EXHIBIT 10.6
ELECTRO-OPTICAL SCIENCES, INC.
CONSULTING AGREEMENT
This Consulting Agreement (this "AGREEMENT") is made as of May 31,
2005, between Electro-Optical Sciences, Inc., a Delaware corporation with its
principal office at 0 Xxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxx Xxxx 00000
(the "COMPANY"), and Xxxxx Xxxxxx, Ph.D. ("CONSULTANT"), residing at 00
Xxxxxxxxx Xxxx, Xxxxx Xxxxx, Xxx Xxxx 00000.
WHEREAS, the Company and Consultant agree that it is in both of
their best interests for Consultant to resign as a director and as Chief Science
and Technology Officer of the Company; and
WHEREAS, the parties desire to terminate the Employment Agreement
between the parties dated as June 20, 2003, as amended as of January 5, 2004,
and to enter into this Agreement in order to assure the Company of the services
of Consultant and to set forth the services and compensation of Consultant, all
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises, representations and covenants contained herein, the Company and
Consultant agree as follows:
1. Position and Duties. The Company shall retain Consultant, and
Consultant shall serve, as the Company's Chief Scientist. Consultant shall
perform such services and functions customary with such position, including
without limitation advice on integration of product development, mentoring and
advising staff scientists, providing new product vision, supporting research and
development, and such other similar services as shall from time to time be
assigned to him by the Chief Executive Officer or the Chief Executive Officer's
designee (collectively, "MANAGEMENT").
Except as may be expressly otherwise consented to in writing by
Management, Consultant will use his best efforts to promote the interests of the
Company and devote a majority of his business time and energies to the business
and affairs of the Company. Without the prior consent of Management, which
consent shall not be unreasonably withheld, Consultant shall not, directly or
indirectly, as owner, partner, joint venturer, stockholder, Consultant,
corporate officer or director, engage or become financially interested in, or be
concerned with any other duties or pursuits which interfere with the performance
of the services described hereunder, or which even if noninterfering, may be
inimical or contrary to the best interests of the Company. Notwithstanding the
foregoing, Consultant's ownership of securities of a public company engaged in
competition with the Company's business not in excess of two percent (2%) of any
class of such securities shall not be considered a breach of the covenants set
forth in this Paragraph 1.
2. Term. Unless terminated earlier pursuant to Paragraph 5 of this
Agreement the term of this Agreement will commence on the date hereof and
continue for a period of two (2) years (the "INITIAL TERM") and be automatically
renewed for an additional one (1) year period unless either Consultant or the
Company determine that this Agreement shall not be extended for such one (1)
year period (the "RENEWAL TERM"). Consultant shall be entitled to a $100,000
lump sum payment payable by the Company upon such determination.
3. Place of Performance. Consultant's services hereunder shall be
primarily performed in the Metropolitan New York area at a location or locations
determined by Management. From time to time, at the discretion of Management,
Consultant shall be required to work at other locations determined by the
Company, and to attend business meetings, presentations and the like requiring
business travel, as shall be reasonably necessary to perform the services
contemplated hereunder.
4. Compensation.
(a) Fee. As compensation for services rendered under this Agreement,
Consultant shall receive a monthly fee of $14,583.33 which shall be
payable in installments as determined by the Company, but not less
frequently than once a month (the "FEE"). The Fee shall be paid without
withholding and Consultant shall be responsible for all taxes payable with
respect to the Fee.
(b) Expenses. Consultant is authorized to incur reasonable expenses
in connection with conducting and promoting the business and affairs of
the Company, including reasonable expenses for travel and similar items,
subject to such limitations and restrictions set by Management from time
to time. Consultant will be reimbursed for reasonable out of pocket
expenses actually incurred by him in furtherance of services rendered
under this Agreement. Such expenses shall be reimbursed on a bi-weekly or
other regular basis not less frequently than the Company's employees are
reimbursed generally, to be determined in the Company's sole discretion,
upon presentation by Consultant of an itemized account of such
expenditures, consistent with policies and procedures established by
Management, together with such receipts or other evidence as the Company
shall require for tax or accounting purposes.
5. Termination.
(a) Termination by the Company for Cause. The Company may terminate
Consultant's services at any time, without notice, for "CAUSE".
