Exhibit 10.1
[Nektar
Letterhead]
February 14, 2006
V IA H
AND D ELIVERY
Ajit Gill
Nektar Therapeutics
150 Industrial Road
San Carlos, CA 94070-6256
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Re:
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Transition
and Retirement Agreement
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Dear Ajit:
As discussed, this letter sets forth
the substance of the transition and retirement agreement (the
“Agreement”) that Nektar Therapeutics (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 30, 2006 (the “Separation
Date”).
2. Transitional
Employment.
(a) Resignation of President and
CEO Positions, and Board Membership. You hereby resign from your positions of
President and Chief Executive Officer (“CEO”) of the
Company and as an officer of all affiliated entities (the
“Affiliates”) of the Company, as of March 17, 2006
(the “Resignation Date”). In addition, you hereby
resign as a member of the Company’s Board of Directors (the
“Board”), and as a member of the boards of directors of
any and all Affiliates on whose board you may serve, effective as
of the Resignation Date, and you agree that on the Resignation Date
you will confirm such resignations by signing and delivering to the
Board a resignation letter in the form attached hereto as
Exhibit A.
(b) New Title and
Duties. From the
Resignation Date through the Separation Date (the “Transition
Period”), you will be employed by the Company in an Advisor
position. You will report to the Company’s Acting CEO, and
subsequently to the new CEO if you remain employed at such time as
a new CEO may be designated. Your duties and responsibilities
during the Transition Period will include, but are not limited to,
providing transition assistance and other support to the Acting CEO
and the new CEO within your areas of expertise. During the
Transition Period and the Consulting Period (as defined in
Section 4 herein), 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 Acting CEO or the CEO. 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.
(c) Job Search
Activities. During the
Transition Period, you will be permitted to devote a reasonable
amount of time during normal business hours to your personal job
search 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 job search activities, subject
to all Company policies and procedures governing the use of such
equipment.
(d) 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 $44,387.50 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(e) 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.
(e) 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 $807,650, 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(f) (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
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 ninety (90) 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 such expenses pursuant to its regular business
practice.
(c) Transition
Payments. 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
2.
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 B , return it to the Company and allow it
to become effective, the Company will provide you with transition
payments in the total amount of $1,633,300 (the “Transition
Payments”). No Transition Payments will be provided until at
least six (6) months after the Separation Date, at which time
the Transition Payments shall be paid as follows: (i) on a
date between January 1, 2007 and January 8, 2007, you
will be paid an initial Transition Payment of $272,216.80; and
(ii) you will be paid monthly Transition Payments at the rate
of $45,369.44 on the Company’s payroll schedule, beginning
with the first payday of the calendar month immediately following
payment of the initial Transition Payment and continuing for thirty
(30) months thereafter. All Transition Payments will be
subject to applicable withholdings and deductions.
(d) 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 June 30, 2009 or the date you
become eligible for insurance coverage with another employer (the
“Insurance Payment Termination Date”), to pay the
amount of 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 individual disability insurance
coverage, terminates prior to the Insurance Payment Termination
Date, the Company agrees, through the Insurance Payment Termination
Date, to either reimburse you for your individual premiums on
individual replacement coverage for such insurance that you obtain
applicable to you or your family members or, if you are unable to
obtain such individual replacement coverage, to provide you
payments in lieu of reimbursement, in either case of which the
Company’s reimbursement or payment to you shall be in the
same monthly amount as the Company was previously paying pursuant
to this Section 3(d), provided that you shall not be eligible
for any such reimbursement or payment before the date that is six
(6) months after the Separation Date.
3.
(e) Forfeiture of Transition
Payments and Benefits Payments for Specified Breaches.
You acknowledge and agree that your
obligations under Sections 4(d) (Protection of Information), 4(f)
(Other Work Activities), 8 (Nondisparagement), and 9
(Nonsolicitation), herein, and under your Proprietary Information
Obligations (as provided in Section 6 (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 Transition Payments
and Benefits Payments. You further acknowledge and agree that your
violation of Section 4(f) inevitably would involve use or
disclosure of the Company’s proprietary and confidential
information. Accordingly, you agree that you will forfeit,
effective as of the date of your breach, any right or entitlement
to receive any unpaid portion of the Transition Payments, or any
unpaid Benefits Payments, and the Company’s obligations to
provide the remaining Transition Payments or additional Benefits
Payments will cease in full if you breach any provision of Sections
4(d) (Protection of Information), 4(f) (Other Work Activities), 8
(Nondisparagement), and 9 (Nonsolicitation), or your Proprietary
Information Obligations.
(f) Deferred
Compensation. In the
event that the Company determines that any payments hereunder
(including but not limited to payments pursuant to Sections 2(e)
(Variable Compensation Program), or 3(c) (Transition Payments)), or
continued insurance coverage or Benefits Payments provided under
Section 3(d) (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)(l) of the Code.
