Exhibit
10.37


 


August
20, 2002


VIA HAND DELIVERY


 


Arthur Reidel


Pharsight, Inc.


 


Re: 
New Terms of Employment


 


Dear Art:


As we discussed, this letter sets forth the terms and conditions of
your new employment agreement (the “Agreement”) with PHARSIGHT CORPORATION  (“Pharsight” or the
“Company”).


1.             EMPLOYMENT
POSITION AND RESPONSIBILITIES.   You will continue to be employed in the position of Chairman of
the Board of Directors until March 31, 2003 (the “Separation Date”).  You will report to the Company’s Board of
Directors (the “Board”), and you will continue to perform those job duties and
responsibilities customarily associated with such position, as well as others
as directed by the Board.  During your
continued employment, the Company will provide you with the office space and
administrative support required for the performance of your job duties, as
determined by the Company.  You will
continue to be subject to, and must comply with, the Company’s general
employment policies, rules and regulations. 
If it does not terminate earlier pursuant to Section 7, your employment
relationship with the Company will terminate effective as of the Separation
Date.


2.             WORK SCHEDULE.  Effective as
of August 15, 2002 and until the Separation Date, your work schedule will change
from full-time to half-time.  It is
anticipated that you will be able to perform your duties within a time
commitment averaging about fifty percent (50%) of that of a full-time
professional employee, and you will be expected to maintain a regular work
schedule of at least twenty (20) hours per week. Because your position is
classified as exempt, you will not be eligible for overtime premiums.


3.             COMPENSATION,
EMPLOYEE BENEFITS AND VACATION ACCRUAL RATE. 
The following compensation and employee benefits terms are effective as
of August 15, 2002:


(a)           Base
Salary.  Your annual base salary will be one hundred
ten thousand dollars ($110,000), subject to standard payroll deductions and
withholdings and paid on the Company’s normal payroll schedule.


 


1

















 


(b)           Bonus. 
If your employment continues until the Separation Date, or if the
Company terminates your employment other than for Cause (as defined herein)
prior to the Separation Date, the Company will pay you a one-time bonus in the
amount of seventy-five thousand six hundred twenty-five dollars ($75,625),
subject to standard payroll deductions and withholdings (the “Bonus”).  The Bonus will be paid to you on the Separation
Date or, notwithstanding anything to the contrary in Section 7 below, within
thirty (30) days following your employment termination date if the Company
terminates your employment other than for Cause prior to the Separation
Date.  You will not earn and will not
receive the Bonus if you resign or the Company terminates your employment for
Cause prior to the Separation Date. 
Because of your eligibility to receive the Bonus as provided herein, you
are not eligible to earn or receive any other bonus or incentive compensation,
including but not limited to any bonus pursuant to the Company’s Management
Incentive Bonus Plan.


(c)           Employee
Benefits.  You understand that by reducing your work
schedule to half-time you will no longer be eligible to participate in any of
the Company’s standard employee benefit plans. However, to the extent provided
by the federal COBRA law or, if applicable, state insurance laws, and by the
Company’s current group health insurance policies, you will be eligible to
continue your group health insurance benefits at the Company’s expense as
described below after August 31, 2002. 
Later, you may be able to convert to an individual policy through the
provider of the Company’s health insurance, if you wish. You will be provided a
separate notice describing your rights and obligations under COBRA on or after
the August 31, 2002.  If you timely elect to continue your
health insurance coverage under the federal COBRA law following the above date,
the Company will reimburse your out-of-pocket costs to continue your COBRA
coverage for you at the same level of coverage in effect as of the above date
until the Separation Date or the date that you become eligible for health
insurance coverage through a new employer, whichever is shorter.  Notwithstanding anything to the contrary
stated above, the Company’s obligation to reimburse your COBRA costs ceases
immediately if you resign from your employment with the Company or if you are
terminated for Cause prior to the Separation Date.


(d)           Vacation
Accrual Rate.  As a half-time employee, your annual
vacation accrual rate will be reduced to fifty percent (50%) of the rate for
full-time employees with your length of service.


