EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made this 2nd day of
November, 2004 (the "Effective Date") between Idenix Pharmaceuticals, Inc., a
corporation domesticated under the laws of the State of Delaware (together with
its subsidiaries, successors and assigns, the "Company") and David Shlaes, M.D.,
Ph.D. (the "Employee").
WHEREAS, the Employee currently is employed by the Company as
the Executive Vice President, Research and Development, pursuant to an
Employment Agreement by and between the Employee and the Company dated May 8,
2003 (the "Prior Agreement"), and
WHEREAS, the Employee and the Company mutually desire to
change the Employee's status and relationship with the Company in accordance
with the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
representations contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the Company and the
Employee, the Company and the Employee (individually, a "Party" and, together,
the "Parties") hereto agree as follows:
1. EMPLOYMENT AGREEMENT
This Employment Agreement shall replace and supercede in its entirety
the Prior Agreement.
2. EMPLOYMENT PERIOD
Commencing on the Effective Date, the Company shall employ the
Employee, and the Employee shall serve the Company, under the terms of this
Agreement until June 30, 2005 (together with any extensions of the initial term,
the "Employment Period"). Not less than 60 days prior to the end of the initial
term and any subsequent terms which may be thereafter mutually agreed, the
parties agree to re-evaluate the employment relationship to determine whether
such relationship will be extended beyond the initial term of the Employment
Period.
3. TITLE, DUTIES AND STATUS; PLACE OF EMPLOYMENT
During the Employment Period, the Company hereby engages the Employee
as a Senior Fellow on the terms and conditions set forth in this Agreement.
During the Employment Period, the Employee shall report to the Chief Executive
Officer of the Company, and shall exercise such authority and perform such
duties and functions which are consistent with the Employee's discharge of the
following responsibilities: (a) overseeing the timely completion of the studies
required to effect the filing of an Investigational New Drug application ("IND")
with the U.S. Food and Drug Administration (the "FDA") for the Company's second
HCV drug candidate and an IND for the Company's non-nucleoside reverse
transcriptase inhibitor HIV drug candidate; (b) overseeing, in accordance with
the timeline set forth by the intercompany project team (IcPT), the completion
of the research and development components of the New Drug
Application the Company anticipates filing for telbivudine; and (c) conducting
the research and development undertakings required by the Company in connection
with its efforts to obtain governmental biodefense or bioterrorism related
funding. From the Effective Date until December 31, 2004, the Employee agrees to
devote substantially all of the Employee's business time, efforts and skills to
the performance of the Employee's duties and responsibilities under this
Agreement, provided, however, that the Employee shall be permitted to manage his
personal investments and affairs, to serve, with the prior consent of the
Company's Chief Executive Officer, on such scientific advisory boards or other
similar organizations as agreed to promote the interests of the Company and to
engage in charitable activities and community affairs provided such activities
do not materially interfere with the proper performance of the Employee's duties
and responsibilities hereunder. From January 1, 2005 until the expiration of the
Employment Period, the Employee agrees to devote such of the Employee's business
time, efforts and skills necessary to successfully complete the agreed upon
tasks, but in any case not less than 20 hours worked per week. During the
Employment Period, the Employee's principal place of employment shall be in the
Boston, Massachusetts metropolitan area. Notwithstanding the foregoing, the
Parties agree that, throughout the Employment Period, the Employee may continue
his service on the scientific advisory board of Quark [Co.][Inc.]
As of the Effective Date, the Employee shall cease to be an executive
officer of the Company for all purposes, including without limitation Section 16
of the Securities Exchange Act of 1934, as amended.
4. COMPENSATION AND BENEFITS
A. Salary. During the Employment Period, as compensation for the
performance of the Employee's duties and obligations under this Agreement, the
Company shall pay to the Employee, an annual salary of $200,000 on a monthly
basis of $16,667 per month ("Base Salary") in accordance with the normal payroll
practices of the Company.
