Sample Business Contracts

Employment Agreement - VaxGen Inc. and Robert C. Nowinski

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                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT

of January 1, 1998, that AGREEMENT made and entered into as of December 19,
1995, by and between Robert C. Nowinski, a resident of Washington ("Nowinski"),
VaxGen Inc., (formerly Genenvax Inc.), a Delaware corporation (the "Company"),
and Genentech, Inc., a Delaware corporation ("Genentech").

                              W I T N E S S E T H:

        WHEREAS, the Company and Nowinski desire to set forth in writing the
terms of their amended agreement with respect to Nowinski's employment;

        NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, the parties agree as follows:

        1. Employment. The Company hereby employs Nowinski as its Chairman of
the Board of Directors and Nowinski hereby accepts such employment upon the
terms and conditions set forth in this Agreement.

        2. Term. Nowinski's employment, which began on November 22, 1995, will
continue for a term ending December 31, 2002. Thereafter, Nowinski's employment
will be automatically renewed for successive one-year terms, unless notice of
termination is given by either party to the other at least thirty days before
the expiration of the then-current term.

        3. Business Plan. The Business Plan of the Company will be to develop,
test, and market a vaccine for human immune deficiency virus (HIV).

        4. Duties. Nowinski will perform such executive and administrative
duties consistent with his position as Chairman of the Board of Directors of the
Company as are reasonably assigned to him by the Board and will be given such
executive and administrative powers and authority as may be needed to carry out
those duties, and as are consistent with the office of the Chairman of the Board
of Directors as set forth in the Charter and Bylaws of the Company. Nowinski
will be responsible as Chairman of the Board for corporate finance, supervision
of all securities related matters, including corporate finance and reporting
requirements to government agencies, and corporate shareholder and public
relations. Nowinski will also serve on the Scientific Advisory Board of the
Company and shall be the principal representative for VaxGen with its senior
shareholder, Genentech. The Company will provide to Nowinski an office and staff
in Seattle as are required for the performance of his duties. Nowinski agrees to
serve as Director of the Company and the Company agrees to cause Nowinski to be
elected to the Board of Directors and to be elected Chairman of the Board of

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        5. Compensation. The Company will pay Nowinski an annual base salary of
$250,000, commencing January 1, 1998. Nowinski's annual base salary will be
payable in equal installments not less frequently than monthly.

        6. Expenses. The Company will reimburse Nowinski for travel,
entertainment and other expenses reasonably incurred by him in connection with
his employment under this Agreement upon presentation of appropriate vouchers or

        7. Benefits. During the terms of his employment, Nowinski will be
entitled to the fringe benefits that are generally made available to all
employees of the Company.

        8. Early Termination of Employment. Employment under this Agreement will
terminate prior to expiration of the term upon any of the following:

                (a) Death. Nowinski's employment hereunder shall terminate upon
his death.

                (b) Disability. The Company may terminate Nowinski's employment
hereunder if he has been unable to perform his duties hereunder for a period of
six consecutive months and if he has not resumed on a full-time basis the
performance of such duties within thirty days after written notice from the
Company of its intent to terminate his employment due to disability.

                (c) Cause. The Company may terminate Nowinski's employment
hereunder for Cause. For purposes of this Agreement, the term "Cause" means (i)
willful and repeated failure by Nowinski to perform his duties hereunder which
is not remedied within thirty days after written notice from the Company, (ii)
conviction of Nowinski for a felony, or (iii) Nowinski's dishonesty that is
demonstrably and materially injurious to the Company.

                (d) Termination by Nowinski. Nowinski may terminate his
employment hereunder for Good Reason. For purposes of this Agreement, the term
"Good Reason" shall mean (i) the Company substantially reducing Nowinski's
duties, position, authority or responsibility hereunder and not reinstating the
same within thirty days after written notice from Nowinski, or (ii) breach by
the Company of its obligations under paragraphs 4 through 8 hereof if not
remedied within thirty days after written notice from Nowinski, (iii) reduction
of Nowinski's compensation, (iv) change of control of the Company (see Section
18), (v) Nowinski's loss of board position.

