EXHIBIT 10.1
CONSULTING AND ADVISORY AGREEMENT
EXHIBIT 10.1
2007 CONSULTING AND ADVISORY AGREEMENT
THIS CONSULTING AGREEMENT ("2007 Agreement"), made effective as of the
22nd day of February 2007, is entered into by and between Xsunx, Inc., a
Colorado corporation ("Company"), and Dr. Xxxxxx Xx, an individual
("Consultant"). The Company and Consultant are sometimes herein referred to
individually as a "party" and collectively as the "parties".
R E C I T A L S
WHEREAS, Consultant has developed an expertise in the areas of advanced
semiconductor materials and device structures, novel approaches to electronic
and optoelectronic device design, nanoscale materials analysis and applications
of nanostructures in photovoltaic devices, design and fabrication of materials
and device for photovoltaic applications, and thin-film amorphous silicon
structures and other technology related to amorphous silicon and related alloys
which is of interest to the Company;
WHEREAS, Consultant currently holds the position of Professor of
Electrical and Computer Engineering at the University of California, San Diego.
WHEREAS, the Company desires to obtain the services of Consultant and
Consultant desires to provide the Company with consultancy and advisory services
as contemplated pursuant to the terms and conditions contained herein; and
WHEREAS, the undersigned parties desire to formalize such consultancy
relationship;
NOW, THEREFORE, in consideration of the promises, mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties to this
Agreement agree as follows:
1. Definitions
1.1 "XsunX Field of Use" means the business of developing and
commercializing semi-transparent and opaque solar cells and photovoltaic
technologies, solar cell panels, and methods of manufacture.
1.2 "Business of XsunX" means the business of developing,
manufacturing, and marketing semi-transparent and opaque solar cells and
photovoltaic technologies, solar cell panels, and methods of manufacture.
2. Engagement of Services. The Company hereby engages Consultant as an
independent contractor to provide consulting and advisory services as set forth
herein. All such consulting and services shall be performed in accordance with
the terms and conditions contained herein. Consultant shall report to the
Chairman of the Scientific Advisory Board, or in his absence, the Chief
Executive Officer of the Company. Consultant hereby accepts such engagement in
accordance with such terms and conditions.
3. Services of Consultant. Consultant shall provide consultancy and
advisory services as a member of the XsunX Scientific Advisory Board under the
title of Member of the Advisory Board. Notwithstanding the foregoing title
Consultant shall remain an independent contractor. Consultant shall provide such
services incident thereto as may be necessary from time to time which services
shall include, without limitation, providing the Company with his best efforts
in providing technical expertise in advising the Company in the areas of
research & development, process development, planning, third party technical and
resource requirements, analysis of research and development data, and the
management of intellectual assets pertaining to the Business of XsunX and the
XsunX Field of Use. Consultant is not a corporate officer or director of XsunX
and will not be represented as such.
3.1. Consultant shall provide such other related services as may be
requested of Consultant by the Company and as are not inconsistent with the
provisions of this Agreement. Consultant agrees to devote Consultant's best
efforts, skills, and technical expertise to the business of the Company, to do
Consultant's utmost to further enhance and develop the interests and welfare of
the Company, and to devote necessary time and attention to the business of the
Company, while recognizing Consultant's duties as Professor of Electrical and
Computer Engineering at the University of California, San Diego.
3.2. Consultant shall truthfully and accurately make, maintain and
preserve all records and reports that the Company may, from time to time,
request or require, and shall fully account for all money, records, equipment,
materials or other property belonging to the Company of which Consultant may
have custody and shall pay over and deliver same promptly whenever and however
Consultant may be directed to do so.
3.3. Consultant shall make available to the Company any and all
information of which Consultant has knowledge that is relevant to the Company's
business, but is not otherwise prohibited from disclosing, and make all
suggestions and recommendations which Consultant believes will be of benefit to
the Company.
3.4. Consultant shall, at his own cost, prepare for and attend such
meetings as may be reasonably requested by the Company, provided, however, that
the Company shall pay for the reasonable travel and lodging costs incurred by
Consultant in regard to the foregoing. In addition to incidental communication
of data, questions, and progress updates provided to Consultant via email for
comment by Consultant, the Company may request at least one teleconference
review meeting per month and one meeting requiring attendance per calendar
quarter for the purpose of planning, analysis, and collaborative discussion of
the development matters referenced hereinabove, and the conformance or variance
of the foregoing to or with the Business of XsunX.
