Exhibit 10.12

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Tetraphase Pharmaceuticals, Inc.

480 Arsenal Street, Suite 110

Watertown, MA 02472

 

June 11, 2015

Jacques Dumas

32 Suffolk Lane,

Carlisle, MA 01741

 

Dear Jacques:

On behalf of Tetraphase Pharmaceuticals, Inc. (the "Company"), I am very pleased
to offer you employment with the Company.  The purpose of this letter is to
summarize the terms of your employment with the Company, should you accept our
offer.

1.Employment.  You will be employed to serve in the position of Chief Scientific
Officer, reporting directly to me as President and Chief Executive Officer of
Tetraphase Pharmaceuticals, Inc. Your agreed-upon start date will be July 13,
2015.  As Chief Scientific Officer, you will have such duties and
responsibilities as are customarily assigned to an employee with such title and
such other duties and responsibilities as may be assigned to you by the
Company.  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.Compensation.  Your base salary will be at the rate of $13,461.54 per biweekly
pay period (which if annualized equals $350,000), less all applicable federal,
state and local taxes and withholdings, such base salary to be paid in
installments in accordance with the Company’s standard payroll practices.  Such
base salary may be adjusted from time to time in accordance with normal business
practices and in the sole discretion of the Company.

3.Bonus.  If the Board of Directors approves an annual bonus in any fiscal year
you may be eligible for a discretionary award of up to 35% of your annualized
base salary in such year.  The bonus award, if any, will be based on both
individual and corporate performance and will be determined by the Board of
Directors of the Company in its sole discretion.  In order to be eligible for a
bonus, if any, you must complete three months of continuous service and be an
active employee of the Company on the date such bonus is distributed, as it also
serves as an incentive to remain employed by the Company.  Any bonus payable for
fiscal year 2015 will be prorated.

4.Sign on Bonus. We will pay you a sign on bonus of $30,000 in the event your
current employer does not provide you compensation in connection with your
separation. This bonus, if applicable, will be paid in one lump sum, less
applicable withholdings within your first 30 days of employment with Tetraphase
Pharmaceuticals. In the event that you terminate your employment without Good
Reason or your employment is terminated for Cause within 12 months of your date
of hire, you will be responsible for reimbursing the company for the entire
signing bonus.

5.Benefits.  You shall be eligible to participate in any and all bonus and
benefit programs that the Company establishes and makes available to its
employees from time to time, provided that you

 

 

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are eligible under (and subject to all provisions of) the plan documents
governing those programs.  Such benefits may include: participation in group
medical and dental insurance programs, term life insurance, long-term disability
insurance and participation in the Company's 401(k) plan.  The benefits made
available by the Company, 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.  With respect to vacation time, you will accrue
vacation at 1.67 days/month or the equivalent of 4 weeks per year.

6.Stock Incentive Program.  You will be eligible to participate in the Company's
stock incentive program.  Upon commencement of your employment with the Company,
the Company will grant to you a nonstatutory stock option to purchase 125,000
shares of the Company's Common Stock, which option is granted pursuant to the
inducement grant exception under NASDAQ Rule 5635(c)[4] and not pursuant to the
Company’s 2013 Stock Incentive Plan (the “Plan”) or any equity incentive plan of
the Company.  The inducement grant shall have an exercise price equal to the
closing price of the Company’s common stock on the Nasdaq Global Select Market
on your start date and shall vest over four years, with 25% of the original
number of shares on the first anniversary of your first day of employment and
the balance vesting in equal quarterly installments thereafter, and shall be
subject to such other terms as are customary for the Company’s options under the
Plan.

7.At-Will Employment.  

(a) At-Will Employment. Your employment with the Company will be on an “at-will”
basis, meaning that either you or the Company may terminate the employment
relationship at any time, for any reason, with or without cause and with or
without notice. Although your job duties, title, compensation and benefits, as
well as the Company’s personnel policies and procedures, may change from time to
time, the “at-will” nature of your employment may only be changed by a written
agreement signed by you and the Company, which expressly states the intention to
modify the at-will nature of your employment. Notwithstanding the foregoing,
however, and subject to Section 7(b), if the Company terminates your employment
without Cause, (i) you will receive as severance pay an amount equal to twelve
(12) months of your then-current base salary (subject to all applicable federal,
state and local taxes and withholdings, and payable over a twelve-month period
in accordance with the Company’s regular payroll practices) and (ii) provided
that you are eligible for and elect COBRA coverage, the Company will pay the
amount of premiums it pays for active employees with similar coverage for you
and your covered beneficiaries but not more each month than the monthly amount
it was paying for your coverage when your employment ended until the earlier of
twelve (12) months after your employment ends or the date you (or, as
applicable, your beneficiaries) become eligible for coverage at a new employer,
provided that if the Company’s paying such premiums violates nondiscrimination
laws, the payments will cease.

