Document:

exv10w22

 

Exhibit 10.22

September 19, 2003

PERSONAL AND CONFIDENTIAL

Mark VanAusdal

Evanston, IL

Dear Mark:

     On behalf of Prestwick Pharmaceuticals, Inc. (the “Company”), it gives me great pleasure to
offer you the position of Vice President, Business Development and General Counsel of Prestwick
Pharmaceuticals. You have the qualities that distinguish successful executives: vision, high
integrity, intelligence, humility, a bias to action, and a desire to make a difference. We believe
that you will add substantially to the team, contribute greatly to the ultimate success equation,
and provide the Company with the leadership and vision that you have previously demonstrated. The
Board and I are without exception extremely enthusiastic about your accepting this offer.

This letter embodies the terms of the offer of employment (“the Agreement”) with you:

     1. Employment Duties. You shall devote your full time, ability, attention, energy and
skills solely and exclusively to performing all duties customarily associated with your position,
and as assigned or delegated to you by the Company. You will report to the Chief Executive Officer.

     2. Start Date. If you accept this offer, your employment with the Company shall begin
no later than January 1, 2004 (your “Start Date”). You hereby acknowledge that the terms of this
offer letter, and your performance hereunder, are not inconsistent with and will not breach any of
your contractual obligations, expressed or implied, to any third party.

     3. Salary. Upon employment as the Vice President, Business Development and General
Counsel, you shall be compensated at a rate of $250,000 per year, to be paid per the Company’s
typical payroll schedule. Your salary will be reviewed annually by the CEO and Compensation
Committee of the Board of Directors. You may also be eligible for a cash bonus and/or stock options
at the CEO’s discretion based on a bonus plan to be agreed by you and the CEO, provided that you
will be eligible for an annual performance bonus of up to 40% of your base salary. The Company
shall withhold and deduct all federal and state income, social security and disability taxes as
required by applicable laws. The Company may modify compensation and benefits at any time, as
permitted by law.

 

 

     4. Stock Option. Upon employment as the Vice President, Business Development and
General Counsel, you will be granted a stock option to purchase 425,000 shares of Common Stock of
the Company pursuant to the Company’s 2003 Equity Incentive Plan (the “Plan”), subject to approval
of the BOD (the “Option”). If the BOD does not approve the Option, you may resign immediately while
still being entitled to severance equivalent to one-half of year’s (6 months) salary. The exercise
price for the Option will be equal to the fair market value of the Company’s Common Stock at the
time of grant. The Option will vest over a four-year period, with 25% of the options vesting on the
one-year anniversary of your Start Date, and 1/36 of the balance of the options vesting on the last
day of each month thereafter. Your stock options will be governed by the terns of the Plan and the
Company’s standard form of stock option agreements, which you will be required to execute as a
condition of grant.

     5. Vacation, Holidays, Sick Leave, and Additional Benefits. You will be entitled to 20
days of paid vacation, and Paid Time Off and holidays as per standard Company benefits. The
Company offers a comprehensive benefits program for its employees, for which you are eligible.
Benefits include company paid medical insurance and dental insurance and 401K plan. You shall also
be entitled to reimbursement by the Company for such customary, ordinary and necessary business
expenses as are incurred by you in the performance of your duties and activities associated with
promoting and maintaining the business of the Company.

     6. Acceleration of Vesting. In the event of an Asset Transfer or Acquisition (each as
defined in the Company’s Amended and Restated Certificate of Incorporation) during your employment,
and if one of the following events occurs within twelve (12) months following such Asset Transfer
or Acquisition: (i) you are terminated without “Cause” (as defined below); or(ii) there is a
substantial reduction in your responsibilities, duties, or base pay that has not been cured within
thirty (30) days after written notice from you of such event, then the Option shall immediately
become fully vested upon such event.

     7. Proprietary Rights and Confidentiality. As a condition of your employment with the
Company, you shall execute, contemporaneously with the execution of this agreement, the Proprietary
Information, Non-Solicitation, and Invention Assignment Agreement and incorporated herein by this
reference. This agreement must be signed prior to initiation of employment. You will be expected to
abide by Company rules and regulations. In your work for the Company, you will be expected not to
use or disclose any confidential information, including trade secrets, of any former employer or
other person to whom you have an obligation of confidentiality. Rather, you will be expected to use
only that information which is generally known and used by persons with training and experience
comparable to your own, which is common knowledge in the industry or otherwise legally in the
public domain, or which is otherwise provided or developed by the Company. You also agree that you
will not bring onto Company premises any unpublished documents or property belonging to any former
employer or other person to whom you have an obligation of confidentiality.

     8. At Will Employment. The Company believes that the best work environment is one
where both you and the Company voluntarily agree to work together. Therefore, your employment with
the Company is “at-will” which means that either you or the Company may

 

 

terminate the employment relationship at any time for any reason, with or without cause or
advance notice.

     9. Severance. In the event that your employment with the Company is terminated by the
Company without “Cause” (as defined below), subject to your compliance with the non-competition
provisions of the attached Proprietary Information, Inventions, and Non- Competition Agreement, and
upon your execution of a release in a form reasonably satisfactory to the Company, you will be
entitled to receive a severance in the form of payments at your then current base salary for a
period of six months. Any severance payment paid to you under this Section 9 will be subject to
applicable tax withholding and can be paid, at the Company’s option, periodically in accordance
with the Company’s normal payroll. The severance payment you receive under this paragraph shall be
in lieu of any further payments to you. Being terminated for “Cause” shall specifically mean, (i)
conviction of a felony or any crime involving moral turpitude or dishonesty; (ii) participation in
a fraud or act of dishonesty against the Company; (iii) willful breach of your duties to the
Company or failure to follow lawful directions of the CEO or Board of Directors, in either case if
such breach or failure has not been cured within thirty (30) days after written notice from the
Company’s CEO or Board of Directors of such event; (iv) intentional and material damage to the
Company’s property; or (v) material breach of the attached Proprietary Information, Inventions and
Non-Competition Agreement.

