Personal Services Agreement
EXHIBIT
10.12
This Agreement
(the “Agreement”)
is
entered into and effective this 1st
day of
August, 2005 (the “Effective Date”) by and between Xx. Xxxxxx Xxxxxx at Stanford
School of Medicine, (hereinafter referred to as the “Consultant”), and Viking
Systems, Inc., with offices at 0000 Xxxxxx Xxx Xxx 0000, Xx Xxxxx, XX 00000
(hereinafter referred to as “Company”).
This
Agreement will set forth the general terms of our agreement whereby Consultant
will provide to the Company the consulting services described on Exhibit A
hereto (the “Consulting Services”).
1.
Engagement.
Company
hereby engages Consultant to provide the Consulting Services to the Company
on a
part-time basis. The parties agree that Consultant shall provide the Consulting
Services on an “as needed” basis in an amount not to exceed ten (10) hours per
month over the term of this Agreement. This Agreement covers all of the services
to be furnished by Consultant to Company, and the parties acknowledge that
there
is not now, and during the term of this Agreement shall not be, any other
contract or agreement between Company and Consultant unless such other contract
or agreement shall be in writing signed by both parties. Nothing in this
Agreement shall limit Consultant’s right to provide services to any other
businesses or institutions except as provided in Section 5 below.
2.
Compensation.
In
consideration for the Consulting Services, the Company will pay the Consultant
the fees as specified in Exhibit A. Such fees shall be paid at the conclusion
of
each consulting month upon satisfactory evidence of the provision of such
Consulting Services. The Company will compensate Consultant for such Consulting
Services, but only if the Company receives full documentation regarding the
Consulting Services provided, and all such Consulting Services are approved
in
writing, in advance by the Company.
3.
Expenses.
The
Company will reimburse Consultant for all reasonable travel and other expenses
directly related to Consultant’s performance under this Agreement provided that
(a) such expenses in excess of $2,500 have been approved in writing, in advance
of being incurred, by the Company and (b) such expenses are of a nature (and
adequate documentary evidence has been provided) qualifying them as proper
deductions on federal and state income tax returns of the Company.
4.
Term
and Termination.
This
Agreement shall commence on the Effective Date and shall continue for a term
of
three (3) years. At the conclusion of the initial term, this Agreement may
be
extended for subsequent one (1) -year terms by the mutual consent of both
parties. (The initial term and any subsequent terms are collectively referred
to
herein as the “Term.”) Extension of this Agreement, if any, shall be made in
writing by amending this Agreement. In the event of a material breach of the
Agreement by either party, the other party may terminate this Agreement upon
providing the breaching party with written notice of the breach and ten (10)
days prior written notice of termination, provided that if the breaching party
cures said breach within ten (10) days, this Agreement shall continue in full
force and effect. This Agreement may be terminated by either party with or
without cause upon sixty (60) days written notice to the other
party.
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5.
Absence
of Conflicts.
Consultant represents and warrants that Consultant is not under any existing
obligation that is inconsistent with this Agreement or that would restrict
or
conflict with the performance of Consultant’s obligations under this Agreement.
Consultant agrees not to enter into any agreement or arrangement during the
term
of this Agreement that would impose on Consultant any obligation inconsistent
with this Agreement or that would restrict or conflict with the performance
of
Consultant’s obligations under this Agreement. If Consultant is required by any
applicable guidelines or policies of Consultant’s employer to make any
disclosure or take any action that conflicts with any obligations of Consultant
under this Agreement or is contrary to the terms of this Agreement, Consultant
shall promptly notify the Company of such obligation, specifying the nature
of
such disclosure or action and identifying the applicable guideline or policy
under which disclosure or action is required, prior to making such disclosure
or
taking such action.
6. Inventions
Discovered By Consultant.
The
Consultant shall promptly disclose to the Company any invention, improvement,
discovery, process, formula or method or other intellectual property, whether
or
not patentable or copyrightable, conceived or first reduced to practice by
the
Consultant, either alone or jointly with others, while performing services
hereunder (or, if based on any Confidential Information, within one (1) year
after the Term) (collectively, "Inventions"):
(a) which
pertain to any line of business activity of the Company, if then conducted
or
then being actively planned by the Company, with which the Consultant was or
is
involved, or
(b) which
directly relates to any of the Consultant's work for the Company.
The
Consultant hereby assigns, transfers and conveys to the Company all of the
Consultant's right, title and interest in and to any such Inventions. During
and
after the Term, the Consultant shall, at the Company’s sole expense, execute any
documents necessary to perfect the quitclaim of such Inventions to the Company
and to enable the Company to apply for, obtain and enforce patents, trademarks
and copyrights in any and all countries on such Inventions, including, without
limitation, the execution of any instruments and the giving of evidence and
testimony, without further compensation beyond the Consultant's agreed
compensation during the course of the Consultant's services to the Company
under
this Agreement; provided, however, that after the Term, the Consultant shall
be
compensated by the Company for the assistance required of him under this Section
6 at the rate of $500 per hour, to be paid within thirty (30) days after receipt
of an itemized invoice therefor.
