Document:

EX-10.1

Exhibit 10.1

September 12, 2006

Via Federal Express

David D. Muth

611 SW 15th Street

Boca Raton, Florida 33486

Dear Dave:

On behalf of Avalon Pharmaceuticals, Inc. I am pleased to offer you the following position as an
employee of the Company:

	 	 	 
	Job Title:

	 	Executive Vice President and Chief Business Officer
	 
	 	 
	Reporting to:

	 	Kenneth C. Carter, President & CEO
	 
	 	 
	Starting Date:

	 	September 21, 2006
	 
	 	 
	Initial Starting Salary:

	 	$280,000 per annum, subject to adjustment from

time to time in the Company’s discretion
	 
	 	 
	Classification:

	 	Exempt
	 
	 	 
	Equity:

	 	Subject to the approval of the Compensation

Committee of the Company’s Board of Directors, the

Company will grant you options for 120,000 shares

of Avalon Pharmaceuticals, Inc. Common Stock under

the Company’s Stock Option Plan. These options

will vest over a four (4) year period, effective

the date of grant. The options will be available

to you retroactively only upon the successful

completion of the 90-day Introductory Period. The

terms and conditions for any options will be those

in the Company’s Plan, or as set by the Board.
	 
	 	 
	Bonus Plan:

	 	Eligibility and distribution of bonus is based on

the achievement of corporate and individual

objectives in accordance with the approved Avalon

Pharmaceuticals Compensation Plan. You will be

eligible for a bonus up to 35% of your base pay

depending upon the completion of the approved

goals. The bonus for 2006 will be prorated.
	 
	 	 
	Benefits:

	 	The Company provides a comprehensive benefits

program, which includes standard medical and

dental benefits, long- and short-term disability

coverage, a 401(K) plan, and Employee Assistance

Program, and a flexible benefits plan. Paid time

off is also available to all employees. These

programs will be provided in accordance with the

terms and conditions set forth in each plan, and

are subject to change at the Company’s discretion.

Provided that underwriting approves your

application, you will also receive benefit of

Avalon’s salary continuation plan for executives.
	 
	 	 
	Relocation:

	 	The Company will pay for your moving expenses as

outlined in Attachment A.
	 
	 	 
	Termination:

	 	Upon termination for any reason, the Company shall

pay you within two weeks of such termination, your

current base salary earned through the termination

date, plus accrued vacation, if any, and other

benefits or payments, if any, to which you are

entitled as provided in accordance with the terms

and conditions of such benefit plan. In the event

you are terminated by the Company after the 90-day

Introductory Period without “Cause” (as herein

defined), or if you terminate your employment with

the Company for “Good Reason” (as hereinafter

defined), the Company shall immediately vest one

half (1/2) of any shares granted to you under the

Company’s Stock Option Plan that has not vested as

of the date of your termination, shall continue to

pay you your bi-weekly rate in effect at the time

of termination for a period of six (6) months

(“Severance”); provide you with outplacement

services; provide and pay the Company’s portion of

your health insurance for a period of six (6)

months following such termination. You shall not

be required to mitigate damages by seeking

employment elsewhere. If you are terminated with

cause, the Company shall pay you only your current

base salary earned through the termination date,

plus accrued vacation, if any, to which you are

entitled as provided in accordance with the terms

and conditions of such benefit plan.

“Cause” shall include (i) your conviction of a

felony, either in connection with the performance

of your obligations to the Company or otherwise,

which adversely affects your ability to perform

such obligations or materially adversely affects

the business activities, reputation, goodwill or

image of the Company, (ii) your willful

disloyalty, deliberate dishonesty, breach of

fiduciary duty to the company (iii) your breach of

the terms of this Agreement, or your failure or

refusal to use your best efforts to carry out any

material tasks that do not violate any other term

of this agreement, provided such tasks are

assigned to you by the Company in accordance with

the terms hereof, which breach or failure

continues for a period of more than thirty (30)

days after your receipt of written notice thereof

from the Company, (iv) the commission by you of

any act of fraud, embezzlement or deliberate

disregard of a rule or policy of the Company known
	 
	 	 
	to you o

te a majority of

	 	r contained in a policy and procedure

manual provided to you which results in material

loss, damage or injury to the Company, or (v) the

material breach by you of any of the material

provisions of the Confidentiality Assignment of

Inventions and Non-Competition Agreement.

