Exhibit 10.8 

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is effective as of the last date signed
by the parties hereto (the “Effective Date”) and is entered into by and between
Retrophin, Inc., a Delaware corporation (hereinafter the “Company”), and Alvin
Shih, MD (hereinafter “Executive”).  

 

R  E  C  I  T  A  L  S

 

WHEREAS, Executive and the Company entered into an employment agreement dated
May 23, 2014 (the “Prior Agreement”);

 

WHEREAS, this Agreement amends and restates the Prior Agreement.

 

NOW, THEREFORE, the Company and Executive, in consideration of the mutual
promises set forth herein, agree as follows:

 

Article 1

NATURE OF EMPLOYMENT

 

1.1           Effect of Agreement.  This Agreement shall govern the terms of
Executive’s employment with the Company on and after the Effective Date until it
is terminated by either the Company or Executive pursuant to the terms set forth
in Article 6.

 

1.2           At-Will Employment. Executive shall continue to be employed on an
at-will basis by the Company and therefore either Executive or the Company may
terminate the employment relationship and this Agreement at any time, with or
without Cause (as defined herein) and with or without advance notice, subject to
the provisions of Article 6.

 

Article 2

EMPLOYMENT DUTIES

 

2.1           Title/Responsibilities.  Executive agrees to continue to serve the
Company in the position of Executive Vice President Research and
Development.  Executive shall have the powers and duties commensurate with such
position.

 

2.2           Full Time Attention.  Executive shall devote his best efforts and
his full business time and attention to the performance of the services
customarily incident to such office and to such other services as the President
and Chief Executive Officer (hereinafter “CEO”) or Board of Directors may
reasonably request.

 

2.3           Other Activities.  Except upon the prior written consent of the
CEO, Executive shall not during the period of employment engage, directly or
indirectly, in any other business activity (whether or not pursued for pecuniary
advantage) that is or may be competitive with, or that might place her in a
competing position to that of the Company or any other corporation or

 

Page 1 of 18

 

 

entity that directly or indirectly controls, is controlled by, or is under
common control with the Company (an “Affiliated Company”), provided that
Executive may own less than two percent (2%) of the outstanding securities of
any such publicly traded competing corporation.

 

Article 3

COMPENSATION

 

3.1           Base Salary.  Executive shall receive a Base Salary at an annual
rate of $450,000, payable semi-monthly in equal installments in accordance with
the Company’s normal payroll practices.  The CEO shall provide Executive with
annual performance reviews, and, thereafter, Executive shall be entitled to such
increase in Base Salary as the CEO and the Compensation Committee of Board of
Directors (hereinafter the “Compensation Committee”) may from time to time
establish in their sole discretion.

 

3.2           Signing Bonus.  Executive shall be entitled to a one-time cash
signing bonus in the amount of fifty thousand dollars ($50,000) provided however
if, prior to the 12-month anniversary of the date of his employment, Executive
terminates his employment or the Company terminates his employment for Cause (as
defined below), the Executive agrees to repay to the Company the signing bonus
within thirty (30) days of such termination of employment.

 

3.3           Incentive Bonus.  In addition to any other bonus Executive shall
be awarded by the Compensation Committee, Executive shall be eligible to receive
an annual incentive bonus as determined by the Company’s Compensation Committee
and CEO based upon the achievement by the Company of annual corporate goals
established by the Board of Directors and the achievement of Executive in
meeting annual personal goals established by the CEO and the Compensation
Committee.   Executive’s annual incentive bonus at target will be 50% of
Executive’s Base Salary (the “Target Annual Bonus”) provided Executive shall
receive no less than a one hundred thousand dollars ($100,000) bonus for the
first twelve month period in which Executive is employed by the Company.  The
Compensation Committee in consultation with the independent members of the Board
of Directors and the CEO shall, in their sole discretion, determine whether
Executive’s annual personal goals have been attained.  The Compensation
Committee in consultation with the independent members of the Board of Directors
shall, in its sole discretion, determine whether the annual corporate goals have
been attained.  Any annual incentive bonus shall be considered earned only if
Executive is employed by the Company both on the date that the determination is
made as to whether annual personal goals have been met, and on the date that the
determination is made as to whether annual corporate goals have been met.  These
determinations generally will be made within the first quarter following the end
of the Company’s fiscal year.  Except as provided in Article 6 herein, no
pro-rata bonus will be considered earned if Executive leaves the Company for any
reason prior to the foregoing determination dates.  Any annual incentive bonus
that is earned shall be paid no later than the fifteenth day of the third month
following the end of the Company’s fiscal year for which such bonus was earned.

 

3.4           Equity.  Pursuant to the Company’s 2014 Equity Incentive Plan (the
“Plan”), the

 

Page 2 of 18

 

 

Company granted the Executive a restricted stock unit award in respect of
230,000 shares of the Company’s common stock (the “RSU Award”).  The RSU Award
will be subject to the terms and conditions of the Plan and the applicable
restricted stock unit award grant agreement.  Subject to Executive’s continued
employment through the applicable vesting dates, the RSU Award shall vest
quarterly over three (3) years with vesting to commence June 1, 2014, subject to
accelerated vesting in certain circumstances pursuant to Article 6
below.  Subject to approval by the Company’s Compensation Committee, in
consultation with the independent members of the Board of Directors, Executive
will be eligible to receive additional Stock Awards on terms to be determined by
the Compensation Committee at the time of any such grant.  The determination
whether to grant any additional Stock Award to Executive is in the sole
discretion of the Compensation Committee, in consultation with the independent
members of the Board of Directors.  For all purposes of this Agreement, “Stock
Awards” shall mean any rights granted by the Company to Executive with respect
to the common stock of the Company, including, without limitation, stock
options, stock appreciation rights, restricted stock, stock bonuses and
restricted stock units.  

