EMPLOYMENT AGREEMENT
BY AND BETWEEN
CORVAS INTERNATIONAL, INC.
AND
XXXXXXX X. XXXXX
DATED: MARCH 18, 1997
TABLE OF CONTENTS
PAGE
1. EMPLOYMENT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. LOYAL AND CONSCIENTIOUS PERFORMANCE; NONCOMPETITION. . . . . . . . . . . 2
3. COMPENSATION OF EXECUTIVE. . . . . . . . . . . . . . . . . . . . . . . . 2
4. TERMINATION BY COMPANY.. . . . . . . . . . . . . . . . . . . . . . . . . 3
5. TERMINATION BY EXECUTIVE.. . . . . . . . . . . . . . . . . . . . . . . . 4
6. COMPENSATION UPON TERMINATION. . . . . . . . . . . . . . . . . . . . . . 5
7. CONFIDENTIAL INFORMATION; EXECUTIVE'S DUTIES UPON TERMINATION. . . . . . 7
8. ASSIGNMENT AND BINDING EFFECT. . . . . . . . . . . . . . . . . . . . . . 7
9. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
10. CHOICE OF LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
11. INTEGRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
12. AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
13. WAIVER.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
14. SEVERABILITY.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
15. INTERPRETATION; CONSTRUCTION.. . . . . . . . . . . . . . . . . . . . . . 9
16. REPRESENTATIONS AND WARRANTIES.. . . . . . . . . . . . . . . . . . . . .10
17. COUNTERPARTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
i.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
effective as of March 18, 1997, by and between CORVAS INTERNATIONAL, INC., a
Delaware corporation (the "Company"), and XXXXXXX X. XXXXX, ("Executive"). The
Company and Executive are hereinafter collectively referred to as the "Parties,"
and individually referred to as a "Party."
RECITALS
A. The Company desires assurance of the association and services of
Executive in order to retain Executive's experience, skills, abilities,
background and knowledge, and is willing to engage Executive's services on the
terms and conditions set forth in this Agreement.
B. The Company and the Executive have previously entered into an
Executive Employment Agreement, dated as of May 10, 1996 (the "Prior Agreement")
memorializing the terms of Executive's engagement by the Company.
C. The Company and the Executive desire to terminate the "Prior
Agreement", except as described herein, and to enter into this Agreement, the
terms of which shall supersede in their entirety the terms of the Prior
Agreement.
AGREEMENT
Now, therefore, in consideration of the mutual promises and covenants set
forth herein, and for other good and valuable consideration, the Parties agree
as follows:
1. EMPLOYMENT.
1.1 The Company hereby agrees to continue to employ Executive, and
Executive hereby accepts continued employment by the Company, upon the terms and
conditions set forth in this Agreement, effective as of the date first set forth
above ("Effective Date").
1.2 Executive shall be the President and Chief Executive Officer of the
Company and shall serve in such other capacity or capacities appropriate for a
person serving in the position of President and Chief Executive Officer, as the
Company's Board of Directors ("Board") may from time to time prescribe.
1.
1.3 Executive shall exercise such authority over all of the Company's
operations, employees and business of the Company as is customarily exercised by
a President and Chief Executive Officer, provided, however, that at all times
during his employment Executive shall be subject to the overall direction and
policies from time to time established by the Board.
1.4 Unless the Parties otherwise agree in writing, during the term of this
Agreement, Executive shall perform the services he is required to perform
pursuant to this Agreement at the Company's offices, located at 0000 Xxxxxxx
Xxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx, or at any other place at which the Company
maintains an office; provided, however, that the Company may from time to time
require Executive to travel temporarily to other locations in connection with
the Company's business.
2. LOYAL AND CONSCIENTIOUS PERFORMANCE; NONCOMPETITION.
2.1 During his employment by the Company, Executive shall devote his full
business energies, interest, abilities and productive time to the proper and
efficient performance of his duties under this Agreement.
2.2 During the term of this Agreement, Executive shall not engage in
competition with the Company, either directly or indirectly, in any manner or
capacity, as adviser, principal, agent, partner, officer, director, employee,
member of any association or otherwise, in any phase of the business of
developing, manufacturing and marketing medical products which are in the same
field of use or which otherwise compete with the products or proposed products
of the Company.
2.2.1 Ownership by Executive, as a passive investment, of less
than one percent (1%) of the outstanding shares of capital stock of any
corporation with one or more classes of its capital stock listed on a national
securities exchange or publicly traded in the over-the-counter market shall not
constitute a breach of this paragraph.
3. COMPENSATION OF EXECUTIVE.
3.1 While employed by the Company, the Company shall pay Executive a
salary (the "Base Salary") of Three Hundred Thousand Dollars ($300,000) per
year, payable in regular periodic payments in accordance with Company policy.
