Exhibit 10.16


 


BIOMEDICINES, INC.


 


14 May, 1999


 


PERSONAL AND CONFIDENTIAL


 


James Ahlers


 


Dear James:


 


On behalf of the Board of Directors of BioMedicines, Inc., I would like
to offer you the position of Director of Finance and Operations. Initially you will
report to me in this capacity. This reporting relationship is, however, potentially
subject to change as we have discussed.


 


In your role as Director, you will have responsibility for financial planning
and management, the establishment of financial policies for the company, the
creation of budgets and active management of the budgetary process, the
generation of timely management accounting reports, and other responsibilities
that may be added from time to time. In your role as head of operations, you will
also have responsibility for facilities, telecommunications and management
information systems. I anticipate your active involvement in related hiring
activities and, importantly, for preparing the company for Board related
activities. As the company progresses to larger, more complex and more public
financing(s), it is my hope the you will play an increasingly responsible and
active role, both privately and publicly, on behalf of BioMedicines.


 


This letter will serve to confirm the terms of your employment with BioMedicines,
such employment to recommence on 23 March 2000 to begin on 16 June 1999 or
sooner by mutual agreement. If the terms discussed below are acceptable to you,
please sign this confirmation letter where indicated and return it to me, retaining
a copy for your records. As used herein, the term “Company” refers to
BioMedicines, Inc.


 


1.             COMPENSATION.


 


(a)           SALARY, SIGN-ON
BONUS AND EXPENSE REIMBURSEMENTS. You will be paid a monthly salary of
$10,833.33, and if you respond favorably with seven days of the date shown
above, a one sign-on bonus of $12,000.00, less applicable withholdings.
Currently, salary payments are made twice a month. Changes, if any, in your
annual salary will be based on your performance and applicable Company
policies. In addition, all reasonable business expenses will be reimbursed so
long as they are incurred in the ordinary course of business.


 


(b)           STOCK OPTIONS. It
will be recommended that you receive an option to purchase up to 60,000 shares
of common stock, such number and related purchase price to be approved by the
Board of Directors at the sole discretion of the Board. Such approval is not
automatic. It is anticipated that this grant, if approved, will vest at the
rate of approximately 2.083% per month (i.e., 25% per year), subject to the
condition that the first 12 months of options will vest only after you have
satisfactorily completed 12 months of employment (i.e. options on 15,000 shares
will vest only on the first anniversary of your employment). Thereafter,


 


	
  James Ahlers

  	
  14 May, 1999

  



 





















 


vesting will occur monthly. Other terms, or terms that become
applicable after the date of this letter, will appear in the BioMedicines Stock
Option Plan of which you will receive a copy in the event you accept this
offer. In the event of a stock split or “reverse split” the number of options
and the option price may be adjusted.


 


(1)           ACCELERATED VESTING


 


In addition, as a further incentive to you while you are an employee,
from the 60,000 shares identified above, it will be recommended to the Board of
Directors that vesting accelerate (such that you will be fully vested) in the following
number of shares associated with the stated events in which you play a material
role:


 


4,000 shares in the event that the company raises at least $20 million
in a private placement within the first two years of your employment 6,000
shares in the event that the company completes a successful public offering on
any recognized stock exchange.


 


Moreover, in the event that you are dismissed without cause (see
TERMINATION below), it will be recommended that acceleration will still apply
in the event that, for an activity in whose management you played a material
role, said event is achieved within 90 days of your dismissal without good
cause. The only exception to this will be the need for the Company to correct a
material error on your part in order to facilitate the completion of said event(s).


 


These proposed accelerations, unless subsequently modified by the Board
of Directors, will apply only once. These proposed accelerations will not
apply, however, to any event for which your involvement is considered not to be
material, whether or not such events transpire.


 


In addition, in the event that the Company is fully acquired or that substantially
all of the Company’s assets are acquired or transferred in a merger or
acquisition, and if you are not offered a position in the surviving or
acquiring entity that is substantially the same in salary, benefits, and responsibilities
as the position you held immediately prior to closing, then it will be
recommended that vesting in one-half (50%) of your remaining unvested options
will accelerate. Such acceleration will be at the discretion of the Board.


 


In addition, you understand and acknowledge, however, that the Board of
Directors remains free to change the terms of the grant and vesting schedule at
any time for any reason at its sole discretion.


 


(c)           HEALTH BENEFITS.
Health insurance coverage for you will be provided under the Company’s group
health plan when and if such a plan is adopted by the Company. You will be
entitled to all health and medical benefits as are provided to other employees.
In addition, you will be entitled to participate in the Company’s 401k plan and
all other sponsored employee benefit plans as they are adopted by BioMedicines.


