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Exhibit 10.9
SOMAXON PHARMACEUTICALS, INC.
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "AGREEMENT") made and entered into as
of April
14, 2005, between SOMAXON PHARMACEUTICALS, INC., a Delaware
corporation (the
"COMPANY"), and Dr. Philip Jochelson who resides at 12626
Intermezzo Way
("EXECUTIVE").
W I T N E S S E T H:
WHEREAS, the Company desires to employ Executive and Executive
desires to
accept employment with Company upon the terms and conditions
hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants
hereinafter set forth, and intending to be legally bound hereby,
it is hereby
agreed as follows:
1. Position and Duties. Executive shall diligently and
conscientiously devote Executive's full business time,
attention, energy, skill
and diligent efforts to the business of the Company and the
discharge of
Executive's duties hereunder. Executive's duties under this
Agreement shall be
to serve as SENIOR VICE PRESIDENT AND CHIEF MEDICAL OFFICER,
with the
responsibilities, rights, authority and duties customarily
pertaining to such
office and as may be established from time to time by or under
the direction of
the Board of Directors of the Company (the "BOARD") or its
designees. Executive
shall report to the Board and the President and Chief Executive
Officer of the
Company. Executive shall also act as an officer and/or director
and/or manager
of such affiliates of the Company as may be designated by the
Board from time to
time, commensurate with Executive's office, all without further
compensation,
other than as provided in this Agreement. As an exempt, salaried
employee,
Executive will be expected to work such hours as required by the
nature of
Executive's work assignments.
2. Employment Term. Subject to the provisions contained in
Paragraph
8, Executive's employment by the Company shall be for a term
commencing on the
date hereof and expiring on the close of business on December
31, 2006 (the
"INITIAL TERM"); provided, however, the term of Executive's
employment by the
Company shall continue for an indefinite period thereafter
unless and until
either party shall give to the other 60 days advance written
notice of
expiration of the term (the Initial Term and the period, if any,
thereafter,
during which the Executive's employment shall continue are
collectively referred
to as the "EMPLOYMENT TERM").
3. Place of Employment. Executive's performance of services
under
this Agreement shall be rendered in San Diego County,
California, subject to
necessary travel requirements of Executive's position and duties
hereunder.
4. Compensation.
(a) Base Salary. The Company shall pay to Executive base
salary compensation at an annual rate of not less than $250,000.
Following the
end of the Company's fiscal year 2005, and annually thereafter,
the Board shall
review Executive's base salary in light of the performance of
Executive and the
Company, and may, in its sole discretion, maintain or increase
(but not
decrease) such base salary by an amount it determines to be
appropriate.
Executive's annual base salary payable
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hereunder, as it may be maintained or increased from time to
time, is referred
to herein as "BASE SALARY." Base Salary shall be paid in equal
installments in
accordance with the Company's payroll practices in effect from
time to time for
executive officers, but in no event less frequently than
monthly.
(b) Bonus Plan. The Company shall adopt a bonus program
providing for annual bonus awards to Executive and the Company's
other eligible
employees dependent upon, among other things, the achievement of
certain
performance levels by the Company, the nature, magnitude and
quality of the
services performed by Executive for the Company and the
compensation paid for
positions of comparable responsibility and authority within the
Company's
industry (the "COMPANY EMPLOYEE BONUS PLAN"). Executive shall
receive a one-time
cash bonus payment of $75,000 payable on March 15, 2006,
contingent upon
Executive's being employed, in good standing, with the Company
as of that date.
Said one-time bonus shall be credited against any other bonus
payable to
Executive for calendar year 2005 under any company employee
bonus plan.
(c) Signing Bonus. Executive shall be eligible to receive a
one-time cash bonus payment of $50,000 payable within 10 days of
the execution
of this Agreement.
(d) Option Grant. As additional consideration for the
services
to be rendered by Executive under this Agreement, the Company
will grant to
Executive stock options to purchase 325,000 shares of the
Company's common
stock, subject to approval of the Board. The exercise price per
share of such
options will be equal to the fair market value per share on the
date the options
are granted. The stock options will vest over four years with
1/4 of the shares
subject to the stock options vesting on the first anniversary of
the date the
stock options are granted, and the remainder vesting monthly at
a rate of 1/48th
on the first day of each calendar month thereafter until all
shares are vested.
