EXHIBIT 10.5
 
EMPLOYMENT AGREEMENT
 
This Employment Agreement (this “Agreement”), effective as of February 1, 2012
(the “Effective Date”), is between Transdel Pharmaceuticals, Inc. (the
“Company”), a Delaware corporation, and Andrew R. Boll (the “Executive”). Unless
otherwise specified, capitalized terms used in this Agreement are defined in
Section 21.
 
1.   Term of Employment. The Company hereby agrees to employ Executive, and
Executive hereby agrees to be employed by the Company, upon the terms and
subject to the conditions set forth in this Agreement. The initial period of
Executive’s employment under this Agreement shall begin as of the Effective Date
and shall continue until the third anniversary of the Effective Date, unless
sooner terminated in accordance with Section 4 or extended by mutual written
agreement of the parties (the “Term”).
 
2.   Duties and Responsibilities.
 
(a)   During the Term, Executive shall serve as the Company’s Vice-President of
Accounting and Public Reporting, and such other duties as may be reasonably
assigned to Executive by the Board, and shall exercise such supervision and
powers over and with regard to the business of the Company customarily
associated with each such position. Executive shall be based in the Company’s
principal executive offices in San Diego, California, although the parties
understand that reasonable travel shall be required in the performance of
Executive’s duties under this Agreement.
 
(b)   Executive shall devote at least forty (40) hours each week to the business
of the Company, and shall perform Executive’s duties faithfully and in
compliance with the law.  Executive will not, during the term of this Agreement,
(i) accept any other employment, or (ii) engage, directly or indirectly, in any
other business or consulting activity (whether or not pursued for pecuniary
advantage) that interferes with Executive’s duties and responsibilities
hereunder or create a conflict of interest with the Company, without the prior
consent of the Board (which shall not be unreasonably withheld).
 
(c)   Executive represents and warrants that Executive’s execution of this
Agreement, Executive’s employment with the Company, and the performance of
Executive’s proposed duties under this Agreement shall not violate any
obligations Executive may have to any other employer, person or entity,
including any obligations with respect to proprietary or confidential
information of any other person or entity.
 
(d)   If Executive’s employment with the Company terminates for any reason,
Executive shall immediately resign all positions that Executive then holds with
the Company or any of its Affiliates. If Executive fails to so resign, the Board
shall thereupon have the right to remove Executive from all such positions
without further action or notice.
 
 
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3.   Compensation and Benefits.
 
(a)   Base Salary. During the Term, Executive’s annual base salary (“Base
Salary”) shall be $60,000, subject to review at least annually and may be
increased (but not decreased) by the Committee in its sole discretion.
Notwithstanding the foregoing, Executive’s Base Salary may be decreased in
accordance with a uniform reduction in base salaries applicable to all senior
executives of the Company.
 
(b)   Equity Compensation.
 
(i)  
Concurrent with the execution of this Agreement, the Board shall approve and
document the grant to Executive of a non-qualified stock option to purchase
600,000 shares of the Company’s common stock (the “Option”) on the date that
this Agreement is entered into (the “Date of Grant”), pursuant to the terms and
conditions of the Company’s 2007 Stock Incentive and Awards Plan, as may be
amended from time to time (the “Plan”) and as provided in the Option Agreement
attached hereto as Exhibit A.  The exercise price per share of the Option will
be equal to the closing sale price of one share of the Company’s common stock on
the Date of Grant.

 
(ii)  
The Option shall vest contingent on Executive’s continued service as an
employee, director or consultant of the Company, such that one thirty-sixth
(1/36th) of the unvested shares of common stock subject to the Option shall vest
on each of the thirty-six (36) monthly anniversaries of the Date of Grant (the
“Time-Based Vesting Schedule”).

 
(iii)  
In the event of a Change of Control, the vesting of the Option shall accelerate
and all restrictions on exercise will lapse such that, immediately prior to the
closing of the Change of Control, the Option shall be fully vested and
exercisable with respect to all shares of Company common stock then subject to
the Time-Based Vesting Schedule of the Option.

 
For purposes of this Agreement, “Change of Control” shall mean a change in
ownership or control of the Company effected through a merger, consolidation or
acquisition by any person or related group of persons (other than an acquisition
by the Company or by a person or persons that directly or indirectly controls,
is controlled by, or is under common control with, the Company, including
DermaStar International, LLC) of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities Exchange Act of 1934) of securities possessing more
than fifty percent (50%) of the total combined voting power of the outstanding
securities of the Company.
 
(iv)  
As further described in the Option Agreement, if the Company terminates the
Executive’s employment other than for Cause, Executive shall be entitled to
exercise the portion of the Option that was vested as of the date of termination
in accordance with the Time-Based Vesting Schedule.

 
(v)  
Executive hereby covenants and agrees that Executive shall not sell more than
five percent (5%) of the shares of common stock acquired by Executive upon
exercise of the Option during any single month without the express consent of
the Board; provided, however, that Executive shall be permitted to transfer such
common stock to members of Executive’s immediate family or to a trust the
beneficiaries of which are exclusively Executive and/or a member or members of
Executive’s immediate family, provided, further, that prior to any such
transfer, each transferee shall execute an agreement pursuant to which each
transferee shall agree to receive and hold such securities subject to the
provisions of this Section 3(b)(v).

 
 
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(c)   Benefits. During the Term, Executive shall be eligible to participate in
all of the Company’s employee benefit plans as in effect from time to time (if
any) and subject to the terms and conditions thereof, consistent with an
employee of Executive’s position. Executive acknowledges and agrees that the
Company currently offers no employee benefits and the Company may not, and has
no obligation to, adopt any such employee benefit plans.
 
(d)   Business Expenses. The Company shall reimburse Executive for all
reasonable travel and other business expenses incurred by Executive in the
performance of Executive’s duties to the Company under this Agreement, provided
that such expenses are incurred for business reasons and Executive has timely
provided to the Company, in form and substance reasonably satisfactory to the
Company, appropriate documentation evidencing such expenses.
 