Such salary shall be prorated for any partial year of employment on the basis of
a 365-day fiscal year.
3.2 Executive's compensation may be changed from time to time by mutual
agreement of Executive and the Board.
2.
3.3 Executive's performance shall be reviewed by the Board on a periodic
basis (but not less than once in each fiscal year during the term of this
Agreement). As part of such review, the Board, at its sole discretion, shall
consider appropriate adjustments to Executive's base salary, grant of stock
options and the potential for performance based bonuses.
3.4 All of Executive's compensation shall be subject to customary
withholding taxes and any other employment taxes as are commonly required to be
collected or withheld by the Company.
3.5 Executive shall, in accordance with Company policy, be eligible to
participate in the benefits described in The Employee Benefits Summary, attached
as Exhibit A.
4. TERMINATION BY COMPANY. Executive's employment with the Company may be
terminated by the Company under the following conditions:
4.1 DEATH. Upon Executive's death, in which case termination shall be
effective on the last day of the month in which Executive's death occurs.
4.2 DISABILITY. If Executive becomes completely disabled due to physical
or mental illness as defined under Section 4.2.1, or if Executive shall be
absent from duties on a full-time basis due to illness for six consecutive
months, and shall not have returned to the performance of duties within ten (10)
days after receiving written notice of termination following such six-month
period.
4.2.1 The term "completely disabled" as used in this Agreement
shall mean the inability of Executive to perform the essential functions of his
position under this Agreement by reason of any incapacity, physical or mental,
which the Board, based upon medical advice or an opinion provided by a licensed
physician acceptable to the Board and approved by the Executive, which approval
shall not be unreasonably withheld, determines to have incapacitated Executive
from satisfactorily performing any or all essential functions of his position
for the Company during the foreseeable future. Based upon such medical advice
or opinion, the determination of the Board shall be final and binding and the
date such determination is made shall be the date of such complete disability
for purposes of this Agreement.
4.3 FOR CAUSE. The Company may terminate Executive's employment under
this Agreement "for cause" ("For Cause") by delivery of written notice to
Executive specifying the cause or causes relied upon for such termination. Any
notice of termination given pursuant to this Section 4.3 shall effect
termination as of the date specified in such notice or, in the event no such
date is specified, on the last day of the
3.
month in which such notice is delivered or deemed delivered as provided in
Section 9 below. Grounds for the Company to terminate this Agreement For Cause
shall be limited to the occurrence of any of the following events:
4.3.1 Executive is in material breach of any provision of this
Agreement;
4.3.2 Executive's engaging or in any manner participating in any
activity which is directly competitive with or intentionally injurious to the
Company or which violates any provision of Section 7 of this Agreement;
4.3.3 Executive's commission of any fraud against the Company;
4.3.4 Executive's intentional improper use or appropriation for
his personal use or benefit of any funds or properties of the Company not
authorized by the Board to be so used or appropriated; and
4.3.5 Executive's conviction of any crime involving dishonesty or
moral turpitude.
4.4 WITHOUT CAUSE. The Company may terminate the Executive's employment
without cause ("Without Cause") upon delivery of written notice to the Executive
at any time. Any notice of termination given pursuant to this Section 4.4 shall
effect termination as of the date specified in such notice or, in the event no
such date is specified, on the last day of the month in which such notice is
delivered or deemed deliverable as provided in Section 9 below.
5. TERMINATION BY EXECUTIVE. Executive may terminate Executive's employment
with the Company (a) for Sufficient Reason (as defined below in Section 5.1)
within one hundred eighty (180) consecutive days following the occurrence of an
event or events constituting such Sufficient Reason; or (b) without Sufficient
Reason.
5.1 "Sufficient Reason" shall mean any one or more of the following
events:
5.1.1 The occurrence of a Change in Control of the Company (as
defined below in Section 6.5);
5.1.2 The failure by the Company to comply with any material
provision of this Agreement and such failure has continued for a period of
thirty (30) days after notice of such failure has been given by Executive to the
Company;
5.2 If Executive terminates his employment with the Company voluntarily
prior to one year of service, then Executive agrees to repay the gross amount of
Relocation Benefits described in the Prior Agreement. Executive hereby
authorizes the Company to
4.
deduct such repayments from his final paycheck, including vacation pay or other
wages owed Executive.
6. COMPENSATION UPON TERMINATION.
6.1 DEATH. If Executive's employment shall be terminated by death, the
Company shall pay to Executive's designee(s), beneficiary(ies), or if there is
no such designee or beneficiary, to Executive's estate, an amount equal to three
(3) months of Executive's base salary.
6.2 DISABILITY. If Executive is terminated due to disability as provided
in Section 4.2 the Company shall pay to Executive an amount equal to three (3)
months of Executive's base salary.
