EXHIBIT 10.4
CONSULTING AGREEMENT
CONSULTING AGREEMENT (the "AGREEMENT"), entered into as of
the ____ day of July, 2002 (the "EFFECTIVE DATE"), between Cyberkinetics, Inc.,
a Delaware corporation having offices at 000 Xxxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxx Xxxxxx (the "COMPANY"), and Xxxx X. Xxxxxxxx, Ph.D.
("CONSULTANT"), residing at 109 Hazard Avenue, Providence, Rhode Island,
The parties agree as follows:
1. Consulting Services. Consultant shall perform consulting services for
the Company in the field of the development and commercialization of biomedical
products and systems for the detection, recording, transmission, generation,
coding, decoding and/or stimulation of neuronal or other biochemical signals,
including, without limitation, any product, device or surgical or other method
or technique for inserting or mounting any such product or system or any
component thereof, or the use of any such product or system to control one or
more systems or devices (the "FIELD"). Consultant shall perform such additional
consulting services as may be reasonably requested by the Company, including,
but not limited to, the following:
(a) providing scientific scrutiny of programs engaged in and/or
funded by the Company and any companies in which it invests with respect to
suitability and potential impact of alternative technologies;
(b) advising the Company concerning developments within the Field in
which the Company is engaged or fields in which it proposes to engage; and
(c) identifying individuals who might be suitable to provide
services for the Company as an employee or consultant or collaborator.
All such consulting services are collectively referred to in this
Agreement as the "SERVICES." Consultant will be available for consultation with
the Company by correspondence or telephone, and, when necessary, by meetings at
such times and locations as may be reasonably requested by the Company. The
amount of time to be devoted to the Services to be provided hereunder shall not
exceed 50% of Consultant's working time until September 1, 2003 and 20% of
Consultant's working time thereafter,
2. Compensation. In consideration of the Services performed by Consultant
under this Agreement, and in addition to the founders shares issued to
Consultant, the Company shall provide Consultant the consideration described in
Schedule 2 attached hereto.
3. Expenses. The Company will reimburse Consultant for reasonable
out-of-pocket travel, hotel and other business expenses incurred at the request
of the Company as soon as practicable following submission of statements of
expenses incurred, accompanied by appropriate supporting documentation.
4. Duration. Subject to the provisions of Section 8, the period of this
Agreement shall be for four (4) years from the Effective Date or, if renewed as
set forth below, for such additional period (the "CONSULTING PERIOD"). The
Company has the right to renew this Agreement after the
termination of the original four year period for additional one year periods
annually. This right shall be deemed to be exercised unless the Company gives
Consultant notice to discontinue the Agreement not less than ninety (90) days
prior to an anniversary date of this Agreement.
5. Confidential Information. In connection with Consultant's prior
involvement with the Company from the date of formation to the date hereof, and
in connection with the Services under this Agreement, Consultant has acquired or
may acquire information with respect to business plans, strategies, finances,
materials, compounds, formulations, drug design, patterns, processes, methods,
devices, apparatuses, preparations, technologies, results from ongoing
investigations by others, compilations of data, patent applications, or present
and future plans which is private or confidential in that it is not generally
known or available to the public or is marked "confidential," and is, or is
designed to be, used in the business of the Company, or results from its
research and development activities, or that gives the Company an opportunity to
obtain an advantage over competitors who do not know or use it. Consultant shall
not, without the Company's prior written consent, either during the term of this
Agreement or thereafter, (i) use or disclose such information for any purpose,
(ii) publish any article with respect thereto, or (iii) except in the
performance of the Services, remove any of such information from the premises of
the Company, except as to information that:
(a) was known to the receiving party or generally known to the
public prior to its disclosure under this Agreement; or
(b) subsequently becomes known to the public by some means other
than a breach of a confidentiality obligation including, without limitation,
Section 5 of this Agreement; or
(c) is subsequently disclosed to the receiving party by a third
party having a lawful right to make such disclosure.
Consultant hereby acknowledges that the Company would be irreparably
damaged if such information was disclosed to, or utilized on behalf of, others
in competition in any respect with the Company or companies in which it invests,
which damage cannot be adequately compensated for by an action at law. In the
event of a breach or threatened breach by Consultant of the provisions of this
Agreement, Consultant agrees that the Company shall be entitled to an injunction
restraining him from such breach. Consultant hereby waives any right to object
to the Company's efforts to obtain such an injunction. Nothing in this Agreement
contained shall be construed as prohibiting the Company from pursuing any other
remedies "available at law or in equity for any breach or threatened breach of
this Agreement, provided that Consultant shall not be liable to the Company for
monetary damages for breach of this provision in circumstances in which
Consultant's breach is inadvertent.
