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EXHIBIT 10.6
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of September 29, 1999, by and between
βββββββ� β�. βββββ� (the "EXECUTIVE") and VIROLOGIC, INC., a Delaware corporation
(the "COMPANY").
1. DUTIES AND SCOPE OF EMPLOYMENT.
(a) POSITION. For the term of his employment under this Agreement
("EMPLOYMENT"), the Company agrees to employ the Executive in the position of
Chairman and Chief Executive Officer. The Executive shall report to the
Company's Board of Directors (the "Board").
(b) OBLIGATIONS TO THE COMPANY. During the term of his
Employment, the Executive shall devote his full business efforts and time to the
Company; provided, however, that this shall not preclude the Executive from
serving as a non-executive member of the board of directors of up to three other
companies to the extent such other companies do not compete with the Company and
that such service does not materially impact the ability of the Executive to
fulfill his obligations to the Company. The Executive shall comply with the
Company's policies and rules, as they may be in effect from time to time during
the term of his Employment.
(c) NO CONFLICTING OBLIGATIONS. The Executive represents and
warrants to the Company that he is under no obligations or commitments, whether
contractual or otherwise, that are inconsistent with his obligations under this
Agreement. The Executive represents and warrants that he will not use or
disclose, in connection with his employment by the Company, any trade secrets or
other proprietary information or intellectual property in which the Executive or
any other person has any right, title or interest and that his employment by the
Company as contemplated by this Agreement will not infringe or violate the
rights of any other person or entity. The Executive represents and warrants to
the Company that he has returned all property and confidential information
belonging to any prior employers.
(d) COMMENCEMENT DATE. The Executive shall commence Employment
with the Company on a part-time basis starting on October 4, 1999 and shall
commence Employment with the Company on a full-time basis starting on November
1, 1999.
2. CASH AND INCENTIVE COMPENSATION.
(a) SALARY. The Company shall pay the Executive as compensation
for his services a base salary at a gross annual rate of $300,000, payable in
accordance with the Company's standard payroll schedule. (The compensation
specified in this Subsection (a), together with any increases in such
compensation that the Company may grant from time to time, is referred to in
this Agreement as "Base Compensation.")
(b) INCENTIVE BONUSES. The Executive shall be eligible to be
considered for an annual incentive bonus as part of the Company's bonus program
based on objective or subjective criteria established by the Board after
consultation with Executive. Such bonus shall be contingent upon Executive's
continued employment through the end of the bonus period and
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Executive shall have no right to any pro rata portion of the bonus. The
determinations of the Board with respect to such bonus shall be final and
binding.
(c) STOCK GRANTS.
(i) In consideration of Executive's service to date as a
member of the Board, and subject to the approval of the Board, the Company shall
grant to the Executive a stock bonus award of 300,000 shares of the Company's
Common Stock. Such stock bonus award shall be granted as soon as reasonably
practicable after the date of this Agreement, but in no event later than
September 30, 1999. The shares of stock granted pursuant to such stock bonus
award shall be fully vested and not subject to repurchase by the Company. In
addition, the Company will pay to Executive a cash bonus in the gross amount of
$180,000 on January 15, 2000 and a cash bonus in the gross amount of $180,000 on
April 15, 2000. Such cash bonuses shall be subject to the Company's standard
withholding policies and procedures.
(ii) Subject to the approval of the Board, the Company
shall grant to the Executive an incentive stock option under the Company's 1996
Stock Plan covering 300,000 shares of the Company's Common Stock. Such incentive
stock option shall be granted as soon as reasonably practicable after the date
of this Agreement, but in no event later than October 10, 1999. The per share
exercise price of the option will be equal to the per share fair market value of
the common stock on the date of grant, as determined by the Board of Directors.
The term of such option shall be 10 years, subject to earlier expiration in the
event of the termination of the Executive's Employment. The Executive shall vest
in 60,000 of the option shares on December 31, 1999 and an additional 5,000 of
the option shares on the last day of each month of continuous service
thereafter.