     10. Disputes. While the Company hopes in each instance that its employment
relationships will be free of controversy, we are aware that disputes sometimes do arise. In the
event any dispute arises between you and the Company or you and any employee of the Company, then,
to the extent permitted by law, it shall be settled exclusively by binding arbitration before a
single arbitrator in accordance with the Employment ADR Rules of the American Arbitration
Association. The arbitrator shall be appointed by both parties to this Agreement, and shall be a
person independent of the parties. If the parties are unable to agree on the arbitrator within a
reasonable period of time, then they shall apply to the local chapter of American Arbitration
Association, who will make such appointment according to their rules and the requirements of this
Agreement. The arbitrator’s decision shall be final and binding upon the parties, and may be
entered and enforced in any court of competent jurisdiction by either of the parties. The
arbitrator shall have the power to grant temporary, preliminary and permanent relief, including
without limitation, injunctive relief and specific performance. The Company will pay the direct
costs and expenses of the arbitration. You and the Company are responsible for your respective
attorneys’ fees incurred in connection with enforcing this offer letter; however, you and the
Company agree that, except as may be prohibited by law, the arbitrator may, in his or her
discretion, award reasonable attorneys’ fees to the prevailing party.

     11. Indemnification and D&O Insurance. The Company currently has in place Directors
and Officers Liability Insurance, which also covers you in your position.

     This Agreement, together with the Employee Proprietary Information, Inventions, Non-
Competition and Non-Solicitation Agreements, contain the entire agreement between you and the
Company regarding the terms of your employment and supersedes all prior and contemporaneous
agreements or understandings with respect thereto. If you wish to accept this offer of employment,
please sign in the space provided below. By so signing, you acknowledge

 

 

that you have received no inducements or representations other than those set forth in this
letter, which caused you to accept this offer of employment. This offer expires at 8pm, PDT, on
October 15, 2003 .)

     We look forward to your favorable reply and to a productive and enjoyable work relationship.

	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	

	 	 	 	

	 	 
	

	 	 	 	     Robert S. Whitehead	 	 
	

	 	 	 	     Chief Executive Officer	 	 
	

	 	 	 	     Prestwick Pharmaceuticals, Inc.	 	 

I have read this offer and I understand and accept its terms:

	 	 	 
	

	 	

	Mark Van Ausdal

	 	Date

 

 

PRESTWICK PHARMACEUTICALS, INC.

EMPLOYEE PROPRIETARY INFORMATION,

INVENTIONS AND NON-SOLICITATION AGREEMENT

     In consideration of my employment or continued employment by Prestwick Pharmaceuticals,
Inc. (the “Company”), and the compensation now and hereafter paid to me, I hereby agree as
follows:

1. Nondisclosure. 

     1.1 Recognition of Company’s Rights; Nondisclosure. At all times during my employment and
thereafter, I will hold in strictest confidence and will not disclose, use, lecture upon or publish
any of the Company’s Proprietary Information (defined below), except as such disclosure, use or
publication may be required in connection with my work for the Company, or unless an officer of the
Company expressly authorizes such in writing. I will obtain the Company’s written approval before
publishing or submitting for publication any material (written, verbal, or otherwise) that relates
to my work at Company and/or incorporates any Proprietary Information. I hereby assign to the
Company any rights I may have or acquire in such Proprietary Information and recognize that all
Proprietary Information shall be the sole property of the Company and its assigns. I have been
informed and acknowledge that the unauthorized taking of the Company’s trade secrets may subject me
to civil and/or criminal penalties.

     1.2 Proprietary Information. The term “Proprietary Information” shall mean (a) any and all
confidential and/or proprietary knowledge, data or information of the Company, and (b) any and all
confidential and/or proprietary knowledge, data or information related to the central nervous
system drug development business of Prestwick Scientific Capital, Inc. (“PSC”) acquired by the
Company pursuant to that certain Asset Purchase and Subscription Agreement dated as of December 13,
2002 (the “PSC CNS Business”). By way of illustration but not limitation, the term “Proprietary
Information” includes (a) data, results, ideas, processes, techniques, formulae, know-how,
improvements, discoveries, developments and designs (hereinafter collectively referred to as
“Inventions”), (b) tangible and intangible information relating to biological materials such as
cell lines, antibodies, tissue samples, proteins, nucleic acids and the like, assays and assay
components and media, procedures and formulations for producing any such assays or assay
components, and pre-clinical and clinical data, results, developments or experiments, and (c) plans
for research, development and new products, marketing and selling information, business plans,
budgets and unpublished financial statements, licenses, prices and costs, suppliers and customers,
and information regarding the skills and compensation of other employees of the Company.
Notwithstanding the foregoing, it is understood that, at all such times, I am free to use
information which is generally known in the trade or industry, which is not gained as result of a
breach of this Agreement, and my own, skill, knowledge, know-how and experience to whatever extent
and in whichever way I wish.

     1.3 Third Party Information. I understand, in addition, that the Company has received and in
the future will receive from third parties confidential or proprietary information (“Third Party
Information”) subject to a duty on the Company’s part to maintain the confidentiality of such
information and to use it only for certain limited purposes. During the term of my employment and
thereafter, I will hold Third Party Information in the strictest confidence and will not disclose
to anyone (other than Company personnel who need to know such information in connection with their
work for the Company) or use, except in connection with my work for the Company, Third Party
Information unless expressly authorized by an officer of the Company in writing.

     1.4 No Improper Use of Information of Prior Employers and Others. During my employment by the
Company I will not improperly use or disclose any confidential information or trade secrets, if
any, of any former employer or any other person to whom I have an obligation of confidentiality,
and I will not bring onto the premises of the Company any unpublished documents or any property
belonging to any former employer or any other person to whom I have an obligation of
confidentiality unless (a) consented to in writing by that former employer or person or (b) such
confidential information, trade secrets, documents or property constitute or relate to the PSC CNS
Business. I will use in the performance of my duties only information which is generally known and
used by persons with training and experience comparable to my own, which is common knowledge in the
industry or otherwise legally in the

1.

