Exhibit 10.7
EMPLOYMENT AGREEMENT
It is understood and agreed that the employment by INTERMUNE
PHARMACEUTICALS, INC., a Delaware corporation (the "Company" or "InterMune"), of
W. XXXXX XXXXXXXX ("Executive") shall be subject to the terms and conditions of
this Employment Agreement ("Agreement") effective as of the closing date of the
Company's Series A Preferred Stock financing ("Effective Date").
1. DUTIES/AUTHORITY. Subject to the provisions of Section 4 below, Executive
shall serve as the President and Chief Executive Officer of the Company
reporting to the Company's Board of Directors and shall be granted the authority
to perform and shall perform such customary, appropriate and reasonable
executive duties as are usually performed by a President and Chief Executive
Officer in reputable companies engaged in a line of business similar to that of
the Company, or such reasonable duties as may be delegated to him from time to
time by the Board of Directors of the Company (the "Board") or the Chief
Executive Officer. Executive's position with the Company is exempt. Executive
agrees that as a condition of Executive's employment by the Company that
Executive will be bound and subject to the terms and conditions of the Employee
Handbook applicable to all employees. The Employee Handbook may be revised from
time to time in the sole discretion of the Company.
2. CASH COMPENSATION AND BENEFITS.
2.1 BASE COMPENSATION. Executive shall be paid an annual base salary
of Two Hundred Twenty-Five Thousand Dollars ($225,000.00) ("Base
Compensation"), payable in accordance with the Company's general
payroll practices commencing on the Effective Date. A bonus for
calendar year 1999 of up to Twenty-Five Thousands Dollars
($25,000) shall be paid to Executive, based upon achievement of
the first tier milestones ("First Tier Milestones") set forth in
Exhibit A, attached hereto and by this reference made a part
hereof, and up to an additional Twenty-Five Thousand Dollars
($25,000) based upon achievement of the second tier of milestones
set forth in Exhibit A ("Second Tier Milestones"). After calendar
year 1999, Executive's bonuses shall be based upon milestones
determined by the Board of Directors and Executive on an annual
basis (collectively, with the 1999 bonuses, the "Bonuses").
Bonuses, if any, shall be paid within the first quarter of the
following calendar year.
2.2 EXECUTIVE BENEFITS. In addition to the Base Compensation,
Executive shall further be entitled to participate in any employee
benefits programs offer generally from time to time to senior
management employees of the Company. The Company shall reimburse
Executive up to One Thousand Five Hundred Dollars ($1,500) per
year rewards Executive's purchase of an excess long-term
disability policy and UP to Four Hundred Dollars ($400) per year
towards purchase of a term life insurance policy.
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2.3 VACATION; HOLIDAYS; ETC. Executive shall be entitled to fully-paid
vacation time of fifteen (15) business days per calendar year. In
addition, Executive shall be entitled to all holidays provided
under the Company's regular holiday schedule and any other
benefits specified in the Employee Handbook.
2.4 STOCK PURCHASE. As additional compensation, Executive shall be
entitled to purchase six hundred ninety thousand (690,000) shares
of the Company's common stock in accordance with the terms and
conditions of the Common Stock Purchase Agreement between the
parties of even date herewith ("Stock Agreement"), which is
incorporated herein by reference.
2.5 EXPENSE REIMBURSEMENTS. Executive's expenses in performing his
duties will be reimbursed by the Company in accordance with the
policies established by the Board from time to time.
2.6 TRANSFER OF CONNETICS LOAN. The Company shall assume
responsibility from Connetics for the loan to Executive (the
"Loan") made by Connetics (i.e. the Company shall assume full
responsibility for satisfying Connetics). Comparable terms and
conditions of the Loan shall be reinstituted between the Company
and Executive, with the Company as obligee and Executive as
obligor. Executive shall secure the new loan with Company stock,
substituting said stock for the prior security consisting of
Connetics' stock.
