Exhibit 10.26
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into on September 5,
2000, by and between Xxxxxx Xxxxxx, a resident of New Jersey ("Baxter"), and
VaxGen, Inc., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Company desires to employ Xxxxxx as General Counsel, Senior Vice
President, and Baxter desires to be so employed;
WHEREAS, the Company and Baxter desire to set forth in writing the terms of
their agreement with respect to Xxxxxx'x employment with the Company;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
contained herein, the parties agree as follows:
1. Employment. The Company hereby employs Xxxxxx as its General Counsel, Senior
Vice President, and Baxter hereby accepts such employment upon the terms and
conditions set forth in this Agreement.
2. Term. Xxxxxx'x employment will begin on September 5, 2000, and will continue
for an initial term of four years ending September 4, 2004. Thereafter, Xxxxxx'x
employment will be automatically renewed for successive one-year terms, unless
notice of termination is given by either party to the other at least thirty days
before the expiration of the then current term.
3. Duties. Xxxxxx will perform such executive and administrative duties
consistent with his position as General Counsel, Senior Vice President of the
Company as are reasonably assigned to him by the Board and will be given such
executive and administrative powers and authority as may be needed to carry out
those duties. Xxxxxx shall report directly to the President of the Company.
Xxxxxx will be responsible for managing and coordinating all legal activities of
the Company, work with the CEO to coordinate all business development
activities, and serve as a member of the executive management committee. Xxxxxx
will also serve as an Assistant Corporate Secretary to the board of directors.
The Company will provide to Xxxxxx an office and staff in Brisbane, CA as are
required for the performance of his duties.
4. Compensation. The Company will pay Xxxxxx an annual base salary of $192,000
for the first year of employment. Xxxxxx'x annual base salary will be
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payable semi-monthly. Xxxxxx will have the opportunity for an annual cash bonus
of up to 20% of base salary and up to 10,000 options under the Company's stock
option plan. The CEO and Compensation Committee of the Board of Directors will
consider Xxxxxx'x salary and bonuses annually for potential increase.
5. Stock Options.
(a) Initial Stock Option Grant: Xxxxxx shall receive incentive and
non-qualified options to purchase 105,000 shares of Common Stock of VaxGen
at the fair market value price on the date of the grant (with as many
shares allocated to an incentive stock option as is permissible under
applicable laws). The stock options will be administered according to the
VaxGen's 1996 Stock Option Plan. The options shall vest according to the
following schedule: (a) The first 25% or 26,250 shares shall vest
immediately upon the first date of full-time employment; and (b) the 75% or
78,750 will vest at a rate of 33% on the following three successive
anniversary dates of the stock grant. The options shall accelerate in full
immediately upon occurrence of any of the following events: (i) Change of
Control (as defined below) of VaxGen, or (ii) termination of Xxxxxx'x
employment without cause or by Xxxxxx for Good Reason (as defined below).
Upon an occurrence of event described in (ii) above, the right to exercise
all nonqualified stock options shall be extended to one year from the date
of termination.
(b) Change of Control. In the event the Company undergoes a change of
control (a "Change of Control") by virtue of 50% or more of its outstanding
equity and underlying options and warrants) in a transaction or series of
transactions occurring in any 12 month period, and whereby Xxxxxx loses his
position or if a major change in senior management of the Company occurs,
Xxxxxx shall receive a one time bonus of 31,500 shares of common stock.
6. Expenses. The Company will reimburse Xxxxxx for travel, entertainment and
other expenses reasonably incurred by him in connection with his employment
under this Agreement upon presentation of appropriate vouchers or receipts.
(a) Relocation Allowance. The Company shall provide Xxxxxx with a
relocation allowance of up to $35,000. Xxxxxx shall provide the Company
with valid receipts for the cost of his relocation and he shall be
reimbursed within the company's normal reimbursement schedule. If Xxxxxx
voluntarily terminates his employment with the Company within one year of
his date of hire, he will be required reimburse the Company for 50% of the
total relocation costs. If the Company terminates his employment
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without cause or for good reason within one year of Xxxxxx'x date of hire,
no reimbursement of relocation expenses will be required.
7. Benefits. Xxxxxx shall have the right, on the same basis as other members
of senior management of Company, to participate in and to receive benefits
under any of Company's employee benefit plans, in effect from time to time.
