Employment Agreement - VaxGen Inc. and Phillip W. Berman
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") by and between Phillip W. Berman,
Ph.D. ("Berman") and VaxGen, Inc. ("VaxGen"), is effective February 7, 2002 (the
"Effective Date"). In consideration of the mutual promises made herein, VaxGen
and Berman agree as follows:
EMPLOYMENT. VaxGen hereby employs Berman, and Berman hereby accepts employment
with VaxGen, upon all of the terms and conditions described in this Agreement.
Except with respect to any stock options previously granted to Berman, this
Agreement supercedes, replaces and restates any and all prior agreements between
the parties hereto relating to the terms of Berman's employment with VaxGen,
including any prior agreements concerning confidentiality, non-disclosure and
inventions.
WORK RESPONSIBILITIES. Subject to the terms of this Agreement, Berman is hereby
employed in the position of Senior Vice President, Research and Development and
shall perform the functions and responsibilities of that position. Berman shall
devote the whole of his professional time, attention and energies to the
performance of his work responsibilities. Berman's position, job description,
duties and responsibilities may be modified from time to time in the sole
discretion of VaxGen.
COMPENSATION. As consideration for the services and covenants described in this
Agreement, VaxGen agrees to compensate Berman during the term of this Agreement
in the following manner:
a) Salary/Wages. VaxGen agrees to pay Berman a base salary of $235,000
per year. Berman's salary, less required and authorized deductions,
shall be paid in equal, periodic installments no less frequently than
semi-monthly in accordance with VaxGen's then current payroll
practices. The Compensation Committee of the Board will consider
Berman's salary annually for potential increase. This annual base
salary shall be retroactive to November 15, 2000.
b) Option Grants. Berman will be eligible to receive an annual award of
stock options, which will be issued, if at all, in accordance with the
terms and conditions of this Agreement and VaxGen's stock option plan
as in effect at the time of the award, in an amount to be determined
in the sole discretion of the Board. In the event that Berman's
employment is terminated by the Company without Cause pursuant to
paragraph 16(a)(iv) below or by Berman with Good Reason pursuant to
paragraph 16(a)(v) below or following a Change in Control pursuant to
paragraph 16(d) below, then Berman shall have three (3) years from the
date of termination to exercise all options which are then vested or
which vest as a result of this Agreement, provided however that in no
event will Berman be entitled to exercise such stock options after the
expiration of 10 years from the date of grant of such stock options.
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c) Performance Bonus. Berman is eligible to receive an annual performance
bonus of up to thirty percent (30%) of his annual base salary in cash,
VaxGen securities or a combination thereof, provided that no more than
50% of the performance bonus shall be paid in securities. The CEO and
Berman will mutually cooperate to establish annual performance
objectives for Berman and the performance bonus will be paid to Berman
if the performance objectives are met; provided that, satisfaction of
the established performance objectives and the amount of the
performance bonus, if any, shall be determined by the Board in its
sole discretion. The Compensation Committee of the Board will consider
Berman's bonus annually for potential increase.
d) Benefits. Berman shall be entitled to employment benefits in
accordance with policies established by or at the direction of the
Board with respect to senior executives of VaxGen, including holidays,
leaves of absence, health insurance, dental insurance, vacation and
other benefits, if any, in accordance with any eligibility
requirements, policies, procedures, or benefit plans adopted by VaxGen
from time to time during the existence of this Agreement. Berman's
rights, or those of Berman's dependents under any such benefits
policies or plans, shall be governed solely by the terms of such
policies or plans. VaxGen's employment benefits, and policies related
thereto, are subject to termination, modification or limitation at
VaxGen's sole discretion.
e) Total Compensation. Berman agrees that the compensation stated above
constitutes the full and exclusive monetary consideration and
compensation for all services rendered under this Agreement and for
all promises and obligations under this Agreement.
f) Business Expenses. VaxGen shall pay Berman's reasonable business
expenses, including expenses incurred for travel on VaxGen business,
in accordance with the policies and procedures of VaxGen, as may be
adopted or amended from time to time at VaxGen's sole discretion. If
Berman incurs business expenses under this Agreement, he shall submit
monthly to VaxGen a request for reimbursement together with supporting
documentation satisfactory to VaxGen.
VAXGEN POLICIES. Berman agrees to abide by VaxGen's written policies, and
procedures that have been communicated or made available to him, as they may
from time to time be adopted or modified by VaxGen in its sole discretion.
VaxGen's written policies and procedures, including the Employee Handbook, shall
be binding on Berman unless superseded by, or in conflict with, this Agreement.