4. Duty to University of California, San Diego. The parties recognize
that Consultant is and shall remain employed by University of California, San
Diego, and that as an employee of University of California, San Diego,
Consultant shall devote time and effort to the business of University of
California, San Diego. Notwithstanding the same, Consultant shall conform
2
Consultants' conduct to the fiduciary duties of confidentiality and loyalty owed
to the Company. In that regard, Consultant shall inform the Company at the
earliest opportunity at such time as Consultant may perceive a potential
conflict of interest with regard to Consultant's duties to University of
California, San Diego and Consultant's duties to the Company. Consultant shall
not make any unauthorized disclosure of the confidential information of
University of California, San Diego to the Company. Consultant shall not make
any unauthorized disclosure of the confidential information of the Company to
University of California, San Diego (or any other party not permitted to receive
such information).
5. Compensation. For and in consideration of the performance by Consult
-ant of the services, terms, conditions, covenants and promises herein recited,
the Company agrees and promises to pay to Consultant at the times and in the
manner herein stated and as set forth below:
5.1. As the principal consideration of the services to be performed by
Consultant hereunder during the term of this Agreement, Consultant shall receive
from the Company One Thousand Dollars ($1,000) monthly, and an initial grant of
a Consultancy and Advisory Warrant for the purchase of up to One Hundred
Thousand (100,000) shares of common voting stock of the Company. Such warrant
will vest in accordance with the vesting provisions set for within an
appropriate warrant agreement ("Warrant Instrument"). Except as may otherwise be
set forth herein, the cash compensation and warrant grant shall constitute the
sole compensation of Consultant hereunder. Such compensation may sometimes be
herein referred to as Consultant's "Base Compensation".
5.2. The Company shall reimburse Consultant, from time to time, upon
Consultant's submission of expense account and supporting documents on Company
approved format, and as required by the Internal Revenue Service, for all
reasonable out of town travel, and other ordinary, reasonable and necessary
business expenses incurred by Consultant as part of and in connection with the
direct performance of duties specified herein.
6. Relationship of the Parties
6.1 Legal Status. Consultant shall be an independent contractor of the
Company in accordance with the provisions of Sections 2750.5 and 3353 of the
California Labor Code, or any other corresponding provision of the Colorado or
Canadian Statutes, and not an employee, agent, or partner. It is expressly
declared that such independent contractor status is bona fide and not a
subterfuge to avoid employee status. This Agreement shall not create an
employer-employee relationship and shall not constitute a hiring of such nature
by either party.
6.2. Items Furnished to Consultant. Unless expressly agreed in writing
otherwise by the parties, the Company shall not provide any telephone equipment
or services, office equipment, stationery, secretarial or office support
3
services or other items or services for the benefit of Consultant. Consultant
shall, at its own expense, provide and make arrangement for all equipment,
stationery, secretarial and office support services.
6.3. Consent of Company. Consultant shall have no right or authority
at any time to make any contract or binding promise of any nature on behalf of
the Company, whether oral or written, without the express prior written consent
of the Company.
6.4. Manner of Performing Services. Consultant shall retain all
discretion and judgment in regard to the manner and means of carrying out its
duties hereunder subject, however, to the reasonable requests of the Company.
Consultant shall have the right to control and discretion as to the manner of
performance of its services hereunder in that the result of the work and not the
means by which it is accomplished shall be the primary factor for which the
parties have bargained hereunder in accordance with Sections 2750.5 and 3353 of
the California Labor Code or any corresponding provision in the Colorado or
Canadian Statutes. Consultant's obligations for performance of services
hereunder shall be limited to the completion of the consultation and services
described above in accordance with the Business of XsunX and the XsunX Field of
Use. Consultant shall have no obligation to work any particular hours or days or
any particular number of hours or days. The Company shall have no right to
control or direct the details, manner or means by which Consultant accomplishes
the results of the services performed hereunder.
6.5. Payment of Taxes. Consultant shall be responsible for and pay
Consultant's own self-employment taxes, estimated tax liabilities, business
equipment or personal property taxes and other similar obligations, whether
federal, state or local. The Company shall not pay or withhold any FICA, SDI,
federal or state income tax or unemployment insurance or tax or any other
amounts because the relationship of the parties hereto is not that of
employer-employee, but that of independent contractor. Consultant shall be
solely responsible for the payment of all taxes, withholdings and other amounts
due in regard to Consultant's own employees.
