Executive Employment Agreement For Xxxx X. Xxxxxxxxx, Ph.D.
This Employment Agreement ("Agreement") is effective as of June 18, 2001 (the
"Effective Date") between Cypress Bioscience, Inc. ("Employer") and Xxxx X.
Xxxxxxxxx, Ph.D. ("Executive").
RECITALS
A. Employer desires assurance of the continued association and services of
Executive in order to retain his experience, abilities and knowledge, and is
therefore willing to engage his services on the terms and conditions set forth
below.
B. Executive desires to continue in the employ of Employer and is willing to do
so on the terms and conditions set forth below.
Therefore, in consideration of the above recitals and of the mutual promises and
conditions in this Agreement, it is agreed as follows:
1. Engagement of Employment.
In accordance with the terms and subject to the conditions set forth
in this Agreement, Employer agrees to employ Executive, and Executive agrees to
accept employment, as Chief Operating Officer and Executive Vice-President of
Employer.
2. Term.
Subject to earlier termination as provided in this Agreement, Executive
shall be employed for a term (the "Term") of one (1) year beginning June 18,
2001 and ending June 18, 2002 provided, however, that unless the Employer or
Executive give notice of failure to renew this Agreement, as provided in
Sections 13.1.4 and 13.1.5, before any anniversary date of this Agreement, this
Agreement's Term will be extended for an additional Term of one (1) year on the
anniversary date ("Automatic Renewal Date"), and for each year thereafter. This
Agreement's Term shall include any mutually agreed extensions pursuant to the
proceeding sentence.
3. Place of Employment.
Unless the Employer and the Executive agree otherwise in writing, during
the employment Term Executive shall perform the services he is required to
perform under this Agreement at Employer's offices, located at 0000 Xxxxxxxxx
Xxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx; provided, however, that Employer may
from time to time require Executive to travel temporarily to other locations on
Employer's business.
4. Executive's Duties and Authority.
Employer shall employ Executive as Chief Operating Office and Executive
Vice-President. Executive shall serve in an executive capacity and shall perform
such duties as are
1.
consistent with his positions as Chief Operating Officer and Executive Vice-
President and as may be reasonably required by Employer's Board of Directors.
Such duties shall include, without limitation, leading and coordinating
Employer's efforts to develop and implement strategic and operating plans for
Employer; executing day-to-day general management of Employer; developing
relationships with new partners, distributors, customers, and suppliers;
maintaining and solidifying relationships with Employer's existing partners,
distributors, customers, and suppliers; and supporting the development and
growth of Employer.
5. LOYAL AND CONSCIENTIOUS PERFORMANCE; NONCOMPETITION.
5.1 Loyalty. During the Executive's employment by the Employer, the
Executive shall devote Executive's full business energies, interest, abilities
and productive time to the proper and efficient performance of Executive's
duties under this Agreement.
5.2 Covenant not to Compete. Except with the prior written consent of
the Employer's Board of Directors, the Executive will not, during the Term of
this Agreement, and any period during which the Executive is receiving
compensation or any other consideration from the Employer, including, but not
limited to, severance pay pursuant to Section 13 herein, engage in competition
with the Employer or any of its affiliates, either directly or indirectly, in
any manner or capacity, as adviser, principal, agent, affiliate, promoter,
partner, officer, director, employee, stockholder, owner, co-owner, consultant,
or member of any association or otherwise, in any phase of the business of
developing, manufacturing and marketing of products or services which are in the
same field of use or which otherwise compete with the products or services or
proposed products or services of the Employer or any of its affiliates.
5.3 Agreement not to Participate in Employer's Competitors. During the
Term of this Agreement, the Executive agrees not to acquire, assume or
participate in, directly or indirectly, any position, investment or interest
known by Executive to be adverse or antagonistic to the Employer, its business
or prospects, financial or otherwise or in any company, person or entity that
is, directly or indirectly, in competition with the business of the Employer or
any of its affiliates. Ownership by the Executive, as a passive investment, of
less than two percent (2%) 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 on the Nasdaq Stock Market or in the
over-the-counter market shall not constitute a breach of this paragraph.
6. Executive's Compensation and Benefits.
6.1 Base Salary. During the term of this Agreement, Employer agrees to
pay Executive a Base Salary ("Base Salary") of $260,000.00 per year. The Base
Salary shall be payable as current salary, in pay is bi-monthly installments
subject to all applicable withholdings and deductions.
6.2 Annual Base Salary Review. Employer's Board of Directors shall
review Executive's Base Salary and additional benefits then being paid to
Executive not less frequently then every twelve (12) months. Following such
review, the Board may in its discretion increase (but shall not be required to
increase) Executive's Base Salary or any other benefits, but may not
2.
decrease Executive's Base Salary and additional benefits during the time he
serves as Chief Operating Officer and Executive Vice-President.
6.3 Bonus. A cash and/or stock bonus may be awarded by the Employer at
the Board's discretion to the Executive.