This
Section 6 shall survive the termination of this Agreement..
7.
Independent
Contractor Status.
The
parties agree that Consultant is serving as an independent contractor and is
not
an employee of the Company. As such, Consultant acknowledges that Consultant
is
not entitled to any medical benefits, paid time off, tax withholding or other
benefits routinely provided to employees.
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8.
Taxes;
Attorney’s Fees.
(a) By
reason
of Consultant’s status as an independent contractor and the representations made
herein, Consultant hereby instructs the Company not to withhold any taxes from
the fees paid to Consultant. Consultant acknowledges and agrees that Consultant
is solely responsible for the payment of any and all domestic or foreign taxes
and/or assessments imposed on account of the payment of fees or other
compensation by the Company to Consultant. Consultant expressly agrees to treat
any fees and other compensation earned under this agreement as self-employment
income for federal and state income taxes, unemployment insurance taxes,
disability insurance taxes or any other taxes when such amounts become due
and
payable.
(b) Notwithstanding
anything to the contrary, the Company shall pay the attorney’s fees incurred by
the Consultant in connection with the review and negotiation of this Agreement
by paying a flat fee of $10,000 directly to Squire, Xxxxxxx & Xxxxxxx L.L.P.
(“SSD”) within ten (10) days of the execution and delivery of this Agreement by
the Consultant to the Company. SSD shall be considered a third party beneficiary
of this Agreement specifically for purposes of this Section 8(b).
9.
Confidentiality.
The
Consultant, during the term of this Agreement, will have access to and become
acquainted with various business, technical, and financial information and
compilations of information and records of the Company containing trade secrets
of the Company not generally available to the public, all of which shall be
deemed confidential information of the Company (hereinafter “Confidential
Information”). Notwithstanding anything to the contrary, “Confidential
Information” does not include information that (i) is or becomes generally
available to the public other than as a result of a breach of this Agreement
by
the Consultant, (ii) was available to the Consultant on a non-confidential
basis
prior to its disclosure by the Company to the Consultant, (iii) becomes
available to the Consultant on a non-confidential basis from another source,
provided that such other source is not known by the Consultant to be bound
by,
and to the Consultant’s knowledge such disclosure does not breach, directly or
indirectly, a confidentiality agreement between such other source and the
Company, (iv) is provided by the Company to a third party on a non-confidential
basis, or (v) is independently developed by the Consultant without access to
the
Confidential Information, as evidenced by written records. The Consultant shall
not disclose any of the Confidential Information, directly or indirectly, or
use
it in any way, either during the term of this Agreement or at any time
thereafter for a period of three (3) years; provided, however, that the
Consultant may disclose Confidential Information if such disclosure is required
by any applicable law, subpoena, court order, regulation, or judicial or
administrative process, provided that, to the extent practicable and permitted
by applicable law or regulation, the Consultant provides notice of such
requirement to the Company for the purpose of enabling the Company to seek
a
protective order or otherwise prevent such disclosure. All Confidential
Information summarized or described in files, documents, records, and similar
items, whether prepared by the Consultant or otherwise coming into the
Consultant’s possession, shall remain the Confidential Information of the
Company. At or promptly after the termination of the Agreement, the Consultant
shall either return to the Company, or certify to the Company the destruction
of, all Confidential Information of the Company then in the possession of the
Consultant.
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10. Provisions
Necessary and Reasonable.
The
Consultant agrees that the provisions of Sections 6 and 9 of this Agreement
are
necessary and reasonable to protect the Company's Confidential Information,
Inventions and goodwill. In the event of any breach of any of the covenants
set
forth in Sections 6 and 9 herein, the Company would suffer substantial
irreparable harm and would not have an adequate remedy at law for such breach.
In recognition of the foregoing, the Consultant agrees that in the event of
a
breach or threatened breach of any of these covenants, in addition to such
remedies as the Company may have at law, without posting any bond or security,
the Company shall be entitled to seek and obtain equitable relief, in the form
of specific performance, and/or temporary, preliminary or permanent injunctive
relief, or any other equitable remedy which then may be available. The seeking
of such injunction or order shall not affect the Company's right to seek and
obtain damages or other equitable relief on account of any such actual or
threatened breach.
11.
Limitation
on Authority.
Consultant shall not have any authority to obligate or bind the Company to
any
agreement, purchase or obligation of any kind without the express written
approval of an officer of the Company. The Company shall not have any authority
to obligate or bind the Consultant to any agreement, purchase or obligation
of
any kind without the express written approval of the Consultant.
12.