B. 2004 Bonus. For services rendered during 2004, the Employee shall be
eligible for a bonus of no less than $82,950 (the "Target Bonus"), if the
Company's Board of Directors, in its sole discretion, determines that the
performance criteria set forth in section 3 above relating to the period ending
December 31, 2004 have been met. If such performance goals are exceeded, the
Employee shall be entitled to receive an amount of up to 200% of the Target
Bonus. Any bonus amount authorized by the Company's Board of Directors shall be
paid to the Employee no later than March 30, 2005 in accordance with the terms
of the bonus program established by the Board.
C. Bonus. Provided that the Employment Period has not been terminated
by the Employee or by the Company for Cause prior to June 30, 2005, the amount
of $66,667 (the "Retention Bonus") will be paid to the Employee not later than
July 31, 2005.
D. Equity.
(i) Continued Vesting. During the Employment Period (including
extensions of the Employment Period beyond the initial term which are mutually
agreed by the Company and the Employee), all options to purchase shares of the
Company's capital stock ("Equity
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Awards") will continue to vest and be exercisable. Except in the case of a
Covered Termination, such vesting and exercise shall occur in accordance with
the terms of such stock option agreements entered into between the Company and
the Employee under the 1998 Equity Incentive Plan. In the event of a Covered
Termination (as such term is hereinafter defined), the terms of this Agreement
shall supercede the terms of the respective option agreements with respect to
vesting and exercise of Equity Awards.
(ii) Equity Holding Requirement. The Employee agrees not to sell,
transfer, pledge or otherwise dispose of any interest in more than 50% of the
"Holding Period Shares" prior to the later of: (i) June 30, 2005 or (ii) such
later expiration of the Employment Period as is mutually agreed by the Company
and the Employee. For purposes of this Agreement, "Holding Period Shares" shall
mean any shares acquired upon the exercise or vesting of the Equity Awards
possessed by the Employee as of May 9, 2003. The foregoing restriction shall
immediately lapse upon termination of the Employee's employment as a result of:
(i) Disability (as defined below) of the Employee, (ii) the death of the
Employee, or (iii) termination of the Employee's employment by the Company for
any reason other than Cause. The foregoing restriction is not applicable to
dispositions of the Holding Period Shares to a family member, family trust or
family-controlled entity for estate planning purposes of the Employee.
E. Employee Benefits. During the Employment Period, the Employee shall
be entitled to participate in all of the employee and fringe benefit plans of
the Company in effect during the Employment Period on the same basis as provided
generally to officers of the Company, subject to, and on a basis consistent
with, the participation requirements and other terms and conditions of such
plans. During the Employment Period, for purposes of the Company's travel
policy, the Employee will be entitled to such benefits and terms and conditions
that are applicable under such policy to executive vice presidents of the
Company. For the calendar year ended December 31, 2004, the Employee shall be
entitled to four (4) weeks vacation, subject to such carry-over policy as is
approved by the Board. For the period from January 1, 2005 to the expiration of
the Employment Period, the Employee shall not accrue any vacation time.
F. Business Expenses. During the Employment Period, the Company shall
promptly reimburse the Employee for all appropriately documented, reasonable
business expenses incurred by the Employee in the performance of the Employee's
duties under this Agreement, in accordance with Company's policies.
5. TERMINATION OF EMPLOYMENT
A. Termination by either Party. Either Party shall have the right to
terminate the Employment Period and the Employee's employment hereunder without
cause upon thirty (30) days written notice to the other Party. In addition, the
Company shall have the right to terminate the Employment Period and the
Employee's employment hereunder immediately for Cause. For purposes of this
Agreement, the Company shall have "Cause" to terminate the Employee's employment
hereunder if such termination shall be the result of: (i) willful fraud or
willful material dishonesty in connection with the Employee's employment by the
Company; (ii) intentional failure by the Employee to substantially perform the
Employee's duties hereunder or gross neglect in the performance of such duties;
(iii) gross misconduct by the Employee that is materially detrimental to the
Company's reputation, goodwill or business operations; (iv) a
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breach of any of the Employee's covenants as provided in Section 6 hereof; or
(v) the conviction of, or plea of nolo contendere to, a charge of commission of
a felony.