(iii) Subject to the approval of the Board, the Company
shall grant the Executive a non-qualified stock option covering 500,000 shares
of the Company's Common Stock. Such option shall be granted as soon as
reasonably practicable after the date of this Agreement, but in no event later
than October 10, 1999. The per share exercise price of the option will be equal
to the per share fair market value of the common stock on the date of grant, as
determined by the Board of Directors. The term of such option shall be 10 years,
subject to earlier expiration in the event of the termination of the Executive's
Employment. The Executive shall vest in 25% of the option shares after the first
12 months of continuous service and shall vest in the remaining option shares in
equal monthly installments over the next three years of continuous service. Such
option will include an early exercise provision that allows Executive to
exercise the option as to vested and unvested shares, subject to a right of
repurchase with respect to unvested shares.
(iv) Subject to the approval of the Board, the Company
shall grant the Executive an additional non-qualified stock option covering
500,000 shares of the Company's Common Stock. Such option shall be granted as
soon as reasonably practicable after the date of this Agreement, but in no event
later than October 10, 1999. The per share exercise price of the option will be
equal to the per share fair market value of the common stock on the date of
grant, as determined by the Board of Directors. The term of such option shall be
10 years, subject to earlier expiration in the event of the termination of the
Executive's Employment. The option shares shall vest as to 100% of the shares on
the fifth anniversary of the commencement date of
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Executive's employment with the Company, provided Executive remains continuously
employed by the Company through that date. Prior to the fifth anniversary of
Executive's employment commencement date, the vesting of the option shares shall
accelerate as to one-half (1/2) of the option shares on the occurrence of (i) a
merger or acquisition of the Company where the value of the merger or
acquisition per share of Common Stock is more than $9.25 (as adjusted for stock
splits, stock dividends, recapitalizations and the like), or (ii) the Company
makes an initial public offering ("IPO") with a per share price to the public of
more than $9.25 (as adjusted for stock splits, stock dividends,
recapitalizations and the like). Prior to the fifth anniversary of Executive's
employment commencement date, the vesting of the option shares shall accelerate
as to an additional one-half (1/2) of the option shares if the Company's product
revenue for any fiscal year exceeds $20,000,000 for such fiscal year before
December 31, 2001. Such option will include an early exercise provision that
allows Executive to exercise the option as to vested and unvested shares,
subject to a right of repurchase with respect to unvested shares.
(v) The grants of options pursuant to subsections (ii),
(iii) and (iv) above shall be subject to the Company's standard form of stock
option agreement, copies of each of which are attached hereto as exhibits and
must be executed as a condition of the grant. While Executive remains employed
by the Company he shall have the right to exercise his options by delivery of a
non-recourse promissory note, provided: (i) the promissory note is secured by
property other than the shares of stock being purchased ("Other Property"), (ii)
the Other Property is not owned by the payee of the promissory note, and (ii)
the Other Property is worth as much as the principal value of the promissory
note on the date of exercise. As an alternative to a non-recourse promissory
note, Executive shall have the right to exercise his options while he remains
employed by the Company by delivering a full recourse promissory note secured by
a pledge of the shares purchased thereunder. If required under the laws of the
Company's state of incorporation, Executive shall pay cash for the par value of
the exercised option shares. Interest on the promissory note shall be repayable
annually at the applicable Federal rate under the Internal Revenue Code to avoid
imputed income and the principal balance and interest shall be due in full on
the earlier of the fourth anniversary of Executive's hire date, 90 days after
the Executive's termination of employment, or the one year anniversary of the
Company's initial public offering. The note shall be subject to such other terms
and conditions as may be agreed to by the Company and Executive. The credit
extended to Executive hereunder shall equal the aggregate option price payable
for the purchased shares. For 90 days following the effective date of the
termination of his employment for any reason, Executive shall have the right to
exercise his vested stock options.
(vi) If the Company terminates Executive's Employment
Without Cause (as defined in section 6(d)) within one year after a Change of
Control or Executive resigns for Good Reason within one year after a Change of
Control, then each of Executive's outstanding options will become fully vested.
"Change of Control" shall mean (i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting power of
the Corporation's outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to such
transaction, or (ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation. "Good Reason" for Executive's resignation will
exist if he resigns within sixty days of any of the following: (i) any reduction
in his base salary, except as generally applicable to all executive officers;
(ii) a change in his
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position with the Company which materially reduces his level of responsibility;
or (iii) any requirement that he relocate his place of employment by more than
fifty (50) miles from his then current office, provided such reduction, change
or relocation is effected by the Company without his written consent.
