EXHIBIT 10.77

 

[InterMune Letterhead]

 

October 15, 2004

 

Norman Halleen

337 S. Fremont Street #407

San Mateo, CA  94401

(650) 685-6281

 

Re:  Employment with InterMune, Inc.

 

Dear Norman:

 

On behalf of InterMune, Inc., I am pleased to extend to you this official offer
of employment with InterMune as Senior Vice President, Finance and Chief
Financial Officer, reporting to Dan Welch, President and Chief Executive
Officer, beginning on October 25, 2004.

 

Your employment is subject to proof of your legal right to work in the United
States, and to your completing the INS Employment Eligibility Verification Form
I-9.  Your employment also is subject to successful verification of your
professional references, and to our standard pre-employment process, which
includes completion of an employment application and successful completion of a
standard background check.

 

Compensation

 

If you accept this offer and begin employment, you will receive an initial base
salary of $22,916.66 per month (equivalent to $275,000.00 per year), paid on a
semi-monthly basis on our regular paydays.  Deductions required by law or
authorized by you will be taken from each paycheck.

 

Additionally, you will be eligible to participate in our discretionary incentive
bonus program designed to provide a financial reward for achieving performance
goals.  The incentive plan will be based on two criteria:  your individual
performance against your goals as determined by your manager and InterMune’s
performance as determined by the Company’s senior management and Board of
Directors.

 

You also will be eligible to participate in the Company’s Equity Incentive
Plan.  Following commencement of employment, the grant of an option to purchase
up to 90,000 shares of Common Stock under InterMune’s Equity Incentive Plan will
be recommended to the Company’s Board of Directors on your behalf.  All option
grants are subject to approval by the Compensation Committee of the InterMune
Board of Directors.  The options will vest over a four-year period beginning the
first date of your employment.  The option exercise price will be the NASDAQ
closing price of InterMune common stock on the last business day before you
begin your InterMune employment.  The exercise of any options will be subject to
the terms of your stock option agreement and the equity incentive plan.

 

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Employee Benefits

 

As a full-time employee, you will be eligible for paid time-off benefits, such
as sick leave and holidays, in accordance with our policies for similarly
situated employees.  You also will be eligible to participate in InterMune’s
employee benefit plans, in accordance with the terms and eligibility
requirements of those plans.  Currently, InterMune maintains group health
insurance, vision and dental plans; a long-term disability plan; a Flexible
Spending Account plan; a group Life Insurance and AD&D plan; a 401(k) savings
plan, and an Employee Stock Purchase Plan.

 

InterMune reserves the right to modify, amend or discontinue any benefit plan at
any time, in its sole discretion.  You may receive such other benefits as we may
determine from time to time, in our sole discretion.

 

Other Terms and Conditions of Employment

 

Employment with InterMune is at will.  “Employment at will” means that you are
free to resign from your employment at any time, for any reason or  no reason,
with or without cause and with or without notice.  Similarly, InterMune may
terminate your employment at any time for any legal reason, with or without
cause and with or without notice.  By accepting this offer of employment, you
agree that your employment is at will, and acknowledge that no one, other than
the Chief Executive Officer of InterMune, has the authority to promise you
anything to the contrary.  Any such agreement must be in writing and signed by
both you and the Chief Executive Officer of InterMune to be effective.

 

We believe that your employment with InterMune requires a significant
commitment.  Employment with any other entity, or for yourself in competition
with InterMune, is not permitted.

 

During the course of your employment, you may create, develop or have access to
confidential information belonging to InterMune, including trade secrets and
proprietary information, such as clinical and other scientific data, customer
information, business plans, marketing plans, unpublished financial information,
software, source codes, and personnel information.  You agree that as a
condition of your employment with InterMune, you will sign and comply with the
enclosed InterMune Proprietary Information and Inventions Agreement, which
contains certain commitments regarding confidentiality.  By accepting employment
with InterMune, you also agree to keep all InterMune information strictly
confidential, and not to use it or disclose it to any person or entity, except
as is necessary in the ordinary course of performing your work.  Similarly, you
agree to act in accordance with any valid non-disclosure agreements to which you
may be subject.  You further acknowledge that your obligation to protect our
confidential information from disclosure exists both during your employment and
after it ends.  You also agree that at the termination of your employment, for
any reason, you will return to us all copies (including electronic copies) of
any documents or other materials you have that refer to or contain InterMune’s
confidential information, including notebooks, manuals, letters and customer
lists.

 

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You also agree, if you accept this offer of employment, that for a period of two
years after your employment ends, you will not solicit any InterMune employee to
leave his or her employment with InterMune in order to begin employment or a
consulting or independent contractor relationship with any company or business
in actual or potential competition with InterMune.

