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Exhibit 99.5
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made and entered into
as of July 31, 1999 by and between Xxxxxxx Xxxxxx, a resident of California
("Xxxxxx"), and VaxGen, Inc. a Delaware corporation (the "Company").
WITNESSETH:
WHEREAS, the Company desires to continue to employ Xxxxxx as its Senior
Vice President of Research and Development and Xxxxxx desires to be so employed;
and
WHEREAS, the Company and Xxxxxx desire to set forth in writing the
terms of their agreement with respect to Xxxxxx'x continued employment; and
WHEREAS, the Company and Xxxxxx desire to amend and restate Section 5
of the Amended and Restated Employment Agreement executed by and between Xxxxxx
and the Company on June 28, 1999 to clarify the terms therein contained; and
WHEREAS, this Agreement replaces and supersedes the Amended and
Restated Employment Agreement executed by and between Xxxxxx and the Company on
June 28, 1999:
NOW, THEREFORE. in consideration of the promises and of the mutual
covenants contained herein, the parties agree as follows:
1. Term. Xxxxxx'x employment, which began on November 15, 1997, will
continue in its initial term of three years, expiring on November 14, 2000.
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.
2. Duties. Xxxxxx will perform such executive and administrative
duties consistent with his position as Senior Vice President of Research and
Development 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 VaxGen. Xxxxxx will be responsible as Senior Vice President of Research and
Development for all activities regarding research in the basic sciences and in
clinical research (including laboratory clinical support) required for the
Company's development of its HIV vaccine, as well as other products. The Company
will provide to Xxxxxx an office, laboratory space and staff in South San
Francisco as are required for the performance of his duties. Xxxxxx agrees to
serve as Director of the Company and the Company agrees to cause Xxxxxx to be
elected to the Board of Directors.
3. Compensation. The Company will pay Xxxxxx an annual base salary
of $200,000. Xxxxxx'x annual base salary will be payable in equal installments
not less
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frequently than monthly. Xxxxxx shall be entitled to an annual bonus of up to
30% of salary, such bonus to be determined solely by the Company's Board of
Directors. Xxxxxx'x salary and bonus will be considered annually for potential
increase by the Compensation Committee of the Board of Directors.
4. Stock Options.
(a) Initial Stock Option Grant. Xxxxxx received incentive and
non-qualified options to purchase 200,000 (400,00 shares, pre-reverse split)
shares of Common Stock of VaxGen at $7.00 per share ($3.50 per share,
pre-reverse split) (with as many shares allocated to an incentive stock option
as is permissible under applicable laws). The stock options will continue to be
administered according to the VaxGen Stock Option Plan and shall vest over time
as indicated in the Stock Option Plan; provided, however, that the option
agreements shall provide that the vesting of the options shall accelerate in
full immediately upon occurrence of any of the following events: (i) Change of
Control (as defined below) of VaxGen; (ii) full enrollment of Phase III clinical
trials of VaxGen B/E and B/B vaccines or (iii) termination of Xxxxxx'x
employment without cause or by Xxxxxx for Good Reason (as defined below). Upon
an occurrence of event described in (iii) above, the right to exercise all
nonqualified stock options shall be extended to one year from the date of
termination.
(b) Stock Option Bonus. Xxxxxx shall be entitled to an annual
stock option bonus of a grant of up to 15,000 additional stock options, such
bonus to be determined solely by the Company's Board of Directors.
