Document:

Exhibit 10.7

 

 

Patricia Bitar, CPA

 

 

September 16, 2014

 

Dear Patricia,

 

 

We are pleased to offer you the position of Chief Financial Officer, a position in which you will report to the President & Chief Executive Officer.  We expect that your start date of employment will be no later than September 22, 2014.  The following are details of your offer:

 

	
Position:
    	
Chief Financial   Officer.  Responsibilities include, but   are not limited to, leadership and management of the Company’s Financial   Department; and other general responsibilities on behalf of the Company.
    
	
 
    	
 
    
	
Reporting   to:
    	
Charles Theuer,   President and Chief Executive Officer
    
	
 
    	
 
    
	
Compensation:
    	
Base Salary at   the annualized rate of $250,000, to be paid in accordance with the Company’s   standard payroll practices.

 

Eligibility for   a discretionary annual, performance-based bonus targeted at up to 30% of base   salary (prorated as applicable for 2014). The Board of Directors of the   Company and senior management have the sole discretion to establish   performance criteria and bonus conditions and to determine both whether you   have satisfied the performance objectives and the actual amount, if any, of   the annual bonus.  The annual bonus, if   earned, will be paid no later than March 15 of the calendar year   subsequent to the bonus year.

 

Subject to the   approval of the Company’s Board of Directors, you will be granted a stock   option under the Company’s 2011 Equity Incentive Plan to purchase 228,776   shares of the Company’s outstanding common stock, with a per share exercise   price equal to the fair market value of a Company common share on the date of   grant as determined by the Company’s Board of Directors.  Vesting and other terms of this stock   option will be specified in a Company standard stock option agreement which   you must execute as a condition of grant.
    

 

 

 

TRACON Pharmaceuticals, Inc. · 8910 University Center Lane, Suite 700 · San Diego, California  92122

 

Phone:  858-550-0780 · Fax:  858-550-0786 · Website:  www.traconpharma.com

 

 

	
 
    	
In addition to   major holidays that the Company recognizes, you are eligible to accrue at the   rate of fifteen (15) days paid vacation annually up to a maximum accrual cap   of 60 days in accordance with the Company’s vacation policy (prorated as   applicable for 2014).
    
	
 
    	
 
    
	
Additional:
    	
You are entitled   to all rights and benefits for which you are eligible under any benefit or   other plans (including, without limitation, dental, medical, medical   reimbursement and hospital plans, 401K plans, employee stock purchase plans,   bonus plans and other so-called “fringe” benefits) as the Company shall make   available to its employees from time to time, provided that you meet any   required employee contribution(s).    These benefits currently include a $4,000 health savings account contribution   (for employee plus dependents health coverage) for 2014, prorated based upon   your employment start date.

 

You will be   eligible to participate in the Company’s Severance Plan, pursuant to which   you will be eligible for six months of severance in the event of a specified   and qualifying involuntary termination of employment (as defined in the   Severance Plan).  Your eligibility for   any such severance benefits are subject to the terms and conditions of the   Severance Plan and Severance Agreement (the Severance Plan and form of your   Severance Agreement will be separately provided to you).  You must execute the Severance Agreement in   order to be eligible to participate in the Severance Plan and such   eligibility will commence only after your start date of employment and only   after you have delivered the signed Severance Agreement to the Company.
    

 

 

Your employment with the Company is for no specified period and constitutes “at will” employment.  As a result, you may terminate your employment with the Company at any time and for any reason whatsoever simply by notifying the Company; and the Company can terminate your employment at any time, with or without cause, and with or without notice (subject to the terms of the executed Severance Agreement).  Nothing in this offer letter alters the terms of your at will employment with the Company.  In addition, the Company retains the discretion to modify your other employment terms from time to time, including but not limited to your position, duties, reporting relationship, work location, compensation and benefits.

 

As a condition of your employment, you shall sign and comply with the Company’s non-solicitation, nondisclosure and developments agreement (the “Confidential Information Agreement”), which is attached as Exhibit A.  In addition, you will be required to sign and acknowledge the Company’s employment manual.