6. Inventions.
(a) Subject to the provisions of Section 6(b):
(i) Consultant has disclosed and shall promptly disclose to
the Company any and all inventions, discoveries, compositions, original works of
authorship, concepts, ideas and the like (whether or not patentable or
copyrightable or constituting trade secrets) conceived, made,
-2-
created, developed or reduced to practice by Consultant, alone or jointly with
others, in the course of Consultant's prior involvement with the Company from
the date of formation to the date hereof and in the course of performing
Services under this Agreement ("CONSULTANT INVENTIONS");
(ii) all Consultant Inventions shall be the sole and exclusive
property of the Company, and all original works of authorship that are made by
Consultant (solely or jointly with others) within the scope of his Services
under this Agreement and that are protectable by copyright are "works made for
hire," as that term is defined in the United States Copyright Act;
(iii) Consultant hereby assigns and agrees to assign to
Company Consultant's full right, title and interest, if any, to any and all
Consultant Inventions and agrees to execute, without additional compensation,
any further documentation that Company may request in order to make this
assignment fully effective; and
(iv) Consultant shall render to the Company (and its
designees) other assistance as it may require in the prosecution of rights to
such Consultant Inventions, in the prosecution or defense of interferences which
may be declared involving any of such rights, and in any litigation in which the
Company may be involved relating to such rights.
(b) Notwithstanding Section 4.1 above, the Company acknowledges that
Consultant, as a member of the faculty of Xxxxx University ("Institution"), is
required to comply with the Xxxxx University Patent and Invention Policy (the
"Institution Inventions Policy") and that, under the Institution Inventions
Policy, Institution owns all inventions, and patents claiming them, that: (i)
received direct or indirect financial support from Institution, including
funding from any outside source awarded to or administered by Institution, or
(ii) made substantial use of any space, facilities, materials or other resources
of Institution including resources provided in-kind by outside sources. The
Company and Consultant acknowledge and agree that the Services to be performed
under this Agreement will not be directly or indirectly supported financially by
Institution and will not involve the use of Institution space, facilities,
materials or other resources. If the Company desires to conduct any animal lab
or other research or clinical activities at Institution, it will directly
contract with Institution for such activities.
(c) The parties acknowledge that Consultant is required to disclose
to Institution's Office of Research Administration all inventions that are
related to Consultant's research, clinical, or educational activities at
Institution in order to provide Institution an opportunity to assess, together
with the Company, whether the invention is subject to the provisions of this
Section 6(b). Consultant hereby represents and warrants to the Company that he
has disclosed to the Company any and all inventions, discoveries, compositions,
original works of authorship, concepts, ideas and the like (whether or not
patentable or copyrightable or constituting trade secrets) conceived, made,
created, developed or reduced to practice by Consultant, alone or jointly with
others, which might reasonably be of commercial value to the Company in the
Field. Consultant agrees to notify the Company in writing forty-five (45) days
in advance before engaging in any new research, clinical, or educational
activities at Institution that Consultant believes would be related to the
Services performed for the Company under this Agreement.
(d) Consultant hereby represents and warrants to the Company that he
is not, as of the Effective Date, engaged in any research or clinical activities
related to the Field other than
-3-
research or clinical activities conducted at Institution. Consultant agrees to
notify the Company in writing forty-five (45) days in advance before engaging in
any new research or clinical activities related to the Field at or on behalf of
any institution or entity other than Institution.
7. Restricted Activities. Consultant agrees that some restrictions on his
activities during and after his engagement to provide Services under this
Agreement are necessary to protect the goodwill, confidential information and
other legitimate interests of the Company and its affiliates:
(a) During the term of this Agreement and for twelve (12) months
after this Agreement terminates (the "Non-Competition Period"), Consultant shall
not, directly or indirectly, whether as owner, partner, investor, consultant,
agent, employee, co-venturer or otherwise, compete with the Business of the
Company and its affiliates anywhere in the world or undertake any planning for
any business competitive with the business of the Company and its affiliates.
