This excerpt taken from the ANX DEF 14A filed Apr 16, 2008.
Employment and Separation Arrangements with Former President and Chief Medical Officer
In connection with the commencement of Dr. Merritts employment in September 2006, the Company entered into an offer letter agreement with Dr. Merritt which provided that in the event of Dr. Merritts involuntary termination, subject to Dr. Merritts execution of a mutual release, Dr. Merritt would receive an amount equal to his base salary for the six-month period immediately prior to the effective date of such involuntary termination, payable in 6 substantially equal installments over the six-month period following such effective date, and the Company would pay all costs the Company would otherwise have incurred to maintain Dr. Merritts health, welfare and retirement benefits if Dr. Merritt had continued to render services to the Company for six months after such effective date. In addition, the Company granted to Dr. Merritt a stock option to purchase up to 300,000 shares of the Companys common stock, which option would vest and become exercisable monthly over 48 months. However, the stock option agreement for this option award provided that in the event of Dr. Merritts involuntary termination, and subject to Dr. Merritts execution of a mutual release, that number of shares underlying the option would vest and become exercisable, effective immediately prior to the effective date of such involuntary termination, as would have vested and become exercisable had Dr. Merritt remained in continuous service (i.e., the absence of any interruption or termination of services as an employee, director or consultant of the Company, or any subsidiary) for six months following such effective date, and Dr. Merritt will have 180 days following the effective date of such involuntary termination to exercise this stock option. The stock option agreement also provided that in the event of an acquisition, 50% of any unvested shares underlying this stock option would vest and become exercisable as of the closing date of such acquisition and the remaining unvested shares underlying this stock option will vest ratably by month over the 12-month period beginning on the closing of such acquisition, subject to Dr. Merritts continuous service. In addition, in the event of Dr. Merritts involuntary termination within 24 months of an acquisition constituting a change in control, that number of unvested shares underlying the stock option would vest and become exercisable, as of the effective date of such involuntary termination, that would have vested and become exercisable had Dr. Merritt remained in continuous service for 24 months following such effective date.
With respect to Dr. Merritt, an involuntary termination would be one that occurred by reason of dismissal for any reason other than misconduct or of voluntary resignation following: (i) a change in position that materially reduces the level of Dr. Merritts responsibility, (ii) a material reduction in Dr. Merritts base salary, or (iii) relocation by more than 50 miles; provided that (ii) and (iii) will apply only if Dr. Merritt has not consented to the change or relocation. Misconduct means the commission of any act of fraud, embezzlement or dishonesty by Dr. Merritt,
any unauthorized use or disclosure by Dr. Merritt of confidential information or trade secrets of the Company (or any parent or subsidiary), or any other intentional misconduct by Dr. Merritt adversely affecting the business affairs of the Company (or any parent or subsidiary) in a material manner.
In January 2008, Dr. Merritts employment relationship with the Company ended. In February 2008, the Company entered into a letter agreement regarding terms of separation with Dr. Merritt. The terms of Dr. Merritts employment separation, as provided in the letter agreement, are substantially identical to those set forth in his offer letter, dated September 7, 2006, and in the stock option agreement relating to the stock option granted to him in September 2006 in connection with the commencement of his employment, both of which are described above and have been previously filed with the SEC, except that the Company agreed to extend the exercise period of that option from June 29, 2008 to December 31, 2008.
As set forth in the letter agreement regarding terms of separation, in exchange for a mutual release, beginning in February 2008, the Company will pay Dr. Merritt an aggregate of $181,250, which is equal to six months of Dr. Merritts base salary in effect at the time of termination, less applicable state and federal payroll deductions, in substantially equal installments in accordance with the Companys standard payroll practices over the Companys next 13 pay periods. In addition, the Company will pay Dr. Merritt $16,038, less applicable state and federal payroll deductions, which the Company and Dr. Merritt agreed satisfies in full the Companys obligation to pay all costs that the Company would otherwise have incurred to maintain Dr. Merritts health, welfare and retirement benefits if Dr. Merritt had continued for six continuous months after Dr. Merritts termination date. The Company will pay the $16,038 amount in substantially equal installments commencing on and continuing in accordance with the same schedule described above with respect to payment of Dr. Merritts base salary. Furthermore, the Company accelerated the vesting and extended the time to exercise vested shares under the stock option granted to Dr. Merritt in September 2006 in connection with the commencement of his employment. Under this option, Dr. Merritt was granted the right to purchase up to 300,000 shares of the Companys common stock at a price of $2.86 per share, which right was subject to a vesting schedule. As of Dr. Merritts termination date, this option was vested as to 100,000 shares and unvested as to 200,000 shares. Pursuant to the letter agreement regarding terms of separation, the Company accelerated vesting as to 31,249 of the unvested shares, which resulted in this option being vested as to a total of 131,249 shares, and extended the time for Dr. Merritt to exercise the vested shares under this option to Noon (Pacific time) on December 31, 2008.
Under the letter agreement regarding terms of separation, Dr. Merritt represented that he had returned to the Company all of its property and data that had been in his possession or control and acknowledged that he is bound by an agreement with the Company regarding the use and confidentiality of the Companys confidential information.