 

3.5           Withholdings.  All compensation and benefits payable to Executive
under this Agreement shall be subject to all federal, state, local taxes and
other withholdings and similar taxes and payments required by applicable law.

 

Article 4

EXPENSE ALLOWANCES AND FRINGE BENEFITS

 

4.1           Vacation.  Executive shall be entitled to participate in the
Company’s vacation plan pursuant to the terms of that plan.

 

4.2           Benefits.  During Executive’s employment hereunder, the Company
shall also provide Executive with the health insurance benefits it generally
provides to its other senior management employees.  As Executive becomes
eligible in accordance with criteria to be adopted by the Company, the Company
shall provide Executive with the right to participate in and to receive benefit
from life, accident, disability, medical, and savings plans and similar benefits
made available generally to employees of the Company as such plans and benefits
may be adopted by the Company.  With respect to long-term disability insurance
coverage, the Executive will pay all premiums for such coverage with after-tax
dollars, and the Company will reimburse the Executive for the premium costs so
paid by the Executive, which reimbursement benefit shall be taxable income,
subject to withholding.  The amount and extent of benefits to which Executive is
entitled shall be governed by the specific benefit plan as it may be amended
from time to time.

 

4.3           Business Expense Reimbursement.  During the term of this
Agreement, Executive shall be entitled to receive proper reimbursement for all
reasonable out-of-pocket expenses incurred by her (in accordance with the
policies and procedures established by the Company for its senior executive
officers) in performing services hereunder.  Executive agrees to furnish to the
Company adequate records and other documentary evidence of such expense for
which Executive seeks reimbursement.  Such expenses shall be reimbursed and
accounted for

 

Page 3 of 18

 

 

under the policies and procedures established by the Company, and such
reimbursement shall be made promptly, but in no event later than December 31 of
the calendar year following the year in which such expenses were incurred by
Executive.

 

Article 5

CONFIDENTIALITY

 

5.1           Proprietary Information.  Executive represents and warrants that
he has previously executed and delivered to the Company the Company’s standard
Proprietary Information and Inventions Agreement.

 

5.2           Return of Property.  All documents, records, apparatus, equipment
and other physical property which is furnished to or obtained by Executive in
the course of his employment with the Company shall be and remain the sole
property of the Company.  Executive agrees that, upon the termination of his
employment, he shall return all such property (whether or not it pertains to
Proprietary Information as defined in the Proprietary Information and Inventions
Agreement), and agrees not to make or retain copies, reproductions or summaries
of any such property.

 

5.3           No Use of Prior Confidential Information.  Executive will not
intentionally disclose to the Company or use on its behalf any confidential
information belonging to any of his former employers or any other third party.

 

Article 6

TERMINATION

 

6.1           General.   As set forth in Section 1.2 herein, Executive shall be
employed on an at-will basis by the Company.  Notwithstanding the foregoing,
Executive’s employment and this Agreement may be terminated in one of six ways
as set forth in this Article 6:  (a) Executive’s Death (Section 6.2); (b)
Executive’s Disability (Section 6.3); (c) Termination by the Company for Cause
(Section 6.4); (d) Termination by the Company without Cause (Section 6.5); (e)
Termination by Executive due to a Constructive Termination (Section 6.6); or (f)
Voluntary Resignation (Section 6.7).

 

6.2           By Death. Executive’s employment and this Agreement shall
terminate automatically upon the death of Executive.  In such event:

 

(a)          Stock Awards.  The vesting of the RSU Award (to the extent it is
then unvested) shall be accelerated so that the amount of shares vested under
such RSU Award shall equal 1/12th of the total number of shares subject to the
RSU Award multiplied by the number of full months that elapsed between the grant
date and Executive’s termination of employment.

 

(b)          Bonus.  The Company shall pay to Executive’s beneficiaries or
hisestate, as the case may be, a lump sum amount equal to Executive’s Target
Annual Bonus (as defined in Section 3.2) for the Company’s fiscal year in which
Executive’s death occurs multiplied by a

 

Page 4 of 18

 

 

fraction, the numerator of which is the number of full months of employment by
Executive in such fiscal year and the denominator of which is 12.  Such amount
shall be paid as soon as administratively practicable, but in no event later
than March 15 following the year in which Executive’s death occurred.

 

(c)          Accrued Compensation.  The Company shall pay to Executive’s
beneficiaries or his estate, as the case may be, any accrued Base Salary, any
vested deferred compensation (other than pension plan or profit-sharing plan
benefits that will be paid in accordance with the applicable plan), any benefits
under any plans of the Company (other than pension and profit-sharing plans) in
which Executive is a participant to the full extent of Executive’s rights under
such plans, 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”).

 

(d)          No Severance Compensation.  The compensation and benefits set forth
in Sections 6.2(a) through (c) herein shall be the only compensation and
benefits provided by the Company in the event of Executive’s death and no other
severance compensation or benefits shall be provided.