 


(d)           VACATION, HOLIDAYS
AND SICK LEAVE. You will receive three (3) weeks of paid vacation per year as
described in the Company’s Policy Manual. You are encouraged to plan for and to
take, under appropriate circumstances, the vacation time to which you are
entitled. Sick leave and


 


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holidays will be provided in accordance with the Company’s policies,
which will be announced from time to time.


 


2.             TERMINATION. You or
the Company may terminate the employment relationship at any time, for any
reason, with or without good cause. However, if the Company terminates your
employment without good cause, the Company will continue to pay your monthly
salary on the regular monthly basis for three (3) months from the date of your
termination, less all applicable withholdings. Unvested options, if any, will
also continue to vest for the same three (3) months from the date of your
termination. For purposes of this Agreement, “good cause” means gross
misconduct, wrongful acts or omissions that may adversely affect the Company’s
business, neglect of duties whether or not assumed by another employee or
company consultant or agent, breach of any terms or conditions of this
Agreement or the Company’s Proprietary Information Agreement, death, or any
disability that renders you incapable of diligently or expeditiously performing
all of your essential duties and obligations to the Company for any period of
three (3) consecutive months or a total of ninety (90) days, whether or not
consecutive, in any twelve (12) month period.


 


3.             NON-COMPETE AND
OUTSIDE ACTIVITIES. You agree that, while serving as an employee of the
Company, you will not engage in any activity which is competitive with the Company
and will give your sole and only loyalty to the Company. It is understood that
buying and selling of securities of any public company does not constitute a
violation of this agreement. An investment in a private company other than, or
not affiliated with, the Company may be construed as a violation of this
non-compete clause unless you have received the prior approval of the Board of
Directors or Chief Executive Officer of the Company, as appropriate. It is
understood, Mr. Ahlers, that any reasonable obligations that you may have to
assist or cooperate with a previous employer in legal proceedings, in the
issuance of patents or prosecution of patent applications, or in compliance
with requests from governmental authorities do not constitute violations of
this agreement, provided that these obligations are not fulfilled on Company
time and do not adversely impact in a material way the performance of your
current duties to the Company.


 


4.             PROPRIETARY
INFORMATION AND INVENTIONS AGREEMENT. Your acceptance of this offer is
contingent upon the execution of the Company’s Proprietary Information and
Inventions Agreements, copies of which are enclosed for your review and
execution.


 


5.             ARBITRATION. Any
controversy between the parties hereto involving the construction or
application of any terms, covenants or conditions of this Agreement, or any
claims arising out of or relating to this Agreement or the breach thereof or
with your employment with the Company or any termination of that employment,
except with respect to prejudgment remedies, will be submitted to and settled
by final and binding arbitration in San Francisco, California, in accordance
with the Model Employment Dispute Resolution Rules of the American Arbitration
Association (the “Rules”) then in effect, any arbitrator shall be selected
pursuant to such Rules and judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction thereof.


 


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To accept this offer, please sign in the space below, indicating your acceptance
and agreement to the terms contained herein. No amendment or modification of
the terms of this letter will be valid unless made in writing and signed by you
and an authorized officer of the Company.


 


Sincerely,


 


	
  /s/ M. Moran

  	
   

  
	
   

  
	
  Mark Moran, M.D.

  
	
  Chief Executive Officer

  
	
   

  
	
  /s/ James Ahlers

  	
   

  
	
  James Ahlers

  
	
   

  
	
  5/16/99

  	
   

  
	
  Date

  



 


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AMENDMENT TO ACCOUNTING SERVICES AND
OPERATIONS AGREEMENT


 


17 AUGUST 1999


 


In the event that you perform continuously and satisfactorily in your
role as consultant and financial advisor to BioMedicines, Inc. (the “Company”)
and shall return to full time employment with the Company within 1 year from
the date of execution of the ACCOUNTING SERVICES AND OPERATIONS AGREEMENT (16 August
1999), then paragraph 1(b) of the employment agreement previously executed
between you and the Company (on 14 May 1999) shall be enforced as if you were
continuously a full time employee from your original date of full time
employment with the Company (15 June 1999), and other terms and conditions of
your renewed employment shall be renegotiated in good faith and incorporated
into a revised employment agreement.


 


	
  EXECUTED as of the date written above.

  	
   

  
	
   

  	
   

  
	
  for BIOMEDICINES

  	
  for VENDOR

  
	
   

  	
   

  
	
  /s/ Mark Moran, M.D.

  	
   

  	
  /s/ James Ahlers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Mark Moran, M.D.

  	
  James Ahlers

  
	
  Chief Executive Officer

  	
   

  
	
  BioMedicines, Inc.