Exhibit 99.4
CONSULTING AGREEMENT
This CONSULTING AGREEMENT (the "Agreement") dated effective as of June
24, 2004 is made and entered into by and among L. Xxxxx Xxxxx, an individual
(the "Consultant"), Xenomics, a company incorporated under the laws of the state
of California (the "Xenomics"), and, and Used Kar Parts, Inc., a company
incorporated under the laws of the state of Florida ("Holding," and,
collectively with Xenomics "Company").
In consideration of the mutual promises and agreements set forth herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
agree as follows:
1. Consulting Services. The Company hereby engages Consultant to
provide certain consulting services to the Company upon request of management
from time to time and Consultant hereby accepts such engagement and agrees to
perform Consultant's duties and responsibilities in accordance with the terms
and conditions hereinafter set forth.
1.1 Duties and Responsibilities. Consultant shall serve as
co-Chairman of the Board of Directors of the Company. During the Consulting Term
(as defined below), Consultant shall perform all duties and accept all
responsibilities incident to such position and other appropriate duties as may
be assigned to Consultant by the Company's Board of Directors from time to time
including service as an officer, director, employee or consultant for Company's
subsidiaries, affiliates and joint ventures.
1.2 Consulting Term. The term of this Agreement shall commence
as of June 24, 2004 (the "Effective Date") and shall continue for 36 months,
unless earlier terminated in accordance with Section 4 hereof. The term shall be
automatically renewed for successive one (1) year periods until the Consultant
or the Company delivers to the other party a written notice of their intent not
to renew the "Consulting Term," (a "Non-Renewal Notice") such written notice to
be delivered at least sixty (60) days prior to the expiration of the
then-effective "Consulting Term" as that term is defined below. The period
commencing as of the Effective Date and ending 36 months thereafter or such
later date (the "Expiration Date") to which the term of this Agreement shall
have been extended by mutual written agreement is referred to herein as the
"Consulting Term."
1.4 Consulting Fee. From the Effective Date until the earlier
of (a) the date Company, directly or through Holding or any direct or indirect
majority owned subsidiary of Holding, has received equity or debt financing
yielding net proceeds of not less than One Million Dollars ($1,000,000), or (b)
eight (8) months after Effective Date (the "Increase Date"), the Company shall
pay Consultant a consulting fee (the "Base Consulting Fee") at the annual rate
of $135,000 (U.S.), payable at such times as the Company customarily pays its
senior level executive officers (but in any event no less often than monthly).
Commencing on the Increase Date, the Consulting Fee shall be increased to an
annual rate of $175,000 (U.S.).
1.5 Incentive Fee. In addition to the Base Consulting Fee
Consultant shall be eligible to earn a cash bonus of up to fifty (50%) of his
Consulting Fee for each twelve-month period during the Consulting Term ("Annual
Bonus") at the discretion of the Company's Board of Directors, or if the Board
organizes a compensation committee, such committee (the "Committee"). Within
three (3) months after the Effective Date, the Board or the Committee shall
agree upon a bonus schedule that provides the goals and targets required for
Consultant to earn the Annual Bonus, including the achievement of certain
development, approval, publishing, and revenue goals.
1.6 Options. Consultant shall be eligible to participate in
the Stock Option Plan of Holding (the "Plan").
(a) The Board of Directors of Holding, will make an initial grant of
options to the Consultant as follows:
(i) The number of option shares granted to
Consultant is 1,012,500 shares of Company's
common stock.
(ii) The exercise price at which Consultant can
purchase option shares is one Dollar and
twenty-five cents ($1.25) per share.
(iii) The option is exercisable only to the extent
vested in accordance with the schedule set
forth in paragraph 1.6(a)(iv), below, and
the Plan.
(iv) The first day that option shares commence to
vest is the Effective Date. Option shares
shall vest in accordance with the following
schedule:
253,125 option shares shall vest on the
first anniversary of the Effective Date;
303,750 option shares shall vest on the
second anniversary of the Effective Date;
and
455,625 option shares shall vest on the
third anniversary of the Effective Date.
(v) The option shall expire, and be of no
further force or effect, on the earlier of
the tenth anniversary of the Effective Date
or, except in the event of Involuntary
Termination, four years after Consultant
ceases to serve as a Consultant to the
Company under this Agreement.
(b) In the event of the termination of this Agreement as a result of
Involuntary Termination (as defined below), any outstanding stock options or
restricted stock held by Consultant under the Plan, Company's stock option
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plans, and under the stock options plans of corporations that have merged with
or into the Company shall automatically have its vesting accelerated (including,
for restricted stock, accelerated lapse of a right of repurchase by the Company)
in addition to any portion of the option or restricted stock vested prior to the
date of termination.
