PROCEPT, INC.
BOARD OF DIRECTORS
CONSULTING AND CONFIDENTIALITY AGREEMENT
THIS CONSULTING AND CONFIDENTIALITY AGREEMENT (the "Agreement") is made as of
this 1st day of January 1998 (the "Effective Date") by and between PROCEPT,
INC., a Delaware corporation (the "Company") and Xxxx X. Xxxxxx, M.D. (the
"Consultant").
WHEREAS, Consultant is a member of the Board of Directors of the Company and has
extensive professional experience in the areas of business development,
licensing and research planning in the pharmaceutical industry.
WHEREAS, in addition to obtaining the Consultant's services as a member of the
Board of Directors of the Company, the Company wishes to avail itself of the
services of the Consultant to perform certain tasks for the benefit of the
Company, and the Consultant is willing to perform such services on the terms and
conditions set forth below.
NOW, THEREFORE, the Company and Consultant, in consideration of the mutual
promises contained herein, hereby agree as follows:
1. DEFINITIONS.
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As used in this Agreement, the following terms shall have the meanings as
set forth below:
"Consultancy" means the current, anticipated or subsequent retention of
Consultant by the Company as a consultant hereunder, or any other period
during which Consultant receives compensation from the Company in any
capacity.
"Effective Common Stock Price" means the average closing bid price
(adjusted, where appropriate, for any change of shares) of the common stock
for five (5) days immediately preceding the payment dates shown in Schedule
1.
"Intellectual Property" means any Invention (as herein after defined),
writing, trade name, trademark, service xxxx or any other material
registered or otherwise protected or protectible under state, federal, or
foreign patent, trademark, copyright, or similar laws.
"Inventions" includes ideas, methods, discoveries, inventions,
developments, improvements, biological materials and other results of
Consultant's participation in this consulting relationship, his involvement
with employees and/or advisors of the Company and/or ideas and information
supplied to him as part of his consulting duties and interactions, whether
or not reduced to practice, whether or not patentable or otherwise
within the definition of Intellectual Property and whether or not made or
conceived on the premises of the Company.
"Proprietary Materials" includes any scientific, technical, trade or
business secrets of the Company and any scientific, technical, trade or
business materials that are treated by the Company as confidential or
proprietary, including, but not limited to, the inventions and confidential
information obtained by or given to the Company about or belonging to its
suppliers, licensors, licensees, partners, affiliates, customers, potential
customers or others.
The definition of "Proprietary Materials" herein shall not include
Proprietary Materials which (i) were known by Consultant prior to its
disclosure by the Company; (ii) are publicly known through publication or
otherwise through no wrongful act of Consultant; (iii) are received from a
third party who rightfully discloses it to Consultant without restriction
on its subsequent disclosure; or (iv) are disclosed pursuant to the lawful
requirement of a governmental agency or by order of court of competent
jurisdiction, provided that such disclosure is subject to all applicable
governmental or judicial protection available for like material.
"Repricing" means that the exercise price of the Standard Option (as
described below) shall be adjusted downward, upon the occurrence of a Reset
Event (as defined in the Subscription Agreement relating to the Company's
unit offering which had a final closing in April, 1998), to a price equal
to the Dilution Value (as defined in such Subscription Agreement) after
giving effect to the Reset Event for such investors in such offering.
2. SERVICES.
2.1 Director Services. Consultant's services as a member of the Board of
Directors hereunder shall include:
(a) Membership on the Company's Board of Directors, including
attending six (6) Board Meetings per year;
(b) Advice on business and scientific matters related to the Company;
(c) Consultation with the Company's Board of Directors, officers,
employees and agents, as may be reasonably requested by the
Company, with respect to the above-mentioned activities; and
(d) Such other services as shall be reasonably requested by the
Company.
2.2 Consultant Services. Consultant's services shall include additional
work not described in Section 2.1 above, including, but not limited
to:
(a) Proactive efforts to help inlicense or acquire new compounds/
technology;
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(b) Interviewing key candidates for executive positions;
(c) Proactive efforts to help partner the Company's drug development
compounds; and
(d) Such other services as shall be reasonably requested by the
Company.
