BEI MEDICAL SYSTEMS COMPANY, INC.
CONSULTING AGREEMENT
THIS AGREEMENT is made by BEI MEDICAL SYSTEMS, INC., ("BEI") and XXXXX
XXXXXXX, M.D., an individual residing at 000 Xxxxx Xxxxx, Xxxxxxx, Xxx Xxxx
00000 ("Contractor"), effective March 1, 1998, for the purpose of setting forth
the exclusive terms and conditions by which BEI will acquire Contractor's
services on a temporary basis.
In consideration of the mutual obligations specified in this Agreement and
any compensation paid to Contractor for her or his services, the parties agree
to the following:
1. Work To Be Performed.
(a) Contractor will use his "best efforts" to consult with the Company
on matters that may come before the management team in areas of medical
research and clinical information, including but not limited to:
(i) the review of protocol(s) and method(s) for clinical studies
within the Territory defined on Schedule A (the "Territory");
(ii) participation in planning and preparation for and
participation in BEI-sponsored workshops, anticipated to be scheduled
at rate of six per twelve month period and to require up to twelve
man-days of Consultant's time per twelve month period;
(iii) participation in the preparation and submission of
abstracts for presentation at major clinical meetings within the
Territory (AAGL/ACOG type meetings);
(iv) communicating with Federal Drug Administration ("FDA")
officials;
(v) reviewing documents to be submitted to the FDA for accuracy,
completeness and scientific consistency;
(vi) reviewing and interpreting tissue samples in response to FDA
inquiries;
(vii) reviewing clinical and scientific papers and reports
presented to BEI concerning BEI products; and
(viii) representing BEI in communications with FDA investigators
for scientific affairs, clinical affairs and historical procedural
issues in connection with the FDA's Phase 3 investigation of the
HydroThermAblator(R) (the "HTA(R)").
1.
(b) BEI is not obligated to issue any additional orders for work by
Contractor under this Agreement. Contractor should not commence services
under this Agreement until this Agreement is signed and delivered by an
authorized representative of BEI.
(c) It is understood that Contractor is presently affiliated with
Columbia University (the "Institution"). Services performed pursuant to
this Agreement shall be performed during such hours and on such terms as
shall not conflict with Contractor's responsibilities and obligations to
the Institution.
2. Rate and Method of Payment. As full and complete compensation for
Contractor's services and for the discharge of all Contractor's obligations
hereunder, BEI shall:
(a) Subject to approval of the Board of Directors or BEI's
Compensation Committee, as applicable, award Contractor fifty thousand
(50,000) shares of BEI common stock in exchange for services to be rendered
under this Agreement, subject to the following conditions:
(i) ten thousand (10,000) of the shares of BEI common stock shall
be granted outright in consideration of prior service and shall not be
subject to vesting or forfeiture to BEI if this Agreement were
terminated prior to the end of the Initial Term (as hereinafter
defined);
(ii) forty thousand (40,000) of the shares of BEI common stock
shall vest at the rate of 1,666 shares per month for 23 months with
1,682 shares vesting in the 24th month such that all 40,000 shares
shall be fully vested at the end of 24 months;
(iii) the unvested shares of BEI common stock shall revert to BEI
upon any termination of this Agreement prior to the end of the Initial
Term;
(iv) the unvested shares of BEI common stock shall be placed in
escrow with BEI and Contractor shall execute and deliver to BEI two
stock assignments, duly endorsed (with date and number of shares
blank), to facilitate the transfer of unvested shares of BEI upon
termination of this Agreement prior to the end of the Initial Term;
(v) Contractor and BEI shall execute a stock purchase agreement
containing the provisions identified above and any other terms
reasonably necessary in the judgment of BEI within 21 days after the
execution of this Agreement.
(b) In accordance with BEI's travel policy, reimburse Contractor for
travel and other out-of-pocket costs reasonably incurred by him in the
course of performing services under this Agreement; provided however, that
BEI shall not be obligated hereunder unless (i) BEI has agreed in advance
to reimburse such costs and (ii) Contractor provides BEI with appropriate
receipts or other relevant documentation for all such costs as part of any
submission by Contractor for reimbursement.
2.
(c) Pay Contractor a commission of one thousand dollars ($1,000.00) by
the thirtieth day after the end of each calendar quarter for each HTA
Hardware Unit sold and shipped in the Territory by BEI and paid for by the
customer prior to the termination or expiration of this Agreement. This
commission is payable in arrears in U.S. Dollars on cash amounts actually
paid to and received by BEI during the immediately preceding calendar
quarter for orders solicited from parties in the Territory, accepted by BEI
and delivered by BEI within the Territory.
