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EXHIBIT 10.6
EMPLOYMENT AGREEMENT
This Agreement, by and between XXXXXX XXXXXX, M.D. ("Employee") and
Caliper Technologies Corp. (the "Company"), is made as of January 18, 1999.
In consideration of the mutual covenants contained in this Agreement, and
in consideration of the employment of Employee by the Company, the parties agree
as follows:
1. Duties and Scope of Employment
(a) Position. The Company agrees to employ Employee under the terms of
this Agreement in the position of President and Chief Executive
Officer beginning on February 28, 1999 (the "Start Date"). As
President and Chief Executive Officer, Employee shall be the
principal executive officer of the Company, shall have full
responsibility for managing the Company, and shall report directly
to the Board of Directors of the Company.
(b) Obligations. Employee shall devote his efforts full time to the
Company, and shall not engage in any outside activities that
interfere or conflict with Employee's responsibilities to the
Company or are inconsistent with the Company's policies as
established by the Board of Directors from time to time.
Notwithstanding the foregoing, nothing shall preclude Employee from
serving with prior notice to and approval of the Board, on the
boards of directors of a reasonable number of other corporations.
(c) Director. Upon joining the Company, Employee shall become a member
of the Company's Board of Directors. As long as Employee serves as
Chief Executive Officer, Employee shall be nominated to serve on the
Board of Directors in connection with any meeting to elect the same.
Employee agrees to submit immediately his resignation as a director
if Employee ceases to be President and Chief Executive Officer.
2. Compensation
(a) Base Salary. Beginning on the Start Date, Employee shall be paid a
base salary of $350,000 per year, payable semi-monthly in accordance
with the Company's payroll policies and subject to standard payroll
deductions and withholdings. The Board of Directors shall review
Employee's performance and the Company's financial and operating
results on at least an annual basis, and may increase Employee's
base salary as in its reasonable discretion deems appropriate based
on such review.
(b) Annual Bonuses. Within the first 60 days following the Start Date,
the Board and Employee shall prepare and agree on a reasonable bonus
plan setting forth reasonable performance goals in various areas,
such as delivering research contracts, defining company strategy and
goals, preparing annual budgets,
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developing strategic relationships and developing products, to be
achieved in calendar year 1999. The intent of the bonus plan is that
Employee's complete achievement of such goals shall result in a
bonus equaling 50% of Employee's Base Salary.
During the 1999 annual performance review (which shall occur on or
before January 31, 2000), the Board shall determine the extent to
which performance goals have been achieved and shall award Employee
the appropriate bonus based on the bonus plan. If a bonus is
awarded, the bonus shall be delivered to Employee within 60 days of
the date that Employee is provided with his annual performance
review.
For each subsequent fiscal year the Company, Employee shall
participate in any annual incentive plan or program of the Company
at a level commensurate with his positions and responsibilities at
the Company. Under such plans and programs, Employee shall have an
on-plan target bonus opportunity each year of at least 50% of his
then current annualized Base Salary, payable in that amount if the
performance goals established for the relevant year are completely
met. If such performance goals are not completely met, Employee
shall receive a lesser amount (or nothing) as determined in
accordance with applicable guidelines. Employee shall receive his
annual bonus payment no later than other senior executives receive
their annual bonus payments.
3. Equity and Housing Loan Forgiveness
(a) Employee will be granted an incentive stock option which shall be
incentive stock options to the maximum extent permitted by law to
purchase 1,000,000 shares of Common Stock of the Company at the fair
market value of such shares on the Start Date. The fair market value
of common shares on December 15, 1998 was $0.62. The shares subject
to the option will vest over a five-year period vesting at a rate of
1/60th of the shares per month of employment, except as otherwise
provided in Sections 3 and 8. The option will be granted pursuant to
the Company's 1996 Stock Incentive Plan and the Company's standard
form of stock option agreement except as such standard form of
agreement is modified by the terms of this agreement. Such shares
will represent approximately 3.3% of the approximately 30 million
shares of Common and Preferred Stock outstanding.
