EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), dated as of May ___, 2001,
and effective as of July 1, 2001 (the "Effective Date"), is made and entered
into by and between Helix BioMedix, Inc., a Delaware corporation, (the
"Company"), and R. Xxxxxxx Xxxxxx (the "Executive").
The Company and Executive hereby agree as follows:
1. EMPLOYMENT
The Company will employ Executive and Executive will accept employment by the
Company as President and Chief Executive Officer. During Executive's employment,
Executive shall serve the Company faithfully and to the best of his ability,
devoting substantially all his working time, attention and energies to the
business of the Company, unless otherwise approved in writing by the Board of
Directors of the Company (the "Board"). Subject to the direction of the Board,
Executive will have such reasonable duties, responsibilities, powers and
authority as are prescribed by the Board or the bylaws of the Company. Executive
shall not engage in any other business activity (except the management of
personal investments and charitable and civic activities that in the aggregate
do not interfere with the performance of Executive's duties) without first
obtaining the written consent of the Board, and such consent shall not
unreasonably be withheld.
2. TERM OF AGREEMENT
The term of this Agreement ("Term") shall commence on July 1, 2001 and will
continue in effect until June 30, 2003, unless otherwise terminated as set forth
herein.
3. COMPENSATION
(a) Base Salary. Company shall pay Executive a base salary at an annual
rate of Two Hundred Thousand Dollars ($200,000) payable in accordance with
Company's regular pay schedule for senior management. The Board shall review
Executive's salary and performance annually, and Executive shall be eligible for
an increase in his base salary based on such review.
(b) Stock Options. The Company shall issue options to Executive to acquire
shares of the Company's common stock ("Shares"), under the following terms and
conditions:
(1) Executive's existing options to acquire One Hundred Twenty
Thousand (120,000) shares of Company common stock at an exercise price of
$0.70 per share shall be extended in term such that they shall remain
exercisable until June 30, 2011. These options shall be considered vested
as of the date of execution of this Agreement
(2) Pursuant to the Company's 2000 Stock Option Plan, Executive shall
be granted an option to purchase One Hundred Eighty Thousand (180,000)
shares of company common stock at an exercise price of $1.50 per share.
These options will vest in four equal installments of Forty Five Thousand
(45,000) shares on January 1, 2002, July 1, 2002, January 1, 2003, and July
1, 2003. Any unexercised options issued pursuant to this Section 3(b)(2)
shall expire on June 30, 2011.
(3) Executive may, at his or the Company's option, pay for all or any
portion of the aggregate exercise price by delivering a combination of any
or all of the following:
(i) By delivering shares of the Company's common stock previously
held by Executive which have a fair market value at the date of
exercise equal to the aggregate exercise price to be paid by Executive
upon such exercise;
(ii) By delivering a properly executed exercise notice together
with irrevocable instructions to a broker to promptly deliver to the
Company the amount of sale or loan proceeds to pay the exercise price;
or
(iii) By delivering a full recourse promissory note for all or
part of the aggregate exercise price, payable on such terms and
bearing such interest rate as determined by the Board (but in no event
less than the minimum interest rate specified under the Internal
Revenue Code at which no additional interest would be imputed and in
no event more than the maximum interest rate allowed under applicable
usury laws), which promissory note may be either secured or unsecured
in such manner as the Board shall approve (including, without
limitation, by a security interest in shares of the Company's stock).
(4) The Board will qualify the options for an exemption from registration
under the applicable federal and any applicable state securities laws.
(d) Incentive Compensation. Executive shall be entitled to participate in a
manner consistent with all other senior management participation in any
incentive compensation plan which may be adopted by the Company.
(e) Benefits.
(1) Executive shall be entitled to receive three weeks paid vacation
and all benefits (such as medical, dental, sick leave, disability, and
retirement benefits) as are generally available from time to time to
employed senior executives of Company.
(2) Company will maintain a policy of insurance for directors' and
officers' liability with such coverage as may be determined by the Board.
Executive will be included within that policy of insurance with the
premiums paid by Company.
(3) Company shall grant to Executive an annual personal travel
allowance of up to Ten Thousand Dollars ($10,000), for travel related to
Executive's duties under this Agreement.
(4) Company shall allow Executive periodic use of a corporate
apartment in Seattle, Washington, until such time as the Executive has
established a residence in the Seattle metropolitan area.
(5) Company shall reimburse Executive for all reasonable expenses
incurred in connection with Executive's relocation to Seattle, Washington.