3. TERMINATIONS AND SEVERANCE COMPENSATION
3.1 DEFINITIONS. For purposes of this Agreement the following terms,
when capitalized and used herein, shall have the following
meanings:
3.1.1. "INVOLUNTARY TERMINATION" SHALL MEAN (I) WITHOUT
EXECUTIVE'S EXPRESS WRITTEN CONSENT, A MATERIAL
REDUCTION OF EXECUTIVE'S DUTIES, POSITIONS OR
RESPONSIBILITIES RELATIVE TO EXECUTIVE'S DUTIES,
POSITIONS, OR RESPONSIBILITIES IN EFFECT IMMEDIATELY
PRIOR TO SUCH MATERIAL REDUCTION ("MATERIAL REDUCTION
OF DUTIES"), (II) WITHOUT EXECUTIVE'S EXPRESS WRITTEN
CONSENT OR OTHER THAN IN CONNECTION WITH A PERCENTAGE
SALARY DECREASE GENERALLY APPLICABLE TO SUBSTANTIALLY
ALL EMPLOYEES OF THE COMPANY, A MATERIAL REDUCTION OF
EXECUTIVE'S COMPENSATION PACKAGE, AS ADJUSTED, IN
EFFECT IMMEDIATELY PRIOR TO SUCH REDUCTION, (II)
WITHOUT EXECUTIVE'S EXPRESS WRITTEN CONSENT, THE
RELOCATION OF EXECUTIVE TO A FACILITY OR LOCATION
OUTSIDE OF THE GREATER SILICON VALLEY AREA, I.E. FIFTY
MILES OR MORE FROM SAN FRANCISCO, OR (IV) ANY
TERMINATION OF THE EXECUTIVE BY THE COMPANY WHICH IS
NOT EFFECTED FOR CAUSE, AS DEFINED BELOW.
NOTWITHSTANDING THE FOREGOING, EXECUTIVE'S
INVOLUNTARY REMOVAL AS EITHER PRESIDENT OR CHIEF
EXECUTIVE OFFICER (BUT NOT
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BOTH) SHALL BE DEEMED NOT TO BE A MATERIAL REDUCTION
OF DUTIES IN THE EVENT OF EITHER A CORPORATE
TRANSACTION OR IF SUCH REMOVAL AS EITHER PRESIDENT OR
CHIEF EXECUTIVE OFFICER (BUT NOT BOTH) OCCURS AFTER
DECEMBER 31, 2000.
3.1.2. "CAUSE FOR TERMINATION" SHALL MEAN: (I) EXECUTIVE'S
CONVICTION BY, OR ENTRY OF A PLEA OF GUILTY OR NOLO
CONTENDERE IN, A COURT OF COMPETENT JURISDICTION FOR
ANY CRIME WHICH CONSTITUTES A FELONY IN THE
JURISDICTION INVOLVED (OTHER THAN A FELONY TRAFFIC
OFFENSE), (II) EXECUTIVE'S MISAPPROPRIATION OF FUNDS
OR COMMISSION OF ACT OF FRAUD UPON THE COMPANY, (III)
GROSS NEGLIGENCE BY EXECUTIVE IN THE SCOPE OF
EXECUTIVE'S SERVICES TO THE COMPANY, WHICH GROSS
NEGLIGENCE EXECUTIVE HAS NOT CURED WITHIN THIRTY (30)
DAYS OF WRITTEN NOTICE THEREOF, (IV) A WILLFUL
MATERIAL BREACH BY EXECUTIVE OF A MATERIAL PROVISION
OF THIS AGREEMENT OF THE PROPRIETARY INFORMATION AND
INVENTIONS AGREEMENT, WHICH WILLFUL MATERIAL BREACH
EXECUTIVE HAS NOT CURED WITHIN (30) DAYS OF WRITTEN
NOTICE THEREOF, OR (V) A WILLFUL MATERIAL FAILURE OF
EXECUTIVE TO SUBSTANTIALLY PERFORM HIS DUTIES AS
PRESIDENT OR CHIEF EXECUTIVE OFFICER WHICH WILLFUL
MATERIAL FAILURE EXECUTIVE HAS NOT CURED WITHIN (30)
DAYS OF WRITTEN NOTICE THEROF.