Copies of written policies and procedures are available to Berman in the offices
of VaxGen, and Berman shall be responsible at all times to review, and make
himself familiar with, these policies and procedures.
WARRANTIES. Berman hereby represents and warrants that he has not unlawfully
misappropriated any confidential, proprietary or trade secret information from
Berman's prior employer or employers and, except to the extent such information
has become publicly available, will not knowingly disclose such information to
VaxGen or improperly use any such information on behalf of VaxGen. Berman
acknowledges that VaxGen has specifically requested that, if Berman has any such
confidential, proprietary or trade secret knowledge or information, Berman not
use such information while employed by VaxGen for the benefit of VaxGen. Berman
further
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warrants that by entering into this Agreement with VaxGen he is not violating
any of the terms, agreements or covenants of any previous employment or
association.
PRIOR INVENTIONS. Berman acknowledges that, except for the inventions disclosed
on Appendix A, Berman does not have any right or claim to any invention, idea,
process, formula, discovery, copyright, patent or other such item or matter. No
rights are hereby conveyed by Berman to VaxGen with respect to inventions, if
any, made by Berman prior to employment by VaxGen, which inventions are listed
in Schedule A, attached hereto.
SUBSEQUENT INVENTION DISCLOSURE. Berman hereby agrees to promptly disclose to
VaxGen any and all inventions that he develops during the term of his
employment. Berman will also disclose to the Chief Executive Officer (the "CEO")
all inventions made, conceived, reduced to practice, or developed by Berman
within six months of the termination of his employment with VaxGen that resulted
from his prior work with VaxGen. Such disclosures shall be received by VaxGen in
confidence and do not extend the assignment of inventions disclosed beyond that
required by law.
ASSIGNMENT OF INVENTIONS. Berman hereby assigns and agrees to assign to VaxGen
or its designee, Berman's entire right, title and interest in and to all
inventions, works of authorship, developments, concepts, discoveries, ideas,
trademarks and trade secrets, whether or not patentable or registrable under
copyright or other intellectual property laws ("Inventions") which Berman may
solely or jointly develop, conceive or reduce to practice, during the period of
employment, except as provided in paragraph 10 below. Berman agrees that all
such Inventions are the sole property of VaxGen. Berman further agrees that all
such Inventions, including works of authorship, are "works for hire" for
purposes of VaxGen's rights under copyright laws. Berman agrees to keep and
maintain adequate and current written records of all Inventions made by him
(solely or jointly with others) during the term of his employment with VaxGen.
The records will be in the form of notes, sketches, drawings, and any other
format that may be specified by VaxGen. The records will be available to and
remain the sole property of VaxGen at all times. Berman understands and agrees
that the decision whether or not to commercialize or market any Invention
developed by him solely or jointly with others is within VaxGen's sole
discretion and for VaxGen's sole benefit and that no royalty will be due to him
as a result of VaxGen's efforts to commercialize or market any such Invention.
Berman further agrees to perform, during and after employment with VaxGen, all
acts deemed necessary or desirable by VaxGen to permit and assist VaxGen, at
VaxGen's expense, in obtaining and enforcing the full benefits, enjoyment,
rights and title, throughout the world, of and to the Inventions hereby assigned
by Berman to VaxGen as set forth above.
PATENT AND COPYRIGHT REGISTRATIONS. Berman agrees to assist VaxGen, or its
designee, at VaxGen's expense, in every proper way to secure VaxGen's rights in
the Inventions and any copyrights, patents, trademarks, and trade secret rights
or other intellectual property rights in connection with any such Inventions in
any and all countries, including the disclosure to VaxGen of all pertinent
information and data with respect thereto, the execution of all applications,
specifications, oaths, assignments and all other instruments or papers which
VaxGen shall deem necessary in order to apply for and obtain such rights and in
order to assign and convey to VaxGen, its successors, assigns, and nominees the
sole and exclusive rights, title
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and interest in and to such Inventions, and any copyrights, patents, trademark
and other intellectual property rights relating thereto. Berman further agrees
that his obligation to execute or cause to be executed, when it is in his power
to do so, any such instrument or papers shall continue after the termination of
this Agreement. If VaxGen is unable, because of Berman's mental or physical
incapacity or for any other reason, to secure his signature to apply for or to
pursue any application for any United States or foreign patents or copyright
registrations covering Inventions or original works of authorship assigned to
VaxGen as above, then Berman hereby irrevocably designates and appoints VaxGen
and its duly authorized officers and agents as his agent and attorney in fact to
act for and in his behalf and stead to execute and file any such applications
and to do all other lawfully permitted acts to further the prosecution and
issuance of letters patent or copyright registrations thereon with the same
legal force and effect as if executed by Berman.
