EXHIBIT 10.20
CONSULTING AGREEMENT
CONSULTING AGREEMENT (the "Agreement") dated as of the 1st day of February,
2002, between FLEMINGTON PHARMACEUTICAL CORPORATION, a Delaware corporation
(together with its successors and assigns referred to herein as the
"Corporation"), with principal offices located at 00 Xxxxx Xxxxx 00 Xxxx,
Xxxxxxxxxx, Xxx Xxxxxx 00000 and XXXX X. XXXXX, residing at 000 Xxxxxxx Xxxx
Xxxx, Xxxxxx, Xxx Xxxxxx 00000 (the "Consultant").
W I T N E S S E T H
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WHEREAS, the Corporation desires to retain Consultant to engage in such
activities and to render such services under the terms and conditions hereof and
has authorized and approved the execution of this Agreement; and
WHEREAS, Consultant desires to be retained by the Corporation under the
terms and conditions hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
herein contained, the parties agree as follows:
1. CONSULTING DUTIES AND ACCEPTANCE.
1.1 SERVICES. During service hereunder, Consultant shall perform
such services as requested by the Board of Directors of the Corporation (the
"Board") and shall report directly to the Board, of which Consultant shall be a
member and Chairman. Consultant shall devote appropriate business time,
attention, knowledge and skills faithfully, diligently and to the best of
Consultant's ability in furtherance of the business and activities of the
Corporation (the "Services"). The principal place of performance by Consultant
of services hereunder shall be at the principal offices of the Corporation,
Consultant's offices in New York City, or other appropriate places.
1.2 ACCEPTANCE. Consultant hereby accepts such retention and
agrees to render the Services.
2. TERM OF RETENTION.
2.1 TERM. The Consultant's retention under this Agreement (the
"Term") shall begin as of the Effective Date (as hereinafter defined) and shall
continue for a term of one (1) year, unless sooner terminated pursuant to
Sections 5 or 9 of this Agreement. Notwithstanding anything to the contrary
contained herein, the provisions of this Agreement governing Protection of
Confidential Information shall continue in effect as specified in Section 10
hereof and survive the expiration or termination hereof.
2.2 EFFECTIVE DATE. The effective date of this Agreement is the
date set forth above.
2.3 RENEWAL. This Agreement shall automatically renew itself for
additional one (1) year terms unless one party shall give the other a Notice of
non-renewal on or before the first of January preceding the date of termination
of the term then in effect.
3. COMPENSATION AND EXPENSE REIMBURSEMENT.
3.1 COMPENSATION. The Corporation shall pay Consultant a
consulting fee at the annual rate of $300,0000 per year. Payment shall be made
monthly, on the first day of each calendar month. For any subsequent renewal
year of retention, the annual fee shall be renegotiated by the parties as part
of the renewal process. Consultant shall be responsible for the payment of all
taxes and similar charges levied in connection with the payment to him of the
fee and any other payments due hereunder, and shall hold the Corporation, its
officers and directors harmless in that regard.
3.2 EXPENSE REIMBURSEMENT. All travel and other expenses
reasonably incurred by Consultant incidental to the rendering of Services to the
Corporation hereunder shall be paid by the Corporation or reimbursed to
Consultant upon receipt and approval of expense reports on Corporation forms
supported by appropriate documentation. From time to time, Consultant shall
submit, and obtain approval for, proposed expense budgets. All unbudgeted
expenses in excess of $1,000.00 (individually, or collectively if in connection
with a single, related subject or project within a given month) shall require
advance approval. In addition, the Corporation shall provide Consultant with the
cost of a car and driver for Consultant in lieu of and associated with the
travel required of Consultant due to his not relocating his residence to closer
proximity to the Corporation's principal offices. Payment therefor shall be made
on the first of each month. Consultant acknowledges and agrees that, to the
extent deemed appropriate by the Corporation's accountants, the cost of the car
and driver shall be deemed to be additional imputed income to Consultant in the
amount of $6,000 per month.
