EXHIBIT 10.13
Second Amended Consulting Agreement - Xxxxxxxx Xxxx Capital
SECOND AMENDED AND RESTATED CONSULTING AGREEMENT
XXXXXXXX HILL CAPITAL PARTNERS, INC.
This SECOND AMENDED AND RESTATED CONSULTING AGREEMENT
(this "Agreement"), dated as of August 15, 2002, is entered
into by and among HELIX BIOMEDIX, INC., a Delaware
corporation ("Helix"), and XXXXXXXX XXXX CAPITAL PARTNERS,
INC., a California corporation ("Consultant").
PRELIMINARY RECITALS
WHEREAS, Helix and Consultant entered into a Consulting Agreement on
October 27, 2000 and an Amended and Restated Consulting Agreement on May 30,
2001 (the "Prior Agreements"), containing provisions relating to the services to
be provided to Helix by Consultant and the compensation to be paid by Helix to
Consultant; and
WHEREAS, Helix and Consultant desire to amend and restate the terms
governing the relationship between the parties; and
WHEREAS, Helix is a publicly owned biotechnology company which is engaged
in (i) developing, testing, patenting, and manufacturing synthetic bioactive
peptides (small proteins) having applications in the pharmaceutical and health
care fields and (ii) licensing its proprietary technology and in seeking
strategic corporate alliances for further development and commercialization of
its technology (collectively, the "Business"); and
WHEREAS, Helix desires outside professional assistance in various areas of
strategic and financial planning and believes that Consultant has experience and
expertise that will be valuable to Helix; and
WHEREAS, Helix desires to engage Consultant as a consultant, and Consultant
desires to perform consulting services for Helix, under the terms and conditions
set forth herein; and
WHEREAS, Helix anticipates receipt of $1M from an equity bridge financing
on or about September, 0000 ("Xxxxxx Xxxxxxxxx"); and
WHEREAS, Helix anticipates receipt of an additional $1.5M from an equity
financing occurring after receipt of the Bridge Financing funds and prior to
December 31, 2002 ("Next Round of Financing");
NOW, THEREFORE, in consideration of the premises, the mutual covenants
of the parties hereinafter set forth and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
-1-
1. Novation.
------------
Except as provided in sections 2.5(a) and 16 below, the Prior Agreements
are hereby extinguished and replaced in their entirety by this Agreement.
2. Consulting.
--------------
2.1 Consulting Services.
------------------------
Helix hereby engages Consultant, and Consultant hereby accepts such
engagement and agrees to serve as consultant to Helix concerning the
Business for a period of one year, beginning on the date hereof (the
"Consulting Period"). In connection with the performance of its duties,
Consultant shall cause Consultant's duties hereunder to be performed
primarily by Xxxxxxx X.-X. Xxxxxxx (the "Consulting Principal").
2.2 Duties.
-----------
Consultant shall faithfully and to the best of its ability perform the
duties assigned by the Board of Directors of Helix and shall serve under
the direction of the President and Chief Executive Officer of Helix. These
duties shall include, without limitation, the following duties:
(a) strategic planning,
(b) assisting Helix in developing and monitoring business and science
plans,
(c) assisting Helix in seeking additional financing,
(d) assisting Helix with efforts to enhance shareholder value, and
(e) reporting on a quarterly basis Consultant's progress in respect
of duties assigned by Board, in a format reasonably requested by
the Chief Executive Officer of Helix.
2.3 Relationship of Parties.
----------------------------
Consultant shall be deemed an independent contractor and not an
employee of Helix. All letterhead, business cards and promotional materials
used or distributed by Consultant shall present Consultant as a business
consultant to, and not an employee or principal of, Helix. Consultant shall
be responsible for all taxes associated with payment hereunder, including
but not limited to income taxes and social security taxes.