 

public domain, or which is otherwise provided or developed by the Company.

2. Assignment of Inventions. 

     2.1 Proprietary Rights. The term “Proprietary Rights” shall mean all trade secret, patent,
copyright, mask work and other intellectual property rights or “moral rights” throughout the world.
“Moral rights” refers to any rights to claim authorship of an Invention or to object to or prevent
the modification of any Invention, or to withdraw from circulation or control the publication or
distribution of any Invention, and any similar right, existing under judicial or statutory law of
any country in the world, or under any treaty, regardless of whether or not such right is
denominated or generally referred to as a “moral right.”

     2.2 Prior Inventions. Inventions, if any, patented or unpatented, which I made prior to the
commencement of my employment with the Company are excluded from the scope of this Agreement;
provided, however, that Inventions related to the PSC CNS Business shall be expressly included
within the scope of this Agreement. To preclude any possible uncertainty, I have set forth on
Exhibit A (Previous Inventions) attached hereto a complete list of all Inventions that I have,
alone or jointly with others, conceived, developed or reduced to practice or caused to be
conceived, developed or reduced to practice prior to the commencement of my employment with the
Company, that I consider to be my property or the property of third parties and that I wish to have
excluded from the scope of this Agreement (collectively referred to as “Prior Inventions”). If
disclosure of any such Prior Invention would cause me to violate any prior confidentiality
agreement, I understand that I am not to list such Prior Inventions in Exhibit A but am only to
disclose a cursory name for each such invention, a listing of the party(ies) to whom it belongs and
the fact that fill disclosure as to such inventions has not been made for that reason. A space is
provided on Exhibit A for such purpose. If no such disclosure is attached, I represent that there
are no Prior Inventions. If, in the course of my employment with the Company, I incorporate a Prior
Invention into a Company product, process or machine, the Company is hereby granted and shall have
a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license (with rights to sublicense
through multiple tiers of sublicensees) to make, have made, modify, use and sell such Prior
Invention. Notwithstanding the foregoing, I agree that I will not incorporate, or permit to be
incorporated, Prior Inventions in any Company Inventions without the Company’s prior written
consent.

     2.3 Assignment of Inventions. Subject to Sections 2.4 and 2.6, I hereby assign and agree to
assign in the future (when any such Inventions or Proprietary Rights are first reduced to practice
or first fixed in a tangible medium, as applicable) to the Company all my right, title and interest
in and to any and all Inventions (and all Proprietary Rights with respect thereto) whether or not
patentable or registrable under copyright or similar statutes, made or conceived or reduced to
practice or learned by me, either alone or jointly with others, during the period of my employment
with the Company. Inventions assigned to the Company, or to a third party as directed by the
Company pursuant to this Section 2, are hereinafter referred to as “Company Inventions.”

     2.4 Unassigned Inventions. I recognize that this Agreement will not be deemed to require
assignment of any Invention that was developed entirely on my own time without using the Company’s
equipment, supplies, facilities, or trade secrets and neither related to the Company’s actual or
anticipated business, research or development, nor resulted from work performed by me for the
Company.

     2.5 Obligation to Keep Company Informed. During the period of my employment and for six (6)
months after termination of my employment with the Company, I will promptly disclose to the Company
fully and in writing all Inventions authored, conceived or reduced to practice by me, either alone
or jointly with others. In addition, I will promptly disclose to the Company all patent
applications filed by me or on my behalf within a year after termination of employment. The Company
will keep in confidence and will not use for any purpose or disclose to third parties without my
consent any confidential information disclosed in writing to the Company pursuant to this
Agreement.

     2.6 Government or Third Party. I also agree to assign all my right, title and interest in and
to any particular Company Invention to a third party, including without limitation the United
States, as directed by the Company.

     2.7 Works for Hire. I acknowledge that all original works of authorship which are made by me
(solely or jointly with others) within the scope of my employment and which are protectable by
copyright are “works made for hire,” pursuant to United States Copyright Act (17 U.S.C., Section
101).

     2.8 Enforcement of Proprietary Rights. I will assist the Company in every proper way to
obtain, and from time to time enforce, United States and foreign Proprietary Rights relating to
Company Inventions in any and all countries. To that end I will execute, verify and deliver such
documents and perform such other acts (including appearances as a witness) as the Company may
reasonably request for use in applying for, obtaining, perfecting, evidencing, sustaining and
enforcing such

2.

 

Proprietary Rights and the assignment thereof, In addition, I will execute, verify and deliver
assignments of such Proprietary Rights to the Company or its designee. My obligation to assist the
Company with respect to Proprietary Rights relating to such Company Inventions in any and all
countries shall continue beyond the termination of my employment, but the Company shall compensate
me at a reasonable rate after my termination for the time actually spent by me at the Company’s
request on such assistance.

In the event the Company is unable for any reason, after reasonable effort, to secure my signature
on any document needed in connection with the actions specified in the preceding paragraph, I
hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as
my agent and attorney in fact, which appointment is coupled with an interest, to act for and in my
behalf to execute, verify and file any such documents and to do all other lawfully permitted acts
to further the purposes of the preceding paragraph with the same legal force and effect as if
executed by me. I hereby waive and quitclaim to the Company any and all claims, of any nature
whatsoever, which I now or may hereafter have for infringement of any Proprietary Rights assigned
hereunder to the Company.

3. Records. I agree to keep and maintain adequate and current records (in the form of
notes, sketches, drawings and in any other form that may be required by the Company) of all
Proprietary Information developed by me and all Inventions made by me during the period of my
employment at the Company, which records shall be available to and remain the sole property of the
Company at all times.