7. Stock Options.
7.1 Options. Concurrent with execution of this Agreement Executive
shall receive a stock option (the "Option") to purchase 125,000 shares of
Employer's common stock. To the extent possible, the Option will be treated as
an Incentive Stock Option. The Option will be granted under Employer's 2000
Equity Incentive Plan, as amended (the "Plan") and the strike price will be the
fair market value as determined under the Plan. Forty percent (40 %) of the
shares subject to the Option shall vest upon the first day of Executive's
employment and the remaining sixty percent (60 %) shall vest on a daily basis
over a four (4) year period from the effective date of this Agreement.
8. Relocation and Living Expenses.
8.1 Relocation Expenses. Concurrent with the execution of this
Agreement, Executive shall receive a gross payment of $5,000.00 to off-set
moving expenses and related incidentals.
8.2 Living Expenses. Employer shall reimburse Executive for his
monthly housing expense in the Employer's general geographic area not to exceed
a gross payment of $2,000.00 per month payable until the first anniversary of
the Effective Date.
9. Health and Dental Benefits.
9.1 Executive's Health and Dental Benefits. During the Term of
employment, Executive shall be entitled to receive all benefits of employment
generally available to Employer's other executive and managerial employees,
including medical hospitalization, health and accident, dental, life and
disability insurance benefits. With respect to life insurance, Employer shall
provide life insurance coverage insuring Executive's life for two times his Base
Salary (i.e., $570,000.00) at standard rates, subject to policy and plan
limitations.
9.2 Health, Dental and Life Insurance Benefits for Executive's Family
Members. During the Term of this Agreement, Executive shall be entitled to have
his family members covered under Employer's group insurance, hospitalization,
medical, dental, health and accident, disability, or similar plan or program of
Employer now existing or established hereafter to the extent that Executive's
family members are eligible for coverage under the plan or program's general
provisions.
3.
10. Retirement Plan.
10.1 401K Plan. During the Term of this Agreement, Executive shall be
eligible to participate in Employer's 401K plan pursuant to the terms of the
plan.
11. Vacation.
Executive shall be accrue four (4) weeks of paid vacation each 12-
month period on a pro-rata basis from the date employment commences under this
Agreement. Upon Executive's termination of employment with Employer, Executive
shall be paid at his then current Base Salary rate for all accrued unused
vacation time. If Executive's employment with Employer commences before July
13, 2001, the Employer shall permit Executive to take a week of paid vacation in
July, in addition to the vacation Executive is entitled to accrue for the year
2001 pursuant to this Agreement.
12. Additional Benefits.
12.1 Attorneys' Fees. The Employer agrees to reimburse Executive for
reasonable attorneys' fees in an amount not to exceed $5,000.00 incurred by
Executive in having this Agreement drafted by Executive's attorney, Xxxxxxx X.
Xxxx, Esq. of the law firm of Xxxx, King & Xxxxxxx.
13. Termination.
13.1 Termination By the Employer. The Executive's employment with the
Employer may be terminated under the following conditions:
13.1.1 Death or Disability. The Executive's employment with the
Employer shall terminate effective upon the date of the Executive's death or
"Complete Disability" (as defined in Section 13.4.1).
13.1.2 For Cause. The Employer may terminate the Executive's
employment under this Agreement for "Cause" (as defined in Section 13.5.3) by
delivery of written notice to the Executive specifying the Cause or Causes
relied upon for such termination. Any notice of termination given pursuant to
this Section 13.1.2 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 delivered as provided in Section 14
below.
13.1.3 Without Cause. The Employer may terminate the
Executive's employment under this Agreement at any time and for any reason by
delivery of written notice of such termination to the Executive. Any notice of
termination given pursuant to this Section 13.1.3 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 month in which such notice is delivered or deemed delivered
as provided in Section 14 below.
13.1.4 Non-Renewal Notice. The Employer may terminate this
Agreement by providing the Executive with ninety (90) days notice (the "Notice
Period") of non-renewal.
4.
13.1.5 Termination By The Executive. The Executive may terminate
the Executive's employment with the Employer upon sixty (60) days written notice
to the Employer.
13.2 Termination by Mutual Agreement of the Parties. The Executive's
employment pursuant to this Agreement may be terminated at any time upon a
mutual agreement in writing of the Parties. Any such termination of employment
shall have the consequences specified in such agreement. The Company and
Executive agree that in the event the CEO leaves his position as CEO of Employer
for any reason and the Employer's Board of Directors begins a search to recruit
a new CEO, the Board of Directors will give Executive the option of remaining
with the Employer pursuant to the terms of this Agreement or resigning within 90
days of hire of the new CEO, and receiving, upon delivery of an effective
Release and Waiver in the form attached hereto as Exhibit A: i) the greater of
the remainder of Executive's pay due through the Term of the Agreement or six
(6) months Base Salary, less standard deductions and withholdings; and ii)
accelerated vesting of the number of shares subject to the Option that would
have vested had Executive remained employed with Employer during the six (6)
months following his termination date.
