Exhibit 10.86


 





 


August 9, 2004


 


Ms. Robin Steele, Esq.


[Address]


 


Re:                               Employment with
InterMune, Inc.


 


Dear Robin:


 


On behalf of InterMune, Inc., I am
pleased to extend to you this official offer of employment with InterMune as
Senior Vice President of Legal Affairs, General
Counsel and Corporate Secretary, reporting to Daniel Welch, President
and Chief Executive Officer, beginning on August 10, 2004. You will be a
member of the Executive Committee of the Company. This position is a full-time,
exempt position.


 


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 and character
references, and to our standard pre-employment process, which includes
completion of an employment application.


 


Compensation


 


If you accept this offer and begin
employment, you will receive an initial base salary of  $23,750.00 per month (equivalent to
$285,000.00 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. For 2004, the bonus target at the Senior
Vice President level is 35% of annual base salary.  Salary and merit increases will be reviewed
on an annual basis in connection with your performance review.


 


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 period of four years beginning the first date of your employment
and 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 in all respects to the
terms of your stock option agreement and the equity incentive plan.


 





















 


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
many 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 full-time 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.


 


2





















 


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).  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” (as that term is defined
below) in the absence of a “Change in Control” of InterMune (as that term is
defined below), 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:


 


•                  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.


 


Compensation
upon Change in Control.  In the event of a Change in Control of the
Company that results in: (i) your termination 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


 


3





















 


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 2
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.


 


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.


 


4





















 


Robin, 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/ Robin Steele

  	
   

  	
   

  	
   

  
	
  Robin Steele

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  8/11/04

  	
  /

  	
  August 10, 2004

  	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
  Start Date

  	
   

  	
   

  	
   

  
							



 


5