INVENTIONS NOT ASSIGNED. The parties agree that the assignment of inventions
under this Agreement does not apply to an invention which qualifies fully for
protection under Section 2870 of the California Labor Code, which states that
"Any provision in an employment agreement which provides that an employee shall
assign, or offer to assign, any of his or her rights in an invention to his or
her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer's equipment,
supplies, facilities or trade secret information except for those inventions
that either: (1) relate at the time of conception or reduction to practice of
the invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer; or (2) result from any work performed
by the employee for the employer."
CONFIDENTIAL, PROPRIETARY AND TRADE SECRET INFORMATION. During the course of his
employment, Berman will come into possession of or acquire knowledge of
confidential, proprietary and trade secret information of VaxGen. Berman hereby
covenants and agrees that he will not, either during his employment or at any
time thereafter, disclose any such confidential, proprietary or trade secret
information to any person, firm, corporation, association, partnership or other
entity (other than those in VaxGen's organization qualified and authorized to
receive such information) for any purpose or reason whatsoever. Such
confidential and proprietary information shall be deemed to include, but not be
limited to, manuals, discs, tapes, and summaries or originals of any papers,
documents, plans, specifications, client lists, contracts, licenses or licensing
agreements, data bases, or portions thereof, related to the research and
development, products or operations of VaxGen, provided that such information is
confidential, proprietary or falls within the definition of a "trade secret"
under the Uniform Trade Secrets Act. Berman specifically agrees that he will not
make use of any such confidential or proprietary information for his own
purpose, or for the benefit of any person, firm, corporation or other entity
except VaxGen. Berman will abide by VaxGen's policies and procedures, as
established from time to time for the protection of its trade secrets and
confidential information.
RETURN OF PROPERTY. All confidential, proprietary and trade secret information,
and all other documents, records, apparatus, equipment and other physical
property which is furnished to or obtained by Berman in the course of employment
with VaxGen, shall be and remain the sole property of VaxGen. Berman agrees that
upon request by VaxGen or the termination of
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Berman's employment (whichever occurs first), Berman shall return all such
property, and agrees not to make or retain copies, reproductions or summaries of
any such property without the express written consent of VaxGen.
NON-SOLICITATION, ANTI-RAIDING. For a period of one (1) year immediately
following the termination of his employment, Berman agrees that he will not,
either directly or indirectly, (a) attempt to recruit, solicit or take away any
of the employees of VaxGen who worked for VaxGen at any time during the term of
this Agreement; make known to any person, firm or corporation the names or
addresses of, or any information pertaining to, any current or former employees
of VaxGen; (b) use any confidential or proprietary information to attempt to
call on, solicit or take away any clients of VaxGen or any other persons,
entities, or corporations with which VaxGen has had or contemplated any business
transaction or relationship during Berman's employment with VaxGen, including,
but not limited to, investments, licenses, joint ventures, and agreements for
development.
EQUITABLE RELIEF. Berman and VaxGen each agree that in the event of a breach or
threatened breach of paragraphs 7 through 13 of this Agreement each party will
not have an adequate remedy at law. Thus, in the event of such a breach or
threatened breach by one party, the other party will be entitled to such
equitable and injunctive relief in a court of law as may be available to prevent
and restrain a breach of the provisions of paragraphs 7 through 13. Said
availability to obtain injunctive relief will not prevent either party from
pursuing any other equitable or legal relief, including the recovery of damages
from such breach or threatened breach.
AT-WILL EMPLOYMENT. Berman understands and agrees that employment at VaxGen is
at-will. This means that, for any reason or no reason, Berman's employment may
be terminated, with or without cause, at any time by either Berman or by VaxGen,
subject to the severance and notice provisions contained in Section 16 below.
Nothing in this or any other document or statement shall limit the right of
VaxGen to terminate Berman's employment at-will. Only the Board has the
authority to amend this Agreement on behalf of VaxGen, and then only in a
writing that is signed by both Berman and VaxGen pursuant to authority expressly
granted by the Board.
TERMINATION OF EMPLOYMENT.
Subject to the survivability provisions of Section 18 below, Berman's employment
under this Agreement and all compensation and benefits provided for herein shall
terminate upon the occurrence of any of the following events.
Death: In the event of Berman's death, the termination shall be effective upon
the date thereof.
