Exhibit 10.1
[Nektar Therapeutics
Letterhead]
March 6, 2006
V IA H
AND D ELIVERY
Ajay Bansal
Nektar Therapeutics
150 Industrial Road
San Carlos, CA 94070-6256
Dear Ajay:
As discussed, this letter sets forth
the substance of the transition agreement (the
“Agreement”) that Nektar Therapeutics, Inc. (the
“Company”) is offering to you to aid in your employment
transition.
1. Separation Date.
You will remain employed as an
at-will employee of the Company until the earliest of: (a) the
date you resign from your employment; (b) the date the Company
terminates your employment for any reason; or
(c) June 15, 2006, which date can be extended by mutual
agreement of you and the Company (the “Separation
Date”).
2. Transitional
Employment.
(a) Title and Duties.
From the date that you sign this
Agreement through the Separation Date (the “Transition
Period”), you will remain employed with the Company in the
position of Finance and Strategic Advisor, and you shall perform
all duties and responsibilities assigned to you by the
Company’s Acting Chief Executive Officer or Chief Executive
Officer (“CEO”) or the Company’s Chief Financial
Officer (“CFO”). You will report to the CFO. Your
duties will include, but not be limited to, completing such pending
projects as may be requested and providing transition briefing
information regarding your work activities. During the Transition
Period, you will have no authority to represent the Company to
third parties or to bind the Company to any contractual
obligations, whether written, oral or implied, or represent that
you have such authority, unless authorized to do so in writing by
the CFO. During the Transition Period, you shall continue to abide
by all of the Company’s general policies and procedures in
effect from time to time, and perform your job duties in good faith
to the best of your abilities.
(b) Outplacement Services and Job
Search Activities. During
the Transition Period and through February 1, 2007, you will
be permitted to utilize reasonable Senior Executive professional
outplacement services provided by the Lee Hecht Harrison firm, at
the Company’s expense. In addition, during the Transition
Period, you will be permitted to devote a reasonable amount of time
during normal business hours to your personal job search and other
professional activities, provided that such activities do not
unreasonably interfere with
your duties to the Company. You may make
reasonable use of the Company’s equipment ( e.g .,
Company computers) in connection with such activities, subject to
all Company policies and procedures governing the use of such
equipment.
(c) Salary and Benefits; Equity
Award Vesting. During
the Transition Period: (i) you will continue to be paid your
current base salary at the rate of $25,840.50 per month for your
services, subject to required withholdings and deductions;
(ii) your salary will be paid on the Company’s customary
payroll dates; (iii) you will not be eligible to receive a
bonus for your services during the Transition Period, other than
under the Company’s Variable Compensation program (as
provided in Section 2(d) herein); (iv) you will continue
to be eligible to participate in all benefit plans the Company
makes generally available to its employees, and any other benefit
plans in which you are enrolled as of the date of this letter, to
the extent permitted by the terms and conditions governing those
plans; and (v) subject to the terms of the stock option grants
and restricted stock unit grants provided to you in connection with
your employment (collectively, the “Equity Awards”),
and the terms of the applicable equity incentive plans, your Equity
Awards will continue to vest.
(d) Variable Compensation
Program. During the
Transition Period, you shall be eligible to participate in the
Company’s Variable Compensation program. After the Separation
Date, you will not be eligible to participate in the Variable
Compensation program. Any compensation provided under the Variable
Compensation program will be calculated based on your current
annual total target compensation rate of $413,448, prorated for any
partial period of participation. To the extent that compensation is
paid under the Variable Compensation program after the Separation
Date, payment of such compensation may be delayed as provided under
Section 3(g) (Deferred Compensation).
3. Termination of
Employment.
(a) Final Pay.
After the Separation Date, you will
cease to be employed in any position with the Company or any of its
affiliated entities (the “Affiliates”). The Company
will pay you all accrued salary and all accrued and unused vacation
(if any) earned by you through the Separation Date, less applicable
withholdings and deductions, in accordance with applicable
law.
(b) Final Expense
Reimbursements. No later
than thirty (30) days after the Separation Date, you must
submit your final documented expense reimbursement statement
reflecting all business expenses you incurred through the
Separation Date for which you seek reimbursement. The Company will
reimburse you for these expenses pursuant to its regular business
practice.
(c) Severance Pay.
Although the Company is not
otherwise obligated to do so, provided that (i) you sign this
Agreement, return it to the Company, and allow it to become
effective; (ii) you abide by the terms set forth herein; and
(iii) on or promptly after the Separation Date, you sign the
Separation Date Release attached hereto as Exhibit A ,
return it to the Company and allow it to become effective, the
Company will provide you with severance pay in the total amount of
$413,448 (the “Severance”). The Severance will be paid
on the following schedule: (i) you will receive an initial
payment of $50,000 within ten (10) business days
after
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the Effective Date of the Separation Date
Release (as defined therein); and (ii) you will be paid
monthly Severance payments at the rate of $30,287.33 on the
Company’s payroll schedule, beginning with the first payday
immediately following the initial severance payment, for twelve
(12) months thereafter. All Severance payments will be subject
to applicable withholdings and deductions.