(e)   Clawback Policy. Notwithstanding anything to the contrary in this
Agreement, all incentive-based compensation payable to Executive shall be
subject to any clawback policy adopted by the Company from time to time,
including but not limited to any such clawback policies adopted in accordance
with the Dodd-Frank Wall Street Reform and Consumer Protection Act.
 
4.   Termination of Employment.
 
(a)   Termination by the Company.  The employment of Executive shall be
“at-will” at all times.  The Company may terminate Executive’s employment with
the Company at any time, for any reason or no reason at all, notwithstanding
anything to the contrary contained in or arising from any statements, policies
or practices of the Company relating to the employment, discipline or
termination of its employees.  The Company may terminate Executive’s employment
for Cause without any advance notice.  The Company may terminate Executive’s
employment at any time without Cause upon sixty (60) days’ prior written notice
of its intention to terminate Executive’s employment.  During such notice period
Executive shall continue to diligently perform all of Executive’s duties
hereunder.
 
(b)   Death. Executive’s employment shall terminate upon Executive’s death.
 
(c)   Disability. If the Company determines in good faith that Executive is
Disabled during the Term, the Company may give Executive written notice of its
intention to terminate Executive’s employment. In such event, Executive’s
employment with the Company shall terminate effective on the 30th day after
receipt of such notice by Executive if, within the 30 days after such receipt,
Executive shall not have returned to full-time performance of Executive’s duties
with or without a reasonable accommodation.
 
 
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(d)   Termination by Executive.  Executive may terminate employment with the
Company at any time for any reason or no reason at all, upon sixty (60) days’
advance written notice.  During such notice period Executive shall continue to
diligently perform all of Executive’s duties hereunder.  The Company shall have
the option, in its sole discretion, to make Executive’s termination effective at
any time prior to the end of such notice period as long as the Company pays
Executive the Base Salary to which Executive is entitled up through the last day
of the sixty (60) day notice period.  Thereafter all obligations of the Company
shall cease.
 
5.   Compensation After Termination of Employment. Upon termination of
Executive’s employment under this Agreement during the Term, Executive (or such
payee as Executive designates in writing or Executive’s estate) shall be
entitled to receive the following compensation:
 
(a)   Base Salary and Accrued but Unpaid Expenses and Vacation. The Company
shall pay Executive any Base Salary for services rendered to the date of
termination and any accrued but unpaid expenses required to be reimbursed under
this Agreement.
 
(b)   Other Compensation and Benefits. Except as otherwise provided under this
Agreement,
 
(i)  
any other compensation or benefits (including retirement or deferred
compensation benefits) to which Executive may be entitled at the time of
termination shall be determined and paid in accordance with the terms of such
plans, policies, and arrangements providing such compensation or benefits; and

 
(ii)  
Executive shall have no right to receive any other compensation, or to
participate in any other plan, arrangement, or benefit, with respect to future
periods after such termination or resignation.

 
6.   Survival. The expiration or termination of the Term shall not impair the
rights or obligations of any party to this Agreement which shall have accrued
under this Agreement prior to such expiration.
 
7.   Restrictive Covenants.
 
(a)   Proprietary Information and Invention Assignment.  As a condition of
Executive’s employment, shall enter into the Proprietary Information and
Invention Assignment Agreement, attached hereto as Exhibit B (the “Proprietary
Information Agreement”).
 
(b)   No Conflict of Interest. During the Term, Executive shall not engage in
any work, paid or unpaid, that creates an actual conflict of interest with the
Company. Such work shall include, but is not limited to, directly or indirectly
competing with the Company in any way, or acting as an officer, director,
employee, consultant, stockholder, volunteer, lender, or agent of any business
enterprise of the same nature as, or which is in direct competition with, the
business in which the Company is now engaged or in which the Company becomes
engaged during the Term. If the Company reasonably determines such a conflict
exists during the Term, the Company may ask Executive to choose to discontinue
the other work or resign employment with the Company. In addition, Executive
agrees not to refer any client or potential client of the Company to competitors
of the Company, without obtaining Company’s prior written consent, during the
Term.
 
 
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(c)   Non-Solicitation. Executive understands and agrees that significant
information regarding the Company’s employees and customers is treated as
confidential and constitutes Proprietary Information (as that term is defined in
the Proprietary Information Agreement).  As such, during the Term and for a
period of two years thereafter, Executive agrees not to, directly or indirectly,
separately or in association with others, use any Proprietary Information to
interfere with, impair, disrupt or damage the Company’s relationship with any of
its customers or prospective customers. During the Term and for a period of two
years thereafter, Executive further agrees not to, directly or indirectly,
separately or in association with others, damage the Company’s relationships
with its employees by soliciting such employees to leave the employ of the
Company.
 
(d)   Non-Disparagement. During and after the Term, Executive shall not make any
voluntary statements, written or oral, or cause or encourage others to make any
such statements that defame, disparage or in any way criticize the personal
and/or business reputations, practices or conduct of the Company, as well as the
Company’s employees, officers, directors, agents, successors and assigns.
 
(e)   Acknowledgment and Enforcement. Executive acknowledges and agrees that
(i) the purpose of the foregoing covenants is to protect the goodwill, trade
secrets, and Proprietary Information of the Company; (ii) because of the nature
of the business in which the Company is engaged and because of the nature of the
Proprietary Information to which Executive has access, the Company would suffer
irreparable harm and it would be impractical and excessively difficult to
determine the actual damages of the Company in the event Executive breached any
of the covenants of this Section 7 or the Proprietary Information Agreement; and
(iii) remedies at law (such as monetary damages) for any breach of Executive’s
obligations under this Section 7 and Proprietary Information Agreement would be
inadequate. Executive therefore agrees and consents that if Executive commits
any breach of the covenant under Section 7(b), the Company may demand all unpaid
severance benefits shall be immediately forfeited as the Company’s sole remedy
under this Agreement and at law, and (II) if Executive commits any breach of a
covenant under this Section 7 or threatens to commit any such breach at any
time, the Company shall have the right (in addition to, and not in lieu of, any
other right or that may be available to it) to temporary and permanent
injunctive relief from a court of competent jurisdiction, without posting any
bond or other security and without the necessity of proof of actual damage.
 