(b) Termination Following Change in Control. If, upon or during the twelve month
period commencing upon a Change in Control Event, your employment with the
Company or the acquiring or succeeding company is terminated by the Company or
the acquiring or succeeding company without Cause or, upon or during the twelve
month period commencing upon the Change in Control Event, you terminate your
employment with the Company or the acquiring or

succeeding company for Good Reason (as defined in Exhibit A), then, in lieu of
the severance and other benefits provided for in Section 7(a), to the extent
applicable, (i) you will receive as severance pay (x) an amount equal to twelve
(12) months of your then-current base salary (subject to all applicable federal,
state and local taxes and withholdings and payable over a twelve-month period in
accordance with the

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Company’s regular payroll practices) and (y) an amount equal to 100% of your
then-current annual target bonus (subject to all applicable federal, state and
local taxes and withholdings and payable in a lump sum), (ii) provided that you
are eligible for and elect COBRA coverage, the Company will pay the amount of
premiums it pays for active employees with similar coverage for you and your
covered beneficiaries but not more each month than the monthly amount it was
paying for your coverage when your employment ended until the earlier of twelve
(12) months after your employment ends or the date you (or, as applicable, your
beneficiaries) become eligible for coverage at a new employer, provided that if
the Company’s paying such premiums violates nondiscrimination laws, the payments
will cease, and (iii) the vesting of all stock options held by you on the date
of termination shall be automatically accelerated, effective as of the date of
termination, such that such stock options shall become 100% fully vested and
exercisable.

(c) Conditions of Severance Benefits. Your receipt of severance pay and the
other benefits as set forth in Sections 7(a) and 7(b) of this letter (other than
the acceleration of options set forth in subsection (iii) of Section 7(b)) is
conditioned upon your execution of an agreement containing a comprehensive
release of claims prepared by and satisfactory to the Company (the “Release”)
and any applicable revocation period with respect to the Release expiring within
60 days (or such shorter period as the Company determines) following your
termination date (such period, the “Release Period”), and is conditioned on your
full compliance with the Non-Competition, Non-Solicitation and Non-Disclosure
Agreement (the “Non-Competition Agreement”) described in Section 8 below. If the
Release has been executed and any applicable revocation period has expired prior
to the 60th day (or such shorter period) following your termination, then the
severance payments and benefits shall commence (or in the case of any lump sum
payment, be paid) on the first regular pay date after the applicable revocation
period has expired (but no earlier than the 30th day following your termination
date); provided, however, that if the 60th day following your termination occurs
in the calendar year following the calendar year during which your termination
occurs, then the severance payments and benefits shall commence (or in the case
of any lump sum payment, be paid) no earlier than January 1 of such subsequent
calendar year. The provision of severance pay and benefits hereunder shall be
subject to the terms and conditions set forth in Section 11 hereto. In the event
you breach your obligations under the Release or the Non-Competition Agreement,
you will have no right to receive, and the Company shall not provide to you, any
severance pay or benefit following the date of such breach; provided, however,
that if any provision of such Non-Competition Agreement is adjudged by a court
of competent jurisdiction to be unenforceable, you will have the right to
receive full severance benefits hereunder irrespective of any such alleged
breach of that provision. Such cessation of payments and benefits shall be in
addition to, and not in lieu of, any and all other remedies, whether at law or
in equity, available to the Company for such breach.

 

8.Non-Competition, Non-Solicitation and Non-Disclosure Agreement.  

As a condition of your employment, you will be required to execute the Company's
Non-Competition, Non-Solicitation and Non-Disclosure Agreement (the
“Non-Competition Agreement”), a copy of which is enclosed with this letter.

9.Proof of Legal Right to Work.  For purposes of federal immigration law, you
will be required to provide the Company with documentary evidence of your
identity and eligibility for employment in the United States.  Such
documentation must be provided to the Company within three (3) business days of
your date of hire, or our employment relationship with you may be
terminated.  You

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may need to obtain a work visa in order to be eligible to work in the United
States.  If that is the case, your employment with the Company will be
conditioned upon your obtaining a work visa in a timely manner as determined by
the Company.  

10.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 email) 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.

11.Other Agreements and Governing Law. You represent that you are not bound by
any employment contract, restrictive covenant or other restriction preventing
you from entering into employment with or carrying out your responsibilities for
the Company, or which is in any way inconsistent with the terms of this
letter.  Please note that this offer letter is your formal offer of employment
and supersedes any and all prior or contemporaneous agreements, discussions and
understandings, whether written or oral, relating to the subject matter of this
letter or your employment with the Company.  The resolution of any disputes
under this letter will be governed by Massachusetts law.

12.Section 409A of the Code.  

Subject to the provisions in this Section 12, any severance payments or benefits
under this letter will 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 letter.

(a) It is intended that each installment of the severance payments and benefits
provided under this letter shall be treated as a separate “payment” for purposes
of Section 409A of the Internal Revenue Code and the guidance issued thereunder
(“Section 409A”). Neither you nor the Company will 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) The determination of whether and when your separation from service from the
Company has occurred shall be made and 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 paragraph, “Company” shall include all persons with whom
the Company would be considered a single employer under Section 414(b) and
414(c) of the Internal Revenue Code.