Termination by the Company for "Cause" shall mean termination based upon:
(a) the conviction of Consultant of, or entry by Consultant of a plea of
guilty or no contest to, any felony, fraud, misappropriation or
embezzlement or other crime of moral turpitude; (b) the conviction of
Consultant of, or entry by Consultant of a plea of guilty or no contest
to, any crime or offence involving money or other property of the Company;
(c) failure by Consultant to materially perform the services described in
this Agreement or materially perform or observe any of the terms and
provisions of this Agreement in a manner reasonably satisfactory to
Management and the Board of Directors of the Company, and failure to cure
such misconduct or default within thirty (30) days of receipt of written
notice from the Company stating the nature of the misconduct or default in
reasonable detail (provided that such thirty day notice shall not apply in
the case of a failure to materially perform or observe any of the terms
and provisions of Section 6 or 7 of this Agreement); or (d) willful or
purposeful misconduct on the part of Consultant that is, or that will be
if continued, materially and demonstrably damaging or detrimental to the
Company, financial or otherwise. In the event the Company terminates
Consultant pursuant to this Section, Consutant shall not be entitled to
receive any payment pursuant to this Agreement other than accrued but
unpaid fees under Section 4 hereof.
(b) Termination by the Company for Financial Hardship. In the event
that the company experiences severe financial hardship then the Company
and Consultants shall renegociate the terms of this agreement at such time
based on the then current circumstances. Severe financial hardship shall
be determined the Company's Board of Directors in its reasonable
discretion. In the event the Company terminates Consultant pursuant to
this Section, Consutant shall not be entitled to receive any payment
pursuant to this Agreement other than accrued but unpaid fees under
Section 4 hereof. This Section shall have no further force and effect upon
consummation by the Company of an offering or a securities offering
producing not less than $10,000,000 in gross proceeds.
(c) Termination by the Company upon Death or Disability. If
Consultant shall die or become "Permanently Disabled" during the term of
this Agreement, this Agreement and all compensation hereunder shall
terminate, except the $100,000 termination payment provided in Section 2.
For the purposes of this Agreement, Consultant shall be deemed to be
"PERMANENTLY DISABLED" if, during the Initial Term or the Renewal Term,
because of ill health, physical or mental disability, or for other causes
beyond Consultant's control, Consultant shall have been unable or
unwilling, or shall have failed to perform his duties hereunder for either
sixty (60) consecutive days or a total period of ninety (90) days in any
twelve-month period during the term of this Agreement whether consecutive
or not. Notwithstanding anything to the contrary contained herein, during
any period that Consultant fails to perform his duties hereunder as a
result of his disability (but prior to the termination of this Agreement
as a result of such disability), (i) Consultant shall continue to receive
his monthly fee, provided that payments made to Consultant pursuant to
this Section 6 shall be reduced by the sum of the amounts, if any, payable
to Consultant at or prior to the time of any such payment under any
disability benefit plan or program to which Consultant is entitled, and
(ii) the Company shall have the right to hire or engage any other
individual or individuals to perform such duties and functions as the
Company shall desire, including those duties heretofore performed by
Consultant.
6. Protection of Confidential Information. Consultant hereby
covenants and agrees that all of the terms, conditions and provisions relating
to inventions, non-disclosure and non-competition of that certain Employee
Invention, Non-Disclosure and Non-Competition Agreement, dated September 1,
1997, by and between the Company and Consultant (the "EINN AGREEMENT") are, and
shall continue to be, in full force and effect as if Consultant were still
serving as an Employee of the Company for so long as Consultant shall be engaged
as a Consultant to the Company hereunder, and are hereby ratified and confirmed
in all respects notwithstanding the change of status of Consultant from an
Employee to a Consultant.
Consultant represents and warrants that he has complied with the EINN Agreement
since the date thereof, and covenants and agrees that he shall comply with the
EINN Agreement during the Initial and the Renewal Term. This Agreement shall
supersede the EINN Agreement to the extent of any difference or inconsistency in
the provisions of said agreements.
