Exhibit 10.1
TRANSDEL PHARMACEUTICALS, INC.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the “Agreement”) is made effective as of October 18,
2010 (the “Effective Date”), by and between Transdel Pharmaceuticals, Inc., a
Delaware corporation (the “Company”), and Dr. John Bonfiglio (“Executive”):
WHEREAS, The Company and the Executive desire to enter into this Agreement to
provide for Executive’s employment by the Company, upon the terms and conditions
set forth herein.
The parties hereby agree as follows:
1. Duties.
1.1 Position. Executive shall serve as the Company’s Chief Executive Officer and
President, and serve as a director on the Company’s Board of Directors (the
“Board”), and shall have the duties and responsibilities incident to such
position and such other duties as may be determined in consultation with the
Board. Executive shall perform faithfully, cooperatively and diligently all of
his job duties and responsibilities and agrees to and shall devote his full
time, attention and effort to the business of the Company and other assignments
as directed by the Board. The Executive will report directly to the Board.
1.2 Best Efforts. Executive will expend his best efforts on behalf of the
Company in connection with his employment and will abide by all policies and
decisions made by Board, as well as all applicable federal, state and local
laws, regulations or ordinances.
1.3 Start Date. Executive agrees that he will report to work at the Company’s
headquarters on October 20, 2010 (the “Start Date”). For purposes of clarity,
the Start Date will be used to calculate Executive’s compensation and benefits
pursuant to Sections 3 through 7 of this Agreement.
2. At-Will Employment. Executive’s employment with the Company is not for a
specific term and can be terminated by Executive or the Company at any time and
for any reason, with or without cause or advanced notice. The at-will nature of
Executive’s employment described in this Agreement shall constitute the entire
agreement between Executive and the Company concerning the nature and duration
of Executive’s employment and the circumstance under which Executive or the
Company may terminate the employment relationship. No oral statement by any
person can change the at-will nature of Executive’s employment with the Company.
If Executive shall cease serving as the Company’s Chief Executive Officer,
Executive agrees to simultaneously submit his resignation from the Board. In
addition, Executive agrees to continue to abide by the Company’s Information and
Inventions Agreement following his resignation or the termination of his
employment with the Company.

 

 

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3. Compensation.
3.1 Annual Base Salary. As compensation for Executive’s performance of his
duties hereunder, the Company shall pay to Executive an initial base annual
salary of One Hundred Fifty Thousand Dollars ($150,000), starting on the Start
Date (“Annual Base Salary”), payable in accordance with the normal payroll
practices of Company, less required deductions for state and federal withholding
tax, social security and all other employment taxes and payroll deductions.
3.2 Annual Bonus. The Executive shall be eligible to receive an annual cash
bonus in an amount up to 40% of his Annual Base Salary (the “Annual Bonus”)
beginning in fiscal 2011. The actual amount of the Annual Bonus will be
determined by the Board based on Executive’s achieving Company and personal
goals established and mutually agreed upon between the Executive and the Board
of Directors. Both the goals for the Company and the Executive shall be agreed
to by Executive and the Board of Directors as follows: (i) for the remainder of
fiscal year 2010, on or before November 15, 2010; and (ii) for fiscal year 2011,
on or before January 31, 2011; and (iii) for each fiscal year thereafter, on or
before January 31 for that particular year. In addition, the Board of Directors
and the Executive hereby agree that the objectives for the other officers or
employees will be determined on the same dates as set forth above. If awarded,
the Annual Bonus will be paid on or before March 15 of the year following the
year in which the Annual Bonus was earned.
3.3 Salary Increase and Special Bonus. Immediately upon the date that (i) the
Company closes a debt or equity financing in which the gross proceeds to the
Company equals or exceeds $ 3 million; or (ii) completes a corporate partnership
transaction that includes gross proceeds to the Company of at least $3 million
to support the Company’s general and administrative expenses (each a “Qualified
Transaction”), the Executive’s Annual Base Salary shall be increased to Three
Hundred and Fifteen Thousand Dollars ($315,000). In addition, upon the closing
of a Qualified Transaction, the Company will pay Executive a bonus equal to the
product of (i) $165,000 times (ii) the number of days between the Start Date and
the closing of a Qualified Transaction dividend by 365 days (the “Special
Bonus”).
3.4 Equity Grants. Subject to approval of the Board of Directors, the Executive
shall be eligible to receive a stock option grant for 400,000 shares of common
stock and 50,000 shares of restricted common stock in accordance with Transdel’s
2007 Incentive Stock and Awards Plan. For these initial grants of stock options
and restricted common stock, they will vest as follows: 25% of the option shares
and the restricted stock shall vest immediately upon the Start Date, with the
balance of the option shares and the restricted stock vesting in equal monthly
installments over the next 36 months beginning 30 days after the Start Date;
provided, however, the Executive shall gain a vested interest in an additional
10% of the option shares and the restricted stock upon the closing of a
Qualified Transaction. The exercise price of the stock option will be the
reported closing price of the Company’s common stock on the date of grant. The
vesting of all options will fully accelerate upon an Involuntary Termination of
Executive’s employment within twelve months following a Change of Control (as
such terms are defined in Executive’s Option Agreement).