(f)   Effect of Termination of Employment. The period of Executive’s employment
for purposes of determining the applicability of the restrictions contained in
Section 7 of this Agreement shall include any period during which Executive is
employed by the Company’s successors or assigns. Upon termination of employment,
as defined herein and for whatever cause, Executive shall immediately deliver to
the Company or its successors or assigns, all Company property, including
without limitation all Proprietary Information (as defined in the Proprietary
Information Agreement).
 
 
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8.   Cooperation Following Termination of Employment. Executive agrees that, for
five years following termination of employment for any reason, Executive shall
assist and cooperate with the Company with regard to any matter or project in
which Executive was involved during the Term, including but not limited to any
litigation that may be pending or arise after such termination of employment.
Further, Executive agrees to notify the Company at the earliest reasonable
opportunity of any contact that is made by any third parties concerning any such
matter or project. The Company shall not unreasonably request such cooperation
of Executive and shall cooperate with Executive in scheduling any assistance by
Executive taking into account and not interfering with Executive’s business and
personal affairs and shall reasonably compensate Executive for any time spent or
expenses associated with such cooperation and assistance.
 
9.   Withholding of Taxes. The Company shall withhold from any compensation and
benefits payable under this Agreement all applicable federal, state, local, or
other taxes.
 
10.   Binding on Successors. This Agreement shall be binding upon and inure to
the benefit of the Company, Executive and their respective successors, assigns,
personnel and legal representatives, executors, administrators, heirs,
distributees, devisees, and legatees, as applicable. The Company shall cause any
successor to all or substantially all of its assets or business to assume this
Agreement.
 
11.   Governing Law. This Agreement is being made and executed in and is
intended to be performed in the State of California, and shall be governed,
construed, interpreted and enforced in accordance with the substantive laws of
the State of California without regard to its conflict or choice of law rules.
 
12.   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. If any part of this Agreement is found to be unreasonable, then it may
be amended by appropriate order of a court of competent jurisdiction to the
extent deemed reasonable.
 
13.   Notices. Any notice, request, claim, demand, document and other
communication under this Agreement to any party shall be effective upon receipt
(or refusal of receipt) and shall be in writing and delivered personally or
sent, by telex, telecopy, facsimile transmission, or certified or registered
mail, postage prepaid, as follows:
 
If to the Company, addressed to:
1302 Waugh Drive, Suite 618
Houston, Texas 77019
Attn: Mark L. Baum
 
If to Executive, at the home address most recently communicated by Executive to
the Company in writing;
 
or at any other address as any party shall have specified by notice in writing
to the other parties in accordance herewith.
 
 
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14.   Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same Agreement. This Agreement shall not become
enforceable until executed by the Company.
 
15.   Entire Agreement. The terms of this Agreement and the exhibits and
attachments hereto are intended by the parties to be the final expression of
their agreement with respect to the employment of Executive by the Company, may
not be contradicted by evidence of any prior or contemporaneous agreement, and
supersedes any and all prior agreements. The parties further intend that this
Agreement shall constitute the complete and exclusive statement of its terms and
that no extrinsic evidence whatsoever may be introduced in any judicial,
administrative, or other legal proceeding to vary the terms of this Agreement or
the exhibits and attachments hereto.
 
16.   Amendments; Waivers. This Agreement may not be modified, amended, or
terminated except by an instrument in writing, signed by Executive and an
independent director of the Company or by an arbitrator or court seeking to
render enforceable through “judicial” modification an otherwise unenforceable
provision. By an instrument in writing similarly executed, Executive or the
Company may waive compliance by the other party with any provision of this
Agreement that such other party was or is obligated to comply with or perform,
so long as such waiver shall not operate as a waiver of, or estoppel with
respect to, any other or subsequent failure. No failure to exercise and no delay
in exercising any right, remedy, or power under this Agreement shall preclude
any other or further exercise of any other right, remedy, or power provided
herein or by law or in equity.
 
17.   Arbitration. The Company and Executive agree to attempt to resolve any
dispute between them quickly and fairly. Any dispute related to this Agreement
which remains unresolved shall be resolved exclusively by final and binding
arbitration conducted in San Diego, California, pursuant to the then-current
rules of the American Arbitration Association with respect to employment
disputes. The Company shall bear any and all costs of the arbitration process
plus, if Executive substantially prevails on all issues raised, any attorneys’
fees incurred by Executive with regard to such arbitration.
 
18.   No Inconsistent Actions; Cooperation.
 
(a)   The parties shall not voluntarily undertake or fail to undertake any
action or course of action inconsistent with the provisions or essential intent
of this Agreement. Furthermore, it is the intent of the parties to act in a fair
and reasonable manner with respect to the interpretation and application of the
provisions of this Agreement.
 
(b)   Each of the parties shall cooperate and take such actions, and execute
such other documents as may be reasonably requested by the other in order to
carry out the provisions and purposes of this Agreement.
 
19.   No Alienation of Benefits. To the extent permitted by law the benefits
provided by this Agreement shall not be subject to garnishment, attachment or
any other legal process by the creditors of Executive, Executive’s beneficiary
or Executive’s estate.
 
 
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20.   Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns. 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 to assume expressly 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 succession had taken place if such assumption does not occur as
a matter of law.
 
21.   Certain Definitions.
 
(a)   “Affiliate” means any entity in which the Company has a significant
ownership interest as determined by the Committee.
 
(b)   “Base Salary” is defined in Section 3(a).
 
(c)   “Board” means the Board of Directors of the Company.
 
