CONSULTING AGREEMENT
THIS AGREEMENT is made and entered into this 24th day of February 2002,
between DNAprint genomics, Inc. a Utah Corporation ("Company") whose business
address is 000 Xxxxxxxx Xxx., Xxxxxxxx, Xxxxxxx 00000 and Xxxx X. Xxxxxxx
("Consultant") whose business address is 000 Xxxxxxxxxxx Xxxx, Xxxxxxx Xxxx,
Xxxxxx, Xxxxxxx 00000.
WHEREAS, Company desires the commercial services of Consultant and both parties
agree to a specified selection of services to be performed to assist the
Company in achieving a number of its business objectives.
WHEREAS, both parties agree that Consultant will perform such services on a
part-time basis at the discretion of management.
WHEREAS, both parties wish to execute both this Consulting Agreement and the
attached Stock Option Agreement Contract (Schedule A).
1. General:
This agreement is to provide a framework for Consultant to work with and
support management in its effort to optimize the strategic value of
DNAprint shares for its shareholders.
2. Services To Be Rendered:
Consultant will generally provide management with general business,
business development and other commercial advice. More specifically the
consultant will work with and assist management in general as directed from
time to time but with a focus on the following objectives:
|X| Define, evaluate and articulate strategic and tactical business plans
|X| Assess a variety of commercially competitive challenges
|X| Support and provide advice on in and out licensing activities
|X| Support negotiation efforts on in and out licensing with prospective
commercial and operational partners
|X| Recommend other advisors, Board members, consultants and outsourcing
opportunities that are capable of supporting the tactical and strategic
business plan from time to time
1
|X| Assist in the preparation of Company presentations for in and out
licensing, M&A activities, fund raising, negotiations, Board and other
meetings
|X| Prospect, engage and evaluate potential acquisitions, mergers and other
combinations that support the Company strategy
|X| Engage in activities and relationships that support the objective of
obtaining a NASDAQ or AMEX listing for DNAprint shares.
3. Term:
The term of this consulting agreement shall be for a period of 15 months
from Effective Date and can be extended by mutual agreement of both
parties. It is understood that Consultant will have minimal involvement
between Effective Date and May 31, 2002 while Consultant has another
commitment.
4. Termination:
The Company or the consultant will have the option to terminate with 30
days notice to the other party.
4.1 Termination by the Consultant
The Consultant will promptly turn over all Company material in
its possession to the Company. The Consultant will submit any
final expense reports and the Company agrees to promptly
reimburse such reasonable and customary expenses. All stock
options vested by the Consultant up to and including the date of
termination will remain the property of the Consultant and will
be exercisable for the full term of the option.
4.2 Termination by the Company
The Consultant will receive all of the privileges described under
Section 4.1 plus any option vesting that would have occurred over
the next 30 days from the official date of termination. In
addition, during the 24 months following Termination if the
Company should consummate relationships or agreements with
people, companies, services, licenses, debt or equity placements,
or other business deals that were either first introduced to
Company by Consultant or that Consultant supported during the
Term at the direction of Company management, then the Consultant
will have the benefit of the vesting of all milestones that would
have occurred if no Termination had occurred.
2
5. Expenses:
Company agrees to promptly reimburse Consultant for reasonable and
customary business expenses incurred in the execution of consultant's
services for the Company. These business expenses will include travel,
meals, lodging and other direct out of pocket costs including production of
presentation materials and overnight delivery charges that are associated
with activities approved in advance by management. In addition, the Company
agrees to compensate Consultant for routine office charges such as phone,
telefax, cable, internet and office expenses of $100 per month. Any charges
above $100 per month will require the prior approval of Company.
6. Time Commitment:
Between Effective Date and approximately May 31 the Consultant will have
minimal involvement such as occasional phone calls at night or on weekends.
In addition, Consultant will not be available to the Company for travel
assignments prior to May 31. Once Consultant is freed up from other
commitments he will begin providing services on the basis of one day per
week.
7. Compensation:
There will be no compensation under this contract until Consultant
completes his full time responsibilities with his current employer.
Thereafter, services will begin as planned and non-cash compensation in the
form of a performance-based stock option contract will begin. This stock
option contract will vest partly on time but mostly on the achievement of
specific milestones that are achieved with consultant's support.
8. Confidentiality:
Consultant agrees to keep confidential all information provided to it
during the course of this relationship. Upon termination, all confidential
information will be returned to Company, except for one copy to be kept by
Consultant to verify the coverage of the confidential boundaries.
Consultant agrees to keep all information confidential for a period of five
(5) years from Effective date.
3
9. Special Performance-Based Stock Option Contract:
As an inducement for Consultant to provide services for no cash and use his
contacts and relationships with others, the Company agrees to grant a
special Incentive Stock Option (ISO) contract as follows:
9.1 Basis For Determining Number of Options In Grant
The grant will be for 4.7% of the outstanding shares of the
Company (on a fully diluted basis after allowance for the grant)
on the date of execution. Schedule B (attached) represents a
complete and accurate capitalization schedule existing as of
Effective Date with all 5% or more shareholders listed
individually, stock option holders, shares held in reserve for
previously approved purposes and preferred shares. In addition,
all stock option contracts are listed with strike prices.