2.4 Expenses.
-------------
All ordinary and reasonable out-of-pocket expenses incurred by
Consultant solely as a result of the performance of Consultant's services
as assigned pursuant to Section 2.2 above, including reasonable travel
expenses, shall be reimbursed to Consultant by Helix, provided that
Consultant shall have submitted an invoice together with other
documentation of such expenses as Helix may reasonably require.
-2-
2.5 Compensation.
-----------------
(a) Consultant's current entitlement to options or warrants to
acquire Helix stock at $1.50 per share, not including any potential
entitlement contingent upon triggering events, shall survive this
Novation and vest in accordance with the provisions of the Prior
Agreements.
(b) As consideration for the services to be rendered by
Consultant hereunder, its agreement not to compete with Helix and its
agreement to promote services for and through Helix during the
Consulting Period, Helix hereby grants to Consultant warrants
("Warrants") to purchase an aggregate of 50,000 shares of the Helix's
common stock at an exercise price per share of the lower of $1.50 or
the price of the Next Equity Financing. Warrants shall have a ten-year
term, commencing on August 15, 2002 and ending on August 15, 2012,
when any and all unexercised Warrants granted herein shall expire and
terminate.
c) In addition to the compensation to be paid in the form of
warrants as referenced in paragraph 2.5(b) above, upon receipt by
Helix of Bridge Financing funds of $1M, Helix shall pay Consultant a
one-time lump sum payment of $18,000 and thereafter $1,500 per month
for the next twelve (12) months beginning on the first day of the
month following receipt of such funds.
(d) In addition to the compensation to be paid pursuant to
paragraph 2.5(b) and (c) above, upon receipt by Helix of funds of
$1.5M or more from the Next Equity Financing, Helix shall pay
Consultant an additional one-time lump sum payment of $18,000 and
thereafter an additional $1,500 per month for the next twelve (12)
months beginning on the first day of the month following receipt of
such funds.
(e) In the event of any change in the outstanding shares of
common stock by reason of any stock dividend or split,
recapitalization, merger, consolidation, combination or exchange of
shares or other similar corporate change, the maximum aggregate number
and class of shares of common stock which may be purchased by
Consultant pursuant to the Warrants will be equitably adjusted for
such event.
2.6 Restricted Stock
--------------------
(a) Consultant recognizes and understands that neither the
Warrants nor the shares of Common Stock of Helix to be purchased by
Consultant pursuant to the Warrants (collectively, the "Securities")
will be registered under the Securities Act of 1933 ("Securities Act"),
or under the securities laws of any state (the "securities laws").
-3-
(b) Consultant represents and warrants that (i) the Consulting
Principal has knowledge and experience in business, finance, securities
and investments, such experience being based on actual participation
therein, (ii) the Consulting Principal is capable of evaluating the
merits and risks of an investment in the Securities and the suitability
thereof as an investment therefor, (iii) the Consulting Principal is an
experienced and sophisticated investor in investments, including
investments similar to that of the Securities, (iv) Securities to be
acquired by it will be acquired solely for investment and not with a
view toward resale or redistribution in violation of the securities
laws, and no assurances have been made concerning the future results of
Helix or as to the value of the Securities, (v) it (and the Consulting
Principal) is an "accredited investor" within the meaning of Regulation
D promulgated by the United States Securities and Exchange Commission
(the "Commission") pursuant to the Securities Act, and (vi) the
Consulting Principal is the sole shareholder of Consultant.
(c) Consultant has consulted with its own counsel in regard to
the securities laws and is fully aware (i) of the circumstances under
which it is required to hold the Securities, (ii) of the limitations on
the transfer or disposition of the Securities, and (iii) that the
securities must be held indefinitely unless the transfer thereof is
registered under the securities laws or an exemption from registration
is available.