 

 

You understand and agree that by accepting this offer of employment, you represent to the Company that your performance will not breach any other agreement to which you are a party and that you have not, and will not during the term of your employment with the Company, enter into any oral or written agreement in conflict with any of the provisions of this letter or the Company’s policies.  You are not to bring with you to the Company, or use or disclose to any person associated with the Company, any confidential or proprietary information belonging to any former employer or other person or entity with respect to which you owe an obligation of confidentiality under any agreement or otherwise.  The Company does not need and will not use such information and we will assist you in any way possible to preserve and protect the confidentiality of proprietary information belonging to third parties.  Also, we expect you to abide by any obligations to refrain from soliciting any person employed by or otherwise associated with any former employer and suggest that you refrain from having any contact with such persons until such time as any non-solicitation obligation expires.

 

During the term of your employment, you agree that you will devote all of your business time and attention to the business of the Company, the Company will be entitled to all of the benefits and profits arising from or incident to all such work and advice, you will not render commercial or professional services of any nature to any person or organization, whether or not for compensation, without the prior written consent of the Company’s Board of Directors (which will be provided or withheld in its sole discretion), and you will not directly or indirectly engage or participate in any business that is competitive in any manner with the business of the Company.  Notwithstanding the foregoing, you may continue to provide certain limited consulting services to Exagen Diagnostics; provided, that such consulting services do not, in the sole discretion of the Company: (i) occupy more two (2) hours per week, and (ii) interfere or conflict with the performance of your Company duties.

 

You understand and agree that you are responsible for any applicable taxes of any nature (including any penalties or interest that may apply to such taxes) that the Company reasonably determines apply to any payment, benefit or equity award made to you under this offer letter (or any arrangement contemplated hereunder), that your receipt of any benefit hereunder is conditioned on your satisfaction of any applicable withholding or similar obligations that apply to such benefit, and that any cash payment owed to you hereunder will be reduced to satisfy any such withholding or similar obligations that may apply thereto.

 

For purposes of federal immigration law, you are required to provide appropriate documentation of your authorization to work in the United States within three (3) business days of your start date of employment, or the Company may terminate your employment (without eligibility for any Severance Plan benefits).

 

This offer letter, along with the Confidential Information Agreement, constitutes the full and entire understanding and agreement of the parties with regard to the subjects hereof and supersedes in their entirety all other or prior agreements, whether written or oral, with respect thereto.  Once you accept the terms of this offer, and with the exception of those changes expressly reserved to the Company’s discretion in this offer letter, the terms of your employment addressed herein will be subject to change and modification only by another written agreement, signed by both you and a representative of the Company authorized in writing by the Company’s Board of Directors.

 

 

Patricia, your experience and accomplishments will be a strong addition to TRACON Pharmaceuticals.

 

Welcome aboard!

 

I’m very pleased to have you assume a key role on our team.

 

 

 

 

 

 

 

Best,

 

/s/ Charles P. Theuer

 

 

 

Charles P. Theuer, MD PhD
 President & Chief Executive Officer
 TRACON Pharmaceuticals, Inc.

 

 

 

If the foregoing terms of employment, which represent the sum total of our offer, are acceptable to you, please so indicate by countersigning and dating the attached copy of this Letter in the space provided and returning a copy to                          no later than September 22, 2014.

 

 

 

	
/s/ Patricia L. Bitar
    	
 
    	
9-17-2014
    	
 
    
	
Patricia Bitar
    	
 
    	
DateExhibit 10.8

 

	
 

 

 

 

 

 

 

 

 

 

 

 

TRACON   PHARMACEUTICALS, INC.

 

SEVERANCE   PLAN

 

AND

 

SUMMARY   PLAN DESCRIPTION

 

 

 

 

 

 

 

 

 

 

 

Plan Effective   Date:  June 2, 2014

 

 

 

 

 

 

 

 

 

 

 

 
    

 

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TRACON PHARMACEUTICALS, INC.

