1
EXHIBIT 10.8
PAIN THERAPEUTICS, INC.
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made by and between Pain
Therapeutics, Inc., a Delaware corporation (the "Company") and Xxxx Xxxxxxx
("Executive") as of July 1, 1998.
RECITALS
A. The Company desires to have Executive's active services as President,
Chief Executive Officer and Chairman of the Board of the Company for the period
set forth in this Agreement.
B. The Company and Executive desire to enter into this Agreement on the
terms and conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and in consideration of Executive's continued employment by the Company, the
parties hereto agree as follows:
1. Duties and Scope of Employment
(a) Duties. The Company shall employ Executive to render services to
the Company. Executive agrees that he will devote his full business time and
efforts to the business of the Company, excluding up to four (4) weeks paid
vacation per year, and, in addition, sick leave in accordance with the Company's
policies. In the course of Executive's employment, Executive shall perform the
duties of President and Chief Executive Officer of the Company under the
direction of the Board of Directors.
(b) Term of Employment. Executive's employment with the Company
pursuant to this Agreement shall commence on the date hereof and shall continue
until thirty-six (36) months thereafter (the "Employment Period"), provided that
such term shall automatically renew for an additional 12 months at the end of
such initial term and each subsequent renewal, unless ninety (90) days prior to
the date of such renewal either party shall give written notice to the other
party of cancellation, and in such event the Executive's employment hereunder
shall terminate. Subject to Executive's right to severance compensation under
certain circumstances as set forth herein, the employment relation of Executive
with the Company shall be terminable upon sixty (60) days prior written notice
by either party.
(c) Director. As long as Executive serves as President and Chief Executive
Officer, Executive shall be nominated to serve on the Company's Board of
Directors. Executive
2
agrees to submit his resignation immediately as a director if Executive ceases
to be President and Chief Executive Officer, unless removed as President and
Chief Executive Officer without Cause as defined below.
2. Compensation
(a) Base Compensation. The Company shall pay the Executive as
compensation for his service a base salary at the annualized rate of Two Hundred
Fifty Thousand Dollars ($250,000) ("Salary"). Such Salary shall increase each
anniversary date by the greater of the Company's Consumer Price Index or five
percent (5%), whichever is greater, and shall be reviewed at least annually and
may be increased from time to time subject to accomplishment of such performance
and contribution goals and objectives as may be established and agreed upon from
time to time by the Board of Directors and the Executive. Such Salary shall be
paid periodically in accordance with normal Company payroll. The annual
compensation (including bonus and benefit amounts pursuant to Section 2(b) and
(c) below) specified in this Section 2(a), together with any increases in such
compensation that the Board of Directors may grant from time to time, is
referred to in this Agreement as "Base Compensation."
(b) Deferment of Salary. One Hundred Thousand Dollars ($100,000) of
the Executive's annual Salary shall be deferred until such time as the Company
raises a total of Four Million Dollars ($4,000,000) or more in any combination
of debt or equity capital from outside investors, corporate partners, alliances,
mergers, etc, The Executive shall automatically forgive the Company any deferred
compensation in month 36 of this Employment Agreement, provided Executive is
still an employee in good standing at such time. Any deferred compensation shall
be immediately due upon termination of the Executive's employment without Cause
(as defined below).
(c) Bonuses. Beginning with the Company's 1998 fiscal year and for
each fiscal year thereafter during the Employment Period, the Executive will be
eligible to receive an annual bonus based upon certain criteria to be agreed
upon by Executive and the Board of Directors to be paid on January 15 of each
calendar year hereafter, provided that Executive is employed by the Company on
such dates.
(d) Executive Benefits. The Executive shall be eligible to
participate in the employee benefit plans and executive compensation programs
maintained by the Company applicable to other key executives of the Company,
including (without limitation) retirement plans, savings or profit-sharing
plans, deferred compensation plans, supplemental retirement or excess benefit
plans, life, disability, health, accident and other insurance programs, paid
vacations, and similar plans or programs, subject in each case to the generally
applicable terms and conditions of the plan or program in question and to the
determination of any committee administering such plan or program.
(e) Expenses During Employment. The Company shall reimburse the
Executive for all reasonable business, entertainment and travel expenses
actually incurred or paid by the
-2-
3
Executive in the performance of his services on behalf of the Company, in
accordance with the Company's expense reimbursement policy as from time to time
in effect.
