date of
Executive’s Release (as defined below), (iv) subject to
Executive’s continued compliance with Section 5, for the
period beginning on the date of termination and ending on the date
which is twelve (12) full months following the date of
termination (or, if earlier, the date on which the applicable
continuation period under COBRA expires), the Company shall
(A) reimburse Executive for the costs associated with
continuation coverage pursuant to COBRA for Executive and his or
her eligible dependents who were covered under the Company’s
health plans as of the date of Executive’s termination
(provided that Executive shall be solely responsible for all
matters relating to his or her continuation of coverage pursuant to
COBRA, including, without limitation, his or her election of such
coverage and his or her t