(d) Within 30 days after the end of each calendar quarter, pay
Contractor a commission equal to two percent (2%) of the Net Invoice Price
of HTA Disposables (as hereinafter defined on Schedule B) included in
orders solicited and received by BEI prior to the first anniversary of the
termination or expiration of this Agreement. This commission is payable in
arrears in U.S. Dollars on cash amounts actually paid to and received by
BEI during the immediately preceding calendar quarter for orders solicited
from parties within the Territory, accepted by BEI and delivered by BEI to
users within the Territory. "Net Invoice Price" shall mean BEI's billing
price less refunds, returns, commissions payable to third parties,
packaging, insurance, duty, shipping costs, taxes, and allowances granted.
(e) Make and keep full and accurate books and records in sufficient
detail to enable commissions payable hereunder to be determined. On seven
(7) days prior written notice to BEI, independent certified public
accountants nominated and paid by Contractor shall have full access to the
books and records of BEI pertaining to activities under this Agreement and
shall have the right to make copies therefrom at Contractor's expense. Said
certified public accounts shall have such access at all commercially
reasonable times during normal business hours. Prompt adjustment shall be
made by BEI to compensate for any errors or omissions disclosed by such
audit and agreed to by BEI. Contractor agrees to hold confidential all
information learned in the course of any examination of BEI's books and
records hereunder, except when it is necessary for Contractor to reveal
such information in order to enforce his rights under this Agreement in
court, or similar dispute resolution or enforcement proceeding or action,
or when compelled by law, and shall take all reasonable steps necessary to
prevent the public dissemination of such information given BEI's status as
a publicly-traded company.
Contractor shall not be entitled to a commission on any order solicited by
Contractor which is rejected by BEI, regardless of the reason for BEI's
rejection, and no commission shall be payable on any orders that are canceled or
terminated for any reason. Subject to the provisions of Section 2(d), Contractor
shall not be entitled to a commission on any order solicited by Contractor which
is received by BEI after the termination or expiration of this Agreement. If,
after a commission has been paid to Contractor for a product, BEI refunds any or
all of the purchase price of such product to the customer for any reason, BEI
may deduct from future commissions all or the proper proportionate amount of the
commission previously paid to Contractor for such product or, at BEI's election,
require Contractor to repay BEI such amount within thirty (30) days after
receiving notice of such election.
Notwithstanding anything in this Agreement to the contrary, any part of any
amount payable to Contractor hereunder may be reduced due to any counterclaim,
set-off, adjustment or other right which BEI might have against Contractor.
3.
All payments of commissions not disputed as to correctness by Contractor
within two (2) years after receipt thereof shall thereafter conclusively be
deemed correct for all purposes.
3. Nondisclosure And Trade Secrets.
(a) During the term of this Agreement and in the course of
Contractor's performance hereunder, Contractor may receive and otherwise be
exposed to confidential and proprietary information relating to BEI's
business practices, strategies and technologies. Such confidential and
proprietary information may include but not be limited to confidential and
proprietary information supplied to Contractor with the legend "BEI
Confidential and Proprietary", or equivalent. The confidential and
proprietary information may include, but is not limited to, BEI's marketing
and customer support strategies, BEI's financial information, including
sales, costs, profits and pricing methods, BEI's internal organization,
employee information and customer lists, BEI's technology, including
discoveries, inventions, research, clinical data, test data, and
development efforts, processes, samples, methods, product know-how and
show-how, and all derivatives, improvement and enhancements to any of the
above and information of third parties as to which BEI has an obligation of
confidentiality (collectively referred to as "Information").
(b) Contractor acknowledges the confidential and secret character of
the Information, and agrees that the Information is the sole, exclusive and
extremely valuable property of BEI. Accordingly, Contractor agrees not to
use the Information except in the performance of this Agreement, and not to
disclose all or any part of the Information in any form to any third party,
either during or after the term of this Agreement, unless necessary to
perform the tasks which are the subject of this Agreement. Upon termination
of this Agreement for any reason, including expiration of term, Contractor
agrees to cease usage and to return to BEI all whole and partial copies and
derivatives of the Information, whether in Contractor's possession or under
Contractor's direct or indirect control.
