EXHIBIT 10.1
2007 CONSULTING AND ADVISORY AGREEMENT
THIS CONSULTING AGREEMENT ("2007 Agreement"), made effective as of the 28
day of August 2007, is entered into by and between Xsunx, Inc., a Colorado
corporation ("Company"), and Xxxxxxx X. Xxxxxx, Ph.D., ("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 experience and expertise in the areas of
thin film materials and devices for magnetic recording, photovoltaic, solar
thermal applications, semiconductor devices as well as glass, glass-ceramic and
ceramic materials. Consultant has also benefited from thirty five years of
industrial scientific research and product development experience with over
twelve years experience at the executive management level all of which is of
interest to the Company; and
WHEREAS, Consultant currently holds the position of Executive Director
XXXXX-U.S. with such duties and responsibilities incident thereto; and
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 and product 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 XsunX, 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 an independent consultant.
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 and business matters referenced hereinabove, and the conformance
or variance of the foregoing to or with the Business of XsunX.
4. Duty to Consultancies. The parties recognize that Consultant is and
shall remain an independent consultant and that as an independent consultant,
Consultant shall devote time and effort to its business. Notwithstanding the
same, Consultant shall conform its conduct to the fiduciary duties of
2
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 other consultancies and Consultant's duties to the Company. Consultant shall
not make any unauthorized disclosure of the confidential information of other
clients to the Company. Consultant shall not make any unauthorized disclosure of
the confidential information of the Company to any other party not permitted to
receive such information.
5. Compensation. For and in consideration of the performance by Consultant
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, an additional One
Thousand Dollars ($1,000) for each quarterly meeting of the Scientific Advisory
Board, 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
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
services or other items or services for the benefit of Consultant. Consultant
3
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
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 August 28, 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 Agreement 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 or projects 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, 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,
specifications, drawings, charts, plans, schematics, books, files, records,
reports, documents, Instruments, agreements, contracts, correspondence, letters,
5
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 non Company resources, shall belong to the
Company. As soon as Consultant owns, conceives of, or develops any such
Invention, Consultant agrees immediately to communicate such fact in writing to
6
the Chief Executive Officer 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. 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 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
7
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 that may now exist or that may exist in
the future. 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.
9
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
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., Xxxxxxx X. Xxxxxx, Ph.D.
a Colorado corporation
By:_________________________ By: ____________________________
Xxx X. Xxxxxxxxx, as CEO Xxxxxxx X. Xxxxxx, Ph.D., as
Consultant
10
