Exhibit 10.8
Consulting Agreement for Xxxxxxx X. Xxxxxx.
NATUREWELL INCORPORATED
CONSULTING AGREEMENT
XXXXXXX X. XXXXXX
THIS CONSULTING AGREEMENT (this "Agreement") is effective as of the 1st day of
October, 2002, by and between NatureWell, Incorporated, a Delaware corporation
(the "Company"), its subsidiaries, affiliates, successors and assigns
(collectively, "Affiliates") and Xxxxxxx X. Xxxxxx, an individual (the
"Consultant" or "Connor") with reference to the following facts:
RECITALS
A. The Company desires to retain Consultant and to have Consultant serve
on the terms and conditions hereinafter set forth; and
B. Consultant desires to be retained by the Company and to perform and to
serve the Company on the terms and conditions hereinafter set forth.
AGREEMENTS
NOW, THEREFORE, in consideration of the premises and of the mutual promises,
agreements and covenants set forth herein, the parties hereto agree as follows:
1. CONSULTANCY.
(a) DUTIES. The Company hereby agrees to retain Consultant, and
Consultant hereby accepts such consultancy for the Company. In his role as
Consultant Connor shall be responsible for such duties and functions of a
supervisory, project or managerial nature as may be directed from time to time
by the Chief Executive Officer provided that such duties are reasonable and
customary for a Consultant. Consultant agrees that he shall, during the term of
this Agreement, except during reasonable vacation periods, periods of illness
and the like, devote a reasonable amount of his business time, attention and
ability to his duties and responsibilities hereunder; provided, however, that
nothing contained herein shall be construed to prohibit or restrict Consultant
from (i) serving as a director of any corporation, with or without compensation
therefor; (ii) serving in various capacities in community, civic, religious or
charitable organizations or trade associations or leagues; or (iii) attending
to personal business; provided, however, that no such service or activity
permitted in this Section 1(a) shall materially interfere with the performance
by Consultant of his duties hereunder. Consultant shall report directly to the
Chief Executive Officer.
(b) TERM.
(i) The term of this Agreement and Connor's consultancy period
shall be for a term commencing on the date of this Agreement and ending on the
third (3rd) anniversary of the date of this Agreement (the "Consultancy
Period"); provided, however, that commencing on the first day after the date of
this Agreement and on each day thereafter, the Consultancy Period shall be
extended for one (1) additional day so that a constant three (3) year
Consultancy Period shall be in effect, unless (A) the Company or Consultant
elects not to extend the term of this Agreement by giving written notice to the
other party in accordance with Sections 3(b) and 10 hereof, in which case, the
term of this Agreement shall become fixed and shall end on the third (3rd)
anniversary of the date of such written notice ("Notice of Non-Renewal"), or
(B) Connor's consultancy terminates hereunder.
(ii) Notwithstanding anything contained herein to the contrary,
(A) Connor's consultancy with the Company may be terminated by the Company or
Consultant during the Consultancy Period, subject to the terms and conditions
of this Agreement; and (B) nothing in this Agreement shall mandate or prohibit
a continuation of Connor's consultancy following the expiration of the
Consultancy Period upon such terms and conditions as the Board and Consultant
may mutually agree.
(iii) If Connor's consultancy with the Company is terminated,
for purposes of this Agreement, the term "Unexpired Consultancy Period" shall
mean the period commencing on the date of such termination and ending on the
last day of the Consultancy Period.
(c) LOCATION/TRAVEL. Consultant shall work at an office of his
choosing, which office expense shall be borne by Consultant. Consultant shall
not be required to relocate from San Diego County during the Consultancy
Period.
2. COMPENSATION. Subject to the provisions of Sections 7 and 9 hereof,
the Company and its Affiliates shall each be responsible and have joint and
several liability for all compensation and benefits owed to Consultant under
this Agreement. A reference to a Company plan, program, obligation or
commitment shall also be considered an obligation or commitment of each of the
Company and its Affiliates but shall not result in duplicate benefits being
paid or provided to Consultant.