In the event of termination of the Employment Period by the Company for
any reason other than: (i) Cause or (ii) the expiration of the Employment Period
(a "Covered Termination"), and provided the Employee enters into the Agreement
and Release in the form attached hereto as Exhibit A, the Employee shall be
entitled to:
(i) payment of a cash lump-sum amount equal to the sum of (x) the Base
Salary which would have been payable to the Employee if the Employment Period
had continued until its expiration date, which in the case of the initial term
is June 30, 2005; (y) the Retention Bonus provided that such amount which is
payable only once has not been previously paid; and (z) the Target Bonus if such
bonus has not been paid prior to the effective date of the Covered Termination
and: (i) such Covered Termination occurs prior to December 31, 2004 or (ii) if
the Covered Termination occurs after December 31, 2004, the Board has determined
that the relevant performance criteria necessary for the Target Bonus to be
earned have been satisfied;
(ii) the immediate acceleration, vesting and exercisability of such
Equity Awards that would have vested had the Employment Period continued until
the later of: (i) June 30, 2005; or (ii) the mutually agreed extension of the
Employment Period beyond the initial term.
(iii) for a period of 24 months following the date of the Covered
Termination (or until the expiration of the term of the option, if earlier),
exercise all outstanding Equity Awards that were vested on the date of Covered
Termination and such other Equity Awards that would have vested had the
Employment Period continued until the later of (i) June 30, 2005; or (ii) the
mutually agreed extension of the Employment Period beyond the initial term.
(iv) continued coverage for the Employee and the Employee's eligible
dependents under all group medical and dental insurance coverages that are
provided to employees of the Company generally for a period of 12 months
following a Covered Termination, with such coverage to be at the Company's cost
(subject to standard employee contribution requirements). Any such coverage
shall be discontinued in the event that the Employee obtains substitute coverage
from subsequent employment or service during such 12-month period; and
(v) payment of (x) any earned but unpaid amounts as of the date of
termination, including, but not limited to, Base Salary through the date of
termination, any incentive awards, including if applicable, bonuses earned for
performance periods that have ended and reimbursement of business expenses, (y)
any compensation previously deferred by the Employee together with any vested
Company matching contributions and (z) any accrued but unpaid vacation days
under Company policy through the date of termination ("Accrued Obligations"),
payable as soon as practicable following such termination.
B. Termination Upon Death or Disability. The Employment Period and the
Employee's employment hereunder shall be terminated by the death of the
Employee. The Employment Period and the Employee's employment hereunder may be
terminated by the Company or the Employee if the Employee shall be rendered
incapable of performing the
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Employee's duties to the Company by reason of any medically determined physical
or mental impairment that can reasonably be expected to result in death or has
lasted for a period of six (6) or more consecutive months from the first date of
the Employee's absence due to the disability (a "Disability"). In the event the
Employee's employment with the Company is terminated on account of death or
Disability during the Employment Period, the Company shall provide the Employee
(or his estate or legal representative, as the case may be) with such death or
disability benefits as are provided under the death and disability plans that
are available to employees of the Company generally on the date of termination.
In addition, the Employee (or his estate or legal representative, as the case
may be) shall be entitled to:
(i) payment of 60% of Base Salary during the Employment Period (with
such payment obligation offset by amounts that the Employee is entitled to
receive from any insurance plan or policy of the Company);
(ii) for a period of 24 months following the date of termination (or
until the expiration of the term of the option, if earlier), exercise all
outstanding Equity Awards that were vested on the date of termination and such
other Equity Awards that would have vested had the Employment Period continued
until June 30, 2005;
(iii) continued coverage for the Employee (in the case of Disability)
and the Employee's eligible dependents under all group medical and dental
insurance policies that are provided to employees of the Company generally for a
period of 12 months following such termination, with such coverage to be at the
Company's cost (subject to standard employee contribution requirements). Any
such coverage shall be discontinued in the event that the Employee obtains
substitute coverage from subsequent employment or service during such 12-month
period; and
(iv) payment of Accrued Obligations as soon as practicable following
the termination of employment.
