Exhibit 10.5
C.E.O. EMPLOYMENT AGREEMENT
February 11, 2003
Xx. Xxxxxx X. Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Dear Xxxxxx:
This letter shall serve to amend and restate the terms of employment
offered to you by Ribozyme Pharmaceuticals, Inc. (the "Company") and acknowledge
your acceptance of the employment on such terms as detailed below. This letter
is being entered into in connection with the proposed private venture capital
financing in the approximate amount of $45 million for the Company (the
"Financing"), and shall become effective upon the closing of the Financing and
the transactions contemplated thereby (the "Effective Time"). Until the
Effective Time, your current employment letter agreement dated January 4, 2001,
as amended on June 19, 2001 and June 24, 2002 (collectively, the "Current
Agreement") shall remain in full force and effect.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings ascribed to them on Appendix 1 hereto.
1. POSITIONS AND SCOPE OF EMPLOYMENT. Upon the Effective Time, you shall
continue to serve as President and Chief Executive Officer of the Company. You
shall render such business and professional services in the performance of your
duties, consistent with your position within the Company, consistent with the
Bylaws of the Company and as shall reasonably be assigned to you by the
Company's Board of Directors (the "Board"), and you shall report directly to the
Board. You shall perform your duties faithfully and to the best of your ability
and shall devote your full business efforts and time to the Company. The Company
agrees that you shall continue to be nominated and elected to the Board
throughout the term of your employment with the Company.
2. COMPENSATION.
(a) BASE SALARY; ANNUAL REVIEWS. During the period beginning as of the
Effective Time and ending on December 31, 2003, the Company shall pay to you as
compensation for your services a base salary at the annualized rate of $345,000
(the "Base Salary"). Thereafter, your Base Salary shall be subject to annual
performance review by the Board for appropriate upward adjustment, and you will
be considered for additional grants of stock options in connection with each
annual review by the Board. Your Base Salary shall be paid in accordance with
the Company's normal payroll practices.
(b) BONUS. In each calendar year of your employment with the Company
you shall be eligible to earn a bonus, including the 2003 calendar year. The
annual bonus shall be based upon attainment of reasonable and achievable goals
which shall be mutually agreed upon by you and the Board. The amount of the
annual bonus which you shall be eligible to earn shall be equal to thirty
percent (30%) of your then current annual Base Salary in the event you achieve
such goals. Your bonus shall be reasonably increased or decreased based on the
overachievement or underachievement of such goals. Such bonus shall be payable
in a cash lump sum within thirty (30) days after the end of the calendar year
with respect to which the bonus is payable.
(c) OPTIONS. On or before the date of signing of the Stock Purchase
Agreement in connection with the Financing, the Company shall grant to you stock
options to purchase such number of shares of the Company's common stock as shall
equal four and one-half percent (4 1/2%) of the Company's issued and outstanding
common stock immediately after the closing of the Financing, on a fully diluted,
fully converted basis, less 377,000 shares (which 377,000 shares have been
calculated based on the Company's current capitalization and before the proposed
reverse stock split, and will be considered a credit against the stock options
otherwise relating to four and one-half (4 1/2%) of the Company's issued and
outstanding common stock), which options shall be exercisable for a period of
ten (10) years at an exercise price equal to the greater of (i) the Fair Market
Value (as defined in the Company's stock option plan) on the date of the stock
option grant and (ii) $0.35 per share. Except as otherwise provided in Sections
4(d)(iii) and 5 below, the stock options shall vest during your employment with
the Company over a period of five (5) years beginning on the Effective Time, at
the rate of twenty percent (20%) after the first year and on a monthly basis
thereafter throughout years two (2) through five (5) (so as to be fully vested
at the end of a period of five (5) years after the Effective Time). Each stock
option grant shall be in the form of incentive stock options in the maximum
amount permitted by applicable law. To the extent that any such stock option
grant shall be in the form of non-qualified stock options (either by initial
grant or by reason of any incentive stock options being disqualified as such),
you shall be permitted to exercise such non-qualified stock options for a period
of five (5) years following the termination of your employment for any reason;
provided, that if you are terminated for Cause (as defined below) you may
exercise such non-qualified stock options only during the ninety (90) day period
following the termination of your employment.