(b) If any Adjustments Upon Changes in Stock are made under Section 13
of the Company's 1996 Stock Incentive Plan, such adjustments shall
apply to Employee as they do to all other employees of the Company
except that the eighteen (18) month accelerated vesting mentioned in
subsection 13(b) shall be replaced for Employee by twenty-four (24)
months if a Change of Control is to be completed for a transaction
price that is greater than $200 million and by thirty (30) months if
a Change of Control is completed for a transaction price that is
greater than $300 million. Such adjustments shall apply to the Stock
Award granted in subsection 3(a) of this Employment Agreement and to
any other Stock Awards granted to Employee. If the Change of Control
occurs within twenty-four (24)
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months of the Start Date and either 18 months or 24 months or 30
months accelerated vesting is granted, then either 18 or 24 or 30
months, respectively, of the Housing Loan described in Section 4(f)
will be forgiven at the rate of 1/60th of the housing loan per
month. Such forgiveness shall not be grossed up for tax purposes.
4. Employee Benefits- Closing Costs- Attorney Fees, Housing Loan
(a) Employee shall be entitled to the full benefits for which Employee
is eligible under the employee benefit plans and executive
compensation programs maintained by the Company, including medical,
dental, disability and life insurance benefits.
(b) Employee shall be reimbursed for normal real estate commissions,
closing costs and reasonable packing, shipping, storage, unpacking
and insurance expenses in connection with selling his current
residence and obtaining new permanent living quarters near the
Company. Employee shall also be reimbursed for up to two points on a
mortgage on the new permanent residence.
(c) Employee shall be reimbursed for normal temporary housing costs
incurred by the employee in connection with signing this Employment
Agreement for up to six months.
(d) Employee and his immediate family shall be reimbursed for normal
travel and living expenses for two weekend trips to the Palo Alto
area for the purpose of purchasing a new principal residence.
(e) Employee shall be reimbursed for normal travel expenses for two
weekend trips per month to the San Diego area from the Start Date to
the earlier of August 31, 1999 or the moving of his family to the
Palo Alto area.
(f) Employee shall be entitled to a housing loan of up to $500,000 in
connection with retaining living quarters near the Company. Such
loan will be made to the Employee by the Company with a maximum term
of six (6) years (with the due date for full repayment accelerated
upon voluntary termination of employment to such date of
termination) at an annual interest rate of 4.64%, compounded
annually, (or such higher interest as shall be necessary to avoid
imputed income to Employee under all applicable sections of the
Code). Portions of such loan and interest due may be forgiven by the
Board of Directors based upon annual Employee performance reviews
each year. Any forgiveness granted will be grossed up for tax
purposes by paying Employee an additional 75% of the amount of the
debt forgiveness to assist with the payment of tax liability for
such forgiveness. A minimum of 10% of the total loan will be
forgiven each year if Employee is retained into the coming year. It
is the intent, but not the obligation, of the Board to forgive this
loan based upon good performance over five years.
(g) Employee shall be entitled to a monthly mortgage assistance payment
to support up to $500,000 of mortgage principal on a 30 year
mortgage. Such payment shall
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be grossed up for tax purposes by paying Employee an additional 75%
of the amount of the mortgage assistance payment to assist with the
payment of tax liability for such mortgage assistance payment. Such
grossed up payment shall start with the first month such payment is
due and shall continue for twelve months at 100% of the payment,
shall continue for the next twelve months at 80% of the payment, for
the next twelve months at 60% of the payment, for the next twelve
months at 40% of the payment and for the next twelve months at 20%
of the payment, at which time such payments shall end. Such payments
shall also end at the termination of Employee's employment at
Caliper.
5. Proprietary Information Agreement
Employee agrees to sign and comply with the Company's Proprietary
Information and Inventions Agreement.