 

6.3           By Disability.  If Executive is prevented from performing his
duties hereunder by reason of any physical or mental incapacity that results in
Executive’s satisfaction of all requirements necessary to receive benefits under
the Company’s long-term disability plan due to a total disability, then, to the
extent permitted by law, the Company may terminate the employment of Executive
and this Agreement at or after such time.  In such event, and if Executive signs
the General Release set forth as Exhibit A or such other form of release as the
Company may require (the “Release”) on or within the time period set forth
therein, but in no event later than forty-five (45) days after the termination
date and allows such Release to become effective (the “Release Effective Date”),
then:

 

(a)          Accrued Compensation.  The Company shall pay to Executive all
Accrued Compensation (as defined in Section 6.2(c) herein).

 

(b)          Base Salary Continuation.  The Company shall continue to pay
Executive’s Base Salary, less required withholdings, for a period of 12 months
(the “Disability Base Salary Payments”) following Executive’s separation from
service; provided that the Disability Base Salary Payments shall be reduced by
any insurance or other payments to Executive under policies and plans sponsored
by the Company, even if premiums are paid by Executive.  Subject to the
provisions of Section 6.11, the Disability Base Salary Payments shall be paid in
accordance with the Company’s standard payroll practices; provided, however,
that any amounts that would otherwise be scheduled to be paid prior to the
Release Effective Date shall instead accrue and be paid during the first payroll
period following the Release Effective Date, and all other payments shall be
made as originally scheduled.

 

(c)          Bonus.  The Company shall pay to Executive a lump sum amount equal
to Executive’s Target Annual Bonus (as defined in Section 3.2) for the Company’s
then-current fiscal year multiplied by a fraction, the numerator of which is the
number of full months of employment by Executive in the current fiscal year and
the denominator of which is 12.  Such

 

Page 5 of 18

 

 

payment shall be made within ten (10) days following the Release Effective Date.

 

(d)          Stock Awards.  The vesting of all outstanding Stock Awards held by
Executive shall be accelerated such that the amount of shares vested under such
Stock Awards shall equal that number of shares that would have been vested if
Executive had continued to render services to the Company for 12 continuous
months after the date of Executive's termination of employment.

 

(e)          Health Insurance Benefits.  To the extent provided by the federal
COBRA law or, if applicable, state insurance laws, and by the Company’s current
group health insurance policies, Executive will be eligible to continue
Executive’s group health insurance benefits at Executive’s own expense.  If
Executive timely elects continued coverage under COBRA, the Company shall pay
Executive’s COBRA premiums, and any applicable Company COBRA premiums, necessary
to continue Executive’s then-current coverage for a period of 12 months after
the date of Executive’s termination of employment; provided, however,  that any
such payments will cease if Executive voluntarily enrolls in a health insurance
plan offered by another employer or entity during the period in which the
Company is paying such premiums.  Executive agrees to immediately notify the
Company in writing of any such enrollment.

 

Notwithstanding the foregoing, if the Company determines, in its sole
discretion, that it cannot provide the foregoing benefit without potentially
incurring financial costs or penalties under applicable law (including, without
limitation, Section 2716 of the Public Health Service Act), the Company shall in
lieu thereof provide to Executive a taxable monthly amount to continue his group
health insurance coverage in effect on the date of separation from service
(which amount shall be based on the premium for the first month of COBRA
coverage), which payments shall be made regardless of whether Executive elects
COBRA continuation coverage and shall commence in the month following the month
in which Executive incurs a separation from service and shall end on the earlier
of (x) the date on which Executive voluntarily enrolls in a health insurance
plan offered by another employer or entity during the period in which the
Company is paying such amounts and (y) 12 months after the date of Executive’s
separation from service.

 

(f)          Disability Plans.  Nothing in this Section 6.3 shall affect
Executive’s rights under any disability plan in which Executive is a
participant.

 

6.4           Termination by the Company for Cause.

 

(a)          No Liability.  The Company may terminate Executive’s employment and
this Agreement for Cause (as defined below) without liability at any time.  In
such event, the Company shall pay Executive all Accrued Compensation (as defined
in Section 6.2(c) herein), but no other compensation or reimbursement of any
kind, including without limitation, any severance compensation or benefits shall
be paid, and thereafter the Company’s obligations hereunder shall terminate.

 

(b)          Definition of “Cause.”  For purposes of this Agreement, “Cause”
shall mean one or more of the following:

 

Page 6 of 18

 

 

(i)          Executive’s intentional commission of an act, or intentional
failure to act, that materially injures the business of the Company; provided,
however, that in no event shall any business judgment made in good faith by
Executive and within Executive’s defined scope of authority constitute a basis
for termination for Cause under this Agreement;

 

(ii)         Executive’s intentional refusal or intentional failure to act in
accordance with any lawful and proper direction or order of the Board of
Directors or the Chief Executive Officer;

 

(iii)        Executive’s material breach of Executive’s fiduciary, statutory,
contractual, or common law duties to the Company (including any material breach
of this Agreement, the Proprietary Information and Inventions Agreement, or the
Company’s written policies);

 

(iv)        Executive’s indictment for or conviction of any felony or any crime
involving dishonesty; or

 

(v)         Executive’s participation in any fraud or other act of willful
misconduct against the Company;

 

provided, however, that in the event that any of the foregoing events is
reasonably capable of being cured, the Company shall provide written notice to
Executive describing the nature of such event and Executive shall thereafter
have ten (10) business days to cure such event.

 

6.5           Termination by the Company without Cause.

 

(a)          The Company’s Right.  The Company may terminate Executive’s
employment and this Agreement without Cause (as defined in Section 6.4(b)
herein) at any time by giving thirty (30) days advance written notice to
Executive.