(d) Accelerated Vesting of Equity
Awards; Post-Termination Exercise. Pursuant to the terms of the Equity Awards and
the applicable equity incentive plans, your Equity Awards will
cease to vest as of the Separation Date except as provided by the
following sentence. Although the Company is not otherwise obligated
to do so, provided that (i) you sign this Agreement, return it
to the Company, and allow it to become effective; (ii) you
abide by the terms set forth herein; and (iii) on or promptly
after the Separation Date, you sign the Separation Date Release,
return it to the Company and allow it to become effective, the
Company will accelerate vesting of the Equity Awards in the
additional number of shares that would have vested if your
employment had continued for fourteen (14) months after the
Separation Date, effective as of the Separation Date, and will
amend the terms of your Equity Awards to permit you to exercise any
vested shares subject to the Equity Awards on or before
December 31, 2006 (or, if earlier, the expiration of the term
of any Equity Award) (the “Equity Acceleration”).
Except as expressly modified in the preceding sentence, your Equity
Awards will continue to be governed in full by the terms of the
operative agreements and applicable equity incentive
plans.
(e) Benefits Payments.
Your group health insurance coverage
will terminate on the Separation Date, or earlier if you fail to
meet the eligibility requirements of the Company’s group
health insurance plan. To the extent provided by the federal COBRA
law or applicable state insurance laws, and by the Company’s
current group health insurance policies, you then will be eligible
to continue your group health insurance benefits at your own
expense. Later, you may be able to convert to an individual policy
through the provider of the Company’s health insurance, if
you wish. You will be provided with a separate notice more
specifically describing your rights and obligations to continuing
health insurance coverage under applicable state and/or federal
insurance laws and the terms of the applicable health insurance
plans after you no longer meet the eligibility requirements of the
Company’s group health insurance plan. In addition, you will
be able to continue your Company supplemental life insurance and
individual disability insurance coverage, or convert to an
individual policyholder, at your own expense, subject to the terms
of the applicable plans and policies. If you enter into this
Agreement and abide by the terms set forth herein, and you timely
elect continued health, life and disability insurance coverage (or
convert to an individual policyholder, as applicable), the Company
agrees, through the earlier of twelve (12) months after the
Separation Date, or the date you become eligible for insurance
coverage with another employer (the “Insurance Payment
Termination Date”), to pay your health insurance premiums,
your life insurance premiums, and your individual disability
insurance premiums, sufficient to continue each such insurance
coverage at the Company’s group insurance rates and at the
same level in effect as of the date of coverage loss (including
dependent coverage, if any) (the “Benefits Payments”)
to the extent such coverage is available. You agree to notify the
Company in writing immediately upon commencing other employment
that provides health insurance, life insurance, or disability
insurance benefits. In the event that your health insurance
coverage through the Company’s group health plan, or your
Company supplemental life insurance coverage, or your Company
disability insurance coverage, terminates prior to the Insurance
Payment Termination Date and
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you obtain individual coverage for health
insurance, life insurance, or disability insurance, the Company
will reimburse you, through the Insurance Payment Termination Date,
for your individual premiums on such insurance in the same monthly
amount as the Company was previously paying pursuant to this
Section 3(e), provided that you shall not be eligible for any
such reimbursement before the date that is six (6) months
after the Separation Date.
