Exhibit
10.2
Execution
Copy
EMPLOYMENT
AGREEMENT
This
EMPLOYMENT AGREEMENT (the “Agreement”)
is
made this 11th day of May 2007, by and between NILE
THERAPEUTICS, INC.,
a
Delaware corporation with principal executive offices at 2850 Telegraph Avenue,
Suite 310, Berkeley, CA 94705, (the “Company”),
and
PETER
M. STRUMPH,
residing at 585 Eureka Street, San Francisco, CA 94114 (the “Executive”).
W
I T N E S S E T H:
WHEREAS,
the Company desires to employ the Executive as Chief Executive Officer of the
Company; and
WEHERAS,
the Executive desires to serve the Company in such capacity, upon the terms
and
subject to the conditions contained in this Agreement;
NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained
herein, the parties hereto hereby agree as follows:
1. Employment.
The
Company agrees to employ the Executive, and the Executive agrees to be employed
by the Company, upon the terms and subject to the conditions of this
Agreement.
2. Term.
The
employment of the Executive by the Company as provided in Section 1 shall
commence on June 4, 2007 (the “Effective
Date”)
and
continue for a period of three (3) years from the Effective Date unless
terminated earlier
as set
forth in Sections 9
and
10
below or
by mutual written agreement of the parties hereto (the “Term”).
In
the event that the Company does not intend to renew this Agreement, the Company
shall provide the Executive with a minimum of 120 days written notice prior
to
the expiration of the Term.
3. Duties;
Best Efforts; Place of Performance.
(a) The
Executive shall serve as Chief Executive Officer of the Company and shall,
subject to the direction of the Board of Directors of the Company, have such
powers and perform such duties as are customarily performed by the Chief
Executive Officer including, but not limited to developing Company strategy
and
managing its implementation, overseeing Company hiring, supervising the
performance of the Company’s management, and interfacing with investors,
customers, potential customers, media, analysts and the general public on behalf
of Company. The Executive shall also have such other powers and duties as may
be
from time to time directed by the Board of Directors of the Company, provided
that the nature of the Executive’s powers and duties so prescribed shall not be
inconsistent with the Executive’s position and duties herein.
(b) The
Executive shall devote substantially all of his business time, attention and
energies to the business and affairs of the Company and
shall
use his best efforts to advance the interests of the Company and shall not
during the Term be actively engaged in any other business activity, whether
or
not such business activity is pursued for gain, profit or other pecuniary
advantage, that will interfere with the performance by the Executive of his
duties hereunder or the Executive’s availability to perform such duties or that
will adversely affect, or negatively reflect upon, the Company.
(c) The
duties to be performed by the Executive hereunder shall be performed primarily
at the office of the Company, which shall be located in or within close
proximity to Berkeley, California, or such other location as the Company and
Executive may mutually agree; provided, however, that the Executive understands
that his duties will require periodic travel, which may be substantial at
times.
4. Directorship.
The Company shall use its best efforts to cause the Executive to be elected
as a
member of its Board of Directors throughout the Term and shall include him
in
the management slate for election as a director at every stockholders meeting
during the Term at which his term as a director would otherwise expire. The
Executive agrees to accept election, and to serve during the Term, as director
of the Company, without any compensation hereto other than as specified in
this
Agreement.
5. Compensation.
As full compensation for the performance by the Executive of his duties under
this Agreement, the Company shall pay the Executive as follows:
(a) Base
Salary.
The
Company shall pay the Executive a base salary (the “Base
Salary”)
equal
to Three Hundred Ten Thousand Dollars ($310,000.00) per annum, payable during
the Term in accordance with the Company’s normal payroll practices; provided,
however, that the Base Salary may be increased at the discretion of the Board
of
Directors upon each anniversary of this Agreement.
(b) Performance
Bonus.
The
Company shall annually pay the Executive a proportionate share (based on the
assigned weight of each of the Performance Milestones (as defined below) of
One
Hundred Twenty Five Thousand Dollars ($125,000.00) upon the successful
completion of annual corporate or individual performance milestones (the
“Performance
Milestones”)
at the
“Baseline” metric. If Performance Milestones are achieved at the “Exemplary”
metric, the Company shall pay Executive a proportionate share of One Hundred
Fifty Thousand Dollars ($150,000.00), and if achieved at the “Pessimistic”
metric, the Company will pay you a proportionate share of One-Hundred Thousand
Dollars ($100,000.00).
The
Performance Milestones and the metrics for the first year of the Term are as
set
forth on Schedule
5(b).
The
Performance Milestones shall be amended each subsequent year during the Term
upon the mutual agreement of the Company and the Executive no later than 30
days
following the beginning of such year.
(c) Change
of Control Bonus.
The
Company shall pay the Executive the applicable amount set forth on Schedule
5(c)
upon a
Change of Control (as defined below) of the Company where the Company is
ascribed a valuation equal to or above those amounts set forth on Schedule
5(c).