3.2 CAUSE AND VOLUNTARY TERMINATION. The Company shall have the right
to terminate Executive's employment hereunder for Cause upon
written notice to Executive, but effective no earlier than June 2,
1999. The Executive shall have the right voluntarily to terminate
this Agreement at any time upon thirty (30) days' prior written
notice to the Company. If Executive voluntarily terminates his
employment hereunder or the Company terminates Executive's
employment for Cause, the Executive's sole and exclusive right and
remedy hereunder shall be the right to receive his accrued Base
Compensation, accrued Bonus, if any, outstanding expense
reimbursements and accrued Company stock pursuant to the Stock
Agreement, through the date of such termination only and the
Company shall have no responsibility for the payment of any other
compensation or benefits to the Employee for any time period
subsequent to such termination except as may be expressly requited
by law or the respective terms of benefit arrangements to be paid
even upon termination for cause or voluntary termination.
3.3 TERMINATION WITHOUT CAUSE: CORPORATE TRANSACTION. The Company
shall have the right to terminate Executive's employment hereunder
without Cause upon written notice to Executive (but such notice
shall in no event be issued earlier than June 2, 1999). Should
Executive be terminated, without Cause or should there be a
CORPORATE TRANSACTION as defined in the Stock Agreement, the
Company shall give to Executive: any accrued and unpaid Base
Compensation and Bonuses; any accrued pension benefits, insurance
benefits and stock options; any stock and related stock purchase
rights (per the Stock Agreement, E.G., Sections 2(b)-(f)) and any
other rights and benefits to the extent, if at all, Executive is
entitled to them through the effective date
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of the termination under their respective terms or the terms
herein. Executive shall also be entitled to continue to receive
from the Company his then-current Base Compensation for a period
of six (6) months; provided, that, if requested to do so by the
Company, Executive shall continue to serve in his capacity(s)
averaging not more than two (2) days per week during the initial
forty-five (45) calendar day period following notice of
termination, and subject to modification by mutual agreement of
the Parties including, without limitation, extension of his
employment for an additional ninety (90) days to facilitate
transition of duties. All such amounts shall be payable in
accordance with the Company's general payroll practices.
4. ATTENTION TO DUTIES; CONFLICT OF INTEREST. While employed by the
Company, Executive shall devote Executive's full business time, energy
and abilities exclusively to the business and interests of InterMune,
and shall perform all duties and services in a faithful and diligent
manner and to the best of Executive's abilities. Executive shall not,
without the Company's prior written consent, render to others, services
of any kind for compensation or engage in any other business activity
that would materially interfere with the performance of Executive's
duties under this Agreement. Executive represents that Executive has no
other outstanding commitments inconsistent with any of the terms of
this Agreement or the services to be rendered to InterMune. While
employed by the Company, Executive shall not no directly or indirectly,
whether as a partner, employee, creditor, shareholder, or otherwise,
promote, participate or engage in any activity or other business
competitive with the Company's business. Executive shall not invest in
any company or business which competes in any manner with the Company,
except those companies whose securities are listed on national
securities exchanges or quoted daily in the Nasdaq National Market
listing of THE WALL STREET JOURNAL. Notwithstanding the foregoing, the
Company agrees that Executive may devote an average of 20% of each work
week to financial consulting services to Connetics Corporation;
provided, that Executive's Base Compensation shall be reduced by 20%
during such period as he performs such consulting services.