6. Employment at Will: Limitation of Remedies
The Company and Employee acknowledge that Employee's employment is at will
and can be terminated by either party at any time with or without cause.
Except as provided in Section 9, if Employee's employment terminates for
any reason, Employee shall not be entitled to any payments, benefits,
damages, awards or compensation other than as provided by this Agreement.
This at-will relationship supersedes any previous written or oral
statements by the parties and cannot be changed except in writing signed
by Employee and duty authorized officer of the Company.
7. Term of Employment
(a) Voluntary Termination by Employee. Employee may terminate his
employment voluntarily giving the Company 30 days' advance notice in
writing. No compensation or payments will be paid or provided
following the date when such a termination is effective. In lieu of
continuing to employ Employee through the date when such a
termination is effective, the Company shall have the option to
terminate Employee's employment immediately upon receipt of such
notice, provided that the Company shall be obligated to continue to
pay Employee his base salary, benefits and vacation accruals through
the date termination otherwise would have been effective had the
Company not exercised such option. Termination by the Company
pursuant to this Section 7(a) shall not be deemed to be termination
without Cause.
(b) Termination by the Company. The Company may terminate Employee's
employment at any time, for any reason or for no reason.
(i) Termination for Cause. If the Company terminates Employee's
employment for Cause, no compensation or payments will be
provided to Employee following the date when such a
termination of employment is effective. Any remaining housing
loan shall be converted to a five year note at prime plus
1.0%, compounded annually, and the first payment shall begin
one year from the termination date.
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(ii) Termination Without Cause. If the Company terminates
Employee's employment without Cause, the provisions of Section
8 and the Definitions of Section 9 shall apply. Any remaining
housing loan shall be converted to a five year note at prime
plus 1.0%, compounded annually, and the first payment shall
begin one year from the termination date.
8. Payment Upon Termination Pursuant to Termination Without Cause and
Constructive Termination
(a) If Employee's employment is terminated without Cause, or voluntarily
by Employee within three months following a Constructive
Termination, Employee shall be entitled to receive the following:
(i) Severance Payment. The Company shall continue to pay to
Employee his then current salary for twelve months in monthly
installments, and benefits, following the date when such a
termination of employment is effective, provided that: (A) the
Company's obligation to continue to pay such base salary shall
cease as of the date Employee commences full-time employment
with another business entity (and Employee agrees to provide
notice of such employment within three business days of
accepting such an offer); and (B) Employee executes a waiver
and release of claims substantially in the form set forth in
Exhibit A hereto.
(ii) Acceleration of Stock Vesting. If such termination without
Cause or voluntary termination following a Constructive
Termination shall occur after the six month anniversary of the
Start Date, all of the shares that would become vested within
twelve months of such date of termination under the terms of
the options described in Section 3 and any other options
granted to Employee in the future will be deemed to have
vested provided Employee executes a waiver and release of
claims substantially in the form set forth in Exhibit A
hereto.
(b) If Employee's employment is terminated without Cause within thirteen
months after a Change in Control, or is voluntarily terminated by
Employee following a Constructive Termination within thirteen months
after a Change of Control, Employee shall be entitled to receive the
following:
(i) Severance Payment. The Survivor shall continue to pay to
Employee his then current salary for twelve months in monthly
installments, and benefits, following the date when such a
termination of employment is effective, provided that: (A) the
Survivor's obligation to continue to pay such base salary
shall cease as of the date Employee commences full-time
employment with another business entity (and Employee agrees
to provide notice of such employment within three business
days of accepting such an offer); and (B) Employee executives
a waiver and release of claims substantially in the form set
forth in Exhibit A hereto.
