EX-10.6






CONFIDENTIAL RETENTION AGREEMENT




This Confidential Retention Agreement (“Agreement”) is made by and between La Jolla
Pharmaceutical Company (“LJPC”) and Deirdre Y. Gillespie M.D. (“Gillespie”) with respect to the
following facts:



A. Gillespie is currently employed by LJPC as the President and Chief Executive Officer
pursuant to a Chief Executive Officer Employment Agreement dated March 15, 2006 and Amendment to
Chief Executive Officer Employment Agreement dated July 31, 2007 and Amendment to Chief Executive
Officer Employment Agreement dated December 31, 2008 (collectively referred to as “Employment
Agreement”), which provides for severance in exchange for a release of all claims, in the event
Gillespie’s employment is involuntarily terminated without Cause.



B. Due to the negative result of LJPC’s clinical trial, LJPC is considering a merger,
liquidation, financing or other transaction (the “Transaction”).



C. LJPC and Gillespie previously entered into a Confidential Retention and Separation
Agreement and General Release of All Claims (the “Prior Agreement”) dated December 12, 2009, which
by its terms expired on March 31, 2010. The Prior Agreement provided for a Retention Bonus of
$202,800.00 payable on execution of that Agreement and a severance payment ($405,600.00) upon the
earlier of Gillespie’s involuntary termination of employment or March 31, 2010. Such severance
payment under the Prior Agreement were structured so as to be exempt from application of Internal
Revenue Code Section 409A.



D. LJPC and Gillespie confirm that Gillespie’s Retention Bonus of $202,800.00 paid in December
2009 was earned on March 31, 2010, and that her severance payment of $405,600.00 was in effect a
Retention Bonus and was earned on March 31, 2010 and is now payable.



E. LJPC and Gillespie confirm that Gillespie was not terminated on March 31, 2010 and
Gillespie’s employment with LJPC will be extended until the first to occur of (1) the closing
of a Transaction, (2) an involuntary termination of employment without cause,.(3) July 31,
2010



F. In order to retain Gillespie’s services, the parties wish to supersede the severance
provisions of the Employment Agreement and the Prior Agreement and proceed in accordance with the
terms and conditions in this Agreement.



G. The parties desire to settle all claims and issues that have, or could have been raised, in
relation to Gillespie’s employment with LJPC and arising out of or in any way related to the acts,
transactions or occurrences between Gillespie and LJPC to date, including, but not limited to,
Gillespie’s employment with LJPC or the termination of that employment, on the terms set forth
below.



THEREFORE, in consideration of the promises and agreements hereinafter set forth, it is agreed
by and between the undersigned as follows:



1. Severance Payment. LJPC agrees to pay Gillespie her severance payment
of $405,600.00, less all legally required payroll deductions and withholdings, payable in a lump
sum on the first regular pay day following the Effective Date of this Agreement.



2. Retention Bonus. LJPC agrees to pay Gillespie a Retention Bonus to retain her
services for the additional term. The amount of this Retention Bonus will be determined as follows:




	 	•	 	$152,100.00 should the company determine to dividend the Company’s remaining
cash to stockholders






	 	•	 	$202,800.00 should the Company secure additional funding or be acquired by
another company






	 	•	 	$405,600.00 should the Company secure a product partnership with related
financing





The Retention Bonus, less all legally required payroll deductions and withholdings (“Retention
Bonus”), is payable in a lump sum on the first regular pay day following the date on which the
Board of Directors confirms that one of the events described above has occurred.



3. General Release. Gillespie unconditionally, irrevocably and absolutely
releases and discharges LJPC, and any parent and subsidiary corporations, divisions and affiliated
corporations, partnerships or other affiliated entities of LJPC, past and present, as well as
LJPC’s employees, officers, directors, agents, successors and assigns (collectively, “Released
Parties”), from all claims related in any way to Employment Agreement and all transactions or
occurrences between them to date, to the fullest extent permitted by law, including, but not
limited to, Gillespie’s employment with LJPC, the termination of Gillespie’s employment, and all
other losses, liabilities, claims, charges, demands and causes of action, known or unknown,
suspected or unsuspected, arising directly or indirectly out of or in any way connected with
Gillespie’s employment with LJPC. This general release is intended to have the broadest possible
application and includes, but is not limited to, any tort, contract, common law, constitutional or
other statutory claims, including, but not limited to alleged violations of the California Labor
Code or the federal Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964 and the
California Fair Employment and Housing Act, the Americans with Disabilities Act, the Age
Discrimination in Employment Act of 1967, as amended, and all claims for attorneys’ fees, costs and
expenses. Gillespie expressly waives Gillespie’s right to recovery of any type, including damages
or reinstatement, in any administrative or court action, whether state or federal, and whether
brought by Gillespie or on Gillespie’s behalf, related in any way to the matters released herein.
However, this general release is not intended to bar any claims that, by statute, may not be
waived, such as claims for workers’ compensation benefits, unemployment insurance benefits,
statutory indemnity, and any challenge to the validity of Gillespie’s release of claims under the
Age Discrimination in Employment Act of 1967, as amended, as set forth in this Agreement.