6.6. Employees of Consultant. Consultant may subcontract with
and/or employ such parties upon such terms and conditions as it may deem proper
or necessary.
7. Warranties and Indemnification
7.1. Warranties. Consultant warrants and represents that the services
of Consultant's subcontractors or employees shall be performed in full
compliance with the terms and conditions of this Agreement, and, that all
services performed hereunder shall be performed in accordance with all federal,
state and local laws, rules or regulations.
7.2. Indemnification by Consultant. Consultant shall indemnify, defend
and hold the Company and the property of the Company, free and harmless from any
and all claims, losses, damages, injuries, and liabilities, including the
Company's reasonable attorney fees and costs (the Company may choose its own
counsel when defended hereunder), arising from or in any way connected with the
performance of services under this Agreement or any other act or omission by
Consultant, its agents, subcontractors, or employees.
4
7.3. Indemnification by the Company. The Company shall indemnify,
defend and hold Consultant and the property of Consultant, free and harmless
from any and all claims, losses, damages, injuries, and liabilities, including
Consultant's reasonable attorney fees and costs, arising from or in any way
connected with any act or omission on the part of the Company, its constituent
partners, agents, subcontractors, or employees.
8. Term. Consultant's engagement pursuant to this Agreement shall be
for a period of two (2) years and shall commence upon the date of execution
hereof (the "Commencement Date") and shall continue to and including February
22, 2009 (the "Termination Date") unless earlier terminated in accordance with
the provisions of Section 9 of this Agreement; provided further that the term of
this Agreement may be extended by the mutual agreement of the parties hereto.
9. Termination. Notwithstanding any other provision of this Agreement
to the contrary, either party may terminate this Agreement at any time upon
ninety (90) days prior written notice to the other. This Agreement may also be
terminated by the Company, at its option, at any time during the term of this
Agreement without notice, for good cause. Termination for good cause shall
include, but not be limited to, any of the following:
9.1. The commission by Consultant of an act of fraud or other act
materially evidencing bad faith or dishonesty;
9.2. The misappropriation by Consultant of any funds or property or
other rights of the Company;
9.3. The suspension or removal or termination of Consultant by or
at the request or requirement of any governmental authority having jurisdiction
over the Company;
9.4. The breach by Consultant of any material terms of this Agree-
ment or any other agreement between Consultant on the one hand and the Company,
or any affiliate of the Company, on the other hand, including, but not limited
to, the Technology Agreement;
9.5. Upon the death of the Consultant;
9.6. The failure by Consultant to reasonably achieve the goals and
purpose of the consultant relationship within the time frame assigned.
10. Confidentiality. All information derived or provided to Consultant
under the terms and specific to the performance of this Agreement, including
lists and databases, and any part of such lists, databases, or information,
pertaining to customers, merchants, salespersons, financial records, computer
software programs, strategic plans, contracts, agreements, literature, manuals,
brochures, books, records, correspondence, computer programs, software, source
codes, computations, data files, algorithms, techniques, processes, designs,
5
specifications, drawings, charts, plans, schematics, computer disks, magnetic
tapes, books, files, records, reports, documents, Instruments, agreements,
contracts, correspondence, letters, memoranda, financial, accounting, sales,
purchase and consultant data, capital structure information, corporate
organizational information, identities, names and address of, and any
information pertaining to, shareholders, directors, officers, consultants,
contractors, vendors, suppliers, customers, clients, lenders, financing and
business participants, and all persons associated with the Company, information
pertaining to business models, business plans, projections, assumptions and
analyses, particular projects, and all other data and information and similar
items relating to the business of the Company and all other data and information
and similar items relating to the Company of whatever kind or nature and whether
or not prepared or compiled by the Company and all other materials furnished or
made available to Consultant by the Company or any of its affiliates (as
hereinafter defined) relating to the business conducted by the Company
("Confidential Information"), is and are proprietary and confidential and are
and shall remain the sole property of the Company. Affiliate as used in this
section shall mean the Company, any entity in which Company owns a majority
ownership (directly or indirectly), or any entity which owns a majority
ownership of Company (directly or indirectly). Consultant acknowledges that the
Confidential Information derives independent economic value, actual or
potential, from not being generally known to the public or to other persons who
can obtain economic value from its disclosure or use and that this
confidentiality provision constitutes efforts that are reasonable under the
circumstances to maintain the secrecy thereof. Consultant further acknowledges
that the Confidential Information constitutes trade secrets pursuant to
California Civil Code ss.3426.1. Consultant shall not, directly or indirectly,
at any time during or after termination of consultant use or reveal, divulge,
disclose, disseminate, distribute, license, sell, transfer, assign or otherwise
make known, directly or indirectly, the Confidential Information to any person
or entity not expressly authorized by the Company to receive such Confidential
Information.