(d)   “Cause” means any act of fraud, intentional misrepresentation, gross or
willful negligence, or embezzlement, misappropriation or conversion of assets of
the Company or any entity that is directly or indirectly controlled by the
Company or any Affiliate, or Executive’s intentional and repeated violation of
material written policies or procedures of the Company or its Affiliates after a
written demand is delivered to Executive by the Board or its representative,
which specifically identifies the manner in which the Board believes that
Executive has intentionally and repeatedly violated the material written
policies or procedures and Executive has failed to cure such violation within
thirty (30) days after receiving such notice, to the extent that such violation
is susceptible to cure.
 
(e)   “Code” means the Internal Revenue Code of 1986, as amended, and the
Treasury regulations and guidance issued under the Code.
 
(f)   “Committee” means the Compensation Committee of the Board.
 
(g)   “Disabled” has the meaning specified Section 22(e)(3) of the Code
effective at the time of Executive’s disability.
 
(h)   “Term” is defined in Section 1.
 
[Signatures follow.]
 
 
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.
 

  TRANSDEL PHARMACEUTICALS, INC.            
By:
/s/        Name: Mark L. Baum       Title:   Chairman of the Board of Directors
            EXECUTIVE                   Andrew R. Boll  

 
 
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EXHIBIT A

 
STOCK OPTION AGREEMENT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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EXHIBIT B
 
TRANSDEL PHARMACEUTICALS, INC.
 
EMPLOYEE PROPRIETARY INFORMATION AND INVENTION ASSIGNMENT AGREEMENT
 
Employee Name:  Andrew R. Boll
 
In consideration of my employment by Transdel Pharmaceuticals, Inc. (the
“Company”), I hereby agree to the restrictions and obligations placed by the
Company on my use and development of certain information, technology, ideas,
inventions and other materials, as set forth in this Employee Proprietary
Information and Invention Assignment Agreement (the “Agreement”).
 
1.   At-Will Employment.  I acknowledge that nothing in this Agreement shall be
construed to imply that the term of my employment is guaranteed for any period
of time.  Unless otherwise stated in a written agreement signed by a duly
authorized representative of the Company other than me, my employment is
“at-will” and may be terminated with or without cause and with or without
notice.
 
2.   Proprietary Information.
 
(a)   Definition.  I understand that the term “Proprietary Information” in this
Agreement means any and all information and materials, in whatever form,
tangible or intangible, whether disclosed to or learned or developed by me
before or after the execution of this Agreement, whether or not marked or
identified as confidential or proprietary, pertaining in any manner to the
business of or used by the Company and its affiliates, or pertaining in any
manner to any person or entity to whom the Company owes a duty of
confidentiality.  Proprietary Information includes, but is not limited to, the
following types of information and materials:  (i) research, development,
technical or engineering information, know-how, data processing or computer
software, programs, tools, data, designs, diagrams, drawings, schematics,
sketches or other visual representations, plans, projects, manuals, documents,
files, photographs, results, specifications, trade secrets, inventions,
discoveries, compositions, ideas, concepts, structures, improvements, products,
prototypes, instruments, machinery, equipment, processes, formulas, algorithms,
methods, techniques, works in process, systems, technologies, disclosures,
applications and other materials; (ii) financial information and materials,
including, without limitation, information and materials relating to costs,
vendors, suppliers, licensors, profits, markets, sales, distributors, joint
venture partners, customers, subscribers, members and bids, whether existing or
potential; (iii) business and marketing information and materials, including,
without limitation, information and materials relating to future development and
new product concepts; (iv) personnel files and information about compensation,
benefits and other terms of employment of the Company’s other employees and
independent contractors; and (v) any other information or materials relating to
the past, present, planned or foreseeable business, products, developments,
technology or activities of the Company.
 
 
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(b)   Exclusions.  Proprietary Information does not include any information or
materials that I can prove by written evidence (i) is or becomes publicly known
through lawful means and without breach of this Agreement by me; (ii) was
rightfully in my possession or part of my general knowledge prior to my
employment by the Company; or (iii) is disclosed to me without confidential or
proprietary restrictions by a third party who rightfully possesses the
information or materials without confidential or proprietary
restrictions.  However, to the extent the Company owes a duty of confidentiality
to a third party with respect to such information, idea or material, such
information, idea or material shall continue to be Proprietary Information until
such time as the Company’s duty of confidentiality terminates or expires.  If I
am uncertain as to whether particular information or materials are Proprietary
Information, I will request the Company’s written opinion as to their status.
 
(c)   Prior Knowledge.  Except as disclosed on Schedule A to this Agreement, to
my knowledge, I have no information or materials pertaining in any manner to the
business of or used by the Company and its affiliates, other than information I
have learned from the Company in the course of being hired and employed.
 
3.   Restrictions on Proprietary Information.
 
(a)   Restrictions on Use and Disclosure.  I agree that, during my employment
and at all times thereafter, I will hold the Proprietary Information in strict
confidence and I will not use, reproduce, disclose or deliver, directly or
indirectly, any Proprietary Information except to the extent necessary to
perform my duties as an employee of the Company or as permitted by a duly
authorized representative of the Company.  I will use my best efforts to prevent
the unauthorized use, reproduction, disclosure or delivery of Proprietary
Information by others.
 
(b)   Location.  I agree to maintain at my work station and/or any other place
under my control only such Proprietary Information as I have a current “need to
know.”  I agree to return to the appropriate person or location or otherwise
properly dispose of Proprietary Information once that need to know no longer
exists.
 
(c)   Third Party Information.  I recognize that the Company has received and
will receive Proprietary Information from third parties to whom or which the
Company owes a duty of confidentiality.  In addition to the restrictions set
forth in this Section 3, I will not use, reproduce, disclose or deliver such
Proprietary Information except as permitted by the Company’s agreement with such
third party.
 