The stock options will be granted under the Company's 2004
Equity Incentive
Award Plan (the "OPTION PLAN") and will be subject to the terms
and conditions
applicable to stock options granted under that plan, as
described in that plan
and the applicable stock option agreement.
5. Benefits. Executive shall be eligible to participate in
all
employee benefit programs of the Company offered from time to
time during the
Employment Term by the Company to employees or executive
officers of Executive's
rank, to the extent that Executive qualifies under the
eligibility provisions of
the applicable plan or plans, in each case consistent with the
Company's
then-current practice as approved by the Board from time to
time. Except to the
extent financially feasible for the Company, the foregoing shall
not be
construed to require the Company to establish such plans or to
prevent the
modification or termination of such plans once established, and
no such action
or failure thereof shall affect this Agreement. Executive
recognizes that the
Company has the right, in its sole discretion, to amend, modify
or terminate its
benefit plans without creating any rights in Executive.
6. Vacation. Executive shall be entitled to paid vacation and
sick
time ("PTO") of up to four weeks per calendar year, with such
number of weeks
being pro-rated for the remainder of the 2005 calendar year.
Executive may
roll-over unused PTO time from one calendar year to another,
subject to a
maximum of six weeks of accrued PTO.
7. Business Expenses. The Company shall promptly reimburse
Executive
for Executive's reasonable and necessary expenditures for
travel, entertainment
and similar items made in furtherance of Executive's duties
under this Agreement
consistent with the policies of the Company as applied to all
executive
officers. Executive shall document and substantiate such
expenditures as
required by the policies of the Company as applied to all
executive officers,
including an itemized list of all expenses incurred, the
business purposes for
which such expenses were incurred, and such receipts as
Executive reasonably has
been able to obtain.
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8. Termination of Employment.
(a) Death or Disability.
(i) In the event of Executive's death during the
Employment Term, the Employment Term shall automatically
terminate.
(ii) Each of the Company and Executive shall have the
right to terminate the Employment Term in the event of
Executive's Disability.
"DISABILITY" as used in this Agreement shall have meaning set
forth in Section
22(e)(3) of the Internal Revenue Code, which as of the date of
this Agreement is
as follows: "An individual is permanently and totally disabled
if he is unable
to engage in any substantial gainful activity by reason of any
medically
determinable physical or mental impairment which can be expected
to result in
death or which has lasted or can be expected to last for a
continuous period of
not less than 12 months." A termination of Executive's
employment by either
party for Disability shall be communicated to the other party by
written notice,
and shall be effective on the 10th day after receipt of such
notice by the other
party (the "DISABILITY EFFECTIVE DATE"), unless Executive
returns to full-time
performance of Executive's duties before the Disability
Effective Date.
(b) By the Company. The Company shall have the right to
terminate the Employment Term for Cause. "CAUSE" as used in this
Agreement shall
mean:
(i) Executive's breach of any of the covenants contained
in Paragraphs 9, 10, and 11 of this Agreement;
(ii) Executive's conviction by, or entry of a plea of
guilty or nolo contendere in, a court of competent and final
jurisdiction for
any crime involving moral turpitude or punishable by
imprisonment in the
jurisdiction involved;
(iii) Executive's commission of an act of fraud, whether
prior to or subsequent to the date hereof upon the Company;
(iv) Executive's continuing repeated willful failure or
refusal to perform Executive's duties as required by this
Agreement (including,
without limitation, Executive's inability to perform Executive's
duties
hereunder as a result of chronic alcoholism or drug addiction
and/or as a result
of any failure to comply with any laws, rules or regulations of
any governmental
entity with respect to Executive's employment by the
Company);
(v) 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;
(vi) Executive's intentional commission of any act which
Executive knows (or reasonably should know) is likely to be
materially
detrimental to the Company's business or goodwill; or
(vii) Executive's material breach of any other provision
of this Agreement, provided that termination of Executive's
employment pursuant
to this subsection (vii) shall not constitute valid termination
for good cause
unless Executive shall have first received written notice from
the Board stating
with specificity the nature of such breach and affording
Executive at least
twenty days to correct the breach alleged.
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Nothing in this Paragraph 8(b) shall prevent Executive from
challenging the
Board's determination that Cause exists or that Executive has
failed to cure any
act (or failure to act) that purportedly formed the basis for
the Board's
determination, under the arbitration procedures set forth in
Paragraph 20 below.