4.             CURRENT EQUITY AWARDS;
NEW STOCK OPTION GRANT.  Your employment under a half-time schedule will be
considered continuous service to the Company and your current equity award(s)
with unvested shares will vest during your continued employment.  In addition, subject to approval by the
Board, you will be provided a stock option grant to purchase ninety thousand
(90,000) shares of Pharsight Common Stock under the Pharsight 2000 Equity
Incentive Plan (the “Plan”), at a purchase price equal to the fair market value
of the Common Stock on the date of grant, as determined by the Board (the “New
Option”).  The New Option, if granted,
will be subject to the terms and conditions of the Plan and a grant agreement,
which will include a nine-month vesting schedule under which, during your
Continuous Service to the Company (as defined in the Plan), the New Option will
vest in monthly installments with eleven thousand two hundred fifty (11,250)
shares vesting effective August 31, 2002 (the “Vesting Commencement Date”) and
eleven thousand two hundred fifty (11,250) shares vesting on each monthly
anniversary of the Vesting Commencement Date. 
If the Company terminates your 


 


2

















 


employment other than for
Cause prior to the Separation Date vesting for your current equity awards and
the New Option will be accelerated to the level of vesting you would have
reached on the Separation Date.


5.             CONTINUING BOARD MEMBERSHIP.  Your role as
a member of the Board is not affected by this Agreement or your change to
half-time employment status.


6.             PROPRIETARY INFORMATION AND INVENTIONS
AGREEMENT. 
You acknowledge that during your employment with the Company you had and
continue to have access to, and have obtained and will obtain, proprietary
information and trade secrets of the Company. 
Concurrent with the execution of this Agreement, and as a condition of
your continued employment, you agree to execute the form of Proprietary
Information and Inventions Agreement attached hereto as Exhibit A.


7.             AT-WILL
EMPLOYMENT STATUS.  Nothing in this Agreement alters the at-will
nature of your employment relationship with the Company, and either you or the
Company may terminate your employment relationship at any time (including prior
to the Separation Date), with or without Cause or advance notice.  However, if the Company terminates your employment
other than for Cause prior to the Separation Date, and if you first sign, make
effective, and return to Pharsight a general release of all known and unknown
claims in a form acceptable to Pharsight, you will receive the following as
your sole severance benefits (the “Severance Benefits”):  (a) severance pay equal to the amount
of additional base salary you would have received if your employment had
continued from your employment termination date until the Separation Date,
subject to required payroll deductions and withholdings and paid in a single
lump sum within thirty (30) days after your employment termination date; and
(b) your equity awards with unvested shares as of your employment
termination date, including but not limited to the New Option, will be subject
to accelerated vesting equal to the number of additional shares that would have
vested if your employment had continued from your employment termination date
until the Separation Date.  If do not
sign the above general release, you will not receive the Severance Benefits,
but you will receive the Bonus. If you resign from your employment or the
Company terminates your employment for Cause prior to the Separation Date, you
will not be eligible for and will not receive the Severance Benefits or the
Bonus.  Because of your eligibility to
receive the Severance Benefits as provided herein, you are not eligible to earn
or receive any other severance compensation or benefits.


8.             DEFINITION OF CAUSE FOR TERMINATION.   For the purposes of this Agreement, Cause for termination of your
employment by the Company shall mean: 
(a) your conviction (including a guilty or no contest plea) of any
felony or any other crime involving dishonesty; (b) your participation in
any fraud against the Company; (c) your breach of any obligation under
this Agreement; (d) your damage to any Company property; or
(e) conduct by you which in the good faith and reasonable determination of
the Company’s Board of Directors demonstrates gross unfitness to serve.