                (e) Termination without Cause. If termination by the Company
occurs without cause or with cause under Section 9(c)(i) (but not under Sections
9(c)(ii) or (iii)) or if termination by Nowinski for Good Reason occurs, the
Company shall be obligated to pay in full all compensation due for the remaining
duration of this contract within 10 days of the notice of termination.

<PAGE>   3

        9. Restrictive Covenants.

                (a) Confidential Information. Nowinski acknowledges that, during
the course of his employment with the Company, he will have access to
confidential information and biological materials not generally known outside
the Company (whether conceived or developed by Nowinski or others) and
confidential information and biological materials entrusted to the Company by
third parties, including, without limitation, trade secrets, techniques,
formulae, biological materials, marketing and other business plans, data,
strategies and forecasts (collectively, "Confidential Information"). Any
Confidential Information conceived or developed by Nowinski during employment
will be the exclusive property of the Company. Except as may be necessary in
connection with the Company's business, Nowinski will not (during or after his
employment with the Company) disclose Confidential Information to any third
person, firm or entity or use Confidential Information for his own purposes or
for the benefit of any third person, firm or entity. In his work for the
Company, Nowinski will refrain from unauthorized use or disclosure of
information and biological materials owned by former employers or other third

                (b) Inventions. Nowinski will promptly disclose to the Company
any discoveries, inventions, formulae and techniques, whether or not patentable,
made, conceived or first reduced to practice by him, either alone or together
with others, during his employment with the Company (collectively, the
"Inventions"). Nowinski hereby assigns to the Company all of his right, title
and interest in and to any Inventions. Nowinski will execute such documents and
take such other actions as may be reasonably requested by the Company (at the
Company's expense) to enable the Company to apply for, obtain, maintain and
enforce patents on any of the Inventions or to facilitate the transfer or
assignment of any of the Company's rights with respect to the Inventions and

                NOTICE (REQUIRED BY WASHINGTON STATUTE): This subparagraph 9(b)
does not apply to an invention for which no equipment, supplies, facility or
trade secret information of the Company was used and which was developed
entirely on Nowinski's own time, unless (i) the invention relates (A) directly
to the business of the Company, or (B) to the Company's actual or demonstrably
anticipated research of development, or (ii) the invention results from any work
performed by Nowinski for the Company.

                (c) Company Documents. Upon the termination of his employment,
Nowinski will deliver to the Company all documents and other tangible property
containing Confidential Information which are then in his possession or control.

                (d) Covenant Not to Compete. Nowinski acknowledges that his
duties hereunder and the services he will provide to the Company are of a
special, unique, unusual and extraordinary character, which gives this Agreement
particular value to the Company, and that it would be difficult to employ any
individual or individuals to replace Nowinski in the performance of such duties
and services. Therefore, during

<PAGE>   4

employment and for a period of one year after the termination of his employment
with the Company, Nowinski will not, directly or indirectly, enter into,
organize, control, engage in, be employed by, serve as a consultant to, be an
officer or director of or have any direct or indirect investment in any
business, person, partnership, association, firm or corporation engaged in any
business activity (including, but not limited to, research, development,
manufacturing, selling, leasing, licensing or providing services) which is
competitive with the business and/or scientific activities that the Company is
developing or exploiting during Nowinski's employment with the Company. Nothing
contained in this Agreement shall be construed to prevent Nowinski from owning
at any time, directly or indirectly, as much as 5% of any class of equity
securities issued by any corporation or other entity which are publicly traded
and registered under the Securities and Exchange Act of 1934, as amended.

                (e) Miscellaneous. The restrictive covenants set forth in the
preceding Section 9(d) will not be applicable or enforceable if Nowinski's
employment is terminated prior to the expiration of the term of this Agreement
either by the Company without Cause and for disability pursuant to subparagraph
8(b) or by Nowinski for Good Reason.