9.2 Specific Grant Amount Determination
Based on the above, a 4.7% grant amounts to 28,000,000 million
stock options on a fully diluted basis after the grant.
10. Stock Option Contract Restrictions:
10.1 Unauthorized Shares
This ISO stock option grant will be for underlying shares that do
not exist as of Effective Date because such issuance of shares
above 500 million are not authorized by the shareholders. This
stock option contract can only begin to have any economic value
if the Board of Directors supports a shareholder decision to
increase the number of shares outstanding above 500 million which
has not occurred. The shares underlying this option contract will
only come from such authorization. The DNAprint Board of
Directors has not approved an increase in the number of
authorized shares and has not made any plans to take such a
proposal to the shareholders for approval. There is no assurance
that the Board will approve such a proposal and that the
shareholders will approve such a proposal, if asked, to nor is
there any assurance that such approvals, if they happen at all,
will occur any time in the near future. Furthermore, if such an
increase in authorized shares is approved there is no assurance
that such plan would allow for the issuance of shares underlying
Consultant's option grant. In addition, given the Companies need
for cash there may not be any cash available to support the
travel and other activities that will support efforts in
advancing the company and/or those efforts that Consultant will
focus on in order to achieve success and vest certain milestones.
Therefore, Consultant takes considerable risk that this stock
4
option grant may not at any time be of any economic value.
10.2 Additional Restrictions on Grant
In the event the DNAprint Board approves an increase in the
number of shares outstanding and the Board then supports a
program to take such vote to the shareholders for final approval
and if the shareholders vote in favor of the proposal there will
still be additional restrictions placed on this stock option
contract as follows:
|X| The shares will not have any voting privileges for the first
12 months from the Effective Date
|X| The shares will not be subject to any dividends, any rights
offerings, any distributions of any kind
|X| The shares will not have anti-dilution rights
|X| The shares will not be exercisable for the first 12 months
|X| The shares will not be registered for the first 12 months
|X| After 12 months, or upon termination or upon a change of control
the above restrictions will cease.
10.3 Special Default Restriction on Grant
Finally, for any of the shares to be exercisable at least one of
the milestones listed in Section 11 must be achieved. If no such
milestone achievement is made within 12 months then all
restrictions in Section 10.2 will continue past the 12 month
anniversary until at least one milestone is achieved at which
time such restrictions will be permanently lifted. Therefore,
with this special restriction and all the others Consultant takes
considerable risk that this stock option grant may not at any
time be of any economic value.
11. Grant Vesting Criteria:
The contract will vest on the basis of one half (1/2) of 1 % of the entire
grant amount on a monthly basis (6 %) over 12 months with up to 94% of the
remaining balance vesting on the following set of criteria:
Vesting
Criteria Amount
|X| Achievement of a listing on NASDAQ small cap
or NASDAQ NMS or AMEX small cap exchange 25% of grant
5
|X| A merger, joint venture, acquisition or other significant
business venture supported by Consultant and approved by
the DNAprint Board of Directors 25% of grant
|X| A license/partnership, to a company recommended by 10% of grant
Consultant, of one of the Company's for each
key programs (eye color, race etc.) license
|X| Any business deal recommended by Consultant 10% of grant
that involves the issuance of 20% or more for each
of the outstanding shares of the Company business deal
|X| Any management support for fundraising that includes 10% of grant
prospecting, introductions and presentations to money for each $1
managers, broker-dealers or other parties that eventually million
take a direct equity position in the Company
|X| A change of control involving the cumulative effect of Balance of
50% or more of the shares or voting control of the grant
Company from Effective Date of the grant; or a change
in the majority of the DNAprint Board
NOTE: In no case with any combination of vesting activities above will
the total amount of options vesting exceed 28,000,000 million.
12. Other Characteristics of This Stock Option Grant:
12.1 Option Strike Price
Given the substantial amount of restrictions on this stock option
grant the strike price will be $.01/per share.
12.2 Term
The term of the options will be 10 years.
12.3 Exercise Period
Once vested all options will be exercisable for the full
remaining term of these 10-year options regardless of the
Consultant's status with the Company.
12.4 Transferability
6
Consultant will have the right to transfer this option or parts
thereof to other parties at any time.
12.5 Cashless Exercise Priveledge
Consultant will have the right to do cashless exercises and to
allow such exercise to take place by redeeming DNAprint shares in
lieu of cash if so desired.
13. Registration of Underlying Shares
The Company agrees to take steps in order to have a registration statement
declared effective for the total number of shares underlying the stock
option grant twelve months from the Effective Date. Furthermore, the
Company agrees to keep this registration effective for the full 10 year
term of the options plus one-year as long as any options continue to remain
effective and exercisable.
14. DNAprint Board Approval:
The Company represents that this contract has been approved by its Board of
Directors and its officers are authorized to execute it on behalf of the
Company.
IN WITNESS WHEROF, the Company has caused this Amendment to be duly executed as
of the date first above written.
/s/ Xxxx Xxxxxxxx /s/ Xxxx X. Xxxxxxx
Xxxx Xxxxxxxx, Ph.D. Xxxx X. Xxxxxxx
CEO, Chairman Consultant
DNAprint genomics, Inc.
000 Xxxxxxxxxxx Xxxx
Xxxxxxx Xxxx
Xxxxxx, Xxxxxxx 00000
