Document:

Exhibit 10.31 

EATON VANCE CORP.
ANNUAL PERFORMANCE INCENTIVE PLAN 

FOR NON-COVERED EMPLOYEES 

		1.	PURPOSE 

The purpose of the Plan is to attract, retain and motivate employees by providing performance awards to designated employees of the Company or its Subsidiaries. This Plan document memorializes and amends the terms of the annual performance incentive program sponsored by the Company for non-covered employees. This Plan was originally effective as of November 1, 2008 and has been amended as of October 25, 2010, as approved by the Board of Directors and voting shareholders of the Company. Covered Employees are not entitled to participate in this Plan, as they are subject to the terms of the Eaton Vance Corp. Executive Performance-Based Compensation Plan
(“Covered Plan”). 

		2.	DEFINITIONS. 

Unless the context otherwise requires, the words which follow shall have the following meaning: 

		(a)	“Board” – shall mean the Board of Directors of the Company. 

		(b)	“Code” – shall mean the Internal Revenue Code of 1986, as amended and any successor thereto. 

		(c)	“Code Section 409A” – shall mean Section 409A of the Code and the regulations and guidance promulgated thereunder. 

		(d)	“Company” – shall mean Eaton Vance Corp. and any successor entity by merger, consolidation or otherwise. 

		(e)	“Compensation Committee” – shall mean the Compensation Committee of the Board. 

		(f)	“Committee” – shall mean the members of Company management to whom the Compensation Committee, by specific act or practice, has delegated responsibility for administering this Plan. 

		(g)	“Covered Employee” – shall mean a “Covered Employee” determined under Code Section 162(m), or an employee who has been granted an Award Agreement under the Covered Plan. 

		(h)	“Participant” – shall mean members of executive management, excluding covered employees, and senior staff of the Company (determined in accordance with the Company’s normal policies and practices) or such other employee of the Company or any Subsidiary selected, in accordance with Section 4 hereof, to be eligible to receive a Performance Award in accordance with this Plan. 

		(i)	“Performance Award” – shall mean the amount paid or payable under Sections 6 hereof. 

		(j)	“Performance Period” – shall mean a period of not more than one Plan Year (as specified by the Committee). 

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		(k)	“Plan” – shall mean this Eaton Vance Corp. Annual Performance Incentive Plan for Non-Covered Employees. 

		(l)	“Plan Year” – shall mean a fiscal year of the Company, which commences on November 1 of each year and ends the next following October 31. 

		(m)	“Subsidiary” – shall mean Eaton Vance Management, Eaton Vance Distributors and Eaton Vance Investment Counsel and such other entity as may be designated by the Committee for participation in the Plan. 

		3.	ADMINISTRATION AND INTERPRETATION OF THE PLAN. 

The Plan shall be administered by the Committee which shall have the authority and responsibility to: (i) interpret the Plan; (ii) approve and notify designated Participants of bonus awards; (iii) review and approve the timing and form of amounts to be paid out under the Plan and the conditions for payment thereof; (iv) adopt, amend and rescind rules and regulations relating to the Plan; and (v) make all other determinations and take all other actions necessary or desirable for the Plan’s administration, including, without limitation, correcting any defect, supplying any omission or reconciling any inconsistency in the Plan in the manner and to
the extent it shall deem necessary to carry the Plan into effect. 

The Committee is required on an annual basis to make a presentation to the Compensation Committee for their consideration, and, if appropriate, approval of the following items: (i) methodology of calculating the annual bonus pool, (ii) actual calculation of bonus pool, (iii) historical data, review of compensation studies, and analysis as requested (e.g. largest year-over-over year increase and decrease by individual participant, compensation studies from independent third parties, etc.), and (iv) the approval of the bonus pool. 

All decisions of the Committee on any question concerning the selection of Participants, amount of any Performance Award payable to any Participant hereunder, and the interpretation and administration of the Plan shall be final, conclusive and binding upon all parties. The Committee may rely on information, and consider recommendations, provided by the Board or the executive officers of the Company. 

To the extent permitted by applicable law and not inconsistent with the Certificate of Incorporation and Bylaws of the Company, the Company and its Subsidiaries, as applicable, shall indemnify and hold harmless the Committee against all expense, liability and loss (including legal fees, judgments, fines, taxes and penalties, and amounts paid in settlement) reasonably incurred or suffered in connection with the discharge of their responsibilities with respect to the Plan, except to the extent such actions are taken in bad faith or with willful misconduct; provided that any expense, liability or loss arising due to actions taken in bad faith or with
willful misconduct shall not be covered under this indemnity. 