1.7 No Other Compensation. Except as expressly provided in
Sections 1.4 through 1.6, and under Section 4 below, Consultant shall not be
entitled to any other compensation or benefits for services to the Company in
any capacity and for services as an officer, director, employee and consultant
for Company's subsidiaries, affiliates and joint ventures.
2. Confidential Information. Consultant recognizes and acknowledges
that by reason of Consultant's engagement by and service to the Company before,
during and, if applicable, after the Consulting Term, Consultant will have
access to certain confidential and proprietary information relating to the
Company's business, which may include, but is not limited to, trade secrets,
trade "know-how," product development techniques and plans, formulas, customer
lists and addresses, financing services, funding programs, cost and pricing
information, marketing and sales techniques, strategy and programs, computer
programs and software and financial information (collectively referred to herein
as "Confidential Information"). Consultant acknowledges that such Confidential
Information is a valuable and unique asset of the Company and Consultant
covenants that he will not, unless expressly authorized in writing by the
Company, at any time during the course of Consultant's engagement use any
Confidential Information or divulge or disclose any Confidential Information to
any person, firm or corporation except in connection with the performance of
Consultant's duties for and on behalf of the Company and in a manner consistent
with the Company's policies regarding Confidential Information. Consultant also
covenants that at any time after the termination of such engagement, directly or
indirectly, he will not use any Confidential Information or divulge or disclose
any Confidential Information to any person, firm or corporation, unless such
information is in the public domain through no fault of Consultant or except
when required to do so by a court of law, by any governmental agency having
supervisory authority over the business of the Company or by any administrative
or legislative body (including a committee thereof) with apparent jurisdiction
to order Consultant to divulge, disclose or make accessible such information.
All written Confidential Information (including, without limitation, in any
computer or other electronic format) which comes into Consultant's possession
during the course of Consultant's engagement shall remain the property of the
Company. Unless expressly authorized in writing by the Company, Consultant shall
not remove any written Confidential Information from the Company's premises,
except in connection with the performance of Consultant's duties for and on
behalf of the Company and in a manner consistent with the Company's policies
regarding Confidential Information. Upon termination of Consultant's engagement,
the Consultant agrees to immediately return to the Company all written
Confidential Information (including, without limitation, in any computer or
other electronic format) in Consultant's possession. As a condition of
Consultant's continued engagement with the Company and in order to protect the
Company's interest in such proprietary information, the Company shall require
Consultant's execution of a Confidentiality Agreement and Inventions Agreement
in the form attached hereto as Exhibit "A", and incorporated herein by this
reference.
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3. Non-Competition; Non-Solicitation.
3.1 Non-Compete. The Consultant hereby covenants and agrees
that during the term of this Agreement and, in the event of (a) Voluntary
Termination (as defined below), (b) termination by Company for Cause (as defined
below) or Misconduct (as defined below), or (c) the expiration of the Consulting
Term as a result of a Non-Renewal Notice for a period of one year following the
end of the Consulting Term, the Consultant will not, without the prior written
consent of the Company, directly or indirectly, on his own behalf or in the
service or on behalf of others, whether or not for compensation, engage in any
business activity, or have any interest in any person, firm, corporation or
business, through a subsidiary or parent entity or other entity (whether as a
shareholder, agent, joint venturer, security holder, trustee, partner,
consultant, creditor lending credit or money for the purpose of establishing or
operating any such business, partner or otherwise) with any Competing Business
in the Covered Area. For the purpose of this Section 3.1, (i) "Competing
Business" means any medical or health care company, any contract manufacturer,
any research laboratory or other company or entity (whether or not organized for
profit) that has, or is seeking to develop, one or more products or therapies
that is related to genetic testing through the use of urine specimens and (ii)
"Covered Area" means all geographical areas of the United States, Italy and
other foreign jurisdictions where Company then has offices and/or sells its
products directly or indirectly through distributors and/or other sales agents.
Notwithstanding the foregoing, the Consultant may own shares of companies whose
securities are publicly traded, so long as ownership of such securities do not
constitute more than one percent (1%) of the outstanding securities of any such
company.