(c) Contractor shall not disclose or otherwise make available to BEI
in any manner any confidential information of Contractor or confidential
information received by Contractor from third parties that Contractor is
not entitled to disclose.
(d) Contractor agrees not to export, directly or indirectly, any U.S.
source technical data acquired from BEI or any products utilizing such data
to any counties outside the United States which export may be in violation
of the United States Export Laws or Regulations. Nothing in this section
releases Contractor from any obligation stated elsewhere in this Agreement
not to disclose such data.
(e) At all times, both during the term of this Agreement and after its
termination, Contractor will keep in confidence and trust all Information
and shall not use or disclose and Information or anything related to such
information without the written consent of the Company, except as may be
required in the ordinary course of performing services as a Contractor to
the Company.
4.
(f) Notwithstanding subsection (e) above, Contractor shall not be
obliged to keep in Confidential Information which:
(i) prior or after the time of disclosure becomes part of the
public knowledge or literature, not as a result of any inaction or
action of Contractor, or
(ii) is approved in writing for release by the Company.
(g) This Section 3 shall survive the termination of this Agreement for
any reason, including expiration of term.
4. Additional Activities.
(a) During the period in which Contractor provides advisory,
consulting and related services to and for the Company (the "Consulting
Period"), Contractor will not directly or indirectly (whether for
compensation or without compensation):
(i) as an individual, proprietor, partner, stockholder, officer,
employee, consultant, director, joint venture, investor, lender, or in
any other capacity whatsoever (other than as the holder of not more
than one percent (1%) of the total outstanding stock of a publicly
held company), engage in any business activity that involves the
development, production, marketing or selling of products, processes
or techniques which are, directly or indirectly, identical to,
substantially similar to, or competitive with products and processes
or techniques of the Company or other businesses involved in the
design or production of medical devices utilized in gynecology,
obstetrics or reproductive medicine (the "Field");
(ii) recruit, solicit or induce, or attempt to induce, any
employee of or consultant to the Company to terminate their employment
or consultancy or otherwise cease their relationship with the Company;
or
(iii) solicit, divert or take away, or attempt to divert or to
take away, the business or patronage of any of the clients, customers
or accounts of the Company, or prospective clients, customer or
accounts, if any, of the Company that were contact, solicited or
served by Contractor during the term of this Agreement.
(b) During the 180 days following termination of the Consulting
Period, Contractor will not directly or indirectly (whether for
compensation or without compensation) engage in the activities identified
in paragraph 4(a)(i)-(iii), above. For purposes of the prior sentence, the
definition of the term "Field" shall mean engaging in any business activity
that involves the development, production, marketing or selling of
products, processes or techniques which are, directly or indirectly,
identical to, substantially similar to, or competitive with products,
processes or techniques of the Company or other businesses involved in the
design or production of endometrial ablation products.
(c) The restrictions set forth in paragraphs 4(a) and (b) are
considered by the parties to be reasonable for the purposes of protecting
the business of the Company. However, if
5.
any such restriction is found by any court of competent jurisdiction to be
unenforceable because it extends for too long a period of time or over too
great a range of activities or m too broad a geographic area, it shall be
interpreted to extend only over the maximum period of time, range of
activities or geographic areas as to which it may be enforceable.
(d) After termination of this Agreement, Contractor will disclose all
patent applications filed by him within a year after such termination. At
the time of each such disclosure, Contractor will advise BEI in writing of
any Inventions that Contractor believes are not subject to the assignment
provisions of Section 8; and Contractor will at that time provide to BEI in
writing all evidence necessary to substantiate that belief.
5. No Conflicting Obligation.
(a) Contractor represents that Contractor's performance of all of the
terms of this Agreement and Contractor's services as a consultant to BEI do
not and will not breach any agreement to keep in confidence any proprietary
information of another entity.
(b) Contractors represents and warrants that his performance of all
terms of this Consulting Agreement and Contractor's services as a
consultant to BEI do not and will not conflict with any written or oral
agreement.
6. Reports. Contractors shall keep the President of BEI fully informed of
the Contractor's activities under this Consulting Agreement and, at the request
of the President of BEI, shall discuss all matters relating to the conduct of
the Contractor's activities hereunder with the Vice President of International
Sales and the Director, Quality and Regulatory Affairs, or with any other
personnel designated by the President of BEI. If requested by the President of
BEI, Contractor shall provide the President of BEI with written reports
describing Contractor's activities under this Consulting Agreement. A final
written report shall be rendered to BEI within a reasonable period subsequent to
termination of the Agreement.