4. Duty Of Loyalty During Employment. I understand that my employment with the Company
requires my full attention and effort. I agree that during the period of my employment by the
Company I will not, without the Company’s express written consent, engage in any employment or
business activity other than for the Company, including but not limited to employment or business
activity which is competitive with, or would otherwise conflict with, my employment by the Company.

5. No Solicitation of Employees, Consultants, Contractors or Customers. I agree that for
the period of my employment by the Company and for one (1) year after the date my employment by the
Company ends for any reason, including but not limited to voluntary termination by me or
involuntary termination by the Company, I will not, either directly or through others, (i) solicit
or attempt to solicit any employee of the Company to end his or her relationship with the Company;
and (ii) solicit any consultant, contractor, or customer of the Company, with whom I had contact or
whose identity I learned as a result of my employment with the Company to diminish or materially
alter its relationship with the Company.

     The parties agree that for purposes of this Agreement, a customer is any person or entity to
which the Company has provided goods or services at any time during the period commencing six (6)
months prior to my employment with the Company and ending on the date my employment with the
Company ends.

6. No Conflicting Agreement or Obligation. I represent that my performance of all the
terms of this Agreement and as an employee of the Company does not and will not breach any
agreement or obligation of any kind made prior to my employment by the Company, including
agreements or obligations I may have with prior employers or entities for which I have provided
services. I have not entered into, and I agree I will not enter into, any agreement or obligation
either written or oral in conflict herewith.

7. Return of Company Documents. When I leave the employ of the Company, I will deliver to
the Company any and all drawings, notes, memoranda, specifications, devices, formulas, and
documents, together with all copies thereof, and any other material containing or disclosing any
Company Inventions, Third Party Information or Proprietary Information of the Company. I further
agree that any property situated on the Company’s premises and owned by the Company, including
disks and other storage media, filing cabinets or other work areas, is subject to inspection by
Company personnel at any time with or without notice. Prior to leaving, I will cooperate with the
Company in completing and signing the Company’s termination statement.

8. Legal and Equitable Remedies. I recognize that in the course of employment with the
Company, I will have access to Proprietary Information, to Third Party Information, and to
employees, consultants, contractors, clients, and customers of the Company. I also recognize that
the services I will be employed to provide are personal and unique. I understand that because of
this the Company may sustain irreparable injury if I violate this Agreement. In order to limit or
prevent such irreparable injury, the Company shall have the right to enforce this Agreement and any
of its provisions by injunction, specific performance or other equitable relief, without bond and
without prejudice to any other rights and remedies that the Company may have for a breach of this
Agreement.

9. Notices. Any notices required or permitted hereunder shall be given to the appropriate
party at the address specified below or at such other address as the party shall specify in
writing. Such notice shall be deemed given upon personal delivery to the appropriate address or

3.

 

if sent by certified or registered mail, three (3) days after the date of mailing.

10. Notification of New Employer. In the event that I leave the employ of the Company, I
authorize the Company to provide notice of my rights and obligations under this Agreement to my
subsequent employer and to any other entity or person to whom I provide services.

11. General Provisions.

     11.1 Governing Law; Consent to Personal Jurisdiction. This Agreement will be governed by and
construed according to the laws of the District of Columbia, as such laws are applied to agreements
entered into and to be performed entirely within the District of Columbia between residents of the
District of Columbia. I hereby expressly consent to the personal jurisdiction of the state and
federal courts for the District of Columbia in any lawsuit filed there against me by Company
arising from or related to this Agreement.

     11.2 Severability. In case any one or more of the provisions, subsections, or sentences
contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect the other
provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. Moreover, if any one or more of the
provisions contained in this Agreement shall for any reason be held to be excessively broad as to
duration, geographical scope, activity or subject, it shall be construed by limiting and reducing
it, so as to be enforceable to the extent compatible with the applicable law as it shall then
appear.

     11.3 Successors and Assigns. This Agreement will be binding upon my heirs, executors,
administrators and other legal representatives and will be for the benefit of the Company, its
successors, and its assigns.

     11.4 Survival. The provisions of this Agreement shall survive the termination of my employment
and the assignment of this Agreement by the Company to any successor in interest or other assignee.

     11.5 Employment At-Will. I agree and understand that I am employed at-will, and that nothing
in this Agreement shall change this at-will status or confer any right with respect to continuation
of employment by the Company, nor shall it interfere in any way with my right or the Company’s
right to terminate my employment at any time, with or without cause.

     11.6 Waiver. No waiver by the Company of any breach of this Agreement shall be a waiver of any
preceding or succeeding breach. No waiver by the Company of any right under this Agreement shall be
construed as a waiver of any other right. The Company shall not be required to give notice to
enforce strict adherence to all terms of this Agreement.

     11.7 Entire Agreement. The obligations pursuant to Sections 1 and 2 of this Agreement shall
apply to any time during which I was previously employed, or am in the future employed, by the
Company as a consultant if no other agreement governs nondisclosure and assignment of inventions
during such period. This Agreement is the final, complete and exclusive agreement of the parties
with respect to the subject matter hereof and supersedes and merges all prior discussions between
us. No modification of or amendment to this Agreement, nor any waiver of any rights under this
Agreement, will be effective unless in writing and signed by the party to be charged. Any
subsequent change or changes in my duties, salary or compensation will not affect the validity or
scope of this Agreement.

     This Agreement shall be effective as of the first day of my employment with the Company,
namely: October 20, 2003.

4.

 

     I have read this agreement
carefully and understand its terms. I have
completely filled out Exhibit A to this
agreement.

	 	 	 
	Dated:
	 	 
	

	 	 
	 
	 	 
	 
	(Signature)
	 
	 	 
	 
	(Printed Name)
	 
	 	 
	Accepted and Agreed To:
	 
	 	 
	Prestwick Pharmaceuticals, Inc.
	 
	 	 
	By:
	 	 
	

	 	 
	 
	 	 
	Title:
	 	 
	

	 	 
	 
	 	 
	 
	(Address)
	 
	 	 
	 
	 
	 	 
	Dated:
	 	 
	

	 	 

5.