3.2 Non-Solicitation. The Consultant further agrees that as
long as the Agreement remains in effect and, in the event of (a) Voluntary
Termination (as defined below), or (b) termination by Company for Cause (as
defined below), Misconduct (as defined below) or the expiration of the Term as a
result of a Non-Renewal Notice for a period of one (1) year from its
termination, the Consultant will not divert any business of the Company and/or
its affiliates or any customers or suppliers of the Company and/or the Company's
and/or its affiliates' business to any other person, entity or competitor, or
induce or attempt to induce, directly or indirectly, any person to leave his or
her engagement with the Company and/or its affiliates.
3.3 Remedies. The Consultant acknowledges and agrees that his
obligations provided herein are necessary and reasonable in order to protect the
Company and its affiliates and their respective business and the Consultant
expressly agrees that monetary damages would be inadequate to compensate the
Company and/or its affiliates for any breach by the Consultant of his covenants
and agreements set forth herein. Accordingly, the Consultant agrees and
acknowledges that any such violation or threatened violation of this Section 3
will cause irreparable injury to the Company and that, in addition to any other
remedies that may be available, in law, in equity or otherwise, the Company and
its affiliates shall be entitled to obtain injunctive relief against the
threatened breach of this Section 3 or the continuation of any such breach by
the Consultant without the necessity of proving actual damages.
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4. Termination.
4.1 By Company. The Company, acting by duly adopted
resolutions of the Board, may, in its discretion and at its option, terminate
the Consultant's engagement with or without Cause or Misconduct, and without
prejudice to any other right or remedy to which the Company or Consultant may be
entitled at law or in equity or under this Agreement. In the event the Company
desires to terminate the Consultant's engagement without Cause or Misconduct,
the duly adopted resolutions of the Board must include the consent of at least
one director appointed to the Board by the former shareholders of Xenomics. and
the Company shall give the Consultant not less than sixty (60) days advance
written notice of such termination. Termination of Consultant's engagement
hereunder shall be deemed to be "for Cause" in the event that Consultant
violates his duties under any provisions of this Agreement after there has been
delivered to Consultant a written demand for performance from the Company which
describes the basis for the Company's belief that Consultant has not
substantially performed his duties. Termination of Consultant's engagement
hereunder shall be deemed to be "for Misconduct", if Consultant is found to be
in material breach of the provisions of Sections 2 or 3 of this Agreement, is
guilty of any felony or an act of fraud or embezzlement, is guilty of willful
misconduct or gross neglect, misappropriation, concealment or conversion of any
money or property of the Company, or reckless conduct which endangers the safety
of other persons or property during the course of engagement or while on
premises leased or owned by the Company..
4.2 Involuntary Termination. "Involuntary Termination" shall
mean (i) a material reduction by the Company in the compensation of Consultant,
without the Consultant's written consent, as in effect immediately prior to such
reduction; (ii) any termination of Consultant by the Company which is not
effected for Misconduct, Cause or as a result of the expiration of the Term as a
result of a Non-Renewal Notice, or any purported termination for Misconduct or
Cause for which the grounds relied upon are determined by a court of competent
jurisdiction not to be valid, unless Consultant, following such purported
termination, receives all compensation, including vesting of all unvested stock
options and restricted stock within five business days of such determination, or
(iii) the termination by Consultant for Company's or Holding's violation of any
material provision of this agreement, unless the grounds relied upon are
determined by a court of competent jurisdiction not to be valid.
4.3 By Consultant's Death or Disability. This Agreement shall
also be terminated upon the Consultant's death and/or a finding of permanent
physical or mental disability, such disability expected to result in death or to
be of a continuous duration of no less than three (3) months, and the Consultant
is unable to perform his usual and essential duties for the Company.
4.4 Voluntary Termination. Consultant may voluntarily
terminate the Engagement Term upon sixty (60) days' prior written notice for any
reason; provided, however, that no further payments shall be due under this
Agreement in that event except that Consultant shall be entitled to any benefits
due under any compensation or benefit plan provided by the Company for
Consultants or otherwise outside of this Agreement.
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4.5 Compensation on Termination.
(a) Cause or Misconduct. In the event the Company
terminates Consultant for Cause or Misconduct, Consultant shall not be entitled
to any compensation other than Base Consulting Fee accrued through the date of
termination. Such termination shall also immediately cease the vesting of all
outstanding unvested options and restricted stock held on the date of
termination and all such unvested options shall thereupon expire.
(b) Voluntary Termination. In the event Consultant
resigns from the Company voluntarily, Consultant shall not be entitled to any
compensation other than Base Consulting Fee accrued through the effective date
of his resignation.
