Document:

exv10w3

 

Exhibit 10.3

Barbara G. McClung

Dear Barbara:

     This Employment Agreement (the “Agreement”) sets forth the terms and conditions of your
employment with Cygnus, Inc. (the “Company,” “Cygnus”). All of such terms are conditional upon
your having signed and delivered this Agreement to the Company. This Agreement and your
commencement of employment will have an effective date of April 2, 2005 (the “Effective Date”).

     In consideration of the mutual covenants and promises made in this Agreement, you and the
Company agree as follows:

1. Position and Responsibilities.

     (a) Position and Responsibilities. As of the Effective Date, you will serve in the
position of Chief Legal Officer and Corporate Secretary with appropriate responsibilities for such
roles. You will be an “officer” of the Company as that term is defined in Rule 16a-1(f) of the
Securities Exchange Act of 1934. As Chief Legal Officer and Corporate Secretary, you shall report
directly to the Chief Executive Officer. Your office will be located in the San Francisco,
California area. You will be responsible for the orderly dissolution of the Company and overseeing
the Company’s arbitration matter with Ortho-McNeil Pharmaceutical, Inc., a Johnson & Johnson
company (the “Arbitration Matter”).

     (b) At-Will Relationship. Subject to the terms and conditions of this Agreement, your
employment at the Company is “at will” and you or the Company are free to terminate the employment
relationship at any time, with or without Cause (as defined below) in each case subject to the
terms and provisions of Section 6.

2. Salary. You will earn a base salary of $275,000.00 per year (“Base Salary”), which
shall cover all hours worked, payable in the time and manner that salary is paid by the Company and
subject to customary tax deductions.

3. Bonus. You may be eligible for a discretionary bonus to be determined by the Company’s
Board of Directors in its sole and absolute discretion upon settlement of the Arbitration Matter;
however, nothing in this Agreement shall be construed as a guarantee of any bonus.

 

 

Barbara G. McClung

Page 2

4. Benefits and Reimbursements.

     (a) Benefits. During your employment with the Company, you will be eligible to
participate in all Company employee benefit plans and programs then available or thereafter made
available to all of the Company’s officers.

     (b) Business Expense Reimbursement. During your employment as [insert title], you
will be reimbursed for all reasonable and approved business expenses upon the properly completed
submission of requisite forms and receipts to the Company in accordance with its business expense
reimbursement and travel policies. Such reimbursements shall be in compliance with applicable
rules and regulations promulgated by the Internal Revenue Service.

5. Other Employment. With the prior written consent of the Company Board of
Directors, you may enter into employment, consulting, or directorship arrangements with other
companies or entities while employed by the Company, with the exception of Johnson & Johnson and
any of its subsidiary or affiliate companies, including but not limited to Ortho-McNeil
Pharmaceutical, Inc., provided, however, that you continue to satisfactorily perform the duties
outlined in Section 1(a) above. An affiliate is defined to be any company, directly or indirectly
controlling, controlled by, or under common control with Johnson & Johnson, wherein “control” shall
mean the ownership of twenty (20%) or more of the outstanding voting securities of such company,
directly or indirectly, or the power to direct or cause the direction of the management of such
company. You will notify the Company in writing at least five business days prior to your
intention to enter into such a service relationship with another company or entity. Such notice
shall include the name of the other entity, the date you intend to commence rendering services and
the nature of such services.

6. Termination of Employment.

     (a) For Cause. For purposes of this Agreement, your employment with the Company
may be terminated for “Cause” by the Company at any time as a result of the occurrence of any
one or more of the following:

	 	(i)  	Your willful misconduct or gross negligence that could
reasonably be expected to have a material adverse effect on the business and
affairs of the Company;
	 
	 	(ii)  	Your willful disregard of lawful instructions from the Board of
Directors (the “Board”) relating to the business of the Company ;
	 
	 	(iii)  	The commission by you of a crime, an act involving moral
turpitude or an act constituting common law fraud, or a felony, or any criminal
act against the Company or any Company stockholder; or

2

 

Barbara G. McClung

Page 3

	 	(iv)  	Your material breach or material violation of a material
provision of this Agreement or of the Company’s Code of Ethics or any other
major Company policy.