For the purposes of this Section 7, the "business of the Company and its
affiliates" shall include the development or commercialization of products in
the Field.
(b) Consultant further agrees that during the term of this Agreement
and during the Non-Competition Period, Consultant will not hire or attempt to
hire any employee of the Company or any of its affiliates, assist in such hiring
by any person, encourage any such employee to terminate his or her relationship
with the Company or any of its affiliates, or solicit or encourage any
independent contractor doing business with the Company or any of its affiliates
to terminate or diminish its relationship with them.
(c) Nothing in this Section 7 shall be construed to restrict or
limit the activities Consultant is performing or may perform in the course of,
or incidental to, Consultant's appointment at Institution, including but not
limited to research sponsored by a third party commercial entity, nor shall
anything in this Section 7 be construed to restrict or limit Consultant's right
to serve as an advisor to any hospital, governmental or not-for-profit
organization.
8. Termination. This Agreement may be terminated by the Company or
Consultant with or without cause at any time upon thirty (30) days prior notice
to the other party, provided, however, that such notice shall not be required in
the case of a termination by the Company by reason of a breach by Consultant of
the provisions of Sections 5, 6 or 7 of this Agreement. The obligations of
Sections 5, 6 and 7 of this Agreement shall survive any termination of this
Agreement and the Consulting Period. The effect (if any) of a termination
pursuant to this Section 8 on the options granted pursuant to Section 2 shall be
as set forth in the Option Agreement.
9. No Conflicts. Consultant represents and warrants to the Company that
the execution of this Agreement and the performance of his obligations under
this Agreement will not breach or be in conflict with any other agreement to
which Consultant is a party or is bound (including without limitation the
Institution Inventions Policy and that Consultant is not now subject to any
covenants against competition or similar covenants or any court order or other
legal obligation that would affect the performance of his obligations under this
Agreement.
-4-
10. Independent Contractor. Consultant's relationship with the Company
shall be that of an independent contractor, and he will not be an employee of
the Company for any purpose whatsoever.
11. Indemnification. The Company shall hold harmless, indemnify and defend
Consultant against any and all claims, liabilities, losses, costs or expenses
(including reasonable attorney's fees) arising out of or in connection with his
Services under this Agreement, unless such claims, liabilities, losses, costs or
expenses arise from an act or omission by Consultant constituting willful
misconduct, gross negligence, self dealing or fraud, or an act or omission the
payment of indemnification for which is prohibited by law.
12. Notices. Any notice or other communication under this Agreement shall
be in writing, shall be given either manually or by mail or fax, addressed to
the party to be notified at its address first set forth above, and shall be
deemed sufficiently given as of the third day thereafter. Either party may, by
notice to the other, change its address for receiving such notices and
communications.
13. Assignability. This Agreement shall inure to the benefit of any
assignee of or successor to the Company, and Consultant specifically agrees on
demand to execute any and all necessary documents in connection therewith.
14. Entire Agreement. This Agreement constitutes the entire understanding
between the parties hereto with reference to the subject matter of this
Agreement and shall not be changed or modified except by a written instrument
signed by both parties.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Rhode Island, without regard to its
conflicts of laws principles.
16. Severability. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
17. Counterparts. This Agreement may be executed in any number of
counterparts, and each counterpart of this Agreement shall be deemed an original
instrument, but all such counterparts together shall constitute but one
agreement.
[Signature page follows]
-5-
IN WITNESS WHEREOF, this agreement has been executed by the parties
hereto, as of the day and year first above written.
CYBERKINETICS, INC.
By: /s/ Xxxx Xxxxxxxx
-------------------------
Name: Xxxx Xxxxxxxx
Title:
CONSULTANT
/s/ Xxxx X. Xxxxxxxx
-----------------------------
Xxxx X. Xxxxxxxx, Ph.D., individually
SCHEDULE 2
COMPENSATION
Consultant shall be a participant in the company's Founders Option Plan
(the"Founders Plan") and shall be granted options thereunder to acquire a
minimum of 100,000 shares of the Company's common stock, subject to the terms
and conditions (including, without limitation, vesting conditions) of such
Founders Plan and as more specifically provided in the option grant to
Consultant.
In addition, during the first year of the Consulting Period, the Company
shall pay Consultant, not less frequently than bi-weekly in arrears, a
consulting fee at the annual rate of One Hundred Fifty Thousand Dollars
($150,000).