        10. Indemnification. The Company will indemnify Nowinski to the fullest
extent permitted by law and will hold harmless from and against any claim,
liability or expense (including reasonable attorneys' fees) made against or
incurred by Nowinski in connection with his relationship with the Company. This
obligation will include, without limitation, prompt payment in advance of any
and all costs of defending the same, including attorney fees.

        11. No Impediment to Agreement. Except as otherwise disclosed herein,
Nowinski hereby represents to the Company that he is not, as of the date hereof,
and will not be, during employment with the Company, employed under contract,
oral or written, by any other person, firm or entity and is not and will not be
bound by the provisions of any restrictive covenant or confidentiality agreement
which would constitute an impediment to, or restriction upon, his ability to
enter into this Agreement and to perform the duties of his employment.

        12. Notices. Any notice under this Agreement must be in writing and will
be deemed to have been given when personally delivered or mailed by first-class
or express mail to the recipient at the following address (or such other address
as shall be specified by prior written notice):

        To the Company:                     VaxGen, Inc.
                                            501 Forbes Blvd.
                                            So. San Francisco, CA 94080

        Copy to:

<PAGE>   5

        To Dr. Robert C. Nowinski:          23210 Woodway Park Road
                                            Edmonds, WA 98020

        13. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law. If any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or the interpretation of this Agreement in any other jurisdiction.

        14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the law of

        15. Successors and Assigns. The services and duties to be performed by
Nowinski hereunder are personal and may not be assigned. This Agreement shall be
binding upon and inure to the benefit of the Company, its successors and
assigns, and Nowinski, his heirs and representatives.

        16. Success Bonus. In recognition of the success of the Company,
Nowinski shall receive a one-time success bonus. Success shall be considered to
have been achieved if either of the following tests is met (either of which
shall be an Event of Success): (i) the public market valuation of a share of the
Company's stock as computed on a 30 day trailing average is equal to or greater
than 4 times the valuation of the initial private placement ($3.50 per share),
or (ii) there is an acquisition of the Company through tender offer or otherwise
in which all shareholders have the opportunity to participate and realize a
value equal to or greater than 4 times the valuation of the initial private
placement ($3.50 per share). The Company shall notify Nowinski when an Event of
Success has occurred. In either case Nowinski shall be entitled to receive a
success bonus of 250,000 shares of common stock which shall be delivered to
Nowinski at Nowinski's request within 24 months of becoming entitled to receive
such shares. The effective date of this section shall be the date on which the
transfer of control occurs.

        17. Change of Control. In the event following the closing of the
original public offering or private financing, the Company undergoes a change of
control by virtue of any person or entity, or affiliated group of persons or
entities, increasing its shareholding in the Company to a level of 50% or more
of the voting stock of the Company, this Agreement shall terminate and (i) all
salary obligations to Nowinski outstanding in this Agreement shall be paid in

<PAGE>   6
        18.     Complete Agreement. This Agreement constitutes the entire
agreement between the parties concerning the subject matter hereof and
supersedes all prior agreements between the parties concerning the subject
matter hereof.

        19.     Waiver. Failure by either party to insist upon strict adherence
to any one or more of the provisions of this Agreement on one or more occasions
shall not be construed as a waiver, nor shall it deprive that party of the
right to require strict compliance thereafter.

        20.     Survival. The obligations set forth in paragraphs 10(a) and 11
shall survive termination of this Agreement.

        21.     Amendments. No amendment hereto, or waivers or releases of
obligations or liabilities hereunder, shall be effective unless agreed to in
writing by the parties hereto.

        22.     Withholding. The Company may deduct and withhold from the
payments to be made to Nowinski hereunder any amounts required to be deducted
and withheld by the Company under the provisions of any statute, law,
regulation or ordinance now or hereafter enacted.

        IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date first above written.

VaxGen, Inc.

Its: President

Robert C. Nowinski