10.1 Consultant shall exercise the highest degree of care and
discretion in accordance with the duty of Consultant hereunder to prevent
improper use or disclosure of the Confidential Information and will retain all
such Confidential Information in trust in a fiduciary capacity unless: (i) such
use or disclosure has been authorized in writing by the Company through an
officer or director, or (ii) is required to be disclosed by law, a court of
competent jurisdiction or a governmental or regulatory agency. Further,
Consultant shall return and deliver all such materials, including all copies,
remnants, or derivatives thereof to the Company upon the termination of
consultant with the Company or at any other time upon request by the Company.
11. Patents and Inventions. Any interest in patents, patent
applications, inventions, technological innovations, copyrights, copyrightable
works, developments, discoveries, designs, and processes ("Inventions") which
Consultant may develop under the scope of the Consulting agreement and without
the use or involvement of any University of California resources, including
facilities, funds, employees and students, or University proprietary information
that has not been published and is not available to the public, shall belong to
the Company. As soon as Consultant owns, conceives of, or develops any such
6
Invention, Consultant agrees immediately to communicate such fact in writing to
the Secretary of the Company, and without further compensation, but at the
Company's expense, immediately upon request of the Company, Consultant shall
execute all such assignments and other documents (including applications for
patents, copyrights, trademarks, and assignments thereof) and perform any and
all acts as the Company may reasonably request in order (a) to vest in the
Company all Consultant's right, title, and interest in and to such Inventions,
free and clear of liens, mortgages, security interests, pledges, charges, and
encumbrances arising from the acts of Consultant and (b), if patentable or
copyrightable, to obtain patents or copyrights (including extensions and
renewals) therefore in any and all countries in such name as the Company shall
determine. Upon 30 days prior notice to the Company such Inventions must be
disclosed to the University of California. The University requirement to
disclose all inventions does not imply that the University will claim title to
all inventions. Notwithstanding the foregoing, pursuant to Section 2872 of the
California Labor Code, this Agreement shall not apply to any Invention which
qualifies fully under the provisions of Section 2870 of the California Labor
Code. Consultant acknowledges receipt of a copy of 2870 of the California Labor
Code.
12. Assignment. The obligations of Consultant under this Agreement
are unique and may not be assigned.
13. Securities Compliance. No Offer or Sale. This Agreement is not
intended to be an offer for the sale or issuance of securities, whether
pertaining to stock, options, or otherwise, unless the same is exempt from
registration and qualification pursuant to an applicable exemption. The issuance
of stock and warrants is expressly subject to compliance with all state and
federal securities laws, rules and regulations by the parties. While the Company
does not consider this Agreement itself to be a securities or offer of any
securities, whether pertaining to stock, warrants, or otherwise, in the event
that this letter is construed to be an offer, the parties acknowledge the
following disclosure in accordance with Section 25102(a) of the California
Corporations Code:
The sale of the securities which are the subject of this
agreement has not been qualified with the Commissioner of
Corporation of the State of California and the issuance of
such securities or the payment or receipt of any part of the
consideration therefore prior to such qualification is
unlawful, unless the sale of securities is exempt from the
qualification by Section 25100, 25102, or 25105 of the
California Corporations Code. The rights of all parties to
this agreement are expressly conditions upon such
qualification being obtained unless the sale is so exempt.
13.1 General Securities Compliance. Notwithstanding anything contained
in this Agreement to the contrary, this Agreement, and the stock warrants
discussed herein, shall be, and are, expressly subject to all SEC and
securities, laws, rules, regulations and reporting and disclosure requirements,
to the extent applicable to the Company as a reporting company, the shares,
and\or any party hereto, including, but not limited to, shareholder voting and
7
proxy solicitation rules. All issuances, sales, transfers, or other dispositions
of shares of the Company shall be made in compliance with all applicable
securities laws, rules and regulations, and pursuant to registration of
securities under the Securities Act of 1933 ("Act") (and qualification under
General Corporation Law of California) or pursuant to an exemption from
registration under the Act (and qualification under General Corporation Law of
California). Notwithstanding the foregoing, nothing in this Agreement shall
obligate the Company to seek registration or qualification of any of its shares,
and, to the extent that any obligation hereunder cannot be performed without
registration or qualification of any of its shares, such obligation shall be
excused on the part of the Company to the extent that the Company provides other
adequate consideration therefore.