		4.	ELIGIBILITY AND PARTICIPATION.  For each Performance Period, the Committee shall designate the employees of the Company or its Subsidiaries who are to participate in the Plan. 

		5.	PERFORMANCE AWARD PROGRAM. 

5.1  PERFORMANCE AWARDS.  Subject to the satisfaction of any conditions on payment imposed by the Committee pursuant to the terms of this Plan, each Participant shall be eligible to receive a Performance Award based upon his or her performance during a Performance Period. 

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5.2  BONUS POOL.  Each Plan Year a Bonus Pool shall be established from which Performance Awards under this Plan shall be made. The Bonus Pool for each Plan Year shall be a percentage of “adjusted operating income” first reduced by awards granted to Covered Employees under the Covered Plan. Adjusted operating income shall be determined in accordance with the Company’s normal procedures, with such adjustments including but not limited to add-backs for stock based compensation, closed-end structuring fees, commissions associated with closed-end fund offers, and other similar non-recurring items as determined by the
Committee. The Committee shall determine the Bonus Pool available for a Fiscal Year and shall present its finding for review and approval by the Compensation Committee prior to the end of the Fiscal Year to which the Bonus Pool relates. The Committee shall establish procedures pursuant to which a percentage of the Bonus Pool will be payable to each Participant. 

5.3  PAYMENT DATE; COMMITTEE REVIEW.  Performance Awards will be paid in a single lump sum payment (net of all taxes and applicable withholdings) as soon as reasonably practicable following the end of the Plan Year for which such Performance Award is paid, but in no event later than the date that is 21⁄2 months following the close of the Plan Year for which such Performance Award is paid. 

		6.	PERFORMANCE AWARDS—SPECIAL RULES. 

6.1  Except as set forth in this Section 6, no Performance Award shall be made to any Participant who is not an active employee of the Company or one of its Subsidiaries on the last day of the Fiscal Year for which such Performance Award is payable. 

6.2  The Committee, in its sole and absolute discretion, may, but is not required to make, a full, pro rata or other award to a Participant for a Performance Period, in the event that during such Performance Period (i) the Participant’s employment is terminated due to death or disability, or (ii) the Participant’s employment is terminated by the Company or Subsidiary, as applicable, without Cause (as defined in Section 2.4 of the Eaton Vance Corp. 2008 Omnibus Incentive Plan) prior to the end of a Fiscal Year. 

6.3  Notwithstanding anything contained herein to the contrary, in all events the Company shall be obligated to pay the full amount of the Bonus Pool established for each Plan Year. Once established, in no event shall any amount of the Bonus Pool revert to the Company. 

		7.	NON-ASSIGNABILITY.  No Performance Award under the Plan or payment thereof nor any right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance, garnishment, execution or levy of any kind or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber and to the extent permitted by applicable law, charge, garnish, execute upon or levy upon the same shall be void and shall not be recognized or given effect by the Company. 

		8.	NO RIGHT TO EMPLOYMENT.  Nothing in the Plan or in any notice of award pursuant to the Plan shall confer upon any person the right to neither continue in the employment of the Company or one of its Subsidiaries or affiliates nor affect the right of the Company or any of its Subsidiaries or affiliates to terminate the employment of any Participant. 

		9.	AMENDMENT OR TERMINATION.  While the Company hopes to continue the Plan indefinitely, it reserves the right in its Board (or a duly authorized committee thereof) to amend, suspend or terminate the Plan or to adopt a new plan in place of the Plan at any time; provided, that no such amendment, suspension or termination shall, without the consent of the Participant, alter or impair a Participant’s right to receive payment of a Performance Award for a Performance Period otherwise payable hereunder. 

		10.	SEVERABILITY.  In the event that any one or more of the provisions contained in the Plan shall, for any reason, be held to be invalid, illegal or unenforceable, in any respect, such invalidity, illegality or 

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			unenforceability shall not affect any other provision of the Plan and the Plan shall be construed as if such invalid, illegal or unenforceable provisions had never been contained therein. 

		11.	CODE SECTION 409A.  Although the Company makes no guarantee with respect to the tax treatment of payments hereunder, the Plan is intended to comply with, or be exempt from, Code Section 409A and to the maximum extent permitted the Plan shall be limited, construed and interpreted in accordance with such intent. 