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(6) Company shall allow Executive periodic use of a Company vehicle
for matters relating to his duties under this Agreement.
(7) For purposes of this section 3(e):
(A) Benefits shall not include benefits to employees leased to
the Company.
(B) Vacation shall not include time spent by Executive at events
attended by (i) persons who hold or represent the holders of at least
20% of the Company's outstanding voting stock; or (ii) any person with
whom the Company has an existing Consulting Agreement.
4. TERMINATION
Employment of Executive pursuant to this Agreement may be terminated as follows:
(a) By Executive. Executive may terminate his employment at any time, for
any reason.
(b) By the Company. The Company may terminate the employment of Executive
at any time, for any reason, with or without cause.
(c) Automatic Termination. This Agreement and Executive's employment shall
terminate automatically upon the death or total disability of Executive. The
term "total disability" as used in this Agreement shall mean Executive's
inability to perform the duties set forth in Section 1 for a period or periods
aggregating one-hundred twenty (120) calendar days in any 12-month period as a
result of physical or mental illness, loss of legal capacity or any other cause
beyond Executive's control, unless Executive is granted a leave of absence by
the Board. Executive and the Company acknowledge that Executive's ability to
perform the duties specified in Section 1 is of the essence of this Agreement.
5. TERMINATION PAYMENTS
In the event of termination of the employment of Executive, all compensation and
benefits set forth in this Agreement shall terminate, except as specifically
provided in this Section 5. For purposes of this Agreement, the effective date
of termination shall be thirty (30) days after the Executive or the Company
gives written notice of termination.
(a) Termination by the Company With Cause. Upon termination by the Company
with Cause (as defined below), the Company shall pay Executive any unpaid annual
base salary, earned but unused vacation, and bonuses due (if any), for services
already performed (subject to normal withholding and other deductions) to the
effective date of termination of employment.
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(b) Termination by the Company Without Cause. Upon termination by the
Company without Cause (as defined below), the Company shall pay Executive any
unpaid annual base salary, any amount due but not paid under any Company
incentive compensation plan, earned but unused vacation and bonuses due (if any)
for services already performed (subject to normal withholding and other
deductions) to the effective date of termination of employment; and monthly
severance payments equivalent to six (6) months base salary. These payments will
be made in accordance with the Company's customary payroll schedule, minus
deductions required by law. The Company will issue and file appropriate tax
documents in connection with any severance payments. Payment of the
above-described severance compensation and benefits is conditioned on Executive
executing a full mutual release of all claims related to his employment with or
termination from Company in substantially the form attached hereto as Exhibit A.
Such a release will not include accrued and unpaid wages and benefits, claims to
industrial insurance, vested pension benefits or indemnification rights.
Executive will have the duty to mitigate the costs of Company by attempting to
obtain other employment within a reasonable time after termination; Executive's
compensation from such other employment will be credited against the amounts due
from Company to the extent the combined compensation from Executive's new
position and Company's payments under this Section 5(b) would otherwise exceed
Executive's base salary with Company at the date of termination.
(c) Termination by Executive Without Good Reason. Upon termination by
Executive without Good Reason (as defined below), Executive shall be paid the
compensation as set forth in Section 5(a) and shall not be entitled to any other
benefits or payments.
(d) Termination by Executive With Good Reason. Upon termination by
Executive with Good Reason (as defined below), Executive shall receive the
compensation as set forth in Section 5(b) and shall not be entitled to any other
benefits or payments.
(e) Termination as a Result of Death or Total Disability. In the event of
termination of Executive's employment pursuant to Section 4(c), Executive or his
estate shall be paid the compensation set forth in Section 5(a) and shall not be
entitled to any other benefits or payments.
(f) Definition of "Cause." "Cause" as used in this Agreement shall mean a
determination by the Board that one or more of the following has occurred:
willful misconduct, or dishonesty in the performance of Executive's
duties that results in a material adverse effect on the Company;
conviction of Executive of a felony involving an act of dishonesty,
moral turpitude, deceit or fraud; or
current use by the Executive of illegal substances.
(g) Definition of "Good Reason." "Good reason" shall mean the occurrence of
any of the following events, without the consent of the Executive:
a demotion or other material reduction in the nature or status of
Executive's responsibilities; or"
a material reduction in Executive's annual base salary or any failure
by the Company to satisfy its duty to compensate the Executive as
required under this Agreement.