13.3 Compensation Upon Termination.
13.3.1 Death or Complete Disability. If the Executive's
employment shall be terminated by death or Complete Disability as provided in
Section 13.1.1, the Employer shall pay the Executive's accrued base salary and
accrued and unused vacation benefits earned through the date of termination at
the rate in effect at the time of termination to Executive and/or Executive's
heirs, and the Employer shall thereafter have no further obligations to the
Executive and/or Executive's heirs under this Agreement.
13.3.2 With Cause or Non-renewal. If the Executive's employment
shall be terminated by the Employer with Cause, or if Employer provides the
Executive with a non-renewal notice at least ninety (90) days prior to the
Automatic Renewal Date and the Notice Period (as defined in Section 13.1.4) is
complete as of the date of termination, the Employer shall pay the Executive's
accrued base salary and accrued and unused vacation benefits earned through the
date of termination at the rate in effect at the time of the notice of
termination to Executive, and the Employer shall thereafter have no further
obligations to the Executive under this Agreement. In the event the Notice
Period extends beyond the Automatic Renewal Date and upon delivery of an
effective Release and Waiver in the form attached as Exhibit A: i) Executive
will be entitled to be paid his base salary, less standard deductions and
withholdings, for each day that the Notice Period extends beyond the Automatic
Renewal Date; and ii) Executive will receive accelerated vesting of the unvested
shares subject to the Option, for each day that the Notice Period extends beyond
the Automatic Renewal Date, so that all of Executive's unvested options that
would have vested had he remained employed during the Notice Period will be
vested as of the date of termination.
13.3.3 Without Cause. If the Employer terminates the Executive's
employment without Cause, the Executive shall be entitled to the Executive's
base salary and accrued and unused vacation earned through the date of
termination, subject to standard deductions and withholdings. In addition, upon
the Executive's furnishing to the Employer an
5.
effective waiver and release of claims (a form of which is attached hereto as
Exhibit A), the Executive shall be entitled to:
(i) The equivalent of the Executive's annual base salary in
effect at the time of termination for a period of the greater of three (3)
months or the remainder of the Term (the "Severance Period"). In addition, the
vesting of shares subject to the Option that would have vested had Executive
remained employed during the Severance Period will be accelerated and
immediately vested as of the date of termination and Executive will have one (1)
year from his date of termination to exercise his vested shares subject to the
Option.
13.3.4 Covenant not to Compete. Notwithstanding any provisions
in this Agreement to the contrary, including any provisions contained in this
Section 13.4, the Employer's obligations, and the Executive's rights, pursuant
to Section 13.4.3 shall cease and be rendered a nullity immediately should the
Executive violate any provision of Section 5 herein, or should the Executive
violate the terms and conditions of the Executive's Proprietary Information and
Inventions Agreement.
13.3.5 Termination of Obligations. In the event of the
termination of the Executive's employment hereunder and pursuant to this Section
13.3, the Employer shall have no obligation to pay Executive any base salary,
bonus or other compensation or benefits, except as provided in this Section 13.3
or for benefits due to the Executive (and/or the Executive's dependents) under
the terms of the Employer's benefit plans. The Employer may offset any amounts
Executive owes it or its subsidiaries against any amount it owes Executive
pursuant to this Section 13.3.
13.4 Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
13.4.1 Complete Disability. "Complete Disability" shall mean the
inability of the Executive to perform the Executive's duties under this
Agreement because the Executive has become permanently disabled within the
meaning of any policy of disability income insurance covering employees of the
Employer then in force. In the event the Employer has no policy of disability
income insurance covering employees of the Employer in force when the Executive
becomes disabled, the term "Complete Disability" shall mean the inability of the
Executive to perform the Executive's duties 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,
determines to have incapacitated the Executive from satisfactorily performing
all of the Executive's usual services for the Employer for a period of at least
one hundred twenty (120) days during any twelve (12) month period (whether or
not consecutive). 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.
6.
13.4.2 For Cause. "Cause" for the Employer to terminate
Executive's employment hereunder shall mean the occurrence of any of the
following events:
(i) the Executive's repeated failure to satisfactorily perform
the Executive's job duties after written notice of such deficiency and an
opportunity to cure;
(ii) has committed an act that materially injures the business
of the Employer;
(iii) has refused or failed to follow lawful and reasonable
directions of the Board or the appropriate individual to whom Executive reports
(iv) has been convicted of a felony involving moral turpitude
that is likely to inflict or has inflicted material injury on the business of
the Employer;
(v) the Executive's engaging or in any manner participating in
any activity which is directly competitive with or intentionally injurious to
the Employer or any of its affiliates or which violates any material provisions
of Section 5 hereof or the Executive's Proprietary Information and Inventions
Agreement; or
(vi) the Executive's commission of any fraud against the
Employer, its affiliates, employees, agents or customers or use or intentional
appropriation for his personal use or benefit of any funds or properties of the
Employer not authorized by the Board to be so used or appropriated.
