Exhibit 10.13
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT
AGREEMENT (the “
Agreement ”), is made as of the 22
nd
day of December, 2005
(the “ Effective Date ”, by and between CV
THERAPEUTICS, INC. (the “ Company ”) and LOUIS
G. LANGE (the “ Executive ”).
WHEREAS, the Company and the
Executive have entered into that certain Amended and Restated
Executive Severance Benefits Agreement effective December 31,
2002 (the “ Severance Agreement ”);
WHEREAS, the Company and the
Executive now wish this Agreement to supersede the Severance
Agreement and any other agreement relating to cash severance
benefits between the Executive and the Company in their
entirety;
WHEREAS, the Company recognizes that
the Executive can contribute to the growth and success of the
Company and desires to continue to employ the Executive on the
terms and conditions set forth in this Agreement;
WHEREAS, the Executive has been
appointed by the Company’s Board of Directors (the “
Board ”) to serve as the Chairman of the Board, Chief
Executive Officer and Chief Science Officer of the Company, and has
been approved by the stockholders of the Company to serve as a
director of the Company; and
WHEREAS, the Executive desires to
continue to be so employed by the Company.
NOW, THEREFORE, in consideration of
the foregoing and the mutual covenants and promises contained
herein, and intending to be bound hereby, the parties agree as
follows:
1. Employment .
1.1. Term . The Company
agrees to employ the Executive in accordance with the terms of this
Agreement and the Executive agrees to accept such terms of
employment, effective as of the Effective Date for a term of eight
years (the “ Term ”). Notwithstanding the
foregoing, the Executive’s employment with the Company shall
be “at will,” and either the Executive or the Company
may terminate the Executive’s employment at any time, for any
reason, with or without Good Reason (as defined below) or with or
without Cause (as defined below); provided, that such termination
is subject to the termination provisions of Section 3 of this
Agreement.
1.2. Positions . During the
Term, the Executive will continue to serve as Chairman of the
Board, Chief Executive Officer and Chief Science Officer of the
Company, reporting directly to the Board. At all times during the
Term, the Executive shall serve as a member of the Board if so
requested by the Executive.
1.3. Duties . The Executive
will continue to perform such duties and functions as are
customarily performed by the chairman, chief executive officer and
chief science officer, of an enterprise the size and nature of the
Company, including the duties and functions from time
to time assigned to him by the Board as are
commensurate with such positions. Without limiting the generality
of the foregoing, the Executive will continue to be responsible for
all aspects of the Company’s performance, including strategy,
research and development, business development, sales and
marketing, operations, manufacturing, technology development and
licensing, corporate development, information management, finance,
legal, patent, regulatory, human resources, investor relations and
corporate communications.
1.4. Place of Performance .
The Executive shall continue to perform his services hereunder at
the principal executive offices of the Company, which are currently
located in Palo Alto, California; provided, however, that the
Executive will be required to travel from time to time for business
purposes.
1.5. Time Devoted to
Employment . The Executive will devote his best efforts and
substantially all of his business time and services to the
performance of his duties under this Agreement. Notwithstanding the
foregoing, the Executive may engage in charitable, community
service and industry association activities and upon notice to the
Board, serve as a member of boards of directors of companies not
deemed to be engaged in competition with the Company and manage his
own finances so long as those activities do not interfere with the
performance of his duties under this Agreement as determined by the
Board.
2. Compensation, Benefits and
Expense Reimbursements .
2.1. Base Salary . The
Company shall continue compensating the Executive while he is
employed as the Chief Executive Officer of the Company in the same
manner that it has done during his past and current employment with
the Company. The Executive shall receive a minimum annual salary of
$600,000 (to be increased to $624,000, effective January 1,
2006) (the “ Base Salary ”), paid semi-monthly
or otherwise in accordance with the Company’s customary
payroll practices, as in effect from time to time. As stated in the
Company’s compensation philosophy which is described annually
in the Company’s Proxy Statement as filed with the Securities
and Exchange Commission on Schedule 14A (the “ Proxy
”), the Compensation Committee of the Board (the “
Compensation Committee ”) shall review the
Executive’s Base Salary in relation to the Company’s
comparator group and the Executive’s peer group, and in
relation to the Executive’s performance. In accordance with
an evaluation of such factors, the Compensation Committee may
increase the Executive’s Base Salary from time to
time.