C. C. Other Termination. In the event that the Employee's employment
with the Company is terminated during the Employment Period (i) by the Company
for Cause or (ii) by the Employee for any reason, the Employee shall not be
entitled to any further payments, compensation or other benefits under this
Agreement, except the Employee shall be entitled to (i) payment of Accrued
Obligations as soon as practicable following such termination and (ii) treatment
of any outstanding Equity Awards in accordance with the applicable plan or award
agreement. The payments and benefits to which the Employee will be entitled upon
expiration of the Employment Period, whether at the end of either the initial
term or mutually agreed subsequent terms are set forth in Section 5.D. below.
It shall be a condition precedent to the Company's right to terminate the
Employee's employment for Cause that (1) the Company shall first have given the
Employee prior written notice stating with reasonable specificity the reason for
the termination ("breach"), (2) if such breach is susceptible of cure or remedy,
a period of 30 calendar days from and after the giving of such notice shall have
elapsed without the breaching party having effectively cured or remedied such
breach during such 30-day period, and (3) if the Employee fails to cure such
neglect or conduct within such 30-day period, the Employee has an opportunity to
be heard
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before the Board or, if the Board shall so designate, before a committee
comprised of the Chief Executive Officer of the Company and two other senior
executives of the Company, in each such case subject to a majority vote to
terminate the Employee's employment for Cause.
D. Expiration of the Employment Period. Upon expiration of the
Employment Period, the Employee shall be entitled to:
(i) continued coverage for the Employee and the Employee's eligible
dependents under all group medical and dental insurance policies that are
provided to employees of the Company generally for a period of 12 months
following the expiration of the Employment Period, with such coverage to be at
the Company's cost (subject to standard employee contribution requirements). Any
such coverage shall be discontinued in the event that the Employee obtains
substitute coverage from subsequent employment or service during such 12-month
period;
(ii) payment of Accrued Obligations as soon as practicable following
the expiration of the Employment Period; and
(iii) exercise Equity Awards vested on the date of expiration of the
Employment Period in accordance with the terms and conditions provided in the
agreements relating to such Equity Awards.
Except as otherwise provided in this Section 5.D above, upon expiration of the
Employment Period, the terms and conditions of this Agreement shall terminate,
except that the Employee's obligations pursuant to the Inventions and
Non-Disclosure Agreement by and between the Company and the Employee dated as of
May 8, 2003 (the "Inventions Agreement") and the Release of Claims incorporated
herein and the Release of Claims to be executed at the expiration or termination
the Employment Period shall survive the Employment Period, and Sections 6 and 8
hereof shall survive in accordance with their terms for the periods specified
therein.
E. Other Benefits. Except for statutory obligations and the obligations
of the Company arising under this Agreement and agreements relating to any
Equity Awards, the Company shall have no further severance obligations to the
Employee or the Employee's beneficiaries upon the Employee's termination of
employment.
6. RESTRICTIVE COVENANTS
A. Inventions. The Employee acknowledges that he has signed and will
continue to honor the Inventions Agreement.
B. Nonsolicitation of Employees. During the Restricted Period (as
defined in Section 6.D below), the Employee shall not, without the express prior
written approval of the Company, (i) directly or indirectly, knowingly solicit
any employee of the Company or any of its affiliates (or any employee who was
employed by the Company or any of its affiliates at any time within six (6)
months prior to the date the Employee seeks to solicit such person) to leave the
employ of the Company or its affiliates, as the case may be.