9.             DISPUTE
RESOLUTION.  To ensure rapid and economical resolution of any and
all disputes that may arise in connection with this Agreement or your
employment relationship, you and the Company agree that any and all disputes,
claims, and causes of action, in law or equity, arising from or relating to
your employment or this Agreement, its enforcement, performance, 


 


3

















 


breach, or
interpretation, will be resolved, to the fullest extent permitted by law, by
final, binding and confidential arbitration in San Francisco, California
conducted by a single arbitrator at Judicial Arbitration and Mediation
Services, Inc. (“JAMS”) or its successor, under the then applicable employment
rules of JAMS.  The parties acknowledge that by agreeing to this
arbitration procedure, they hereby waive the right to resolve any such dispute
through a trial by jury or judge or by administrative proceeding.  The arbitrator shall:  (a) have the authority to compel adequate
discovery for the resolution of the dispute and to award such relief as would
otherwise be permitted by law; and (b) issue a written arbitration decision
including the arbitrator’s essential findings and conclusions and a statement
of the award.  The Company will pay all
JAMS’ arbitration fees in excess of those that which would be required if the
dispute were decided in a court of law. 
Nothing in this Agreement is intended to prevent either you or the
Company from obtaining injunctive relief in court to prevent irreparable harm
pending the conclusion of any arbitration. 
Notwithstanding the foregoing, you and the Company each have the right
to resolve any issue or dispute involving Company trade secrets, proprietary
information or intellectual property rights by court action instead of
arbitration.


10.          MISCELLANEOUS.  This Agreement,
including Exhibit A, constitutes the complete, final and exclusive embodiment
of the entire agreement between you and the Company with regard to your
employment relationship.  It is entered
into without reliance on any promise or representation, written or oral, other
than those expressly contained herein, and it supersedes any other such
promises, warranties or representations related to its subject matters.  The failure to enforce any breach of this
Agreement shall not be deemed to be a waiver of any other or subsequent
breach.  For purposes of construing this
Agreement, any ambiguities shall not be construed against either party as the
drafter.  If any provision of this Agreement
is determined to be invalid or unenforceable, in whole or in part, this determination
will not affect any other provision of this Agreement and the provision in
question will be modified so as to be rendered enforceable in a manner
consistent with the intent of the parties insofar as possible.  This Agreement will be deemed to have been
entered into and will be construed and enforced in accordance with the laws of
the State of California as applied to contracts made and to be performed
entirely within California.  This
Agreement may be executed in counterparts or with facsimile signatures, which
shall be deemed equivalent to originals.


If this Agreement is
acceptable to you, please sign below and return the original to me.


Pharsight appreciates
your continued dedication and commitment.


Sincerely,


PHARSIGHT
CORPORATION


	
  By:

  	
  /s/ Ferrell
  Sanders

  	
   

  
	
   

  	
  Ferrell Sanders

  	
   

  
	
   

  	
  Chairman of the Compensation
  Committee, Board of Directors

  



 


 


 


4

















 


 


I HAVE READ, UNDERSTAND AND AGREE FULLY TO THE FOREGOING
AGREEMENT.


	
  /s/  Arthur Reidel

  	
   

  
	
  ARTHUR REIDEL

  	
   

  



 


Date: 
August 20, 2002


 


 


Exhibit A — Proprietary
Information and Inventions Agreement


 


 


 


5

















 


Exhibit A


 


PHARSIGHT CORPORATION


 


Proprietary Information and
Inventions Agreement


 


In consideration
of, and as a condition of, my employment with Pharsight
Corporation, a Delaware corporation (the “Company”), I hereby represent
to and agree with the Company as follows:


 


1.             Purpose of Agreement; Effective
Date.  I understand that the
Company is engaged in a continuous program of research, development,
production, and marketing in connection with its business and that it is
critical for the Company to preserve and protect its Proprietary Information
(as defined below) and its rights in Inventions (as defined below) and all
related intellectual property rights. 
Accordingly, whether or not I am expected to create inventions of value
for the Company, I am entering into this Proprietary Information and Inventions
Agreement (this “Agreement”) as a condition of my employment with the
Company.  This Agreement shall be
effective as of the first day of my employment with the Company.