Assignment
of Rights and Duties.
Neither
Consultant nor the Company may assign its rights or duties under this Agreement
without prior written consent of the other, which consent may be withheld for
any reason. Any attempted assignment, transfer, conveyance, or other disposition
of any interest of either party in this Agreement shall be void.
13.
Notice.
All
notices and other communications required or permitted under this Agreement
shall be in writing and shall be deemed given upon personal delivery, facsimile
transmission (with confirmation of receipt), delivery by a reputable overnight
courier service or five (5) days following deposit in the United States mail
(if
sent by certified or registered mail, postage prepaid, return receipt
requested), to the parties at the following addresses (unless the party has
by
written notice subsequently provided a new contact person or
address):
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For
the CONSULTANT:
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Xx.
Xxxxxx Xxxxxx, M.D., FACOG, FACS
Center
for Special Minimally Invasive Surgery
Stanford
University Medical Center
000
Xxxxx Xxxx, Xxxxx 000
Xxxx
Xxxx, XX 00000
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For
COMPANY:
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Xxxxx
Xxxxxxxx
Xx.
Vice President, Commercial Operations
0000
Xxx Xxxxx 000
Xx
Xxxxx, XX 00000
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With
a copy to:
Xxxxxx
Xxxxx, CEO
0000
Xxxxxx Xxx Xxx 0000
Xxx
Xxxxx, XX 00000
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14.
Legal
Fee; Arbitration.
With the
exception of the Company’s right to a temporary restraining order, a preliminary
injunction or a permanent injunction under 10 above, the parties hereto
expressly agree that any dispute, controversy or claim arising hereunder or
in
any way related to this Agreement shall be resolved by arbitration in the County
of San Diego, State of California by JAMS-Endispute. The arbitration shall
be
conducted by a sole arbitrator appointed by JAMS-Endispute (the “Arbitrator”)
or
any
successor entity. If neither Arbitrator nor any successor entity exists at
the
time of the dispute, the dispute shall be submitted for arbitration to the
AAA
or any successor entity. The
Arbitrator’s decision shall be final and binding on all parties. The parties
intend that this arbitration provision be irrevocable and be construed as
broadly as possible. The arbitration shall be governed by the provisions of
the
Arbitration Act, and judgment upon the award rendered by the Arbitrator may
be
entered by any court having jurisdiction thereof.
15.
Attorneys
Fees.
If a
legal action or other proceeding is brought by the Company or by the Consultant
for enforcement of this Agreement or for judgment on an arbitration award under
this Agreement, the party that prevails shall be entitled to recover reasonable
attorney’s fees, costs and expenses incurred in addition to any other relief to
which that party may be entitled.
16.
Governing
Law.
This
Agreement shall be governed by and construed under the laws of the State of
California without reference to principles of conflicts of laws.
17.
Entire
Agreement.
This
Agreement, including Exhibit A hereto, sets forth the entire agreement and
understanding among the parties as to the subject matter hereof and supersedes
all prior agreements or understandings with respect to such subject matter,
whether written or oral. This Agreement may not be amended or modified except
in
writing signed by Consultant and a duly authorized officer of the Company.
No
waiver of any term, provision or condition of this Agreement, whether by conduct
or otherwise in any one or more instances shall be deemed to be or construed
as
a further or continuing waiver of any such term, provision or condition, or
of
any other term, provision or condition. The invalidity or unenforceability
of
any term or provision of the parties with respect to the subject matter of
this
Agreement shall not affect the validity or enforceability of any other term
or
provision of this Agreement. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
18.
Representations
and Warranties; Covenant.
The
authorized capital stock of the Company as of the Effective Date consists of
100,000,000 shares of Common Stock, 52,132,100 shares of which are outstanding
(fully diluted), 25,000,000 shares of Preferred Stock, none of which are
outstanding,. The Company has reserved 7,500,000 shares of Common Stock for
issuance to employees, consultants and advisors under its stock option plan.
Except as set forth in this Section 18, there are no other options, warrants,
conversion privileges or other rights presently outstanding to purchase or
otherwise acquire any authorized but unissued shares of capital stock or other
securities of the Company.
To
the
extent that, at any time during the term of this agreement, the number of shares
subject to the Option (as defined in Exhibit A) constitute less than one percent
(1%) of the Company’s capital stock on a fully diluted basis (which definition
of fully diluted shall include all outstanding options to purchase common stock
and any other securities exercisable for or convertible into to common stock),
then the vesting of the Option shall be accelerated such that at such time
that
the shares subject to the Option constitute less than one percent (1.00%) of
the
Company’s capital stock on a fully diluted basis, one hundred percent (100%) of
the Option shall be exercisable immediately upon such event and as of such
time,
and Consultant shall have the right to terminate this Agreement with no
penalties.
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19.
Indemnification.