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6. INTELLECTUAL PROPERTY
Company shall own all right, title and interest (including patent rights,
copyrights, trade secret rights, mask work rights, sui generis database rights
and all other intellectual rights of any sort throughout the world) relating to
any and all inventions (whether or not patentable), works of authorship, mask
works, designs, know-how, ideas and information made or conceived or reduced to
practice, in whole or in part, by Executive during the term of Executive's
employment with Company to and only to the fullest extent allowed by Washington
Revised Code Annotated Section 49.44.140 (which is attached as Exhibit B)
(collectively "Inventions") and Executive will promptly disclose all Inventions
to Company. Executive will also disclose anything Executive believes is excluded
by Section 49.44.140 so that Company can make an independent assessment.
Executive hereby makes all assignments necessary to accomplish the foregoing.
Executive shall further assist Company, at Company's expense, to further
evidence, record and perfect such assignments, and to perfect, obtain, maintain,
enforce, and defend any rights specified to be so owned or assigned. Executive
hereby irrevocably designates and appoints Company as its agents and
attorneys-in-fact to act for and in Executive's behalf to execute and file any
document and to do all other lawfully permitted acts to further the purposes of
the foregoing with the same legal force and effect as if executed by Executive.
If Executive wishes to clarify that something created by Executive prior to
Executive's employment that relates to Company's actual or proposed business is
not within the scope of this Agreement, Executive has listed it on Exhibit C. If
Executive uses or (except where disclosed pursuant to this Section 6 as a
claimed exclusion to RCW 49.44.140 or in Exhibit C) discloses Executive's own or
any third party's confidential information or intellectual property when acting
within the scope of Executive's employment or otherwise on behalf of Company,
Company will have and Executive hereby grants Company a perpetual, irrevocable,
worldwide royalty-free, non-exclusive, sublicensable right and license to
exploit and exercise all such confidential information and intellectual property
rights. To the extent allowed by law, this section includes all rights of
paternity, integrity, disclosure and withdrawal and any other rights that may be
known as or referred to as "moral rights," "artist's rights," "droit moral," or
the like (collectively "Moral Rights"). To the extent Executive retains any such
Moral Rights under applicable law, Executive hereby ratifies and consents to any
action that may be taken with respect to such Moral Rights by or authorized by
Company and agree not to assert any Moral Rights with respect thereto. Executive
will confirm any such ratifications, consents and agreements from time to time
as requested by Company.
7. PRIVACY
Executive recognizes and agrees that Executive has no expectation of privacy
with respect to Company's telecommunications, networking or information
processing systems (including, without limitation, stored computer files, email
messages and voice messages) and that Executive's activity and any files or
messages on or using any of those systems may be monitored at any time without
notice.
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8. RESTRICTIVE COVENANTS
Executive acknowledges: (i) that Executive will have access during his
employment with Company to confidential information regarding all Inventions and
all other business, technical and financial information (including, without
limitation, the identity of and information relating to customers or employees)
Executive develops, learns or obtains during the term of Executive's employment
that relates to Company or the business or demonstrably anticipated business of
Company or that are received by or for Company in confidence, and that all such
information constitutes "Proprietary Information"; (ii) that information
regarding Proprietary Information constitutes a valuable asset and trade secret
of Company; and (iii) that it is reasonable for Company to protect itself from
misappropriation of Proprietary Information by Executive upon termination of
employment or otherwise. Accordingly, in consideration of employment hereunder,
and other good and valuable consideration, Executive agrees to the following
nondisclosure, noninterference and noncompetition covenants during the Term and
for a period of twenty-four (24) months after the Term:
(a) Nondisclosure. Executive will not copy, remove, or disclose any
Proprietary Information, except as may be required by law or in the course of
performing services for Company, Executive will hold in confidence and not
disclose or, except within the scope of Executive's employment, use any
Proprietary Information at any time, even after Executive's employment with
Company ends for whatever reason. However, Executive shall not be obligated
under this paragraph with respect to information Executive can document by clear
and convincing evidence is or becomes readily publicly available without
restriction through no fault of Executive. Upon termination of Executive's
employment or if sooner requested, Executive will promptly return to Company all
items containing or embodying Proprietary Information (including all copies),
except that Executive may keep Executive's personal copies of (i) Executive's
compensation records, (ii) materials distributed to stockholders generally and
(iii) this Agreement;
(b) Noninterference. Executive will not employ, solicit, or seek to employ
any person who is an employee of Company or its subsidiaries (i) as of the date
hereof; (ii) during the Term, or (iii) at the time of employment or
solicitation; and
(c) Noncompetition and Nonsolicitation. Executive will not, directly or
indirectly, as principal, agent, employee, officer, shareholder, consultant or
otherwise, engage in any business that competes directly with Company, and will
not solicit or aid in soliciting, endeavor to obtain as a customer or client,
accept sales, marketing, financial, or consulting business from, or perform
sales, marketing, consulting or related business for any person, firm,
corporation, association or other entity: (i) that is or was a Company customer
for whom Executive performed any services or with whom Executive had maintained
substantial business contacts at any time during the Term; or (ii) whose
business Executive solicited, either alone or in conjunction with others, on
behalf of Company or any of its subsidiaries during the Term.