(c) Involuntary Termination. In the event Consultant
is terminated by the Company due to an Involuntary Termination prior to the
expiration of the Engagement Term, the Company shall pay to Consultant (i) the
balance of Consultant's Base Consulting Fee in accordance with the schedule such
payments had been made during the six months preceding such termination for the
remainder of the Consulting Term; and (ii) twenty five percent (25%) of such
balance, representing an estimate of all bonuses which would have been paid
during such period, payable 60 days after such termination.
(d) Death or Disability In the event of termination
by reason of Consultant's death and/or permanent disability, Consultant or his
executors, legal representatives or administrators, as applicable, shall be
entitled to an amount equal to Consultant's Base Consulting Fee accrued through
the date of termination, plus a pro rata share of any annual bonus to which
Consultant would otherwise be entitled for the year during which death or
permanent disability occurs.
5. Guarantee by Holding. Holding hereby unconditionally and irrevocably
guarantees to Consultant the timely payment and performance by Company of all
payments under this Agreement as they becomes due. Holding acknowledges,
covenants and agrees that this guaranty shall survive the termination of the
Agreement and shall continue in full force and effect with respect to any of
Company's obligations hereunder which are not performed upon and which survive
the termination of this Agreement.
6. General Provisions.
6.1 Modification; No Waiver. No modification, amendment or
discharge of this Agreement shall be valid unless the same is in writing and
signed by all parties hereto. Failure of any party at any time to enforce any
provisions of this Agreement or any rights or to exercise any elections shall in
no way be considered to be a waiver of such provisions, rights or elections and
shall in no way affect the validity of this Agreement. The exercise by any party
of any of its rights or any of its elections under this Agreement shall not
preclude or prejudice such party from exercising the same or any other right it
may have under this Agreement irrespective of any previous action taken.
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6.2 Notices. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be deemed to have been given when hand delivered or mailed
by registered or certified mail as follows (provided that notice of change of
address shall be deemed given only when received):
If to the Company, to: Xenomics
0000 Xxxxxxxx Xxx.
Xxxxxxxx, XX 00000
Attn: President
with a required copy to: Xxxx Xxxxxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx LLP
Four Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
If to Consultant, to: L. Xxxxx Xxxxx
0000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Or to such other names or addresses as the Company or Consultant, as the case
may be, shall designate by notice to each other person entitled to receive
notices in the manner specified in this Section.
6.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
6.4 Further Assurances. Each party to this Agreement shall
execute all instruments and documents and take all actions as may be reasonably
required to effectuate this Agreement.
6.5 Severability. Should any one or more of the provisions of
this Agreement or of any agreement entered into pursuant to this Agreement be
determined to be illegal or unenforceable, then such illegal or unenforceable
provision shall be modified by the proper court or arbitrator to the extent
necessary and possible to make such provision enforceable, and such modified
provision and all other provisions of this Agreement and of each other agreement
entered into pursuant to this Agreement shall be given effect separately from
the provisions or portion thereof determined to be illegal or unenforceable and
shall not be affected thereby.
6.6 Successors and Assigns. Consultant may not assign this
Agreement without the prior written consent of the Company. The Company may
assign its rights without the written consent of Consultant, so long as the
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Company or its assignee complies with the other material terms of this
Agreement. The rights and obligations of the Company under this Agreement shall
inure to the benefit of and be binding upon the successors and permitted assigns
of the Company, and the Consultant's rights under this Agreement shall inure to
the benefit of and be binding upon his heirs and executors. The Company's
subsidiaries and controlled affiliates shall be express third party
beneficiaries of this Agreement.
6.7 Entire Agreement. This Agreement supersedes all prior
agreements and understandings between the parties, oral or written. No
modification, termination or attempted waiver shall be valid unless in writing,
signed by the party against whom such modification, termination or waiver is
sought to be enforced.
6.8 Counterparts; Facsimile. This Agreement may be executed in
one or more counterparts, each of which shall for all purposes be deemed to be
an original, and all of which taken together shall constitute one and the same
instrument. This Agreement may be executed by facsimile with original signatures
to follow.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first written above.
"COMPANY:" Xenomics,
a California Corporation
By: /s/ Xxxxxx Xxxxxxx
---------------------------
Name: Xxxxxx Xxxxxxx
Title: President
"CONSULTANT:" /s/ L. Xxxxx Xxxxx
---------------------------
L. Xxxxx Xxxxx
"HOLDING:" Used Kart Parts,Inc.,
a Florida Corporation
By: /s/ Xxxxxxxxx Xxxxxxxx
---------------------------
Name: Xxxxxxxxx Xxxxxxxx
Title: President
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Exhibit A
Confidentiality Agreement and Inventions Agreement
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