Exhibit 10.5

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June 1, 2017

 

Paul C. Grint, M.D.

7757 Doug Hill Court

San Diego, CA 92127

 

Dear Paul:

 

We are pleased to confirm our offer of employment with AmpliPhi Biosciences
Corporation (the “Company”), in the position of Chief Executive Officer (“CEO”)
on the terms set forth in this letter agreement (the “Agreement”).

 

1.                   Position. As CEO, you will be responsible for managing the
day to day operations and strategy of the Company and will report directly to
the Board of Directors of the Company (the “Board”). You agree to devote your
full business time and attention to your work for the Company. Except upon the
prior written consent of the Board, you will not, during your employment with
the Company, (i) accept or maintain any other employment, or (ii) engage,
directly or indirectly, in any other business activity (whether or not pursued
for pecuniary advantage) that might interfere with your duties and
responsibilities as a Company employee or create a conflict of interest with the
Company. Such consent will not be unreasonably withheld for up to two director
positions at companies that do not compete with the Company.

 

2.                   Salary. Your initial base salary will be paid at the
annualized rate of $475,000 per year on the Company’s regular payroll dates and
subject to approved deductions and required withholdings. Your salary will be
reviewed from time to time by the Board or its compensation committee, and may
be adjusted in the sole discretion of the Board or its compensation committee.

 

3.                   Bonus. You will be eligible to earn an annual performance
bonus based on achievement of Company performance objectives to be established
by the Board or its compensation committee and provided to you. Your annual
target performance bonus will initially be equal to 50% of your base salary,
although the amount of any payment will be dependent upon actual performance as
determined by the Board or its compensation committee. Generally, you must be
employed by the Company through the date on which bonuses are paid in order to
be eligible to receive a bonus, however if your employment is terminated during
the year for any reason other than Cause (as defined below), you will remain
eligible to be awarded a pro-rated portion of the performance bonus for the year
in which your termination occurred, based on achievement of Company performance
objectives, as determined by the Board or its compensation committee. Your
annual target performance bonus, if any, shall be paid to you on or before March
15 of the year following the year to which it relates. Your annual target
performance bonus percentage is subject to modification from time to time in the
discretion of the Board or its compensation committee.

 

4.                   Equity Award. Upon your commencement of employment with the
Company and subject to approval by the Board and, if deemed necessary, the
Company’s shareholders, you will be granted an option under the Company’s 2016
Equity Incentive Plan (the “Plan”) to purchase 475,189 shares of the Company’s
common stock (the “Option”). The Option shall vest over time with respect to 40%
of the total number of shares (the “Time-Based Shares”), conditioned upon your
continuous service to the Company on the applicable vesting dates, as follows:
i) 25% of the Time Based Shares shall vest on the first anniversary of your
commencement of employment as the CEO and ii) thereafter the balance of the
shares shall vest on the final day of each month in 36 equal installments. With
respect to 60% of the total number of shares (the “Performance-Based Shares”),
the Option shall vest based on the Board’s or its compensation committee’s
determination of the achievement of corporate performance criteria. The
corporate performance criteria applicable to the Performance-Based Shares shall
be determined by the Board or its compensation committee, after consultation
with you. The exercise price of the Option shall be the fair market value of the
Company’s common stock on the date of grant in accordance with the Plan and
shall be subject to the terms and conditions of the Plan, stock option grant
notice and option agreement to be entered into between you and the Company.

 

 

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5.                   Benefits. You will be eligible to participate in the
benefits made generally available by the Company to its senior executives, in
accordance with the benefit plans established by the Company, and as may be
amended from time to time in the Company’s sole discretion.

 

6.                   At-Will Employment. The Company is an “at-will” employer.
Accordingly, either you or the Company may terminate the employment relationship
at any time, with or without advance notice, and with or without cause.

 

7.                   Termination. Upon any termination of your employment, you
will be deemed to have resigned, and you hereby resign, from all offices and
directorships, if any, then held with the Company or any subsidiary. In the
event of termination of your employment with the Company, regardless of the
reasons for such termination, the Company shall pay your base salary and accrued
but unused vacation up to and through the date of termination, less applicable
payroll and tax withholdings (the “Accrued Obligations”).

