Exhibit 10.1

 

LOGO [g73675img01.jpg]    Titan Pharmaceuticals, Inc.

April 29, 2008

Louis R. Bucalo, M.D.

Dear Lou:

This letter agreement (“Agreement”) sets forth the agreement between you and
Titan Pharmaceuticals, Inc. (the “Company”) (collectively, the “Parties” and,
each, a “Party”) regarding your retirement and resignation of employment with
the Company and your position as a Director of the Company.

1. Retirement and Resignation of Employment and Board Membership. The Parties
acknowledge and agree that, effective the date hereof (the “Effective Date”),
you have retired and resigned both (i) your employment as the Company’s
Executive Chairman and (ii) your position as a member of the Company’s Board of
Directors (the “Board”). Consequently, you acknowledge and agree that you no
longer have any authority to speak for or on behalf of the Company or bind the
Company, and you represent and warrant that you will not do so hereafter. The
Parties hereby waive the 30-day notice period required under paragraph 4(a) of
the Parties’ September 17, 2007 letter agreement (the “Chairman’s Letter”).

2. Payments and Benefits.

a. The Company will pay you for (i) any and all outstanding wages due through
the Effective Date and (ii) business expenses incurred in accordance with the
Company’s policy on or before the Effective Date and documented in accordance
with the Company’s procedures.

b. Additionally, in recognition of your service and contributions to the
Company, the Company will continue to pay your monthly salary on a regular
bi-monthly basis at the applicable rates set forth in paragraph 3(a) of the
Chairman’s Letter for the period beginning on the Effective Date and continuing
to and through May 14, 2010 (the “Salary Continuation Period”). For the
avoidance of doubt, such salary continuation shall be at the rate of $31,250 per
month until September 30, 2009 and, thereafter for the remainder of the Salary
Continuation Period, at the rate of $15,625 per month. Moreover, your Options
(as defined in the Chairman’s Letter) will vest in full upon the Effective Date.
Any other options you currently have to purchase shares of the Company’s stock
(“Other Stock Options”) will continue to vest pursuant to their existing vesting
schedule(s) during the 24-month period following the Effective Date, and any
such options that remain unvested at the conclusion of such 24-month period
shall be forfeited. Any of your vested options (including the Options and the
Other Stock Options) may be exercised at any time during the Salary Continuation
Period. The payments made under this paragraph 2 shall be subject to all
applicable withholdings.

 

400 Oyster Point Blvd., Suite 505, South San Francisco, CA 94080 Tel.
(650) 244-4990 Fax (650) 244-4956

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c. You represent, warrant and acknowledge that the Company owes you no wages,
commissions, bonuses, sick pay, personal leave pay, severance pay, vacation pay,
business expenses or other compensation or benefits or payments or form of
remuneration of any kind or nature, other than that specifically provided for in
this Agreement.

d. Notwithstanding the foregoing, to the extent that the payments provided by
paragraph 2.b come within the definition of “nonqualified deferred compensation”
under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)
and the regulations promulgated thereunder (collectively, “Section 409A”), and
only to the extent necessary to comply with Section 409A, the payment of such
payments shall be delayed and made to you no earlier than the earlier of (i) the
last day of the 6th complete calendar month following the Effective Date or
(ii) the date of your death, except, as permitted by Section 409A, that the
payment of such severance payments shall not be so delayed from when they would
otherwise be paid to the extent that (x) they otherwise would be paid on or
before March 15 of the calendar year following the calendar year in which your
employment is terminated or (y) such amounts constitute “involuntary severance”
under Section 409A and are less than or equal to the lesser of (A) 200% of your
annual compensation for the calendar year preceding the calendar year of your
termination of employment or (B) 200% of the limitation amount under
Section 401(a)(17) of the Code on tax-qualified retirement plan compensation in
effect for the calendar year of your termination of employment. Any payment
delayed by reason of the prior sentence shall be paid out in a single lump sum
at the end of such required delay period in order to catch up to the original
payment schedule.

3. Public Statement, Announcement Or Disclosure. The Parties agree to respond to
any inquiries, including, without limitation those from the media or the general
public, regarding the terms, provisions or conditions surrounding your
resignation of employment and from the Board by providing the requesting party
with a copy of the press release in the form attached hereto as Exhibit A (the
“Press Release”) or with an oral statement that is substantially the same in
substance as the Press Release and the Current Report on Form 8-K in the form
previously delivered to you (a copy of which is attached). The parties agree not
to make any other statement, announcement or disclosure regarding the terms,
provisions or conditions surrounding your resignation of employment and from the
Board unless such communication, statement, announcement or disclosure is agreed
to in writing, in advance, by you and the Company.