Disability: In the event that Berman should become "disabled," VaxGen may
terminate Berman's employment under this Agreement. For purposes of this
paragraph "disabled" shall mean Berman's inability, despite reasonable
accommodation, to perform the essential duties of his position for a period of
five (5) consecutive months, and failure to
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resume the performance of such duties on a full-time basis within thirty (30)
days of notice from VaxGen of intent to terminate this Agreement on such
grounds. The termination shall be effective upon the date specified in VaxGen's
notice to Berman as provided for herein. Any base salary payable to Berman by
VaxGen may be offset by any benefits paid to Berman under any applicable
short-term or long-term disability plan.
Cause: VaxGen may terminate Berman's employment under this Agreement upon the
occurrence of "cause" for termination as herein defined. "Cause" shall mean (A)
Berman being found by the Board to have committed fraud, misappropriation,
embezzlement or other willful commission of a dishonest or unlawful act that has
the effect of materially injuring VaxGen or its reputation, (B) Berman's
conviction of a crime involving moral turpitude or a felony, (C) Berman's
willful or reckless violation of VaxGen's written policies or procedures that
has the effect of materially injuring VaxGen, or Berman's breach of the
confidential information and invention assignment provisions of this Agreement,
and, if any such violation or breach under this Section 16(a)(iii)(C) is
curable, Berman's failure to cure such violation or breach within 15 business
days of receiving notice of such violation or breach from the Board, or (D)
Berman's habitual failure to perform his job duties, as determined by the Board
in its reasonable judgment, and after notice of such failure has been given to
Berman by the Board and Berman has had a 15 business-day period within which to
cure such failure. The Parties acknowledge that the reference to a "for Cause"
termination herein does not alter the employment at-will relationship, but
merely sets forth circumstances under which VaxGen has no obligation to pay
severance to Berman. The termination shall be effective upon the date specified
in VaxGen's notice to Berman.
Without Cause: Either VaxGen or Berman may terminate Berman's employment under
this Agreement without Cause at any time upon thirty (30) days written notice to
the other party. The termination shall be effective upon the date specified in
the notice given pursuant hereto.
By Berman with Good Reason: Berman may terminate his employment under this
Agreement for Good Reason (A) in the event VaxGen breaches a material term
hereof and, after receiving written notice from Berman detailing the specific
provision allegedly breached, does not remedy said breach within thirty (30)
days of receiving notice, (B) there is a demotion of Berman from the position of
Senior Vice President, Research and Development or the assignment of job duties
or responsibilities materially inconsistent with such position, (C) VaxGen moves
Berman's principal place of business more than thirty-five (35) miles from
VaxGen's current principal place of business at 1000 Marina Blvd, Brisbane,
California, (D) there is a reduction in Berman's then-current base salary and/or
performance bonus opportunity, or (E) there is a material and substantial
reduction in the aggregate of Berman's employee benefits. The termination shall
be effective on the date specified in the notice given hereunder, which date
shall not be earlier than the date such notice is given, nor more than 30 days
after the date such notice is given.
In the event that Berman's employment under this Agreement is terminated by
VaxGen under paragraphs 16(a)(i), 16(a)(ii) or 16(a)(iii) above, or by Berman
under paragraph 16(a)(iv) above,
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no severance pay will be due to Berman; however Berman shall be entitled to
payment for any earned but unpaid base salary through the date of termination as
well as payment for any accrued but unused vacation time and any accrued
employee benefits, subject to the terms of the applicable employee benefit
plans.
In the event that Berman's employment under this Agreement is terminated by
VaxGen under paragraph 16(a)(iv) above or by Berman under paragraph 16(a)(v)
above, Berman shall be entitled to receive: (i) severance pay in the amount of
six (6) months of his then-existing annual base salary plus one additional month
of base salary for each full year of employment with VaxGen (such severance
being limited strictly to annual base salary and will not include any amount
paid or payable as a bonus or stock option grant) up to a maximum severance
payment of twelve (12) months annual base salary, less required and authorized
deductions, payable on VaxGen's ordinary payroll cycles until fully paid out;
and (ii) accelerated vesting of all his outstanding stock options to fully
vested status as of the date of termination.
Berman shall be entitled to the severance benefits provided for in 16(c) above
if, within twelve (12) months following a Change in Control (as defined below),
VaxGen or its successor in interest terminates Berman's employment for any
reason other than for Cause (as defined above) or Berman terminates his
employment on account of any of the following: (i) in the event VaxGen breaches
a material term hereof and, after receiving written notice from Berman detailing
the specific provision allegedly breached, does not remedy said breach within
thirty (30) days of receiving notice; or (ii) there is a material reduction in
Berman's job duties or responsibilities, including, without limitation, demotion
from the position of Senior Vice President, Research and Development; or (iii)
VaxGen or its successor in interest moves Berman's principal place of business
more than thirty-five (35) miles from VaxGen's current principal place of
business at 1000 Marina Blvd, Brisbane, California; or (iv) there is a reduction
in Berman's then-current base salary and/or performance bonus opportunity; or
(v) there is a material and substantial reduction in the aggregate of Berman's
employee benefits.