SEVERANCE PLAN

AND

SUMMARY PLAN DESCRIPTION

 

The TRACON Pharmaceuticals, Inc. Severance Plan (the “Plan”) provides severance benefits to a selected group of employees of TRACON Pharmaceuticals, Inc., a Delaware corporation (the “Company”).  The Plan is effective for eligible employees who receive and execute a Severance Agreement (an “Agreement”) and who otherwise satisfy the conditions set forth in such Agreement and the provisions of this Plan (“Covered Employees”).

 

This Plan is designed to be an “employee welfare benefit plan,” as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).  This Plan is governed by ERISA and, to the extent applicable, the laws of the State of Delaware, without reference to the conflict of law provisions thereof.

 

This document and your Agreement constitute both the official plan document and the required summary plan description under ERISA.

 

I.          ELIGIBILITY

 

You will become a Covered Employee participant in the Plan only if you: (i) are selected by the Company to be eligible to participate in this Plan, (ii) receive and sign the Agreement (attached hereto as Exhibit A) indicating your agreement to be bound by the terms of this Plan and the Agreement and (iii) timely return such signed Agreement to the Company.

 

II.        BENEFITS

 

If you are a Covered Employee, you shall be eligible for severance benefits at such times and in such amounts as may be specified in your Agreement.

 

III.       OTHER IMPORTANT INFORMATION

 

A. Plan Administration.  As the Plan Administrator, the Company has the full and sole discretionary authority to administer and interpret the Plan, including discretionary authority to determine eligibility for participation in and for benefits under the Plan, to determine the amount of benefits (if any) payable per participant, and to interpret any terms of this document.  All determinations by the Plan Administrator will be final and conclusive upon all persons and be given the maximum possible deference allowed by law.  The Plan Administrator is the “named fiduciary” of the Plan for purposes of ERISA and will be subject to the applicable fiduciary standards of ERISA when acting in such capacity.  The Company may delegate in writing to any other person all or a portion of its authority or responsibility with respect to the Plan.

 

B. Source of Benefits.  The Plan is unfunded, and all severance benefits will be paid from the general assets of the Company or its successor.  No contributions are required under the Plan.

 

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C. Claims Procedure.  If you are a Covered Employee and believe you have been incorrectly denied a benefit or are entitled to a greater benefit than the benefit you received under the Plan, you may submit a signed, written application to the Company’s Chief Executive Officer (“Claims Administrator”).  You will be notified in writing of the approval or denial of this claim within ninety (90) days of the date that the Claims Administrator receives the claim, unless special circumstances require an extension of time for processing the claim.  In the event an extension is necessary, you will be provided written notice prior to the end of the initial ninety (90) day period indicating the special circumstances requiring the extension and the date by which the Claims Administrator expects to notify you of approval or denial of the claim.  In no event will an extension extend beyond ninety (90) days after the end of the initial ninety (90) day period.  If your claim is denied, the written notification will state specific reasons for the denial, make specific reference to the Plan provision(s) on which the denial is based, and provide a description of any material or information necessary for you to perfect the claim and why such material or information is necessary.  The written notification will also provide a description of the Plan’s review procedures and the applicable time limits, including a statement of your right to bring a civil suit under section 502(a) of ERISA following denial of your claim on review.

 

You will have sixty (60) days from receipt of the written notification of the denial of your claim to file a signed, written request for a full and fair review of the denial by a review panel which will be a named fiduciary of the Plan for purposes of such review.  This request should include the reasons you are requesting a review and may include facts supporting your request and any other relevant comments, documents, records and other information relating to your claim.  Upon request and free of charge, you will be provided with reasonable access to, and copies of, all documents, records and other information relevant to your claim, including any document, record or other information that was relied upon in, or submitted, considered or generated in the course of, denying your claim.  A final, written determination of your eligibility for benefits shall be made within sixty (60) days of receipt of your request for review, unless special circumstances require an extension of time for processing the claim, in which case you will be provided written notice of the reasons for the delay within the initial sixty (60) day period and the date by which you should expect notification of approval or denial of your claim.  This review will take into account all comments, documents, records and other information submitted by you relating to your claim, whether or not submitted or considered in the initial review of your claim.  In no event will an extension extend beyond sixty (60) days after the end of the initial sixty (60) day period.  If an extension is required because you fail to submit information that is necessary to decide your claim, the period for making the benefit determination on review will be tolled from the date the notice of extension is sent to you until the date on which you respond to the request for additional information.  If your claim is denied on review, the written notification will state specific reasons for the denial, make specific reference to the Plan provision(s) on which the denial is based and state that you are entitled to receive upon request, and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to your claim, including any document, record or other information that was relied upon in, or submitted, considered or generated in the course of, denying your claim.  The written notification will also include a statement of your right to bring an action under section 502(a) of ERISA.

