Exhibit 10.5
March 18, 2002
CONFIDENTIAL
Xx. Xxxx Xxxxxx
00 Xxxxxx Xxxx
Xxxxxx Xxxxxx, Xxx Xxxxxx 00000
Dear Xx. Xxxxxx:
On behalf of Novirio Pharmaceuticals, Inc. ("Novirio"), I am pleased to offer
you the position of Chief Financial Officer. In this position, you will report
directly to Xxxxxxx's Chief Executive Officer. The terms of employment set forth
below are intended to reflect our prior discussions.
Commencement: Employment will commence on or before March 1, 2002.
The initial term of this agreement will be for a
period of two years, renewable thereafter for
successive one year periods upon the mutual agreement
of the parties unless either party elects not to
renew and provides notice thereof to the other party
at least 30 days prior to the end of the initial two
year period or any subsequent one year period.
Salary: Your monthly salary will be $21,666.67 (equivalent to
$260,000 annually), payable semi-monthly in arrears
subject to applicable withholding. In no event will
your salary be reduced. Novirio annually reviews the
performance of and compensation (both cash and
equity) payable to its employees. You may expect to
be included in performance and compensation reviews
which occur subsequent to the commencement of your
employment.
Bonus: In connection with your acceptance of this position,
Xxxxxxx will pay to you the amount of $150,000. Such
bonus amount will be payable in three installments
commencing on the first and continuing thereafter on
each of the second and third anniversary of your
employment commencement provided that your employment
with Novirio has not been terminated for Cause (as
hereinafter defined) prior to such respective payment
date. In the event that your employment with Novirio
is: (i) terminated by you for Good Reason (as
hereinafter defined); (ii) is terminated by Novirio
without Cause (as hereinafter defined); or (iii)
Novirio elects not to renew the term of this
arrangement after the initial term, payment of the
bonus will be accelerated to the date of your
termination.
Xx. Xxxx Xxxxxx
March 18, 2002
Page 2
It is currently anticipated that a bonus program for
officers of Novirio will be instituted upon
consummation of a Successful Initial Public Offering.
You may expect to participate in such bonus program
at a level commensurate with your position. The bonus
program will be intended to provide benefits similar
to those described in the draft report on Total
Compensation prepared by PricewaterhouseCoopers, a
copy of which has been previously provided to you.
For purposes hereof, a Successful Initial Public
Offering will be deemed to have occurred if the
transaction is complete on or before June 30, 2003,
the offering price per share exceeds $10.00 (or such
other equivalent amount if a stock split (forward or
reverse) is effected prior to the occurrence of an
initial public offering), the shares are traded on
the NASDAQ NMS and net proceeds to the Company from
the sale of the Ordinary Shares exceeds $80 million.
Equity: On the date your employment commences, you will be
granted an option to purchase up to 300,000 ordinary
shares ("Ordinary Shares") of Novirio's parent
company, Novirio Pharmaceuticals Limited ("Novirio
Limited"), at $3.00 per share. The option, which is
intended to be an incentive stock option and is
conditioned on your continued employment with Novirio
and other customary terms set forth in Novirio
Limited's 1998 Equity Incentive Plan, will to the
extent of 200,000 Ordinary Shares (the "Employment
Shares") become exercisable ratably in four annual
installments beginning on the first anniversary of
your employment commencement date. The remaining
option to purchase 100,000 Ordinary Shares (the
"Performance Shares") will vest on the earlier of:
(i) the first and second anniversary of the date of
consummation of a Successful Initial Public Offering
(in which case the options will vest ratably on each
anniversary date) or (ii) the fifth anniversary of
your employment commencement. To the extent, the
Board of Directors approves, in place of incentive
stock options, the substitution of immediately
exercisable stock options (which will have vesting
and transferability restrictions on the underlying
shares similar to those originally provided in the
incentive stock option award), you will be entitled
to receive such stock options in substitution for the
incentive stock options described above.