The
Company agrees to indemnify, defend, and hold harmless Consultant, and any
of
Consultant’s affiliates from any and all damage, loss, liability, cost or
expense, including without limitation reasonable attorneys’ fees, costs and
expenses related to defending any claims resulting from any claim, demand,
suit
or proceeding arising out of or related to (i) any products liability claims
for
a defect in the Company’s products, and (ii) any claims brought against
Consultant in connection with services that Consultant performs for the Company
hereunder.
20.
Waiver.
Any
waiver by any party hereto of any breach of any kind or character whatsoever
by
any other party, whether such waiver be direct or implied, shall not be
construed as a continuing waiver or consent to any subsequent breach of this
Agreement on the part of the other party or parties.
21.
Severability.
The
provisions of this Agreement are severable and should any provision hereof
be
void, voidable or unenforceable under any applicable law, such void, voidable
or
unenforceable provision shall not affect or invalidate any other provision
of
this Agreement, which shall continue to govern the relative rights and duties
of
the parties as though void, voidable or unenforceable provision were not a
part
hereof. In addition, it is the intention and agreement of the parties that
all
of the terms and conditions hereof be enforced to the fullest extent permitted
by law.
22.
Modification.
This
Agreement may not be modified except by a written instrument signed by all
the
parties hereto.
23.
Headings.
The
headings of sections and subsection used in this Agreement are for convenience
only and are not part of its operative language. They shall not be used to
affect the construction of any provision hereof.
[remainder
of page intentionally left blank]
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The
foregoing is acknowledged, understood and agreed to as evidenced by execution
by
the parties in the spaces below.
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CONSULTANT:
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By:
/s/ Xxxxxx Xxxxxx
Name:
Title:
Social
Security Number:
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By:
/s/ Xxxxxx X. Xxxxx
Name:
Xxxxxx X. Xxxxx
Title:
CEO
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Exhibit
A
Consulting
Services -
Clinical
development, business value enhancement and new product advisory
Part
1 - Clinical
development
Assist
the Company establish the clinical benefits of the Endosite 3Di product
portfolio and 3-dimensional laparoscopic imagery as an enhancement to
laparoscopic surgical procedures, and agree to provide the foregoing services.
The Consulting Services will be directed by the Company’s Vice President of
Clinical Development and Sr. Vice President of Commercial
Operations.
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A.
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Lead
Viking Systems OBGYN and general Minimally Invasive Surgical Clinical
Advisory Panel (not to exceed two meetings per year in conjunction
with
scheduled either SLS or other appropriate
meetings)
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B.
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Lead
and complete clinical studies resulting in peer-reviewed journal
publications.
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C.
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Present
abstracts and posters of clinical data and observations at major
medical
meetings.
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Part
2 - Contribution to business value enhancement
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A.
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Discussions
with investors and board of directors reflecting view of 3-dimenstional
product portfolio, clinical utility and aid in assessing additional
products and companies for collaboration or
acquisitions
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B.
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Assistance
to management with the business and medical industry
press
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C.
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Act
as an exposure center (Viking Center of Excellence) providing access,
opportunity to view, training and information to other surgeons relative
to the 3-dimensional vision system product portfolio including surgeon
outreach as it relates to Viking’s placements in other academic and
prestigious institutions
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Part
3 - New product advisory
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A.
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Assist
in new product planning including R&D
programs
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B.
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Suggestions
and due diligence for business
collaborations
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C.
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Suggestions
and due diligence for potential
acquisitions.
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Compensation
for Personal Services:
Payment
for the Consulting Services shall be in the form of a five year non-qualified
stock option in the amount of 1,000,000 shares with an exercise price at fair
market value on the Effective Date (the “Option”). The Option shall vest in
quarterly installments over a thirty-six (36) month period commencing on the
Effective Date, subject to acceleration of vesting upon completion of the
following milestones in the amounts set forth below. In the event this Agreement
is terminated by either party, further vesting of the option is terminated.
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1.
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15%
of the Option at execution of this
agreement
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2.
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10%
of the Option upon installation of the Viking 3Di System and used
regularly for surgery and training, regardless of whether Stanford
pays
for the system.
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3.
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15%
of the Option upon completion of the $8 million convertible preferred
financing round.
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4.
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15%
of the Option upon the placement of 5 systems in OBGYN academic centers
on
or prior to December 31, 2005
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5.
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10%
of the Option upon the placement of 15 systems in OBGYN academic
centers
on or prior to December 31, 2006
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6.
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5%
of the Option upon the placement of 25 systems in OBGYN academic
centers
on or prior to December 31, 2007
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7.
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Development
of data, submission of abstracts, presentations/poster sessions,
and
public presentations, interviews or articles at least 3 per year
in each
of the following years:
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a.
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2006,
10% of the Option
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b.
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2007,
10% of the Option
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