		12.	GOVERNING LAW.  The Plan and any amendments thereto shall be construed, administered, and governed in all respects in accordance with the laws of the Commonwealth of Massachusetts (regardless of the law that might otherwise govern under applicable principles of conflict of laws). This Plan is intended to establish a bonus plan that meets the “all events test” as described in Revenue Ruling 61-127. Notwithstanding anything contained herein to the contrary, this Plan is intended to establish a binding right in the Participants to the total amount of the Bonus Pool established each year, in accordance with the terms hereof. In all events, this Plan is intended and should be construed to meet the requirements of Revenue Ruling 61-127 in establishing an annual obligation by the Company to pay out the Bonus Pool, as described herein. 

152Exhibit
10.1

       

      SEPARATION
AGREEMENT

       

      This
Separation Agreement (the “Agreement”) is entered into by and between Vivian H.
Liu (“Liu”) and Apricus Biosciences, Inc. and its affiliates and subsidiaries
(collectively, the “Company”).

       

      BACKGROUND:

       

      A. Liu
was employed as the Company’s Executive Vice President pursuant to that certain
Amended and Restated Employment Agreement by and between the Company and Liu,
dated as of December 14, 2009 (the “Prior Agreement”) and served as the Chairman
of the Company’s Board of Directors.

       

      B. The
Company and Liu wish to enter into this Agreement to set forth the terms of
Liu’s separation from the Company, effective December 31, 2010 (the “Separation
Date”).

       

      C.  Upon
entry into this Agreement, Liu shall simultaneously tender her resignation as an
officer and director of the Company.

       

      AGREEMENT:

       

      In
consideration for the promises to Liu from the Company recited below, and other
good and valuable consideration, including the release of claims pursuant to
this Agreement, the parties agree as follows:

       

      1.           Liu Payment and
Release. By the later of (a) January 11, 2011 or (b) five business days
following the expiration of Liu’s seven-day revocation period set forth in
Section 7.b. below, the Company shall provide to Liu company stock with a value
of $165,000 (valued at the fair market value of the stock on the Separation
Date) as consideration hereunder (the “Additional Stock”).  Liu
acknowledges that she is not otherwise entitled to receive such consideration.
It is agreed that some or all of the stock provided above as consideration under
this Agreement is paid in settlement of any potential claim by Liu to any Bonus,
as defined in the Prior Agreement, and that Liu accordingly has no separate or
future right to any such Bonus. Pursuant to the Prior Agreement, and
notwithstanding whether Liu signs this Agreement, the Company shall also pay to
Liu (a) any accrued but unpaid Base Salary (as defined in the Prior Agreement),
less applicable deductions, including salary in respect of any accumulated
vacation, due to Liu as of the Separation Date, (b) any amounts owing, but not
yet paid, with respect to reasonable business expenses incurred by Liu, subject
to documentation in accordance with the Company’s policy, (c) the Incentive
Bonus (as defined in the Prior Agreement) of $50,000 payable in cash and 7,540
shares of company common stock (valued at $50,000 based upon the closing sales
price of the company common stock on the approval date of the Incentive Bonus)
due to Liu as of the Separation Date, and (d) the annual grants of common stock
pursuant to Section 3(d)(i) and Section 3(d)(ii) of the Prior Agreement, which
grants shall be made as of the Separation Date.  All of Liu’s
outstanding but unvested equity awards granted pursuant to Sections 3(c) and
3(d) of the Prior Agreement, including the awards to be issued as of the
Separation Date under clause (d) of the prior sentence, shall vest immediately
upon the expiration of Liu’s seven-day revocation period set forth in Section
7.b. below.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Except
for the Additional Stock, and in consideration for such Additional Stock, Liu
for herself and her heirs, agents, assigns, executors, successors and each of
them, voluntarily releases and forever discharges the Company, its affiliated
and released entities (including, without limitation, the Company’s parent and
subsidiary entities), its and their respective predecessors, successors and
assigns, its and their respective employee benefit plans and fiduciaries of such
plans, and the current and former officers, directors, shareholders, employees,
attorneys, accountants and agents of each of the foregoing in their official and
personal capacities (collectively referred to as the “Releasees”) generally from
all claims, demands, debts, damage and liabilities of every name and nature,
known or unknown (“Claims”) that, as of the date when Liu signs this Agreement,
Liu ever had, now claims to have or ever claimed to have had against any or all
of the Releasees; provided,
however, that Liu shall not be deemed to release any Claims relating to
any rights provided under this Agreement.