In the
event of a Change of Control, the applicable bonus shall be paid on the
effective date of such Change of Control and all unvested Employment and
Performance Options shall vest and become exercisable immediately and shall
remain exercisable for a period of not less than five (5) years, regardless
of
whether the Executive’s employment is terminated.
(i) For
purposes of this Agreement, a “Change
of Control”
shall
mean:
A. a
private
transaction (or series of related private transactions) leading to a merger,
acquisition, consolidation, or sale of all or substantially all of the assets
of
the Company; or
B. any
transaction a result of which a single party (or group of affiliated parties)
acquires or holds capital stock of the Corporation representing a majority
of
the Corporation’s outstanding voting power.
C. the
disposition by the Company (whether direct or indirect, by sale of assets or
stock, merger, consolidation or otherwise) of all or substantially all of its
business and/or assets in one transaction or series of related transactions
(other than a merger effected exclusively for the purpose of changing the
domicile of the Company)
(ii) Notwithstanding
Section 5(c)(i)A
and
5(c)(i)B
above,
no transaction shall be considered a Change of Control under this Agreement,
and
no bonus shall be paid or options vest, pursuant to this Section 5(c):
A. if
the
stockholders existing prior to such transaction(s) hold in the aggregate more
than fifty percent (50%) of the securities or assets of the surviving or
resulting company;
B. in
connection with a private placement of equity securities of the Company in
connection with a financing of the Company’s on-going operations; or
C. for
any
transaction ascribing a valuation to the Company of less than Seventy Five
Million Dollars ($75,000,000); provided, however, that such a transaction may
be
considered as part of a series of transactions that gives rise to a Change
of
Control pursuant to Section 5(c)(i).
(d) Withholding.
The
Company shall withhold all applicable federal, state and local taxes and social
security and such other amounts as may be required by law from all amounts
payable to the Executive under this Section 5.
(e) Equity.
(i) Employment
Options.
The
Company shall grant to the Executive stock options (the “Employment
Options”),
pursuant to the Company’s 2005 Stock Option Plan, to purchase that number of
shares of common stock of the Company, par value $0.001 per share (the
“Common
Stock”)
representing four percent (4%) of the outstanding shares of Common Stock of
the
Company on a Fully Diluted Basis (as defined below in Section 5(e)(iii)C)
immediately following the closing of the first Company financing subsequent
to
the Effective Date (the “Financing”).
The
Employment Options shall vest and become exercisable in three (3) equal
installments on the day before each anniversary of this Agreement at an exercise
price equal to the Fair Market Value (as determined under the Company’s 2005
Stock Plan) (the “Exercise
Price”)
of a
share of Common Stock following the Financing.
(ii) Performance
Options.
The
Company shall grant to the Executive stock options (the “Performance
Options”),
pursuant to the Company’s 2005 Stock Option Plan, to purchase that number of
shares of Common Stock representing three and six tenths percent (3.6%) of
the
outstanding Common Stock on a Fully Diluted Basis immediately following the
Financing.
On the
last day of each year during the Term, a proportionate share (based on the
assigned weights of each of the Performance Milestones) of that portion of
the
Performance Options representing 1.2% of the outstanding Common Stock on the
date of grant shall become vested and immediately exercisable for Performance
Milestones that are achieved during that year at the “Exemplary” metric.
Performance Options to purchase a proportionate share of 1% of the outstanding
shares of Common Stock on the grant date shall become vested and immediately
exercisable for Performance Milestones that are achieved during the year at
the
“Baseline” metric. Performance Options to purchase a proportionate share of 0.8%
of the outstanding shares of Common Stock on the grant date for Performance
Milestones shall become vested and immediately exercisable for Performance
Milestones that are achieved at the “Pessimistic” metric.
(iii) Technology
Options.
In the
event that the Company acquires by license, acquisition or otherwise, an
additional biotechnology product or series of biotechnology products (a
“Technology”)
for
development that is first identified by the Executive, then the Company shall
grant to the Executive options (the “Technology
Options”)
to
purchase a number of shares of Common Stock, as follows:
A. One
percent (1%) of the then outstanding shares of Common Stock of the Company
on a
Fully Diluted Basis for a Technology that is in pre-clinical development;
and
B. Two
Percent (2%) of the shares of Common Stock of the Company on a Fully Diluted
Basis for a Technology that is in human clinical trials.
C. 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 outstanding from time
to
time, plus the shares of Common Stock issuable upon conversion or exercise,
as
the case may be, of all issued and outstanding securities of the Company
convertible into, exercisable for, or exchangeable for, directly or indirectly,
shares of Common Stock of the Company, including but not limited to, options
and
warrants to purchase Common Stock that are currently exercisable by the holder
thereof or which will become exercisable within 90 days of determining
event
D. Any
such
Technology Options issued to the Executive shall vest immediately upon the
date
of grant and shall be exercisable for a period of five (5) years at an exercise
price equal to the Fair Market Value (as determined under the Company’s 2005
Stock Plan) of the Common Stock on the date of the grant of such Technology
Options.