7. Current Employment and Consulting Relationships. Contractor represents
that he is not currently a director, employee, consultant, advisor, partner or
stockholder of any third party in the Field.
8. Ownership Of Work Product.
(a) Contractor shall specifically describe and identify in Exhibit C
to this Agreement all technology (i) which Contractor intends to use in
performing under this Agreement (ii) which is either owned solely by
Contractor or licensed to Contractor with a right to sublicense, and (iii)
which is in existence in the form of a writing or working prototype prior
to the effective date of this Agreement ("Background Technology").
(b) Contractor agrees that any and all ideas, improvements, inventions
and works of authorship conceived, written, created or first reduced to
practice in the performance of work under this Agreement shall be the sole
and exclusive property of BEI and hereby assigns to BEI
6.
all its right, title and interest in and to any and all such ideas,
improvements, inventions and works of authorship.
(c) Contractor further agrees that except for Contractor's rights in
Background Technology, BEI is and shall be vested with all rights, title
and interests including patent, copyright, trade secret and trademark
rights in all of Contractor's work product under this Agreement. Contractor
hereby grants to BEI a non-exclusive, royalty free and worldwide right to
use and sublicense the use of Background Technology for the purpose of
developing and marketing BEI products, but not for the purpose of marketing
Background Technology separate from BEI products.
(d) Contractor shall execute all papers, including patent
applications, invention assignments and copyright assignments, and
otherwise shaft assist BEI as reasonably required to perfect BEI the
rights, title and other interests in Contractor's work product expressly
granted to BEI under this Agreement. Costs related to such assistance, if
required, shall be paid by BEI.
9. Indemnification.
(a) Contractor agrees to take all necessary precautions to prevent
injury to any persons (including employees of BEI) or damage to property
(including BEI's property) during the term of this Agreement and shall
indemnify and hold harmless BEI and its officers, agents, directors and
employees against any claim, loss judgment, liability, expense (including
reasonable attorneys' and expert witnesses' fees and costs) and injury to
person or property (including death) resulting in any way from Contractor's
willful misconduct, breach of contract or negligence in the performance or
failure to perform Contractor's obligations under this Agreement.
(b) BEI agrees to indemnify and hold Contractor harmless against any
claim, loss, judgment, liability, expense (including reasonable attorneys'
and expert witnesses' fees and costs) and injury to person or property
(including death) to the extent of any act, omission or negligence on the
part of BEI resulting during the performance of the Contractor's duties
under this Agreement.
(c) In the event of the assertion or commencement by an person of any
claim or legal proceeding (whether against BEI or against any other person)
with respect to which Contractor may become obligated to hold harmless,
indemnify, compensate or reimburse BEI or its affiliates pursuant to this
Section 9, BEI shall have the right, at its election, to proceed with the
defense of such claim or legal proceeding on its own. If BEI so proceeds
with the defense of any such claim or legal proceeding:
(i) all reasonable expenses relating to the defense of such claim
or legal proceeding shall be borne and paid exclusively by Contractor;
(ii) Contractor shall make available to BEI any documents and
materials in his possession or control that may be necessary to the
defense of such claim or legal proceeding; and
7.
(iii) BEI shall have the right to settle, adjust or compromise
such claim or legal proceeding with the consent of Contractor
provided, however, that such consent shall not be unreasonably
withheld.
(d) No indemnitee (other than BEI or any successor thereto or assign
thereof) shall be permitted to assert any indemnification claim or exercise
any other remedy under this Agreement unless BEI (or any successor thereto
or assign thereof) shall have consented to the assertion of such
indemnification claim or the exercise of such other remedy.
BEI shall give the Contractor prompt notice of the commencement of any such
legal proceeding against BEI; provided, however, that any failure on the part of
BEI to so notify Contractor shall not limit any of the obligations of Contractor
under this Section 9 (except to the extent such failure materially prejudices
the defense of such legal proceeding).
10. Term and Termination.
(a) The initial term of this Agreement shall be two (2) years
("Initial Term"). The Initial Term may be extended for additional twelve
(12) month periods (a "Subsequent Term") only upon the mutual written
consent of BEI and Contractor, executed no less than sixty (60) days prior
to the termination of the current term.
(b) Either BEI or Contractor may terminate this Agreement with or
without cause with thirty (30) days' advance written notice. In such event,
Contractor shall cease work immediately after receiving notice from BEI,
unless otherwise advised by BEI, and shall notify BEI of expenses incurred
up to the termination date.
