Document:

Exhibit 10.1

 

iVOW, Inc.

11455 El Camino Real, Suite 140

San Diego, CA 92130

 

April 19, 2006

 

Michael H. Owens, M.D.

11455 El Camino Real, Suite 140

San Diego, CA 92130

 

Dear Dr. Owens:

 

On behalf of iVOW, Inc. (the “Company”), I
am pleased to offer you the following compensation package in consideration of
your continued service as the Company’s President and Chief Executive Officer. In
consideration for this compensation package, you agree to the best of your
ability and experience that you will at all times loyally and conscientiously
perform all of the duties and obligations required of and from you
pursuant to the express and implicit terms hereof, and to the reasonable
satisfaction of the Board of Directors of the Company (the “Board”).

 

1.                                       Compensation. You will be paid an
annual salary of $250,000 (the “Base Salary”), effective as of April 1,
2006. Your salary will be payable in accordance with the Company’s regular
payroll policy. In addition to the Base Salary, you will be eligible to receive
an annual bonus of up to $100,000, of which $75,000 is tied to the Company’s
satisfaction of the 2006 Budget presented to the Board and the remaining
$25,000 is to be paid at the discretion of the Board of Directors based on your
performance.

 

2.                                       Stock Option Grant. Contingent upon approval by the Company’s
stockholders at the next annual meeting of stockholders of an increase in the
number of shares available for issuance or award under the Company’s 1997 Stock
Option/Stock Issuance Plan (the “Plan”), you will be granted an option (“Option”)
to purchase 210,389 shares of Company common stock under the Plan. The Option
shall provide for monthly vesting over a four-year period. The per share
exercise price of the option shares shall be equal to the fair market value of
a share of Company common stock on the date of the option grant, which is
anticipated to be the date of the stockholder approval or as soon as
administratively possible after stockholder approval. In the event the
stockholders to do not approve an increase in the Plan’s allowable shares at
the next annual meeting, you will not be granted the Option but instead will be
granted 70,130 restricted shares (“Restricted Stock”) of Company common
stock under the Plan. The Company shall have a right to reacquire any shares at
no cost to the extent such reacquisition right has not expired as of the date
of your termination. The reacquisition right will expire pro rata on a
quarterly basis over a four-year period or as otherwise provided in the Plan.
The Company will permit you to defer delivery and taxation of the Restricted
Stock if you request such deferral. Any such deferral must be consistent with
the terms of the Plan and applicable law.

 

 

3.                                       Retention Agreement. The Company will
provide you a Retention Agreement, attached hereto as Exhibit A,
which will entitle you to (i) one year salary severance and COBRA coverage
in the event that your employment with the Company is terminated without Cause
(as defined in the Retention Agreement) or you resign following an event that
qualifies as an Involuntary Termination (as defined in the Retention Agreement)
within twelve months following a Change of Control (as defined in the Retention
Agreement) or (ii) six month salary severance and COBRA coverage in the
event that your employment with the Company is terminated without Cause or you
resign following an event that qualifies as an Involuntary Termination that
occurs prior to a Change of Control.

 

4.                                       Benefits.

 

(a)                                  Insurance Benefits. The Company
will provide you with the opportunity to participate in the standard benefits
plans currently available to other Company employees, subject to any
eligibility requirements imposed by such plans.

 

(b)                                 Vacation; Sick Leave. You will be
entitled to four weeks paid vacation and paid time off for sick leave according
to the Company’s standard policies.

 

5.                                       Confidential Information and Invention Assignment
Agreement. You hereby acknowledge and agree to continue to be
bound by the terms of the Company’s Confidential Information and Invention
Assignment Agreement (the “Confidentiality Agreement”).

 

6.                                       At-Will Employment. Your employment
with the Company is on an “at will” basis, meaning that either you or the
Company may terminate your employment at any time for any reason or no
reason, without further obligation or liability.

 

7.                                       No Conflicting Obligations. You
understand and agree that by accepting this offer, 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.

 

8.                                       Entire Agreement. This letter together
with the Confidentiality Agreement sets forth the entire agreement and
understanding between you and the Company relating to your employment and
supersedes all prior agreements and discussions between us. This letter may not
be modified or amended except by a written agreement signed by the Chairman of
the Board of the

 

2

 

Company. This letter will
be governed by the laws of the State of California without regard to is
conflict of laws provision.

 

We are all delighted to be able to extend you this
offer and look forward to our continued working relationship with you. To
indicate your acceptance of the Company’s offer, please sign and date this
letter in the space provided below and return it to me.