13.5 Survival of Certain Sections. Sections 5, 13, 18 and 23 of this
Agreement will survive the termination of this Agreement.
14. Miscellaneous Provisions.
14.1 Notices. Any notices provided hereunder must be in writing and
shall be deemed effective on the earlier of personal delivery (including
personal delivery by telecopier or telex) or the third day after mailing by
first class mail to the recipient at the address indicated below:
To the employer Cypress Bioscience, Inc.,
0000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: Chairman of the Board and Chief Financial Officer,
To Executive:
Xxxx X. Xxxxxxxxx,
21022 Los Alisos Blvd., #0000,
Xxxxxx Xxxxx Xxxxxxxxx, Xxxxxxxxxx 00000,
7.
With a copy to
Xxxxxxx X. Xxxx of Xxxx, Xxxx & Xxxxxxx,
000 X. Xxxxxxxxxx, Xxxxx 000,
Xxxxx Xxx, XX 00000,
Or to such other address or to the attention of such other person as the
recipient party will have specified by prior written notice to the sending
party.
15. Severability.
If any Term, provision, or part of this Agreement is found by a court
to be invalid, illegal, or incapable of being enforced by any rule of law or
public policy, all other terms, provisions and parts of this Agreement shall
nevertheless remain in full force and affect as long as the economic or legal
substance of the transaction contemplated hereby is not affected in any manner
materially adverse to any party. On such determination that any term,
provision, or part of this Agreement is invalid, illegal, or incapable of being
enforced this Agreement and shall be deemed modified so as to effect the
parties' original intent as closely as possible to the end that the transactions
contemplated by this Agreement and the terms and provisions of this Agreement
are fulfilled to the greatest extent possible.
16. Entire Agreement.
This document constitutes the final, complete, and exclusive
embodiment of the entire Agreement and understanding between the parties related
to the subject matter of this Agreement and supercedes and preempts any prior or
contemporaneous understandings, agreements, or representations by or between
the parties, written or oral, including, but not limited to any offer letter
between the parties. Without limiting the generality of the foregoing, except
as provided in this Agreement, all understandings and agreements, written or
oral, relating to Executive's employment by Employer, or the payment of any
compensation or the provision of any benefit in connection therewith or
otherwise, are hereby terminated and shall be of no future force and effect.
17. Counterparts.
This Agreement may be executed on separate copies, any one of which
need not contain signatures of more than one (1) party, but all of which taken
together will constitute one and the same Agreement.
18. Successors and Assigns.
This Agreement is intended to bind and inure to the benefit of and be
enforceable by Executive and Employer, and their respective successors and
assigns, except that Executive may not assign any of his rights or duties under
this Agreement without Employer's prior written consent.
8.
19. Confidential and Proprietary Information; Nonsolicitation.
As a condition of employment the Executive agrees to execute and abide
by the Proprietary Information and Inventions Agreement attached hereto as
Exhibit B.
20. Attorney's Fees.
If any legal proceeding is necessary to enforce or interpret the terms
of this Agreement, or to recover damages for breach of this Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees, as well as
costs and disbursements, in addition to any other relief to which the prevailing
party may be entitled.
21. Amendments.
No amendments or other modifications to this Agreement may be made
except by a writing signed by both parties.
22. Choice of Law.
All questions concerning the construction, validity, and
interpretation of this Agreement will be governed by the internal law, and not
the law of conflicts, of the State of California.
23. Arbitration.
To ensure the rapid and economical resolution of disputes that may
arise in connection with Executive's employment with the Employer, Executive and
the Employer agree that any and all disputes, claims, or causes of action, in
law or equity, arising from or relating to Executive's employment, or the
termination of Executive's employment, will be resolved, to the fullest extent
permitted by law, by final, binding and confidential arbitration in San Diego,
California conducted by the Judicial Arbitration and Mediation
Services/Endispute, Inc. ("JAMS"), or its successors, under the then current
rules of JAMS for employment disputes; provided that the arbitrator shall: (a)
have the authority to compel adequate discovery for the resolution of the
dispute and to award such relief as would otherwise be permitted by law; and (b)
issue a written arbitration decision including the arbitrator's essential
findings and conclusions and a statement of the award. Both Executive and the
Employer shall be entitled to all rights and remedies that Executive or the
Employer would be entitled to pursue in a court of law. The Employer shall pay
all fees in excess of those which would be required if the dispute was decided
in a court of law. Nothing in this Agreement is intended to prevent either
Executive or the Employer from obtaining injunctive relief in court to prevent
irreparable harm pending the conclusion of any such arbitration.
Notwithstanding the foregoing, Executive and the Employer each have the right to
resolve any issue or dispute arising under the Proprietary Information and
Inventions Agreement by Court action instead of arbitration.