2.2. Bonus . The Company
shall continue compensating the Executive while he is employed as
the Chief Executive Officer of the Company in the same manner that
it has done during his past and current employment with the
Company. As stated in the Company’s compensation philosophy
which is described annually in the Proxy, the Compensation
Committee shall review the Executive’s annual bonus
compensation (“ Annual Bonus ”) in relation to
the Company’s comparator group and the Executive’s peer
group, and in relation to the Company’s and the
Executive’s performance. In accordance with an evaluation of
such factors, the Compensation Committee will establish the
Executive’s Annual Bonus; provided, that the target Annual
Bonus established by the Board during the Term shall be no less
favorable than the Executive’s target Annual Bonus as of the
Effective Date.
2
2.3. Long Term Incentive .
The Executive shall be eligible to be granted long-term incentive
and equity compensation awards in the discretion of the
Compensation Committee and the Board based on the Compensation
Committee’s evaluation of the Executive’s performance
and market and peer compensation.
2.4. Restricted Stock Units .
Subject to approval of the Board, the Company shall provide the
Executive with a restricted stock unit (“ RSU ”)
grant for 201,694 shares of the Company’s common stock. Ten
percent of the shares of common stock under the RSU shall vest as
of the date of the grant and 5.625% of the shares of common stock
under the RSU shall vest at the end of each three month period
commencing on the date of grant (each a “ Vesting Date
”), so as to be 100% vested on the fourth anniversary of the
date of grant, subject to the Executive’s continuous
employment by the Company through the respective Vesting Date. The
vested shares of common stock subject to the RSU shall be
distributed to the Executive on each 12 month anniversary of their
relevant vesting date. Executive shall be permitted to satisfy the
minimum tax withholding obligations arising upon the vesting or
receipt of the RSU shares, as applicable, by having the Company
withhold shares with a then fair market value equal to the minimum
amount required to be withheld.
2.5. Expenses . During the
Term, the Executive will be entitled to reimbursement by the
Company for all expenses reasonably incurred by him in connection
with the performance of his duties, including, without limitation,
travel and entertainment expenses reasonably related to the
business of the Company, in accordance with the policies and
procedures established from time to time by the Company.
2.6. Automobile Allowance .
During the Term, the Executive shall be entitled to a monthly
allowance of $1,000 for the use of an automobile.
2.7. Financial/Legal/IT
Assistance . During the Term, the Executive shall be entitled
to reimbursement for financial, legal and IT support and assistance
expenses of up to $25,000 annually.
2.8. Other Benefits . During
the Term, the Executive shall be entitled to participate in any
benefit plans, policies or arrangements sponsored or maintained by
the Company from time to time for its executive employees. In
addition to the foregoing, the Company shall provide the Executive
supplemental long-term disability insurance providing no less than
$10,000 per month in additional coverage; provided, that the
Executive conforms to the insurance company underwriting
requirements. Notwithstanding the foregoing, the Executive’s
eligibility for and participation in any of the Company’s
employee benefit plans, policies or arrangements will be subject to
the terms and conditions of such plans, policies or arrangements as
they apply to other senior executives of the Company. Moreover,
subject to the terms and conditions of such plans, policies or
arrangements, the Company may amend, modify or terminate such
plans, policies or arrangements at any time for any or no
reason.
2.9. Attorney’s Fees .
The Company shall reimburse the Executive for reasonable
attorney’s fees incurred by the Executive in connection with
the negotiation of this Agreement, not to exceed
$30,000.
3
3. Termination .
3.1. In General . The Company
may terminate the Executive’s employment at any time. The
Executive may terminate his employment at any time. Upon any
termination of the Executive’s employment with the Company
for any reason: (i) the Executive (unless otherwise requested
by the Board) concurrently will resign any officer positions he
holds with the Company, its subsidiaries or affiliates;
(ii) the Company will pay to the Executive all accrued but
unpaid Base Salary and all accrued and unused vacation days through
the date of termination; and (iii) except as explicitly
provided in this Section 3, in Section 6, or otherwise
pursuant to the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended (“ COBRA ,”) or the California
Continuation Benefits Replacement Act, as amended (“
Cal-COBRA ”), all compensation and benefits will cease
and the Company will have no further liability or obligation to the
Executive.
3.2. Termination without Cause or
for Good Reason .