3. Termination of Employment
(a) By Death. The Employment Period shall terminate automatically
upon the death of the Executive. In such event, the Company shall pay to
Executive's beneficiaries or his estate, as the case may be, any accrued Salary,
the pro rata amount of the guaranteed annual bonus, any vested deferred
compensation (other than pension plan or profit-sharing plan benefits which will
be paid in accordance with the applicable plan), any benefits under any plan of
the Company in which Executive is a participant to the full extent of
Executive's rights under such plan, any accrued vacation pay and any appropriate
business expenses incurred by Executive in connection with his duties hereunder,
all to the date of termination (collectively "Accrued Compensation"), but no
other compensation or reimbursement of any kind, including, without limitation,
severance compensation, and thereafter, the Company's obligations hereunder
shall terminate. Nothing in this Section shall affect any entitlement of the
Executive's heirs to the benefits of any life insurance provided by the Company
as set forth above.
(b) By Disability, If the Executive is prevented from properly
performing his duties hereunder by reason of any physical or mental incapacity
for a period of more than sixty (60) days in the aggregate in any 365-day
period, then, to the extent permitted by law, the Company may terminate the
Employment Period on the 60th day of such incapacity. In such event, the Company
shall pay to Executive all Accrued Compensation, and shall continue to pay to
Executive the Salary and the pro rata amount of the guaranteed annual bonus
until such time as Executive shall become entitled to receive disability
insurance payments under the disability insurance policy maintained by the
Company (but not more than ninety (90) days following termination), but no other
compensation or reimbursement of any kind, including without limitation,
severance compensation, and thereafter the Company's obligations hereunder shall
terminate. Nothing in this Section shall affect Executive's rights under any
disability plan in which he is a participant.
(c) By Resignation or By Company for Cause. If Executive's
employment with the, Company terminates due to his voluntary resignation or if
the Company terminates Executive's employment due to Cause (as defined below),
the Company shall pay Executive all Accrued Compensation less the pro rata,
amount of the annual guaranteed bonus (which shall not be paid to Executive),
but no other compensation or reimbursement of any End, including without
limitation, severance compensation, and thereafter the Company's obligations
hereunder shall terminate. Termination shall be for "Cause" in the event of the
occurrence of any of the following: (i) any intentional action or intentional
failure to act that was performed in bad faith and to the detriment of the
Company; (ii) any intentional refusal or intentional failure to act in
accordance with any lawful and proper direction or order of the Board; (iii) any
willful and habitual neglect of the duties of full or part-time employment as
assigned by the Board from time to time; or (iv) any conviction of a felony
crime under the state or federal laws of the United States of America; provided
that, in the event that any of the foregoing events is capable of being cured,
the Company shall provide written
-3-
4
notice to the Purchaser describing the nature of such event, and the Purchaser
shall thereafter have five (5) business days to cure such event.
(d) By Company for Other Than Cause. If the Company terminates
Executive's employment with the Company for any reason other than Cause,
Executive shall be entitled to receive: (i) Accrued Compensation to the date of
termination; (ii) severance compensation equal to Executive's Base Compensation,
immediately prior to the termination, for twelve (12) months after the date of
termination (the "Termination Date"); (iii) continued participation in the
Company medical and disability plans, at the Company's expense, for twelve (12)
months after the date of termination; and (iv) all insurance coverages, at the
Company's expense, in effect immediately prior to the termination. "Other Than
Cause" shall include, but not be limited to the following: (i) without the
Executive's express written consent, the assignment to the Executive of any
duties or the reduction of the Executive's duties, either of which results in a
significant diminution in the Executive's position or responsibilities with the
Company in effect immediately prior to such assignments or the removal of the
Executive from such position and responsibilities; (ii) without the Executive's
express written consent, a substantial reduction, without good business reasons,
of the facilities and perquisites (including office space and location)
available to the Executive immediately prior to such reduction; (iii) a
reduction by the Company in the Base Compensation of the Executive as in effect
immediately prior to such reduction, other than a bonus reduction resulting from
application of a bonus formula or plan on a basis that is consistent with prior
practice; (iv) a material reduction by the Company in the kind or level of
employee benefits to which the Executive is entitled immediately prior to such
reduction with the result that the Executive's overall benefits package is
significantly reduced; (v) the relocation of the Executive to a facility or a
location more than twenty-five (25) miles from the Executive's then present
location, without the Executive's express written consent; (vi) any purported
termination of the Executive by the Company which is not effected for Cause, for
valid grounds, or due to the Executive's death or Disability; or (vii) any
purported termination of the Executive's employment by the Company which is not
effected pursuant to a notice of termination satisfying the requirements of
Section I (b) above, and for purposes of this, Agreement, no such purported
termination shall be effective. If Executive resigns due to one of the above
enumerated factors, such resignation shall be deemed a termination by the
Company for Other Than Cause and shall be governed by this Section 3(d).
