August 1, 2011
Exhibit 10.5
August 1, 2011
Xxxxx X. Xxxxxx, III
0 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
0 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
Dear Xxx:
It is my pleasure to inform you that, effective as of the date of this Agreement (the “Effective
Date”) you shall have the additional position of Senior Vice President, Operations. In connection
with your additional position, Idera Pharmaceuticals, Inc. (the “Company”) desires to amend and
restate the employment letter dated November 8, 2007 between you and the Company, as amended (the
“Prior Agreement”), and to provide that, effective upon the Effective Date, your continued
employment with the Company shall be on the terms set forth in this Agreement and the Prior
Agreement shall be terminated and of no further force or effect.
| 1. | Employment. You will be employed to serve on a full time basis as Chief Financial Officer and Senior Vice President, Operations of the Company, reporting solely to the Chief Executive Officer and performing such duties as are customarily assigned to a chief financial officer or senior vice president, operations, plus such other duties as may from time to time be assigned to you by the Chief Executive Officer. You agree to devote your full business time, best efforts, skill, knowledge, attention and energies to the advancement of the Company’s business and interests and to the performance of your duties and responsibilities as an employee of the Company. |
| 2. | Base Salary and Bonus. Your annual base salary will be $315,000 per year, effective May 1, 2011, and shall be payable to you at periodic intervals in accordance with the Company’s payroll practices for salaried employees. Such base salary may be adjusted from time to time in accordance with normal business practices and in the sole discretion of the Company. You shall also be eligible to receive, for each fiscal year of the Company ending during your employment with the Company, an annual bonus, whether pursuant to a formal bonus or incentive plan or program of the Company or otherwise. Such bonus, if any, will be approved by the Board of Directors or the Compensation Committee of the Board of Directors (together, the “Board”) in its sole discretion and will be based on both individual and Company performance objectives as developed and determined by the Company in its sole discretion. Any bonus earned by you and approved by the Board under this Section 2 shall be paid to you no later than March 15th of the calendar year following the calendar year in which such bonus is earned and approved by the Board under this Section 2. All salary, bonus and other compensation payable to you pursuant to this Agreement shall be subject to applicable withholding taxes. |
| 3. | Benefit Programs. You may participate in any and all benefit programs that the Company may establish and make available to its employees from time to time, provided you are eligible under (and subject to all provisions of) the plan documents governing those programs. Such benefits may include medical, dental and retirement plans. Any benefits made available by the Company, and the rules, terms and conditions for participation in such benefit plans, may be changed by the Company at any time and from time to time without advance notice. |
| 4. | Reimbursement of Expenses. The Company shall reimburse you, in accordance with the Company’s expense reimbursement policy, for all reasonable travel, entertainment and other expenses incurred or paid by you in connection with, or related to, the performance of your duties, responsibilities or services under this Agreement, upon presentation by you of appropriate documentation, expense statements, vouchers and/or such other supporting information as the Company may request and in accordance with Section 10(e) below. |
| 5. | Termination of Employment Period. Your employment by the Company pursuant to this Agreement shall terminate upon the occurrence of any of the following: |
(a) At the election of the Company, for Cause (as defined below), immediately
upon written notice by the Company to you, which notice shall identify the Cause
upon which the termination is based.
(b) Upon your death or disability. As used in this Agreement, the term
“disability” shall mean inability by you, due to a physical or mental
disability, for a period of 90 days, whether or not consecutive, during any
360-day period to perform the services contemplated under this Agreement, with
or without reasonable accommodation as that term is defined under state or
federal law. A determination of disability shall be made by a physician
satisfactory to both you and the Company, provided that if you
and the Company do not agree on a physician, you and the Company shall each
select a physician and these two together shall select a third physician, whose
determination as to disability shall be binding on all parties;
(c) At the election of either party, upon not less than fifteen days’ prior
written notice of termination.
| 6. | Effect of Termination. |
(a) In the event your employment is terminated pursuant to Section 5(a), Section
5(b) or Section 5(c), the Company shall pay to you the compensation and benefits
otherwise payable you under Section 2 through the last day of your actual
employment by the Company.