11. Effect of Termination. Unless otherwise state herein, upon the
termination of this Agreement, each party shall be released from all obligations
and liabilities to the other occurring or arising after the date of such
termination, except that any termination of this Agreement shall not relieve
Contractor of Contractor's obligations under sections 3, 4, 6, 8, 9, 11 and 14
hereof, nor shall any such termination relieve Contractor or BEI from any
liability arising from any breach of this Agreement. Upon termination of this
Agreement for any reason whatsoever, Contractor shall promptly surrender and
deliver to BEI all documents, notes, laboratory notebooks, drawings,
specification, calculations, sequences, data and other materials of any nature
pertaining to Contractor's work with BEI, and any documents or data of any
description (or any reproduction of any documents or data) containing or
pertaining to any Information. Contractor agrees that in the event of such
termination, Contractor will cooperate with BEI in completing and signing BEI's
termination statement for consultants.
12. Compliance with Applicable Laws. Contractor warrants that all material
supplied and work performed under this Agreement complies with or will comply
with all applicable United States and foreign laws and regulations.
13. Independent Contractor. Contractor is an independent contractor, is not
an agent or employee of BEI and is not authorized to act on behalf of BEI,
except as expressly stated in this Agreement or mutually agreed by the President
of BEI and Contractor. Contractor
8.
will not be eligible for any employee benefits, nor will BEI make deductions
from any amounts payable to Contractor for taxes or other employee withholdings.
Taxes and such withholdings shall be the sole responsibility of Contractor.
14. Legal and Equitable Remedies. Contractor hereby acknowledges and agrees
that in the event of any breach of this Agreement by Contractor, including,
without limitation, the actual or threatened disclosure of Information without
the prior express written consent of BEI, BEI will suffer an irreparable injury,
such that no remedy at law will afford it adequate protection against, or
appropriate compensation for, such injury. Accordingly, Contractor hereby agrees
that BEI shall be entitled to specific performance of Contractor's obligations
under this Agreement, as well as such further relief as may be granted by a
court of competent jurisdiction.
15. General. The parties' rights and obligations under this Agreement will
bind and insure to the benefit of their respective successors, heirs, executors,
and administrators and permitted assigns. This Agreement and the Schedules
attached hereto and hereby incorporated herein constitute the parties' final,
exclusive and complete understanding and agreement with respect to the subject
matter hereof, and supersede all prior and contemporaneous understandings and
agreements relating to its subject matter. This Agreement may no be waived,
modified, amended or assigned unless mutually agreed upon in writing by both
parties. In the event any provision of this Agreement is found to be legally
unenforceable, such unenforceability shall not prevent enforcement of any other
provision of the Agreement. This Agreement shall be governed by the laws of the
State of New Jersey, excluding its conflict of laws principles. Any notices
required or permitted hereunder shall be given to the appropriate party, at the
address specified below or at such other address as the party shall specify in
writing.
Such notice shall be deemed given: (a) upon personal delivery; (b) or sent
by certified or registered mail, postage prepaid, three (3) days after the date
of mailing; (c) when sent by confirmed facsimile or telex if sent during normal
business hours of the recipient, if not, then on the next business day; or (d)
one day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt.
9.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
BEI MEDICAL SYSTEMS COMPANY, INC. CONTRACTOR
By: /s/ Xxxx Xxxxx By: /s/ Xxxxx Xxxxxxx, M.D.
------------------------------ ------------------------------
Xxxx Xxxxx Xxxxx Xxxxxxx, M.D.
(Print Name)
President & CEO
----------------------------------- -----------------------------------
(Title) Social Security Number
Address: __________________________ Address: __________________________
___________________________________ ___________________________________
___________________________________ ___________________________________
10.
SCHEDULE A
TERRITORY
LATIN AMERICA
(Including: MEXICO, CENTRAL AMERICA, SOUTH AMERICA
AND THE CARIBBEAN)
FAR EAST
(Including: INDIA, CHINA, AUSTRALIA
AND THE PACIFIC RIM)
SCHEDULE B
PRODUCTS
HTA(R) HARDWARE
Hydro ThermAblator(R) System for Hysteroscopic Endometrial Ablation (Reorder
Numbers: 55000 & 55001 per attached pages 1 & 2)
HTA(R) Disposables
Procedure Set, Sterile, Single Patient use (Reorder Number 55015 per attached
page 3)
SCHEDULE C
BACKGROUND TECHNOLOGY