5. Success Bonus. In recognition of the success of the Company,
Xxxxxx shall receive a one-time success bonus. Success shall be considered to
have been achieved if either of the following tests is met (either of which
shall be an Event of Success): (i) the public market valuation of a share of the
Company's common stock, as computed on a 30 day trailing average based on the
average of the daily closing price of the Company's Common Stock over such
period as reported by the Nasdaq Stock Market, is equal to or greater than four
(4) times the valuation of the initial private placement ($7.00 per share, as
adjusted for the April 1999 reverse stock split); or (ii) there is an
acquisition of the Company through tender offer or otherwise in which all
shareholders have the opportunity to participate and realize a value equal to or
greater than four (4) times the valuation of the initial private placement
($7.00 per share, as adjusted for the April 1999 reverse stock split). The
Compensation Committee shall notify Xxxxxx when an Event of Success has
occurred. Upon the occurrence of an Event of Success, Xxxxxx shall be entitled
to receive a success bonus of 75,757 shares of common stock (as adjusted for the
April 1999 reverse stock split). All share and price figures set forth in this
provision shall be adjusted proportionately for stock splits, reverse stock
splits, dividends, combinations, consolidations or subdivisions of shares of the
Company's capital stock.
6. Change of Control. In the event the Company undergoes a change of
control (a "Change of Control") by virtue of any person or entity, or affiliated
group, of persons or entities, increasing its shareholding in the Company to a
level of 50% or
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more of the voting stock of the Company, this Agreement shall terminate and all
salary obligations to Xxxxxx outstanding in this Agreement shall be paid in
full.
7. 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.
8. Benefits. Xxxxxx shall have the right, on the same basis as other
members of senior management of VaxGen, to participate in and to receive
benefits under any of VaxGen'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 VaxGen's vacation, holiday and business
expense reimbursement policies.
9. Early Termination of Employment. Employment under this Agreement
will terminate prior to expiration of the term upon any of the following:
(a) Death. Xxxxxx'x employment hereunder shall terminate upon his
death.
(b) 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.
(c) 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 injurious to the Company.
(d) Termination by Xxxxxx. Xxxxxx may terminate his employment
hereunder for Good Reason. For purposes of this Agreement, the term "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 under this Agreement if not remedied within thirty
days after written notice from Xxxxxx.
10. Benefits Upon Termination.
(a) Voluntary Termination, Termination for Cause Due to Death or
Disability. In the event of Xxxxxx'x voluntary termination from employment with
VaxGen 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 VaxGen other than those earned under paragraph 3 above through the date of
his termination or in the case of any stock options, vested through the time of
his termination.
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(b) Termination Without Cause or For Good Reason. If Xxxxxx'x
employment is terminated by VaxGen for any reason other than for cause or by
Xxxxxx for Good Reason, Xxxxxx shall be entitled to the following separation
benefits:
(i) all accrued compensation (including pro-rated target
bonus) and benefits through the date of termination;
(ii) continued payment of Xxxxxx'x salary at his Base Salary
rate, less applicable withholding, for twelve (12) months following his
termination; and
(iii) acceleration of vesting of his options as provided in
paragraph 4(a) above.
11. Restrictive Covenants.
(a) 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 limitations, 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 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 of 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.
(b) 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.
(c) 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.
(d) 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
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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 with the Company, and for a one-year period following
termination of employment, 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 activity that the Company is
developing or exploiting during Xxxxxx'x employment with the Company. Nothing
contained in this Agreement shall be construed to prevent Xxxxxx from 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.
12. Indemnification. The Company will indemnify Xxxxxx to the fullest
extent permitted by law and will hold him 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's fees.
13. 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.
14. 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.
Attn: Xxxxxx X. Xxxxxxx
0000 Xxxxxx Xxxx., Xxxxx 000
Xxxxxxxx, XX 00000
Copy to: Xx. Xxxxxxx Xxxxxx
00 Xxxxxxxx Xxxxx
Xxxxxxx Xxxxxx, XX 00000
15. 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
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will not affect any other provision or the interpretation of this Agreement in
any other jurisdiction.
16. 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.
17. 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.
18. 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.
19. 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 construed as a waiver, nor shall it deprive that party of the right
to require strict compliance thereafter.
20. Survival. The obligations set forth in paragraphs 11(a) and 12
shall survive termination of this Agreement.
21. 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.
22. 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: /s/ XXXXXX X. XXXXXXXX
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Its: Chairman
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/s/ XXXXXXX XXXXXX
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Xxxxxxx Xxxxxx
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