(b) In the event that the Company terminates your employment with the Company at
any time without Cause pursuant to Section 5(c), then, subject to Section 6(e),
the Company shall continue to pay you your then current base
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salary for a period of three (3) months, payable in accordance with and at the
times contemplated by the Company’s then current payroll practices.
(c) Notwithstanding Section 6(b) above, and in lieu of any payment owed under
Section 6(b), if any, in the event that the Company terminates you without Cause
or you resign from employment with the Company for Good Reason upon a Change in
Control (as defined below) or within the twelve (12) month period following the
Change in Control, then, subject to Section 6(e), the Company shall continue to
pay you your then current base salary for a nine-month period, payable in
accordance with and at the times contemplated by the Company’s then current
payroll practices.
(d) Following a termination of your employment entitling you to severance
payments under Section 6(b) or Section 6(c), and subject to Section 6(e), if you
are eligible for and elect to continue receiving group medical and/or dental
insurance under the continuation coverage rules known as COBRA, the Company will
pay the share of the premium for such coverage that it pays for active and
similarly-situated employees who receive the same type of coverage (single,
family, or other) until the earlier of (i) the end of the period for which the
Company is paying you your then current base salary pursuant to Section 6(b) or
Section 6(c) above (as applicable, the “Severance Period”) or (ii) the date your
COBRA continuation coverage expires.
(e) Notwithstanding anything in this Section 6 to the contrary, the Company’s
obligations to make severance payments and provide benefits to you pursuant to
this Section 6 shall be contingent upon your execution of a separation and
release agreement (the “Release Agreement”) in a form reasonably acceptable to
the Company which Release Agreement must become irrevocable within 60 days (or
such earlier date as the Release Agreement provides) following the date of your
termination of employment. Such payments and benefits shall begin to be paid or
provided in the first regular payroll period beginning after the Release
Agreement becomes binding on you; provided, however, that if the 60th
day after termination occurs in the calendar year following the year of your
date of termination, the severance payments and benefits shall be paid or
provided no earlier than January 1 of such subsequent calendar year (whether or
not the Release Agreement is executed prior to such date. You must continue to
comply with the covenants referenced in Section 7 to continue to receive
severance benefits. The severance payments and benefits shall constitute your
sole remedy in connection with the termination of your employment in the event
of a termination of your employment by the Company without Cause or by you for
Good Reason.
(f) For purposes of this Agreement, Cause shall mean (i) a material breach of
any material term of this Agreement, (ii) a plea of guilty or nolo contendere
to, or conviction of, a felony offense, (iii) repeated unexplained or
unjustified absence, or refusals to carry out the lawful directions of the Board
or (iv)
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material breach of a fiduciary duty owed to the Company under this Agreement,
provided that any action or inaction described by (i), (iii) or (iv), above,
shall not be the basis of a termination of your employment with the Company for
“Cause” unless the Company provided you with at least 20 days advance written
notice specifying in reasonable detail the conduct in need of being cured and
such conduct was not cured within the notice period or prior to termination.
(g) For purposes of this Agreement, a Change of Control shall mean the
occurrence of any of the following events: (i) a change in the composition of
the Board over a period of thirty-six consecutive months or less such that a
majority of the members of the Board ceases to be comprised of individuals who
are Continuing Members; for such purpose, a “Continuing Member” shall mean an
individual who is a member of the Board on the date of this Agreement and any
successor of a Continuing Member who is elected to the Board or nominated for
election by action of a majority of Continuing Members then serving on the
Board; (ii) any merger or consolidation that results in the voting securities of
the Company outstanding immediately prior thereto representing (either by
remaining outstanding or by being converted into voting securities of the
surviving or acquiring entity) less than 60% of the combined voting power of the
voting securities of the Company or such surviving or acquiring entity
outstanding immediately after such merger or consolidation; (iii) any sale of
all or substantially all of the assets of the Company; (iv) the complete
liquidation or dissolution of the Company; or (v) the acquisition of “beneficial
ownership” (as defined in Rule 13d-3 under the Exchange Act) of securities of
the Company representing 50% or more of the combined voting power of the
Company’s then outstanding securities (other than through a merger or
consolidation or an acquisition of securities directly from the Company) by any
“person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act,
other than the Company, any trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any corporation owned directly or
indirectly by the stockholders of the Company in substantially the same
proportion as their ownership of stock of the Company; provided however that,
where applied to compensation subject to Section 409A of the Internal Revenue
Code and the guidance issued thereunder (“Section 409A”), any acceleration of or
change in payment shall only apply (if required by Section 409A) if the Change
of Control is also a change in control event described in Treasury Regulation
1.409A-3(i)(5).