(e) Insurance, If the Executive is entitled to severance compensation
under Section 3(d), in addition to such severance benefits, the Executive shall
receive health insurance coverage as provided to the Executive immediately prior
to the Termination Date to the extent the cost of such health insurance coverage
does not exceed the cost of such health insurance coverage prior to Executive's
termination. The health insurance coverage shall continue for a period of twelve
(12) months following the Termination Date; provided, however, that to the
extent Executive becomes covered under another employer's group health insurance
plan, the Company shall not be obligated to provide such health insurance
coverage.
-4-
5
(f) No Duty to Mitigate. The Executive shall not be required to
mitigate the amount of any payment contemplated by Section 3(d) (whether by
seeking new employment or in any other manner).
4. Equity In the event Executive resigns due to one of the enumerated
factors in Section 3(d), all of the unvested portion of the shares of Common
Stock of the Company owned by the Executive pursuant to the Restricted Stock
Purchase Agreement between the Company and the Executive dated June 22, 1998
shall immediately vest and be released from the Company's repurchase option as
of the Termination Date.
5. Confidential Information
(a) Company Information. Executive agrees at all times during the
term of Executive's employment and thereafter to hold in strictest confidence
and not to use, except for the benefit of the Company, or to disclose to any
person, firm or corporation without written authorization of the Board of
Directors of the Company, any Confidential Information of the Company. Executive
understands that "Confidential Information" means any Company proprietary
information, technical data, trade secrets or know-how, including, but not
limited to, research product plans, products, services, customer lists and
customers (including, but not limited to, customers of the Company on whom
Executive called or with whom Executive became acquainted during the term of
Executive's employment), markets, software, developments, inventions, processes,
formulas, technology, designs, drawings, engineering, hardware configuration
information, marketing, finances or other business information disclosed to
Executive by the Company either directly or indirectly in writing, orally or by
drawings or observation of parts or equipment. Executive further understands
that Confidential Information does not include any of the foregoing item which
has become publicly known and made generally available through no wrongful act
of Executive's or of others who were under confidentiality obligations as to the
item or items involved,
(b) Former Employer Information. Executive agrees that Executive will
not, during Executive's employment with the Company, improperly use or disclose
any proprietary information or trade secrets of any former or concurrent
employer or other person or entity and that Executive will not bring onto the
premises of the Company any unpublished document or proprietary information
belonging to any such employer, person or entity unless consented to in writing
by such employer, person or entity.
(c) Third Party Information. Executive recognizes that the Company
has received and in the future will receive from third parties their
confidential or proprietary information subject to a duty on the Company's part
to maintain the confidentiality of such information and to use it only for
certain limited purposes. Executive agrees to hold all such confidential or
proprietary information in the strictest confidence and not to disclose it to
any person, firm or corporation or to use it except as necessary in carrying out
his work for the Company consistent with the Company's agreement with such third
party.
-5-
6
6. Representations. Executive has not entered into, and will not enter
into, any oral or written agreement in conflict herewith.
7. Arbitration. Executive and Company agree that any dispute or controversy
arising out of or relating to any interpretation, construction, performance or
breach of this Agreement shall be settled by arbitration of a single arbitrator
to be held in South San Francisco, California, in accordance with the rules then
in effect of the American Arbitration Association. The arbitrator may grant
injunctions or other relief in such dispute or controversy. The decision of the
arbitrator shall be final, conclusive and binding on the parties to the
arbitration. Judgment may be entered on the arbitrator's decision in any court
having jurisdiction. The Company and Executive shall each pay one-half of the
costs and expenses of such arbitration, and each party shall separately pay
counsel fees and expenses.
8. General Provisions
(a) Governing Law; Consent to Personal Jurisdiction. This Agreement
will be governed by the laws of the State of California. Executive and Company
hereby expressly consent to the personal jurisdiction of the state and federal
courts located in California for any lawsuit filed relating to this Agreement.-
(b) Entire Agreement. This Agreement sets forth the entire agreement
and understanding between the Company and Executive relating to the subject
matter herein and merges all prior discussions between the parties. No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, will be effective unless in writing signed by both parties
hereto. Any subsequent change or changes in Executive's duties, Salary or
compensation will not affect the validity or scope of this Agreement
(c) Severability. If one or more of the provisions in this Agreement
are deemed void by law, then the remaining provisions will continue in fall
force and effect.
(d) Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective heirs, legal
representatives, successors, and permitted assigns.
(e) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together will
constitute one and the some instruments.
-6-
7
IN WITNESS WHEREOF, each of the parties has executed this Agreement of the
Company by its duly authorized OFFICER, as of the day and year first written
above.
XXXX XXXXXXX, AN INDIVIDUAL
Date: July 1 /s/ XXXX XXXXXXX
---------------------- ---------------------------------------
PAIN THERAPEUTICS, INC.
Date: By: XXXX XXXXXXX
---------------------- -----------------------------------
Title: President & CEO
---------------------------------