 

Exhibit A

Previous Inventions

	 	 	 
	TO:

	 	Prestwick Pharmaceuticals, Inc.
	 
	 	 
	FROM:
	 	 
	

	 	 
	 
	 	 
	DATE:
	 	 
	

	 	 
	 
	 	 
	SUBJECT:

	 	Previous Inventions

1. Except as listed in Section 2 below, the following is a complete list of all inventions or
improvements relevant to the subject matter of my employment by Prestwick Pharmaceuticals, Inc.
(the “Company”) that have been made or conceived or first reduced to practice by me alone or
jointly with others prior to my engagement by the Company:

For Check Boxes:

	 	 	 
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	 	 ̈
	 	No inventions or improvements.
	 
	 	 	 	 
	

	 	 ̈
	 	See below:
	 
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	 ̈	 	Additional sheets attached.

2. Due to a prior confidentiality agreement, I cannot complete the disclosure under Section 1 above
with respect to inventions or improvements generally listed below, the proprietary rights and duty
of confidentiality with respect to which I owe to the following party(ies):

	 	 	 	 	 	 	 
	 	 	Invention or Improvement	 	Party(ies)	 	Relationship
	1.

	 	

	 	

	 	

	 
	 	 	 	 	 	 
	2.

	 	

	 	

	 	

	 
	 	 	 	 	 	 
	3.

	 	

	 	

	 	

	 
	 	 	 	 	 	 
	 ̈

	 	Additional sheets attached.	 	 	 	 

A - 1.

 

Mark Van Ausdal

Employment Agreement Amendment

With respect to your employment agreement, dated September 19, 2003, Prestwick Pharmaceuticals,
Inc. and you have agreed that your employment with the company shall terminate on December 31,
2004, at which date you will be paid all accrued compensation (including for vacation and personal
days not taken) and six months severance.

Agreed to this 10th day of November 2004.

Prestwick Pharmaceuticals, Inc.

By:

	 	 	 
	

	 	 
	 
	 	 
	David Cory, R.Ph.
	 	 
	President and COO
	 	 
	Prestwick Pharmaceuticals, Inc.
	 	 
	 
	 	 
	

	 	 
	Mark Van Ausdal
	 	 

2.exv10w1

 

EXHIBIT 10.1

ARKANSAS BEST CORPORATION

EXECUTIVE OFFICER

ANNUAL INCENTIVE COMPENSATION PLAN

As Established Effective January 1, 2005

SECTION 1. ESTABLISHMENT AND PURPOSE

1.1 ESTABLISHMENT OF THE PLAN

Arkansas Best Corporation, a Delaware corporation, hereby establishes an annual incentive
compensation plan to be known as the “Executive Officer Annual Incentive Compensation Plan” (the
“Plan”), as set forth in this document. The Plan permits annual cash awards to Executive Officers
of the Company and Subsidiaries, based on the achievement of pre-established performance goals. The
Plan shall become effective as of January 1, 2005 (the “Effective Date”) and shall remain in effect
until terminated as provided in Section 11 herein.

1.2 PURPOSE

The purposes of the Plan are to: (a) retain and attract qualified individuals by rewarding those
practices which enhance the financial performance of the Company; (b) encourage teamwork among
Executive Officers in various segments of the Company; (c) reward performance with pay that varies
in relation to the extent to which the pre-established goals are achieved; and (d) ensure that the
compensation paid under this Plan qualifies for the “performance based compensation” exemption
under Code Section 162(m).

SECTION 2. DEFINITIONS

The following terms shall have the meanings set forth below whenever used in this document
and, when the defined meaning is intended, the term is capitalized:

2.1 “ABC” means Arkansas Best Corporation.

2.2 “BASE SALARY” means, as to any specific Plan Year, an Executive Officer’s base salary paid in
the fiscal year for which the annual incentive is earned. Base salary shall not be reduced by any
voluntary salary reductions or any salary reduction contributions made to any salary reduction
plan, defined contribution plan or other deferred compensation plans of the Company.

2.3 “BOARD” OR “BOARD OF DIRECTORS” means the ABC Board of Directors.

2.4 “CHANGE IN CONTROL” means, unless the Committee or the Board provides otherwise, the
occurrence of any of the following events:

     (i) The acquisition by any individual, entity or group (within the meaning of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a
“Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 35% or more of either (i) the then outstanding Shares (the “Outstanding
Company Common Stock”) or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); provided, however, that for purposes of this
subsection (i), the following acquisitions will not constitute a Change in Control: (A) any
acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (D) any acquisition by any corporation pursuant to a
transaction that constitutes a Merger of Equals as defined in subsection (iii) of this Section
2(d).

 

 

     (ii) In any 12-month period, the individuals who, as of the beginning of the 12-month period,
constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board of Directors; provided, however, that any individual becoming a director
subsequent to the Effective Date whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the directors then comprising the
Incumbent Board will be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board of Directors.

     (iii) Consummation of a reorganization, merger, statutory share exchange or consolidation or
similar corporate transaction involving the Company or any of its subsidiaries (each, a
“Business Combination”), in each case, unless such Business Combination constitutes a
Merger of Equals. A Business Combination will constitute a “Merger of Equals” if, following
such Business Combination, (A) all or substantially all of the individuals and entities that were
the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination beneficially own, directly
or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company’s assets either directly or through one
or more subsidiaries) (the “Resulting Corporation”) in substantially the same proportions
as their ownership, immediately prior to such Business Combination of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding the Resulting Corporation and its affiliates or any employee benefit plan [or related
trust] of the Resulting Corporation and its affiliates) beneficially owns, directly or indirectly,
35% or more of, respectively, the then-outstanding shares of common stock of the Resulting
Corporation or the combined voting power of the then outstanding voting securities of the Resulting
Corporation except to the extent that such ownership existed with respect to the Company prior to
the Business Combination, and (C) at least a majority of the members of the board of directors of
the Resulting Corporation (the “Resulting Board”) were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of the Board of Directors,
providing for such Business Combination; or

     (iv) The sale or other disposition of all or substantially all of the assets of the Company to
any Person, other than a transfer to (A) any corporation or other Person of which a majority of its
voting power or its voting equity securities or equity interest is owned, directly or indirectly,
by the Company or (B) any corporation pursuant to a transaction that constitutes a Merger of Equals
as defined in subsection (iii) of this Section 2(d).