(d) SPECIAL BONUS. Executive will participate in a special bonus
program pursuant to which he will be paid a net cash bonus of at least $50,000
and, subject to the approval of the Board, up to $100,000 each year, which will
be grossed up for tax purposes, provided he is employed as of November 1 of such
year.
3. VACATION AND EXECUTIVE BENEFITS. During the term of his Employment,
the Executive shall be eligible for paid vacations in accordance with the
Company's standard policy for similarly situated employees, as it may be amended
from time to time. During the term of his Employment, the Executive shall be
eligible to participate in any employee benefit plans maintained by the Company
for similarly situated employees, subject in each case to the generally
applicable terms and conditions of the plan in question and to the
determinations of any person or committee administering such plan.
4. BUSINESS EXPENSES. During the term of his Employment, the Executive
shall be authorized to incur necessary and reasonable travel, entertainment and
other business expenses in connection with his duties hereunder. The Company
shall reimburse the Executive for such expenses upon presentation of an itemized
account and appropriate supporting documentation, all in accordance with the
Company's generally applicable policies.
5. TERM OF EMPLOYMENT.
(a) BASIC RULE. Executive will remain employed with the Company
from the commencement date set forth in Section 1(d) until the date when the
Executive's Employment terminates pursuant to Subsection (b) below. The
Executive's Employment with the Company shall be "at will," and either the
Executive or the Company may terminate the Executive's Employment at any time,
for any reason, with or without Cause. Any contrary representations, which may
have been made to the Executive shall be superseded by this Agreement. This
Agreement shall constitute the full and complete agreement between the Executive
and the Company on the "at will" nature of the Executive's Employment, which may
only be changed in an express written agreement signed by the Executive and a
duly authorized officer of the Company.
(b) TERMINATION. The Company may terminate the Executive's
Employment at any time and for any reason (or no reason), and with or without
Cause, by giving the Executive notice in writing. The Executive may terminate
his Employment by giving the Company 14 days' advance notice in writing. The
Executive's Employment shall terminate automatically in the event of his death
or permanent disability.
(c) RIGHTS UPON TERMINATION. Except as expressly provided in
Section 6, upon the termination of the Executive's Employment pursuant to this
Section 5, the Executive shall only be entitled to the compensation, benefits
and reimbursements described in Sections 2,
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3 and 4 for the period preceding the effective date of the termination. The
payments under this Agreement shall fully discharge all responsibilities of the
Company to the Executive.
(d) TERMINATION AGREEMENT. This Agreement shall terminate when
all obligations of the parties hereunder have been satisfied. The termination of
this Agreement shall not limit or otherwise affect any of the Executive's
obligations under Section 7.
6. TERMINATION BENEFITS.
(a) SEVERANCE PAY. If the Company terminates the Executive's
Employment for any reason other than for Cause, or if employment is terminated
by the death or permanent disability of the Executive, then the Company shall:
(i) pay the Executive his Base Compensation for a period
of twelve (12) months following the termination of his Employment (the
"Continuation Period"), which Base Compensation shall be paid at the rate in
effect at the time of the termination of Employment and in accordance with the
Company's standard payroll procedures, and
(ii) provide for vesting of the options granted pursuant
to Sections 2(c)(ii) and 2(c)(iii) in an amount equal to an additional twelve
(12) months following the termination of his Employment (if the Executive has
been continuously employed by the Company for less than two years at the time of
the termination) or provide for vesting of the options granted pursuant to
Sections 2(c)(ii), (iii) and (iv) such that they shall become fully vested (if
the Executive has been continuously employed by the Company for two years or
more at the time of the termination).
(b) HEALTH INSURANCE. If Subsection (c) below applies, and if the
Executive elects to continue his health insurance coverage under the
Consolidated Omnibus Budget Reconciliation Act ("COBRA") following the
termination of his Employment, then the Company shall pay the Executive's
monthly premium under COBRA until the earliest of (i) the close of the
Continuation Period or (ii) the expiration of the Executive's continuation
coverage under COBRA.
(c) GENERAL RELEASE. Any other provision of this Agreement
notwithstanding, if the Executive has been continuously employed by the Company
for two years or more at the time of his termination then Subsections (a) and
(b) above shall only apply if the Executive (i) has executed a general release
(in the form attached hereto as Exhibit A) of all known and unknown claims that
he may then have against the Company or persons affiliated with the Company and
(ii) has agreed not to prosecute any legal action or other proceeding based upon
any of such claims.