 

(b)          Severance Benefits.   If the Company terminates Executive’s
employment without Cause, and if Executive signs the Release on or within the
time period set forth therein (but in no event later than forty-five (45) days
after the termination date) and allows such Release to become effective, then:

 

(i)          Accrued Compensation.  The Company shall pay to Executive all
Accrued Compensation (as defined in Section 6.2(c) herein).

 

(ii)         Cash Compensation Amount Payments.  The Company shall pay Executive
an amount equal to (A) Executive’s annual Base Salary plus Executive’s Target
Annual Bonus (as defined in Section 3.2 herein) multiplied by (B) 1.0 (the “Cash
Compensation Amount”).  Subject to the provisions of Section 6.11, the Cash
Compensation Amount will be paid in equal installments on the Company’s standard
payroll dates over a period of 12 months following Executive’s separation from
service; provided, however, that any amounts that would otherwise be scheduled
to be paid prior to the Release Effective Date shall instead accrue and be paid
during the first payroll period following the Release Effective Date, and all
other payments shall be made as originally scheduled.

 

Page 7 of 18

 

 

(iii)        Stock Awards.  The vesting of all outstanding Stock Awards held by
Executive shall be accelerated such that the amount of shares vested under such
Stock Awards shall equal that number of shares that would have been vested if
Executive had continued to render services to the Company for 12 continuous
months after the date of Executive's termination of employment.

 

(iv)        Health Insurance Benefits.  To the extent provided by the federal
COBRA law or, if applicable, state insurance laws, and by the Company’s current
group health insurance policies, Executive will be eligible to continue
Executive’s group health insurance benefits at Executive’s own expense.  If
Executive timely elects continued coverage under COBRA, the Company shall pay
Executive’s COBRA premiums, and any applicable Company COBRA premiums, necessary
to continue Executive’s then-current coverage for a period of 12 months after
the date of Executive’s termination of employment; provided, however,  that any
such payments will cease if Executive voluntarily enrolls in a health insurance
plan offered by another employer or entity during the period in which the
Company is paying such premiums.  Executive agrees to immediately notify the
Company in writing of any such enrollment.

 

Notwithstanding the foregoing, if the Company determines, in its sole
discretion, that it cannot provide the foregoing benefit without potentially
incurring financial costs or penalties under applicable law (including, without
limitation, Section 2716 of the Public Health Service Act), the Company shall in
lieu thereof provide to Executive a taxable monthly amount to continue his group
health insurance coverage in effect on the date of separation from service
(which amount shall be based on the premium for the first month of COBRA
coverage), which payments shall be made regardless of whether Executive elects
COBRA continuation coverage and shall commence in the month following the month
in which Executive incurs a separation from service and shall end on the earlier
of (x) the date on which Executive voluntarily enrolls in a health insurance
plan offered by another employer or entity during the period in which the
Company is paying such amounts and (y) 12 months after the date of Executive’s
separation from service.

 

6.6           Termination by Executive due to a Constructive Termination.

 

(a)          Executive’s Right.  Executive may resign his employment and
terminate this Agreement at any time as a result of a Constructive Termination
(as defined in Section 6.6(c) herein).

 

(b)          Severance Benefits.  If Executive resigns his employment and
terminates this Agreement as a result of a Constructive Termination, and if
Executive signs the Release on or within the time period set forth therein (but
in no event later than forty-five (45) days after the termination date) and
allows such Release to become effective, then Executive shall receive all of the
severance benefits set forth in Section 6.5(b) herein.

 

(c)          Definition of “Constructive Termination.” For purposes of this
Agreement, “Constructive Termination” shall mean a resignation of employment and
termination of this Agreement by Executive for one or more of the following
reasons:

 

Page 8 of 18

 

 

(i)          Assignment to, or withdrawal from, Executive of any duties or
responsibilities that results in a material diminution in such Executive’s
authority, duties or responsibilities as in effect immediately prior to such
change;

 

(ii)         A material diminution in the authority, duties or responsibilities
of the supervisor to whom Executive is required to report;

 

(iii)        A material reduction by the Company of Executive’s annual Base
Salary;

 

(iv)        A relocation of Executive or the Company’s principal executive
offices if Executive’s principal office is at such offices, to a location more
than forty (40) miles from the location at which Executive is then performing
his duties, except for an opportunity to relocate which is accepted by Executive
in writing; or

 

(v)         A material breach by the Company of any provision of this Agreement
or any other enforceable written agreement between Executive and the Company;

 

provided however, that Executive must first provide the Company with written
notice specifying the condition giving rise to a Constructive Termination within
ninety (90) days following the initial existence of such condition; and
Executive’s notice must specify that Executive intends to terminate her
employment no earlier than thirty (30) days after providing such notice, and the
Company must be given an opportunity to cure such condition within thirty (30)
days following its receipt of such notice and avoid paying benefits.

 

6.7           Voluntary Resignation.  Executive may resign his employment and
terminate this Agreement at any time for any reason other than due to a
Constructive Termination (as defined in Section 6.6(c) herein).  In such event,
(a) the Company shall pay Executive all Accrued Compensation (as defined in
Section 6.2(c) herein), and (b) the vesting of the RSU Award (to the extent it
is then unvested) shall be accelerated so that the amount of shares vested under
such RSU Award shall equal 1/12th of the total number of shares subject to the
RSU Award multiplied by the number of full months that elapsed between the grant
date and Executive’s termination of employment, but no other compensation or
reimbursement of any kind, including without limitation, any severance
compensation or benefits shall be paid, and thereafter the Company’s obligations
hereunder shall terminate.

