Exhibit
10.4


 


EXECUTION COPY


 


September 14,
2005


 


Michael
D. Webb


EPIX
Pharmaceuticals, Inc.


161
First Street


Cambridge,
MA 02142


 


Dear
Michael:


 


The
purpose of this letter agreement (hereinafter the “Agreement”) is to confirm
the terms of your separation from EPIX Pharmaceuticals, Inc. (“EPIX” or “Company”).  The Consideration described below is
contingent on your agreement to and compliance with the terms of this
Agreement.  The Effective Date of this
Agreement shall be the eighth day following the day that you sign it.


 


1.             Separation of Employment.  You
acknowledge that by signing this Agreement, you shall have submitted your
resignation as Chief Executive Officer and member of the Board of Directors to
the Board of Directors, which resignation shall be effective on September 14,
2005 (the “Separation Date”).  Except as
provided for below, you acknowledge that from and after the Separation Date,
you shall have no authority and shall not represent yourself as an employee or
agent of Company.


 


2.             Consideration.  In
exchange for the mutual covenants set forth in this Agreement, and beginning as
soon as practicable after the Effective Date of this Agreement, the Company
agrees to provide you with the following Consideration:


 


(i)            The Company shall pay you severance pay in
the amount of $175,150.50, paid out in six (6) approximately equal monthly
payments, beginning in the first month following the conclusion of the
Consulting Period (as defined in Section 3) (the six month period during
which the severance pay is being paid referred to as the “Severance Period”).


 


(ii)           You shall remain eligible to be paid, in the
discretion of the Board of Directors, an annual bonus for the period ending December 31,
2005.  In determining the amount of the
bonus to be awarded, if any, the Board will refer to but shall not be bound by
the terms of the short-term incentive plan referred to on page 21 of the
Company’s Proxy Statement dated on or about April 25, 2005, and any bonus
shall be prorated by the number of months of employment as CEO in 2005.


 


(iii)          The Company will reimburse your reasonable
documented attorneys fees incurred in connection with the negotiation and
execution of this Agreement and preparation of the related press releases and
prepared responses to media inquiries, up to a maximum of $5000.00.


 


(iv)          By law, and regardless of whether you sign
this Agreement, you will have the right to continue your medical and dental
insurance pursuant to the provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA).  The
COBRA “qualifying event” shall be deemed to be the Separation Date.  If you complete the appropriate forms and
execute this Agreement, the Company will cover the cost of the COBRA payments
to 


 





















 


continue
your participation in EPIX’s medical and dental insurance plans during the
Consultancy Period (as defined in Section 3) and the Severance Period to
the same extent that such insurance is provided to persons employed by
EPIX.  All other benefits shall cease as
of the Separation Date.


 


(v)           EPIX will instruct its officers, members of
the Board of Directors and senior managers to refrain from making any private
or public statements that are professionally or personally disparaging about
you and to refrain from engaging in any conduct that is intended to harm your
reputation.


 


You
acknowledge and agree that the Consideration provided herein is not otherwise
due or owing to you under any Company employment agreement (oral or written) or
Company policy or practice, nor is this Consideration intended to, and shall
not, constitute a severance plan, and shall confer no benefit on anyone other
than the parties hereto.


 


3.             Consultancy Agreement.   Upon
the Separation Date, and until December 31, 2005 (or until terminated
earlier as specifically set forth in this Agreement), the Company desires that
you shall perform, and you agree to perform, such services, and have such
responsibilities, as the Chief Executive Officer or Board of Directors may
direct (the period during which you are serving in this role hereinafter
referred to as the “Consultancy Period”). 
As consultant: (i) you acknowledge that you are acting as an
independent contractor, and that nothing in this provision shall be construed
to create an employment relationship between the parties, and (ii) you are
not authorized to enter into contracts or agreements on behalf of the Company
or to otherwise create obligations of the Company to third parties.  The Company shall pay you a consultancy fee
at the rate of $29,191.75 per month, plus reasonable expenses.  You may terminate the Consultancy Period
prior thereto by four weeks’ written notice to the Chief Executive Officer
and/or the Chairman of the Board of Directors.