(d) Consultant and the Consulting Principal have been
furnished with a copy of the Annual Report on Form 10-KSB of Helix
filed with the Commission under the Securities Exchange Act of 1934, as
amended, for the fiscal year ended December 31, 2001. Helix has made
available to Consultant the opportunity to ask questions and receive
answers concerning the terms and conditions of the transactions
contemplated by this Agreement and to obtain any additional information
which they possess or could reasonably acquire the purpose of verifying
the accuracy of the information furnished to Consultant as set forth
herein or for the purpose of considering the transactions contemplated
hereby. Helix has offered to, and agrees during the term of this
Agreement, make available to Consultant upon request at any time all
exhibits filed by Helix with the Commission as part of any of the
reports filed therewith.
2.7 Company Information.
------------------------
In connection with Consultant's engagement, Helix will furnish
Consultant and/or the Consulting Principal with all information concerning
Helix which Consultant and/or the Consulting Principal shall reasonably
request. Helix represents and warrants that all such information concerning
Helix will be true and accurate in all material respects and will not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make statements therein not misleading in light
of the circumstances under which such statements are made. Helix
acknowledges and agrees that Consultant and the Consulting Principal will
be using and relying upon such information supplied by Helix and its
officers, agents and others concerning Helix without independent
investigation or verification thereof or independent appraisal by
Consultant or the Consulting Principal.
-4-
2.8 Restrictive Covenant.
-------------------------
Except as otherwise consented to in writing by Helix, such consent
being not unreasonably withheld, during the term of this Agreement and for
a period of two years thereafter, neither Consultant nor the Consulting
Principal shall either as an individual on his own account; as a partner,
joint venturer, consultant, agent, salesman for any person; as an officer,
director or stockholder (other than a beneficial holder of not more than 5%
of the outstanding voting stock of a company having at least 250 holders of
voting stock) of a corporation; or otherwise, directly or indirectly:
(a) enter into or engage in any business or consult with any
business or entity directly competitive with Helix anywhere in the
world;
(b) solicit or attempt to solicit any of Helix customers with
whom Consultant has had contact as a Consultant or employee of Helix
with the intent or purpose to perform for such customer the same or
similar services which Consultant performed for such customer during
the term of his service hereunder or employment by Helix;
(c) employ or solicit, or attempt to employ or solicit, for
himself or any third party, the employment of any of Helix's
employees; or
(d) induce or attempt to induce any employee, consultant or agent
of Helix to discontinue services to Helix.
Notwithstanding the above, Helix acknowledges and agrees that Consultant's
and Consulting Principal's existing relationships with Northwest
Biotherapeutics, Inc., VaxGen, Inc., and MediQuest Therapeutics, Inc. are not in
violation of this Section 2.8. The provisions of this Section 2.8 shall survive
the termination of this Agreement.
3. Assignment.
--------------
No party hereto may assign or delegate any of its rights or obligations
hereunder without the prior written consent of the other party hereto. Except as
otherwise expressly provided herein, all covenants and agreements contained in
this Agreement by or on behalf of any of the parties hereto shall be binding and
inure to the benefit of the respective legal representatives, heirs, successors
affiliates and assigns of the parties hereto, whether so expressed or not.
4. Severability.
----------------
If any provision of this Agreement is held to be unenforceable for any
reason, it shall be adjusted rather than voided, if possible, in order to
achieve the intent of the parties to the extent possible. In any event, all
other provisions of this Agreement shall be deemed valid and enforceable to the
full extent.
5. Counterparts.
----------------
This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original, but all of which taken together shall constitute
one and the same Agreement.
6. Descriptive Headings: Interpretation.
----------------------------------------
The descriptive headings in this Agreement are inserted for convenience of
reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement. The use of the word "including" in this
Agreement shall be by way of example rather than by limitation.
-5-
7. Notices.
-----------
All notices, demands or other communications to be given or delivered under
or by reason of the provisions of this Agreement shall be in writing and shall
be deemed to have been duly given if (i) delivered personally to the recipient,
(ii) sent to the recipient by reputable express courier service (charges
prepaid) or mailed to the recipient by certified or registered mail, return
receipt and postage prepaid, or (iii) transmitted by telecopy to the recipient
with a confirmation copy to follow the next day to be delivered by overnight
carrier. Such notices, demands and other communication shall be sent to the
addresses indicated below:
(a) If to Consultant:
Xxxxxxxx Hill Capital Partners, Inc.