 

 

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3.5 Additional Equity Grant. Contingent upon the closing of a Contingent
Financing with (i) any entity that is not listed in Exhibit A, attached hereto
and incorporated herein by reference, or (ii) any entity that is introduced to
the Company by Executive after the Start Date, the Company will issue Executive
an option to purchase 200,000 shares of common stock, with 25% of the option
shares vested on the date of grant and the balance vesting in equal monthly
installments over the next 36 months. The exercise price of this option will be
the reported closing price of the Company’s common stock on the date of grant,
which will take place following the public announcement of such Qualified
Transaction.
3.6 Future Equity Grants. In addition, in connection with setting the
Executive’s annual compensation, the Board will agree to examine the Executive’s
overall annual compensation package and issue an appropriate stock option grant
or other equity award based on the Company’s comparator group.
4. Health and Welfare Benefit Plans. The Company will provide to Executive and
his family throughout the term of this Agreement health, dental and vision and
other benefits on the same or substantially similar terms as those provided to
Executive and the other executive officers of the Company during the first six
months of Executive’s employment with the Company.
5. Customary Benefits. Executive shall be entitled to all customary and usual
fringe benefits and shall be entitled to participate in all savings and
retirement plans, practices, policies and programs generally applicable to
employees of the Company that are in effect during the Employment Term, subject
to the terms and conditions of Company’s benefit plan documents, as applicable.
6. Business Expenses. Executive shall be entitled to receive prompt
reimbursement for all reasonable, out of- pocket business expenses incurred in
the performance of his duties on behalf of Company (including, but not limited
to, cell phone, computer and internet expenses). In addition, Executive shall be
entitled to receive prompt reimbursement for all reasonable travel and lodging
expenses related to providing services at the Company’s headquarters, with all
business expense plans (i.e., how many flights back and forth per month) and
amounts to be pre-approved by the Board.
7. Vacation. Executive shall be entitled to paid vacation, personal and sick
days each calendar year, in accordance with the Company’s plans, policies and
programs then in effect. Initially Executive will be granted four (4) weeks of
paid vacation, with the Executive’s vacation for 2010 pro-rated based on the
period of his service during 2010.
8. Relocation Expenses. Contingent upon the closing of a Qualified Transaction,
the Company agrees to reimburse Executive for up to $30,000 in relocation
expenses associated with Executive’s relocation to San Diego County; provided,
however, that Executive shall promptly repay the Company for any reimbursement
payments made by the Company to Executive should Executive terminate his
employment from the Company for other than Good Reason (as such term is defined
in Executive’s Option Agreement) within 12 months of the Start Date.