 

6.8           Change in Control.

 

(a)          Severance Benefits.  If (i) within thirty (30) days prior to, or on
or within six (6) months after, the consummation of a Change in Control (as
defined in Section 6.8(b) herein), (1) the Company terminates Executive’s
employment and this Agreement without Cause pursuant to Section 6.5 herein or
(2) Executive resigns his or her employment and terminates this Agreement as a
result of a Constructive Termination pursuant to Section 6.6 herein, and (ii) in
either event (1) or (2), Executive signs the Release on or within the time
period set forth therein, but in no event later than forty-five (45) days after
the termination date and allows such Release to become effective, then Executive
shall receive the following severance benefits in lieu of any severance benefits
set forth in Section 6.5(b) or Section 6.6(b) herein:

 

Page 9 of 18

 

 

(i)          Accrued Compensation.  The Company shall pay to Executive all
Accrued Compensation (as defined in Section 6.2(c) herein).

 

(ii)         CIC Cash Compensation Amount Payment.  The Company shall pay
Executive an amount equal to (A) Executive’s annual Base Salary plus Executive’s
Target Annual Bonus (as defined in Section 3.2 herein) multiplied by (B) 1.5
(collectively, the “CIC Cash Compensation Amount”).  The CIC Cash Compensation
Amount will be paid in one lump sum within ten (10) days following the Release
Effective Date.

 

(iii)        Stock Awards.  The vesting of all outstanding Stock Awards held by
Executive shall be accelerated in full, effective as of the Release Effective
Date.

 

(iv)        Health Insurance Benefits.  To the extent provided by the federal
COBRA law or, if applicable, state insurance laws, and by the Company’s current
group health insurance policies, Executive will be eligible to continue
Executive’s group health insurance benefits at Executive’s own expense.  If
Executive timely elects continued coverage under COBRA, the Company shall pay
Executive’s COBRA premiums, and any applicable Company COBRA premiums, necessary
to continue Executive’s then-current coverage for a period of 18 months after
the date of Executive’s termination of employment; provided, however,  that any
such payments will cease if Executive voluntarily enrolls in a health insurance
plan offered by another employer or entity during the period in which the
Company is paying such premiums.  Executive agrees to immediately notify the
Company in writing of any such enrollment.

 

Notwithstanding the foregoing, if the Company determines, in its sole
discretion, that it cannot provide the foregoing benefit without potentially
incurring financial costs or penalties under applicable law (including, without
limitation, Section 2716 of the Public Health Service Act), the Company shall in
lieu thereof provide to Executive a taxable monthly amount to continue his or
her group health insurance coverage in effect on the date of separation from
service (which amount shall be based on the premium for the first month of COBRA
coverage), which payments shall be made regardless of whether Executive elects
COBRA continuation coverage and shall commence in the month following the month
in which Executive incurs a separation from service and shall end on the earlier
of (x) the date on which Executive voluntarily enrolls in a health insurance
plan offered by another employer or entity during the period in which the
Company is paying such amounts and (y) 18 months after the date of Executive’s
separation from service.

 

(b)          For purposes of this Agreement, a “Change in Control” shall have
occurred if at any time following the Effective Date, any of the following
events shall occur:

 

(i)          The Company is merged, or consolidated, or reorganized into or with
another corporation or other legal person, and as a result of such merger,
consolidation or reorganization less than 50% of the combined voting power of
the then-outstanding securities of such corporation or person immediately after
such transaction are held in the aggregate by the holders of voting securities
of the Company immediately prior to such transaction;

 

(ii)         The Company sells all or substantially all of its assets or any
other corporation or other legal person and thereafter, less than 50% of the
combined voting power of

 

Page 10 of 18

 

 

the then-outstanding voting securities of the acquiring or consolidated entity
are held in the aggregate by the holders of voting securities of the Company
immediately prior to such sale;

 

(iii)        There is a report filed after the date of this Agreement on
Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report), each
as promulgated pursuant to the Securities Exchange Act of 1934 (the “Exchange
Act”) disclosing that any person (as the term “person” is used in Section
13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the beneficial
owner (as the term beneficial owner is defined under Rule 13d-3 or any successor
rule or regulation promulgated under the Exchange Act) representing 50% or more
of the combined voting power of the then-outstanding voting securities of the
Company; or

 

(iv)        During any period of two (2) consecutive years following the
Effective Date, individuals who at the beginning of any such period constitute
the directors of the Company cease for any reason to constitute at least a
majority thereof unless the election to the nomination for election by the
Company’s shareholders of each director of the Company first elected during such
period was approved by a vote of at least two-thirds of the directors of the
Company then still in office who were directors of the Company at the beginning
of such period.

 

6.9           Mitigation.  Except as otherwise specifically provided herein,
Executive shall not be required to mitigate the amount of any payment provided
under this Agreement by seeking other employment or self-employment, nor shall
the amount of any payment provided for under this Agreement be reduced by any
compensation earned by Executive as a result of employment by another employer
or through self-employment or by retirement benefits after the date of
Executive’s termination of employment from the Company, except as provided
herein.

