Exhibit 10.1

 

SUMMARY OF

RETENTION AND INCENTIVE PLAN

 

On September 24, 2002, the Board of Directors of Restoragen, Inc. approved a
Retention and Incentive Plan for the Company’s four senior managers (the
“Plan”).  Following is a summary of the material terms of the Plan.

 

Senior Managers

 

David Hathaway

Ashleigh Palmer

Roberta Schneider

David Walker

 

Retention Plan:

 

•                                          For the period beginning August 1,
2002 through January 31, 2003, the base salary of each of the Senior Managers
will be increased by 50%.  Each Senior Manager’s increase will apply only to
those pay periods during which the Senior Manager remains employed by the
Company.  Beginning February 1, 2003, the base salary will revert back to the
base salary prior to adoption of this Plan, unless the Board of Directors
determines otherwise.

 

•                                          The Company will pre-pay 100% of the
Senior Manager’s health insurance and dental insurance premiums for the period
from October 1, 2002 to September 30, 2003.  This coverage will continue for
this period regardless of whether a Senior Manager resigns or is terminated by
the Company during this period.

 

•                                          Payments made for increased salary
and insurance will reduce any obligations by the Company under the Senior
Manager’s employment contracts.  The employment contracts are not being
terminated at this point in time.

 

Incentive Plan – This Incentive Plan is intended to define the milestones for
incentive compensation described in the employment agreements with each Senior
Manager.  Rather than basing the objectives on a calendar year (as contemplated
by the employment agreements), the following incentive payments will be made if
the objectives are accomplished during the 12-month period beginning on the date
of adoption of this Plan by the Board of Directors.  Each Senior Manager will be
entitled to the following incentive payments if the Senior Manager is employed
by the Company on the date the Company signs a definitive agreement for the
transaction and the transaction closes as set forth in the definitive agreement:

 

•                                          0.5 month’s salary upon receipt of
the first $500,000 milestone payment under the non-strategic license agreement
under negotiation.

 

•                                          0.5 month’s salary upon receipt of
payment of the second $500,000 payment under the non-strategic license agreement
under negotiation.

 

 

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•                                          1.0 month’s salary upon the
successful closing of at least $1.5 million in a private placement of debt.

 

•                                          3.0 months salary upon completion of
a Board-approved partnership arrangement with a viable development partner.

 

Payment of the incentive amounts will be made as follows:

 

•                                          50% on the closing of the transaction
(receipt of funds) described in objective

 

•                                          50% within 30 days of closing

 

If a Senior Manager is terminated by the Company without cause after signing of
the definitive agreement but prior to closing, the Senior Manager will be
entitled to payment of the full amount for that objective.  If a Senior Manager
resigns at any time or is terminated for any other reason, the Senior Manager
forfeits any unpaid amounts under this Incentive Plan.

 

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