(d)   Interference with Business.  I acknowledge that, because of my
responsibilities at the Company, I will help to develop, and will be exposed to,
the Company’s business strategies, information on customers and clients, and
other valuable Proprietary Information and trade secrets, and that use or
disclosure of such Proprietary Information and trade secrets in breach of this
Agreement would be extremely difficult to detect or prove.  I also acknowledge
that the Company’s relationships with its employees, customers, clients,
vendors, and other persons are valuable business assets.  Therefore, I agree as
follows:
 
 
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(i)   I shall not, during my employment or for a period of one year following
termination of my employment with the Company for any reason, directly or
indirectly solicit, induce, recruit, or encourage any officer, director,
employee, independent contractor or consultant of the Company who was employed
by or affiliated with the Company at the time of my termination to leave the
Company or terminate his or her employment or relationship with the Company.
 
(ii)   I shall not, following the termination of my employment with the Company
for any reason, use the Company’s Proprietary Information or trade secrets or
any other means that would amount to unfair competition to solicit any of the
Company’s customers, clients, vendors, business partners, or suppliers, or
otherwise interfere with any business relationship or contract between the
Company and any of its customers, clients, vendors, business partners, or
suppliers.
 
I understand and agree that nothing in this Section 3 limits or modifies in any
way my duties under any other Section of this Agreement or any applicable law
regarding the Company’s Proprietary Information.
 
4.   Privacy; Protection of Personal Information.
 
(a)   Privacy.  I acknowledge that the Company may access all information and
materials generated, received or maintained by or for me on the premises or
equipment of the Company (including, without limitation, computer systems and
electronic or voice mail systems), and I hereby waive any privacy rights I may
have with respect to such information and materials.
 
(b)   Protection of Personal Information.  During my employment with the Company
and thereafter, I shall hold Personal Information in the strictest confidence
and shall not disclose or use Personal Information about other individuals,
except in connection with my work for the Company, or unless expressly
authorized in writing by an authorized representative of the Company.  I
understand that there are laws in the United States and other countries that
protect Personal Information, and that I must not use Personal Information about
other individuals other than for the purposes for which it was originally used
or make any disclosures of other individuals’ Personal Information to any third
party or from one country to another without prior approval of an authorized
representative of the Company.  I understand that nothing in this Agreement
prevents me from discussing my wages or other terms and conditions of my
employment with coworkers or others, unless such discussion would be for the
purpose of engaging in unfair competition or other unlawful conduct.
 
(c)   Definition of Personal Information.  “Personal Information” means
personally identifiable information about employees, independent contractors or
third party individuals, including names, addresses, telephone or facsimile
numbers, Social Security Numbers, background information, credit card or banking
information, health information, or other information entrusted to the Company.
 
 
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5.   Inventions.
 
(a)   Definitions.
 
(b)   I understand that the term “Inventions” in this Agreement means any and
all ideas, concepts, inventions, discoveries, developments, modifications,
improvements, know-how, trade secrets, data, designs, diagrams, plans,
specifications, methods, processes, techniques, formulas, algorithms, tools,
works of authorship, derivative works, software, content, textual or artistic
works, mask works, video, graphics, sound recordings, structures, products,
prototypes, systems, applications, creations and technologies in any stage of
development, whether or not patentable or reduced to practice and whether or not
copyrightable, that relate to the business of the Company or its affiliates, or
the actual or demonstrably anticipated research or development of the Company or
its affiliates.
 
(c)   I understand that the term “Intellectual Property Rights” in this
Agreement means any and all (A) patents, utility models, industrial rights and
similar intellectual property rights registered or applied for in the United
States and all other countries throughout the world (including all reissues,
divisions, continuations, continuations-in-part, renewals, extensions and
reexaminations thereof); (B) rights in trademarks, service marks, trade dress,
logos, domain names, rights of publicity, trade names and corporate names
(whether or not registered) in the United States and all other countries
throughout the world, including all registrations and applications for
registration of the foregoing and all goodwill related thereto; (C) copyrights
(whether or not registered) and rights in works of authorship, databases and
mask works, and registrations and applications for registration thereof in the
United States and all other countries throughout the world, including all
renewals, extensions, reversions or restorations associated with such
copyrights, now or hereafter provided by law, regardless of the medium of
fixation or means of expression; (D) rights in trade secrets and other
confidential information and know-how in the United States and all other
countries throughout the world; (E) other intellectual property or proprietary
rights in the United States and all other countries throughout the world,
including all neighboring rights and sui generis rights; (F) rights to apply
for, file, register establish, maintain, extend or renew any of the foregoing;
(G) rights to enforce and protect any of the foregoing, including the right to
bring legal actions for past, present and future infringement, misappropriation
or other violations of any of the foregoing; and (H) rights to transfer and
grant licenses and other rights with respect to any of the foregoing, in the
Company’s sole discretion and without a duty of accounting.
 
(d)   Assignment.  I hereby assign, and agree to assign automatically upon
creation, to the Company, without additional compensation, my entire right,
title and interest (including, without limitation, all Intellectual Property
Rights) in and to (a) all Inventions that are made, conceived, discovered or
developed by me (either alone or jointly with others), or result from or are
suggested by any work performed by me (either alone or jointly with others) for
or on behalf of the Company or its affiliates, (i) during the period of my
employment with the Company, whether before or after the execution of this
Agreement and whether or not made, conceived, discovered or developed during
regular business hours or (ii) during or after the period of my employment with
the Company, whether before or after the execution of this Agreement, if based
on or using Proprietary Information or otherwise in connection with my
activities as an employee of the Company (collectively, the “Company
Inventions”), and (b) all benefits, privileges, causes of action and remedies
relating to the Company Inventions, whether before or hereafter accrued
(including, without limitation, the exclusive rights to apply for and maintain
all registrations, renewals and/or extensions; to sue for all past, present or
future infringements or other violations of any rights in the Invention; and to
settle and retain proceeds from any such actions), free and clear of all liens
and encumbrances.  I agree that all such Company Inventions are the sole
property of the Company or any other entity designated by it, and all
Intellectual Property Rights shall vest in and inure to the benefit of the
Company or such other entity.  I agree and acknowledge that all copyrightable
Company Inventions shall be considered works made for hire prepared within the
scope of my employment.  THIS PARAGRAPH DOES NOT APPLY TO ANY INVENTION WHICH
QUALIFIES FULLY UNDER THE PROVISIONS OF SECTION 2870 OF THE LABOR CODE OF THE
STATE OF CALIFORNIA, A COPY OF WHICH IS ATTACHED TO THIS AGREEMENT AS
EXHIBIT 1.  I understand that nothing in this Agreement is intended to expand
the scope of protection provided me by Sections 2870 through 2872 of the
California Labor Code.
 