(d) EMPLOYEE BENEFITS. During your employment with the Company, you
shall be entitled to participate in the employee benefit plans currently and
hereafter maintained by the Company which shall include, without limitation, the
following:
(i) group PPO medical and dental insurance plans (the coverage
under which shall include your dependents and contain no restrictions
relative to pre-existing conditions and no waiting period prior to coverage
becoming effective);
(ii) short-term disability insurance and long-term disability
insurance with a benefit of at least sixty percent (60%) of predisability
income up to a maximum benefit of $250,000 annually (which coverage shall
contain no restrictions relative to pre-existing conditions). The Company
shall continue to provide for your benefit additional long-term disability
coverage up to a maximum benefit of $250,000 annually, at your expense (but
only to the extent of the premium cost for the annual benefit in excess of
$72,000), at the group rates applicable to the Company (which coverage
shall contain no restrictions relative to pre-existing conditions);
(iii) term life insurance in the amount of $500,000, with your
having the right to designate the beneficiary(ies) thereof;
(iv) participation in the Company's 401(k) plan, your
contributions to which may be matched by the Company with contributions of
shares of its common stock if approved by the Board; provided that any such
matching contributions shall vest over three (3) years of service;
(v) participation in the Company's Flexible Spending Account; and
(vi) participation in the Company's Stock Purchase Plan, allowing
purchase of shares of the Company's common stock at fifteen percent (15%)
below the market price.
The Company reserves the right to revise, add or rescind any benefits
at any time for its employees generally; provided that any such permitted
revision, addition or rescission of benefits by the Company shall be without
prejudice to your rights provided in Section 4(d) hereof.
(e) VACATION DAYS; SICK DAYS; HOLIDAYS. You shall be entitled to paid
vacation, sick days and holidays in accordance with the Company's policies as in
effect from time to time.
(f) EXPENSES. The Company shall reimburse you for reasonable travel,
entertainment or other expenses incurred by you in the furtherance of or in
connection with the performance of your duties hereunder, in accordance with the
Company's expense reimbursement policy as in effect from time to time.
3. LOAN. The Company previously provided to you an interest-free loan in
the amount of $400,000 (the "Loan"). As of the date hereof, the Company has
forgiven forty percent (40%) of the original principal amount of the Loan and
the balance of the Loan shall continue to be forgiven by the Company at the rate
of twenty percent (20%) of the original principal amount of the Loan each year
on the anniversary date in accordance with the original terms thereof until the
Loan has been fully forgiven on January 3, 2006, provided, however, that the
Loan shall be fully forgiven in the event of termination of your employment due
to your death or permanent disability (as hereinafter defined). In the event
that it shall be determined that any payment shall be due by you for taxes of
any kind or nature relating to the forgiveness of the Loan or the imputation of
interest in connection therewith ("Taxes"), the Company shall deliver to you an
additional payment in an amount such that, after payment of any taxes applicable
to such additional payment by the Company, the net amount available to you after
payment of all such taxes shall be equal to the Taxes payable by you, together
with any interest or penalties associated therewith (a "Gross-Up Payment").
4. TERMINATION.
(a) AT-WILL EMPLOYMENT. You and the Company agree that your employment
with the Company shall be "at-will" employment, that you are free to resign and,
subject to the provisions hereof, the Company is free to terminate your
employment at any time, without notice, procedure or formality, with or without
Cause (for any reason or no reason).
(b) VOLUNTARY TERMINATION; TERMINATION FOR CAUSE. In the event that
your employment with the Company is terminated voluntarily by you or for Cause
by the Company, then (i) all options which have vested shall continue to be
exercisable in accordance with the terms of Section 2(c) of this Agreement, the
Company's stock option plan and applicable legal requirements; (ii) all payments
of Base Salary and bonuses accrued but unpaid on the date of termination, as
well as all expenses incurred to the date of termination, shall be due and
payable to you immediately and all further compensation by the Company to you
hereunder shall terminate as of the date of termination; (iii) the unforgiven
balance of the Loan shall be repaid by you within thirty (30) days of the date
of termination; and (iv) you shall be entitled to continue medical and dental
insurance coverage for yourself and your dependents, at your expense, at the
same level of coverage as was provided to the you under the Company's insurance
plan immediately prior to the termination ("Health Care Coverage") by electing
COBRA continuation coverage ("COBRA") in accordance with applicable law.