24. Trade Secrets of Others.
It is the understanding of both the Employer and the Executive that
the Executive shall not divulge to the Employer and/or its subsidiaries any
confidential information or trade
9.
secrets belonging to others, including the Executive's former employers, nor
shall the Employer and/or its affiliates seek to elicit from the Executive any
such information. Consistent with the foregoing, the Executive shall not provide
to the Employer and/or its affiliates, and the Employer and/or its affiliates
shall not request, any documents or copies of documents containing such
information.
25. Signatures.
In Witness Whereof, the parties now execute this Agreement, to be effective on
the date set forth in paragraph 2, hereinabove.
Executive
Date: 06/26/01 /s/ Xxxx X. Xxxxxxxxx
-------------- -----------------------------
Xxxx X. Xxxxxxxxx, Ph.D.
Employer
Date:______________ Cypress Bioscience, Inc.
By: /s/ Xxx Xxxxxxxx
-------------------------
Xxx Xxxxxxxx
President and CEO
10.
EXHIBIT A
RELEASE AND WAIVER OF CLAIMS
In consideration of the payments and other benefits set forth in Section
13.3 of the Employment Agreement dated 06/26/01, to which this form is
-----------
attached, I, Xxxx X. Xxxxxxxxx, Ph.D., hereby furnish Cypress Bioscience, Inc.
(the "Employer"), with the following release and waiver ("Release and Waiver").
I hereby release, and forever discharge the Employer, its officers,
directors, agents, employees, stockholders, successors, assigns, affiliates,
parent, subsidiaries, and benefit plans, of and from any and all claims,
liabilities, demands, causes of action, costs, expenses, attorneys' fees,
damages, indemnities and obligations of every kind and nature, in law, equity,
or otherwise, known and unknown, suspected and unsuspected, disclosed and
undisclosed, arising at any time prior to and including my employment
termination date with respect to any claims relating to my employment and the
termination of my employment, including but not limited to, claims pursuant to
any federal, state or local law relating to employment, including, but not
limited to, discrimination claims, claims under the California Fair Employment
and Housing Act, and the Federal Age Discrimination in Employment Act of 1967,
as amended ("ADEA"), or claims for wrongful termination, breach of the covenant
of good faith, contract claims, tort claims, and wage or benefit claims,
including but not limited to, claims for salary, bonuses, commissions, stock,
stock options, vacation pay, fringe benefits, severance pay or any form of
compensation.
I also acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A general release does not
extend to claims which the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor." I hereby expressly waive
and relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to any claims I may have against the
Employer.
I acknowledge that, among other rights, I am waiving and releasing any
rights I may have under ADEA, that this Release and Waiver is knowing and
voluntary, and that the consideration given for this Release and Waiver is in
addition to anything of value to which I was already entitled as an executive of
the Employer. I further acknowledge that I have been advised, as required by
the Older Workers Benefit Protection Act, that: (a) the release and waiver
granted herein does not relate to claims under the ADEA which may arise after
this Release and Waiver is executed; (b) I have the right to consult with an
attorney prior to executing this Release and Waiver (although I may choose
voluntarily not to do so); and if I am 40 years of age or older upon execution
of this Release and Waiver: (c) I have twenty-one (21) days from the date of
termination of my employment with the Employer in which to consider this Release
and Waiver (although I may choose voluntarily to execute this Release and Waiver
earlier); (d) I have seven (7) days following the execution of this Release and
Waiver to revoke my consent to this Release and Waiver; and (e) this Release and
Waiver shall not be effective until the seven (7) day revocation period has
expired.
Date: 06/26/01 By: /s/ Xxxx X. Xxxxxxxxx
---------------- --------------------------------
Xxxx X. Xxxxxxxxx, Ph.D.
EXHIBIT B
Cypress Bioscience, Inc.
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
In consideration of my employment or continued employment by Cypress
Bioscience, Inc. (the "Employer"), and the compensation now and hereafter paid
to me, I, Xxxx X. Xxxxxxxxx, Ph.D., hereby agree as follows:
1. Nondisclosure
1.1 Recognition of Employer's Rights; Nondisclosure. At all times during
my employment and thereafter, I will hold in strictest confidence and will not
disclose, use, lecture upon or publish any of the Employer's [and/or its
Affiliates'] Proprietary Information (defined below), except as such disclosure,
use or publication may be required in connection with my work for the Employer,
or unless an officer of the Employer expressly authorizes such in writing. I
will obtain Employer's written approval before publishing or submitting for
publication any material (written, verbal, or otherwise) that relates to my work
at Employer and/or incorporates any Proprietary Information. I hereby assign to
the Employer any rights I may have or acquire in such Proprietary Information
and recognize that all Proprietary Information shall be the sole property of the
Employer and its assigns. [For purposes of this Agreement, "Affiliate" means,
with respect to any specific entity, any other entity that, directly or
indirectly, through one or more intermediaries, controls, is controlled by or is
under common control with such specified entity.]