3.3 SUCCESS FEES. In addition, Consultant shall be entitled to (a)
such other bonuses and other compensation in the form of stock, stock options or
other property or rights as may from time to time be awarded by the Board in
connection with Consultant's rendition of services and (b) receive a Success Fee
upon the completion of each Corporate Deal introduced to the Corporation by him,
according to the following schedule:
A. Ten percent (10%) of the net revenue received by the Corporation in any
Corporate Deal where the Corporation's share of the profits is at least
fifty percent (50%);
B. Eight percent (8%) of the net revenue received by the Corporation in any
Corporate Deal where the Corporation's share of the profits is at least
forty percent (40%);
C. Six percent (6%) of the net revenue received by the Corporation in any
Corporate Deal where the Corporation's share of the profits is at least
thirty percent (30%);
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D. Four percent (4%) of the net revenue received by the Corporation in any
Corporate Deal where the Corporation's share of the profits is at least
twenty percent (20%);
E. Two percent (2%) of the net revenue received by the Corporation in any
Corporate Deal where the Corporation's share of the profits is at least ten
percent (10%);
A "Corporate Deal" is defined for the purpose of this Agreement as being any
strategic partnership, licensing arrangement or similar venture, between the
Corporation and one or more unrelated parties introduced to the Corporation by
Consultant, and relating to the development and sale of the Corporation's
products. Where the Corporation is to receive a continuing stream of revenue
over a period of time, the Success Fee shall be paid to Consultant as the
revenue is received by the Corporation. "Net revenue" for the purpose of this
Agreement means the gross revenue received by the Corporation from the
transaction less all direct costs incurred by the Corporation in performing its
obligations in the transaction. Payments shall be made to Consultant as payments
are received by the Corporation. Initial up-front payments received by the
Corporation shall trigger the beginning of payments to Consultant.
4. OPTIONS. Upon execution of this Agreement, Corporation shall issue
to Consultant Non-Plan Options to purchase One Million (1,000,000) shares of the
Corporation's Common Stock at an exercise price of $2.40 per share of stock
underlying the Options. The Options shall vest and become exercisable in three
equal annual installments, on February 1, 2003, 2004 and 2005 respectively. The
Options shall permit cashless exercise. Notwithstanding the foregoing vesting
schedule, the sale by the Corporation of more than fifty percent (50%) ownership
of the Corporation in a single transaction, whether by sale, merger or
otherwise, shall result in the total and immediate vesting of all Options.
5. SEVERANCE.
5.1 TERMINATION FOR GOOD REASON. If Consultant's retention
hereunder shall be terminated for Good Reason (as defined in Section 9.4 hereof)
at any time prior to the end of the Term, Consultant shall be entitled to
receive from the Corporation, in addition to any fees earned to the date of
termination, a severance payment in an amount equal to Consultant's fee for the
remainder of the entire Term, payable to the Consultant in monthly increments
until the date on which the Term would have otherwise expired, had the
termination not occurred. In the event of such termination, the amounts due
hereunder shall be payable without offset or defense or any obligation of the
Consultant to mitigate damages.
5.2 CONSULTANT'S TERMINATION WITHOUT GOOD REASON. If the
Consultant terminates without Good Reason (as defined in Section 9.4 hereof) at
any time prior to the end of the Term, Consultant shall be entitled to receive
from the Corporation payment of any unpaid fees earned through the date of
termination. In the event of such termination, all obligations of the
Corporation hereunder shall terminate on the date of termination and the
Consultant's termination without Good Reason shall act as a waiver of all claims
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to compensation which would have otherwise accrued after the date of
termination, except as to future Success Fees for transactions closed before
termination where revenue will continue to be received by the Corporation
following termination.
6. [INTENTIONALLY OMITTED]
7. [INTENTIONALLY OMITTED]
8. INDEMNIFICATION.
The Corporation shall indemnify Consultant and hold Consultant harmless
against any and all expenses reasonably incurred by him in connection with or
arising out of (a) the defense of any action, suit or proceeding to which
Consultant is a named party, or (b) any claim asserted or threatened against
Consultant, provided, in either case, the matter has arisen because of or in
connection with Consultant's being or having been an consultant to or director
of the Corporation, whether or not he continues to be such at the time the
expenses indemnified against are incurred, except insofar as (a) such
indemnification may be prohibited by law, (b) the expenses were incurred in
connection with a matter where the Corporation is or was in an adversarial
position to Consultant and the Corporation prevailed against Consultant in such
matter, or (c) the expenses were incurred in connection with a matter arising
out a material breach by Consultant of this Agreement or of Consultant's
obligations to the Corporation. Expenses indemnified against include, without
limitation, reasonable attorneys fees, money judgments and money settlements,
provided the Corporation's advance approval has been sought and obtained. This
Section 8 is independent of any similar indemnification obligation which may be
contained in the Corporation's Certificate of Incorporation or By-laws.