(c) TERMINATION UPON DEATH OR DISABILITY. In the event that your
employment with the Company is terminated as a result of your death or permanent
disability then (i) all options which have vested shall continue to be
exercisable in accordance with the terms of Section 2(c) of this Agreement, the
Company's stock option plan and applicable legal requirements; (ii) the Company
shall pay to you or your estate, as applicable, all payments of Base Salary and
bonuses accrued but unpaid on the date of termination, as well as expenses
incurred to the date of termination, immediately upon the date of termination
and all further compensation by the Company to you hereunder shall terminate as
of the date of termination; (iii) the Company shall forgive all amounts owed by
you or your estate, as applicable, in connection with the Loan and make any
necessary Gross-Up Payment; and (iv) you shall be entitled to continue medical
and dental insurance coverage for yourself and your dependents, at your expense,
at the same level of coverage as was provided to you under the Company's Health
Care Coverage by electing COBRA in accordance with applicable law. For purposes
hereof, the term "permanent disability" shall mean your inability to perform
your duties hereunder on account of illness, accident or other physical or
mental incapacity which shall continue for a consecutive period of ninety (90)
days or an aggregate of one hundred twenty (120) days in any consecutive
twelve-month period.
(d) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. In the event that
your employment with the Company is terminated by the Company without Cause or
by you for Good Reason, then (i) all options which have vested shall continue to
be exercisable in accordance with the terms of Section 2(c) of this Agreement,
the Company's stock option plan and applicable legal requirements; (ii) all
payments of Base Salary and bonuses accrued but unpaid on the date of
termination, as well as all expenses incurred to the date of termination, shall
be due and payable to you immediately; (iii) subject to the provisions of
Section 5 hereof, fifty percent (50%) of all unvested options shall become fully
vested and exercisable, and the remaining fifty percent (50%) of your unvested
options shall terminate; (iv) the Company shall forgive all amounts owed by you
in connection with the Loan and make any necessary Gross-Up Payment; (v) the
Company shall pay to you a severance payment, in monthly installments, equal to
your Base Salary plus the lesser of your full annual target bonus for the then
current calendar year (which shall be equal to thirty percent (30%) of your then
current Base Salary) or the average of your actual annual bonuses for the
previous two (2) calendar years, for a period of twelve (12) months; provided,
however, that either in the event you are terminated without Cause within twelve
(12) months after the Effective Time or the termination is a result of a Change
of Control (whether due to termination without Cause or your termination for
Good Reason following a Change of Control) the amount of such severance payment
shall be eighteen (18) months' severance; provided, further, that in the event
you obtain other employment during the applicable twelve (12) or eighteen (18)
months severance period, your severance payments thereafter shall be reduced on
a prospective basis (not to less than 0) in the amount of cash compensation
received by you during the remainder of such applicable severance period; and
(vi) the Company shall be responsible for all costs relating to maintaining your
Health Care Coverage for you and your dependents under COBRA for the shorter of
eighteen (18) months or for so long as allowed by law; provided, however, that
such Health Care Coverage shall terminate upon your obtaining comparable Health
Care Coverage from a future employer (after taking into account any waiting
periods for such coverage to become effective).
5. CHANGE OF CONTROL. Notwithstanding anything to the contrary contained
herein, in the event of a Change of Control of the Company, then (i) all options
which have vested shall continue to be exercisable in accordance with Section
2(c) of this Agreement, the Company's stock option plan and applicable legal
requirements; (ii) one hundred percent (100%) of the unvested options shall vest
one (1) year after the Change of Control; (iii) the Company shall forgive all
amounts owed by you in connection with the Loan and make any necessary Gross-Up
Payment; and (iv) to the extent that such Change of Control results in your
termination, whether by the Company without Cause or by you for Good Reason, the
Company shall pay to you a severance payment in accordance with the provisions
of Section 4(d) above, plus one hundred percent (100%) of the unvested options
shall vest immediately upon such termination. Notwithstanding the foregoing, to
the extent that the acceleration of vesting as contemplated in clause (ii) above
shall cause the options to not qualify as incentive stock options under
applicable tax laws, you shall be entitled to require that the Company not
accelerate the vesting of all or part of your unvested stock options in such
manner as shall preserve the status of the options as incentive stock options.