14. Rule 144. Consultant acknowledges that the shares of the Company
may be subject to the restrictions on transfer set forth in Rule 144 of the
Rules promulgated under the Act. Any and all offers, sales, transfer or other
dispositions of shares of the Company shall be made only in compliance with Rule
144. Consultant agrees to comply with all policies and procedures established by
the Company with regard to Rule 144 matters. Consultant acknowledges that the
Company or its attorneys or transfer agent may require a restrictive legend on
the certificate or certificates representing the shares pursuant to the
restrictions on transfer of the shares imposed by Rule 144.
15. Amendments. This Agreement may be amended only in writing executed by
Consultant and Company and approved in writing by the majority vote of the Board
of Directors of the Company.
16. Effect of Headings. The subject headings of the paragraphs and
subparagraphs of this Agreement are included for purposes of convenience only,
and shall not affect the construction or interpretation of any of its
provisions.
17. Parties in Interest. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Contract, nor shall any provision give any third person any right of subrogation
or action over against any party to this Agreement.
18. Recovery of Litigation Costs. If any legal action or any
arbitration or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party or parties shall be entitled to recover as an
element of their damages, reasonable attorneys' fees and other costs incurred in
that action or proceeding, in addition to any other relief to which they may be
entitled.
19. Gender; Number. Whenever the context of this Contract requires, the
masculine gender includes the feminine or neuter gender, and the singular number
includes the plural.
8
20. Time of Essence. Time shall be of the essence in all things pertaining
to the performance of this Agreement unless waived in writing by the undersigned
parties.
21. Authority. The parties to this Agreement warrant and represent that
they have the power and authority to enter into this Agreement in the names,
titles and capacitates herein stated and on behalf of any entities, persons or
firms represented or purported to be represented by each respective party.
22. Waiver. A Waiver by either party of any of the terms and conditions
of this Agreement in any instance shall not be deemed or construed to a waiver
of such terms of condition for the future, or of any subsequent breach thereof,
or of any other term and condition of this Agreement. All waivers must be made
in writing executed by the waiving party.
23. Entire Agreement. This Agreement constitutes the entire agreement
between the parties respecting the subject matter hereof, and there are no
representations, warranties, agreements or commitments between the parties
hereto except as set forth herein; provided that the terms of any Option or
Award may be set forth in a Grant Instrument, which shall be read in conjunction
with this Agreement. This Agreement shall control over any and all provisions or
guidelines contained in any Consultant Manual, Consultant Handbook, Company
Policy Manual or other similar document. Consultant expressly acknowledges that
no Consultant Manual, Consultant Handbook, Company Policy Manual or other
similar document is or shall become a contract between the Company and
Consultant.
24. Notices. Any notice, request, demand or other communication
permitted to be given hereunder shall be in writing and shall be deemed to be
duly given when personally delivered to an Consultant officer of the Company or
to Consultant, as the case may be, or when deposited in the United States mail,
by certified or registered mail, return receipt requested, postage prepaid, at
the respective addresses of the Company and Consultant as shown on the signature
page hereto. Either party may change by notice the address to which notices are
to be sent.
25. Severability. If any provision of this Agreement shall, for any reason,
be held unenforceable, such provision shall be severed from the contract. The
invalidity of such specific provision, however, shall not affect the
enforceability of any other provision herein, and the remaining provision shall
remain in full force and effect.
26. Choice of Law and Venue. This Agreement shall, to the fullest
extent allowed by law, be construed, interpreted and enforced in accordance with
the laws of the State of Colorado, without regard to or application of conflict
of law rules, and the venue in regard to any disputes arising hereunder shall,
to the fullest extent allowed by law, be in Orange County, California.
27. Press Releases. Any press release, company disclosures and
advertisement made by the Company relating to Consultant shall be subject to the
approval of Consultant prior to public release. Consultant will not unreasonably
9
withhold such approval and agrees to respond to such requests for approval
within two (2) business days.
IN WITNESS WHEREOF, this Agreement is made effective by Consultant and the
Company on the date set first forth above.
COMPANY: CONSULTANT:
Xsunx, Inc., Dr. Xxxxxx Xx
a Colorado corporation
By:_________________________ By: ____________________________
Xxx X. Xxxxxxxxx, as CEO Dr. Xxxxxx Xx, as Consultant
10