(f) Expenses.
The
Company shall reimburse the Executive for all normal, usual and necessary
expenses incurred by the Executive in furtherance of the business and affairs
of
the Company, including reasonable travel and entertainment, upon timely receipt
by the Company of appropriate vouchers or other proof of the Executive’s
expenditures and otherwise in accordance with any expense reimbursement policy
as may from time to time be adopted by the Company.
(g) Insurance.
The
Company shall pay the premiums relating to personal life insurance coverage
for
Executive in an amount equal to One Million Dollars ($1,000,000.00), naming
Executive’s heirs as beneficiaries. In the event that the Company does not have
appropriate medical, dental and vision plans in place on the Effective Date,
the
Company shall reimburse the Executive for the cost of COBRA premiums associated
with his continued coverage under the plans of his prior employer.
(h) Other
Benefits.
The
Executive shall be entitled to all rights and benefits for which he shall be
eligible under any benefit or other plans (including, without limitation,
dental, medical, vision, medical reimbursement and hospital plans, pension
plans, employee stock purchase plans, profit sharing plans, bonus plans and
other so-called “fringe benefits”) as the Company shall make available to its
senior executives from time to time.
(i) Vacation.
The
Executive shall, during the Term, be entitled to four (4) weeks of vacation
per
annum,
in
addition to holidays observed by the Company.
The
parties agree that Executive shall not take a vacation in excess of two
consecutive weeks without the express consent of the Board.
Executive shall
not
be entitled to accrue more than eight (8) weeks of vacation at any time
during his employment with the Company.
6. Confidential
Information and Inventions.
(a) The
Executive recognizes and acknowledges that in the course of his duties he is
likely to receive confidential or proprietary information owned by the Company,
its affiliates or third parties with whom the Company or any such affiliates
has
an obligation of confidentiality. Accordingly, during and after the Term, the
Executive agrees to keep confidential and not disclose or make accessible to
any
other person or use for any other purpose other than in connection with the
fulfillment of his duties under this Agreement, any Confidential and Proprietary
Information (as defined below) owned by, or received by or on behalf of, the
Company or any of its affiliates. “Confidential
and Proprietary Information”
shall
include, but shall not be limited to, confidential or proprietary scientific
or
technical information, data, formulas and related concepts, business plans
(both
current and under development), client lists, promotion and marketing programs,
trade secrets, or any other confidential or proprietary business information
relating to development programs, costs, revenues, marketing, investments,
sales
activities, promotions, credit and financial data, manufacturing processes,
financing methods, plans or the business and affairs of the Company or of any
affiliate or client of the Company. The Executive expressly acknowledges the
trade secret status of the Confidential and Proprietary Information and that
the
Confidential and Proprietary Information constitutes a protectable business
interest of the Company. The Executive agrees not to:
(i) use
any
such Confidential and Proprietary Information for strictly personal use or
for
others; and
(ii) permanently
remove any Company material or reproductions (including but not limited to
writings, correspondence, notes, drafts, records, invoices, technical and
business policies, computer programs or disks) thereof from the Company’s
offices at any time during his employment by the Company, except as required
in
the execution of the Executive’s duties to the Company, provided; however, that
the Executive shall not be prevented from using or disclosing any Confidential
and Proprietary Information:
A. that
Executive can demonstrate was known to him prior to the effective date of that
certain Confidential Disclosure Agreement entered into between the Parties
dated
December 12, 2006;
B. that
is
now, or becomes in the future, available to persons who are not legally required
to treat such information as confidential unless such persons acquired the
Confidential and Proprietary Information through acts or omissions of Executive;
or
C. that
he
is compelled to disclose pursuant to the order of a court or other governmental
or legal body having jurisdiction over such matter.
(b) The
Executive agrees to return immediately all Company material and reproductions
(including but not limited, to writings, correspondence, notes, drafts, records,
invoices, technical and business policies, computer programs or disks) thereof
in his possession to the Company upon request and in any event immediately
upon
termination of employment.
(c) Except
with prior written authorization by the Company, the Executive agrees not to
disclose or publish any of the Confidential and Proprietary Information, or
any
confidential, scientific, technical or business information of any other party
to whom the Company or any of its affiliates owes a legal duty of confidence,
at
any time during or after his employment with the Company.
(d) The
Executive agrees that all inventions, discoveries, improvements and patentable
or copyrightable works, relating to the Company’s Business (as defined below).