Termination of your employment by you shall

constitute termination for “Good Reason” if such

termination occurs (a) within eighteen months of a

“Change in Control” (as hereinafter defined) (b)

within three months of a material diminution in

your responsibilities as Chief Business Officer,

provided that such diminution is not in connection

with the termination of your employment for Cause,

(c) within three months of your principal work

location changing to be more than 50 miles from

your then current residence; or (d) in the event

you should die while an employee of the Company.

The Company shall notify you, within 10 days of

receipt of your notice of intent to terminate your

employment for Good Reason, if the Company

disagrees with your intent to terminate pursuant

to this paragraph.

A “Change in Control” shall be deemed to have

occurred if either: (i) any “person” (including,

without limitation, any individual, sole

proprietorship, partnership, trust, corporation,

association, joint venture, or other entity,

whether or not incorporated), or “group” of

persons (as such terms are used in Sections 13(d)

and 14(d) of the Securities Exchange Act of 1934,

as amended (the “Exchange Act”)), becomes, after

the date hereof, the “beneficial owner” (as

defined in Rule 13d-3 under the Exchange Act),

directly or indirectly, of securities of the

Company representing fifty percent (50%) or more

of the combined voting power of the Company’s then

outstanding securities; (ii) during any two (2)

year period, individuals who constitute the Board

of Directors at the beginning of such period,

together with any new directors elected or

appointed during the period whose election or

appointment resulted from a vacancy on the Board

of Directors caused by the retirement, death, or

disability of a director and whose election or

appointment was approved by a vote of at least a

majority of the directors then still in office who

were directors at the beginning of the period,

cease for any reason to constitu

the Board of Directors; (iii) the Company sells,

assigns, conveys, transfers, leases or otherwise

disposes of all or substantially all of its assets

to any person; (iv) the Company consolidates with,

or merges with or into another entity, or any

entity consolidates with, or merges with or into,

the Company (a “Merger”), in which the owners of

outstanding voting stock of the Company

immediately prior to such Merger do not represent

at least a majority of the voting power in the

surviving entity after the Merger; or (v) the

stockholders of the Company approve a plan of

liquidation or dissolution.
	 
	 	 
	Conflict:

	 	You hereby acknowledge that you are not a party to

any agreement that in any way prohibits or imposes

any restrictions on your employment with the

Company, and your acceptance hereof will not

breach any agreements to which you are a party.
	 
	 	 
	Employment Requirements

And Period:

	 	If you accept this position, you will be an

employee at will, meaning you are not obligated to

remain employed at the Company for any specific

period of time. Likewise, the Company is not

obligated to employ you for any specific period.
	 
	 	 
	Other Provisions:

	 	Employment will be contingent upon your signing

the Avalon Pharmaceuticals, Inc. Confidentiality,

Assignment of Inventions and Non-Competition

Agreement. You also agree to be bound by all

personnel policies that may be adopted from time

to time.

I look forward to having you as part of the team and believe you will play an important role in the
growth of the Company.

Sincerely,

ON BEHALF OF AVALON PHARMACEUTICALS, INC.:

	 	 	 
	/s/ Kenneth C. Carter

	 	September 21, 2006
	 

	 	 
	Kenneth C. Carter

President & CEO

	 	Date

	 
	 	 
	ACCEPTED:

	 	

	 
	 	 
	/s/David D. Muth

	 	September 21, 2006
	 

	 	 
	David D. Muth

	 	Date

1

Attachment A

Moving Assistance & Relocation

David Muth

September 2006

Sale of house

	 	•	 	Realtor fees, not to exceed 6% unless authorization is obtained for a higher rate

	 	•	 	Closing costs, including attorney fees and stamp taxes

Move

	 	•	 	Moving costs, including packing, unpacking, transportation, declared value insurance

Employee must submit 3 bids from moving companies to Avalon

Avalon will provide insurance on the declared value of your household goods

	 	•	 	One week of temporary housing during your first week of employment plus reimbursement
of up to $7,800 additional temporary housing. The Company is not obligated to pay this
allowance if it is not utilized

Does not include cost of phone, food or utilities

	 	•	 	Storage of household goods, if necessary, for up to 90 days while in temporary housing

Purchase of new house

	 	•	 	Closing costs of new home

	 	•	 	Reimbursement for up to 3 round trip flights and related expenses for your spouse to
come to Maryland for house hunting trips.

	 	•	 	Additional reimbursable fees include: title search, customary legal, notary,
recording, transfer, necessary pre-purchase home inspections and other approved closing
fees

	 	•	 	Reimbursement up to a maximum of $1,000 for miscellaneous one-time expenses associated
with moving into a new house (e.g. cost of re-keying the house, fees to establish
telephone, gas, electric, cable services, etc.)