 


4.             Stock Options.  Until
the Separation Date, you shall continue to vest in stock options (“Options”) in
accordance with your Notice of Grant of Stock Options and Option Agreements (“Awards”)
and the Amended and Restated 1992 Equity Incentive Plan (“Plan”).  You shall not vest in any additional Options
following the Separation Date.  Following
the Separation Date, you may exercise any vested Incentive Stock Options in
accordance with the terms of the Awards and the Plan.  You may exercise any vested Nonqualified
Stock Options up through and including the 90th day following the
conclusion of the Consultancy Period.


 


5.             No Amounts Owing.  You
acknowledge that except for the specific financial consideration set forth in
this Agreement and any salary and vacation pay that you shall earn up to the
Separation Date, you have been paid and provided all wages, commissions,
bonuses, vacation pay, holiday pay and any other form of compensation or
benefit that may be due to you now or which would have become due in the future
in connection with your employment with or separation of employment from Company.


 


6.             Confidentiality and Related
Covenants. You hereby agree and
acknowledge the following:


 


(i)            On or before the Separation Date, you will
return to EPIX all Company documents (and any copies thereof), property and any
Proprietary Information as defined in the Invention and Non-Disclosure
Agreement (the Inventions Agreement) previously signed by you, 


 


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which
is attached hereto as Exhibit A, the terms of which are
incorporated herein and shall survive the signing of this Agreement, and you
hereby reaffirm your obligation to fully abide by the provisions of the
Inventions Agreement.


 


(ii)           You will not make any private or public
(including to the print or electronic media) statements that are professionally
or personally disparaging about, or adverse to, the interests of Company
(including its officers, directors and employees) including, but not limited
to, any statements that disparage any person, product, service, finances,
financial condition, capability or any other aspect of the business of Company,
or engage in any conduct which is intended to harm professionally or personally
the reputation of Company (including its officers, directors and employees);
provided, nothing herein shall, or shall be construed to, apply to any
statements made by you:  (a) as may
be required by law;  (b) in any
judicial or other adjudicatory proceeding or action; or (c) in any
privileged or confidential communication with your counsel or other
confidential personal or professional advisors.


 


(iii)          The material breach of any of the foregoing
covenants by you shall constitute a material breach of this Agreement and shall
relieve Company of any further obligations hereunder and, in addition to any
other legal or equitable remedy available to Company, shall entitle Company to
terminate the Consultancy Period immediately upon written notice to you and/or
to recover from you any monies already paid to you or on your behalf pursuant
to Section 2 of this Agreement.


 


7.             Cooperation.  You
agree that during your employment and thereafter you shall provide reasonable
cooperation to Company upon its request to assist in its defense or prosecution
of any claims or actions now in existence or which may be brought or threatened
in the future against or on behalf of Company, including any claims or actions
against its officers, directors and employees. 
Your cooperation in connection with such matters, actions and claims
shall include, without limitation, to prepare for and/or participate in any
proceeding (including, without limitation, consultation, discovery or trial)
and to assist with any audit, inspection, proceeding or other inquiry.  For any cooperation provided pursuant to this
Section after the conclusion of the Severance Period, you shall be
reimbursed for any reasonable documented costs, expenses and time in an amount
equal to $250 an hour, plus reasonable attorneys’ fees, provided that
you shall not be provided this reimbursement for time spent in your own
defense.  Nothing herein shall be
construed to require you to provide any cooperation with respect to any matter
in which your interests are or may be adverse to the interests of the Company.