9. TERMINATION.
9.1 DEATH. If Consultant dies during the Term of this Agreement,
Consultant's retention hereunder shall terminate upon his death and all
obligations of the Corporation hereunder shall terminate on such date, except
that Consultant's estate or his designated beneficiary shall be entitled to
payment of any unpaid accrued fees through the date of his death, and any vested
portion of Success Fees payable thereafter, to be paid as received by the
Corporation.
9.2 DISABILITY. If Consultant shall be unable to perform a
significant part of his duties and responsibilities in connection with the
conduct of the business and affairs of the Corporation and such inability lasts
for a period of at least 90 consecutive days by reason of Consultant's physical
or mental disability, whether by reason of injury, illness or similar cause,
Consultant shall be deemed disabled, and the Corporation any time thereafter may
terminate Consultant's retention hereunder by reason of the disability. During
such 90 day period, the fees payable to Consultant hereunder shall not be
suspended or diminished. Upon delivery to Consultant of notice to terminate,
all obligations of the Corporation hereunder shall terminate, except that
Consultant shall be entitled to payment of any unpaid accrued fees through the
date of termination, and any vested portion of Success Fees payable thereafter,
to be paid as received by the Corporation. The obligations of Consultant under
Section 10 hereof shall continue notwithstanding termination of Consultant's
retention pursuant to this Section 9.2.
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9.3 TERMINATION FOR CAUSE. The Corporation may at any time during
the Term, with 30 days prior written notice, terminate this Agreement and
discharge Consultant for Cause, whereupon the Corporation's obligation to pay
compensation or other amounts payable hereunder to or for the benefit of
Consultant shall terminate on the date of such discharge. As used herein the
term "Cause" shall be deemed to mean and include: (i) a material breach by
Consultant of this Agreement including without limitation a breach by Consultant
of the obligations set forth in Section 10 hereof; (ii) excessive absenteeism,
alcoholism or drug abuse; (iii) substantial neglect or inattention by Consultant
of or to his duties hereunder; (iv) willful violation of specific and lawful
written or oral direction from the Board of Directors of the Corporation
provided such direction is not inconsistent with the Consultant's duties and
responsibilities; or (v) fraud, criminal conduct or embezzlement. The following
shall be deemed a material breach for the purposes of Subsection (i) hereof:
(a) the Consultant's conviction for, or a plea of nolo contendere to, a felony
or a crime involving moral turpitude (which, through lapse of time or otherwise,
is not subject to appeal); (b) willful misconduct as a Consultant to or Director
of the Corporation; or (c) willful or reckless disregard of his responsibilities
under this Agreement. The obligations of the Consultant under Section 10 shall
continue notwithstanding termination of the Consultant's retention pursuant to
this Section 9.3.
9.4 TERMINATION BY CONSULTANT. The Consultant shall have the
right to terminate this Agreement for Good Reason, as hereinafter defined. Good
Reason shall mean any of the following: (i) the assignment to the Consultant of
duties inconsistent with the Consultant's position, duties or responsibilities,
as described herein; (ii) any material reduction by the Corporation of the
Consultant's duties and responsibilities; (iii) any reduction by the Corporation
of the Consultant's compensation or benefits payable hereunder (it being
understood that a reduction of benefits applicable to all employees of the
Corporation, including the Consultant, shall not be deemed a reduction of the
Consultant's compensation package for purposes of this definition); or (iv)
requiring the Consultant to be based without his consent at a location not
within reasonable commuting distance of Flemington, New Jersey.
10. CONFIDENTIALITY; NON-COMPETITION.
10.1 CONFIDENTIALITY. The Corporation and Consultant acknowledge
that the services to be performed by Consultant under this Agreement are unique
and extraordinary, and, as a result of Consultant's retention hereunder,
Consultant will be in possession of confidential information and trade secrets
relating to the business and affairs of both the Corporation and its clients.