 

 

	
  Very truly yours,

  	
  ACCEPTED AND AGREED:

  
	
   

  	
   

  
	
  iVOW, INC.

  	
  MICHAEL H. OWENS, M.D.

  
	
   

  	
   

  	
   

  
	
  By:

  	
     /s/    GEORGE B. DEHUFF

  	
   

  	
  By:

  	
    /s/    MICHAEL H. OWENS

  	
   

  
	
  George B. DeHuff

  	
  Michael H. Owens, M.D.

  
	
  Chairman, Compensation Committee

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
  Date: April 19, 2006

  	
   

  	
  Date: April 19, 2006

  
	
   

  	
   

  	
   

  
							

 

Exhibit A: 
Retention Agreement

 

3Exhibit 10.2

 

RETENTION AGREEMENT

 

This
Retention Agreement (this “Agreement”)
is entered into effective as of April 19, 2006, between Michael H. Owens, M.D.
(“Employee”)
and iVOW, Inc., a Delaware corporation (the “Company”). This Agreement is intended to
provide Employee with certain benefits described herein upon the occurrence of
specific events. Certain capitalized terms used in this Agreement are defined
in Article 4.

 

RECITALS

 

A.            The Board of Directors (the “Board”) believes it
is in the best interests of the Company and its stockholders to retain Employee
and provide incentives to Employee to continue in the service of the Company
and aid in any Change of Control (as defined below) event.

 

B.            To accomplish the foregoing
objectives, the Board has directed the Company, upon execution of this
Agreement by Employee, to agree to the terms provided in this Agreement.

 

Now
therefore, in consideration of the mutual promises, covenants and agreements
contained herein, and in consideration of the continuing employment of Employee
by the Company, the parties hereto agree as follows:

 

ARTICLE
1

CHANGE OF CONTROL

 

1.1   Trigger Events. If
Employee’s employment with the Company or any Surviving Company (as defined
below) terminates under circumstances constituting a Covered Event (as defined
below), subject to Employee’s obligations and such other terms and conditions
as described herein, including without limitation those set forth in Section
3.2, Employee shall be entitled to receive the following benefits set forth in
Sections 1.2 and 1.3.

 

1.2   Salary; Severance. Employee
shall receive any Base Salary that has accrued but is unpaid as of the date of
a Covered Event, and contingent upon the Employee’s execution of the Release
(attached hereto as Attachment A)(the “Effective Date”), Employee shall also be
entitled to receive severance in an amount equal to twelve (12) months of his
Base Salary (less payroll deductions and all required withholdings) that
Employee was receiving immediately prior to the Effective Date, payable in
twelve (12) equal monthly payments beginning on the Effective Date.

 

1.3   Health Insurance Coverage in the
event of Change of Control. Provided that Employee makes a
timely election to continue coverage under the Company’s group health plan
pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) in connection
with a Covered Event, the Company will pay Employee’s COBRA premiums for a
maximum period of twelve (12) months
following the effective date of such Covered Event (the “COBRA Continuation Period”).
In addition, if Employee’s spouse and/or dependents were enrolled in the
Company’s group health plan on the date of the Covered Event, the Company will

 

 

pay the COBRA premiums for Employee’s eligible dependents during the COBRA
Continuation Period, but only to the same extent that such dependents’ premiums
under such plan were paid by the Company prior to the date of such Covered
Event. No provision of this Agreement will affect the continuation coverage
rules under COBRA, except that the Company’s payment of any applicable premiums
during the COBRA Continuation Period will be credited as payment by Employee
for purposes of the Employee’s payment required under COBRA. At the conclusion
of the COBRA Continuation Period, Employee will be responsible for the entire
payment of premiums required under COBRA for the remaining duration of
eligibility for COBRA, if any. Nothing in this Section 1.3 shall restrict the
ability of the Company or its successor from changing the provider and/or some
or all of the terms of such health insurance plan, provided that all similarly
situated participants are treated the same and provided, further, that Employee
and his eligible dependents receive approximately the same benefits they were
eligible to receive prior to the change in provider and/or some or all of the
terms of such health insurance plan.

 

ARTICLE
2

NON-CHANGE
OF CONTROL

 

2.1   Trigger Events. If
the Company terminates Employee’s employment without Cause (as defined below)
or Employee resigns under circumstances constituting an Involuntary Termination
(as defined below) prior to a Change of Control (i.e., does not qualify as a
Covered Event)(a “Termination
Event”), subject to Employee’s obligations and such other terms
and conditions as described herein, including without limitation those set
forth in Section 3.2, Employee shall be entitled to receive the following
benefits set forth in Sections 2.2 and 2.3.