6. NON-DISCLOSURE/INVENTION ASSIGNMENT AGREEMENT;
NON-COMPETITION/NON-SOLICITATION AGREEMENT. You acknowledge that you previously
have entered into the Company's standard Non-Disclosure and Invention Assignment
Agreement upon commencing employment hereunder, in the forms of ATTACHMENT A and
ATTACHMENT B hereto. In addition, you agree to enter into the
Non-Competition/Non-Solicitation Agreement in the form of ATTACHMENT C hereto.
7. DIRECTORS' AND OFFICERS' LIABILITY POLICY. You will be covered under the
Company's directors' and officers' liability insurance policy, which shall
provide coverage in an amount and upon terms customary to similarly situated
companies. The Company shall maintain such policy throughout the duration of
your employment.
8. EXPENSES ASSOCIATED WITH THIS AGREEMENT. The Company shall reimburse you
for all expenses incurred by you in the preparation, review and negotiation of
this Agreement, including, without limitation, reasonable attorneys' fees and
accountants' fees.
9. INDEMNIFICATION. The Company agrees that if you are made a party or are
threatened to be made a party to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of the
fact that you are or were a director or officer of the Company or any subsidiary
or affiliate of the Company, whether or not the basis of such Proceeding is
alleged action in an official capacity as a director, officer, employee or
agent, you shall be indemnified and held harmless by the Company to the fullest
extent authorized by Delaware law, as the same exists or may hereafter amended,
against all damages, losses, judgments, liabilities, fines, penalties, excise
taxes, settlements and costs, including reasonable attorneys' fees, accountants'
fees and disbursement, incurred or suffered by you in connection therewith
(including the advancement of your defense costs and expenses as and when
incurred) and such indemnification shall continue as to you even if you have
ceased to be an officer, director or agent and are no longer employed by the
Company and shall inure to the benefit of your heirs, executors and
administrators.
10. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of (a) your heirs, executors and legal representatives upon your death
and (b) any successor of the Company. Any such successor of the Company shall be
deemed substituted for the Company under the terms of this Agreement for all
purposes. For this purpose, "successor" means any person, firm, corporation or
other business entity which at any time, whether by purchase, merger or
otherwise, directly or indirectly acquires all or substantially all of the
assets or business of the Company.
11. NOTICES. All notices, requests, demands and other communications
provided hereunder shall be in writing and shall be deemed given (i) on the date
of delivery if delivered personally, (ii) one (1) day after being sent by a well
established commercial overnight service, or (iii) four (4) days after being
mailed by registered or certified mail, return receipt requested, prepaid and
addressed to the parties or their successors at the following addresses, or at
such other addresses as the parties may later designate in writing:
If to the Company:
RIBOZYME PHARMACEUTICALS, INC.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Chairman of the Board
If to you:
at the last residential address known by the Company.
12. SEVERABILITY. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.
13. INTEGRATION. Upon the Effective Time, this Agreement, together with the
Non-Disclosure and Invention Assignment Agreement represents the entire
agreement and understanding between the parties as to the subject matter herein
and supersedes all prior or contemporaneous agreements whether written or oral,
including without limitation the Change of Control Agreement, dated as of April
30, 2001, between you and the Company and, except as expressly provided in
Section 16 below, the Current Agreement. No waiver, alteration, or modification
of any of the provisions of this Agreement shall be binding unless in writing
and signed by duly authorized representatives of the parties hereto.
14. GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Colorado, without reference to
principles of conflict of laws.
15. SALE OF STOCK. You shall have the opportunity to exercise your vested
options and sell any Company capital stock owned by you in reasonable
quantities, consistent with legal and your Company obligations.
16. CONDITIONAL WAIVER OF CHANGE OF CONTROL. You agree to waive the
occurrence of a Change of Control under the Current Agreement, but only with
respect to the Financing, subject, however, to the condition that such waiver
shall not be considered to be a material modification of the Loan under the
Xxxxxxxx-Xxxxx Act of 2002 (the "Act"), which would prohibit a loan to an
officer or director of the Company after the effective date thereof. In the
event that such waiver would constitute a material modification of the Loan
under the Act, your waiver hereunder shall have no force or effect, and you will
be entitled to all of your rights relating to the Loan under the Current
Agreement and this Agreement with respect to the Change of Control by reason of
the Financing.
17. EFFECTIVE TIME. This Agreement shall become effective at the Effective
Time.