2.3 Status. The Company and Consultant agree that Consultant will be an
independent contractor for all purposes including, but not limited to,
payroll and tax purposes, and that Consultant shall not in any way
represent himself to be an employee or officer of the Company.
2.4 Consent. In order to protect the Company's patent rights, any actual
work done by Consultant under this Agreement, if any, shall be done at
the Company's place of business or at some other location approved in
advance by the Company and no work under this Agreement, if any, shall
be done by Consultant at his employer's place of business unless the
Company has an agreement with such employer to conduct such work.
3. TERM.
3.1 Term. This agreement will be for an initial term of one (1) year
beginning as of the Effective Date and ending December 31, 1998, and
may be extended for additional period or periods of one (1) year by
mutual written agreement by Consultant and the Company prior to the
end of the term set forth above.
3.2 Termination by Company. Company may terminate this Agreement at any
time by giving 30 days prior written notice.
3.3 Termination by Consultant. Consultant may terminate this Agreement at
any time by giving 30 days prior written notice.
4. COMPENSATION AND EXPENSES.
4.1 Board of Directors' Compensation. As full compensation for
Consultant's serving as a member of the Board of Directors pursuant to
Section 2.1 above, the Company shall:
(a) Pay consultant annually either Ten Thousand Dollars ($10,000) in
cash or options to purchase shares of Common Stock under the
Company's 1989 Stock Plan having an aggregate exercise price of
Twenty Thousand Dollars ($20,000) (see formula below), at the
choice of the Consultant, payable in accordance with Schedule 1.
If the Consultant chooses options
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to purchase shares of common stock, the number of shares that could be
purchased would be determined by the following formula: Five Thousand
Dollars ($5,000) (quarterly payment) divided by the Effective Common
Stock Price. The option would be immediately exercisable in full at a
"strike" price equal to the Effective Common Stock Price. The option
would have a ten (10) year term.
(b) Distinct and different from the options described in Section 4.1(a),
Consultant shall be granted an option to purchase 25,000 shares of
Procept Common Stock (the "Standard Option") at $5 per share (unless
Repricing occurs). The Standard Option (25,000 shares) vests annually
over a period of 4 years at the rate of 6,250 shares per year,
starting from the date of this Agreement and would have a ten (10)
year term. If a Repricing occurs prior to the exercise of the option,
the exercise price of the Standard Option will be reduced to the price
specified in the definition of Repricing above.
(c) In consideration of this new Agreement and Consultant's receipt of the
Standard Option, Consultant agrees to surrender all options previously
granted by the Company to the Consultant.
4.2 Consulting Compensation. As full compensation for Consultant's
services pursuant to Section 2.2 above, the Company shall:
(a) Pay Consultant One Thousand Dollars ($1,000) per day in cash plus
options to purchase ---- shares of Common Stock under the Company's
1989 Stock Plan having an aggregate exercise price of One Thousand
Three Hundred Fifty Dollars ($1,350) per day (see formula below),
payable in accordance with Schedule 1. The number of shares that could
be purchased with the option would be determined by the following
formula: the number of days worked in the quarter multiplied by One
Thousand Three Hundred Fifty Dollars ($1,350) divided by the Effective
Common Stock Price. The option would be immediately exercisable in
full at a "strike" price equal to the Effective Common Stock Price.
The option would have a ten (10) year term.
4.3 Expenses. Consultant shall be entitled to reimbursement for reasonable
travel and other out-of-pocket expenses incurred in the performance of
his duties hereunder, provided such expenses are agreed upon in
advance, following submission of written statements and bills.
5. REPRESENTATION OF CONSULTANT; USE OF NAME.
Consultant hereby represents that his current principal place of employment
has received disclosure of this Agreement and of the duties required of
Consultant hereunder, and that
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such employer consents fully to Consultant's execution of this Agreement
and the position that he will hold. Consultant further represents that
there are no binding agreements, written or oral, to which he is a party or
by which he is bound, forbidding or restricting his activities herein. In
addition, Consultant and his current employer consent to the use of their
names in various reports, brochures or other documents produced by or on
behalf of the Company, including any and all documents filed with the
Securities and Exchange Commission, but not to the use of their names in
any advertising or promotion without the prior written consent of
Consultant and his employer.
