Employment Agreement - Lipid Sciences Inc. and Barry Michaels
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), which is effective as of
April 2, 2001 is between Lipid Sciences, Inc., a Delaware corporation (the
"Company"), and Barry Michaels ("Executive"), who agree as follows. The Company
and Executive are hereinafter collectively referred to as the "Parties," and may
individually be 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; and
B. Executive desires to be in the employ of the Company and is willing to
accept this employment on the terms and conditions set forth in this Agreement.
AGREEMENT
1. EMPLOYMENT.
1.1 The Company will employ Executive, and Executive hereby accepts
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"),
for the term of one year from the Effective Date. This Agreement will
automatically be renewed for the term of one year unless either party gives
notice to the other at least 60 days prior to the expiration of the then current
term of employment of such party's intention not to renew.
1.2 Executive will be the Chief Financial Officer (CFO). Executive
will report to the President/CEO.
1.3 Executive will do and perform all services, acts or things
necessary or advisable to manage and conduct the world wide financial affairs of
the Company, including financial strategy, budgeting, planning, reporting and
auditing. Executive will also be a corporate officer.
1.4 Unless the Parties otherwise agree in writing, prior to
Executive's termination in accordance with this Agreement, Executive will
perform the services he is required to perform in accordance with the terms of
this Agreement, reporting to the Company's President/CEO.
2. LOYAL AND CONSCIENTIOUS PERFORMANCE; NONCOMPETITION.
2.1 During his employment by the Company, Executive will devote his
full business employment, interest, abilities and productive time to the proper
and efficient performance of his duties under this Agreement. Executive may not
be employed by another company or receive compensation for employment from any
other source. During his
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employment by the Company, Executive may 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 of products that are in the same field of use or
which otherwise directly compete with the products or proposed products of the
Company.
3. COMPENSATION OF EXECUTIVE.
3.1 The Company will pay Executive a salary of Two hundred,
twenty-five thousand dollars ($225,000.00) per year ("Base Salary"), payable in
regular periodic payments in accordance with Company policy. Such salary will be
prorated for any partial year of employment on the basis of a 365-day fiscal
year. Executive's compensation may be changed from time to time by mutual
agreement of Executive, the CEO and Board of Directors, but under no
circumstance will the annual Base Salary be less than $225,000.00.
3.2 All of Executive's compensation is subject to customary
withholding taxes and any other employment taxes as are commonly required to be
collected or withheld by the Company.
3.3 Executive will, in the discretion of the Board and in accordance
with Company policy, be entitled to participate in benefits under any employee
benefit plan or arrangement made available by the Company now or in the future
to its executives and key management employees.
3.4 Executive's performance will be reviewed by the CEO on a
periodic basis (not less than once each fiscal year). The CEO with approval of
the Board may, in their sole discretion, award bonuses to Executive as will be
appropriate or desirable based on Executive's performance. Executive will be
reviewed within twelve months of commencing employment hereunder.
3.5 Executive will be granted options to purchase the Company's
common stock. The number of options to be granted has been determined by the
parties and will be set forth in a separate stock option agreement, attached as
EXHIBIT A. As of the Effective Date of this Agreement, the Company will grant
Executive an option to purchase up to two hundred thousand (200,000) shares of
the Company's common stock. The exercise price per share of these options (the
"Options") will be equal to $7.00 per share. Options will vest as to twenty-five
thousand (25,000) shares following the first six (6) continuous months of
service with the Company and the remainder over three and one half years at the
rate of 1/42nd per month of the total 200,000 shares.
3.6 Executive is entitled to receive prompt reimbursement of all
reasonable expenses incurred by Executive in performing Company services,
including expenses related to travel, entertainment, parking, and business
meetings. These expenses will be accounted for in accordance with the policies
and procedures established by the Company.
4. TERMINATION. Either party may terminate this Agreement and Executive's
employment without cause, upon thirty (30) days written notice. Upon
termination, the Company will be released from any and all obligations under
this Agreement, except in the event
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the Executive's employment is involuntarily terminated by the Company for other
than "good cause," then Executive will resign from all positions with the
Company, and enter into a consulting arrangement for twelve (12) months
commencing immediately after the termination date. In consideration for such
consulting arrangement, Executive will continue to be paid salary and benefits
for twelve (12) months. However, if Executive obtains new full time employment
during such twelve (12) month period, any salary paid pursuant to such
arrangement will be offset from amounts due under this Letter Agreement.
