Exhibit 10.1
December 4, 2003
Graham P. Allaway, Ph.D.
14205 White Water Way
Darnestown, Maryland
20878
Dear Graham:
This letter sets forth the terms and conditions
of the severance benefits that will be provided to you by Panacos
Pharmaceuticals, Inc. (the “Company” ) in
the event your employment is terminated by the Company for a reason
other than Cause, or in the event you voluntarily resign for a Good
Reason, as those terms are defined below (a “Qualifying
Termination” ). No severance benefits will be
provided upon your termination for Cause or your voluntary
resignation (for other than a Good Reason). Except as provided
herein, no severance benefits will be provided upon your death or
termination due to a disability, as determined by the Company in
its reasonable discretion. No severance will be provided upon your
termination in connection with the Company’s dissolution or
cessation of operations without the establishment of a successor
entity. This letter shall be referred to as the
“Agreement” herein. For the purposes
hereof, the “Trigger Date” shall mean the
earlier of (i) the closing of a financing transaction (or
series of related financing transactions) in which the Company
raises at least $10 million or (ii) the closing of a sale of
all or substantially all of the Company’s assets or a merger,
consolidation or reorganization of the Company with or into another
corporation or other legal person other than a merger,
consolidation or reorganization in which more than fifty percent
(50%) of the combined voting power of the then outstanding
securities of the surviving entity (or if more than one entity
survives the transaction, the controlling entity) immediately after
such a transaction are held in the aggregate by holders of voting
securities of the Company immediately prior to such transaction or
(iii) December 31, 2004.
1. Severance Benefits.
Although the Company has no general
policy or procedure for providing severance benefits at this time,
if you incur a Qualifying Termination prior to or on a Trigger
Date, the Company will make severance payments to you in the form
of continuation of your base salary in effect on the date of your
separation from employment ( “Separation
Date” ) for twelve (12) months following the
Separation Date. If you incur a Qualifying Termination after a
Trigger Date, the Company will make severance payments to you in
the form of continuation of your base salary in effect on the
Separation Date for six (6) months following the Separation
Date. These payments will be made on the Company’s ordinary
payroll dates, and will be subject to standard payroll deductions
and withholdings.
2. Health Insurance.
To the extent provided by the
federal COBRA law or, if applicable, state insurance laws, and by
the Company’s current group health insurance policies, as of
your termination from employment, you will be eligible to continue
your group health
insurance benefits. If you are eligible for and
elect COBRA continuation coverage, the Company agrees to pay or
reimburse you in an amount equal to the amount of the health
insurance premiums currently being paid by the Company on your
behalf as of the date of this Agreement. These Company-paid amounts
shall continue only so long as the period that you are actually
receiving severance payments under this Agreement. Later, you may
be able to convert to an individual policy through the provider of
the Company’s health insurance, if you wish.
3. Stock Options.
To date, you have been granted
options to purchase up to 412,740 shares of the Company’s
common stock, pursuant to the Company’s 2000 Stock Option
Plan (the “Plan” ). In the event of a
Qualifying Termination prior to or on a Trigger Date, the Company
agrees that all of your stock options will immediately vest. In the
event of a Qualifying Termination after a Trigger Date, the Company
agrees that your stock options will continue to vest during the
period that you are receiving severance benefits under
Section 1 above. In any such event, you shall have 12 months
following the date of the final severance payment under this
Agreement to exercise the vested portion of your stock options,
after which time your options shall expire. Notwithstanding the
above, in the event you breach any material term of this Agreement
or your Employee Inventions, Non-Competition, Non-Disclosure and
Non-Solicitation Agreement with the Company (the
“Non-Compete Agreement” ), the continued
vesting of your stock options, if applicable, shall cease
immediately as of the date of such breach and you shall immediately
forfeit any right to exercise the stock options. In all other
respects, the terms of the Plan and the applicable stock option
agreement(s) shall control.
4. Other Compensation or
Benefits. You acknowledge
that, except as expressly provided in this Agreement, you will not
receive any additional compensation, severance or benefits after
the Separation Date.
5. Return of Company
Property. By the
Separation Date, you agree to return to the Company all Company
documents (and all copies thereof) and other Company property that
you have had in your possession at an