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C. Nonsolicitation of Customers. During the Restricted Period, the
Employee agrees that other than in the ordinary course of business he shall not,
without the express prior written approval of the Company, knowingly solicit,
recruit or encourage any customer of the Company or any of its affiliates who
was a customer at, or was a customer within the six (6) month period preceding,
the date of the Employee's termination of employment to reduce or cease its
business with the Company or any such affiliate.
D. Noncompetition. In consideration of the continued employment of the
Employee by the Company and the payments and other benefits accruing to the
Employee under the terms of this Agreement, the Employee shall not, during the
Restricted Period, without the express written approval of the Company, other
than in the ordinary course of performing his duties hereunder, engage in a
"Competitive Business," directly or indirectly, as an individual, partner,
shareholder, director, officer, principal, agent, employee, trustee, consultant,
or in any relationship or capacity, in any geographic location in which the
Company or any of its Affiliates is engaged in business. Anything to the
contrary notwithstanding, it shall not be a violation of this Section 6.D for
the Employee to (i) own or acquire up to two percent (2%) of the outstanding
equity securities (measured by value) of any entity, (ii) serve as a member of
the board of directors or as a member of an advisory committee of any entity on
which Employee was serving prior to the date of termination of his employment or
of any entity which is not engaged in a Competitive Business or (iii) provide
services to a subsidiary, division or affiliate of a Competitive Business if
such subsidiary, division or affiliate is not itself engaged in a Competitive
Business and the Employee does not provide services to, or have any
responsibilities regarding, the Competitive Business.
For purposes of this Agreement, the term "Competitive Business" shall
mean a commercial, for profit entity that discovers, develops and commercializes
therapeutics for the treatment of human viral diseases in the same geographic
area that the therapeutics for the treatment of human viral diseases are
discovered, developed, marketed and commercialized by the Company or any of its
subsidiaries. For purposes hereof, the "Restricted Period" shall be the
Employment Period and a period of one (1) year following the termination of the
Employment Period.
E. Enforcement. The Employee acknowledges that if he breaches any
provision of this Section 6, the Company will suffer irreparable injury. It is
therefore agreed that the Company shall have the right, if permitted by a court
of the applicable jurisdiction, to enjoin any such breach, without posting any
bond. The Employee hereby waives the adequacy of a remedy at law as a defense to
such relief. The existence of this right to injunctive, or other equitable
relief, shall not limit any other rights or remedies which the Company may have
at law or in equity including, without limitation, the right to monetary,
compensatory and punitive damages. The Employee acknowledges and agrees that the
provisions of this Section 6 are reasonable and necessary for the successful
operation of the Company. In the event a court of competent jurisdiction
determines that the Employee has breached the Employee's obligations in any
material respect under this Section 6 (other than through the issuance of an
injunction issued without a determination on the merits), the Company, in
addition to pursuing all available remedies under this Agreement, at law or
otherwise, and without limiting its right to pursue the same, shall be entitled
to cease all payments due to the Employee under this Agreement as of the date of
such determination.
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7. RELEASE OF CLAIMS
In further consideration of the Parties entering into this Agreement,
upon execution of this Agreement, the Parties will execute the attached
Agreement and Release of Claims at Exhibit A. Additionally, the Employee agrees
to enter into the Agreement and Release of Claims set forth at Exhibit A upon
termination or expiration of the Employment Period.
8. DISPUTE RESOLUTION
Except as otherwise provided in Sections 5.C. and 6.E hereof, any
controversy, dispute or claim arising out of or relating to this Agreement shall
be resolved by final and binding arbitration, to be held in Boston,
Massachusetts, in accordance with the Commercial Arbitration Rules (and not the
National Rules for the Resolution of Employment Disputes) of the American
Arbitration Association and this Section 8. Judgment upon the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction thereof.
Neither Party shall be liable for punitive or exemplary damages.
9. WITHHOLDING OF TAXES
All payments required to be made by the Company to the Employee under
this Agreement shall be subject to the withholding of such amounts relating to
income tax, employment tax and such other taxes and withholdings as the Company
may reasonably determine it should withhold pursuant to any applicable U.S.