6.3 CAUSE, WITHOUT SUFFICIENT REASON. If Executive's employment shall be
terminated by the Company For Cause, or if Executive terminates employment
hereunder without Sufficient Reason, the Company shall pay Executive his base
salary and accrued benefits through the date of termination at the rate in
effect at the time of the notice of termination, and the Company shall
thereafter have no further obligations to Executive under this Agreement.
6.4 WITHOUT CAUSE, SUFFICIENT REASON. If (a) Executive shall terminate
Executive's employment with the Company or the New Company (as defined in
Section 6.5 of this Agreement) for Sufficient Reason under Section 5.1 of this
Agreement; or (b) the Company shall terminate Executive's employment Without
Cause, then upon Executive's furnishing to the Company (or the New Company, as
the case may be) an executed waiver and release of claims (a form of which is
attached hereto as Exhibit B), Executive shall be entitled to the following:
6.4.1 Executive's base salary and accrued benefits through the
date of termination;
6.4.2 Executive's annual base salary in effect at the time of
termination for a period of one year;
6.4.3 Immediate vesting of all unvested stock options of the
Company held by Executive;
6.4.4 Continued receipt for one year of all employee benefit plans
and programs in which the Executive and Executive's family were entitled to
participate immediately prior to the date of termination, provided that the
Executive's continued participation is possible under the general terms and
provisions of such plans and
5.
programs. In the event that the Executive's participation in any such plan or
program is barred, the Company shall arrange to provide the Executive with
benefits substantially similar to those which the Executive would otherwise have
been entitled to receive under such plans and programs from which his continued
participation is barred.
6.4.5 In the event that any payment or benefit received or to be
received by Executive pursuant to this Section 6.4 would result in all or a
portion of such payment to be subject to excise tax under Section 4999 of the
Code, then the Executive's payment shall be either (i) the full payment or (ii)
such lesser amount which would result in no portion of the payment 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 employment
taxes, income taxes, and the excise tax imposed by Section 4999 of the Code,
results in the receipt by Executive, on an after-tax basis, of the greatest
amount of the payment notwithstanding that all or some portion of the payment
may be taxable under Section 4999 of the Code. All determinations required to
be made under this Section 6.4 shall be made by KPMG Peat Marwick or any other
nationally recognized accounting firm which is the Company's outside auditor at
the time of such determination, which firm must be reasonably acceptable to
Executive (the "Accounting Firm"). The Company shall cause the Accounting Firm
to provide detailed supporting calculations of its determinations to the Company
and Executive. Notice must be given to the Accounting Firm within fifteen (15)
business days after an event entitling Executive to a payment under this
Agreement. All fees and expenses of the Accounting Firm shall be borne solely
by the Company. The Accounting Firm's determinations must be made with
substantial authority (within the meaning of Section 6662 of the Code).
6.5 CHANGE IN CONTROL.
6.5.1 A "Change in Control" of the Company shall be deemed to have
occurred if and when:
(i) Any person or entity or group of persons and/or entities
acting in concert shall acquire, directly or indirectly, beneficial ownership
of more than fifty-one percent (51%) of the outstanding shares of voting
stock of the Company or other securities of the Company convertible (after
giving effect to such conversion) into more than fifty-one percent (51%) of
the outstanding shares of voting stock of the Company; or
(ii) The Company is a participant in a merger or consolidation in
which the Company does not survive as an independent company and shareholders of
the Company immediately prior to such transaction fail to retain at least fifty
percent (50%) of the voting power of the Company immediately following such
transaction; or
6.
(iii) The business or businesses of the Company for which
Executive's services are principally performed are disposed of by the Company
pursuant to a partial or complete liquidation of the Company, a sale of assets
or otherwise; or
(iv) During any period of two consecutive years during the term
of Executive's employment hereunder, individuals who at the beginning of such
period constitute the Board cease for any reason to constitute at least a
majority thereof, unless the election of each Director who was not a Director at
the beginning of such period has been approved in advance by Directors
representing at least two-thirds of the Directors then in office who were
Directors at the beginning of the period.
6.5.2 If any of the above events occur, then for purposes of this
Agreement, the Company or the Company's successor will be considered the "New
Company."
6.5.3 If within one hundred eighty (180) days following the
occurrence of a Change in Control, Executive's employment with the New Company
is terminated by the New Company for any reason whatsoever other than as
specified in Section 4.3, upon Executive's furnishing to the New Company an
executed waiver and release of claims (Exhibit B), Executive shall be entitled
to the compensation provided for in Section 6.4.
All payments provided for in this Section 6 to be made to Executive shall
be made in one lump sum within thirty (30) calendar days of Executive's date of
termination unless otherwise directed by Executive.