In addition, Xxxxxx shall be entitled to the benefits afforded to other
members of senior management under Company's paid time off, holiday and
business expense reimbursement policies.
(a) Housing Loan. The Company shall provide Xxxxxx with an interest-free
loan of up to $75,000 to assist him in purchasing a home in the Bay
Area. However, the Company will be required to impute interest by
using a fair market value rate and recording the free interest as
income on Xxxxxx'x annual W-2 statement of earnings. Xxxxxx shall
execute a promissory note with the Company upon receiving the borrowed
funds. The loan shall be collateralized by Xxxxxx'x vested stock
options. Any net proceeds due to Xxxxxx'x exercising of his stock
options shall be first used to repay the obligation set forth in the
promissory note.
8. Early Termination of Employment. Employment under this Agreement will
terminate prior to expiration of the term upon any of the following:
(b) Death. Xxxxxx'x employment hereunder shall terminate upon his death.
(c) Disability. The Company may terminate Xxxxxx'x employment hereunder if
he has been unable to perform his duties hereunder for a period of six
consecutive months and if he has not resumed on a full-time basis the
performance of such duties within thirty days after written notice
from the Company of its intent to terminate his employment due to
disability.
(d) Cause. The Company may terminate Xxxxxx'x employment hereunder for
Cause. For purposes of this Agreement, the term "Cause" means (i)
willful and repeated failure by Xxxxxx to perform his duties hereunder
which is not remedied within thirty days after written notice from the
Company, (ii) conviction of Xxxxxx for a felony, or (iii) Xxxxxx'x
dishonesty that is demonstrably and materially injurious to the
Company.
(e) Termination by Xxxxxx. Xxxxxx may terminate his employment hereunder
for Good Reason. For purposes of this Agreement, the term
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"Good Reason" shall mean (i) the Company substantially reducing
Xxxxxx'x duties, position, authority or responsibility hereunder and
not reinstating the same within thirty days after written notice from
Xxxxxx, or (ii) breach by the Company of its obligations this
Agreement if not remedied within thirty days after written notice from
Xxxxxx.
9. Benefits Upon Termination.
(b) Voluntary Termination, Termination for Cause for Due to Death or
Disability. In the event Xxxxxx'x voluntary termination from
employment with Company or termination of Xxxxxx'x employment as a
result of his death or disability or for Cause, Xxxxxx shall be
entitled to no compensation or benefits from Company other than those
earned under paragraph 7 above through the date of his termination or
in the case of any stock options, vested through the date of his
termination.
(c) Termination Without Cause or for Good Reason. If Xxxxxx'x employment
is terminated by Company for any reason other than for cause or by
Xxxxxx for Good Reason, Xxxxxx shall be entitled to the following
separation benefits:
(ii) all accrued compensation (including pro-rated target bonus) and
benefits through the date of termination;
(iii) continued payment of Xxxxxx'x salary at his Base Salary rate,
less applicable withholding, for twelve (12) months following
his termination; and
(iv) acceleration of vesting of his options as provided in paragraphs
4 and 5 above.
10. Restrictive Covenants.
(b) Confidential Information. Xxxxxx acknowledges that, during the course
of his employment with the Company, he will have access to
confidential information and biological materials not generally known
outside the Company (whether conceived or developed by Xxxxxx or
others) and confidential information and biological materials
entrusted to the Company by third parties, including, without
limitation, trade secrets, techniques, formulae, biological materials,
marketing and other business plans, data, strategies and forecasts
(collectively, "Confidential Information"). Any Confidential
Information conceived or developed by Xxxxxx during employment will be
the exclusive
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property of the Company. Except as may be necessary in connection with
the Company's business, Xxxxxx will not (during or after his
employment with the Company) disclose Confidential Information to any
third person, firm or entity or use Confidential Information for his
own purposes or for the benefit or any third person, firm or entity.
In his work for the Company, Xxxxxx will refrain from unauthorized use
or disclosure of information and biological materials owned by former
employers or other third parties.
(c) Inventions. Xxxxxx will promptly disclose to the Company any
discoveries, inventions, formulae and techniques, whether or not
patentable, made, conceived or first reduced to practice by him,
either alone or together with others, during his employment with the
Company (collectively, the "Inventions"). Xxxxxx hereby assigns to the
Company all of his right, title and interest in and to any Inventions.