3.2.1. If the Executive’s
employment by the Company ceases due to a termination by the
Company without Cause or a resignation by the Executive for Good
Reason and the Executive executes and does not revoke a general
release of claims against the Company in substantially the form
attached hereto as Exhibit A to the Company (a “ General
Release ”), then, the Company will pay to the Executive
(i) all accrued but unpaid Base Salary and all accrued and
unused vacation days through the date of termination; (ii) a
cash amount equal to the sum of two times the Executive’s
Base Salary; (iii) a cash amount equal to two times the
Executive’s Average Annual Bonus, with such Average Annual
Bonus determined by adding the amounts payable to Executive under
the Company’s annual bonus programs for the three full
calendar years prior to the year in which such termination of
employment occurs and dividing the resulting amount by three
(“Average Annual Bonus”); (iv) a cash payment
equal to the Executive’s then target Annual Bonus, multiplied
by a fraction, the numerator of which is the number of days in the
Company’s fiscal year prior to such termination of employment
and the denominator of which is 365; and (v) group health,
dental and vision insurance coverage benefits equivalent to those,
and on the same tax-free basis as those, to which the Executive
would have been entitled if he had continued working for the
Company for an additional 18 month period (or if less, until
Executive becomes covered under comparable plans of another
employer), after which period COBRA and/or Cal-COBRA shall become
available to the Executive such that the end of the first 18-month
period will be the COBRA “qualifying event” for
Executive and his eligible dependents. In addition to the
foregoing, in the event of such termination of employment,
(i) any options to purchase the common stock of the Company
previously granted to the Executive and not otherwise vested shall
be fully vested as of the date of the Executive’s termination
of employment; (ii) any “at-the-money” or
“underwater” option grants as of the Effective Date
will have a post-termination exercise period extending through the
earliest of (A) 36 months following the Executive’s
termination of employment, (B) their original expiration date,
or (C) such shorter period as does not result in any adverse
tax consequences to the Executive under Section 409A of the
Internal Revenue Code of 1986, as amended (the “ Code
”); (iii) any of Executive’s stock options that,
as of the Effective Date, have a per share exercise price that is
less than the closing trading price of the Company’s common
stock on the Effective Date shall have a post-termination exercise
period extending through the later of (A) two and one-half
months beyond, or (B) December 31 following, the three
month anniversary of the Executive’s termination of
employment (or their original expiration date, if earlier); and
(iv) the
4
Executive’s previously granted RSUs shall
become vested as to the amount of additional shares the Executive
would have been entitled if he had continued working for the
Company for an additional 12 month period.
3.2.2. For purposes of this
Agreement, “ Cause ” means, unless the Executive
fully corrects the circumstances constituting Cause (provided such
circumstances are capable of correction) prior to the date of
termination, the Executive:
(a) has willfully committed an
improper act that materially injures the business of the
Company;
(b) has willfully and repeatedly
refused or failed to follow specific, lawful and reasonable
directions of the Board (other than any such refusal or failure
resulting from the Executive’s incapacity due to physical or
mental illness or any such actual or anticipated failure after his
issuance of a notice of termination for Good Reason, as defined
below), after a written demand for substantial performance is
delivered to the Executive by the Board, which demand specifically
identifies the manner in which the Board believes that the
Executive has willfully and repeatedly refused or failed to follow
specific, lawful and reasonable directions of the Board;
(c) has willfully, substantially and
habitually neglected the Executive’s duties for the Company
(other than any such neglect resulting from the Executive’s
incapacity due to physical or mental illness or any such actual or
anticipated neglect after his issuance of a notice of termination
for Good Reason, as defined below), after a written demand for
substantial performance is delivered to the Executive by the Board,
which demand specifically identifies the manner in which the Board
believes that the Executive has willfully, substantially and
habitually neglected his duties or services to the Company;
or
(d) has been convicted of a felony
or a crime involving moral turpitude; provided, that for purposes
of this agreement a traffic related offense (including without
limitation the offense of driving under the influence of drugs or
alcohol) shall not constitute a crime of moral
turpitude.
For purposes of this
Section 3.2.2, no act, or failure to act, on the
Executive’s part shall be deemed “willful” unless
done, or omitted to be done, by him not in good faith.
3.2.3. For purposes of this
Agreement, “ Good Reason ” means any of the
following are undertaken without the Executive’s express
written consent:
(a) the assignment to the Executive
of any duties, authority or responsibilities which results in a
significant diminution in the Executive’s duties, authority
or responsibilities;
(b) any change in the
Executive’s title from Chief Executive Officer;
(c) the Executive ceasing to report
to the Board;
5
(d) a reduction by the Company of
the Executive’s Base Salary or target Annual Bonus as of the
Effective Date or as increased thereafter;
(e) a material reduction of the
facilities and perquisites available to the Executive immediately
prior to such reduction, other than a reduction generally
applicable to all senior management of the Company;
(f) a material reduction by the
Company in the aggregate level of employee benefits, to which the
Executive was entitled immediately prior to such reduction with the
result that the Executive’s aggregate benefits package is
materially reduced (other than a reduction that generally applies
to Company executive officers);
(g) a relocation of the
Executive’s business office to a location more than 25 miles
from the location at which the Executive performs duties as of the
Effective Date, except for required travel by the Executive on the
Company’s business;
(h) a material breach by the Company
of any provision of this Agreement; or
(i) any failure by the Company to
obtain the assumption of this Agreement by any successor or assign
of the Company.