Please sign this Agreement and return one signed original copy to me,
acknowledging your agreement with and acceptance of these terms of employment.
Sincerely,
RIBOZYME PHARMACEUTICALS, INC.
By: /s/ Xxxxxx Xxxxxxx Xxxx
----------------------------
Name: Xxxxxx Xxxxxxx Xxxx
Title: Chairman of the Board of Directors
Agreed and accepted:
/s/ Xxxxxx X. Xxxxx
-----------------------------
Xxxxxx X. Xxxxx
Dated: February 11, 2003
Acknowledged and agreed:
OXFORD BIOSCIENCE PARTNERS IV L.P.
By: /s/ Xxxx Xxxxxx
-----------------------
Name: Xxxx Xxxxxx
Title: General Partner
THE SPROUT GROUP
By: /s/ Xxxxxxxx X. Xxxxxxx
-------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Managing Director
VENROCK ASSOCIATES
By: /s/ Xxxxx Xxxxxxx
------------------------
Name: Xxxxx Xxxxxxx
Title: As a General Partner or Member
Appendix 1
DEFINITIONS
CAUSE. "Cause" is defined as (i) conviction of a felony crime involving
moral turpitude, (ii) an intentional action or intentional failure to act which
was performed in bad faith and to the material detriment of the Company, (iii)
continued intentional refusal or intentional failure to act in accordance with
any lawful and proper direction or order of the Board, (iv) willful and habitual
neglect of the duties of employment, or (v) breach of the Non-Disclosure
Agreement, contemplated hereunder; provided, however, that with respect to the
events of "cause" described under clauses (ii) through (v) above, the Company
shall have first provided to you written notice describing the nature of the
event and, thereafter, provided a reasonable opportunity to cure such event,
which reasonable opportunity shall in no event be less than thirty (30) days
following receipt of such notice.
CHANGE OF CONTROL. "Change of Control" of the Company is defined as: (i)
any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) becomes the "beneficial owner" (as defined in
Rule 13d-3 under said Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the total voting power represented
by the Company's then outstanding voting securities; or (ii) the consummation of
a merger or consolidation of the Company with any other corporation that has
been approved by the stockholders of the Company, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the stockholders
of the Company approve a plan of complete liquidation of the Company; or
(iii) the consummation of the sale or disposition by the Company of all or
substantially all the Company's assets; or (iv) when the individuals who on the
date hereof constitute the Board and any new director (other than a director
designated by a person or entity who has entered into an agreement to effect a
transaction described in clause (i), (ii) or (iii) above), whose nomination
and/or election to the Board was approved by a vote of at least a majority of
the directors still in office who either were directors on the date hereof or
whose election or nomination for election was previously approved, cease for any
reason to constitute a majority of the Board. For the avoidance of doubt, the
Financing in no event shall be deemed a Change of Control for the purposes of
this Agreement except as expressly provided in Section 16 of this Agreement.
GOOD REASON. "Good Reason" is defined as your voluntary resignation from
your employment with the Company upon the occurrence of any of the following
without your express written consent: (i) the assignment to you of any duties or
responsibilities inconsistent with the scope of the duties or responsibilities
associated with your titles or positions or any diminution to or adverse change
of your titles, positions, status or circumstances of employment; (ii) a
reduction by the Company in your Base Salary or bonus target percentage or,
absent a good business reason, of the facilities, benefits and perquisites
available to you immediately prior to such reduction; (iii) the taking of any
action by the Company which would adversely affect your participation in, or
reduce your benefits under, the Company's benefit plans (including equity
benefits) as of the date of execution hereof, except to the extent that the
benefits of all other employees of the Company are similarly reduced; provided,
that regardless of whether the Company may similarly reduce the benefits of
other employees, it shall constitute Good Reason in the event the Company takes
any action which would adversely affect your participation in, or adversely
affect or reduce in any material aspect your benefits under, the Company's
medical, dental, short-term disability and/or long-term disability benefit plans
or arrangements; (iv) a relocation of your principal office to a location more
than thirty (30) miles from Boulder, Colorado, except for reasonable periods of
required travel on Company business; (v) any breach by the Company of any
material provision of this Agreement; or (vi) any failure by the Company to
obtain the assumption of this Agreement in writing by any successor or assign of
the Company.