(“Inventions”)
initiated, conceived or made by him, either alone or in conjunction with others,
during the Term shall be the sole property of the Company to the maximum extent
permitted by applicable law and, to the extent permitted by law, shall be “works
made for hire” as that term is defined in the United States Copyright Act (17
U.S.C.A., Section 101). For purposes of this Agreement, “Company’s
Business”
shall
be the development of novel therapeutics for the treatment of human disease,
and
which are listed on the attached Schedule
6(d)
(which
Schedule
6(d)
may be
amended from time to time to include additional therapeutics), and in the
future, any other business in which it actually devotes substantive resources
to
study, develop or pursue. The Company shall be the sole owner of all patents,
copyrights, trade secret rights, and other intellectual property or other rights
in connection therewith. The Executive hereby assigns to the Company all right,
title and interest he may have or acquire in all such Inventions; provided;
however, that the Board of Directors of the Company may in its sole discretion
agree to waive the Company’s rights pursuant to this Section 6(d)
with
respect to any Invention that is not directly or indirectly related to the
Company’s business. The Executive further agrees to assist the Company in every
proper way (but at the Company’s expense) to obtain and from time to time
enforce patents, copyrights or other rights on such Inventions in any and all
countries, and to that end the Executive will execute all documents
necessary:
(i) to
apply
for, obtain and vest in the name of the Company alone (unless the Company
otherwise directs) letters patent, copyrights or other analogous protection
in
any country throughout the world and when so obtained or vested to renew and
restore the same; and
(ii) to
defend
any opposition proceedings in respect of such applications and any opposition
proceedings or petitions or applications for revocation of such letters patent,
copyright or other analogous protection.
(e) The
Executive acknowledges that while performing the services under this Agreement
the Executive may locate, identify and/or evaluate patented or patentable
inventions having commercial potential in the fields of pharmacy,
pharmaceutical, biotechnology, healthcare, technology and other fields which
may
be of potential interest to the Company or one of its affiliates (the
“Third
Party Inventions”).
The
Executive understands, acknowledges and agrees that all rights to, interests
in
or opportunities regarding, all Third-Party Inventions identified by the
Company, any of its affiliates or either of the foregoing persons’ officers,
directors, employees (including the Executive), agents or consultants during
the
Term shall be and remain the sole and exclusive property of the Company or
such
affiliate and the Executive shall have no rights whatsoever to such Third-Party
Inventions and will not pursue for himself or for others any transaction
relating to the Third-Party Inventions which is not on behalf of the
Company.
(f) The
provisions of this Section 6
shall
survive any termination of this Agreement.
7. Non-Competition
and Non-Solicitation.
(a) The
Executive understands and recognizes that his services to the Company are
special and unique and that in the course of performing such services the
Executive will have access to and knowledge of Confidential and Proprietary
Information (as defined in Section 6)
and the
Executive agrees that, during the Term he shall not in any manner, directly
or
indirectly, on behalf of himself or any person, firm, partnership, joint
venture, corporation or other business entity (“Person”),
enter
into or engage in any business which is directly or indirectly competitive
with
the Company Business, either as an individual for his own account, or as a
partner, joint venturer, owner, executive, employee, independent contractor,
principal, agent, consultant, salesperson, officer, director or shareholder
of a
Person in a business competitive with the Company within the geographic area
of
the Company’s Business, which is deemed by the parties hereto to be worldwide;
provided; however, if a Person’s business has multiple lines or segments, some
of which are not competitive with the Company’s Business, nothing herein shall
prevent the Executive from being employed by, working for or assisting that
line
or segment of a Person’s business that is not competitive with the Company’s
Business. The Executive acknowledges that, due to the unique nature of the
Company’s Business, the loss of any of its clients or business flow or the
improper use of its Confidential and Proprietary Information could create
significant instability and cause substantial damage to the Company and its
affiliates and therefore the Company has a strong legitimate business interest
in protecting the continuity of its business interests and the restriction
herein agreed to by the Executive narrowly and fairly serves such an important
and critical business interest of the Company. Notwithstanding the foregoing,
nothing contained in this Section 7(a)
shall be
deemed to prohibit the Executive from acquiring or holding, solely for
investment purposes, the securities of any corporation or other entity, some
or
all of the activities of which are competitive with the business of the Company
so long as such securities do not, in the aggregate, constitute more than five
percent (5%) of any class or series of outstanding securities of such
corporation or other entity.
(b) During
the Term and for a period of twelve (12) months thereafter (or six (6) months
in
the case of clause (b)(ii) below), the Executive shall not, directly or
indirectly, without the prior written consent of the Company:
(i) solicit
or induce any employee of the Company or any of its subsidiaries or Two River
Group Holdings, LLC (“Two
River”)
to
leave the employ of the Company or such subsidiaries or Two River;
or
(ii)
solicit
the business of any agent, client or customer of the Company or any of its
subsidiaries with respect to products or services similar to and competitive
with those provided or supplied by the Company or any of its
subsidiaries.
(c) The
Executive and Company mutually agree that both during the Term and at all times
thereafter, neither party shall directly or indirectly disparage, whether or
not
true, the name or reputation of the other party, and in the case of the Company
including any officer, director or material shareholder of the Company.