Notwithstanding the foregoing, in the event of a
change in control of Novirio Limited (other than by
means of an initial public offering of the equity
securities of Novirio Limited), the options (or to
the extent applicable, the Ordinary Shares) you
possess will become vested in full and fully
exercisable immediately prior to the consummation of
the Change in Control transaction. For purposes
hereof, a "Change in Control" is deemed to mean: (a)
any merger, amalgamation or consolidation which
results in the voting securities of Novirio Limited
outstanding immediately prior thereto representing
immediately thereafter (either by remaining
outstanding or by being converted into voting
securities of the surviving or acquiring entity) less
than 50% of the combined voting power of the voting
securities of Novirio Limited or such surviving or
acquiring entity outstanding immediately after such
merger or consolidation; (b) any sale of all or
Xx. Xxxx Xxxxxx
March 18, 2002
Page 3
substantially all of the assets of the Novirio
Limited, (c) any sale of 50% or more of the
outstanding voting stock of Novirio Limited to any
person; or (c) the complete liquidation of Novirio
Limited. For this purpose, a "person" means any
individual, entity or group within the meaning of
Section 13 (d) (3) or 14 (d) (2) of the Securities
Exchange Act of 1934, as amended.
Benefits: You will be eligible to participate in all benefits
Novirio provides generally to its employees and to
the extent such programs become available, programs
provided by Novirio for the benefit of its officers
including incentive cash and equity compensation
programs. Currently, the benefit programs available
to Novirio employees and officers include major
medical, dental, disability and life insurance and a
401(k) plan.
Relocation: In connection with your relocation to the Cambridge,
Massachusetts area, Xxxxxxx will reimburse you for
reasonable moving and relocation expenses (not to
exceed $20,000), real estate commissions and
conveyancing fees in connection with the sale of your
principal residence (not to exceed 6%), actual
expenses of two househunting trips to Cambridge for
you and your wife and amounts required to gross up
the aggregate of all of the foregoing to offset any
related additional income tax liabilities.
Disclosure of
Inventions: This offer is conditioned on your agreement, that as
an employee of Novirio, you will make full and prompt
disclosure to Novirio of all inventions,
improvements, modifications, discoveries, creations,
methods, processes and developments which are
created, made, or reduced to practice by you alone,
under your direction or with others in connection
with or relating to Xxxxxxx's then present or planned
business or research and development activities
during the term of your employment, whether or not
such developments are patentable or protected as
confidential information. Such disclosures will be
obligated during the period of your employment with
Novirio, whether or not such developments are made or
conceived during normal working hours or on or off
the premises of Novirio (all of which are hereinafter
collectively termed "Developments").
Assignment of
Inventions: By your acceptance of this offer of employment, you
agree to assign and do hereby assign to Novirio all
your title, interests and rights, including, without
limitation, intellectual property rights, in and to
any and all inventions and Developments created
during the period of your employment with Xxxxxxx,
and you agree to assign to Novirio any and all
patents and patent applications arising from such
Developments, and to execute and deliver such
assignments, patents and patent applications and
other documents (including, without limitation, power
of attorney) as
Xx. Xxxx Xxxxxx
March 18, 2002
Page 3
Novirio may direct. Additionally, you agree to
cooperate fully with Novirio both during and after
the term of your employment, to enable Xxxxxxx to
secure and maintain rights in said Developments
assigned to Novirio in any and all countries provided
that such cooperation will be at Novirio's expense
and if occurring after the term of employment will be
at such times as you are reasonably available and not
inconsistent with any obligations you may have with
respect to subsequent employment.
No Conflict: By your acceptance of this offer of employment, you
hereby represent that you are not bound by the terms
of any agreement with any previous employer to
refrain from competing, directly or indirectly, with
the business of such previous employer or any other
party. You further represent that your acceptance of
this offer of employment and employment by Xxxxxxx
does not and will not breach any agreement to keep in
confidence proprietary information, knowledge or data
acquired by you in confidence or in trust prior to
your employment with Xxxxxxx.
Severance: Either you or Novirio may terminate your employment
at any time on not less than 45 days prior written
notice. In the event that you voluntarily resign for
other than "Good Reason" (as hereinafter defined), or
Novirio terminates your employment for "Cause" (as
hereinafter defined), you will be entitled to receive
all accrued salary, bonus and other benefits and will
be allowed, in accordance with the terms of the 1998
Equity Incentive Plan, to exercise any vested options
to purchase Ordinary Shares. In such event, Xxxxxxx
will have no further obligation to you except for any
amounts to which you are entitled under applicable
law. The same provisions will apply in the event your
employment is terminated by reason of death or
disability, except that you or your estate will also
receive any amounts to which you or it may be
entitled under applicable life insurance and
disability plans maintained by Novirio.