     (v) A complete liquidation or dissolution of the Company.

Notwithstanding anything herein to the contrary, in no event shall amounts in respect of Awards
that, as determined by the Committee in its sole discretion, provide for the deferral of
compensation, be distributed upon a Change in Control prior to the occurrence of either a “change
in the ownership or effective control” of the Company or in the “ownership of a substantial portion
of the assets” of the Company within the meanings ascribed to such terms in Treasury Department
regulations or other guidance issued under Section 409A of the Code.”

2.5 “CODE” means the Internal Revenue Code of 1986, as amended.

2.6 “COMMITTEE” means a committee of two (2) or more individuals, all of whom shall be “outside
directors” within the meaning of the regulations under Code Section 162(m), appointed by the Board
to administer the Plan, pursuant to Section 3 herein.

2.7 “COMPANY” means Arkansas Best Corporation, a Delaware corporation, (including, as appropriate,
any and all Subsidiaries) and any successor thereto.

2.8 “DISABILITY” means a physical or mental condition resulting from bodily injury, disease or
mental disorder, which constitutes a disability under the terms of the Company’s Short Term
Disability Policy.

2.9 “EFFECTIVE DATE” means the date the Plan becomes effective, as set forth in Section 1.1
herein.

 

 

2.10 “EMPLOYEE” means a full-time, salaried employee of the Company or a Subsidiary.

2.11 “EXCHANGE ACT” means the Securities Exchange Act of 1934, as amended from time to time, or
any successor act thereto.

2.12 “EXECUTIVE OFFICER” means an Employee who, as of the last day of the applicable Plan Year, is
covered by the compensation limitations of Code Section 162(m) or the regulations issued
thereunder.

2.13 “FINAL AWARD” means the actual award earned during a Plan Year by an Executive Officer.

2.14 “INDIVIDUAL AWARD OPPORTUNITY” means the various levels of incentive award compensation which
an Executive Officer may earn under the Plan including Target Incentive Awards, as established by
the Committee pursuant to Section 5.

2.15 “PLAN YEAR” means the Company’s fiscal year.

2.16 “RETIREMENT” means termination from active employment with the Company and its Subsidiaries
(a) at or after age 55 and with at least ten (10) years of service with the Company and its
Subsidiaries, or (b) at or after age 65.

2.17 “SUBSIDIARY” means any corporation in which ABC, or a Subsidiary of ABC, owns fifty percent
(50%) or more of the total combined voting power of all classes of stock.

2.18 “TARGET INCENTIVE AWARD” means the award that may be paid to an Executive Officer when
“targeted” performance results, as established by the Committee, are attained.

SECTION 3. ADMINISTRATION

3.1 THE COMMITTEE. The Compensation Committee of the Board shall initially administer the
Plan. Subject to the terms of this Plan, the Board may appoint a successor Committee to administer
the Plan. The members of the Committee shall be appointed by, serve at the discretion of, and must
be independent members of the Board.

3.2 AUTHORITY OF THE COMMITTEE. Subject to the provisions herein, the Committee shall have full
power to certify after the end of each Plan Year the Employees who qualify as Executive Officers;
determine the size and types of performance measurements and goals, Individual Award Opportunities
and Target Incentive Awards; determine the terms and conditions of Individual Award Opportunities
in a manner consistent with the Plan; construe and interpret the Plan and any agreement or
instrument entered into under the Plan; establish, amend, or waive rules and regulations for the
Plan’s administration; and amend the terms and conditions of any outstanding Individual Award
Opportunities to the extent such terms and conditions are within the sole discretion of the
Committee as provided in Section 11 herein. Further, the Committee shall make all other
determinations that may be necessary for the administration of the Plan. To the extent permitted by
Section 162(m) and its regulations, the Committee may, from time-to-time, delegate some or all of
its authority hereunder.

3.3 DECISIONS BINDING. All determinations and decisions of the Committee in the administration of
the Plan, including questions of construction and interpretation, shall be final, binding, and
conclusive upon all parties.

SECTION 4. ELIGIBILITY AND PARTICIPATION

Each Employee who is an Executive Officer shall be eligible and shall participate in the Plan
for each Plan Year in which he is an Executive Officer. No later than ninety (90) days after the
end of each Plan Year, the Committee shall identify and certify each Employee who is an Executive
Officer for the Plan Year just ended.

 

 

SECTION 5. AWARD DETERMINATION

5.1 PERFORMANCE MEASURES AND PERFORMANCE GOALS. No later than ninety (90) days after the
beginning of each Plan Year, the Committee shall select performance measures and shall establish in
writing performance goals for that Plan Year. Except as provided in Section 5.7 herein, performance
measures which may serve as determinants of Executive Officers’ Individual Award Opportunities
shall be limited to the Company’s pretax income, net income, earnings per share, revenues,
expenses, return on assets, return on equity, return on capital employed, return on investment, net
profit margin, operating profit margin, operating cash flow, total shareholder return,
capitalization, liquidity, results of customer satisfaction surveys and safety or productivity
improvement. Performance goals may be determined solely by reference to the performance of ABC, a
Subsidiary, or a division or unit of either of the foregoing, or based upon comparisons of any of
the performance measures relative to other companies. For each Plan Year, the Committee may
establish ranges of attainment of the performance goals which will correspond to various levels of
Individual Award Opportunities. Each range may include levels of performance above and below the
one hundred percent (100%) performance level at which a greater or lesser percent of the Target
Incentive Award may be earned.