7. Covenant Not To Compete.
(a) Consultant agrees that: during the term of this Agreement and
for a period of two (2) years thereafter (the "RESTRICTED PERIOD")
Consultant shall not either directly or indirectly, whether by
establishing a new business or by joining an existing one, and whether as
a principal, stockholder, officer, director, broker, agent, consultant,
corporate officer, licensor or in any other capacity, compete with the
Company or become associated with a business enterprise which competes
with any business operation of the Company or any business operation of
the Company planned prior to Consultant's termination of employment, as
evidenced by the Company's business plan, financial budgets or other
similar documentation (including, without limitations, the DIFOTI,
MelaFind, MelaMeter or SkinSurf products), in the geographical areas in
which, prior to Consultant's termination of employment, the Company is
doing or proposes to do business, as evidenced by the Company's business
plan, financial budgets or other similar documentation, during the
Restricted Period.
Notwithstanding the foregoing, Consultant's ownership of securities
of a public company engaged in competition with the Company's Business not in
excess of two percent (2%) of any class of such securities shall not be
considered a breach of the covenants set forth in this Paragraph.
(b) Consultant and the Company intend that this covenant not to
compete shall be construed as a series of separate covenants, one for each
county and each product line. If, in any judicial proceeding, a court
shall refuse to enforce any one or more of the separate covenants deemed
included in subsection (a) of this Section 7, then such unenforceable
covenant shall be deemed severed from this Agreement for the purposes of
such judicial proceeding to the extent necessary to permit the remaining
separate covenants to be enforced.
(c) Consultant acknowledges that the Company plans to conduct
business on a nationwide basis, that its sales and marketing prospects are
for expansion into national and international markets and that, therefore,
the territorial and time limitations set forth in this Section 7 are
reasonable and properly required for the adequate protection of the
business of the Company. In the event any such territorial or time
limitation is deemed to be unreasonable by a court of competent
jurisdiction, Consultant agrees to the reduction of the territorial or
time limitation to the area or period which such court deems reasonable.
(d) The existence of any claim or cause of action by Consultant
against the Company shall not constitute a defense to the enforcement by
the Company of the foregoing restrictive covenants, but such claim or
cause of action shall be litigated separately.
(e) Consultant agrees that he will not solicit for himself or any
entity the employment of any employee of the Company.
(f) Consultant agrees that he will not persuade or attempt to
persuade any customer of the Company to cease doing business with the
Company or any of its subsidiaries or affiliates, or to reduce the amount
of business any customer does with the Company or any of its subsidiaries
or affiliates.
(g) Consultant agrees that he will not solicit for himself or any
entity the business of a customer of the Company or any of its
subsidiaries or affiliates, or solicit any business which was a customer
of the Company or any of its subsidiaries or affiliates within six months
prior to the termination of the Consultant's employment.
8. Independent Contractor. It is the express intention of the
Company and Consultant that Consultant perform the Services as an independent
contractor to the Company. Nothing in this Agreement shall in any way be
construed to constitute Consultant as an agent, employee or representative of
the Company. Without limiting the generality of the foregoing, Consultant is not
authorized to bind the Company to any liability or obligation or to represent
that Consultant has any such authority.
9. Additional Agreements. Consultant agrees that, following
termination of his engagement hereunder, Consultant shall furnish such
information and proper assistance to the Company as may reasonably be required
by the Company in connection with any litigation in which the Company or any of
its subsidiaries or affiliates is, or may become, a party. The Company agrees to
reimburse Consultant for any reasonable out-of-pocket disbursements (including
reasonable attorney fees), incurred by Consultant in connection with or
furnishing such information or providing such assistance. The Company further
agrees that following termination of this Agreement other than pursuant to
Section 5(a) hereof, the Company shall pay to Consultant an amount equal to any
payments Consultant would have had to make in order to extend his insurance
benefits under COBRA for a period of 18 months. For so long as Consultant is
providing services to the Company hereunder, all currently outstanding options
and/or warrants granted to Consultant in his former capacities at the Company
shall be continued on the same terms as previously provided; however, any
incentive stock options shall become non-statutory by reason of the change in
Consultant's status.
10. Lock-up. Consultant agrees to enter into and be bound by a
lock-up agreement with respect to any securities of the Company held by him.
Such agreement shall be in the same form and on terms not less favorable to
those entered into by principal shareholders of the Company.
11. Disputes.
(a) Arbitration. Consultant and the Company will arbitrate any
and all controversies, claims or disputes arising out of or relating to this
Agreement or the Consultant's employment with the Company ("Claims") in New York
City before a single arbitrator at the American Arbitration Association ("AAA")
in accordance with the AAA's National Rules for the Resolution of Employment
Disputes. Consultant waives any right to a trial by jury in any
controversy, claim or dispute with the Company, including those that arise under
any federal, state or local law, including without limitation, claims of
harassment, discrimination or wrongful termination under common law or under
Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the
Americans with Disabilities Act, the Age Discrimination in Employment Act, the
Older Workers' Benefit Protection Act, the Consultant Retirement Income Security
Act of 1974 and the Fair Labor Standards Act.
