SYNTHEMED, INC. CONSULTING AGREEMENT
This
Consulting Agreement (the "Agreement") is entered into effective October 1, 2008
(the “Effective Date”) by and between SyntheMed, Inc., a Delaware
corporation (the "Company"), and Xxxxxxx X. Xxxxxxxx, MD
("Consultant").
WHEREAS, Consultant is
presently Chairman of the Board of Directors of the Company;
WHEREAS, the Company desires
Consultant to assume an expanded role in the Company in the capacity
of Executive Chairman, and Consultant desires to assume such role;
NOW, THEREFORE, in
consideration of the mutual covenants contained herein, the Company and
Consultant agree as follows:
1. Consulting
Relationship. During the term of this Agreement,
Consultant will serve as Executive Chairman of the Company, which shall be an
executive officer position, and in that capacity Consultant shall have the
rights, powers, authority, functions, duties and responsibilities customarily
associated with the position of an executive chairman, and such additional
rights, powers, authority, functions and responsibilities as the Board of
Directors may assign to Consultant from time to time that are commensurate with
Consultant’s status as Executive Chairman. Without limiting the
foregoing, Consultant will be actively engaged in, and have responsibility,
working with the Board of Directors and the President and Chief Executive
Officer of the Company, for (i) the overall leadership and strategic direction
of the Company, (ii) providing guidance and support to senior management of the
Company, (iii) the coordination of the activities of the Board of Directors and
(iv) communication with shareholders and other important
constituencies. Consultant shall be responsible to and shall report
to the Board of Directors. Consultant shall devote such time and
attention to the business of the Company as is reasonably necessary to fulfill
Consultant’s responsibilities as Executive Chairman.
2. Compensation. As
full compensation for the services to be rendered by Consultant in all
capacities to the Company, the Company shall pay Consultant the compensation set
forth on Exhibit A
hereto, together with such additional cash (but not equity-based) compensation
as the Board of Directors may from time to time establish for the services of
its members generally.
3. Expense
Reimbursement. Consultant shall be entitled to
reimbursement for reasonable travel and other out-of-pocket expenses incurred by
Consultant in the performance of services rendered hereunder following
submission of written expense statements and other supporting documentation in
accordance with the policy and practice of the Company.
4. Term
and Termination. The term of this Agreement shall
commence on the Effective Date and shall continue until December 31, 2009,
subject to automatic extension for successive one-year
periods unless either party provides written notice to the other of its
intention not to renew at least ten days prior to the then scheduled expiration
date. Notwithstanding the foregoing, either party may terminate this
Agreement at any time prior to its then scheduled expiration date, upon thirty
(30) days' prior written notice to the other party if termination is
without cause and upon written notice to the other party if termination is as a
result of a breach by the non-terminating party. Upon termination of
this Agreement, neither Consultant nor the Company shall have any further
obligations under this Agreement, except that any liabilities accrued through
the date of termination (including under Sections 2 and 3) and Sections 5, 7 and
10 shall survive termination.
5. Independent
Contractor. Consultant's relationship with the
Company will be that of an independent contractor and not that of an
employee.
(a) Method
of Provision of Services. Consultant shall be
solely responsible for determining the method, details and means of rendering
services to the Company hereunder.
(b) No
Benefits. Consultant acknowledges and agrees that
Consultant will not be eligible for any Company employee benefits and, to the
extent Consultant otherwise would be eligible for any Company employee benefits
but for the express terms of this Agreement,
Consultant hereby expressly declines to participate in such Company employee
benefits.
(c) Withholding;
Indemnification. Consultant shall have full
responsibility for applicable withholding taxes for all compensation paid to
Consultant under this Agreement. Consultant agrees to indemnify, defend and hold
the Company harmless from any liability for, or assessment of, any claims or
penalties with respect to such withholding taxes, including any liability for,
or assessment of, withholding taxes imposed on the Company by the relevant
taxing authorities with respect to any compensation paid to Consultant, as well
as reasonable attorneys’ fees incurred in connection therewith.
6. [Intentionally
omitted]
7. Non-Competition,
Non-Solicitation and Confidentiality Restrictions. In
further consideration for the compensation payable by the Company hereunder and
as a condition to the Company’s obligations hereunder, Consultant agrees to be
bound by the provisions set forth on Exhibit B
hereto.
8. Compliance
with Law. Consultant represents and warrants to the Company
that Consultant will render the services to be performed by Consultant hereunder
in compliance with all applicable laws and regulations.