(a) SALARY. Consultant shall receive an annual consulting fee of
One Hundred Thousand Dollars ($100,000) which shall be payable on a monthly
basis. The annual consulting fee payable to Consultant pursuant to this
Section 2(a), which may be increased but not decreased by the Chief Executive
Officer shall be hereinafter referred to as the "Annual Consulting Fee."
(b) ANNUAL BONUS.
(i) Consultant shall be entitled to receive an annual bonus
based upon a formula and subject to certain performance goals having been
achieved (the "Formula"), in an amount determined by the Chief Executive
Officer, in his sole discretion, hereinafter referred to as the "Discretionary
Annual Bonus". Consultant's Discretionary Annual Bonus will be for the annual
period of August 1st to July 31 each year.
(ii) Consultant's Discretionary Annual Bonus shall be paid to
Consultant within ninety (90) days of calendar year end.
(c) REIMBURSEMENT OF BUSINESS EXPENSES. The Company shall promptly
reimburse Consultant for all reasonable out-of-pocket expenses incurred by him
pursuant to his consultancy hereunder during the Consultancy Period, including,
but not limited to, all reasonable travel and entertainment expenses.
Consultant may only obtain reimbursement under this Section 2(c) upon
submission of such receipts and records as may be initially required by the
Chief Executive Officer and, thereafter, as may be required under the
reimbursement policies established by the Company. Notwithstanding the
foregoing, Consultant shall be permitted to charge reasonable expenses
delineated in this Section 2(c) to Company charge cards or other credit
accounts made available to Consultant.
(d) ADDITIONAL BENEFITS; GENERAL RIGHTS. During the Consultancy
Period, Consultant shall be entitled to:
(i) participate in all welfare plans established by the Company
such as life insurance, medical, dental, disability, and business travel
accident plans and programs as the Company may designate from time to time. In
addition, the Company shall reimburse Consultant for (i) any premium costs
Executive may incur with respect to the health insurance plan currently
maintained by the Company (and which may be maintained by the Company from time
to time) in which Executive (and his spouse and children) participates, and
(ii) for all other medical and dental expenses not covered by any medical or
dental plan in which Executive (and his spouse and children) participates,
including, without limitation, deductibles and out of pocket expenses;
(ii) a monthly automobile allowance of Five Hundred Dollars
($500.00); and
(iii) any other benefits provided by the Company to its
executive officers.
(e) WITHHOLDING. The Company shall pay Consultant without
withholding any Federal, State or city withholding taxes, social security
contributions ord any other amounts. Consultant shall receive a IRS Form 1099
each year for amounts paid to Consultant pursuant to the Agreement.
3. TERMINATION OF CONSULTANCY; EVENTS OF TERMINATION.
(a) This Agreement may be terminated during the Consultancy Period
under the following circumstances:
(i) CAUSE. Connor's consultancy hereunder shall terminate for
"Cause" ten (10) days after the date the Company shall have given Consultant
notice of the termination of his consultancy for "Cause". For purposes of this
Agreement, "Cause" shall mean the commission by Consultant of fraud, theft,
embezzlement or an act of serious, criminal moral turpitude or the refusal by
Consultant to perform any reasonable duties or projects requested of him by the
Chief Executive Officer.
(ii) DEATH. Connor's consultancy hereunder shall terminate
upon his death.