(g) 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, with the exception of the laptop computer
provided for your use by the Company (the “Laptop”) as
provided in Section 3(h) (Transfer of Laptop Ownership), and
any other property that the Company authorizes you in writing to
retain in connection with your consulting Services hereunder, which
property shall be returned promptly upon the request of the
Company. 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, 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
4.
or proprietary information from
those systems; and you agree to provide the Company access to your
system as requested to verify that the necessary copying and/or
deletion is done; and, with respect to the Laptop, you shall follow
all of the same procedures set forth above in this sentence. Your
eligibility to receive Transition Payments and Benefits Payments is
conditioned upon your compliance with the provisions set forth in
this paragraph.
(h) Transfer of Laptop
Ownership. Provided that
you have satisfied the conditions for receipt of Transition
Payments hereunder, the Company hereby transfers its ownership
interests in the Laptop to you, effective as of the Effective Date
of the Separation Date Release (as defined therein). The Laptop
will be provided to you “as is” without warranty or
guarantee of any kind.
4. Consulting
Relationship. If you
sign, date, return to the Company and allow to become effective the
Separation Date Release on or within twenty-one (21) days
after the Separation Date, and you comply with the terms of this
Agreement, then the Company will engage you as a consultant under
the terms and conditions specified below.
(a) Consulting Period.
The Company will engage you as a
consultant for the period (the “Consulting Period”)
commencing on the day immediately following the Separation Date and
continuing until the earlier of: (i) June 30, 2009; or
(ii) the date your consulting relationship is terminated by
the Company due to material breach of this Agreement or your
Proprietary Information Obligations; or (iii) the date that
you and the Company mutually agree to terminate the consulting
relationship.
(b) Consulting Duties.
Each month during the Consulting
Period, you agree to provide at least eight (8) hours, but not
more than ten (10) hours, of consulting services (the
“Services”) which shall consist of reporting your
recommendations periodically (generally quarterly) to the Acting
CEO or the new CEO, as applicable, regarding relevant market trends
and opportunities, as well as any other strategic recommendations
for the Company, which reports may (in your discretion) include
analyses of analyst reports pertaining to the Company, its
competitors and the relevant markets; or such other reports or
services as may be mutually agreed upon by you and the Company. You
shall exercise the highest degree of professionalism and utilize
your expertise and creative talents in performing the Services.
Subject to the restrictions contained herein, you shall be free to
pursue employment or consulting with third parties during the
Consulting Period. The Company shall not require you to perform the
Services in a manner that would unreasonably interfere with your
performance of your other professional duties.
(c) Equity Award
Vesting. In consideration
of the Services, and to the extent consistent with, and subject to,
the terms of your Equity Awards, and the applicable equity
incentive plans, your Equity Awards will continue to vest during
the Consulting Period. You will be able to exercise any vested
shares subject to the Equity Awards in accordance with the terms of
your Equity Awards and the applicable equity incentive plans. You
will not receive any additional consideration or compensation for
the Services, including but not limited to consulting fees. In the
event that the Consulting Period terminates prior to June 30,
2009 as a direct result of a Change in Control (defined below), the
Equity Awards will be subject to accelerated vesting such that all
unvested shares will become fully vested and exercisable.
Furthermore, if, during
5.
the Consulting Period, the equity
awards of the Company’s employees are subject to accelerated
vesting due to a Change in Control, your Equity Awards also will be
subject to accelerated vesting under substantially similar terms
and conditions as applicable to the Company’s employees
generally. For the purposes of this Agreement, a “Change in
Control” shall be deemed to occur if:
(i) there is consummated a sale or other disposition
of all or substantially all of the assets of the Company, as
determined on a consolidated basis (other than a sale to an entity
where at least fifty percent (50%) of the combined voting
power of the voting securities of such entity are owned by the
stockholders of the Company immediately after such sale or other
disposition); or
(ii) there is consummated a merger, consolidation or
similar transaction involving (directly or indirectly) the Company,
and, immediately after the consummation of such transaction, the
stockholders of the Company immediately prior to the consummation
of such transaction do not directly or indirectly own, immediately
after the consummation of such transaction, outstanding voting
securities representing at least fifty percent (50%) of the
combined outstanding voting power of the surviving entity in such
transaction or at least fifty percent (50%) of the combined
outstanding voting power of the parent of the surviving entity in
such transaction; or
(iii) any person, entity or group (other than the
Company, a subsidiary or affiliate of the Company, or a Company
employee benefit plan, including any trustee of such plan acting as
trustee) becomes the beneficial owner, directly or indirectly, of
securities of the Company representing at least fifty percent
(50%) of the combined voting power of the Company’s
then-outstanding securities, other than by virtue of a merger,
consolidation or similar transaction.
(d) Protection of
Information. You agree
that, during the Consulting Period and thereafter, you will not use
or disclose any confidential or proprietary information or
materials of the Company that you obtain or develop in the course
of performing the Services, except with permission of a
duly-authorized Company officer. Any and all work product you
create in the course of performing the Services will be the sole
and exclusive property of the Company. You hereby assign to the
Company all right, title, and interest in all inventions,
techniques, processes, materials, and other intellectual property
dev
