Flexion Therapeutics

10 Mall Road, Suite 301, Burlington MA  01803

www.flexiontherapeutics.com

info@flexiontherapeutics.com

781.305.7777

 

 

 

 

 

 

[ga1ddbnv5uov000001.jpg]Exhibit 10.1

 

January 16, 2020

 

Melissa Layman

[Address]

 

 

Dear Melissa:

 

We are pleased to offer you employment with Flexion Therapeutics, Inc. (the
"Company") as Chief Commercial Officer reporting to Michael Clayman, Chief
Executive Officer. Your start date is anticipated to be March 12, 2020 (“Start
Date”).

 

Initial Compensation: Your initial compensation package includes the following:

 

 

•

Salary. An initial base salary at the rate of $15,384.62 on a bi-weekly basis
(which equates to $400,000.00 on an annualized basis), less payroll deductions
and all required withholdings and payable in accordance with the Company's
standard payroll practices as may be modified from time to time. As an exempt
salaried employee you will not be eligible for overtime pay. You will also be
eligible for performance reviews on a periodic basis and may be eligible for
annual salary increases as long as you remain employed by Flexion.

 

 

•

Bonus. A discretionary target performance bonus of forty-five percent (45%) of
your base salary (which bonuses, if any, are calculated annually, and subject to
approval by the Board of Directors of the Company (the "Board")) including a
prorated bonus for your actual time worked in 2020. Among other eligibility
factors for such a discretionary bonus to be determined by the Board, you must
be employed in good standing at the time that bonuses are paid out in order to
be eligible for such a bonus.  Bonuses are paid on or before March 15th of the
calendar year following the applicable “bonus” year.

 

 

•

Equity.

 

(1) Subject to Board approval, you will be granted an option (the “Option”)
under the Company’s equity incentive plan in place at the time of grant (the
"Plan"), to purchase 30,000 shares of common stock of the Company at an exercise
price per share equal to the fair market value per share of the Company's common
stock on the date of grant. Subject to your Continuous Service (as defined in
the Plan) through each vesting date, the Option will vest as to 25% of the
shares of common stock underlying such Option on the one year anniversary of
your employment commencement date and as to 1/48th of the shares of common stock
underlying such Option in equal monthly installments on the last day of each
month thereafter, so that all of the shares subject to the Option will vest four
years from the anniversary of your employment commencement date.   All other
terms, conditions, and limitations of the Option will be set forth in a stock
option grant notice, the Company's standard stock option agreement and the Plan
(collectively, the “Stock Option Documents,” which shall govern your
Option).  To the extent there

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is a conflict between this Agreement and the Stock Option Documents, the Stock
Option Documents shall govern.

 

(2) In addition, subject to Board approval, you will be granted under the Plan
61,000 restricted stock units (“RSUs”).  Subject to your Continuous Service
through each vesting date, 25% of the shares of common stock subject to the RSUs
will vest on each anniversary of your employment commencement date so that all
of the shares subject to the RSU will vest four years from the anniversary of
your employment commencement date.  All other terms, conditions, and limitations
of the RSUs will be set forth in a Restricted Stock Unit Grant Notice, the
Company's Restricted Stock Unit Award Agreement and the Plan (collectively, the
“RSU Documents,” which shall govern your RSUs).  To the extent there is a
conflict between this Agreement and the RSU Documents, the RSU Documents shall
govern.

 

(3) In addition, subject to Board approval, you will be granted under the Plan
30,000 performance based restricted stock units (“PSUs”).  Subject to your
Continuous Service with the Company through each vesting date and the
achievement of the vesting milestones, 25% of the shares of common stock subject
to the PSUs will vest in 2021 upon the Compensation Committee of the Board’s
confirmation of your achievement of the vesting milestones and thereafter on
January 1 of the subsequent three years so that all of the shares subject to the
PSU will have vested on January 1, 2024.   All other terms, conditions, and
limitations of the PSUs will be set forth in a Restricted Stock Unit Grant
Notice, the Company's Restricted Stock Unit Award Agreement and the Plan
(collectively, the “RSU Documents,” which shall govern your RSUs).  To the
extent there is a conflict between this Agreement and the RSU Documents, the RSU
Documents shall govern.