(c) 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), then each
installment of the severance payments and benefits provided under this letter
shall be made on the dates and terms set forth in this letter.

(d) 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
letter that, in accordance with the dates and terms set forth herein, will in
all circumstances, regardless of when your separation

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from service occurs, be paid within the short-term deferral period (as defined
under Section 409A) 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 and shall be paid on the dates and terms set forth in this
letter; and

(ii) Each installment of the severance payments and benefits due under this
letter that is not described in Section 12(d)(i) 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 payments or benefits if and to the maximum extent
that 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 the taxable year
in which the separation from service occurs.

(e) All reimbursements and in-kind benefits provided under this letter 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 your offer letter), (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 makes no
representation or warranty and shall have no liability to you or to any other
person if the payments and benefits provided in this letter are determined to
constitute deferred compensation subject to Section 409A but that do not satisfy
an exemption from, or the conditions of, that section.

 

If this letter correctly sets forth the initial terms under which you will be
employed by the Company, please sign the enclosed duplicate of this letter in
the space provided below and return it to my attention at Tetraphase.  This
offer is effective through June 16, 2015.  This offer is contingent on
satisfactory reference checks.  

On behalf of Tetraphase Pharmaceuticals, Inc.

/s/Guy Macdonald

Guy Macdonald

President and Chief Executive Officer

 

The foregoing correctly sets forth the terms of my at-will employment by the
Company.

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    /s/Jacques Dumas                                    
Jacques Dumas

 

Date:        June 12, 2015                              

 

 

EXHIBIT A

Definitions

For the purposes of this Offer Letter:

(1)  “Cause” shall mean (a) a good faith finding by the Board of Directors of
the Company that (i) you have failed to substantially perform your assigned
duties for the Company, which failure is not cured within 20 days following
written notice from the Company to you specifying the duties not performed, (ii)
you have engaged in dishonesty, gross negligence or misconduct or (iii) you have
breached any employment agreement, confidentiality agreement, non-disclosure
agreement or other agreement entered into between you and the Company or (b)
your conviction of, or the entry of a pleading of guilty or nolo contendere by
you to, any crime involving moral turpitude or any felony.

(2)  “Change in Control Event” shall mean

(a) the acquisition by an 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
(the “Exchange Act”)) (a “Person”) of beneficial ownership of any capital stock
of the Company if, after such acquisition, such Person beneficially owns (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) 50% or more of the
combined voting power of the then-outstanding securities of the Company entitled
to vote generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change in Control Event: (i) any
acquisition directly from the Company (excluding an acquisition pursuant to the
exercise, conversion or exchange of any security exercisable for, convertible
into or exchangeable for common stock or voting securities of the Company,
unless the Person exercising, converting or exchanging such security acquired
such security directly from the Company or an underwriter or agent of the
Company), or (ii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company; or

(b) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving the Company or a sale or
other disposition of all or substantially all of the assets of the Company (a
“Business Combination”), unless, immediately following such Business Combination
all or substantially all of the individuals and entities who were the beneficial
owners of the Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 50% of
the combined voting power of the then-outstanding securities entitled to vote
generally in the election of directors, respectively, of the resulting or
acquiring corporation in such Business Combination (which shall include, without
limitation, a corporation which as a result of such transaction owns the Company
or substantially all of the Company’s assets either directly or through one or
more subsidiaries) in substantially the same proportions as their ownership of
the Outstanding Company Voting Securities immediately prior to such Business
Combination: provided that, where

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required to avoid additional taxation under Section 409A, the event that occurs
must also be a “change in the ownership or effective control of a corporation,
or a change in the ownership of a substantial portion of the assets of a
corporation” as defined in Treasury Regulation Section 1.409A-3(i)(5).

 

(3)  “Good Reason” shall occur if a Cause event has not occurred or has not been
cured, to the extent curable, and if (x) you provide written notice to the
Company of the event or change you consider to constitute “Good Reason” within
30 calendar days following its occurrence, (y) you provide the Company with a
period of at least 30 calendar days to cure the event or change, and (z) the
“Good Reason” persists following the cure period, and you actually resign within
60 calendar days following the event or change. An event or change constituting
“Good Reason” shall be limited to any of the following that occur without your
prior written consent: (a) a material diminution of your duties, authority or
responsibilities, provided, however, that the assignment of different duties to
you by the Company involving a reasonably comparable level of responsibility
shall not, by itself, constitute “Good Reason,” and provided, further, that a
change in your duties, authority or responsibilities solely as a result of the
Company’s acquisition by or merger with another entity, if you continue to have
a comparatively senior role relative to the Company or its successor following
such event, shall not, by itself, constitute “Good Reason”; (b) a material
diminution in your base compensation, or (c) a material diminution in the
authority, duties or responsibilities of the supervisor to whom you are required
to report”.  

 

 

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