 

2.2   Salary; Severance. Employee
shall receive any Base Salary that has accrued but is unpaid as of the date of
a Termination Event, and contingent upon the Employee’s execution of the
Release (attached hereto as Attachment A)(the “Termination Effective Date”), Employee
shall also be entitled to receive severance in an amount equal to six (6)
months of his Base Salary (less payroll deductions and all required
withholdings) that Employee was receiving immediately prior to the Termination
Effective Date, payable in six (6) equal monthly payments beginning on the
Termination Effective Date.

 

2.3   Health Insurance Coverage in the
event of a Termination Event. Provided that Employee makes a
timely election to continue coverage under the Company’s group health plan
pursuant to COBRA in connection with a Termination Event, the Company will pay
Employee’s COBRA premiums for a maximum period of six (6) months following the effective date of
such Termination Event (the “Non-Change COBRA Continuation Period”). In addition, if
Employee’s spouse and/or dependents were enrolled in the Company’s group health
plan on the date of the Termination Event, the Company will pay the COBRA
premiums for Employee’s eligible dependents during the Non-Change COBRA
Continuation Period, but only to the same extent that such dependents’ premiums
under such plan were paid by the Company prior to the date of such Termination
Event. No provision of this Agreement will affect the continuation coverage
rules under COBRA, except that the Company’s payment of any applicable premiums
during the Non-Change COBRA Continuation Period will be credited as payment by
Employee for purposes of the Employee’s payment required under COBRA. At the
conclusion of the Non-Change COBRA Continuation Period, Employee will be
responsible for the entire payment of premiums required under COBRA for the
remaining duration of eligibility for COBRA, if any.

 

2

 

Nothing in this Section 2.3 shall restrict the ability of the Company
or its successor from changing the provider and/or some or all of the terms of
such health insurance plan, provided that all similarly situated participants
are treated the same and provided, further, that Employee and his eligible
dependents receive approximately the same benefits they were eligible to
receive prior to the change in provider and/or some or all of the terms of such
health insurance plan.

 

ARTICLE
3

LIMITATIONS AND CONDITIONS ON BENEFITS

 

3.1   Withholding of Taxes.
The Company and Employee shall agree whether the Company shall withhold
appropriate federal, state, local (and foreign, if applicable) income and
employment taxes from any payments hereunder.

 

3.2   Release Prior to Receipt of Benefits.
Upon the occurrence of a Covered Event or a Termination Event, and prior to the
receipt of any benefits under this Agreement on account of the occurrence of
such Covered Event or Termination Event, Employee shall execute a release (the “Release”) in the
form incorporated herein and attached hereto as Attachment A.

 

ARTICLE
4

DEFINITIONS

 

For
purposes of this Agreement, the following terms are defined as follows:

 

4.1   “Base Salary” means the Employee’s
base salary (exclusive of bonuses and other forms of supplemental compensation)
at the rate in effect during the last regularly scheduled payroll period
immediately preceding the date of the event in question, computed before any
deferrals or pre- or post-tax payroll deductions, unless a different time
period for establishing Base Salary is expressly set forth in this Agreement.

 

4.2   “Cause” shall mean the
occurrence of any one or more of the following: (i) Employee’s conviction
of, or plea of no contest with respect to, any felony involving fraud or
dishonesty; (ii) Employee’s participation in a fraud or act of dishonesty
against the Company that results in material harm to the business of the
Company; (iii) Employee’s material breach of any contract or agreement or
direct order between Employee and the Company or any statutory duty Employee
owes to the Company; (iv) Employee’s willful failure or refusal to comply
with a lawful instruction of the Board; or (v) Employee’s habitual neglect of
duties or incompetence that results in material harm to the business of the
Company; provided, however, that with respect to a termination based on clauses
(iii) and/or (v) above, the action or conduct continues after the Company has
provided Employee with written notice thereof and 15 days to cure the same.

 

4.3   “Change of Control”
means (a) any bona fide
sale, conveyance or disposition of all or substantially all of the Company’s
assets (including, without limitation, a grant of an exclusive license or
exclusive licenses to all or substantially all of the corporation’s
intellectual property) or (b) the acquisition of the Company by means of
consolidation, merger or other form of corporate reorganization by a single or
related series of transactions in which the outstanding shares of the Company
are converted or exchanged for securities or other consideration issued, or
caused to be issued, by the acquiring corporation or its subsidiary, unless the
Company’s

 

3

 

stockholders of record as constituted immediately prior to such sale,
conveyance, disposition or acquisition will hold more than a majority of the
voting power of the surviving entity immediately following such sale,
conveyance, disposition or acquisition.