For purposes of this Agreement, a "Change in Control" shall be deemed to have
occurred if: (i) there is an acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (for the purposes of this Section,
a "Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of the voting power of the
then outstanding voting securities of VaxGen entitled to vote generally in the
election of directors (the "Outstanding Company Voting Securities"); provided,
however, that for purposes of this subsection 16(e), any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by VaxGen or
any corporation controlled by VaxGen shall not constitute a Change in Control;
or (ii) individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual (other than an individual whose
initial assumption of office occurs as a result of an actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board) who becomes a director subsequent to the date hereof whose election or
nomination for election by VaxGen's shareholders was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board shall be
considered as though such
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individual were a member of the Incumbent Board; or (iii) there is a
consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of VaxGen (a "Business
Combination") unless, following such Business Combination, (A) individuals and
entities who were the beneficial owners of the Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the voting power of the then
Outstanding Company Voting Securities of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as a
result of such transaction owns VaxGen or all or substantially all of VaxGen's
assets either directly or through one or more subsidiaries) and (B) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or (iv) approval by the shareholders of
VaxGen of a complete liquidation or dissolution of VaxGen.
In the event Berman's employment with VaxGen is terminated, Berman agrees that
he will, unless otherwise requested by the Board, resign his position on the
Board within ten (10) days of the date his employment is terminated.
INDEMNIFICATION. VaxGen shall maintain, for the benefit of Berman, director and
officer liability insurance in form at least as comprehensive as, and in an
amount that is at least equal to, that maintained by VaxGen as of the Effective
Date of this Agreement for officers and directors. In addition, VaxGen shall
indemnify Berman against liability as an officer and director of VaxGen or any
subsidiary or affiliate of VaxGen to the maximum extent permitted by applicable
law. Berman's rights under this Paragraph 17 shall continue so long as he may be
subject to such liability, whether or not his employment may have terminated
prior thereto.
SURVIVABILITY. The respective rights and obligations of the Parties hereunder,
including, without limitation, Sections 7, 8, 9, 10, 11, 12, 13, 14, 16(c), 17,
19 and 28 of this Agreement, shall, to the extent necessary, survive any
termination of Berman's employment or this Agreement.
GOVERNING LAW. This Agreement shall be construed in accordance with and governed
by the laws of the State of California without regard to its conflict of law
rules. This Agreement shall be interpreted in accordance with the plain meaning
of its terms and not strictly for or against either party.
ENTIRE AGREEMENT. This Agreement embodies the complete agreement and
understanding of the parties related to Berman's employment by VaxGen,
superseding any and all other prior or contemporaneous oral or written
agreements between the parties hereto with respect to the employment of Berman
by VaxGen, and contains all of the covenants and agreements of any kind
whatsoever between the parties with respect to such employment. Each party
acknowledges that no representations, inducements, promises or agreements,
whether oral or written, express or implied, have been made by either party or
anyone acting on behalf of a party, that are not incorporated herein and that no
agreement or promise not contained herein shall be valid or binding.
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WAIVER. The failure of either party to insist, in any one or more instances,
upon performance of the terms or conditions of this Agreement shall not be
construed as a waiver or a relinquishment of any right granted under this
Agreement or of the future performance of any such term, covenant or condition.
INVALIDITY. Should any provision, portion or part of this Agreement be held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions, portions or parts shall be unaffected and shall continue
in full force and effect, and said invalid, void or unenforceable provision(s),
portion(s) or part(s) shall be deemed not to be part of this Agreement.
NO THIRD PARTY BENEFICIARIES. This Agreement is not intended by either party to
create any third-party beneficiaries, and shall not be so construed in any
proceeding. The sole parties to this Agreement are Berman and VaxGen, and it is
their mutual intent that they alone shall have standing to enforce the
provisions of this Agreement, subject to the provisions of Section 26 below.
VOLUNTARY AGREEMENT. Berman and VaxGen represent and agree that each has
reviewed all aspects of this Agreement, has carefully read and fully understands
all provisions of this Agreement, and is voluntarily entering into this
Agreement. Each party represents and agrees that such party has had the
opportunity to review any and all aspects of this Agreement with the legal, tax
or other advisor or advisors of such party's choice before executing this
Agreement.