 

If your claim is initially denied or is denied upon review, you are entitled to receive upon request, and free of charge, reasonable access to, and copies of, any document, record or other information that demonstrates that (1) your claim was denied in accordance with the terms of the Plan, and (2) the provisions of the Plan have been consistently applied to similarly situated Plan

 

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participants, if any.  In pursuing any of your rights set forth in this section, your authorized representative may act on your behalf.

 

If you do not receive notice within the time periods described above, whether on initial determination or review, you may initiate a lawsuit under Section 502(a) of ERISA.

 

D. Prior Plans Superseded.  The Plan supersedes any and all prior separation, change in control, severance and salary continuation arrangements, programs and/or similar plans that may previously have been offered or provided by the Company (and its predecessors-in-interest) to Covered Employees provided, however, that an Agreement may provide for the survival of some or all of the provisions in such prior arrangements.

 

E. Plan Amendment or Termination.  The Company reserves the right to amend or terminate the Plan at any time, in whole or in part, and in any manner, and for any reason.  Notwithstanding the foregoing, unless a Covered Employee provides written consent to the contrary, any termination or amendment of the Plan will be effective only after two (2) years advance written notice to a Covered Employee if such amendment or termination would result in a reduction of benefits that the Covered Employee would have otherwise been able to receive under the pre-amended or terminated Plan.

 

F. At-Will Employment.  No provision of the Plan is intended to provide you with any right to continue as an employee with the Company or in any other capacity, for any specific period of time, or otherwise affect the right of the Company to terminate the employment or service of any individual at any time for any reason or no reason, with or without cause.

 

G. Section 409A of the Internal Revenue Code.  This Plan is intended to provide severance benefits pursuant to an employee welfare benefit plan subject to ERISA.  The Plan is not intended to constitute a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Internal Revenue Code (“Code”).  Notwithstanding the foregoing, in the event this Plan or any benefit paid under this Plan to a Covered Employee is deemed to be subject to Code Section 409A, such Covered Employee consents to the Company’s adoption of such conforming amendments as the Company deems advisable or necessary, in its sole discretion, to comply with Code Section 409A and avoid the imposition of taxes under Code Section 409A.  Each payment made pursuant to any provision of this Plan shall be considered a separate payment and not one of a series of payments for purposes of Code Section 409A.  While it is intended that all payments and benefits provided under this Plan to Covered Employees will be exempt from or comply with Code Section 409A, the Company makes no representation or covenant to ensure that the payments under this Plan are exempt from or compliant with Code Section 409A.  The Company will have no liability to Covered Employees or any other party if a payment or benefit under this Plan is challenged by any taxing authority or is ultimately determined not to be exempt or compliant.  The Covered Employees further understand and agree that the Covered Employees will be entirely responsible for any and all taxes on any benefits payable to the Covered Employees as a result of this Plan.  In addition, if upon a Covered Employee’s “separation from service” within the meaning of Code Section 409A, he or she is then a “specified employee” (as defined in Code Section 409A), then solely to the extent necessary to comply with Code Section 409A and avoid the imposition of taxes under Code Section 409A, the Company shall defer payment of “nonqualified deferred compensation” subject to Code Section 409A payable as a result of and within six (6) months following such “separation from service” under this Plan until the earlier of (i) the first business day of the

 

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seventh month following the Covered Employee’s “separation from service,” or (ii) ten (10) days after the Company receives written confirmation of the Covered Employee’s death.  Any such delayed payments shall be made without interest.