Xxxxxx will execute such documents and take such other actions as may
be reasonably requested by the Company (at the Company's expense) to
enable the Company to apply for, obtain, maintain and enforce patents
on any of the Inventions or to facilitate the transfer or assignment
of any of the Company's rights with respect to the Inventions and
patents.
(d) Company Documents. Upon the termination of his employment, Xxxxxx will
deliver to the Company all documents and other tangible property
containing Confidential Information, which are then in his possession
or control.
(e) Covenant Not to Compete. Xxxxxx acknowledges that his duties hereunder
and the services he will provide to the Company are of a special,
unique, unusual and extraordinary character, which gives this
Agreement particular value to the Company, and that it would be
difficult to employ any individual or individuals to replace Xxxxxx in
the performance of such duties and services. Therefore, during
employment and for a period of one year after the termination of his
employment with the Company, Xxxxxx will not, directly or indirectly,
enter into, organize, control, engage in, be employed by, serve as a
consultant to, be an officer or director of or have any direct or
indirect investment in any business, person, partnership, association,
firm or corporation engaged in any business activity (including, but
not limited to, research, development, manufacturing, selling,
leasing, licensing or providing services) which is competitive with
the business and/or scientific activities that the Company is
developing or exploiting during Xxxxxx'x employment with the Company.
Nothing contained in this Agreement shall be construed to prevent
Baxter from
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owning at any time, directly or indirectly, as much as 5% of any class
of equity securities issued by any corporation or other entity which
are publicly traded and registered under the Securities and Exchange
Act of 1934, as amended.
11. Indemnification. The Company will indemnify Baxter to the fullest extent
permitted by law and will hold harmless from and against any claim, liability or
expense (including reasonable attorneys' fees) made against or incurred by
Xxxxxx in connection with his relationship with the Company. This obligation
will include, without limitation, prompt payment in advance of any and all costs
of defending the same, including attorney fees.
12. No Impediment to Agreement. Except as otherwise disclosed herein, Xxxxxx
hereby represents to the Company that he is not, as of the date hereof, and will
not be, during employment with the Company, employed under contract, oral or
written, by any other person, firm or entity and is not and will not be bound by
the provisions of any restrictive covenant or confidentiality agreement which
would constitute an impediment to, or restriction upon, his ability to enter
into this Agreement and to perform the duties of his employment.
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13. Notices. Any notice under this Agreement must be in writing and will be
deemed to have been given when personally delivered or mailed by first-class or
express mail to the recipient at the following address (or such other address as
shall be specified by prior written notice):
To the Company: VaxGen, Inc.
0000 Xxxxxx Xxxx., Xxxxx 000
Xxxxxxxx, XX 00000
Copy to: Xxx Xxxxxxxx, Esq.
Xxxxxxx Xxxxxxxx, X.X.
Xxxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
To Xxxxxx Xxxxxx: Xxxxxx Xxxxxx
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17. Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law. If
any provision of this Agreement is held to be invalid, illegal or unenforceable
in any respect under any applicable law in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or the
interpretation of this Agreement in any other jurisdiction.
18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the law of
conflicts.
19. Successors and Assigns. The services and duties to be performed by Xxxxxx
hereunder are personal and may not be assigned. This Agreement shall be binding
upon and inure to the benefit of the Company, its successors and assigns, and
Xxxxxx, his heirs and representatives.
20. Complete Agreement. This Agreement constitutes the entire agreement between
the parties concerning the subject matter hereof and supersedes all prior
agreements between the parties concerning the subject matter hereof.
21. Waiver. Failure by either party to insist upon strict adherence to any one
or more of the provisions of this Agreement on one or more occasions shall not
be
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construed as a waiver, nor shall it deprive that party of the right to require
strict compliance thereafter.
22. Survival. The obligations set forth in paragraph 13 shall survive
termination of this Agreement.
23. Amendments. No amendment hereto, or waivers or releases of obligations or
liabilities hereunder, shall be effective unless agreed to in writing by the
parties hereto.
24. Withholding. The Company may deduct and withhold from the payments to be
made to Xxxxxx hereunder any amounts required to be deducted and withheld by the
Company under the provisions of any statute, law, regulation or ordinance now or
hereafter enacted.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
date first above written.
VaxGen, Inc.
By:
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Its:
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Xxxxxx Xxxxxx
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