EXHIBIT 10.6
November 29, 1999
Ms. Theresa M. Mitchell
296 Maywood Drive
San Francisco, CA 94127
Dear Theresa:
On behalf of ORATEC Interventions, Inc. (the "Company"), I am pleased to
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offer you the position of Vice President, Regulatory and Clinical Affairs, and
Quality Assurance of the Company. Speaking for myself, as well as the other
members of the Company's management team, we are all very impressed with your
credentials and we look forward to your future success in this position.
The terms of your new position with the Company are as set forth below:
1. Position.
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a. You will become the Vice President, Regulatory and Clinical Affairs
and Quality Assurance of the Company, working out of the Company's headquarters
office in Menlo Park, CA. You will report to the Company's President and Chief
Executive Officer.
b. You agree to the best of your ability and experience that you will
at all times loyally and conscientiously perform all of the duties and
obligations required of and from you pursuant to the terms hereof. During the
term of your employment, you further agree that you will devote all of your
business time and attention to the business of the Company, the Company will be
entitled to all of the benefits and profits arising from or incident to all such
work services and advice, you will not render commercial or professional
services of any nature to any person or organization, whether or not for
compensation, without the prior written consent of the Company's President and
Chief Executive Officer, and you will not directly or indirectly engage or
participate in any business that is competitive in any manner with the business
of the Company. Nothing in this letter agreement will prevent you from accepting
speaking or presentation engagements in exchange for honoraria or from serving
on boards of charitable organizations, or from owning no more than one percent
(1%) of the outstanding equity securities of a corporation whose stock is listed
on a national stock exchange.
November 29, 1999
Page 2
2. Start Date. Subject to fulfillment of any conditions imposed by this
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letter agreement, you will commence this new position with the Company on
December 13, 1999 (the "Start Date").
3. Proof of Right to Work. For purposes of federal immigration law, you
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will be required to provide to the Company documentary evidence of your identity
and eligibility for employment in the United States. Such documentation must be
provided to us within three (3) business days of your Start Date, or our
employment relationship with you may be terminated.
4. Compensation.
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a. Base Salary. You will be paid a bi-weekly salary of $5,769.23,
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which is equivalent to $150,000 on an annualized basis (the "Base Salary").
Your salary will be payable in two equal payments per month pursuant to the
Company's regular payroll policy (or in the same manner as other officers of the
Company).
b. Incentive Bonus. You will be eligible to receive an annual
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incentive bonus of $25,000 for the calendar year ending December 31, 2000.
Payment of the bonus will be based on achievement of specified corporate and
individual performance targets mutually agreed upon by you and the Company's
President and Chief Executive Officer within 60 days of your Start Date. You
will also be eligible to earn incentive bonuses in future years, again based on
achievement of objectives.
c. Annual Review. Your Base Salary will be reviewed at the end of
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each calendar year as part of the Company's normal salary review process.
5. Stock Options.
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a. Initial Grant. In connection with the commencement of your
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employment, the Company will recommend that the Board of Directors grant you an
option to purchase 120,000 shares of the Company's Common Stock ("Shares") with
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an exercise price equal to the fair market value on the date of the grant. These
option shares will become exercisable at the rate of twelve forty-eighths
(12/48) of the Shares twelve months after the Vesting Commencement Date and one
forty-eighth (1/48) of the Shares at the end of each calendar month thereafter.
The Vesting Commencement Date will be your Start Date. Vesting will, of course,
depend on your continued employment with the Company. Notwithstanding the above,
in the event that (i) your employment is terminated by the Company or a
successor other than for Cause (as defined below), or (ii) your job duties,
responsibilities and requirements or compensation are materially reduced or
changed such that they are inconsistent with your prior duties, responsibilities
and requirements or compensation, in either case in connection with, or as a
result of, a Change of Control (as defined below), one hundred percent (100%) of
the option that has not yet become exercisable shall become exercisable on the
effective date of such termination, reduction or change. For purposes of this
letter, a termination or material reduction or change will be deemed to have
occurred in connection with, or as a result of, a Change in Control if it occurs
within 24 months of such Change in Control. The option will be an incentive
stock option to the maximum extent allowed
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November 29, 1999
Page 3
by the tax code and will be subject to the terms of the Company's 1999 Stock
Plan and the Stock Option Agreement between you and the Company.
b. Subsequent Option Grants. Subject to the discretion of the
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Company's Board of Directors, you may be eligible to receive additional grants
of stock options from time to time in the future, on such terms and subject to
such conditions as the Board of Directors shall determine as of the date of any
such grant.
6. Employee Benefits. You will be entitled to participate, to the extent
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you are eligible under the terms and conditions thereof, in any medical
insurance plans, 401(k) plans, deferred compensation plans, life insurance
plans, vacation, retirement or other employee benefit plans which are generally
available to executives of the Company or are available to senior executives or
a select group of executives of the Company and which may be in effect from time
to time during your employment with the Company. The Company shall be under no
obligation to institute or continue the existence of any employee benefit plan
described herein and may from time to time amend, modify or terminate any such
employee benefit plan.
7. Severance Agreement. If your employment is terminated by the Company
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or its successor for any reason other than Cause, as defined below, you will be
entitled to receive continuation of your Base Salary and medical insurance
benefits for a period of 6 months following the date of termination.