 

H. Indemnification.  The Company agrees to indemnify its officers and employees and the members of the Board of Directors of the Company from all liabilities from their acts or omissions in connection with the administration, amendment or termination of the Plan, to the maximum extent permitted by applicable law.

 

I. Severability.  If any provision of the Plan is held invalid or unenforceable, its invalidity or unenforceability will not affect any other provision of the Plan, and the Plan will be construed and enforced as if such provision had not been included.

 

J. Headings.  Headings in this Plan document are for purposes of reference only and will not limit or otherwise affect the meaning hereof.

 

IV.       STATEMENT OF ERISA RIGHTS

 

As a participant in the Plan you are entitled to certain rights and protections under ERISA.  ERISA provides that all Plan participants shall be entitled to:

 

A. Receive Information About Your Plan and Benefits

 

Examine, without charge, at the Plan Administrator’s office and at other specified locations, such as work sites, all documents governing the Plan, including a copy of the latest annual report (Form 5500 Series) if required to be filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration.

 

Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the Plan, including copies of the latest annual report (Form 5500 Series), if required to be filed by the plan, and updated summary plan description.  The Plan Administrator may impose a reasonable charge for the copies.

 

You will receive a summary of the plan’s annual financial report, provided that the Plan is required to file an annual report (Form 5500 Series) with the U.S. Department of Labor.

 

B. Prudent Actions by Plan Fiduciaries

 

In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan.  The people who operate your Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of you and other Plan participants and beneficiaries.  No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a welfare benefit or exercising your rights under ERISA.

 

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C. Enforce Your Rights

 

If your claim for a welfare benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.

 

Under ERISA, there are steps you can take to enforce the above rights.  For instance, if you request a copy of Plan documents and do not receive it within 30 days, you may file suit in a federal court.  In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110.00 per day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator.  If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or federal court after you have completed the Plan’s administrative appeals process.  If you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court.  The court will decide who should pay court costs and legal fees.  If you are successful, the court may order the person you have sued to pay these costs and fees.  If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.

 

D. Assistance With Your Questions

 

If you have any questions about the Plan, you should contact the Plan Administrator.  If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the Plan Administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory, or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210.  You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.

 

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ADDITIONAL PLAN INFORMATION

 

	
 

Name   of Plan:

 
    	
 

TRACON   Pharmaceuticals, Inc. Severance Plan

 
    
	
 

Employer   Sponsoring Plan:
    	
 

TRACON   Pharmaceuticals, Inc.

8910 University Center   Lane, Suite 700

San Diego, CA 92122
    
	
 

Employer   Identification Number:
    	
 

XX-XXXXXXX
    
	
 

Plan   Number:
    	
 

510
    
	
 

Plan   Year:

 
    	
 

Calendar Year

 
    
	
 

Plan   Administrator:
    	
 

TRACON   Pharmaceuticals, Inc.

c/o Chief Executive   Officer

8910 University Center   Lane, Suite 700

San Diego, CA 92122

Telephone No.    858-550-0780
    
	
 

Agent   for Service of Legal Process:

 
    	
 

Plan   Administrator, at the above address
    
	
 

Type   of Plan:

 
    	
 

Employee Welfare   Benefit Plan providing for severance benefits

 
    
	
 

Plan   Costs:

 
    	
 

The cost of the Plan is   paid by TRACON Pharmaceuticals, Inc.

 
    
	
 

Type   of Administration:

 
    	
 

Self-administered by   the Plan Administrator

 
    

 

IN WITNESS WHEREOF, the Company has caused this Plan to be duly executed as of June 2, 2014.

 

	
TRACON PHARMACEUTICALS, INC.
    
	
 
    	
 
    
	
/s/ Charles P. Theuer
    	
 
    
	
-------------------------------------
    	
 
    
	
By:    Charles   P. Theuer
    	
 
    
	
Title: Chief   Executive Officer
    	
 
    

 

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