 

8.                   Severance. You shall be eligible for the severance benefits
described in this Section 8.

 

a.                   In the event (i) the Company terminates your employment
without Cause (as defined below and other than due to your death or disability),
or (ii) you terminate your employment for Good Reason (as defined below), and
provided in either case of (i) or (ii) such termination or resignation
constitutes a “separation from service” (as defined under Treasury Regulation
Section 1.409A-1(h), without regard to any alternative definition thereunder, a
“Separation from Service”) (such termination or resignation, an “Involuntary
Termination”), then, in addition to the Accrued Obligations, subject to your
obligations below, you shall be entitled to receive an amount equal to twelve
(12) months of your then current base salary (ignoring any decrease in base
salary that forms the basis for Good Reason), less all applicable withholdings
and deductions, paid on the schedule described below (the “Severance Pay”).

 

b.                  The Severance Pay is conditional upon (i) your continuing to
comply with your obligations under your PIIA (as defined in Section 11) during
the period of time in which you are receiving the Severance Pay; (ii) your
delivering to the Company an executed separation agreement and general release
of claims in favor of the Company, in a form attached hereto as Exhibit A,
within the time period set forth therein, which becomes effective in accordance
with its terms, which shall be no later than sixty (60) days following your
Separation from Service (the “Release”). The Severance Pay will be paid in equal
installments on the Company’s regular payroll schedule over the period outlined
above following the date of your Separation from Service; provided, however,
that no payments will be made prior to the sixtieth (60th) day following your
Separation from Service. On the sixtieth (60th) day following your Separation
from Service, the Company will pay you in a lump sum the amount of the Severance
Pay that you would have received on or prior to such date under the original
schedule but for the delay while waiting for the sixtieth (60th) day, with the
balance of the Severance Pay being paid as originally scheduled.

 

 

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c.                   “Cause” for purposes of your Severance Pay means (i) your
gross negligence or willful failure substantially to perform your duties and
responsibilities to the Company or deliberate violation of a Company policy;
(ii) your commission of any act of fraud, embezzlement or dishonesty against the
Company or any other willful misconduct that has caused or is reasonably
expected to result in material injury to the Company; (iii) your unauthorized
use or disclosure of any proprietary information or trade secrets of the Company
or any other party to whom you owe an obligation of nondisclosure as a result of
your relationship with the Company; or (iv) your willful breach of any of your
obligations under any written agreement or covenant with the Company, including
without limitation this Agreement and your PIIA.

 

d.                  “Good Reason” for purposes of your Severance Pay means the
occurrence at any time of any of the following without your prior written
consent: (i) a material reduction in your authority, duties or responsibilities
(other than a mere change in title following any merger or consolidation of the
Company with another entity); (ii) a material reduction in your base salary; or
(iii) any willful failure or willful breach by the Company of any of its
material obligations under this Agreement. For purposes of this subsection, no
act, or failure to act, on the Company’s part shall be deemed “willful” unless
done, or omitted to be done, by the Company not in good faith and without
reasonable belief that the Company’s act, or failure to act, was in the best
interest of the Company. In order to terminate your employment under this
Agreement for Good Reason, you must (1) provide written notice to the Company
within ninety (90) days of the first occurrence of the events described above,
(2) allow the Company at least thirty (30) days from such receipt of such
written notice to cure such event, and (3) if such event is not reasonably cured
within such period, resign from all position you then hold with the Company
effective not later than the one-hundred eightieth (180th) day after the initial
occurrence of such event.

 

9.                   Change in Control. If your Involuntary Termination occurs
within one (1) month prior to, or twelve (12) months following a Change in
Control (as defined in the Plan), the vesting of all of your outstanding equity
awards (including the Option) that are subject to time-based vesting
requirements (including the Time-Based Shares) shall accelerate in full such
that all such equity awards shall be deemed fully vested as of the date of such
Involuntary Termination (or Change in Control, if later).

 

10.               Taxes. All amounts paid under this Agreement shall be paid
less all applicable state and federal tax withholdings (if any) and any other
withholdings required by any applicable jurisdiction or authorized by you.