       

      This
Agreement includes, without limitation, all Claims: relating to the Prior
Agreement, Liu’s employment with the Company and the termination of Liu’s
employment; of wrongful discharge; of breach of contract; of retaliation or
discrimination under federal, state or local law, including, but not limited to,
Claims of discrimination or retaliation under Title VII of the Civil Rights Act
of 1964, Claims of disability discrimination or retaliation under the Americans
with Disabilities Act, Claims of discrimination or retaliation under the
California Fair Employment and Housing Act; Claims under the Age Discrimination
in Employment Act or Older Workers Benefit Protection Act; Claims under other
federal or state statutes; of defamation or other torts; of violation of public
policy; for wages, bonuses, incentive compensation, stock, stock options,
warrants, vacation pay or any other compensation or benefit; and for damages or
other legal or equitable remedies of any sort, including, without limitation,
compensatory damages, punitive damages, indirect damages, injunctive relief and
attorney’s fees.  Notwithstanding the foregoing, Liu does not release
(a) any rights that cannot be waived, including, without limitation, her right
to indemnity pursuant to California Labor Code Section 2802; (b) her right to
future indemnity pursuant to the Company’s bylaws and Nevada corporation law;
and (c) her rights arising solely as a stockholder of the Company.

       

      Liu
acknowledges that she is familiar with Section 1542 of the California Civil
Code, which reads as follows:

       

      California Civil Code
Section 1542

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      “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.”

       

      Liu
agrees that she is releasing unknown claims and waiving all rights that she may
have under Section 1542 of the Civil Code of California or under any statute or
common law principle of similar effect.

       

      2.           Mutual
Non-Disparagement.

       

      (a)           Liu
agrees that she will not make any written or oral communications that could
reasonably be considered to be disparaging of the Company in any respect,
including, but not limited to, the Company’s business, technology, products,
executives, officers, directors, former executives, consultants or
agents.

       

      (b)           The
Company agrees that its directors and officers will not make any written or oral
communications that could reasonably be considered to be disparaging of Liu in
any respect.

       

      3.           Resignation. Liu
hereby resigns as an employee and director of the Company, effective December
31, 2010.

       

      4.           Negotiation of
Agreement. This Agreement was negotiated for Liu by a representative of
her own choosing. Liu has had an opportunity to negotiate this Agreement with
the Company; accordingly, there shall be no presumption that drafting
ambiguities shall be construed against either party as the drafter. Both the
Company and Liu are voluntarily agreeing to this Agreement. It is agreed that
the payments under this Agreement are not an admission of any liability or
obligation.

       

      5.           Understanding of Agreement;
Entire Agreement. Liu expressly states that she has read this Agreement
and understands all of its terms, that the preceding paragraphs recite the sole
consideration for this Agreement, and that this Agreement constitutes the entire
agreement with respect to any matters referred to in it. This Agreement
supersedes any and all other agreements between Liu and the Company regarding
Liu’s employment and the terms of separation, including the Prior Agreement.
This Agreement may only be amended in writing signed by Liu and an officer of
the Company, and it is executed voluntarily and with full knowledge of its
significance.

       

      6.           Review and Revocation
Periods.

       

      (a)           Liu
has the opportunity to consider this Agreement for twenty-one days before
signing it. To accept this Agreement, Liu must return a signed original of this
Agreement so that it is received by the undersigned at or before the expiration
of this twenty-one day period. If Liu signs this Agreement within less than
twenty-one days of the date of its delivery to Liu, Liu acknowledges by signing
this Agreement that such decision was entirely voluntary and that Liu had the
opportunity to consider this Agreement for the entire twenty-one day period. Liu
is advised to consult with an attorney before signing this
Agreement.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (b)           For
the period of seven days from the date when this Agreement is signed by Liu, Liu
has the right to revoke this Agreement solely with respect to claims released
under the Age Discrimination in Employment Act or Older Workers Benefit
Protection Act; any such revocation shall be effected by written notice to the
Company’s Chief Executive Officer. For such a revocation to be effective, it
must be delivered so that it is received by the undersigned at or before the
expiration of the seven-day revocation period. This Agreement shall become
effective on the first business day following the expiration of the revocation
period.