9. Conflicts
with this Agreement. Consultant represents and
warrants that Consultant is not presently under any contractual or other
restriction or obligation which conflicts with, or would be materially breached
by Consultant’s execution and delivery of, this Agreement or the performance of
the services to be rendered by Consultant hereunder, and during the term of this
Agreement, Consultant will not become subject to any such contractual
restriction or obligation, whether written or oral.
10. Miscellaneous.
(a) Amendments
and Waivers. Any term of this Agreement may be
amended or waived only with the written consent of the parties.
(b) Sole
Agreement. This Agreement, including the Exhibits
hereto, constitutes the sole agreement of the parties and supersedes all oral
negotiations and prior writings with respect to the subject matter
hereof.
(c) Notices. Any
notice required or permitted by this Agreement shall be in writing and shall be
deemed sufficient upon receipt, when delivered personally or by courier,
overnight delivery service or confirmed facsimile, or 48 hours after being
deposited in the regular mail as certified or registered mail (airmail if sent
internationally) with postage prepaid, if such notice is addressed, in the case
of the Company, to the address or facsimile number of its corporate headquarters
(attention: Board of Directors) with a copy to Xxxxxxxxx Xxxxxx & Xxxx LLP,
00 X 00xx Xxxxxx,
XX, XX 00000, and in the case of Consultant, to Consultant’s address or
facsimile number as currently on file with the Company, or as subsequently
modified by written notice.
(d) Choice of
Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
New Jersey, without giving effect to the principles of conflict of
laws.
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(e) Severability. If
one or more provisions of this Agreement are held by a court of competent
jurisdiction to be unenforceable under applicable law, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such provision were so excluded and
(iii) the balance of the Agreement shall be enforceable in accordance with
its terms.
(f) Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together will constitute one and the same
instrument.
(g) Arbitration; Consent to Jurisdiction. Any dispute or claim
arising out of or in connection with any provision of this Agreement shall be
exclusively and finally settled by binding arbitration in Middlesex County, New
Jersey, in accordance with the rules of the American Arbitration Association by
one arbitrator appointed in accordance with said rules. The arbitrator shall
apply New York law, without reference to rules of conflicts of law or rules of
statutory arbitration, to the resolution of any dispute. Judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. Notwithstanding the foregoing, the parties may apply to any court of
competent jurisdiction for preliminary or interim equitable relief, or to compel
arbitration in accordance with this paragraph, without breach of this
arbitration provision. This Section 10(g) shall not apply to the
Confidentiality Agreement. To the extent that any court action is permitted
consistent with or to enforce this Section 10(g), the parties hereby consent to
the jurisdiction of the state and federal courts located in Middlesex County,
New Jersey. Accordingly, with respect to any such court action, the
Consultant (i) submits to the personal jurisdiction of such courts;
(ii) consents to service of process; and (iii) waives any other
requirement (whether imposed by statute, rule of court, or otherwise) with
respect to personal jurisdiction or service of process.
(h) Assignment. Consultant
agrees that Consultant may not assign this Agreement, as it is personal to
Consultant. The Company may assign this Agreement upon notice to
Consultant.
(i) Advice of
Counsel. EACH PARTY ACKNOWLEDGES THAT, IN
EXECUTING THIS AGREEMENT, SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE
OF INDEPENDENT LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OFTHE TERMS AND
PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY
PARTYBY REASON OF THE DRAFTING OR PREPARATION HEREOF.
The
parties have executed this Consulting Agreement on the respective dates set
forth below.
By:_s/Xxxxxx X.
Xxxxxx
Name: X.
X. Xxxxxx
Title: President/CEO
Date: 10/1/08
XXXXXXX
X. XXXXXXXX, MD
s/Xxxxxxx X.
Xxxxxxxx
Date: [not
dated]
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COMPENSATION
Cash Fee: $100,000
per annum, payable monthly in arrears.
Stock Options: Non-qualified
stock options to purchase 750,000 shares of common stock, exercisable as to
125,000 shares at $.40/share (or such higher price as is equal to fair market
value on the date of grant), 125,000 shares at $.60/share, 250,000 shares at
$.80/share and 250,000 shares at $1.00/share, provided that vesting of the $.40
and $.60 installments is subject to the 30-day average stock price achieving a
$.60 level by the first anniversary of grant and vesting of the remaining two
installments is subject to the stock price achieving a $1.00 30-day average
level by the second anniversary of the date of, and expiring on the tenth
anniversary of, the date of grant. The options shall be granted on
the Effective Date or as soon thereafter as is reasonably
practicable.