0000 Xxxxxxxx Xxxxxx, Xxx. 00-X
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxxxx X.-X. Xxxxxxx
(b) If to Helix:
Helix Biomedix, Inc.
00000 00xx Xxx. XX
Xxxxxxx, XX 00000
Attn: Chief Executive Officer
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party. The
effective date of such notice shall be (w) the date such notice is personally
delivered, (x) three days after the date of mailing if sent by certified or
registered mail, (y) one day after date of delivery to the overnight courier if
sent by overnight courier or (z) the next business day after the date of
transmission by telecopy or e-mail.
8. Confidential Information and Discoveries.
--------------------------------------------
Consultant and the Consulting Principal agree that all information of a
technical or business nature such as know-how, trade secrets, secret business
information, plans, data, processes, techniques, customer information,
inventions, discoveries, formulae, patterns, devices, etc., ("Confidential
Information") pertaining to the business of Helix, is a valuable business
property right of Helix. Consultant and the Consulting Principals agree that
such Confidential Information, whether in written, verbal or model form, shall
not be disclosed to anyone outside the employment of Helix or otherwise used by
Consultant or the Consulting Principal for any purpose other than fulfillment of
their respective obligations under this Agreement, without the express
authorization of Helix. Confidential Information does not include information
which Consultant or the Consulting Principal can demonstrate (i) has become
generally available to the public other than as a result of a disclosure by
Consultant or the Consulting Principal, (ii) has become available to Consultant
or the Consulting Principal on a non-confidential basis from a source other than
Helix, provided such source is not bound by a confidentiality agreement with
Helix or otherwise prohibited from transmitting the information to Consultant or
the Consulting Principal by a contractual, legal or fiduciary obligation.
-6-
Any and all improvements, inventions, discoveries, formulae or processes in
any way related to Helix's business which Consultant or the Consulting Principal
may conceive or make during his regular working hours or otherwise shall be the
sole and exclusive property of Helix and Consultant and the Consulting Principal
will disclose the same to Helix and will, whenever requested by Helix to do so
(either during the terms of this Agreement or thereafter), execute and assign
any and all applications, assignments and/or other instruments and do all things
which Helix may deem necessary or appropriate in order to apply for, obtain,
maintain, enforce and defend patents, copyrights, trademarks or other forms of
protection, or in order to assign and convey or otherwise make available to
Helix the sole and exclusive right, title and interest in and to said
improvements, inventions, discoveries, formulae, processes, applications or
patents.
No provision in this Agreement is intended to require assignment of any of
the rights of Consultant or the Consulting Principal in an invention if no
equipment, supplies, facilities, or trade secret information of Helix was used,
and the invention was developed entirely on the Consultant's or Consulting
Principal's own time; and the invention does not relate to the business of Helix
or to Helix's actual or demonstrably anticipated research or development; and
does not result from any work performed by the Consultant or the Consulting
Principal for Helix.
The provisions of this Section 8 shall survive the termination of this
Agreement.
9. Return of Documents.
-----------------------
Upon the termination of this Agreement for any reason, Consultant shall
forthwith return and deliver to Helix and shall not retain any original or
copies of any books, papers, price lists or customer contracts, bids or customer
lists, files, books of account, notebooks and other documents and data (in
printed, audio, video, electronic or other form) relating to the performance of
services rendered by Consultant hereunder, all of which materials are hereby
agreed to be the property of Helix.
10. Preliminary Recitals.
-------------------------
The Preliminary Recitals set forth in the preamble hereto are hereby
incorporated and made part of this Agreement.
11. Entire Agreement.
---------------------
Except as otherwise expressly set forth herein, this Agreement sets forth
the entire understanding of the parties, and supersedes and preempts all prior
oral or written understandings and agreements with respect to the subject matter
hereof.