6. OWNERSHIP.
6.1 Proprietary Materials. The Company retains all rights of ownership to
all Proprietary Materials furnished to or developed by the Consultant
hereunder.
6.2 Inventions and Intellectual Property. All Inventions and Intellectual
Property created, developed or otherwise invented by Consultant
hereunder, including all materials, products, models, data,
information, documentation, and other results of Consultant's services
hereunder, are and shall be the exclusive property of the Company, and
the Company may use or pursue them without restriction or additional
compensation. Consultant shall maintain and furnish to the Company
complete and current records of all such Inventions and Intellectual
Property and disclose to the Company in writing all such Inventions
and Intellectual Property. Consultant: (i) hereby assigns, sets over
and transfers to the Company all of his right, title, and interest in
and to such Inventions and Intellectual Property; (ii) agrees that
Consultant and his agents shall, during and after the period
Consultant is retained by the Company, upon reasonable request of the
Company, cooperate fully in obtaining patent, trademark, service xxxx,
copyright or other proprietary protection for such Inventions and
Intellectual Property, all in the name of the Company (but only at
Company expense), and, without limitation, shall execute all requested
applications, assignments and other documents, and take such other
measures as the Company shall reasonably request in order to perfect
and enforce the Company's rights in such Inventions and Intellectual
Property, and hereby appoints the Company his attorney to execute and
deliver any such applications, assignments or other documents on his
behalf in the event the Consultant fails or refuses to execute and
deliver any such applications, assignments or other documents
requested by the Company; and (iii) shall, upon termination of his
Consultancy, provide to the Company in writing a full, signed
statement of all Inventions and Intellectual Property in which
Consultant participated prior to termination of his Consultancy to the
Company.
6.3 Third Party Claims. Unless covered by an appropriate agreement between
any third party and the Company, Consultant shall not engage in any
activities or use any facilities, whereby claims of ownership to any
results hereunder may be made by such third party.
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7. CONFIDENTIALITY.
7.1 Consultant Acknowledgment. The Company has developed and will develop
its Proprietary Materials and Intellectual Property over a substantial
period of time at a substantial expense, and its Proprietary Materials
and Intellectual Property are integral to the goodwill of the Company.
During the course of Consultancy to the Company, Consultant may
develop or become aware of Proprietary Materials and/or Intellectual
Property. Protection of the Proprietary Materials and Intellectual
Property is necessary to conduct the Company's business, and the
Company is and shall at all times remain the sole owner of the
Company's Proprietary Materials and Intellectual Property.
7.2 Confidentiality. Consultant shall at all times, both during and for
five (5) years after any termination of Consultant's Consultancy to
the Company by either the Company or the Consultant, maintain in
confidence and not utilize the Proprietary Materials or the
Intellectual Property of the Company, except in performing services
for the Company under this Agreement. Maintaining such Proprietary
Materials and Intellectual Property in confidence shall include
refraining from disclosing such Proprietary Materials or Intellectual
Property to any third party (except when duly and specifically
authorized in writing to do so for the purpose of furthering the
business of the Company), and refraining from using such Proprietary
Materials or Intellectual Property for the account of Consultant or
for any other person or business entity. Consultant agrees not to make
any copies of the Proprietary Materials or Intellectual Property of
the Company (except when appropriate for the furtherance of the
business of the Company or duly and specifically authorized to do so)
and agrees promptly upon request, whether during or after the period
of Consultancy to the Company, to return to the Company any and all
samples, documentary, machine-readable or other elements or evidence
of such Proprietary Materials, Intellectual Property, any copies of
either that may be in Consultant's possession or under Consultant's
control.
7.3 Non-Solicitation.
During the term of this Agreement and for five (5) years thereafter,
Consultant shall not, directly or indirectly, without the prior
written consent of the Company:
(a) Solicit or induce any employee, Consultant of the Company, or any
affiliate to leave the employ or consultation of the Company or
any affiliate; or hire for any purpose any employee of the Company
or any affiliate, or any former employee who has left the
employment of the Company or any affiliate within six months of
the termination of said employee's employment with the Company or
affiliate;
(b) Solicit or accept employment or be retained by any party who, at
any time during the term of this Agreement, was a customer or
supplier of the
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Company or any affiliate where his position will be related to the
business of the Company; or
(c) Solicit or accept the business of any customer or supplier of the
Company or any affiliate with respect to products similar to the
business of the Company.