4. Non-Disparagement. You shall not issue or cause to be issued any
communication, written or otherwise, that disparages, criticizes or otherwise
reflects adversely or reasonably may be construed to reflect adversely on, or
that may encourage any adverse action against, the Company, its affiliates and
their respective successors and assigns, and each of their officers, directors
and employees (the “Company Entities”), including, but not limited to, any
statements that disparage any product, service, finances, financial condition,
capability or any other aspect of the business of the Company. Similarly, the
Company shall not, and shall

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instruct its officers and directors not to, issue or cause to be issued any
communication, written or otherwise, that disparages, criticizes or otherwise
reflects adversely or reasonably may be construed to reflect adversely on, or
that may encourage any adverse action against, you. The limitations imposed by
this paragraph shall not apply to a Party that is testifying truthfully under
oath pursuant to any lawful court order or subpoena or otherwise responding to
or providing disclosures required by law.

5. Transition Assistance. During the Salary Continuation Period, in order to
provide an orderly transition with respect to your departure from the Company,
you agree the Company may contact you to seek information regarding matters
pertaining to the business and operations of the Company prior to the Effective
Date or during the Salary Continuation Period and that you will reasonably
cooperate, at times and places as are mutually agreeable to you and the Company,
with and render reasonable assistance to the Company in response to such
contacts and inquiries without any obligation on the part of the Company to
compensate you beyond the express provisions of this Agreement; provided,
however, that the Company shall reimburse you, in accordance with the current
policies of the Company, for any pre-approved, reasonable and documented
expenses you incur in responding to such contacts and inquiries from the
Company. In this regard, you agree to, among other things, assist with the
transition of your duties and projects to other employees and directors of the
Company, “navigate” the appropriate Company personnel through the paper and
electronic files that you maintained in connection with your affiliation with
the Company, return all of the Company’s confidential or proprietary files
(whether hard-copy or electronic), and return all of the Company’s property in
your possession or control, which property you will return at the Company’s
expense to the Company within 30 days of the date of this letter.

6. Cooperation. You agree to assist and to cooperate with the Company in
connection with the defense or prosecution of any claim that may be made against
or by the Company, or in connection with any ongoing or future investigation or
dispute or claim of any kind involving the Company, including any proceeding
before any arbitral, administrative, regulatory, judicial, legislative, or other
body or agency, including testifying in any proceeding to the extent such
claims, investigations or proceedings relate to services performed or required
to be performed by you, pertinent knowledge possessed by you, or any act or
omission by you. You will also perform all acts and execute and deliver any
documents that may be reasonably necessary to carry out the provisions of this
paragraph. The Company will reimburse you for reasonable expenses you incur in
fulfilling your obligations under this paragraph.

7. Legal Process. If you are served with legal process or other request for you
to testify, produce documents or information concerning any of the Company
Entities, you shall, to the extent permitted by law, (i) refuse to provide such
testimony, information or documents absent a subpoena, court order or similar
process from a regulatory agency; (ii) promptly notify the Company of such legal
process or other request; and (iii) promptly deliver to the Company a copy of
all legal papers and documents served upon you and – prior to producing any
responsive documents – any and all documents that are responsive to such legal
process or request.

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8. Non-Solicitation/Non-Interference. You agree that, during the Salary
Continuation Period, you shall not, directly or through another person or
entity, retain, hire, engage, solicit or induce any supplier of any product or
service to, or vendor of, the Company (whether as a wholesaler, distributor,
agent, commission agent, employee or otherwise) to terminate, reduce or refrain
from renewing or extending his, her or its contractual, employment or other
relationship with the Company.

9. Confidentiality of this Agreement. The Parties agree that the facts and
circumstances leading up to this agreement, are and shall be kept confidential
and shall not hereafter be disclosed by them to any other person or entity,
except (i) as may be required by law or governmental authority; (ii) as may be
required by any taxing authority; (iii) to the Parties’ respective attorneys,
accountants, or financial advisors; (iv) as may be required in the performance
or enforcement of this Agreement; (v) with respect to you, to your immediate
family members; and (vi) with respect to the Company, its officers, directors
and employees who have a reason to know of such information, provided, with
respect to subsections (iii), (v) and (vi) of this paragraph, the disclosing
Party makes the person to whom such disclosure is made aware of the
confidentiality provisions of this Agreement and such person to whom disclosure
is to be made agrees to keep any information protected from disclosure by the
terms of this paragraph fully confidential.

10. Code Section 409A.

a. Neither the Company nor you, individually or in combination, may accelerate
any payment under this Agreement, except in compliance with Section 409A to the
extent applicable, and no amount shall be paid prior to the earliest date on
which it is permitted to be paid under Section 409A. Notwithstanding anything
herein to the contrary, no amendment may be made to this Agreement if it would
cause this Agreement or any payment hereunder to not be in compliance with the
requirements of Section 409A.

b. The Company agrees to make you whole, on an after tax basis (federal, state
and local), for any and all penalties and interest to which you may become
subject pursuant to Section 409A as a result of any compensation paid or to be
paid by the Company to you pursuant to this Agreement (collectively,
“Penalties”), provided you comply with your obligations hereunder, including,
without limitation, your obligations under this paragraph 10.

c. You agree to notify the Company in writing of any claim by the United States
Internal Revenue Service or any other taxing authority that, if successful,
would require the payment by you of any Penalties and, therefore, a payment by
the Company under paragraph 10.b above (a “Gross-Up Payment”). Such notification
shall be given as soon as practicable, but not later than 10 business days after
you receive written notice of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid.
You agree not to pay such claim prior to the expiration of the 30-day period
following the date on which you give such notice to the Company. If the Company
notifies you in writing prior to the expiration of such period that it desires,
in good faith, to contest such claim and that it will bear the costs and provide
the indemnification as required by this sentence, you shall, in good faith:

i) give the Company any information reasonably requested by the Company relating
to such claim;

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ii) take any and all action in connection with contesting such claim as the
Company shall, in good faith, reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney selected by the Company;

iii) cooperate with the Company in good faith in order effectively to contest
such claim; and

iv) permit the Company to participate, in good faith, in any proceedings
relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest.