 

Severance Pay in the Event of Termination (Not for Cause).  As a member of the
Company’s Executive Committee, you will be entitled to the following benefits in
the event your employment is terminated other than for “Cause” or in the event
of a “Change in Control” of InterMune (as those terms are defined below). 
Although you at all times will remain an at-will employee of InterMune,
InterMune agrees that in the event you are terminated by the Company other than
for “Cause” in the absence of a “Change in Control” of InterMune, you will
receive the following benefits within fourteen (14) days after receipt by the
Company of a general release duly signed by you that releases the Company from
all of your actual  or potential claims against InterMune:

 

•        If you have completed less than one (1) full year of service, you will
receive six (6) months’ base salary at your final rate of pay, six (6) months
benefits continuation (i.e., Company-provided COBRA payments), and six (6)
months immediate acceleration of vesting of each of your outstanding equity
grants, whether stock options or restricted shares;

 

•        If you have completed at least one (1) year but less than two (2) years
of service, you will receive nine (9) months’ base salary at your final rate of
pay, nine (9) months benefits continuation; (i.e., Company-provided COBRA
payments), and nine (9) months immediate acceleration of vesting of each of your
outstanding equity grants, whether stock options or restricted shares;

 

•        If you have completed two (2) years of service or more, you will
receive twelve (12) months’ base salary at your final rate of pay, twelve (12)
months benefits continuation; (i.e., Company-provided COBRA payments), and
twelve (12) months immediate acceleration of vesting of each of your outstanding
equity grants, whether stock options or restricted shares;

 

•        If such termination not for Cause occurs in the second half of the
calendar year, you also will receive a pro rata share of your target bonus for
that year..

 

The acceleration of vesting provided for in this section of this agreement is
intended to be in lieu of any acceleration rights provided in any operative
Stock Option Agreement you may sign, and in addition to any acceleration rights
provided in the operative Stock Plan documents.  All other terms and conditions
applicable to your equity grants, e.g. with regard to exercise after
termination, forfeiture, etc., will continue to be governed by the operative
Stock Option Agreement and Stock Plan document.  Cash compensation required to
be paid pursuant to this section of this Agreement will be paid either in a
single lump-sum payment or ratably on a monthly basis over the severance period,
in the Company’s sole discretion.

 

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Compensation upon Change in Control.  In the event of a Change in Control of the
Company that results in: (i) your terminations without Cause, or (ii) your
resignation for “Good Reason,” which for purposes of this Agreement shall mean
either (a) a material diminution in your duties, title or compensation, or (b) a
requirement that you relocate more than fifty (50) miles from the Company’s Home
Office location, any of which event occurs within one (1) year of the change in
control (a “Triggering Event”), you will receive the following benefits within
fourteen (14) days after receipt by the Company of a general release duly signed
by the you that releases the Company from all of your actual or potential claims
against InterMune:

 

(a)           Cash Compensation:  Two (2) years base salary at your final rate
of pay and two (2) years benefits continuation (i.e., Company-provided COBRA
payments).  If a Triggering Event occurs in the second half of the calendar
year, you also will receive a pro rata share of your target bonus for that year.

 

(b)           Options or Restricted Share Grants:  Vesting of all outstanding
equity grants (including InterMune stock option grants, InterMune restricted
stock grants, and any grants made by the acquiring entity) will immediately
accelerate.  The acceleration of vesting provided for in this section of this
Agreement is intended to be in lieu of any acceleration rights provided in the
operative Stock Option Agreement, and in addition to any acceleration rights
provided in the operative Stock Plan document.  All other terms and conditions
applicable to your equity grants, e.g., with regard to exercise after
termination, forfeiture, etc., will continue to be governed by the operative
Stock Option Agreement and Stock Plan documents.

 

(c)           Transition Management Services: you will receive executive
transition management services for a one-year period with Lee Hecht Harrison,
Right Management, or a similar transition management firm, up to a cap of Forty
Thousand Dollars ($40,000).

 

 

Definitions.

 

For purposes of this agreement, “Cause” shall mean any of the following:

 

•              Willful refusal to follow lawful and reasonable corporate policy
or Chief Executive Officer directives; or

•              Willful failure, gross neglect or refusal to perform duties; or

•              Willful act that intentionally or materially injures the
reputation or business of the  Company; or

•              Willful breach of confidentiality that has a material adverse
affect on the Company; or

•              Fraud or embezzlement; or

•              Indictment for criminal activity.

 

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For purposes of this agreement, “Change in Control” shall mean any of the
following:

 

•              A sale, lease or other disposition of all or substantially all of
the securities or assets of the Company; or

•              A merger or consolidation in which the Company is not the
surviving corporation;

or

•              A reverse merger in which the Company is the surviving
corporation but the shares of Common Stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise.

 

The terms described in this letter replace all prior agreements, understandings,
and promises between InterMune and you concerning the terms and conditions of
your employment with InterMune.  Any modification of this agreement will be
effective only if it is in writing and is signed by both you and the Chief
Executive Officer of InterMune.  This offer remains open through end of the day
on October 22, 2004.

 

Norman, I am pleased to extend this offer of employment to you, and hope that
your association with InterMune will be successful and rewarding.  Please
indicate your acceptance of this offer by signing this letter below and
returning the letter as soon as possible.  A copy of this letter is enclosed for
your records.

 

 

Sincerely,

 

 

 

InterMune, Inc.

 

 

 

/s/ Howard Simon

 

 

By:

Howard Simon

 

 

 

Sr. Vice President, Human Resources &

 

 

Assoc. General Counsel

 

I understand and agree to the foregoing terms and conditions of employment with
InterMune, Inc. 

 

 

 

 

 

/s/ Norman Halleen

 

 

Norman Halleen

 

 

 

10/19/04  / October 25, 2004

 

 

 

Date

Start Date

 

 

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