       

      7.           Return of Property.
Liu confirms that, to the best of her knowledge, she has returned or, no later
than the Separation Date, will return to the Company all Company property,
including, without limitation, computer equipment, software, keys and access
cards, credit cards, files and any documents (including computerized data and
any copies made of any computerized data or software) containing information
concerning the Company, its business or its business relationships (in the
latter two cases, actual or prospective). Liu also commits to deleting and
finally purging any duplicates of files or documents that may contain Company
information from any computer or other device that remains her property after
the Separation Date.  In the event that Liu discovers that she
continues to retain any such property, she shall return it to the Company
immediately.

       

      8.           Legal Representation.
This Agreement is a legally binding document and Liu’s signature will commit her
to its terms.  Liu acknowledges that she has been advised to discuss
all aspects of this Agreement with her attorney, that she has carefully read and
fully understand all of the provisions of this Agreement and that she is
voluntarily entering into this Agreement.

       

      9.           Absence of Reliance.
In signing this Agreement, Liu is not relying upon any promises or
representations made by anyone at or on behalf of the Company, except as may be
set forth in this Agreement.

       

      10.           Enforceability. If
any portion or provision of this Agreement (including, without limitation, any
portion or provision of any section of this Agreement) shall to any extent be
declared illegal or unenforceable by a court of competent jurisdiction, then the
remainder of this Agreement, or the application of such portion or provision in
circumstances other than those as to which it is so declared illegal or
unenforceable, shall not be affected thereby, and each portion and provision of
this Agreement shall be valid and enforceable to the fullest extent permitted by
law.

       

      11.           Waiver. No waiver of
any provision of this Agreement shall be effective unless made in writing and
signed by the waiving party. The failure of any party to require the performance
of any term or obligation of this Agreement, or the waiver by any party of any
breach of this Agreement, shall not prevent any subsequent enforcement of such
term or obligation or be deemed a waiver of any subsequent breach.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      12.           Governing Law;
Interpretation. This Agreement shall be interpreted and enforced under
the laws of the state of California, without regard to conflict of law
principles.  In the event of any dispute, this Agreement is intended
by the parties to be construed as a whole, to be interpreted in accordance with
its fair meaning, and not to be construed strictly for or against either you or
the Company or the “drafter” of all or any portion of this
Agreement.

       

      13.           Attorneys’ Fees and
Costs. In the event that either party brings an action to enforce or
effect its rights under or relating to this Agreement, the prevailing party
shall be entitled to recover its costs and expenses, including the costs of
mediation, arbitration, litigation, court fees, and reasonable attorneys’ fees
incurred in connection with such an action.

       

      14.           Employee Confidentiality and
Assignment Agreement. Liu acknowledges and agrees that she is bound by
and will comply with the Employee Confidentiality and Assignment Agreement that
she has signed with the Company.  That Employee Confidentiality and
Assignment Agreement shall remain in full force and effect to the extent not
inconsistent with this Agreement.

       

      15.           Counterparts. This
Agreement may be executed in any number of counterparts, each of which when so
executed and delivered shall be taken to be an original, but all of which
together shall constitute one and the same document.

       

      16.           Address and Contact
Information. The following addresses (which may be changed through
written notice by the parties) shall be used for notices:

       

       

      
        
          
            	
                    Apricus
      Biosciences, Inc.

                    Attn:
      Chief Executive Officer

                    6330
      Nancy Ridge Dr., Suite 103

                    San
      Diego, CA 92121

                     

                  	
                     

                  
	
                    With a copy to:

                    Goodwin
      Procter LLP

                    Attn:
      Ryan Murr, Esq.

                    Three
      Embarcadero Center, 24th
      Floor

                    San
      Francisco, CA 94111

                  	 
      

          

        

      

       

       

      [signature page
follows]

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      In witness whereof, the parties have
signed this Separation Agreement as of the date(s) set forth below.

       

       

      
        
          
            	
                    Dated:  December
      16, 2010

                  	 
      	 
      	
                    Vivian
      H. Liu

                  
	 	 	 	 
	 
      	 
      	 
      	 
      	
                    /s/
      Vivian H. Liu

                  
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	
                    Dated:  December
      16, 2010

                  	 
      	 
      	
                    Apricus
      Biosciences, Inc.

                  
	 	 	 	 
	 
      	 
      	 
      	
                    By:

                  	
                    /s/
      Bassam Damaj

                  
	 
      	 
      	 
      	 
      	
                    Bassam
      Damaj

                  
	 
      	 
      	 
      	 
      	
                    Chief
      Executive Officer

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