8. Definitions.
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a. Cause. For purposes of this letter agreement, "Cause" shall mean
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(a) willful misconduct or gross negligence in performance of your duties
hereunder; (b) refusal to comply in any material respect with the legal
directives of the Company's Board of Directors so long as such directives are
not inconsistent with your position and duties, which is not remedied (if
remediable) within twenty (20) working days after written notice from the
Company's Board of Directors, which written notice shall state that failure to
remedy such conduct may result in termination for Cause; (c) a deliberate
attempt to do an injury to the Company; (d) conduct, dishonest, fraudulent or
otherwise, that materially discredits the Company or is materially detrimental
to the reputation of the Company; (e) conviction of a felony or a crime
involving moral turpitude causing material harm to the standing and reputation
of the Company; or (f) material breach of any element of the Company's
Proprietary Information Agreement, including without limitation, the theft or
other misappropriation of the Company's proprietary information, in each case as
determined in good faith by the Company's Board of Directors.
b. Change of Control. For purposes of this letter agreement, a
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"Change of Control" shall mean the occurrence of any of the following events:
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(i) an acquisition of the Company by another entity by means of any transaction
or series of related transactions (including,
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November 29, 1999
Page 4
without limitation, any reorganization, merger or consolidation but excluding
any merger effected exclusively for the purpose of changing the domicile of the
Company), or (ii) a sale of all or substantially all of the assets of the
Company (collectively, a "Merger"), so long as in either case (x) the Company's
shareholders of record immediately prior to such Merger will, immediately after
such Merger, hold less than fifty percent (50%) of the voting power of the
surviving or acquiring entity, or (y) the Company's shareholders of record
immediately prior to such Merger will, immediately after such Merger, hold less
than sixty percent (60%) of the voting power of the surviving or acquiring
entity and a majority of the members of the Board of Directors of the surviving
or acquiring entity immediately after such Merger were not members of the Board
of Directors of the Company immediately prior to such Merger.
9. Limitation on Change of Control Benefits. In the event that the
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severance and stock option acceleration benefits provided in this letter
agreement in connection with, or as a result of, a Change of Control of the
Company (i) constitute "parachute payments" within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code") and (ii) but for
this Section, would be subject to the excise tax imposed by Section 4999 of the
Code, then such benefits shall be payable either: (a) in full, or (b) as to such
lesser amount which would result in no portion of such benefits being subject to
excise tax under Section 4999 of the Code, whichever of the foregoing amounts,
taking into account the applicable federal, state and local income taxes and the
excise tax imposed by Section 4999, results in your receipt on an after-tax
basis, of the greatest amount of benefits, notwithstanding that all or some
portion of such benefits may be taxable under Section 4999 of the Code. Unless
you and the Company otherwise agree in writing, any determination required under
this Section 9 shall be made in writing by independent public accountants
appointed by you and reasonably acceptable to the Company (the "Accountants"),
whose determination shall be conclusive and binding upon you and the Company for
all purposes. For purposes of making the calculations required by this Section
9, the Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of Section 280G and 4999 of the Code. The Company
and you shall furnish to the Accountants such information and documents as the
Accountants may reasonably request in order to make a determination under this
Section. The Company shall bear all costs the Accountants may reasonably incur
in connection with any calculations contemplated by this Section 9.
10. Proprietary Information Agreement. Your acceptance of this offer and
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commencement of employment with the Company is contingent upon the execution,
and delivery to an officer of the Company, of the Company's Proprietary
Information Agreement, a copy of which is enclosed for your review and execution
(the "Proprietary Information Agreement"), prior to or on your Start Date.
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11. Confidentiality of Terms. You agree to follow the Company's strict
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policy that employees must not disclose, either directly or indirectly, any
information, including any of the terms of this agreement, regarding salary,
bonuses, or stock purchase or option allocations to any person, including other
employees of the Company; provided, however, that you may discuss such terms
with members of your immediate family and any legal, tax or accounting
specialists who provide you with individual legal, tax or accounting advice.
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November 29, 1999
Page 5
12. At-Will Employment. Notwithstanding the Company's obligation
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described in Sections 5a, 7 or elsewhere herein, your employment with the
Company will be on an "at will" basis, meaning that either you or the Company
may terminate your employment at any time for any reason or no reason, without
obligation or liability, except as specifically provided herein. We are all
delighted to be able to extend you this offer and look forward to working with
you. To indicate your acceptance of the Company's offer, please sign and date
this letter in the space provided below and return it to me, along with a signed
and dated copy of the Proprietary Information Agreement. This letter, together
with the Proprietary Information Agreement, set forth the terms of your
employment with the Company and supersede any prior representations or
agreements, whether written or oral. This letter may not be modified or amended
except by a written agreement, signed by the Company and by you.
Very truly yours,
ORATEC Interventions, Inc.
By: _______________________________________
Title: President and Chief Executive Officer
ACCEPTED AND AGREED:
THERESA M. MITCHELL
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Signature
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Date
Enclosure: Proprietary Information Agreement
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SCHEDULE 1
ESTIMATED RELOCATION EXPENSES
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