Without limitation on the foregoing provisions of this paragraph 10.c, the
Company shall, exercising good faith, control all proceedings taken in
connection with such contest and, at its sole option (but in good faith), may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option (but in good faith), either direct you to pay (subject to paragraph
10.b above) the Penalties and any other amounts claimed and sue for a refund or
contest the claim in any permissible manner, and you agree to follow such
directions of the Company and to prosecute any such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as the Company shall determine. The Company’s
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and you shall be entitled to settle
or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

11. Expenses Relating to this Agreement. Within 15 days of your execution and
delivery of this Agreement, the Company shall pay you a lump sum payment of
$2,000, less applicable withholdings, to defray expenses you have incurred in
connection with the negotiation and preparation of this Agreement.

12. Choice of Law and Forum. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Florida (where you reside), without
regard to its conflict-of-law principles. The Parties agree that any dispute
concerning or arising out of this Agreement shall be settled by arbitration
within, or tried exclusively in an appropriate state or federal court in, Miami,
Florida, and the parties hereby consent and waive any objection to the
jurisdiction of any such court.

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13. Entire Agreement. This Agreement constitutes the entire understanding and
agreement of the Parties regarding the subject matter hereof. As of the
Effective Date, this Agreement supersedes the Chairman’s Letter. Each Party
acknowledges and agrees that he/it is not relying on, and he/it may not rely, on
any oral or written representation of any kind that is not set forth in writing
in this Agreement. Notwithstanding the foregoing, (i) the Proprietary
Information and Inventions Agreement between you and the Company, (ii) the
Indemnification Agreement between you and the Company, and (iii) to the extent
they do not conflict herewith, any stock option plan or stock option agreements
concerning the Options or Other Stock Options shall each remain in full force
and effect. No amendment or modification of the terms of this Agreement will be
valid unless made in writing and signed by you and an authorized director of the
Company.

To accept this offer, please sign in the space below, indicating your acceptance
and agreement to the terms contained herein.

 

Sincerely, /s/ Ley S. Smith Ley S. Smith, on behalf of the Executive Committee
Accepted by: /s/ Louis R. Bucalo Louis R. Bucalo, MD

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EXHIBIT A

PRESS RELEASE

Titan Pharmaceuticals Inc. Executive Chairman, Dr. Louis R. Bucalo, Retires to
Pursue Other Interests

South San Francisco, CA — April 24, 2007—Titan Pharmaceuticals Inc. (AMEX:TTP),
announced today that Titan’s Executive Chairman, Louis R. Bucalo, M.D., has
retired and left the company and the board of directors to pursue other
interests. Dr. Bucalo founded Titan and was formerly President and CEO for many
years and its Chairman from 2000-2008.

E.M. Cavalier, a long-time member of the board of directors, stated “Titan
thanks Lou for his leadership and important contributions to the company. As the
key force behind our Spheramine and Probuphine programs, as well as the
acquisition of our other current products in development, Dr. Bucalo
substantially helped create the foundation for Titan’s future success, and the
potential to improve the lives of thousands of patients. We wish Lou well in his
future endeavors.”

“I would like to thank the Board”, stated Dr. Bucalo, “and all of Titan’s
employees for their great efforts together in building Titan, and toward
improving lives through the development of new medical treatments.”

About Titan Pharmaceuticals

Titan Pharmaceuticals, Inc. (AMEX: TTP) is focused on the late-stage development
and commercialization of innovative treatments for central nervous system
disorders including schizophrenia, opioid addiction, Parkinson’s Disease and
chronic pain. Titan has established strategic partnerships with leading
pharmaceutical companies, including Vanda and Bayer Schering, to advance some of
these programs. For more information, please visit the Company’s website at
www.titanpharm.com.

The press release may contain “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Such statements include, but are not limited to, any
statements relating to the Company’s development program and any other
statements that are not historical facts. Such statements involve risks and
uncertainties, including, but not limited to, those risks and uncertainties
relating to difficulties or delays in development, testing, regulatory approval,
production and marketing of the Company’s drug candidates, adverse side effects
or inadequate therapeutic efficacy of the Company’s drug candidates that could
slow or prevent product development or commercialization, the uncertainty of
patent protection for the Company’s intellectual property or trade secrets, and
the Company’s ability to obtain additional financing. Such statements are based
on management’s current expectations, but actual results may differ materially
due to various factors, including those risks and uncertainties mentioned or
referred to in this press release.