 

4.4   “Covered Event” means
(i) the termination of Employee’s employment by the Company or any Surviving
Company without Cause within twelve (12) months of a Change of Control or (ii)
Employee resigns under circumstances constituting an Involuntary Termination
within twelve (12) months following a Change of Control.

 

3.5   “Involuntary Termination”
means Employee’s resignation or termination of employment with the Company or
any Surviving Company within 60 days following: (i) a reduction in Employee’s
level of compensation (including Base Salary and fringe benefits) by more than fifteen percent (15%) in the aggregate
(other than in connection with a general decrease in the salary applicable to
all executives of the Company or all executives of any Surviving Company), (ii)
a relocation by the Company or any Surviving Company of Employee’s work site to
a facility or location more than 50
miles from Employee’s principal work site for the Company at the time of
the Change of Control, (iii) a material reduction in Employee’s duties or
responsibilities without Employee’s consent, or (iv) a reduction in the number
of weeks of paid vacation that Employee is eligible to take without Employee’s
consent.

 

3.6   “Surviving Company”
means any company into which the Company is merged or consolidated in
connection with a Change of Control.

 

ARTICLE
5

GENERAL PROVISIONS

 

5.1   Employment Status. This
Agreement does not constitute a contract of employment or impose on Employee
any obligation to remain as an employee, or impose on the Company any
obligation (i) to retain Employee as an employee, (ii) to change the status of
Employee as an at-will employee, (iii) to change the Company’s policies
regarding termination of employment; or (iv) to be unable to terminate Employee’s
employment with the Company at any time, with or without notice, for any reason
or no reason.

 

5.2   Covenants of Employee. Employee
agrees that he will provide reasonable assistance with respect to the negotiation
and consummation of any Change of Control, including all due diligence
procedures undertaken in connection therewith or the winding-up of the Company’s
affairs.

 

5.3   Termination. The
terms of this Agreement shall terminate upon the earlier of (i) the date
of voluntary termination of Employee’s employment with the Company or any
Surviving Company by Employee for any reason other than Involuntary
Termination, (ii) the date of termination of Employee’s employment with the
Company or any Surviving Company for Cause, (iii) the date of termination
of Employee’s employment with the Company or any Surviving Company because
Employee dies or becomes disabled (Disabled means that Employee shall have
failed, due to illness or other physical or mental incapacity, to render
services of the character contemplated by this Agreement for an aggregate of
more than ninety

 

4

 

(90) calendar days during any twelve (12) month period.), and (iv) the
date that all obligations of the parties hereunder have been satisfied.

 

5.4   Notices. Any notices
provided hereunder must be in writing and such notices or any other written
communication shall be deemed effective upon the earlier of personal delivery
(including delivery by facsimile) or the third day after mailing by first class
mail, to the Company at its primary office location and to Employee at Employee’s
address as listed in the Company’s payroll records. Any payments made by the
Company to Employee under the terms of this Agreement shall be delivered to
Employee either in person or at the address as listed in the Company’s payroll
records.

 

5.5   Severability. If a
legal authority of competent jurisdiction determines that any term or provision
of this Agreement is invalid or unenforceable, in whole or in part, then the
remaining terms and provisions hereof shall be unimpaired. Such legal authority
will have the authority to modify or replace the invalid or unenforceable term
or provision with a valid and enforceable term or provision that most
accurately embodies the parties’ intention with respect to the invalid or
unenforceable term or provision.

 

5.6   Complete Agreement. This
Agreement, including Attachment A and any other written agreements
referred to in this Agreement, constitutes the entire agreement between
Employee and the Company with regard to the subject matter hereof.

 

5.7   Amendment or Termination of
Agreement. This Agreement may be changed or terminated only upon
the mutual written consent of the Company and Employee. The written consent of
the Company to a change or termination of this Agreement must be signed by an
officer of the Company after such change or termination has been approved by
the Board.

 

5.8   Counterparts. This
Agreement may be executed in separate counterparts, any one of which need not
contain signatures of more than one party, but all of which taken together will
constitute one and the same Agreement.

 

5.9   Successors and Assigns.
This Agreement is intended to bind and inure to the benefit of and be enforceable
by Employee and the Company, and their respective successors, assigns, heirs,
executors and administrators, except that Employee may not assign any duties
hereunder and may not assign any rights hereunder without the prior written
consent of the Company, which consent shall not be withheld unreasonably.

 

5.10 Attorneys’ Fees. If
either party hereto brings any action to enforce his or its rights hereunder,
the prevailing party in any such action shall be entitled to recover his or its
reasonable attorneys’ fees and costs incurred in connection with such action.