Consultant agrees that Consultant will not, other than in the ordinary course of
business and subject to receipt of an appropriate Confidentiality Agreement,
during or after any term of retention, directly or indirectly use or disclose to
any person, firm or corporation any confidential information regarding the
clients, customers, business practices, products, research programs of the
Corporation or its clients acquired by Consultant during Consultant's retention,
unless Consultant has obtained the Corporation's advance written consent
specifically authorizing Consultant's disclosure or use thereof.
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10.2 NON-COMPETITION. Consultant agrees that, for a period
beginning with the Effective Date of this Agreement and ending twelve months
after the date of termination of his retention by the Company, Consultant will
not, either individually or in conjunction with any person, firm, association,
syndicate, company or corporation, directly or indirectly (as principal, agent,
employee, director, officer, shareholder, partner, independent contractor,
individual proprietor, or as an investor who has made advances, loans or
contributions to capital, or in any other manner whatsoever) compete with
company in the business then conducted by Company. Consultant also agrees that,
during such period, Consultant will not solicit or encourage any persons who,
during such period, were employees of Company to (i) terminate such persons'
retention with Company; or (ii) become affiliated with any person, firm,
association, syndicate, company or corporation which is in a business similar to
that of the Company and in which Consultant, either directly or indirectly, has
an interest. If Company directs Consultant to cease and desist a proposed
post-termination course of conduct, on the grounds that he is proposing to
compete with the Company's business, during this one-year post-termination
period, Company shall compensate Consultant by paying him his base fee during
the period he is prevented from pursuing such activity.
10.3 ANTI-RAIDING. Consultant agrees that during the term of his
retention hereunder, and, thereafter for a period of one (1) year, Consultant
will not, as principal, agent, employee, employer, consultant, director or
partner of any person, firm, corporation or business entity other that the
Corporation, or in any individual or representative capacity whatsoever,
directly or indirectly, without the prior express written consent of the
Corporation approach, counsel or attempt to induce any person who is then in the
employ of the Corporation to leave the employ of the Corporation or employ or
attempt to employ any such person or persons who at any time during the
preceding six months was in the employ of the Corporation.
10.4 INJUNCTION. Consultant acknowledges and agrees that, because
of the unique and extraordinary nature of his services, any breach or threatened
breach of any of the above provisions of this Section 10 hereof will cause the
Corporation irreparable injury and incalculable harm and, therefore, the
Corporation will have "no adequate remedies at law". Consultant, therefore,
agrees in advance that Corporation shall be entitled to injunctive and other
equitable relief for such breach or threatened breach and that resort by the
Corporation to such injunctive or other equitable relief shall not be deemed to
waive or to limit in any respect any right or remedy which the Corporation may
have with respect to such breach or threatened breach. The Consultant agrees
that in such action, if the Corporation makes a prima facie showing that
Consultant has violated or apparently intends to violate any of the provisions
of this Section 10, the Corporation need not prove either damage or irreparable
injury in order to obtain injunctive relief. The Corporation and Consultant
agree that any such action for injunctive or equitable relief shall be heard in
a state or federal court situated in New Jersey and each of the parties hereto
agrees to accept service of process by registered mail and to otherwise consent
to the jurisdiction of such courts.
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10.5 NO INDEMNIFICATION. The provisions of Section 8, above, do
not apply to any expenses incurred by Consultant in defending against any claim
made pursuant to this Section 10.
10.6 SEVERABILITY. If any provision contained within this Section
10 is found to be unenforceable by reason of the extent, duration or scope
thereof, or otherwise, then such restriction shall be enforced to the maximum
extent permitted by law, and Consultant agrees that such extent, duration or
scope may be modified in any proceeding brought to enforce such restriction.
11. ARBITRATION.
Except with respect to any proceeding brought under Section 10 hereof, any
controversy, claim, or dispute between the parties, directly or indirectly,
concerning this Agreement or the breach hereof, or the subject matter hereof,
including questions concerning the scope and applicability of this arbitration
clause, shall be finally settled by arbitration in the State of New Jersey
pursuant to the rules then applying of the American Arbitration Association.
