Exhibit 10.7

 

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September 19, 2016

John McCabe

17 Brookside Farm Lane

Sudbury, MA 01776

 

  Re: Severance and Retention Incentives

Dear John:

Eleven Biotherapeutics (the “Company”) recognizes and appreciates the
contributions you have made to the Company during your employment and wants you
to remain committed and focused following the closing (the “Closing”) of the
proposed acquisition by the Company of Viventia Bio Inc. (“Viventia”) pursuant
to a Share Purchase Agreement (the “Agreement”) by and among the Company,
Viventia, the shareholders of Viventia named on the signature pages thereto and,
for certain limited purposes, Clairmark Investments Ltd., pursuant to which
Agreement the Company will acquire all of the outstanding equity interests in
Viventia and Viventia will become a wholly-owned subsidiary of the Company.
Although the Company had earlier contemplated terminating your employment upon
or shortly following the Closing, we have decided that we would like you to stay
on and continue guiding the Company forward in your role as Chief Financial
Officer.

We recognize that you would have been eligible to receive certain benefits under
the employment letter agreement between you and the Company dated August 28,
2015 (the “Employment Agreement”) had your employment been terminated as earlier
contemplated, and that we are asking you to remain employed by us during a time
of change and challenge. We also recognize that your preference may have been to
pursue other opportunities, had you had more of an opportunity to fully evaluate
the opportunity that remaining presents to you and therefore want to offer that,
if you voluntarily terminate your employment for any reason during the six (6)
month period following the Closing, you will be eligible to receive the same
severance benefits that you would have been eligible to receive pursuant to the
Employment Agreement had your employment been involuntarily terminated without
Cause (as defined in the Employment Agreement) upon the Closing (including,
without limitation, vesting of 100% of your then outstanding unvested equity
awards that were granted prior to the Closing). Such severance benefits will be
payable in the same manner and subject to the same conditions as set forth in
the Employment Agreement (including, without limitation, your timely entering
into a separation and release of claims agreement that will be provided to you
by the Company should you voluntarily resign during the six (6) month period
following the Closing). For the avoidance of doubt, you acknowledge that portion
of the severance benefits under your Employment Agreement comprised of (i) the
12 months of base salary and (ii) the delivery of the shares subject to the
outstanding restricted stock units granted to you prior to Closing will be
subject to the six-month delay required by Section 409A of the Internal Revenue
Code.

 

 

   1

215 First Street, Suite 400, Cambridge, MA 02142    PHONE: 617-871-9911    FAX:
617-858-0911

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Further, in order to reward you for your contributions prior to and in
connection with the Viventia transaction and to provide an extra incentive for
you to remain enthusiastically employed by the Company during this period of
transition, you will be eligible to receive the following retention incentives:

 

  1. A special transaction bonus in the amount of $75,000, less applicable taxes
and withholdings, payable in a lump sum on the next regular payroll date
following the Closing.

 

  2. A special retention bonus in the amount of $75,000, less applicable taxes
and withholdings, if (a) during the six (6) month period following the Closing
(the “Bonus Eligible Period”) the Company involuntarily terminates your
employment without Cause or you voluntarily resign from employment for Good
Reason (with each of Cause and Good Reason as defined in the Employment
Agreement), or (b) you remain actively employed with the Company for the
duration of the Bonus Eligible Period. If your employment is terminated
involuntarily without Cause or you terminate your employment for Good Reason, in
either case during the Bonus Eligible Period, your eligibility to receive such
bonus will be subject to your timely entering into a separation and release of
claims agreement that will be provided to you by the Company upon termination.
If you are actively employed on the last day of the Bonus Eligible Period, you
will not be required to execute a release in order to receive the special
retention bonus. The special retention bonus will be paid to you, if payable, on
the next payroll date following the end of the Bonus Eligible Period, or, if
earlier, when the release becomes effective following your termination without
Cause or resignation for Good Reason.

 

  3. Subject to the approval of the Board of Directors of the Company, and
effective on the next business day following the date of the Closing, you will
be granted an option to purchase 100,000 shares of the Company’s common stock at
a price per share equal to the fair market value of common stock on the date of
grant of the option (the “Post-Closing Option”). Subject to your continued
service to the company on the vesting dates, the stock option will vest over
four (4) years with 25% of the option vesting on the first anniversary of the
date of the award and 6.25% of the option vesting at the end of each successive
three-month period thereafter. This option grant shall be subject to all terms,
vesting schedules, limitations, restrictions and termination provisions set
forth in the Company’s 2014 Stock Incentive Plan and in a separate option
agreement that shall be executed by you and the Company to evidence the grant of
the options (collectively, the “Equity Documents”). For the avoidance of doubt,
the vesting of the Post-Closing Option will not accelerate at Closing nor on
your termination for any reason following the Closing, except that if there is a
Change in Control Transaction following the closing of the August 16, 2016
exclusive licensing deal with F. Hoffmann-La Roche Ltd. and Hoffmann-La Roche
Inc., then the Post-Closing Option will be subject to the general severance
provisions of the Employment Agreement.

 

 

   2

215 First Street, Suite 400, Cambridge, MA 02142    PHONE: 617-871-9911    FAX:
617-858-0911

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John, we very much appreciate your service to the Company during this time of
transition and are grateful for the assistance you have provided.

Please note that nothing in this letter alters your status as an employee at
will, and that the Employment Agreement remains in full force and effect.

Please sign where indicated below to acknowledge your receipt of this letter and
your understanding of, and agreement, with the terms hereof.

 

Sincerely, By:  

/s/ Daniel Lynch

Daniel Lynch Board Member and Chairman of Eleven Biotherapeutics, Inc.

Received, read, acknowledged and agreed:

 

/s/ John McCabe

   

September 20, 2016

John McCabe     Date

 

 

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215 First Street, Suite 400, Cambridge, MA 02142    PHONE: 617-871-9911    FAX:
617-858-0911