 

6.10         Coordination.  If upon termination of employment, Executive becomes
entitled to rights under other plans, contracts or arrangements entered into by
the Company, this Agreement shall be coordinated with such other arrangements so
that Executive’s rights under this Agreement are not reduced, and that any
payments under this Agreement offset the same types of payments otherwise
provided under such other arrangements, but do not otherwise reduce any payments
or benefits under such other arrangements to which Executive becomes entitled.

 

6.11         Application of Section 409A.  Notwithstanding anything to the
contrary herein, the following provisions apply to the extent severance benefits
provided herein are subject to Section 409A of the Code and the regulations and
other guidance thereunder and any state law of similar effect (collectively
“Section 409A”).  Severance benefits shall not commence until Executive has a
“separation from service” for purposes of Section 409A.  If Executive is a
“specified employee” within the meaning of 409A(a)(2)(B)(i) of the Code, any
installment payments of Disability Base Salary Payments pursuant to Section
6.3(b) or Cash Compensation Amounts pursuant to Section 6.5(b) or 6.6(b) that
are triggered by a separation from service shall be accelerated to the minimum
extent necessary so that (a) the lesser of (y) the total cash severance payment
amount, or (z) six (6) months of such installment payments are paid no later
than March 15 of the calendar year following such termination, and (b) all
amounts paid pursuant to the foregoing clause (a) will constitute separate
payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations and
thus will be payable pursuant to the “short-term

 

Page 11 of 18

 

 

deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury
Regulations.  It is intended that if Executive is a “specified employee” within
the meaning of Section 409A(a)(2)(B)(i) of the Code at the time of such
separation from service the foregoing provision shall result in compliance with
the requirements of Section 409A(a)(2)(B)(i) of the Code because payments to
Executive will either be payable pursuant to the “short-term deferral” rule set
forth in Section 1.409A-1(b)(4) of the Treasury Regulations or will not be paid
until at least 6 months after separation from service.  The severance benefits
are intended to qualify for an exemption from application of Section 409A or
comply with its requirements to the extent necessary to avoid adverse personal
tax consequences under Section 409A, and any ambiguities herein shall be
interpreted accordingly.

 

6.12         Parachute Payments.

 

(a)          If any payment or benefit (including payments or benefits pursuant
to this Agreement) that Executive would receive in connection with a Change in
Control or otherwise (“Payment”) would (1) constitute a “parachute payment”
within the meaning of Section 280G of the Code, and (2) but for this sentence,
be subject to the excise tax imposed by Section 4999 of the Code (the “Excise
Tax”), then such Payment shall be equal to the Reduced Amount.  The "Reduced
Amount" shall be either (x) the largest portion of the Payment that would result
in no portion of the Payment being subject to the Excise Tax or (y) the largest
portion, up to and including the total, of the Payment, whichever amount, after
taking into account all applicable federal, state and local employment taxes,
income taxes, and the Excise Tax (all computed at the highest applicable
marginal rate), results in Executive's receipt, on an after-tax basis, of the
greater economic benefit notwithstanding that all or some portion of the Payment
may be subject to the Excise Tax. If a reduction in payments or benefits
constituting "parachute payments" is necessary so that the Payment equals the
Reduced Amount, Executive shall have no rights to any additional payments and/or
benefits, and reduction shall occur in the manner that results in the greatest
economic benefit for Executive.  If more than one method of reduction will
result in the same economic benefit, the items so reduced will be reduced pro
rata.

 

(b)          In the event it is subsequently determined by the Internal Revenue
Service that some portion of the Reduced Amount as determined pursuant to clause
(x) in the preceding paragraph is subject to the Excise Tax, Executive agrees to
promptly return to the Company a sufficient amount of the Payment so that no
portion of the Reduced Amount is subject to the Excise Tax.  For the avoidance
of doubt, if the Reduced Amount is determined pursuant to clause (y) in the
preceding paragraph, Executive will have no obligation to return any portion of
the Payment pursuant to the preceding sentence.

 

(c)          The independent registered public accounting firm engaged by the
Company for general audit purposes as of the day prior to the effective date of
the event described in Section 280G(b)(2)(A)(i) of the Code will perform the
foregoing calculations.  If the independent registered public accounting firm so
engaged by the Company is serving as accountant or auditor for the individual,
entity or group effecting such Change in Control or similar transaction, the
Company will appoint a nationally recognized independent registered public
accounting firm to make the determinations required hereunder.  The Company will
bear all expenses with respect to the determinations by such independent
registered public accounting

 

Page 12 of 18

 

 

firm required to be made hereunder.  Any good faith determinations of the
independent registered public accounting firm made hereunder will be final,
binding and conclusive upon the Company and you.

 

Article 7

GENERAL PROVISIONS

 

7.1           Governing Law.  The validity, interpretation, construction and
performance of this Agreement and the rights of the parties thereunder shall be
interpreted and enforced under California law without reference to principles of
conflicts of laws.

 

7.2           Assignment; Successors; Binding Agreement.

 

(a)          No Assignment.  Executive may not assign, pledge or encumber his
interest in this Agreement or any part thereof.

 

(b)          Assumption by Successor.  The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company, by
operation of law or by agreement in form and substance reasonably satisfactory
to Executive, to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession had taken place.

 

(c)          Binding Agreement.  This Agreement shall inure to the benefit of
and be enforceable by Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributee, devisees and legatees.  If
Executive should die while any amount is at such time payable to Executive
hereunder, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Executive’s devisee, legates or
other designee or, if there be no such designee, to her estate.

 

7.3           Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.