Executive acknowledges and agrees: (i) that a breach of any of the
covenants contained in this Section 8 would cause irreparable injury to Company
for which monetary damages alone would be inadequate to compensate and protect
Company; (ii) that Company may therefore seek and obtain injunctive relief to
enjoin any breach of such restrictive covenants in addition to, and not in
limitation of, any other legal or equitable remedies that are available as a
matter, of law or equity; and (iii) that specific enforcement of this Agreement
by way of an injunction shall not prevent Executive from earning a reasonable
livelihood. Executive further acknowledges and agrees that the nondisclosure,
noninterference, noncompetition and nonsolicitation covenants contained herein
are necessary for the protection of Company's legitimate business interests and
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are reasonable in duration, geographic scope, and other content. However, in the
event a court of competent jurisdiction should decline to enforce any term of
the nondisclosure, noninterference, noncompetition or nonsolicitation covenants,
as written herein, such covenant shall be deemed to be modified to require
confidentiality and restrict Executive's interference, competition and
solicitation with Company and its subsidiaries to the maximum duration,
geographic scope, and other content that the court shall find enforceable.
9. ASSIGNMENT
Except as may be provided under Section 3(b) above, this Agreement is personal
to Executive and shall not be assignable by Executive. If the Company changes it
name or changes to another corporate form, this Agreement will remain in effect
between the Executive and the Company's successor. All the terms and provisions
of this Agreement shall be binding on and shall inure to the benefit of and be
enforceable by the parties and their respective successors and permitted
assigns.
10. WAIVERS
No delay or failure by any party to this Agreement in exercising, protecting or
enforcing any of its rights, titles, interests or remedies hereunder, and no
course of dealing or performance with respect thereto, shall constitute a
waiver. The express waiver by a party of any right, title, interest or remedy in
a particular instance or circumstance shall not constitute a waiver in any other
instance or circumstance. All rights and remedies shall be cumulative and not
exclusive of any other rights or remedies.
11. ARBITRATION
Any controversies or claims arising out of or relating to this Agreement shall
be fully and finally settled by arbitration in the city of Seattle, Washington
in accordance with the Employment Arbitration Rules of the American Arbitration
Association then in effect (the "AAA Rules"), conducted by one arbitrator either
mutually agreed upon by the Company and Executive or chosen in accordance with
the AAA Rules, except that the parties shall have any right to discovery as
would be permitted by the Federal Rules of Civil Procedure for a period of 90
days following the commencement of such arbitration, and the arbitrator shall
resolve any dispute that arises in connection with such discovery. Judgment upon
the award rendered by the arbitrator may be entered in any court having
jurisdiction.
12. AMENDMENTS IN WRITING
No amendment, modification, waiver, termination or discharge of any provision of
this Employment Agreement, nor consent to any departure from any provision of
this Agreement by either party, shall in any event be effective unless the same
shall be in writing, specifically identifying this Agreement and the provision
intended to be amended, modified, waived, terminated or discharged and signed by
the Company and Executive, and each such amendment, modification, waiver,
termination or discharge shall be effective only in the specific instance and
for the specific purpose for which given. No provision of this Agreement shall
be varied, contradicted or explained by any oral agreement, course of dealing or
performance or any other matter not set forth in an agreement in writing and
signed by the Company and Executive.
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13. APPLICABLE LAW
This Agreement shall in all respects, including all matters of construction,
validity and performance, be governed by, and construed and enforced in
accordance with, the laws of the state of Washington, without regard to any
rules governing conflicts of laws.