5. PROPRIETARY INFORMATION. Executive agrees to be bound by the terms of
the Proprietary Information Agreement and exhibits thereto, which are
attached as Exhibit A and incorporated by this reference ("Proprietary
Agreement"), and, by the rules of confidentiality promulgated by
InterMune from time to time.
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6. DEATH; DISABILITY
6.1 DEATH. This Agreement shall terminate automatically upon
Executive's death. If Executive's employment hereunder is
terminated on account of his death, the Company shall pay To
Executive's estate, as its sole right and remedy under this
Agreement, all accrued and unpaid Base Compensation, accrued
Bonus, if any, and expense reimbursements through the date of
Executive's death and the Executive's estate shall also be
entitled to receive any then accrued Company stock pursuant to the
Stock Agreement, insurance and other rights and benefits, to the
extent, if at all, the Executive was entitled to them under their
respective terms.
6.2 DISABILITY. In the event that Executive, because of accident,
disability or physical or mental fitness, is incapable of
performing his usual duties hereunder, the Company shall have the
right to terminate Executives employment hereunder, upon thirty
(30) days prior written notice to Executive. For purposes of this
Section 4.2, Executive shall be deemed to have become incapable of
performing his usual duties hereunder if the Board shall
reasonably determine that Executive is, by reason of any
medically determinable physical or mental impairment expected to
result in death or to be of a duration of not less than six (6)
months, unable to perform consistently and materially his usual
duties for the Company with or without reasonable accommodation.
If Executive's employment hereunder is terminated pursuant to this
Section 6.2, the Company shall pay to Executive, as his sole and
exclusive right and remedy under this Agreement all accrued and
unpaid Base Compensation, Bonuses and reimbursements through the
date of Executive's termination and the Executive shall also be
entitled to receive any then accrued stock pursuant to the Stock
Agreement, insurance and other rights and benefits to the extent,
if at all, the Executive was entitled to them under their
respective terms.
7. BINDING ARBITRATION.
7.1 Any dispute, claim or controversy with respect to Executive's
termination of employment with the Company (whether the
termination of employment is voluntary or involuntary), and any
dispute, claim or controversy with respect to incidents or events
leading to such termination or the method or manner of such
termination, and any question of arbitrability hereunder, shall be
settled exclusively by arbitration.
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7.2 Executive and InterMune each waive their constitutional rights to
have such matters determined by a jury. Instead of a jury trial,
an arbitrator shall be chosen by InterMune and Executive.
Arbitration is preferred because, among other reasons, it is
quicker, less expensive and less formal than litigation in court.
The provisions governing arbitration are described in detail in
InterMune's Employee Handbook.
7.3 The arbitrator shall not have the authority to alter, amend,
modify, add to or eliminate any condition or provision of this
Agreement, including, but not limited to, the "at-will" nature of
the employment relationship. The arbitration shall be held in San
Mateo County, California. The award of the arbitration shall be
final and binding on the parties. Judgment upon the arbitrator's
award may be entered in any court, state or federal, having
jurisdiction over the parties. If a written request for
arbitration is not made within one (1) year of the date of the
alleged wrong or violation, all remedies regarding such alleged
wrong or violation shall be waived.
7.4 Should any court determine any provision(s) of this Agreement to
arbitrate is void or invalid, the parties specifically intend
every other provision of this Agreement to arbitrate to remain
enforceable and intact. The parties explicitly and definitely
prefer arbitration to recourse to the courts, for the reasons
described above, and have prescribed arbitration as the sole and
exclusive method of dispute resolution.
7.5 NO INCONSISTENT OBLIGATIONS. Executive represents that Executive
is not aware of any obligations, legal or otherwise, inconsistent
with the terms of this Agreement or Executive's undertakings under
this Agreement.