Notwithstanding the foregoing, nothing in this Agreement shall preclude the
parties hereto or their successors from making truthful statements in the proper
performance of their jobs or that are required by applicable law, regulation
or
legal process, and the parties shall not violate this provision in making
truthful statements in response to disparaging statements made by the other
party.
(d) In
the
event that the Executive materially breaches any provisions of Section
6
or this
Section 7,
then,
in addition to any other rights which the Company may have, the Company shall
be
entitled to seek injunctive relief to enforce the restrictions contained in
such
Sections which injunctive relief shall be in addition to any other rights or
remedies available to the Company under the law or in equity.
(e) The
right
and remedy enumerated in Section 7(d)
shall be
independent of and shall be in addition to and not in lieu of any other rights
and remedies available to the Company at law or in equity. If any of the
covenants contained in this Section 7,
or any
part of any of them, is hereafter construed or adjudicated to be invalid or
unenforceable, the same shall not affect the remainder of the covenant or
covenants or rights or remedies which shall be given full effect without regard
to the invalid portions. If any of the covenants contained in this Section
7
is held
to be invalid or unenforceable because of the duration of such provision or
the
area covered thereby, the parties agree that the court making such determination
shall have the power to reduce the duration and/or area of such provision and
in
its reduced form such provision shall then be enforceable. No such holding
of
invalidity or unenforceability in one jurisdiction shall bar or in any way
affect the Company’s right to the relief provided in this Section 7
or
otherwise in the courts of any other state or jurisdiction within the
geographical scope of such covenants as to breaches of such covenants in such
other respective states or jurisdictions, such covenants being, for this
purpose, severable into diverse and independent covenants.
(f) In
the
event that an actual proceeding is brought in equity to enforce the provisions
of Section 6
or this
Section 7,
the
Executive shall not urge as a defense that there is an adequate remedy at law
nor shall the Company be prevented from seeking any other remedies which may
be
available. The Executive agrees that he shall not raise in any proceeding
brought to enforce the provisions of Section 6
or this
Section 7 that the covenants contained in such Sections limit his ability to
earn a living.
(g) The
provisions of this Section 7 shall survive any termination of this Agreement,
provided that the Company has not breached its obligations under this
Agreement.
8. Representations
and Warranties by the Executive. The Executive hereby represents and
warrants to the Company as follows:
(a) Neither
the execution or delivery of this Agreement nor the performance by the Executive
of his duties and other obligations hereunder violate or will violate statute
or
law or conflict with or constitute a default or breach of any covenant or
obligation, including without limitation any non-competition restrictions,
under
(whether immediately, upon the giving of notice or lapse of time or both) any
prior employment agreement, contract, or other instrument to which the Executive
is a party or by which he is bound. Notwithstanding the foregoing, the Executive
makes no representation as to the enforceability of the provision in Section
7.
(b) The
Executive has the full right, power and legal capacity to enter and deliver
this
Agreement and to perform his duties and other obligations hereunder. This
Agreement constitutes the legal, valid and binding obligation of the Executive
enforceable against him in accordance with its terms. No approvals or consents
of any persons or entities are required for the Executive to execute and deliver
this Agreement or perform his duties and other obligations hereunder.
Notwithstanding the foregoing, the Executive makes no representation as to
the
enforceability of the provision in Section 7.
9. Termination
by the Company. The Executive’s employment hereunder shall be terminated as
follows:
(a) Automatically
upon the Executive’s death.
(b) By
the
Company due to the Executive’s Disability. For purposes of this Agreement, a
termination for “Disability” shall occur:
(i) when
the
Board of Directors of the Company has provided a written termination notice
to
the Executive supported by a written statement from a reputable independent
physician to the effect that the Executive shall have become so physically
or
mentally incapacitated as to be unable to resume, even with any reasonable
accommodations, within the ensuing twelve (12) months, his employment hereunder
by reason of physical or mental illness or injury; or
(ii) upon
rendering of a written termination notice by the Board of Directors of the
Company after the Executive has been unable, even with any reasonable
accommodations, to substantially perform his duties hereunder for one hundred
twenty (120) or more consecutive days, or more than one hundred eighty (180)
days in any consecutive twelve month period, by reason of any physical or mental
illness or injury.
(iii) For
purposes of this Section 9(b),
the
Executive agrees to make himself available and to cooperate in any reasonable
examination by a reputable independent physician designated by the Company
and
reasonably acceptable to the Executive.