EXHIBIT
B
CONFIDENTIALITY,
NON-SOLICITATION AND
NON-COMPETITION
AGREEMENT
Capitalized terms used but not defined
in this Exhibit B shall have the meanings ascribed thereto in the Consulting
Agreement to which this Exhibit B is attached.
1.
Non-Compete; Non-Solicitation.
(a) No Competition. So
long as the Company fulfills its obligations under the Agreement, including,
without limitation, its obligations under Section 2, during the term of the
Agreement, and for 12 months thereafter (the "Restricted Period"), Consultant
shall not, directly or indirectly, own, manage, operate, join, control,
participate in, invest in or otherwise be connected or associated with, in any
manner, including as an officer, director, employee, partner, stockholder, joint
venturer, lender, consultant, advisor, agent, proprietor, trustee or investor,
any Competing Business located in the United States or in any other location
where the Company operates or sells its products or services.
(i) As used in this
Agreement, the term "Competing Business" shall mean any business or venture
which engages in any business area, or sells or provides products or services
that compete or overlap with any business area, in which the Company engages or
is actively developing products or technology to engage in at any time during
the term of the Agreement, or any business or venture which sells or provides
products or services that compete or overlap with the products or services as
sold or provided, or are being actively developed to be sold or provided, by the
Company at any time during the term of the Agreement. For the avoidance of
doubt, and without limiting the foregoing, “Competing Business” includes any
business or venture that offers for sale products or services to reduce or
prevent formation of adhesions in patients following surgical
procedures.
(ii) For purposes of
this Section 4(a), the term "invest" shall not preclude an investment in not
more than one percent (1%) of the outstanding capital stock of a corporation
whose capital stock is listed on a national securities exchange or included in
the NASDAQ Stock Market, so long as Consultant does not have the power to
control or direct the management of, or is not otherwise associated with, such
corporation.
(b) No Solicitation. During
the Restricted Period, Consultant shall not, directly or indirectly, solicit or
encourage any employee or consultant of the Company to leave the employ, or
cease his or her relationship with, the Company for any reason, nor employ or
retain such an individual in a Competing Business or any other
business.
(c) Company
Customers. Consultant shall not, during the Restricted Period,
directly or indirectly, contact, solicit or do business with any "customers" (as
hereinafter defined) of the Company for the purpose of selling or providing any
product or service then sold or provided by the Company to such customers or
being actively developed to be sold or provided to such customers during
Consultant's retention by the Company or at the time of termination of
Consultant's retention hereunder.
(i) For the
purposes of the provisions of this Section (c), "customer" shall include any
entity that purchased any product or service from the Company or its
distributors within twelve months of the termination of Consultant's retention
hereunder, without regard to the reason for such termination. The term
"customer" also includes any former customer or potential customer of the
Company which the Company has solicited within twelve months of such
termination, for the purpose of selling or providing any product or service then
sold or
provided,
or then actively being developed to be sold or provided, by the
Company.
(d) Modification of Covenants.
The restrictions against competition set forth in this Exhibit B are considered
by the parties to be reasonable for the purposes of protecting the business of
the Company. However, if any such restriction is found by any court of competent
jurisdiction to be unenforceable because it extends for too long a period of
time or over too great a range of activities or in too broad a geographic area,
it shall be interpreted to extend only over the maximum period of time, range of
activities or geographic area as to which it may be enforceable.
2.
Confidential Information.
(a) Existence of Confidential
Information. The Company owns and has developed and compiled, and will
develop and compile, certain proprietary technology, know-how and confidential
information which have great value to its business (referred to, collectively,
as “Confidential Information”). Confidential Information includes not only
information disclosed by the Company to Consultant, but also information
developed or learned by Consultant during the course or as a result of retention
by the Company, which information shall be the property of the Company. By way
of example and without limitation, Confidential Information includes all
information that has or could have commercial value or other utility in the
business in which the Company is engaged or contemplates engaging, and all
information of which the unauthorized disclosure could be detrimental to the
interests of the Company, whether or not such information is specifically
labeled as Confidential Information. By way of example and without limitation,
Confidential Information includes any and all information developed, obtained,
licensed by or to or owned by the Company concerning trade secrets, techniques,
know-how (including research data, designs, plans, procedures, merchandising,
marketing, distribution and warehousing know-how, processes, and research
records), software, computer programs, and any other intellectual property
created, used or sold (through a license or otherwise) by the Company, product
know-how and processes, innovations, discoveries, improvements, research,
development, test results, reports, specifications, data, formats, marketing
data and plans, business plans, strategies, forecasts, unpublished financial
information, orders, agreements and other forms of documents, price and cost
information, merchandising opportunities, expansion plans, budgets, projections,
customer, supplier, licensee, licensor and subcontractor identities,
characteristics, agreements and operating procedures, and salary, staffing and
employment information.