(f) Forfeiture of Severance and
Benefits Payments for Specified Breaches. You agree that during the Transition Period and
for twelve (12) months after the Separation Date (the
“Forfeiture Period”), you will not carry on any
business or activity (whether directly or indirectly, as a partner,
stockholder, principal, agent, director, affiliate, employee or
consultant) that is competitive in any manner with the business
conducted by the Company, nor engage in any other activities that
conflict with your obligations to the Company. For the purposes of
this Agreement, you and the Company agree that drug delivery
technology business in the fields of insulin, pulmonary, and
pegylation delivery will be considered competitive with the
business of the Company as will any delivery-based product using
drug molecules in pre-clinical or clinical testing. In the
event that the Company exits the pulmonary or pegylation licensing
business through selling its line of business in such field,
spinning-off an entity in which the Company retains less than 20%
control, or discontinuing licensing efforts in such field such that
the Company does not have a significant financial interest in
future licensing or partner deals, then your participation in a
business or activity in the field exited by the Company shall not
constitute competitive activity for the purposes of this paragraph
unless it is competitive in some other respect described in this
paragraph . If a Change in Control (defined below) occurs
during the Forfeiture Period, the scope of competitive activity
from which you will be prohibited hereunder will be determined by
the scope of the actual and planned business activities of the
Company prior to the Change in Control. Before commencing any
participation in any business or activity during the Forfeiture
Period, you shall submit advance written notice to the Acting CEO
or CEO, as applicable, describing the nature of the proposed
business or activity and the general scope of the business of the
entity or individual for which you are proposing to perform the
work activity or in whose business you are proposing to participate
in some manner, and the Company shall provide a written response
within seven (7) business days indicating whether it consents
to the proposed business activity. Failure to respond within this
seven (7) business day period shall constitute consent by the
Company to the proposed business activity. In the event that the
Company initially consents to the proposed business or activity and
subsequently the Company becomes competitive with such business or
activity by virtue of commencing a new line of research and
development, the Company shall not withdraw its consent unless and
until such new research and development has reached the stage of
clinical trials, after notice of which you shall be subject to the
forfeiture provisions provided below if you persist in such
business or activity. If the Company does not consent to the
proposed business activity or withdraws its consent pursuant to the
provisions of the previous sentence, the parties agree that upon
your request they will proceed to an expedited arbitration under
the provisions of Section 16 (Dispute Resolution) to decide
the question of whether the proposed business activity violates the
terms of this Section 3(f). The arbitration will be conducted
within ten (10) business days of the demand for arbitration,
and the arbitrator shall be required to issue a short form decision
within two (2) business days of the close of the hearing. You
will not engage in the proposed business activity until the issue
is resolved. The Company agrees that it will not invoke the below
forfeiture provisions for a violation of this Section 3(f)
unless you engage in the proposed business activity without the
Company’s consent or engage in the business activity
notwithstanding an adverse
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ruling by the arbitrator. Notwithstanding the
above restrictions in this Section 3(f), you shall not be
prohibited from being a passive shareholder of up to 1% of the
public stock of a competitive entity. You acknowledge and agree
that your obligations under this Section 4(f), Section 7
(Nondisparagement), Section 8 (Nonsolicitation), and
Section 5 (Proprietary Information Obligations) herein are an
essential part of the consideration you are providing hereunder in
exchange for which and in reliance upon which the Company has
agreed to provide the Severance and Benefits Payments. You further
acknowledge and agree that your violation of this Section 4(f)
inevitably would involve use or disclosure of the Company’s
proprietary and confidential information. Accordingly, you agree
that you will forfeit any right or entitlement to receive any
unpaid Severance, or any unpaid Benefits Payments, and the
Company’s obligations to provide any additional Severance or
additional Benefits Payments will cease in full if you breach any
provision of this Section 4(f) or Section 7
(Nondisparagement), Section 8 (Nonsolicitation), or
Section 5 (Proprietary Information Obligations) hereof,
effective as of the date of your breach.
(g) Deferred
Compensation. In the
event that the Company determines that any payments hereunder
(including but not limited to payments pursuant to Sections 2(d)
(Variable Compensation Program) or 3(c) (Severance Pay)), or
continued insurance coverage or Benefits Payments provided under
Section 3(e) (Benefits Payments), fail to satisfy the
distribution requirement of Section 409A(a)(2)(A) of the
Internal Revenue Code (the “Code”) as a result of
Section 409A(a)(2)(B)(i) of the Code, then the payment of such
benefits shall not be made pursuant to the payment schedules
provided herein and instead the payment of such benefits shall be
delayed or otherwise restructured to the minimum extent necessary
so that such benefits are not subject to the provisions of
Section 409A(a)(1) of the Code.
(h) Return of Company
Property. On the
Separation Date (or earlier as requested by the Company), you shall
return to the Company all documents (and all copies thereof) and
other property belonging to the Company that you have in your
possession or control. The documents and property to be returned by
you include, but are not limited to, all files, correspondence,
email, memoranda, notes, notebooks, drawings, records, plans,
forecasts, reports, studies, analyses, compilations of data,
proposals, agreements, financial information, research and
development information, sales and marketing information,
operational and personnel information, specifications, code,
software, databases, computer-recorded information, tangible
property and equipment (including, but not limited to, computers,
facsimile machines, mobile telephones, and servers), credit cards,
entry cards, identification badges and keys; and any materials of
any kind which contain or embody any proprietary or confidential
information of the Company or any of its Affiliates (and all
reproductions thereof in whole or in part). You agree to make a
diligent search to locate any such documents, property and
information. If you have used any personally owned computer,
server, or e-mail system to receive, store, review, prepare or
transmit any Company confidential or proprietary data, materials or
information, within fifteen (15) business days after the
Separation Date, you shall provide the Company with a
computer-useable copy of all such information and then permanently
delete and expunge such confidential or proprietary information
from those systems withou