For these purposes, no act or failure to act shall be considered “willful” unless it is done, or
omitted to be done, in bad faith without reasonable belief that the action or omission was in the
best interest of the Company. If your employment is terminated for Cause, then you will not be
eligible to receive any discretionary bonus as described in Section 3.

     (c) Termination Without Cause. The Company may terminate your employment without
Cause at any time and for any reason including, without limitation, after the Company has filed its
Certificate of Dissolution with the Delaware secretary of state and has completed all of its
corporate activities, including but not limited to, distribution, if any, to stockholders.

     (d) Voluntary Termination, Death or Disability. You may terminate your employment
with the Company of your own volition or as a result of death or Disability (as defined in the
Company’s Long-Term Disability Plan).

     (e) Upon termination of your employment for any reason, you will be entitled
only to any accrued and unpaid salary due you pursuant to Section 2 above through the date
of termination. You will be entitled to no other compensation or benefits (other than those
benefits provided to you by COBRA, if available) from the Company. In addition, as of the
date of your termination of employment, you will be deemed to have resigned from all Company
positions, offices, directorships and the like unless the Company specifically in writing
requests you to continue on in such other capacity(ies).

7. Other Conditions. As a condition of this Agreement, you also agree to
the following:

     (a) You will not at any time during and subsequent to your period of employment with
the Company make any disparaging statements (oral or written) about the Company, or any of
its affiliated entities, officers, directors, employees, stockholders, representatives or
agents, or any of the Company’s products, in any manner that might be harmful to their
businesses, business reputations or personal reputations; and

     (b) Upon your termination of employment, you will no longer represent that you are an
officer, director or employee of the Company and you will immediately discontinue using your
Company mailing address, telephone, facsimile machines, voice mail and e-mail and you shall
promptly return to the Company any and all Company property.

8. Assignability; Binding Nature. Commencing on the Effective Date, this Agreement
will be binding upon you and the Company and any respective successors, heirs, and assigns. Any
successor of the Company will be deemed substituted for the Company under the terms of this
Agreement for all purposes and any such successor will expressly assume in writing all of

3

 

Barbara G. McClung

Page 4

the Company’s obligations under this Agreement. This Agreement may not be assigned by you except
that your rights to compensation and benefits hereunder, subject to the limitations of this
Agreement, may be transferred by will or operation of law.

9. Governing Law; Arbitration. This Agreement will be deemed a contract made
under, and for all purposes shall be construed in accordance with, the laws of California. Any
controversy or claim relating to this Agreement any breach thereof, and any claims you may have
against the Company or any officer, director or employee of the Company or arising from or relating
to your employment with the Company, will be settled solely and finally by arbitration in San
Francisco, California in accordance with the rules of the American Arbitration Association (“AAA”)
then in effect in the State of California, and judgment upon such award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof, provided that this Section 9
shall not be construed to eliminate or reduce any right you or the Company may otherwise have to
obtain a temporary restraining order or a preliminary or permanent injunction to enforce the
Confidential Information obligations before the matter can be heard in arbitration. The arbitrator
may provide that the cost of the arbitration (including reasonable legal fees) incurred by you or
the Company will be borne by the non-prevailing party except that, to the extent required by
applicable California law, any arbitration-specific costs will be paid by the Company.

10. Withholding. Anything to the contrary notwithstanding, all payments made by the
Company hereunder to you or your estate or beneficiaries will be subject to tax withholding
pursuant to any applicable laws or regulations. In lieu of withholding, the Company may, in its
sole discretion, accept other provisions for payment of taxes as required by law, provided it is
satisfied that all requirements of law affecting its responsibilities to withhold such taxes have
been satisfied.

11. Entire Agreement. Except as otherwise specifically provided in this Agreement,
this Agreement contains all the legally binding understandings and agreements between you and the
Company pertaining to the subject matter of this Agreement and supersedes all such agreements
including, but not limited to, any employment or change of control agreements, whether oral or in
writing, previously entered into between the parties. You also specifically consent to the
immediate termination of any such agreements and waive any and all provisions contained in such
agreements that may have provided for notice periods with respect to the termination of such
agreements or for the continuation of such agreements beyond their date of termination including
the employment and change of control agreements between the Company and yourself, [prior employment
agreements], and the additional benefits provided to you hereunder constitute adequate
consideration for your waiver of such rights.