1.2 Proprietary Information. The term "Proprietary Information" shall mean
any and all confidential and/or proprietary knowledge, data or information of
the Employer and/or its Affiliates. By way of illustration but not limitation,
"Proprietary Information" includes (a) trade secrets, inventions, mask works,
ideas, processes, formulas, source and object codes, data, programs, other works
of authorship, know-how, improvements, discoveries, developments, designs and
techniques (hereinafter collectively referred to as "Inventions"); and (b)
information regarding plans for research, development, new products, marketing
and selling, business plans, budgets and unpublished financial statements,
licenses, prices and costs, suppliers and customers; and (c) information
regarding the skills and compensation of other employees of the Employer [and/or
its Affiliates]. Notwithstanding the foregoing, it is understood that, at all
such times, I am free to use information which is generally known in the trade
or industry, which is not gained as result of a breach of this Agreement, and my
own, skill, knowledge, know-how and experience to whatever extent and in
whichever way I wish.
1.3 Third Party Information. I understand, in addition, that the Employer
has received and in the future will receive from third parties confidential or
proprietary information ("Third Party Information") subject to a duty on the
Employer's part to maintain the confidentiality of such information and to use
it only for certain limited purposes. During the term of my employment and
thereafter, I will hold Third Party Information in the strictest confidence and
will not disclose to anyone (other than Employer personnel who need to know such
information in connection with their work for the Employer) or use, except in
connection with my work for the Employer, Third Party Information unless
expressly authorized by an officer of the Employer in writing.
1.4 No Improper Use of Information of Prior Employers and Others. During
my employment by the Employer I will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employer or any
other person to whom I have an obligation of confidentiality, and I will not
bring onto the premises of the Employer any unpublished documents or any
property belonging to any former employer or any other person to whom I have an
obligation of confidentiality unless consented to in writing by that former
employer or person. I will use in the performance of my duties only information
which is generally known and used by persons with training and experience
comparable to my own, which is common knowledge in the industry or otherwise
legally in the public domain, or which is otherwise provided or developed by the
Employer.
2. Assignment of Inventions.
2.1 Proprietary Rights. The term "Proprietary Rights" shall mean all
trade secret, patent, copyright, mask work and other intellectual property
rights throughout the world.
1.
2.2 Prior Inventions. Inventions, if any, patented or unpatented, which I
made prior to the commencement of my employment with the Employer are excluded
from the scope of this Agreement. To preclude any possible uncertainty, I have
set forth on Exhibit B-2 (Previous Inventions) attached hereto a complete list
of all Inventions that I have, alone or jointly with others, conceived,
developed or reduced to practice or caused to be conceived, developed or reduced
to practice prior to the commencement of my employment with the Employer, that I
consider to be my property or the property of third parties and that I wish to
have excluded from the scope of this Agreement (collectively referred to as
"Prior Inventions"). If disclosure of any such Prior Invention would cause me
to violate any prior confidentiality agreement, I understand that I am not to
list such Prior Inventions in Exhibit B-2 but am only to disclose a cursory name
for each such invention, a listing of the party(ies) to whom it belongs and the
fact that full disclosure as to such inventions has not been made for that
reason. A space is provided on Exhibit B-2 for such purpose. If no such
disclosure is attached, I represent that there are no Prior Inventions. If, in
the course of my employment with the Employer, I incorporate a Prior Invention
into a Employer product, process or machine, the Employer is hereby granted and
shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide
license (with rights to sublicense through multiple tiers of sublicensees) to
make, have made, modify, use and sell such Prior Invention. Notwithstanding the
foregoing, I agree that I will not incorporate, or permit to be incorporated,
Prior Inventions in any Employer Inventions without the Employer's prior written
consent.
2.3 Assignment of Inventions. Subject to Sections 2.4 and 2.6, I hereby
assign and agree to assign in the future (when any such Inventions or
Proprietary Rights are first reduced to practice or first fixed in a tangible
medium, as applicable) to the Employer all my right, title and interest in and
to any and all Inventions (and all Proprietary Rights with respect thereto)
whether or not patentable or registrable under copyright or similar statutes,
made or conceived or reduced to practice or learned by me, either alone or
jointly with others, during the period of my employment with the Employer.
Inventions assigned to the Employer, or to a third party as directed by the
Employer pursuant to this Section 2, are hereinafter referred to as "Employer
Inventions".
2.4 Nonassignable Inventions. This Agreement does not apply to an
Invention which qualifies fully as a nonassignable Invention under Section 2870
of the California Labor Code (hereinafter "Section 2870"). I have reviewed the
notification on Exhibit B-1 (Limited Exclusion Notification) and agree that my
signature acknowledges receipt of the notification.