 

 

•

Change of Control Severance Benefits. Upon your Start Date, you will be eligible
for benefits under the Company’s Change in Control Severance Benefit Plan (the
“CIC Plan”) and Participation Agreement (the “Participation Agreement”), which
you will receive on or before your Start Date.  You must execute the
Participation Agreement within the time frame set forth therein and comply with
its terms to be eligible for such
benefits.                                                                                                                          

 

 

•

Sign-On & Retention Bonuses. In addition to your base salary, the Company will
provide you with a sign-on bonus of $200,000 as follows:

(i) $100,000 (less applicable taxes) to be paid to you on or about April 3, 2020

(ii) $50,000 (less applicable taxes) to be paid to you six (6) months following
your Start Date (on or about September 18, 2020); and

(iii) $50,000 (less applicable taxes) to be paid to you on the one (1) year
anniversary of your Start Date (on or about March 19, 2021).

 

These three additional payments are referred to as the “Additional Bonuses.” To
be eligible for these Additional Bonuses you must be employed and in good
standing as the Chief Commercial Officer on the specified payment dates and be
in full compliance with your Proprietary Information Agreement (as defined
herein).

 

“Cause” means with respect to such employee, the occurrence of any of the
following events: (i) such employee’s commission of any felony or any crime
involving fraud; (ii) such employee’s attempted commission of, or participation
in, a fraud or act of dishonesty against the Company; (iii) such employee’s
intentional, material violation of any contract or agreement between the
employee and the Company or of any statutory duty owed to the

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Company; (iv) such employee’s repeated and willful failure to satisfactorily
perform such employee’s job duties after written notice of such deficiency and
an opportunity to cure or; (v) such employee’s engaging or participating in any
activity which is directly competitive with or injurious to the Company or which
violates any material provisions of Company’s policies or employee’s Proprietary
Information and Inventions Agreement with the Company. The determination whether
a termination is for Cause shall be made by the Company in its sole and
exclusive judgment and discretion.

 

Benefits:  You will be eligible to participate on the same basis as similarly
situated employees in the Company's benefit plans in effect from time to time
during your employment.  All matters of eligibility for coverage or employee
benefits under any benefit plan shall be determined in accordance with the
provisions of such plan. For a more detailed understanding of the Company’s
benefits and the eligibility requirements, please consult the policies and
summary plan descriptions for the programs which will be made available to
you.  Please note that the Company reserves the right to change, alter, or
terminate any benefit plan in its sole discretion.  

 

At-Will Employment; Certain Conditions of Employment:  Your employment with the
Company will be “at will,” which means that the Company may modify the terms of
employment at any time, and either you or the Company may terminate your
employment at any time for any or no reason, with or without prior
notice.  Along these same lines, please note that nothing in this offer letter
is a promise or guarantee of employment for any specific period of time or for
continued employment.

 

Please be advised that this offer is contingent on: (a) your executing this
offer letter within the time set forth herein and a Proprietary Information,
Inventions, Non-Solicitation, and Non-Competition Agreement (“PIIA”); and (b)
your satisfying the eligibility requirements for employment in the United
States; and (c) your satisfying a background and reference checks.

 

In addition to the above, by signing this letter you are representing that you
have full authority to accept this position and perform the duties of the
position without conflict with any other obligations, and that you are not
involved in any situation that might create, or appear to create, a conflict of
interest with respect to your loyalty to or duties for the Company. You
specifically warrant that you are not subject to an employment agreement or
restrictive covenant preventing full performance of your duties to the Company.
You agree not to bring to the Company or use in the performance of your
responsibilities at the Company any materials or documents of a former employer
that are not generally available to the public, unless you have obtained express
written authorization from the former employer for their possession and use. You
also agree to honor all obligations to former employers during your employment
with the Company.