(iii) DISABILITY. If Consultant becomes unable due to a mental
or physical disability (as defined by Section 12926 of the California Fair
Employment and Housing Act) to perform the essential functions of his position,
with or without reasonable accommodation, for an aggregate of six (6) months in
any twelve (12) month period (a "Disability"), the Company, at its option, may
terminate Connor's consultancy hereunder (the date of such termination, the
"Disability Date", and, thereafter, Consultant shall not be deemed to be
retained under this Agreement. In determining Disability under this Section,
the Company shall rely upon the written opinion of the physician regularly
attending Consultant in determining whether a Disability is deemed to exist. If
the Company disagrees with the opinion of such physician, the Company may
choose a second physician, the two (2) physicians shall choose a third
physician, and the written opinion of a majority of the three (3) physicians
shall be conclusive as to Consultant's Disability. The expenses associated with
the utilization of any physician other than the physician regularly attending
Consultant shall be borne solely by the Company. Consultant hereby consents to
any required medical examination and agrees to furnish any medical information
requested by the Company and to waive any applicable physician/patient
privilege that may arise because of such determination. Nothing in this
Agreement is intended to cause the Company to be in violation of the Americans
with Disabilities Act.
(iv) GOOD REASON. Consultant shall have the right to terminate
his consultancy for "Good Reason." This Agreement shall terminate effective
immediately on the date Consultant shall have given the Chief Executive Officer
notice of the termination of his consultancy with the Company for "Good
Reason." For purposes of this Agreement, "Good Reason" shall mean (A) any
material and substantial breach of this Agreement by the Company, (B) a Change
in Control (as defined below) occurs and Consultant voluntarily quits at any
time within the six (6) month period on or immediately following the Change in
Control, (C) the Company issues a Notice of Non-Renewal to Consultant, (D) a
reduction in Consultant's Annual Consulting Fee or a material reduction in
other benefits (except for bonuses or similar discretionary payments) as in
effect at the time in question, or any other failure by the Company to comply
with Section 2, hereof, or (G) this Agreement is not assumed by a successor to
the Company.
For purposes of this Agreement, a "Change in Control" of the Company shall be
deemed to have occurred upon the happening of any of the following events:
(i) approval by the Board or stockholders of the Company of a transaction that
would result in the reorganization, merger, or consolidation of the Company
with one or more other "Persons" within the meaning of Sections 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934 ("Exchange Act"), other than a
transaction following which: (A) at least seventy-one percent (71%) of the
equity ownership interests of the entity resulting from such transaction are
beneficially owned (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) in substantially the same relative proportions by Persons who,
immediately prior to such transaction, beneficially owned (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) at least seventy-one percent
(71%) of the outstanding equity ownership interests in the Company; and (B) at
least seventy-one percent (71%) of the securities entitled to vote generally in
the election of directors of the entity resulting from such transaction are
beneficially owned (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) in substantially the same relative proportions by Persons who,
immediately prior to such transaction, beneficially owned (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) at least seventy-one percent
(71%) of the securities entitled to vote generally in the election of directors
of the Company; (ii) the acquisition of all or substantially all of the assets
of the Company; (iii) a complete liquidation or dissolution of the Company, or
approval by the stockholders of the Company of a plan for such liquidation or
dissolution; (iv) the occurrence of any event in the nature of an event
described in this Section if, immediately following such event, at least
seventy-five percent (75%) of the members of the Board do not belong to any of
the following groups: (A) individuals who were members of the Board on the date
of this Agreement; or (B) individuals who first became members of the Board
after the date of this Agreement either: (I) upon election to serve as a member
of the Board by affirmative vote of three-quarters of the members of such
Board, or of a nominating committee thereof, in office at the time of such
first election; or (II) upon election by the stockholders of the Company to
serve as a member of the Board, but only if nominated for election by
affirmative vote of three-quarters of the members of the Board, or of a
nominating committee thereof, in office at the time of such first nomination;
provided, however, that such individual's election or nomination did not result
from an actual or threatened election contest (within the meaning of Rule 14a-
11 of Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents (within the meaning of Rule 14a-
11 of Regulation 14A promulgated under the Exchange Act) other than by or on
behalf of the Board; and (v) one or more other Persons, other than an retainee
benefit plan sponsored by the Company, becomes the "beneficial owner," as such
term is used in Section 13 of the Exchange Act, of thirty percent (30%) or more
of the Common Stock of the Company issued and outstanding prior to such
acquisition.