7. CONFIDENTIAL INFORMATION; EXECUTIVE'S DUTIES UPON TERMINATION.
7.1 Executive recognizes that his employment with the Company will involve
contact with information of substantial value to the Company, which is not old
and generally known in the trade, and which gives the Company an advantage over
its competitors who do not know or use it, including but not limited to,
techniques, designs, drawings, processes, inventions, developments, equipment,
prototypes, sales and customer information, and business and financial
information relating to the business, products, practices and techniques of the
Company, (hereinafter referred to as "Confidential Information"). Executive
will at all times regard and preserve as confidential such Confidential
Information obtained by Executive from whatever source and will not, either
during his employment with the Company or thereafter, publish or disclose any
part of such Confidential Information in any manner at any time, or use the same
except on behalf of the Company, without the prior written consent of the
7.
Company. Executive has signed and will continue to be bound by the Company's
"Employment Agreement," attached as Exhibit C.
8. ASSIGNMENT AND BINDING EFFECT.
8.1 This Agreement, including Exhibits A, B and C, shall be binding upon
and inure to the benefit of Executive and Executive's heirs, executors, personal
representatives, assigns, administrators and legal representatives. Because of
the unique and personal nature of Executive's duties under this Agreement,
neither this Agreement nor any rights or obligations under this Agreement shall
be assignable by Executive. This Agreement shall be binding upon and inure to
the benefit of the Company and its successors, assigns and legal
representatives.
9. NOTICES.
9.1 All notices or demands of any kind required or permitted to be given
by the Company or Executive under this Agreement shall be given in writing and
shall be personally delivered (and receipted for) or mailed by certified mail,
return receipt requested, postage prepaid, addressed as follows:
9.1.1 If to the Company:
Chairman of the Board
Corvas International, Inc.
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx
9.1.2 If to Executive:
Xxxxxxx X. Xxxxx
X.X. Xxx 000000
Xxxxxx Xxxxx Xx, XX 00000-0000
Any such written notice shall be deemed received when personally delivered or
three (3) days after its deposit in the United States mail as specified above.
Either Party may change its address for notices by giving notice to the other
Party in the manner specified in this section.
10. CHOICE OF LAW.
10.1 This Agreement is made in San Diego, California. This Agreement shall
be construed and interpreted in accordance with the laws of the State of
California.
8.
11. INTEGRATION.
11.1 This Agreement contains the complete, final and exclusive agreement of
the Parties relating to the subject matter of this Agreement, and supersedes all
prior oral and written employment agreements or arrangements between the
Parties.
12. AMENDMENT.
12.1 This Agreement cannot be amended or modified except by a written
agreement signed by Executive and the Company.
13. WAIVER.
13.1 No term, covenant or condition of this Agreement or any breach thereof
shall be deemed waived, except with the written consent of the Party against
whom the wavier in claimed, and any waiver or any such term, covenant, condition
or breach shall not be deemed to be a waiver of any preceding or succeeding
breach of the same or any other term, covenant, condition or breach.
14. SEVERABILITY.
14.1 The finding by a court of competent jurisdiction of the
unenforceability, invalidity or illegality of any provision of this Agreement
shall not render any other provision of this Agreement unenforceable, invalid or
illegal. Such court shall have the authority to modify or replace the invalid
or unenforceable term or provision with a valid and enforceable term or
provision which most accurately represents the parties' intention with respect
to the invalid or unenforceable term or provision.
15. INTERPRETATION; CONSTRUCTION.
15.1 The headings set forth in this Agreement are for convenience of
reference only and shall not be used in interpreting this Agreement. This
Agreement has been drafted by legal counsel representing the Company, but
Executive has been encouraged, and has consulted with, his own independent
counsel and tax advisors with respect to the terms of this Agreement. The
Parties acknowledge that each Party and its counsel has reviewed and revised, or
had an opportunity to review and revise, this Agreement, and the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement.
9.
16. REPRESENTATIONS AND WARRANTIES.
16.1 Executive represents and warrants that he is not restricted or prohibited,
contractually or otherwise, from entering into and performing each of the terms
and covenants contained in this Agreement, and that his execution and
performance of this Agreement will not violate or breach any other agreements
between Executive and any other person or entity.
17. COUNTERPARTS.
17.1 This Agreement may be executed in two counterparts, each of which
shall be deemed an original, all of which together shall contribute one and the
same instrument.
10.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
The Company:
CORVAS INTERNATIONAL, INC.
a Delaware Corporation
By: /S/ XXXX X. XXXXX
-----------------------------------------
Chairman of the Board
Board of Directors
Date: March 27, 1997
--------------------------------------
EXECUTIVE:
/S/ XXXXXXX X. XXXXX
--------------------------------------------
Xxxxxxx X. Xxxxx
Date: March 18, 1997
--------------------------------------
Exhibit A: Employee Benefits Summary
Exhibit B: Waiver and Release Agreement
Exhibit C: Employment Agreement
11.