 
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(e)   License.  If, under applicable law notwithstanding the foregoing, I retain
any right, title or interest (including any Intellectual Property Right) with
respect to any Company Invention, I hereby grant and agree to grant to the
Company, without any limitations or additional remuneration, a worldwide,
exclusive, royalty-free, irrevocable, perpetual, transferable and sublicenseable
(through multiple tiers) license to make, have made, use, import, sell, offer to
sell, practice any method or process in connection with, copy, distribute,
prepare derivative works of, display, perform and otherwise exploit such Company
Invention and I agree not to make any claim against the Company or its
affiliates, suppliers or customers with respect to such Company Invention.
 
(f)   Records; Disclosure.  I agree to keep and maintain adequate and current
written records regarding all Inventions made, conceived, discovered or
developed by me (either alone or jointly with others) during my period of
employment or after the termination of my employment if based on or using
Proprietary Information or otherwise in connection with my activities as an
employee of the Company.  I agree to make available such records and disclose
promptly and fully in writing to the Company all such Inventions, regardless of
whether I believe the Invention is a Company Invention subject to this Agreement
or qualifies fully under the provisions of Section 2870(a) of the California
Labor Code, and the Company will examine such disclosure in confidence to make
such determination.  Any such records related to Company Inventions shall be the
sole property of the Company.
 
(g)   Assistance and Cooperation.  I agree to cooperate with and assist the
Company, and perform, during and after my employment, all acts deemed necessary
or desirable by the Company, to apply for, obtain, establish, perfect, maintain,
evidence, enforce or otherwise protect any of the full benefits, enjoyment,
right, title and interest throughout the world in the Company Inventions.  Such
acts may include, but are not limited to, execution of assignments of title and
other documents and assistance or cooperation in legal proceedings.  Should the
Company be unable to secure my signature on any such document, whether due to my
mental or physical incapacity or any other cause, I hereby irrevocably designate
and appoint the Company and each of its duly authorized representatives as my
agent and attorney-in-fact, with full power of substitution and delegation, to
undertake such acts in my name as if executed and delivered by me (which
appointment is coupled with an interest), and I waive and quitclaim to the
Company any and all claims of any nature whatsoever that I may have or may later
have for infringement of any Intellectual Property Rights in or to the Company
Inventions.
 
 
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(h)   Moral Rights.  To the extent allowed by applicable law, the assignment of
the Company Inventions includes all rights of paternity, integrity, disclosure
and withdrawal and any other rights that may be known as or referred to as
“moral rights,” “artist’s rights,” “droit moral,” or the like (collectively
“Moral Rights”).  To the extent I retain any such Moral Rights under applicable
law, I hereby waive and agree not to institute, support, maintain or permit any
action or proceeding on the basis of, or otherwise assert, such Moral Rights.  I
hereby authorize the Company to publish the Company Inventions in the Company’s
sole discretion with or without attributing any of the foregoing to me or
identifying me in connection therewith and regardless of the effect on such
Company Inventions or my relationship thereto.  I agree to ratify and consent to
any action that may be taken or authorized by the Company with respect to such
Company Inventions, and I will confirm any such ratifications and consents from
time to time as requested by the Company.
 
(i)   Excluded Inventions.  I agree to identify in Schedule A all Inventions, if
any, that I wish to exclude from the scope of this Agreement, including all
Inventions made, conceived, discovered or developed (either alone or jointly
with others) prior to my employment by the Company (collectively, “Excluded
Inventions”).  I represent and warrant that such list is complete and accurate,
and I understand that by not listing an Invention I am acknowledging that such
Invention was not made, conceived, discovered or developed prior to my
employment by the Company.
 
(j)   Employee Inventions and Third Party Inventions.  I shall not, without
prior written approval by the Company, make any disclosure to the Company of or
incorporate into Company property or Company Inventions any Invention owned by
me or in which I have an interest (“Employee Invention”) or owned by a third
party (“Third Party Invention”).  If, in the course of my employment with the
Company, I make any disclosure to the Company of or incorporate into Company
property or Company Inventions an Employee Invention, with or without Company
approval, I hereby grant and agree to grant to the Company a worldwide,
nonexclusive, royalty-free, irrevocable, perpetual, transferable and
sublicenseable (through multiple tiers) license to make, have made, use, import,
sell, offer to sell, practice any method or process in connection with, copy,
distribute, prepare derivative works of, display, perform and otherwise exploit
such Employee Invention and I agree not to make any claim against the Company or
its affiliates, suppliers or customers with respect to any such Employee
Invention.
 
(k)   Representations; Warranties and Covenants.  I represent, warrant and
covenant that:  (i) I have the right to grant the rights and assignments granted
herein, without the need for any assignments, releases, consents, approvals,
immunities or other rights not yet obtained; (ii) any Company Inventions that
are copyrightable works are my original works of authorship; and (iii) neither
the Company Inventions nor any element thereof are subject to any restrictions
or to any mortgages, liens, pledges, security interests, encumbrances or
encroachments.
 