(v) WITHOUT CAUSE. The Company shall have the right to
terminate Connor's consultancy hereunder Without Cause subject to the terms and
conditions of this Agreement. In such event, this Agreement shall terminate,
effective immediately upon the date on which the Company shall have given
Consultant notice of the termination of his consultancy for reasons other than
for Cause or due to Consultant's Disability.
(vi) WITHOUT GOOD REASON. Consultant shall have the right to
terminate his consultancy hereunder without Good Reason at any time for any
reason subject to the terms and conditions of this Agreement. This Agreement
shall terminate, effective immediately upon the date as of which Consultant
shall have given the Board notice of the termination of his consultancy without
Good Reason.
(b) NOTICE OF TERMINATION. Any termination of Connor's consultancy
by the Company or any such termination by Consultant (other than on account of
death) shall be communicated by written Notice of Termination to the other
party hereto. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Connor's
consultancy under the provision so indicated. In the event of the termination
of Connor's consultancy on account of death, written Notice of Termination
shall be deemed to have been provided on the date of death.
4. PAYMENTS UPON TERMINATION.
(a) WITHOUT CAUSE, FOR GOOD REASON OR DISABILITY. If Connor's
consultancy is terminated by the Company Without Cause (pursuant to
Section 3(a)(v)) or by Consultant for Good Reason (pursuant to Section
3(a)(iv)), or by the Company due to Consultant's Disability (pursuant to
Section 3(a)(iii)), Consultant, or in the case of Consultant's Disability,
Consultant's legal representative (assuming Consultant's affairs are handled by
a representative rather than Consultant himself), shall be entitled to receive
from the Company (i) a lump sum payment in an aggregate amount equal to three
(3) times the sum of (A) the current Annual Consulting Fee and (B) the average
of Consultant's Annual Bonus paid during the two (2) immediately preceding full
fiscal years of consultancy ending prior to the date of termination (the
"Severance Payment"); (ii) any bonuses which have been earned but not been paid
prior to such termination ("Prior Bonus Payment") and (iii) reimbursement of
expenses incurred prior to date of termination (the "Expense Reimbursement").
The aforesaid amounts shall be payable in cash without discount for early
payment, at the option of Consultant, either in full immediately upon such
termination or monthly over the Unexpired Consultancy Period (the "Payment
Election"). In addition, Consultant's fringe benefits specified in Section 2
shall continue through the end of the Unexpired Consultancy Period; provided,
however, that such benefits which may not continue pursuant to law shall
terminate on the date of termination and further provided, that Consultant
shall be entitled to COBRA continuation coverage and to continue the applicable
life insurance policies thereafter, at his cost ("Fringe Benefit
Continuation").
In the event Consultant terminates his consultancy within the six (6) month
period on or immediately following a Change in Control which constitutes a
termination for Good Reason under this Agreement pursuant to Section 5(a)(iv),
Consultant shall be entitled to receive from the Company an additional lump sum
cash payment in an amount sufficient to pay any excise taxes which may be
imposed on Consultant pursuant to Section 4999 of the Code (or any successor
provisions) plus any excise or income tax liability on the gross up payment
itself so that on a net after tax basis Consultant shall be in the same
position as if the excise tax under Section 4999 of the Code (or any successor
provisions) had not been imposed.
In the event Consultant is terminated by the Company Without Cause or due to
Consultant's Disability or Consultant terminates his consultancy with the
Company for Good Reason, Consultant shall have no duty to mitigate the amount
of the payment received pursuant to this Section 6(a), it being understood that
Consultant's acceptance of other consultancy shall not reduce the Company's or
the other Company' obligations hereunder.
(b) DEATH. If Connor's consultancy is terminated due to death of
Consultant, Consultant's estate or beneficiary(ies), as the case may be, shall
be entitled to receive Consultant's Prior Bonus Payment and Expense
reimbursement and Consultant's spouse and covered children shall be entitled to
receive Fringe Benefit Continuation to the extent applicable.