 

a.                   Section 409A. The Severance Pay provided in this Agreement
is intended to qualify for an exemption from application of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”) and the regulations and
other guidance thereunder and any state law of similar effect (collectively
“Section 409A”) or to comply with its requirements to the extent necessary to
avoid adverse personal tax consequences under Section 409A, and any ambiguities
herein shall be interpreted accordingly. Each installment of Severance Pay is a
separate “payment” for purposes of Treasury Regulations Section
1.409A-2(b)(2)(i), and the Severance Pay is intended to satisfy the exemptions
from application of Section 409A provided under Treasury Regulations Sections
1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9). However, if such exemptions
are not available and you are, upon Separation from Service, a “specified
employee” for purposes of Section 409A, then, solely to the extent necessary to
avoid adverse personal tax consequences under Section 409A, the timing of the
Severance Pay shall be delayed until the earlier of (i) six (6) months and one
day after your Separation from Service, or (ii) your death. Except to the
minimum extent that payments must be delayed because you are a “specified
employee”, all amounts of Severance Pay will be paid as soon as practicable in
accordance with the schedule provided herein and in accordance with the
Company’s normal payroll practices.

 

 

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b.                  Section 280G. If any payment or benefit you will or may
receive from the Company or otherwise (a “280G Payment”) would (i) constitute a
“parachute payment” within the meaning of Section 280G of the Code, and (ii) but
for this sentence, be subject to the excise tax imposed by Section 4999 of the
Code (the “Excise Tax”), then any such 280G Payment pursuant to this Agreement
or otherwise (a “Payment”) shall be equal to the Reduced Amount. The “Reduced
Amount” shall be either (x) the largest portion of the Payment that would result
in no portion of the Payment (after reduction) being subject to the Excise Tax
or (y) the largest portion, up to and including the total, of the Payment,
whichever amount (i.e., the amount determined by clause (x) or by clause (y)),
after taking into account all applicable federal, state and local employment
taxes, income taxes, and the Excise Tax (all computed at the highest applicable
marginal rate), results in your receipt, on an after-tax basis, of the greater
economic benefit notwithstanding that all or some portion of the Payment may be
subject to the Excise Tax. If a reduction in a Payment is required pursuant to
the preceding sentence and the Reduced Amount is determined pursuant to clause
(x) of the preceding sentence, the reduction shall occur in the manner (the
“Reduction Method”) that results in the greatest economic benefit for you. If
more than one method of reduction will result in the same economic benefit, the
items so reduced will be reduced pro rata (the “Pro Rata Reduction Method”).

 

Notwithstanding the foregoing, if the Reduction Method or the Pro Rata Reduction
Method would result in any portion of the Payment being subject to taxes
pursuant to Section 409A that would not otherwise be subject to taxes pursuant
to Section 409A, then the Reduction Method and/or the Pro Rata Reduction Method,
as the case may be, shall be modified so as to avoid the imposition of taxes
pursuant to Section 409A as follows: (A) as a first priority, the modification
shall preserve to the greatest extent possible, the greatest economic benefit
for you as determined on an after-tax basis; (B) as a second priority, Payments
that are contingent on future events (e.g., being terminated without Cause),
shall be reduced (or eliminated) before Payments that are not contingent on
future events; and (C) as a third priority, Payments that are “deferred
compensation” within the meaning of Section 409A shall be reduced (or
eliminated) before Payments that are not deferred compensation within the
meaning of Section 409A.

 

Unless you and the Company agree on an alternative accounting firm, the
accounting firm engaged by the Company for general tax compliance purposes as of
the day prior to the effective date of the change of control transaction
triggering the Payment shall perform the foregoing calculations. If the
accounting firm so engaged by the Company is serving as accountant or auditor
for the individual, entity or group effecting the change of control transaction,
the Company shall appoint a nationally recognized accounting firm to make the
determinations required hereunder. The Company shall bear all expenses with
respect to the determinations by such accounting firm required to be made
hereunder. The Company shall use commercially reasonable efforts to cause the
accounting firm engaged to make the determinations hereunder to provide its
calculations, together with detailed supporting documentation, to you and the
Company within fifteen (15) calendar days after the date on which your right to
a 280G Payment becomes reasonably likely to occur (if requested at that time by
you or the Company) or such other time as requested by you or the Company.

 

If you receive a Payment for which the Reduced Amount was determined pursuant to
clause (x) of the first paragraph of this Section 10(b) and the Internal Revenue
Service determines thereafter that some portion of the Payment is subject to the
Excise Tax, you shall promptly return to the Company a sufficient amount of the
Payment (after reduction pursuant to clause (x) of the first paragraph of this
this Section 10(b) so that no portion of the remaining Payment is subject to the
Excise Tax. For the avoidance of doubt, if the Reduced Amount was determined
pursuant to clause (y) in the first paragraph of this this Section 10(b), you
shall have no obligation to return any portion of the Payment pursuant to the
preceding sentence.