 

To the Company:

Retrophin, Inc.
12255 El Camino Real Suite 250

San Diego, CA 92130

To Executive:

Alvin Shih, MD

 

Page 13 of 18

 

 

7.4           Modification; Waiver; Entire Agreement.  This Agreement
constitutes the complete, final and exclusive embodiment of the entire agreement
between Executive and the Company with regard to this subject matter.  It is
entered into without reliance on any promise or representation, written or oral,
other than those expressly contained herein, and it supersedes any other such
promises, warranties or representations.  No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by Executive and such officer as may be specifically
designated by the Board of Directors of the Company.  No waiver by either party
hereto at any time of any breach by the other party of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or any prior or subsequent time.

 

7.5           Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.

 

7.6           Controlling Document. Except to the extent described in Section
6.10, in case of conflict between any of the terms and conditions of this
Agreement and any document herein referred to, the terms and conditions of this
Agreement shall control.

 

7.7           Executive Acknowledgment. Executive acknowledges (a) that he has
consulted with or has had the opportunity to consult with independent counsel of
his own choice concerning this Agreement, and has been advised to do so by the
Company, and (b) that he has read and understands the Agreement, is fully aware
of its legal effect, and has entered into it freely based on his own judgment.

 

7.8           Dispute Resolution.  To ensure the rapid and economical resolution
of disputes that may arise in connection with Executive’s employment, Executive
and the Company agree that any and all disputes, claims, or causes of action, in
law or equity, arising from or relating to the enforcement, breach, performance,
execution, or interpretation of this Agreement, Executive’s  employment, or the
termination of that employment, shall be resolved, to the fullest extent
permitted by law pursuant to the Federal Arbitration Act, 9 U.S.C. §1-16, by
final, binding and confidential arbitration in San Diego, California conducted
before a single arbitrator by Judicial Arbitration and Mediation Services, Inc.
(“JAMS”) or its successor, under the then applicable JAMS rules; provided,
however, that in no event shall the Arbitrator be empowered to hear or determine
any class or collective claim of any type.  The JAMS rules can be found online
at www.jamsadr.com.  By agreeing to this arbitration procedure, both Executive
and the Company waive the right to resolve any such dispute through a trial by
jury or judge or by administrative proceeding.  The arbitrator shall:  (a) have
the authority to compel adequate discovery for the resolution of the dispute and
to award such relief as would otherwise be permitted by law; and (b) issue a
written arbitration decision including the arbitrator’s essential findings and
conclusions and a statement of the award.  The Company shall pay all of JAMS’
arbitration fees.  Nothing in this letter agreement shall prevent either
Executive or the Company

 

Page 14 of 18

 

 

from obtaining injunctive relief in court if necessary to prevent irreparable
harm pending the conclusion of any arbitration.  The parties agree that the
arbitrator shall award reasonable attorneys’ fees, costs, and all other related
expenses to the prevailing party in any action brought hereunder, and the
arbitrator shall have discretion to determine the prevailing party in an
arbitration where multiple claims may be at issue.

 

7.9           Remedies.

 

(a)          Injunctive Relief.  The parties agree that the services to be
rendered by Executive hereunder are of a unique nature and that in the event of
any breach or threatened breach of any of the covenants contained herein, the
damage or imminent damage to the value and the goodwill of the Company’s
business will be irreparable and extremely difficult to estimate, making any
remedy at law or in damages inadequate. Accordingly, the parties agree that the
Company shall be entitled to injunctive relief against Executive in the event of
any breach or threatened breach of any such provisions by Executive, in addition
to any other relief (including damage) available to the Company under this
Agreement or under law.

 

(b)          Exclusive.  Both parties agree that the remedy specified in Section
7.9(a) above is not exclusive of any other remedy for the breach by Executive of
the terms hereof.

 

7.10         Counterparts.  This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
Agreement.

 

Executed by the parties as follows:

 

EXECUTIVE   RETROPHIN, INC.               By: /s/ Alvin Shin   By: /s/ Laura
Clague              

Date: 05/07/2015   Date: 05/08/2015  

 

Page 15 of 18

 

 

EXHIBIT A

GENERAL RELEASE

[To be signed on or after employment termination date]

 

Pursuant to the terms of the Employment Agreement between Retrophin, Inc.  (the
“Company”) and Alvin Shih, MD (“Executive”) dated May __, 2015 (the
“Agreement”), the parties hereby enter into the following General Release (the
“Release”):

 

1.          Accrued Salary and Vacation.  Executive understands that, on the
last date of Executive’s employment with the Company, the Company will pay
Executive any accrued salary and accrued and unused vacation to which Executive
is entitled by law, regardless of whether Executive signs this Release.

 

2.          General Release.  Executive hereby generally and completely releases
the Company and its directors, officers, employees, shareholders, partners,
agents, attorneys, predecessors, successors, parent and subsidiary entities,
insurers, affiliates, and assigns (collectively the “Released Parties”) of and
from any and all claims, liabilities and obligations, both known and unknown,
arising out of or in any way related to events, acts, conduct, or omissions
occurring at any time prior to or at the time that Executive signs this Release.

