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Exhibit
10.13
SEPARATION AGREEMENT AND GENERAL RELEASE
This
Separation Agreement and General Release (this "Agreement") is
entered into on August 10, 2007, between NILE THERAPEUTICS,
INC. (the "Company"), and ALLAN GORDON, M.D. (the
"Executive").
WHEREAS,
the Executive was employed by the Company pursuant to an
Employment Agreement, dated December 12, 2006 (the "Employment
Agreement");
WHEREAS,
the Executive resigned from the Company, effective May 21,
2007; and
WHEREAS,
for the purposes of avoiding the uncertainty, expense and
burden associated with any dispute, the Executive and the
Company desire to resolve all issues that may arise by virtue
of the previously existing employment relationship between the
Executive and the Company, the termination of the employment
relationship or the parties' respective rights under the
Employment Agreement.
NOW,
THEREFORE, in consideration of the mutual promises, covenants,
conditions and provisions set forth below, it is agreed as
follows:
1.
The
Executive hereby confirms his resignation as an officer,
director and employee of the Company effective as of May 21,
2007 (the "Separation Date"). The Executive shall be entitled
to receive within five days of the execution of this Agreement
(i) his Base Salary (as defined in the Employment Agreement)
through the Separation Date and (ii) $9,565, representing his
accrued and unused vacation through the Separation Date. The
Executive acknowledges and agrees that he will receive no
additional compensation, payments or benefits from the Company
except as specifically set forth herein .
2.
In
addition to the payments described in Section 1, the Company
agrees to provide the Executive with the following
benefits:
(a)
The Executive shall be entitled to receive: (i) $300,000,
representing his Base Salary; (ii) $120,000, representing his
annual Performance Bonus; and (iii) $46,356.16, representing
a
pro rata portion
of his annual Performance Bonus. All amounts payable representing
Base Salary under this Section 2(a) shall be paid in accordance
with the Company's regular payroll practices over a period of one
year following the Separation Date and all amounts payable
representing Performance Bonuses shall be paid in a single-lump sum
in January 2008 .
(b)
The Company shall, upon presentation of appropriate vouchers
therefor, reimburse the Executive for all unclaimed business
expenses incurred by him in the performance of his duties for
the Company through the Separation Date, in accordance with
the Company's standard practices and procedures, but all such
reimbursements shall be paid no later than December 31,
2008.
(c)
The Company shall pay the Executive 12 monthly payments of
$1,360.38 representing the cost of COBRA (Consolidated Omnibus
Budget Reconciliation Act) premiums associated with his
continued health insurance coverage on the same terms as
existed prior to this Agreement. The Company shall make such
payments whether or not the Executive elects or continues
COBRA coverage.
(d)
For a period of one-year following the Separation Date, the
Company will continue to pay the premiums relating to personal
life insurance coverage for the Executive in an amount equal
to $1,000,000.
(e)
The Company shall grant to the Executive, immediately after
the closing of the next round of equity financing (the
“Financing”), five-year stock options to purchase
that number of shares representing two and one-half percent
(2.5%) of the outstanding common stock of the Company, par
value $.001 per share (the “Common Stock”) on a
fully diluted basis as of the closing of the Financing. The
options shall be 100% vested and immediately exercisable and
have an exercise price equal to the fair market value of a
share of Common Stock on the date of grant. 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 of the Company (the “Preferred Stock”)
outstanding on the date of the Financing, plus the shares of
Common Stock issuable upon conversion or exercise, as the case
may be, of all securities of the Company convertible into,
exercisable for, or exchangeable for, directly or indirectly,
shares of Common Stock, that are currently exercisable by the
holder thereof or which will become exercisable within 90 days
of the date of the Financing. The Executive shall have the
right (the “Executive’s Right”) to include
for resale the shares of Common Stock issuable upon exercise
of the options granted pursuant to this Section 2(e) in a
registration statement filed by the Company under the
Securities Act of 1933, as amended, if and to the same extent
as any such right to registration may in the future first be
given to the persons that on the date hereof are holders of
Common Stock (the “Other Registration Right”);
provided, however, that the shares of Common Stock underlying
the options granted pursuant to this Section 2(e) shall not be
entitled to be included in any registration statement that may
be filed by the Company with respect to securities issued in
the Financing. The Executive’s Right is conditioned upon
the Executive’s compliance with the terms and conditions
of the Other Registration Right as if he was a party to any
agreement which memorialized the terms and conditions thereof.
The Executive’s Right is personal to the Executive and
shall not run with the shares of Common Stock issuable upon
exercise of the options granted pursuant to this Section 2(e).
If, as currently contemplated, the Financing consists of two
steps, an equity capital raise followed by a merger with a
subsidiary of a public shell corporation, the exercise price
and number of fully diluted shares will be determined as of
the close of the equity capital raise, without regard to the
subsequent merger.
(f)
The Company shall reimburse the Executive for up to $12,500
for legal fees he incurred in connection with the negotiation
of this Agreement within 30 days after he submits appropriate
documentation related to such fees provided that the Executive
submits such documentation by November 30, 2008.
3.
The
Executive hereby ratifies and confirms, and agrees to continue
to be bound by, the provisions of Section 6 (Confidential
Information and Inventions) of the Employment Agreement (a
copy of which is attached hereto as
Exhibit A ).
In connection therewith, the Executive acknowledges that the
Company would not make the payments and provide the benefits
specified in Sections 1 and 2 hereof (other than the payment of the
Executive's base salary through the Separation Date) without the
Executive's agreement to continue to be bound by the provisions set
forth in Section 6 of the Employment Agreement and, therefore, that
in the event of a breach by the Executive of such provisions, the
Company shall be entitled to cease making further payments under
Sections 1 and 2 of this Agreement and to recover all amounts
(other than the Executive's base salary through the Separation
Date) previously paid to the Executive under such Sections 1 and 2.
The Executive agrees, whether or not requested, to promptly return
any and all copies of Confidential Information (as defined in the
Employment Agreement), in whatever medium and form. In addition,
the Executive agrees to refrain forever from using or disclosing
the Company's Confidential Information for any reason unless he is
required to do so by law or legal process. The Executive's
obligations under this Section 3 will survive the expiration
of this Agreement.
4.
(a)
The Executive agrees tha
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