(d) DEFINITION OF "CAUSE." For all purposes under this Agreement,
"Cause" shall mean:
(i) Unauthorized use or intentional disclosure of the
confidential information or trade secrets of the Company;
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(ii) Any material breach of this Agreement or the Employee
Proprietary Information Agreement between the Executive and the Company;
(iii) Conviction of, or a plea of "guilty" or "no contest"
to, a felony under the laws of the United States or any state thereof;
(iv) Misappropriation of the assets of the Company or
other acts of dishonesty;
(v) Engagement in substance abuse which substantially
impairs Executive's ability to perform the duties and obligations of Executive's
employment or causes material harm to the reputation of the Company;
(vi) Personal engagement in any act of moral turpitude
that causes material harm to the reputation of the Company;
(vii) Commencement of employment with another employer
while Executive is an employee of the Company without the prior consent of the
Board of Directors; or
(VIII) Material misconduct or gross negligence in the
performance of duties assigned to the Executive under this Agreement.
7. NON-SOLICITATION AND NON-DISCLOSURE.
(a) NON-SOLICITATION. During the period commencing on the date of
this Agreement and continuing until (i) the date Executive's Employment
terminates if the Company terminates Executive's Employment for any reason other
than Cause, or (ii) the first anniversary of the date Executive's Employment
terminates if Executive resigns for any reason or the Company terminates
Executive's Employment for Cause, the Executive shall not directly or
indirectly, personally or through others, solicit or attempt to solicit (on the
Executive's own behalf or on behalf of any other person or entity) the
employment of any employee of the Company or any of the Company's affiliates.
(b) NON-DISCLOSURE. As a condition of employment the Executive
has entered into a Proprietary Information Agreement with the Company, which is
incorporated herein by reference.
8. SUCCESSORS.
(a) COMPANY'S SUCCESSORS. This Agreement shall be binding upon
any successor (whether direct or indirect and whether by purchase, lease,
merger, consolidation, liquidation or otherwise) to all or substantially all of
the Company's business and/or assets. For all purposes under this Agreement, the
term "Company" shall include any successor to the Company's business and/or
assets which becomes bound by this Agreement.
(b) EXECUTIVE'S SUCCESSORS. This Agreement and all rights of the
Executive hereunder shall inure to the benefit of, and be enforceable by, the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
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9. MISCELLANEOUS PROVISIONS.
(a) NOTICE. Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by overnight courier, U.S. registered
or certified mail, return receipt requested and postage prepaid. In the case of
the Executive, mailed notices shall be addressed to him at the home address
which he most recently communicated to the Company in writing. In the case of
the Company, mailed notices shall be addressed to its corporate headquarters,
and all notices shall be directed to the attention of its Secretary.
(b) MODIFICATIONS AND WAIVERS. No provision of this Agreement
shall be modified, waived or discharged unless the modification, waiver or
discharge is agreed to in writing and signed by the Executive and by an
authorized officer of the Company (other than the Executive), No waiver by
either party of any breach of, or of compliance with, any condition or provision
of this Agreement by the other party shall be considered a waiver of any other
condition or provision or of the same condition or provision at another time.
(c) WHOLE AGREEMENT. No other agreements, representations or
understandings (whether oral or written) which are not expressly set forth in
this Agreement have been made or entered into by either party with respect to
the subject matter of this Agreement. This Agreement and the Proprietary
Information Agreement contain the entire understanding of the parties with
respect to the subject matter hereof.
(d) WITHHOLDING TAXES. All payments made under this Agreement
shall be subject to reduction to reflect taxes or other charges required to be
withheld by law.
(e) CHOICE OF LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California (except provisions governing the choice of law).
(f) SEVERABILITY. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.
(g) ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof, or the Executive's Employment
or the termination thereof, shall be settled in South San Francisco, California,
by arbitration in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association. The decision of the
arbitrator shall be final and binding on the patties, and judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitration will be in lieu of a jury trial and Executive and the
Company each waive their right to a jury trial. The parties hereby agree that
the arbitrator shall be empowered to enter an equitable decree mandating
specific enforcement of the terms of this Agreement. The Company and the
Executive shall share equally all fees and expenses of the arbitrator. Both
parties hereby consent to personal jurisdiction of the state and federal courts
located in the State of California for any action or proceeding arising from or
relating to this Agreement or relating to any arbitration in which the parties
are participants.