 

You further acknowledge that the Board has determined that you will be
performing significant policy-making functions for the Company and shall
therefore be regarded as a Section 16 officer of the Company pursuant to Section
16(a) of the Securities Exchange Act (“Section 16 Officer”).  For so long as the
Board continues to regard you as a Section 16 Officer, you acknowledge your
obligation to make certain periodic filings with the SEC, including but not
limited to, the “Initial Statement of Beneficial Ownership of Securities” on
Form 3 and the “Statement of Changes of Beneficial Ownership of Securities” on
SEC Form 4.  You represent and warrant that you will timely comply with all
obligations relating to your role as a Section 16 Officer.  

 

Severance Eligibility: Subject to the other provisions of this Agreement, upon
termination of your employment, the Company shall pay your base salary and
accrued and unused vacation benefits earned

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through the date of termination at the rate in effect at the time of
termination, less standard deductions and withholdings (the “Accrued
Obligations”).  In addition, you will be eligible for the following severance
benefits if your employment is terminated under the circumstances described
below.

 

If the Company (or its successor) terminates your employment without Cause (as
defined below) or if you terminate your employment for Good Reason (as defined
below) and provided such termination constitutes a “Separation from Service” (as
defined under U.S. Treasury Regulation Section 1.409A-1(h), without regard to
any alternative definition thereunder) and such termination is not as a result
of your death or disability, then in addition to the Accrued Obligations, you
will be eligible to receive the following benefits:

(i)         You shall continue to receive your then-current base salary
(ignoring any decrease that forms the basis for your termination for Good
Reason, if applicable), less standard deductions and withholdings, for fifteen
(15) months following the date of termination (the “Severance Period”).

(ii)         If you are eligible for and timely elect to continue your health
insurance coverage under the Company’s group health plans under the Consolidated
Omnibus Budget Reconciliation Act of 1985 or the state equivalent (“COBRA”), the
Company will pay the COBRA premiums for you and your eligible dependents until
the earlier of (A) the end of the Severance Period, (B) the expiration of your
eligibility for the continuation coverage under COBRA or (C) such time as you
become employed by another employer or self-employed through which you are
eligible for health insurance (thereafter, you will be responsible for all COBRA
premium payments, if any) (such period from your termination date through the
earliest of (A) through (C), the “COBRA Payment Period”). For purposes of this
Section, references to COBRA premiums shall not include any amounts payable by
you under an Internal Revenue Code Section 125 health care reimbursement plan.
Notwithstanding the foregoing, if the Company determines, in its sole
discretion, that the Company cannot provide the COBRA premiums 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 pay you a taxable cash amount, which payment
shall be made regardless of whether you elect health care continuation coverage
(the “Health Care Benefit Payment”). The Health Care Benefit Payment shall be
paid in monthly installments on the same schedule that the COBRA premiums would
otherwise have been paid to you and shall be equal to the amount that the
Company would have otherwise paid for COBRA premiums (which amount shall be
calculated based on your COBRA premium for the first month of coverage), and
shall be paid until the earlier of (i) expiration of the COBRA Payment Period or
(ii) the date you voluntarily enroll in a health insurance plan offered by
another employer or entity.

(iii)        If your termination occurs within one (1) month prior to or twelve
(12) months following a Change in Control, you shall be eligible to receive the
payments and benefits as described in the Company’s Change in Control Severance
Benefit Plan (the “CIC Plan”) and the Participation Agreement thereunder (the
“Participation Agreement”).  You must execute the Participation Agreement within
the time frame set forth therein and comply with its terms to be eligible for
such benefits.  If as a result of your termination or resignation you become
entitled to severance benefits under the CIC Plan and you are also entitled to
severance benefits described under Sections (i) and (ii) of the “Severance
Eligibility” section of this Agreement above, the severance benefits under the
CIC Plan shall be provided in lieu of the severance benefits you are entitled to
under Sections (i) and (ii) of the “Severance Eligibility” section of this
Agreement described above. 

Severance benefits under this Agreement are expressly conditioned upon (a) your
delivery to the Company of a signed release and waiver of claims in such form as
may be specified by the Company (or its successor) (the “Release”) within the
applicable deadline set forth therein, and permitting the Release

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to become effective in accordance with its terms no later than the Release
Deadline (as defined in the Section 409A Section below); and (b) your fully
complying with your obligations under your Proprietary Information Agreement.