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(ii) Acceleration of Stock Vesting and Housing Loan Forgiveness
after a Change of Control if the Survivor assumes the Stock
Awards or substitutes similar Stock Awards. If such
termination without Cause or voluntary termination following a
Constructive Termination shall occur, all of the shares that
would become vested within twenty-four (24) months (thirty
(30) months if a Change of Control is completed for a
transaction price that is greater than $300 million) of the
Termination Date under the terms of the options described in
Section 3 and any other options granted to Employee in the
future, will be deemed to have vested. If the Change of
Control occurs within twenty-four (24) months of the Start
Date and either 24 months or 30 months accelerated vesting is
granted then either 24 or 30 months, respectively, of the
Housing Loan described in Section 4(f) will be forgiven at the
rate of 1/60th of the housing loan per month provided Employee
executes a waiver and release of claims substantially in the
form set forth in Exhibit A hereto. Such forgiveness shall not
be grossed up for tax purposes.
9. Parachute Payment
Anything in this Agreement to the contrary nonwithstanding, if the
aggregate of the amounts due Employee under this Agreement and any other
plan, program, or arrangement of the Company or its Affiliates constitutes
a "Parachute Payment" as such term is defined in Section 280G of the
Internal Revenue Code of 1986 (the "Code"), and the amount of the
Parachute Payment, reduced by all Federal, state and local taxes
applicable to such payments which are considered to be contingent on a
Change in Control, including the excise tax imposed pursuant to Section
4999 of the Code, is less than the amount Employee would receive, after
taxes, if he were paid only a dollar amount equal to three times his Base
Amount as defined in Section 280G(b)(3) of the Code less $1.00, then the
payments made to Employee under this Agreement which are contingent on a
Change of Control shall be reduced to an amount which, when added to the
aggregate of all other payments to Employee which are contingent on a
Change of Control, will make the total fair market value of such payments
equal to three times his Base Amount less $1.00, all as determined under
Section 280G of the Code.
10. Definition
As used in this Agreement, the following definitions shall apply
(a) "Cause" shall mean the occurrence of any of the following: (i)
Employee engages in conduct that constitutes willful gross neglect
or willful gross misconduct in carrying out his duties under this
Agreement, resulting, in either case, in material economic harm to
the company, unless Employee believed in good faith that such
conduct was in, or not opposed to, the best interests of the
Company; (ii) any unjustified refusal to follow reasonable
directives duly adopted by the Board; or (iii) conviction of a
felony crime involving moral turpitude. Written notice shall be
provided and Employee shall have a 30-day period to correct.
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(b) "Change in Control" shall mean (i) any merger or consolidation of
the Company with, or any sale of all or substantially all of the
Company's assets to any other unaffiliated corporation or entity,
unless as a result of such merger, consolidation or sale of assets
the holders of the Company's voting securities prior thereto hold at
least 50 percent of the total voting power in the surviving or
successor corporation or entity, or (ii) the acquisition by any
Person (other than any employee benefit plan, or related trust,
sponsored or maintained by the Company or an affiliate of the
Company) as Beneficial Owner (as such terms are defined in the
Securities Exchange Act of 1934, as amended, or the rules and
regulations thereunder), directly or indirectly, of securities of
the Company representing 50 percent or more of the total voting
power represented by the Company's then outstanding voting
securities. For purposes of this section 10(b), the term "affiliate"
shall mean any person which controls the Company, which is
controlled by the Company, or which is under common control with the
Company within the meaning of Rule 144(a)(1) promulgated under the
Securities Act of 1933, as amended. Notwithstanding any provision in
this agreement to the contrary, the term "affiliate" shall not
include the Hewlett-Packard Company or Dow Corning Corporation or
any subsidiary of either company.
(c) "Constructive Termination" shall mean either (i) a substantial
reduction in Employee's duties, responsibilities or position or (ii)
any substantial downward change in Employee's compensation or
benefits, except for compensation and benefit changes which are
consistent with downward changes for all Company executives.
11. Other Agreements
Employees represents and warrants the Employee's performance of his duties
for the Company will not violate any agreements, obligations or
understandings that he may have with any third party or prior employer.