8. MISCELLANEOUS.
8.1 SUCCESSORS AND ASSIGNS. This Agreement shall be binding on and
inure to the benefit of the parties hereto, and their heirs,
executors, legal representatives, successors and assigns. Neither
party shall have the right to assign its obligations, or all or
any portion of their rights or interests under Agreement without
the prior written consent of the other party hereto, and any
attempt to do so will be null and void; provided, that the Company
shall have the right to assign this Agreement in connection with
(A) any merger or consolidation of the Company with another
entity, whether or not the Company is the continuing or surviving
entity, in which fifty percent (50%) or more of the Company's
voting capital is transferred to holders different from persons or
their affiliates who held the immediately prior to such merger or
consolidation or (B) any sale of all or substantially all of the
Company's assets to another entity or person of which fifty
percent (50%) or more of the capital stock is held by holders
different from persons or their affiliates who hold voting capital
stock of the Company.
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8.2 WITHHOLDING. Executive hereby agrees to make appropriate
arrangements with the Company for the satisfaction of all Federal,
State or local income tax withholding requirements and Federal
social security employee tax requirements applicable to this
Agreement.
8.3 AMENDMENT. No promises or changes in Executive's status as an
employee of the Company or any of the terms and conditions of this
Agreement; can be made unless they are made in writing and signed
by the Chief Executive Officer of InterMune. This Agreement and
the terms and conditions described in it cannot be changed orally
or by any conduct of either Executive or InterMune or any course
of dealings between Employee, or another person and InterMune.
8.4 GOVERNING LAW. This Agreement and performance under it, and any
suits or special proceedings brought under it, shall be construed
in accordance with the laws of the United States of America and
the State of California and any arbitration, mediation or other
proceeding arising hereunder shall be filed and adjudicated in San
Mateo County, California.
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8.5 SEVERABILITY. If any term or condition, or any part of a term or
condition, of this Agreement shall prove to be invalid, void or
illegal, it shall in no way affect, impair or invalidate any of
the other terms or conditions of this Agreement, which shall
remain in full force and effect.
8.6 WAIVER. The failure of either party at any time to require
performance by the other party of any provision hereof shall not
affect in any way the full right to require such performance at
any time thereafter, nor shall a waiver by either party of a
breach of any provision hereof be taken or held to be a continuing
waiver of such provision, or waiver of any other breach under any
other provision of this Agreement.
8.7 RELIANCE: CONSTRUCTION. The parties to this Agreement represent
and acknowledge that in executing this Agreement they do not rely
and have not relied upon any representation or statement made by
the other party or the other party's agents, attorneys or
representatives regarding the subject matter, basis, or effect of
this Agreement or otherwise, other than those specifically stated
in this written Agreement. This Agreement shall be interpreted in
accordance with the plain meaning of its terms and not strictly
for or against any party. This Agreement shall be construed as if
each party was its author and each party hereby adopts the
language of this Agreement as if it were his, her or its own. The
captions in this Agreement and its sections, subsections, tables
and exhibits are inserted only for convenience and shall not be
construed as part of this Agreement or as a limitation on or
broadening of the scope of this Agreement or any section,
subsection, table or exhibit.
8.8 COUNTERPARTS. This Agreement may be executed by facsimile
signature (which will be as valid as an original signature) and in
any number of counterparts, each of which shall be deemed to be an
original, and all of which together will constitute one and the
same Agreement.
8.9 NO CONFLICT. Executive covenants and represents that he is not a
party in any agreement or understanding which impairs or prohibits
his ability to enter into and perform services under this
Agreement.
Employee and InterMune have executed this Agreement and agree to enter into and
be bound by the provisions hereof as of the date first set forth above.
INTERMUNE PHARMACEUTICALS INC.
By: /s/Xxxxx X. Xxxxx /s/Xxxxxx Xxxxxxxx
------------------------------ ----------------------------------
Xxxxx X. Xxxxx Xxxxxx Xxxxxxxx
Director Director
[SIGNATURES CONTINUED]
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By: /s/Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx
Director
Sign: /s/W. Xxxxx Xxxxxxxx
-----------------------------------
W. Xxxxx Xxxxxxxx
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