(c) By Executive.
(i) Executive shall have the right to terminate the
Employment Term for Good Reason (as defined below), upon 30
days' written notice
to the Board given within 60 days following the occurrence of an
event
constituting Good Reason; provided that the Company shall have
20 days after the
date such notice has been given to the Board in which to cure
the conduct
specified in such notice. Executive's continued employment
during such 20-day
period shall not constitute Executive's consent to, or a waiver
of rights with
respect to, any act or failure to act constituting Good Reason
hereunder.
(ii) For purposes of this Agreement "GOOD REASON" shall
mean:
(1) a change in Executive's position or
responsibilities (including reporting responsibilities) that
represents a
substantial reduction in the position or responsibilities as in
effect
immediately prior thereto; the assignment to Executive of any
duties or
responsibilities that are materially inconsistent with such
position or
responsibilities; or any removal of Executive from or failure to
reappoint or
reelect Executive to any of such positions, except in connection
with the
termination of Executive's employment for Cause, as a result of
his or her
Disability or death, or by Executive other than for Good
Reason;
(2) a reduction in Executive's Base Salary other
than in connection with a general reduction in wages for all
employees of the
Company and its parent and subsidiaries, if any;
(3) the Company requiring Executive (without
Executive's consent) to be based at any place outside a 50-mile
radius of his or
her initial place of employment with the Company, except for
reasonably required
travel on the Company's business;
(4) the Company's failure to provide Executive
with compensation and benefits substantially equivalent (in
terms of benefit
levels and/or reward opportunities) to those provided for under
each of the
Company's material employee benefit plan, program and practice
as in effect from
time to time; or
(5) any material breach by the Company of its
obligations to Executive under this Agreement.
(iii) Subject to the notice period set forth in
Paragraph 2 above, Executive shall have the right to terminate
his or her
employment hereunder without Good Reason by providing the
Company with a written
notice of termination, and such termination shall not in and of
itself be a
breach of this Agreement.
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(d) Termination Payments.
(i) If the Employment Term is terminated pursuant to
Paragraph 8(a)(i) (i.e., death), the Company shall pay to
Executive (a) his or
her accrued but unpaid Base Salary through the date of
termination (plus all
accrued and unpaid expenses reimbursable in accordance with
Paragraph 7), (b)
any accrued but unused PTO, and (c) at the discretion of the
Board, an annual
bonus for the year in which Executive's death occurs, prorated
through the date
of death, based on the Board's good-faith estimate of the actual
amount, if any,
that would have been payable for such year under the Company
Employee Bonus Plan
(assuming Executive had remained employed by the Company through
the end of such
year) in accordance with Paragraph 4(b).
(ii) If the Employment Term is terminated pursuant to
Paragraph 8(a)(ii) (i.e., Disability), the Company shall pay to
Executive (a)
his or her accrued but unpaid Base Salary through the date of
termination (plus
all accrued and unpaid expenses reimbursable in accordance with
Paragraph 7),
(b) any accrued but unused PTO, (c) an amount equal to
Executive's actual Base
Salary (not including any bonus payable) for the 6 month period
immediately
prior to such termination, payable in 6 equal installments
during the 6 month
period following such termination, and (d) at the discretion of
the Board, an
annual bonus for the year in which Executive's Disability
occurs, prorated
through the date of Disability, based on the Board's good-faith
estimate of the
actual amount, if any, that would have been payable for such
year under the
Company Employee Bonus Plan (assuming Executive had remained
employed by the
Company through the end of such year) in accordance with
Paragraph 4(b).
(iii) If the Employment Term is terminated by Executive
pursuant to Paragraph 8(c)(i) (i.e., Good Reason), or if the
Company terminates
the Employment Term other than pursuant to Paragraphs 8(a) or
8(b), or if the
Company does not renew the Employment Term pursuant to Paragraph
2, then the
Company shall pay to Executive the following, which Executive
acknowledges to be
fair and reasonable, as consideration for the Release described
in Paragraph
8(f):
(a) Executive's accrued but unpaid Base Salary
through the date of termination (plus all accrued and unpaid
expenses
reimbursable in accordance with Paragraph 7);
(b) any accrued
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