(h) For purposes of this Agreement, Good Reason shall mean any action on the
part of the Company not consented to by you in writing having the following
effect or effects: (i) a material reduction in your base salary; (ii) a material
diminution in your duties, responsibilities or authority as set forth in Section
1 of this Agreement or (iii) the Company’s requiring you to perform your ongoing
and regular services at a location more than 50 miles from the location you are
then performing your ongoing and regular services. You must (A) give notice to
the Company of your intention to resign for Good
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Reason within 90 days after the occurrence of the event (or series of events)
that you assert entitle you to resign for Good Reason, (B) state in that notice
the condition that you consider to provide you with Good Reason to resign, (C)
provide the Company with at least 30 days after you deliver your notice to cure
the condition and (D) if the condition is not cured, resign for Good Reason on
or prior to the 60th day after you deliver your notice.
| 7. | Invention, Non-Disclosure and Non-Competition Agreement. You have previously executed an Invention, Non-Disclosure and Non-Competition Agreement with the Company and hereby ratify and confirm your ongoing obligations under such agreement. |
| 8. | Company Policies and Procedures. As an employee of the Company, you will be required to comply with all Company policies and procedures. Violations of the Company’s policies may lead to immediate termination of your employment. Further, the Company’s premises, including all workspaces, furniture, documents and other tangible materials, and all information technology resources of the Company (including computers, data and other electronic files, and all internet and e-mail) are subject to oversight and inspection by the Company at any time. Company employees should have no expectation of privacy with regard to any Company premises, materials, resources or information. |
| 9. | Other Agreements and Governing Law. You represent that you are not bound by any employment contract, restrictive covenant or other restriction preventing you from continuing in employment with or carrying out your responsibilities for the Company, or which is in any way inconsistent with the terms of this Agreement. Please note that this Agreement supersedes any and all prior or contemporaneous agreements, discussions and/or understandings, whether written or oral, relating to the subject matter of this Agreement or your employment with the Company, including without limitation the Prior Agreement which shall terminate as of the Effective Date. The resolution of any disputes under this Agreement will be governed by Massachusetts law. |
| 10. | Compliance with Section 409A. Subject to the provisions in this Section 10, any severance payments or benefits under this Agreement (including under Section 6 hereof) shall begin only upon the date of your “separation from service” (determined as set forth below) which occurs on or after the date of termination of your employment. The following rules shall apply with respect to distribution of the payments and benefits, if any, to be provided to you under this Agreement: |
(a) It is intended that each installment of the severance payments and benefits
provided under this Agreement shall be treated as a separate “payment” for
purposes of Section 409A. Neither the Company nor you shall have the right to
accelerate or defer the delivery of any such payments or benefits except to the
extent specifically permitted or required by Section 409A.
(b) If, as of the date of your “separation from service” from the Company, you
are not a “specified employee” (within the meaning of Section 409A),
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then each installment of the severance payments and benefits shall be made on
the dates and terms set forth in this Agreement.
(c) If, as of the date of your “separation from service” from the Company, you
are a “specified employee” (within the meaning of Section 409A), then:
(i) Each installment of the severance payments and benefits due under this
Agreement that, in accordance with the dates and terms set forth herein, will in
all circumstances, regardless of when the separation from service occurs, be
paid within the Short-Term Deferral Period (as hereinafter defined) shall be
treated as a short-term deferral within the meaning of Treasury Regulation
Section 1.409A-1(b)(4) to the maximum extent permissible under Section 409A.