2.5 Obligation to Keep Employer Informed. During the period of my
employment and for six (6) months after termination of my employment with the
Employer, I will promptly disclose to the Employer fully and in writing all
Inventions authored, conceived or reduced to practice by me, either alone or
jointly with others. In addition, I will promptly disclose to the Employer all
patent applications filed by me or on my behalf within a year after termination
of employment. At the time of each such disclosure, I will advise the Employer
in writing of any Inventions that I believe fully qualify for protection under
Section 2870; and I will at that time provide to the Employer in writing all
evidence necessary to substantiate that belief. The Employer will keep in
confidence and will not use for any purpose or disclose to third parties without
my consent any confidential information disclosed in writing to the Employer
pursuant to this Agreement relating to Inventions that qualify fully for
protection under the provisions of Section 2870. I will preserve the
confidentiality of any Invention that does not fully qualify for protection
under Section 2870.
2.6 Government or Third Party. I also agree to assign all my right, title
and interest in and to any particular Employer Invention to a third party,
including without limitation the United States, as directed by the Employer.
2.7 Works for Hire. I acknowledge that all original works of authorship
which are made by me (solely or jointly with others) within the scope of my
employment and which are protectable by copyright are "works made for hire",
pursuant to United States Copyright Act (17 U.S.C., Section 101).
2.8 Enforcement of Proprietary Rights. I will assist the Employer in
every proper way to obtain, and from time to time enforce, United States and
foreign Proprietary Rights relating to Employer Inventions in any and all
countries. To that end I will execute, verify and deliver such documents and
perform such other acts (including appearances as a witness) as the Employer may
reasonably request for use in applying for, obtaining, perfecting, evidencing,
sustaining and enforcing such Proprietary Rights and the assignment thereof. In
addition, I will execute, verify and deliver assignments of such Proprietary
Rights to the Employer or its designee. My obligation to assist the Employer
with respect to Proprietary Rights relating to such Employer Inventions in any
and all countries shall continue beyond the
2.
termination of my employment, but the Employer shall compensate me at a
reasonable rate after my termination for the time actually spent by me at the
Employer's request on such assistance.
In the event the Employer is unable for any reason, after reasonable effort, to
secure my signature on any document needed in connection with the actions
specified in the preceding paragraph, I hereby irrevocably designate and appoint
the Employer and its duly authorized officers and agents as my agent and
attorney in fact, which appointment is coupled with an interest, to act for and
in my behalf to execute, verify and file any such documents and to do all other
lawfully permitted acts to further the purposes of the preceding paragraph with
the same legal force and effect as if executed by me. I hereby waive and
quitclaim to the Employer any and all claims, of any nature whatsoever, which I
now or may hereafter have for infringement of any Proprietary Rights assigned
hereunder to the Employer.
3. Records. I agree to keep and maintain adequate and current records (in
the form of notes, sketches, drawings and in any other form that may be required
by the Employer) of all Proprietary Information developed by me and all
Inventions made by me during the period of my employment at the Employer, which
records shall be available to and remain the sole property of the Employer at
all times.
4. Additional Activities. I agree that during the period of my employment
by the Employer I will not, without the Employer's express written consent,
engage in any employment or business activity which is competitive with, or
would otherwise conflict with, my employment by the Employer. I agree further
that for the period of my employment by the Employer and for one (l) year after
the date of termination of my employment by the Employer I will not induce any
employee of the Employer to leave the employ of the Employer.
5. No Conflicting Obligation. I represent that my performance of all the
terms of this Agreement and as an executive of the Employer does not and will
not breach any agreement to keep in confidence information acquired by me in
confidence or in trust prior to my employment by the Employer. I have not
entered into, and I agree I will not enter into, any agreement either written or
oral in conflict herewith.
6. Return of Employer Documents. When I leave the employ of the Employer,
I will deliver to the Employer any and all drawings, notes, memoranda,
specifications, devices, formulas, and documents, together with all copies
thereof, and any other material containing or disclosing any Employer
Inventions, Third Party Information or Proprietary Information of the Employer.
I further agree that any property situated on the Employer's premises and owned
by the Employer, including disks and other storage media, filing cabinets or
other work areas, is subject to inspection by Employer personnel at any time
with or without notice. Prior to leaving, I will cooperate with the Employer in
completing and signing the Employer's termination statement.
7. Legal and Equitable Remedies. Because my services are personal and
unique and because I may have access to and become acquainted with the
Proprietary Information of the Employer, the Employer shall have the right to
enforce this Agreement and any of its provisions by injunction, specific
performance or other equitable relief, without bond and without prejudice to any
other rights and remedies that the Employer may have for a breach of this
Agreement.
8. Notices. Any notices required or permitted hereunder shall be given to
the appropriate party at the address specified below or at such other address as
the Party shall specify in writing. Such notice shall be deemed given upon
personal delivery to the appropriate address or if sent by certified or
registered mail, three (3) days after the date of mailing.
9. Notification of New Employer. In the event that I leave the employ of
the Employer, I hereby consent to the notification of my new employer of my
rights and obligations under this Agreement.
10. General Provisions.
10.1 Governing Law; Consent to Personal Jurisdiction. This Agreement will
be governed by and construed according to the laws of the State of California,
as such laws are applied to agreements entered into and to be performed entirely
within California between California residents. I hereby expressly consent to
the personal jurisdiction of the state and federal courts located in San Diego
County, California for any lawsuit filed there against me by Employer arising
from or related to this Agreement.