In establishing or adjusting a performance goal, the Committee may exclude the impact of any of the
following events or occurrences which the Committee determines should appropriately be excluded:
(a) any amounts accrued by the Company or its Subsidiaries pursuant to management bonus plans or
cash profit sharing plans and related employer payroll taxes for the fiscal year; (b) any
discretionary or matching contributions made to the savings and deferred profit-sharing plan or
deferred compensation plan for the fiscal year; (c) asset write-downs, (d) litigation, claims,
judgments or settlements, (e) the effect of changes in tax law or other such laws or regulations
affecting reported results, (f) accruals for reorganization and restructuring programs, (g) any
extraordinary, unusual or nonrecurring items as described in Accounting Principles Board (“APB”)
Opinion No. 30, (h) any change in accounting principle as defined in APB No. 20 and (i) any loss
from a discontinued operation as described in Financial Accounting Standards No. 144.

Notwithstanding any other provision of this Plan, and only to the extent it would not eliminate the
ability of the Individual Award Opportunities held by Executive Officers to qualify for the
“performance based compensation” exception under Code Section 162(m), in the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction, such as any merger,
consolidation, separation, spin-off, or other distribution of stock or property of the Company, any
reorganization (whether or not such reorganization comes within the definition of such term in Code
Section 368), or any partial or complete liquidation of the Company, such adjustment may be made in
the Individual Award Opportunities and/or the performance measures or performance goals related to
then-current performance periods, as may be determined to be appropriate and equitable by the
Committee, in its sole discretion, to prevent dilution or enlargement of rights.

5.2 INDIVIDUAL AWARD OPPORTUNITIES. No later than ninety (90) days after the beginning of each
Plan Year, the Committee shall establish, in writing, Individual Award Opportunities which
correspond to various levels of achievement of the pre-established performance goals. The
established Individual Award Opportunities may vary in relation to the job classification of each
Participant or among Participants in the same job classification and be established as a function
of each Executive Officer’s Base Salary or such other criteria as the Committee may select. In the
event an Executive Officer changes job levels during a Plan Year, the Participant’s Individual
Award Opportunity may be adjusted to reflect the amount of time at each job level during the Plan
Year.

5.3 COMPUTATION OF FINAL AWARDS. Each Executive Officer’s Final Award shall be based on: (a) the
Executive Officer’s Target Incentive Award; (b) the potential Final Awards corresponding to various
levels of achievement of the pre-established performance goals, as established by the Committee;
and (c) Company or Subsidiary performance in relation to the pre-established performance goals.

5.4 FINAL AWARD LIMIT. The Committee may establish guidelines governing the maximum Final Awards
that may be earned by Executive Officers (either in the aggregate, by Employee class, or among
individual Executive Officers) in each Plan Year. The guidelines may be expressed as a percentage
of companywide goals of financial measures, or such other measures as the Committee shall from time
to time determine; provided, however, that the maximum payout with respect to a Final Award payable
to any one Executive Officer in connection with performance in any one Plan Year shall not exceed
$2,000,000.

 

 

5.5 NO MID-YEAR CHANGE IN AWARD OPPORTUNITIES. Except as provided in Sections 5.1 and 5.7 herein,
each Executive Officer’s Final Award shall be based exclusively on the Individual Award Opportunity
levels established by the Committee pursuant to Section 5.2 above.

5.6 NONADJUSTMENT AND CERTIFICATION OF PERFORMANCE GOALS. Except as provided in Sections 5.1 and
5.7, performance goals shall not be changed following their establishment, and Executive Officers
shall not receive any payout under this Plan when the minimum performance goals are not met or
exceeded. Following the completion of each Plan Year, if the performance goals were met, the
Committee shall certify in writing prior to payment of Final Awards that the corresponding
performance goals for such Plan Year were satisfied.

5.7 POSSIBLE MODIFICATIONS. If, on the advice of the Company’s counsel, the Committee determines
that Code Section 162(m) and the regulations thereunder will not adversely affect the deductibility
for federal income tax purposes of any amount paid under the Plan by permitting greater discretion
and/or flexibility with respect to performance measures, performance goals, or Individual Award
Opportunities granted to Executive Officers, then the Committee may, in its sole discretion, apply
such greater discretion and/or flexibility to such performance measures, performance goals or
Individual Award Opportunities as is consistent with such advice and the terms of this Plan. In
addition, in the event that changes are made to Code Section 162(m) or the regulations thereunder
to permit greater flexibility with respect to any Individual Award Opportunities under the Plan,
the Committee may exercise such greater flexibility consistent with the terms of the Plan and to
the extent of such changes.

SECTION 6. PAYMENT OF FINAL AWARDS

6.1 FORM AND TIMING OF PAYMENT. Unless a deferral election is made by an Executive Officer
pursuant to Section 6.2 herein, or deferral of all or a portion of an Executive Officer’s Final
Award is required by Section 6.3, each Executive Officer’s Final Award shall be earned and paid in
cash, in one lump sum, as soon as the Final Award’s calculation is completed and the written
certification of the Committee in Section 5.6 hereof has been issued. Except as provided in Section
7, an Executive Officer must be employed by the Company or a Subsidiary on the date of payment to
receive a Final Award.

6.2 VOLUNTARY DEFERRAL OF FINAL AWARD PAYOUTS. An Executive Officer may defer receipt of some or
all payments otherwise due under the Plan pursuant to the terms of the Company’s Voluntary Savings
Plan (“VSP”).

6.3 DEFERRAL OF FINAL AWARD PAYOUTS. In the event that all or a portion of an Executive Officer’s
Final Award is not deductible by the Company due to limits contained in Code Section 162(m) or any
successor Code Section, the Committee shall require that payment of the nondeductible portion of
such Final Award shall be deferred until the earlier of the Executive Officer’s death, disability,
a Change in Control, or 185 days after termination of employment. The Committee, in a manner
consistent with the requirements of Code Sections 162(m) and the regulations thereunder, shall
determine rates of interest on such deferred amounts.