(c) By
the
Company for Cause; provided, however, that any case where the Executive’s action
or inaction that may constitute Cause is capable of being cured, such action
or
inaction shall not constitute Cause if such action or inaction is cured by
the
Executive within 30 days receipt of written notice from the Company of the
action or inaction. For purposes of this Agreement, “Cause”
shall
include any of the following:
(i) Willful
failure to perform the duties or obligations hereunder or willful misconduct
by
the Executive in respect of such duties or obligations,
including, without limitation, willful
failure, disregard or refusal by the Executive to abide
by
specific objective and lawful directions received by the Executive in writing
from the Board of Directors;
(ii) Any
willful, intentional or grossly negligent act by the Executive having the effect
of injuring, in a material way, whether financial or otherwise, the business
or
reputation of the Company or any of its subsidiaries or affiliates;
(iii) The
Executive’s indictment of any felony or a misdemeanor involving moral
turpitude
that
causes material harm to the Company or its reputation;
(iv) The
determination by the Company, after a reasonable and good-faith investigation
by
the Company following a written allegation by another employee of the Company,
that the Executive engaged in some form of harassment prohibited
by law
(including, without limitation, age, sex or race discrimination),
unless
the Executive’s actions were specifically directed by the Company; provided,
however, that Cause shall not exist under this clause (iii)
unless
the Company gives written notice to Executive where such notice describes
with particularity the alleged act(s) at issue and has given the Executive
an
opportunity to be heard at a meeting of the Board, and that the Board provide
the Executive with a summary of its findings;
(v) Any
misappropriation or embezzlement of the property of the Company or its
affiliates (whether or not a misdemeanor or felony); and
(vi) Material
breach by the Executive of any of the provisions of Sections
6,
7
or
8 of
this
Agreement.
Notwithstanding
the foregoing, no act or omission by the Executive shall be deemed to be
“willful” if the Executive reasonably believed in good faith that such acts or
omissions were in the best interests of the Company.
(d) The
Executive’s employment hereunder may be terminated by the Board of Directors of
the Company (or its successor) upon the occurrence of a Change of Control (as
defined in Section 5(c)(i) above).
10. Termination
by Executive.
Executive may terminate his employment as follows:
(a) at
any
time, for any reason or no reason at all, upon not less than sixty (60) days
prior written notice to the Company, which may be waived by the
Company;
(b) at
any
time for “Good
Reason”
which
shall constitute:
(i) an
actual
diminution by the Company of the Executive’s title, duties, Base Salary,
Performance Bonus or benefits;
(ii) a
material breach by the Company of any of the provisions contained herein, which,
if capable of being cured, is not cured by the Company within 30 days of written
notice by the Executive to the Company; and
(iii) relocating
the Company’s principal place of business more than fifty (50) miles away from
Berkeley, California.
11. Compensation
upon Termination.
(a) If
the
Executive’s employment is terminated pursuant to Section 9(a),
or
9(b),
the
Company shall pay to the Executive or to the Executive’s estate, as
applicable:
(i) any
Base
Salary, Performance Bonus, vacation and expense reimbursement accrued through
the date of termination (the “Accrued
Obligations”)
(ii) his
Base
Salary for a period of six (6) months following termination;
(iii) a
pro
rata portion of the Performance Bonus for the year in which the Executive’s
employment is terminated; and
(iv) all
Employment Options shall vest immediately and become exercisable.
(b) If
the
Executive’s employment is terminated pursuant to Section 9(c)
or
10(a),
then:
(i) the
Company shall pay to the Executive the Accrued Obligations;
(ii) the
Executive shall have no further entitlement to any other compensation or
benefits from the Company except as provided in the Company’s compensation and
benefit plans; and
(iii) all
Employment Options and Performance Options that have not previously vested
shall
expire immediately.
(c) If
the
Executive’s employment is terminated pursuant to Section 9(d)
or
Section 10(b),
or by
the Company other than pursuant to Section 9(a),
9(b)
or
9(c),
then:
(i) the
Company shall:
| |
A.
|
pay
the Executive the Accrued
Obligations;
|
| |
B.
|
pay
to the Executive his Base Salary and benefits for a period of one
(1) year
following such termination; and
|
| |
C.
|
pay
the Executive a pro rata Performance Bonus for the year in which
the
Executive’s employment is terminated (based on the assumption that the
Baseline metric is met).
|
(ii) all
unvested Employment Options shall vest and become exercisable immediately and
shall remain exercisable for a period of not less than five (5) years.
(d) In
the
event of non-renewal of this Agreement, the Company will pay the Executive
all
Accrued Obligations on the expiration date of this Agreement.
(e) Notwithstanding
anything to the contrary herein or in this Section 11
or
otherwise in the Company’s 2005 Stock Option Plan, following termination of the
Executive’s employment other than pursuant to Section 9(c)
or
10(a),
the
Executive shall have a period of no less than six (6) months to exercise any
and
all vested Employment Options and Performance Options; provided, however, if
the
Company sends to the Executive a non-renewal notice provided for under Section
2
hereof,
the Executive shall have a period of no less than twelve (12) months after
the
termination of his employment to exercise any and all vested Employment Options
and Performance Options.