In the event that your employment is terminated by
you for Good Reason, or by Novirio without Cause or
Novirio elects not to renew the term of employment,
in each case other than in connection with a Change
in Control of Novirio Limited, (i) you will receive a
lump sum payment equal to the salary and bonus which
would have been payable to you over the longer of (a)
the next succeeding year, or (b) the number of months
then remaining in the current term of the agreement,
with bonus to be determined based on targeted amounts
and prorated for any partial years, and (ii) you will
become vested in the greater of (A) 25% of the
unvested options to purchase Employment Shares and
any other options to purchase Ordinary Shares which
have been awarded to you subsequent to the
commencement of your employment which vest solely
based on the passage of time and continued employment
(the "Continuity Shares") or (B) the number of
unvested options to purchase Employment and
Continuity Shares which would have become vested over
the longer of (a) the next succeeding year, or (b)
the number of months then remaining in the current
term of the agreement. If a Successful Initial Public
Offering has been consummated on or prior to the date
of termination for
Xx. Xxxx Xxxxxx
March 18, 2002
Page 4
the reasons set forth in this paragraph, you will
become fully vested in any then unvested Performance
Shares.
In the event that: (i) your employment is terminated
for any reason other than Cause or (ii) you
voluntarily resign at any time on, after or in
connection with a Change of Control of Novirio
Limited, you will receive (1) accelerated vesting of
any then unvested options to purchase Employment or
Continuity Shares (as described in the provision
herein captioned "Equity") and (2) payment equal to
salary and bonus which would have been payable to you
over the longer of (a) the next succeeding year, or
(b) the number of months then remaining in the
current term of the agreement, with bonus to be
determined based on targeted amounts and prorated for
any partial years. Further, to the extent that it is
approved for Xxxxxxx's Chief Executive Officer or any
other officer or employee of Novirio or Novirio
Limited, you will, in addition to receipt of the lump
sum payment, be entitled to receive payment for: (i)
for any excise taxes to which the lump sum payment
may be subject under Section 4999 of the Internal
Revenue Code of 1986, as amended, and (ii) related
taxes applicable to such additional payment.
For purposes hereof, "Good Reason" will be deemed to
mean (1) any change, without your prior written
consent, in your title, or any material diminution
of your authority, responsibilities or duties, (2) a
reduction, without your prior written consent, in
your annual compensation, including the opportunity
to participate in bonus programs at rates
proportionate to the immediately preceding prior
year, (3) a relocation of your primary place of
employment to a location more than 40 miles further
from your primary residence than the current location
of Novirio's offices in Cambridge, Massachusetts, or
(4) any other material breach of the terms of this
employment arrangement which is not promptly cured
after your delivery of written notice of such breach
to Novirio or Novirio Limited as the case may be.
For purposes hereof, "Cause" will be deemed to mean
(1) your willful and repeated failure to
substantially perform your duties as the Chief
Financial Officer of Novirio, (2) your commission of
or willful participation in an act of material fraud,
embezzlement or dishonesty against Novirio or its
affiliates, (3) your conviction of a felony or crime
involving moral turpitude or dishonesty, or (4) your
intentional, material violation of any agreement with
Novirio or its affiliates or any statutory duty owed
by you to Novirio or its affiliates which is not
corrected within 30 days after receipt of written
notice thereof.
In the position of Chief Financial Officer, you will have access to valuable,
confidential and proprietary information. Accordingly, as a condition to your
commencing employment, you will be required to enter into a confidentiality and
non-disclosure agreement in standard form regarding the nondisclosure and nonuse
of such valuable, confidential and proprietary information.
Xx. Xxxx Xxxxxx
March 18, 2002
Page 6
If you agree with the above terms, please sign both copies of this letter
indicating your acceptance and return one copy to me at your earliest
convenience. Please retain the other copy for your records. This offer of
employment will expire on _____________, 2002.
We look forward to you joining us at Novirio!
Very truly yours,
Xxxx-Xxxxxx Xxxxxxxxxx, Ph.D.
Chief Executive Officer
ACCEPTED as of this 18th day of March, 2002
/s/ Xxxx Xxxxxx
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Xxxx Xxxxxx