Executive's obligations under Paragraph 5 of this Agreement will continue beyond
his termination of employment.
5. CONFIDENTIAL INFORMATION; NONSOLICITATION.
5.1 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 Company; provided, however, that Executive may disclose
Confidential Information in the best interest of the Company with properly
executed Company confidentiality or secrecy agreements with the third party. As
a condition of this Agreement, the Executive will sign and return a copy of the
Company's Proprietary Information and Inventions Agreement, attached as EXHIBIT
B.
5.2 While employed by the Company and for one (1) year thereafter,
in order to protect the Company's confidential and proprietary information from
unauthorized use, Executive may not, either directly or through others, (i)
solicit or attempt to solicit any employee, consultant or independent contractor
of the Company to terminate his or her relationship with the Company in order to
become an employee, consultant or independent contractor to or for any other
person or business entity; or (ii) solicit or attempt to solicit the business of
any customer, vendor or distributor of the Company which, at the time of
termination or one (1) year immediately prior thereto, was listed on the
Company's customer, vendor or distributor list.
6. SUCCESSORS. The Company will require any successor (whether direct or
indirect, by purchase, merger, or consolidation) to all or substantially all of
the business and/or assets of the Company, by agreement in form and substance
reasonably satisfactory to the Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
7. ASSIGNMENT AND BINDING EFFECT. This Agreement is binding on and inures
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
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under this Agreement are assignable by Executive. This Agreement is binding on
and inures to the benefit of the Company and its successors, assigns and legal
representatives.
8. NOTICES. All notices or demands of any kind required or permitted to be
given by the Company or Executive under this Agreement will be given in writing
and will be personally delivered (and receipted for) or mailed by certified
mail, return receipt requested, postage prepaid.
9. CHOICE OF LAW. This Agreement will be construed and interpreted in
accordance with the laws of the State of California, without regard to the
conflict of laws provision thereof.
10. INTEGRATION. 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.
11. AMENDMENT. This Agreement may not be amended or modified except by a
written agreement signed by Executive and the Company.
12. WAIVER. No term, covenant or condition of this Agreement or any breach
thereof will be deemed waived, except with the written consent of the Party
against whom the waiver is claimed, and any waiver of any such term, covenant,
condition or breach will not be deemed to be a waiver of any preceding or
succeeding breach of the same or any other term, covenant, condition or breach.
13. SEVERABILITY. The finding by a court of competent jurisdiction of the
unenforceability, invalidity or illegality of any provision of this Agreement
will not render any other provision of this Agreement unenforceable, invalid or
illegal. Such court will 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.
14. INTERPRETATION; CONSTRUCTION. The headings set forth in this Agreement
are for convenience of reference only and will not be used in interpreting this
Agreement. 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 will not be employed in the interpretation
of this Agreement.
15. REPRESENTATIONS AND WARRANTIES. Executive represents and warrants
that, to the best of Executive's knowledge, 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.
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16. COUNTERPARTS. This Agreement may be executed in two counterparts, each
of which will be deemed an original, all of which together will contribute one
and the same instrument.
17. ARBITRATION. If any dispute arises regarding the application,
interpretation, or enforcement of this Agreement, including fraud in the
inducement, the dispute will be resolved by final and binding arbitration before
one arbitrator at the Judicial Arbitration and Mediation Service in Los Angeles,
California. The decision of the arbitrator will be final and may not be appealed
by either of the Parties.
18. ATTORNEYS' FEES AND COSTS. The prevailing party in any dispute arising
out of this Agreement will be entitled to reimbursement by the losing party of
all of its or his attorneys' fees and costs including, but not limited to,
arbitrator's fees and expert's fees.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
THE COMPANY: LIPID SCIENCES, INC.
By: /s/ Phil Radlick
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Phil Radlick, Ph.D.
President/CEO.
EXECUTIVE: /s/ Barry D. Michaels
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Barry D. Michaels
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