 


2.             Definition of Proprietary
Information.  Proprietary
Information is any information of a confidential nature (i.e., not generally
known or publicly available) that may be disclosed to me that relates to the
business of the Company or to the business of any parent, subsidiary,
affiliate, customer, or supplier of the Company or to the business of any other
party with whom the Company agrees to hold the information disclosed by such
party in confidence.   Proprietary
Information includes but is not limited to Inventions, marketing plans, product
plans, business strategies, financial information, forecasts, personnel
information, customer lists, and product sales and pricing information.


 


3.             Confidentiality.  I  understand that my
employment by the Company creates a relationship of confidence and trust with
respect to Proprietary Information.  At
all times, both during my employment with the Company and after the termination
of such employment, I will keep and hold all Proprietary Information in
confidence and trust, and I will not use or disclose any Proprietary
Information without the prior written consent of the Company, except as may be
necessary to perform my duties as an employee of the Company for the benefit of
the Company.  Upon termination of my
employment with the Company, I will promptly deliver to the Company all
documents and materials of any nature pertaining to my work with the Company,
and I will not take with me any documents or materials or copies thereof
containing any Proprietary Information.


 


4.             Work for Hire.  I acknowledge and agree that any copyrightable works
prepared by me within the scope of my employment are “works for hire” under the
Copyright Act and that the Company will be considered the author and owner of
such copyrightable works.


 


5.             Additional Activities.  I agree that during the period of my employment by the Company I
will not, without the Company’s express written consent, engage in any
employment or business activity which is competitive with, or would otherwise
conflict with, my employment 


 


 


6

















 


by the
Company.  I agree further that for the
period of my employment by the Company and for one (l) year after the date of
termination of my employment by the Company I will not, either directly or
through others, solicit or attempt to solicit any employee, independent
contractor or consultant of the company to terminate his or her relationship
with the Company in order to become an employee, consultant or independent
contractor to or for any other person or entity.


 


6.       Definition of Invention.  The term Invention includes all inventions,
improvements, designs, original works of authorship, formulas, processes,
compositions of matter, algorithms, computer software programs, databases, mask
works, and trade secrets that either (a) are developed using equipment,
supplies, facilities or trade secrets of the Company, (b) result from work
performed by me for the Company, or (c) relate to the Company’s business or to
its current or anticipated research or development.


7.             Disclosure and Assignment of
Inventions.   I will promptly disclose in confidence to the
Company all Inventions that I make or conceive or create or first reduce to
practice, either alone or jointly with others, during the period of my
employment, whether or not in the course of my employment and whether or not
such Inventions are patentable, copyrightable, or protectable as trade
secrets.  I agree that all Inventions
that (a) are developed using equipment, supplies, facilities or trade secrets
of the Company, (b) result from work performed by me for the Company, or (c)
relate to the Company’s business or to its current or anticipated research or
development will be the sole and exclusive property of the Company and are
hereby irrevocably assigned by me to the Company.


 


8.             Assignment of Other Rights.  In addition to the foregoing
assignment of Inventions to the Company, I hereby irrevocably transfer and
assign to the Company: (a) all worldwide patents, patent applications,
copyrights, mask works, trade secrets, and any other intellectual property
rights in any and all Inventions, and (b) any and all Other Rights (as defined
below) that I may have in or with respect to any Invention.  I also hereby forever waive and agree never
to assert any Other Rights I may have in or with respect to any Invention, even
after termination of my employment with the Company.  “Other Rights” means any right to claim author’s rights with
respect to an Invention, to object to or prevent the modification of any
Invention, and any similar right, existing under judicial or statutory law of
any country in the world, or under any treaty, regardless of whether such right
is denominated or generally referred to as a “moral right” or otherwise.