7.4 Continued Obligations. Consultant's obligations under this Section 7
shall not be affected: (i) by any termination of Consultant's
Consultancy, including termination upon the Company's initiative; nor
(ii) by any change in Consultant's position, title or function with
the Company; nor (iii) by any interruption in Consultancy during which
Consultant leaves and then rejoins the Company for any period within a
period of one year and for any reason.
8. NOTICES.
For purposes of this Agreement, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been
duly given when delivered personally or by overnight courier with a receipt
obtained therefor or when mailed by United States registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
If to the Consultant, to: Xxxx X. Xxxxxx, M.D.
00 Xxxxx Xxxx Xxxx
Xxx Xxxxxx, XX 00000
(000) 000-0000 telephone
(000) 000-0000 fax
If to the Company, to: Xx. Xxxx X. Xxx
President and CEO
Procept, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
(000) 000-0000 telephone
(000) 000-0000 fax
or to such other address as either party may furnish to the other in
writing in accordance with this Section, except that notices or changes of
address shall be effective upon receipt.
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9. OTHER PROVISIONS.
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9.1 Remedies. In the event of any breach by Consultant of any of the
provisions of this Agreement, the Company shall be entitled, in
addition to monetary damages and to any other remedies available to
the Company under this Agreement and at law, to equitable relief,
including injunctive relief, and to payment by Consultant of all costs
incurred by the Company in enforcement against Consultant of the
provisions of this Agreement, including reasonable attorneys' fees.
9.2 No Waiver. Waiver of any provision of this Agreement, in whole or in
part, in any one instance shall not constitute a waiver of any other
provision in the same instance, nor any waiver of the same provision
in another instance, but each provision shall continue in full force
and effect with respect to any other then-existing or subsequent
breach.
9.3 Headings. The paragraph headings have been inserted for purposes of
conveniences only and shall not be used for interpretive purposes.
9.4 Assignment. This Agreement, and the rights and obligations hereunder,
may not be assigned or transferred by either party without the prior
written consent of the other party, except the Company may assign this
Agreement in connection with the merger, consolidation, or sale of all
or substantially all assets of the Company. Subject to the foregoing,
this Agreement shall be binding upon Consultant and his heirs,
executors, administrators, successors, representatives and assigns and
shall inure to the benefit of the Company and any successor or assign
of the Company.
9.5 Entire Agreement. This Agreement, including Schedule 1 attached hereto
and incorporated herein by reference, constitutes the entire agreement
of the parties with regard to the subject matter hereof, and
supersedes all previous written or oral representations, agreements
and understandings between the Company and Consultant, whether
expressed or implied. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all
of which together will constitute one and the same agreement.
9.6 Amendment. Any amendment or modification of this Agreement or waiver
of any right, in whole or in part, will be effective only if it is in
writing and signed by the parties hereto.
9.7 Applicable Law and Severability. This Agreement shall be governed by
the law of The Commonwealth of Massachusetts. If a court of competent
jurisdiction determines that any provision of this Agreement is
invalid or unenforceable, then the validity or unenforceability of
that provision shall not affect the validity or enforceability of any
other provision of this Agreement, and all other provisions shall
remain in full force and effect. If any of the provisions of this
Agreement is held to be excessively broad, it shall be reformed and
construed by limiting and reducing it so as to be enforceable to the
maximum extent permitted by law.
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Consultant and the Company have executed and delivered this Agreement as a
document under seal as of the Effective Date.
COMPANY: PROCEPT, INC.
By: /s/ Xxxx X. Xxx
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Xxxx X. Xxx, President and CEO
CONSULTANT:
/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx, M.D.
For payment purposes, please furnish the following information:
Home Address:
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Soc. Sec. #:
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SCHEDULE 1
Consulting Services Cash Payments to be
Provided During the Made During the
Month of Month of Grant Dates for Stock Options
------------------- -------------------- -----------------------------
January
February
March April - current year April 15 - current year
April
May
June July - current year July 15 - current year
July
August
September October -current year October 15 - current year
October
November
December January - following year January 15 -following year
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