(f) This
Section 11
sets
forth the only obligations of the Company with respect to the termination of
the
Executive’s employment with the Company, and the Executive acknowledges that,
upon the termination of his employment, he shall not be entitled to any payments
or benefits which are not explicitly provided in Section 11.
(g) Upon
termination of the Executive’s employment hereunder for any reason, the
Executive shall be deemed to have resigned as director of the Company, effective
as of the date of such termination.
(h) The
provisions of this Section 11
shall
survive any termination of this Agreement.
(i) This
Agreement shall be governed by, and construed and interpreted in accordance
with, the laws of the State of California, without giving effect to its
principles of conflicts of laws.
12. Miscellaneous.
(a) This
Agreement shall be governed by, and construed and interpreted in accordance
with, the laws of the State of California, without giving effect to its
principles of conflicts of laws.
(b) Any
dispute arising out of, or relating to, this Agreement or the breach thereof
(other than Sections 6
or
7
hereof),
or regarding the interpretation thereof, shall be exclusively decided by binding
arbitration conducted in California
in
accordance with the rules of the American Arbitration Association (the
“AAA”)
then
in effect before a single arbitrator appointed in accordance with such rules.
Judgment upon any award rendered therein may be entered and enforcement obtained
thereon in any court having jurisdiction. The arbitrator shall have authority
to
grant any form of appropriate relief, whether legal or equitable in nature,
including specific performance. Each of the parties agrees that service of
process in such arbitration proceedings shall be satisfactorily made upon it
if
sent by registered mail addressed to it at the address referred to in clause
(g)
below.
The
costs
of such arbitration shall be borne proportionate to the finding of fault as
determined by the arbitrator. Judgment
on the arbitration award may be entered by any court of competent
jurisdiction.
(c) This
Agreement shall be binding upon and inure to the benefit of the parties hereto,
and their respective heirs, legal representatives, successors and
assigns.
(d) This
Agreement, and the Executive’s rights and obligations hereunder, may not be
assigned by the Executive. The Company may assign its rights, together with
its
obligations, hereunder in connection with any sale, transfer or other
disposition of all or substantially all of its business or assets provided
the
assignee entity which succeeds to the Company expressly assumes the Company’s
obligations hereunder and complies with the terms of this
Agreement.
(e) This
Agreement cannot be amended orally, or by any course of conduct or dealing,
but
only by a written agreement signed by the parties hereto.
(f) The
failure of either party to insist upon the strict performance of any of the
terms, conditions and provisions of this Agreement shall not be construed as
a
waiver or relinquishment of future compliance therewith, and such terms,
conditions and provisions shall remain in full force and effect. No waiver
of
any term or condition of this Agreement on the part of either party shall be
effective for any purpose whatsoever unless such waiver is in writing and signed
by such party.
(g) All
notices, requests, consents and other communications, required or permitted
to
be given hereunder, shall be in writing and shall be delivered personally or
by
an overnight courier service or sent by registered or certified mail, postage
prepaid, return receipt requested, to the parties at the addresses set forth
on
the first page of this Agreement, and shall be deemed given when so delivered
personally or by overnight courier, or, if mailed, five (5) days after the
date
of deposit in the United States mails. Either party may designate another
address, for receipt of notices hereunder by giving notice to the other party
in
accordance with this clause (g).
(h) This
Agreement sets forth the entire agreement and understanding of the parties
relating to the subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, relating to the subject matter
hereof. No representation, promise or inducement has been made by either party
that is not embodied in this Agreement, and neither party shall be bound by
or
liable for any alleged representation, promise or inducement not so set
forth.
(i) As
used
in this Agreement, “affiliate” of a specified Person shall mean and include any
Person controlling, controlled by or under common control with the specified
Person.
(j) The
section headings contained herein are for reference purposes only and shall
not
in any way affect the meaning or interpretation of this Agreement.
(k) This
Agreement may be executed in any number of counterparts, each of which shall
constitute an original, but all of which together shall constitute one and
the
same instrument.
13. Certain
Tax Provisions.
(a) Section
409A.
Any
payment otherwise required under this Agreement or any other plan or arrangement
of the Company to be made to the Executive after a termination of Executive’s
employment that the Company reasonably determines is subject to Section
409A(a)(2)(B)(i) of the Internal Revenue Code of 1986, as amended (the “Code”)
shall not be paid or payment commenced until the later of (a) six months after
the date of the Executive’s “separation from service” (within the meaning of
Section 409A of the Code) and (b) the payment date or commencement date
specified in this Agreement for such payment(s). On the earliest date on which
such payment(s) can be made or commenced without violating the requirements
of
Section 409A(a)(2)(B)(i) of the Code, the Company shall pay the Executive,
in a
single lump sum, an amount equal to the aggregate amount of all payments delayed
pursuant to the preceding sentence. Such delay will not affect the timing of
any
installments or other payments otherwise payable after the delay period imposed
under Section 409. In addition, other provisions of this Agreement or any other
such plan or arrangement notwithstanding, the Company shall have no right to
accelerate or delay any such payment or to make any such payment as the result
of any specific event except to the extent permitted under Section
409A.