For the avoidance of doubt, you shall not be eligible for severance and
continued benefits (other than the Accrued Obligations) if you are terminated by
the Company for Cause (as defined herein), resign without Good Reason, or are
terminated due to your death or disability.

Definitions: For purposes of this Agreement, the following terms “Good Reason”
and “Change in Control” shall have the following meanings set forth in the CIC
Plan.

Section 409A: Notwithstanding anything in this Agreement to the contrary, the
following provisions apply to the extent severance benefits provided herein are
subject to Section 409A of the Internal Revenue Code of 1986, as amended (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 you have a Separation from Service. Each installment of severance
benefits is a separate “payment” for purposes of Treasury Regulations Section
1.409A-2(b)(2)(i), and the severance benefits are intended to satisfy the
exemptions from application of Section 409A provided under Treasury Regulations
Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9). However, if such
exemptions are not available and you are, upon Separation from Service, a
“specified employee” for purposes of Section 409A, then, solely to the extent
necessary to avoid adverse personal tax consequences under Section 409A, the
timing of the severance benefits payments shall be delayed until the earlier of
(i) six (6) months and one day after your Separation from Service, or (ii) your
death. You shall receive severance benefits only if you execute and return to
the Company the Release within the applicable time period set forth therein and
permit such Release to become effective in accordance with its terms, which date
may not be later than sixty (60) days following the date of your Separation from
Service (such latest permitted date, the “Release Deadline”). If the severance
benefits are not covered by one or more exemptions from the application of
Section 409A and the Release could become effective in the calendar year
following the calendar year in which your Separation from Service occurs, the
Release will not be deemed effective any earlier than the Release Deadline. None
of the severance benefits will be paid or otherwise delivered prior to the
effective date of the Release. Except to the minimum extent that payments must
be delayed because you are a “specified employee” or until the effectiveness of
the Release, all amounts will be paid as soon as practicable in accordance with
the schedule provided herein and in accordance with the Company’s normal payroll
practices.  All in-kind benefits provided and expenses eligible for
reimbursement under this Agreement shall be provided by the Company or incurred
by you during the time periods described in this Agreement. All reimbursements
shall be paid as soon as administratively practicable, but in no event shall any
reimbursement be paid after the last day of the taxable year following the
taxable year in which the expense was incurred. The amount of in-kind benefits
provided or reimbursable expenses incurred in one taxable year shall not affect
the in-kind benefits to be provided or the expenses eligible for reimbursement
in any other taxable year. Such right to reimbursement or in-kind benefits is
not subject to liquidation or exchange for another benefit.  The benefits under
this Agreement 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.

Compliance with Rules, etc.:  You will comply at all times with (i) all Company
policies, rules and procedures as they may be established, stated and/or
modified from time to time at the Company’s sole discretion, (ii) the terms of
any Proprietary Information Agreement that you sign with the Company, and (iii)
all laws and regulations applicable to the Company’s business and your
performance of your duties for the Company. 

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General:  By signing this letter, you acknowledge that the terms described in
this letter, together with the Equity Documents and Proprietary Information
Agreement attached hereto, set forth the entire offer to you and understanding
between you and the Company and supersedes any prior representations or
agreements, whether written or oral pertaining to the subject matter
herein.  You further acknowledge that there are no terms, conditions,
representations, warranties or covenants other than those contained herein. No
term or provision of this letter may be amended waived, released, discharged or
modified except in writing, signed by you and an authorized officer of the
Company, except that the Company may, in its sole discretion, adjust salaries,
incentive compensation, stock plans, benefits, job titles, locations, duties,
responsibilities, and reporting relationships.

 

We look forward to your joining the Flexion team and becoming part of the energy
and excitement to realize our business goals. Unless signed and accepted, this
offer will expire three business days after the date of this letter.

 

Sincerely,

/s/Michael Clayman, M.D.

Michael Clayman, M.D.

Chief Executive Officer

 

 

ACCEPTED AND AGREED TO:

 

 

/s/Melissa Layman

 

Date:  January 20, 2020

 

                   cc:Christina Willwerth

 

 

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