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(h) NO ASSIGNMENT. This Agreement and all rights and obligations
of the Executive hereunder are personal to the Executive and may not be
transferred or assigned by the Executive at any time. The Company may assign its
rights under this Agreement to any entity that assumes the Company's obligations
hereunder in connection with any sale or transfer of all or a substantial
portion of the Company's assets to such entity.
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(i) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.
βββββββ� β�. βββββ�
/s/ βββββββ� β�. βββββ�
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VIROLOGIC, INC.
By:
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Title:
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[Exhibit A - Form of Release]
GENERAL RELEASE OF ALL CLAIMS
In consideration of the severance benefit to be paid to me by Virologic,
Inc. in accordance with the Employment Agreement entered into as of September
__, 1999, I hereby fully and forever release and discharge Virologic, Inc. and
its directors, officers, employees, agents, successors, predecessors,
subsidiaries, shareholders, employee benefit plans and assigns (together the
"Company"), from all claims and causes of action arising out of or relating in
any way to my employment with the Company, including the termination of my
employment.
1. I understand and agree that this RELEASE is a full and complete
waiver of all claims, including (without limitation) claims of wrongful
discharge, breach of contract, breach of the covenant of good faith and fair
dealing, violation of public policy, defamation, personal injury or emotional
distress and claims under Title VII of the Civil Rights Act of 1964, as amended,
the Fair Labor Standards Act, the Equal Pay Act of 1963, the Americans with
Disabilities Act, the Civil Rights Act of 1866, the Age Discrimination in
Employment Act of 1967, as amended (ADEA), the California Fair Employment and
Housing Act, the Family and Medical Leave Act or any federal or state law or
regulation relating to employment or employment discrimination. I further
understand and agree that this RELEASE is a full and complete waiver of all
claims, including (without limitation) claims under the Employee Retirement
Income Security Act of 1974 (ERISA) related to severance benefits. I further
understand that by this RELEASE I agree not to assist, encourage, institute or
cause to be instituted the filing of any administrative charge or legal
proceeding against the Company relating to employment discrimination.
2. I also hereby agree that nothing contained in this RELEASE shall
constitute or be treated as an admission of liability or wrongdoing by me or the
Company. This RELEASE does not relieve the Company of its obligations to comply
with the terms of the Employment Agreement, any stock option agreement or any
employee benefit plan or similar program in which I am a participant or eligible
for benefits.
3. I agree to abide by Company's Proprietary Information and Inventions
Agreement that I previously executed.
4. In addition, I hereby expressly waive any and all rights and benefits
conferred upon me by the provisions of Section 1542 of the Civil Code of the
State of California (or any analogous law of any other state), which states 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.
5. I hereby acknowledge that I have read and understand the foregoing
RELEASE and that I sign it voluntarily and without coercion. I further
acknowledge that I was given an opportunity to consider and review this RELEASE
and to consult with an attorney of my own choosing concerning the waivers
contained in this RELEASE and that the waivers are knowing,
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conscious and with full appreciation that I am forever foreclosed from pursuing
any of the rights that I waived.
6. I understand that I may have up to twenty-one (21) days after receipt
of this letter within which I may review and consider, discuss with an attorney
of my own choosing, and decide to execute or not execute it. I also understand
for a period of seven (7) days after I sign this RELEASE, I may revoke this
RELEASE and that the RELEASE will not become effective until seven (7) days
after I sign it, and only then if I do not revoke it. In order to revoke this
agreement, I must deliver to the Chairman of the Board of Virologic, Inc. within
seven (7) days after I have executed this RELEASE, a letter stating that I am
revoking it.
7. I understand that if I choose to revoke this RELEASE within seven (7)
days after I signed it, I will not receive any severance benefit and the RELEASE
will have no effect.
8. Before signing my name to this RELEASE, I state that:
[ ] I have read it,
[ ] I understand it,
[ ] I know that I am giving up important rights,
[ ] I am aware of my right to consult an attorney before signing it, and
[ ] I have signed it knowingly and voluntarily.
Dated:
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Signature
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Print Full Name
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