10.2 Severability. In case any one or more of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality
3.
or unenforceability shall not affect the other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. If moreover, any one or more of the
provisions contained in this Agreement shall for any reason be held to be
excessively broad as to duration, geographical scope, activity or subject, it
shall be construed by limiting and reducing it, so as to be enforceable to the
extent compatible with the applicable law as it shall then appear.
10.3 Successors and Assigns. This Agreement will be binding upon my
heirs, executors, administrators and other legal representatives and will be for
the benefit of the Employer, its successors, and its assigns.
10.4 Survival. The provisions of this Agreement shall survive the
termination of my employment and the assignment of this Agreement by the
Employer to any successor in interest or other assignee.
10.5 Employment. I agree and understand that nothing in this Agreement
shall confer any right with respect to continuation of employment by the
Employer, nor shall it interfere in any way with my right or the Employer's
right to terminate my employment at any time, with or without Cause.
10.6 Waiver. No waiver by the Employer of any breach of this Agreement
shall be a waiver of any preceding or succeeding breach. No waiver by the
Employer of any right under this Agreement shall be construed as a waiver of any
other right. The Employer shall not be required to give notice to enforce
strict adherence to all terms of this Agreement.
10.7 Entire Agreement. The obligations pursuant to Sections 1 and 2 of
this Agreement shall apply to any time during which I was previously employed,
or am in the future employed, by the Employer as a consultant if no other
agreement governs nondisclosure and assignment of inventions during such period.
This Agreement is the final, complete and exclusive agreement of the Parties
with respect to the subject matter hereof and supersedes and merges all prior
discussions between us. No modification of or amendment to this Agreement, nor
any waiver of any rights under this Agreement, will be effective unless in
writing and signed by the Party to be charged. Any subsequent change or changes
in my duties, salary or compensation will not affect the validity or scope of
this Agreement.
This Agreement shall be effective as of the first day of my employment with
the Employer, namely: June 26, 2001.
-----------------
I have read this Agreement carefully and understand its terms. I have
completely filled out Exhibit B-1 to this Agreement.
Dated: 06/26/01
-------------------------------------
/s/ Xxxx X. Xxxxxxxxx
-------------------------------------------
(Signature)
Xxxx X. Xxxxxxxxx
-------------------------------------------
(Executive's Printed Name)
Accepted and Agreed To:
Cypress Bioscience, Inc.
____________________________
____________________________
By: /s/ Xxx Xxxxxxxx
----------------------------------------
Title: CEO
-------------------------------------
Dated: 06/22/01
-------------------------------------
4.
Exhibit B-1
LIMITED EXCLUSION NOTIFICATION
This is to notify The Executive in accordance with Section 2872 of the
California Labor Code that the foregoing Agreement between the Executive and the
Employer does not require the Executive to assign or offer to assign to the
Employer any invention that the Executive developed entirely on Executive's own
time without using the Employer's equipment, supplies, facilities or trade
secret information except for those inventions that either:
1. Relate at the time of conception or reduction to practice of the
invention to the Employer's business, or actual or demonstrably
anticipated research or development of the Employer;
2. Result from any work performed by The Executive for the Employer.
To the extent a provision in the foregoing Agreement purports to require
the Executive to assign an invention otherwise excluded from the preceding
paragraph, the provision is against the public policy of this state and is
unenforceable.
This limited exclusion does not apply to any patent or invention covered by
a contract between the Employer and the United States or any of its agencies
requiring full title to such patent or invention to be in the United States.
I acknowledge receipt of a copy of this notification.
/s/ Xxxx X. Xxxxxxxxx
------------------------------------------
Xxxx X. Xxxxxxxxx, Ph.D.
Date: 06/26/01
-------------------------------------
Witnessed by:
_________________________________
(Printed Name of Representative)
Exhibit B-2
TO: Cypress Bioscience, Inc.
FROM: Xxxx X. Xxxxxxxxx, Ph.D.
DATE: ________________, 2001
SUBJECT: Previous Inventions
1. Except as listed in Section 2 below, the following is a complete list of
all inventions or improvements relevant to the subject matter of my employment
by Cypress Bioscience, Inc. (the "Employer") that have been made or conceived or
first reduced to practice by me alone or jointly with others prior to my
engagement by the Employer:
[X] No inventions or improvements.
[_] See below:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
[_] Additional sheets attached.
2. Due to a prior confidentiality agreement, I cannot complete the disclosure
under Section 1 above with respect to inventions or improvements generally
listed below, the proprietary rights and duty of confidentiality with respect to
which I owe to the following party(ies):
Invention or Improvement Party(ies) Relationship
1. ___________________________ _______________ ___________________________
2. ___________________________ _______________ ___________________________
3. ___________________________ _______________ ___________________________
[_] Additional sheets attached.
2.