Federal, state or local law or regulation.
10. NOTICE
All notices, requests and other communications pursuant to this
Agreement shall be in writing and shall be deemed to have been duly given, if
delivered in person or by courier, sent by express, registered or certified
mail, postage prepaid, or sent by facsimile transmission, addressed to the
Employee at the Employee's personal residence as reflected in the Company's
records, and to the Company at 60 Hampshire Street, Cambridge, Massachusetts
02139. Either Party may, by written notice to the other in accordance herewith,
change the address to which notices to such Party are to be delivered or mailed.
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11. GOVERNING LAW
This Agreement shall be construed, interpreted and enforced in
accordance with the laws of the Commonwealth of Massachusetts, without giving
effect to the choice of law principles thereof.
12. WAIVER OF BREACH
Any waiver of any breach of this Agreement shall not be construed to be
a continuing waiver or consent to any subsequent breach on the part either of
the Employee or of the Company. Any waiver to be effective must be in writing
and signed by the Party against whom it is being enforced (either the Employee
or an authorized officer of the Company, as the case may be) and must
specifically refer to the provision of this Agreement which is being waived.
13. NON-ASSIGNMENT; SUCCESSORS
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors, heirs (in the case of the Employee) and
assigns. No rights or obligations of the Company under this Agreement may be
assigned or transferred by the Company except that such rights or obligations
may be assigned or transferred pursuant to a merger or consolidation in which
the Company is not the continuing entity, or the sale or other disposition of
all or substantially all of the assets of the Company, provided that the
assignee or transferee is the successor to all or substantially all of the
assets of the Company and such assignee or transferee assumes the liabilities,
obligations and duties of the Company, as contained in this Agreement, either
contractually or as a matter of law. No rights or obligations of the Employee
under this Agreement may be assigned or transferred by the Employee other than
his accrued rights to compensation and benefits, which may be transferred only
by will or operation of law, except as provided in this Section 13 or in an
applicable plan, program, grant or agreement of the Company or any affiliate. In
the event of the Employee's death or a judicial determination of his
incompetence, references in this Agreement to the Employee shall be deemed,
where appropriate, to refer to his beneficiary, estate or other legal
representative.
14. SEVERABILITY
If any provision of this Agreement is determined by a court of
competent jurisdiction to be not enforceable in the manner set forth in this
Agreement, the Employee and the Company agree that it is the intention of the
Parties that such provision should be enforceable to the maximum extent possible
under applicable law. If any provisions of this Agreement are held to be invalid
or unenforceable, such invalidation or unenforceability shall not affect the
validity or enforceability of any other provision of this Agreement (or any
portion thereof).
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15. ENTIRE AGREEMENT
This Agreement, the Inventions Agreement and the Agreement and Release
constitute the entire agreement by the Company and the Employee with respect to
the subject matter hereof and thereof and except as specifically provided
herein, supersedes any and all prior agreements or understandings between the
Employee and the Company with respect to the subject matter hereof and thereof,
whether written or oral, including, without limitation, the Prior Agreement. Any
award agreement relating to an Equity Award, to the extent inconsistent with any
provision of this Agreement, shall be treated as amended in a manner consistent
with the terms of this Agreement. This Agreement may be amended or modified only
by a written instrument (specifically referencing the provision of this
Agreement being so amended) executed by the Employee and an authorized officer
of the Company.
16. COUNTERPARTS
This Agreement may be executed in two or more counterparts.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above and this Agreement shall be effective and
binding on the Parties from such date.
IDENIX PHARMACEUTICALS, INC.
/s/ Jean-Pierre Sommadossi
--------------------------------
By: Jean-Pierre Sommadossi, Ph.D.
Its: Chief Executive Officer
EMPLOYEE
/s/ David Shlaes
--------------------------------
Name: David Shlaes, M.D., Ph.D.
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