14. SEVERABILITY
If any provision of this Agreement shall be held invalid, illegal or
unenforceable in any jurisdiction, for any reason, including, without
limitation, the duration of such provision, its geographical scope or the extent
of the activities prohibited or required by it, then, to the full extent
permitted by law (a) all other provisions shall remain in full force and effect
in such jurisdiction and shall be liberally construed in order to carry out the
intent of the parties as nearly as may be possible, (b) such invalidity,
illegality or unenforceability shall not affect the validity, legality or
enforceability of any other provision, and (c) any court or arbitrator having
jurisdiction shall have the power to reform such provision to the extent
necessary for such provision to be enforceable under applicable law.
15. HEADINGS
All headings used in this Agreement are for convenience only and shall not in
any way affect the construction of, or be taken into consideration in
interpreting, this Agreement.
16. COUNTERPARTS
This Agreement, and any amendment or modification entered into pursuant to
Section 12, may be executed in any number of counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original
and all of which counterparts, taken together, shall constitute one and the same
instrument.
17. ENTIRE AGREEMENT
This Agreement and the Indemnification Agreement between Executive and the
Company (and any addenda, amendments or extensions to those agreements)
constitute the entire agreement between the Company and Executive with respect
to the subject matters of this Agreement and the Indemnification Agreement.
HELIX BIOMEDIX, INC. EXECUTIVE:
/s/ Xxxxxx X. Xxxxxxx /s/ R. Xxxxxxx Xxxxxx
----------------------------- ------------------------------
Xxxxxx X. Xxxxxxx R. Xxxxxxx Xxxxxx
Director
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EXHIBIT A
WAIVER AND RELEASE
For and in consideration of the severance payments and benefits set out in the
Employment Agreement attached hereto, Executive, on behalf of himself and his
agents, heirs, successors and assigns, expressly waives any claims against
Company and releases Company (including its officers, directors, stockholders,
managers, agents and representatives) from any and all claims, demands,
liabilities, damages, obligations, actions or causes of action of any kind,
known or unknown, past or present, arising out of, relating to, or in connection
with Executive's employment, termination of employment, or the holding of any
office with Company or any other related entity. The claims released by
Executive include, but are not limited to, claims for defamation, libel,
invasion of privacy, intentional or negligent infliction of emotional distress,
wrongful termination, constructive discharge, breach of contract, breach of the
covenant of good faith and fair dealing, breach of fiduciary duty, fraud, or for
violation of any federal, state or other governmental statute or ordinance,
including, without limitation, Title VII of the Civil Rights Act of 1964, the
federal Age Discrimination in Employment Act, the Americans with Disabilities
Act, the Family and Medical Leave Act, the Employment Retirement Income Security
Program or any other legal limitation on the employment relationship.
This waiver and release shall not waive or release claims (1) where the events
in dispute first arise after execution of this Release; (2) for rights or
benefits due under the Employment Agreement attached hereto; or (3) relating to
Executive's rights to indemnity as a corporate officer of Company.
Executive agrees he has been provided the opportunity to consider whether to
enter into this Release, and has voluntarily chosen to enter into it on this
date. This Release shall be effective when signed. Executive acknowledges that
she is voluntarily executing this Release, that she has carefully read and fully
understands all aspects of this Release and the attached Employment Agreement,
that she has not relied upon any representations or statements not set forth
herein or made by Company's agents or representatives, that she has been advised
to consult with an attorney prior to executing the Release, and that, in fact,
she has consulted with an attorney of his choice as to the subject matter and
effect of this Release.
/s/ R. Xxxxxxx Xxxxxx
----------------------- ------------------------
Date Executive
EXHIBIT B
Washington Revised Code Annotated Section 49.44.140
Washington Revised Code Annotated Section 49.44.140 provides as follows:
A provision in an employment agreement that provides that an employee shall
assign or offer to assign any of the employee's rights in an invention to
the employer does not apply to an invention for which no equipment,
supplies, facilities, or trade secret information of the employer was used
and that was developed entirely on the employee's own time, unless:
(a) the invention relates (i) directly to the business of the
employer, or (ii) to the employer's actual or demonstrably anticipated
research or development, or
(b) the invention results from any work performed by the employee for
the employer.
Any provision that purports to apply to such an invention is to that extent
against the public policy of this state and is to that extent
unenforceable.
An employer shall not require a provision made void and unenforceable by
subsection (a) of this section as a condition of employment or continuing
employment.
EXHIBIT C
None.