12. Governing Law.
------------------
This Agreement shall be construed and enforced in accordance with, and all
questions concerning the construction, validity, interpretation and performance
of this Agreement shall be governed by, the laws of the State of California.
13. Representations and Warranties.
-7-
13.1 Helix represents and warrants that: (i) Helix is a
corporation, duly organized, validly existing and in good standing
under the laws of the State of Delaware, has duly authorized the
execution and performance of this Agreement, and such execution and
performance will not violate its Articles of Incorporation, Bylaws, or
any contract or agreement by which it is bound; and (ii) this
Agreement is valid and enforceable against Helix in accordance with
its terms, and each instrument to be executed by Helix pursuant to
this Agreement will, when executed and delivered, be enforceable in
accordance with its terms, subject to bankruptcy, insolvency and
similar laws affecting creditors' rights generally. 13.2 Consultant
represents and warrants that: (i) Consultant is a corporation duly
organized, validly existing and in good standing under the laws of the
State of California, has duly authorized the execution and performance
of this Agreement, and such execution and performance will not violate
its Articles of Incorporation, bylaws or any contract or agreement by
which it is bound; and (ii) this Agreement is valid and enforceable
against Consultant and the Consulting Principal in accordance with its
terms, and each instrument to be executed by Consultant and the
Consulting Principal pursuant to this Agreement will, when executed
and delivered, be enforceable in accordance with its terms, subject to
bankruptcy, insolvency and similar laws affecting creditors' rights
generally.
14. Compliance with Laws.
-------------------------
Consultant shall comply with all federal, state, and local laws,
regulations, ordinances, orders, decrees, resolutions, and other acts of any
governmental entity, including, but not limited to, securities laws and
regulations that are applicable to this Agreement and the work and services
performed or provided hereunder.
15. Attorney's Fees.
--------------------
If a dispute arises relating to the performance of the obligations of
either Consultant (or the Consulting Principal) or Helix pursuant to the terms
of this Agreement and legal or other costs are incurred, the prevailing party
shall be entitled to recover all reasonable costs incurred in the defense or
prosecution of the claim, including court costs, reasonable attorney's fees, and
other claim-related expenses.
16. Indemnification.
--------------------
Helix shall (A) indemnify Consultant and Consulting Principal (jointly
and/or severally, the "Indemnified Parties"), and hold them harmless to the
fullest extent permitted by law against any losses, claims, damages or
liabilities to which the Indemnified Parties may become subject in connection
with (i) their use of information that is inaccurate in any respect (as a result
of misrepresentation, omission, failure to update, or otherwise) that is
provided to Indemnified Parties by Helix, its representatives, agents or
advisers, regardless of whether the Indemnified Parties knew or should have
known of such inaccuracy, or (ii) any other aspect of rendering such services,
in the case of each of clauses (i) and (ii) above unless it is finally
judicially determined that such losses, claims, damages or liabilities relating
thereto arise only out of the gross negligence or willful misconduct of any of
the Indemnified Parties, and (B) reimburse Indemnified Parties for any legal or
other expenses reasonably incurred by them in connection with investigating,
preparing to defend or defending any lawsuits, claims, or other proceedings
arising in any manner out of or in connection with their performance of their
duties pursuant to the engagement contemplated herein, unless it is finally
judicially determined that the losses, claims, damages or liabilities relating
thereto arise only out of the gross negligence or willful misconduct of the
Indemnified Parties. If, for any reason, the foregoing indemnity is unavailable
to the Indemnified Parties or is insufficient to hold the Indemnified Parties
-8-
harmless (other than in the event that the losses, claims, damages or
liabilities relating thereto arise only out of the gross negligence or willful
misconduct of the Indemnified Parties), then Helix shall contribute to the
amount paid or payable by Indemnified Parties as a result of such claims,
liabilities, losses, damages, or expenses in such proportion as is appropriate
to reflect not only the relative benefits received by Helix on the one hand and
the Indemnified Parties on the other, but also the relative fault of Helix and
the Indemnified Parties, as well as any equitable considerations.