 


8.             Release of Claims.


 


(i)            You hereby agree and acknowledge that by
signing this letter and agreeing to the Consideration to be provided to you,
and other good and valuable consideration provided for in this Agreement, you
are waiving your right to assert any form of legal claim against Company(1)
whatsoever for any alleged action, inaction or circumstance existing or arising
from the beginning of time through the date you sign this Agreement.  Your waiver and release herein is intended to
bar any form of legal claim, charge, complaint or any other 


 










(1)           For
the purposes of this Section 8, “Company” shall include EPIX Pharmaceuticals,
Inc. and any of its divisions, affiliates, subsidiaries and all other related
entities, and its and their directors, officers, employees, trustees, agents,
successors and assigns.


 


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form
of action (jointly referred to as “Claims”) against the Company seeking any
form of relief including, without limitation, equitable relief (whether
declaratory, injunctive or otherwise), the recovery of any damages or any other
form of monetary recovery whatsoever (including, without limitation, back pay,
front pay, compensatory damages, emotional distress damages, punitive damages,
attorneys fees and any other costs) against Company, for any alleged action,
inaction or circumstance existing or arising through the date you sign this
Agreement.


 


Without limiting the
foregoing general waiver and release, you specifically waive and release
Company from any Claim arising from or related to your employment relationship
with Company or the termination thereof, including, without limitation:


 


**           Claims under any state or federal discrimination, fair employment
practices or other employment related statute, regulation or executive order
(as they may have been amended through the Effective Date) prohibiting
discrimination or harassment based upon any protected status including, without
limitation, race, national origin, age, gender, marital status, disability,
veteran status or sexual orientation. 
Without limitation, specifically included in this paragraph are any
Claims arising under the federal Age Discrimination in Employment Act, the
Older Workers Benefit Protection Act, the Civil Rights Acts of 1866 and 1871,
Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Equal
Pay Act, the Americans With Disabilities Act and any similar Massachusetts or
other state statute.


 


**           Claims under any other state or federal employment related statute,
regulation or executive order (as they may have been amended through the
Effective Date) relating to wages, hours or any other terms and conditions of
employment.  Without limitation,
specifically included in this paragraph are any Claims arising under the Fair
Labor Standards Act, the Family and Medical Leave Act of 1993, the National
Labor Relations Act, the Employee Retirement Income Security Act of 1974, the
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) and any similar
Massachusetts or other state statute.


 


**           Claims under any state or federal common law theory including, without
limitation, wrongful discharge, breach of express or implied contract,
promissory estoppel, unjust enrichment, breach of a covenant of good faith and
fair dealing, violation of public policy, defamation, interference with
contractual relations, intentional or negligent infliction of emotional
distress, invasion of privacy, misrepresentation, deceit, fraud or negligence.


 


**           Any other Claim arising under state or
federal law.


 


(ii)           Notwithstanding the
foregoing, this section does not release the Company from any obligation
expressly set forth in this Agreement, does not act as a waiver or release of
any claims that you cannot by law waive or release, and does not waive any of
your rights to indemnification (including the right, if any, to advance of
legal fees) by the Company.


 


(iii)          This Section does not
prohibit you from challenging the validity of this release under the federal
Age Discrimination in Employment Act (“ADEA”), filing a charge or complaint of 


 


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age
discrimination with the federal Equal Employment Opportunity Commission (“EEOC”),
or participating in any investigation or proceeding conducted by the EEOC.  In addition, nothing in this release or this
Agreement shall limit EPIX’s right to seek immediate dismissal of such charge
or complaint on the basis that your signing of this Agreement constitutes a
full release of any individual rights under the ADEA or other laws, or seek
recovery from you, to the extent permitted by law, of the Consideration
provided to you under this Agreement in the event that you successfully
challenge the validity of this release and prevail on the merits of a claim
under the ADEA or other laws.


 


(iv)          You acknowledge and agree
that, but for providing this waiver and release, you would not be receiving the
Consideration and other benefits being provided to you under the terms of this
Agreement.