(b) Administrative Claims. While this Agreement precludes the
Consultant from filing a court action for any Claim against the Company, this
Agreement does not prohibit the Consultant from filing an administrative charge
with a local, state or federal administrative body.
(c) Injunctive Relief. Notwithstanding the agreement to
arbitrate, Consultant recognizes that the services to be rendered by him are of
a special, unique, extraordinary and intellectual character involving skill of
the highest order and giving them peculiar value, the loss of which cannot be
adequately compensated for in damages and that a breach by the Consultant of his
obligations under Section 6 or 7 of this Agreement would cause the Company
irreparable harm and no adequate remedy at law would be available to the
Company. Accordingly, if any dispute arises between the parties under Section 6
or 7, the Company shall also have the right to institute judicial proceedings in
any court of competent jurisdiction to enjoin such acts without the need to post
a bond. If such judicial proceedings are instituted, such proceedings shall not
be stayed or delayed pending the outcome of any arbitration proceeding under
Section 11(a) of this Agreement. The Consultant and the Company consent to the
jurisdiction of the United States District Court for the Southern District of
New York (or if such court cannot exercise jurisdiction for any reason, to the
jurisdiction of the New York State Supreme Court for the County of New York) for
this purpose. Further, the Consultant and the Company waive any objections to
the jurisdiction of such courts based on improper or inconvenient forum
12. Successors; Binding Agreement. This Agreement and all rights of
Consultant hereunder shall inure to the benefit of, and shall be enforceable by,
Consultant's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Consultant should die
while any amount would still be payable to him hereunder if he had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Consultant's devisee, legatee or
other designee or, if there be no such designee, to Consultant's estate.
13. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given three days after being mailed by United
States registered or certified mail, return receipt requested, postage prepaid,
or the day of being sent by hand delivery or by facsimile (if promptly confirmed
in writing), addressed as follows:
If to Consultant: 00 Xxxxxxxxx Xxxx
Xxxxx Xxxxx, Xxx Xxxx 00000
If to the Company: 0 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
Facsimile: 914/591-3701
With a copy to: Xxxxxxx X. Price, Esq.
Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 212/652-3789
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall be
effective only upon receipt.
14. Amendments and Waivers. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by Consultant and such officers of the Company
as may be specifically designated by Management of the Company. No waiver by
either party at any time of any breach by the other party of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.
15. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
16. Entire Agreement; Supercession. This Agreement and the EINN
Agreement set forth the entire agreement and understanding of the parties hereto
in respect of the subject matter contained herein, and supersedes all prior
agreements, promises, covenants, arrangements, communications, representations
or warranties, whether oral or written, by any officer, Consultant or
representative of any party hereto or any predecessor of any party hereto,
including without limitation that certain Employment Agreement between the
Company and Consultant dated as of June 20, 2003, as amended as of January 5,
2004.
17. Nonassignability. This Agreement is entered into in
consideration of the personal qualities of Consultant and may not be, nor may
any right or interest hereunder be, assigned by him without the prior written
consent of Company. It is expressly understood and agreed that this Agreement,
and the rights accruing and obligations owed to the Company hereunder, and the
obligations to be performed by the Company hereunder, may be assigned by the
Company to any of its successors or assigns.
18. Choice of Law. This Agreement is to be governed by and
interpreted under the laws of the State of New York without regard to its
conflict of laws principles.
19. Survival. The termination of Consultant's engagement hereunder
shall not affect the enforceability of Sections 6, 7 , 9, 10, 11, 18 and 19 of
this Agreement.
20. Headings. The Section headings appearing in this Agreement are
for the purposes of easy reference and shall not be considered a part of this
Agreement or in any way modify, demand or affect its provisions.
21. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year first-above written.
ELECTRO-OPTICAL SCIENCES, INC.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxx X. Xxxxx, M.D., M.B.A.
Title: Chief Executive Officer
CONSULTANT
/s/ Xxxxx Xxxxxx
------------------------------------
Xxxxx Xxxxxx, Ph.D.