(l)   Adequate Consideration.  I acknowledge that the Company Inventions and the
associated Intellectual Property Rights may have substantial economic value,
that any and all proceeds resulting from use and exploitation thereof shall
belong solely to the Company, and that the salary and other compensation I
receive from the Company for my employment with the Company includes fair and
adequate consideration for all assignments, licenses and waivers hereunder.
 
 
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6.   Prohibition on Disclosure or Use of Third Party Confidential
Information.  I will not disclose to the Company or induce the Company to use
any confidential, proprietary or trade secret information or materials belonging
to others (including without limitation any former employers) at any time, nor
will I use any such information or materials in the course of my employment with
the Company.  I acknowledge that no officer or other employee or representative
of the Company has requested or instructed me to disclose or use any such
information or materials, and I will immediately inform my supervisor in the
event I believe that my work at the Company would make it difficult for me not
to disclose to the Company any such information or materials.
 
7.   No Conflicts; Former Agreements.  I represent and warrant that I have no
other agreements or relationships with or commitments to any other person or
entity that conflict with my obligations to the Company as an employee of the
Company or under this Agreement, and that my employment and my performance of
the terms of this Agreement will not require me to violate any obligation to or
confidence with another.  I agree I will not enter into any oral or written
agreement in conflict with this Agreement.  Except as disclosed on Schedule A to
this Agreement, I represent and warrant that I have not entered into any other
agreements or relationships with or commitments to any other person or entity
regarding proprietary information or Inventions.
 
8.   Third Party and Government Contracts.  I understand that the Company has or
may enter into contracts with other persons or entities, including the United
States government or its agents, under which certain Intellectual Property
Rights will be required to be protected, assigned, licensed, or otherwise
transferred.  I hereby agree to be bound by all such agreements, and to execute
such other documents and agreements as are necessary to enable the Company to
meet its obligations under any such contracts.
 
9.   Termination; Return of Materials.  I agree to promptly return all property
of the Company, including, without limitation, (a) all source code, books,
manuals, records, models, drawings, reports, notes, contracts, lists,
blueprints, and other documents or materials and all copies thereof, (b) all
equipment furnished to or prepared by me in the course of or incident to my
employment, and (c) all written or tangible materials containing Proprietary
Information in my possession upon termination of my employment for any reason or
at any other time at the Company’s request.  Following my termination, I will
not retain any written or other tangible material containing any Proprietary
Information or information pertaining to any Company Invention.  I understand
that my obligations contained in this Agreement will survive the termination of
my employment and I will continue to make all disclosures required of me by
Section 5(e) above.  In the event of the termination of my employment, I agree,
if requested by the Company, to sign and deliver the Termination Certificate
attached as Schedule B hereto.  I agree that after the termination of my
employment, I will not enter into any agreement that conflicts with my
obligations under this Agreement and will inform any subsequent employers of my
obligations under this Agreement.  The termination of any employment or other
agreement between the Company and me shall not terminate this Agreement and each
and all of the terms and conditions hereof shall survive and remain in full
force and effect.
 
 
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10.   Remedies.  I recognize that nothing in this Agreement is intended to limit
any remedy of the Company under prevailing law governing the protection of trade
secrets or other Intellectual Property Rights.  In addition, I acknowledge that
any breach by me of this Agreement would cause irreparable injury to the Company
for which pecuniary compensation would not afford adequate relief and for which
it would be extremely difficult to ascertain the amount of compensation which
would afford adequate relief to the Company.  Therefore, I agree that if I
breach any provision of this Agreement, the Company shall be entitled to
injunctive or other equitable relief to remedy any breach or prevent any
threatened breach of this Agreement, without the necessity of posting bond or
other security or proving it has sustained any actual damage.  This remedy will
be in addition to any other remedies available to the Company at law or in
equity.
 
11.   Miscellaneous Provisions.
 
(a)   Assignment; Binding Effect.  I acknowledge and agree that my performance
is personal hereunder, and that I shall have no right to assign, delegate or
otherwise transfer and shall not assign, delegate or otherwise transfer any
rights or obligations under this Agreement.  Any such assignment, delegation or
other transfer shall be null and void.  This Agreement may be assigned or
transferred by the Company.  Subject to the foregoing, this Agreement shall
inure to the benefit of the Company and its affiliates, successors and assigns,
and shall be binding on me and my heirs, executors, administrators, devisees,
spouses, agents, legal representatives and successors in interest.
 
(b)   Governing Law.  This Agreement will be governed by and construed in
accordance with the laws of the State of California, without giving effect to
its conflict of law rules.
 
(c)   Jurisdiction.  Except for actions for injunctive or other equitable
relief, which may be brought in any court of competent jurisdiction, any legal
suit, action or proceeding arising out of or relating to this Agreement shall be
commenced in a federal court in the Southern District of California or in state
court in the County of San Diego, California, and each party hereto irrevocably
submits to the exclusive jurisdiction and venue of any such court in any such
suit, action or proceeding.
 
(d)   Severability.  If any provision of this Agreement, or application thereof
to any person, place, or circumstance, shall be held by a court of competent
jurisdiction to be unenforceable, such provision shall be enforced to the
greatest extent permitted by law and the remainder of this Agreement shall
remain in full force and effect.
 
(e)   Waivers.  Delay or failure to exercise any right or remedy under this
Agreement shall not constitute a waiver of such right or remedy.  Any waiver of
any breach of this Agreement shall not operate as a waiver of any subsequent
breaches.  All rights or remedies specified for a party herein shall be
cumulative and in addition to all other rights and remedies of the party
hereunder or under applicable law.
 
 
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(f)   Interpretation.  This Agreement shall be construed as a whole, according
to its fair meaning, and not in favor of or against any party.  Sections and
section headings contained in this Agreement are for reference purposes only,
and shall not affect in any manner the meaning of interpretation of this
Agreement.  Whenever the context requires, references to the singular shall
include the plural and the plural the singular and any gender shall include any
other gender.
 