For purposes of this Agreement, the “Short-Term Deferral Period” means the
period ending on the later of the fifteenth day of the third month following the
end of your tax year in which the separation from service occurs and the
fifteenth day of the third month following the end of the Company’s tax year in
which the separation from service occurs; and
(ii) Each installment of the severance payments and benefits due under
this Agreement that is not described in Section 10(c)(i) above and that would,
absent this subsection, be paid within the six-month period following your
“separation from service” from the Company shall not be paid until the date that
is six months and one day after such separation from service (or, if earlier,
your death), with any such installments that are required to be delayed being
accumulated during the six-month period and paid in a lump sum on the date that
is six months and one day following your separation from service and any
subsequent installments, if any, being paid in accordance with the dates and
terms set forth herein; provided, however, that the preceding
provisions of this sentence shall not apply to any installment of severance
payments and benefits if and to the maximum extent that such installment is
deemed to be paid under a separation pay plan that does not provide for a
deferral of compensation by reason of the application of Treasury Regulation
1.409A-1(b)(9)(iii) (relating to separation pay upon an involuntary separation
from service). Any installments that qualify for the exception under Treasury
Regulation Section 1.409A-1(b)(9)(iii) must be paid no later than the last day
of your second taxable year following your taxable year in which the separation
from service occurs.
(d) The determination of whether and when your separation from service from the
Company has occurred shall be made in a manner consistent with, and based on the
presumptions set forth in, Treasury Regulation Section 1.409A-1(h). Solely for
purposes of this Section 10(d), “Company” shall include all persons with whom
the Company would be considered a single employer under Section 414(b) and
414(c) of the Code.
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(e) All reimbursements and in-kind benefits provided under this Agreement shall
be made or provided in accordance with the requirements of Section 409A to the
extent that such reimbursements or in-kind benefits are subject to Section 409A,
including, where applicable, the requirements that (i) any reimbursement is for
expenses incurred during your lifetime (or during a shorter period of time
specified in this Agreement), (ii) the amount of expenses eligible for
reimbursement during a calendar year may not affect the expenses eligible for
reimbursement in any other calendar year, (iii) the reimbursement of an eligible
expense will be made on or before the last day of the calendar year following
the year in which the expense is incurred and (iv) the right to reimbursement is
not subject to set off or liquidation or exchange for any other benefit.
(f) Notwithstanding anything herein to the contrary, the Company shall have no
liability to you or to any other person if the payments and benefits provided
hereunder that are intended to be exempt from or compliant with Section 409A are
not so exempt or compliant.
| 11. | Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation with which or into which the Company may be merged or which may succeed to its assets or business; provided, however, that your obligations to the Company are personal and shall not be assigned by you. |
| 12. | Acknowledgment. You state and represent that you have had an opportunity to fully discuss and review the terms of this Agreement with an attorney. You further state and represent that you have carefully read this Agreement, understand the contents herein, freely and voluntarily assent to all of the terms and conditions hereof, and sign your name of your own free act. |
| 13. | Miscellaneous. |
(a) No delay or omission by the Company in exercising any right under this
Agreement shall operate as a waiver of that or any other right. A waiver or
consent given by the Company on any one occasion shall be effective only in that
instance and shall not be construed as a bar to or waiver of any right on any
other occasion.
(b) The captions of the sections of this Agreement are for convenience of
reference only and in no way define, limit or affect the scope or substance of
any section of this Agreement.
(c) In case any provision of this Agreement shall be invalid, illegal or
otherwise unenforceable, the validity, legality and enforceability of the
remaining provisions shall in no way be affected or impaired thereby.
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If you are in agreement with, and agree to, the terms under which you will continue to be employed
by the Company, please sign the enclosed duplicate of this Agreement in the space provided below
and return it to me.
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| Very truly yours, |
||||
| By: | /s/ Xxxxxx Xxxxxxx | |||
| Name: | Xxxxxx Xxxxxxx | |||
| Title: | Chief Executive Officer | |||
The foregoing correctly sets forth the terms of my employment with Idera Pharmaceuticals, Inc. I
am not relying on any representations other than as set forth above.
| /s/ Xxxxx X. Xxxxxx | Date: 8-1-11 | |||
| Xxxxx X. Xxxxxx | ||||
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