 

 

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9. Indemnification. In connection with the execution of the Agreement, the
Company will also enter into a customary indemnification agreement with
Executive.
10. Severance Benefits. Executive and the Board recognize the fact that the
Company at the time of this Agreement, does not have the financial capacity to
offer a full typical Chief Executive Officer severance package. However, upon
the closing of a Qualified Transaction, a severance package of at least one
year’s pay and continued company paid healthcare expenses will automatically be
instituted.
11. Section 409A of the U.S. Internal Revenue Code. The Company and Executive
intend in good faith that this Agreement comply with the applicable requirements
of Section 409A of the Internal Revenue Code of 1986 and that this Agreement be
construed, interpreted and administered in accordance with such intent.
12. Dispute Resolution. In the event of any dispute or claim relating to or
arising out of Executive’s employment relationship with Company, this agreement,
or the termination of Executive’s employment with Company for any reason
(including, but not limited to, any claims of breach of contract, defamation,
wrongful termination or age, sex, sexual orientation, race, color, national
origin, ancestry, marital status, religious creed, physical or mental disability
or medical condition or other discrimination, retaliation or harassment),
Executive and Company agree that all disputes shall be fully resolved by
confidential, binding arbitration conducted by a single neutral arbitrator in
San Diego, California through the American Arbitration Association (“AAA”)
pursuant to the AAA’s Employment Arbitration Rules, which are available at the
AAA’s website at www.adr.org or by requesting a copy from the President of the
Company. The arbitrator shall permit adequate discovery and is empowered to
award all remedies otherwise available in a court of competent jurisdiction and
any judgment rendered by the arbitrator may be entered by any court of competent
jurisdiction. The arbitrator shall issue an award in writing and state the
essential findings and conclusions on which the award is based. To the fullest
extent permitted by applicable law, by signing this letter, Executive and
Company both waive the rights to have any disputes or claims tried before a
judge or jury.
13. General Provisions.
13.1 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their heirs, personal representatives and
successors, including any successor of the company by reason of any dissolution,
merger, consolidation, sale of assets or other reorganization of the Company.
13.2 Waiver. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power or privilege; and no single or partial exercise of any such right, power
or privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by applicable law, (i) no claim or right arising out of this
Agreement or the documents referred to in this Agreement can be discharged by
one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (ii) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (iii) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.

 

 

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13.3 Validity. The invalidity or unenforceability of any provision or provisions
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.
13.4 Headings. The headings set forth in this Agreement are for convenience only
and shall not be used in interpreting this Agreement.
13.5 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the United States and the State of California,
without reference to its conflicts of laws principles.
13.6 Counterparts. This Agreement may be executed in one or more counterparts,
all of which when fully executed and delivered by all parties hereto and taken
together shall constitute a single agreement, binding against each of the
parties.
13.7 Survival. Sections 8, 9, 10, 11 and, 12 of this Agreement shall survive
Executive’s employment by Company.
13.8 Notices. All notices, consents, waivers and other communications under this
Agreement shall be in writing and will be deemed to have been duly given when
(i) delivered by hand (with written confirmation of receipt); (ii) sent by
facsimile (with written confirmation of receipt); or (iii) when received by the
addressee, if sent by a nationally recognized overnight delivery service, return
If to Executive:
John Bonfiglio
125 Edgewood Drive
Durham, NC 27713
If to the Company:
Dr. Jeffrey Abrams
Transdel Pharmaceuticals, Inc.
4275 Executive Square, Suite 230
La Jolla, CA 92037
or to such other address as either party shall have furnished to the other in
writing in accordance herewith.
[Remainder of Page Intentionally Left Blank]

 

 

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IN WITNESS WHEREOF, THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING
AGREEMENT AND FULLY UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN.

              EXECUTIVE
 
            /s/ John Bonfiglio           John Bonfiglio    
 
            TRANSDEL PHARMACEUTICALS, INC.    
 
            By:   /s/ Jeffrey Abrams              
 
  Name:   Dr. Jeffrey Abrams    
 
  Title:   Chairman of the Board    

[Signature Page to Employment Agreement]