12. Miscellaneous. No provision of this Agreement may be amended or waived unless
such amendment or waiver is agreed to by you and the Company in writing. No waiver by you or the
Company of the breach of any condition or provision of this Agreement will be deemed a waiver of a
similar or dissimilar provision or condition at the same or any prior or subsequent time. In the
event any portion of this Agreement is determined to be invalid or unenforceable

4

 

Barbara G. McClung

Page 5

for any reason, the remaining portions shall be unaffected thereby and will remain in full force
and effect to the fullest extent permitted by law.

13. Intellectual Property.

     (a) General. Any and all intellectual property (including but not limited to
inventions, trademarks, trade secrets, copyrights, software or literary creations) made, developed
or created by you during the term of this Agreement using Company time or Company equipment,
supplies, facilities, resources, or trade secret information or which reasonably relate to the
business of the Company or which reasonably relate to any business conducted by the Company during
the term of your employment by the Company (each, “Intellectual Property”), whether at the request
or suggestion of the Company or otherwise, whether alone or in conjunction with others, and whether
during regular working hours of work or otherwise, shall be promptly and fully disclosed by you to
the Company and shall be the Company’s exclusive property as against you, and you shall promptly
deliver to the Company all papers, drawings, models, data and other material relating to any
Intellectual Property made, developed or created by you as aforesaid. In addition, you covenant
and agree to disclose to the Company any Intellectual Property developed or created by you during
the term of this Agreement, whether or not such Intellectual Property relates to the business being
conducted by the Company at the time of development or creation of such Intellectual Property.

     (b) Works for Hire. You hereby expressly acknowledge and agree that any
copyrights developed or created by you during the term of this Agreement which reasonably relates
to the business of the Company or which reasonably relates to the business conducted by the Company
during your employment by the Company shall be considered “works made for hire” within the meaning
of the Copyright Act of 1976, as amended (17 U.S.C. § 101). Each such copyright as well as all
copies of such copyrights in whatever medium fixed or embodied, shall be owned exclusively by the
Company as of the date of creation.

     (c) Cooperation. You shall, upon the Company’s request and without any payment
therefor, execute all documents necessary or advisable to register or protect the Company’s
Intellectual Property or to vest in the Company full and exclusive title to such Intellectual
Property, the expense of registering or protecting the Intellectual Property to be borne by the
Company. In addition, you agree not to file any documents adverse to the Company’s ownership of
such Intellectual Property.

     (d) Disclosure. This Agreement does not apply to Intellectual Property that
qualifies fully as a nonassignable invention under the provisions of California law. You hereby
covenant and agree to disclose promptly in writing to the Company all Intellectual Property made or
conceived by you during the term of your employment and for one (1) year thereafter, whether or not
you believe that such Intellectual Property is subject to this Agreement, to permit a determination
by the Company as to whether such Intellectual Property should be the property of the Company. Any
such information will be received in confidence by the Company.

5

 

Barbara G. McClung

Page 6

     If the terms of this Agreement are acceptable to you, please execute the enclosed copy of this
letter and return it to me.

	 	 	 	 	 
	 	Very truly yours,

CYGNUS, INC.

 	 
	 	By:  	 	 
	 	 	John C Hodgman 	 
	 	 	Chairman, CEO , and President 	 
	 

AGREED TO AND ACCEPTED BY:

	 	 

     Barbara G. McClung

6exv10w4

 

Exhibit 10.4

John Hodgman

 

 

Re:     Termination Agreement

Dear John:

          This letter, upon your signature, will constitute the agreement between you and Cygnus, Inc.
(the “Company”) on the terms of your termination from employment with the Company.

          1. Your position with the Company will be eliminated as of April 1, 2005 (your “date of
termination”). You therefore will no longer represent to anyone that you are still an employee of
the Company and will not say or do anything purporting to bind the Company or any of its
subsidiaries or affiliates.