CAPTIONS. The captions of the various paragraphs of this Agreement are placed
herein for the convenience of the parties and the reader, do not constitute a
substantive term or terms of this Agreement, and shall not be considered in any
issue involving the interpretation or application of this Agreement.
SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the
benefit of and shall be enforceable by and against Berman's heirs, beneficiaries
and legal representatives. It is agreed that the rights and obligations of
Berman may not be delegated or assigned except as specifically set forth in this
Agreement. In the event of a Change in Control (as defined above), VaxGen may
assign its rights and obligations under this Agreement to its
successor-in-interest, and in that event such successor-in-interest shall be
deemed to have acquired all rights and assumed all obligations of VaxGen under
this Agreement.
NOTICES. Notices given under the terms of this Agreement shall be in writing and
shall be deemed delivered when personally delivered to the person identified
below, or three (3) days after deposited, proper first class postage prepaid, in
the U. S. Mail and addressed as set forth below, or one day after properly
consigned to a recognized national next-day delivery service (e.g., Federal
Express) prepaid and addressed as set forth below, or faxed to the number
provided below and confirmed by a delivery report from the sending fax
transmitter. The officer, addresses and facsimile numbers below may be changed
by written notice given pursuant to this paragraph. Notices shall be given:
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If to VaxGen: Chief Executive Officer of VaxGen
1000 Marina Blvd., Suite 200
Brisbane, California 94005
Fax number: 650-624-1001
With a copy to: Garrett Waltzer, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
525 University Avenue, Suite 1100
Palo Alto, California 94301
Fax number: 650-470-4570
If to Berman: Phillip W. Berman
ALTERNATIVE DISPUTE RESOLUTION PROGRAM. Except as to efforts to seek injunctive
relief as specifically addressed in paragraphs 7 through 14, the parties
understand and agree that any dispute arising out of Berman's employment by
VaxGen, the termination of that employment, or arising out of or relating to
this Agreement shall be submitted to binding arbitration in accordance with the
terms of the Alternative Dispute Agreement set forth in Appendix B to this
Agreement and incorporated herein.
Dated:_________________ ______________________________
Phillip W. Berman, Ph.D.
Dated:_________________ VaxGen, Inc.
By:___________________________
Title:________________________
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APPENDIX A
Inventions. Except as set forth below, I hereby acknowledge that at this time I
have no right, title or other interest in any invention, patent, copyright or
other such material other than the following (if none, so state):
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Dated:__________________________ _____________________________
Phillip W. Berman, Ph.D.
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APPENDIX B
ALTERNATIVE DISPUTE AGREEMENT
o Agreement To Arbitrate
In the event that any employment dispute arises between VaxGen, Inc.
("VaxGen") and Phillip W. Berman, Ph.D. ("Berman"), the parties involved will
make all efforts to resolve any such dispute through informal means. However, if
within thirty (30) days of the event giving rise to the dispute, these informal
attempts at resolution fail and if the dispute arises out of or is related to
Berman's Employment Agreement, Berman's employment, the termination of Berman's
employment or alleged unlawful discrimination, including but not limited to
sexual or other unlawful harassment (an "Arbitrable Dispute"), VaxGen and Berman
will submit the dispute to final and binding arbitration, except as set forth in
Paragraphs 7-14 of the Employment Agreement.
The parties expressly understand and agree that arbitration is the
exclusive remedy for all such Arbitrable Disputes; with respect to such
disputes, no other action may be brought in court or any other forum (except
actions to compel arbitration or enforce an award issued hereunder). THIS
ALTERNATIVE DISPUTE RESOLUTION ("ADR") AGREEMENT IS A WAIVER OF THE PARTIES'
RIGHTS TO A CIVIL COURT ACTION FOR A DISPUTE RELATING TO BREACH OF THE PARTIES'
EMPLOYMENT AGREEMENT, TERMINATION OF THAT EMPLOYMENT OR ALLEGED UNLAWFUL
DISCRIMINATION, WHICH INCLUDES RETALIATION OR SEXUAL OR OTHER UNLAWFUL
HARASSMENT; ONLY AN ARBITRATOR, NOT A JUDGE OR JURY, WILL DECIDE THE DISPUTE.
Arbitrable Disputes arising out of or related to employment, or the
termination of such employment or alleged unlawful discrimination, including
retaliation or sexual or other unlawful harassment, shall include, but not be
limited to, the following: alleged violations of federal, state and/or local
constitutions, statutes or regulations; claims based on any purported breach of
contractual obligation, including breach of the covenant of good faith and fair
dealing; and claims based on any purported breach of duty arising in tort,
including violations of public policy.