 

 

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11.               Other. As a condition of employment, you must read, sign and
comply with the Company’s Proprietary Information and Invention Assignment
Agreement (“PIIA”), which (among other provisions) prohibits any unauthorized
use or disclosure of Company proprietary, confidential or trade secret
information. As required by law, this offer is subject to satisfactory proof of
your identity and right to work in the United States. Further, if requested by
the Company, this offer is contingent upon your successful completion of a
background check to the satisfaction of the Company. If the Company desires that
you complete a background check, you will be required to give your consent for
the Company, through an outside firm, to complete a criminal background check
and verification of information provided on your employment application.

 

12.               Entire Agreement. Please let us know of your decision to join
the Company by signing a copy of this Agreement and returning it to us not later
than June 1, 2017. This Agreement, together with your PIIA, sets forth our
entire agreement and understanding regarding the terms of your employment with
the Company and supersedes any prior representations or agreements, whether
written or oral. This Agreement may not be modified in any way except in a
writing signed by the Chairman of the Board upon due authorization by the Board
or its compensation committee and you. It shall be governed by California law,
without regard to principles of conflicts of laws.

  

Sincerely,       /s/ Jeremy Curnock Cook       Jeremy Curnock Cook   Chairman of
the Board of Directors           ACCEPTED AND AGREED:           /s/ Paul C.
Grint, M.D.   Paul C. Grint, M.D.       1st June 2017   Date  

 

 

 

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Exhibit A

 

SEPARATION AGREEMENT AND RELEASE

 

 

I enter into this Separation Agreement and Release (the “Release”) pursuant to
Section 8 of the Offer Letter Agreement between AmpliPhi Biosciences Corporation
(the “Employer”), and me dated June 1, 2017 (the “Agreement”). I acknowledge
that my timely execution and return and my non-revocation of this Release are
conditions to the payments and benefits pursuant to Section 8 of the Agreement.
I therefore agree to the following terms:

 

1.                  Release of Claims. I voluntarily release and forever
discharge the Employer, its affiliated and related entities, its and their
respective predecessors, successors and assigns, its and their respective
employee benefit plans and fiduciaries of such plans, and the current and former
officers, directors, stockholders, members, employees, attorneys, accountants
and agents of each of the foregoing in their official and personal capacities
(collectively referred to as the “Releasees”) generally from all claims,
demands, debts, damages and liabilities of every name and nature, known or
unknown (“Claims”) that, as of the date when I sign this Release, I have, ever
had, now claim to have or ever claimed to have had against any or all of the
Releasees. This release includes, without limitation, all Claims:

 

·relating to my employment by the Employer and/or any affiliate of the Employer
and the termination of my employment;

·of wrongful discharge;

·of breach of contract;

·of retaliation or discrimination under federal, state or local law (including,
without limitation, Claims of age discrimination or retaliation under the Age
Discrimination in Employment Act, Claims of disability discrimination or
retaliation under the Americans with Disabilities Act, Claims of discrimination
or retaliation under Title VII of the Civil Rights Act of 1964, Claims of any
form of discrimination or retaliation that is prohibited by the California Fair
Employment and Housing Act;

·under any other federal or state statute;

·of defamation or other torts;

·of violation of public policy;

·for wages, bonuses, incentive compensation, stock, stock options, vacation pay
or any other compensation or benefits (except for such wages, bonuses, incentive
compensation, stock, stock options, vacation pay or other compensation or
benefits otherwise due to me under the Agreement); and

·for damages or other remedies of any sort, including, without limitation,
compensatory damages, punitive damages, injunctive relief and attorney’s fees;

 

I agree that the release set forth in this section shall be and remain in effect
in all respects as a complete general release as to the matters released. This
release does not extend to any obligations incurred under this Release, under
any ongoing Company benefit plans or for indemnification under any
indemnification agreement, the Company’s Bylaws or applicable law. This release
does not release claims that cannot be released as a matter of law, including,
but not limited to, my right to file a charge with or participate in a charge by
the Equal Employment Opportunity Commission, or any other local, state, or
federal administrative body or government agency that is authorized to enforce
or administer laws related to employment, against the Company (with the
understanding that any such filing or participation does not give me the right
to recover any monetary damages against the Company; my release of claims herein
bars me from recovering such monetary relief from the Company).