(b) Protection of Confidential
Information. Consultant acknowledges and agrees that in the
performance of duties hereunder Consultant develops and acquires, and the
Company discloses to and entrusts Consultant with, Confidential Information
which is the exclusive property of the Company and which Consultant may possess
or use only in the performance of duties for the Company. Consultant also
acknowledges that Consultant is aware that the unauthorized disclosure of
Confidential Information, among other things, may be prejudicial to the
Company's interests, an invasion of privacy and an improper disclosure of trade
secrets. Consultant shall not, directly of indirectly, use, make available,
sell, disclose or otherwise communicate to any corporation, partnership,
individual or other third party, other than in the course of Consultant's
assigned duties and for the benefit of the Company, any Confidential
Information, either during the term of the Agreement or thereafter. In the event
Consultant desires to publish the results of Consultant's work for or
experiences with the Company through literature, interviews or speeches,
Consultant will submit requests for such interviews or such literature or
speeches to the Board of Directors of the Company at least fourteen (14) days
before any anticipated dissemination of such information for a determination of
whether such disclosure is in the best interests of the Company, including
whether such disclosure may impair trade secret status or constitute an invasion
of privacy. Consultant agrees not to publish, disclose or otherwise disseminate
such information without the prior written approval of the Board of Directors of
the Company.
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3.
Invention and Patents.
(a) Consultant will
promptly and fully disclose to the Company any and all inventions, discoveries,
trade secrets and improvements, whether or not patentable or whether or not they
are made, conceived or reduced to practice during working hours or using the
Company's data or facilities, which Consultant shall develop, make, conceive or
reduce to practice during Consultant's retention by the Company, either solely
or jointly with others (collectively, "Developments"). All such
Developments related to anti-adhesion products shall be the sole property
of the Company, and Consultant hereby assigns to the Company, without further
compensation, all his right, title and interest in and to such Developments and
any and all related patents, patent applications, copyrights, copyright
applications, trademarks and trade names in the United States and
elsewhere.
(b) Consultant shall keep
and maintain adequate and current written records of all Developments (in the
form of notes, sketches, drawings and as may be specified by the Company), which
records shall be available to and, to the extent related to anti-adhesion
products, remain the sole property of the Company at all times.
(c) Consultant shall
assist the Company in obtaining and enforcing patent, copyright and other forms
of legal protection for the Developments related to anti-adhesion products
in any country. Upon request, Consultant shall sign all applications,
assignments, instruments and papers and perform all acts necessary or desired by
the Company and to enable the Company its successors, assigns and nominees, to
secure and enjoy the full exclusive benefits and advantages
thereof.
(d) Consultant
understands that Consultant’s obligations under this Section 3 will continue
after the termination of his retention with the Company and that Consultant
shall perform such obligations without further compensation, except (i) for
reimbursement of expenses incurred at the request of the Company and (ii) that
after the termination of Consultant’s retention with the Company and
notwithstanding anything in this Section 3 to the contrary, Consultant shall not
be required to provide assistance to the Company in accordance with this Section
3 for more than 50 hours during any twelve-month period. If the Company desires
assistance beyond such 50-hour limitation, such assistance shall be subject to
Consultant’s consent, not to be unreasonably withheld, and the Company will
compensate Consultant on a per diem basis at a per diem rate that is determined
by dividing the Consultant’s annual retention fee in effect when the term of the
Agreement terminated or expired by 250 days.
4. Injunction. Consultant
agrees that the restrictions and agreements contained in this Exhibit B are
reasonable and necessary to protect the legitimate interests of the Company, and
that any violation of these provisions will cause substantial and irreparable
harm to the Company that would not be quantifiable and for which no adequate
remedy would exist at law. Consultant further acknowledges that
Consultant has requested, or has had the opportunity to request, that legal
counsel review this Exhibit B and the Agreement, and having exhausted such
right, agrees to the terms herein without reservation. Accordingly,
Consultant authorizes the issuance of injunctive relief by any court of
appropriate jurisdiction, without the requirement of posting bond, for any
actual or threatened violation of the provisions of this Exhibit B.
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