The following types of employment disputes are not subject to this ADR
Agreement: (1) disputes related to workers' compensation and unemployment
insurance; (2) claims for benefits covered by a separate benefit plan that
provides for arbitration; and (3) claims subject to Sections 7 through 14 of the
Employment Agreement. Also, nothing in the Employment Agreement or in the ADR
Agreement shall be construed as precluding Berman from filing a charge with the
Equal Employment Opportunity Commission ("EEOC"), the National Labor Relations
Board ("NLRB") or other federal, state or local agencies, seeking administrative
assistance in resolving claims. However, any claim that cannot be resolved
administratively through such an agency shall be subject to the Employment
Agreement and the ADR Agreement.
o Request For Arbitration
o Attempt At Informal Resolution Of Disputes
Prior to the submission of any Arbitrable Dispute to arbitration, Berman
and VaxGen shall attempt to resolve the dispute informally as set forth below.
Berman and VaxGen will select a mediator from a list provided by the
Federal Mediation and Conciliation Service or other similar agency who will
assist the parties in attempting to reach a settlement of the dispute. The
mediator may make settlement suggestions to the Parties but shall not have the
power to impose a settlement upon them. If the dispute is resolved in mediation,
the matter shall be deemed closed. If the dispute is not resolved in mediation
and goes to the next step (binding arbitration), any proposals or compromises
suggested by either of the parties or the mediator shall not be referred to in
or have any bearing on the arbitration procedure. The mediator cannot also serve
as the arbitrator in the subsequent proceeding unless all parties expressly
agree in writing.
o Arbitration Procedures
The party desiring arbitration, whether Berman or VaxGen, must submit a
"Request For Arbitration" in
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writing to the other party within the time period required by the law that
applies to the claim under the applicable statute of limitations. If the
"Request for Arbitration" is not submitted in accordance with the aforementioned
time limitations, the party failing to do so will not be able to bring his
claims to this or any other forum. The requesting party may use a "Request for
Arbitration" form supplied by VaxGen (Appendix C). Alternatively, the requesting
party may create a "Request For Arbitration" form that, unless otherwise
required by law, clearly states "Request For Arbitration" at the beginning of
the first page and includes the following information:
1. A factual description of the dispute in sufficient detail to advise the
other party of the nature of the dispute;
2. The date when the dispute first arose;
3. The names, work locations and telephone numbers of any individuals,
including employees or supervisors, with knowledge of the dispute; and
4. The relief requested by requesting party.
The responding party may submit counterclaim(s) in accordance with
applicable law.
o Selection Of The Arbitrator
All disputes will be resolved by a single Arbitrator, the Arbitrator will
be mutually selected by VaxGen and Berman. If the parties cannot agree on an
Arbitrator, then a list of seven (7) arbitrators, experienced in employment
matters, shall be provided by the Judicial Arbitration Mediation Services
("JAMS/Endispute"). The Arbitrator will be selected by the parties who will
alternately strike names from the list. The last name remaining on the list will
be the Arbitrator selected to resolve the dispute. Upon selection, the
Arbitrator shall set an appropriate time, date and place for the arbitration,
after conferring with the parties to the dispute.
o The Arbitrator's Authority
The Arbitrator shall have the powers enumerated below:
1. Ruling on motions regarding discovery, and ruling on procedural and
evidentiary issues arising during the arbitration.
2. Ruling on motions to dismiss and/or motions for summary judgment
applying the standards governing such motions under the Federal Rules of Civil
Procedure.
3. Issuing protective orders on the motion of any party or third party
witness. Such protective orders may include, but are not limited to, sealing the
record of the arbitration, in whole or in part (including discovery proceedings
and motions, transcripts, and the decision and award), to protect the privacy or
other constitutional or statutory rights of parties and/or witnesses.
4. Determining only the issue(s) submitted to him/her. The issue(s) must be
identifiable in the "Request For Arbitration" or counterclaim(s). Except as
required by law, any issue(s) not identifiable in those documents is outside the
scope of the Arbitrator's jurisdiction and any award involving such issue(s),
upon motion by a party, shall be vacated.
o Discovery
The discovery process shall proceed and be governed by the standards of the
California Code of Civil Procedure and the Federal Arbitration Act. Each party
may obtain discovery necessary to adequately explore and arbitrate their
respective claims. The Arbitrator shall have the power to enforce the
aforementioned discovery rights and obligations by the imposition of the same
terms, conditions, consequences, liabilities, sanctions and penalties as can or
may be imposed in like circumstances in a civil action under the California Code
of Civil Procedure, except the power to order the arrest or imprisonment of a
person.