3. California Civil Code Section 1542 Waiver. Gillespie expressly
acknowledges and agrees that all rights under Section 1542 of the California Civil Code are
expressly waived. That section provides:



A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.



4. Representation Concerning Filing of Legal Actions. Gillespie
represents that, as of the date of this Agreement, she has not filed any lawsuits, charges,
complaints, petitions, claims or other accusatory pleadings against LJPC or any of the other
Released Parties in any court or with any governmental agency.



5. Nondisparagement. Gillespie agrees that she will 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 LJPC or any of the other Released Parties.



6. Confidentiality and Return of LJPC Property. By signing this
Agreement, Gillespie represents and warrants that Gillespie has, or will, return to LJPC on or
before the Separation Date, all LJPC property, data and information belonging to LJPC and agrees
not use or disclose to others any confidential or proprietary information of LJPC or the Released
Parties.



7. Continuing Obligations. Gillespie further agrees to comply with the
continuing obligations regarding confidentiality set forth in the surviving provisions of the
Invention and Confidential Information Agreement signed by Gillespie.



8. No Admissions. By entering into this Agreement, the Released Parties
make no admission that they have engaged, or are now engaging, in any unlawful conduct. The
parties understand and acknowledge that this Agreement is not an admission of liability and shall
not be used or construed as such in any legal or administrative proceeding.



9. Older Workers’ Benefit Protection Act. This Agreement is intended to
satisfy the requirements of the Older Workers’ Benefit Protection Act, 29 U.S.C. sec. 626(f).
Gillespie, by this Agreement, is advised to consult with an attorney before executing this
Agreement.



9.1 Acknowledgments/Time to Consider. Gillespie acknowledges and agrees
that the Retention Bonus is a sum to which she is not otherwise entitled absent the signing of this
Agreement; (b) Gillespie has read and understands the terms of this Agreement; (c) Gillespie has
been advised in writing to consult with an attorney before executing this Agreement; (d) Gillespie
has obtained and considered such legal counsel as she deems necessary; (e) Gillespie has been given
twenty-one (21) days to consider whether or not to enter into this Agreement (although she may
elect not to use the full 21-day period at her option); and (f) by signing this Agreement,
Gillespie acknowledges that she does so freely, knowingly, and voluntarily.



9.2 Revocation/Effective Date. This Agreement shall not become effective
or enforceable until the eighth day after Gillespie signs this Agreement. In other words, she may
revoke her acceptance of this Agreement within seven (7) days after the date she signs it.
Gillespie’s revocation must be in writing and received by Craig R. Smith M.D., Chairman, Board of
Directors, by 5:00 p.m. Pacific Time on the seventh day in order to be effective. If Gillespie does
not revoke acceptance within the seven (7) day period, her acceptance of this Agreement shall
become binding and enforceable on the eighth day (“Effective Date”). The Severance Payment shall
become due and payable in accordance with paragraph 1, provided this Agreement has not been
revoked.



9.3 Preserved Rights of Gillespie. This Agreement does not waive or
release any rights or claims that Gillespie may have under the Age Discrimination in Employment Act
that arise after the execution of this Agreement. In addition, this Agreement does not prohibit
Gillespie from challenging the validity of this Agreement’s waiver and release of claims under the
Age Discrimination in Employment Act of 1967, as amended.



10. Full Defense. This Agreement may be pled as a full and complete
defense to, and may be used as a basis for an injunction against, any action, suit or other
proceeding that may be prosecuted, instituted or attempted by Gillespie in breach hereof.



11. Severability. In the event any provision of this Agreement shall be
found unenforceable, the unenforceable provision shall be deemed deleted and the validity and
enforceability of the remaining provisions shall not be affected thereby.



12. Applicable Law. The validity, interpretation and performance of
this Agreement shall be construed and interpreted according to the laws of the United States of
America and the State of California.



13. Entire Agreement; Modification. This Agreement and the surviving
provisions of the Invention and Confidential Information Agreement previously executed by
Gillespie, is intended to be the entire agreement between the parties and supersedes and cancels
any and all other and prior agreements, written or oral, between the parties regarding this subject
matter. Except as expressly amended hereby, all other terms and provision of the Employment
Agreement shall remain in full force and effect. This Agreement may be amended only by a written
instrument executed by all parties hereto.



THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND EACH AND EVERY
PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN
BELOW.



Dated: May 24, 2010


By: /s/ Deirdre Y. Gillespie


Deirdre Y. Gillespie M.D.


LA JOLLA PHARMACEUTICAL COMPANY



Dated: May 24, 2010


By: /s/ Craig R. Smith M.D.


Craig R. Smith M.D.


Chairman of the Board