Employee agrees not to make any unauthorized disclosure or use, on behalf
of the Company, of any confidential information belonging to any of
Employee's former employers. Employee also represents that he is not in
authorized possession of any materials containing a third party's
confidential and proprietary information. During Employee's employment
with the Company, Employee may make use of information general known and
used by persons with training and experience comparable to Employee's own,
and information which is common knowledge in the industry or is otherwise
legally available in the public domain.
12. Governing Law
This Agreement shall be governed by the laws of the State of California as
applied to agreements and entered into by California residents and to be
performed entirely within the State of California.
13. Expiration of Offer
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This offer of employment expires at midnight on January 31, 1999.
14. Entire Agreement
This Agreement constitutes the complete, final exclusive embodiment of the
entire agreement between Employee and the Company with respect to the
terms and conditions of Employee's employment. Employee represents and
warrants that he is entering into this Agreement voluntarily, and without
reliance upon any promise, warranty or representation, written or oral,
other than those expressly contained herein. This Agreement supersedes any
other such promises, warranties, representations or agreements. This
Agreement may not be amended or modified except by a written instrument
signed by Employee and duly authorized officer of the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
CALIPER TECHNOLOGIES CORP.
/s/ XXXXX XXXXXXXX
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XXXXX XXXXXXXX
CHAIRMAN
/s/ XXXXXX XXXXXX, M.D.
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XXXXXX XXXXXX, M.D.
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EMPLOYMENT AGREEMENT AND RELEASE
Exhibit A
Except as otherwise set forth in this Employee Agreement and Release (the
"Agreement") and Section 9 of that certain Employment Agreement, dated as of
January 1, 1999 between the undersigned and Caliper Technologies Corp. (the
"Company"), I hereby release, acquit and forever discharge the company, its
parents and subsidiaries, and their officers, directors, agents, servants,
employees, attorneys, shareholders, successors, assigns and affiliates, of and
from any and all claims, liabilities, demands, causes of action, costs,
expenses, attorneys fees, damages, indemnities and obligations of every kind and
nature, in law, equity, or otherwise, known and unknown, suspected and
unsuspected, disclosed and undisclosed, arising out of or in any way related to
agreements, events, acts or conduct at any time prior to and including the
execution date of this Agreement, including but not limited to: all such claims
and demands directly or indirectly arising out of or in any way connected with
my employment with the Company or the termination of that employment; claims or
demands related to salary, bonuses, commissions stock, stock options, or any
other ownership interests in the company, vacation pay, fringe benefits, expense
reimbursements, severance pay, or any other form of compensation; claims
pursuant to any federal, state or local law, statute, or cause of action
including, but not limited to, the federal civil rights Act of 1964, as amended;
the federal Americans with Disabilities ("ADEA"); the California Fair Employment
and Housing Act, as amended; tort law; contract law; wrongful discharge;
discrimination; harassment; fraud; defamation; emotional distress; and breach of
the implied covenants of good faith and fair dealing.
I acknowledge that I am knowingly and voluntarily waiving and releasing
any rights I may have under ADEA. I also acknowledge that the consideration
given for the waiver and release in the preceding paragraph hereof is in
addition to anything of value to which I was already entitled. I further
acknowledge that I have been advised by this writing, as required by the ADEA,
that; (a) my waiver and release do not apply to any rights or claims that may
arise after the execution date of this Agreement; (b) I have been advised hereby
that I have the right to consult with an attorney prior to executing this
Agreement; (c) I have twenty-one (21) days to consider this Agreement (although
I may choose to voluntarily execute this Agreement earlier); (d) I have seven
(7) days following the execution of this Agreement by the parties to revoke the
Agreement; and (e) this Agreement shall not be effective until the date upon
which the revocation period had expired, which shall be the eighth day after
this Agreement is executed by me.
In giving this release, which includes claims which may be unknown to me
at present, I acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR." I hereby expressly waive and
relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to my release of any claims I may
have against the Company.
Date: January 18, 1999 By: /s/ XXXXXX XXXXXX, M.D.
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XXX XXXXXX, M.D.
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