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o Hearing Procedure
The hearing shall be held at a location mutually agreed upon by the
parties, or as determined by the Arbitrator in the absence of an agreement, and
shall proceed according to the current version of the American Arbitration
Association's "National Rules for the Resolution of Employment Disputes" (the
"Rules") with the following amendments:
1. The Arbitrator shall rule at the outset of the arbitration on procedural
issues that bear on whether the arbitration is allowed to proceed.
2. Each party has the burden of proving each element of its claims or
counterclaims, and each party has the burden of proving any of its affirmative
defenses.
3. In addition to, or in lieu of closing argument, either party shall have
the right to present a post-hearing brief, and the due date for exchanging any
post-hearing briefs shall be mutually agreed on by the parties and the
Arbitrator, or determined by the Arbitrator in the absence of agreement.
4. The Rules shall otherwise be modified to the extent necessary to be
consistent with applicable law.
o Substantive Law
1. The parties agree that they will be afforded the identical legal,
equitable, and statutory remedies as would be afforded them were they to bring
an action in a court of competent jurisdiction.
2. The applicable substantive law shall be the law of the State of
California and/or federal law. Choice of substantive law in no way affects the
procedural aspects of the arbitration, which are exclusively governed by the
provisions of this ADR Agreement.
o Opinion And Award
The Arbitrator shall issue a written opinion and award, in conformance with
the following requirements:
1. The opinion and award must be signed and dated by the Arbitrator.
2. The Arbitrator's opinion and award shall decide all issues submitted.
3. The Arbitrator's opinion and award shall set forth the findings of fact
and conclusions of law supporting each part of the opinion.
4. The Arbitrator shall have the same authority to award remedies, damages
and costs as provided to a judge and/or jury under parallel circumstances.
o Enforcement Of Arbitrator's Award
Following the issuance of the Arbitrator's decision, any party may petition
a court to confirm, enforce, correct or vacate the Arbitrator's opinion and
award under the Federal Arbitration Act, and/or applicable State law.
o Fees And Costs
Unless otherwise required by law, fees and costs shall be allocated in the
following manner:
1. Each party shall be responsible for its own attorneys' fees, except as
otherwise provided by law for the particular claim(s) at issue.
2. VaxGen shall pay the entire cost of the arbitrator's services, the
facility in which the arbitration is to be held, and any similar costs that
Berman would not have otherwise incurred if the dispute were adjudicated in a
court of law
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rather than through arbitration.
3. VaxGen shall pay the entire cost of a court reporter to transcribe the
arbitration proceedings. Each party shall advance the cost for said party's
transcript of the proceedings. Each party shall advance its own costs for
witness fees, service and subpoena charges, copying, or other incidental costs
that each party would bear during the course of a civil lawsuit.
4. Each party shall be responsible for its costs associated with discovery,
except as required by law or court order.
o Severability
Each term, clause and provision of this ADR Agreement is separate and
independent, and should any term, clause or provision of this ADR Agreement be
found to be invalid or unenforceable, the validity of the remaining terms,
clauses, and provisions shall not be affected. As to those terms, clauses and
provisions found to be invalid or unenforceable, they shall be replaced with
valid and enforceable terms, clauses or provisions or shall be modified, in
order to achieve, to the fullest extent possible, the economic, business and
other purposes of the invalid or unenforceable terms, clauses or provisions.
Dated:_________________ ______________________________
Phillip W. Berman, Ph.D.
Dated:_________________ VaxGen, Inc.
By:___________________________
Title:________________________
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APPENDIX C
REQUEST FOR ARBITRATION FORM
ALTERNATIVE DISPUTE RESOLUTION AGREEMENT
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Submission This form (or, alternatively, a form that includes the
Requirement information below) must be submitted by the individual
claimant to the CEO within the time period required by the
law that applies to the claim. If VaxGen requests
arbitration, the form must also be served on the individual
within the appropriate time period.
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State the nature of the claim in detail:
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(Continue on reverse and add pages if necessary)
Enter the date of termination or date(s) of alleged incident(s) (i.e., date of
last instance of unlawful discrimination, sexual or other unlawful harassment):
_______/________/_______
Month Day Year
Provide the names and work locations of any individuals, including employees or
supervisors, with knowledge of the dispute:
Name Job Title Work Location
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Describe the relief requested (i.e., what you want done):
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(Please attach any documents relevant to the dispute.)
Signature of Party Requesting Arbitration:
DATED:______________ ______________________________
Phillip W. Berman, M.D., D.Sc.
-- or --
DATED:______________ VaxGen, Inc.
By:___________________________
Title:________________________