          2. You will be paid your earned salary and accrued vacation pay through the date of your
termination.

          3. You will return to the Company all company property in your possession, including but not
limited to your card key, office keys, business cards, computer files, lab notebooks and other
notebooks and documents relating to Cygnus business, training binders, etc. By no later than March
23, 2005, you will submit expense reports, if any, for pre-approved business expenses that you
incurred prior to your date of termination. The Company will reimburse you in accordance with its
existing policies for these expenses. Cygnus will deduct the cost of any Cygnus property that has
not been returned before reimbursing you for approved business expense reports.

          4. In consideration of the following: (a) your acceptance of this Termination Agreement; and
(b) your signing the Company’s Proprietary Information Agreement Termination Certification; then
pursuant to Paragraph 13, the Company will pay you a lump-sum post-termination severance of
$627,100.00 (the “Severance Amount”) less customary payroll deductions. In addition, the Company
will purchase a life insurance policy on your behalf at the cost of $626.40 per year. You will
have twelve (12) months after the date of your termination of employment to exercise your vested
stock options (subject to the option’s expiration date as provided in the applicable option
agreement).

 

 

John Hodgman

Page 2

          The Company will also give you a computer and other miscellaneous equipment and you have
agreed to take this property as-is. The Company will not in any way be responsible for any repair
or replacement or ongoing support relating to this equipment. Furthermore you warrant that you
will immediately remove all company information from this equipment.

          5. As of the date of your termination, you will no longer be eligible to participate in any of
the Company’s benefit or compensation plans, except as provided by law or the terms of the
applicable plans. Information regarding your rights to continuation of your health insurance
coverage under the terms of COBRA will be sent to you under separate cover. To the extent that you
have such rights, nothing in this Termination Agreement will impair them.

          6. On behalf of yourself and your representatives, agents, heirs and assigns, you waive,
release, discharge and promise never to assert any and all claims, liabilities or obligations of
every kind and nature, whether known or unknown, suspected or unsuspected that you ever had, now
have or might have as of the effective date of this Termination Agreement against the Company, its
predecessors, subsidiaries, affiliates, related entities, officers, directors, shareholders,
owners, agents, attorneys, employees, successors, or assigns.

          The released claims include, without limitation, any claims arising from or related to your
employment with the Company, the termination of your employment with the Company, and/or the
execution of this Termination Agreement. The claims also specifically include, without limitation,
any claims arising under any federal, state and local statutory or common law, such as Title VII of
the Civil Rights Act, the federal Age Discrimination in Employment Act, the California Fair
Employment and Housing Act, the Americans With Disabilities Act, the Employee Retirement Income
Security Act, the Fair Labor Standards Act, the California Labor Code (all as amended), the law of
contract and tort, and any claim for attorneys’ fees.

          You also waive and release and promise never to assert any such claims, even if you do not now
know or believe that you have such claims. You therefore waive your rights under section 1542 of
the Civil Code of California, which states:

A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known to him must have materially
affected his settlement with the debtor.

          In short, you agree that you will not bring any lawsuits or claims of any kind against the
Company, its predecessors, subsidiaries, affiliates, related entities, officers, directors,
shareholders, owners, agents, attorneys, employees, successors, or assigns and will not accept the
benefits of any lawsuits or claims of any kind brought on

 

 

John Hodgman

Page 3

your behalf against the Company, its predecessors, subsidiaries, affiliates, related entities,
officers, directors, shareholders, owners, agents, attorneys, employees, successors, or assigns.

          7. Unless required by court order or law, you will not disclose to anyone any information
regarding the terms of this Termination Agreement, the benefits being paid to you under it or the
fact that a payment was made to you, except that you may disclose this information to your spouse,
attorney, accountant or other professional advisor to whom you must make the disclosure in order
for them to render professional services to you. In such circumstances, however, you will instruct
them to maintain the confidentiality of this information just as you must.

          8. You will not disclose to anyone any confidential or other information regarding the
Company’s practices, procedures, business, trade secrets, corporate strategy, customer lists or
marketing strategies, without prior written permission from the Chief Executive Officer of the
Company or unless required by court order. You acknowledge the highly confidential nature of
information regarding the Company’s customers, subsidiaries, affiliates and employees.

          9. You further agree that you will not disparage the Company, any of its subsidiaries,
affiliates, related entities or any past or present officers, directors or employees of the
Company. You also agree that you will not say or do anything that damages or impairs in any way
the business organization, goodwill, or reputation of the Company or any of its subsidiaries,
affiliates or related entities.