 


(v)           Nothing in this section shall
be construed to deprive the parties to a determination of proportionate
liability and of the judgment reduction provisions set forth in Section 21D(f)(2)(B) and
21D(f)(3) of the Securities Exchange Act of 1934, as amended.  The release provided by this section shall
be null and void if and only to the extent that it would otherwise prevent
either party hereto from reducing its or his liability and/or amount of
judgment against it or him pursuant to the foregoing proportionate liability
and judgment reduction provisions.


 


9.             ADEA Consideration and Rescission
Periods.  You and EPIX acknowledge that you are 40
years of age or older and that you, therefore, have specific rights under the
ADEA, which prohibits discrimination on the basis of age.  You and the Company further acknowledge and
agree that the release set forth in the preceding paragraph is intended to
release any right you may have to file a claim against Company alleging
discrimination on the basis of age. 
Consistent with the provisions of the ADEA, you shall have twenty-one
(21) days (the “Consideration Period”) from your receipt of this Agreement to
consider and accept its terms by signing below, and you are advised to consult
with an attorney prior to signing this Agreement.  In addition, you may rescind your assent to
this Agreement if, within seven (7) days after the date you sign this
Agreement (the “Rescission Period”), you deliver a notice of rescission to the
Chairman of the Board of Directors, EPIX Pharmaceuticals, Inc., 161 First
Street, Cambridge, MA 02142.  To be
effective, such rescission must be hand delivered or postmarked within the
seven (7) day period.  Any such
rescission shall not affect the termination of your employment, which shall in
any event occur on September 14, 2005.


 


10.          Publicity.  Any press release or other public disclosure
of the terms and provisions of this Agreement, including filings required by
securities laws, shall be subject to the prior review and comment of the other
party as to those provisions relating to the terms and provisions of this
Agreement.  During the Consultancy Period
and the Severance Period, no party to this Agreement shall cause, discuss,
cooperate or otherwise aid in the preparation of any press release or other
publicity other than filings required by securities laws, concerning any other
party to this Agreement or the Agreement’s operation without prior approval of
such other party unless required by law, in which case notice of such
requirement shall be given to the other party.


 


11.          Voluntary Agreement.  You acknowledge that you have been given sufficient time and opportunity
to consult with legal counsel for the purpose of reviewing the terms of this
Agreement.  By executing this Agreement,
you are acknowledging that you have been afforded sufficient time to understand
the terms and effects of this Agreement, that your agreements and obligations
hereunder are 


 


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made
voluntarily, knowingly and without duress, and that neither Company nor its
agents or representatives have made any representations inconsistent with the
provisions of this Agreement.


 


12.          Entire Agreement/Choice of Law/Full Agreement. 
Except for that
certain “Indemnification Agreement” dated December 9, 1996, the Awards
(except as specifically provided herein), and as otherwise expressly provided
for herein, this Agreement supersedes any and all prior oral and/or written
agreements and sets forth the entire agreement between you and Company.  No variations or modifications hereof shall
be deemed valid unless reduced to writing and signed by the parties
hereto.  This Agreement shall take effect
as an instrument under seal and shall be governed by and construed in
accordance with the laws of Massachusetts. 
The provisions of this Agreement are severable, and if for any reason any
part hereof shall be found to be unenforceable, the remaining provisions shall
be enforced in full.


 


If
the foregoing correctly sets forth our understanding, please sign, date and
return the enclosed copy of this Agreement to the Chairman of the Board of
Directors of EPIX Pharmaceuticals, Inc., within 21 days of the date of
this letter.


 


	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
  EPIX
  Pharmaceuticals, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
     /s/
  Christopher F.O. Gabrieli

  	
   

  
	
   

  	
  By:

  	
  Christopher
  F.O. Gabrieli

  
	
   

  	
   

  	
  Chairman
  of the Board

  
					



 


 


Confirmed
and Agreed:


 


 


	
  /s/
  Michael D. Webb

  	
   

  



Michael
D. Webb


 


 


Dated:  September 14, 2005


 


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