 


9.             Labor Code Notice.  I  have been notified and
understand that the provisions of paragraphs 6 and 7 of this Agreement do not
apply to any Invention that qualifies fully under the provisions of Section
2870 of the California Labor Code, which states as follows:


 


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.  TO THE
EXTENT A 


 


 


7

















 


 


PROVISION IN AN
EMPLOYEE AGREEMENT PURPORTS TO REQUIRE AN EMPLOYEE TO ASSIGN AN INVENTION
OTHERWISE EXCLUDED FROM BEING REQUIRED TO BE ASSIGNED UNDER CALIFORNIA LABOR
CODE SECTION 2870 (A), THE PROVISION IS AGAINST THE PUBLIC POLICY OF THIS
STATE AND IS UNENFORCEABLE.


 


10.           Assistance.  I  agree
to assist the Company in every proper way to obtain for the Company and to
enforce patents, copyrights, mask work rights, trade secret rights, and other
legal protections for the Company’s Inventions in any and all countries.  I will execute any documents that the
Company may reasonably request for use in obtaining or enforcing such patents,
copyrights, mask work rights, trade secret rights and other legal protections.  My obligations under this paragraph will
continue beyond the termination of my employment with the Company, provided
that the Company will compensate me at a reasonable rate after such termination
for time and expenses actually spent by me at the Company’s request on such
assistance.


 


11.           No Breach of Prior Agreement.  I  represent that my
performance of all the terms of this Agreement and my duties as an employee of
the Company will not breach any invention assignment, proprietary information,
or similar agreement with any former employer or other party. During my
employment by the Company I will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employer or
any other person to whom I have an obligation of confidentiality, and I will
not bring onto the premises of the Company any unpublished documents or any
property belonging to any former employer or any other person to whom I have an
obligation of confidentiality unless consented to in writing by that former
employer or person, or unless the items have been legally transferred to the
Company or are generally available to the public.  I will use in the performance of my duties only information which
is generally known and used by persons with training and experience comparable
to my own, which is common knowledge in the industry or otherwise legally in
the public domain, or which is otherwise provided, developed or owned by the
Company.


 


12.         Prior Inventions.  If, in the course of my employment with the Company, I
incorporate a prior invention made by me into a Company product, process or
machine, the Company is hereby granted and shall have a nonexclusive,
royalty-free, irrevocable, perpetual, worldwide license (with rights to
sublicense through multiple tiers of sublicensees) to make, have made, modify,
use and sell such prior invention. 
Notwithstanding the foregoing, I agree that I will not incorporate, or
permit to be incorporated, prior inventions in any Company Inventions without
the Company’s prior written consent.


 


13.           Notification. I  hereby authorize the Company
to notify my future employers of the terms of this Agreement and my
responsibilities hereunder.


 


14.           Injunctive Relief. 
I  understand that in the event of a breach
or threatened breach of this Agreement by me, the Company may suffer
irreparable harm and will therefore be entitled to injunctive relief to enforce
this Agreement.


 


15.           Governing Law; Severability.  This Agreement will be governed and interpreted in
accordance with the laws of the State of California, without regard to
application of choice of law rules or principles.  In the event that any provision of this Agreement is found by a
court, 


 


 


8

















 


 


arbitrator, or
other tribunal to be illegal, invalid, or unenforceable, then such provision
shall not be voided but shall be enforced to the maximum extent permissible
under applicable law, and the remainder of this Agreement shall remain in full
force and effect.


 


16.           No Duty to Employ. 
I  understand that this Agreement does not
constitute a contract of employment or obligate the Company to employ me for
any stated period of time.


 


17.           FDA Debarrment.  I represent that I have never been debarred under Section 306(a)
or (b) of the Federal Food Drug or Cosmetic Act and that I will immediately
notify the Company in the event that any debarrment proceedings are commenced
against me.


 


 


	
  PHARSIGHT CORPORATION

  	
   

  	
  Arthur Reidel

  
	
   

  	
   

  	
   

  	
   

  
	
  By

  	
  /s/  Stacy Murphy

  	
   

  	
  /s/ Arthur
  Reidel

  
	
   

  	
   

  	
   

  	
   

  
	
  Stacy Murphy

  	
   

  	
  Date:  August 20, 2002

  
	
  Vice President, Human Resources

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


 


 


9