6.4 UNSECURED INTEREST. No Executive Officer or any other party claiming an interest in amounts
earned under the Plan shall have any interest whatsoever in any specific asset of the Company or
any Subsidiary. To the extent that any party acquires a right to receive payments under the Plan,
such right shall be equivalent to that of an unsecured general creditor of the Company.

SECTION 7. TERMINATION OF EMPLOYMENT

7.1 TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY OR RETIREMENT. In the event an
Executive Officer’s employment is terminated by reason of death, Disability, or Retirement, the
Final Award is to be paid as soon as its calculation is completed and the written certification of
the Committee in Section 5.6 hereof has been issued following the end of the Plan Year in which
employment termination occurs. In the case of an Executive Officer’s Disability, the employment
termination shall be deemed to have occurred on the date that the Committee determines the
definition of Disability to have been satisfied. An Executive Officer must have been a Participant
in the Plan during the Plan Year for not less than the ninety (90) days prior to his Retirement.

 

 

7.2 TERMINATION OF EMPLOYMENT FOR OTHER REASONS. In the event an Executive Officer’s employment is
terminated for any reason other than death, Disability, or Retirement (of which the Committee shall
be the sole judge), the Executive Officer’s opportunity to receive a Final Award shall be
forfeited. The Committee, in its sole discretion, may pay a prorated award for the portion of the
Plan Year that the Executive Officer was employed by the Company, computed as determined by the
Committee.

SECTION 8. RIGHTS OF PARTICIPANTS

8.1 EMPLOYMENT. Nothing in the Plan shall interfere with or limit in any way the right of the
Company to terminate any Executive Officer’s or other Employee’s employment at any time, nor confer
upon any Executive Officer or other Employee any right to continue in the employ of the Company.

8.2 NONTRANSFERABILITY. No right or interest of any Executive Officer or other Employee in the
Plan shall be assignable or transferable, or subject to any lien, directly, by operation of law or
otherwise, including, but not limited to, execution, levy, garnishment, attachment, pledge, and
bankruptcy.

SECTION 9. BENEFICIARY DESIGNATION

Each Executive Officer may, from time to time, name any beneficiary or beneficiaries (who may
be named contingently or successively) to whom any benefit under the Plan is to be paid in case of
his or her death before he or she receives any or all of such benefit. Each designation will revoke
all prior designations by the same Executive Officer, shall be in a form prescribed by the
Committee, and will be effective only when filed by the Executive Officer in writing with the
Committee during his or her lifetime. Beneficiary designations filed with respect to predecessor
plans prior to the adoption of this Plan shall be effective with respect to this Plan. In the
absence of any such designation, benefits remaining unpaid at the Executive Officer’s death shall
be paid to the Executive Officer’s estate.

SECTION 10. CHANGE IN CONTROL

In the event of a Change in Control, each Executive Officer shall receive a pro rata payment
of the greater of his or her Target Incentive Award or Final Award for the Plan Year during which
such Change in Control occurs. In such circumstances, the Committee shall determine the Final Award
based upon performance during the Plan Year until the date of the Change in Control and shall
determine the Executive Officer’s base salary as of a date on or before the Change in Control. Such
proration shall be determined as a function of the number of days within the Plan Year prior to the
effective date of the Change in Control, in relation to three hundred sixty-five (365). Such amount
shall be paid in cash to each Executive Officer as soon as the final calculation is completed, but
in any event within forty-five (45) days after the effective date of the Change in Control.

Notwithstanding anything in the foregoing to the contrary, if any of the payments provided for in
this Plan, together with any other payments which Executive Officer has the right to receive from
the Company, would constitute an “excess parachute payment” (as defined in Code Section
280G(b)(3)), the payments pursuant to this Plan and/or other plans or agreements shall be reduced
to the largest amount and/or paid at such time as will result in no portion of such payments being
subject to the excise tax imposed by Code Section 4999.

SECTION 11. AMENDMENTS

The Committee, or the Board, may at any time and without notice, modify or amend, in whole or
in part, any or all of the provisions of the Plan, or suspend or terminate it entirely; provided,
however, that no such modification, amendment, suspension, or termination may, without the consent
of an Executive Officer (or his or her beneficiary in the case of the death of the Executive
Officer), reduce the right of an Executive Officer to a payment or distribution hereunder to which
he or she is entitled at the time such actions are taken. Provided, further, that certain material
amendments to the Plan shall be subject to shareholder approval pursuant to Code Section 162(m).

 

 

SECTION 12. MISCELLANEOUS

12.1 GOVERNING LAW. The Plan, and all agreements hereunder, shall be governed by and
construed in accordance with the laws of the state of Arkansas, and shall be construed in a manner
consistent with Code Section 162(m) of the Code.

12.2 WITHHOLDING TAXES. The Company shall have the right to deduct from all payments under the
Plan any foreign, federal, state, or local income or other taxes required by law to be withheld
with respect to such payments. Before payment of any Final Award may be deferred under Section 6,
the Company may require that the Executive Officer pay or agree to withholding for any foreign,
federal, state or local income or other taxes which may be imposed on any amount deferred.

12.3 SEVERABILITY. In the event any provision of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan
shall be construed and enforced as if the illegal or invalid provision had not been included.

12.4 SUCCESSORS. All obligations of the Company under the Plan shall be binding upon and inure to
the benefit of any successor to the Company, whether the existence of such successor is the result
of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all
of the business and/or assets of the Company.

12.5 SHAREHOLDER APPROVAL. No Final Award shall be paid to any Executive Officer unless and until
the material terms of the Plan have been approved by the shareholders of the Company in accordance
with Code Section 162(m).

12.6 APPLICABILITY OF PLAN. The provisions of this Plan shall apply only to Executive Officers. In
the event of any inconsistencies between this Plan and the provisions of any other bonus or
incentive plan that might pertain to Executive Officers, the provisions of this Plan shall control.

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