	 	•	 	Reimbursement of origination fees not to exceed $2,000.00

	 	•	 	Discount points will be excluded

Avalon Pharmaceuticals will gross-up relocation expenses, which are not deductible pursuant to
Federal income tax law. In addition to the Federal income tax liability, Avalon Pharmaceuticals
will gross-up certain reimbursed relocation expenses which you are unable to deduct in full or in
part pursuant to state income tax law. If you are subject to additional FICA tax due to
reimbursement of non-deductible relocation expenses, you will be grossed-up for the appropriate
amount.

Initials

/s/KCC

/s/DDM

2EX-10.58

EXHIBIT 10.58

August 29, 2006

Mr. Richard Emil

Dear Mr. Emil:

I am pleased on behalf of En Pointe Technologies to present to you this formal change in your
compensation plan effective April 1, 2006. Except as noted herein, all other terms and conditions
of your employment as Vice President – Service remain unchanged.

To communicate your acceptance to our offer, please:

	 	1)	 	Sign your name in full and date below

	 	2)	 	Initial the bottom of the 2nd page.

	 	3)	 	Return the signed document to Corporate Human Resources, attention of Luz Garza,
Senior HR Administrator with seven (7) days of the date of this letter.

If you have any questions, please feel free to contact me at 310-725-5286. We look forward to your
continuing as part of the En Pointe Technologies team!

Sincerely,

/s/ Javed Latif

Javed Latif

Chief Financial Officer & Senior Vice President – Operations

	 	 	 
	READ & AGREED:
With my signature below, I acknowledge
that I have read, understood and accept
the terms outlined in this offer and its
attachment.

	 
	 	 
	 

	 
	 	 
	Name (Print):

	 	Richard Emil
	 

	 	 
	 
	 	 
	Signature:

	 	/s/ Richard Emil
	 

	 	 
	 
	 	 
	Date:

	 	September 27, 2006
	 

	 	 
	 
	 	 

1

Quarterly Executive Bonus (QEB) Plan Summary: Vice-President – Service

Effective Period

	•	 	April 1, 2006 through March 31, 2007

Base Salary

	•	 	This full-time, exempt position will be paid a base salary of $6,250.00 per semi-monthly
pay period

	•	 	There are 24 semi-monthly pay periods in a payroll year

Commission (Services Only)

	•	 	2.0% of top-line services revenue for Services sales generated exclusively by this
position.

	•	 	0.5 % of top-line services revenue for Services sales generated by those Services positions
which report to this position.

	•	 	Services commission shall exclude all existing Enterprise Solutions business, i.e., prior
to date of hire.

	•	 	Services commission shall be calculated monthly and paid on the 23rd of each month for the
prior calendar sales month.

Bonus Criteria (Effective 4/1/06 to 3/31/07)

	•	 	During the Effective Period this position will be eligible to participate in En Pointe’s
Quarterly Executive Bonus (QEB) plan which is tied to company profitability.

	•	 	Under the QEB plan, this position may earn a yearly bonus of $75,000.00 in quarterly
increments during the Effective Period based on meeting the following profitability targets:

Quarterly Profitability

(“Net Profit” as defined below)

$150,000

$350,000

$750,000

$1,000,000

% of Target Quarterly Bonus Payable

100%

115%

125%

145%

General Terms & Conditions of Eligibility for QEB Payment

	1)	 	“Net Profit” is defined as “net after taxes” with the bonus paid expense included as part of
the period’s net income computation, including consolidated subsidiaries and as reported in
the Company’s quarterly press release.

	2)	 	Each quarter’s profitability results stands alone and a minimum of $150,000.00 in net
quarterly profit is required for bonus to be awarded. Accordingly:

	 	a)	 	No bonus is earned if quarterly net profit is less than $150,000.00

	 	b)	 	Profitability results cannot be transferred across quarters to achieve QEB targets.

	3)	 	QEB participant must be employed for the full quarter and must be a full time employee until
bonus is paid.  Accordingly:

	 	a)	 	There is no vesting or pro-rations for partial quarters of employment. 

	 	b)	 	Termination for any reason prior to the end of a quarter constitutes waiver and
forfeiture of bonus eligibility for all future quarters and for the partial quarter in
which termination occurs.

	4)	 	All bonuses are discretionary with the Compensation Committee of the Board of Directors.  All
bonuses are performance-based and are conditional upon achieving the Company’s bonus criteria
as shown above, together with each person’s individual conformity with all Company policies. 
Bonus payments may be forfeited, reduced, or withheld subject to any pending investigation.

2

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