(c) TERMINATION WITH CAUSE OR WITHOUT GOOD REASON. If the Company
terminates Connor's consultancy for Cause (pursuant to Section 3(a)(i)) or in
the event Consultant voluntarily terminates his consultancy without Good Reason
(pursuant to Section 3(a)(vi)), Consultant shall be entitled to his Annual
Consulting Fee through the date of the termination of such consultancy and
Consultant shall be entitled to any bonuses which have been earned but not paid
prior to such termination. Consultant shall not be entitled to any other
bonuses. Consultant's additional benefits specified in Section 2 shall
terminate at the time of such termination and the entire outstanding balance
(principal and interest) of any loans from the Company to Consultant shall be
due and owing on date of such termination. Any amounts owed by Consultant to
the Company hereunder shall be set off against any amounts payable from the
Company to the Consultant.
(d) TERMINATION BY THE COMPANY UPON CHANGE IN CONTROL. If the
Company terminates Connor's consultancy for any reason in connection with a
Change in Control which is not approved by the Continuing Directors of the
Company, Consultant shall receive from the Company in one lump sum, payable on
the consummation of the Change in Control an amount equal to the Severance
Payment, the Prior Bonus Payment and the Expense Reimbursement. The aforesaid
amount shall be payable in cash without discount for early payment on the
consummation of such Change in Control. In addition, any outstanding balances
(principal and interest) of any loans made by the Company to Consultant shall
be forgiven on the consummation of such Change in Control. Consultant (and his
spouse and children) shall be entitled to Fringe Benefit Continuation. In
addition to the aforesaid cash payment, the Company shall pay Consultant, on
the consummation of the Change in Control, in one lump sum, a cash payment (i)
in an amount sufficient to cover the full tax consequences of the forgiveness
of any loans so that on a net after tax basis Consultant shall be the same as
if no taxable events had occurred upon such forgiveness (ii) in an amount
sufficient to pay any excise taxes which may be imposed on Consultant pursuant
to Section 4999 of the Code (or any successor provisions) plus any excise or
income tax liability on the gross up payment itself so that on a net after tax
basis Consultant shall be the same as if the excise tax under Section 4999 of
the Code (or any successor provisions) had not been imposed.
In the event Consultant is terminated by the Company in connection with a
Change in Control which is not approved by the Continuing Directors of the
Company, Consultant shall have no duty to mitigate the amount of the payment
received pursuant to this Section 6(d), it being understood that Consultant's
acceptance of other consultancy shall not reduce the Company's obligations
hereunder.
(e) VESTING TRUST. At Consultant's option, the Company shall
establish a vesting trust into which the Company shall, to the extent
economically feasible, contribute and/or pledge assets to secure its severance
obligations to Consultant under this Agreement.
5. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the Company, its successors and assigns. The Company
shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all its assets to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent the Company would be required to perform if no such succession had taken
place. Consultant agrees that this Agreement is personal to him and may not be
assigned by him other than by the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by Consultant's
legal representative.
6. JOINT AND SEVERAL LIABILITY.
(a) NO DUPLICATION OF PAYMENTS. The Company and its Affiliates shall
be jointly and severally liable for any amounts payable to Consultant under
this Agreement. Any amounts payable to Consultant shall be paid in the first
instance by the Company, and to the extent not paid by the Company shall be
paid by its Affiliates. In no event shall any amount payable pursuant to this
Agreement be paid by the Company and its Affiliates and Consultant shall not be
entitled to receive duplicate benefits or payments under any of the provisions
of this Agreement.
(b) NEW SUBSIDIARIES. Any subsidiary of the Company that is formed
or acquired on or after the date hereof shall be required to become a signatory
to this Agreement and shall become jointly and severally liable with the
Company for the obligations hereunder.
(c) SALE OF SUBSIDIARIES. Upon the sale of the stock or
substantially all of the assets of any subsidiary of the Company, which is
approved by the Board, such subsidiary shall be automatically released from its
obligations hereunder and shall not be considered as having any continuing
liability for the obligations hereunder, and Consultant shall be released from
his obligations to such subsidiary hereunder.
