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Exhibit 10.11
SOMAXON PHARMACEUTICALS, INC.
EMPLOYMENT AGREEMENT
EMPLOYMENT
AGREEMENT (this "AGREEMENT") made and entered into as of August
15, 2003 between SOMAXON PHARMACEUTICALS,
INC., a Delaware corporation (the
"COMPANY"), and Jeffrey Raser who resides
at P.O. Box 8952, Rancho Santa Fe,
California 92067 ("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 best 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, Sales &
Marketing, 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.
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, 2004 (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 $200,000. Following the
end of the Company's fiscal year 2003, 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
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.
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(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").
(c) Equity Investment by Executive. Concurrently with the
signing of this Agreement, the Company is
offering Executive, and Executive is
purchasing from the Company, pursuant to a
Restricted Stock Purchase Agreement
substantially in the form attached hereto
as Exhibit A, 450,000 shares of Common
Stock of the Company, for an aggregate
purchase price of $45.00. Such shares of
Common Stock shall be subject to a right of
repurchase at the original price
thereof according to a monthly vesting
schedule over four years commencing
retroactive to May 1, 2003.
(d) Option Grants. In connection with the Company's subsequent
preferred stock financing or other
significant capital raising transaction, the
Company shall adopt an equity incentive
plan providing for the grant of stock
options and other stock awards to the
Company's employees (the "OPTION PLAN").
The Board shall set grant to Executive an
option to acquire a number of shares
deemed to be appropriate by the Board in
its discretion in order to reward
Executive for services rendered to the
Company and/or as an incentive for
continued service to the Company. Such
option shall be subject to the terms and
conditions of the Option Plan, including
vesting, exercise price and
termination, except as may be modified by
this Agreement or an addendum hereto.
5.
Benefits. As soon as financially feasible for the Company, the
Company shall adopt a reasonably
comprehensive benefits package for the
participation of Executive, which shall
include, but not necessarily be limited
to, the following: medical, dental, vision,
disability, life insurance,
accidental death & dismemberment,
medical savings and 401(k) plans. 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 2003 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 11 and 12 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 commission of any act which is
detrimental to the Company's business or
goodwill; or
(vii) Executive's 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 fifteen
(15) 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 22 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 or Disability occurs, prorated
through the date of death or 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).
(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 12 month period immediately
prior to such termination, payable in 12
equal installments during the 12 month
period following such termination, and (d)
at the discretion of the Board, an
annual bonus for the year in which
Executive's death or Disability occurs,
prorated through the date of death or
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.e., Good
Reason), if the Company elects not to
renew the Employment Term in accordance
with Paragraph 2 or if the Company
terminates the Employment Term other than
pursuant to Paragraphs 8(a) or 8(b),
the Company shall pay to Executive the
following, which Executive acknowledges
to be fair and rea