(g)   Entire Agreement; Amendment.  This Agreement, including without limitation
the Schedules and Exhibits hereto, constitutes the entire agreement between the
Company and me with respect to the subject matter hereof and replaces and
supersedes any prior or existing agreement entered into by me and the Company
with respect to the subject matter hereof.  This Agreement may not be modified
or amended, in whole or in part, except by a writing signed by me and a duly
authorized representative of the Company other than me.  I agree that any
subsequent change in my duties or compensation for employment will not affect
the validity or scope of this Agreement.
 
IF YOU HAVE ANY QUESTIONS CONCERNING THIS AGREEMENT, YOU MAY WISH TO CONSULT AN
ATTORNEY.  MANAGERS, LEGAL COUNSEL AND OTHERS AT THE COMPANY ARE NOT AUTHORIZED
TO GIVE YOU LEGAL ADVICE CONCERNING THIS AGREEMENT.
 
I HAVE READ THIS AGREEMENT CAREFULLY AND I UNDERSTAND AND ACCEPT THE OBLIGATIONS
THAT IT IMPOSES UPON ME WITHOUT RESERVATION.  NO PROMISES OR REPRESENTATIONS
HAVE BEEN MADE TO ME TO INDUCE ME TO SIGN THIS AGREEMENT.  I SIGN THIS AGREEMENT
VOLUNTARILY AND FREELY.
 

Date:     Andrew R. Boll         Employee Name                          
Employee Signature

 
 
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EXHIBIT 1
 
CALIFORNIA LABOR CODE
SECTION 2870-2872
 
2870. (a) Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer’s
equipment, supplies, facilities, or trade secret information except for those
inventions that either:
 
1.  
Relate at the time of conception or reduction to practice of the invention to
the employer’s business, or actual or demonstrably anticipated research or
development of the employer; or

 
2.  
Result from any work performed by the employee for the employer.

 
(b) To the extent a provision in an employment agreement purports to require an
employee to assign an invention otherwise excluded from being required to be
assigned under subdivision (a), the provision is against the public policy of
this state and is unenforceable.
 
2871. No employer shall require a provision made void and unenforceable by
Section 2870 as a condition of employment or continued employment. Nothing in
this article shall be construed to forbid or restrict the right of an employer
to provide in contracts of employment for disclosure, provided that any such
disclosures be received in confidence, of all of the employee’s inventions made
solely or jointly with others during the term of his or her employment, a review
process by the employer to determine such issues as may arise, and for full
title to certain patents and inventions to be in the United States, as required
by contracts between the employer and the United States or any of its agencies.
 
2872. If an employment agreement entered into after January 1, 1980, contains a
provision requiring the employee to assign or offer to assign any of his or her
rights in any invention to his or her employer, the employer must also, at the
time the agreement is made provide a written notification to the employee that
the agreement does not apply to an invention which qualifies fully under the
provisions of Section 2870. In any suit or action arising thereunder, the burden
of proof shall be on the employee claiming the benefits of its provisions.
 
 
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SCHEDULE A
EMPLOYEE DISCLOSURE
 
1.           PROPRIETARY INFORMATION
 
Except as set forth below, I acknowledge that at this time I know nothing about
the business or Proprietary Information of Transdel Pharmaceuticals, Inc. (the
“Company”), other than information I have learned from the Company in the course
of being hired:
 

       

 
(Check here _____ if continued on additional attached sheets)

2.           EXCLUDED INVENTIONS
 
The following information is provided in accordance with Section 5 of the
Employee Proprietary Information and Invention Assignment Agreement
(“Agreement”) executed by me:
 

     
I have made no Inventions prior to my employment with the Company that are owned
by me (either alone or jointly with others) and I do not wish to exclude any
Inventions from the scope of the Agreement.
             
The following is a complete and accurate list of all Inventions I have made,
conceived, discovered or developed prior to my employment with the Company, that
are owned by me (either alone or jointly with others), which I wish to exclude
from the scope of the Agreement:

 

       

 
(Check here _____ if continued on additional attached sheets)

 
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3.           FORMER AGREEMENTS
 
The following information is provided in accordance with Section 5(l) of the
Agreement:
 
 

     
I am not party to any agreement or have any relationship with or commitment to
any other person or entity regarding proprietary information or Inventions.
             
The following is a complete and accurate list of all agreements, relationships
with or commitments to any other person or entity regarding proprietary
information or Inventions.  I have attached copies of any such agreements in my
possession or, to the extent that I am prohibited from doing so due to
confidentiality obligations, I have summarized the relevant terms thereof.

 

       

 
(Check here _____ if continued on additional attached sheets)
 

Date:     Andrew R. Boll         Employee Name                          
Employee Signature

 
 
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SCHEDULE B
 
TERMINATION CERTIFICATE CONCERNING
PROPRIETARY INFORMATION AND COMPANY INVENTIONS
 
This document is to certify that I have returned all property of Transdel
Pharmaceuticals, Inc. (the “Company”), including, without limitation, (a) all
source code, books, manuals, records, models, drawings, reports, notes,
contracts, lists, blueprints, and other documents or materials and all copies
thereof, (b) all equipment furnished to or prepared by me in the course of or
incident to my employment, and (c) all written and tangible materials containing
Proprietary Information in my possession.
 
I further certify that I have reviewed the Employee Proprietary Information and
Invention Assignment Agreement (the “Agreement”) signed by me and that I have
complied with and will continue to comply with all of its terms, including,
without limitation, (i) the disclosure of any Inventions made, conceived,
discovered or developed by me (either alone or jointly with others) during my
period of employment or after the termination of my employment if based on or
using Proprietary Information or otherwise in connection with my activities as
an employee of the Company, and (ii) the preservation as confidential of all
Proprietary Information pertaining to the Company.  This certificate in no way
limits my responsibilities or the Company’s rights under the Agreement.
 
On termination of my employment with the Company, I will be employed by
__________________________________ in the position of
_____________________________.
 

Date:     Andrew R. Boll         Employee Name                          
Employee Signature

 
 
 
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