(b) Section
280G.
Notwithstanding anything to the contrary contained in this Agreement, to the
extent that any of the payments and benefits provided for under this Agreement
or any other agreement or arrangement between the Executive and the Company
(collectively, the "Payments") constitute a "parachute payment" within the
meaning of Section 280G of the Code and (ii) but for this Section 13(b), would
be subject to the excise tax imposed by Section 4999 of the Code, then the
Payments shall be payable either (i) in full or (ii) as to such lesser amount
which would result in no portion of such Payments being subject to excise tax
under Section 4999 of the Code; whichever of the foregoing amounts, taking
into
account the applicable federal, state and local income taxes and the excise
tax
imposed by Section 4999, results in the Executive’s receipt on an after-tax
basis, of the greatest amount of economic benefits under this Agreement,
notwithstanding that all or some portion of such benefits may be taxable under
Section 4999 of the Code. Unless the Executive and the Company otherwise agree
in writing, any determination required under this Section 13(b) shall be made
in
writing by the Company’s independent public
accountants (the "Accountants"), whose reasonable determination shall be
conclusive and binding upon the Executive and the Company for all purposes.
For
purposes of making the calculations required by this Section 13(b), the
Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of the Sections 280G and 4999 of the Code. The
Executive and the Company shall furnish to the Accountants such information
and
documents as the Accountants may reasonably request in order to make a
determination under this Section 13(b). If this Section 13(b) is applied to
reduce an amount payable to the Executive, and the Internal Revenue Service
successfully asserts that, despite the reduction, the Executive has nonetheless
received payments which are in excess of the maximum amount that could have
been
paid to him without being subjected to any excise tax, then, unless it would
be
unlawful for the Company make such a loan or similar extension of credit to
the
Executive, the Executive may repay such excess amount to the Company though
such
amount constitutes a loan to you made at the date of payment of such excess
amount, bearing interest at 120% of the applicable federal rate (as determined
under section 1274(d) of the Code in respect of such loan).
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first above written.
|
|
| |
|
|
| |
|
|
|
By:
|
/s/
David M. Tanen
|
|
| |
Name:
Mr. David M. Tanen
|
| |
Title:
Secretary
|
| |
Date:
March 16, 2007
|
| |
|
|
| |
|
|
|
EXECUTIVE
|
| |
|
|
| |
|
|
|
By:
|
/s/
Peter M. Strumph
|
|
| |
Name:
Mr. Peter M. Strumph
|
| |
Date:
March 11, 2007
|
SCHEDULE
5(b)
Nile
Therapeutics, Inc.
Goals
Worksheet
Executive: Peter
M. Strumph
Period:
June
15, 2007 - June 15, 2008
Goal
#1
|
Definition:
|
Dosing
of First Patient in Phase Ib Clinical Trial
|
|
Issues:
|
|
| |
A
|
Engage
CRO; design clinical protocol
|
| |
B
|
Establish
clinical trial sites; complete manufacturing of clinical drug
substance
|
| |
C
|
Dose
first patient
|
|
Descriptor
|
Critical
Path
|
|
Weight
|
20%
|
|
Metric
|
Timing
|
|
Exemplary
|
4
months from LPV of Phase Ia
|
|
Baseline
|
6
months from LPV of Phase Ia
|
|
Pessimistic
|
8
months from LPV of Phase Ia
|
Goal
#2
|
Definition:
|
|
|
Issues:
|
|
| |
A
|
|
| |
B
|
|
| |
C
|
|
|
Descriptor
|
|
|
Weight
|
|
|
Metric
|
|
|
Exemplary
|
|
|
Baseline
|
|
|
Pessimistic
|
|
Goal
#3
|
Definition:
|
|
|
Issues:
|
|
| |
A
|
|
| |
B
|
|
| |
C
|
|
|
Descriptor
|
|
|
Weight
|
|
|
Metric
|
|
|
Exemplary
|
|
|
Baseline
|
|
|
Pessimistic
|
|
SCHEDULE
5(c)
Change
of Control Bonus
|
Cash
Bonus
|
|
Company
Valuation
|
| |
|
|
|
$50,000
|
|
Greater
then $75,000,000 but Less then $100,000,000
|
| |
|
|
|
$100,000
|
|
Greater
then $100,000,000 but Less then $150,000,000
|
| |
|
|
|
$150,000
|
|
Greater
then $150,000,000 but Less then $200,000,000
|
| |
|
|
|
$200,000
|
|
Greater
then $200,000,000
|
SCHEDULE
6(d)
1. The
development of novel naturetic peptides for the treatment of cardiovascular
and
inflammatory disease in humans.