 

 

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I agree that I shall not seek or accept damages of any nature, other equitable
or legal remedies for my own benefit, attorney’s fees, or costs from any of the
Releasees with respect to any Claim released by this Release. I represent that I
have not assigned to any third party and I have not filed with any agency or
court any Claim released by this Release.

 

Nothing in this Agreement prevents me from filing a charge or complaint with the
Equal Employment Opportunity Commission, the National Labor Relations Board, the
Occupational Safety and Health Administration, the Securities and Exchange
Commission or any other federal, state or local governmental agency or
commission (collectively, the “Government Agencies”). I understand this
Agreement does not limit my ability to communicate with any Government Agencies
or otherwise participate in any investigation or proceeding that may be
conducted by any Government Agency, including providing documents or other
information, without notice to the Company.  While this Agreement does not limit
my right to receive an award for information provided to the Securities and
Exchange Commission, I understand and agree that, to the maximum extent
permitted by law, I am otherwise waiving any and all rights I may have to
individual relief based on any claims that I have released and any rights I have
waived by signing this Agreement.

 

2.                  Ongoing Obligations. I reaffirm my ongoing obligations under
the Agreement, including without limitation my obligations under Section 11 with
respect to the Proprietary Information and Invention Assignment Agreement.

 

3.                  No Assignment. I represent that I have not assigned to any
other person or entity any Claims against any Releasee.

 

4.                  Right to Consider and Revoke Release. I acknowledge that I
have been given the opportunity to consider this Release for a period of
twenty-one (21) days from the date when it is tendered to me. In the event that
I executed this Release within less than twenty-one (21) days, I acknowledge
that such decision was entirely voluntary and that I had the opportunity to
consider this Release until the end of the twenty-one (21) day period. To accept
this Release, I shall deliver a signed Release to the Employer’s General Counsel
within such twenty-one (21) day period; provided that I acknowledge that the
Employer may change the designated recipient by notice. For a period of
seven (7) days from the date when I execute this Release (the
“Revocation Period”), I shall retain the right to revoke this Release by written
notice that is received by the Employer’s General Counsel or other
Employer-designated recipient on or before the last day of the Revocation
Period. This Release shall take effect only if it is executed within the
twenty-one (21) day period as set forth above and if it is not revoked pursuant
to the preceding sentence. If those conditions are satisfied, this Release shall
become effective and enforceable on the date immediately following the last day
of the Revocation Period (the “Effective Date”).

 

 

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5.                  California Civil Code Section 1542. I acknowledge that I
have been advised to consult with legal counsel and am familiar with the
provisions of California Civil Code Section 1542, a statute that otherwise
prohibits the release of unknown claims, which provides as follows:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.

 

I, being aware of said code section, agree to expressly waive any rights I may
have thereunder, as well as under any other statute or common law principles of
similar effect.

 

6.                  Other Terms.

 

(a)               Legal Representation; Review of Release. I acknowledge that I
have been advised to discuss all aspects of this Release with my attorney, that
I have carefully read and fully understand all of the provisions of this Release
and that I am voluntarily entering into this Release.

 

(b)               Binding Nature of Release. This Release shall be binding upon
me and upon my heirs, administrators, representatives and executors.

 

(c)               Amendment. This Release may be amended only upon a written
agreement executed by the Employer and me.

 

(d)               Severability. In the event that at any future time it is
determined by an arbitrator or court of competent jurisdiction that any
covenant, clause, provision or term of this Release is illegal, invalid or
unenforceable, the remaining provisions and terms of this Release shall not be
affected thereby and the illegal, invalid or unenforceable term or provision
shall be severed from the remainder of this Release. In the event of such
severance, the remaining covenants shall be binding and enforceable.

 

(e)               Governing Law and Interpretation. This Release shall be deemed
to be made and entered into in the State of California, and shall in all
respects be interpreted, enforced and governed under the laws of the State of
California, without giving effect to the conflict of laws principles of such
State. The language of all parts of this Release shall in all cases be construed
as a whole, according to its fair meaning, and not strictly for or against
either the Employer or me.

 

(f)                Entire Agreement; Absence of Reliance. I acknowledge that I
am not relying on any promises or representations by the Employer or any of its
agents, representatives or attorneys regarding any subject matter addressed in
this Release.

 

So agreed.

 

      Paul C. Grint, M.D.   Date