 

5.11 Advice of Counsel. Employee
represents and warrants that he has had the opportunity to (and was encouraged
to) obtain the advice of independent counsel with respect to the review,
preparation and execution of this Agreement. Employee further acknowledges that
Heller Ehrman LLP represented solely the interests of the Company with respect
to preparation of this Agreement.

 

5

 

5.12 Choice of Law. All
questions concerning the construction, validity and interpretation of this
Agreement will be governed by the laws of the State of California, without
regard to such state’s conflict of laws rules.

 

IN
WITNESS WHEREOF, the parties have executed this Agreement on the day and year
written above.

 

	
  iVOW, INC.

  	
  EMPLOYEE

  
	
   

  	
   

  
	
  By:

  	
  /s/
      GEORGE B. DEHUFF

  	
   

  	
  By:

  	
  /s/
      MICHAEL H. OWENS

  	
   

  
	
  George B. DeHuff

  	
  Michael H. Owens, M.D.

  
	
  Chairman, Compensation Committee

  	
  Chief Executive Officer

  
						

 

6

 

ATTACHMENT A

 

RELEASE

 

Certain
capitalized terms used in this Release are defined in the Retention Agreement
(the “Agreement”)
which each party hereto has executed and of which this Release is a part.

 

Employee
hereby confirms his continuing obligations under the Company’s proprietary
information and inventions agreement.

 

Except
as otherwise set forth in this Release, each party hereto hereby releases,
acquits and forever discharges the other party, such other party’s parents and
subsidiaries, and their officers, directors, agents, servants, employees,
shareholders, successors, assigns and affiliates, of and from any and all
claims, liabilities, demands, causes of action, costs, expenses, attorneys
fees, damages, indemnities and obligations of every kind and nature, in law,
equity, or otherwise, known and unknown, suspected and unsuspected, disclosed
and undisclosed (other than any claim for indemnification one party hereto may
have against the other party hereto), arising out of or in any way related to
agreements, events, acts or conduct at any time prior to the date of execution
of this Release, including, but not limited to: 
all such claims and demands directly or indirectly arising out of or in
any way connected with Employee’s employment with the Company or the
termination of that employment, including but not limited to, claims of
intentional and negligent infliction of emotional distress, any and all tort
claims for personal injury, claims or demands related to salary, bonuses, commissions,
stock, stock options, or any other ownership interests in the Company, vacation
pay, fringe benefits, expense reimbursements, severance pay, or any other form
of disputed compensation; claims pursuant to any federal, state or local law or
cause of action including, but not limited to, the federal Civil Rights Act of
1964, as amended; the federal Age Discrimination in Employment Art of 1967, as
amended (“ADEA”);
the federal Employee Retirement Income Security Act of 1974, as amended; the
federal Americans with Disabilities Act of 1990; tort law; contract law;
statutory law; common law; wrongful discharge; discrimination; fraud;
defamation; emotional distress; and breach of the implied covenant of good
faith and fair dealing; provided, however, that nothing in this
paragraph shall be construed in any way to release the Company from its
obligation to indemnify Employee pursuant to the Company’s indemnification
obligation pursuant to agreement or applicable law; and provided further, however, that nothing herein shall release the
Company from claims by Employee arising after the date of this Release based
solely on Employee’s rights as a stockholder of the Company.

 

In
giving this release, which includes claims that may be unknown at present, each
party hereto acknowledges that it has read and understand Section 1542 of the
California Civil Code which reads as follows: “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 by him must have materially affected his settlement with the debtor.”
Each party hereto expressly waives and relinquishes all rights and benefits
under Section 1542 of the California Civil Code and any law of any jurisdiction
of similar effect with respect to the release of any unknown or unsuspected
claims against the other party.

 

7

 

Employee
acknowledges that he is knowingly and voluntarily waiving and releasing any
rights he may have under ADEA. Employee also acknowledges that the
consideration given under the Agreement for the waiver and release in the
preceding paragraph hereof is in addition to anything of value to which he was
already entitled. Employee further acknowledges that he has been advised by
this writing, as required by the ADEA, that: (A) the waiver and release herein
do not apply to any rights or claims that may arise on or after the date of
execution of this Release; (B) he has the right to consult with an attorney
prior to executing this Release; (C) he has twenty-one (21) days to consider
this Release (although he may choose to voluntarily execute this Release
earlier); (D) he has seven (7) days following the execution of this Release by
the parties to revoke the Release; and (E) this Release shall not be effective
until the date upon which the revocation period has expired, which shall be the
eighth day after this Release is executed by Employee.

 

	
   

  	
  iVOW, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
					

 

8

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