3.3. Certain Terminations On or
After a Change in Control .
3.3.1. Within 18 Months on or
After a Change in Control . If the Executive’s employment
with the Company ceases within the 18 month period commencing on a
Change in Control (as defined below) as a result of a termination
by the Company without Cause or a resignation by the Executive for
Good Reason and the Executive executes and does not revoke a
General Release, then the Company will provide the Executive with
the same payments and benefits as specified under
Section 3.2.1 hereof, except that the period of group health,
dental and vision coverage shall be extended from 18 to 24 months
(or if less, until Executive becomes covered under comparable plans
of another employer), after which period COBRA and/or Cal-COBRA
shall become available to the Executive such that the end of the
first 24-month period will be the COBRA “qualifying
event” for Executive and his eligible dependents.
3.3.2. At Any Time Following a
Change in Control . If the Executive’s employment with
the Company ceases at any time following a Change in Control as a
result of a termination by the Company without Cause or a
resignation by the Executive for Good Reason, and the Executive
executes and does not revoke a General Release, then the Company
will provide the Executive with the same payments and benefits as
specified under Section 3.3.1 hereof, and additionally all
stock options, restricted stock and other equity compensation
granted to Executive on or after the Change in Control shall
immediately accelerate vesting as to 100% of the covered
shares.
3.3.3. Definition of Change in
Control . For purposes of this Agreement, “ Change in
Control ” means a change in ownership or control of the
Company effected through any of the following transactions, in one
or a series of related transactions:
(a) a sale of substantially all of
the assets of the Company;
6
(b) a merger or consolidation in
which the Company is not the surviving corporation (other than a
merger or consolidation in which shareholders immediately before
the merger or consolidation have, immediately after the merger or
consolidation, equal or greater stock voting power);
(c) a reverse merger in which the
Company is the surviving corporation but the shares of the
Company’s common stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise (other than a
reverse merger in which shareholders immediately before the merger
have, immediately after the merger, greater stock voting power);
or
(d) any transaction or series of
related transactions in which in excess of 50% of the
Company’s voting power is transferred.
3.4. Termination for Death or
Disability . If the Executive’s employment by the Company
ceases due to a termination by reason of death or disability as
determined by the Board in its sole discretion and the Executive
(or the Executive’s beneficiaries as the case may be)
executes and does not revoke a General Release, then the Company
will provide to the Executive or his beneficiaries the same
payments and benefits as set forth in Section 3.2.1
hereof.
4. Restrictive Covenants . As
consideration for all of the payments to be made to the Executive
pursuant to Sections 2, 3, 5, and 6 of this Agreement, as well as
for any equity incentive awards that the Executive may receive from
the Company, the Executive agrees to be bound by the provisions of
this Section 4 (the “ Restrictive Covenants
”). These Restrictive Covenants will apply without regard to
whether any termination of the Executive’s employment is
initiated by the Company or the Executive, and without regard to
the reason for such termination.
4.1. Covenant Not To Compete
. The Executive covenants that, during the period beginning on the
Effective Date and ending on the date of the termination of the
Executive’s employment with the Company (the “
Restricted Period ”), he will not (except in his
capacity as an employee or director of the Company) do any of the
following, directly or indirectly, anywhere in the
world:
4.1.1. engage or participate in any
business competitive with the Business (as defined
below);
4.1.2. become interested in (as
owner, stockholder, lender, partner, co-venturer, director,
officer, employee, agent or consultant) any person, firm,
corporation, association or other entity engaged in any business
competitive with the Business; provided, however, that unless such
holdings materially interfere with the Executive’s
performance of his duties hereunder, Executive or his affiliates
may hold up to 4.9% of the outstanding securities of any class of
any publicly-traded securities of any company and up to 10% of the
outstanding securities of any class of any non-publicly traded
company and such ownership shall not constitute a breach of this
section 4.1.2;
4.2. Covenant Not To Solicit
. The Executive covenants that, during the Restricted Period and
for one year thereafter, he will not (except in his
capaci