The arbitrators shall consist of one representative selected by the Corporation,
one representative selected by the Consultant and one representative selected by
the first two arbitrators. The parties agree to expedite the arbitration
proceeding in every way, so that the arbitration proceeding shall be begun
within thirty (30) days after request therefor is made, and shall continue
thereafter, without interruption, and that the decision of the arbitrators shall
be handed down within thirty (30) days after the hearings in the arbitration
proceedings are closed. The arbitrators shall have the right and authority to
assess the cost of the arbitration proceedings and to determine how their
decision or determination as to each issue or matter in dispute may be
implemented or enforced. The decision in writing of any two of the arbitrators
shall be binding and conclusive on all of the parties to this Agreement. Should
either the Corporation or the Consultant fail to appoint an arbitrator as
required by this Section 11 within thirty (30) days after receiving written
notice from the other party to do so, the arbitrator appointed by the other
party shall act for all of the parties and his decision in writing shall be
binding and conclusive on all of the parties to this Agreement. Any decision or
award of the arbitrators shall be final and conclusive on the parties to this
Agreement; judgment upon such decision or award may be entered in any competent
Federal or state court located in the United States of America; and the
application may be made to such court for confirmation of such decision or award
for any order of enforcement and for any other legal remedies that may be
necessary to effectuate such decision or award.
12. NOTICES.
All notices, requests, consents and other communications required or
permitted to be given hereunder, shall be in writing and shall be deemed to have
been duly given if delivered personally or sent by facsimile or mailed
first-class, postage prepaid, by registered or certified mail (notices sent by
mail shall be deemed to have been given on the date sent), to the parties at
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their respective addresses hereinabove set forth or to such other address as
either party shall designate by notice in writing to the other in accordance
herewith. Copies of all notices shall be sent to Xxxxxx X. Xxxxxx, Esq. Esq. at
00 Xxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000.
13. GENERAL.
13.1 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the local laws of the State of New
Jersey applicable to agreements made and to be performed entirely in New Jersey.
13.2 CAPTIONS. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
13.3 ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement and understanding of the parties relating to the subject matter
hereof, and supersedes all prior agreements, arrangements and understandings,
written or oral, relating to the subject matter hereof. No representation,
promise or inducement has been made by either party that is not embodied in this
Agreement, and neither party shall be bound by or liable for any alleged
representation, promise or inducement not so set forth.
13.4 SEVERABILITY. If any of the provisions of this Agreement
shall be unlawful, void, or for any reason, unenforceable, such provision shall
be deemed severable from, and shall in no way affect the validity or
enforceability of, the remaining portions of this Agreement.
13.5 WAIVER. The waiver by any party hereto of a breach of any
provision of this Agreement by any other party shall not operate or be construed
as a waiver of any subsequent breach of the same provision or any other
provision hereof.
13.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same Agreement.
13.7 ASSIGNABILITY. This Agreement, and Consultant's rights and
obligations hereunder, may not be assigned by Consultant. The Corporation may
assign its rights, together with its obligations, hereunder in connection with
any sale, transfer or other disposition of all or substantially all of its
business or assets; in any event the rights and obligations of the Corporation
hereunder shall be binding on its successors or assigns, whether by merger,
consolidation or acquisition of all or substantially all of its business or
assets.
13.8 AMENDMENT. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived, only by a written instrument executed by both of the parties hereto,
or in the case of a waiver, by the party waiving compliance. No superseding
instrument, amendment, modification, cancellation, renewal or extension hereof
shall require the consent or approval of any person other than the parties
hereto. The failure of either party at any time or times to require performance
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of any provision hereof shall in no matter affect the right at a later time to
enforce the same. No waiver by either party of the breach of any term or
covenant contained in 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 breach, or a waiver of the breach of any other
term or covenant contained in this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ATTEST: FLEMINGTON PHARMACEUTICAL
CORPORATION.
By:/s/ Xxxxxx X. Xxxxxx By:/s/ Xxxxx X. Xxxxxx III
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Xxxxxx X. Xxxxxx, Secretary
WITNESS:
/s/ Xxxxxx X. Xxxxxx /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
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