 

3.          Scope of Release.  This general release includes, but is not limited
to: (1) all claims arising out of or in any way related to Executive’s
employment with the Company or the termination of that employment; (2) all
claims related to Executive’s compensation or benefits from the Company,
including salary, bonuses, commissions, vacation pay, expense reimbursements,
severance pay, fringe benefits, stock, stock options, or any other ownership or
equity interests in the Company; (3) all claims for breach of contract, wrongful
termination, and breach of the implied covenant of good faith and fair dealing
(including claims based on or arising under the Agreement); (4) all tort claims,
including claims for fraud, defamation, emotional distress, and discharge in
violation of public policy; and (5) all federal, state, and local statutory
claims, including claims for discrimination, harassment, retaliation, attorneys’
fees, or other claims arising under the federal Civil Rights Act of 1964 (as
amended), the federal Americans with Disabilities Act of 1990, the federal Age
Discrimination in Employment Act (as amended) (“ADEA”), the federal Family and
Medical Leave Act, the California Labor Code (as amended), the California Family
Rights Act, and the California Fair Employment and Housing Act (as amended).

 

4.          ADEA Waiver.  Executive acknowledges that Executive is knowingly and
voluntarily waiving and releasing any rights Executive may have under the ADEA,
and that the consideration given for the waiver and release in the preceding
paragraph is in addition to anything of value to which Executive is already
entitled. If Executive is age 40 or older upon execution of this Release,
Executive further acknowledges that Executive has been advised by this writing
that,  (1) Executive’s waiver and release do not apply to any rights or claims
that may arise after the date Executive signs this Release; (2) Executive should
consult with an attorney prior to signing this Release (although Executive may
choose voluntarily not to do so); (3) Executive has twenty-one (21) days to
consider this Release (although Executive may choose voluntarily to sign it
earlier); (4) Executive has seven (7) days following the date Executive signs

 

Page 16 of 18

 

 

this Release to revoke it by providing written notice of revocation to the
Company’s Chief Executive Officer; and (5) this Release will not be effective
until the date upon which the revocation period has expired, which will be the
eighth calendar day after the date Executive signs it provided that Executive
does not revoke it.  If Executive is under 40 years of age upon execution of
this Release, the Release will be effective upon signing and not revocable.

 

5.          Waiver of Unknown Claims.  EXECUTIVE UNDERSTANDS THAT THIS AGREEMENT
INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.  Executive acknowledges that
Executive has read and understands Section 1542 of the California Civil Code
which reads as follows:  “A general release does not extend to claims which the
creditor does not know or suspect to exist in his or her favor at the time of
executing the release, which if known by him or her must have materially
affected his or her settlement with the debtor.”  Executive hereby expressly
waives and relinquishes all rights and benefits under that section and any law
or legal principle of similar effect in any jurisdiction with respect to
Executive’s respective release of claims herein, including but not limited to
Executive’s release of unknown and unsuspected claims.

 

6.          Excluded Claims.  Executive understands that notwithstanding the
foregoing, the following are not included in the Released Claims (the “Excluded
Claims”): (i) any rights or claims for indemnification Executive may have
pursuant to any written indemnification agreement to which he is a party, the
charter, bylaws, or operating agreements of any of the Released Parties, or
under applicable law; or (ii) any rights which are not waivable as a matter of
law.  In addition, Executive understands that nothing in this release prevents
Executive from filing, cooperating with, or participating in any proceeding
before the Equal Employment Opportunity Commission, the Department of Labor, or
any similar government agency, except that Executive acknowledges and agrees
that Executive shall not recover any monetary benefits in connection with any
such claim, charge or proceeding with regard to any claim released
herein.  Executive hereby represents and warrants that, other than the Excluded
Claims, Executive is not aware of any claims he has or might have against any of
the Released Parties that are not included in the Released Claims.

 

7.          Executive Representations.  Executive hereby represents that
Executive has been paid all compensation owed and for all hours worked;
Executive has received all the leave and leave benefits and protections for
which Executive is eligible, pursuant to the Family and Medical Leave Act, the
California Family Rights Act, or otherwise; and Executive has not suffered any
on-the-job injury for which Executive has not already filed a workers’
compensation claim.

 

8.          Nondisparagement.  Executive agrees not to disparage the Company,
its parent, or its or their officers, directors, employees, shareholders,
affiliates and agents, in any manner likely to be harmful to its or their
business, business reputation, or personal reputation (although Executive may
respond accurately and fully to any question, inquiry or request for information
as required by legal process).

 

9.          Cooperation.  Executive agrees not to voluntarily (except in
response to legal compulsion) assist any third party in bringing or pursuing any
proposed or pending litigation,

 

Page 17 of 18

 

 

arbitration, administrative claim or other formal proceeding against the other
party, or against the Company’s parent or subsidiary entities, affiliates,
officers, directors, employees or agents.  Executive further agrees to
reasonably cooperate with the other party, by voluntarily (without legal
compulsion) providing accurate and complete information, in connection with such
other party’s actual or contemplated defense, prosecution, or investigation of
any claims or demands by or against third parties, or other matters, arising
from events, acts, or failures to act that occurred during the period of
Executive’s employment by the Company.

 

10.         No Admission of Liability.  The parties agree that this Release, and
performance of the acts required by it, does not constitute an admission of
liability, culpability, negligence or wrongdoing on the part of anyone, and will
not be construed for any purpose as an admission of liability, culpability,
negligence or wrongdoing by any party and/or by any party’s current, former or
future parents, subsidiaries, related entities, predecessors, successors,
officers, directors, shareholders, agents, employees and assigns.  The parties
specifically acknowledge and agree that this Release is a compromise of disputed
claims and that the Company denies any liability for any matter released herein.

 

Retrophin, Inc.:   Executive:               By:     By:                

Date:     Date:    

 

Page 18 of 18