Notwithstanding the provisions of this Agreement, the aggregate contribution of
the Indemnified Parties to all claims, liabilities, losses, damages and expenses
shall not exceed the amount of the fees actually received by Consultant pursuant
to its engagement by Helix. It is hereby further agreed that the relative
benefits to Helix on the one hand and the Indemnified Parties on the other hand
with respect to the transactions contemplated in the engagement referenced above
shall be deemed to be in the same proportion as (i) the total value of the
transaction bears to (ii) the fees paid to Consultant with respect to such
transactions. Helix agrees that the indemnification and reimbursement
commitments set forth in this Agreement shall apply whether or not the
Indemnified Parties are a formal party to any such lawsuits or other
proceedings, that the Indemnified Parties are entitled to retain separate
counsel of their choice in connection with any of the matters to which such
commitments relate, that such commitments shall be in addition to any liability
that Helix may have to the Indemnified Parties at common law or otherwise, and
that such commitments shall extend upon the terms set forth in this Agreement to
any controlling person, director, officer, employee, agent or affiliate of
Indemnified Parties and shall survive any termination of this Agreement;
provided that any such claim arising other than as a result of this
indemnification procedure shall serve as a set-off against any claim hereunder.
Notwithstanding the provisions of Section 1 above, the indemnification
provisions of the Prior Agreement shall survive this novation and the provisions
of this Section 16 shall serve to supplement the provisions therein.
17. Termination.
----------------
This Agreement may be terminated by either party upon 30 days' advanced
written notice to the other party. Any securities which have not vested pursuant
to the retained provisions of the Prior Agreement or have not otherwise been
earned pursuant to this Agreement shall automatically be terminated and canceled
and Helix shall have no further obligation to Consultant or the Consulting
Principal in respect of such securities. Subsection 2.8 and Sections 8 and 16 of
this Agreement shall survive the expiration or termination of this Agreement.
18. Activities of Consultant.
-----------------------------
In connection with this engagement, it is understood that Consultant and/or
the Consulting Principal may identify and facilitate contact between Helix and
corporations or individuals that may potentially become the Helix's joint
venture partners, licensees, commercial collaborators, agents, directors, or
investors. To the extent that Consultant and/or the Consulting Principal contact
corporations or individuals as potential joint venture partners, licensees,
commercial collaborators, agents, directors, or investors, Helix acknowledges
that Consultant's and/or the Consulting Principal's sole role is to initially
contact such potential joint venture partners, licensees, commercial
collaborators, agents, directors, or investors and refer any resulting contact
to Helix or its designated agent(s). Accordingly, Consultant and/or the
Consulting Principal shall have no liability to Helix or any other person or
-9-
party resulting from their so acting in connection with initiating such contacts
referenced herein. It is explicitly agreed that Consultant's and/or the
Consulting Principal's role under this engagement will not include, without
limitation: performing due diligence; verifying information provided to
Consultant an/or the Consulting Principal or, directly or indirectly, to other
persons or parties pursuant to contacts made by Consultant and/or the Consulting
Principal as contemplated by this paragraph; preparing any offering memoranda;
or, negotiating or structuring any agreements, licenses, commercial
collaborations, or investments by or with third parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
HELIX BIOMEDIX, INC.
By: /s/ R. Xxxxxxx Xxxxxx
---------------------------------
R. Xxxxxxx Xxxxxx, President
and Chief Executive Officer
XXXXXXXX HILL CAPITAL PARTNERS, INC.
By: /s/ Xxxxxxx X.-X. Xxxxxxx
---------------------------------
Xxxxxxx X.-X. Xxxxxxx, President
CONSULTING PRINCIPAL
/s/ Xxxxxxx X.-X. Xxxxxxx
---------------------------------
Xxxxxxx X.-X. Xxxxxxx
-10-