7. SECURITIES IN LIEU OF CASH NOT A DEFAULT. Notwithstanding any
provision in this Agreement, the Company may, in its reasonable discretion,
make any payment due to Consultant, or his beneficiary(ies), pursuant to the
Agreement, using Securities issued by the Company in lieu of cash, except for
payments due for termination pursuant to Section 4(d), provided however, the
Company must have a reasonable good faith belief that payment to Consultant of
cash for amounts due pursuant to any of the terms of the Agreement (except
Section 4(d)) would unduly burden the Company and its ability to conduct its
business. Any payment made in lieu of cash pursuant to this Section 7 shall not
be considered an event of default under the Agreement. For purposes of this
Section 7 "Securities" is defined as, but is not limited to common stock,
preferred stock, notes, or accruals carried on the Company's books for salary
or expenses payable to Consultant.
8. GOVERNING LAW. This Agreement shall be construed in accordance with,
and its validity, interpretation, performance and enforcement and shall be
governed by, the laws of the State of California without regard to conflicts of
law principles thereof. Substantial obligations under this Agreement are to be
performed in San Diego, California. The parties select San Diego, California,
as the proper and sole venue for any action filed to enforce, construe, or
interpret this Agreement.
9. ENTIRE AGREEMENT. This instrument contains the entire understanding
and agreement among the parties relating to the subject matter hereof, except
as otherwise referred to herein, and supersedes all other prior agreements and
undertakings, both written and oral, among the parties with respect to the
subject matter hereof. Neither this Agreement nor any provisions hereof may be
waived or modified, except by an agreement in writing signed by the party(ies)
against whom enforcement of any waiver or modification is sought.
10. SEVERABILITY. In case any one or more of the provisions of this
Agreement shall be invalid, illegal or unenforceable in any respect, or to any
extent, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
11. NOTICES. Any notice required or permitted to be given under the
provisions of this Agreement shall be in writing and delivered by courier or
personal delivery, facsimile transmission (to be followed promptly by written
confirmation mailed by certified mail as provided below) or mailed by certified
mail, return receipt requested, postage prepaid, addressed as follows:
If to the Company: 0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, Xxxxxxxxxx 00000
Attention: Corporate Secretary
If to Executive: Xx. Xxxxxxx X. Xxxxxx
/Illegible/
If delivered personally, by courier or facsimile transmission (confirmed as
aforesaid and provided written confirmation and receipt is obtained by the
sender), the date on which a notice is delivered or transmitted shall be the
date on which such delivery is made. Notices given by mail as aforesaid shall
be effective and deemed received upon the date of actual receipt or upon the
third business day subsequent to deposit in the U.S. mail, whichever is
earlier. Either party hereto may change its or his address specified for
notices herein by designating a new address by notice in accordance with this
Section 12.
12. NO UNDUE INFLUENCE. This Agreement is executed voluntarily and
without any duress or undue influence. Consultant acknowledges that he has
read this Agreement and executed it with his full and free consent. No
provision of this Agreement shall be construed against any party by virtue of
the fact that such party or its counsel drafted such provision or the entirety
of this Agreement.
13. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and both of which taken
together shall constitute one and the same agreement.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Company and Consultant have executed this Agreement as
of the date first above written.
CONSULTANT: COMPANY:
NatureWell, Incorporated,
a Delaware Corporation
/S/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxx Arabia
-------------------------- --------------------------
Xxxxxxx X. Xxxxxx Xxxxx Arabia, CEO
AFFILIATES:
Diagnos Tech, Inc.,
a California corporation
By: /S/ Xxxxxx Xxxxxxx
--------------------------
Xxxxxx Xxxxxxx, Chairman and CEO
Nasal Mist, Inc.,
a California corporation
By: /S/ Xxxxxx Xxxxxxx
--------------------------
Xxxxxx Xxxxxxx, Chairman and CEO