          10. Upon request by the Company, you agree to cooperate to the extent necessary to protect the
interests of the Company or any of its subsidiaries, affiliates or related entities, including
without limitation, in providing any information that you have about the Company’s business and its
operations and/or in providing truthful testimony as a witness or declarant in connection with any
potential future litigation which may arise as to which you have any relevant information.

          11. In the event that you breach any of your obligations under this Termination Agreement or
as otherwise imposed by law, the Company will be entitled to immediate return of any and all
benefits paid to you under this Agreement and to obtain injunctive relief and all other relief
provided by law or equity. All other duties and obligations under the Agreement, however,
including your waivers and releases, shall remain in full force and effect.

          12. With the exception of a suit for injunctive or equitable relief, in the event that a
dispute arises concerning the interpretation or enforcement of this Termination Agreement, or any
other related matter, you and the Company agree that any such dispute shall be resolved by a
three-member arbitration panel in accordance with the commercial arbitration rules of the American
Arbitration Association. You and the

 

 

John Hodgman

Page 4

Company therefore specifically waive any right to a jury trial on any such disputes. The losing
party in any such dispute shall pay all of the winning party’s costs, including any arbitrator or
administrative fees and reasonable attorneys’ fees. Any arbitration shall be held in San Francisco
County and this Termination Agreement will in all respects be interpreted and governed under the
laws of the State of California.

          13. Pursuant to the Older Workers Benefit Protection Act (OWBPA), you acknowledge that you
were provided up to 45 days to consider and accept the terms of this Termination Agreement
(although you may accept it at any time within those 45 days) and that you were advised to consult
with an attorney about the Termination Agreement before signing it. In addition, pursuant to the
OWBPA, attached is an informational exhibit.

          To accept the agreement, please date and sign this letter and return it to Human Resources.
Once you do so, you will still have an additional seven days in which to revoke your acceptance.
To revoke, you must send Human Resources a written statement of revocation by registered mail. If
you do not revoke, the eighth day after the date of your acceptance will be the “effective date” of
the agreement. Your Severance Amount will be provided to you within 10 business days from the
effective date of this Agreement.

          14. Except as set forth in this Termination Agreement, there are no representations, promises,
agreements or understandings between you and the Company about or pertaining to the termination of
your employment with the Company, or the Company’s obligations to you with respect to your
employment or any other matter mentioned above. This Agreement therefore supercedes any prior
written or oral representations, promises, agreements and understandings regarding any of the
matters discussed above (including without limitation the following: (a) the February 5, 1996
Letter Agreement; (b) the February 5, 1996 as modified on August 28, 1998 Letter Agreement; (c) the
August 28, 1998 Letter Agreement; (d) the December 12, 2000 Letter Agreement; and (e) the December
18, 2003 Letter). This Termination Agreement therefore supercedes any prior written or oral
representations, promises, agreements and understandings regarding any of the matters discussed
above.

	 	 	 
	

	 	Sincerely,
	 
	 	 
	 
	 	 
	

	 	 
	

	 	Barbara G. McClung
	

	 	Corporate Secretary

 

 

John Hodgman

Page 5

          By signing this letter, I acknowledge that I have carefully reviewed and considered this
Termination Agreement; that I fully understand all of its terms; and that I voluntarily agree to
them.

          Date:                                         

	 	 	 
	 
	 	 
	

	 	 
	 

	 	John Hodgman

 

 

John Hodgman

Page 6

Exhibit

	 	 	 	 	 	 	 	 	 
	 	 	 
	 	Job Title	 	 	ages of # selected	 	 	ages of # not selected	 
	 	 	 	 	 	 	 	 	 
	 	Officers

	 	 	61, 57
	 	 	50, 50	 
	 	 	 	 	 	 	 	 	 
	 	Technical

	 	 	36, 44, 46, 50,

51, 56, 56, 62
	 	 	none	 
	 	 	 	 	 	 	 	 	 
	 	Administrative

	 	 	34, 34, 35, 41,

47, 53, 53, 60
	 	 	none

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00081-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00081-of-00352.parquet"}]]